O.M.P. (COMM) 167/2026 Page 1 of 19

$~33

* IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of decision: 06

th

APRIL, 2026

IN THE MATTER OF:

+ O.M.P. (COMM) 167/2026 & I.A. 8944/2026, I.A. 8945/2026

PASHCHIMANCHAL VIDYUT VITRAN NIGAM LIMITED

.....Petitioner

Through: Mr. Vivek Narayan Sharma, Mr.

Adhiraj Wadhera, Mrs. Mahima

Bhardwaj, Mr. Akash Singh, Ms.

Palak Kaushik, Ms. Annika,

Advocates.

versus

IL AND FS ENGINEERING AND CONSTRUCTION COMPANY

LTD .....Respondent

Through: Mr. Kaushik Laik, Mr. Ashay

Kaushik, Mr. Shashank Tiwari and

Mr. H.N. Thangal, Advocates

CORAM:

HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD

JUDGMENT (ORAL)

1. The present Petition under Section 34 of the Arbitration and

Conciliation Act, 1996 (hereinafter referred to as “the Act”) has been filed

by the Petitioner challenging an Award dated 11.10.2025 passed by the

learned Arbitral Tribunal (hereinafter referred to as “Tribunal”) while

adjudicating the disputes that arose between the parties herein.

2. Shorn of unnecessary details, facts of the case as discernable from the

material on record are as follows:

(i) The Petitioner, a Government-owned company incorporated under the

O.M.P. (COMM) 167/2026 Page 2 of 19

Companies Act, 1956, is a subsidiary of the Uttar Pradesh Power

Corporation Limited and is engaged in the business of maintaining

and operating a distribution system for supplying electricity to the

consumers in various districts of the State of Uttar Pradesh. It also

implements various schemes sponsored by the State Government

and Ministry of Power, Government of India related with system

strengthening of electrical network across 14 districts from time to

time. The Respondent covers 6 distribution zones based at Meerut,

Ghaziabad, Amroha, Noida, Saharnpur and Muradabad and each is

headed by an officer of the rank of Chief Engineer.

(ii) On the other hand, the Respondent is a company duly incorporated

under the Companies Act, 1956 having its registered office at

Door No. 8-2-120/113, Block B, 1

st

Sanali Info Park, Road No. 2,

Banjara Hills, Hyderabad, Telengana.

(iii) The Ministry of Power, Government of India, vide an Office

Memorandum dated 02.09.2013 sanctioned the Rajiv Gandhi

Gramin Vidyutikaran Yogna [“RGGVY”] 12

th

Plan and declared

that the Rural Electrification Corporation [“REC”] would be the

nodal agency for the scheme. Subsequently, REC vide its Office

Letter dated 06.01.2014 sanctioned the project for rural electricity

infrastructure and rural household‟s electrification under the 12

th

Plan in partially electrified/unelectrified villages and habitations

of district Amroha (UP) under the „RGGVY‟ scheme by PVVNL

through Principal Secretary (Energy), Government of Uttar

Pradesh.

(iv) The parties entered into two contracts in March 2015 qua the

supply and erection/installation of rural electrification works in

O.M.P. (COMM) 167/2026 Page 3 of 19

Village Majre of Amroha District, Uttar Pradesh. Two Agreements

dated 03.03.2015 amounting to Rs. 94.5 Crores were executed

between the parties which contains the General Conditions of

Contract and the same were provided to the Respondent on turnkey

basis are as mentioned hereinbelow:

(a) Ex-works Supply Contract Agreement: The present

contract was for ex-works supply of all equipment‟s and

materials including type testing (including supply of

materials and equipment as per technical specifications,

loading, unloading, transportation, delivery, storage at

work sites, erection and commissioning) of augmentation

and renovation of 33/11 KV Sub-Station including

associated civil works, new 11 KV line works, new LT line

on AB Cable and releasing of service connections to BPL

households in village Majre of Amroha. The Contract

Price under this Agreement was INR 75,18,19,481.25/-

[“Contract for Supply”].

