IN THE HIGH COURT OF DELHI AT NEW DELHI
  
  
  
  O.M.P. 771 of 2010
  
  
  
  BWL LIMITED ..... Petitioner
  
  Through: Mr. D.K. Malhotra and Mr. Rajesh Kumar
  
  Malhotra, Advocates.
  
  
  
  
versus
  
  
  
  UNION OF INDIA and ANR ..... Respondents
  
  Through: Mr. Sukumar Pattjoshi, Advocate.
  
  Mr. A.K. Jain, Arbitrator, presently
  
  Director (HR), BSNL.
  
  
  
  And
  
  
  
  O.M.P. 772 of 2010
  
  
  
  BWL LIMITED ..... Petitioner
  
  Through: Mr. D.K. Malhotra and Mr. Rajesh Kumar
  
  Malhotra, Advocates.
  
  
  
  
Versus
  
  
  
  UNION OF INDIA and ANR ..... Respondents
  
  Through: Mr. Sukumar Pattjoshi, Advocate.
  
  Mr. A.K. Jain, Arbitrator, presently
  
  Director (HR), BSNL.
  
  
  
  
  
  CORAM: JUSTICE S. MURALIDHAR
  
  
  
  ORDER
  
   04.07.2012
  
  
  
  1. OMP No.771 is by BWL Limited challenging an Award dated 21st
  September 2010 passed by the sole Arbitrator in the disputes between it
  and Union of India through the Ministry of Telecommunication (Respondent
  No.1) and the Bharat Sanchar Nigam Ltd. (?BSNL?, Respondent No.2).
  
  
  
  2. OMP No.772 of 2010 is another petition by BWL Limited under Section
  34 of the Arbitration and Conciliation Act, 1996 (?Act?) challenging the
  Award dated 23rd September 2010 passed by the sole Arbitrator in the
  disputes between the parties.
  
  
  
  3. The background to the present petitions is that Respondent No.1,
  through the Department of Telecommunications (?DoT?) floated a tender
  dated 10th September 1998 for procurement of 2292 Kms. of 6F Aerial
  Optical Fibre Cable along with accessories and fixtures. The items had
  to be procured by the bidder only through the type approved sources. The
  supplies were to be made within two to six months from the date of the
  Purchase Order (?PO?).
  
  
  
  4. The Petitioner submitted its offer on 14th October 1998 and the
  tender was opened on 15th October 1998.
  
  
  
  5. The Respondents thereafter issued an Advance Purchase Order (?APO?)
  to the Petitioner on 4th January 1999 for supply of 1146 Kms. of 6F
  Aerial Optical Fibre Cable with accessories. The Petitioner gave its
  acceptance to the APO dated 4th January 1999 by a letter dated 22nd
  January 1999 and also furnished a bank guarantee in the sum of
  Rs.30,22,000 valid upto 21st January 2001.
  
  
  
  6. In the meantime, the Petitioner was issued one additional purchase
  order for supply of 304 kms. of Aerial Optical Fibre Cable along with
  fixtures. The Petitioner was issued another APO dated 8th June 1999.
  APO dated 26th July 1999 for the 304 kms of Aerial Optical Fibre cable
  was thereafter issued. According to the Petitioner, the delivery period
  of six months was unilaterally reduced to three months by the
  Respondents.
  
  
  
  
  
  7. It is stated that the Petitioner applied for type approval including
  that of infrastructure assessment on 17th November 1998. Type approval
  was granted by the TEC on 2nd July 1999 i.e. after a period of almost
  eight and a half months whereas the original delivery period was only
  four months. The Petitioner kept requesting the Respondent for extending
  the delivery period upto 31st May 2000 without levy of liquidated
  damages. It was further pointed out that the Petitioner?s inventory of
  6F Aerial Cable of the sum of Rs.7 to 8 crores was blocked and it could
  be liquidated on receipt of the extension of the delivery period. By a
  letter dated 19th May 2000, the Respondents extended the delivery period
  but with liquidated damages. It was further stated that the extension
  was only at provisional prices which was subject to further adjustments.
  
