M/S CONSTRUCTION & DESIGN SERVICES vs DELHI DEVT.AUTH.

The Supreme Court addressed the issue of liquidated damages under contract law, specifically examining the distinction between liquidated damages and penalties as per Section 74 of the Indian Contract Act, 1872. The Court held that the burden of proof lies on the party alleging that the stipulated damages constitute a penalty, and that in the absence of evidence of actual loss, the stipulated amount may still serve as a measure of compensation. The appeals were dismissed, affirming the High Court's decision to uphold the compensation levied by the Delhi Development Authority.