(b) Service Contract Agreement: The present agreement

agreement dated 03.03.2015 was for erection of all

equipment and materials including type-testing etc. The

contract also included performance of all activities such as

in-land transportation to final destination at site and

insurance, taking delivery, unloading, handling and storing

of all equipment and material, installation of equipment,

providing service connections to Below Poverty Line

consumers including associated civil works, testing and

commissioning of all equipment and materials. Further, the

O.M.P. (COMM) 167/2026 Page 4 of 19

material procured by the Respondent had to be routed

through the nearest store center of Petitioner under the

supervision of the concerned Executive Engineer. The

Contract Price was INR 18,86,89,724.71/- [“Contract for

Installation”]

For the sake of brevity, wherever required, the above two

contracts shall be collectively referred to as “the Contracts,” and

the works to be carried out under the Contracts shall be referred to

as “the Project”.

(v) The work under the said contracts was to be completed within two

years (twenty-four months) from the date of the Letter of Award

dated 01.11.2014 (hereinafter referred to as “LOA”), that is, on or

before 31.10.2016.

(vi) A Performance Bank Guarantee was furnished by the Respondent

to the Petitioner in accordance with the Contracts, albeit with some

delay, according to the Petitioner.

(vii) Material on record reveals that under the Contract for Supply, it

was the Respondent‟s obligation to ensure that the equipment as

supplied were new, unused and in accordance with specifications

of Contract. Further, the Respondent‟s obligation to replace the

equipment was limited to (a) if equipment failed to pass the test

and/or inspections prior to actual commercial utilization of those

equipment; (b) any damage, loss, theft, pilferage, or fire occurred

in the equipment during the execution of the Contract; or (c) in

particular, during the Defects Liability Period which was for a

period of twelve (12) months from the Taking Over/Completion of

Facilities, the Respondent was obligated to replace and repair the

O.M.P. (COMM) 167/2026 Page 5 of 19

equipment, if defects were so found in the design, engineering,

materials and the workmanship of the Plant and equipment

supplied or of the work executed by the Contractor i.e., the

Respondent herein.

(viii) Undisputedly, the Respondent was specifically absolved from any

obligation to replace equipment in case of improper operation or

maintenance of facilities of the employer i.e., the Petitioner herein,

operation of facilities outside specifications provided in the

Contract and normal wear & tear.

(ix) As noted by the Arbitral Tribunal, though the work was to be

completed within a period of twenty-four (24) months, the Project

stood finally commissioned on 20.02.2019.

(x) The Respondent was further obligated to supply and install

distribution transformers [“DTRs”] that had specific load bearing

capacities and once these DTRs were installed by the Respondent,

they were to be used by the Petitioner in a manner that the load on

these transformers did not exceed their maximum load bearing

capacities. In addition, the Petitioner had to ensure that the

network of connections to households had to be maintained to such

limits that the aggregate load on the transformers did not exceed

their bearing capacities.

(xi) The Respondent/Claimant‟s case before the Arbitral Tribunal was

that though the DTRs installed by the Respondent at the Project

Site were designed with a safe margin to handle increased loads

and were also equipped with cooling systems to dissipate the heat

generated by the increased load, there was a limit to which this in-

built system could sustain the continued overloading on the

O.M.P. (COMM) 167/2026 Page 6 of 19

system. It was further averred that the Petitioner miserably failed

in ensuring that after taking over the DTRs from the Respondent,

they were not to be overloaded beyond the load limit.

(xii) According to the Respondent, due to the Petitioner‟s massive

overloading coupled with the several illegal attempts by the locals

over the years to by-pass the protection systems of the DTRs,

caused the DTRs to witness repeated breakdowns and faults. In

this situation, the Respondent is stated to have informed the

Petitioner that it was not responsible to replace the DTRs in case of

overloading, yet the Respondent was asked to carry out the

replacement at its own cost.

(xiii) It is the case of the Respondent/Claimant that it did replace some

DTRs, however, the same was done under protest. However, when

the Respondent/Claimant denied further requests of the Petitioner

to replace the DTRs, the Petitioner started making illegal

deductions from the Respondent/Claimant‟s bills towards

replacement of the damaged DTRs. As per the

Respondent/Claimant, an aggregate amount of INR 6,23,99,190/-

was deducted by the Petitioner.

