HEMANT KUMAR SRIVASTAVA, J.:–Heard learned counsel for the petitioners as well as learned counsel appearing for the opposite party.

2. The opposite party and petitioners entered into an agreement on 21.12.2006 and accordingly, the opposite party was allotted work for construction of roads within 21 months from the date of agreement i.e. by 20.09.2008. The opposite party failed to complete the work within above stated period as a result whereof, petitioners deducted penalty amount as per terms of the contract. However, the petitioners extended the time for completion of the work by 31.12.2009 and after extension of time the opposite party completed the work within extended period and claimed the amount which was deducted by the petitioners due to non completion of the work by the opposite party within first prescribed period.

3. The opposite party carried the matter to the Tribunal by filing Reference Case No. 21 of 2012 and the learned Chairman and Member of the Tribunal allowed the claim of the opposite party directing the petitioners to make payment of deducted amount with simple interest at the rate of 10 % per annum with effect from 17.04.2010 till its realization.

4. Learned counsel appearing for the petitioners submits that the learned Tribunal committed error in awarding the aforesaid amount to the opposite party because admittedly, the opposite party failed to complete the work within prescribed period. He further submits that the Tribunal also committed error by allowing interest on the aforesaid deducted amount because as per agreement, the department was not liable to pay any interest on the deducted amount.

5. Learned counsel for the petitioners further submits that Engineer in Chief has written letter dated 02.07.2009 to all the concerned officials not to return the amount of penalty in any case and, therefore, in the light of aforesaid letter, the department rightly refused to return the deducted amount but the Tribunal failed to take note of the aforesaid fact.

6. On the other hand, learned counsel appearing for the opposite party refuted the above stated submissions arguing that as per Clause 2 of the agreement, the department was bound to return the deducted penalty amount, if the work is completed within the extended period of time. He further submits that the Tribunal rightly passed the award taking note of the aforesaid terms of the agreement because the dispute of parties to a contract can only be decided on the basis of terms of the agreement and, therefore, the Tribunal rightly passed the award in favour of the opposite party. He further submits that even if there is agreement between the parties that no interest shall be paid on deducted amount, then also, the Tribunal can grant interest on the deducted amount during pendente lite. In support of his contention, he referred the decision of Board of Trustees For The Port of Calcutta Vs. Engineers-De-Space-Age reported in (1996) 1 SCC 516 in which it has been held by their Lordships that even if the clause of contract does not permit the arbitrator to award interest, then also, the aforesaid clause of the contract cannot prohibit the arbitrator from awarding interest pendente lite.

7. Having heard the contentions of both the parties, I have gone through the record. It would appear from perusal of the impugned award that the Tribunal has passed the impugned award having relied upon Clause 2 of the agreement which runs as follows:—

“The amount of compensation may be adjusted or set-off against any sum payable to the Contractor under this or any other contract with the government. In case, the contractor does not achieve a particular milestone mentioned in schedule-F, or the rescheduled milestone(s) in terms of Clause 5.4, the amount shown against that milestone shall be withheld, to be adjusted against the compensation levied at the final grant of extension of time. Withholding of this amount of failure to achieve a milestone, shall be automatic without any notice

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