JUDGMENT - VIJAY DAGA, J.:---This is a petition directed against the award dated 8th June 1999 delivered by the sole arbitrator Smt. Shail Goel, Additional Legal Adviser to the Government of India, Ministry of Law, Justice and Company Affairs, New Delhi who was appointed as a sole arbitrator vide letter dated 19th February 1997 by the Director General of Supplies and Disposal, New Delhi under the terms and conditions of the contract bearing No. BTX-3/137/G/0737(91)/COAD/868 dated 28th December 1992 to resolve the disputes between the parties.

2.The facts of this case, in brief, are as follows:

The petitioner, Union of India, through the Director General of Supplies and Disposals, Directorate of Supplies (Textiles) having its offices at New Delhi and Mumbai had placed the above contract on the respondent for supply of Shorts Men's Drill Khaki-1977 pattern in assorted sizes aggregating to 2,79, 795 pairs as per tender specifications with delivery period upto 31st August 1993. Though the goods were to be delivered upto 31st August 1993. Though the goods were to to be delivered up to 31st August 1993, the said period was extended upto 31st July 1995. The respondent contractor, according to the petitioner, in spite of repeated reminders, did not supply goods within the extended delivery period. Thus by letter dated 11th September 1995 the contract was cancelled at the risk and cost of the contractor. According to the petitioner, the breach of contract committed by the respondent contractor had resulted in heavy losses to the petitioner and its indenting departments, which were recoverable from the respondent contractor as per the terms of contract.

3.The petitioners had further stated that after cancellation of the contract it did not initiate separate purchase contract at the risk of the respondent because of decentralisation and the direct purchases made by the user departments. The petitioner had further stated that the items sought to be purchased were exclusively meant for the defence use and were not available in the open market. Thus the petitioner, after termination of contract by letters dated 11th September 1996 and 20th January 1997, demanded from the respondent, an amount of Rs. 46,40,350/- being the amount of damages and losses suffered by the petitioner and its indending departments. The respondent, in spite of receipt, of the said demands, failed and neglected to comply with the same. The dispute was, therefore, raised and referred to arbitration which lead to appointment of Smt. Shail Goel as a sole arbitrator to resolve dispute between the parties.

4.The petitioner had filed its statement of claim on 20th March 1998, before the learned arbitrator. The petitioner stated in the said claim that the risk purchase contract could not be concluded as the finance had certain reservations. The petitioner had further stated that the contracted items were exclusively meant for defence use and not available in the open market. The petitioner, therefore, had to set up a claim towards general damages in the sum of Rs. 46,40,350/- together with interest at the rate of 21% per annum from the due date till the realisation of the amount.

5.On being noticed by the arbitrator, the respondent had filed its written statement and raised a counter claim against the petitioner Union of India. The respondent had submitted that the extension of delivery period upto 31st July 1995 was unilateral. The respondent had further contended that the claimant Union of India never suffered any loss on account of alleged breach. The claimant had not effected risk purchase as the finance had certain reservations with the result the claimant had to return the indent to the indentor. The respondent had, therefore, denied its liability to pay the general damages alleged to have been suffered by the petitioner as no stores were purchased on or around the date of alleged breach. Thus the loss alleged to have been suffered by the petitioner was denied by the respo

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