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2015 DIGILAW 742 (KAR)

Prism Cement Limited v. D. C. S. Limited

2015-07-10

N.K.PATIL, RATHNAKALA

body2015
JUDGMENT : Rathnakala, J. 1. The judgment and decree passed by 6th Additional City Civil Court, City Civil Judge, Bangalore on his file in Arbitration Suit No. 119 of 2006, dated 17-10-2008 is under attack in this appeal. By the impugned judgment, the learned Court dismissed the suit filed by this appellant/plaintiff under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) came to be dismissed. 2. The plaintiff had filed the said suit to set aside the award passed by the Arbitrator on 5-8-2006. 3. Briefly stated:- The appellant's predecessor by name M/s. Fletcher Pioneer (India) Private Limited (the previous company since purchased by the appellant, hereinafter for short the appellant) entered into a rock processing/crushing agreement dated 10-4-2002 with Delta Constructions Systems Limited (hereinafter for short the Delta) as per Ex. C. 17, dated 10-4-2002 for crushing of feed rock supplied by the appellant into small pieces. As per the agreement, the actual quantity of feed rock to be crushed in three years was 4,80,000 m.ts. But the actual quantity crushed was 196497 m.ts. Thus there was a short fall of 283503 m.ts of feed rock to be crushed. The agreement came to an end by efflux of time. By virtue of arbitration clause in the agreement, the Delta initiated arbitration proceedings and made as many as 6 claims as under:- Claim 1(1) : Final bill of settlement Rs. 3,87,726.87 towards non-payment of processed rock of 4192.095 metric tons - Rs. 3,52,128/- was awarded on the basis of agreed rate to process the feed rock at Rs. 84/- per metric ton. 1(2) Rs. 10,59,682.74 towards rehandling charges of the feed rock (rejected). 1(3) Rs. 1,30,000/- towards reimbursement of licence fee and electric power consumed by the appellant. Rs. 1,08,000/- was awarded. Claim 2(1) Rs. 1,52,38,286.25 as compensation for the loss incurred on account of expenses incurred including overheads, reduced productivity from the machinery and equipment deployed and expected profit but not reimbursed - Rs. 1,30,41,000/- was awarded. Claim 2(2) Rs. 204.88 lakhs towards loss on account of encashment of bank guarantee but rejected. Claim 3 : Interest at the rate of 18% p.a. towards past, pendente lite and future. Awarded 12% p.a. with effect from 1-10-2005 till payment. Claim 4 : Cost of Arbitration at Rs. 7,22,851.86. Awarded Rs. 2,00,000/-(lump-sum) 4. 1,30,41,000/- was awarded. Claim 2(2) Rs. 204.88 lakhs towards loss on account of encashment of bank guarantee but rejected. Claim 3 : Interest at the rate of 18% p.a. towards past, pendente lite and future. Awarded 12% p.a. with effect from 1-10-2005 till payment. Claim 4 : Cost of Arbitration at Rs. 7,22,851.86. Awarded Rs. 2,00,000/-(lump-sum) 4. The appellant made counter claim as follows:- Counter claim 1 : Rs. 70,000/- towards money advanced to the respondent-Delta (since admitted by Delta, this amount was held to be adjusted against the amount awarded against RMC ready works). Counter claim 2 : Rs. 36,00,000/- towards liquidated damages under Section 74 of the Contract Act, 1872 - Rejected. Counter claim 3 : Rs. 3,43,744/- towards feed rock supplied and not handed over - Rejected. Counter claim 4 : Rs. 3,53,475/- towards amount advanced for mobilisation on return basis but not returned - Rejected. Counter claim 5 : Money paid by mistake towards rehandling charges of crushed feed rock Rs. 11,51,904/- Rejected. Counter claim 6 : Interest on the amount awarded by the Arbitrator at 12% (rejected) and cost rejected. Thus, by giving set off to the amount due by respondent-Delta to the appellant Rs. 1,34,31,128/- with 12% p.a. is awarded with effect from 1-10-2005, to be payable by the appellant herein. The original suit filed by the appellant challenging the award under Section 34 of the Act before the City Civil Court in A.S. No. 119 of 2006 has been dismissed. 5. Sri G.K.V. Murthy, for the appellant submits, the Arbitrator has awarded un-liquidated damages, though there was no such clause in the Arbitral agreement and granting interest at the rate of 12% p.a. much against the rate of interest which was in vogue at the relevant point of time as per notification of RBI, is without jurisdiction. As such there was no provision made in the arbitration agreement stipulating un-liquidated damages to the extent of short supply of agreed quantity of feed rock. Only liquidated damages at the rate of Rs. 15/- per metric ton on the deficit quantity, subject to a maximum amount of Rs. 6,00,000/- p.a. was contemplated in Clause 4.5 of arbitration agreement. In case of the appellant failed to lift the crushed rock or failed to supply adequate quantity of feed rock for crushing in both cases, liquidated damage to a maximum