Vipin Sanghi, J. (Oral)

1. The petitioner, MCD has filed this petition under section 34 of the Arbitration and Conciliation Act to assail the arbitral award dated 16.06.2009 passed by Shri Prem Kumar, the learned arbitrator, whereby he has allowed claims No. 1 (for refund of earnest money), claim No. 2 (for compensation of account of loss of profit due to breach of contract), claim No. 4 (towards interest), and claim No. 6 (towards the arbitration costs), amounting to Rs. 34,24,384/-. The learned arbitrator has also awarded the amount of stamp duty, i.e. Rs. 3424/-. He has further granted interest on Rs. 34,27,808/- @ 9% p.a. from the date of the award till realization.

2. The respondent/contractor was awarded the work for construction of pucca school building of MC primary school at New Ashok Nagar, in AC-37/67 in Shahdara South, Delhi vide letter dated 11.03.2004. While the estimated cost put to tender was Rs. 2,49,14,000/-, the amount tendered by the respondent contractor, and accepted by the petitioner was Rs. 2,25,92,552/-. The respondent was called upon to start the work at once. It was stated that the time allowed to carry out the work shall be reckoned from tenth day of issue of the work order to commence the work.

3. In the Notice Inviting Tender (NIT) issued by the petitioner, clause 3 provided that the time allowed will be 24 months from the tenth day after the date of written orders to commence the work, or from the first day of handing over of the site, whichever is later, in accordance with the phasing, if any, indicated in the tender documents. Clause 4 of the NIT provided that the site will be fully made available at the time of the work order.

4. The "Clauses of Contract", inter alia, prescribed in clause 5 the "Time and Extension for Delay". The same reads as follows:

"Clause 5

Time and Extension for Delay

The time allowed for execution of the works as specified in the Schedule `F' or the extended time in accordance with these conditions shall be the essence of the Contract. The execution of the works shall commence from the 15th day or such time period as mentioned in Letter of Award after the date on which the Engineer-in-Charge issues written orders to commence the work of (or) sic from the date of handing over of the site whichever is later. If the Contractor commits default in commencing the execution of the work as aforesaid, Government shall without prejudice to any other right or remedy available in law, be at liberty to forfeit the earnest money absolutely". (emphasis supplied)

5. Clause 10C and 10CC provided for payment on account of increase in prices/wages due to statutory order, and payment due to increase/decrease in prices/wages after receipt of tender for works.

6. The work involved dismantling of the existing structures and cost of the salvage was put at Rs. 1,70,626/-, which the respondent was required to deposit. Vide communication dated 16.04.2004, the petitioner called upon the respondent to execute the agreement within three days and also to deposit the amount of Rs. 1,70,626/- as shown in Part B of the work order before dismantling the old structure.

7. Undisputedly, the respondent contractor did not carry out any work under the contract. Neither the contract document was signed; nor the demolition work was carried out. The cost of salvage was also not deposited. According to the respondent, the said cost was not required to be deposited, and the same had to be adjusted from the bills as and when raised by the respondent. The petitioner issued various communications to the respondent to execute the contract document and commence the works. The stand of the respondent was that the work site was not made available in full, and the drawings were not given to him. Eventually, the petitioner issued an show cause notice dated 11.01.2005 and rescinded the contract on 04.02.2005.

8. The case of the petitioner before the arbitral tribunal was that the respondent did not take any steps whatsoever in pursuan