Contractual damages clause can exclude ordinary section 73 relief where parties prescribe a substitute purchase remedy.

A contractual clause governing default and substitute procurement was treated as displacing the ordinary damages measure under section 73 of the Indian Contract Act, because section 62 of the Sale of Goods Act allowed the parties to vary the remedy by agreement. The claim for compensation also failed on facts because the appellants did not prove actual loss, additional expenditure, or recoverable quantum. Further, Clause 14(ii) required actual purchase of the short-supplied goods after termination, and no such substitute purchase was made. The arbitral awards and challenge order were therefore sustained, and the non-supply compensation claims were rejected.

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Issues: (i) Whether section 73 of the Indian Contract Act applied to the contracts in view of Clause 14(ii). (ii) Whether the appellants proved any loss or damage. (iii) Whether actual purchase of the short-supplied goods after termination was necessary to claim damages under Clause 14(ii).

Issue (i): Whether section 73 of the Indian Contract Act applied to the contracts in view of Clause 14(ii).

Analysis: The contracts contained a special stipulation governing default and the consequences of non-supply. Clause 14(ii) reserved to the purchaser a specific right to purchase substitute goods and recover additional cost or liquidated damages. Read with section 62 of the Sale of Goods Act, the contractual term was treated as an express variation of the ordinary rule as to damages. The ordinary measure under section 73 could be displaced by such agreement between the parties.

Conclusion: Section 73 of the Indian Contract Act was held inapplicable, and damages on that basis could not be awarded.

Issue (ii): Whether the appellants proved any loss or damage.

Analysis: Compensation under the law of contract requires proof of actual loss caused by the breach. The majority awards recorded a factual finding that the appellants failed to prove the quantum of loss or any additional expenditure occasioned by the breach. That finding was based on appreciation of evidence.

Conclusion: The appellants were held not to have proved recoverable loss or damage.

Issue (iii): Whether actual purchase of the short-supplied goods after termination was necessary to claim damages under Clause 14(ii).

Analysis: Clause 14(ii) contemplated purchase of substitute goods upon termination, and the record showed that no such purchase was made. The claims for damages were not founded on actual substitute procurement. In that context, the contractual mechanism for recovery was not invoked in the manner required by the clause.

Conclusion: Actual purchase of the short-supplied goods was held necessary for claiming damages under Clause 14(ii).

Final Conclusion: The arbitral majority awards and the order under challenge were sustained, and the compensation claims for non-supply were rejected.

Ratio Decidendi: Where a contract expressly provides a special measure and mechanism for recovery on default, section 73 of the Indian Contract Act may be excluded by agreement under section 62 of the Sale of Goods Act, and a claimant must also prove actual loss or comply with the contractual method for claiming damages.

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