Contract and Law : An Interesting View of Supreme Court
An important view on issue of law of contract was stated by Hon'ble Supreme Court on 19 August 1969.
In the context of Indian Contract Act, 1872, it has been noted at page 6 of Maula Bux v Union of India [1969] GCtR 2836 (SC) thus : -
"Forfeiture of earnest money under a contract for sale of property-movable or immovable--if the amount is reasonable, does not fall within s. 74."
"But if forfeiture is of the nature of penalty, s. 74 applies. Where under the terms of the contract the party in breach has undertaken to pay a sum of money or to forfeit a sum of money which he has already paid to the party complaining of a breach of contract, the undertaking is of the nature of a penalty."
Kindly note that full text Judgments of Hon'ble Supreme Court can be downloaded absolutely free of cost (without any charges except internet data) from the official website at the link
https://main.sci.gov.in/judgments
Then entering the date of Judgment, for example, as 19 August 1969.
Written by
Vishal
Delhi
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