Liquidated damages under contract law must be justified by actual loss; mere failure to complete work does not suffice without quantification of damages.

JUDGMENT & ORDER :

N. Unni Krishnan Nair, J.

Heard Mr. M. Z. Ahmed, learned senior counsel, along with Ms. B. Dutta, learned senior counsel, assisted by Mr. A. M. Dutta, learned counsel, appearing on behalf of the appellants in WA No. 321/2018 and WA No. 338/2018, and for the respondents in WA No. 287/2022; as well as Mr. Pandey Neeraj Rai, learned counsel, along with Mr. A. Goyal, Mr. A. Choudhury, and Mr. D. Rathi, learned counsels, appearing on behalf of the appellant in WA No. 287/2022, and for the sole respondent in WA No. 321/2018 and WA No.338/2018.

2. The above-noted writ appeals have been preferred by the appellants, herein, presenting a challenge to the common Judgment & Order, dated 19.07.2018, passed by the learned Single Judge in WP(c)6867/2013, and WP(c)5585/2015. The appellant in WA No. 287/2022, has presented an additional challenge to the order, dated 19.06.2019, passed by the learned Single Judge dismissing Review Petition No. 88/2019, thereby, rejecting the prayer of the appellant, therein, for grant of interest with regard to the dues receivable by it.

3. The facts leading to the institution of the above-noted writ appeals, is briefly noticed, as under:

3.1 WRIT APPEAL NO. 338/2018:

The appellants, herein, had on 28.03.2008, issued a Notice Inviting Tender(NIT), for production of carbonaceous shale(CL) and removal of hard shale(HL) in accordance with the requirement of safety regulations and transportation of coal to the railway siding as per the schedule with regard to 4(four) locations i.e. Tirap(East), Tirap(West), Tikak(East) and Tikak OCM.

The sole respondent in WA No. 338/2018, in pursuance of the said Notice Inviting Tender(NIT), submitted its bid for all the 4(four) locations for the works involved. The bid of the sole respondent being found to be suitable; the appellants, herein, proceeded to award the contracts for the work, in question, for the above-noted 4(four) locations to the sole respondent.

The dispute arising in the present proceeding, pertains to the contract awarded to the sole respondent, herein, in relation to Tikak(East) and Tirap(West) locations. Accordingly, the facts pertaining to the said locations are being noticed.

The appellants, herein, had issued work orders, dated 18.08.2008, in respect of Tikak(East) and Tirap(West) locations to the sole respondent for the work, in question, and the work involved, was to be completed within a period of 3(three) years w.e.f. 11.07.2008. The contract value for Tikak(East) location was fixed at Rs. 7353.42 lakhs while the contract value for Tirap(West) location was fixed at Rs. 6663.24 lakhs.

The sole respondent could not complete the work involved with regard to Tikak(East) and Tirap(West) locations within the period of 3(three) years as allotted which had come to an end on 10.07.2011.

The sole respondent had made a request for grant of extension of time for completion of the work involved with regard to the said 2(two) locations vide communication, dated 08.07.2011, without imposition of liquidated damages and/or penalty.

The appellants, herein, had required the sole respondent to accept the extension of period of time for completion of the work with certain conditions which was declined by the sole respondent. Thereafter, the sole respondent had stopped the work and had also removed the machineries utilized for the work, in question, at the said 2(two) locations. The sole respondent, thereafter, had approached the appellants, herein, for closure of the contracts involved for the said 2(two) locations viz. Tikak(East) and Tirap(West) and for making arrangements for carrying-out the final measurements and for clearing its outstanding dues.

During the pendency of the applications preferred by the sole respondent; the appellants, herein, proceeded to issue a communication, dated 12.06.2013, with the Heading “Settlement of dues” and therein, by highlighting that the sole respondent was unable to complete the production in Tikak(East) and Tirap(West) locatio