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Gauhati High Court · body

2002 DIGILAW 54 (GAU)

Pranab Kumar Saha v. F. C. I.

2002-01-28

B.B.DEB

body2002
B.B. DEB, J. — This first appeal is directed against the judgment and decree dated 10.10.96 (decree drawn up on 26.11.96) passed by the learned Civil Judge, Sr. Division, West Tripura, Agartala in T.S. No. 59/93 whereby the plaintiffs suit was dismissed. 2. I have heard Mr. A.K. Bhowmik, learned Sr. counsel assisted by Mr. S. Ghosh for the appellant. Also heard Mr. O.K. Biswas, learned counsel for the respondents. 3. In short, the appellant's (hereinafter called "the plaintiff') case is that he being a registered carrying contractor entered into an agreement with the defendant-respondent Food Corporation of India (FCI) (hereinafter called "the defendant") through its Sr. Regional Manager, Shillong on 27.9.92 for carrying foodgrains from Kumarghat Railway Head to FCI Depot at Agartala for two years. Pursuant to work order, the plaintiffstarted the transportation of foodgrains on 31.5.93. The plaintiff took a load of 130 bags common rice containing 119.41 quintals on 31.5.93 at Kumarghat Railway Head for carrying the same to the FCI Depot at Agartala through a truck bearing No. TRL-2446. The consignment was issued under FCI Road Movement permit. Though the consignment was expected to reach at Agartala on the following day, but it did not. Instead, it came to the notice of the plaintiff that one vehicle met with an accident with consignment of foodgrains near Teliamura at Assam-Agartala road. The plaintiff rushed to the spot and identified the said truck, but he did not find any consignment. He came to know that just after the accident, the miscreants looted the consignment. He lodged FIR with Teliamura P.S. For non-delivery of the aforesaid consignment of rice, the FCI deducted Rs. 1,63,956.51 from the plaintiffs subsequent bills having resorted to the terms embodied under clause-XII (a) and clause 27 of the Agreement. Hence he filed the suit seeking declaration of the aforesaid terms of the Agreement to be void and for recovery of the aforesaid amount. The defendant FCI contested the suit having filed a written objection contending, inter alia, that since the plaintiff failed to deliver the consignment of rice he received at Kumarghat Railway Head in terms of Agreement, three times of the issue price/ value of the aforesaid non-delivered foodgrains had been rightly recovered from his subsequent bills. The learned trial Court on conclusion dismissed the suit. Hence the present appeal. 4. The learned trial Court on conclusion dismissed the suit. Hence the present appeal. 4. The fate of the present appeal solely depends upon the interpretation, implications and consequences of clause XII(a) and clause 27 of the Agreement having applied the statutory test of Section 74 of the Indian Contract Act (shortly, "the Act"). 5. As per clause XII (a) of the Agreement, the plaintiff-contractor "shall be liable for all costs, damages, demurrages, wharfages, forfeiture of wagons, registration fees, charges and expenses suffered or incurred by the defendant Corporation due to the contractor's negligency and unworkmanlike performance or his failure to carry out the work and also for all other damages or losses occasioned to the Corporation due to the act whether negligence or otherwise of the contractor" and the decision of the Sr. Regional Manager regarding such failure of contractor and the liability thereof shall be final and binding upon the contractor. In clause 27 of the Agreement, among others it is stipulated that contractor shall make good the value of any shortage, wastage, loss or damage of goods in transit at three times the issue rate as applicable from time to time for all foodgrains and commodities other than sugar and four times the issue rate as applicable from time to time in respect of sugar (emphasis supplied). 6. In the present case, admittedly, the plaintiff-contractor failed to deliver 119.41 quintals of common rice in terms of the Agreement. It is also admitted that the said loss has never been happened conseq1 2nt to any act of God like natural calamity. The loaded vehicle met an accident in transit and the foodgrains were looted by the unknown miscreants and as a result, undoubtedly the defendant FCI sustained loss. It is not the case of the defendant FCI that for earning any illegal gain, the plaintiff-contractor committed any sort of unwanted activities. 