Arun Chandra Upadhyay, J.

1. This appeal under Section 37 of the Arbitration and Conciliation Act, 1996, is directed against the impugned judgment and order dated 22.9.2006, whereby the learned District Judge, Bongaigaon dismissed Misc. Arb. Case No. 5 of 2004 instituted by M/s. Bongaigon Refinery and Petrochemicals Ltd, the appellant herein, for setting aside the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 (the Act).

2. We have heard Mr. K.N. Choudhury, Learned Senior Counsel assisted by Mr. R. Dubey, Learned Counsel for the appellant and Mr. M.S. Sarma, Learned Counsel for the respondent.

3. The facts, leading to tiling of this appeal may be narrated briefly, as follows:-

The appellant, a Government company, floated an enquiry on 16.5.1990, inviting offers for execution of the work of design, fabrication, testing, packing, forwarding and supply of 2 (two) numbers of SO2 Vessels. In the enquiry aforesaid, a Schematic Drawing, Nozzle Orientation, Design Data and special notes were also furnished, fixing 19.6.1990 as last date for submission of the offer. As the Vessel mentioned in the enquiry came under the purview of the Indian Explosives Act, 1884, it had to be designed as per Static and Mobile Pressure Vessel (Unfired Rules, 1981 and, thus, the design and drawing of the Vessel required approval from the Chief Controller of Explosives, (in short CCE). Nagpur before its fabrication.

4. Pursuant to the aforesaid enquiry, the respondent No. 1, besides others, had submitted its offer quoting an amount of Rs. 8.79,240 (Rupees eight lakhs seventy-nine thousand two hundred forty only), for each vessel, together with additional amount of Rs, 6,000 per Vessel on account of transportation charges. The respondent No. 1 had, inter alia, together with the offer had proposed a clause concerning price escalation, which read as follows:

Price escalation: Our offer is subject to the price variation in the event of any increase/ decrease in steel prices by the Government J.P.C. The effect of price variation of steel will vary our quoted price by 0.75% over every increase of 1% in steel price.

5. After consideration of the respective offers made by the parties, the appellant called the respondent No. 1 for negotiation pursuant to which a meeting was held on 20.12.1990 in the office of the appellant at Dhaligaon. The proceedings of the meeting was reduced into writing and signed by the parties. The minutes of the said meeting contained the price escalation formula, which read as follows:

BRPL (appellant) reiterated that price escalation should be the price increase based on actual variation of Steel Price as per J.P.C. and quantity to the weight of the Vessel. M/s. Buildworth did not agree to the above price and they are firm to their original price escalation clause. However, they have offered that procurement time of materials is limited to 41/2 months from the date of receipt of our technical clear order or 31/2 months from the date of receipt of interest free 20% mobilization advance. No escalation of price will be applicable beyond the period as specified above.

6. The Minutes also laid down the delivery period of the Vessels to be 7 months from the date of receipt of the approved design and fabrication drawing from the Chief Controller of Explosives, Nagpur (CCE). Pursuant to the above, the respondent No. 1 by letter dated 20.12.1990 intimated the appellant confirming the price escalation clause. Thereafter, the appellant M/s. Bongaigaon Refinery and Petrochemicals Ltd. (BRPL) by letter dated 29.1.1991, referring to the Letter of Inquiry, quotation and the discussions held between the appellant and the respondent No. 1, issued Letter of Intent (LOI), for fabrication and supply of 2 Nos. of Sulphur Dioxide Storage Vessels. In the LOI it has been also mentioned that the base price of each Vessel including Excise Duty, Assam Finance Tax and freight charges would be Rs. 8,79,240 and the period of delivery woul