The court's decision highlighted the importance of the existence of the Arbitration Agreement, the requirements for refund of Security Deposit, and the application of Escalation Clause and Interest under the Arbitration and Conciliation Act, 1996.

NAVIN CHAWLA, J.

1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) has been filed by the petitioner challenging the Arbitral Award dated 16.03.2015 passed by the Sole Arbitrator adjudicating the disputes that have arisen between the parties in relation to the Work Order dated 22.12.2006 read with Agreement dated 15.01.2007 by which the petitioner had awarded the work of construction of Multi storeyed School Building, Turkman Gate (Balance Work), S.P. Zone, Delhi to the respondent. The summary of the Award is reproduced hereinbelow :

Claim of Respondent	Award
Claim No.1	Rs.14,70,514.00p
Claim No.2	NIL
Claim No.3	NIL
Claim No.4	13,32,028.00p
Claim No.5	6,42,487.00p
Total of Claim No.1, 4, 5	Rs.34,45,029.00p
Claim No. 6	Interest on Rs.34,45,029.00p @ 10% per annum for the period from 01.04.2010 till the date of filing of the claim, i.e. 04.05.2013 (37 months) Rs.10,33,509.00p
Claim No.7	Pendente lite and future interest on Rs.44,78,538.00p @ 10% till the date of actual payment (23 months between filing of claim and date of award) Rs.8,58,386.00p
Claim No.8	Rs.2,00,000.00p
TOTAL	Rs.55,36,924.00p

2. Counsel for the petitioner submits that the Award is liable to be set aside as there is no Arbitration Agreement between the parties. She submits that by a Circular dated 11.12.2006 the Arbitration Agreement had been deleted and therefore, the arbitration proceedings were not maintainable.

3. I am unable to agree with the said submission of the learned counsel for the petitioner. In the present case, the Notice Inviting Tender was issued by the petitioner on 05.06.2006, that is, much prior to the Circular dated 11.12.2006. The Circular admittedly does not have a retrospective effect. Even though the Work Order was issued on 22.12.2006 and formal Agreement was executed on 15.01.2007, it would have no effect on the existence of the Arbitration Agreement as the tender had been accepted prior to the issuance of the Circular dated 11.12.2006.

4. Counsel for the petitioner has further challenged the award of refund of Security Deposit in claim no.5. She submits that the amount of Security Deposit was to be refunded only upon the respondent producing Clearance Certificate from the Labour Office. The same having not been produced by the respondent, the respondent was not entitled to this claim.

5. I do not find any merit in the said submission. Even as per the petitioner, the respondent had left the site of work on 30.09.2009. Though, we are in the year 2018, it is not the case of the petitioner that any demand or complaint has been received by it from the Labour Department. In that view merely, because the respondent did not produce a formal Clearance Certificate, it cannot be denied such claim.

6. Counsel for the petitioner further challenged the Award of Rs.14,70,514/- in favour of the respondent under Claim No.1, which was towards the Final Bill. She submits that the respondent had abandoned the work on 30.09.2009 and for all the work that had been done by the respondent, payment has been made by the petitioner in form of the 5 R.A. Bills.

7. I am unable to agree with the said submission of the learned counsel for the petitioner. The Arbitrator has considered the evidence led by the parties before him and has concluded that the extract of the Measurement Books that were produced by the petitioner before the Arbitrator could not be proved and relied upon. Apart from this the Arbitrator found that there were certain interpolations in the measurement books and also inconsistency in the statement of witnesses produced by the petitioner. As far as the work done by the respondent and the ultimate Award is concerned, the relevant extract from the finding of the Arbitrator are repr