Legal injury must be established for claiming liquidated damages, and the appellant's delays justified the imposition of such damages.

COMMON JUDGMENT

R.POORNIMA, J.

The appellant has filed these Civil Miscellaneous Appeals against the fair order and decreetal order dated 19.09.2019 passed in Ar.O.P.Nos.58 of 2018 and 33 of 2019 by the Principal District Judge, Thoothukudi.

2. The claimant and the respondent filed Arbitration Petitions under Section 34 of The Arbitration and Conciliation Act, 1996. The appellant filed Ar.O.P.No.58 of 2818 and respondent filed Ar.O.P.No. 33 of 2019 on the file of the Principal District Judge, Thoothukudi. In a common impugned order dated 19.09.2019, the Principal District Judge allowed Ar.O.P.No.33 of 2019 and dismissed Ar.O.P.No.58 of 2018, against which the present Civil Miscellaneous Appeals filed by the appellant (claimant) with the following among other grounds :

a) The learned Judge has not independently, analysed the law on liquidated damages at all anywhere in the impugned order.

b) In para 27 of the order, the learned judge stated that the delay is a factual aspect and concludes that the Arbitral Tribunal has considered the same.

c) In para 36, page 60, the learned judge holds that actual loss need not be proved for levy of liquidated damages and rejects the contention of the appellant. The findings of the learned judge is erroneous, since what has to be proved first is legal injury or loss due to breach and if this is proved then even if actual loss is not proved, only then liquidated damages can be levied. In short, proving legal injury arising out of the breach is a sine qua non for levying liquidated damages of contract. d) Even assuming, without admitting that delays were on the part of Appellant, respondent could not commission the cooling tower even after completion of work by the claimant for the reason not attributable to the claimant. Therefore, there was no loss or legal injury to the respondent and hence levy of liquidated damages was wrong. The assured losses which the respondent claims is mere assertion of non-existent claims since the commissioning of the plant after the completion of the scope of work on the part of the appellant.

e) To Levi liquidated damages, the party complaining of a breach must plead and proved legal injury, and then only they would be entitled for damages. If the legal injury or the loss is proved, but could not be quantifiable then the pre-estimated damages in the form of liquidated damages would spring into effect.

f) The learned judge ought not to have brushed aside the admission made by the respondent with respect to seven months and seven days delay on the ground that it is factual, but ought to have seen why the Arbitral Tribunal failed to award compensation for this period and ought to have set aside the Award on this aspect too.

g) The learned Judge erred in allowing the interest under Section 34 of the Arbitration and Conciliation Act, 1996 and the same is against the well settled proposition laid down as to when an Arbitral Award can be set aside.

h) The learned Judge erred in stating that liquidated damages refund would attract interest.

i) The learned Judge ought to have appreciated the fact that grant of interest is always a matter of discretion which the Tribunal had possessed.

j) The learned Judge erred in interfering with the Award by granting interest at the rate of 18% from an imaginary date and that too on the ground that the Award suffers from 'patent illegality'.

k) The learned Judge has not specifically rendered a finding that the award is a violation of any procedure and this being the case the Judge cannot substitute its view on that of the Arbitral Award especially when the award had gone against the terms of the agreement.

3. The learned counsel for the respondent orally put forth the argument and also filed written argument as follows :

i) The dates and events of the contract set fourth below :