JUDGMENT AND ORDER : Heard Mr. I. Choudhury, the learned Sr. counsel representing the petitioner. The Food Corporation of India (FCI) and their officer are represented by the learned counsel Mr. P.K. Roy. 2. The petitioner is a proprietorial concern and was appointed by the Food Corporation of India (FCI) as a transport contractor for carrying foodgrains from the New Guwahati Railway siding to the FCI godown, Ramnagar, under the order dated 24.03.2008 (Annexure-B). The contract tenure was for 2 years and the goods are to be carried at the negotiated rate of Rs.1285/- per Metric Ton. During the subsistence of the contract, the FCI learnt that the experience certificate produced by the petitioner to secure the contract is not genuine and on the basis of the notices of 24.06.2009 and 29.07.2009 (Annexures-D and E), the contract with the petitioner was terminated, under the communication of 07.08.2009 (Annexure-F). In consequence thereof, Clause X(b) of the Model Tender Form (MTF) was invoked and forfeiture of the whole security money was ordered, against the errant contractor. 3. The petitioner never responded to the show-cause notice issued against them and therefore the learned Sr. counsel Mr. I. Choudhury submits that termination of the contract is not being challenged by the petitioner. But the counsel questions the justification for the decision of the forfeiture of the whole security amount for the terminated contract. 4. Before proceeding any further, few relevant uncontroverted facts pertaining to the carriage contract, needs to be noted. The contract executed by the parties on 08.10.2007 specified that the successful tenderer should furnish security deposit of Rs.60,90,700/- with the option to pay 50% upfront and the remaining amount by deduction @5% from each admitted bills for the work done under the contract. The forfeiture of the whole security would mean the loss of Rs.31,85,930/- i.e. Rs.15,49,820/- + deduction from bills Rs.16,36,110/-. 5. For the forfeiture of security, the FCI has invoked Clause XI(c), but since Clause X(b) of the MTF may also be relevant, both provisions of the contract are extracted herein below for ready reference :- “X. Summary Termination (a) …………………. The forfeiture of the whole security would mean the loss of Rs.31,85,930/- i.e. Rs.15,49,820/- + deduction from bills Rs.16,36,110/-. 5. For the forfeiture of security, the FCI has invoked Clause XI(c), but since Clause X(b) of the MTF may also be relevant, both provisions of the contract are extracted herein below for ready reference :- “X. Summary Termination (a) …………………. (b) The General Manager (Region) shall also have, without prejudice to other rights and remedies, the right in the event of the breach by the contractors of any of the terms and conditions of the contract, to terminate the contract forthwith and to get the work done for the unexpired period of the contract at the risk and cost of the contractors and/or forfeit the security deposit or any part thereof for the sum or sums due for any damages, losses, charges, expenses or costs that may be suffered or incurred by the Corporation due to the contractor’s negligence or un-workman like performance of any of the services under the contract. .................... XI. Security Deposit (a) …………. (b) ……………. (c) In the event of termination of the contract, as envisaged in Clause-X, the General Manager (Region), shall have the right to forfeit the entire or part of the amount of security deposit lodged by the contractor or to appropriate the security deposit or any part thereof in or towards the satisfaction of any sum due to be claimed for any damages, losses, charges, expenses or costs that may be suffered or incurred by the Corporation. (d) ……………………….” 6.1 The learned Sr. counsel Mr. I. Choudhury submits that the two clauses extracted above protects the FCI from the damage, losses, charges or expenses suffered by them in the event of termination of contract and therefore he argues that it is incumbent upon the FCI to quantify the damage suffered by them to determine the forfeiture amount. In this context, the counsel submits that since the outer limit of the security is specified, the forfeiture of the entire sum is not at all justified. 6.2 The learned counsel reads Section 74 of the Contract Act, 1872 to project that terminated contractor cannot be penalised by forfeiture of the entire sum of security since there is no predetermination of the nature of the breach and the penalty amount to be charged for such breach. 6.2 The learned counsel reads Section 74 of the Contract Act, 1872 to project that terminated contractor cannot be penalised by forfeiture of the entire sum of security since there is no predetermination of the nature of the breach and the penalty amount to be charged for such breach. Accordingly it is argued that forfeiture of the entire security amount is inconsistent, with the terms of the contract. 6.3 The petitioner refers to the uncontroverted averments in paragraph 6 of the writ petition to project that the FCI authorities arranged for execution of the balance 7 months of the contract work, through the co-contractor M/s S.D. Enterprise at the same agreed rate (Rs.1285/- per Metric Ton) and therefore the counsel argues that there was no monetary loss for the FCI on account of engagement of the substitute carriage contractor, to complete the balance period of contract. 7.1 On the other hand, Mr. P.K. Roy, the learned counsel for the FCI submits that forfeiture is the consequence of the termination of the contract and since the termination decision has been left unchallenged, the contractor is not entitled to challenge the forfeiture of his security on account of the false information provided by the tenderer, but for which, he would not have been awarded the contract. 