STATE OF ORISSA Vs. CALCUTTA COMPANY LIMITED

JUDGEMENT

(1.) Plaintiff, a Company incorporated under the Indian Companies Act with its registered office at Calcutta, entered into a contract with the State of Orissa through its officers for supply of materials meant for use in construction of projects and/or buildings of the State. Mutual rights and obligations were stipulated in the contract. When the security furnished by the plaintiff was forfeited and penalty was levied against it on the plea of breach, it filed a suit on 23-8-1965 for declaration that the order of forfeiture and the levy of penalty were liable to be set aside and for a direction that the amounts withheld be paid to the plaintiff. The plaintiff pleaded that it was the obligation of the defendants to provide a motorable road to the siphon site where delivery and stacking of materials were to be made. The defendants were under obligation to provide the stacking site too. They having failed to perform their part of the contract, the plaintiff could not make the supply according to the time schedule though it was ready to fulfil its obligation. It was also contended that the levy of penalty was unconscionable and otherwise bad.

(2.) All the defendants in a joint written statement contended that the plaintiff had no cause of action as the penalty and the forfeiture were in accordance with the terms of the contract. They disputed their obligation to provide the road and pleaded that they had indicated the stacking site. Plaintiff committed breach of the contract and in terms of the stipulations became liable to be visited with an order of forefeiture of the security deposit and levy of penalty.

(3.) In paragraph 11 of the written statement it was pleaded :-