Delhi High Court
Gail (India) Limited vs Punj Lloyd Limited on 8 May, 2017
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 01.05.2017.
Pronounced on: 08.05.2017
+ RFA (OS)(COMM) 6/2016 & C.M. APPL.41061-62/2016 &
352/2017
GAIL (INDIA) LIMITED ..... Appellant
Through : Sh. Sanjay Jain, ASG with Sh. N.L.
Ganapathi, Sh. Mitash Charan, Sh. Vignrai
Passayat, Ms. Natasha Thakur and Ms. Adrija
Thakur, Advocates.
versus
PUNJ LLOYD LIMITED ..... Respondent
Through : Sh. J.P. Sengh, Sr. Advocate with Sh.
Manish Jha, Sh. Akhil Bhardwaj and Ms. Manisha
Mehta, Advocates.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE YOGESH KHANNA
MR. JUSTICE S. RAVINDRA BHAT
%
1. The present appeal questions the judgment and order of a learned
single judge, which decreed in part a civil suit filed by the respondent (Punj
Lloyd). The said plaintiff, Punj Lloyd has also preferred cross objections,
which were heard finally, with the consent of counsel for parties. The said
cross objections shall be treated as admitted; the Registry shall accordingly
register it and appropriately number it. The record of the suit and the
proceedings before the learned single judge were called for and were part of
the appeal file at the time of hearing, of this appeal.
2. Punj Lloyd sued to recover `29,15,07,084.80/- from the appellant
(hereafter "GAIL") The suit amount was deducted towards interim liquidated
damages in terms of Clause 57.2 of the Special Conditions of Contract
(SCC) to which the present disputants were parties. Punj Lloyd complained
that GAIL had withheld amounts on account of the liquidated damages
deducted for interim stages delays in the completion of works, in exercise of
GAIL's rights under Clause 57.2 of the SCC from Punj Lloyd's bills.
3. GAIL was to lay down gas pipelines for transportation of re-gasified
natural gas originating from Petronet LNG Terminal at Dahej in Gujarat and
terminating at Vijaipur in Madhya Pradesh. This and other associated
facilities was called the DAHEJ-VIJAIPUR Pipeline Project (DVPL
Project). It consisted of four parts (called "spreads"). The invitation for bids
described the spreads as follows:-
SPREAD DETAILS TOTAL LENGTH (IN KMS)
I. Dahej to Sherpura 169.9
II. Sherpura to Jhabua 100.8
III. Jhabua to Jagoti 152.3
IV. Jagoti to Vijaipur 193.3
4. Punj Lloyd submitted its bid for spreads I, II and III from DAHEJ to
Jagoti for a pipeline length of 423 kms consisting of spreads I, II and III. It
also bid for overall commissioning of the four spreads for the Project. It was
awarded the laying of pipeline work for the Spreads I, II and III. Spread IV
was awarded to another bidder M/s RNGS. Punj Lloyd was also awarded the
commissioning contract for the entire DVPL Project- for all four spreads.
GAIL's Fax of Intent (FOI) intimating the grant of contract for laying of the
pipelines for three spreads and for the commissioning of the entire pipelines
of all four spreads was dated 05.05.2003 (Ex.PW2/2). The detailed Letter of
Acceptance was issued on 14.05.2003 (Ex.PW2/3). The Contract Agreement
was executed on 31.05.2003 (Ex.PW2/4).
5. The contractual time schedule for spreads I, II and III for laying
pipeline, the completion schedule/period prescribed was as follows:-
SPREAD DETAILS COMPLETION PERIOD
I. Dahej to Vemar 7 Months up to pre-commissioning
II. Vemar to Sherpura 7½ Months up to pre-commissioning
III. Sherpura to Jhabua 7½ Months up to pre-commissioning
III. Jhabua to Jagoti 7½ Months up to pre-commissioning
The period of commencement of seven months/seven and a half months was
from 5.5.2003.
6. With respect to commissioning of the DVPL Project, the completion
period (Clause 45.1 of the General Conditions of Contract (GCC)) prescribed
for Dahej to Vemar was 3 weeks for overall
commissioning; Vemar to Sherpura was 6 weeks for overall commissioning,
as was in the case of Sherpura to Jhabua and Jhabua to Jagoti. As compared
to the scheduled date for pre-commissioning being 19.12.2003 (seven or
seven and a half months from 5.5.2003) and the scheduled date for
commissioning of the entire DVPL Project as 30.1.2004, the actual
completion date for spreads I, II and III to the pre-commissioning stage was
22.2.2004 and the actual date of completion of commissioning of all the
spreads was 10.4.2004. It is, therefore, seen that with respect to the pre-
commissioning date there is a delay from 19.12.2003 to 22.2.2004 i.e delay
of approximately 65 days. So far as the date of final commissioning of the
complete DVPL Project is concerned, the actual date of completion was
10.4.2004 instead of 30.1.2004 i.e a delay of 71 days approximately.
7. GAIL deducted liquidated damages on account of the failure of the
plaintiff to complete the works at intermediate dates fixed for the spreads I,
II and III of the pipelines laying project. The defendant has not deducted any
damages on account of delay caused beyond the final date for
commissioning of the work inasmuch as, and as given in detail below, the
defendant has given extension to the plaintiff for completion of the project
upto 10.4.2004 while simultaneously levying interim liquidated damages as
per Clause 57.2 of the SCC for failure of the plaintiff to meet interim
deadlines/dates.
8. Punj Lloyd sued GAIL for the amounts deducted, apart from other
claims. GAIL, in its written statement, inter alia, argued that:
"16. Para 16 of the Plaint is not only incorrect and frivolous,
but the same is also an attempt on part of the Plaintiff to
mislead this Hon'ble Court on fact. As a matter of fact, as per
the records of contract performance maintained at site, there
was a big Punch List towards pending works on part of the
Plaintiff as on 05.02.2004 and the Plaintiff was attending
Electrical/instrumentation/civil works at almost all SV stations
during February/March, 2004. River protection works were
pending at almost all crossing locations. Also pipe-line
swabbing work (an activity required before Mechanical
completion) was not done by the Plaintiff as per the specified
Item in the contract, and therefore, the contention of the
Plaintiff is not correct that the Plaintiff's scope of work upto
pre-commissioning stage was completed on 05.02.2004.
