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ROHINTON FALI NARIMAN, VINEET SARAN
MAHANAGAR TELEPHONE NIGAM LIMITED – Appellant
Versus
TATA COMMUNICATIONS LIMITED – Respondent
Key Points: - Compensation for breach of contract is governed by terms of the contract; any excess beyond stipulated limits must be refunded. (!) (!) (!) - The contract limits liquidated damages to a maximum of 12%, which is INR 25,83,181 in the cited scenario; amounts above this must be refunded. (!) (!) - The purchaser may recover liquidated damages as specified for delay in delivery and for installation/commissioning, with rates and caps outlined in clauses 16.2(a)-(c). (!) (!) (!) (!) - The petitioner's claim for interest was not allowed at 18% in the absence of contractual stipulation; interest awarded at 9% from amounts due until judgment. (!) - The relief is determined by the Purchase Order terms and the TDSAT judgment upholding the 12% cap on liquidated damages. (!) (!) - The decision concludes that compensation for breach of contract is to be measured within the contract’s terms, and any quantum meruit claim under Section 70 is not applicable where an express contract governs the relationship. (!) (!) (!)
JUDGMENT
R.F. Nariman, J.
The present appeal arises out of a dispute under the Telecom Regulatory Authority of India Act, 1997. The relief sought through a petition before the Telecom Disputes Settlement and Appellate Tribunal, New Delhi ["TDSAT"] by the respondent, Tata Communication Ltd. against the appellant, Mahanagar Telephone Nigam Ltd., is for a recovery of a sum of INR 1,10,57,268/- plus interest thereon. The question that arose between the parties is whether the appellant was justified in adjusting this amount from the dues payable to the respondent by deduction from the bills raised by the respondent. Since the Purchase Order dated 01.10.2008 forms the basis for the claim, it is important to set out clauses 4 and 8 of the said Purchase Order as under:
"4. SCOPE OF ORDER
xxx xxx xxx
iv. Termination of the bandwidth on STM-1 would be done at the MTNL sites/locations in Delhi (Kidwai Bhawan and Nehru Place) and Mumbai (Fountain Head & Prabha Devi) respectively as per the requirement with redundancy in last mile connectivity. For this bandwidth termination purpose, optical/electrical converter, cable and any other hardware/software etc. required, if any, would be arranged by the b
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