{"id":250913,"date":"2021-07-14T15:30:43","date_gmt":"2021-07-14T10:00:43","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=250913"},"modified":"2021-10-21T12:20:10","modified_gmt":"2021-10-21T06:50:10","slug":"the-legitimate-interest-test-uk-on-the-enforceability-of-liquidated-damages-clauses-and-its-implications-for-indian-law","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2021\/07\/14\/the-legitimate-interest-test-uk-on-the-enforceability-of-liquidated-damages-clauses-and-its-implications-for-indian-law\/","title":{"rendered":"The Legitimate Interest Test (UK) on the Enforceability of Liquidated Damages Clauses and its Implications for Indian Law"},"content":{"rendered":"

Commercial contracts stipulate liquidated damages1<\/sup> as a standard remedy for breach. The liquidated damages clause comes in a variety of forms, like provisions for payment or forfeiture of stipulated sums, formulae for determination, directions for compulsory transfer of property.2<\/sup> Lawyers design these clauses to meet contract-specific requirements. Determination of damages falls within the natural domain of judicial assessment, being a matter to be tried and decided based on the evidence adduced. In this light, permitting the contracting parties to agree upon the damages in the contract implies an inroad into the judicial function. Common law jurisdictions, therefore, treat liquidated damages as a justiciable issue and the freedom of contract is far from absolute.<\/p>\n

 <\/p>\n

In common law jurisdictions, such as the United Kingdom, Australia, New Zealand, Singapore, courts have been exercising substantive judicial review over these clauses, with a view to ensure that the award of damages is restricted to fair compensation for losses suffered. Commonwealth nations, like India and Malaysia, which have codified contract law, have statutory provisions that achieve the same effect.3<\/sup> Civil law jurisdictions, such as France, Italy and Germany, despite their avowedly limited review of liquidated damages provisions4<\/sup>, empower courts to grant a reduced amount towards damages if the liquidated damages clause stipulate a sum found to be manifestly excessive.5<\/sup><\/p>\n

 <\/p>\n

In 2015, the United Kingdom Supreme Court (\u201cUKSC\u201d) broke new ground in Cavendish Square Holding BV<\/em> v. Makdessi<\/em>6<\/sup> (\u201ccavendish\u201d). The vintage position on liquidated damages, based on its contradistinction with penalties, was crystallised by the Lord Dunedin of the House of Lords in Dunlop<\/em>7<\/sup> in 1915. The UKSC in Cavendish<\/em>6<\/sup> found the Dunlop<\/em>7<\/sup> tests to be inadequate to deal with liquidated damages clauses in modern commercial contracts. The Court found that the Dunlop<\/em>7<\/sup> tests were meant for assessing ordinary damages, and could no longer be considered apposite to deal with liquidated damages clauses of a more complex variety found in contemporary contracts. For the modern contracts, the UKSC devised a novel test viz. a provision for liquidated damages deserves to be enforced provided that the detriment imposed is not out of all proportion to the legitimate commercial interests the aggrieved party has in the enforcement of the primary obligations under the contract.8<\/sup><\/p>\n

 <\/p>\n

This revolutionary test has been applied in subsequent decisions in the United Kingdom. Moreover, common law jurisdictions, like Australia, New Zealand, Singapore and Malaysia, have applied the Cavendish<\/em>6<\/sup> formulation in a variety of fact-situations. A wealth of judicial and academic discussion on the subject has, thus, been generated over the last five years across the world. However, superior courts in India have not had an occasion to effectively deliberate upon the new test yet.9<\/sup> This essay seeks to appreciate the contours of the \u201clegitimate interest<\/em>\u201d test developed in the United Kingdom, study its application through various rulings handed down by courts globally, and explores the possibility of the assimilation of the \u201clegitimate interest<\/em>\u201d test in Indian law and the common law jurisdictions in general.<\/p>\n

 <\/p>\n

THE \u201cLEGITIMATE INTEREST\u201d TEST AND ITS APPLICATION IN THE UNITED KINGDOM<\/strong><\/span><\/p>\n

    \n
  1. The Dunlop<\/em>10<\/sup> Tests (1915)<\/strong><\/span><\/li>\n<\/ol>\n

    In Dunlop<\/em>10<\/sup>, the House of Lords crystallised the legal position on liquidated damages in the form of four tests11<\/sup> designed to distinguish valid liquidated damages provision from one attracting the vice of being in the nature of penalty and hence unenforceable:<\/p>\n

