S. C. MOHAPATRA, J. ( 1 ) THESE three appeals arise out of a common judgment assailed by each of the parties. As the appeals are to be heard by a single Judge, I heard them dispensing with preparation of paper books with consent of parties which are disposed of by this common judgment. ( 2 ) PLAINTIFF is constituted under the Food Corporation of India Act. In kharif year 1971-72 it had monopoly right in Orissa to purchase paddy and rice which are essential commodities under the Essential Commodities Act. Defendant No. 1 is owner of a rice mill in Bargarh named M/s. Govind Kailash Rice Mill. He applied to act as Purchasing-cum-Milling Agent of plaintiff for kharif year 1971-72 (lst November to 3/10/1972 ). For purchasing paddy defendant No. 1 applied for advance as per Ext. 6/ a. Plaintiff advanced Rs. 87,000/- on 20-12-1971, Rs. 62,000/- on 20-12-1971 and Rs. 41,000/- on 21-12-1972 executing promissory note, (Ext. 4 series) where it was stipulated that Defendant No. 1 would pay interest at the rate of 841/2% per annum. Plaintiff insured itself covering the risk up to one lakh rupees in two policies towards loss sustained by it on account of fraud, embezzlement, dishonest or default committed by Defendant No. 1 for the period between 30-12-1971 and 30-12-1972 in one policy (Ext. 7) and between 8-12-1971 and 8-12-1972 in another policy (Ext. 7/a) issued by the Orissa Co-operative Insurance Society Ltd. Business of this society was taken over by Defendant No. 2 insurer. While agency business with defendant No. 1 was continuing on 18-10-1972 there was a physical stock verification of paddy and rice with defendant No. 1 as on 15-10-1972 and various shortages were found (Ext. ll ). Thereafter, plaintiff demanded delivery of the entire stock in its letter dated 21-11-1972 (Ext. 8/a ). Defendant No. 1 had to face a prosecution for offence under the Essential Commodities Act in respect of this shortage. ( 3 ) CASE of plaintiff is that it advanced Rs. 1,90,000/- to defendant No. 1 which carries interest at the rate of 71/2% per annum for purchase of paddy in Kharif year 1971-72 and loss of plaintiff on that account is secured by insurance to the extent of Rs. 2 lakhs. ( 3 ) CASE of plaintiff is that it advanced Rs. 1,90,000/- to defendant No. 1 which carries interest at the rate of 71/2% per annum for purchase of paddy in Kharif year 1971-72 and loss of plaintiff on that account is secured by insurance to the extent of Rs. 2 lakhs. Defendant No. 1 was to supply paddy and rice procured and in case of non-supply or sub- standard supply, he has to pay penalty at different rates. Defendant No. 2 agreed to compensate and indemnify plaintiff for all sums payable by Defendant No. 1 in case there is a breach of contract by Defendant No. 1. Defendant No. 1 sold huge quantity of paddy and rice purchased by him on behalf of plaintiff and did not deliver the same which was found to be short in November, 1972. Therefore, defendant No. 1 is liable to pay Rs. 98,248. 04 paise towards balance out of amount advanced with interest and Rs. 41,787. 01 paise as penalty. Therefore, the suit was filed on 31-10-1975 for recovery of Rs. 1,40,835. 05 paise from defendant Nos. 1 and 2 making them jointly and severally liable. ( 4 ) DEFENDANT Nos. 1 and 2 contested the suit by filing written statements separately. ( 5 ) DEFENDANT No. 1 accepted receipt of Rs. 1,90,000/- as advance with interest at rate of 71/2% per annum. His case is that he was prosecuted under Section 7 of the Essential Commodities Act where he was acquitted. Defendant No. 2 secured loss by an act of fraud, embezzlement, dishonest or default committed by defendant No. 1. There was no agreement to pay any penalty. Defendant No. 1 had the stock and requested plaintiff to take delivery. But plaintiff did not pay any heed to it. By 30-10-1972 including interest plaintiff had an outstanding of Rs. 70,913. 70 paise. In the police case, stock worth Rs. 24,537. 16 paise was seized on 3-11-1972 the same has been delivered to plaintiff and as such it is to be deducted which would bring the balance to Rs. 46,375. 54 paise. As the stock was damaged on account of not being taken delivery by plaintiff, defendant No. 1 is not liable to pay anything defendant No. 1 has a security of Rs. 4,000/- with plaintiff which is to be set off against claim of plaintiff. 46,375. 