LAWS(DLH)-1984-3-2

SHIV ISPAT UDYOG P LTD Vs. INDUS VALLEY

Decided On March 10, 1984
SHIV ISPAT UDYOG P. LTD. Appellant
V/S
INDUS VALLEY Respondents

JUDGEMENT

(1.) This is an appeal from the order of the Additional District Judge, dated July 30, 1983.

(2.) The appellant, Shiv Ispat Udyog P. Ltd., is the seller. They are a company engaged in the manufacture of nuts and bolts. They entered into a contract dated September 19, 1978, with the respondent purchaser, Indus Valley, for the supply of a large quantity of nuts. The value of the goods to be supplied was roughly Rs. 8,00,000. The goods were to be delivered on or before February 28, 1979. Before the time for the delivery of goods arrived, the seller wrote the purchased a letter dated February 2, 1979, asking for extension of time up to March 15, 1979. The purchaser agreed to the extension of time but "without prejudice to our right of encashing the bank guarantee for default committed by you in supplying the material in terms of the agreement". In the agreement dated September 19, 1978, clause 5 reads as follows : "In case the second party does not supply whole quantity of goods in time then the second party will be penalised 1/1000% of the total value of the goods for every day's delay and the corresponding amount will be collected from the performance bank guarantee. In case the delay exceeds 7 days, then the first party will cancel the contract and will confiscate the guarantee of Rs. 40,000 in his own favour."

(3.) This was the term of the contract regarding damages on account of delay in delivery of goods.