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2023 Supreme(Tri) 58

HIGH COURT OF TRIPURA AGARTALA
Aparesh Kumar Singh, CJ., Arindam Lodh, J.
The Food Corporation of India & Ors. - Appellants
Versus
Smt. Namita Paul & Ors. - Respondents
RFA 25 and 26 of 2022
Decided On : 19-10-2023

Advocates appeared:
Mr. A. Bhaumik, Advocate and Mr. S. Dey, Advocate, for the Appellant; Mr. Raju Datta, Advocate, for the Respondent.

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.

Headnote:(A) Commercial Courts Act, 2015 - Section 13 - Indian Contract Act, 1872 - Sections 73 and 74 - Appeals against judgment and decree in commercial suits concerning contract disputes related to transportation services - Court found that failure to establish actual loss disentitled the defendants to forfeit the plaintiff's security deposit, and the conduct of both parties indicated an implied term allowing transportation of specified load capacities. (Paras 4, 10, 12, 30, 38)

(B) Contract Law - Implied Terms - The court ruled that the parties had implicitly agreed on load capacities for transportation as part of the contractual obligations. (Para 18)

(C) Forfeiture of Security Deposit - The failure to prove actual loss prevented defendants from justifying forfeiture of security deposits under the contract terms and provisions of the Indian Contract Act. (Paras 36-38)

(D) Recovery of Damages - Court dismissed the contractor's claim for loss of profits due to lack of evidence of actual damages, resulting in significant adjustments to the trial court's judgments. (Paras 39)

Facts of the case:
The plaintiff was contracted for transportation of food grains, but faced issues due to changes imposed by the defendants regarding load capacity. The contract was terminated by the defendants citing poor performance, leading to subsequent legal disputes over security deposits and damages.

Findings of Court:
The court upheld the trial court's decision to refund the security deposit but reversed the award for loss of profits.

Issues: The main issues were the validity of contract termination, the legal standing of load capacity changes, and the entitlement to security deposits and damages.

Ratio Decidendi: It was established that the defendants failed to prove any actual loss caused by the plaintiff's actions, and that the implied understanding regarding load capacities was essential for fulfilling contract terms.

Result: Appeals allowed in part; security deposit to be refunded, but claim for loss of profits dismissed.

Table of Content
1. issuance of contracts and obligations under nit. (Para 2 , 3)
2. arguments surrounding responsibility and performance obligations. (Para 10 , 11)
3. court observations on the legality of contract termination and conditions of refund. (Para 12 , 39)
4. implied terms in commercial contracts and their enforceability. (Para 15 , 16)

JUDGMENT & ORDER

Arindam Lodh, J. - Since common questions of law and facts are involved in both the appeals, these were heard together on consent of learned counsel for the parties and are being taken up for decision by this common judgment.

2. These appeals under Section 13 of the Commercial Courts Act , 2015 read with Order XLI of the Civil Procedure Code,1908 have been filed challenging the common Judgment and Decree dated 06.07.2022, passed in Case No. C.S.08/2017 & C.S. 04/2016 by the learned District Commercial Court, West Tripura, Agartala whereby the Suit bearing No. CS 08 of 2017 filed by the respondent [the original plaintiff] was partly decreed and the Suit bearing No.CS 04 of 2016 filed by the appellants [the original defendants] was dismissed.

3. The facts as narrated in common judgment i.e. in Commercial Suit No. 08 of 2017 and Commercial Suit No.04 of 2016 by learned Judge, District Commercial Court, may be reproduced here-in-below for the sake of convenience since the facts leading to CS 08 of 2017 filed by M/S Namita Paul being the plaintiff and her defence in CS 04 of 2016 are similar and the Food Corporation of India ( for short, 'FCI') and its officials being the plaintiffs in CS 04 of 2016 and their defence in CS 08 of 2017 are also similar and identical.

'The plaintiff claimed to be a Transport Contractor and has been carrying on such business successfully since 1995. The defendants issued a Notice Inviting Tender(for short NIT) dated 21.08.2009 in two bid tendering system(technical bid and price bid) for appointment of transport contractors for a period of two years for transportation of food grains/sugar and other allied materials from Railway siding(FSD), Churaibari to FSD Arundhutinagar, Agartala. Estimated value of the work was 4 crores 35 lacs and the scheduled rate for carrying food grains was prescribed at Rs. 611.22 per MT. The plaintiff being lowest bidder was accordingly appointed for transportation of food grains/sugar and other allied materials and after negotiation rate was fixed at Rs. 913.77 per MT which is 49.5% above the scheduled rate. The plaintiff commenced the transportation of food grains in terms of contract w.e.f. 16.11.2009. According to the plaintiff the rate quoted by the plaintiff was feasible only if she carries a load ranging from 16 MT to 19 MT per vehicle. Accordingly the plaintiff did the transportation works carrying loads of 16 to 19 MT per vehicle and bills submitted by the plaintiff in this connection were duly cleared by the defendants. The defendants also issued road movement permits(RMP) for the vehicle indicating gross weight of the goods to be carried ranging from 16 MT to 19 MT but from the 3rd week of October, 2010 all on a sudden the plaintiff started facing difficulties in its transportation within the State of Tripura because of the fact that the defendants have deviated from the prevailing system of issuing indents for Truck and instead of issuing indents on the basis of load capacity of 16 to 19 MT per Truck they started issuing indents on the basis of reduced load capacity of 8 to 10 MT per Truck. Being confronted by the situation the plaintiff came to know about the Supreme Court judgment in the case of Paramjit Bhasin & Ors vs Union of India & Ors. reported in (2005) 12 SCC 642. In the said case Hon 'ble the Supreme Court had examined the legality of notifications issued by various State Governments permitting carriage of excess weight of goods laying down the law and issued directions to withdraw such notifications forthwith. Situating thus, the plaintiff started facing serious difficulties in its transport operat

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