Zephyr Power Limited (Zephyr) is a company primarily engaged in developing wind power plants. It was employed (contracted) by Suzlon Energy Private Limited (Suzlon) to develop the second largest Wind Park in Jaisalmer, with a capacity of 1,864MW. Zephyr commissioned Apex Solutions Private Limited (Apex) to perform key stages in setting up Wind Park in Jaisalmer, such as site selection and preparation, foundation construction, tower installation, turbine assembly and installation, blade installation, and grid connection. A fully functional Wind Park was to be handed over to Zephyr.

The entire value of the contract between Zephyr and Apex for setting up Wind Park in Jaisalmer was Rs. 500 Crore. The contract provided a date by which a fully completed and functional Wind Park was to be handed over by Apex to Zephyr.

Apex delayed handing over of the completed functional Wind Park by 25 days. The work was satisfactory, and Zephyr accepted it. However, the delay by Apex delayed the completion of the main contract and Zephyr had to pay Rs. 50 crores in damages to the employer, that is, the Suzlon which had commissioned the Jaisalmer Wind Park. Zephyr sought to recover the damages from Apex. The contract Zephyr had with Apex had the following clauses on damages:

Clause 201.1. Apex shall be liable to Zephyr for any damage suffered by Zephyr as a consequence of Apex’s breach of contract …

Clause 201.2. For a delay in handing over a fully functional Wind Park, Apex will be liable to pay damages at the rate of 0.1% per day of delay of the contract value.

Zephyr calculated its damages under the two clauses as follows:

1. Under clause 201.1:  Rs. 50 crores

2. Under clause 201.2:   Rs. 500 crores x 0.1% x 25 days = Rs. 12.5 crores

Zephyr claimed both the amounts in damages from Apex. Apex denied its liability to pay either of the two damages. The parties are in dispute. In this context, which of the following statements on award of damages is correct?