Case: Oil &amp; Natural Gas Corporation Ltd Vs. Saw Pipes Ltd

Appellant-ONGC which is a Public Sector Undertaking, has challenged the arbitral award dated 2nd May, 1999 by filing Arbitration Petition No. 917/1999 before the High Court of Bombay. Learned Single Judge dismissed the same. Appeal No. 256/2000 preferred before the Division Bench of the High Court was also dismissed. Hence, the present appeal.

Court's reasoning:
(1) The impugned award requires to be set aside mainly on the grounds:-(i) there is specific stipulation in the agreement that the time and date of delivery of the goods was the essence of the contract;(ii) in case of failure to deliver the goods within the period fixed for such delivery in the schedule, ONGC was entitled to recover from the contractor liquidated damages as agreed;(iii) it was also explicitly understood that the agreed liquidated damages were genuine pre-estimate of damages;(iv) on the request of the respondent to extend the time limit for supply of goods, ONGC informed specifically that time was extended but stipulated liquidated damages as agreed would be recovered;(v) liquidated damages for delay in supply of goods were to be recovered by paying authorities from the bills for payment of cost of material supplied by the contractor.(vi) there is nothing on record to suggest that stipulation for recovering liquidated damages was by way of penalty or that the said sum was in any way unreasonable.(vii) In certain contracts, it is impossible to assess the damages or prove the same. Such situation is taken care by Sections 73 and 74 of the Contract act and in the present case by specific terms of the