Question

    In Hadley v. Baxendale, a landmark case referenced in

    Indian Contract Law, the Supreme Court in SBI v. C. Natarajan (2024) held that damages for breach of contract under Section 73 of the Indian Contract Act:
    A Automatically apply to all contractual breaches Correct Answer Incorrect Answer
    B Must be foreseeable and within the parties' contemplation at contract formation Correct Answer Incorrect Answer
    C Are not applicable to SARFAESI Rule 9(5) forfeiture provisions Correct Answer Incorrect Answer
    D Are limited to monetary damages only Correct Answer Incorrect Answer
    E Cannot exceed 10% of contract value Correct Answer Incorrect Answer

    Solution

    This 2024 landmark Supreme Court judgment held that Sections 73 and 74 of the Indian Contract Act (dealing with compensation for loss and penalty clauses) do NOT apply to forfeiture under Rule 9(5) of SARFAESI Rules. Special enactments like SARFAESI override general contract law by virtue of their non obstante clauses. This prevents mischievous borrowers from using contract law to defeat recovery proceedings.

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