The enforceability of liquidated damages does not necessitate proof of actual loss when such damages are agreed upon in the contract.

1. Legality of the levy of liquidated damages, on delay in execution of contract work, is the core issue for consideration in this appeal.

2. The Cochin Port Trust (hereinafter referred to as ''the respondent'') invited global tenders for fabrication, supply, erection and commissioning of two cranes at the wharf at Ernakulam. The tender submitted by M/s.Cimmco Birla Limited (hereinafter referred to as ''the claimant'') was the lowest and it was accepted. The order for the first crane was placed on 06.06.1994 and the order for the second crane was placed on 09.09.1994. As per the terms of the contract entered into between the claimant and the respondent, the work had to be completed and the commissioning of the first crane had to be done on or before the date 05.06.1995 and the second crane, on or before the date 09.09.1995. Time was the essence of the contract. However, there was delay in completion of the work. The periodical requests made by the claimant, for extension of time for completion of work, were granted by the respondent subject to the condition in the contract with regard to levy of liquidated damages. After the completion of the work, when final bill submitted by the claimant was paid, the respondent deducted 15% on the executed value of the work as liquidated damages. The disputes which then arose between the parties were referred to arbitration as provided in the contract.

3. The arbitral tribunal consisted of three arbitrators. The arbitral tribunal found that all claims made by the claimant, except Claim No.1, cannot be allowed. Regarding Claim No.1 relating to liquidated damages, as per the majority award passed by the arbitral tribunal, it was found that, in the absence of proof of sustaining any specific loss, the respondent was not entitled to levy any liquidated damages from the claimant. The respondent was directed to pay an amount of Rs. 77,44,857/- to the claimant with interest at the rate of 15% per anum.

4. The respondent filed application under S.34(1) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ''the Act'') in the District Court, Ernakulam challenging the majority award passed by the arbitral tribunal. The learned Additional District Judge found that the award passed is against the terms of the contract between the parties and set aside the award. The claimant has challenged the aforesaid order in this appeal.

5. We have heard learned counsel for the appellant as well as the respondent. We have also perused the available records.

6. There is no dispute with regard to the fact that, as per the terms of the contract entered into between the claimant and the respondent, the work had to be completed and the commissioning of the first crane had to be done on or before the date 05.06.1995 and the second crane, on or before the date 09.09.1995. There is also no dispute with regard to the fact that the claimant did not complete the work within the period provided in the contract.

7. The time fixed for completion of the work was extended by the respondent periodically at the request of the claimant upto the date 31.01.1997. Extension of time was granted each time subject to the right of the respondent to recover liquidated damages as per the provisions of the agreement executed between the parties.

8. The work order, which forms part of the contract, provided that in the event of failure of the contractor to complete the work and hand over the equipment within the contractual delivery period, the contractor was liable to pay liquidated damages as per Art.23 of S.3 of the bid docu