“One neat question arises before this Court, which is, whether, when parties are governed by contract, a claim in quantum meruit under Section 70 of The Indian Contract Act, 1872 would be permissible. Section 70 occurs in Chapter V of The Contract Act. An early Judgment reported as Moselle Solomon v. Martin & Co., ILR (1935) 62 Cal 612 resulted in a split verdict between the Two Judges on the point of whether Section 70 of The Contract Act can apply when there is, in fact, a contract between the parties.

Section 73 makes it clear that damages arising out of a breach of contract is treated separately from damages resulting from obligations resembling those created by contract. When a contract has been broken, damages are recoverable under paragraph 1 of Section 73. When, however, a claim for damages arises from obligations resembling those created by contract, this would be covered by paragraph 3 of Section 73.

The present case is really covered by Section 74 of The Contract Act. Since a clause governs the relations between the parties, obviously, a higher figure, contractually speaking, cannot be awarded as liquidated damages, which are to be considered as final and not challengeable.”

– Hon’ble Justice R.F. Nariman, Mahanagar Telephone Nigam Ltd. v. Tata Communications, [Civil Appeal No. 1766 of 2019].