54 paise. As the stock was damaged on account of not being taken delivery by plaintiff, defendant No. 1 is not liable to pay anything defendant No. 1 has a security of Rs. 4,000/- with plaintiff which is to be set off against claim of plaintiff. ( 6 ) SHORT case of defendant No. 2 is that plaintiff has not satisfied terms and conditions of the policy by giving notice in writing within seven days of discovery of loss with full particulars and in case any dispute arises in respect of liability of insurer, the matter is to be referred to arbitration within l2 months of disclaim by insurer. ( 7 ) PLAINTIFF examined three witnesses and proved documents marked Exts. 1 to 11 series in support of its case. Defendant No. 1 examined three withnesses and proved documents marked Exts. A to H series in support of his case. Defendant No. 2 has not examined any witness and has not proved any document possibly because the two policies under which its liability arises has been produced by plaintiff. ( 8 ) TRIAL court relied upon Ext. 6 which is an application signed by son of plaintiff (defendant) on behalf of rice mill of the plaintiff (defendant) where application was made to District Manager for receiving advance undertaking that the rice mill will abide by the terms and conditions of the agreement as may be prescribed by plaintiff for Kharif year 1971-72 including rate of interest prescribed in it, trial court found that son of defendant No. 1 was acting as his agent and therefore, having admitted to have received advanced defendant is liable to pay interest. Trial Court has also held that defendant is liable to pay penalty. It has held that defendant No. 1 is entitled to adjustment of the value of paddy and rice seized. Defendant No. 2 was made liable for the entire decretal amount. ( 9 ) M/s. Gobind Kailash Rice Mill is a trade name. It is not a juristic person. Son of defendant No. 1 was signing all documents for the rice mill and not on behalf of his father. Plaintiff has not made out any case that son of defendant No. 1 was acting as agent of defendant No. 1. A case of such agency was required to be made out clearly in the plaint. Son of defendant No. 1 was signing all documents for the rice mill and not on behalf of his father. Plaintiff has not made out any case that son of defendant No. 1 was acting as agent of defendant No. 1. A case of such agency was required to be made out clearly in the plaint. Defendant No. 1 specifically denied that his son was authorised to act on his behalf. In such circumstances, a statutory authority take plaintiff bound by financial rules is required to prove that from the inception defendant No. 1 authorised his son to act on behalf of his business contract with plaintiff. P. W. 1 was specifically asked who stated that son of Defendant No. 1 did not produce any power of attorney on behalf of the Mill or Defendant No. 1 while executing Ext. 6. If defendant No. 1 would have denied in the written statement about his acting as agent of plaintilf for Khariff yrar 1971-72, possibly on the materials available, it would not have been possible to find such relationship. Defendant No. 1. however, accepted to have acted as agent and to have received advance of Rs. 1,90,000/ -. Therefore, liability of defendant No. 1 would flow from his admission in written statement and not from any document which have not been executed either by defendant No. 1 or on his behalf being duly authorised. ( 10 ) P. W. 1 has stated that from out of advance of Rs. 1,90,000/ - defendant supplied paddy and rice worth Rs. 17,360. 88 paise and on adjustment balance outstanding comes to Rs. 72,639. 12 paise as on 21-10-1972. It is stated by P. W. 2 that goods seized were handed over to plaintiff. Defendant No. 1 as D. W. 1 has proved that value of the said goods is Rs. 24,537. 16 paise. Trial court has rightly found that this amount is to be adjusted. Thus, on this basis defendant No. 1 is liable to pay back Rs. 48,101. 96 paise. ( 11 ) COMING to liability of defendant No. 1 to pay interest, in plaint interest at the rate of 71/2% per annum has been claimed. Ext. 4 series indicates that interest at the rate of 81/2% per annum is payable. Ext. 6 indicates that interest as would he prescribed in the agreement is payable. 48,101. 96 paise. ( 11 ) COMING to liability of defendant No. 1 to pay interest, in plaint interest at the rate of 71/2% per annum has been claimed. Ext. 4 series indicates that interest at the rate of 81/2% per annum is payable. Ext. 6 indicates that interest as would he prescribed in the agreement is payable. P. W. 1 stated that at the time of execution of Ext. 4 series, rate of interest prevailing was 71/2%. If that be so, there is no reason why in Ext. 4 series rate of interest was stated to be 81/2%. He has categorically admitted that he cannot say under what basis plaintiff made a claim for interest. I have already held that on basis of documents defendant No. 1 cannot be held liable since he has not executed any nor authorised any person to execute any document. Normally in business where advance is given, no interest is charged. There is no specific stipulation to pay interest. Accordingly, on the facts and in circumstances of this case, I am satisfied that defendant No. 1 is not liable to pay any interest prior to filing of the suit. ( 12 ) PLAINTIFF has claimed penalty of Rs. 41,787. 