STATE OF KARNATAKA ETC. vs SHRI RAMESHWARA RICE MILLS THIRTHAHALLI ETC.

The Supreme Court held that under Clause 12 of the agreements, the right to assess damages for breach arises only if the breach is admitted or unchallenged. The Court clarified that the State, as a party to the agreement, cannot adjudicate on the breach itself, as a party cannot be an arbiter in its own cause. Consequently, the assessment of damages must be conducted by an independent body, and the recovery of such damages as arrears of land revenue is not permissible if the breach is disputed. The appeals by the State were dismissed, upholding the High Court's decision.