(xiv) The Respondent/Claimant further averred that when it was

undertaking erection works, the Petitioner herein had started

demanding replacement of the transformers from time to time,

which were being not acceded to by the Claimant/Respondent

herein who also issued several communications to the Plaintiff

highlighting that under the Contract, it was not liable to replace the

burnt/damaged transformers. It is the case of the

Claimant/Respondent herein that even during the Defects Liability

O.M.P. (COMM) 167/2026 Page 7 of 19

Period, the obligation of the Claimant/Respondent herein was

restricted to replace only those transformers affected due to

normal wear and tear, manufacturing defects, and poor

workmanship, however, none of the transformers have been

damaged due to the above said reasons and since the

Claimant/Respondent herein was not replacing the transformers,

the Petitioner herein started deducting money from his bills.

(xv) Further, the Petitioner issued the competition certificate to the

Respondent/Claimant only after the expiry of Defects Liability

Period i.e., on 05.04.2022 indicating to the Respondent/Claimant

that the REC had already permitted the closure of the Project way

back on 15.12.2020.

3. It is further the case of the Respondent/Claimant herein that there was

inordinate delay in release of the certified dues under the Running Account

Bills (“RA Bill”). It is the case of the Respondent/Claimant herein that once

the RA Bills were certified, the same were to be paid in a timely manner so

that the contractual works could be performed in a smooth and efficient

manner. It is the case of the Respondent/Claimant herein that there is a delay

of over a period of 1.5 years in releasing the Respondent/Claimant‟s dues

and therefore, they are entitled to the compensation for the loss towards

delay in releasing the amount. It is also the case of the Respondent/Claimant

herein that the Project was delayed for the reasons not attributable to the

Respondent/Claimant herein. It is the case of the Claimant/Respondent

herein that despite the fact that the delay cannot be attributable to the

Claimant/Respondent herein, the Petitioner herein sought to penalize by

recovering money towards the liquidated damages on account of delay in the

competition of work.

O.M.P. (COMM) 167/2026 Page 8 of 19

4. Due to the above-stated disputes arose between the Parties, the

Respondent/Claimant herein invoked arbitration on 20.09.2022 under Clause

21.2 of the Contracts and subsequently the Arbitral Tribunal was

constituted.

5. The Respondent/Claimant raised various claims, inter alia, three

claims that were raised by the Respondent/Claimant before the Arbitral

Tribunal are reads as under: -

i. Claim No. 1: A sum of Rs.6,23,99,190/- towards monies wrongly

deducted by the Petitioner/Respondent from the

Respondent/Claimant‟s bills towards damage caused to

Respondent/Claimant‟s equipment for reasons attributable to the

Petitioner/Respondent;

ii. Claim No. 2: A sum of Rs. 2,29,92,066/- towards the

Respondent/Claimant loss of interest on account of delayed release of

the Respondent/Claimant‟s contractual dues;

iii. Claim No. 3: A sum of Rs.4,50,68,820/- was sought towards

liquidated damages which the Petitioner/Respondent had wrongly and

illegally deducted from the Respondent/Claimant‟s bills.

6. Claims Nos.1 & 2 were rejected by the Arbitral Tribunal. In so far as

Claim No. 3 is concerned, the Respondent/Claimant herein sought a sum of

Rs. 4,50,68,820/- which was deducted from the bills towards the liquidated

damages. It was the case of the Respondent/Claimant herein before the

Arbitral Tribunal that these deductions were arbitrary, unjustified and in

violation of the terms and conditions of the contract. According to the

Respondent/Claimant herein, the delay was entirely attributable to the

Petitioner herein and despite numerous letters being issued by the

Respondent/Claimant herein highlighting the hindrances being faced by the

O.M.P. (COMM) 167/2026 Page 9 of 19

Respondent/Claimant in execution of the project, no remedial steps were

taken by the Petitioner herein to remove the hindrances and in fact not even

a single attempt was made to correspond with the Respondent/Claimant

herein in this regard. It is the also the case of the Respondent/Claimant that

the Petitioner herein had failed to provide adequate Right of Way to the

Respondent/Claimant. According to the Respondent/Claimant herein that

despite fulfilling their obligation under the contract and since the

Respondent/Claimant herein were not responsible for the delay in

performing the contract, the Petitioner herein could not have made any

deductions on the ground of liquidated damages.