In fact in the present para, the Plaintiff has stated only about
the delay in achieving the final completion of the contract by
the Plaintiff, while suppressing the fact that the Defendant had
levied only Interim Liquidated Damages to the extent of 5.425%
of the value of the contract in terms of Clause 57.2, and that
there was no Liquidated Damages levied on the overall
performance of the contract by the Plaintiff. As a matter of fact,
the contract between the parties duly provided for Interim
Liquidated Damages applicable against delays by the
Contractor in achieving the agreed stipulated targets, "in
addition to" the Liquidated Damages applicable against any
delay in performance of the overall contract. In any event, the
contract was being performed under the direct supervision of
the Engineer-in- charge, whose decision on the said issue was
agreed by the parties to be final and binding against them. It is
submitted at the cost of repetition that the Plaintiff has not
challenged the decision of the Engineer-in-charge at all and the
same is binding against the parties."
9. Six issues were framed in this suit on 15.12.2008; the material issues,
for the present purposes were No. 3 and No. 5:-
"3. Whether the levy of the liquidated damages by the
defendant was not in accordance with the agreement between
the parties and the law and whether the plaintiff is entitled to
recover the suit amount or any other amount from the
defendant? OPP
5. Whether the defendant could deduct intermediate liquidated
damages? OPP"
10. To decide these issues, the conditions of the contract, particularly
Clauses 26.1, 27, 57.1 and 57.2 were taken into account. These are as
follows:
"26.1 CONDITIONS FOR FORCE MAJEURES In the event of
either party being rendered unable by Force Majeures to
perform any obligations required to be performed by them
under the CONTRACT the relative obligation of the party
affected by such Force Majeure shall upon notification to the
other party be suspended for the period during which Force
Majeure event lasts. The cost and loss sustained by the either
party shall be borne by respective parties.
The term "Force Majeure‟ as employed herein shall mean acts
of God, earthquake, war (declared or undeclared), revolts,
riots, fires, floods, rebellions, explosions, hurricane, sabotage
civil commotions and acts and regulations of respective
Government of the two parties, namely the OWNER and the
CONTRACTOR.
Upon the occurrence of such cause (s) and upon its
termination, the party alleging that it has been rendered unable
as aforesaid thereby, shall notify the other party in writing
immediately but not later than 72 (Seventy-two) hours of the
alleged beginning and ending thereof, giving full particulars
and satisfactory evidence in support of its claim.
xxxx xxxxx
xxxxx
27.0 COMPENSATION FOR DELAY (LIQUIDATED
DAMAGES): 27.1 Time is essence of the CONTRACT. In case
the CONTRACT fails to complete the WORK within the
stipulated period then, unless such failure is due to Force
Majeure as defined in Clause 26 here above or due to
OWNER's defaults, the CONTRACTOR shall pay to the
OWNER, by way of compensation for delay and not as penalty,
a sum @ 1/2% (Half Percent) of the VALUE OF CONTRACT
for delay per week on pro-rata for part thereof subject to a
maximum of 10% (Ten percent) of the VALUE OF CONTRACT.
The parties agree that this is a genuine pre-estimate of the
loss/damage which will be suffered on account of delay/breach
on the part of the CONTRACTOR and the said amount will be
payable on demand without there being any proof of the actual
loss or damages caused by such delay/breach.
The decision of the ENGINEER-IN-CHARGE in regard to
applicability of Compensation for Delay shall be final and
binding on the CONTRACTOR.
27.2 All sums payable by way of compensation under any of the
conditions shall be considered as reasonable compensation
without reference to the actual loss or damages which shall
have been sustained.
xxxxxxxxxxxxxx
57.0 WORK IN MONSOON AND DEWATERING:
57.1 The execution of the WORKS may entail working in the
monsoon also. The CONTRACTOR must maintain a minimum
labour force as may be required for the job and plan and
execute the construction and erection according to the
prescribed schedule. No extra rate will be considered for such
work in monsoon.
57.2 During monsoon and other period, it shall be the
responsibility of the CONTRACTOR to keep the construction
work site free from water at his own cost."
The relevant stipulations in the Special Conditions of Contract (SCC)
and are as under:-
"57.0 COMPENSATION FOR DELAY/LIQUIDATED
DAMAGES
57.1 Clause No:27.0 of GCC, pertaining to Compensation For
Delay (Liquidated Damages) stands modified to the following
extent: 57.1.1 "Price Reduction/Liquidated Damages @ 2% of
the total contract/order value per week or part thereof shall be
levied for delay in delivery/completion of work subject to a
maximum of 20% of total contract/order value."
11. These conditions in the SCC underwent a change and the applicable
clauses of Clause 57, additionally thereafter having Clauses 57.1.2, 57.2,
57.2.1, 57.2.2 and 57.3, read as under:
"57.2 Intermediate Compensation for Delay/Liquidated
Damages
57.2.1 Pipeline Laying Schedule as per Appendix-XV to SCC
shall be considered as contractual schedule for the purpose of
determining intermediate compensation for delay, to be paid by
Contractor to Owner, which shall be calculated on the
following basis:
1. No compensation for delay shall be payable in case the
cumulative progress at the end of month in lowering of pipeline
is less upto 5% of corresponding cumulative length as per the
above mentioned schedule.
2. For every 1% additional slippage beyond 5% as mentioned
above in monthly cumulative scheduled progress, compensation
for delay shall be levied @0.5% of contract value subject to
maximum of cumulative 10% of contract value. With this
provision, the compensation for delay shall get re-adjusted with
recovery/improvement in progress by the Contractor in
subsequent months, within the contractual completion period.
For cumulative slippage resulting to compensation for delay
exceeding 10% of contract value, other relevant provisions of
contract document shall be applicable.
57.2.2 Intermediate compensation for Delay/Liquidated
Damages stated in sub- clause 57.2.1 above shall be in addition
to compensation for Delay/Liquidated Damages stated in sub-
clause 57.1.1 of SCC.
57.3 The total liability of the contractor to Owner under sub-
clause 57.1.1 of SCC on Compensation for Delay/Liquidated
Damages and sub-clause 57.2 of SCC on Intermediate
Compensation for Delay/Liquidated Damages shall not exceed
20% (Twenty Percent) of contract value. The compensation on
account of any liability (ies) other than above shall be as per
provisions of bidding document."
