Delhi HC Upholds Arbitral Award – Liquidated Damages Require Delay Attribution Proof & Verification – Clause 27 of the Contract of IRCON and AFCONS
Judgment dated 13.2.2026 of the High Court of Delhi in O.M.P. (COMM) No.279 of 2019 of IRCON INTERNATIONAL LTD Vs. AFCONS INFRASTRUCTURE LTD
The tenders for the Udhampur-Baramulla new BG Railway Line Project were invited. The geological and other problems that may be faced by the contractor and the detailed provisions for requisite compensation for the same were also disclosed.
On 20.1.2024, the bid of AFCONS was accepted and the contract dated 14.3.2024 was executed engaging AFCONS as sub-contractor of the project.
On 14.8.2014, the extension for 171 days was sought on account of adverse unanticipated geology, weather conditions and law & order issues.
The extension of time was granted and at the same time, the liquidated damages were proposed for the delay period beyond the extended time.
AFCON invoked arbitration. The Arbitral Tribunal passed the Award dated 5.3.2019 and allowed the claims of AFCONS.
In that context, the question was as to the determination of extension of time in terms of Key dates under the contract. AFCONS said that the delay was caused by reasons not attributable to it and therefore, entitled to extension of time as granted.
The High Court accepted the finding of the Arbitral Tribunal on interpretation of clause 27 of SCC-I that the liquidated damages could not be levied unless after delay analysis is done and that the contractor was responsible for such delay.
In this case, Clause 27 of Special Conditions of Contract-I provided that after an application for extension of time as made by the contractor, the Engineer is to determine the permissible extension and only thereafter, the Employer would become entitled to liquidated damages after giving a further notice as per clause 27.6(vii). Thus, the liquidated damages are levied for delays attributable to the contractor.
