AIR 1987 SUPREME COURT 1257 ::1987 SCFBRC 126 ::(1987) 1 Supreme 370 ::(1987) 2 ComLJ 98 ::(1987) MahLR 1067 ::1987 2 SCC 423 ::1987 (1) SCC 183 ::1987 UJ(SC) 1 79 ::1987 2 UJ (SC) 105 ::(1987) 2 All RentCas 256 ::1987 (2) SCC 424 ::(1987) 100 Mad LW 1114 ::(1987) 1 CurCC 216 ::1987 MPRCJ 110 ::(1987) 1 Ker LT 753 ::(1987) 1 Kant LJ 186 ::(1987) 1 RenCR 276 ::(1987) 1 RentLR 105 ::(1987) 1 SCJ 686 ::(1987) 2 SCJ 257 ::1987 2 SCJ 257 ::(1987) 1 RenCJ 62 ::1987 (1) Supreme 370 ::(1986) 4 Supreme 294 ::(1987) 2 CurLJ(CCR) 166.2 ::(1987) 2 CurLJ(CCR) 166.1 ::(1986) JT 1028 (SC) ::(1987) 2 JT 53 (SC) ::1987 3 JT 53

Supreme Court Of India

(From : AIR 1972 Ker 21)

Hon'ble Judge(s): V. Khalid, G. L. Oza , JJ

Contract Act (9 of 1872) , S.74— Contractual agreement - Particular stipulation whether penal in nature - Determination of - Factors to be considered by Court. AIR 1972 Ker 21, Reversed. The question whether a particular stipulation in a contractual agreement is in the nature of a penalty has to be determined by the Court against the background of various relevant factors, such as the character of the transaction and its special nature, if any, the relative situation of the parties, the rights and obligations accruing from such a transaction under the general law and the intention of the parties in incorporating in the contract the particular stipulation which is contended to be penal in nature. If on such a comprehensive consideration, the Court finds that the real purpose for which the stipulation was incorporated in the contract was that by reason of its burdensome or oppressive character it may operate in @page-SC1258 terrorem over the promisor so as to drive him to fulfil the contract, then the provision will be held to be one by way of penalty. AIR 1972 Ker 21, Reversed.(Para 5) Where a contract provides for payment of money in instalments and contains also a stipulation that on default being committed in paying any of the instalments the whole sum shall become payable at once,....