IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.12391 of 2007 SURYA NATH MISHRA Versus FOOD CORPORATION OF INDIA &ORS ----------- 2. 24.06.2008 Heard learned counsel for the parties. The petitioner has filed the writ application for setting aside the order dated 4.5.2007 issued under the signature of the General Manager (R ), Food Corporation of India, Regional Office, Patna by which he terminated the contract of the petitioner with immediate effect and further ordered that Transporting Contract Work for the unexpired period of his contract will be got done at the petitioner’s risk and cost and losses of extra expenditure as a result thereof will be recoverable from him besides forfeiture of the security deposit. During the course of submission learned counsel for the petitioner has confined his grievance with respect to the later part by which it has been stipulated that the contract work would be got done and losses of extra expenditure as a result thereof will be recoverable from the petitioner and also with respect to forfeiture of the security money. Learned counsel for the petitioner fairly submits that the petitioner having failed to perform the contract in terms of the agreement entered between the parties, it was open to the Food Corporation of India to have rescinded and terminated the contract. However, he submits that the petitioner is not liable to a further - 2 - penalty of suffering the loss incurred by getting the contract executed by appointing another contractor. He further challenges the forfeiture of security deposit. Learned counsel for the Food Corporation of India, on the other hand, relies upon the provisions of Clause X of the Agreement dated 11.2.2006 (Annexure-A to the counter affidavit). According to him the stipulations contained in sub-clauses (a) and (b) of Clause X of the agreement justify the passing of the impugned order. The said provisions of the contract read as follows:- “X Summary Termination: (a) In the event of the contractors having been adjusted insolvent or going into liquidation or winding up their business or making arrangements with their creditors or failing to observe any of the provisions of this contract or any of the terms and conditions governing the contract, the Sr. Regional Manager shall be at liberty to terminate the contract forthwith without prejudice or any other rights or remedies under the contract and to get the work done for the unexpired period of the contract at the risk and cost of the contractors and to claim from the contractors any resultant loss sustained or costs incurred. (b) The Sr. Regional Manager shall also have without prejudice to other rights and remedies, the right, in the event of breach by the contractors of any of the terms and conditions of the contract to terminate the contract forthwith and to get the work done for the unexpired period of the contract at the risk and cost of the contractors and/or forfeit the security deposit or any part thereof for the sum or sums due for any damages, losses, charges, expenses or costs that may be suffered or incurred by the Corporation due to the contractor’s negligence or unwork-man like performance of any of the services under the contract.” It is evident from the said clause (a) of clause X of the agreement between the parties that after rescinding and terminating the contract for non-performance of the same, it was open to the Food - 3 - Corporation of India to provide for recovery of the losses and extra expenditures from the petitioner by getting the contract executed by another contractor. It is further provided in sub-clause (b) that the Corporation, in addition, may forfeit security deposit or any part thereof for the sum or sums due for any damages, losses, charges, expenses or costs that may be suffered or incurred by the Corporation due to the contractor’s negligence or unwork-man like performance of any of the services under the contract. The order dated 4.5.2007 itself states that apart from recovering the cost and loss of extra expenditure for getting the part of the contract done by another party, the security money was being forfeited under the provisions of Clauses IX and X of the agreement. In view of the reference to Clause X of the said agreement the last part of the impugned order is to be read as meaning that only the actual damages, losses, charges, expenses or costs that has been suffered or incurred by the Corporation due to the petitioner’s negligence or unwork-man like performance of any of the work under the contract can be recovered from the security money and thus the forfeiture of the security money would be confined only to that extent and not of the entire security money as apparently appears from the impugned order dated 4.5.2007. The writ application is accordingly partly allowed to the extent that the Corporation will be entitled to forfeit the security money only to the extent of the damages, losses, charges, expenses or - 4 - costs that had been suffered or incurred due to the petitioner’s negligence or unwork-man like performance of any of the services under the contract. S.Pandey (Ramesh Kumar Datta, J.)