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40. In Naresh Chandra Sanyal v. Calcutta Stock Exchange Association Ltd. (1971 (1) SCC 50), the Court pointed out in para 19 of the report, while following Fateh Chand, that "duty not to enforce the penalty clause, but only to award reasonable compensation is statutorily imposed upon Courts by Section 74 of the Indian Contract Act".

41. The stipulation for payment of ground rent, as pointed out earlier, is only a stipulation in the nature of penalty, falling under the second category of cases covered by Section 74 of the Contract Act. This is for two reasons, namely, (a) that the quantum is unconscionably huge that in a period of 200 days, the ground rent will exceed the value of the material, and (b) that the ground rent is fixed not on the basis of the storage space occupied by the material, but on the basis of the value of the material occupying the space.