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comprehensively applies to every covenant involving a penalty whether it is for payment on breach of contract of money or delivery of property in future, or for forfeiture of right to money or other property already delivered. Duty not to enforce the penalty clause but only to award reasonable compensation is statutorily imposed upon courts by s. 74 . In all cases, therefore, where there is a stipulation in the nature of penalty for forfeiture of an amount deposited pursuant to the terms of contract which expressly provides for forfei- ture, the court has " jurisdiction to award such sum only as it considers reasonable, but not exceeding the amount specified in the contract as liable to forfeiture. (emphasis supplied)
i). It has been held in Fateh Chand supra that Section 74 of Indian Contract Act would apply even to forfeiture of money already delivered under a contract and the courts have been enjoined not to enforce penalty clause but only to award reasonable compensation.
j). The proposition has been further clarified by the pronouncement in M/s Kailash Nath Associates vs Delhi Development Authority & Anr CIVIL APPEAL NO. 193 OF 2015 on 9 January, 2015 as follows: