IMPORTANT POINT
The court emphasized the limited grounds for setting aside an arbitral award under Section 34 of the A&C Act and the lack of power to modify, revise, or vary the terms of an award under this section.

JUDGMENT

Dharmesh Sharma, J. - This Judgment shall decide the present appeal preferred by the appellant under Section 37 of the Arbitration and Conciliation Act, 1996[A&C Act] read with Section 13(1A) of the Commercial Courts Act, 2015[CC Act] for setting aside the impugned judgment dated 12 March 2021 passed by learned Additional District Judge-03, South District, Saket Courts, New Delhi[ADJ] in ARBTN No.20824/2016, whereby the learned ADJ chose to partially set aside the award dated 29 August 2016 on the aspect of liquidated damages[LD] to be paid by the appellant to the respondent.

FACTUAL BACKGROUND:

2. The appellant, which is a Government Enterprise under the Ministry of Water Resources and also a company registered under the Companies Act, 1956 consequent to letter of intent[LOI] dated 03 March 2017 entered into an agreement dated 13 March 2007 as Project Management Consultant of the Central Reserve Police Force[CRPF] with the respondent, which was a micro enterprise stated to be having a turnover of less than Rs. 10 Lacs, for installation of Fire Protection System for the Auditorium Block, CRPF Campus, Vasant Kunj, New Delhi. The project was stipulated to be completed within a period of 7 months from the date of issuance of LOI for total contract value of Rs. 90,79,200/-. However, performance got delayed.

3. To cut a long story short, the appellant claimed that the respondent was in breach of its obligations under the contract and delayed its performance by taking about 33 months for completion of work, and therefore, in terms of clause 35.5 of the contract, LD was levied and adjusted against the payment payable to the respondent not only for the abnormal delay but also for causing damage to the reputation of the appellant for the delay caused; and accordingly payment for a sum of Rs. 1,13,97,341/- i.e., 10% of the work cost of the CRPF camp project was withheld. The respondent in terms of clause 52 of the 'General Conditions' of the contract invoked arbitration and accordingly Sh. Suresh Chandra Garg, Ex. General Manager of the appellant was appointed as the Sole Arbitrator to adjudicate upon the disputes between the parties vide appointment/nomination letter dated 17 April 2014. The Arbitrator entered upon the reference, conducted the proceedings, and eventually passed the award dated 29 August 2016.

4. After considering the dispute between the parties in light of various clauses of the contract, the Arbitrator partly granted the reliefs claimed by the claimant/respondent as follows:-

'Claim No.1:

The claim for refund of Rs. 9,68,470/- was disallowed after adjusting LD of Rs. 9,17,000/- giving balance of Rs. 51,470/- to the claimant;

Claim No.2:

Claim No.2 for an amount of Rs. 4,47,578- towards the balance of security deposit was allowed;

Claim No.3:

Claim for unfair profit earned by the respondent by utilizing payments received from CRPF against RA bills of claimant amounting to Rs. 1,78,486/- with interest was declined;

Claim No.4:

Direct expenses induced by the respondent towards Pump Operator plus interest besides insurance charges was rejected;

Claim No.5:

Claim for escalation charges and interest upon escalation charges was rejected;

Claim No.6:

Claim for damages of loss of profits and loss as well as goodwill amounting to Rs. 25,00,000/- was rejected;

Claim No.7:

Fair compensation on account of harassment, mental agony and physical harm to the tune of Rs. 5,00,000/- was rejected; and INTEREST:

Interest was allowed on the claim No.1 @ 6% per annum from the date of appointment of the Arbitrator i.e., 17 April 2014 till the date of Award and it was directed that in case interest is not paid within 60 days, it shall carry interest @ 9% per annum from the date of the Award till payment.'

5. Simultaneously, the Arbitrator also dealt with the counter claims of the appellant herein and arrived at the following decision:

(i) Claim for loss of reputation to the respondent/organization to Rs. 1,00,00,000/- was rejected.

(ii) Claim for damages i