( 1 ) (PER ) the plaintiffs were the highest bidders in the auction conducted for sale of arrack for the groups of Miryalaguda, Kodad and huzurnagar of Nalgonda District for the excise year 1990-91. The Excise year starts from 1st October and ends by 30th of september each year. In terms of the agreement between the parties a minimum guaranteed quota was fixed and that had to be lifted by the contractors (plaintiffs ).- rentals had to be paid within stipulated period. For the sale of arrack in these three areas 300 shops had to be set up by the contractors. The plaintiffs had to deposit earnest money, container deposit, minimum guarantee quota deposit, one month s advance rentals in cash and one month s rentals by furnishing bank guarantee. The minimum guarantee quota had to be lifted by depositing issue price within stipulated period. The plaintiffs on the other hand were entitled to conduct business of selling arrack in a fair and free manner. According to the plaintiffs, it was the responsibility of the defendants to provide an environment free of obstructions because State was overall incharge of the affairs of the State and also licensing authority and a party to the contract. The plaintiffs further contended that they were not expected to pay rentals without being able to conduct the business in accordance with the contract entered into and the licence granted. It was not enough for the State to grant licence and leave the plaintiffs to make their own arrangements for maintaining the law and order. Although the plaintiffs made their arrangements, even if they were not supposed to make under the contract, but they failed in conducting the business when the naxalites started interfering in the business of the plaintiffs. In the first week of October, 1990 the naxalites directed that arrack shall not be sold and even if it was sold it had to be sold at the rate at which it had been sold during the year 1989-90. The plaintiffs further contended that in 1989-90 arrack was sold at Rs. 60. 00 per bulk litre which in turn works out to rs. 6/- per 100ml sachet. There were no problems in selling arrack during the year 1989-90 but as compared to year 1989-90 there was an increase of 35% in the rentals for the Excise year 1990-91. In view of the increase in rentals higher selling price had to be fixed but the naxalites threatened that the sale price should not exceed Rs. 3. 00 in villages and Rs. 4. 00 at mandal headquarters. In some of the villages the naxalites did not even allow the plaintiffs to open the shops. The owners of the premises were threatened with dire consequences if they let out the premises to run arrack shops. Because of the threats from the naxalites and a price list having been fixed by the naxalites the plaintiffs could not run the business. The plaintiffs tried to resist, as a result they were not allowed to open certain shops and some shops were even burnt along with arrack and furniture. There was looting, arson and violence on large scale. The Excise officials advised the plaintiffs to concede to the demands of the naxalites as there was no other alternative. The Excise authorities were not able to give enough police force for protecting the business of the plaintiffs. The plaintiffs made several representations for protection but the defendants expressed their inability in the matter and could not curb the naxal problem. For arrack there was no fixed selling price. The plaintiffs were entitled to sell the arrack at a price fixed by the plaintiffs but restrictions were placed on their right to sell at the price of their choice by the naxalites. It would have been only profitable business had the plaintiffs been able to sell arrack at the rate of Rs. 70. 00 per bulk litre. In any case the plaintiffs should not have sold the arrack for a rate less than rs. 607- per bulk litre. The monthly rentals for Huzurnagar, Miryalaguda and Kodad groups were Rs. 27,77,777. 77 ps. , rs. 31,27,999. 99 ps. ,