limit of Rs. 15/- per metric ton on the deficit quantity, subject to a maximum amount of Rs. 6,00,000/- p.a. was contemplated in Clause 4.5 of arbitration agreement. In case of the appellant failed to lift the crushed rock or failed to supply adequate quantity of feed rock for crushing in both cases, liquidated damage to a maximum limit of Rs. 6,00,000/- only was payable by the appellant. The draft agreement circulated between the parties did not contain Clause 4.5 of the agreement. At the instance of the appellant only, Clause 4.5 was inserted. In the bill raised by the respondent (Ex. C. 25), the Delta made claim of Rs. 6,00,000/- for the period 1-10-2002 to 30-9-2003 under Clause 4.5. The Arbitrator could not have expanded the relief on his own, exceeding Rs. 6,00,000/- which is the amount claimed by Delta in its communication at Ex. C. 25 which is an undisputed document, it is only at the stage of argument before the Arbitrator, the Delta tried to over come Ex. C. 25 by contending that it was an erroneous interpretation of the contract by the Manager Accounts. Such explanation not advanced either during the stage of pleading or during evidence is not acceptable. However, by Ex. C. 26 the letter of the Director of the company who also has referred to Ex. C. 25, whereby, he has admitted that the contract stipulates the reimbursement of 1 short supply of Rs. 30/- per metric ton. Though it is an incorrect figure used at the place Rs. 15/- per metric ton, this admission is sufficient to infer that the contract provided for liquidated damages only for the short supply of the feed rock. Exs. C. 25 and C. 26, though produced in evidence, learned Arbitrator has not made any discussion about these documents. Ex. C. 15 e-mail dated 1-4-2002 and Ex. C. 25-Bill dated 20-11-2003 of Delta clearly shows that at an undisputed point of time (e-mails exchanged between the parties), the parties had understood that Clause 4.5 provides for liquidated damages. The Court below though noticed this aspect of the matter, still held that the mistake committed by the parties will not come in the fair interpretation of the agreement clause. The respondent was only in a position of the Bailee, so far the crushed rock is not lifted by the appellant. The Court below though noticed this aspect of the matter, still held that the mistake committed by the parties will not come in the fair interpretation of the agreement clause. The respondent was only in a position of the Bailee, so far the crushed rock is not lifted by the appellant. If the appellant failed to pay the charges under Clause 5.1, respondent could have exercised it's lien under Section 170 of the Contract Act, 1872 only. 6. Further learned Counsel referring to the agreement dated 10-4-2002/Ex. C. 17 submits, the actual quantity of feed rock to be crushed in 3 years was 4,80,000 metric tons but the actual quantity crushed is 1,96,497 metric tons. Thereby, there was a short fall of 2,83,503 metric tons of feed rock crushed. The arbitration agreement came to an end by efflux of time on 31-5-2005. The respondent-Delta before the Arbitrator claimed charges in respect of 4192 metric tons of feed rock that was not crushed amounting to Rs. 3,87,726.87, rehandling charges at Rs. 10,59,682.74, reimbursement of licence fee and electricity consumption charges at Rs. 1,30,000/-. That apart, it has claimed un-liquidated damages/compensation in excess, towards the losses suffered due to short supply of feed rock and expected profit at Rs. 1,52,38,286.25 and further claimed compensation towards loss incurred on account of encashment of its bank guarantee at Rs. 52,50,000/- with interest at 18% p.a. under the Interest Act, 1978 with costs. 7. Learned Counsel further adds, it was the case of Delta that Clause 4.5 of the agreement provides that, in case of failure of appellant taking delivery of the quantities specified in Clause 4.2 of the agreement, the appellant is liable to pay Delta, liquidated damages at the rate of Rs. 15/- per metric ton on the deficit quantity subject to a maximum value of Rs. 6,00,000/- per annum; if this argument is accepted then it would lead to a anomalous situation. On the other hand, if Delta's plant and machinery do not run due to non-supply of feed rocks by the appellant, they will be entitled to claim un-liquidated damages running to more than a crore. But that was not the intention of the parties while entering into agreement. In the month of April 2005, respondent had submitted a bill claiming Rs. But that was not the intention of the parties while entering into agreement. In the month of April 2005, respondent had submitted a bill claiming Rs. 67,63,311.17 towards loss suffered during the first 33 months of the contract period due to alleged short supply of feed rock. That being so, if some more amount is added to the remaining contract period (3 months), the total claim will not exceed Rs. 74,00,000/-. While awarding the un-liquidated damage of Rs. 1,52,38,286/- the Arbitrator ignored this fact. 8. Learned Counsel further submits, about the quantification of the loss suffered by the Delta that Rs. 36/- per metric ton is taken towards machinery hiring charges. But as per Clause 1.2/the machinery lease agreement, respondent and its sister concern/India Quarries Limited, has to pay Rs. 36/- as hire charges per metric ton of feed rocks/ boulders actually crushed. Though there is no stipulation in Clause 1.2 of machinery lease agreement about lease charge the Court below wrongly held that the respondent is liable to pay the hire charges at Rs. 36/- per metric ton without any basis. There was admission from the respondent witness that whenever appellant uses the plant, the rental will be Rs. 36 x 50. Admittedly, the plant worked only for 30 months during the contract period. The commercial production started only on 1-10-2002. During March-April 2003 there was a major break down of plant and machinery, still the Arbitrator has wrongly assumed that the plant has worked for all 36 months. Instead of allowing the entire contract period to run over the Delta could have repudiated the contact and mitigated the loss. 9. Learned Counsel attacking the interest awarded at 12% p.a. on the compensation amount submits that as per the circular of the RBI, the rate of interest on various deposits was only 7% p.a. at relevant point of time. Interest was rejected to the appellant's claim by observing that there was no agreement to pay interest and conversely, 12% interest is awarded to the respondent. 10. While concluding his submissions Sri G.K.V. Murthy placed his reliance on several Authorities of the Apex Court. Among others, we deem it proper to refer the judgment of Delhi Development Authority vs. R.S. Sharma and Company, New Delhi, (2008) 13 SCC 80 : 2008 AIR SCW 5735 wherein the circumstance under which an award is open for interference was listed as follows:- "21. Among others, we deem it proper to refer the judgment of Delhi Development Authority vs. R.S. Sharma and Company, New Delhi, (2008) 13 SCC 80 : 2008 AIR SCW 5735 wherein the circumstance under which an award is open for interference was listed as follows:- "21. From the above decisions, the following principles emerge: (a) An award, which is:- (i) Contrary to substantive provisions of law. (ii) The provisions of the Arbitration and Conciliation Act, 1996. (iii) Against the terms of the respective contract. (iv) Patently illegal. (v) Prejudicial to the rights of the parties. Open to interference by the Court under Section 34(2) of the Act. (b) Award could be set aside if it is contrary to:- (a) Fundamental policy of Indian law. (b) The interest of India. (c) Justice or morality. (c) The award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court. (d) It is open to the Court to consider whether the award is against the specific terms of contract and if so, interfere with it on the ground that it is patently illegal and opposed to the public policy of India." In Mcdermott International Inc. vs. Burn Standard Company Limited and Others, (2006) 11 SCC 181 : 2006 AIR SCW 3276 it was held that the conduct of the parties is a relevant factor and the correspondences exchanged between the parties are relevant for construction of a contact. Final submission of Sri G.K.V. Murthy in the light of above judgments is the Award to the extent of un-liquidated damage of Rs. 1,30,41,000/- and interest at the rate of 12% was without jurisdiction illegal and liable to be set aside. 11. In reply Sri S.S. Ramdas, learned Senior Counsel, appearing for the respondent submitted that it is true that the amount payable on the feed rock that was processed was Rs. 3,87,726.87 and the same was claimed by the respondent. The quantity that was processed and unpaid was 4,192.95 metric ton of rocks. Enhanced amount at the rate of 92.49 metric ton was claimed by the respondent due to escalation of diesel price during the period of contract. Still the Arbitrator has awarded at 84 per metric ton. In this appeal filed under Section 37(1) of the Act, this Court cannot look into minute details as in the case of regular first appeal. Enhanced amount at the rate of 92.49 metric ton was claimed by the respondent due to escalation of diesel price during the period of contract. Still the Arbitrator has awarded at 84 per metric ton. In this appeal filed under Section 37(1) of the Act, this Court cannot look into minute details as in the case of regular first appeal. Clause 4.4 of Ex. C. 17 is in reference to short supply of feed rock from Delta to the appellant. Clause 4.5 is in respect of failure of the appellant to take delivery of the processed material as specified in the contract. However, the contract does