In a Nutshell – ‘Law of Damages in India’ – By Devul Dighe

Damages are basically compensation payable to aggrieved person/party for breach of contract by other person/party and loss suffered thereby.

In commercial arena, there are numerous contracts which contain provisions for compensation and/or damages and/or penalty payable for breach of Contract.

Under Indian Law, in particular under Indian Contract Act, 1882 (Contract Act) penalty in not recoverable and hence clauses drafted in the nature of penalty are redundant.

With respect to compensation or what is popularly known as “Damages”, the same may be quantified or unquantified. Hence there are two kinds of Damages:-

THE ESSENTIAL CONDITIONS TO BE SATISFIED FOR AWARD OF DAMAGES:-

IMPORTANT LEGAL PRINCIPLES:-

*In case of liquidated damages, the court in no circumstances award amount bigger than amount specified in contract.

*Even if there is breach of contract but no loss is suffered by party, no damages can be awarded by Courts.

*If party aggrieved does not take reasonable steps to mitigate losses, then such party is not entitled to damages to the extent loss suffered due to such neglect.

MYTHS ABOUT DAMAGES UNMASKED:-

* The same is irrespective of the clauses of the contract as no contract can override the provisions of law.

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Devul Dighe is a practising advocate appearing for Resolution Professionals and other Professionals in National Company Law Tribunals. Mr. Dighe also handles Insolvency Applications apart from other property, consumer, testamentary, trust matters and other commercial litigation matters. Mr. Dighe obtained his LLB as well as his LLM degree from University of Mumbai. You can reach him at advdevul@gmail.com.

Disclaimer: The views or opinions expressed are solely of the author.