2011 (4) TMI 1479 - HC - Indian Laws

Summary

Issues Involved:
1. Deduction of Liquidated Damages
2. Extension of Time and Acquiescence
3. Legal Interpretation of Liquidated Damages Clauses
4. Proof of Actual Loss
5. Role of Arbitrator and Judicial Review

Summary:

1. Deduction of Liquidated Damages:
The Appeal challenges the concurrent findings of the Arbitral Tribunal and the learned Single Judge regarding the deduction of Rs. 1,32,04,290/- from the Respondent's Running Bills as liquidated damages. The Appellant had placed a Purchase Order on the Respondent for the supply of Tubular Towers, with specific delivery deadlines. Clauses 16.1 and 16.2 of the Contract stipulated the imposition and recovery of liquidated damages for delayed deliveries.

2. Extension of Time and Acquiescence:
The Appellant argued that since it had granted an extension of time for supply subject to liquidated damages and the Respondent did not object, the claim was untenable. The Court, however, opined that failure to record an objection does not inexorably lead to the conclusion that any subsequent demur is unjusticiable. The Court emphasized that acquiescence under duress or coercion can be withdrawn, and the Arbitral Tribunal can determine if the accord and satisfaction were free of extraneous circumstances.

3. Legal Interpretation of Liquidated Damages Clauses:
The Court referred to several precedents, including ONGC -vs- Saw Pipes, to elucidate that liquidated damages cannot be punitive and actual loss need not be proved to sustain a claim for liquidated damages. However, the presence of a liquidated damages clause does not automatically entitle a party to claim damages without proving some loss attributable to the breach.

4. Proof of Actual Loss:
The Respondent contended that the Appellant did not lead evidence to prove actual damages resulting from the delay. The Court noted that the Arbitrator found no delay attributable to the Respondent and no damages resulted from the delayed completion of supplies. These findings were based on documentary evidence and were not perverse, thus not warranting interference.

5. Role of Arbitrator and Judicial Review:
The Court highlighted that its role, as well as that of the learned Single Judge, is not to exercise appellate powers but to ensure that the Arbitrator's conclusions are not perverse or repugnant to public policy. The Arbitrator's findings, based on evidence, were deemed sustainable, and the Court refrained from interfering.

Conclusion:
The Appeal was dismissed as devoid of merits, with no justiciable question arising u/s 34 or u/s 37 of the Arbitration & Conciliation Act. The Court upheld the Arbitrator's findings and the learned Single Judge's decision, emphasizing the limited scope of judicial review in arbitration matters.