  
  
  8. It is stated that by a letter dated 19th May 2000, the Respondents
  threatened to impose liquidated damages (?LD?) as well as change the
  contractual price. This was protested by the Petitioner. It is stated
  that the Respondents levied LD on the supplies totaling to Rs.39,63,730.
  Further, the Respondents simultaneously and unilaterally imposed lower
  rates on the supplies made, thereby deducting further a total amount of
  Rs.22,02,391 from what was due to the Petitioner as per the original
  contract rates. On the other hand, it was contended by the Petitioner
  that upon successful completion of the PO within the extended delivery
  period, it was entitled to the price of the goods supplied at the agreed
  rates in the sum of Rs.9,10,56,834. Contesting the recovery of LD by the
  Respondent, the Petitioner filed a claim in the sum of Rs.22,02,730 being
  the illegal reduction in rates by the Respondent plus Rs.39,63,730 being
  the reduction made towards LD totalling to Rs.61,66,121 along with
  interest at 24%.
  
  
  
  9. The above claim was the subject matter of the Award dated 21st
  September 2010 of the learned sole Arbitrator, which Award has been
  challenged in OMP No.771 of 2010. In relation to the deduction of LD by
  the Respondent in the sum of Rs.11,89,303, the same was challenged by the
  Respondent and the dispute was referred to a separate arbitration in
  which the learned Arbitrator passed an Award dated 23rd September 2010.
  This Award has been challenged by the Petitioner in OMP No.772 of 2010.
  
  
  
  10. Both petitions were heard on 3rd January 2011. As regards OMP
  No.771 of 2010, this Court on the said date passed the following order:-
  
  ?O.M.P. 771/2010
  
  
  
  This petition has been preferred by the petitioner under section 34 of
  the Arbitration and Conciliation Act to seek the setting aside of the
  arbitral award?dated 21.09.2010 passed by the learned sole arbitrator Sh.
  A.K. Jain.??
  
  
  
  The petitioner was awarded the contract for supply of optical fibre
  cable?along with accessories and fixtures. The purchase order was issued
  on?02.02.1999. The petitioner was granted four months time from the date
  of?issuance of the purchase order to complete the deliveries, i.e. by
  01.06.1999.??The TAC was, however, granted belatedly, i.e. on 02.07.1999.
  Consequently, the?petitioner was granted extension of time for completion
  of deliveries upto?27.02.2000 without levy of liquidated damages.
  However, the petitioner did not?make the deliveries of the contracted
  materials on time. On the request of the?petitioner, the delivery period
  was extended upto July 2000, subject to?liquidated damages and also with
  a condition that the supplies shall be made at?provisioning unit prices @
  90% of the price finalized for the year 1999-2000.??The respondent levied
  liquidated damages to the tune of Rs.39,63,730/- and also??deducted an
  amount of Rs.22,02,391/- towards the price difference, i.e. the??original
  price at the time of issuance of the purchase order and the
  subsequent??price finalized for the year 1999-2000. The petitioner
  preferred claims in?respect of the aforesaid two amounts.??The learned
  arbitrator has rendered the award on the basis of the?following findings
  returned by him. Firstly, he holds that time was of the?essence of the
  contract and delivery should have been complete not later than?the dates
  specified in the purchase order. He takes note of clause 16 of
  the?General (Commercial) Conditions of Contract, which prescribes the
  conditions for?imposition of liquidated damages. The said clause reads as
  follows:
  
  
  
  ?16. Liquidated Damages
  
  
  
  16.1 The date of delivery of the stores stipulated in the acceptance of
  tender should be deemed to be the essence of the contract and delivery
  must be?completed not later than the dates specified therein. Extension
  will not be given except in exceptional circumstances. Should, however,
  deliveries be made after expiry of the contract delivery period without
  
  prior concurrence of the?Purchaser, and be accepted by the consignee, such deliveries will not deprive?the Purchaser of his right to recover
  liquidated damages under clause 16.2?below. However, when supply is made
  within 21 days of the contracted original?delivery period, the consignee
  may accept the stores and in such cases the?provision of clause 16.2 will
  not apply.
  
