Judgment

G.N. RAY, J.

(1) BOTH the parties have appeared through their respective counsel and oral and written submissions besides filing objections and counter-objections to the validity of the impugned award of the joint arbitrators have been made.

(2) THE short facts concerning the arbitration award in question may be stated as follows.

(3) A contract for the construction of second portion of Mahi Bajaj Sagar Dam, Banswara was given to the respondent Company, Puri Construction (P) Ltd. by the appellant State of Rajasthan in April 1975. Differences and disputes arose between the parties. The respondent contractor invoked the provisions of the arbitration agreement and nominated a retired chief justice of Delhi High court, Mr Justice S.N. Andley as an arbitrator. The appellant State of Rajasthan appointed as its nominee Shri S. Adiappa, a retired Chief Engineer, PWD (B&R) Rajasthan as an arbitrator. However, the proceedings before the said arbitrators did not continue. The respondent contractor filed a petition under Section 20 of the Arbitration Act before the Delhi High court. Such application was registered as Suit No. 758-A of 1982. By an order passed on 9/11/1982 by the Delhi High court, the arbitration agreement between the parties was filed and reference to arbitration was made. The parties thereafter sought for variation of the reference order dated 9/11/1982. Instead of reference to a sole arbitrator, reference was made to two arbitrators namely Shri Manohar Lal being, the nominee of appellant State of Rajasthan and Shri Guru Charan Singh being the nominee of the respondent contractor. The State of Rajasthan moved the division bench of Delhi High court for stay of arbitration proceedings. The said arbitrators Shri Lal and Shri Singh thereafter resigned. Against the order of the Delhi High court, the appellant, State of Rajasthan filed a special leave petition before this court being Special Leave Petition (Civil) No. 9089 of 1984.

(4) IN the said Special Leave Petition (C) No. 9089 of 1984 it was agreed to refer all the subsisting disputes and differences between the parties to the arbitration of Mr Justice C.M. Lodha, retired chief justice of Rajasthan and Mr Justice A.B. Rohatgi, a retired Judge of the Delhi High court. The parties agreed to refer all the disputes and differences including subject-matter of Civil Suit No. 4 of 1979 pending in the court of the District Judge, Banswara, Civil Suit No. 4 of 1980 pending before the District Judge, Jaipur, and the said Suit No. 758-A of 1982 pending before the High court at Delhi, FAO (OS) No. 5 of 1983 and suit pending under Order 37 Civil Procedure Code before the District Judge, Banswara, filed by the State of Rajasthan for recovery of bank guarantee amounts.

(5) BY an order dated 25/2/1985 passed in Special Leave Petition (C) No. 9089 of 1984 this court noted that the parties for the said Special Leave Petition having agreed to refer all the disputes arising out of the agreement dated 2/6/1975 between the government of Rajasthan and the respondent contractor the appellant State of Rajasthan has appointed as its nominee Shri C.M. Lodha, a Sr. Adv. and retired chief justice of Rajasthan High court and the Respondent I-contractor M/s Puri Construction (P) Ltd. has appointed as its nominee a retired Judge of the Delhi High court Shri A.N. Rohatgi as an arbitrator. On the prayer of the learned counsel of both the parties this court appointed Mr Justice A.C. Gupta, a retired Judge of this court as the umpire. This court on the basis of the said agreement since filed before this court evidencing the desire of the parties to refer the matter to arbitration, referred the disputes to the arbitration of Mr Justice C.M. Lodha and Mr Justice A.B. Rohatgi.

(6) THE arbitration proceedings before the said arbitrators continued for about seven years and about seventy hearings had taken place before the said arbitrators. On 21/1