15. For completion of narration it is noted that Engineers India
Limited was a consultant of the defendant for the project and the
Engineer-in-Charge of the project as per the definitional Clause 1.3 of
the GCC was the person who was authorized by the defendant and the
defendant authorized the concerned person of Engineers India Limited
as the Engineer-in-Charge of the DVPL Project."
12. It was held by the learned single judge that:
"Admittedly, there were delays on the part of the plaintiff to
complete the project, and as already stated above. Delays exist
because the scheduled date for pre-commissioning was
19.12.2003 whereas the actual date for pre-commissioning for
spreads I, II and III (falling to the share of the plaintiff) was
22.2.2004 and whereas the scheduled date for completion or
commissioning of the entire DVPL Project was 30.1.2004, and
the actual date of commissioning was 10.4.2004. Whereas the
case of the plaintiff is that it was entitled to and was granted
extension of time by the defendant for completion of the project,
the case of the defendant is that though plaintiff was granted
extension upto 10.4.2004; on which date the project was
actually commissioned; however, the defendant is entitled to
interim liquidated damages in terms of Clause 57.2 of the SCC
on account of the plaintiff failing to meet intermediate
deadlines/timelines. I have already reproduced above para 16
of the written statement, and I will refer to the admitted
documents between the parties hereinafter, but one thing is an
undisputed fact between the parties that the liquidated damages
which have been levied upon the plaintiff by the defendant are
not the liquidated damages as per Clause 57.1.1 of the SCC of
delay beyond the final date of the complete project, but the
liquidated damages are interim liquidated damages imposed in
terms of Clause 57.2 with its various sub-clauses of the SCC as
reproduced above. In sum and substance, the contract provided
for liquidated damages upto a maximum of 10% as interim
liquidated damages and further liquidated damages not
exceeding 10% on account of the liquidated damages beyond
the contract completion final date as per Clause 57.1.1 of the
SCC. Clause 57.2.2 of the SCC clarifies that interim
compensation and the interim liquidated damages accordingly
payable in terms of Clause 57.2.1 would be in addition to the
liquidated damages payable as per Clause 57.1.1 of the SCC.
Effectively, therefore a total of 10% interim liquidated damages
and 10% of overall liquidated damages with respect to the last
date fixed for commissioning of the DVPL Project was fixed as
per the aforesaid terms of the contract, totaling to the total
liquidated damages of 20%. We are in the present case only
concerned with the issue as to whether the defendant was
entitled to levy the interim liquidated damages of 5.425% of the
value of the contract in terms of Clause 57.2 of the SCC."
13. After so holding, the learned single judge discussed the law applicable
to damages, under Sections 73 and 74 of the Contract Act and held that only
in the event of actual loss can damages be recovered, relying on Fateh
Chand v Balkishan Dass AIR 1963 SC 1405. The difference between the
grant of damages under Section 73 and 74 of the Indian Contract Act,
besides Section 73 dealing with unliquidated damages and Section
74 dealing with the liquidated damages, is that Section 74 provides the
upper limit of damages which can be granted subject to the condition that the
liquidated damages specified are not in the nature of penalty. Punj Lloyd
argued that neither were there breaches of contract by it inasmuch as time
had been extended for overall completion of the contract, nor was monetary
loss caused to the GAIL inasmuch as once there was extension of time, for
overall completion of the project, no monetary loss for the interim delays
could have been caused to the defendant.
14. It was held that:
"though there are breaches with respect to delays caused qua
interim completion periods of the three spreads of the project
granted to the plaintiff upto the stage of pre-commissioning
inasmuch as the contractual date for pre-commissioning was
19.12.2003 with actual date of pre-commissioning being
22.2.2004, actually there are no legal breaches and no losses
have been caused for the delays in completion of interim stages
of the project to the defendant and the defendant has extended
the period of final completion of the project till 10.4.2004, and
admittedly by which date the entire spreads I, II and III were
constructed by the plaintiff and the entire project from spreads
I to IV were commissioned by the plaintiff for the defendant.
These aspects of existence of breaches of delays at interim
stages of completion of the spreads I to III upto the stage of
pre-commissioning and whether any loss would have been
caused to the defendant merely on account of such preliminary
delays/breaches by failing to meet the interim completion dates,
and grant of extension of time by the defendant to the plaintiff
for completion of the final stage of the work by commissioning
all the spreads I to IV, are subject matter of the
following correspondences entered into between the Engineer-
in-Charge of the project with the defendant; the defendant with
the Engineer-in-Charge and the Engineer-in- Charge with the
plaintiff:-
(i) Letter dated 21.4.2004 by the Engineer-in-Charge of the
project to the defendant, Ex.PW2/6.
(ii) Letter dated 26/27.5.2004 of Engineer-in-Charge to the
plaintiff, Ex.PW2/8.
(iii) Letter dated 3.7.2004 by the Engineer-in-Charge to the
plaintiff, Ex.PW2/7.
(iv) Letter dated 5.7.2004 by the defendant to the Engineer-in-
Charge, Ex.PW2/10.
(v) Letter dated 6.7.2004 by the Engineer-in-Charge to the
plaintiff, Ex.PW2/11.
(vi) Letter dated 16.8.2004 by Engineer-in-Charge to the
plaintiff, Ex.PW2/9.
(vii) Letter dated 1.8.2005 by the defendant to the plaintiff,
Ex.PW2/14."
15. The learned single judge then analyzed the letter dated 21.4.2004
(Ex.PW2/6) of the Engineers India Ltd. The said letter inter alia, said that:
"5.0 EXTENSION OF TIME SCHEDULE The work of pipeline
laying and commissioning was awarded to PLL under single
contract. Though there are separate completion periods for
laying of pipeline for spread I, II, III and for overall
commissioning of pipeline system, the date of commissioning
entire pipeline work, being last activity is considered as
contractual date for completion of total work. Accordingly,
extension of time schedule has been worked out w.r.t. last
activity i.e commissioning of Pipeline System. Although pre-
commissioning of Spreads in PLL scope (Spread I, II &III) was
delayed by 65 days but it has not delayed the commissioning of
pipeline system. From para 4.2, following has been observed:
i) PLL has started Gas-in-activity on 29th February'04
immediately after gas for commissioning was made available.
The commissioning of pipeline system and Performance Test
Runs were completed on 10th April '04.
ii) The last section taken up for commissioning was Spread IVA.
