The Petitioner (original Respondent) has challenged the Award under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act, 1996) passed by the sole Arbitrator. The conclusion of the Award is as under :

“1 The respondent shall refund the liquidated damages recovered for Malabar Hill, Gamdevi, Turbhe PCM & City PCM exchanges amounting to a total of Rs. 2,19,453/2 with interest @ 9% p.a with effect from 24-7-2000, till the date of this award.

2 The respondent shall refund an amount of Rs. 96000/-to the claimant, out of the risk and cost expenses recovered for Malabar Hill & Gamdevi with interest @ 9% p.a with effect from 24-7-2000, till the date of this award.

3 The performance bank guarantee furnished by the claimant shall be returned back, duly discharged by the respondent.”

2. The Petitioner is a public sector undertaking in Central Government Company under the Companies Act. The Respondent is a private limited company and was awarded the work of supply, installation, testing and commissioning for A.C. Units at various Telephone Exchanges of the Petitioner at Mumbai and New Delhi. As there arose dispute between the parties and in view of the arbitration clause, the claimant/Respondent raised various claims by alleging wrongful termination of the contract and consequent recoveries made by the Petitioner for work completed at the risk and cost of the Respondent and also levied liquidated damages for alleged delays.

3. The first issue is whether the Officers of the Petitioners had authority to terminate the contract as only the purchaser i.e. The Corporate office of MTNL was authorised to do so. As per clause 18, the right to terminate the contract vests with the Company. Any officer of the company cannot terminate the contract without due compliance of the relevant conditions as specified by the Authority empowered to do so. The finding given by the learned Arbitrator by interpreting the provisions which read by both the Counsel and also made rival submissions upon it. After reading the said clause, I am also of the view that the termination of the contract was legal. The Petitioner has also accepted the same position and acted accordingly.

4. The Arbitrator was appointed to adjudicate the dispute and difference between the parties. It covers all the disputes between the parties arising out of and related with the contract. Both the parties acted and proceeded and so also the Arbitrator.

5. The Respondent/original claimant pursuance to the purchase orders delivered the units at the respective places. As the Petitioner failed to make full payment and wrongly imposed liquidated damages, the Respondent approached the Chairman and Managing Director of MTNL, New Delhi and accordingly arbitration claim was filed for making a reference for adjudication of the claim aggregating to amount of Rs.66,22,832/. The claims were raised with respect to Exchanges in question.

6. The Arbitrator by the impugned Award dated 18 April 2007 by considering all the material and documents placed on record by the parties, adjudicated the claims Exchange-wise. There is no challenge made by the Respondent/original claimant to the original Award. The Award is only challenged by the Petitioner/original Respondent.

7. Considering the reasoning as well as the operative part of the Award, the second issue is about the grant/refund of liquidated damages. The party is entitled to recover the liquidated damages as per the agreed terms and conditions. In the present case the relevant clauses are Clause 16.1 and 16.2. The learned Arbitrator, after interpreting those provisions and considering the facts and circumstances held that the supply of equipment was made and the same was accepted by the Petitioner. Therefore, there was no question of deducting any amount towards the liquidated damages as done in the present case in view of the additional 21 days grace period as contemplated under Clause 16.1 and 16.2. The clause fur