The plaint

1. The plaintiff is a company incorporated under the provisions of the Indian Companies Act 1956 and is involved in business activities including mining iron ore. Government of Karnataka holds 26% shareholding in the plaintiff company. The plaintiff holds license to mine ore in the State of Karnataka and more particularly in Bellary District. The plaintiff does not carry out mining of iron ore in any other place in India. The iron ore is sold in domestic and international market. It had been stated that the export of iron ore constitutes a major part of its revenue which has progressed on an increasing scale from the year 2002 to July 2010. The exports have been done primarily through the Chennai Port Trust. The iron ore is transported from Karnataka by road/rail. At Chennai Port, the iron ore are stacked within its premises. The said area is allotted on availability and an exporter is required to pay license for use of stacking area. There are also several terms and conditions. One of the condition is that there must be a minimum export guaranteed throughput during the allotment period. It had been stated that the plaintiff was allotted transit area by the first defendant from 01.02.2010 to 31.12.2010 by allotment order No. 5/2010 dated 31.01.2010. A further allotment order No. 15/2010 was issued by the second defendant on 05.02.2010.

2. According to the terms of the allotment order, under Clause 2, a valid export license is to be produced and minimum of 5,48,680 Metric Tonnes should be exported during the said period. An amount of Rs.27,75,000/- being 50% of the charges had been paid by the plaintiff. A Bank Guarantee had also been furnished for a total sum of Rs.6,09,03,480/- being the license fee. If there is a shortfall in the export, the plaintiff has to pay the defendant the license fee for such shortfall quantity.

3. The plaintiff alleged that they had exported the minimum guaranteed quantity continuously from the period 2002-2003 till 2009-2010. However, owing to various complaints, the Government of Karnataka issued G.O.No. LOE 186 PSP 2010, Bangalore, dated 26.07.2010 prohibiting export of iron ore. Another G.O.No. CI 162 MMM 2010, Bangalore was issued on 28.07.2010 prohibiting transportation of iron ore. Consequently, export transport of iron ore from Karnataka was not possible. The Writ Petitions filed by the exporters were dismissed by the High Court and also by the Supreme Court. This prevented the plaintiff from performing their part of the agreement with the defendant. The plaintiff claimed frustration of contract since the contract became impossible of performance and in-fact unlawful owing to the Government Order.

4. It had been stated that the plaintiff had brought this fact to the notice of the defendants. However, the second defendant by letter dated 07.12.2010 directed handing over of the area. A letter was issued by the plaintiff dated 20.12.2010 retracting the earlier letters and claiming that the contract is void and seeking refund of security deposit. It had been stated that the defendants are not entitled to retain the security deposit since the contract had become void. It had been stated that performance was not possible only because of the Government Orders and mining of Iron ore becoming illegal. Consequently, the suit has been filed as stated above for the above reliefs.

The Written Statement:

5. In the written statement, it had been stated that the export of Iron ore was banned only due to illegal mining activities and consequently, it was not attributable to the defendants. It had been further stated that the defendants had to follow certain strict rules since the Ministry of Shipping fixes a target for export every financial year. It had been stated that the plaintiff was issued with stacking transit area and the details and exported quantity and shortfall had been given in the w