In Brief
In a dispute over delay penalties in a solar power project, the Supreme Court held that an appellate court cannot recalculate liquidated damages under Section 37 of the Arbitration Act once a lower court has made a valid determination. NTPC Vidyut Vyapar Nigam Ltd. contracted with Saisudhir Energy to build a 20 MW solar plant by February 2013, but the developer delayed by two to five months. The trial judge awarded 50% of stipulated damages (₹27.06 crore) as reasonable compensation. The appellate bench reduced it to ₹20.70 crore. The Supreme Court restored the trial judge's award, clarifying that Section 37's scope is limited to reviewing whether the lower court properly exercised jurisdiction—not to substitute its own view on quantum. In public utility contracts, stipulated damages may be enforced as reasonable compensation without strict proof of actual loss.
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