7. Per contra, it is the case of the Petitioner herein that the deductions

towards liquidated damages were in terms of the Clause 21.2 of the GCC

and the Contracts. It was the responsibility of the Respondent/Claimant

herein to complete the project within the period of 24 months and repeated

extensions were sought by the Respondent/Claimant on the various grounds

for completing the work within the prescribed time. It is the case of the

Petitioner herein before the Arbitral Tribunal that the payments as per the

conditions of the contract were released from time to time as per availability

of funds released by the Nodal Agency M/s REC. Furthermore, it was stated

by the Petitioner herein that Right of Way cannot be treated as a ground to

seek time extensions as the same are common during the performance of the

contract. Therefore, the Petitioners were justified in deductions towards

liquidated damages.

8. The Arbitral Tribunal after carefully perusing the contentions of the

parties and examining the material on record held as under: -

i. The Petitioner herein i.e., the Respondent before the Arbitral Tribunal

has failed to establish satisfactorily the delay was entirely attributable

O.M.P. (COMM) 167/2026 Page 10 of 19

to the Claimant/Respondent herein and ,therefore, deductions from the

RA bills raised by the Respondent/Claimant towards liquidated

damages were justified.

ii. It has come on record that several Letters dated 30.09.2016,

04.03.2017, 29.08.2017, 09.10.2017, 23.01.2018 and 30.03.2019 were

addressed by the Claimant/Respondent herein during the currency of

the contract seeking extension of time for particular duration citing

various hindrances being faced by the site, however, no response to

the said Letters was issued by the Petitioner. The applications filed by

the Claimant/Respondent herein for extension were neither accepted

nor rejected by any formal order and despite the expiry of stipulated

period, the Claimant/Respondent herein continued to carry out its

activities under the agreement without any restraint by the Petitioner

herein and the project was finally completed on 20.02.2019. There is

no extension by the Petitioner herein i.e., the Respondent before the

Arbitral Tribunal as to why no action whatsoever was taken under the

contract qua delay in completion of the project and the

Claimant/Respondent herein was permitted to continue the work

without any extension of time.

iii. There was no deduction towards the liquidated damages by the

Petitioner herein due to the delay and the amount of Rs.4,50,68,820/-

was recovered towards the liquidated damages only in June 2022 and

that to without issuing any prior notice to the Petitioner herein.

iv. No specific order of any Competent Authority imposing liquidated

damages and making deductions thereof and the bill was placed on

record by the Petitioner herein.

v. The work was completed on 20.02.2019 and the Completion

O.M.P. (COMM) 167/2026 Page 11 of 19

Certificate was issued on 05.04.2022 and no grievance has been raised

by the Petitioner herein about the delay in the completion of the

project, rather it was recorded that the Claimant/Respondent herein

had completed all the works in the Project satisfactorily. The various

letters had been issued by the Claimant/Respondent herein for non-

release of the mobilization advance and the request for the same was

kept pending. The Petitioner herein had not raised any grievance that

the mobilization advance was not been released due to the

deficiencies in compliance of the conditions to avail mobilization

advance.

vi. The grievance of the Claimant/Respondent herein that the execution

of the work was hampered due to obstructions created by the villagers

and despite several communications to the Petitioner herein, no

attempt was made to resolve the issues, rather only a reply was given

that such hindrances are common.

vii. There has been an inordinate delay in release of the dues of RA bills.

9. Considering all these aspects and complete inaction on the part of the

Petitioner herein in removing the hindrances, the Arbitral Tribunal came to a

conclusion that the Respondent/Claimant herein was not responsible alone

for delay in the completion of the project which will only enable the

Petitioner herein from making the deduction towards the liquidated

damages.

10. There is nothing on record to show that the Petitioner herein suffered

any proof of actual loss which would entitle them to recover the liquidated

damages.

