JUDGMENT - Chagla, C.J.

(1) This appeal arises out of a suit filed by the plaintiffs for return of a deposit made by them of a sum of Rs. 3,000 under a contract which they entered into with the defendants, who are the Trustees of the Port of Bombay. The contract was for the supply of timber, bamboos and of her miscellaneous articles during the year 1947. Under the contract, the plaintiffs had to supply materials of the value of about Rs. 30,000 and the deposit had to be made of 10 per cent, of that value. In fact, the plaintiffs supplied materials of the value of Rs. 56,000. and then they intimated to the defendants that they would not make any further supplies. Thereupon the defendants forfeited the deposit of Rs. 3,000. And the question that arose in the suit, and which arises in this appeal, is whether the plaintiffs are entitled to recover the deposit.

(2) It is not disputed by the plaintiffs that they committed a breach of the contract in failing to supply materials to the defendants although called upon to do so. But the contention of the plaintiffs is that the deposit which they made, and which was forfeited by the defendants, was in the nature of a penalty, and that the plain

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