Answer By law4u team
In Indian law, emotional distress or mental agony is not usually compensable in a breach of contract case - because contract law is based on economic loss, not emotional suffering. However, there are limited exceptions where courts have recognized such claims, depending on the nature of the contract and the circumstances of the breach. Let’s understand this in detail. 1. General Rule – No Compensation for Emotional Distress in Contract Under Indian Contract Act, 1872, especially Section 73, compensation for breach of contract is awarded for: > “Loss or damage which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach.” This means damages are given only for actual, measurable financial loss that is reasonably foreseeable - not for emotional pain, anxiety, or disappointment. For example: If a company fails to deliver goods on time, the buyer can claim compensation for financial loss (like loss of profit or business), but not for mental frustration or inconvenience. So generally, emotional distress is not compensable because it does not have a direct monetary value or commercial connection to the contract. 2. Exception – Where the Contract Itself Involves Mental Satisfaction or Comfort Courts have made exceptions in certain special contracts, where mental satisfaction or emotional peace is an essential part of the agreement. Examples include: Contracts with hotels, travel agencies, or airlines where the purpose is enjoyment or relaxation. Marriage or honeymoon packages. Contracts for personal services where breach causes humiliation or distress. In such cases, courts have held that the loss of emotional satisfaction or mental agony can be a direct result of the breach. Example: If a person books an international honeymoon tour and the travel company cancels or mismanages the trip due to negligence, the person may claim compensation not only for financial loss but also for mental agony, harassment, and disappointment. Indian consumer forums and civil courts have recognized such claims in several judgments, treating them as “compensation for deficiency in service” rather than purely contractual damages. 3. Consumer Law Approach Under the Consumer Protection Act, 2019, courts and commissions regularly award compensation for mental agony, harassment, and emotional distress, especially where the contract involves consumer services such as: Defective goods or deficient services (e.g., airlines, tour operators, housing projects). Delay in delivery of flats or property by builders. Negligence by hospitals or banks. Even though these cases arise from contractual relationships, the Consumer Commissions treat mental agony as a valid ground for awarding compensation because such losses directly arise from deficiency in service. Thus, while contract law alone may not support emotional distress damages, consumer protection law often allows it where the breach affects dignity, comfort, or peace of mind. 4. Judicial Recognition in India Indian courts have occasionally recognized emotional or mental suffering in breach-related cases: Ghaziabad Development Authority v. Balbir Singh (2004) 5 SCC 65 – The Supreme Court held that compensation may include mental agony and harassment in cases of delay or deficiency in service by government authorities. Lucknow Development Authority v. M.K. Gupta (1994) 1 SCC 243 – The Court stated that mental harassment caused by negligence of a service provider can be compensated. However, in commercial contracts (like sale of goods, construction contracts, or business agreements), courts usually reject emotional distress claims unless they relate to personal enjoyment or comfort. 5. Difference from Tort Law If emotional distress results from wrongful conduct or negligence that amounts to a civil wrong (tort) - for example, defamation, negligence by a doctor, or violation of privacy then the affected person can seek compensation under tort principles, not under contract. This distinction is important because tort law recognizes non-economic harm, whereas contract law is limited to economic loss. 6. Conclusion To summarize: General rule: Emotional distress or mental agony cannot be claimed in a simple breach of contract under the Indian Contract Act. Exceptions: Compensation may be awarded when the very object of the contract is to provide pleasure, relaxation, or emotional satisfaction - such as in holiday, travel, or housing contracts. Consumer law and tort law provide broader remedies for mental agony, but not ordinary commercial contracts. So, in most commercial disputes, only financial or economic losses are compensable. Emotional distress can be claimed only in exceptional circumstances, where the breach directly affects personal comfort, dignity, or mental peace.
