Summary
The Court upheld TDSAT’s order requiring MTNL to refund deductions exceeding the contractual liquidated-damages limit. Because an express contract governed the last-mile connectivity obligation and damages, MTNL could not substitute its own dark-fibre rental charges through a quantum meruit claim under Section 70 of the Contract Act.
Issues
- Whether Section 70 permitted recovery on quantum meruit where the express contract governed the parties’ obligations and consequences of breach.
Provisions considered
- Section 70, Indian Contract Act, 1872The quasi-contractual remedy could not displace express contractual terms governing the work and consideration. (¶¶ 2, 3, 4, 5, 6, 7)
- Sections 73 and 74, Indian Contract Act, 1872The claim arose from breach of contract and was governed by reasonable compensation within the stipulated limit, rather than an independent restitutionary claim above that limit. (¶¶ 8, 9, 10, 11, 12, 13)
Held
- Section 70 concerns obligations resembling contractual obligations. Work or services governed by express terms cannot be repriced through quantum meruit to displace the agreed consideration and allocation of liability. (¶¶ 2, 3, 4, 5, 6, 7)
- Section 73 distinguishes damages for breach of contract from damages for failure to discharge quasi-contractual obligations. The present dispute was governed by Section 74 and the contract’s liquidated-damages provisions. (¶¶ 8, 9, 10)
- The contractual sum or penalty sets an upper limit on reasonable compensation. The Court applied the principles requiring proof where actual loss can be proved and permitting a genuine pre-estimate where proving loss is difficult or impossible. (¶ 11)
- Clauses 16.2 to 16.4 limited liquidated damages to 12 percent. MTNL could retain only the contractual amount allowed by TDSAT and had to refund the excess deducted; its unilateral rental assessment could not enlarge the contractual entitlement. (¶¶ 1, 12, 13, 14)
Result
Appeal dismissed; TDSAT order upheld, including refund of Rs.84,74,087 with interest at 9 percent from the respective due dates to the date of its judgment.