1. The Petitioner has invoked Section 34 of the Arbitration and Conciliation Act,1996(for short, the Arbitration Act, 1996) and thereby challenged the Award dated 31st October 2009 passed by the sole arbitrator.

2. Learned Counsel appearing for the Petitioner fairly stated that their challenge is restricted to claim Nos.1,2, and 7.

3. There is no counterclaim or Petition filed by the Respondent so far as other claims are concerned.

4. The work order in question was issued to the Respondent on 29th March, 2004. The date of completion of the work was 17.10.2005 i.e. 18 months. For various reasons the work could not be completed within the basic stipulated period. It was extended from time to time by consent of the parties. The work was completed on 11.07.2007. So there was actual 20.8 months delay. As there arose dispute, therefore in view of the arbitration agreement between the parties, the matter was referred to the sole arbitration.

5. The relevant clause on which both the parties have made their rival submission is as under:

“No escalations shall be payable for a work for which stipulated period is 18 months or less”

6. There is no dispute that by way of this agreed clause originally existing clause 51.1 got deleted. This must be with clear understanding between the parties that the work should be completed within 18 months onwards. Therefore, parties agreed that there shall be no escalation prices payable for a work for which stipulated period is 18 months onwards. There is nothing mentioned any where, what happens if 18 months period get extended by the consent of the parties.

7. There is no dispute that based upon the agreement between the parties, inspite of above clause it was extended from time to time, by consent of both parties.

8. Having extended the period beyond 18 months or more by consent, the escalation clause so added and referred above, losses, its importance. There was no other specified clause which restricts the Petitioner not to claim any amount on the basis of such situation in my view, also the Respondent contractor is entitled for escalation costs, as there was no agreed restriction to claim the same.

9. The learned arbitrator therefore considering this clause, and after going through the material placed on the record by the contractor granted the claim by adopting the formula of clause 51.1 which was admittedly deleted in the above circumstance.

10. Learned Counsel appearing for the Petitioner therefore submitted that clause 51.1, cannot be read in the contract as the same was never accepted by and between the parties. There is nothing on record to show that the said clause revived automatically. Learned Counsel for the Respondent also unable to point out any other provisions or clause in which this got revived in case the stipulated period got extended more than 18 months. But in absence of any other formula or material on record, while granting such award, the recognized formula (clause 51.1) in such type of contract, though was deleted, rightly adopted. Therefore, in my view, there is no illegality committed by the arbitrator while adopting the scheme for granting the award for the escalation as claimed.

11. Learned arbitrator has assessed the material and by applying the principle of clause 51.1 of general conditions of contact and awarded the amount by giving the reasons. The arbitrator has also considered the building cost index of CPWD and the cement/index cost adopted by the MTNL. The arbitrator has also considered details of index of price rise by adopting the procedure of clause 51.1, by referring to the various factors. The claimants have also submitted the supporting calculations/details. The arbitrator after hearing both the parties, including escalation, clarifications on the points, and by referring to the provisions of Section 73 of the Contract Act by giving quarterly intervals and adopting the formula by reducing value to 15% to allow for overheads and profit element as fi