    (a<\/em>) If the sum stipulated is extravagant and unconscionable in comparison with the greatest loss arising from the breach that could conceivably be proved, then the clause is in the nature of a penalty.<\/p>\n

    (b<\/em>) If the breach complained of is non-payment of an amount and the clause in question stipulates payment of a greater amount as a remedy, then the clause will be treated as penalty.<\/p>\n

    (c<\/em>) There is a presumption that the clause amounts to a penalty, when a single lumpsum amount is directed to be paid by way of remedy for the breaches which consist of one or more or all of several events, some of which may occasion serious and others trifling damage.<\/p>\n

    (d<\/em>) If it is impossible to pre-estimate the quantum of damages, then it is probable that the amount named in the clause is a genuine pre-estimate of damages and, hence, a valid liquidated damages clause.<\/p>\n

    \n

    READ COMPLETE ARTICLE HERE<\/a><\/h2>\n

    \u2014\u2014\u2014<\/p>\n

    *The article has been published with kind permission of Eastern Book Company. Cite as (2021) 2 SCC J-37<\/a><\/strong><\/p>\n

    \u2020<\/sup> BA, LLB (Hons.), NLSIU, Bangalore and Advocate, Bombay High Court. The author thanks Mr Arvind P. Datar, Senior Advocate, for his guidance and comments on a previous draft of this piece.<\/p>\n

    1<\/sup> \u201cLiquidated damages\u201d refers to the stipulated and agreed damages provided for in a contract as and by way of compensation for the breach of a significant or material nature.<\/p>\n

    2<\/sup>Ewan McKendrick<\/em> (Ed.), Goode on Commercial Law<\/em> (5th Edn.) 134-5 (London, UK: Penguin, 2016). Usually, the transfer of shares, debentures, etc. is specified as compensation by way of liquidated damages.<\/p>\n

    3<\/sup> The Indian Contracts Act, 1872<\/a> (Section 74<\/a>) and the Malaysian Contracts Act, 1950 (Section 75).<\/p>\n

    4<\/sup> M. Berger, \u201cDamages and International Contract Law\u201d, 4 IBLJ 427-443 (2004).<\/p>\n

    5<\/sup> M. Armandola, \u201cLiquidated Damages in International Arbitration\u201d, 2 IBLJ 2013 99-107; Ugo Draetta et al, \u201cLiquidated Damages and Penalty Clauses in International Trade Practice\u201d, 3 IBLJ 1993 261-272; M. Pargendler, \u201cThe Role of the State in Contract Law\u201d, 43 Yale J Int’l Law 143 (2018); L, Miller, \u201cPenalty Clauses in England and France\u201d, ICLQ 2004, 53(1), 79-106; P. Rosher, \u201cDelay analysis in international construction projects: a comparative study in English and French law\u201d, 6 IBLJ 427-443 (2014).<\/p>\n

    6<\/sup>[2016] A.C. 1172<\/a> : 2015 UKSC 67<\/a> (\u201cCavendish\u201d) (Seven-Judge Bench). The UKSC was deciding two distinct appeals in this case:<\/p>\n

    (i) Cavendish Square Holding BV<\/em> v. Makdessi<\/em> and<\/p>\n

    (ii) ParkingEye<\/em> v. Beavis<\/em>. They are collectively referred to in this Article as \u201cCavendish\u201d.<\/p>\n

    7<\/sup>Dunlop Pneumatic Tyre Co. Ltd.<\/em> v. New Garage & Motor Co. Ltd.<\/em>, [1915] A.C. 79<\/a> (HL) (Four-Judge Bench) (\u201cDunlop\u201d).<\/p>\n

    8<\/sup>Cavendish Square Holding BV<\/em> v. Makdessi<\/em>, [2016] A.C. 1172<\/a> : 2015 UKSC 67<\/a> (\u201cCavendish\u201d) (Seven-Judge Bench), per Lord Neuberger of Abbotsbury and Lord Sumption. This test is referred to hereinafter variously as \u201cthe Cavendish test\/formulation\u201d and \u201cthe legitimate interest test\u201d.<\/p>\n

