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(c) The liability of the Accused company is less than the amount of the cheque in question:

33.It has been submitted by Ld. Counsel for Accused that the cumulative value of the cheque in question in the present complaint and in the connected case, i.e., CC No. 6788/2017 is Rs. 10,00,00,000/- and the liability of the Accused No. 1 company, if any, is not of the said amount. The fact that an agreement dt. 29.07.2016, i.e., Ex.

CW1/13 was executed between the parties is not disputed. The obligation of the Accused No. 1 company to supply 5200 MT of sugar by 28.02.2017 to the Complainant is not disputed. It is also not disputed that the Accused has only been able to supply only 1942.9 MT of sugar to the Complainant by the due date, i.e., Sainik Foods Pvt. Ltd. v. Indian Sugar Manufacturing Company Ltd. 28.02.2017. It is also not in dispute that the supply agreement Ex. CW1/13 has not been challenged by the Accused or any other party before any appropriate forum. The fact of execution of the cheque in question by the Accused company in favour of the Complainant is also undisputed. As set out above, only because the cheque has been issued with the intent of being a security cheque does not make it immune from the provisions of section 138 NI Act, if on the date of presentation of the cheque in question, liability of the Accused company existed towards the Complainant. As per the Complainant the total liability of the Accused company was Rs. 10,62,89,858/- on 28.02.2017, with Rs. 3,75,35,765/- being the principal amount due towards the Complainant, for which no sugar had been supplied; Rs. 1,95,42,600/- (being the penalty at the rate of Rs. 6,000/- per MT for non-supply of the sugar by the due date to the Complainant); Rs. 2,64,19,580/- (being the difference in price between the price of sugar to set out in the agreement and the market price, incurred by the Complainant due to non-supply of sugar by the Accused); Rs. 2,11,06,008/- (being the interest at the rate of Rs. 30 per MT per day), for the non-supply of sugar; and Rs. 16,85,905/- being the interest component. Hence, as per the Complainant, the liability for the different clauses of the agreement, which is triggered by the non-supply of the sugar, is more than the cumulative value of the present cheque in question and the cheque in the connected complaint, i.e., CC No. 6788/2017. Ld. Counsel for Accused persons has submitted that even if the arguments of the Complainant are accepted, the cheque in question Sainik Foods Pvt. Ltd. v. Indian Sugar Manufacturing Company Ltd. could not be used for the penalty clause, as the question of damages is to be decided only by a civil court. Hence, it has been submitted that a complaint u/s 138 NI Act can only lie to enforce payment under a bounced cheque if it is otherwise enforceable in civil law. Hence, as per Ld. Counsel for Accused, there is no power to enforce a penalty clause but only reasonable compensation can be granted, as per section 74 of the Indian Contract Act. Reliance in this regard is placed on the judgment of the Hon'ble Supreme Court in P. Mohan Das v. Shah Bros. Ispat Pvt. Ltd. (supra) and Fateh Chand v. Bal Kishan Das, AIR 1963 SC 1405. In this regard, it is seen that clause 2 of the supply agreement, Ex. CW1/13 stipulates a penalty of Rs. 6,000/- per MT, for non-delivered/supplied sugar. It is thus a clause that operates in terrorum (i.e., a penalty clause). This is also clear from the fact that apart from the penalty clause, interest on delayed delivery is also provided in clause 5 of the agreement and there is also entitlement to the difference in the market price of the sugar and the agreed price of sugar in case of non-delivery by the due date.

39.Hence, duty not to enforce the penalty clause but only to award reasonable compensation is statutorily imposed upon the court by section 74, Indian Contract Act, 1872. Thus, in case of breach of an agreement, a party is not entitled to recover the entire amount mentioned in the agreement as penalty but only to a reasonable compensation. Accordingly, since Ex. CW1/13 provides for different clauses for Sainik Foods Pvt. Ltd. v. Indian Sugar Manufacturing Company Ltd. interest on delayed delivery and payment of differential between the agreed price and the market price of the sugar, it appears that clause 2 is a penalty clause and the Complainant would be entitled to reasonable compensation, which will be capped at the penalty amount. Hence, to the extent of the penalty, i.e., Rs. 1,95,42,600/-, there does not appear to be a legally enforceable liability as on date of presentation of the cheque, since the question of penalty becomes subject to adjudication by a competent civil court.