The main legal point established in the judgment is the application of equitable rates for variation in quantities of work under clauses 31 and 32 of the contract, and the proper awarding of interest under claim No. 14.

( 1 ) THIS appeal by the State of Karnataka through the Executive Engineer, UKP Dam, division No. 2, Alamatti Dam, is directed against the Judgment and decree dated 20-10-1989 passed in Arbitration Case No. 2 of 1988 by the learned Principal Civil Judge, Bijapur.

( 2 ) THE matter arises this way:respondent-1 is a Class-I contractor executing the civil work under the appellant and in the course of executing the work, he had entered into a local competitive bidding contract with the appellant on 12-11-1982 in No. 13 in respect of work of construction of Alamatti power Dam at Alamatti, Bijapur District. By virtue of Clause-53 of the said contract, the disputes between the parties arising out of the said contract are to be referred to the arbitrator and the parties are to abide by the decision of the Arbitrator certain disputes having arisen between the parties, the same were referred to Sri A. Sel- varaj, Chief Engineer, Government of Karnataka, as a sole Arbitrator. Thereafter, the arbitrator issued notices to the parties. The respondent presented an application claiming certain sum of money payable by the appellant for the work done under the contract. The appellant filed his counter. Both parties adduced oral as well as documentary evidence in support of their respective cases. The Arbitrator having heard the parties on both sides on various dates from 21-11-1987 to 24-1-1988 finally, passed an award and accordingly he informed the parties by a registered post on 24-1-1988. Later the respondent requested the Arbitrator on 9-2-1988 to file the award before the court for making it rule of the Court and also to take action under Section 17 of the Arbitration act to pass a decree thereon with future interest at 19% per annum from the date of decree till payment. The Court having issued notices to both parties and the Arbitrator, the Arbitrator appeared through Sri C. K. Dharwadkar, counsel and both the parties represented their respective cases. The appellant filed objections to the award taking several contentions.

( 3 ) HAVING regard to the nature of the disputes,material evidence produced and the arguments advanced, the learned Civil Judge raised the following points: (1) Whether the Arbitrator has misconducted himself in granting relief in respect of claims Nos. 1, 4, 7, 13 and 14? (2) Whether the claimant is entitled to the decree in terms of the award? (3) What order?

( 4 ) AFTER discussing in detail the material evidence produced, the arguments advanced and the reasons furnished by the Arbitrator, the learned Civil Judge held that the conclusions reached by the Arbitrator in all the points are sustainable. Accordingly, agreeing with the conclusions reached by the Arbitrator, the petition filed by the Arbitrator came to be allowed and a decree was directed to be drawn in terms of the award passed by the Arbitrator.

( 5 ) AGGRIEVED by the Judgment and decree made by the learned Civil Judge, the State has presented this appeal with six grounds on which the conclusions reached by the Arbitrator on 'claims Nos. 1, 4, 7, 13 and 14 where simple interest at 15% per annum was awarded, are called in question. To reiterate, except the award on claims Nos. 1,4,7 and 13, the State did not challenge the award on the other claims. Therefore, sri Acharya argued only on the awards in the above claims.

( 6 ) THE learned Advocate General having taken us through the relevant documentary evidence and the award, in particular the discussion made on claims Nos. 1, 4, 7 and 13, argued that having regard to clauses 31 and 32 of the contract, it was not open to the Arbitrator to award at the rates quoted for the individual item for the variation in the work, after considering the rate analysis and that he had failed to take into account S. R. rate or tender rate whichever was higher, while reaching the conclusion. He also argued that the awarding of equitable rates under clauses 31 and 32 for the items of work executed where the varia