AIR 2019 SUPREME COURT 1233 ::2019 (2) KCCR SN 83 (SC) ::(2019) 2 CivilCourtC 810 ::2019 (5) SCC 341 ::(2019) 2 RecCivR 321 ::(2019) 3 Scale 864

Supreme Court Of India

Hon'ble Judge(s): Rohinton Fali Nariman, Vineet Saran , JJ

Contract Act (9 of 1872) , S.70, S.73, S.74— Breach of contract - Recovery of money and interest - Clauses of purchase order between parties stipulating liquidated damages in case of default @12% of purchase value - Since dispute arising out of breach of contract - Matter will be governed by S. 74 and not by S. 70. S. 73 makes clear that damages arising out of a breach of contract is treated separately from damages resulting from obligations resembling those created by contract. When a contract has been broken, damages are recoverable under paragraph 1 of Section 73. When, however, a claim for damages arises from obligations resembling those created by contract, this would be covered by paragraph 3 of Section 73. The present case is really covered by Section 74 of the Contract Act, which occurs in Chapter VI, which is headed, 'of the consequences of breach of contract'. A maximum of 12% can be levied as liquidated damages under the contract, which sum would amount to a sum of INR 25 lakh. Since this clause governs the relations between the parties, obviously, a higher figure, contractually speaking, cannot be awarded as liquidated damages, which are to be considered as final and not challengeable by the supplier. This being the case, the appellant can claim only this sum. Anything claimed above this sum would have to be refunded to the respondent.(Para 9 ....