The central legal principle established in the judgment is that the compensation for breach of contract must be reasonable and should not exceed the ceiling limit quantified in the Agreement, as per Section 74 of the Indian Contract Act.

This first appeal is directed against the judgment and decree dated 10.10.96 (decree drawn up on 26.11.96) passed by the learned Civil Judge, Sr. Division, West Tripura, Agartala in T.S. No. 59/93 whereby the plaintiffs suit was dismissed.

2. I have heard Mr. A.K. Bhowmik, learned Sr. counsel assisted by Mr. S. Ghosh for the appellant. Also heard Mr. O.K. Biswas, learned counsel for the respondents.

3. In short, the appellant's (hereinafter called "the plaintiff') case is that he being a registered carrying contractor entered into an agreement with the defendant-respondent Food Corporation of India (FCI) (hereinafter called "the defendant") through its Sr. Regional Manager, Shillong on 27.9.92 for carrying foodgrains from Kumarghat Railway Head to FCI Depot at Agartala for two years. Pursuant to work order, the plaintiffstarted the transportation of foodgrains on 31.5.93. The plaintiff took a load of 130 bags common rice containing 119.41 quintals on 31.5.93 at Kumarghat Railway Head for carrying the same to the FCI Depot at Agartala through a truck bearing No. TRL-2446. The consignment was issued under FCI Road Movement permit. Though the consignment was expected to reach at Agartala on the following day, but it did not. Instead, it came to the notice of the plaintiff that one vehicle met with an accident with consignment of foodgrains near Teliamura at Assam-Agartala road. The plaintiff rushed to the spot and identified the said truck, but he did not find any consignment. He came to know that just after the accident, the miscreants looted the consignment. He lodged FIR with Teliamura P.S.

For non-delivery of the aforesaid consignment of rice, the FCI deducted Rs. 1,63,956.51 from the plaintiffs subsequent bills having resorted to the terms embodied under clause-XII (a) and clause 27 of the Agreement. Hence he filed the suit seeking declaration of the aforesaid terms of the Agreement to be void and for recovery of the aforesaid amount.

The defendant FCI contested the suit having filed a written objection contending, inter alia, that since the plaintiff failed to deliver the consignment of rice he received at Kumarghat Railway Head in terms of Agreement, three times of the issue price/ value of the aforesaid non-delivered foodgrains had been rightly recovered from his subsequent bills. The learned trial Court on conclusion dismissed the suit. Hence the present appeal.

4. The fate of the present appeal solely depends upon the interpretation, implications and consequences of clause XII(a) and clause 27 of the Agreement having applied the statutory test of Section 74 of the Indian Contract Act (shortly, "the Act").

5. As per clause XII (a) of the Agreement, the plaintiff-contractor "shall be liable for all costs, damages, demurrages, wharfages, forfeiture of wagons, registration fees, charges and expenses suffered or incurred by the defendant Corporation due to the contractor's negligency and unworkmanlike performance or his failure to carry out the work and also for all other damages or losses occasioned to the Corporation due to the act whether negligence or otherwise of the contractor" and the decision of the Sr. Regional Manager regarding such failure of contractor and the liability thereof shall be final and binding upon the contractor.

In clause 27 of the Agreement, among others it is stipulated that contractor shall make good the value of any shortage, wastage, loss or damage of goods in transit at three times the issue rate as applicable from time to time for all foodgrains and commodities other than sugar and four times the issue rate as applicable from time to time in respect of sugar (emphasis supplied).

6. In the present case, admittedly, the plaintiff-contractor failed to deliver 119.41 quintals of common rice in terms of the Agreement. It is also admitted that the said loss has never been happened conseq1 2nt to any act of God like natural calamity. The loaded vehicle met an accident in transit and the foodgra