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TMI Blog2024 (7) TMI 1249X X X X Extracts X X X X X X X X Extracts X X X X ..... nce there are no pleadings on record concerning the imposition of liquidated damages by NTPC, no leave can be granted at the second stage of scrutiny. The appeal is dismissed. Costs are quantified at Rs. 20,000/-. - HON'BLE MR JUSTICE RAJIV SHAKDHER And HON'BLE MR JUSTICE AMIT BANSAL For the Appellant : Mr Neeraj Malhotra , Sr Adv. with Mr Sarojanand Jha , Ms Rajreeta Ghosh , Mr Rahul Kumar and Mr Nimish Gupta , Advs For the Respondent : Mr Raman Kapur , Sr. Advocate with Mr Varun Kapur , Advocates ORDER RAJIV SHAKDHER , J. : ( ORAL ) 1. This appeal is directed against the judgment dated 01.09.2023 rendered by the learned Single Judge. The learned Single Judge, via the impugned judgment, has dismissed the appellant s petition preferred under Section 34 of the Arbitration and Conciliation Act, 1996 [in short, 1996 Act ]. 1.1 In effect, the learned Single Judge has confirmed the award dated 29.03.2022. 2. The record shows that the learned Arbitrator has awarded Rs.1,28,52,203/- to the respondent. Furthermore, the award provides that if the appellant fails to pay the amount indicated therein, within 60 days, it would have to pay simple interest at the rate of 8% per annum, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bid was opened on 25.05.2017, and the offer made by the respondent was accepted. 6.4 This led to two (2) purchase orders being issued in the respondent s favour for the supply of transformers and mandatory spares. The purchase order for transformers bore a site price of Rs.10,92,20,600/-, while the purchase order for mandatory spares had a site price of Rs.16,55,460/-. These purchase orders are dated 30.06.2017. 6.5 The respondent sent its acknowledgment qua the purchase orders on 05.07.2017. 7. It is not in dispute that correspondence ensued between the disputants with regard to the submission of drawings/documents through July-August of 2017. 8. Although the Central Goods and Service Tax Act, 2017 was brought into force around June-July of 2017, the purchase orders, erroneously, referred to an earlier tax regime. Upon this aspect being brought to the notice of the appellant, an addendum concerning the purchase orders was issued to the respondent, via e-mail, on 03.08.2017, which was 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months, when 8 out of 46 transformers supplied were commissioned. 18. Thus, based on the appreciation of evidence placed before the learned Arbitrator, he concluded that the appellant had not suffered any loss/injury due to the delay in supply of transformers. In support of this conclusion, the learned Arbitrator relied upon the judgments rendered in Kailash Nath Associates v. Delhi Development Authority, (2015) 4 SCC 136 and Indian Oil Corpn. v. Lloyds Steel Industries Ltd., (2007) SCC OnLine Del 1169. 19. We may also note that the learned Arbitrator has returned a finding of fact that the pleadings concerning the injury/loss on account of delay in the supply of transformers are vague since no specific mention was made as to how and in what manner loss had been suffered. 20. The learned Single Judge, while dismissing the petition filed under Section 34 of the 1996 Act, after hearing counsel for the parties and perusing the record, has come to the same conclusion. 21. 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 impos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arty is required to demonstrate legal injury. 26.1 Thus, section 74 of The Indian Contract Act, 1872 [in short, Contract Act ], which alludes to liquidated damages, does not relieve the aggrieved party from proving that it had suffered a legal injury. The aggrieved party cannot claim compensation unless it can establish that it suffered some loss or damage. 26.2 Liquidated damages, as agreed to between the disputants, represents the maximum amount that can be paid to an aggrieved party. Since damages for breach of contract is paid as compensation, the law requires the defaulting party to pay, even under Section 74 of the Contract Act, reasonable compensation. It is only where, for instance, the contract obtaining between the party is inveigled in complexity, that the law dispenses proof of actual loss or damage. This, however, does not relieve the aggrieved party from establishing that it had suffered legal injury as a result of the breach committed by the 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. The guiding principle is reasonable compensation . In order to see what would be the reasonable compensation in a given case, the Court can adjudge the said compensation in that case. For this purpose, as held in Fateh Chand (supra) it is the duty of the Court to award compensation according to settled principles. Settled principles warrant not to award a compensation where no loss is suffered, as one cannot compensate a person who has not suffered any loss or damage. There may be cases where the actual loss or damage is incapable of proof; facts may be so complicated that it may be difficult for the party to prove actual extent of the loss or damage. Section 74 exempts him from such responsibility and enables him to claim compensation inspite of his failure to prove the actual extent of the loss or damage, provided the basic requirement for award of compensation‟, viz. the fact that he has suffered some loss or damage is established. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... breach of contract under Section 74 can be stated to be as follows: 43.1. Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine pre-estimate of damages fixed by both parties and found to be such by the court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, only reasonable compensation can be awarded not exceeding the penalty so stated. In both cases, the liquidated amount or penalty is the upper limit beyond which the court cannot grant reasonable compensation. 43.2. Reasonable compensation will be fixed on well-known principles that are applicable to 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 sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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