JUDGMENT :

Krishna Rao, J.

1. The Union of India through the General Manager, East Coast Railway, Bhubaneswar, Orissa has referred the instant application under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as Act of 1996) against the award passed by the learned sole Arbitrator dated 12th day of March, 2008.

2. The petitioner had invited tender for earth-work in formation, construction of bridges and other allied works Inspection XXI at Sambalpur End from chainage 35900 to the chainage 39600 of Sambalpur-Telcher Rail Link Project. The respondent had participated in the said tender process and accordingly after negotiation, the respondent had accepted the said work order for a total sum of Rs. 28,83,531/-on 13th July, 1989 and completion period was 20 months with effect from 31st July, 1989 to 12th March, 1991. After acceptance of the offer, an agreement was entered between the parties. The respondent had completed about 77.08% of work and accordingly as per the bill raised by the respondent an amount of Rs. 22,22,602/-was paid to the respondent.

3. Due to implementation of new Forest Act, the project area was affected and forest clearance for the said work was required to be obtained. After obtaining clearances from different departments, the petitioners by letter dated 22nd June, 1992 requested the respondent to start the balance work within 10 days and also requested the respondent to submit an application for reasonable extension of time so as to complete the balance works along with progress of work.

4. The respondent has neither started the work nor had submitted any application for extension of time to complete the balance work and accordingly on 23rd April, 1993, again a notice was served upon the respondent directing the respondent to start the balance work within seven days from the date of receipt of the letter and also to submit a request for reasonable extension of time enclosing the program of work. In the said letter, it was also informed to the respondent that if no action is taken within the time period, it will be deemed that the respondent is not interested to execute the work and appropriate action will be taken to determine the contract as per the General Condition of the Contract.

5. On 5th June, 1993, the petitioner had again sent a letter to the respondent informing that the Railway Authorities desirious to discuss with the respondent with regard to closing/finalisation of the agreement and requested the respondent to attend the office of the authority on 10th June, 1993 and in the said letter it was also informed that if the contractor will not attend the office on the said date it will be deemed that the respondent is not interested to finalise the agreement and the Railway authority will take appropriate action to deal with the agreement as per extent rule.

6. Immediately after receipt of forest clearance, the petitioners have advised the respondent time to time to restart the work but the respondent has not taken any effective steps to comply with the instruction of the petitioner and accordingly by a letter dated 24th June, 1993, the petitioners in terms of the Clause 61(1) of the General Condition of Contract terminated the contract without liability on either side and requested the petitioner to vacate the site and to return all the Railway materials and machineries if any in the custody of the respondent.

7. After determination of the contract, the petitioners vide their letter dated 28th September, 1994 requested the respondent to come forward for taking final measurements and in the said letter, it was also mentioned that if the respondent fails to come within seven days of issuance of the letter, ex-parte measurement will be taken, which will be considered as final measurement for finalisation of the work. Again on 5th October, 1994, a notice was sent to the res