JUDGMENT :

PRASANTA KUMAR DEKA, J.

1. Heard Mr. D. Mazumdar, learned Senior Counsel assisted by Mr. A Sarma, learned counsel for the appellant. Also heard Mr. GN Sahewalla, learned Senior Counsel assisted by Mr. D. Senapati, learned counsel for the respondents.

2. This appeal is filed under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') against the judgment and order dated 31.08.2013 passed in Misc. (Arb) Case No. 3/2012 by the learned District Judge, Dibrugarh. The said Misc. (Arb) Case was filed against the award dated 28.03.2012 passed by the arbitral tribunal. Vide the said award the tribunal held that the appellant is entitled to compensation in terms of Clause 17 of General Conditions of Contract (for short, GCC) i.e. a maximum of 7½% of the contract value and not in terms of Clause 18 of the GCC i.e. the entire performance security amounting 10% of the contract value for the breach committed by the respondent. The main contention before the learned District Judge by the present appellant that there was complete failure on the part of the respondent in fulfilling its obligation under the contract by not mobilising the Rig and illegally terminating the contract. But by the impugned judgment and order, the learned District Judge did not advert to the submissions made by the appellant that the award is against the specific terms of the contract and as such, warrants interference under Section 34 of the Act.

3. The dispute arose in respect of contract No. OIL/CCO/DRLG/GLOBAL/117/2005 for Charter Hiring of one number of drilling Rig. The respondent invoked the arbitration clause provided in the said contract. The respondent is a company incorporated under the Companies act and the appellant is a Government of India Enterprise incorporated under the Companies Act. The appellant floated a tender bearing No. OIL/CCO/DRLG/GLOBAL/117/2005 for Charter Hiring of one 1500 HP drilling Rig package. The respondent and others participated in the tender and the Letter of Award (LoA) was issued by the appellant which read as follows:-

"With reference to above, we have pleasure in awarding you our firm Contract No. OIL/CCO/DRLG/GLOBAL/117/2005 for Charter Hiring of 1 (one) Number Drilling Rig Model National 110UE AC/SCR 1500 HP for a period of 2 (two) years at an estimated contract value of US $ 7,644,120.00 inclusive of all taxes but excluding service tax and customs duty, if applicable, shall be to OIL's account. The salient terms and conditions of the contract are given below:

(A) MOBILISATION : Within 6 (six) months from the date of this LoA.

(B) PERFORMANCE GURANTEE: Please arrange to submit performance security in the form of Bank Guarantee for an amount of US $ 7,64,412.00 and the same should be valid upto 30th June, 2009."

4. The respondent confirmed its acceptance of the LoA and vide letter dated 08.12.2006 it submitted a performance security in the form of bank guarantee dated 07.04.2006 for US $ 7,64,412 issued by Oriental Bank of Commerce. The bank guarantee was valid till 30.06.2009 and a formal contract between the parties was thereafter signed on 30.05.2006 at Duliajan, Assam. Relevant provisions of the Contract are reproduced hereinbelow:

SECTION I

GENERAL CONDITIONS OF CONTRACT

1.1(c) "Work" means each and every activity required for the successful performance of the services described in Section II, the Terms of Reference.

2.0 EFFECTIVE DATE, MOBILISATION TIME, DATE OF COMMENCEMENT OF THE CONTRACT AND DURATION OF CONTRACT:

2.1 The contract shall become effective from 21-Mar-2006 i.e. date on which company notified contractor in writing that it has been awarded the contract. Such date of notification of award of Contract shall be the Effective Date of Contract.

2.2 The mobilisation of the drilling unit and associated services shall commence on the date Company notifies the Contractor in writing that the Contractor has been awarded the Contract. The date on which Contractor's Rig Unit & acc