The expression ‘damages’ is neither vague nor over- wide. Its precise import in a given context is not difficult to discern. A plurality of variants stemming out of a core concept is seen in such words as actual damages, civil damages, compensatory damages, consequential damages, contingent damages, continuing damages, double damages, excessive damages, exemplary damages, general damages, irreparable damages, pecuniary damages, prospective damages, special damages, speculative damages, substantial damages, unliquidated damages. But the essentials are (a) detriment to one by the wrong doing of another, (b) reparation awarded to the injured through legal remedies and (c) its quantum being determined by the dual components of pecuniary compensation for the loss suffered and often not always a punitive addition as a deterrent-cum-denunciation by the law. [74 B-D]

‘Damages’ as imposed by s. 14B, includes a punitive sum quantified according to the circumstances of the case. In ‘exemplary damages’ this aggravating element is prominent. Constitutionally speaking such a penal levy included in damages is perfectly within the area of implied powers and the legislature may, while enforcing collections, legitimately and reasonably provide for recovery of additional sums in the shape of penalty so as to see that avoidance is obviated. Such a penal levy can take the form of damages

Section 73 of the Contract Act is lays down the provision relating to damages. It provides that the party, who breaches a contract, is liable to compensate the injured party for any loss or damage caused, due to the breach of contract. For compensation to be payable, Two things should be taken into consideration (i) The loss or damage should have arisen as a natural consequence of the breach, or (ii)It should have been something the parties could have reasonably expected to arise from a breach of the contract. In the former case, an objective test would be applied where as in the latter case a subjective test would be applied. Under this section, the burden of proof lies on the injured party. This section, however, provides that compensation shall not be awarded for any remote or indirect loss sustained by the parties. Section 73 also provides that the same principles will apply for breach of a quasi-contractual obligation, i.e. in the event that an obligation resembling that created by contract has not been discharged, the injured party is entitled to receive compensation as if a contractual obligation has been breached.

Damages under Section 73 of the Act are compensatory and not penal in nature. The explanation to this section further provides that in estimating the loss or damage arising from a breach of contract, the existing cost of remedying the inconvenience caused may be taken into account.

There are two principles regarding compensation that flow from this section. Firstly where money can substitute the loss incurred, the aggrieved party is to be put in the same situation, as it would have been in had the contract been performed. This is qualified by the second principle, which imposes a duty upon the defaulting party to take reasonable steps to mitigate the consequences which arise as a result of the breach.