Hon’ble Amitava Lala, J.—The petitioner, which is a registered firm, entered into a contract on 10th May, 2009 with the National Highways Authority of India (hereinafter in short called as the ‘’authority’) as a collecting entity for collection of user fees at Km. 351.500 (Anantram Toll Plaza) for Km. 321.100 to Km. 393.000 on Etawah-Sikandra (Kanpur Dehat) Section of National Highway No. 2, for a period of one year or for the extended period, if any.

2. By means of this writ petition, the petitioner wants to get an order quashing the impugned notice dated 1st July, 2010 issued by the authority, respondent No. 1 herein, inviting tenders for collection of user fees on the aforesaid toll plaza and also prayed for a direction upon the respondent No. 1 to release certain amount for the purpose of payment of salary/wages to the employees of the petitioner firm since January, 2010 till the continuance of agency of the petitioner firm. By an amendment dated 13th September, 2010 the petitioner has incorporated two other prayers, which are as follows:

“(v) To declare the imposition of penalty illegal, arbitrary and unlawful.

(vi) To command the Respondents to release to a sum of Rs. 78,46,857/- withheld as penalty.”

3. By an interim order dated 18th February, 2011 passed by a Division Bench of this Court, the admitted amount of Rs. 18,70,852/- was directed to be paid by the respondent authority to the petitioner and, according to the parties, it has already been paid. Now the petitioner’s contention is that the penalty which has been imposed by the respondent authority upon it for a sum of Rs. 78,46,857/-, which according to the respondent-authority is Rs. 72,50,795/-, is arbitrary in nature. According to the petitioner, the respondent-authority has given a chart at page 8 of its counter-affidavit, from which it would be apparent that since certain amount of fees was not collected by the petitioner, even then penalty has been imposed upon it. The petitioner has relied upon Section 74 of the Indian Contract Act, 1872 (hereinafter in short called as the ‘’Contract Act’) to establish that the penalty can be claimed, at best, double the amount of the claim, particularly in view of the Illustrations (a), (d) and (e) under such section. Section 74 of the Contract Act with Explanations and Illustrations (a), (d) and (e) are quoted below:

“74. Compensation for breach of contract where penalty stipulated for.—When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.

Explanation.—A stipulation for increased interest from the date of default may be a stipulation by way of penalty.

Explanation.—When any person enters into any bail-bond, recognizance or other instrument of the same nature, or, under the provisions of any law, or under the orders of the Central Government or of any State Government, gives any bond for the performance of any public duty or act in which the public are interested, he shall be liable, upon breach of the condition of any such instrument, to pay the whole sum mentioned therein.

Explanation.—A person who enters into a contract with Government does not necessarily thereby undertake any public duty, or promise to do an act in which the public are interested.

Illustrations

(a) A, contracts with B, to pay B, Rs. 1,000, if he fails to pay B, Rs. 500 on a given day. A, fails to pay B, Rs. 500 on that day. B, is entitled to recover from A, such compensation, not exceeding Rs. 1,000 as the Court considers reasonable.

(b) ... .... ....

(c) ... .... ....

(d) A, gives B, a bond for the repayment of Rs. 1,000 with inte