not provide for liquidated damages in the event of short supply of feed rocks. In the said circumstance, Section 73 of the Contract Act is invoked by the Arbitrator to calculate the damages. In the absence of contract agreement not providing liquidated damages, as per Arbitration Clause of the agreement "any claims, differences or disputes under or in relation to this agreement will be referred to a Sole Arbitrator in accordance with the provisions of the Arbitration and Conciliation Act, 1996." Hence, the Arbitrator had jurisdiction over claim 1(1). This question of jurisdiction to award un-liquidated damages raised for the first time before this Court cannot be entertained. The respondent could not make effort to mitigate the loss arising due to short supply of feed rock since the agreement does not empower the respondent to terminate the agreement in the event of default of the appellant. As per Clause 8, if the respondent terminated the contract, it was liable to pay liquidated damages in addition to balance mobilisation advance. It is quite improbable on the part of the appellant to contend that Rs. 84/- per metric ton to cover all form of breaches by the appellant. As per Clause 5.1 Delta gets Rs. 84 for processing feed rock. Clause 4.5 of the agreement specify that in the event, the appellant fails to take delivery of the processed rock, in addition Rs. 15/- per metric ton that would be imposed as liquidated damages. In view of Clause 9.9 of the agreement, all the prior agreement, arrangements, understanding whether verbal or written or implied are superseded by the agreement-Ex. C. 17, dated 10-4-2002. Any further amendment will have to be in writing and signed by both the parties. 15/- per metric ton that would be imposed as liquidated damages. In view of Clause 9.9 of the agreement, all the prior agreement, arrangements, understanding whether verbal or written or implied are superseded by the agreement-Ex. C. 17, dated 10-4-2002. Any further amendment will have to be in writing and signed by both the parties. The prior communications between the parties is not relevant after agreement of 10-4-2002 came into force. The bill and the letter at Exs. C. 25 and C. 26 respectively were sent by the respondent by mistake and they were rejected by the appellant vide ifs letter/Ex. R. 16. The Arbitrator has considered these transactions in Para 18 of the award. There was no evidence to the effect that Clause 4.5 is applicable for short supply of feed rock. Since the contract has run over the contention of the appellant that the respondent would be entitled to the maximum of the liquidated damages only to a particular amount and various heads of the contract will not stand. None of the clauses of Ex. C. 17 empower the respondent to terminate the contract and to claim liquidated damages on breach by the appellant. Even if the appellant did terminate the contract in the second or third year, respondent's claim would be still alive for non-supply of feed rocks arising out of such termination. 12. Learned Senior Counsel further emphasising on the measure of damages, submits that as per the documentary evidence/Ex. C. 18/Machine lease agreement between India Quarries Limited and Delta dated 19-4-2002 and cross-examination evidence of C.W. 1, rent payable by Delta to its lessor was only on the crushed aggregate and not on the capacity of the plant. The plant whenever operated irrespective whether it crushed the feed rocks or not payment would be on the basis of lease rentals. The price of the feed rocks purchased by the appellant was Rs. 30/- as per Ex. R. 20, the price at which it will be sold was at Rs. 84/- per metric ton as per Ex. C. 17 and hence, the difference between the prices is 54 and this is the actual damage suffered and still the Arbitrator has awarded Rs. 46/- per metric ton. There was admission from C.W. 1 that the respondent has actually paid the amount of Rs. 36/- and its Accounts Department would be able to identify the same. C. 17 and hence, the difference between the prices is 54 and this is the actual damage suffered and still the Arbitrator has awarded Rs. 46/- per metric ton. There was admission from C.W. 1 that the respondent has actually paid the amount of Rs. 36/- and its Accounts Department would be able to identify the same. The communication as at Ex. R. 19 (demanding Rs. 2 lakhs towards 2500 metric tonnes crushed rock) was only an attempt by conciliation which was not accepted by the appellant. The claim made by Delta for Rs. 67,63,311.17 was arrived on no profit and no loss basis. Said amount was arrived after deducting the advance mobilisation that was still lying with Delta and the said letter was issued three months prior to the contract coming to an end. However, the appellant adjusted the Bank guarantee towards the said amount and the figure does not reflect the said amount. 13. With regard to the question of challenge of interest, the reply submission is - the notification of the RBI was not placed before the Arbitrator and the respondent was paying interest at 12% p.a. for its credit facility as established in Ex. C. 46 and the awarding interest is on the discretion of the Arbitrator. Under Section 34 of the Act, if the agreement is silent, the interest at the rate of 18% p.a. will be payable. Awarding interest for free reference is substantial and post reference is procedural in that view of the matter the provisions of the Interest Act is not applicable in the present circumstance. Since the appellant was claiming on mobilisation which was interest free as per Ex. C. 17, rightly the Arbitrator disallowed the interest sought by appellant in it's counter claim. The scope of interference by the Court in the matter of Arbitral Award, is narrow and controlled by Section 34 of the Act. The appellant is trying to bring the challenge within the purview of Section 34(2)(b) of the Act. An award can be said in conflict with the public policy of India only if it is in violation/contrary to the statutory provisions making it patently illegal to the fundamental policy of Indian law or the interest of India or to justice and morality but the award in question is not hit by any of the above. An award can be said in conflict with the public policy of India only if it is in violation/contrary to the statutory provisions making it patently illegal to the fundamental policy of Indian law or the interest of India or to justice and morality but the award in question is not hit by any of the above. It is strictly in accordance with the provisions contained in the agreement/Ex. C. 17, dated 10-4-2002 and the provisions of Contract Act and the appeal is liable to be rejected. 14. In the light of the above rival submissions, the point that arises for our consideration are:- 1. Whether the Arbitrator had no jurisdiction to award un-liquidated damages and the interest beyond the existing rate of interest under the RBI Notification? 2. Whether the quantum of un-liquidated damages awarded is justified? 15. The appellant filed the suit in A.S. No. 119 of 2006 before the Court below challenging the Arbitral award on the ground that the agreement did not stipulate un-liquidated damages for short supply of feed rock by the plaintiff, even if there was short supply, liquidated damages at Rs. 15/- per metric ton subject to maximum of Rs. 6,00,000/- p.a. was provided. As per Clause 8 of the arbitration agreement, Delta was entitled to terminate the agreement at any time subject to payment of liquidated damages of Rs. 27,00,000/- if the termination is during the first year, Rs. 18,00,000/- during the second year and Rs. 9,00,000/- during the third year was payable by Delta; having not terminated the agreement during the period of the agreement it was not permissible for the respondent-Delta to claim un-liquidated damages. The compensation shall be in accordance with Clause 8.2 of the arbitration agreement which contemplates liquidated damages in the event of non-supply of feed rock by the plaintiff for Delta for crushing; since the Delta had admitted arbitration agreement about providing liquidated damages in the event of short supply and it has raised bill on the plaintiff on the said basis vide its letter addressed to the plaintiff, the Arbitrator was not justified in holding that there is no provision in the arbitration agreement for liquidated damages in case of short supply of the feed rock by the plaintiff. 16. For the first time the question of jurisdiction of the Arbitrator in granting un-liquidated damages is taken before this Court. 16. For the first time the question of jurisdiction of the Arbitrator in granting un-liquidated damages is taken before this Court. The appellant was very well-aware of the claim made by the Delta for un-liquidated damages and could have insisted the Arbitrator at the initial stage itself to give a finding whether such a claim of un-liquidated damages falls within the framework of the Arbitral agreement. Section 16 of the Act, reads thus:- "16. Competence of Arbitral Tribunal to rule on its jurisdiction:- (1) The Arbitral Tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose:- (a) An arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. (b) A decision by the Arbitral Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. (2) A plea that the Arbitral Tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an Arbitrator. (3) A plea that the Arbitral Tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the Arbitral proceedings. (4) The Arbitral Tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified. (5) The Arbitral Tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3) and where the Arbitral Tribunal takes a decision rejecting the plea, continue with the Arbitral proceedings and make an Arbitral award. (6) A party aggrieved by such an Arbitral award may make an application for setting aside such an Arbitral award in accordance with Section 34." Without availing the opportunity available under Section 16 of the Act against Arbitrator's jurisdiction to award un-liquidated damages, the appellant submitted itself to the jurisdiction of the Arbitrator. (6) A party aggrieved by such an Arbitral award may make an application for setting aside such an Arbitral award in accordance with Section 34." Without availing the opportunity available under Section 16 of the Act against Arbitrator's jurisdiction to award un-liquidated damages, the appellant submitted itself to the jurisdiction of the Arbitrator. Having not availed benefit available under sub-section (2) or (3) of Section 16 of the Act, now it is not open to the appellant to question the jurisdiction of Arbitrator to award un-liquidated damages towards non-supply of feed rock by the plaintiff. 17. In Steel Authority of India Limited vs. Gupta Brother Steel Tubes Limited, (2009) 10 SCC 63 : 2009 AIR SCW 7191, the Apex Court upheld the Authority of the Arbitrator, awarding un-liquidated damages when provision is made for liquidated damages in respect of specific breaches, leaving other types of breaches to be dealt as un-liquidated damages. 18. Much deliberated and analysed covenant in the agreement of 10-4-2002/Clause 4.5 of Ex. C. 17-Rock Processing/Crushing Agreement read thus: "4.5 In case of failure by FPI in taking delivery of the quantities specified in Clause 4.2 above, FPI is liable to pay Delta, liquidated damages at the rate of Rs. 15 (Rupees Fifteen) per ton on the deficit quantity subject to a maximum value of INR 6 (Six Lacs) per annum. The said sum of liquidated damages will be paid within 30 days from the date of claim by Delta." 19. The learned Arbitrator has read the entire Clause 4 of the agreement and finds that Clause 4 of the agreement stipulates minimum volume and Clause 4.1 specifies 540 tons for a day to be processed. As per Clause 4.2, at least 10,000 tons of feed rocks should be processed every month or 1,60,000 tons per year, which ever is higher has to be processed. Whenever there is increase in the supply of feed rocks, Delta has to suitably enhance the processing speed to ensure the timely processing of the increased quantity of the feed rock. Clause 4.4 contemplates levy of damages in case of Delta failing to supply agreed quantity of processed material at the rate of Rs. 30/- per ton on the deficit quantity subject to a maximum of Rs. 12,00,000/- per annum. Clause 4.4 contemplates levy of damages in case of Delta failing to supply agreed quantity of processed material at the rate of Rs. 30/- per ton on the deficit quantity subject to a maximum of Rs. 12,00,000/- per annum. Clause 4.5 stipulates damages payable by the appellant in taking delivery of the quantity specified in Clause 4.2 at the rate of Rs. 15/- per ton of the deficit quantity subject to maximum of Rs. 6,00,000/- p.a. Clause 4.6 is about calculation of the volume. Clause 4.7 is about the quantity the Delta that could be stocked upto 3,600 tons aggregate per month and stocks upto the said quantity will have to be rehandled free of charge upto that quantity. The learned Arbitrator has made a scrupulous observation that no provisions is made in the agreement stipulating liquidated damages in case the appellant fails to supply agreed quantity of feed rock. That is how he has resorted to Section 73 of the Contract Act for awarding damages, since liquidated damages is not provided under the agreement. Section 73 of the Contract Act provides for compensation in favour of a party who suffers due to breach of contract by opposite party thus:- "73. When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. Compensation for failure to discharge obligation resembling those created by contract -When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract. Explanation.-In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenient caused by the non-performance of the contract must be taken into account." 20. Explanation.-In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenient caused by the non-performance of the contract must be taken into account." 