The court upheld the arbitral award allowing refund of liquidated damages due to the interpretation of contract clauses, confirming limited grounds for interference under arbitration law.

JUDGMENT

Anup Jairam Bhambhani, J. The present appeal under section 13 of the Commercial Courts Act 2015 read with section 10 the Delhi High Court Act 1966 and section 37 of the Arbitration & Conciliation Act 1996 (`A&C Act') has been filed by the Union of India, Ministry of Railways and North Eastern Railways (`Railways') impugning judgment dated 27.02.2020 rendered by the learned single Judge of this court in O.M.P. (COMM) No. 112/2020 (`impugned judgment'), whereby the learned single Judge has upheld arbitral award dated 08.02.2011 (`arbitral award') made by the learned Sole Arbitrator in arbitral proceedings between the Railways and M/s Annavaram Concrete Pvt Ltd., Hyderabad (`Annavaram').

2. The Railways had filed a petition under section 34 of the A&C Act challenging arbitral award dated 08.02.2011; in which award the learned Sole Arbitrator had directed the Railways to refund to Annavaram the sum of Rs.1,22,38,125/-, which had been deducted/withheld by the Railways as `liquidated damages' imposed upon Annavaram for alleged breach of the terms and conditions of a tender bearing No. CS 160/2007, pursuant to which a Letter of Acceptance dated 15.09.2008 (`1st LoA') was issued by the Railways to Annavaram for supply of 10000 Pre-Stressed Concrete Sleepers (`sleepers') by 14.01.2009.

3. By the impugned judgment, the learned single Judge has upheld the arbitral award and has also awarded interest for the delay in payment of the awarded sum.

4. Briefly, disputes arose between the Railways and Annavaram in relation to alleged non-performance and non-compliance by Annavaram with the terms of the 1st LoA. As per the record, after issuance of the 1st LoA, vidi its letter dated 22.12.2008 Annavaram requested the Railways for an additional order, representing that their capacity was to manufacture 25000 sleepers per month; whereupon vidi a Second Letter of Acceptance dated 27.01.2009 (`2nd LoA') the Railways ordered an increased quantity of 150000 (one lac fifty thousand) sleepers to be supplied by Annavaram by 14.07.2009, which order was accepted by Annavaram. It is the Railways' contention that Annavaram failed to supply even a single sleeper within the stipulated time; nor did they obtain any extension of time for making such supply; whereupon, the contract comprised in the 1st LoA and 2nd LoA lapsed by efflux of time on 14.07.2009. Consequently, it is the contention of the Railways, that as per IRS Condition 0702, the Railways imposed liquidated damages to the tune of Rs.1,22,38,125/- (Rupees One Crore Twenty-two Lacs Thirty-eight Thousand One Hundred and Twenty-five Only) upon Annavaram on 27.05.2009. It is further contended that on grounds of non-performance, on 08.04.2010 the Railways also terminated the contract with Annavaram.

5. Disputes having arisen between the parties, on 21.06.2010 the learned Sole Arbitrator came to be appointed and entered upon reference. Subsequently he rendered the arbitral award awarding Rs.1,22,38,125/- (Rupees One Crore Twenty-two Lacs Thirty-eight Thousand One Hundred and Twenty-five Only) in favour of Annavaram and against the Railways, which sum was directed to be refunded within 03 months from the date of the award. For completeness, it may be mentioned that the Railways had also preferred a counter-claim in the sum of Rs.10,00,000/- (Rupees Ten Lac Only) against Annavaram in the arbitral proceedings.

6. It is the contention of the Railways that the 1st LoA was amended by the 2nd LoA, whereby, apart from increasing the quantity of sleepers to be supplied by Annavaram, clause 1.0 and clause 1.1 were amended and a new clause 1.2 was inserted in the terms and conditions of the contract. Clauses 1.1 and