UNION OF INDIA (UOI) OWNING THE SOUTHERN RAILWAY BY ITS GENERAL MANAGER Vs. S.M. ARUNACHALA MUDALIAR AND COMPANY REPRESENTED BY A.C. RAMASWAMI MUDALIAR

JUDGEMENT

(1.) THIS Second Appeal is preferred against the decree and judgment of the learned Subordinate Judge of Tiruchirapalli in A.S. No. 251 of 1954, modifying the decree and judgment of the learned District Munsif of Karur, in O.S. No. 426 of 1952. The plaintiff firm undertook to supply 1,000 tins of gingelly oil in two loads, 500 at Erode and 500 at Karur. Both the Courts have found that there was default on the part of the plaintiff in regard to the supply of 280 tins of gingelly oil. On this default the defendant, the Southern Railway, forfeited a sum of Rs. 1,840 which had been given as security by the plaintiff -firm for the fulfilment of the terms of the contract.

(2.) HOW this sum of Rs. 1,840 came to be deposited as security deposit was as follows: The terms of the contract are to be found in Exhibits A -i and B -i. Before submitting the tender to qualify one to become a tenderer, he must deposit a sum of Rs. 1,000 as earnest money. If his tender is not accepted, the amount will be refunded to him. If his tender is accepted but the tenderer declines to take up the contract, the amount will be forfeited to the railway. If his tender is accepted and the tenderer takes up the contract, he will have to pay such further amount as may be' necessary to make up 5 per cent, of the value of the commodities ordered; if the value of the commodities ordered happens to be less than Rs. 1,000, the security deposit will be Rs. 1,000. In such cases, the earnest money will alone serve as security deposit. In either case, where extra sum is to be deposited, the earnest money already deposited together with the later deposit will be the security deposit.

(3.) BOTH the Courts came to the conclusion that there was default and a breach of the contract by the plaintiff -firm in regard to 280 tins of gingelly oil. The learned District Munsif further held that by reason of the breach, the railway was entitled to forfeit the amount of Rs. 1,840. On appeal the learned Subordinate Judge who seems to have been ruled more by his heart than by his head observed: