FOOD CORPORATION OF INDIA versus M/S. LAXMI CATTLE FEED INDUSTRIES

Citation: [2006] 2 S.C.R. 409 · Decided: 22-02-2006 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Appeal(s) allowed

Judgment (excerpt)

r 
J 
FOOD CORPORATION OF INDIA 
A 
.. ---r 
v. 
MIS. LAXMI CATTLE FEED INDUSTRIES 
FEBRUARY 22, 2006 
[ARIJIT PASAYAT AND TARUN CHATTERJEE, JJ.] 
B 
-1 
Contract Act, 1872: 
.~ 
Breach of contract-Agreement for sale of damaged-food grains entered c 
into between Food Corporation and an Industry-Industry could not fulfil its 
part of the contract and requested for refand of balance amount deposited in 
terms of the contract-Corporation warned the industry to lift the ~alance 
stocks failing which the stocks would be disposed of at its risk-Industry filing 
a suit for recovery of damages-Decreed by Trial Court-Appeal against 
dismissed by the High Court-On appeal, Held: Evidence furnished by the D 
Corporation clearly established the loss sustained by them-Without any 
material in support the Courts below held the Corporation liable for committing 
. .., 
breach of the contract-Hence, judgment and decree of the Trial Court set 
,, ), 
aside. 
The appellant-Corporation invited tenders for purchasing the E 
damaged foodgrains. Tender submitted by the respondent-Industries was 
accepted by the Corporation. In terms of the contract, respondent 
deposited certain amount with the appellant. Later, the respondent 
requested the appellant that part of the agreement which was not capable 
of being perfor.med may be cancelled and balance amount be refunded F 
and for waiver of storage charges levied by the authorities concerned. 
~ 
Certain amount was refunded by the appellant. In the meantime, a 
telegram was issued by the appellant-Corporation asking the respondent 
lift the balance stocks from the Depot immediately, failing which the stocks 
would be disposed of at the respondent's risk as per the terms of the 
contract. However, a suit was filed by the respondent for recovery of G 
certain sum from the appellant alleging breach of contract. The Trial 
-
Court decreed the suit holding that the appellant had committed breach 
\ 
of the contract in refunding the balance amount and not supplying the 
~ 
goods to the entire extent for which the bid was submitted by the 
-
409 
H 
j 
410 
SUPREME cot;Rr REPORTS 
[2006] 2 S.C.R. 
A respondent. First Appeal was filed by the appellant-Corporation before 
the Delhi High Court which was dismissed by the High Court upholding 
the judgment and decree of the Trial Court. Hence the present appeal. 
Allowing the appeal, the Court 
B 
HELD: Without any material whatsoever the Courts below held that 
the appellant had committed breach. On the contrary, the evidence clearly 
established that the appellant had proved the loss sustained. The 
1 
respondent was to establish its own case. It did not choose to lead evidence. 
~ 
Therefore, the Trial Court in the absence of any evidence tendered by the 
C plaintiff should not have decreed the suit The High Court committed error 
by proceeding under the erroneous a!:sumption that the respondent had 
led evidence and not the appellant-Corporation. Hence, the judgment and 
decree of the trial Court as affirmi!d by the High Court cannot be 
sustained, and are set aside. (413-D-E .. F] 
D 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5261 of2003. 
E 
F 
From the Final Order & Judgment and dated 30.1.2003 of Delhi High 
Court in Regular First Appeal No. 546 of 1988. 
Ajit Pudussery for the Appellant. 
The Judgment of the Court was d1:livered by 
ARIJIT P ASAY AT, J. Appellant-Corporation calls in question legality 
of the judgment rendered by a Division Bench of the Delhi High Court 
dismissing the First Appeal questioning correctness of the order dated 
13.11.1987 of learned Additional District Judge, Delhi who had granted a 
decree of Rs.81,442.53 with interest in favour of the respondent who was the 
plaintiff before the Trial Court. 
The background facts in a nutshell are as follows:-
G 
The appellant invited tenders from persons intending to purchase 
damaged foodgrains, by advertisement dated 9.6.1983. Tender submitted by 
the respondent was accepted on 22.7.1983. It is to be noted that the respondent 
was one of the successful bidders. Certain terms of the agreement which shall 
be indicated in detail stipulated payment of the price and the consequence of 
failure to do so i.e. levy of storage charges for the stock not lifted and 
H interest. The tendered quantity was 2246 M.T. of damaged foodgrains. 
. 
' 
-
\ 
~ 
) 
FOODCORPN. OF INDIA"· LAXMI CA TILE FEED INDUSTRIES [PASA Y AT. J.] 
411 
Respondent deposited certain amounts. On I .2.1984 the

Excerpt shown. Read the full judgment & AI analysis in Lexace.