1. Present petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “Act, 1996”) challenging the arbitral Award dated 8th August, 2000 passed by the Sole Arbitrator, Mr. B.L. Nishad, Additional Legal Adviser, Ministry of Law and Justice.

2. Briefly stated the facts of the present case are that on 2nd February, 1996 a tender enquiry bearing No. J-12015/1/96-Pur.III was floated for procurement of 7300 MTs Gram Whole by the Army Purchase Organisation with the following schedule :-

Delivery Period

Quantity

16-31 March, 1996

1825 MT

01-15 April, 1996

1825 MT

16-30 April, 1996

1825 MT

01-15 May, 1996

1825 MT

3. On 19th March, 1996, the contract for supply of 6000 MTs Gram Whole was placed upon the petitioner-objector with the following details :-

Delivery Period

Quantity (MT)

Rate/Qtl (Rs.)

16-31.3.96

525

Rs. 1017/-

01-15.4.96

1825

16-30.4.96

1825

01-15.5.96

1825

4. On 26th March, 1996, petitioner-objector acknowledged the acceptance of tender but requested the respondent-claimant for rescheduling the delivery period from 15th March, 1996 to 15th April, 1996.

5. Thereafter on 12th April, 1996, 28th May, 1996, 17th July, 1996 and 10th September, 1996 respondent-claimant granted repeated extension of time to petitioner-objector to supply the contracted quantity of Gram Whole. Each of the abovementioned extensions was granted at the petitioner-objector's request and was subject to respondent-claimant's right to levy liquidated damages upto 2% per month.

6. On 18th October, 1996, respondent-claimant at petitioner-objector's request granted fifth extension of time upto 30th April, 1997 for delivery of balance quantity of Gram Whole. However, according to respondent-claimant, a clerical error occurred while granting fifth extension which was rectified by way of a corrigendum dated 23rd October, 1996 as well as by letter dated 28th October, 1996 whereby letter dated 18th October, 1996 was superceded and the delivery period for balance 3929 MTs of Gram Whole was extended only upto 30th November, 1996. Even this extension was subject to respondent-claimant's right to levy liquidated damages upto 2% per month.

7. On 4th November, 1996, petitioner-objector acknowledged and accepted fifth extension upto 30th November, 1996. But by this letter, petitioner-objector once again requested for extension of time for supply of balance quantity of Gram Whole upto March and April, 1997. The said letter dated 4th November, 1996 reads as under :-

“No. DLI/MK/67/96-97/1393 DATED 4.11.1996 The Jt. Secretary (AFO), Ministry of Defence, South Block, New Delhi. Sub: Supply of Gram Whole against A.T. No. J-13015/1/67/96.Pur-III dt. 19.3.96. Dear Sir, We are thankful to you for granting us extension upto 30.11.96 for the balance quantity of 3929 MTs of Gram Whole against the above mentioned A.T. You will kindly appreciate that we have already supplied to you a qty of 2071 MTs in spite of the rates of Gram Whole having gone up substantially and several other constraints. We had requested you vide our letter of even number dated 04.10.1996 for granting us extension upto 30.4.1997 because of non-availability of the stocks as per your specifications. In case extension for the balance qty is not possible upto 30.4.97 we shall request you to please divide the above balance qty in two months i.e. March “97 and April “97. Further, we undertake the guarantee to supply you the above goods in case emergency arises within a month”s time on receiving your instructions. As we are already suffering heavy losses in the above supplies, we shall be highly thankful to you if you kindly consider condoning LD charges charged against the above supplies. Thanking you, Yours faithfully, Sd/- (D.N. GUPTA) BRANCH MANAGER CC: The Chief Director of Purchase, Govt. of India, Ministry of Defence, Army Purchase organization, Krishi Bhawan, New Delhi - for kind favour. Sd/- BRANCH MANAGER” (emphasis supplied)

8. On the basis of assurance given by