JUDGMENT:

1. The present Civil Miscellaneous Appeal has been filed by the Government, against the award dated 05.05.2006, in O.P.No.1929 of 2002, on the file of the learned XIV Additional Chief Judge, City Civil Court, Hyderabad, wherein and whereby the claim of respondent No.1 was partly allowed by setting aside the award of the arbitrator dated 24.06.2002 with regard to grant of liquidated damages of Rs.1,50,000/-, in addition to actual loss awarded by the arbitrator.

2. The main contention of the learned Deputy Solicitor General of India appearing for the appellants is that the Court below has committed error in setting aside the order of granting liquidated damages. It is contrary to the scope of interference of the Court below in the arbitration award. According to him, the clause 50 of the general conditions of contract, enable the Government, which has given the contract to respondent No.1, to impose 10% of contract value towards liquidated damages for breach of contract. According to him, there is a clear breach of contract. Therefore, the appellants are entitled for the liquidated damages, which were rightly fixed by the arbitrator. Such appreciation of the arbitrator ought not to have been interfered by the Court below when the award does not suffer from any perversity.

3. Heard the learned counsel for the appellants and perused the materials placed on record. There is no representation for respondent No.1.

4. The background of the facts show that the contract was assigned to respondent No.1 by the appellants for execution of repair and re-erection of sheds in military complex. The contract value was Rs.15,77,944/-. The work was to be executed within one year from the date of commencement. The work was commenced on 14.07.1997 and it was to be completed by 13.07.1998. When the work was not completed within the said time, time was extended up to 28.07.1998. Still the work could not be completed. Further extension was given up to 28.09.1998. In spite of twice extensions were granted, respondent No.1 did not complete the work assigned under the contract and thereby, he breached the contract. Therefore, the appellants issued a letter under Ex.A29, dated 30.11.1998 asking respondent No.1 to complete the work. As there was no response from him, by a letter dated 28.01.1999, the contract was cancelled by invoking the powers under clause 54 of general conditions of contract. It was given effect from 08.02.1999. The claimant protested the cancellation by letter dated 06.02.1999 under Ex.A31. Subsequently, the present arbitration proceedings were initiated.

5. The arbitrator, on consideration of evidence on record found that respondent No.1 is liable to pay Rs.4,29,355/- with interest, which includes costs and other expenditure. Aggrieved by the same, respondent No.1 has filed present impugned O.P.No.1929 of 2002 before the learned XIV Additional Chief Judge, City Civil Court, Hyderabad, invoking Section 34 of Arbitration Act. The Court below, considering the evidence on record found that the arbitrator, having granted actual loss sustained by the appellants, which was assessed to be Rs.2,04,052/-, ought not to have awarded the liquidated damages of Rs.1,50,000/-. Consequently, allowed the application in part and set aside the part of the award by granting liquidated damages. Aggrieved by the same, present Civil Miscellaneous Appeal has been preferred at the instance of the Government.

6. There is no dispute that as per clause 50 of general conditions of the contract, the appellants are entitled to recover 10% of the contract value if the contract value is exceeding Rs.10,00,000/- but does not exceed Rs.20,00,000/- in case of breach of contract. In the present case, the contract value was Rs.15,00,000/- and odd. The Court below found that the arbitrator has not assigned any reason for granting Rs.1,50,000/- towards liquidated damages, in addition to the actual loss which the department has sustained on account of breach of contrac