Rajiv Shakdher, J.

1. By this order we intend to dispose of the captioned appeal preferred against the order of the learned Single Judge dated 08.11.2004 passed in suit No. 492/1999. The learned Single Judge, by virtue of the impugned judgment has sustained the award of the learned Arbitrator dated 18.02.1999. The appellant before us, i.e., Progressive Constructions Ltd. (hereinafter in short referred to as `PCL') was the original respondent before the learned arbitrator, while the respondent herein, i.e., Sharma & Associates Construction (P) Ltd. (hereinafter in short referred to as `SAPL') was the original claimant. We would be referring to the parties by their names, as indicated hereinabove.

2. Before the learned arbitrator SAPL had referred seven (7) claims. By virtue of the award the arbitrator allowed claim nos. 1 to 3. Resultantly, the total amount awarded in favour of the SAPL is a sum of Rs. 28,90,107/- along with interest at the rate of 15% per annum with effect from 01.01.1994 till the date of passing of the decree or payment whichever eventuality occurred earlier point in time.

2.1 Before us arguments have been confined to claim No. 1 and 6. Claim No. 6 essentially deals with interest. PCL, before us, therefore, has not pressed its challenge qua claim No. 2 pertaining to retention of amount from SAPL running bills. This claim amounted to Rs. 30,000/-. Similarly claim No. 3, which related to release of money deducted by PCL from running bills towards security deposit has also not been pressed before us. This claim amounted to a sum of Rs. 2,04,189.66/- . Apart from claim nos. 2 and 3, which are not pressed; PCL has also not disputed the payment of escalation to SAPL, in the sum of Rs. 7,17,560/-. This amount is actually subsumed in claim No. 1 whereby, the arbitrator has awarded a sum of Rs. 26,55,917/-; as this amount which otherwise being admitted as being payable to SAPL had not been paid till the stage of adjudication was reached before the learned Arbitrator. Reference in this regard may be had to paragraphs 18 and 20 of the award. Therefore, essentially the dispute relates to claim No. 1 amounting to Rs. 19,38,357/-; which SAPL claims on account of revised rates received by PCL in turn from the main contractor, i.e., Hindustan Steel Works Construction Ltd. (hereinafter in short referred to as `HSCL') towards deviation in quantities. Thus the core issue before us is whether the learned Arbitrator's finding that SAPL could lay claim on the monies received by PCL on account of revised rates for deviations under a separate contract with HSCL was perverse. As noticed above, the other ancillary issue which would arise for our consideration is with regard to interest.

3. Before we advert to the submissions made before us in respect of the said issue, let us briefly sketch out the broad contours in the background of which the dispute arose between the parties at hand.

3.1 It appears that the National Hydro Electrical Power Corporation Ltd. (in short `NHPC') in its capacity as the employer entered into a contract dated 28.01.1986 with HSCL. The said contract involved construction of a "left side afflux bund from RD-00 M to RD-1700 M of Tanakpur Hydro Electrical Project, in Tanakpur District Nainital, Uttar Pradesh" (hereinafter referred to as the `said works').

3.2 HSCL in turn with the consent and knowledge of NHPC sub-contracted the said works to PCL vide contract dated 16.07.1991 (hereinafter referred to as the `main contract'). It appears that parallely on 09.02.1990 a contract was drawn up between PCL and SAPL for further sub-contracting the works in issue which had been awarded by HSCL to PCL. What is not disputed, is the fact (which is recorded by the learned Arbitrator in paragraph 36 & 47 of the impugned award) that as between HSCL and PCL a further sub-contract was not permissible.

3.4 The contract dated 09.02.1990, however, as between PCL and SAPL was signed and sealed on 15.04.1992 (hereinafter referred to as the