11. The Arbitral Tribunal after examining the material on record came to

a conclusion as overserved under: -

O.M.P. (COMM) 167/2026 Page 12 of 19

“51. The material hindrances pointed out by the claimant

in various letters in detail have not been specifically

disputed or denied by the respondent. Considering the

various hindrances and impediments referred above, it

can be inferred that the claimant alone was not

responsible for delay in completion of the project

entitling the respondent to make deductions amounting to

Rs.45,68,820/ towards Liquidated damages. Pertinent to

note is that despite the claimant specifically pleading that

no 'actual loss' was caused to the respondent, the

respondent in the Statement of Defence did not

controvert it. There is no plea either in the Statement of

Defence or in the written submissions by the respondent

if it had suffered 'actual loss' entitling it to make

deductions towards liquidated damages. The law on this

aspect is very clear. In the case of Kailash Nath

Associates (supra), the Hon'ble Supreme Court

categorically observed in para no. 43 .1:

"Where a sum is named in a contract as

liquidated amount payable by way of

damages, the party complaining of a breach

can receive as reasonable compensation

such liquidated amounts only if it’s a

genuine pre-estimate of damages fixed by

both the parties and found to be such by the

court. In other cases, where a sum is named

in a contract as a liquidated amount payable

by way of damages, only reasonable

compensation can be awarded not exceeding

the amount so stated. Similarly, in cases

where the amount fixed is in the nature of

penalty, only reasonable compensation can

be awarded not exceeding the penalty so

stated. In both cases, the liquidated amount

or penalty is the upper limit beyond which

the court cannot grant reasonable

compensation."

52.In para 43.2, the court held that reasonable

O.M.P. (COMM) 167/2026 Page 13 of 19

compensation will be fixed on well known principles that

are applicable to the law of contract, which are to be

found inter alia, in Section 73 of the Contract Act. In

para 43.4, it was held that since Section 7 4 awards

compensation for damages or loss caused by a breach of

contract, damage or loss caused is a sine qua non for the

applicability of the section.

53. The Hon'ble Delhi High Court, in Jammu & Kashmir

Economic Reconstruction ... Agency vs. M/s Simplex

Projects Ltd., 2925:DHC:4076 held that the law

mandates proof of actual loss despite the presence of

liquidated damages (LD) clause and does not allow

automatic recovery of the entire LD amount upon breach.

Therefore, the petitioner's unilateral adjustment without

adjudication was unlawful. The AT rightly held that such

unilateral recovery does not obviate the need for proper

adjudication of the LD claim. In the instant case, no

evidence worth the name has been filed by the respondent

to establish if due to delay in the execution of the project,

the respondent suffered actual loss of Rs.4,50,68,820/-.

The unilateral recovery at one go in June, 2022 after the

expiry of around 3 years of the completion of the project,

without establishing actual loss to the respondent is

untenable and impermissible.

54. It is a matter of record that similar 'dispute' had

arisen in the project of district. Bulandshahr. The project

which was to be completed by 08.04.2015 suffered delay

of around 4 years and was finished on 19.03.2019; huge

quantity of DTRs of 10KVA and 25KVA had

burnt/damaged. Strange enough, despite delay of 4 years,

attributed to the claimant therein, no deduction

whatsoever was made towards liquidated damages. The

respondent has failed to explain or justify as to what had

prompted it to impose liquidated damages in the instant

case while exonerating the same claimant therein from

imposing any liquidated damages. There must be some

basis for imposing liquidated damages in the instant

case. The deduction of Rs.4,50,68,820/- being a sum

O.M.P. (COMM) 167/2026 Page 14 of 19

equivalent to 0.5% of the contract price simplicitor

without any basis/foundation and without any evidence of

actual loss by the respondent can't be sustained; it is

untenable and arbitrary. The claimant is entitled for its

refund/return. The Tribunal is further of the view that

Rs.4,50,68,820/- shall be returned to the claimant along

with interest@ 8% per annum with effect from

01.07.2022 as the claimant was deprived of its legitimate

dues by deducting the liquidated damages in one go in

June, 2022. This issue is decided in favour of the

claimant against the respondent.”

12. The Arbitral Tribunal has, therefore, held that a sum of

Rs.4,50,68,220/- which has been deducted as liquidated damages is

unsustainable. It is this portion of the Award i.e., Claim No.3 which is a

subject matter of challenge in the present petition filed under Section 34 of

the Arbitration and Conciliation Act, 1986.

