The Petitioners-Oil and Natural Gas Corporation Limited (for short, ONGC) have challenged award dated 30/06/2007 passed in favour of the Respondents (Original Claimant) by this Petition under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act).

2 The events based upon the synopsis of the Petitioners are as under:-

On 25/10/1995, the Petitioners issued a tender for the supply of Casing Pipes and the Respondents offered the same. The order was placed accordingly on 04/03/1996.

3. The supply of Casings was divided into two lots. Lot-1 consisting of 5000 Mtrs of 5”OD L80 18 PPF and 7000 Mtrs of 7” OD L80 29PPF Casing Pipes, and;

Lot-2 consisting of 5370 Mtrs of 5” OD L80 18 PPF and 18476 Mtrs of 7” OD L80 29PPF Casing Pipes”.

Delivery of both lots to be completed, as agreed, within 135 days from the date of the order.

4 On 26/03/1996 and 06/05/1996, the Petitioners called upon the Respondents to submit a dispatch schedule by letters. The Respondents submitted a performance bond. On 08/05/1996, the Respondents replied by a letter informing the Petitioners about the developments. On 22/08/1996, the Respondents asked for an extension of delivery period without levying liquidated damages. The Respondents applied for a recommendatory letter. On 02/09/1996, the Petitioners asked for the details regarding the source of import. On 03/09/1996, the Respondents gave a reply to the information sought. On 10/09/1996, the Petitioners issued a recommendatory letter. On 09/09/1996, the Petitioners amended the delivery period to 30/11/1996. On 30/11/1996, the Respondents ultimately delivered the two consignments. 182 days delay as to the 1st consignment and 136 days delay to the 2nd consignment. The Petitioners subtracted an aggregate sum of US$42260.87 out of the price payable to the Respondents by way of liquidated damages.

5 The dispute arose. The former Chief Justice of India Mr. P. N. Bhagwati, was appointed as Arbitrator.

6 On 13/01/1999, the Respondents, Original Claimant, filed a claim Petition. On 07/02/2001, the Petitioners filed a reply, then also came a rejoinder of the Respondents on 28/02/2001.

7 From 03/11/2001 to 23/02/2002, the parties lead an evidence by filing affidavit of respective witnesses, including an additional re-examination-in-chief, of the Petitioners.

8 The written notes were filed by the Petitioners on 21/10/2002.

9 On 16/07/2003, based upon the Oil and Natural Gas Corporation Ltd. V/s. Saw Pipes Ltd. (2003) 5 S.C.C. 705), (dated 17th April, 2003) the Petitioners filed an additional note of arguments. By consent of the parties, that was taken on record and the parties were heard.

10 On 30/06/2007, the learned Arbitrator has passed the Award and directed the Petitioners to refund Rs.15,15,554.78 equivalent to $37408.76, along with an interest of 9%, till the realization of the payment. Therefore, the Petition.

11 The parties have executed a commercial agreement having relevant Clause 11 as under:-

Failure and Termination Clause/ Liquidated Damages

Time and date of delivery shall be essence of the contract. If the contractors fails to deliver the stores, or any installment thereof within the period fixed for such delivery in the schedule or at any time repudiates the contract before the expiry of such period, the purchaser may, without prejudice to any other right or remedy, available to him to recover damages for breach of the contract.

a) Recover from the Contractor as agreed liquidated damages and not by way of penalty, a sum equivalent to 1% (One percent) of the contract price of the whole unit per week for such delay or part thereof (this is an agreed, genuine pre-estimate of damages duly greed by the parties) which the contractors has failed to deliver within the period fixed for delivery in the schedule, where delivery thereof is accepted after expiry of the aforesaid period. It may be noted that such recovery of liquidated damages may be upto 10% of the co