JUDGMENT K.G. Balakrishnan, J. 1. The appeal is directed against the Judgment and decree passed in O. S. No. 99 of 1979 on the file of Sub Court, Thodupuzha. Plaintiff Kudayathoor Panchayat represented by its Executive Officer filed the suit for money due under an agreement. Defendant is the owner of a stage carriage bearing registration No. K.L.K. 9037. The plaintiff's case is that on 22.9.1976 at about 10 A.M. the bus belonging to the defendant was driven by its driver in a negligent manner and hit against a waiting shed at Colapra by the side of Thodupuzha-Moolamattam road causing extensive damage to the same. The shed was constructed by plaintiff Panchayat and, therefore, steps were taken to realise damages from the defendant. The defendant offered to carry out the repairs to set right the damages caused to the waiting shed. An agreement was entered in to between the plaintiff Panchayat and the defendant. By that agreement the defendant agreed to carry out the repairs within a period of one month. It was also agreed by the defendant that in the event of failure to repair the waiting shed within the stipulated time the would pay a sum of Rs. 10,000/- to the Panchayat. The agreement was executed four days after the incident. The plaintiff alleged that inspite of repeated demands the defendant failed to discharge his obligations under the agreement. Therefore, the suit was filed for realisation of the amount due under the agreement. 2. The defendant filed written statement repudiating the liabilities. The defendant contended that the driver of the bus was not negligent and the agreement between the plaintiff and defendant was executed under duress. The defendant alleged that after the accident the officers of the Kudayathoor Panchayat and other interested persons restrained the defendant from removing the bus from the accident spot and under that circumstances the defendant was forced to execute the agreement. The defendant further alleged that he was prepared to carry out necessary repairs to the waiting shed but the plaintiff was not cooperative and the defendant is bound to pay only the actual amount spent by the plaintiff for repairing the shed. The defendant also alleged that he had requested the plaintiff to prefer a claim before the Insurance Company but the plaintiff did not undertake any such demand and the Insurance Company is a necessary party to the suit. 3. The defendant also alleged that he had requested the plaintiff to prefer a claim before the Insurance Company but the plaintiff did not undertake any such demand and the Insurance Company is a necessary party to the suit. 3. During the pendency of the suit, at the instance of the 1st defendant a notice was issued to the Insurance Company. The Insurance Company appeared and filed a statement contending that the Insurance Company is not liable to pay any amount to the plaintiff as the suit is based on a contract between the plaintiff and defendant. 4. The plaintiff produced Exts. A1 to A5 documents and PW1 the President of the 'Panchayat gave evidence on the side of the plaintiff. A Commission was taken out at the instance of the plaintiff and Ext. Cl is the report prepared by the Commissioner. Two witnesses were examined on the side of the defendant. DW1 is the defendant and DW2 is the Commissioner who prepared Ext. C1 report. The trial court held that Ext. A1 agreement, executed by the defendant in favour of the plaintiff, is not vitiated by any duress. It was also held that Rs. 10, 000/- fixed as the quantum of damages was not by way of penalty and thus the suit was decreed for Rs. 10,000/- with 6 per cent interest from the date of suit till payment. 5. In appeal the defendant contended that Rs. 10,000/- fixed in Ext. Al as payable in default of carrying out the work is penally and cannot be held to be reasonable pre-estimate of the compensation. The appellant has also alleged that the agreement was executed by the appellant under duress. The agreement was obtained from the appellant under duress and, therefore, the agreement was unenforceable. The contentions of the appellant cannot be accepted for various reasons. 5A. As per S.74 of the Indian Contract Act, "When a contract is broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for". The parties to a contract may agree at the time of entering into it that in the event of a breach the party in default shall pay a stipulated sum of money to the other. If this sum is a genuine pre-estimate of the loss which is likely to flow from the breach, then it represents the agreed damages, called "liquidated damages". If the stipulated sum if not a genuine pre-estimate of the loss but is in the nature of penalty intended to secure performance of the contract, then it is not recoverable. In distinguishing between liquidated damages and penalties the essential question is whether the stipulated sum is a genuine pre-estimate of the loss which is likely to flow from the breach. It is a question to be decided on the basis of construction of the contract and also taking into consideration of the inherent circumstances judged as at the time of making the contract. The payment will be held to be a penalty if the sum stipulated for is an extravagant and unconscionable amount in comparison with the loss that could conceivably be proved to have followed from the breach. The payment will be held to be a penalty if the sum stipulated is a sum