Clauses in contracts that prohibit claims for damages are against public policy and void under Section 23 of the Indian Contract Act, 1872, as they undermine the sanctity of contracts.

JUDGMENT

Chandra Dhari Singh, J.

1. The instant petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter the Act ) has been filed on behalf of the petitioner seeking the following reliefs:

"i. Set aside the award passed by the Hon'ble Arbitral Tribunal dated 06.03.2020 with respect to Claim No. 3, 4, 6, 7 & 8.

ii. Any other order or relief as this Hon'ble Court deems fit and proper may be passed in the facts and circumstances of the present case."

FACTUAL MATRIX

2. The facts of the case in a nutshell are extracted hereinbelow-

(a) The Petitioner is M/s MBL Infrastructure Ltd. is Public Limited Company engaged in the business of Civil Engineering projects and has a Pan India presence. The respondent is Delhi Metro Railway Corporation, a joint venture of Government of NCT of Delhi and Government of India and is a registered company under the Companies Act.

(b) The respondent invited tenders for 'Construction of Sarai Station including architectural finishing, water supply, sanitary installation, external development works etc. and structure works of PD area on Badarpur - Faridabad Corridor of Delhi, MRTS Phase III' on 9th March, 2012.

(c) On 9th March 2012, the petitioner submitted its tender which was accepted by the respondent on 9th May 2012.

(d) The stipulated dates for commencement and completion of the project were 21st May, 2012 and 20th November, 2013 respectively, spanning over a period of 18 months. The value of the contract was Rs. 41.57 crores.

(e) The petitioner furnished 2 performance bank guarantees amounting to Rs.4,15,71,525/- @ 10 % contract values. The petitioner had also furnished two Bank Guarantees for a total amount of Rs.2,28,64,240/- dated 23rd July 2012 valid upto 20th November 2013 issued by Bank of Baroda in terms of Clause 11.2.1 of the General Conditions of Contract (hereinafter GCC) towards mobilization advance. In lieu of the same, on 6th September 2012, the respondent released the first instalment of mobilization advance amounting to Rs.1,03,92,881/- vide bankers cheque dated 6th September 2012.

(f) Thereafter, the petitioner was handed over the construction site partially after a delay of more than six months on 20th December, 2012. On 28th January 2013, the petitioner requested for handing over the possession of the remaining plot for Sarai Metro Station which was subsequently denied by the respondent.

(g) On 2nd August, 2013, the respondent issued a Notice under clause 13.1 of GCC for alleged failure of the petitioner to adhere to work programs and non-compliance of other obligations.

(h) The respondent vide letter dated 30th September 2023, denied the facts on record and informed the petitioner that it was liable for action under Clause 13.1 of GCC. The petitioner replied to the said letter on 11th October 2013 stating that there was no delay on the part of the petitioner.

(i) On 1st November, 2013, the respondent terminated the contract and encashed the bank guarantees furnished by the petitioner.

(j) The matter was referred to arbitration vide letter dated 1st April, 2015, and accordingly an Arbitral Tribunal was convened on 15th April, 2015.

(k) The Arbitral Tribunal after hearing the parties rendered its award on 6th March, 2020. The learned Tribunal held that the default in terms of delay of the project was on part of the respondent and accordingly, it allowed Claim No. 1 and partly allowed Claim No.5, however, dismissed Claim Nos. 2,3,4,6,7 & 8. It also dismissed all the Counter claims of the respondent.

(l) The learned Tribunal after examining the evidence on record concluded that as the respondent was in breach of contract, thus, the termination of the contract was illegal. The learned Tribunal also held the encashment of Performance Bank Guarantee to be totally unjustified in view of reach of the agreement on behalf of the respondent and thus disallowed the claims for damages, loss of profits, interest and costs under Claims 3, 4, 6, 7 and 8.

(m) Aggrieved by the rejection