    9<\/sup> The only Indian ruling referring to Cavendish, [2016] A.C. 1172<\/a> : 2015 UKSC 67<\/a> is the Madras High Court judgment in Electronics Corpn. of T.N. Ltd.<\/em> v. ICMC Corpn. Ltd.<\/em>, 2020 SCC OnLine Mad 244<\/a> (para 19), wherein the Court merely cited certain stray sentences from the Cavendish, [2016] A.C. 1172<\/a> : 2015 UKSC 67<\/a> ruling and did not elaborate on either the judgment or its effect on the Indian law on the subject.<\/p>\n

    10<\/sup>Dunlop Pneumatic Tyre Co. Ltd.<\/em> v. New Garage & Motor Co. Ltd.<\/em>, [1915] A.C. 79<\/a> (HL) (Four-Judge Bench) (\u201cDunlop\u201d), at pp. 87-88.<\/p>\n

    11<\/sup> These four tests were founded on previous rulings viz. Kemble<\/em> v. Farren<\/em>, (1829) 6 Bing 141 : 130 ER 1234; Commr. of Public Works<\/em> v. Hills<\/em>, [1906] A.C. 368<\/a> (PC); Webster<\/em> v. Bosanquet<\/em>, [1912] A.C. 394<\/a> (PC); Clydebank Engg. & Shipbuilding Co. Ltd.<\/em> v. Don Jose Ramos Yzquierdo Y. Castaneda<\/em>, [1905] A.C. 6 (HL), inter alia.<\/p>\n

    12<\/sup> The more important ones amongst these are: Bridge<\/em> v. Campbell Discount Co. Ltd.<\/em>, [1962] A.C. 600<\/a> : [1962] 2 WLR 439 (HL), Ariston SRL<\/em> v. Charly Records<\/em>, 1990 WL 753432 (CA); Murray<\/em> v. Leisureplay<\/em>, 2005 EWCA Civ 963 (CA); CMC Group Plc.<\/em> v. Zhang<\/em>, 2006 EWCA Civ 408 (CA); Lansat Shipping Co. Ltd.<\/em> v. Glencore Grain BV<\/em>, 2009 EWCA Civ 855 (CA).<\/p>\n

    13<\/sup> The Cavendish, [2016] A.C. 1172<\/a> : 2015 UKSC 67<\/a> ruling is also debated for its inroads into the \u201crule against penalties\u201d in the United Kingdom. However, this aspect of the decision is not relevant for our purposes and hence, has not been elaborated here. Section 74<\/a> of the Contract Act, 1872<\/a> which deals with liquidated damages in India has done away with the distinction between damages and penalty. See: Fateh Chand<\/em> v. Balkishan Dass<\/em>, AIR 1963 SC 1405<\/a> (Five-Judge Bench).<\/p>\n

    14<\/sup> Id, 1247, para 152.<\/p>\n

    15<\/sup>Cavendish Square Holding BV<\/em> v. Makdessi<\/em>, [2016] A.C. 1172<\/a> at pp. 1247-48: 2015 UKSC 67<\/a>.<\/p>\n

    16<\/sup> Robert Elliot, \u201cPenalties: A Brief Guide to Three Revolutions\u201d, 32(6) Construction Law Journal 644-658 (2016).<\/p>\n

    17<\/sup> Lorna Richardson, \u201cCommercial justification for penalty clauses: the death of the old dichotomy?\u201d, 19(1) Edinburgh L Rev 119-124 (2015); William Day, \u201cA Pyrrhic Victory For the Doctrine Against Penalties\u201d, 2 Journal of Business Law 115-127 (2016); Bobby Lindsay, \u201cPenalty Clauses in the Supreme Court: a Legitimately Interesting Decision?\u201d, 20(2) Edinburgh L Rev 204-210 (2016); Mark Stamp, \u201cThe Penalty Rule in Corporate Contracts – Is it Offside?\u201d, 37(7) Company Lawyer 219-222 (2016).<\/p>\n

    18<\/sup> Solene Rowan, \u201cThe Legitimate Interest in Performance in the Law on Penalties\u201d, 78(1) Cambridge Law Journal 148-174 (2019); Mathias Cheung, \u201cShylock’s Construction Law: The Brave New Life of Liquidated Damages?\u201d, 33(3) Construction Law Journal 173-187 (2017); Prof. Larry DiMatteo, \u201cAn Examination of Judicial Reasoning – When A Penalty Is Not A Penalty\u201d, 85 Geo Wash L Rev 1846 (2017); Jonathan Morgan, \u201cThe Penalty Clause Doctrine: Unlovable But Untouchable\u201d, 75 Cambridge Law Journal 11 (2016).<\/p>\n

