JEEVAN REDDY, J.

( 1 ) THIS Writ Appeal is preferred by the 1st respondent in W. P. No. 20019/87, against the judgment of the learned single Judge allowing the writ petition. For the sake of convenience we shall refer to the parties with reference to their ranking in the writ petition.

( 2 ) THE petitioner-company, "bhanu Construction Company (Private) Ltd. ", is engaged in the business of fabrication and construction of Transmission Towers, laying of transmission lines, and other similar works. It was awarded three works by the National Thermal Power Corporation Ltd. , (1st respondent in the writ petition and appellant in this Writ Appeal), the particulars whereof are :- (I) laying of transmission line over a length of 220 Kilometers from Cuddapah to Bangalore, valued at Rs. 360 Lakhs awarded on 31-3-1982; (II) laying of transmission line between Cuddapah and Madras (Cuddapah Red Hills), over a length of 110 Kilometers, valued at Rs. 370 Lakhs awarded on 25-7-1983; and (III) laying of transmission line over a length of 220 Kilometers, between Shankargarh and Kanpur, valued at Rs. 598 Lakhs awarded on 7-12-1984. The terms of contract are stated in the award letter which is accompanied by conditions of contract and technical specifications. According to these conditions : (i) time is the essence of the contract; (ii) if the contractor fails to successfully complete the trial operations within the time prescribed, he shall pay to the Corporation liquidated damages specified in that behalf; (iii) if the contractor fails to execute the work within the time prescribed, the Corporation may terminate the contract and get the work done through other agencies, in which case the Contractor would be liable for the consequent loss and damages; (iv) the Corporation is, however, entitled to extend the time if the delay in execution occurs on account of any act or omission on its part. In such a case, the contractor is entitled to claim demonstrable and reasonable compensation on account of such delay; (v) only the Courts at Delhi shall have exclusive jurisdiction.

( 3 ) APART from the above, there are three other stipulations which are relevant for the purpose of this case. The first relates to the performance bank-guarantee . Clause 5. 0 of the "general Terms and Conditions of Contract" provides that "the contractor shall enter into a contract/agreement with the owner within 60 days from the date of acceptance of "notice of award of contract" or within such extended time as may be granted by the owner. The performance bank guarantee for the proper fulfilment of the contract shall be furnished by the contractor in the prescribed form within thirty days of "notice of award of contract". The performance bank-guarantee shall be as per the terms prescribed in Cl. 23 of Instructions to Bidders of this Volume I".

( 4 ) CLAUSES 6. 0 to 6. 5 set out the manner in which the performance bank-guarantee is to be executed.

( 5 ) THE second relates to the bank-guarantee for advance to be furnished by the contractor, inasmuch as the value of the contract is very high and a contractor is not normally expected to be possessed of such huge funds to carry out the work with his own funds, the contract provides for the Corporation advancing certain amount to the contractor, for which he has to furnish a bank-guarantee. The bank-guarantee has to be furnished in the prescribed form, and is required to be valid for the period prescribed in the pro forma.

( 6 ) THE third relevant clause is contained in Cl. 26. 0 of the conditions of Contract , and relates to arbitration. It says :"if any dispute or difference of any kind whatsoever shall arise between the owner and the contractor, arising out of the contract for the performance of works, whether during the progress of the work or after its completion, or whether before or after the termination, abandonment, or breach of the contract, it shall, in the first place be referred to and settled by the Engineer who, with