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Showing contexts for: penalty clause can be enforced in Union Of India vs Reva Industries Ltd on 9 June, 2025Matching Fragments
(i) The Ld. Sole Arbitrator has passed the impugned award on 02.07.2015. Vide the award dt 02.07.2015 the Ld Sole Arbitrator allowed the claims as raised by the respondent herein and awarded an amount of Rs 78,858/- (withheld amount) togetherwith the costs calculated at Rs 64,200/- and has awarded interest @ 14% per annum on withheld amount for the period commencing w.e.f. 17.04.2009 to 02.07.2015 i.e. the date of pronouncement of the award. The Ld Sole Arbitrator has also granted furture interest @ 18% per annum from the expiry of 45 days from the date of the award to the date of payment. While awarding the aforesaid amounts the Ld Sole Arbitrator has discussed at length the provisions of the micro, small, medium enterprises development Act, 2006 and also has discussed at length the provisions of Section 73 & 74 of the Indian Contract Act and has also discussed the celibrated judgment passed in the matter of Fateh Chand Vs Bal Kishan Das (1964) 1 SCR 515, Maula Bux ARB No 584281/2016 Union of India Vs M/s Reva Industries Ltd Page No 5/29 Vs Union of India (1969) 2 SCC 554 and also the judgment in the matter of Union of India Vs Ramaniron Foundry (1974) 2 SCC 231 to uphold the legal principle that it is the duty of the court not to enforce the penalty clause but only to award reasonable compensation has been held to be statutorily imposed upon courts by section 74 of the contract act. The court just has to adjudge in every case, reasonable compensation for breach of contract having regard to the conditions which existed on the date of the breach [ref: Fateh Chand case (supra)]. An aggrieved party cannot claim that it is still entitled to liquidated damages without, at least, proving a semblance of loss.
12. The Ld Sole Arbitrator vide the detailed award dt 02.07.2015 had accepted the claim petition of the respondent and awarded a sum of Rs 78,858/- (withheld amount), Rs 64,200/- (towards cost) and had also granted interest @ 14% per annum on withheld amount of Rs 78,858/- for the period w.e.f. 17.04.2009 to 02.07.2015 (pronouncement of award). Beside the aforesaid the Ld Sole Arbitrator had also granted further interest @ 18% per annum from the date of the award till the date of the payment in case the payment of the awarded amount is not made within 45 days from the date of passing of the award. While awarding the aforesaid amounts the Ld Sole Arbitrator has discussed at length the provisions of Section 73 & 74 of the Indian Contract Act and has also discussed the celebrated judgment passed in the matter of Fateh Chand Vs Bal Kishan Das (1964) 1 SCR 515, Maula Bux Vs Union of India (1969) 2 SCC 554 and also the judgment in the matter of Union of India Vs Ramaniron Foundry (1974) 2 SCC 231 to uphold the legal principle that it is the duty of the court not to enforce the penalty clause but only ARB No 584281/2016 Union of India Vs M/s Reva Industries Ltd Page No 17/29 to award reasonable compensation has been held to be statutorily imposed upon courts by section 74 of the contract act. The court just has to adjudge in every case, reasonable compensation for breach of contract having regard to the conditions which existed on the date of the breach [ref: Fateh Chand case (supra)]. An aggrieved party cannot claim that it is still entitled to liquidated damages without, at least, proving a semblance of loss.