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SUBRAMANIAM v. ABEYWARDENE
NLR21V161
Present: Bertram C. J. and De Sampayo
J.
SUBRAMANIAM v. ABEYWARDENE.
142-D. C Kalutara, 7,270.
Liquidated damages-Penalty-Agreement
to sell arrack at market rote less Rs. 25-Breach of agreement.
In consideration of a sum of Rs. 8,000 advanced by the plaintiff to
the defendant, the defendant covenanted that he would deliver to the plaintiff
all arrack, not less than 70 leagues, manufactured in his distilleries as and
when required by the plaintiff at any time before a specified day at the market
price less Rs. 25; half the price of arrack was to be paid for on delivery, and
the other half was to be credited to the defendant against the advance. It was
further provided that in the event of the defendant failing to deliver the
arrack, the defendant was to pay to the plaintiff Rs. 100 as liquidated damages
for each leaguer not delivered, and if the plaintiff should refuse to take
delivery, he should pay Rs. 100 per leaguer. The plaintiff sued defendant (inter
alia) for damages for non-delivery of a certain quantity of arrack.
Held, the amount stipulated in the bond should be treated as penalty, and
not as liquidated damages.
THIS
was an action for the recovery of a sum alleged to be due to the plaintiff on
account of advances and payments made against the supply of arrack under an
agreement and for the recovery of damages for failure to supply part of the
arrack promised at the rate of Rs. 100 per leaguer. The material portions of the
agreement were as follows: -
(1) That in consideration ' of the sum of Rs. 8,000 lawful money of Ceylon,
being amount paid on the execution of these presents' by the said wholesale
dealer (the receipt whereof is hereby admitted and acknowledged), the said
distiller doth hereby covenant and agree with the said wholesale dealer that he,
the said distiller, shall and will sell and deliver to the said wholesale
dealer, or Mesars. Kasi Nadar Vaitialingam or Kasi Nadar Yaitialingam Marcandan,
or his heirs or their agent or agents duly authorized by him, all arrack, not
less than 70 leaguers, of 161 gallons per leaguer, manufactured in the
distillery standing on Hatarahawulmanana bearing excise No. 197, situated at
Galaforesaid, and in the distillery standing on' Mukkanappugewatta bearing
excise No. 200, and situated at Yalagama, in or over which the said distiller
shall have the management, control, or interest, as and when required by the
said wholesale dealer or his agent or agents at any time before December 31,
1915, commencing from the date of these presents the price to be paid for all
arrack being any sum less Rs. 25 than the then market price per each leaguer to
the said distiller....................
(5) That in the event of the said distiller failing, refusing, or neglecting to
sell and deliver the said arrack within the period aforementioned, he, the
said distiller, doth hereby covenant and agree that he shall
and
will pay to the said wholesale
dealer Rs. 100 per each leaguer as liquidated damages. In like
manner ,if the said wholesale dealer shall refuse, fail, or neglect to
purchase and take delivery of all such arrack as afore-said
within the period aforementioned, he shall and will pay as
damages Rs. 100 to the said distiller.
The District Judge gave judgment for plaintiff as prayed for.
The defendant appealed.
Bawa, K.C., and F. de Zoysa, for the appellant.
E. W. Jayawardena and Balasingham, for the respondent.
The following authorities were cited at the argument: - Halsbury, vol. X., p.
331, s. 605; (1915) A. C. 79; 15 N. L. R. 125; (1892) 1 Q. B. 127; 47 L. T. 389;
21 Ch. D. 243; 22 Mad. 453; 27 Cal. 421; (1886) 11 A. C. 332; 14 N. L. R. 170;
13 N. L. R. 47.
September 19, 1918. Bertram C.J.-
[His Lordship dealt with the questions of fact raised, and continued]: -
The only question
