Pratibha Bonnerjea, J. - (1.) THE long history of this case is as follows:-- THE petitioner entered into a contract with the respondent for purchase of abandoned fertiliser plants for Rupees 40,02,500/- on "as is where is'' basis pursuant to respondent's invitation to tender No. 14/80 dated 30-5-1980. THE terms of the said contract are contained in the petitioner's offer dated 23-5-1980 and the respondent's letter of acceptance dated 30-5-1980. By this letter, the respondent (hereinafter referred to as the FCI) admitted having received Rs. 5,00,000/-from the petitioner by way of earnest money. THE petitioner was to pay Rs. 5,00,00,000/- by way of security deposit. By this letter of acceptance, the FCI adjusted this aforesaid earnest money against the said security and directed the petitioner to pay the balance Rs. 45.00.000/- within 15 days in the manner as follows:-- (1) Rs. 5,00,000/- by crossed bank draft. (2) Rs. 40,00,000/- by unconditional and irrevocable bank guarantee.
(2.) PURSUANT to the said letter, the petitioner furnished one bank guarantee for Rs. 4,00,00,000/- through the Punjab and Sind Bank on 11-6-1980 and paid Rs. 5,00,000/- in cash on 12-6-80. On 7-7-80 the FCI issued a sale letter in favour of the petitioner which provided that all the general terms and conditions of sale as specified in the tender document subject to agreed amendment/modification on the basis of the discussions on 20/21/-3-1980 and 9/5/1980, would govern the transaction. The modified terms arrived at on 20/21-3-1980 and 9-5-1980 would appear from the minutes of the said two meetings which form part of this sale letter. The two important variations which were made are as follows :-- 1. That the weights of plants indicated in the notice inviting tender were inclusive of weights of the foundations and those weights should be treated as deleted and the weights should be treated as approximate weights. 2. Dismantling and lifting of the plants should be completed within 18 months from the date of acceptance of petitioner's offer. The entire payment of the price to be made to the FCI by equal monthly instalments within 12 months time. The value of the goods lifted by the petitioner should not be more than the payment of quarterly instalments and this would be assessed by the FCI and the assessment will be binding on the petitioner. The said sale order also contains a dismantling schedule which shows the sequence in which different plants have to be dismantled and removed by the petitioner in four instalments. It appears that the net effect of these modifications is that the FCI agrees to accept purchase price in four equal instalments as also to give delivery of the plants in four instalments. The petitioner will be entitled to lift the goods after FCI will assess the proportionate value of the goods to see that it may not exceed the amount of instalment paid. This agreement was challenged by the Workers' Union of the FCI and it obtained an order of stay from the Supreme Court on 25-8-1980. The said petition was, ultimately dismissed on 13-11-1980.
(3.) ON 2-12-1980 the petitioner paid the first instalment of Rs. 1,00,06,250/- and Rs. 4,00,250/- on account of sales tax and prayed for permission to lift the first lot of the plants mentioned in the dismantling schedule of the sale letter. The FCI allowed the petitioner to remove the Ammonia plants as per dismantling schedule on 5-12-80. The dismantling, however, could not be completed due to local labour trouble which started on 7-2-81. Faced with this situation, the petitioner prayed for rearrangement of payment up to 29-3-1981. ON 27-3-1981, the ON 9-3-81 the FCI granted extension of time for payment of the second instalment up to 29-3-1981. ON 27-3-1981, the petitioner however, requested the FCI to extend the period up to 28-4-1981 and alleged that the FCI did not allow the petitioner to lift the entire Ammonia plant although 9 months had elapsed. ON 31-3-1981 the petitioner paid to the FCI another sum of Rs. 50,000,000/- on the understanding that the FCI would allow the petitioner to lift the proportionate quantity of SWG plant mentioned in item No. 2 of the dismantling schedule of the sale letter. ON 23-4-1981, the FCI allowed the petitioner to remove the same. ON 30-4-1981, the petitioner paid to the FCI Rs. 50,06,000/- being the balance of the second instalment which was accepted by the FCI. Thereafter the FCI went on complaining about the poor performance of the contract by the petitioner and the petitioner went on complaining that the FCI did not allow removal of the entire goods from the factory premises. It appears from paragraph 10 (b) of the affidavit-in-opposition of the FCI filed in this proceeding that on 27-7-1981, the petitioner asked for further extension of time for payment of third instalments by six months and the period to complete the work by another two months. ON 9-10-1981 the FCI agreed to give three months extension for payment of the 3rd instalment from 31-7-1981 till 31-10-1981 on condition that the petitioner would pay interest on the said sum at the rate of 18%. By letter dated 12-10-1981 the petitioner complained that the FCI had given a very short extension after taking a long time and also disputed its right to claim interest. ON 4-1-1982, the FCI, at the request of the petitioner, gave further extension for payment of 3rd instalment for 12 days from the date of lifting of the lockout and reminded the petitioner that the 4th instalment must be paid within 3 months from the date of payment of the third instalment and in default of removal of the goods within 6 months from the date of lifting of the lockout, the FCI would charge 3% of the value of the unremoved goods in terms of Clause 4 of the sale letter. ON 2-2-1982, the FCI informed the petitioner that the removal of the parts of Ammonia plant and SWG plant would be stopped unless the petitioner would deposit with the FCI one crore with interest plus sales tax within one week. ON 27-3-1982 the FCI stopped removal of the materials and seized the gate passes. It appears that thereafter the FCI granted ertension for payment of 3rd instalment up to 30-6-1982 on payment of 18% interest by the petitioner from 17-1-82- The petitioner paid Rs. 25,00,000/- towards the third instalment on 28-6-82 and requested the FCI to allow them to remove proportionate value of goods but the FCI demanded full payment and informed the petitioner that Rs. 25,00,000/- paid would be ad-Justed against sales tax and interest. The petitioner disputed the FCI's right to adjust the money in the manner as aforesaid. The petitioner also complained, that in spite of the fact that the first instalment had been paid in full, the FCI did not allow the petitioner to dismantle and remove the entire Ammonia plant since 28-6-1982,;