9911796707
TMI Blog2024 (7) TMI 1249X X X X Extracts X X X X X X X X Extracts X X X X ..... le interest at the rate of 8% per annum, commencing from the date of publication of the award. 3. A perusal of the arbitral award discloses that the following claims were lodged by the respondent before the learned Arbitrator : Claim no. Particulars Accepted Yes/No Reference Claimed Raised Claim Accepted 1(i) Wrong deduction of LD Yes 8.8c 1,25,60,065/- 1,25,60,065/- 1(ii) Interest on LD No 13.1c 34,06,000/- NIL 2(i) Unpaid Invoice for supply of spares Yes 11.4c 1,62,138/- 1,62,138/- 2(ii) Interest on Unpaid Invoice No 13.1c 30,384/- NIL 3 Interest for delay in payment No 13.1c 20,64,568/- NIL 4(i) Demurrage Charges Yes 11.1c 2,16,200/- 1,30,000/- 4(ii) Interest on Demurrage Charges No 13.1c 72,450/- NIL 5 Interest on delay in lifting spares No 13.1c 53,972/- NIL 6 Conciliation Expenses No 14.1c 42,500/- NIL 7 Higher material rates No 11.1c 1,30,28,366/- NIL 8 Financial & Man-hours losses No 11.2c 65,14,183/- NIL 9 Arbitration Expenses No 14.2c NIL 10 Payment of interest No 13.1c NIL Total relief 1,28,52,203/- 4. It is common ground tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s confirmed by the respondent via an e-mail on 17.10.2017. 9. It is not in dispute that the drawings and documents received the final approval of the appellant on 15.03.2018. 9.1 Resultantly, the final delivery date under the subject contract was fixed as 26.08.2018. 9.2 The record shows (and something which is not in dispute) that under the subject purchase order concerning transformers, the respondent was required to, initially, supply 44 transformers. Later on, though, the quantity was increased to 46 transformers. 9.3 It is also not in dispute that of the 46 transformers, 42 transformers were delivered within the timeframe agreed to between the parties, i.e., by 26.08.2018. There was a delay of about 4 months with regard to 4 transformers, which were, admittedly, delivered on 31.12.2018. 10. It is the delay in delivering these 4 transformers that propelled the appellant to levy liquidated damages calculated at the rate of 9.5% of the total contract price in terms of clause 16.2 of the GCC Rev 06. 11. This and the other disputes obtaining between the parties led the respondent to invoke, on 23.06.2020, the arbitration agreement arrived at between the parties. Consequently, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr Malhotra reiterates that since it was an EPC project, the delay in supplying transformers has resulted in injury/loss. Mr Malhotra contends that another entity named NTPC, which was the ultimate employer, had imposed liquidated damages on the appellant. 21.1 Mr Malhotra, however, concedes that this aspect was neither pleaded nor argued before the learned Arbitrator. 21.2 Mr Malhotra fairly concedes that this aspect was also not part of the pleadings in the Section 34 proceedings preferred before the learned Single Judge. 21.3 Furthermore, there is no dispute that no such argument was put forth before the learned Single Judge. 21.4 Insofar as the present appeal is concerned, consistent with its conduct, the appellant has framed no such ground even in the appeal before us. The argument is raised across the Bar. 22. Therefore, we are disinclined to accept this submission as this would amount to ambushing the respondent at the final hearing stage. 23. Furthermore, as last resort, Mr Malhotra seeks to draw our attention to paragraph 11 of internal page 19 of the statement of defence [SOD]. 23.1 We have perused the assertions made therein. There is no reference to NTPC in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he defaulting party. 27. As noticed above, although the learned Arbitrator noticed that there was some delay in delivering 4 out of the 46 transformers, his conclusion, based on material placed before him, was that, because only 8 of the transformers had been commissioned, no legal injury was suffered by the appellant. 27.1 In our opinion, the conclusion arrived at by the learned Arbitrator, albeit, after appreciating the evidence in the context of the pleadings placed before him, falls completely within the ken of the Arbitrator and was rightly not disturbed by the Single Judge. In this context, the following observations made by A K Sikri J. (as he then was) in the matter of Indian Oil Corpn. v. Lloyds Steel Industries Ltd., (2007) SCC OnLine Del 1169, being apposite, are extracted hereafter: "47. Insofar as imposition of liquidated damages is concerned, the discussion is predicated on the issue as to whether any loss is suffered by the petitioner or not. Learned Counsel for the petitioner does not dispute that the construction of terminal at Jodhpur was to be treated as integral part of the entire project, i.e. pipeline project for transferring petroleum products from Kandla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blished. The proof of this basic requirement is not dispensed with by Section 74. That the party complaining of breach of contract and claiming compensation is entitled to succeed only on proof of „legal injury‟ having been suffered by him in the sense of some loss or damage having been sustained on account of such breach, is clear from Sections 73 and 74. Section 74 is only supplementary to Section 73, and it does not make any departure from the principle behind Section 73 in regard to this matter. Every case of compensation for breach of contract has to be dealt with on the basis of Section 73. The words in Section 74 „Whether or not actual damage or loss is proved to have been caused thereby‟ have been employed to underscore the departure deliberately made by Indian Legislature from the complicated principles of English Common Law, and also to emphasize that reasonable compensation can be granted even in a case where extent of actual loss or damage is incapable of proof or not proved. That is why Section 74 deliberately states that what is to be awarded is reasonable compensation. In a case when the party complaining of breach of the contract has not suff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the law of contract, which are to be found inter alia in Section 73 of the Contract Act. 43.3. Since Section 74 awards reasonable compensation for damage or loss caused by a breach of contract, damage or loss caused is a sine qua non for the applicability of the section. 43.4. The section applies whether a person is a plaintiff or a defendant in a suit. 43.5. The sum spoken of may already be paid or be payable in future. 43.6. The expression "whether or not actual damage or loss is proved to have been caused thereby" means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded. 43.7. Section 74 will apply to cases of forfeiture of earnest money under a contract. Where, however, forfeiture takes place under the terms and conditions of a public auction before agreement is reached, Section 74 would have no application." [Emphasis is ours] 29. Significantly, the fact that the initial time fixed for delivery by the appellant ceased to be of essence is ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