20. Learned Arbitrator has also noticed that in the event of Delta rehandling the feed rock instead of processed aggregate is also stipulated. The appellant relied very much on Exs. C. 15 and C. 25; Ex. C. 15 is an E-mail stipulating liquidated damages in case of non-supply of feed rock by the appellant. Ex. C. 25-Bill dated 20-11-2013 raised by Delta claiming Rs. 6 lakhs liquidated damage under Clause 4.5 for the period 1-10-2002 to 20-9-2003 towards short supply of feed rock. The contention of appellant at an undisputed point of time, Clause 4.5 was understood as having provided for liquidated damages in the event of short supply of feed rock for crushing. Exs. C. 15 and C. 25 are no doubt admitted documents, Ex. C. 15 was sent to appellant prior to execution of the agreement-Ex. C. 17. Vide Ex. C. 15-Delta made its remarks to the draft agreement sent by appellant; among other things regarding Clause 4.4, it was insisted that liquidated damage payable to Delta in case of non-supply of feed rock to crushing plant has to be added. According to the appellant, because of the above, Clause 4.5 came into existence. Clause 10.9 of the agreement supersedes any communications exchanged between the parties while it reads:- "9.9 Entire Agreement and Modifications - This Agreement and the Schedules hereto constitute the entire agreement between the parties on its subject and supersede all prior agreements, arrangements or understandings, whether verbal, written or implied. Any amendment hereto will be in writing and signed by both the Parties." 21. The Court below has rightly brushed aside Ex. C. 15 by assigning reason that it had come into existence before parties entered into contract and further endorsed the interference of the learned Arbitrator that there is no clause for liquidated damages for non-supply of feed rock to Delta as well-founded and based on reasons. 22. The Court below has rightly brushed aside Ex. C. 15 by assigning reason that it had come into existence before parties entered into contract and further endorsed the interference of the learned Arbitrator that there is no clause for liquidated damages for non-supply of feed rock to Delta as well-founded and based on reasons. 22. Having held that Delta is entitled for un-liquidated damages in respect of non-supply/short supply of feed rock, the learned Arbitrator has proceeded to award damages for 30 months only instead of the damages sought by Delta for a period of 36 months, by taking note of the fact, that the crushing plant was not operating for a period of 6 months during the agreement period, though the agreement was of 10-4-2002, there was evidence from the appellant side itself that the commercial crushing of feed rock commenced only on 1-10-2002; there was break down of crushing plant and the agreement was for a period of 36 months, it came to an end on 31-5-2005. Thereby, crushing work was carried out only for 30 months. 23. Having held as above, for assessment of damages, the Arbitrator was confronted with the situation that the loss that would occur on non-supply or short supply of feed rock was not at all contemplated in the agreement and no damage in respect of such breach was foreseen by the parties. The learned Arbitrator has considered Exs. C. 1 to C. 15, the correspondences between the parties prior to 1-6-2002. From these documents, he has gathered that the agreed feed rock was not supplied and the Delta was suffering heavy loss and the plant was commissioned between July 2002. The plant was capable of accepting ready quantity of feed rock and processing of feed rock at 540 tons per day and there was a failure to supply sufficient quantity of feed rock. 24. By a letter-Ex. C. 26, dated 29-11-2003, Delta had demanded charges at Rs. 30 per ton. Based on the said letter appellant contended before the learned Arbitrator that now their claim cannot be anything more than that. But the learned Arbitrator has not addressed this contention while calculating the un-liquidated damages. However, the Court below brushed aside this contention that these letters were due to mistake of concerned Director/Officer though no such evidence was placed by Delta before the Arbitrator. But the learned Arbitrator has not addressed this contention while calculating the un-liquidated damages. However, the Court below brushed aside this contention that these letters were due to mistake of concerned Director/Officer though no such evidence was placed by Delta before the Arbitrator. It does not appeal to us also to assimilate the contention that any amount demanded during the course of business interaction during pre-arbitration period and which is not at all accepted by the appellant, shall put a cap on the claim before the Arbitrator. Clause 8 of Ex. C. 17 stipulates definite amount of liquidated damages in the event Delta terminates the contract Rs. 18 lakhs in 1st year, Rs. 12 lakhs in the 2nd year and Rs. 6 lakhs in 3rd year. That is why Delta has taken a stand that it did not take any action to mitigate the loss by terminating the contract unilaterally. Otherwise, it would have been liable to pay damages to the appellant. This explanation sounds reasonable. 