The commissioning for this section was taken up on completion
of pre-commissioning activities by other contractor.
Therefore, completion of Pipeline System was governed by
availability of gas from owner and readiness of spread IVA by
other contractor. In view of above, we are of the opinion that
the time schedule for completion of entire work shall be
extended to the actual date of completion of commissioning i.e
upto 10th April' 04.
6.0 COMPENSATION FOR DELAY/LIQUIDATED DAMAGE
6.1 INTERMEDIATE COMPENSATION FOR
DELAY/LIQUIDATED DAMAGE As on 15th Dec.' 03, the
extended date worked out for completion of lowering of pipeline
(as indicated under para 4.1.3 above), total 358.412 KM of
lowering was completed in 425.905 KM length of pipeline.
Accordingly, the progress of lowering of pipeline works out to
be 84.15% as against scheduled requirement of 100%, which
amounts to delay in lowering of pipeline by 15.85%.
In line with para 2.2.2 above, the liquidated damage shall be
leviable on slippage above 5% i.e on 10.85% (15.85-5.00).
Liquidated damage for this slippage works out to be 5.425% of
contract value @ ½% of contract value for delay of 1% in
lowering (with a ceiling of 10% of contract value).
6.2 FOR DELAY IN COMPLETION OF ENTIRE WORK As
seen under para 4.2.2. above, there is no delay in completion of
commissioning activity by PLL. Therefore, no liquidated
damage is leviable on this account.
xxxxxxxxxxxxxx
7.0 CONCLUSION & RECOMMENDATION
In view of what has been analyzed under para 6.0 above, EIL
recommends the following:
7.1 Extension of time period to PLL for completion of pipeline
lowering upto 15th Dec.'03 and entire work upto 10th April' 04
(till commissioning of entire systems) without compensation for
extended stay or any other claim, may be granted.
7.2 No liquidated damage on account of delay in completion of
commissioning is recommended.
7.3 Liquidated damage on PLL on account of intermediate
delay equivalent to 5.425% of contract value is applicable.
xxxxxxxxxxxxxxxx Keeping in view the best effort made by
contractor for timely completion in line with
project/commissioning requirement of pipeline for his own as
well as other's (RNGS) scope of work in spite of various
difficulties encountered during execution. And also considering
our above recommendation for extension of contract for entire
work completion upto 15.04.04 without levying compensation
for delay/LD, GAIL may consider to condone the intermediate
compensation for delay/liquidated damages as stated in para
7.3 above. While on the subject, it may be appreciated that the
purpose of intermediate LD is basically to pressurize the
contractor for achieving intermediate milestones which in turn
ensures the final completion of job in time.
GAIL may further examine the recommendation and take final
decision on the issue at the earliest, considering the above and
the fact that "Gas-in" as well as commissioning of entire pipe
line was not delayed.
Thanking you and assuring you of our best services at all times,
Very truly yours, Sd/-
16. GAIL's letter dated 5.7.2004 (Ex.PW2/10) to Engineers India Ltd
observed as follows:
"GAIL management has accepted your recommendations
towards extension of contractual completion time period upto
10.04.2004 with an imposition of compensation for delay up to
5.425% of the executed contract value. Accordingly, the same
may be communicated to M/s PLL."
17. The letter, dated 6.7.2004 (Ex.PW2/11) was relied on. Another letter
dated 16.8.2004 (Ex.PW2/9) was noticed and quoted by the learned single
judge. It stated that:
"Sub: Final Time Extension-Pipe laying & Association
facilities-Sp-I, II & III. Ref: LOA
No.GAIL/NOIDA/C&P/4844/02-134-006/C-369 dated
14.05.03. Dear Sir, This has reference to your letter
No.PLL/PROJ/PIIN01/116/099 dated 09.06.2004,
PLL/PROJ/PIIN01/116/098 dated 09.06.2004 and
PLL/DVPL/PIIN01/101/535 dated 14.07.04 regarding final
time extension for aforementioned contract. The following had
been considered in recommending final extension of time for
above referred contract in line with contract provisions.
1. The contract of Spread-I, II & III upto "GAS-IN" has been
considered as one contract in line with ITB clause 34.3. The
overall completion upto 10th April 2004 has been granted with
intermediate compensation for delay/Liquidated Damages
limited to 5.425% of contract value.
2. The delay due to rain has been considered as per contract
provisions. The delay of Seventeen days has been considered
for Dahej to Vemar Section. In spread II and III, the delay of
one and two days respectively has been considered. All the
above delays have been concurrent.
3. The delay of two days has been considered for stoppage of
work in ROU in Dahej to Vemar Section.
4. The delay of fifteen days has been considered due to delay in
forest clearance in Spread II.
5. Accordingly, the contractual completion time for lowering
has been extended upto 15th Dec‟03 in line with SCC Clause
4.5 and GCC Clause 45.1. The lowering completed on 15th
Dec‟03 was 358.412 KM against total 425.905 KM. The
intermediate Compensation for Delay/LD against lowering
works out to be 5.425% of contract value as per contractual
provisions i.e. SCC Clause 57.2.
6. No price Reduction/Liquidated Damages against SCC
Clause 57.1.1. have been levied for delay in overall completion
of works.
7. The total liability under sub clause 57.1.1 of SCC on
Compensation for Delay/Liquidated Damages and sub clause
57.2 of SCC on intermediate Compensation for
Delay/Liquidated Damages has been restricted to 5.425% of
contract value as per the provisions of the contract. Thanking
you, Very truly yours, Sd/-
18. According to the learned single judge, a cumulative reading of the said
portions of the letters Ex.PW2/6, PW2/10, PW2/11 and PW2/9 showed two
aspects: one, that no liquidated damages were imposed with respect to
overall completion of the project/works and two liquidated damages were
only imposed in terms of Clause 57.2 of the SCC towards intermediate
compensation for delay, and being restricted to 5.425% of the contract value.
