( 1 ) THE plaintiff has filed a suit for recovery of Rs 30,22,000/- for recovery of principal amount, interest and damages. The plaintiff claims to be a registered partnership firm engaged in the business of wholesale kirana merchant and commission agents dealing in various kinds of spices. The suit has been instituted through its partner Sh. S. K. Gupta. Defendant no. 1 is a Government of India undertaking while defendant no. 2 is its Assistant Marketing Manager.

( 2 ) IN the beginning of January, 1989 the plaintiff claims to have learned that the defendants were looking for a purchaser of cloves and an offer was thus made vide letter dated 03. 01. 1989 to the defendants for purchase of the entire quantity of cloves available with the State Trading Corporation of India (STC) at the price to be charged by the STC plus a commission of Rs 2 per kg for the defendants. This amount of Rs 2 was in addition to the expenses on account of sales tax, octroi and transport. In pursuance to the offer, the defendants are stated to have agreed to sell to the plaintiff 82 metric tons of cloves in terms of its letter dated 06. 01. 1989 with terms and conditions set out in the letter.

( 3 ) THE STC is stated to be a canalizing agent in whose name the import was carried out and the STC was to retain/receive a nominal commission towards such canalizing charges. It is in view thereof that a letter dated 06. 01. 1989 was exchanged between the STC and the defendants, a copy of which was handed over to the plaintiff. The STC was to be paid by the defendants a sum of Rs 135/- per kg ex-Delhi price.

( 4 ) IN terms of the contract with the defendants of 06. 01. 1989 an amount of Rs 10,00,000/- is stated to have been deposited with the defendants as security. The plaintiff has also paid a further sum of Rs 20,00,000/- towards the first installment against the supplies to be made. It is the case of the plaintiff that though the defendants were required to supply the first installment of cloves within a week it failed to do so and the first installment was thus sent only on 01. 02. 1989. The plaintiff in turn had contracted to sell 80 metric tonnes of clove to M/s Jagdish Persad Mirdul Kumar at the rate of 155 per kg. The plaintiff claims to have suffered a loss on account of the delayed delivery of goods.

( 5 ) THE plaintiff alleges that out of the total initial advance of Rs 20 lakh on supply of goods, balance of Rs 5,16,084. 50/- still remained with the defendants and on account of the delayed supply, the contract between the plaintiff and its purchaser was cancelled causing loss to the plaintiff. The plaintiff in fact is stated to have acceded to the request of the defendants for further advance. Once again on supplies being made a balance advance of Rs 5,45,351. 40/- remained with the defendants. The plaintiff also alleges that on inspection several bags were found to be containing inferior quality of cloves. The plaintiff refused to make further advance payment to the defendants till such time as cloves worth the balance amount were supplied. In the meantime the prices of cloves in the market dropped to Rs 125 per kg as compared to Rs 165/- during the period when the defendants were required to supply the goods. The plaintiff claims to have been ready and willing to lift the balance quantity of goods against the advance but the defendants wanted further advance. The defendants issued a letter dated 27. 02. 1989 extending the time for performance of contract by 3 weeks up to 17. 03. 1989 but again instead of supplying the goods the defendants started demanding advance payment. The disputes between the parties resulted in a communication dated 23. 03. 1989 of the defendants forfeiting the security amount.

( 6 ) THE parties discussed further settlement and it is alleged that in view of the amounts of the plaintiff being blocked, the plaintiff was forced to sign a letter dated 25. 04. 1989 in terms whereof it was agreed that