7.2 The respondents contend that just because the balance work was executed through another contractor at the same rate (Rs.1285/- per Metric Ton), it does not mean that the FCI did not suffer any loss in the process. The counsel submits that there have been instances of non-placement/delayed placement of trucks by the substitute contractor and for those situations, the FCI had to incur demurrage charge for delayed lifting of foodgrains from the rail station and this should be recoverable. He speaks of losses on other heads as well. 8. There is clear distinction between penalty and forfeiture of security in the event of breach of contract and it was held in Union of India Vs. Rampur Distillery and Chemical Co. Ltd. reported in (1973)1 SCC 649 that forfeiture of security under a contract is not covered under Section 74 of the Contract Act. Only when the terms of the contract specifies the nature of the breach and quantifies the sum to be paid for the breach, the entire stipulated sum by way of penalty can be recovered from the party in breach of the contract. Only when the terms of the contract specifies the nature of the breach and quantifies the sum to be paid for the breach, the entire stipulated sum by way of penalty can be recovered from the party in breach of the contract. In such situation, the penalty becomes recoverable irrespective of the loss suffered by the other side. But in other situations, the party suffering breach of contract must establish that they had suffered loss or damage and only the quantified sum is recoverable from the party, in breach of the contract. 9. The Supreme Court in Kailash Nath Associates Vs. Delhi Development Authority reported in (2015)4 SCC 136 clarified the law on compensation for the breach of contract, under Section 74 of the Contract Act. The Court held that- “………………. Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine pre-estimate of damages fixed by both parties and found to be such by the Court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, only reasonable compensation can be awarded not exceeding the penalty so stated. In both cases, the liquidated amount or penalty is the upper limit beyond which the Court cannot grant reasonable compensation. Reasonable compensation will be fixed on well known principles that are applicable to the law of contract, which are to be found inter alia in Section 73 of the Contract Act. ………………….” Clarifying the above proposition, the Supreme Court declared that compensation can only be given for damage or loss suffered and law does not provide for a windfall when the party suffering breach, has not suffered any loss or damage. 10. If we examine the facts of this case on the above legal principles, the important aspect that is necessary to consider is whether the terms of the contract stipulate any penalty, in the event the contract is broken. Here no such stipulation is made for any specific breach or compensation is fixed, in the event of breach of such stipulation. If we examine the facts of this case on the above legal principles, the important aspect that is necessary to consider is whether the terms of the contract stipulate any penalty, in the event the contract is broken. Here no such stipulation is made for any specific breach or compensation is fixed, in the event of breach of such stipulation. Hence when contracts of this kind is terminated, the sufferer can recover reasonable damage as may be quantified and not compensation or penalty, as is envisaged under Section 74 of the Contract Act. 11. It is important to bear in mind that the Clause XI(c) and X(b) of the MTF dated 08.10.2007 speaks of forfeiture of the security deposit or part thereof for any damages, losses, charges, expenses or costs incurred by the FCI. Therefore the forfeiture of the entire security deposited by the contractor, may not be justified in every situation of termination of contract. The loss/expenses or costs suffered by the Corporation on account of the breach committed by the contractor will have to be quantified and only such sum is recoverable, by way of forfeiture and not the entire deposited security, as has been done in the present case. 12. This is not a case of stipulation of a pre-estimated damage or penalty recoverable from the contractor in the event of breach of contract and therefore only reasonable compensation can be claimed for the loss, damage or costs incurred by the FCI. But it must not be overlooked that notwithstanding the execution of the balance contract at the same rate by M/s S.D. Enterprise, it is possible that the FCI suffered damages or incurred additional expenses or costs and therefore it is permissible for the respondents to quantify the amount of damages/expenses suffered by them and recover the same from the errant contractor. But in my considered opinion, the forfeiture of the whole security money without quantification of the damage, losses and expenses suffered by the Corporation is not permitted, under Clause XI(c) and X(b) of the MTF dated 08.10.2007. 13. In the result, the decision on forfeiture of the whole security money, as reflected in the impugned letter dated 07.08.2009 (Annexure-F) is found to be unmerited and is thus quashed. 13. In the result, the decision on forfeiture of the whole security money, as reflected in the impugned letter dated 07.08.2009 (Annexure-F) is found to be unmerited and is thus quashed. However, the respondents are at liberty to quantify the damages, losses and expenses incurred by them on account of the termination of the contract, due to the fault of the contractor. The quantification should however be done on reasonable basis with due opportunity to the petitioner and the balance amount of security should be refunded to the contractor. It is ordered accordingly. 14. With the above order, the case stands allowed. No cost.