M/S. Indian Farmers Fertiliser ... vs M/S. India Tube Mills & Metal ...
2009 Latest Caselaw 4644 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI
+                         O.M.P. No. 291/2000
                                          13th November, 2009.


M/S. INDIAN FARMERS FERTILISER COOPERATIVE LTD.
                                                            ..Petitioner
                          Through:   Mr. V.K.Makhija, Senior Advocate
                                     with Mr. Manoj Verma, Advocate,
                                     Mr. Vikas Bhadauria, Advocate
                                     with Mr. Saurabh Seth, Advocate.

                     VERSUS


M/S. INDIA TUBE MILLS & METAL INDUSTRIES PVT. LTD.
                                             ...Respondents
                          Through:   Mr. Sumit Sen, Advocate.

CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

     1. Whether the Reporters of local papers may be allowed to see
        the judgment?

     2. To be referred to the Reporter or not?

     3. Whether the judgment should be reported in the Digest?
 %
JUDGMENT (ORAL)

1. This petition under Section 34 of the Arbitration and

Conciliation Act, 1996 challenges the Award dated 24.8.2000 passed

by the sole Arbitrator.

O.M.P. No.291/2000 Page 1

2. The only grievance as raised by the learned senior counsel

for the petitioner against the Award is that the objector was entitled

to make recovery from the bills towards the liquidated damages

because the Arbitrator has held objector/IFFCO is not guilty of breach

of contract by causing delays in performance of the contract. The

learned senior counsel has referred to para 11.2 of the Special

Conditions of the Contract (SCC) which reads as under:

"11.2 In case of delay in completion of the work, for reasons not attributable to the Owner, the Owner shall deduct liquidated damages at the rate of ½% of the Contract Price for each week of delay or part thereof subject to a maximum of 5% of the Contract Price."

The Senior counsel therefore urges that because there is the expression

used in clause 11.2 that "for reasons not attributable to the owner".

The same means that since the Arbitrator has not held the objector

guilty of any delays, the objector was therefore entitled to make

recovery from the bills for liquidated damages in terms of the

aforesaid clause 11.2.

3. In order to appreciate the contention of the counsel for

the objector, it is necessary to refer to paras 41 and 46 of the Award

O.M.P. No.291/2000 Page 2 which are the conclusions arrived at by the Arbitrator with respect to

the issue of delay in performance of the contract. These paras 41 and

46 reads as under:

"41. Thus as a matter of fact the delay which had occurred in completion of the contract is not attributable to ITM and legally also not attributable to IFFCO. Issue No.1 is decided accordingly.

46. The clause entitling IFFCO to impose liquidated damages can be legally invoked if the delay in completion of the contract is due to reasons attributable to ITM. "

4. In view of the aforesaid factual finding, it is quite clear that

the respondent is not guilty of breach of contract, although the

petitioner also may not be guilty in committing breach of contract by

causing delays.

5. The question is what therefore follows. In law, being the

provisions of the Contract Act 1872, damages can be claimed under

Section 73(unliquidated damages) or Section 74(liquidated damages) if

in the first place the guilty party is responsible for the breach of the

contract. In the present case, the guilty party is alleged to be the

respondent. Therefore, it has to be seen whether the

respondent/contractor was guilty of breach of performance by causing O.M.P. No.291/2000 Page 3 delay because it is only if there is breach of contract by the respondent

then the provisions of Section 73 or Section 74 would come into play.

These Sections cannot come into play unless and until a person who is

alleged to be guilty is in fact guilty of breach of contract. Merely

because the person who alleges breach is not guilty of breach of

contract cannot automatically mean that the opposite party is also

automatically guilty of breach of contract. The finding of the

Arbitrator in paras 41 and 46 above ultimately hold the respondent

not guilty of breach of contract in performance of his obligations

under the contract by causing any delays. The law with respect to

challenge to an Award under Section 34 of the Arbitration and

Conciliation Act, 1996 is now well settled. An Award can be

challenged only if the same is against the contractual provisions or is

illegal or is so perverse that it shocks the judicial conscience. I do not

find that in the present case it can at all be said that the Award is in

any manner violative of clause 11.2 of the SCC or the law, namely,

Section 74 of the Contract Act. No perversity has been shown to me

for challenging the finding of the Arbitrator.

O.M.P. No.291/2000 Page 4

6. Once it is held that the respondent is not guilty of breach

of contract, consequently there arises no question of the respondent

being held guilty of liability for liquidated damages in terms of clause

11.2 of the SCC. In the present case, what the respondent claimed

before the Arbitrator was the claim for the work done by it for the

petitioner. It is out of these amounts payable for work done that the

petitioner sought to make recovery for liquidated damages in terms of

clause 11.2 of the SCC. The Arbitrator having found the respondent

not guilty of breach of contract held that the recoveries made by the

objector were not sustainable and therefore allowed the claim of the

respondent/claimant with respect to the amount of work done. I do

not find any fault whatsoever with the Award on the ground on

which the same is sought to be challenged by the objector. No other

ground except what is discussed above has been pressed before me.

7. Accordingly, these objections are dismissed with costs

quantified at Rs.50,000/- which shall be payable within a period of

four weeks from today failing which they shall carry further interest @

18% per annum.

O.M.P. No.291/2000 Page 5

8. The present petition is disposed of accordingly.

                                              VALMIKI J.MEHTA, J
November 13, 2009
Ne/ib




O.M.P. No.291/2000                                              Page 6