Judgment :-

R.V. RAVEENDRAN, J.

Leave granted.

2. The Indian Oil Corporation Limited, the appellant herein, awarded an infrastructure work relating to drinking water system for its Paradip Refinery project to the respondent on 17.10.2000 and followed by a formal agreement dated 18.1.2001. The period stipulated under the contract for completion of the work was 13 months from the date of issue of the order dated 17.10.2000 and the contract value was Rs.16,61,17,473/-. The appellant terminated the contract on 29.10.2002 alleging that the respondent contractor though required to complete the work within 13 months, had achieved a progress of hardly 15.94% till 30.4.2002 and notified the respondent that the work will be got completed through an alternative agency, at the risk and cost of the respondent under Clause 7.0.9.0 of the General Conditions of Contract.

3. In view of the said termination, the respondent raised certain claims against the appellant and invoked the arbitration agreement contained in the General Conditions of Contract and filed an application under section 11 of the Arbitration and Conciliation Act, 1996 (`Act' for short) before the Delhi High Court for appointment of an arbitrator. The Designate of the Chief Justice of the High Court, by order dated 17.3.2003, appointed a retired High Court Judge as the arbitrator.

4. Before the arbitrator, the respondent filed a statement of claims raising eight claims. However in its written submission before the Arbitrator, the contractor confined its claims to only three, aggregating to Rs.1,31,81,288/-.

5. The appellant made several counter-claims aggregating to Rs.92,72,529/-. Subsequently the statement of counter-claims was amended and the following para was added in regard to the extra cost in getting the work completed through an alternative contractor:

"Since the aforementioned contract is still pending and IOCL is in the process of inducting agency (ies) to complete the said work, the Engineer-in-charge of the said contract, EIL estimated a minimum expenditure of Rs.18,36,20,000/- for completion of the works under the said contract which EIL intimated to IOCL by its letter dated 23.5.2002, a copy whereof is annexed hereto and marked Annexure RY. The said estimated expenditure has been revised by IOCL who has arrived at the reduced figure of Rs.2,10,41,626/- (Rupees Two Crores Ten Lacs Forty One Thousand Six Hundred Twenty Six Only) in its proposal dated 09.09.2006, a copy whereof is annexed hereto and marked Annexure RY- 1. Accordingly, IOCL is entitled to recover from SPSEL any additional sums including the abovementioned Rs.2,10,41,626/-(Rupees Two Crores Ten Lacs Forty One Thousand Six Hundred Twenty Six Only) that it will according to its estimate incur upon execution of the balance work by other agencies pursuant to the termination of the said contract in terms of Clause 7.0.6.0 of GCC along with any other additional expenditure incurred by IOCL in completion of the said works. IOCL, therefore, is entitled to an amount of Rs.2,10,41,626/-(Rupees Two Crores Ten Lacs Forty One Thousand Six Hundred Twenty Six Only) from SPSEL which SPSEL has not paid till date."

(emphasis supplied)

The prayer in the counter-claim however remained unaltered and did not include the claim of Rs.2,10,41,626/- on account of risk -execution of balance work. Even after the above amendment, the prayer continued to be as under :

"It is therefore prayed that the learned Arbitrator may be pleased to:

(i) award a sum of Rs.92,72,529/-(Rupees Ninety Two Lacs Seventy Two Thousand Five Hundred Twenty Nine Only) against SPSEL and in favour of IOCL along with the additional amounts which in IOC's estimate, IOC will incur in further executing and completing at the Claimant's risk and cost, the balance works remaining incomplete under the said contract.

(ii) grant pendent lite interest @ 18% per annum on the awarded amount;

(iii) grant interest on the awarded amount @ 18% per annum from the da