25. The Apex Court in the matter of Tamil Nadu Electricity Board and Another vs. N. Raju Reddiar and Another, AIR 1996 SC 2025 : (1996) 4 SCC 551 , has observed that:- "Once a contract is reduced to writing, by operation of Section 91 of the Indian Evidence Act, 1872 it is not open to any of the parties to seek to prove the terms of the contract with reference to some oral or documentary evidence to find out the intention of the parties. Under Section 92 of the Evidence Act where the written instrument appears to contain the whole terms of the contract then the parties to the contract are not entitled to lead any oral evidence to ascertain the terms of the contract. It is only when the written contract does not contain the whole of the agreement between the parties and there is any ambiguity then oral evidence is permissible to prove the other conditions which also must not be inconsistent with the written contract." The parties herein having translated into writing their intention to make the said deed their absolute expression as indicated at Clause 9.9, any reference made by the appellant regarding Ex. C. 15 will be of no consequence. 26. C. 15 will be of no consequence. 26. Liquidated damage is worked out by the Arbitrator on the basis of audited balance sheet by the appellant for the period 2004-2005, 2003-2004 and 2002-2003 and also the Directors' report of the Company. Though there was objection from the appellant about these documents in the absence of affidavit of the auditors and without examining the veracity of the statements made therein, the learned Arbitrator holds that they are the documents statutorily prepared by the Companies registered under the Companies Act, 1956. He has worked out the over all losses suffered by Delta at Pages 21 and 22 of the body of the award. The Delta placed material demonstrating that it had incurred process charge at Rs. 84/- whereas, the appellant's rival contention was that, it was paying only Rs. 36/- as hire charges to one M/s. IQL. Out of the entire claim made by the Delta, the learned Arbitrator has disallowed pertaining to diesel element and the lease charges etc. and considers only Rs. 14.20/- per metric ton un-crushed feed rock being 20% towards the site establishment and labour overheads and consumables. By exercising his discretion he awards Rs. 10/- per metric ton as compensation and arrives at Rs. 46/- per metric ton (Rs. 36/- per metric ton being admitted hire charges paid by Delta to its lessor/M/s. IQL). By multiplying the short fall supply of feed rock of 2,83,503 at Rs. 46/- per metric ton, he has awarded un-liquidated damages at Rs. 1,30,41,000/-. 27. Now coming to the question of interest at the rate of 12% per annum, the notification of the Reserve Bank of India was not produced before the Arbitrator to impress upon him that the interest that is allowable is 7% only. Ex. C. 46, a letter addressed to the Delta by its Banker was before him manifesting that Delta was paying interest at the rate of 12% interest towards its credit facility to its banker. Under Section 31(7)(a) of the Act, it is in the discretion of the Arbitrator to award reasonable interest in respect of period between date on which cause of action arose till the date of award. Under Section 31(7)(b), rate of interest is eighteen per cent on the award amount from the date of award till realisation unless otherwise ordered in the award. 28. Under Section 31(7)(b), rate of interest is eighteen per cent on the award amount from the date of award till realisation unless otherwise ordered in the award. 28. The provisions of Interest Act is not applicable in the present circumstances, since the interest is awarded only from the date of reference of the dispute. The grievance of the appellant that no interest is awarded on its counter claim in respect of mobilisation advance does not hold water for the simple reason that it was interest free as could be seen from Ex. C. 17. 29. Now coming to the question of scope of interference by the Courts in the matters of Arbitral awards, Section 34 of the Act is the controlling statutory provision. The principle formulated by the Apex Court in Delhi Development Authority's case holds the field. On a re-reading of the award also, we are unable to subscribe to the contention of the appellant that the award is contrary to the terms of contract or suffers from any patent illegality. The conclusion arrived by the learned Arbitrator flows from his reasoning's discussed in the body of the award. Clause 4.5 reads with Clause 9.9 of the Agreement sustains the view taken by the Arbitrator that no liquidated damages was contemplated in the event of short supply of feed rock and award of un-liquidated damage of Rs. 1,30,41,000/- with interest at 12% per annum with effect from 1-10-2005, was legal. Rightly the Court below has declined to interfere with the Arbitral award and dismissed the suit of the plaintiff. The judgment and decree of the Court below is proper and judicious not warranting interference. Accordingly, appeal is dismissed.