IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN MONDAY, THE 9TH FEBRUARY 2009 / 20TH MAGHA 1930 OP.No. 20199 of 1997(D) ----------------------------- PETITIONER(S): ----------------- Y.P. NANDA, MAHALAKSHMI TIMBER CORPORATION, 1, ABDUL RAHIM ROAD, RACE COURSE, BLACKSTONE ROAD, COIMBATORE – 641018 TAMIL NADU. BY ADV. MR.JOHN JOSEPH VETTIKAD ADV. MR.GOVIND CHANDRASEKHAR RESPONDENT(S): --------------------- 1. STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM. 2. FOREST RANGE OFFICER, SUNGAM RANGE, THUNAVADAVU P.O., 3. DIVISIONAL FOREST OFFICER, PARAMBIKULAM. 4. DISTRICT COLLECTOR, PALAKKAD. MS. M. R. SABU - GOVERNMENT PLEADER THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 09/02/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP.No. 20199 of 1997 APPENDIX EXT.P1: COPY OF LETTER ISSUED BY FOREST RANGE OFFICER, SANGAM RANGE DT. 29.12.92. EXT.P2: COPY OF LETTER ISSUED BY THE DIVISIONAL FOREST OFFICER, PARAMBIKULAM DATED 28.6.1993. EXT.P3: COPY OF THE LETTER SENT BY Y.P. NANDA TO DIVISIONAL FOREST OFFICER, PARAMBIKULAM DATED 25.7.1995. EXT.P4: COPY OF THE NOTIFICATION ISSUED BY THE DIVISIONAL FOREST OFFICER, PARAMBIKULAM DIVISION, DTD 11.10.1999. EXT.P5: COPY OF LETTER ISSUED BY THE DIVISIONAL FOREST OFFICER, PARAMBIKULAM DATED 4.6.1997. TRUE COPY PA TO JUDGE. S. SIRI JAGAN, J. ------------------------------------ O.P.No.20199 OF 1997 ---------------------------------------- Dated this the 9th day of February, 2009 JUDGMENT The petitioner participated in the auction conducted by respondents 2 and 3 for sale of forest timber on 26.11.1992. The petitioner was the highest bidder. The petitioner paid Rs.20,000/- as earnest money deposit. He was asked to pay the balance auction price of Rs.3,61,768/- by Ext.P1 letter dated 29.12.1992 issued by the 2nd respondent. The petitioner did not remit the amount. According to the petitioner on account of a heart ailment suffered by him, he decided to stop the business. By Ext.P2 dated 28.6.1993, the petitioner was informed that on account of the non-remittance of the amounts due from the petitioner towards the balance auction price, a re-auction would be conducted on 13.7.1993 and 14.7.1993 at the risk and costs of the petitioner. No auction was conducted on those days. Thereafter, by Ext.P3 letter dated 25.7.1993, the petitioner informed the 3rd respondent that he is prepared to produce a buyer, who is willing to purchase the timber without any loss to O.P.No.20199/1997 2 the Government. The same was not responded to. Again by Ext.P4 dated 11.10.1993, the petitioner was informed that the re-auction would be conducted on 18.11.1993. Thereafter, by Ext.P5 dated 4.6.1997 the petitioner was directed to pay an amount of Rs.90,283/-as the loss caused to the Government on account of the breach of contract committed by the petitioner. The petitioner is challenging Ext.P5. In Ext.P5, the calculation of loss is given as follows: “Sale value fetched on 26.11.1992 Rs.337848.00. Sale value fetched on 18.11.93 Rs.386732.00 1) Interest for 1 st month on Rs.317848 @ 18% (Rs.337848-2000 = 317848) Rs. 4768.00 (part value) 2) Interest for 12 months on Rs.317848/- @24% Rs. 76284.00 3) Surcharge @ 2.5% on Rs.76284/- Rs. 1907.00 4) Ground rent for 13 months Rs. 5824.00 5)Advertisement charge (approximate) Rs. 1500.00 ------------------- Rs. 90283.00 =============== 2. Although initially the petitioner vehemently contended that the petitioner is not liable to pay any amount at all, the petitioner now submits that the petitioner is prepared to pay the balance amount from the said amount of Rs.90,283/-, after deducting the excess amount fetched by the O.P.No.20199/1997 3 respondents in the re-auction and Rs.20,000/- earnest money deposit lying in deposit with the respondents. 3. The learned Government Pleader opposes the same. According to him, the petitioner is not entitled to deduction of those amounts. 4. I have considered the rival contentions in detail. 5. I do not find any merit in the contentions of the learned Government Pleader that such amounts are not liable to be deducted from the loss. Admittedly in the re-auction, the Government fetched a higher price than the price for which the petitioner had bid in the earlier auction. It is also not disputed before me that an amount of Rs.20,000/- paid by the petitioner as earnest money deposit has not been re-paid to the petitioner. 6. It is settled law that in case of breach of contract the Government is entitled only to recover the actual loss caused to the Government. The loss has to be calculated on the basis of the sale value fetched in re-auction. Since the sale value fetched in re-auction is higher than the original sale value, the damages also have to be fixed on that basis only. In that view, the petitioner is liable to pay only the balance O.P.No.20199/1997 4 amounts out of the total now demanded, in so far as the loss has been calculated based on the price quoted by the petitioner in the auction in which the petitioner was the highest bidder without accounting for the higher value fetched in the re-auction. If compensation is to be calculated on the basis of actual loss caused by the Government, then the difference between the sale value fetched in the re-auction and the sale value fetched in the original auction and the earnest money deposit of the petitioner are also liable to be accounted for. 7. Therefore, I am of opinion that from the amount of Rs.90,283/-, an amount of Rs.68,884/- consisting of the excess sale price fetched in the re-auction and the earnest money deposit have to be duly adjusted. Adjusting that amount, the balance due from the petitioner would be Rs.21,339/-. The petitioner shall pay that amount within one month from the date of receipt of a copy of this judgment as agreed by the petitioner. The original petition is disposed of as above. S. SIRI JAGAN, JUDGE Acd O.P.No.20199/1997 5