Jayasinghe V. Silva

May.16,1911   Present: Lascelles C.J. and Middleton J.

JAYASINGHE v. SILVA.

27-C. R. Colombo, 20,654.

Penalty-Liquidated damages-Fidelity bond-Deposit of a turn, of money-Agreement to forfeit that sum for dishonesty.

The plaintiff, who was a tavern-keeper under the defendant, entered into a fidelity bond and agreed inter alia to forfeit the sum of Rs. 100, which he had deposited with the defendant, if he acted dishonestly in the sale of arrack. The plaintiff was detected selling a bottle of arrack containing " two fingers " less than the proper quantity (causing a loss of about three cents to the buyer). The defendant dismissed the plaintiff and forfeited his deposit of Rs. 100.

Held, the forfeiture was legal.

A Court will not enter into the question of quantum of damages where a penalty is fixed, unless it is shown that the pæna is ingens or immanis at immensis.

THE facts are set out in the judgment of Lascelles C.J.

A. St. V. Jayawardene, for the defendant, appellant-The plaintiff deposited the Rs. 100 with the defendant and agreed to forfeit that amount should he act dishonestly. Under these

circumstances the Court would not inquire whether the deposit is in the nature of a penalty or liquidated damages. Wallis v. Smith1 Hinton v. Sparkes.2 [Lascelles C.J.-Has it not been held that the Roman-Dutch law governs this question ?] Yes, it has been so held by Bonser C.J. in Fernando v. Fernando.3 See also Webster v. Bosanquet.4 The amount agreed upon cannot be said to be ingens.

Seneviratne, for respondent, argued that the amount agreed upon was ingens, as the plaintiff had sold arrack of the value of three cents only below the proper quantity.

Cur. adv. vult.

May 16, 1911. Lascelles C.J.-

The defendant is the renter, under the Government, of the Colombo arrack farm, and the plaintiff was a tavern-keeper in charge of the Hendala tavern, in the defendant's employment. On his appointment the plaintiff entered into the bond D 3, conditioned in the sum of Rs. 500, by which he bound himself, amongst other things, to account duly and faithfully for all goods and property which might be entrusted to him for or on account of the obligee, and not to embezzle or misappropriate any goods or property belonging to the obligee, and to be strictly honest in the sale of arrack. The bond also contained a provision by which the plaintiff deposited with we obligee the sum of Rs. 100, which sum he hypothecated to secure the performance of his obligations under the bond. A circular notice (D 1) was also sent to the plaintiff and other tavern-keepers warning them that if they were found selling arrack by short measurement they would be dismissed at once and their wages and security money forfeited.

On August 29, J. Fernando, an inspector employed on the arrack farm, paid a surprise visit to the plaintiff's tavern and detected the plaintiff selling a bottle of arrack containing " two fingers " less than the proper quantity. The defendant inquired into the matter and ultimately dismissed the plaintiff, forfeiting his deposit of Rs. 100, and also Rs. 25, the amount of wages then owing to him. The plaintiff now sues to recover these sums, and the Commissioner of Requests, though he finds that the plaintiff was rightly dismissed, has given judgment for him on grounds which, I confess, I do not quite appreciate.

The provisions of the Roman-Dutch law with regard to the enforcement of penalties are clearly explained in Fernando v. Fer-nando3. After citing the passages from Voet bearing on the subject, Bonser C.J. stated: -

"In other words, where the amount of the penalty is out of all proportion to the damages likely to be caused by the breach of the contract, in such a case the equitable course is, not to give judgment

1 L. R. 21 Ch. D. 243.                                                                 3 (1899) 4 N. L. R. 285.

2L. R. C. P. 161.                                               

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