A state trading corporation, acting as an independent legal entity and not as an agent of the government, is not liable for the acts of the government.

( 1 ) THE present application of Union M India, defendant No. 1 is to the effect that the plaint of the suit filed by M/s. Shakti Sugars Ltd. does not disclose any cause of action against the former and that therefore the suit against the former should be dismissed with costs.

( 2 ) FOR the purpose of deciding this application obviously only allegations of the plaintiff as contained in the plaint are to be and arc being considered. Those allegations briefly are as follows :

( 3 ) PLAINTIFF is a public limited company incorporared under the provisions of the Indian Companies Act having its registered office at 73-A Race Course Road, Coimbatore. It is carrying on business, infer alia, of manufacture of white crystal sugar at its factory at Appakkudal Bhavani Taluk, District Periyar, Tamil Nadu.

( 4 ) THE State Trading Corporation of India, defendant No. 2. who is canalising export of sugar out of India under the Imports and Exports ( (Control) Act, 1947 (hereinafter referred to as the Act) issued a notice by way of publication in newspaper "the Hindu" dated, August 18, 1978 inviting tenders receivable before August 22, 1978 from Sugar Factories in India for supplying of sugar for export. On ac- count of that notice the plaintiff submitted its tender and samples which were received by defendant No. 2 on August 21, 1978. The lenders were to be opened at 11. 00 a. m. on August 22, 1973. By sending tender, plaintiff accepted the offer of defendant No. 2 in respect of supply of sugar and hence concluded contract regarding supply of sugar came into existence. Defendant No. 2, however, in breach of the aforesaid contract, by means of a letter dated August 28, 1978 which was received by the plaintiff on September 2, 1978 informed the latter that the tender of the latter was not accepted. Defendant No. 2 also returned bank draft which had been sent by the plaintiff as security. There was correspondence between plaintiff and defendant No. 2 and ultimately latter in a letter dated November 10, 1978 addressed to the former stated that the latter had right to reject any offer of any sugar factory without assigning any reason and that offer of the former had been rejected. On account of the said breach of the contract plaintiff is entitled to damages in the amount of Rs. 58. 80 lakhs for the recovery of which present suit was brought against both the defendants.

( 5 ) DEFENDANT No. 1, Union of India, is liable beciusc (as alleged by the plaintiff), defendant was acting as agent of defendant No. 1 under the provisions of the Act for canalising export of sugar.

( 6 ) I have heard the learned counsel for the parties. Relevant paragraphs which seek to fasten liability on the Union of India arc 23 and 26 of the plaint which read as under :

"23. The defendant No. 1, the principal authority under the Act and the defendant No. 2, the canalising agency of the defendant No. 1, which has committed the breach of contract by rejecting the plaintiff s tender are jointly and severally liable to pay the plaintiff a compensation of Rs. 58. 80 lakhs towards the actual loss sustained by the plaintiff consequent on the breach of contract by defendant No. 2 to buy the sugar from the plaintiff. On the said sum, the plaintiff is also entitled to future interest at the rate of 12 per cent per annum from the date of filing the suit to the date of realisation. "26. The cause of action arose at Delhi where the defendants have their offices and from where the defendant No. 2 as agent of the defendant No. 1, invited tenders for D-30 Grade sugar; it also arose when the defendant No. 2 invited the tenders for supply of sugar for export on 18-8-78 and when the plaintiff submitted its tender for supply of 10,000 metric tonnes of D-30 Grade sugar on 22-8-1978, and also when the sugar samples were delivered at the office of the defendant No. 2 on 21-8-1978 and when the defendant No. 2 wrongfully failed to accept the plaintiff s tender on 22-8-1978, 7-9-1978 and 1