JUDGMENT

A.K. Sikri, J. By means of this petitioner filed under Section 34 of the Arbitration and Conciliation Act, 1996 Union of India has challenged the arbitral award dated 27.6.2003 passed in favour of respondent. The petitioner had awarded contract GP-183 to the respondent herein for supply of 10,000 Nos. 22.9 T BG Box'N' wheel sets on 29.8.1996. This quantity was subsequent reduced to 5297 and the respondent shipped the material in 3 lost different dates. According to the petitioner the supplies were made after the stipulated date of delivery. On the request of respondent, delivery period was extended with token Liquidated Damaged (LD) with denial clause for the Ist and the 2nd lots. For the balance 3000 Nos., scheduled delivery period was extended with LD and denial clause to cover foreign exchange and custom duty variation, etc., limiting the total damages to 10% value of the stores besides expenditure on LC extension. The respondent requested for refund of LD levied at 10% and when this request of the respondent was regretted by the petitioner the respondent herein invoked the arbitration vide letter dated 24.5.2000. In terms of the arbitration clause the respondent nominated Justice Ranganath Misra, former Chief Justice of India as its Arbitrator. The petitioner nominated Mr. M.V. Ramani, the then COS, Southern Railway as its Arbitrator. Shri V.S. Malimath, Retd. Chief Justice of Karnataka and Kerala High Court was appointed as third Arbitrator. Before the Arbitral Tribunal thus constituted the respondent submitted its claim raising various claims. It is not necessary to give details of those claims as we are primarily concerned with the dispute over Liquidated Damages. The respondent claimed refund of Liquidated Damages deducted from its bills and interest thereon and cost. The petitioner not only disputed those claims but also made certain counter-claims. Thereafter arguments started and on 27.4.2003 following proceedings were recorded by the Tribunal:

"After discussing the claims at length with reference to the entire material on record, we have come to the following conclusions:

The claim of liquidated damages raised by the respondent shall be confined to 1% uniformly for the entire supply in respect of all the three consignments.

The claimant shall be entitled to the price of the material supplied at the stipulated rate (5297 sets) for which no payment has been made.

The costs actually incurred by the claimant for the CC charges shall be confined to 50%.

In respect of the amount in excess of 1% which will now become refundable to the claimant, interest shall be payable at 6% only.

We assess the costs of the proceeding at US$ 10,000 payable to the claimant.

Parties shall now be called upon to clearly indicate within four weeks from today the exact amounts under each head, and on the basis thereof claimant's dues shall be quantified to determine the stamp duty for the award. Other claims of the claimant and all the claims raised by the respondents are negated.

We are of the unanimous view that if the dues of the claimant to be stated in the award are paid within ninety days from the date of the award, no interest shall be payable; otherwise interest @ 18% shall be payable from the date of the award till recovery."

2. It follows from the above that on the basis of arguments heard by the Arbitral Tribunal it had come to certain conclusions. Primarily, the Arbitral Tribunal was of the view that liquidated damages shall be confined to 1% uniformly for the entire supply meaning thereby LD imposed @ 10% for the third instalment was reduced to 1%. In this manner the excess LD amount was to be refunded and on this, the Arbitral Tribunal deemed it proper that interest @ 6% be payable. Cost of proceedings should also assess at US $ 10,000 which was to be paid to the respondent herein. The cost actually incurred by the respondent for the LC charges was to be confined to 50%. The parties were called upon to indicate the ex