B.N. SRIKRISHNA, J.:--- This appeal under section 39 of the Arbitration Act, 1940 (hereinafter refereed to as 1940 Act') impugns an order of the learned Single Judge dated 6-9-2000 dismissing the petition of the appellant under section 30 for setting aside an arbitration award.

2. The facts necessary for deciding the appeal are as under :---

(a) The appellant is a Government company engaged in the business of exploration and exploitation of Hydro Carbons. The appellant got a project approved called "Water Injection Pipeline and Platform Modification" ("WIPPM") which was to be executed at the Bombay High Offshore field. This project was intended to arrest further decline of the oil well pressure and thereby prevent oil production loss and had certain amount of national importance. Some time in the year 1985, by a notice the appellant invited tenders for execution of the WIPPM project. Several companies including the respondent submitted their tenders. On a scrutiny of the tenders it was found that the respondent was the only Indian Company who had made an offer for the said project. The respondent, however, was not found technically qualified to execute the project. In order to get over this difficulty, the respondent entered into an agreement with two international companies having requisite qualification and claimed technical qualification to execute the project. On 23rd June, 1986 there were meetings between several bidders and the representatives of the appellant. These meetings were called for the purpose of clarification of certain issues on which doubts were raised. In compliance with the suggestion made by the appellant in one of such meetings, the respondent agreed to furnish a liquidated damages bank guarantee for an amount equivalent to 15% of the contract price, by its letter dated 23rd June, 1986. The respondent also agreed that the payment of running bills were to be made only after the signing of the contract. On 28th June, 1986 the respondent submitted price bills on two alternative bases called "A" price and "B" price. By a letter dated 11th August, 1986, the respondent agreed that the advance payment and progressive payments could only be made if the contract was signed between the appellant and the respondent.

(b) During the meetings one of the issues, on which there was difference of opinion, was whether the appellant had to bear the extra cost, if any, arising on account of foreign exchange fluctuation. At the material time the appellant followed a policy of price preference with reference to Indian bidders. The price preference was to the extent of 15%. In other words, the Indian bidder got an advantage of having his bid considered as if it was 15% less. However, the Indian bidders were required to make their bids only in Rupees and were also entitled to payment in Rupees, though, if there was any component of foreign exchange involved, they were required to separately indicate it so that the appellant could assist the bidder in obtaining the requisite foreign exchange by issuing appropriate certificates addressed to the Reserve Bank of India for release of foreign exchange. The respondent was considered the most suitable of the bidders from all points of view. But, the respondent insisted that the payments to it should either be in foreign exchange or, in the alternative, that the additional cost on account of fluctuation of foreign exchange should be borne by the appellant. Since this proposal was not acceptable to the appellant, both the parties stuck to their stands.

(c) Consequently, a high level meeting was convened on 20th August, 1986. The high level meeting was attended by several senior officials of the Government of India, several officials of the appellant corporation and two high powered representatives of the respondent. After discussions, it was decided in this meeting that the bid of the respondent had been found competitive only as a result of the respondent being given 15% price p