( 1 ) THESE appeals are filed by the State of Gujarat against the judgment and decree dated 27/10/1989 passed by the learned Civil judge (S. D), Ahmedabad (Rural) at Mirzapur, below Civil Misc. Application no. 6 of 1989 and in Special Civil Suit No. 48 of 1989. By the impugned judgment and order, the trial Court passed a decree by modifying the award passed by the Arbitrator on 30/03/1988. The Court reduced the amount awarded from Rs. 54,36,885. 00 to Rs. 52,56,608. 98 ps. on the basis of agreed calculation. It also directed that the said amount, after deducting rs. 18 lakhs which are already paid under the interim award should be paid with the simple interest at the rate of 10% per annum instead of 18% interest as awarded by the Arbitrator from the date of the award, i. e. , 30/03/1988 till realisation.

( 2 ) FOR appreciating the contentions which are raised in these appeals, it would be necessary to state a few facts pertaining to the dispute between the parties.

( 3 ) ON 5/08/1981 the Executive Engineer, Irrigation Department, rajpipla, accepted the tender of respondent No. 1 for a sum of Rs. 1,00,77,752. 00 for construction of earth work and lining for Karjan Left Bank main Canal CH. 7. 08 km. to 15. 94 km. of Karjan Project. On 1 6/11/1981 the work order was issued. The work was required to be completed as per the contract within the period of two years from the date of the work order. However, it is found that the State Government was not in a position to hand over the possession of the site to the contractor over which the work was required to be carried out by him. Till 7/02/1985, the respondent carried out the work to the extent of Rs. 52 lakhs and the said amount was paid by the appellants. It is also found that the respondent was required to execute more than 30% of the contract work with regard to some items and extra items which have cropped up due to exigencies of the work.

( 4 ) THE dispute between the parties had arisen with regard to the fixation of revised rates of extra work and also the fixation of rates for extra items not contemplated in the tender agreement. The Government thought that the contractor was claiming much higher rates. Hence, as per the tender agreement, and at the request of the contractor, the State Government decided to refer the dispute for sole arbitration. For this purpose first the Government has issued Memorandum dated 12/08/1985 wherein it is inter alia stated: (i) for the execution of the work where the variation is more than 30% in quantity in some items of the work and (ii) for some extra items which cropped up due to the exigencies of the work there was dispute between the contractor and the State Government with regard to the rate. The contractor has, therefore, desired that his claim for rates claimed by him be settled through arbitration under the terms of the contract. The above proposal was accepted by the State Government and the state Government appointed Shri B. P. Patel as sole Arbitrator in respect of the claims put forth by the contractor as per the list attached as Appendices a and b and subject to the following observations : (a) If there are any counter-claims for compensation for delay in executing the work by the contractor, etc. , these should be put up from government side for arbitration. (b) The Arbitrator will give a speaking award and he will not decide about any interest payable. (c) The Arbitrator should not give any views on the subject which would put the Government in an embarrassing position. (d) Elements of overlapping nature in Extra Items and Escalation are to be verified by the Arbitrator. Appendix a pertains to the claims of the contractor with regard to extra items of work where variation in quantity is more than 30% above the tender quantity. Appendix b pertains to extra items of work on which the rates and payments are to be decided by the Arbitrator.

( 5 ) THEREAFTER, the parties executed arbitration agreement on 4/09/1985. As per the