The main legal point established in the judgment is the enforceability of liquidated damages provisions, the requirement for a genuine pre-estimate of damages, and the limited scope of court interference in arbitration awards.

1. The challenge in this petition under Section 34 of the Arbitration & Conciliation Act, 1996 (‘Act’) by Triveni Engineering & Industries Limited (‘Triveni’) having its office in Deoband, District Saharanpur, Uttar Pradesh is to an Award dated 28th August, 2008 passed by the sole Arbitrator in the disputes between Triveni and the Respondent, Nahar Industrial Enterprises Limited (’Nahar’) (earlier known as Nahar Sugar & Allied Industries Limited), arising out of an Agreement dated 5th August, 1993 whereunder Triveni was to design, procure, manufacture, supply, transport to the site and supervise the erection and commissioning of a sugar plant for Nahar at Fatehgarh Sahib, Punjab for a price of Rs. 20.90 crores subsequently increased to Rs. 21.24 crores.

2. In terms of the Agreement, the plant was to be commissioned by 30th September, 1994. According to Triveni, the plant could not be commissioned by the above date due to force majeure for reasons attributable to Nahar. A meeting was held between the parties on 26th October, 1994 wherein it was agreed that the commissioning of the plant with one boiler would be carried out by 15th November, 1994 and the full plant would be complete in all respects by 15th December, 1994. It was further agreed that any failure on the part of Triveni to adhere to the schedule would make it liable for Liquidated Damages (‘LD’) in terms of Clause 16.1 of the Agreement to be calculated from 1st October, 1994.

3. Triveni states that on 24th/27th November, 1994 it completed and commissioned the plant with one boiler and the plant, completed in all respects, was commissioned on 10th January, 1995. Nahar sent a legal notice dated 18th December, 1996 making certain claims under the Agreement, which were disputed by Triveni. Thereafter, Nahar invoked the arbitration Agreement and filed a petition under Section 11 of the Act in this Court. By an order dated 11th February, 2000, a sole Arbitrator was appointed in the said petition.

4. Nahar filed a statement of claim of which one pertained to LD in the sum of Rs. 105 lakh along with interest at 18% per annum with effect from 1st October, 1994 up to the date of payment. Triveni filed its statement of defence and also filed its counter-claims. The learned Arbitrator on 19th July, 2000 framed the following issues:

“1. Whether the respondent failed to adhere to the terms of the contract and could not erect and commission the plant by or before the stipulated date as alleged by the claimant? If so, its effect.

2. If the answer to the Issue No. 1 is in the affirmative, whether failure to adhere to the terms of the contract and erection and commissioning of the plant by or before the stipulated date was for the reasons attributable to the claimant and force majeure conditions as contended by the respondent? If so, its effect.

3. Whether the respondent failed to commission the plant as agreed at a meeting held on 26th October, 1994 as alleged by the claimant? If so, its effect.

4. If the answer to the Issue No. 3 is in the affirmative, whether the respondent failed to commission the plant as agreed at a meeting held on 26th October, 1994 for the reasons attributable to the claimant and force majeure conditions as contended by respondent?

5. Whether any work had/has remained unattended or incomplete under the contract or that the entire plant complete in all respect has not been handed over by the respondent to the claimant? If so, its effect.

6. Whether the respondent is liable to pay liquidated damages of Rs.l05 lacs or any other amount with interest to the claimant?

7. Whether the claimant is entitled to claim Rs. 10,32,500/- with interest from the respondent for alleged short supply of parts of machinery and material to it by the respondent?

8. Whether the claimant is entitled to claim for Rs. 7,12,387/- with interest from the respondent as claimed in the claim petition?

9. Whether the claimant is entitled to claim Rs. 15,48,8 36,10 with interest being the alleged