13. Learned Counsel for the Petitioner contends that the Clause 21.2 of

the GCC contemplates that if the contractor failed to comply with the time in

accordance with the Clause 21.2 of the GCC, the contractor shall pay to the

employer a sum equivalent of half percent i.e., (0.5%) of the contract price

as liquidated damages for such default and not as a penalty without prejudice

to the employer‟s other remedies under the contract for each week or a part

thereof. He also states that the upper limit permissible was 5% and therefore,

the Petitioner was well within its jurisdiction to deduct the liquidated

damages within the range of 0.5% to 05%. It is, therefore, the case of the

Petitioner herein that the Award is, therefore, contrary to Clause 21.2 of the

GCC. He also states that it is now well settled that if an Award is contrary to

the terms of the contract the Award automatically becomes contrary to the

policy of the country.

14. The scope of Section 34 of the Act is now well crystallized by the

O.M.P. (COMM) 167/2026 Page 15 of 19

Apex Court in a catena of judgments. The Apex Court in Delhi Airport

Metro Express Private Limited v. Delhi Metro Rail Corporation Limited,

(2022) 1 SCC 131, has observed as under:-

“16. DMRC filed an appeal under Section 37 of the

1996 Act read with Section 13 of the Commercial

Courts, Commercial Division and Commercial

Appellate Division of High Courts Act, 2015 (the title

since amended to “the Commercial Courts Act,

2015”), challenging the correctness of the judgment

passed by the learned Single Judge on 6-3-2018

[DMRC v. Delhi Airport Metro Express (P) Ltd., 2018

SCC OnLine Del 7549] dismissing the objections filed

by DMRC under Section 34 of the 1996 Act. The

Division Bench reversed [DMRC v. Delhi Airport

Metro Express (P) Ltd., 2019 SCC OnLine Del 6562]

the judgment of the learned Single Judge and allowed

the appeal filed by DMRC. The award passed by the

Arbitral Tribunal was partly set aside. The parties

were left to invoke the arbitration clause for

adjudication of the issues that were not decided by the

Division Bench. The judgment of the Division Bench

dated 15-1-2019 [DMRC v. Delhi Airport Metro

Express (P) Ltd., 2019 SCC OnLine Del 6562] is

assailed in these appeals.

17. DMRC has also filed SLP (C) No. 8311 of 2019

challenging the correctness of the aforesaid judgment

[DMRC v. Delhi Airport Metro Express (P) Ltd., 2019

SCC OnLine Del 6562] of the Division Bench in

relation to the issues of grant of interest, waiver of the

termination notice due to Damepl's conduct of

operating the project for more than five months from

22-1-2013, refusal by the Division Bench to grant

relief of specific performance of the Concession

Agreement and non-consideration of the issue

pertaining to the real reason for the termination of the

Concession Agreement by Damepl.

O.M.P. (COMM) 167/2026 Page 16 of 19

Reasons given by the Division Bench for setting aside

the award

18. The Division Bench of the High Court held

[DMRC v. Delhi Airport Metro Express (P) Ltd., 2019

SCC OnLine Del 6562] that the award of the Arbitral

Tribunal had recorded two different termination dates.

As the Tribunal had based its reasoning on the validity

of the termination notice on two different dates leading

to confusion and ambivalence as to the termination

notice and the date of termination, the award was

found to be suffering from the vices of perversity,

irrationality and patent illegality. The High Court

observed that in deciding the question on defects in the

civil structure and whether effective steps were taken to

cure the defects, the Arbitral Tribunal had committed

serious error by holding, without “reason”, that the

vital evidence of the sanction granted by the CMRS for

resumption of commercial operations of AMEL and the

fact that DMRC had successfully operated AMEL from

30-6-2013 till the date of the award without any

adverse incident were inconsequential. The High Court

found fault with the Arbitral Tribunal in virtually

negating the certificate issued by the CMRS under the

Delhi Metro Railway (Operation and Maintenance)

Act, 2002 (hereinafter “the Delhi Metro Act”) and held

that the cumulative effect of the findings of the award

on this issue “shocked the conscience of the court”.”

