The main legal point established in the judgment is that the entitlement to recover liquidated damages without proving actual loss and the award of interest under the contract and the Arbitration and Conciliation Act, 1996 must be in accordance with the legal principles and provisions of the law.

JUDGMENT :

1. By this petition filed under section 34 of the Arbitration and Conciliation Act, 1996, the petitioner has impugned the award dated 22nd February, 2019 passed by the learned arbitrator rejecting the substantial part of the claim made by the petitioner. Some of the relevant facts for the purpose of deciding this petition are as under :-

2. The respondent had invited tender for manufacture and supply of grooved rubber sole plates in the year 2012. The petitioner had submitted its bid in response to the said invitation. The bid of the petitioner was found favourable. The petitioner was accordingly issued purchase order by the respondent on 22nd October, 2012. Under the said purchase order, the goods were to be supplied by the petitioner by 23rd June, 2013. Clause 0702 provides for recovery of liquidated damages by the respondent in case of delay at sum equivalent to 2 % of the price of any stores.

3. It was the case of the petitioner that due to various reasons not attributed to the petitioner and more particularly delay on account of the plant shifting as per the advice of the RDSO as well as the electricity outages at the plant of the kneader machine which was a machine for rubber compounding and due to delay on the part of the respondent partly, the petitioner could not supply the material within the stipulated period of completion of delivery i.e. on or before 23rd June, 2013.

4. The petitioner applied for extension of time for delivery with a request not to levy liquidated damages. The respondent granted extension four times however making it clear that the same would be subject to levy of liquidated damages.

5. The respondent deducted approximately a sum of Rs.10,81,050/- from the bills of the petitioner towards the liquidated damages. The petitioner applied for refund of the said amount which was not made by the respondent. The dispute arose between the parties. The petitioner invoked the arbitration agreement recorded in clause 2900 of the contract entered into between the parties. In addition to the amount for refund of liquidated damages deducted by the respondent, the petitioner made various other claims. The Deputy General Manager of the respondent however by letter dated 7th May,2018 while appointing the learned arbitrator mentioned in the letter of appointment that the terms of the reference to the arbitrator in the matter was Claim No. 1 ‘Token penalty of Rs.2,000/- per month from 23rd June,2013 to 31st December,2013 and with full liquidated damages for extension of delivery period and PVC upto Original D.P. i.e. 23rd June, 2013’ to the extent of the amount of Rs.10,81,050/-. By the said letter the learned arbitrator was requested to decide the arbitrability of each claim referred for arbitration and to declare item-wise reasoned award as per clause no. 2900 of IRS condition of contract applicable to the contract.

6. The petitioner thereafter made a claim before the learned arbitrator for recovery of an amount of Rs.33,03,026/- with interest at the rate of 24% per annum and cost quantified at Rs. 2 lacs. The said statement of claim was resisted by the respondent filed by the statement of defence.

7. The learned arbitrator however in the meeting held on 25th July, 2018 directed the petitioner to restrict its claim to the tune of Rs.10.81 lacs in terms of the reference dated 7th August,2018. The petitioner accordingly restricted the claim to Rs.11,91,328/- with interest.

8. Insofar as the claim made by the petitioner for refund of liquidated damage from the bills of the petitioner is concerned, it was the case of the petitioner before the learned arbitrator that the delay was not attributable on the part of the petitioner. In any event, the respondent could not have deducted the amount towards the liquidated damages from the petitioner's bill on the ground that the respondent had not suffered any loss or damages arising out of the delay in supplying the material under the contract awarded to the petitioner. The