Back
2024 Supreme(Online)(MAD) 35720
HIGH COURT OF MADRAS
A.A. Nakkiran, J
M/S.SARAVANA GLOBAL ENERGY – Appellant
Versus
TAMILNADU TRANSMISSION CORPORATION LIMITED (TANTRA – Respondent
C.S. No. 810 of 2012
Mr. S.R. Raghunathan, Ms. M. Sneha
Liquidated damages are enforceable under contract law, and failure to timely invoke force majeure defenses can bar claims for damages.
Headnote:(A) Contract Act - Sections 73 and 74 - Liquidated damages - The plaintiff, a manufacturer, claimed payment for delayed supplies of insulators under three purchase orders, asserting that delays were due to force majeure events. The defendant countered that the plaintiff was liable for liquidated damages due to late delivery. The court found that the plaintiff failed to invoke the force majeure clause timely and that the liquidated damages were enforceable. (Paras 1-17)
(B) Limitation Act - The court ruled that the suit was barred by limitation as the claims for liquidated damages were filed beyond the three-year period stipulated. (Paras 15-17)
Facts of the case:
The plaintiff supplied insulators to the defendant under three purchase orders but faced delays attributed to floods and other issues. The defendant withheld payments citing liquidated damages for late delivery.
Findings of Court:
The court concluded that the plaintiff's claims were barred by limitation and that the liquidated damages were valid under the contract terms.
Issues: The main issues included the enforceability of liquidated damages, the applicability of force majeure, and the limitation period for filing the suit.
Ratio Decidendi: The court held that the plaintiff's failure to notify the defendant of force majeure within the stipulated time rendered the claim for waiver of liquidated damages invalid. The suit was dismissed as it was filed beyond the limitation period.
Result: Suit dismissed.
JUDGMENT
This Civil Suit is filed for the relief as stated in the prayer.
2. The case of the Plaintiff, as set out, in the plaint is as follows:-
(a) The plaintiff is a manufacturer of electrical insulators and a small scale industry providing gainful employment to scores of families. The defendant had invited tenders and the plaintiff had participated in the tender and was declared as the successful bidder. The price agreed was as under:
i. 110 KV Solid core Insulators: Rs.6049.95 per unit [PO NO. 1651].
Though as per the tender the quantity was indicated as 2176 the Purchase order No. 1651 dated 05/03/2007 was placed for 2720 numbers/ units for a total value of Rs. 1,64,55,864/- (Rupees One Crore Sixty Foupppr Lakhs Fifty Five Thousand Eight Hundred Sixty Four Only). The price was inclusive of all taxes, cess and freight.
ii. 230 KV Solid core Insulators: Rs.15572.68 per unit[PO NO. 1724].
Under Purchase order No.1724, dated 30/08/2007, 4104 units were required to be supplied for a total value of Rs.6,39,10,278.72 (Rupees Six Crore Thirty Nine Lakhs Ten Thousand Two Hundred Seventy Eight and Paise Seventy Two Only]. The price was inclusive of all taxes, cess and freight.
iii. 110 KV Solid core Insulators: Rs. 7270.21 Per unit. [PO NO. 1725].
Under Purchase order No.1725 dated 29/08/2007, 5721 units were required to be supplied for a total value of Rs.4,15,92,871.41 [Rupees Four Crore Fifteen Lakhs Ninety Two Thousand Eight Hundred Seventy One and Paise Forty One Only). The price was inclusive of all taxes, cess and freight.
b). The terms and conditions were enumerated in the Annexure to the Purchase order, and hence not a contract arising out of any commercial bargain. The goods were required to be supplied to the various stores of TNEB running through the State of Tamilnadu. The goods were mostly required as a stock.
c. The Plaintiff has sold and delivered the goods to various stores of TNEB and the defendant have without any quarrel or repudiation received the goods. The petitioner has raised periodical invoice for the supplies. d. As per the terms and conditions, the defendant had agreed to make payment of 90% of the "all inclusive price" within a reasonable time after receipt of material, which time as per the prevalent practice of TNEB being 30 days. In breach of this condition/practice, payments have been made with delay. The petitioner is entitled to interest for such delayed payment as under:
i. P.O. No. 1651 - Rs. 3,51,802.00
ii. P.O.NO. 1724 -Rs.37,70,004.00
iii. P.O.No. 1725 -Rs.23,68,098.00
------------------------
Total -Rs.64,89,905.00
------------------------
e. After completion of supply of the goods, the plaintiff had approached the defendant for balance payment due under the invoice raised by our client. To the shock and surprise of plaintiff, the defendant had sent letters dated 26/05/2009, 25/06/2009 and 06/06/2009 informing the plaintiff that a sum of Rs.2,19,673.65, Rs. 43,18,226.06 and Rs. 19,67,790.95 in respect of P.O.Nos 1651, 1724 and 1725 respectively were recovered towards Liquidated damages for delayed supply. Further the defendant had also informed that a sum of Rs.3635/- and Rs.8523.80 was being recovered towards Liquidated damages towards non supply of 5 & 3 nos, of insulators under P.O.No. 1725 and 1724 respectively. Though the defendant had agreed to release the balance payment to the plaintiff, however, they failed to even make payment of this. The balance payment including the amount withheld as Liquidated Damages was Rs.73,45,827/- (Rupees Seventy Three Lakhs Forty Five Thousand Eight Hundred Twenty Seven Only.)
f. Since the plaintiff's activities were affected due to severe flood, heavy rain, labour problem and frequent power cuts by Tamil Nadu Electricity Board, some deliveries were delayed. The reasons were force majeure events and not attributable to the plaintiff. No proof whatsoever, has been produced by the defendant
