JUDGMENT Milap Chandra, J. - This appeal has been filed against the order of the learned District Judge, Udaipur dated on January 4, 1983 by which he dismissed the petitioner's application moved under Section 41, Arbitration Act read with Order 39, Rules 1 and 2 and Section 151 of the Civil Procedure Code, praying that the defendant respondent be restrained from realising the amount of penalty of Rs. 56,283/- imposed under Clauses (2) and (3) of the contract through coercive methods or by deducting it from payments to be made to the appellant in respect of other contracts. The facts of the case giving rise to this appeal may be summarised thus. 2. The appellant was granted a contract by the State of Rajasthan for the construction of a Syphon Aqueduct at R.D. 18018 on Left Main Canal, N. Bajaj Sagar Project, Bansawara. He executed a portion of the work to the extent of Rs. 1,98,078.22 p. He could not carry out further work due to the unreasonable hindrances and obstacles of the Engineering staff of the respondent. He moved the concerned Executive Engineer. He intimated that the appellant may refer the matter for arbitration to Chief Engineer. Accordingly, he moved the Chief Engineer but with no avail. Ultimately, he moved an application under Section 8 read with Section 20 of the Arbitration Act in the Court of the District Judge, Udaipur for getting the agreement filed and for appointing an arbitrator. Meanwhile, the Chief Engineer proceeded to levy the penalty and compensation and directed the recovery of Rs. 56,283/- from the amounts payable to the appellant in respect of other contracts. After hearing the parties, the learned District Judge dismissed the application by his order dated January 4, 1983 which has been challenged in this appeal. 3. It has been contended by the learned Counsel for the plaintiff-appellant that the amounts of compensation and penalty determined by the Chief Engineer are illegal and they have been imposed without any loss or damage. He further contended that the amount of damages for breach of a contract cannot be recovered from other amounts payable to the party in respect of the other contracts. He relied upon in State of Rajasthan v. Mool Chand (A.I.R. 1974 S.C. 1265, 1975 W.L.N. (U.C.) 3). 4. The learned Deputy Govt. Advocate tried her best to support the order under appeal. He relied upon in State of Rajasthan v. Mool Chand (A.I.R. 1974 S.C. 1265, 1975 W.L.N. (U.C.) 3). 4. The learned Deputy Govt. Advocate tried her best to support the order under appeal. She contended that if the appellant furnishes a bank guarantee of the said amount of Rs. 56,283/-, its recovery would not be made by coercive method or by deduction from other amounts payable in respect of other contracts. 5. Arguments have been heard and the record has been perused. It is the admitted case of the parties that the said amount of Rs. 56,283/- has been imposed as compensation and penalty under Clause (2) and (3) of the agreement executed in between the parties. It is not denied that this amount was determined by the Chief Engineer unilaterally, it is also not in dispute that the Chief Engineer did not arbitrate the matter. He passed the order for the recovery of the said amount in his capacity as the Chief Engineer. The details of the loss suffered by the Government as a result of the delayed execution of the contract on the part of the plaintiff are not in the record. There is also nothing on the record to indicate that the reasons for the delay pointed out by the appellant were considered or not. 6. It is well settled law that such disputed amount relating to a contract cannot be recovered from the amounts payable in respect of other contracts or other transactions. In view of these fact and circumstances, it is difficult to endorse the view of the learned District Judge, Udaipur, holding that the plaintiff has no prima facie case. 7. The balance of convenience is also in favour of the plaintiff. He will suffer an irreparable injury of the said amount is deducted from his other payments or recovered through coercive methods particularly when the liability for its payment is seriously disputed. To safeguard the interest of the respondent, the appellant may be directed to furnish the security for the amount which may ultimately be found legally payable by him in respect of the said contract. 8. Consequently, the appeal is allowed and the order of the learned District Judge, Udaipur dated January 1, 1983 is set aside. To safeguard the interest of the respondent, the appellant may be directed to furnish the security for the amount which may ultimately be found legally payable by him in respect of the said contract. 8. Consequently, the appeal is allowed and the order of the learned District Judge, Udaipur dated January 1, 1983 is set aside. The plaintiff-appellant's application moved under Section 41 of the Arbitration Act read with Section 151 and Order 39, Rules 1 and 2 of Civil Procedure Code is allowed and the defendant-respondent is restrained from recovering the amount of Rs. 56,283/- from the amounts payable to the plaintiff in respect of other works, provided he furnishes security within one month to the satisfaction of the concerned Executive Engineer for the payment of the amount which may legally be found payable by him in respect of the said contract. Appeal allowed.