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of <h1>Appeal partially allowed in money recovery suit with price difference upheld but liquidated damages penalty set aside</h1> <h3>Fertilizer Corporation of India Limited Versus Coromandal Sacks Private Limited and (vice-versa)</h3> Fertilizer Corporation of India Limited Versus Coromandal Sacks Private Limited and (vice-versa) - TMI Issues involved:1. Price difference for 33,000 and 9,000 bags.2. Claim for Rs. 1,18,000/- towards loss on 25,000 bags.3. Awarding of liquidated damages of Rs. 1,63,471/-.4. Deduction of Rs. 4,89,919/- as penalty.5. Entitlement to interest @ 24% per annum.Detailed Analysis:1. Price difference for 33,000 and 9,000 bags:The plaintiff, a small-scale industry manufacturing HDPE sacks, supplied bags to the defendant, a fertilizer manufacturing unit. The plaintiff contended that they supplied 33,000 bags under clause 8 of the tender document and 9,000 bags based on oral agreements with the defendant. The defendant regularized the supply at Rs. 8.75 per bag, which the plaintiff disputed, claiming the agreed rates were Rs. 10.25 and Rs. 9.45 per bag respectively. The court found the plaintiff's claim valid, awarding the price difference of Rs. 55,710/-.2. Claim for Rs. 1,18,000/- towards loss on 25,000 bags:The plaintiff claimed they printed 25,000 bags based on the defendant's instructions but the defendant refused to take delivery after receiving a consignment from another supplier. The plaintiff sold these bags as scrap at 50% of the cost, incurring a loss of Rs. 1,18,000/-. The court upheld the plaintiff's claim based on oral and documentary evidence, awarding Rs. 1,18,000/-.3. Awarding of liquidated damages of Rs. 1,63,471/-:The defendant deducted Rs. 1,63,471/- as liquidated damages for delayed supplies. The plaintiff admitted to some delays but disputed the amount. The court found that the plaintiff failed to confront the defendant's evidence effectively and upheld the defendant's claim for liquidated damages.4. Deduction of Rs. 4,89,919/- as penalty:The defendant imposed a penalty for deficiencies in the quality of bags supplied. The plaintiff argued that the bags met the average breaking load strength as per the tender specifications and that the penalties were imposed without proper notice. The court agreed with the plaintiff, noting that the defendants used the bags without rejecting them and imposed penalties without proving actual damage. The court set aside the penalty deduction.5. Entitlement to interest @ 24% per annum:The plaintiff, covered under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, claimed interest for delayed payments. The court found the plaintiff entitled to compound interest at 24% per annum from 16.07.1994 till realization, modifying the trial court's award of 12% interest.Conclusion:The appeals were allowed in part. The court upheld the deduction of Rs. 1,63,471/- towards liquidated damages but awarded the plaintiff the price difference for 42,000 bags, loss on 25,000 bags, and set aside the penalty of Rs. 4,89,919/-. The plaintiff was entitled to compound interest at 24% per annum from 16.07.1994 till realization.
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