    19<\/sup> Solene Rowan, \u201cThe Legitimate Interest in Performance in the Law on Penalties\u201d, 78(1) Cambridge Law Journal 148-174 (2019). A similar view is expressed in Sam Cathro et al, \u201cNew Variations on the Rule Against Penalties: Options for New Zealand\u201d, 27 NZULR 1087 (2017).<\/p>\n

    20<\/sup>Ewan McKendrick<\/em> (Ed.), Goode on Commercial Law<\/em> (5th Edn.) 134-5 (London, UK: Penguin, 2016).<\/p>\n

    21<\/sup> Solene Rowan, \u201cThe Legitimate Interest in Performance in the Law on Penalties\u201d, 78(1) Cambridge Law Journal 148-174 (2019).<\/p>\n

    22<\/sup>(2016) 8 WLUK 293 (Court of Session – Inner House, Scotland) (Three-Judge Bench).<\/p>\n

    23<\/sup>2017 EWHC 350 (Ch) (High Court of Justice – Chancery Division).<\/p>\n

    24<\/sup>2017 EWHC 3288 (Comm) (High Court of Justice – QBD: Commercial Court).<\/p>\n

    25<\/sup>2017 EWHC 3397 (Ch) (High Court of Justice – Chancery Division).<\/p>\n

    26<\/sup> The increased rate applicable in case of default in this case was LIBOR + 10 %.<\/p>\n

    27<\/sup>2018 EWHC 2866 (Comm) (High Court of Justice – QBD: Commercial Court).<\/p>\n

    28<\/sup>2018 EWHC 402 (Ch) (High Court of Justice – Chancery Division).<\/p>\n

    29<\/sup> Since what was levied under the clause was the normal market rate, there was no question of it being exorbitant or unconscionable.<\/p>\n

    30<\/sup>2018 WL 02107059 (High Court of Justice – Chancery Division).<\/p>\n

    31<\/sup>2019 EWHC 476 (Comm) (High Court of Justice – Queen’s Bench Division).<\/p>\n

    32<\/sup> The increased rate applicable in case of default in this case was LIBOR + 12 %.<\/p>\n

    33<\/sup> Michael Furmston, \u201cRecent Developments about Penalties\u201d, 28 (1) NLSI Rev 18 (2016).<\/p>\n

    34<\/sup>2016 HCA 28 (Five-Judge Bench).<\/p>\n

    35<\/sup> Bruno Zeller, \u201cPenalty Clauses – What Has Changed?\u201d, 30 Pace Int’l L Rev 147 (2017).<\/p>\n

    36<\/sup>2017 WL 2730505 (Three-Judge Bench).<\/p>\n

    37<\/sup>2016 NSWCA 328 (Three-Judge Bench).<\/p>\n

    38<\/sup>2017 NZCA 152 (Three-Judge Bench).<\/p>\n

    39<\/sup>2019 NZCA 122 (Three-Judge Bench).<\/p>\n

    40<\/sup>2016 SGHC 77.<\/p>\n

    41<\/sup>Cavendish Square Holding BV<\/em> v. Makdessi<\/em>, [2016] A.C. 1172<\/a>, at p. 1216: 2015 UKSC 67<\/a>.<\/p>\n

    42<\/sup>2016 SGHC 144.<\/p>\n

    43<\/sup> GOH Yihan and Yip Man, \u201cEnglish Reformulation of the Penalty Rule: Relevance in Singapore\u201d, 29 Singapore Academy of Law Journal 257 (2017).<\/p>\n

    44<\/sup>(2019) 2 CLJ 723 (Malaysia) (Five-Judge Bench).<\/p>\n

    45<\/sup>2019 SCC OnLine MYCA 58<\/a> (Three-Judge Bench).<\/p>\n

    46<\/sup> Larissa Welmans et al, \u201cThe \u2018Interest\u2019 Based Penalty Tests in Paciocco and Cavendish\/Parkingeye and the Law of Penalties and Damages in Australia and the United Kingdom\u201d, 43(2) University of Western Australia Law Review 174 (2018).<\/p>\n

    47<\/sup> Jessica Palmer, \u201cImplications of the New Rule against Penalties\u201d, 47 Vict. U. Wellington L Rev 305 (2016).<\/p>\n

