JUDGMENT D.S. Mathur, J. - This is a revision under Section 115, Civil Procedure Code by Radhey Lal Jalan, plaintiff, against the order of the Civil Judge of Moradabad, allowing the appeal of the Union of India, defendant, and thereby dismissing the plaintiff's suit with costs. 2. The material facts of the case are that the tender of the plaintiff for the supply of ration to the mess of the Training School of Chandausi was accepted by the Superintendent of that school. The School was being run by the Northern Railway. The terms and conditions of the contract are contained in the paper (Ex. A-1) and as laid down in Cl. 14 thereof, the plaintiff deposited a sum of Rs. 500/- with the Mess Committee as security for due fulfilment of the terms contained in Clauses 1 to 13 thereof. The contract could be terminated on giving one month's notice on either side in writing, but in the instant case the plaintiff terminated the contract without serving one month's notice. The supply of the ration was to be commenced under the contract from 12-10-1958, but on October 11, 1958, after depositing the sum of Rs. 500/- he intimated to the Superintendent that he was withdrawing his offer. The Superintendent thereupon forfeited the security and did not refund the amount in spite of demand. This naturally led to a dispute and after serving a notice under Section 80, C. P. C the plaintiff instituted the present suit for recovery of the security money with interest and costs. 3. The Munsif recorded the finding that no loss was suffered by the Union of India and consequently decreed the suit in full. This decree was set aside in appeal on the ground that on non-fulfilment of the contract, the plaintiff defaulter could not claim refund of the security which stood forfeited. 4. The question for consideration in the revision is whether the present case is governed by Sections 73 and 74 of the Contract Act, and also whether security money can be forfeited without proof of any damage having been suffered. 5. A perusal of Sections 73 and 74 of the Contract Act shall make it clear that both contemplates a suit by the party suffering a loss or complaining of the breach of contract against the party who has broken the contract.
5. A perusal of Sections 73 and 74 of the Contract Act shall make it clear that both contemplates a suit by the party suffering a loss or complaining of the breach of contract against the party who has broken the contract. None of these sections apply to a suit instituted by the party who has broken the contract. Consequently, the plaintiff-applicant cannot seek benefit of either of these two sections and the case must be decided on the basis of the agreement, direct or implied, between the parties. The plaintiff had not executed any deed of agreement after the acceptance of his tender and after he had deposited the security money. The terms and conditions of the contract shall thus be those on the basis of which tenders were invited. Therein there is no provision for forfeiture though it is clearly mentioned in Cl. 14 that a sum of Rs. 500/- shall be deposited by the licencee as security for due fulfilment of the above terms, that is, of the contract. 6. It was contended before me that the non-fulfilment of the terms could be with regard to the rent of the godown and the charges of electric consumption considering that the ration was to be supplied at the market rates. With regard co the supply of ration, many disputes can arise and even though there may be no express provision in the terms and conditions, the security money shall cover all such disputes and the defendant could recover any loss suffered or damage done out of the security money or any amount which was payable to the plaintiff. The Courts of law, shall, therefore, not be justified in giving a narrow meaning to these terms, and it must be held that the security was for the due fulfilment of all the conditions and for breach of any of them the security money or any other amount due to the plaintiff could be utilised for making good the loss. 7. In the instant case, the defendant has not adduced any evidence as to the loss suffered or damage caused to it, and the question of forfeiture of the security money shall have to be determined on legal considerations and not on facts.
7. In the instant case, the defendant has not adduced any evidence as to the loss suffered or damage caused to it, and the question of forfeiture of the security money shall have to be determined on legal considerations and not on facts. In case the security money could not, in the absence of a clause of forfeiture, be forfeited by the defendant, the whole security money shall be liable to be refunded to the plaintiff, though on satisfactory evidence being adduced the Court may order the refund of a part of the money only. 8. The deposit of money can ordinarily be divided in three categories, by way of earnest money or by way of security, or as advance. Earnest money has been treated as part of the purchase money which cannot be refunded if the purchaser fails to pay the balance of the purchase money and in case of default, the earnest money stands forfeited to the vendor. The same view, though on some what different grounds, can be taken of the security money. The furnishing of security is a part of the contract. In the instant case, contract would not have been given to the plaintiff unless after the acceptance of his tender he deposited the amount as security for the due fulfilment of the contract. When security forms part of the contract, the party breaking the contract cannot demand performance thereof by the other party, and consequently cannot claim refund of the security money, deposited for fulfilment of the contract. Departure from this rule can be made in those cases only where it is specifically provided in the agreement that the security money shall be liable to forfeiture only to the extent of the loss suffered or damage caused. A similar view was expressed in Abdul Gani and Co. v. Trustees of the Port of Bombay, AIR 1952 Bombay 310, Managing Director M/s Hindustan Shipyard Private Ltd. Visakhapatnam v. Attili Appalaswami, A.I.R. 1963 Andhra Pradesh 71 and R.M.K. Venkataperumal Naidu v. the Thiruppyyanam, Panchayat Board Thiruppuvanam, AIR 1955 Madras 717. The last Madras case was based on an early decision of the same High Court in Desu Rattamma v. Kakaraparbhi Krishna Murthi and another, AIR 1928 Madras 326. 9.
The last Madras case was based on an early decision of the same High Court in Desu Rattamma v. Kakaraparbhi Krishna Murthi and another, AIR 1928 Madras 326. 9. To sum up, the plaintiff had asked for the recovery of the security money deposited by him for the due fulfilment of the contract and when he himself broke the contract the security money stood forfeited and he could not be granted a decree for the refund of the security amount. The suit was, therefore, rightly dismissed by the lower appellate court. However, in view of the fact that no appreciable loss or damage was caused to the defendant, the maximum leniency which can be shown to the plaintiff is by ordering that the costs of this Court shall be on the parties. 10. The revision is hereby dismissed. Costs of this Court shall be on the parties.