( 1 ) IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD CIVIL REVISION APPLICATION NO. 178 OF 2004 1. City Industrial Development Corporation .. Petitioners of Mah. Ltd., (CIDCO) [original Through its Chief Administrator. respondents] 2. Consultant Engineer (Elec), CIDCO, Aurangabad. 3. Asstt. Executive Engineer (Elec), CIDCO, New Aurangabad. Versus Gajanan Electricals .. Respondent S.S.I., [original Govt. Registered “A” Class plaintiff] Contractor & Suppliers, N-3, Plot No. 542, CIDCO, New Aurangabad, through its proprietor – Shri Gajanan s/o. Mahadeorao Chimankar, Age. 42 years, Occ. Business, R/o. 542, N-2, CIDCO, Aurangabad. Mr. N.S. Jaju h/f. Mr. A.S. Bajaj, Advocate for the applicants. CORAM : S.S. SHINDE, J. DATED : 14.09.2010 ( 2 ) ORAL JUDGMENT :- 1. The petitioners herein are original defendants. The respondent herein filed Regular Civil Suit no. 764 of 1999 for recovery of Rs. 4828/- inclusive of interest at the rate of 18% p.a. 2. It was case of the respondent/original plaintiff before the Trial Court that the firm of the plaintiff is S.S.I. Unit. The S.S.I. Unit is doing work of electrification. The defendants called tenders for providing erecting, testing and commissioning of street lights at both sides of balance road of 60 mtrs. near M.I.D.C. approach road at Nagar-Waluj Mahanagar, Aurangabad. The tender of the respondent was accepted. On 25th July, 1998, the defendants issued letter and the plaintiff was intimated to deposit initial security deposit of Rs. 3763/-. Said amount was deposited by the plaintiff to the defendants. The agreement was executed in favour of the defendants by the plaintiff. As per terms and conditions the work was to be completed on or before 18.10.1998 i.e. within two months from the date of the contract. It was case of the plaintiff that due to heavy ( 3 ) rain fall he could not start the contract work and ultimately could not complete the same within stipulated period. The defendants intimated the plaintiff to complete the work on or before 18th October, 1998, otherwise the plaintiff will be liable for penalty for delay. The plaintiff requested to extend the period. However, the defendants refused to do so. As a result, since the work was not completed within stipulated period, the defendants i.e. revision petitioners herein forfeited the security deposit. The plaintiff filed the suit. The defendants filed written statement at Exh. 13. The Trial Court framed necessary issues for its determination and dismissed the suit filed by the plaintiff. 3. Aggrieved by dismissal of the suit, the respondents herein i.e. original plaintiff filed Regular Civil Appeal No. 175 of 2001. The revision petitioners herein filed written statement at Exh. 13-B in the Regular Civil Appeal. 4. After considering the material placed on record the Appellate Court recorded findings by framing points. In para 10 of its judgment, the Appellate Court observed that it is admitted that the plaintiff deposited amount of Rs. 3763/- as ( 4 ) security deposit with the defendants. It is further observed that it is also admitted that it was one of the terms of the contract that if this contract is not performed by the plaintiff within stipulated period, then the defendants will have option to forfeit the security deposit amount kept by the plaintiff with the defendants. It appears that the lower Appellate Court held that the forfeiture is penal act and such penalty is charged generally to compensate loss/damage sustained due to non-performance of the contract. The lower Appellate Court has further observed that the damage sustained due to non-performance of the contract has not been pleaded by the defendants. It is further held that the defendants have failed to demonstrate that they sustained any loss or was expected to sustain any loss due to non- completion of the work within stipulated period. The Lower Appellate Court has further observed that the deposit amount cannot be forfeited only on the ground of default and the defendants have failed to prove that said loss is caused by default by non-performing the work in stipulated period. With this cryptic reasoning, it appears that, the lower Appellate Court has allowed the appeal and directed the defendants to pay Rs. 3763/- to the plaintiff/appellant. ( 5 ) 5. Learned Counsel appearing for the revision petitioners vehemently submitted that it is admitted position that there is breach of contract and further the plaintiff has failed to perform the work of putting street lights within stipulated period. The defendants were perfectly