1. This is an application under Section 5 & 8 of Arbitration and Conciliation Act, 1996, in a suit for recovery of Rs.1,79,92,366/-. On 26.09.2005, the defendant/applicant had issued a notice inviting tender for Project Management Consultancy Services, for design and engineering, carrying out investigation work, basic engineering with cost estimate, statutory approvals, procurement assistance etc. and preparation of project completion documents for implementation of LPG/Propane/Butane Import/Export Terminal at Ennore(Tamil Nadu), on a lump sum turnkey basis. The bid documents consisted of two volumes. The first volume contained instructions to bidders; forms of bid, bank guarantee and conditions of contract, etc. whereas the second volume consisted of scope of work and other project requirements. On 1.9.2006, the defendant/applicant issued a Letter of Intent to the plaintiff with respect to the aforesaid tender. Pursuant thereto, a work order dated 3.10.2006 was issued to M/s.Triune Projects Pvt. Ltd., which was substituted by amended work order dated 25.1.2007 in the name of the plaintiff which had acquired the business of M/s.Triune Project Pvt. Ltd. Other terms and conditions of the work order dated 3.10.2006, however, remained unchanged.

2. The work order, inter alia, provided as under:-

“All the tender documents including N.I.T., your quotation, payment terms, special terms and conditions of the tender, general description of the works, subsequent negotiations and all other correspondences connected with the tender, shall form a part of this contract agreement.”

3. The case of the applicant/defendant is that the documents referred in the work order as forming part of the contract included the Format for Agreement of Project Management Service, Article 31 of which provided as under:-

“ARTICLE 31 : ARBITRATION The arbitration proceedings shall be in accordance with OM No.3/5/93-PMA dated 30/6/93, Govt. of India, Department of Public Enterprises, which reads as follows:-

“In the event of any dispute or difference relating to the interpretation and applications of the provisions of the CONTRACTS, such dispute or difference shall be referred by either pasty to the arbitration of one of the Arbitrators in the Department of Public Enterprises to be nominated by the Secretary to Government of India, incharge of Bureau of Public Enterprises. The Arbitration Act, 1940 shall not be applicable to the arbitration under this clause, provided, however, any party aggrieved by such award may make a further reference for setting aside or revision of the award to the Law Secretary, Department of Legal Affairs, Ministry of Law and Justice, Government of India. Upon such reference, the dispute shall be decided by the Law Secretary or the Special Secretary/Additional Secretary when so authorized by the Law Secretary, whose decision shall bind the parties finally and conclusively. The parties in the dispute will share equally the cost of Arbitration as intimated by the Arbitrator.”

4. The contract was terminated by the defendant/applicant vide its letter dated 12.8.2008 on the allegations of various breaches on the part of the plaintiff and claims are stated to have been raised by it against the plaintiff in this regard.

5. The case of the plaintiff is that the work was completed by it by December, 2006 except for soil testing which took another five months as clear site was not made available by the defendant. It is also claimed that the investigation works could start only in April, 2007 and report was submitted to the defendant on 25.2.2007. It is further alleged that vide letter dated 8.9.2007, the defendant issued instructions to the plaintiff to resume the work on part-II of the project and extended the project completion schedule to April, 2009. Pursuant to that letter, the plaintiff commenced work on part-II. However, on 9.6.2008, the defendant asked the plaintiff to cancel the tender giving high cos