The central legal point established in the judgment is the requirement for material evidence and supporting documents, adherence to contract terms in awarding damages and compensation, and the principle of accord and satisfaction on receipt of amount in full and final settlement of claim.

ORAL JUDGMENT:

This Petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, the Act), whereby award dated 31st January, 2007 has been challenged. The Arbitrator has granted the award as under:-

“I hereby direct the Respondents to pay to the Claimants the sum of Rs.9,12,157/- within 30 days from the date of the Award. If the Respondents fails to pay the awarded sum within 30 days from the date of the Award then the Claimants shall be entitled to receive interest at the rate of 9% p.a. On the awarded sum of Rs.9,12,157/.”

2. The facts of the case are the Petitioners are interalia engaged in the business of refineries and marketing, selling and distributing of Petroleum Products. The Respondents is a partnership firm engaged in engineering works.

3. On 26th July, 2002, the Petitioners had floated limited tender No.MSO/ENG/LT-16/01-02/BHADLI for construction of sand pad foundation, fabrication of new cone roof tank for water and installation of fire fighting pumps at Petitioner’s Bhadli depot. Pursuant to the quotation received from the Respondents, the Petitioners by letter dated 26th July, 2002 placed the work order upon the Respondents. Thereafter, the contract was executed between the parties on 23rd August, 2002.

4. The Respondents did not take any steps for taking over of the site and therefore, the Petitioners by their letter dated 18th September, 2002 informed the Respondents that, 28th September, 2002 should be treated as the commencement date of the work order and that the Respondents should report at site and commence the work immediately. Since, the contract was for a period of 6 months, the completion date of the contract was 27th March, 2003. The time was the essence of the contract. The Respondents did commence work on 7th October, 2002.

5. The Respondents’ progress of work was very slow and tardy at site. The Respondents had grossly delayed the execution of the work, and was able to complete only the foundation work for the tank, which constituted only 10% of the total job by 3rd March, 2003.

6. The Respondents did not commence the construction of fire fighting pump housework, which was an independent activity and not related to tank fabrication. The Petitioners had by their aforesaid letter dated 24th February, 2003 advised the Respondents that if they did not commence the pump house construction work on or before 3rd March, 2003 they would delete this portion of the work from the Respondent’s scope and get it done through other agency.

7. The Respondents was advised by letter dated 21st January, 2003 to submit action plan for completion of work by end of February, 2003. However, the Respondents did not submit any action plan also. The Petitioners by letter dated 7th March, 2003 suspended the work at site, as time was the essence of the contract.

8. The Respondents made a claim of Rs.22,83,921.28 Ps. upon the Petitioners for the work alleged to have been done and the expenses incurred by them at site and also on account of loss of profit, compensation and other incidental expenses. The Petitioners rejected the said claims. A net amount of Rs.5,90,441.19 Ps. which was found due and payable by the Petitioners to the Respondents was paid. The Respondents accepted the said amount in full and final settlement of their claims.

9. On30th September, 2004, the Respondents have by their Advocate’s letter dated 30th September, 2004 sought to lodge its claim for the balance amount of Rs.17,17,688.28. The dispute was referred by the Director (Marketing) of the Petitioners Corporation to the Sole Arbitration of Mr. R.D. Kale. The Respondents filed their settlement of Claim and the Petitioners filed its Written Statement. The Respondents filed its rejoinder. The parties also examined witnesses. The Petitioners and the Respondents advanced oral arguments. The Petitioners also submitted their written arguments. On 31st January, 2007 the impugned award was passed by the Arbitrato