Contractual Damages: Kailash Nath Associates v Delhi Development Authority

Abstract

The Supreme Court judgement, Kailash Nath Associates v. Delhi Development Authority consolidates the law on award of liquidated damages and stipulations on penalties. Contractual damages are to cover losses and not to profit from it or penalise the party in breach. Stipulated amounts in damages or penalties are appraised by the courts and only a reasonable compensation given. Earnest money, and its forfeiture, stood distinct. It could be forfeited without appraisal. The case integrates the different categories and re-states the principles for award of damages.