M. Seetharama Murti, J.

1. The A.P. State Civil Supplies Corporation Limited (hereinafter referred to as 'the appellant Corporation') filed this appeal under Section 37 of the Arbitration and Conciliation Act, 1996 having been aggrieved of the judgment dated 17.11.2005 of the learned XIV Additional Chief Judge (Judge, Fast Track Court), City Civil Court, Hyderabad, passed in O.P. No. 1395 of 2003 and O.P. No. 1422 of 2003 insofar as the said judgment related to the dismissal of O.P. No. 1422 of 2003 filed by the appellant.

2. We have heard the submissions of the learned senior counsel for the appellant. None appeared for the 1st respondent though notice was served. The 2nd respondent is the learned Arbitrator. Before the Tribunal, the 1st respondent is the claimant and the appellant herein is the sole respondent. However, in this appeal, the parties shall hereinafter be referred to as 'the appellant' and 'the 1st respondent'.

3. The case of the appellant, in brief, is follows:

The appellant-Corporation is an agent of the State Government for distribution of food grains under the Public Distribution System (PDS) and food for work. The appellant engages contractors for transportation of food grains from the Food Corporation of India (FCI) to Mandal level stockists' points (MLS points). While so, the 1st respondent was appointed as a Contractor for distribution of food grains, which pertained to Mahaboobnagar District. The 1st respondent has to lift the stocks of food grains from FCI and transport them to MLS points within the said District. A concluded contract in the form of an agreement dated 03.04.2001 for the period from 03.04.2001 to 31.03.2002 was reduced into writing and was entered into between the parties. The 1st respondent had deposited Rs. 4,00,000/- with the appellant Corporation towards Security Deposit for due performance of the contract and had also furnished a Bank Guarantee for Rs. 5,00,000/- as stipulated respectively under clauses 4 and 5 of the contract. The 1st respondent started the execution of the said work under the said agreement. In the month of March 2002, a Release Order No. 1881 dated 21.03.2002 was issued to the 1st respondent by the District Manager of the appellant Corporation along with the Movement Order for transportation of 12800 MTs of rice from Central Warehousing Corporation (CWC), Mahaboobnagar to 13 MLS points in the said District; and, the same is meant for Food for Work programme. The said total dispatch also included three lorry loads of 250 bags of rice each of a total quantity of 372.62 quintals (=37.262 MTs). While so, on 26.03.2002, the 1st respondent had dispatched the said three truck loads of rice from CWC, Mahaboobnagar to MLS points by Trucks Nos.AP9U 8251, AP04T 5762 and CAA 5302. While so, the 1st respondent had developed a dishonest intention and had, therefore, diverted the stocks; and the trucks have been seized by the Vigilance and Enforcement officials on 26.03.2002 at Madhavi Traders Rice Mill, Mahaboobnagar. In the circumstances, the appellant had claimed that it had suffered loss on account of breach of agreement committed by the 1st respondent in not delivering the stocks to MLS points. As per Clause 10 of the agreement between the parties, the 1st respondent is liable to make good the loss to the appellant corporation at double the economic price. As per the terms of the agreement, the 1st respondent is responsible both quantity-wise and quality-wise for delivery of the stocks lifted by it. From the point of lifting the stocks till the point of delivery, the 1st respondent shall be responsible; and, if there is any loss caused to the appellant in quality or quantity, the 1st respondent shall make good the loss at double the cost/economic price. As per clause 8(d) of the agreement, the appellant has the right to forfeit the Security Deposit and also claim from the Bankers, the Bank Guarantee for the sums due for any damages, losses, charges, expenses or costs