He then rendered his findings as follows:
"22. The facts of the present case are very peculiar with respect
to the issue as to whether or not legally, the liquidated damages
being the interim liquidated damages for interim delays, ought
or ought not to be imposed i.e whether such damages are
legally allowable or not legally allowable as per Section 74 of
the Indian Contract Act. In order to answer this issue, it is
required to be noted that failure to meet intermediate
compliance schedules of spreads I to IV with their scheduled
dates of completion would not have caused monetary losses to
the defendant as actual transportation of gas through the
pipelines laid was not envisaged on completion of interim
stages of spreads I to III. What is being stated by this Court is
that it is not as if there was a commencement point at the
beginning of spread I with a point of delivery at the end of
spread I or spread II or spread III, i.e commencement of
delivery of gas to a customer by commencement of
transportation at spread I with ending at end point of spread I
or spread II or delivery point commencing for that matter at the
beginning of spread II to end at spread II with the end point of
spread II or spread III etc etc. Meaning thereby, there was no
transportation of gas to be done at any midpoint between
spreads I to IV and the supply of gas by the defendant to its
customers was only to be at the end point of spread IV.
Therefore unless the entire pipeline was laid down for the four
spreads and commissioning of the same was also done, there
was no question of gas being supplied by the defendant to its
customer viz Petronet LNG and which was only at the end point
of spread IV. In these peculiar facts, even if therefore there
existed interim delays of completion of stages of spreads I to IV,
once the defendant gives extension of time for completion of the
project till the project was actually commissioned on 10.4.2004,
intermediate dates of completion and breaches would not result
in any loss of profits or any other monetary loss to the
defendant on account of the facts that on account of these
delays there was no failure of the transportation of the gas by
the defendant to any of its customers including Petronet LNG
i.e no loss of profits to the defendant. In my opinion, therefore,
in the peculiar facts of this case, defendant was not entitled to
fix and demand liquidated damages for interim delays from the
plaintiff as interim delays have not caused any monetary loss to
the defendant once the project completion date upto
commissioning was extended upto 10.4.2004 by the defendant
as evident from Ex.PW2/10, Ex.PW2/11, and Ex.PW2/9 dated
5.7.2004, 6.7.2004 and 16.8.2004 respectively as reproduced
above. It is not the case of the defendant that liquidated
damages have been levied for delay in final completion of
works inasmuch as the final date of completion stands extended
to 10.4.2004, and the case of the defendant is only of interim
compensation for delays in not meeting interim timelines. This
stand of the defendant becomes abundantly clear from paras 6
and 7 of Ex.PW2/9 dated 16.8.2004 of the Engineer-in-Charge
to the plaintiff and para 16 of the written statement of the
defendant. Thus two aspects emerge of firstly of the damage
amount claimed by the defendant from the plaintiff being
5.425% of the contract and secondly that this is the figure of
interim liquidated damages in terms of the written statement
and the documents Ex.PW2/6, Ex.PW2/10, Ex.PW2/11 and
Ex.PW2/9. Therefore, the only claim of the defendant is
towards interim liquidated damages but interim breaches of
contract in the facts of the case have not caused any monetary
loss to the defendant and therefore for the defendant to claim
interim liquidated damages from the plaintiff.
23. In view of the above, issue nos.3 to 5 are decided in favour
of the plaintiff and against the defendant and it is held that
since no monetary loss was caused to the defendant by any
delay caused by the plaintiff for failure to meet interim
timelines for the interim stages of performance during the
spreads I to III of the contract, hence, plaintiff is not liable to
pay any liquidated damages to the defendant under Clause 57.2
of the SCC. For the sake of completion of discussion, I would
like to note that there is no evidence led on behalf of the
defendant with respect to any monetary loss suffered for any
failure to comply with the interim timeline by the plaintiff, and
which in my opinion, in any case, would not have been possible
in the facts of the present case as stated above because the
issue of transportation of gas was only after civil works of
laying of the pipelines from commencement of spread I to
spread IV was completed and also the commissioning took
place of the entire DVPL Project by the transportation of gas in
the pipeline from the commencement of spread I to the end of
spread IV.
Relief
24. In view of the above, the suit of the plaintiff is decreed
against the defendant for an amount of Rs.17,79,76,710/- plus
Indian equivalent of US$ 7,79,536 as on the date of the filing of
the suit i.e Rs.3,17,62,194.32/-. I may note that in view of the
judgment of the Supreme Court in the case of Forasol Vs. Oil
and Natural Gas Commission, AIR 1984 SC 241, plaintiff has
exercised the option of conversion of US dollar into Indian
rupees as on the date of the filing of the suit. On the date of the
filing of the suit the conversion rate of dollar into Indian rupees
was Rs.40.7450/- for every US dollar. The suit is therefore
decreed for a total amount of Rs.20,97,38,904.32/-. Plaintiff is
also entitled to interest pendente lite and future till payment @
6% per annum simple in view of Section 34 CPC. In the
peculiar facts of this case, however, parties are left to bear
their own costs. Decree sheet be prepared."
Arguments in appeal:
19. Sh. Sanjay Jain, learned Additional Solicitor General appearing for
GAIL argued that the impugned judgment is unsustainable for the reason that
the rule of damages enunciated in ONGC v. Saw Pipes 2003 (5) SCC 705,
was overlooked. The Supreme Court had clearly stated that where the
agreement unambiguously recorded/stipulated liquidated damages in the case
of breach of contract, unless it is found that the estimate of damages or
compensation was unreasonable or was not genuine or was by way of
penalty, the party committing breach had to pay that amount and the party
complaining of the breach was not under an obligation to prove actual loss. It
was argued that the learned Single Judge failed to appreciate that the
extension time of the entire contract, particularly the commissioning contract
was conditioned upon payment of interim liquidated damages at 5.425% of
the contract value in terms of the provisions, i.e. Clause 57.2. Furthermore,
importantly, the EIL's letter dated 06.07.2004 and the letter dated 16.08.2004
(by GAIL) also pointed to a qualified extension with the imposition of levy
of intermediate liquidated damages. Significantly, the levy of such
intermediate liquidated damages was never disputed at the time it was
granted in August, 2004.
20. GAIL urges that the impugned judgment is in error of law in holding
that, "no loss had occurred due to intermediate delays when though the
parties had expressly and unambiguously agreed that the intermediate delay
in lowering of pipelines would result in losses and that 1/2% of the contract
value per week or part thereof (subject to a maximum of 10%) was a genuine
pre-estimate of such losses and that the said stipulation was not a penalty.
The said finding of the learned Single Judge is contrary to the intention of
the parties and amounts to rewriting the terms of the contract which is
impermissible in law."