  
  
  16.2 Should the tenderer fail to deliver the stores or any consignment
  thereof within the period prescribed for delivery the Purchaser shall be
  entitled to recover ? % of the value of the delayed supply for each week
  of delay or part thereof, subject to maximum of 5% of the value of the
  delayed supply; provided that delayed portion of the supply does not in
  any way hamper the commissioning of the other systems. Where the delayed
  portion of the supply materially hampers installation and commissioning
  of the other systems, L/D charges shall be levied as above on the total
  value of the Purchase Order. Quantum of liquidated damages assessed and
  levied by the purchaser shall be final and not challengable by the
  supplier.?
  
  
  
  He notes that as per the purchase order, the last date of supply was
  01.06.1999. The material was supplied on 14.07.2000. Upto 27.02.2000, no
  liquidated damages had been imposed by the respondent. He also notes that
  the TAC had already been obtained on 02.07.1999. He also notes the
  decision of the Supreme Court in ONGC v. Saw Pipes, 2003 (4) Scale 92,
  where the Supreme Court had held that it was not open to the arbitrator
  to interfere with the levy of liquidated damages in case of delayed
  supply. He also observes that the submission of the petitioner/claimant
  that without showing any loss suffered by
  
  the respondent, the respondent could not claim any liquidated damages,
  has been replied to on the strength of the same decision of the Supreme
  Court, wherein in the para 69 the Supreme Court has held that it is not
  required that in all cases the loss has to be quantified and example of a
  delay in construction of bridge has been cited in the said judgment as a
  result to show that all cases of losses cannot be demonstrated in
  qualitative terms.??
  
  
  
  The submission of the respondent that the equipment was required
  to?augment the capacity of the network which would generate revenues for
  the?respondent, and that it would not be readily possible to pinpoint the
  losses?occasioned due to delay in installation, and that there was
  recurring loss due??to delay in putting the equipment to use for
  augmenting the network was??accepted. He, consequently, holds that the
  levy of liquidated damages is in accordance with the terms of the
  contract. However, he holds that the imposition of liquidated damages for
  the period 27.02.2000 to 19.05.2000 was not justified, as there was delay
  on the part of the respondent in issuing the letter of extension, which
  
  came to be issued on 19.05.2000. So far as the other claim of Rs.22,02,391/- is concerned, I find from the award that there is
  absolutely no discussion on that aspect, and the same has been rejected
  summarily.
  
  ??
  
  The submission of learned counsel for the petitioner is that from a
  reading of clause 16.2, it is evident that the respondent should have led
  evidence to establish the sufferance of some loss or damage due to the
  delay in the supply of the equipment. That was not done by the
  respondent.
  
  
  
