TMI Blog2019 (2) TMI 2091X X X X Extracts X X X X X X X X Extracts X X X X ..... n implication of a contract to remunerate, and an express stipulation governing the relations between the parties under a contract, cannot be displaced by assuming that the stipulation is not reasonable. In Mulamchand v. State of M.P., [ 1968 (2) TMI 116 - SUPREME COURT ], this Court held that the provisions of Section 175(3) of the Government of India Act are mandatory in character and based on public policy. Therefore, the formalities that are stipulated when contracts are entered into on behalf of the Government cannot be waived or dispensed with. As has been correctly held by the impugned judgment, 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. The impugned judgment of the TDSAT upheld - appeal dismissed. - R.F. Nariman J And Vineet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is more than a year after grant of permission by Delhi and Mumbai units around March and April 2009. On going through the communication dated 01.06.2010, it is evident that the plea that respondents did not allow entry to the petitioner into their premises in Mumbai has been raised quite belatedly and does not appear to be correct and convincing. Hence, we find petitioner s case to be weak and unacceptable in so far as it puts the blame totally upon the respondent for its inability or failure to provide the last mile connectivity. No doubt there was some delay by the respondents at the initial stage but that alone cannot justify or absolve petitioner s total failure. 26. If we had reliable materials to find out the exact cost of providing the last mile connectivity at each of the two premises in Mumbai and Delhi, we would have reduced that much amount from the claim of the petitioner and allowed the rest. That would have served the interest of justice and prevented unjust enrichment of the petitioner. However, in absence of such reliable materials as to actual costs which the petitioner has saved by noncompliance with the requirements of paragraph 4(iv) of the P.O., we have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meruit under Section 70 of the Indian Contract Act, 1872 [ Contract Act ] would be permissible. Section 70 of the Contract Act reads as under: 70. Obligation of person enjoying benefit of nongratuitous act . Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered. This Section occurs in Chapter V of the Contract Act, which chapter is headed, of certain relations resembling those created by contract . There are five sections that are contained in this Chapter. Each of them is posited on the fact that there is, in fact, no contractual relationship between the parties claiming under this Chapter. For example, under Section 68, if a person incapable of entering into a contract is supplied necessaries by another person, then the person who has furnished such supplies becomes entitled to be reimbursed from the property of the person so incapable of entering into the contract. Section 69 also deals with a case where a person has no contractual rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 1947 Nag 84, a learned Single Judge of the High Court was dealing with an application by an eye-specialist of repute who wished to recover an amount of INR 188/- as the price of professional work, i.e., getting a cataract removed in accordance with an agreement with one Mt. Laxmibai and her son-in-law, Mohan Lal, by which agreement, the said operation was to be performed. An appeal to Sections 68 and 70 of the Contract Act was turned down in the following terms: 10. In the course of the argument, an appeal was made to the principles underlying Ss. 68 and 70, Contract Act, for making the husband liable. Indeed S. 68, deals with the supply of necessaries but that is in respect of a person incapable of entering into a contract or any one whom he is legally bound to support , i.e. the dependent of a person incompetent to contract. Indarchandji was not incompetent to contract and this section is inapplicable to him. As to S. 70, it must be observed that this section cannot be availed of by a person who relies on an express contract as the plaintiff alleged to have entered into with Mt. Laxmibai in this case. The husband never entered into the picture when the plaintiff settled th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st not intend to act gratuitously; and the third condition is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. If these conditions are satisfied, Section 70 imposes upon the latter person the liability to make compensation to the former in respect of, or to restore, the thing so done or delivered. The important point to notice is that in a case falling under Section 70 the person doing something for another or delivering something to another cannot sue for the specific performance of the contract, nor ask for damages for the breach of the contract, for the simple reason that there is no contract between him and the other person for whom he does something or to whom he delivers something. So where a claim for compensation is made by one person against another under Section 70, it is not on the basis of any subsisting contract between the parties but on a different kind of obligation. The juristic basis of the obligation in such a case is not founded upon any contract or tort but upon a third category of law, namely, quasi-contract or restitution (at pp. 221-222) 7. This judgment has been recently referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for. Explanation . A stipulation for increased interest from the date of default may be a stipulation by way of penalty. Exception . When any person enters into any bailbond, recognizance or other instrument of the same nature, or, under the provisions of any law, or under the orders of the Central Government or of any State Government, gives any bond for the performance of any public duty or act in which the public are interested, he shall be liable, upon breach of any condition of any such instrument, to pay the whole sum mentioned therein. Explanation . A person who enters into a contract with Government does not necessarily thereby undertake any public duty, or promise to do an act in which the public are interested. 11. In Kailash Nath Associates v. DDA , (2015) 4 SCC 136, after considering the case law on Section 74, this Court held: 43. On a conspectus of the above authorities, the law on compensation for breach of contract under Section 74 can be stated to be as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve on the total value of the concerned package of the Purchase Order. However, when supply is made within 21 days of QA clearance in the extended delivery period, the consignee may accept the stores and in such cases the LD shall be levied upto the date of QA clearance. 16.2 (b) FOR INSTALLATION COMMISSIONING Should the supplier fail to install and commission the project within the stipulated time the purchaser shall be entitled to recover 0.5% of the value of the purchase order for each week of delay or part thereof for a period upto 10 (TEN) weeks and thereafter @ 0.7% of the value of purchase order for each week of delay or part thereof for another 10 (TEN) weeks of delay. In cases, where the delay affects installation/commissioning of part of the project and part of the equipment is already in commercial use, then in such cases, LD shall be levied on the affected part of the project. 16.2 (c) . The Liquidated Damages, as per Clause 16.2 (a) and 16.2 (b) above shall be limited to a maximum of 12%, even in case the DP extension is given beyond 20 weeks. 16.3 . Provisions contained in Clause 16.2(a) shall not be applicable for durations (periods) which attract ..... X X X X Extracts X X X X X X X X Extracts X X X X
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