15. The short question which now arise for consideration is as to whether

the Petitioner was justified in making deductions by way of liquidated

damages for delay in performance of the contract or not.

16. It is well settled that the Arbitral Tribunal is the master of evidence

produced before it. It is also now well settled that the Court while exercising

power under Section 34 of the Act cannot go into details and facts, re-

appreciate evidence and come to a conclusion different from the one arrived

at by the Arbitral Tribunal. Material on record and the findings of the

O.M.P. (COMM) 167/2026 Page 17 of 19

Arbitral Tribunal is that the Claimant/Respondent herein is not alone

responsible for the delay. The delay was attributable to the Petitioner herein

as well.

17. The Arbitral Tribunal has categorically come to a conclusion that the

material hindrances pointed out by the Claimant/Respondent herein in

various letters in detail have not been specifically disputed or denied by the

Petitioner herein. There is no deduction on the ground of liquidated damages

under the various RA bills. The only deduction which has been made was

for not replacing the transformers and there was no imposition of the

liquidated damages for the delay prior to June 2022, RA Bills when first

deduction was made on the ground of liquidated damages and that to without

prior notice.

18. The conclusion of the Arbitral Tribunal that the delay is attributable

on both sides, the unilateral recovery by the Petitioner herein relying on the

Clause 21.2 of the GCC at that to without adjudication is not justified and in

the opinion of this Court would not come within the parameters of Section

34 of the Act either on the ground of patent illegality or on the ground

against the notions of morality or against the public policy of India/country.

19. The Apex Court in Delhi Airport Metro Express Private Limited

(supra) has observed as under:-

“30. Section 34(2)(b) refers to the other grounds on

which a court can set aside an arbitral award. If a

dispute which is not capable of settlement by

arbitration is the subject-matter of the award or if the

award is in conflict with public policy of India, the

award is liable to be set aside. Explanation (1),

amended by the 2015 Amendment Act, clarified the

expression “public policy of India” and its

connotations for the purposes of reviewing arbitral

awards. It has been made clear that an award would

O.M.P. (COMM) 167/2026 Page 18 of 19

be in conflict with public policy of India only when it is

induced or affected by fraud or corruption or is in

violation of Section 75 or Section 81 of the 1996 Act, if

it is in contravention with the fundamental policy of

Indian law or if it is in conflict with the most basic

notions of morality or justice.”

20. The finding of the Arbitral Tribunal that law mandates factual loss

despite the presence of the liquidated damages and does not allow automatic

recovery of the entire liquidated damages upon breach, also cannot be found

fault with as it is supported by the judgment of this Court in Jammu &

Kashmir Economic Reconstruction Agency v. M/s Simplex Projects Ltd.,

2025 SCC OnLine Del 3515, has observed as under:-

“27. In Fateh Chand (Supra); Kailash Nath (Supra);

Sudershan Kumar Bhayana (Deceased) Thr LRs v.

Vinod Seth (Deceased) Thr LRs (Supra), it has been

held that a clause in a contract enabling a party to

claim LD only entitles it to claim the sum up to the LD

amount mentioned in the contract subject to proving

the actual loss suffered. The LD clause does not entitle

a party to claim the whole LD sum automatically upon

the occurrence of breach. In view of this settled

position of law, the Petitioner's failure to raise its LD

claim as a counter claim and seeking a declaration

that pre-arbitration adjustment carried out it by it to

unilaterally recover the LD amount, was illegal.”

21. The conclusion drawn by the Arbitral Tribunal based on the said

judgment which has not been set aside by the Apex Court again, therefore,

said to such which shocks the conscience of this Court.

22. The conclusion of the Arbitral Tribunal that in absence of any

evidence, both the name filed by the Petitioner to establish is due to the

delay in the execution of the project, the Petitioner herein suffered actual

O.M.P. (COMM) 167/2026 Page 19 of 19

loss, deduction of an amount of Rs. 4,50,68,820/- is impermissible also does

not require any interference.

23. In the opinion of this Court, even notice is not to be issued in this

case.

24. Accordingly, the Petition is dismissed along with pending

application(s), if any.

SUBRAMONIUM PRASAD, J

APRIL 6, 2026

Prateek/AP