    48<\/sup> The Supreme Court of India is the highest Court in the country, charged with the constitutional mandate to lay down the law, under Article 141 of the Constitution of India.<\/p>\n

    49<\/sup>(2015) 4 SCC 136<\/a> (Two-Judge Bench).<\/p>\n

    50<\/sup> The Court relied on a host of precedents, prominent among them being (a) Fateh Chand<\/em> v. Balkishan Dass<\/em>, AIR 1963 SC 1405<\/a> (Five-Judge Bench), (b) Maula Bux<\/em> v. Union of India<\/em>, (1969) 2 SCC 554<\/a> (Three-Judge Bench), and (c) ONGC Ltd.<\/em> v. Saw Pipes<\/em>, (2003) 5 SCC 705<\/a> (Two-Judge Bench).<\/p>\n

    51<\/sup> This view is consistent with the Privy Council’s ruling in Bhai Panna Singh<\/em> v. Bhai Arjun Singh<\/em>, 1929 SCC OnLine PC 43<\/a> : AIR 1929 PC 179<\/a> (Three-Judge Bench) (per Lord Atkin), which construed Section 74 to require proof of damages suffered.<\/p>\n

    52<\/sup>Kailash Nath Associates<\/em> v. DDA<\/em>, (2015) 4 SCC 136<\/a> (Two-Judge Bench), paras 43 to 43.7, at pp. 162-3.<\/p>\n

    53<\/sup> The provision on liquidated damages viz. Section 75 of the Malaysian statute, is identical to the corresponding provision in Indian law, section 74<\/a> of the Contract Act, 1872<\/a>.<\/p>\n

    54<\/sup>Kailash Nath Associates<\/em> v. DDA<\/em>, (2015) 4 SCC 136<\/a> (Two-Judge Bench) paras 43 to 43.7.<\/p>\n

    55<\/sup> An illustrative list of such judgments includes:<\/p>\n

    (i) Satya Jain<\/em> v. Anis Ahmed Rushdie<\/em>, (2013) 8 SCC 131<\/a> and<\/p>\n

    (ii) Transmission Corpn. of Andhra Pradesh Ltd.<\/em> v. GMR Vemagiri Power Generation Ltd.<\/em>, (2018) 3 SCC 716<\/a> [on the application of the \u201cbusiness efficacy\u201d test];<\/p>\n

    (iii) BALCO<\/em> v. Kaiser Aluminium Technical Services Inc.<\/em>, (2012) 9 SCC 552<\/a> (Five-Judge Bench) [on the interpretation of provisions in the Arbitration and Conciliation Act, 1996<\/a>];<\/p>\n

    (iv) Dyna Technologies (P) Ltd.<\/em> v. Crompton Greaves Ltd.<\/em>, (2019) 20 SCC 1<\/a> (Three-Judge Bench) [on the permissibility of unreasoned arbitral awards];<\/p>\n

    (v) Markfed Vanaspati & Allied Industries<\/em> v. Union of India<\/em>, (2007) 7 SCC 679<\/a> [on the duties of arbitrators];<\/p>\n

    (vi) Mary<\/em> v. State of Kerala<\/em>, (2014) 14 SCC 272<\/a> [generally on the construction of commercial contracts].<\/p>\n","protected":false},"excerpt":{"rendered":"