justified in forfeiting the security amount as mentioned in the terms and conditions of the contract. Learned Counsel further submitted that in the instant case it was not possible to determine or calculate the loss sustained, since the nature of the work, which was allotted to the plaintiff was to put street lights within stipulated period. Learned Counsel further submitted that it is difficult to calculate the loss caused to the public at large for not putting street lights within the period prescribed in the contract. Learned counsel appearing for the revision petitioners in support of his contention placed reliance on the reported judgment of the Hon’ble Supreme Court in the case of Oil and Natural Gas Corporation Ltd., V/s. SAW Pipes Ltd., AIR 2003 SUPREME COURT 2629. Relying on the said judgment, learned counsel submitted that the point on which the Lower Appellate Court has allowed Regular Civil Appeal is no more dis-integra. ( 6 ) According to learned Counsel for the revision petitioners it was for the plaintiff to prove that due to non-performance of the work within stipulated period, the defendants had not sustained any loss. Therefore, learned counsel submitted that revision application deserves to be allowed. 6. Though the respondent is duly served, none appears for the respondent. 7. I have heard learned Counsel appearing for the revision petitioners at length and perused judgment of the Supreme Court in the case of Oil and Natural Gas Corporation Ltd (Supra). The only reason which is assigned by the lower Appellate Court directing the defendants to refund the security amount is that the defendants failed to prove that due to inaction of the plaintiff to perform the work of putting street light within stipulated period, the defendants have sustained loss. In short the lower Appellate Court has allowed the appeal only on the ground that the defendants have failed to prove or bring on record that they have sustained loss due to non-performance of work given to the plaintiff within stipulated period. ( 7 ) 8. The Supreme Court in case of Oil & Natural Gas Corporation Ltd., cited supra in para 68 held; “In such a contract, it would be difficult to prove exact loss or damage which the parties suffer because of the breach thereof. In such a situation, if the parties have pre-estimated such loss after clear understanding, it would be totally unjustified to arrive at the conclusion that party who has committed breach of the contract is not liable to pay compensation. It would be against the specific provisions of Sections 73 and 74 of the Indian Contract Act. There was nothing on record that compensation contemplated by the parties was in any way unreasonable. It has been specifically mentioned that it was an agreed genuine pre- estimate of damages duly agreed by the parties. It was also mentioned that the liquidated damages are not by way of penalty. It was also provided in the contract that such damages are to be recovered by the purchaser from the bills for payment of the cost of material submitted by the contractor. No evidence is led by the claimant to establish that stipulated condition was by way of penalty or the compensation contemplated was, in any way, unreasonable. There was no reason for the tribunal not to rely upon the clear and unambiguous terms of agreement stipulating pre-estimate damages because of delay in supply of goods. Further, while extending the time for delivery of the goods, respondent was informed that it would be required to pay stipulated damages.” 9. In the facts of the present case it was not possible to calculate the loss looking to the nature of work ( 8 ) which was given on contract to the respondent and as agreed in the terms of contract the revision petitioners rightly forfeited the security amount. I find considerable force in the arguments advanced by the learned Counsel for the revision petitioners that it was for the plaintiff to prove that the defendants have not sustained any loss due to failure of the plaintiff of not completing the work of putting street lights within stipulated period as mentioned in the contract. 9. In the light of above, the findings recorded by the Extra Joint District Judge, Aurangabad, in Regular Civil Appeal No. 175 of 2001 are not sustainable and the same is set aside. The Civil Revision Application is allowed in terms of prayer clause (B). The judgment and order in Regular Civil Suit No. 764 of 1999 is confirmed. The Civil Revision Application is disposed of accordingly. [S.S. SHINDE,J.] snk/2010/SEP10/cra178.04