( 1 ) THIS order will dispose of the application of the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 whereby the petitioner has challenged the award made and published by the arbitrator, namely, respondent No. 2 in the matter of disputes between the parties relating to the project nomenclatured as Al-Muthana (CFBL project) in Iraq. The facts in short are:-

( 2 ) IN or about 1982-83, the New Railway Implementation Authority of the Republic of Iraq awarded certain contracts relating to a railway project in Iraq to the petitioner. One of the project was the cement factory in Al-Muthana (in short referred to as the CFBL project ). The value of this project was about Iraqi Dinars 34. 473 millions and the work of construction of certain buildings and temporary diversions in this project was awarded to the respondent by the petitioner. The work so awarded to the respondent was of the value of about Iraqi Dinar 0. 43 millions.

( 3 ) FOR execution of work, the respondent availed certain loans from the petitioner in foreign currency and Indian rupees and the work was completed in the year 1984-85. The projects at Iraq were executed by the petitioner on Deferred Payment Arrangement (in short referred to as the "dpa") signed between the Government of Iraq and the Government of India. For executing the projects, the petitioner had also availed loans from certain banks including the State Bank of India, Behrain (foreign currency loan) and from the State Bank of India, New Delhi/exim Bank of India (rupee currency loan ). The foreign currency loan was availed by the petitioner against a counter guarantee given by the Ministry of Railways, Government of India to the Bank and the rupee currency funding was availed by the petitioner against security of receivables for the work done at Iraq under the DPA.

( 4 ) PAYMENTS for the work done having not been received in terms of the DPA, the Government of India constituted a task force which recommended as under :-

"i) RBI and ECGC will issue bonds against receivables from Iraq against which project exporters have availed loan from EXIM Bank and commercials hanks.

II) ECGC will issue bonds for amount covered by the organisation under policies/guarantees net of amount settled in cash.

III) RBI will issue bonds for the balance amount, net of amount payable by different Ministries of Government of India under Counter guarantees given by them against guarantees issued by commercial banks and EXIM Bank on behalf of public sector undertakings under relevant Ministry.

IV) Bonds to be issued by RBI will cover exporters dues to commercial banks/exim Bank as also surplus amount due to exporters/concerned company after liquidation of their liabilities to banking system. "

( 5 ) THE cash compensation received by the petitioner in terms of the recommendations of the Task Force was adjusted by the EXIM Bank/state Bank of India, New Delhi against recovery of their loans. The foreign currency loan due to the State Bank of India, Behrain was recovered by the Bank by invoking the counter guarantee given by the Ministry of Railways, Government of India. Pursuant to the recommendations of the Task Force, the petitioner executed a deed of assignment assigning all its rights, title, interest, claim, demand on the receivables from the Government of Iraq. This was in consideration of the Government of India releasing compensation (Project support to Iraq) bonds 2001 under its Notification dated 24th March, 1991.

( 6 ) AS certain amount was due from the respondent to the petitioner being the loan given to the respondent, the petitioner called upon the respondent to pay the same before the Reserve Bank of India bonds were released in its favour. It appears that the loan was adjusted by the petitioner by discounting the RBI bonds by 20% and paid the RBI bonds of the face value of Rs. 10. 50 crores to the respondent. According to the respondent, the petitioner could not discount the bo