Judgement

NATARAJAN, J. :- C. A. No. 471 of 1975 by certificate and C.A. No. 3602 of 1984 and C.A. No. 461 of 1987 (arising out of S.L.P. (Civil) No. 13120 of 1985) by Special leave raise common questions of law and hence they were heard together and are disposed of by this common judgment. The judgments of the High Court in all the three cases have been rendered in accordance with the opinion rendered by a Full Bench of the High Court in a reference made in Regular Second Appeal No. 311 of 1969. The opinion of the Full Bench was sought for in the following circumstances.

2. The respondent in C.A. No. 471 of 1975 entered into an agreement with the State of Mysore to purchase paddy on its behalf under the Paddy Procurement Scheme, 1959 and to hull the paddy and supply rice. Clause 12 of the agreement relates to breach of conditions of the agreement and the consequences that would ensue on such breach. The said clause. referring to the respondent and State as first party and second party respectively is worded as under : -

"In token of the first partys willingness to abide by the above conditions, the first party has hereby deposited as security a sum of Five Hundred Rupees only with th