( 1 ) THIS first appeal by the Union of India (hereinalter to be called the defendant) is directed against the judgment and decree passed by the Senior Subordinate Judge Simla whereby the plaintiff's suit for recoveiy of Rs. 25,270. 00 has bven decreed against the defendant with costs,

( 2 ) THE plaintiff, the Karnal Distillery Co. (Private) Ltd, alleged that it had entered into an agreement with the government of Himaohal Pradesh on July 20, 1950 (Ex. P-l) whereby it agreed to supply 12,000 L. P. gallons, with 10% variation of quantity on either side. of country spirits to the Liquor Licensees of Mandi District during the remaining period of the financial year 1950-51, commencing from August I, 1950, at the rates mentioned in the said agreement. According to the agreement the Government had to provide a suitable building to enable the plaintiff to establish a Ware-house at Mandi, on a rent of Rs. 50. 00 per mensern for the period of the contract. The plaintiff was also required to deposit a sum of Rs. 20001-1- as security for the due performance of the various clauses of the agreement.

( 3 ) THE plaintiff established the warehouse and commenced supplies of country