UNION OF INDIA Vs. CHOUTHMAL

JUDGEMENT

(1.) This appeal, preferred by the Union of India and the Chief Administrator, Dandakaranya Project, is directed against the judgment of the First Addl. District Judge, Raipur, decreeing the plaintiff's suit for recovery of Rupees 42,500 as damages for breach of a contract.

(2.) The facts shortly stated are as follows. In 1964, the Dandakaranya Project was in immediate need of about 5,000 wooden poles for laying electric Transmission lines to the Mana Camp. The plaintiff had evidently approached the Chief Administrator in that connection. On 14-4-1964, whale Shri F. A. Lahiri, Conservator of Forests, Dandakaranya Project, was camping at Raipur, the plaintiff made a written offer, Ex. D-3, to the Chief Administrator, Dandakaranya Project for supply of 2,000 sal Electric Transmission poles at the rate of Rs. 40 per pole F.O.R. Kurud. The Conservator of Forests after obtaining the approval of the Chief Administrator by his memo. No. CF-64/1284, dated 18-4-1964, Ex. P-1, placed an order for the supply of the poles as per specifications given. The terms of the order stipulated, among other things, that the plaintiff would supply 1,000 poles by 5-5-1964. By this memo the plaintiff was also required to deposit by way of security Rs. 4,000, i.e., 5% of the total value of the goods contracted for, and the deposit was, accordingly, made.

(3.) By his telegram dated 6-5-1964, followed by his confirmatory memo. No. III/165/W/Cf-64/1598 of even date, Ex. P-7, the Conservator of Forests, however, cancelled the order. This was done at the instance of Secretary to Dandakaranya Development Authority, Government of India, Ministry of Rehabilitation, since the Government were able to locate alternative sources of supply at much cheaper rates, i.e., from the Government of Madhya Pradesh, Forest Department. The plainiffs case is that the unilateral cancellation of the order constitutes a breach of contract on the part of the Union of India and, therefore, it was liable to pay an amount of Rs. 42,500 as damages for the alleged breach,