LAW FOR ALL

sec.74 of contract Act- The scope of Section 74 has been the subject matter of several pronouncements of this Court including the Constitution Bench decisions in Fateh Chand v. Balkishan Das AIR 1963 SC 1405, Union of India v. Ramam Iron Foundry (1974) 2 SCC 231 and SAIL v. Gupta Brother Steel Tubes (2009) 10 SCC 63. The common thread that runs through all these pronouncements is that an aggrieved party is entitled to receive compensation from the party who has broken the contract whether or not actual damage or loss is proved to have been caused by the breach and that the Court has, subject to the outer limit of the penalty stipulated, jurisdiction to award such compensation as it deems reasonable having regard to the circumstances of the case. This would essentially be a mixed question of law and fact that a Writ Court could not possibly decide. The appellant could and indeed ought to have sought its remedies in a proper civil action if it questioned the reasonableness of the amount recoverable by the appellant in terms of the contractual stipulations.