I. VENKATANARAYANA, J. - The appeal and the Revision Petition arise out of an award dated 6-9-1993 passed by the Arbitrator and confirmed by the Principal Subordinate Judge, Vijaywada by his common judgment and decree dated 4-11-1994. C.R.P. No. 1786 of 1995 arises out of the judgment and decree in O.P. No. 305 of 1993 on the file of the Principal Subordinate Judge, Vijaywada making the award dated 6-9-1993 is 'Rule of the Court'. C.M.A. No. 707 of 1995 is filed against the judgment and decree of the Principal Subordinate Judge, Vijayawada dismissing the suit filed by the appellant-petitioner.

2. The facts leading to the filing of the revision and the appeal are as set out hereunder. The respondent has entered into an agreement No. 59/87-88, dated 27-7-1987 for execution of widening and strengthening the carriage from km 0.00 to km 1.20 of Jaggayyapeta-Muktyala Road. The time for completion of the work is nine months from the date of handing over of the site. The site was handed over on 26-8-1987 and the work is to be complete by 25-5-1988 as per the terms and conditions of the agreement.

3. The respondent-Contractor signed the agreement on 27-7-1987 and it is the contention of the appellant that time is the essence of the contract as envisaged in Clause (4) of the agreement. The period of execution of the work is nine months from the date of handing over the site. The site was handed over on 26-8-1987 and the work has to be completed before 25-5-1998. The respondent-Contractor has executed 15.32% of work as on 4-12-1987, stopped the work and sought for extension of time upto 30-9-1988 by his letter dated 13-5-1988. By a letter dated 20-6-1988 time was extended upto 30-9-1988. Since the respondent-contractor failed to complete the work within the extended period the contract was unilaterally terminated on 17-10-1988. The respondent-contractor by his letter dated 30-11-1988 has demanded compensation for the loss caused and claimed a sum of Rs. 1.72 lakhs. By a letter dated 19-12-1988 the Executive Engineer rejected the claim.

4. The respondent filed O.P. No. 48 of 1989 on the file of the Principal Subordinate Judge, Vijayawada under Section 8 of the Arbitration Act, 1940 for appointment of an Arbitrator to resolve the dispute under agreement No. 58/87-88, dated 27-7-1987. By order dated 21-9-1992 sole Arbitrator was appointed by the Principal Subordinate Judge, Vijayawada under Section 8 of the Arbitration Act, 1940 to resolve the dispute under the agreement.

5. The respondent in his claim statement filed before the Arbitrator alleged that due to breach of agreement on the part of the Department, he could not execute the work and thus sustained the loss. It is his contention that the contract was closed unilaterally and abruptly without intimating the reasons to the respondent. The respondent further contended that the appellant-petitioner has orally instructed him to stop the work since they are short of funds. The respondent contended that the appellant-petitioner failed to get the required funds from Jaggaiahpet Municipality even during the execution of the work and placed strong reliance on the internal correspondence between the Municipality and the appellant-petitioner for establishing that the required funds were not available for executing the work entrusted to the respondent. The respondent-Contractor claimed Rs. 1,72,000.00 under the following heads :

(i) 20% profit on the remaining work for which arbitrary, unilateral and illegal cancellation is made Rs. 1,12,000.00

(ii) Advances made to the quarry Rs. 25,000.00

(iii) Advances made to lorry owners Rs. 25,000.00

(iv) Advances made to labour Rs. 10,000.00

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Total Rs. 1,72,000.00

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