Compensation is payable when breach of contract has resulted in loss to Port Trust.

(Appeal filed under Clause 15 of the Letters Patent and Order XXXVI Rule 1 of the O.S. Rules against the judgment and decree dated 28.3.2003 in O.P.No.269 of 2002.)

P.K. Misra, J.

The facts giving rise to the present appeal are as follows :-

The appellant Port Trust awarded a contract to the first respondent with reference to rock quarrying and transportation. The appellant retained a particular sum as liquidated damages on account of breach of contract by the first respondent by not supplying the rock within the stipulated time. This matter was considered by the Dispute Review Board which held that the Department was not justified in retaining the amount towards liquidated damages. Ultimately the dispute was referred to Arbitral Tribunal.

2. The contention of the first respondent was that the present appellant was not entitled to withhold any amount on account of delay in supply of rocks as no injury had been caused.

3. According to the case of the appellant, on account of delay in supply of rocks by the first respondent, they had delayed the award of work of C4 contract and they have suffered damages under different heads. Invoking clause 47.1 of the General Conditions of contract, amount was claimed on the basis of liquidated damages stipulated in Clauses 43.1 and 44.1 of the contract. Clause 47.1 of the General Conditions of contract is as follows :-

“47.1 If the Contractor fails to comply with the Time for completion in accordance with Clause 48, for the whole of the Works or, if applicable, any Section within the relevant time prescribed by Clause 43, then the Contractor shall pay to the Employer the relevant sum stated in the Appendix to Tender as liquidated damages for such default and not as a penalty (which sum shall be the only monies due from the Contractor for such default) for every day or part of a day which shall elapse between the relevant Time for Completion and the date stated in a Taking-Over Certificate of the whole of the Works or the relevant Section, subject to the applicable limit stated in the Appendix to Tender. The Employer may, without prejudice to any other method of recovery, deduct the amount of such damages from any monies due or to become due to the Contractor. The payment or deduction of such damages shall not relieve the Contractor from his obligation to complete the Works, or from any other of his obligations and liabilities under the Contract.”

4. According to the appellant, since there was delay in supply of materials as per the specific terms of the contract, the appellant was entitled to withhold the amount by way of liquidated damages.

5. The Tribunal observed that as per Clause 604.1 of Technical Specification, it has been stated in sub-para 5 that the Placing in and removal from stockpiles of rock of various grades shall be co-ordinated between contractors in the best possible manner. It was further held that as per Clause 604.4, the Contractor was required to co-ordinate in schedule for supply of rock of particular grades in order to prevent shortages of supply for construction. It was further observed:

“ (iv) They had been meeting the requirements of C-4 contract in terms of the recovery plan submitted in November 1997. The recovery plan also indicated amendments to Table 3 of C-1 contract that in the event they were to follow Table 3 of C-1 contract, it would have resulted in the stock out situation in C4 contract to the extent of 6 months in Grade “C” and the extent of 3 months in respect of Grade “D”.

(v) That by virtue of the agreement of C-4 contract that the C-1 contractor would be given the flexibility to meet the C-4 Contractor’s requirement, the provisions of C-1 contract stand modified to the above extent; that they had met with C4 requirement of different grades of rock without changing the total sectional requirement in each section of the work.”

The Arbitral Tribunal categorically found: -

“ 8.1. The Clause 47.1 of the agreement which prescribes levy of Liquidated da