21. It is argued that the learned Single Judge erred in presupposing the
loss caused by delayed transportation of gas to customers (given by the loss
for GAIL as a result of delay of work by Punj Lloyd). It is next urged that
the interpretation of the expression "in addition to" in clause 57.2 clarified
that such intermediate liquidated damages was unconnected with the
independent liquidated damages stipulated in clause 57.1.1. As a corollary,
losses due to delay in intermediate milestones were in addition to and
independent of the losses that the parties contemplated would arise in the
completion of the entire contract.
22. Learned ASG referred to the impugned judgment and submitted that
the evidence led in the form of letters written by EIL and GAIL with respect
to unsatisfactory progress of the work at site, was not even adverted to or
considered by the learned Single Judge. Learned counsel relied upon a letter
dated 16.09.2003 (Ex. DW-1/4) which had rejected overlooking of delays in
mobilization of equipment; letter of 18.09.2003 (Ex. PW-1/5) with respect to
inadequate mobilization of equipment, shifting of equipment to other
stretches that affected work progress and the letter of EIL dated 25.09.2003
(Ex. D-1/6) which conveyed the satisfaction with the progress of work.
Likewise, reliance was also placed upon the letters [Ex. PW-1/9, 1/10, 1/11
and 1/16]. The last, i.e. PW-1/16 was emphasized to highlight that Punj
Lloyd had failed to appreciate farmers' grievances at the work site which in
turn harmed the GAIL resulting in several disputes. The other letters with
respect to indifferent progress in various areas such as defective planning,
consistently falling behind the agreed schedules etc. were relied upon.
23. Learned counsel relied upon Maula Bux v.UOI 1969 (2) SCC 554, to
highlight that it is not in every case of breach of contract that the person
aggrieved is expected to prove actual loss or damages before the Court and
the Court is within powers to award reasonable compensation even if no
actual damages is proved to be suffered. It is highlighted that in Maula Bux
(supra) the Court held that in case of breach of some contracts, it may be
impossible for the court to assess compensation arising from the breach
while in other cases, compensation can be calculated in accordance with
established rules. Where the Court is unable to assess the compensation, the
sum named by the parties, if it be recorded as a genuine pre-estimate may be
taken into consideration as a measure of reasonable compensation. But not if
the sum named is in the nature of a penalty. Learned counsel also relied upon
H.M. Kamaluddin Ansari and Co. v. Union of India 1983(4) SCC 417, to say
that in a contract such as the present, it was open to GAIL to appropriate any
sum payable to contractors. Learned ASG also relied upon the ruling in
Construction and Design Services v. Delhi Development Authority 2015 (14)
SCC 263). The Court observed as follows:
"14. There is no dispute that the appellant failed to execute the
work of construction of sewerage pumping station within the
stipulated or extended time. The said pumping station certainly
was of public utility to maintain and preserve clean
environment, absence of which could result in environmental
degradation by stagnation of water in low lying areas. Delay
also resulted in loss of interest on blocked capital as rightly
observed in para 7 of the impugned judgment of the High
Court. In these circumstances, loss could be assumed, even
without proof and burden was on the appellant who committed
breach to show that no loss was caused by delay or that the
amount stipulated as damages for breach of contract was in the
nature of penalty. Even if technically the time was not of
essence, it could not be presumed that delay was of no
consequence. Thus, even if there is no specific evidence of loss
suffered by the respondent-plaintiff, the observations in the
order of the Division Bench that the project being a public
utility project, the delay itself can be taken to have resulted in
loss in the form of environmental degradation and loss of
interest on the capital are not without any basis."
24. Sh. J.P. Sengh, learned senior counsel appearing for Punj Lloyd relied
upon Ex. PW-2/6, i.e. the letter of the EIL, making its recommendations to
GAIL. He emphasized that Punj Lloyd, despite severe monsoon, continued
to work to the utmost extent possible and that its overall conduct was such
that even though levy of intermediate delay/liquidated damages had been
indicated in para 6, EIL went on to say that:
"7.0 CONCLUSION & RECOMMENDATION
In view of what has been analyzed under para 6.0 above, EIL
recommends the following:
7.1 Extension of time period to PLL for completion of pipeline
lowering upto 15th Dec. 03 and entire work upto 10th April 04 (till
commissioning of entire systems) without compensation for extended
stay or any other claim, may be granted.
7.2 No liquidated damage on account of delay in completion of
commissioning is recommended.
7.3 Liquidated damage on PLL on account of intermediate delay
equivalent to 5.425% of contract value is applicable.
It has also been noticed that during severe and extended
monsoon, the contractor proactively continued the work to the extent
possible, even at high cost, without resorting for stoppage which
would have entitled them for time extension. Also, the contractor took
the risk of executing the work in forest areas, even without formal
clearance of statutory authorities by close interaction with local
authorities/GAIL in the overall interest of the project.
It will not be out of place to mention here that the contractor extended
all possible help to GAIL/EIL in completing the offloaded work of
other contractor, M/s. RNGS who failed miserably. This in turn
resulted in timely completion/commissioning of DVPL pipeline and
commitments made by GAIL to M/s. Petronet LNG could be honoured.
Keeping in view the best effort made by contractor for timely
completion in line with project/commissioning requirements of
pipeline for his own as well as other's (RNGS) scope of work in spite
of various difficulties encountered during execution. And also
considering our above recommendation for extension of contract for
entire work completion upto 15.04.04 without levying compensation
for delay/LD, GAIL may consider to condone the intermediate
compensation for delay/liquidated damages as stated in para 7.3
above.
While on the subject, it may be appreciated that the purpose of
intermediate LD is basically to pressurize the contractor for achieving
intermediate milestones which in turn ensures the final completion of
job in time."
25. Learned counsel contrasted the language of clause 27.1 of the
General Conditions of Contract which specifically talked about time being of
essence of the contract and also stipulated compensation "not as a penalty a
sum @ ½ % (half percent) of the value of contract for delay per week on
pro-rata for part thereof subject to a maximum of 10% (ten percent) of the
value of the contract. The parties agree that this is a genuine pre-estimate of
the loss/damage which will be suffered on account of delay/breach on the
part of the contractor and the said amount will be payable on demand
without there being any proof of the loss of such loss or damages caused by
such delay/breach." It was submitted that the original clause 57.2, especially
the payment of intermediate compensation for delay/liquidated damages did
not exist and parties introduced it after the agreement. This provision did not,
significantly, mention that the damages or compensation for delay was a
genuine pre-estimate of the loss. The contrast in the language, according to
the learned counsel, was significant in that it did not relieve GAIL of the
onus of establishing and proving actual loss. It was, therefore, submitted that
the rule that not in all cases is an aggrieved party obliged to prove loss, and
that there can be some cases where it can be relieved of such burden, is
inapplicable to the facts of the present case.
