ILR 2016 KAR 1057
KARNATAKA HIGH COURT
Goetze (India) Ltd., and Another vs. H.R. Thimappa Gowda*
📌CONTRACT ACT, 1872 – SECTION 73 – Compensation for loss or damage caused by breach of contract – Wrongful termination of employment contract – Grant of damages and consequential benefits – Judgment and Decree passed by the Civil Court – Appealed against – Availability of action for damages as a matter of right when a contract is broken– Court to consider two important aspects, while calculating the damages that what the position would have been if the old employment had run its full course? and what has the plaintiff done since his dismissal? – Law on mitigation of damages
HELD ,
The master who wrongfully dismisses his servant is bound to pay him such damages as will compensate him for the wrong done to him. The measure of damages for the breach of promise is obtained by considering what is the usual rate of wages for the employment contracted for, and what time would be lost before a similar employment could be obtained. The damages are to be assessed by reference to the amount earned in the service wrongfully terminated and the time likely to elapse before the servant obtains another post for which he fitted.
📌If the contract expressly provides that it is terminable upon, e.g., a month’s notice, the damages will ordinarily be a month’s wages. If the contract of employment is for a specific term, the servant would then be entitled to the whole of the salary, benefits, etc., which he would have earned had he continued in the employment of the master for the full term of the contract, subject of course to mitigation of damages by way of seeking alternative employment. Such damages would be recoverable by the servant for his wrongful dismissal by the master only on the basis of the master having committed a breach of the contract of employment. The damages awarded to the non-defaulting party to a contract will be determined and measured as though that party had made reasonable efforts to avoid the losses resulting from the default. The servant would in that event be entitled to damages the amount of which would be measured prima facie and subject to the rule of mitigation in the salary of which the master had deprived him.