JUDGMENT - B.N. SRIKRISHNA, J.:---This appeal under section 39 (vi) of the Arbitration Act, 1940 (hereinafter referred to as "the Act") is directed against the judgment and order of the learned Single Judge dated 19th October 1994 refusing to set aside an Arbitration Award No. 166 of 1989 dated 20th October 1989.

2.Some time in 1983, the appellant had floated tenders for construction of 14,000 M.T. cold storage at Vashi, New Mumbai. The respondent, a construction firm, had tendered for the work and was awarded the contract for the said construction work. The contract was signed some time in 1984. Some time during the year 1986, disputes arose between the appellant and the respondent. The respondent filed Arbitration Suit No. 3219 of 1986 under the Act for appointment of an arbitrator. There was protracted litigation between the parties which even went to the Supreme Court and came back. We are not concerned with the details of the said litigation except that as a result of certain directions made by the Supreme Court, this Court ultimately appointed one S.N. Mishra, as the sole arbitrator by an order dated 2nd November 1988. The arbitrator entered upon the reference on 1st March 1989. The respondent filed its statement of claim on 2nd March 1989 which was replied by the written statement of the appellant filed on 16th March 1989. A rejoinder was filed on 28th March 1999 and the award came to be made on 20th October 1989. The arbitrator by his award directed the appellant to pay a sum of Rs. 32,68,805.80 ps. to the respondent and further directed that if the appellant failed to pay the said sum to the respondent on or before 15th December 1989, then the said sum was to carry interest at 18% p.a. upto the date of final payment.

3.Being aggrieved by the said arbitration award, the appellant filed Arbitration Petition No. 219 of 1989 under section 30 of the Arbitration Act, 1940. This petition was dismissed by the judgment of the learned Single Judge dated 19th October 1994. Hence, this appeal.

4.Although a number of issues were canvassed in the petition and before the learned Single Judge, Mr. Tulzapurkar, the learned Counsel appearing for the appellant, has confined the appeal only to the following grounds:-

(i) That there is an error apparent on the face of the award on the issue of "balance steel recovery" inasmuch as, having found that the respondent had failed to return certain quantity of steel supplied by the appellant which had remained unutilised, the arbitrator ought to have permitted the appellant to claim penal interest on its value at twice the issue rate, as agreed under the contract. Since the arbitrator awarded interest only at single rate, the arbitrator has acted contrary to the express terms of the contract to do which he had no jurisdiction.

(ii) Certain claims were not arbitrable and were left to the sole decision of the Managing Director of the appellant. Hence, the arbitrator had no jurisdiction to entertain those claims or make any award thereon.

(iii) The arbitrator acted beyond jurisdiction in not awarding at the C.P.W.D. rates for extra items.

(iv) The arbitrator acted contrary to law in directing payment of interest at the rate of 15% p.a. as there was no agreement on the rate of interest and the rate of 15% p.a. is far in excess of what is contemplated even under the Interest Act, 1978.

(v) The arbitrator erred in granting interest on interest on two of the claims.

(vi) Finally, the arbitrator erred in directing interest of costs of arbitration awarded.

Ground (i)

5.The first issue is the issue which was dealt with by the arbitrator as Issue No. 4. Under the terms of the contract, Clause No. 15.2.6 provided as follows:

"If on completion of work, the contractor fails to return surplus materials out of those supplied by the federation, then, in addition to any other liability which the contractor would incur, the Engineer Incharge may, by a written notice to the contractor, require him to pay within a fortnight

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