26. Learned senior counsel argued that in the present case, the
findings of the learned Single Judge as to the actual conduct of the contract
show that in fact there was no delay in the performance of the
commissioning contract and as a consequence there was no loss to GAIL. In
the circumstances, the case law relied upon by it, i.e. Maula Bux (supra)
were inapt. Learned counsel relied upon the judgment reported as Kailash
Nath Associates v. DDA (2015) 4 SCC 136, to say that only reasonable
compensation in respect of the incurred or suffered losses/damages can be
accepted by the aggrieved party. In these circumstances, the letter of EIL
recommending extensions on the one hand and at the same time saying that
the conduct of Punj Lloyd was such that intermediate delayed compensation
should not be levied, was a powerful factor that weighed against the award
of damages or entitled GAIL to take such amounts on the automatic
assumption of loss. GAIL, as a matter of fact, did not lead any evidence or
prove loss and could not, therefore, claim any amount in that regard.
Cross objection
27. Learned senior counsel argued that the plaintiff/Punj Lloyd's
cross-objection in this appeal highlights that the suit filed was for recovery
of US$ 779536.21 and the amount sought for in final relief was in Indian
Rupees solely for the purpose of calculating court fees. It was urged that the
learned Single Judge while decreeing the suit should have applied the
exchange rate for payment of US$ and not the rates prevailing at the time of
the suit. It was also argued importantly, that the learned single judge
accepted the plaintiff's contentions but did not grant any pre-suit interest
which has been specifically sought @ 12%. In this regard, it was submitted
that the suit had claimed `29,15,07,084.80 together with interest @ 18% per
annum from 04.07.2004, i.e. from the date of cause of action when the
amounts were deducted on the assumption of liability. In the absence of any
reasons, learned Single Judge could not have refused the grant of any interest
for the pre-suit period. That the decree granted pendente lite and future
interest only highlighted the learned Single Judge's awareness that
withholding of sums due could result in severe economic consequences. The
omission to adduce any reasons for refusing to grant interest on a substantial
amount for three years, i.e. the pre-suit period was, therefore, a clear error of
law. Learned counsel highlighted that having regard to the totality of
circumstances, the rate claimed, i.e. 18% was justified and legal.
Analysis and Conclusions
28. Kailash Nath Associates (supra) is an authority of recent vintage on
the question of the power of the principal to invoke the performance
guarantee condition, notwithstanding its inability to recover liquidated
damages specified in a contract. The Supreme Court had considered the law
in Fateh Chand's case (supra) and several other decisions, and held as
follows:
"The law laid down by a Bench of 5 Judges in Fateh Chand's
case is that all stipulations naming amounts to be paid in case
of breach would be covered by Section 74. This is
because Section 74 cuts across the rules of the English
Common Law by enacting a uniform principle that would apply
to all amounts to be paid in case of breach, whether they are in
the nature of penalty or otherwise.
43. On a conspectus of the above authorities, the law on
compensation for breach of contract under Section 74 can be
stated to be as follows:
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.
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.
3. Since Section 74 awards reasonable compensation for
damage or loss caused by a breach of contract, damage
or loss caused is sine qua non for the applicability of the
Section.
4. The Section applies whether a person is a plaintiff or a
defendant in a suit.
5. The sum spoken of may already be paid or be payable
in future.
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.
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."
29. In ONGC (supra), after noticing Maula Bax (supra) the Supreme
Court held that in certain eventualities parties may contemplate payment of
damages or compensation to cater to specific situations because the
quantification of such damages by evidence is impossible or impracticable.
The Court observed as follows:
"Under Section 73, when a contract has been broken, the party
who suffers by such breach is entitled to receive compensation
for any loss caused to him which the parties knew when they
made the contract to be likely to result from the breach of it.
This section is to be read with Section 74, which deals with
penalty stipulated in the contract, inter alia (relevant for the
present case) provides that when a contract has been broken, if
a sum is named in the contract as the amount to be paid in
case of such breach, the party complaining of breach is
entitled, whether or not actual loss is proved to have been
caused, thereby to receive from the party who has broken the
contract reasonable compensation not exceeding the amount
so named. Section 74 emphasizes that in case of breach of
contract, the party complaining of the breach is entitled to
receive reasonable compensation whether or not actual loss is
proved to have been caused by such breach. Therefore, the
emphasis is on reasonable compensation. If the compensation
named in the contract is by way of penalty, consideration
would be different and the party is only entitled to reasonable
compensation for the loss suffered. But if the compensation
named in the contract for such breach is genuine pre-estimate
of loss which the parties knew when they made the contract to
be likely to result from the breach of it, there is no question of
proving such loss or such party is not required to lead evidence
to prove actual loss suffered by him.
67........In our view, in such a contract, it would be difficult to
prove exact loss or damage which the parties suffer because of
the breach thereof. In such a situation, if the parties have pre-
estimated such loss after clear understanding, it would be
totally unjustified to arrive at the conclusion that the party who
has committed breach of the contract is not liable to pay
compensation. It would be against the specific provisions
of Section 73 and 74 of the Indian Contract Act. There was
nothing on record that compensation contemplated by the
parties was in any way unreasonable. It has been specifically
mentioned that it was an agreed genuine pre- estimate of
damages duly agreed by the parties. It was also mentioned
that the liquidated damages are not by way of penalty. It was
also provided in the contract that such damages are to be
recovered by the purchaser from the bills for payment of the
cost of material submitted by the contractor. No evidence is led
by the claimant to establish that the stipulated condition was
by way of penalty or the compensation contemplated was, in
any way, unreasonable. There was no reason for the Tribunal
not to rely upon the clear and unambiguous terms of
agreement stipulating pre-estimate damages because of delay
in supply of goods. Further, while extending the time for
delivery of the goods, the respondent was informed that it
would be required to pay stipulated damages."
