SANJAY KISHAN KAUL, J.

( 1 ) THE Department of Telecom, Union of India the respondent herein floated tender for obtaining PIJF underground cables of 1. 66 LCKM. The tender was opened on 22. 4. 1994. The petitioner had submitted his bid in pursuance to the tender enquiry which was accepted by the respondent. Orders were placed on the petitioner for supply of cables on a cash basis and the petitioner was required to submit a performance bank guarantee worth Rs. 85 lacs as per clause 4. 1 of the bid documents. The petitioner accordingly furnished the bank guarantee dated 27. 9. 1994 issued by the State Bank of Patiala, Rajpura for the said amount.

( 2 ) THE respondent took the decision to obtain additional quantity of the said cable of 85 LCKM under the same tender enquiry but on deferred payment terms and the petitioner being one of the approved bidders was accordingly informed about the proposal of additional allocation of 3. 79 LCKMs. This quantity was enhanced to 4. 77 LCKM on 5. 12. 1994 and distributed to different telecom circles. The haryana Circle had to be supplied 1. 64 LCKM, Punjab Circle 2. 40 LCKM and rajasthan Circle 0. 73 LCKM. The petitioner was required to submit their conditional acceptance latest by 9. 2. 1995 and the same was duly done by the petitioner. In view of this additional supply of 4. 7 LCKM the petitioner was required under Clause 4. 1 of the Agreement to submit an additional performance bank guarantee for Rs. 15. 0 lacs to make the total performance bank guarantee of rs. 1. 0 crore and the petitioner duly complied with the same by furnishing the additional bank guarantee of Rs. 15. 0 lacs issued by Canara Bank, IFB Branch, New delhi. The petitioner was required to have separate agreements with the three chief Managers of the three respective telecom circles under this deferred payment arrangement and the petitioner entered into such three separate agreements giving different scheduled dates of delivery.

( 3 ) THE dispute arose between the parties on account of the failure of the petitioner to make the supplies and the respondent invoked the bank guarantees. In view of the existence of Clause 20 as the Arbitration Clause Shri A. K. Garg, general Manager, Telecom District Dheradun was appointed as the Arbitrator by the Government of India vide letter dated 8. 9. 1997. The Arbitrator made and published the award dated 17. 12. 1999. The petitioner aggrieved by the same has filed the present petition under Section 34 of the Arbitration and Conciliation act, 1996 (hereinafter referred to ?the said Act? ).

( 4 ) LEARNED counsel for the petitioner, conscious of the limited jurisdiction of this Court under the provisions of Section 34 (2) of the Act even in view of the extended jurisdiction as enunciated in Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd. , AIR 2003 SC 2629 confined her submissions to three aspects.

( 5 ) THE first aspect sought to be canvassed by the learned counsel for the petitioner was that the rescission of the contract was not in terms of the contract and thus the bank guarantee could not be invoked. It was, however, not disputed that in view of the bank guarantee having been invoked and honoured, the issue did not really survive for consideration and what had to be examined was whether the respondent was entitled to the damages as determined.

( 6 ) THE second issue thus canvassed, and which is the main issue, is the plea that the damages could have been awarded only if the loss has been suffered. The arbitrator has recorded a finding that the respondent was able to obtain supplies at cheaper rate and that the losses were remote but despite this fact the respondent has been held within its rights to have recovered the amount of damages under the bank guarantee. The Arbitrator has arrive at a finding at page 11 of the Award as under:"though it cannot be denied that the respondent must have in one way or the other suffered due to non-performance of the contracts by the petitioners

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