  I do not accept the submission of learned counsel for the petitioner as
  aforesaid. For the imposition of liquidated damages, it would be
  sufficient for the party imposing or claiming the liquidated damages to
  establish that circumstance exist such that in the normal course, the
  aggrieved party would suffer damages on account of the delays and default
  of the opposite party. It is not necessary to quantify the extent of the
  damage. The argument of the petitioner goes contrary to the concept of
  liquidated damages. Moreover, the interpretation of clause 16 was a
  matter which fell in the domain of the learned arbitrator. He has
  interpreted the said clause. It cannot be said that the interpretation is
  not a plausible one. The award made by the learned arbitrator on the
  claim made by the petitioner for Rs.39,63,730/- cannot be faulted and
  ?there is nothing in the award which could be said to indicate a patent
  illegality or perversity therein.??The next submission of counsel for the
  petitioner is that the learned?arbitrator had unduly delayed in passing
  of the award. The arguments had been?reheard by the learned arbitrator
  and the matter was reserved for pronouncing?the award on 16.02.2008.
  However, the award was not rendered. Eventually, the?petitioner had
  preferred a petition under section 14 of the Arbitration and
  ??Conciliation Act, and only upon receipt of notice issued by this Court
  in that petition, the learned arbitrator has rendered the award within
  six days of the?receipt of the notice, on 21.09.2010. He submits that the
  mandate of the learned arbitrator already stood determined on account of
  his failure to act without undue delay. In support of his submission that
  the learned arbitrator should have rendered the award expeditiously, he
  has placed reliance on the decision of this Court in Harji Engg. Works
  Pvt. Ltd. v. Bharat Heavy Electricals Ltd. and Anr., 2008 (4) Arb. L.R.
  199 (Del) = 153 (2008) DLT 489. He further submits that the learned
  arbitrator has not even considered the claim of Rs.22,02,371/-.??I issue
  notice to the respondent on the aspect of delay in rendering the??award,
  which, according to the petitioner, resulted in termination of
  the??mandate of the learned arbitrator, as also on the aspect of the
  award made on the claim of Rs.22,02,391/- returnable on 05.04.2011. It is
  made clear that in case the petitioner succeeds on the aspect of delay,
  the entire award would liable to be set aside, including on the aspect of
  the partial denial of the claim for liquidated damages.?
  
  
  
  11. A separate order in OMP No.772 of 2010 was passed on the same date
  i.e. 3rd January 2011 as follows:-
  
  ?O.M.P. 772/2010
  
  ??
  
  I have passed a detailed order today in OMP No.771/2010. The same may
  be?referred to. In the present case, the claim made by the petitioner was
  only towards refund of liquidated damages of Rs.11,89,303/-. I have
  rejected the said petition insofar as the petitioner?s challenge to the
  award made on the similar
  
  claim is concerned in OMP No.771/2010. The same reasoning may be noted
  for this?case as well.
  
  ??
  
  The petitioner has also challenged the award on the ground that the
  learned arbitrator had lost the mandate on account of inordinate delay in
  rendering the award.
  
  
  
  Limited to the aforesaid extent, issue notice to the respondent
  returnable on 05.04.2011.?
  
  
  
  12. As a result of the above orders, the only two issues to be
  considered are whether the delay in the pronouncement of the Awards have
  vitiated them. Secondly, whether the Petitioner?s claim in the sum of
  Rs.22,03,391 requires to be remitted to the learned Arbitrator for a
  fresh Award.
  
  
  
  13. This Court has heard the submissions of Mr. D.K. Malhotra, learned
  counsel for the Petitioner and Mr. Sukumar Pattjoshi, learned counsel for
  the Respondents.
  
  
  
  14. Relying on the judgment of this Court in Harji Engg. Works Pvt. Ltd.
  v. M/s Bharat Heavy Electricals Ltd. and Anr. 153 (2008) DLT 489 and of
  the Supreme Court in Kanhaiyalal v. Anupkumar (2003) 1 SCC 430, it is
  submitted by Mr.Malhotra that there is a delay of over six years in
  pronouncement of the Award and the Award is, therefore, contrary to the
  public policy of India and ought to be set aside on that ground alone.
  It is pointed out that final arguments were concluded on 6th October 2004
  and the matter was reserved for Award. Thereafter, two hearings took
  place on 14th September 2007 and 16th February 2008. When no Award was
  passed, the Petitioner in August 2010 filed a petition under Sections 14
  
  and 15 of the Act for terminating the mandate of the Arbitrator. Upon service of notice of the said petition being effected on the learned
  Arbitrator on 15th September 2010, he passed the Award in the first
  matter on 21st September 2010 and in the second matter on 23rd September
  2010. It is submitted that since the Award was passed after an
  extraordinary delay, it ought to be set aside on this ground alone.
  Since the above ground is common to both Awards, this Court proposes to
  deal with it first.
  
