The judicial discretion vested in the Court in terms of the provisions of section 34 of the Act takes within its ambit the power to set aside an Award partly or wholly depending on the facts and circumstances of the given case. There is nothing in the provisions of the Act which would debar the Court from applying the principle of severability provided it is otherwise called for in the facts and circumstances of the case.

B.P. Colabawalla J.

1. This Appeal under section 37 of the Arbitration and Conciliation Act, 1996 (“the Act”) takes exception to two orders passed by the learned Single Judge. The Appellant herein was the Claimant before the Arbitral Tribunal. The Tribunal passed an Award dated 30th June, 2005 in favour of the Appellant and the Respondent challenged the same by filing a Petition under section 34 of the Act. In the said Petition, the first order was passed by the learned Single Judge dated 9th November, 2006 (“1st impugned order”) whereby the Award passed by the Arbitral Tribunal in favour of the Appellant was set aside. The second order was passed by the learned Judge on 21st December, 2006 (“2nd impugned order”) which was on an application for “speaking to the minutes of the order” filed by the Respondent. By this order, the learned Judge, added further reasons in the 1st impugned order for rejecting another claim granted to the Appellant. This Appeal was admitted by a Division Bench of this Court on 26th April, 2007 and has now come up for final hearing before us.

2. The facts stated briefly, and which are material for our purpose, are that the Appellant had bid for a contract for execution of work of a “Crude Distribution System” for AU-V project at the Respondent's Gujarat Refinery site at Vadodara. By their fax dated 23rd February 1998, the Respondent accepted the Appellant's bid and the work was awarded to the Appellant at a value of Rs.14,03,30,240/-. The said contract was governed by the General Conditions of Contract (GCC) and Special Conditions of Contract (SCC). The Contract Completion Date was fixed as eight months from the date of the said fax i.e. 22nd October, 1998.

3. As per the requirement of the contract, the Appellant established two bank guarantees (i) towards a security deposit for Rs.35,08,260/-; and (ii) towards Mobilization Advance and Performance of Contract for Rs.1,40,33,000/-. The Appellant was unable to adhere to the Contract Completion Date i.e. 22nd October, 1998 and completed the work only on 6th September, 2000. A Completion Certificate was issued by the Respondent to the Appellant on 3rd October, 2000 and on 6th October, 2000 the Appellant raised its final bill for Rs.2,37,87,663/-.

4. As disputes arose between the parties, the Respondent wrote a letter to the bankers of the Appellant, requesting them to renew the aforesaid bank guarantees, failing which the said letter was to be treated as an invocation of the same.

5. In response to the said letter, on 10th January 2002, the Appellant filed a Petition under section 9 of the Act (Arbitration Petition No.31 of 2002), inter alia seeking to restrain the Respondent from invoking the said bank guarantees. Whilst the section 9 Petition was pending, the Appellant also addressed a notice dated 24th January, 2002 invoking the arbitration clause in General Conditions of Contract. The section 9 Petition was ultimately disposed of in terms of the consent terms that were drawn up between the parties and filed before the Court on 1st April, 2002. The relevant portion of the consent terms read as under:-

“The Petitioner and Respondent No.1 have arrived at a consensus, which is recorded hereunder:-

1. The Petitioner and the Respondent No.1 agree that the arbitration between them shall be time bound and shall be concluded within a period of 8 months from the month following the month of appointment of Arbitrator. The Arbitrator shall also be bound by this condition. Subject to the above the Petitioner and the Respondent No.1 by mutual consent may extend the time to conclude the arbitration, if necessary.

2. In lieu of the bank guarantee No.98/85 for Rs.35,08,260 and Guarantee No.98/84 for Rs.1,40,33,000/- the Petitioner has agreed to furnish a fresh bank guarantee for an amount of Rs.65,00,000/- Lakhs. The said bank guarantee shall be kept in force till the final determination of the disputes by the Arbitral Tribunal by an Award unless the Arbitral Tribunal