#Section 74 Indian Contract Act

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.

Delhi High Court confirmed that a seller may retain only the expressly stipulated earnest-money amount, rejecting forfeiture of the full ₹17.5 million paid. The ruling limits Section 74 ICA to penal clauses and excludes later part-payments, urging parties to define earnest money separately.

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.

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.

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.