01 paise. Penalty is an agreement in terrorem. When there is a contract between the parties, where there is a specific provision for payment of penalty on account of breach of contract, Section 74 of the Contract Act, authorise the plaintiff to demand penalty. However, when the matter comes to Court, claim of plaintiff based on agreement would not be allowed. Court is to find out the amount that is reasonable. In this case, however, though there is a relationship of principal and agent and there is a contract of agency, there is no specific agreement that penalty would be paid. I have already held that Ext. 6 is not binding on Defendant No. 1. No explanation is available why Defendant No. 1 was not called upon to execute the written agreement for Khariff year 1971-72 in the printed form Ext. 1. This case is an explanation to those who disapprove actions of judiciary, how casualness of functioning of statutory bodies allow public funds to suffer making courts helpless in the matter when they consider the law to apply them. 1. This case is an explanation to those who disapprove actions of judiciary, how casualness of functioning of statutory bodies allow public funds to suffer making courts helpless in the matter when they consider the law to apply them. Casualness in coming to Court and proving the case made out is also another reason why relief claimed cannot by given. In view of paucity of evidence satisfying requirements of Section 74 of the Contract Act, claim of penalty by plaintiff is refused. ( 13 ) COMING to pendente lite and future interest, in view of my finding that there is no contractual rate of interest, plaintiff is entitled to interest at the rate of 6% per annum, 1 find from the order-sheet that plaintiff paid the requisite court-fee on plaint only on 26-11-1975. Even then all steps for service of notice on defendants were not taken by plaintiff till 1-3-1977. Therefore, plaintiff is not entitled to interest for this period. Order sheet also reveals that parties including plaintiff were not very serious in early hearing of the suit. However, balancing casualness of parties in their conducts for hearing of the suit, I direct that plaintiff shall be entitled to interest at the rate of 6% per annum from 1-3-1977 till realisation from Defendant No. 1. ( 14 ) COMING to liability of Defendant No. 2, there can be no dispute that insurers' liability flows from term of the policy. Defendant No. 2 has extracted the relevant terms in the written statement. Clause 10 of the terms indicated in the policy clearly stipulates that insurer shall not be liable to indemnify the insured in respect of any loss unless such loss is in respect of stocks of paddy/rice or cash received by or entrusted to Defendant No. 1 and is occasioned by any fraudulent, dishonest, malicious or deliberate acts of Defendant No. 1. These misfeasances of defendant No. 1 are required to be specifically pleaded in the plaint and proved in the suit. Excepting the allegation that defendant No. 1 did not supply the paddy and rice and sold them in open market where price was higher, there is no other assertion and the fact asserted has also not been proved. These misfeasances of defendant No. 1 are required to be specifically pleaded in the plaint and proved in the suit. Excepting the allegation that defendant No. 1 did not supply the paddy and rice and sold them in open market where price was higher, there is no other assertion and the fact asserted has also not been proved. Case of defendant No. 2 that notice of default is required to be given to it by plaintiff within seven days finds support from the policy and plaintiff has not proved when it gave notice of default giving details. I am not impressed with submission of Mr. Y. S. N. Murty, learned counsel for plaintiff that no notice is necessary. Submission of Mr. P. Ray, learned counsel for insurer that suit is not maintainable in view of arbitration clause in the policy has no force since such plea was not taken before filing of written statement. Period within which notice is to be given is not such a term which cannot be extended. Taking into consideration the fact that plaintiff is a statutory body and Defendant No. 2 is a Government Company having monopoly with other Government Companies to carry on business of general insurance and taking into consideration the fact that due care was not taken by officers and agents of both plaintiff and defendant No. l, I modify the decree by directing that on plaintiff giving notice as per clause 1 of the conditions of the policy within three months, defendant No. 2 shall examine the claim to the extent of Rs. 48, 101. 96 paise decreed against defendant No. 1 and in case clause 10 of the conditions is satisfied, it shall settle the same. In case of disclaim by defendant No. 2, plaintiff can resort to the arbitration clause and filing of this suit, will not be a bar for exercising that right since a new cause of action would arise on disclaimer. ( 15 ) IN resulf, all the three appeals are allowed to the extent indicated in this judgment. Parties shall bear their own costs in this appeal. However, plaintiff shall be entitled to proportionate costs from defendant No. 1 in the suit. Appeal allowed.