#liquidated damages

The Delhi High Court held that forfeiture of earnest money under an Agreement to Sell is not automatic; the party retaining the deposit must prove actual legal injury and quantifiable loss under Section 74 of the Indian Contract Act. The court distinguished the K.R. Suresh precedent, ruling it inapplicable to simple recovery suits, thereby strengthening a vendee's right to recover earnest money absent proven damages.

CESTAT held that airline cancellation fees are liquidated damages, not a separate service taxable under Section 66E(e) Finance Act 1994. The ruling exempts airlines from paying service tax on penal charges, affecting carriers and passengers.

Delhi High Court ruled Section 34 challenges to international commercial arbitral awards are limited to patent illegality, rejecting waiver-of-timeline arguments. The decision narrows judicial interference, reinforcing finality of cross-border awards. Parties must rely on these narrow grounds.

Bombay High Court rules that post-award interim protection under Section 9 of the Arbitration Act is exceptional and requires 'rare compelling circumstances'. The court allowed continuation of bank guarantees pending Section 34 challenge, reinforcing security interests in public utility contracts despite arbitral award directions.

Bombay High Court permits continuation of bank guarantees under Section 9 of the Arbitration Act post-award, where liquidated damages claims remain unresolved pending Section 34 challenges. The ruling underscores the need for security in public utility contracts, reconciling conflicting precedents on Section 74 of the Indian Contract Act.

Bombay High Court rules that continuation of post-award interim protection, such as a bank guarantee, under Section 9 of the Arbitration Act demands proof of 'exceptional circumstances'-not merely an arguable challenge to the award. The judgment reinforces the binding nature of consent terms and mandates full disclosure in discretionary proceedings, limiting the scope of post-award relief for parties seeking to extend interim measures.

The Bombay High Court upheld an arbitral award where the tribunal awarded Rs. 8.17 crores for risk purchases through reasoned approximation, not precise computation, affirming that Section 34 does not demand mathematical exactitude. This clarifies that parties and tribunals may rely on logical, evidence-based estimates in complex commercial disputes, reducing the risk of awards being set aside on technical grounds.

The Bombay High Court has ruled that ship-or-pay obligations under gas transportation agreements constitute enforceable contractual debt, not penal liquidated damages, meaning payment is due regardless of actual loss. This affirms the commercial certainty of take-or-pay clauses and impacts energy infrastructure contracts nationwide, especially for shippers and pipeline operators relying on fixed revenue streams.

Karnataka High Court rules that liquidated damages under Section 74 of the Indian Contract Act are enforceable without proof of actual loss if the sum represents a genuine pre-estimate of damages, reinforcing contractual certainty in commercial disputes. The ₹15 crore award stands despite the breaching party's failure to dispute key factual claims.

Bombay High Court rules that a strong prima facie case under a liquidated damages clause overrides a respondent's financial recovery claims, mandating interim security via bank guarantee. The ruling reinforces that arbitral tribunals retain discretion to order interim measures under Section 17 of the Arbitration and Conciliation Act where contractual breaches are evident, even if the respondent disputes liability.

Bombay HC enforces an ICC award governed by Qatari law, holding that Indian public policy does not override parties' choice of foreign law for damages, including both liquidated and unliquidated claims. The ruling clarifies the scope of enforceability of foreign awards in commercial disputes with international elements.

Delhi High Court rules that Price Reduction Schedule clauses in commercial contracts qualify as genuine pre-estimates of loss under Section 74 of the Contract Act, binding parties without requiring proof of actual damage. The judgment reinforces that Section 34 challenges cannot reopen factual findings where parties have explicitly agreed to liquidated damages terms.

The CESTAT holds that compensation for underutilized manufacturing capacity is not consideration for a declared service under Section 66E(e) of the Finance Act, 1994, as no independent obligation to tolerate or refrain exists.

Supreme Court rules that in public utility projects, proof of actual loss is not required for awarding liquidated damages under Section 74 of the Indian Contract Act.

Delhi High Court upholds Rs.25 lakh liquidated damages under arbitration award, clarifying that proof of actual loss is not required if parties agreed to genuine pre-estimate in contract.