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SHREE CHANDRASHEKHAR, REKHA BORANA
CJ DARCL Logistics Ltd. – Appellant
Versus
Rajasthan State Mines and Minerals Ltd. – Respondent
ORDER :
1. The present appeals have been preferred against the judgment and decree dated 17.02.2024 passed by the Commercial Court, Udaipur in Civil Suit No. 43/2021 (CIS No. 43/2021) whereby the suit for recovery as preferred by the plaintiff-CJ DARCL Logistics Ltd. has been partly decreed.
2. Vide the judgment and decree dated 17.02.2024, the plaintiff-Company had been held entitled for an amount of Rs.3,12,000/- (the earnest money) and Rs.76,907/- (the due bill) i.e. a total of Rs.3,88,907/- with interest at the rate of 6% per annum. The relief qua the refund of the bank guarantee to the tune of Rs.21,38,000/- stood dismissed.
3. The appeal (D.B. Civil Misc. Appeal No. 1678/2024) against the rejection of the relief qua the bank guarantee has been preferred by the plaintiff-Company whereas the appeal (D.B. Civil Misc. Appeal No. 1726/2024) against the decree qua earnest money and due bill has been preferred by the defendant-Rajasthan State Mines and Minerals Limited (hereinafter referred to as ‘RSMML’).
4. Appeal (D.B. Civil Misc. Appeal No. 1678/2024) preferred by the plaintiff-Company is reported to be barred by 5 days.
An application under Section 5 of the Limitation Act has been f
The court affirmed the right to forfeit a security deposit for non-completion of work as per contract terms, emphasizing the necessity of proving actual damages.
The court affirmed that failure to demonstrate actual loss precludes the forfeiture of security deposits, underscoring the principle that a breach must cause substantial damages to warrant penalties.
The contractor is not liable for destination shortages absent sufficient evidence, affirming the court's findings on liability for withheld amounts.
The main legal point established in the judgment is that the arbitrator's decision must be in accordance with the terms of the agreement, and failure to do so can result in the decision being set asi....
A party's entitlement to damages in breach of contract cases must correlate with actual damages suffered; security deposits can be refunded when no loss is incurred by the other party.
Premature termination of a contract does not grant right to forfeit the security deposit without proof of actual loss, as it constitutes a penalty under the contract law.
Interest on security deposit is not payable unless the contractor fulfills the conditions specified for refund, which includes obtaining a Labour Clearance Certificate.
The court held that the tribunal's award of refund and risk and cost compensation was justified, but the risk and cost amount should be modified to reflect the corrected value of work done.
Effective acceptance occurs upon dispatch, making a concluded contract binding; additional penalty clauses imposed post-acceptance invalidate forfeiture claims without proof of actual loss.
The court upheld the binding nature of the contract, ruling that the Plaintiff's claims were untenable due to failure to exercise contractual options and were barred by limitation.
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