Dismissed

Food Corporation of India v. M/S Balaji Good Carriers

Punjab & Haryana HC10 Sept 2008RSA/1679/2004

Case brief

AI extract

What is this about?

The High Court dismissed the Food Corporation of India's appeal against lower court decrees. It held that without a formal order terminating the contract or specific order regarding the deposit, the corporation could not retain the Rs.50,000 security amount.

What did the court decide?

Appeal dismissed; implication that lower court decree for return of security is upheld.

Food Corporation of India Vs M/S Balaji Good… — Money Laundering | Punjab & Haryana HC (2008)

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RSA No.1679 of 2004(O&M)

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

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RSA No.1679 of 2004(O&M) Date of decision: 10.9.2008

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Food Corporation of India

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......Appellant

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Versus

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M/s Balaji Goods Carriers

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......Respondent

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CORAM:HON'BLE MR. JUSTICE RAKESH KUMAR GARG

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Present: Mr. H.S. Dhandi, Advocate for the appellant.

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Mr. Ashok Sharma Nabhewala, Advocate for the respondent.

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Rakesh Kumar Garg, J .

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The defendant-appellant invited offers for transportation of stocks of foodgrains from Vallah District Amritsar to Srinagar. The plaintiff-respondent who is carrying on the business as transport Contractor submitted his offer at the rate of Rs.24.84 paise per quintal. The said offer of the respondent was accepted by the appellant-Corporation and the plaintiff-respondent was required to deposit a security amount and complete the other formalities before 21.2.1986. In consequence of the acceptance of the offer of the defendant-appellant, the plaintiff-respondent had deposited Rs.50,000/- as security with the appellant-Corporation on 18.1.1986.

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It is the case of the plaintiff-respondent that in spite of the fact that it was ready and willing to transport the stocks of foodgrains, for the reasons best known to the appellant-Corporation no work of transport on stocks was assigned to it and instead the work was assigned to one M/s Kay Carriers at the risk and cost of the appellant in the month of May,

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RSA No.1679 of 2004(O&M)

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1996 without any notice to the plaintiff-respondent and without terminating the contract.

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The plaintiff-respondent filed a suit for recovery of Rs.4,81,500/- i.e Rs.50,000/- as refund of the security, Rs.4,00,000/- as damages of breach of the contract and Rs.31,500/- as interest up to the date of filing of the suit against the appellant-Corporation.

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The suit was contested by the appellant-Corporation, admitting the fact that the offer of the plaintiff-firm was less and it was asked to complete the formalities and deposit the security amount before 21.2.1986. Deposit of Rs.50,000/- on 18.1.1986 by the respondent was also admitted. It was also admitted that the respondent was awarded contract for one year, which was extendable for further three months. However, the respondent did not complete other formalities of the contract by due date i.e. 21.2.1986 and as such, after waiting for the respondent to fulfill the said requirement till 17.3.1986 the appellant-Corporation allotted the work to M/s Kay Carriers, Amritsar, at the risk and cost of the plaintiff-respondent as per terms and conditions of the tender agreement. It was thus, the stand of the Corporation that the plaintiff was not entitled to the refund of the security amount, interest thereon or the damages.

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After appreciating the evidence on file, the trial Court decreed the suit of the plaintiff-respondent for the recovery of an amount of Rs.50,000/- only with proportionate costs which was the security amount to be deposited by the plaintiff with the appellant-Corporation. Rest of the claim of the respondent was dismissed.

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Feeling aggrieved, the Food Corporation of India filed an appeal which was dismissed by the District Judge, Amritsar vide impugned judgment and decree dated 10.1.2004.

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Still not satisfied, the Food Corporation of India has filed the

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RSA No.1679 of 2004(O&M)

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present appeal challenging the judgments and decrees of the Courts below.

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Mr. H.S. Dhandi, learned counsel for the appellant-Corporation has vehemently argued that as per the terms and conditions of the contract, it was not necessary for the appellant-Corporation to repudiate the contract or to forfeit earnest money. Since after the grant of tender, the Contractor had failed to comply with the terms and conditions, the earnest money was liable to be forfeited.

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On the other hand, learned counsel for the respondent, has supported the findings of the Courts below by arguing that there is no order of the appellant- Corporation repudiating the contract nor any other order was passed forfeiting the security amount. It is the argument of the learned counsel for the respondent that without terminating contract with the plaintiff-firm, the appellant-defendant could not forfeit the amount of security.

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I have heard learned counsel for the parties and perused the record.

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I find no force in the contentions raised by the learned counsel for the appellant. From the documents and evidence on record this fact is also clear that contract between the plaintiff firm and defendant corporation is never terminated till today. There is no order on the file vide which the contract was terminated or any order was passed regarding the security amount of Rs.50,000/-. As per clause X(b) Senior Regional Manager had right to terminate the contract in the event of breach by the contractor of any of the terms and conditions of the contract and to get the work done for the unexpired period of the contract at the risk and cost of the contractor and/or forfeit the security or any part thereof for the sum or sums due for any damages, losses, charges, expenses or costs that may be suffered or

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RSA No.1679 of 2004(O&M)

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incurred by the corporation due to the contractor's negligence. Clause XI(f) deals regarding the termination and forfeit of security deposited or any part thereof towards the satisfaction of any sum due to be claimed for any damages/losses, charges, expenses etc. But there is no evidence on the file to show that any proceedings are followed by the defendant corporation for the recovery of any loss suffered by Food Corporation of India nor the Food Corporation of India has preferred any counter claim in the present case. In my opinion the defendant corporation cannot retain the security amount of Rs.50,000/- without passing formal order of termination of contract with the plaintiff firm or passing any specific order regarding the security amount as per terms and conditions of the contract.`

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For the reasons recorded above, I find no merit in the appeal. No substantial question of law arises in the present appeal.

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Dismissed.

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September 10, 2008 (RAKESH KUMAR GARG) ps JUDGE

Food Corporation of India v. M/S Balaji Good Carriers

Case brief

What is this about?

What did the court decide?

Food Corporation of India v. M/S Balaji Good Carriers

Case brief

What is this about?

What did the court decide?

What the court decided

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