Section 51

Section 51 of the Indian Contract Act, 1872, states: 'When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew when they made the contract to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.' This section emphasizes the principle of awarding compensation for direct losses resulting from a breach of contract. The courts have interpreted this section to mean that the compensation should be such that it puts the aggrieved party in the position they would have been in had the contract been performed. The Supreme Court in the case of M/s. Kasturi & Sons Ltd. vs. M/s. Laddu Mal & Co., has held that the compensation under this section should be reasonable and should not be punitive in nature.