7. Mr. A.K. Bhowmik, learned Sr. counsel appearing on behalf of the plaintiff submits that the learned trial Court having failed to interpret the clause 27 of the Agreement in the light of the Section 74 of the Act arrived at a decision which cannot be sustained under any valid law. On the other hand Mr. 7. Mr. A.K. Bhowmik, learned Sr. counsel appearing on behalf of the plaintiff submits that the learned trial Court having failed to interpret the clause 27 of the Agreement in the light of the Section 74 of the Act arrived at a decision which cannot be sustained under any valid law. On the other hand Mr. O.K. Biswas, learned counsel appearing on behalf of the defendant FCI having referred clause 27 of the agreement submits that the authority within their competence pursuant to the aforesaid clause rightly made deduction of Rs. 1,63,956.51 from the plaintiffs bill being three times of the issue price of 119.41 quintals of common rice. The learned trial Court in paragraph 11 of the judgment held that "the plaintiff is/was the common carrier as defined in Section 2 of the Carriers Act and as such he is/was personally liable to make good the loss incurred by the defendant Nos. 1,2 and 3". That portion of the finding of the learned trial Court appears to be correct. Undoubtedly, the plaintiff being a common carrier is under obligation to make good of the loss incurred by the defendants. But the clause 27 of the Agreement stipulates the quantum of compensation to be three times of the issue price. Whether the terms of clause 27 of the Agreement would prevail over the statutory provision of Section 74 of the Act is to be examined. The main provision of Section 74 of the Indian Contract Act is reproduced below:- "74. Compensation for breach of contract where penalty stipulated for-When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for." 8. The aforequoted statutory provision postulates that if a sum is quantified in the agreement itself as an amount to be paid -by the party committing breach or in case the Agreement contains any other stipulation by way of penalty, the party complaining of the breach is entitled whether suffered actual loss or damage to receive from the party committing breach a reasonable compensation or the penalty as the case may be, but that cannot be allowed to exceed the amount so quantified in the Agreement. In this respect, a profitable guidance could be had from the decision of the Hon'ble Apex Court in Maul Bus -Vs- Union of India ( AIR 1970 SC 1955 ). Mr. O.K. Biswas, learned counsel for the defendant FCI, on the other hand, having referred a citation in K.P. Subbarama Sastri -Vs- K.S. Raghavan reported in (1987) 2 SCC 424 submits that the compensation specified in the Agreement must be held to be the reasonable compensation. On perusal of the aforesaid decision in K.P. Subbarama (supra), it appears that the Hon'ble Apex Court while interpreting Section 23 of the Indian Contract Act on a different background dealt with the matter and as such, the ratio of the said case appears to be no way applicable in the present case. 9. Under the aforesaid analysis of the legal position, I am of the considered opinion to hold that the amount quantified viz. three times of the issue price as in clause 27 of the Agreement is the ceiling limit of the compensation and not the amount of compensation itself. In view of Section 74 of the Act the amount of compensation or penalty as the case may be in case of breach of any contract must be a reasonable one and in calculating the reasonable compensation none can exceed the ceiling limit so quantified in the Agreement itself. 10. In that view of the matter, the defendant FCI is entitled to recover compensation from the plaintiff contractor for the loss of 119.41 quintals of common rice according to its market value prevailed in the first weelc of June 93 at Agartala. But, in no case it should exceed three times of the issue price of the consignment within the meaning of Section 74 of the Act. But, in no case it should exceed three times of the issue price of the consignment within the meaning of Section 74 of the Act. That aspect of the matter has been totally ignored by the learned trial Court and as such the impugned judgment cannot be sustained. 11. Situated thereunder, I am of the opinion to hold that the defendant FCI is entitled to receive from the plaintiff contractor an amount of reasonable compensation which is to be calculated on the basis of the wholesale market rate of common rice prevailed at Agartala in the 1st week of June, 1993. But that amount in no case can exceed three times of the issue price being the upper ceiling limit. 12. In the result, the appeal is partly allowed as indicated above with no order as to cost. The judgment of the learned trial Court is set aside and the suit is decreed accordingly. 13. The Sr. Regional Manager, FCI, the respondent No. 2 herein, is to ascertain the wholesale market rate of the common rice prevailed at Agartala in the first week of June, 1993 and thereafter fix the amount of compensation for the loss of 119.41 quintals of common rice and that amount is only recoverable from the plaintiff-contractor. Any excess amount already recovered from the plaintiff-contractor be refunded with six percent interest and the entire exercise must be completed within a period of two months from this day.