1. The petitioner has preferred this appeal challenging the dismissal of arbitration petition by the learned Single Judge of this Court, whereby the petitioner had challenged the award passed by the learned Arbitrator granting compensation on different head to the respondent no.1 (hereinafter referred to as the ’Contractor’).

2. Admitted facts are that, the petitioner had invited tenders for construction of sewage water reclamation plant at the petitioner’s refinery at Mahul, Mumbai by tender enquiry dated 20th March, 1991. Tender submitted by the contractor was accepted as per the letter of intent dated 27/2/1992. Parties entered into an agreement for execution of the said contract. Under the agreed terms, the contract value was Rs.5,74,25,000/-. The work was to be completed within 18 months from the letter of intent. Admittedly, within the specified period of 18 months, work was not fully executed and on request made by the contractor, time was extended twice. Work was carried on until 31st March, 1996 and thereafter, the contractor abandoned the work. Admittedly, by that time 80% work was completed and only 20% work had remained uncompleted. On 4-7-1996 the contractor made claims on the petitioner for "extra costs of overheads and profits, extra expenditure on machinery, etc." which was allegedly caused due to the delays in completing the works. The contractor indicated by the said letter that they would complete the balance works on the amounts claimed by them being paid. The petitioner called upon the contractor to complete the work. By the said letter the contractor also invoked the arbitration clause and requested for an appointment of arbitrator. By letter dated 5-5-1997, the petitioner called upon the contractor to resume the works and complete the balance work even during the arbitration proceeding as per the terms of the contract. In August, 1997, the respondent no.2 came to be appointed as an arbitrator. The contractor made a claim of Rs.4,68,87,938/- on different heads as follows: SUMMARY i) Claim - 1 Amount (Rs.) Compensation for loss of overheads & profit and also profitability 3,38,38,460.00 ii) Claim - 2 Compensation for the idle machinery and equipment 89,59,615.00 iii) Claim - 3 Compensation for losses incurred due to increased cost of material and labour 26,89,638.00 (iv) Claim - 4 Compensation for carrying out extra work (v) Claim - 5 Cost of repairs & rectification to be assessed after the joint inspection. Total 4,68,87,938.00 The petitioner denied the claims of the contractor and made counter claim of liquidated damages as per the terms of the contract in view of the delays and non completion of the work.

3. It was claimed by the contractor that the delays were caused in completion of the work due to the faults on the part of the petitioner. The work was expected to be completed within 18 months though in the contract amount, the contractor had taken account of the overheads and profits for a period of 22 months. Even though the contract period was over in August, 1993 on account of the delays on the part of the petitioner, work could not be completed and in spite of that the contractor continued to work till the end of March, 1996. The men and machinery of the contractor remained idle. Even the basic approval for the electrical scheme, with numerous revisions, was kept pending, till the end by the petitioner and, therefore, the work could not have been completed. Even the arrangement with M.C.G.B. for the supply of sewage water for purification had not been finalised. The contractor was required to carry out some extra work. Therefore, the contractor made the claim as stated earlier.

4. The petitioner contended that there were no delays on the part of the petitioner. The contractor himself was responsible for the same. It was contended that the contractor can not make any claim because even though the time was essence of the contract, the time was extended on the request o