Indian Kanoon - Search engine for Indian Law

3.3 The refund of Rs.3,00,000/- penalty imposed for delay in completing the sample flat is stated to have been allowed without recording reasons and ignoring the terms and conditions of the contract. Neither there was a provision for extending the time for completion of the sample flat nor the time was extended.

3.4 The grant of loss of on-site and off-site expenses for the prolongation period is stated to be against Section 73 of the Indian Contract Act, 1872 (for short „Contract Act‟) and the law laid by the Supreme Court in Kailash Nath Associates v. DDA, (2015) 4 SCC 136 and Unibros vs. All India Radio, 2023 SCC OnLine SC 1366. The argument is that there was no proof of actual loss or damage suffered and the arbitrator without any basis apportioned the expenses depicted in the certificate issued by the Chartered Accountant (for short „CA‟) and awarded the damages.

4.1 It is argued that from 01.07.2017, GST was levied and service tax thereafter is included in GST. Submission is that clauses 37 and 38 of the contract provided that service tax shall be reimbursed and the arbitrator rightly awarded the service tax portion of the contract covered by GST.

4.2 The contention is that the sample flat was to be completed after two months of casting of first floor slab and the delay in completion was due to repeated revisions suggested by the petitioner. Moreover, the petitioner failed to prove the actual loss or injury suffered due to delay in completion of the sample flat and the arbitrator rightly relied upon the decisions of the Supreme Court in Kailash Nath Associates (supra) and Fateh Chand v. Balkishan Dass, 1963 SCC OnLine SC 49 to allow the claim.

12. The chart forming part of the contract provided for a penalty of Rs.50,000/- per fortnight for delay in completion of the sample flat. It is an admitted position that the sample flat was to be completed within two months of casting of first floor slab and there was delay in completing the sample flat. The arbitrator considered that the hindrances causing delay between casting of first floor slab and construction of the sample flat were not considered by the petitioner and the respondent was not even given an opportunity to explain the delay. The reliance was placed upon the decisions of the Supreme Court in Kailash Nath Associates (supra) and Fateh Chand (supra) to hold that in the absence of loss due to breach of contract the imposition of penalty for delay in completion of sample flat cannot be sustained. It is not a case set up even now that the petitioner had substantiated the loss due to breach of contract. The view taken by the arbitrator is plausible and calls for no interference.

D. The award of three percent difference between the post-GST and pre-GST period is set aside.

E. The grant of refund of penalty for delay in completion of the sample flat is upheld.

F. The award of damages under Section 73 of the Contract Act on account of prolongation of the contract is set aside. G. The interest granted except on the amount withheld for non-