R. V. RAVEENDRAN, J.

( 1 ) THIS is a plaintiffs appeal under Section 96 of the CPC against the judgment and decree dated 15-4-1994 in o. s. No. 35 of 1990 on the file of the civil judge, chitradurga. Plaintiff (state trading corporation of India limited) is a company wholly owned by the central government. It is engaged in the business of importing exporting goods of various kinds including sugar, and acts as a canalising agency of government of India for import/export of various goods. In the course of its business, it purchased, among other things, levy sugar from manufacturers for the purpose of export as per release orders issued by the government of India at the levy sugar price notified by the government of india. Defendant is a co-operative society registered under the Karnataka co-operative societies Act, 1959 running a sugar factory at hiriyur. For convenience appellant will also be referred to as the 'plaintiff or 'stc' and respondent will also be referred to as the 'defendant'.

( 2 ) ON 12-8-1983 government of India issued a release order releasing 1,920 metric tonnes of sugar of 1982-83 crushing season (conforming to iss specification) produced by the defendant for export at the price provided in sugar (price determination for 1982-83 production) Order, 1983, to be supplied to plaintiff. In pursuance of it, the plaintiff through its handling agent (indian sugar industry export corporation limited), issued delivery orders dated 11-10-1983, 9-11-1983, 28-11-1983/4-12-1983 for 600, 660 and 660 tonnes of sugar at the price of 2,947. 60 per metric tonne (levy price plus sugar cess) to be supplied in 50 kg. Bags. Defendant supplied 1,795. 5 m. t. of sugar as against 1,920 m. t. between 15-10-1983 and 15-12-1983 as detailed in defendant's letter dated 19-12-1983.

( 3 ) PLAINTIFF paid Rs. 17,68,560/- in regard to 600 m. t. of sugar (vide receipt dated 14-10-1983 for Rs. 17,20,560/- and receipt dated 20-10-1983 for Rs. 48,000/- issued by defendant ). Defendant supplied the said quantity covered by invoice No. 1/20-10-1983 for Rs. 17,68,560/- between 15-10-1983 and 20-10-1983. 3. 1 plaintiff paid Rs. 19,45,416/- in regard to 660 m. t. of sugar (vide receipt dated 17-11-1983 for Rs. 18,92,616/-, receipt No. 1170, dated 25-11-1983 for Rs. 52,600/- and receipt No. 1171, dated 25-11-1983 for Rs. 200/- issued by defendant ). It supplied 660 m. t. between 21-11-1983 and 25-11-1983. Defendant however issued an invoice No. 2/30-11-1983 for Rs. 18,86,464/- for 640 m. t. only. 3. 2 plaintiff paid Rs. 18,92,616/- in regard to the last 660 m. t. of sugar (vide receipt dated 6-12-1983 for Rs. 8,60,280/-, receipt dated 7-12-1983 for Rs. 8,60,280/- and receipt dated 7-12-1983 for Rs. 1,72,056/- ). Plaintiff supplied only 535. 5 m. t. of sugar between 6-12-1983 to 15-12-1983 of the value of Rs. 15,78,439. 80 which included re- bagging charges of Rs. 42,840/ -. After giving credit to the said sum, Rs. 3,14,176. 20 was due plaintiff as it did not supply the balance of 124. 5 m. t. of sugar. The defendant was thus liable to refund the said sum of Rs. 3,14,176. 20.

( 4 ) AS the sugar was to be released against the export release Order, it had to be rebagged in 50 kg. Gunny bag. As the sugar was already bagged in 100 kg. Bags, it was agreed that plaintiff would supply 50 kg. Capacity gunny bags to the defendant free of cost and the defendant would retain the once used 100 kgs. A-twill gunny bags in lieu of rebagging harges and other incidental expenses including excise duty, spillages, etc. The defendant agreed for the same. The defendant utilised 41,402 gunnies of 50 kgs. Capacity supplied to it free of cost by the plaintiff, during 1983-84. In view of cancellation of export release regarding 1983-84, the sugar so rebagged was sold by the defendant in the internal market. The defendant in its letter dated 10-9-1984, gave an undertaking to plaintiff to pay the cost of 41,402 gunny bags (50 kgs. Capacity) utilised by it, immediately after the sai

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