The Court made the following Common Judgment:

(per Hon’ble Sri Justice R. Raghunandan Rao)

As all these appeals raise the same issues and arise out of awards passed by the same Arbitrator, they are being disposed of, by way of this common judgment.

2. Respondent No.1 in all these cases is a Public Sector Undertaking, involved in the construction, fabrication and repairs of various kinds of vessels and other works. The 1^st respondent had awarded sub-contracts to various sub-contractors for the aforesaid works. These contracts were awarded under separate work orders. All these work orders contained timelines within which the work was to be completed. In the event of failure to adhere to the timeline, all the contracts provided for liquidated damages to be levied @ 2% per week of delay up to a maximum of 20% of the contract value. The 1^st respondent, on the ground that there was delay in all the aforesaid contracts, awarded to the appellants herein, had levied liquidated damages of 20% of the contract value and deducted the same in the bills of the appellants. Aggrieved by the said deduction of liquidated damages, the appellants sought reference to arbitration. A common arbitrator was appointed in all these cases.

3. The details of the claims made by the appellants and the awards passed by the learned Arbitrator are contained in the table set out below:

4. In all these claims, the case of the claimants can be placed under three heads.

i) The delay in the execution of the works entrusted to the appellants, were on account of the inaction as well as actions of the respondent herein including delay in providing clear facilities at ground level for works to be carried on, unrealistic work schedules, insufficient work area, not providing crane facility in needed times, delay in supply of consumables and processed elements, delay in clearing inter dependencies, delayed payments for completed works etc. The claimants contended that all these issues were brought to the notice of the respondents on a number of occasions and in relation to each of the works in particular. Thus, the delay in adherence to time schedule was not on account of claimants but only on account of the respondent.

ii) Similarly constituted contractors who had been awarded similar works had not been levied with liquidated damages and in some cases, revised schedules were also given with liquidated damage being reduced to 0.5% per week of delay subject to a maximum of 5% of the tender value.

iii) The quantum of liquidated damages @ 2% per week of delay subject to a maximum of 20% of the work is exorbitant, unconscionable, arbitrary, unjust, oppressive, illegal and unenforceable. This arbitrary conduct is further made out as similar works awarded by the respondent contained clause stipulating liquidated damages @0.5% per week subject to a maximum of 10% of value.

iv) Though the contract contains a clause for liquidated damages, the respondent did not allege, at any point of time, that it had suffered any loss on account of alleged delay and deducted liquidated damages merely because such a clause was available in the tender document. Such deduction could not have been done without actual loss being suffered by the respondent and without such loss being brought to the notice of the appellants.

v) Once the respondent is at fault for delay, the liquidated damages clause could not have been applied mechanically. The respondent cannot levy liquidated damages as the respondent had acquiesced in the delay as no notice was given to the appellants that time was being extended subject to the liquidated damages clause.

5. The respondent filed counter affidavits, resisting the aforesaid claims. In the counter affidavit, the respondent claimed that the claimant having signed the contract, which included the liquidated damages clause, cannot challenge the same on the ground that the liquidated damages is exorbitant or the other grounds raised in the claim petition. The respondent contended tha