JUDGMENT

N. P. SINGH, J. - Leave granted.

2. Three appeals have been filed against the same judgment of the High Court by which the writ petition filed on behalf of the petitioners/respondents (hereinafter referred to as "the writ- petitioners") was allowed. The dispute related to the publication of the telephone directories of Mahanagar Telephone Nigam Limited, a Government of India Undertaking (hereinafter referred to as "the MTNL").

3. A new concept of yellow pages in the telephone directories was introduced by the MTNL/Department of Telecommunications. The yellow pages were to contain advertisements under different headings. The contractor who was to be awarded the contract for printing such directories was to collect the revenue from the advertisements in the yellow pages as well as in white pages of the telephone directory. The contractor was to print the directories and supply the same free of cost to the MTNL for its subscribers and had to pay royalty to the MTNL in connection with printing of such directories.

4. Tenders for publication of the directories for Delhi and Bombay were invited. Tender of the United India Periodicals Pvt. Ltd. (hereinafter referred to as "the UIP", the 2nd respondent to the wit petition and appellant in one of the appeals) was accepted and an agreement dated March 14, 1987 was executed. United Database (India) Pvt. Ltd. (hereinafter refereed to as "the UDI", the 3rd respondents to the writ petition and appellant in one of the appeals) is a subsidiary of UIP. Under the original agreement UIP was to publish directories every year for a period of five years from 1987 to 1991 for Delhi and Bombay separately and was to pay an amount of Rs. 20.16 crores as royalty to the MTNL and to supply the MTNL directories free of cost with reference to the number of subscribers. UIP was also furnished a performance guarantee for a sum of rupees one crore. UIP was also to supply the same number of supplementary directories which were to be published six months after the publication of the annual issue. The annual issue of the directory was to be published in November/December every year. UIP was given the exclusive right for procurement of the advertisements in the yellow pages as well as strips, bold and extra entire in the white pages. The rates of such advertisements were to be fixed by the UIP for each issue of the directory and such rates had to be printed for general information. It was also stipulated that if UIP committed nay default or breach of the terms and conditions of the agreement or failed in the due performance thereof within the time fixed (which was the essence of the contract), the MTNL shall be entitled to recover from the UIP by way of compensation or liquidated damages an amount calculated at the rate of rupees one lakh for every day or part thereof for the delay beyond the stipulated date in respect of the item which was not completed or finished and delivered completely to the MTNL on the stipulated date as mentioned in the contract. In view of Clause 22 of the agreement, the MTNL without prejudice to other rigs could by notice in writing determine the contract.

5. It is an admitted position that UIP defaulted and committed breach of the terms of the agreement inasmuch as directors for Delhi were published only for the years 1987 and 1988 and for Bombay only for the year 1987. For the year 1987, Delhi issue was published after a delay of seven months and that of Bombay after six months. So far Delhi issue of the directory for the year 1988 is concerned, it was published only in August 1990 after a delay of two year. Under the agreement UIP was to publish directories every year for Delhi and Bombay separately during the period of contract from 1987 to 1991. They were also required to publish supplementary directory each year for Delhi as well as Bombay. But there was no publication of directories for Delhi for the years 1989, 1990 and 1991. Similarly there was no publication of directo