HARYANA TELECOM LIMITED Vs. MAHANAGAR TELEPHONE NIGAM LTD

JUDGEMENT

(1.) The appellant is aggrieved by an order of the learned Single Judge which interfered with the Award of the Arbitral Tribunal under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter "the Act"). The Arbitral Tribunal had held in its Award that the amounts deducted towards liquidated damages had to be paid by the respondent (hereafter "MTNL") to the appellant.

(2.) The undisputed facts are that the parties had entered into a contract whereby the appellant agreed to supply a certain quantity of cables which were to be laid by the MTNL in respect of its telecommunication network (LCKM of underground Jelly Field Telephone Cables ranging between 10 to 2400 pairs). The contract entered into by the parties contained, inter alia, a compensation/liquidated damages clause which reads as follows:-

(3.) It is not in dispute that the appellant did not deliver the cables on time. As a consequence, MTNL deducted amounts in terms of Clause 16.2. The appellant thereafter called upon MTNL to pay the amount which was in the sum of ' 1,03,20,763/- by notice dated 24.02.1997. Non-compliance by MTNL led to reference of the dispute to a three member Arbitral Tribunal. On 12.02003 the Tribunal interpreted the condition i.e. Clause 16.2 and held that the condition, in fact, amounted to an unenforceable penalty which rendered MTNL to refund the amounts. The MTNL challenged the Award before the learned Single Judge. In an earlier round, the learned Single Judge had set aside the Award reasoning that the Tribunal's Award was patently erroneous because Clause 16.2 was a liquidated damages condition and in fact constituted a pre-estimate of damages by the parties. The delay in supply of cables was held to be an event covered by it which entitled the MTNL to deduct the amount. On appeal, the Division Bench set aside the order of the learned Single Judge on a narrow ground that the pleadings of the parties had not been taken into account while setting aside the Award. The second time round again the learned Single Judge arrived at the same findings in the impugned order.