JUDGMENT

Altamas Kabir, J. - Delay condoned in S.L.P. (C) No. 19237/2005.

2. Leave granted in both the Special Leave Petitions which have been taken up together for disposal, since SLP (C) No.19237 of 2005 is directed against the main judgment and Order dated 16th March, 2004, passed by the Calcutta High Court allowing the appeal of the Union of India and SLP (C) No. 2753 of 2005 arises out of the order dated 23rd September, 2004 passed by the said High Court on a Review Petition in respect of the main judgment.

3. Pursuant to a Tender Notice, issued by the respondent for certain new works, additions, alterations, repair and maintenance works in the Mancheswar Complex, the appellant submitted its tender on 2nd September, 1992. The appellants tender was duly accepted by a letter dated 14th September, 1992 with the stipulation that the work was to be completed in all respects by 30th June, 1993. It was also indicated that the work orders were to be issued within 7 days from the date of receipt of the acceptance letter. A formal contract was executed between the parties on 4th March, 1993 and the said agreement provided that the General Conditions of Contract and Standard Specifications of the South Eastern Railways shall be applicable to the contract. Clause 63 of the General Conditions of Contract provides for settlement of disputes by Arbitration.

4. As would appear from the materials on record, the appellant herein was unable to complete the work within the stipulated time frame and accordingly it applied for extension of time by three months upto 30th September, 1993. It is the appellants case that since it was not informed about the decision on the said application, the appellant suffered huge losses on account of idle labour and surplus staff. It appears that ultimately the appellants request was turned down and certain deductions were made from the Running Bills submitted by the appellant and in fact payment was not even made for the works already done by the appellant. According to the appellant, the respondent refused to refund even the appellants security deposit unless the appellant submitted a No-Claim Certificate in terms of Clause 43(2) of the General Conditions of Contract. Having no other alternative and having incurred huge losses on account of idle labour and surplus staff and the establishment expenses, the appellant submitted a No Claim Certificate in order to at least get refund of its security deposit.

5. By a letter dated 17th January, 1996, the appellant called upon the respondent to make payment of a sum of Rs.8,73,168/- and Rs.1,31,642/- which, according to the appellant, was due from the respondent to the appellant under the contract, failing which the respondent was requested to appoint an Arbitrator for adjudication of the disputes which had arisen between the parties. In view of the failure of the respondent either to pay the dues, as demanded, or to appoint an Arbitrator, the appellant filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter called "the 1996 Act") before the Calcutta High Court for reference of its claims in terms of its letter dated 17th January, 1996 to arbitration and for appointment of an Arbitrator. No reply was filed by the respondent to the said application but during the pendency thereof, the respondent refunded to the appellant, the security deposit of Rs. 79,000/-. The same was received by the appellant under protest.

6. As no objection was taken by the respondent to the appellants application under Section 11 of the 1996 Act or with regard to the submission of the No Claim Certificate by the appellant at the time of receiving the security deposit, the learned Single Judge of the Calcutta High Court, by his order dated 20th February, 1998, directed the matter to be placed before Honble the Chief Justice for naming an Arbitrator for adjudication of the disputes. On 12th March, 1998, the Chief Justice appointed one Shri Subrata Bagchi