(1) LEAVE granted. Heard learned counsel.

(2) THE respondent M/s Nav Bharat Builders entered into an agreement on 24/7/1978 to construct masonry dam across river Ghod in Ambegaon District of State of Maharashtra. The period for completion of the contract was 72 calendar months from 24/7/1978, but was extended from time to time. In its execution, there arose a dispute relating to labour escalation charges and other items of dispute. The respondent had given notice for reference to an arbitration. Since the appellant did not agree either for the enhancement as claimed for or for reference to the arbitration, the respondent laid the suit under Section 20 of the Arbitration Act, 1940 for filing the agreement so as to refer the dispute to the arbitrator. Pending suit, he submitted a letter to the government on 8/9/1986 and pursuant to this and further correspondence the government constituted a sub-committee to go into the question of labour escalation claimed by the respondent. The sub-committee in its report had submitted to the government for acceptance of the claim of the respondent subject to the terms mentioned in paragraph 8.0 of its report. Pursuant thereto, when