greater than the sum which ought to have been paid. When a contract contains a term which, not being an integral part of the contract, is introduced only for the purpose of securing the performance of the contract, that term is penal, and, as such, a penalty is a term which is extraneous and collateral to the actual contract. A penal clause, therefore, must be one which imposes, some penalty for the default, that is to say, which puts the defaulter in a worse position than he would occupy if there were no penal clause. If in making provision for breach of contract, the promisee puts in a stipulation not by way of reasonable compensation to the promisee on the breach of contract but in order that by reason of its burdensome or oppressive character it may operate in terrorem over the promisor so as to derive him to fulfil the contract, then stipulation is one by way of penalty. 6. Considering the evidence in this case it cannot be held that a sum of Rs. 6. Considering the evidence in this case it cannot be held that a sum of Rs. 10,000/- fixed as the amount to be payable by the defendant in case of breach of contract is a penalty. The commissioner who estimated the cost of construction found that Rs, 12,795/- would be the cost of reconstruction. The defendant is a licensed contractor. He was aware of the nature of the construction that had to be done. There is nothing in evidence to show that the plaintiff prevented the defendant from removing the bus from the place of accident thereby put pressure on the defendant to execute the contract in favour of the plaintiff. 7. The contention of the appellant defendant that the stipulation to pay Rs. 10,000/- is a penal clause and, therefore, unenforceable. As per S.74 of the Indian Contract, even if the stipulation to pay is in the nature of penalty, the plaintiff would be entitled to get reasonable compensation not exceeding the amount so named. The Supreme Court in Fateh Chand v. Balkishan Dass (AIR 1963 Supreme Court 1405 (V 50 C 204) held that under the Indian Law no distinction is made between liquidated damages and penalty. The court observed: "Section 74 of the Indian Contract Act is clearly an attempt to eliminate the somewhat elaborate refinements made under the English common law in distinguishing between stipulations providing for payment of liquidated damages and stipulations in the nature of penalty. Under the common law a genuine pre-estimate of damages by mutual agreement is regarded as a stipulation naming liquidated damages and binding between the parties: a stipulation in a contract in terrorem is a penalty and the Court refuses to enforce it, awarding to the aggrieved party only reasonable compensation. The Indian Legislature has sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty". Therefore, it is clear that a uniform principle has been adopted in respect of all stipulations either the same be stipulation by way of penalty or the stipulation by way of liquidated damages. A party complaining breach of contract can recover only reasonable compensation for the injuries sustained by him. The stipulation amount being merely an outside limit. Therefore, it is clear that a uniform principle has been adopted in respect of all stipulations either the same be stipulation by way of penalty or the stipulation by way of liquidated damages. A party complaining breach of contract can recover only reasonable compensation for the injuries sustained by him. The stipulation amount being merely an outside limit. It, therefore, makes no difference in the present case that the claim of the appellant is for liquidated damages or for penalty. The respondent plaintiff would be entitled only to reasonable compensation subject to the limit of the amount stipulated in the contract itself. 8. If is pointed out by the respondent's counsel that in Ext. C1 report the commissioner has estimated the cost of reconstruction of the waiting shed as Rs. 12,795/-. The appellant's counsel pointed out that there was no damage to the foundation and basement of the shed and the commissioner had unnecessarily estimated the repair charges for this also. The report of the commissioner is to the effect that due to the hitting of the bus the waiting shed was completely damaged. The pillar on the eastern side and the centre arc completely damaged and the pillar on the western side is partly damaged and the dividing wall also is damaged and it is not in its proper place. The foundation and the basement were constructed by rubble with cement. The commissioner had stated that it had no cracks and the opinion of the commissioner was that the waiting shed cannot be repaired as it was completely damaged and it has to be reconstructed. In Ext. A1 agreement it is specifically mentioned that due to the impact of the hitting there was substantial damage to the waiting shed. It is also important to note that the defendant was allowed one month's time to effect the repair. It was only in case of default the defendant was liable to pay the amount. In view of the above circumstances, it is clear that the amount fixed in Ext. A1 is a genuine pre-estimate of the amount that would be required for repairing the waiting shed and it is reasonable compensation and the suit was rightly decreed by the court below. I find no reason to interfere with the decree and judgment passed by the court below. The appeal fails and it is dismissed with costs.