JUDGMENT

SABYASACHI MUKHARJEE, J.

(1) LEAVE granted. Appeal is disposed of by the judgment herein.

(2) THIS appeal challenges the order of the High court of Rajasthan, dated 16/03/1988. The respondents tender for construction of complete masonry dam (Civil Engineering Works) Mani Bajaj-Sagar Project, Banswara, was accepted by the appellant for a sum of Rs. 5,90,30,791.00 vide letter dated 29/04/1974 and a provisional agreement was entered into between the parties on 23/05/1975. The construction was commenced by the respondent-company but it did not complete the same and, it is alleged, left the work unfinished in the year 1979, which was of the value of Rs. 1,79,80,054.00.

(3) THE letter of acceptance was dated 23/05/1975. It is stated that the respondent did not start (sic complete) the work in spite of written notices and, ultimately, by a letter dated 24/12/1979 of the Executive Engineer (Dam Division), Banswara, the respondent was informed that as it had committed breach of the conditions of the contract, the same had been terminated and that the State government would complete the work under the clauses and conditions of the contract. The work had to be completed departmentally at the cost and risk of the respondent-company. After some litigation between the parties when the civil revision was pending in the High court of Rajasthan at Jodhpur. a compromise between the parties was arrived at on 13/04/1982. It was agreed that the dispute would be settled through arbitration. By an agreement dated 13/06/1982 the parties named their arbitrators.

(4) THE arbitrators entered upon the reference on 19/06/1982. On 5/05/1982, the respondent-company presented its claims under 40 heads claiming a total sum of Rs. 1,90,53,059.28. This amount was later on revised to Rs. 1,82,20,261-02. The State filed a counter claim for a sum of Rs. 1,70,63,026.37 which was revised to Rs. 1,25,706.17. It is stated that the arbitration proceedings were conducted for 52 days during which the number of sittings was 25. Various issues were framed. Minutes of the proceedings were recorded. The arbitrators gave the award on 8/12/1982. It is stated that the award did not contain any reason as to why and how they had arrived at the figure of Rs. 75,41,755.00 in favour of the respondent company. The award, however, mentioned that the State of Rajasthan committed breach of contract and was also guilty of wrongful revocation of the agreement and the actions taken under Clauses 2 and 3 of the conditions of the contract, were wrongful and unjustified. However, no reasons were indicated as to how the arbitrators arrived at those findings.

(5) THE respondent filed an application in the court of the learned District Judge for making the award rule of the court. The appellant, however, filed an objection on the grounds inter alia that no reasons had been given by the arbitrators for the award and the amount of interest awarded was unjustified. It was further averred that the award being ambiguous, showed non-application of mind and the question as regards the plant and machinery of the respondent-company lying at the dam site, were beyond the scope of the arbitrator.

(6) THE learned District Judge by his judgment and order dated 11/08/1987 allowed the objection and set aside the award on the ground of ambiguity and non-application of mind. The award also suffered from the vice of non-statement of reasons, according to the learned District Judge. According to him, the award was not in accordance with law. He further held that the plant and machinery lying at the dam site was beyond the reference made to the arbitrators. He was of the opinion that the interest amount was ambiguous and thus liable to be set aside. There was an appeal to the High court. The High court allowed an appeal and passed a decree for Rs. 75,41,755.00 being the amount of all claims and directed that the State should pay interest @ 5 per cent