JUDGMENT

ADARSH KUMAR GOEL, J.

1. Leave granted.

2. These appeals have been preferred against final judgment and order dated 10th February, 2012 in RFA(OS) No.35 of 2010 and dated 1st June, 2012 in R.P. No.369 of 2012 in RFA (OS) No.35 of 2010 passed by the High Court of Delhi at New Delhi.

3. The question raised for our consideration is when and to what extent can the stipulated liquidated damages for breach of a contract be held to be in the nature of penalty in absence of evidence of actual loss and to what extent the stipulation be taken to be the measure of compensation for the loss suffered even in absence of specific evidence. Further question is whether burden of proving that the amount stipulated as damages for breach of contract was penalty is on the person committing breach.

4. The respondent – Delhi Development Authority awarded a contract vide agreement dated 4th October, 1995 to the appellant for constructing a sewerage pumping station at CGHS area at Kondli Gharoli at Delhi. Clause 2 in the agreement provided as follows:

“the contractor shall comply with the said time schedule. In the event of the contractor failing to comply with this condition, he shall be liable t