R.L. KHURANA, J.—The present suit for the recovery of Rs. 9,08,971/ has been filed by the Himachal Pradesh State Forest Corporation Ltd. and its Divisional Manager, Chamba, hereinafter referred to as the Plaintiffs, on the following averments :

2. The Plaintiffs through advertisement dated 9.2.1991 invited short term tenders for the extraction of resin and its carriage to roadside depots. The defendant submitted his tender in respect of Lot No. 6/91 by quoting the rate of Rs. 329/- per quintal for extraction of resin including crop setting and its carriage up to roadside depot. The rate quoted by the defendant being the lowest was accepted by the plaintiffs on 28.2.1991. The necessary agreement came to be executed between the parties on 30.3.1991. A sum of Rs. 20,000/- was deposited by the defendant as security. As per the agreement the defendant was to extract minimum resin yield of 785.056 quintals by 30.11.1991 from 24,533 blazes.

3. The agreement provided for a fixed time schedule for taking various steps by the defendant for the purpose of resin extraction. It was also specifically provided that on the failure of the defendant to extract the minimum quantity of resin yield of 785.056 quintals by the stipulated date of 30.11.1991, he would be liable to pay compensation to the plaintiffs at the prevalent factory rate of resin per quintal. The shortfall up to 10% in the resin yield in the discretion of the Managing Director or the Director concerned could be waived.

4. The defendant failed to carry out the work of extraction properly inspite of repeated notices/reminders issued to him by the plaintiffs. As a result only 262.40 quintals of resin could be extracted by the defendant by the stipulated date, as against the minimum prescribed quantity of 785.056 quintals. The plaintiffs thus suffered loss to the extent of 522.656 quintals of resin. The prevalent rate of resin at the relevant time was Rs. 1,515/ per quintal. The total loss in terms of money comes to Rs. 7,91,824/, which the defendant is liable to make good in terms of Clause 39 of the agreement. Since the defendant failed to pay the said amount inspite of repeated demands, the plaintiffs have claimed interest on such amount at the rate of 18% per annum, amounting to Rs. 1,17,147/- calculated up to 20.9.1992. The plaintiffs have thus filed the suit for recovery of Rs. 9,08,971/- against the defendant.

5. The defendant, while resisting the suit, admitted having taken the work of extraction of resin of lot No. 6/91 vide agreement dated 30.3.1991. He, however, pleaded that being a Class-C registered contractor, as per the rules and practice of the plaintiffs, he could not have been granted a work exceeding Rs. 1,00,000/-, Since, the agreement dated 30.3.1991 exceeds the said limit, the same was null and void. The defendant admitted that by the due date he could extract resin only to the extent of 267.54 quintals. He denied that the shortfall was due to any negligence or laxity en his part. He pleaded that the officials of the plaintiffs from the very beginning started showing laxity in performing their part of the agreement inasmuch as the necessary equipments, such as, tools, lips, tins, cans, acid drums, etc. which were to be supplied by the plaintiffs free-of-cost to the defendant in terms of Clause 13 of the agreement, were not supplied by them in time, inspite of repeated requests made by the defendant in this regard. Besides, the plaintiffs were duly informed that rill method for extraction of resin could not be applied to 4,221 trees since resin had already been extracted from such trees. In addition the plaintiffs were also informed that resin could not be extracted from about 4,779 trees which were located in four jungles, forming part of lot No. 6/91, since resin had been extracted in three jungles and the fourth jungle was not accessible on account of steep hilly terrain. The defendant had been approaching the plaintiffs for deleting these 9,000 trees f