30. Again, in Bharat Sanchar Nigam Ltd v Reliance Communication Ltd
2011 (1) SCC 394, it was observed by the court, that:
"17. According to Chitty on Contracts "whether a provision is
to be treated as a penalty is a matter of construction to be
resolved by asking whether at the time the contract was entered
into the predominant contractual function of the provision was
to deter a party from breaking the contract or to compensate
the innocent party for breach. The question to be always asked
is whether the alleged penalty clause can pass muster as a
genuine pre-estimate of loss". (See para 26-126 of Chitty on
Contracts, 30th edition) The fact that damage is difficult to
assess with precision strengthens the presumption that a sum
agreed between the parties represents a genuine attempt to
estimate it and to overcome the difficulties of proof at the trial.
According to the Law of Contract by G.H. Treitel (10th
edition), a clause is penal if it provides for "a payment
stipulated as in terrorem of the offending party to force him to
perform the contract. If, on the other hand, the clause is an
attempt to estimate in advance the loss which will result from
the breach, it is a liquidated damages clause. The
question whether a clause is penal or pre-estimate of damages
depends on its construction and on the surrounding
circumstances at the time of entering into the contract". Lastly,
the fact that a sum of money is payable on breach of contract is
described by the contract as "penalty" or "liquidated damages"
is relevant but not decisive as to categorization."
31. GAIL'S argument is that the parties' agreement that intermediate
delay compensation, at the agreed rate was a genuine pre-estimate of
liquidated damages that Punj Lloyd agreed to pay to it, if there were indeed
delays. Punj Lloyd does not dispute that the clause was agreed to voluntarily;
it however premises its resistance to the appeal, on the argument that sans
proof of actual loss suffered, the amount could not be recovered from it, and
further that the overall commissioning was not delayed.
32. The commissioning of the three spreads was over a period of 7 to 7½
months each. The performance of these contracts, treated as one whole
meant that Punj Lloyd had to ensure that equipment was in place, the
requisite material and men were on site and all necessary work (welding,
joining etc) was done according to a pre-arranged schedule. Now, there is no
dispute that there were intermediate delays - to the extent of about 65 days.
If one sees from the perspective of the contractor (Punj Lloyd) that this did
not impact the final commissioning schedule, undoubtedly the imposition of
the liquidated damages clause would seem unjustified. However, two aspects
are to be kept in mind here: first, that when bidding was done, there was
every likelihood of different contractors being declared successful in respect
of different spreads, which would have meant that as far as they were
concerned this condition was essential to ensure compliance with timelines.
That one party (Punj Lloyd) secured three spreads was providential, perhaps
a coincidence. Secondly, the objective of this condition was to ensure that
timelines were adhered to. For instance, if one spread were completed in
time and the other not completed in time, there could potentially be an
adverse impact on the commissioning/overall pipeline laying schedule.
Furthermore, at the time when the delays occurred, the final picture was
unknown. The nuanced nature of the condition, introduced as an amendment
meant that the parties were alive to these details and voluntarily agreed that
such compensation was recoverable. The court finds insubstantial the
argument of Punj Lloyd that omission to the reference to the liquidated
damages from the later condition, agreed to by the parties, meant that
necessarily GAIL had to prove actual damage, to recover the amounts
agreed. It is well settled that the nature of a condition does not depend on its
nomenclature, but on its effect having regard to the overall circumstances of
the case.
33. Punj Lloyd's position that certain events (excessive rainfall, delayed
forest clearance and hold up on account of villagers' ire) being the reason for
delays, in the opinion of the court, are not sufficient to absolve its liability.
When it accepted the contract, it was aware of the possibility of rainfall in
the areas where it had to operate; this included inclement conditions such as
excessive rainfall, etc. Its inability to provide and plan in certain matters
(welding, etc) despite these conditions, actually indicates its failure. It is not
unknown for such activities to be performed in extreme weather conditions.
The challenge is to perform the job in the agreed time, ensuring that all
resources are deployed. Likewise, this court was not shown anything to
suggest that forest clearance or permissions were outside Punj Lloyd's
domain. They certainly were not force majeure situations. Therefore it could
not have legitimately sought shelter because of those facts, to claim
immunity from payment of compensation.
34. These considerations apart, there is sufficient correspondence after the
letter dated 21 July 2003 (i.e. Ex. DW-1/4, DW-1/5 and DW-1/6, DW-1/9,
DW-1/11 and DW-1/16 clearly shows that even after August, 2003, EIL, the
consultant, repeatedly wrote to Punj Lloyd about slippages in work and delay
in completion within the scheduled time agreed in the spreads for which
contracts were awarded. These, in the opinion of the court, emphasize that
the consultant and GAIL were concerned about the timely performance of
the contract, evident from close monitoring of the progress of work at site.
Besides, Punj Lloyd does not appear to have in any meaningful manner,
registered its protest contemporaneously with respect to the decision
communicated that liquidated damages would be levied for the intermediate
period delays.
35. This court is of the opinion that considering all these materials on
record, the stipulation in clause 57.2.1and the amounts deducted were by
way of liquidated damages and a genuine pre-estimate of the loss calculated
in monetary terms. They were not merely precautionary conditions not meant
to be enforced, but conditions that could be insisted upon, as is evident from
clause 57.2.2, which clarifies that"compensation for Delay/Liquidated
Damages stated in sub- clause 57.2.1 above shall be in addition to
compensation for Delay/Liquidated Damages stated in sub-clause 57.1.1 of
SCC." Furthermore, the overall cap on damages at 20% (Clause 57.3)
includes intermediate liquidated damages contemplated under clause 57.1.1.
These intermediate delay liquidated damages were of the kind contemplated
in Maula Bux (supra) and Bharat Sanchar Nigam (supra), which the parties
agreed, would be payable by one of them (Punj Lloyd) without proof of
actual loss.
36. For the above reasons, this court is of the opinion that the appeal
should succeed. The impugned judgment and decree is set aside;
consequently Punj Lloyd's suit is dismissed. The appeal is accordingly
allowed. Punj Lloyd's cross objections to the appeal too, for the above
reasons, have to fail. The appeal is allowed and cross-objections are
dismissed.
S. RAVINDRA BHAT
(JUDGE)
YOGESH KHANNA
(JUDGE)
MAY 8, 2017