  
  
   15. As explained by this Court in Harji Engg. Works Pvt. Ltd. v. M/s
  Bharat Heavy Electricals Ltd. an unexplained delay in the pronouncement
  of the Award is bound to give rise to serious doubts about the fairness
  of the arbitral proceedings. An unconscionable and unexplained delay in
  pronouncement of an Award in arbitration proceedings is doubtless also
  contrary to the public policy of India. In the present case, once notice
  was issued by the Court in the petition under Sections 14 and 15 of the
  Act, the learned Arbitrator has, within a short time after being served
  with the copy of the notice in the petition, passed both Awards. In the
  circumstances, it cannot be said that the delay per se has vitiated the
  impugned Awards. As explained, by this Court in Peak Chemical
  Corporation Inc. v. National Aluminium Co. Ltd. 2012 (188) DLT 680, the
  Court is required to consider whether the unexplained delay in
  pronouncing the Award has, in fact, by itself vitiated the Award. The
  time and expenses involved in the arbitration proceedings will also have
  to be considered. Keeping in view the above factors in mind, this Court
  is not inclined to interfere with the impugned Awards in the instant case
  only on the ground of delay in pronouncement of the Awards.
  
  
  
  16. As regards, OMP No.771 of 2010, the second ground of challenge is
  that in rejecting the Petitioner?s claim for a sum of Rs.22,02,730, the
  learned Arbitrator has not given any reasons whatsoever. In the impugned
  Award, it is simply held as under:
  
  ?Therefore, in the result, the claims of BWL are partly accepted to
  the extent that the Respondent is unjustified in imposing liquidated
  damages on the delayed supply for the period from 27th February, 2000 to
  19th May, 2000 and, therefore, the Respondents are directed to calculate
  the same and refund without any interest. However, the remaining claims
  are rejected.?
  
  
  
  
  
  
  
  17. This Court finds merit in the contention that the rejection of the
  Petitioner?s claim in the sum of Rs.22,02,730 is without any reasons. It
  is straightway hit by Section 31(3) of the Act. On this short ground,
  
  the impugned Award dated 21st September 2010 insofar as it rejects the aforementioned claim in the sum of Rs.22,02,730 is hereby set aside. The
  said claim alone is remitted to the learned Arbitrator for fresh Award on
  the basis of the existing pleadings and evidence. The fresh Award shall
  be pronounced within a period of three months from the date of receipt of
  a certified copy of this order.
  
  
  
  18. As regards OMP No.772 of 2010, the challenge to the impugned Award
  dated 23rd September 2010 is essentially only on the ground of delay.
  This Court is not inclined to interfere with the said Award only on the
  ground that its pronouncement was delayed. There is no other ground made
  out on merits for interference with the impugned Award dated 23rd
  September 2010 under Section 34 of the Act.
  
  
  
  19. In the circumstances, OMP No.771 of 2010 is disposed of by remitting
  to the learned Arbitrator who at present is stated to be the Director
  (HR), BSNL the claim for a sum of Rs.22,02,730 preferred by the
  Petitioner against the Respondent which claim will be decided afresh by
  the learned Arbitrator on the basis of the existing pleadings and
  evidence within a period of three months from the date of receipt of a
  certified copy of this order.
  
  
  
  20. OMP No.772 of 2010 is dismissed, but in the circumstances with no
  orders as to costs.
  
  
  
  21. A certified copy of this order be delivered forthwith to Mr. A.K.
  Jain, Director (HR), BSNL.
  
  
  
  
  
  
  
   S. MURALIDHAR, J.
  
  July 04, 2012
  
  s.pal
  
  
  
  
  
  O.M.P. Nos.771 of 2010 and O.M.P. 772 of 2010
  Page 1 of 12