    by Aditya Shiralkar\u2020<\/p>\n","protected":false},"author":8808,"featured_media":251244,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1191,42504],"tags":[],"class_list":["post-250913","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-op-ed","category-scc-journal-section"],"yoast_head":"\nThe Legitimate Interest Test (UK) on the Enforceability of Liquidated Damages Clauses and its Implications for Indian Law | SCC Times<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.scconline.com\/blog\/post\/2021\/07\/14\/the-legitimate-interest-test-uk-on-the-enforceability-of-liquidated-damages-clauses-and-its-implications-for-indian-law\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Legitimate Interest Test (UK) on the Enforceability of Liquidated Damages Clauses and its Implications for Indian Law\" \/>\n<meta property=\"og:description\" content=\"by Aditya Shiralkar\u2020\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.scconline.com\/blog\/post\/2021\/07\/14\/the-legitimate-interest-test-uk-on-the-enforceability-of-liquidated-damages-clauses-and-its-implications-for-indian-law\/\" \/>\n<meta property=\"og:site_name\" content=\"SCC Times\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/scc.online\/\" \/>\n<meta property=\"article:published_time\" content=\"2021-07-14T10:00:43+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-10-21T06:50:10+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-108.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1330\" \/>\n\t<meta property=\"og:image:height\" content=\"887\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Bhumika Indulia\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Bhumika Indulia\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"10 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.scconline.com\\\/blog\\\/post\\\/2021\\\/07\\\/14\\\/the-legitimate-interest-test-uk-on-the-enforceability-of-liquidated-damages-clauses-and-its-implications-for-indian-law\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.scconline.com\\\/blog\\\/post\\\/2021\\\/07\\\/14\\\/the-legitimate-interest-test-uk-on-the-enforceability-of-liquidated-damages-clauses-and-its-implications-for-indian-law\\\/\"},\"author\":{\"name\":\"Bhumika Indulia\",\"@id\":\"https:\\\/\\\/www.scconline.com\\\/blog\\\/#\\\/schema\\\/person\\\/919ec47cc1b871b362af05740398033a\"},\"headline\":\"The Legitimate Interest Test (UK) on the Enforceability of Liquidated Damages Clauses and its Implications for Indian Law\",\"datePublished\":\"2021-07-14T10:00:43+00:00\",\"dateModified\":\"2021-10-21T06:50:10+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.scconline.com\\\/blog\\\/post\\\/2021\\\/07\\\/14\\\/the-legitimate-interest-test-uk-on-the-enforceability-of-liquidated-damages-clauses-and-its-implications-for-indian-law\\\/\"},\"wordCount\":1996,\"commentCount\":1,\"image\":{\"@id\":\"https:\\\/\\\/www.scconline.com\\\/blog\\\/post\\\/2021\\\/07\\\/14\\\/the-legitimate-interest-test-uk-on-the-enforceability-of-liquidated-damages-clauses-and-its-implications-for-indian-law\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.scconline.com\\\/blog\\\/wp-content\\\/uploads\\\/2021\\\/07\\\/MicrosoftTeams-image-108.jpg\",\"articleSection\":[\"OP. 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Tribunal answers","author":"Editor","date":"August 3, 2021","format":false,"excerpt":"Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Coram of Dilip Gupta (President) and P.V. Subba Rao (Technical Member) allowed the appeals which were related to demand of service tax on liquidated damages recovered by the appellant for acts of default, like delayed or deficient supplies by various suppliers.\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/09\/CESTAT-Taxscan.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/09\/CESTAT-Taxscan.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/09\/CESTAT-Taxscan.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/09\/CESTAT-Taxscan.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/09\/CESTAT-Taxscan.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":272718,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/08\/31\/ministryofrailways-guidelines-gst-recoveryofliquidateddamages-centralboardofindirecttaxesandcustom-circular-railway-cancellationofacfirstclasstickets-gstimposed\/","url_meta":{"origin":250913,"position":4},"title":"Ministry of Railways issues guidelines for implementation of GST implications on recovery of liquidated damages","author":"Editor","date":"August 31, 2022","format":false,"excerpt":"\u00a0 \u00a0 On 10-08-2022, the Ministry of Railways has issued guidelines for implementation of Goods and Service Tax (\u2018GST') implications on recovery of liquidated damages which were given by the Central Board of Indirect Taxes and Customs (\u2018CBIC') vide circular dated 03-08-2022. Key Points: Purpose of the CBIC circular: to\u2026","rel":"","context":"In "Legislation Updates"","block_context":{"text":"Legislation Updates","link":"https:\/\/www.scconline.com\/blog\/post\/category\/legislationupdates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":266205,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/04\/29\/levy-of-liquidated-damages-arbitration-delhi-high-court-cobra\/","url_meta":{"origin":250913,"position":5},"title":"Levy of Liquidated Damages | If a contract comprises, several components awarded to different contractors, would it be inapposite to blame contractor that was last in completing work for loss suffered on account of delay in completing Project? Del HC answers","author":"Bhumika Indulia","date":"April 29, 2022","format":false,"excerpt":"Delhi High Court: While reiterating the law on award of liquidated damages, Vibhu Bakhru, J., expressed that, where a contract comprises, several components awarded to different contractors, it is inapposite to blame the contractor that is last in completing the work for loss suffered on account of delay in completing\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/250913","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/8808"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=250913"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/250913\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/251244"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=250913"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=250913"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=250913"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}