JUDGMENT :

Nagaresh, J.

Aggrieved by the order and decree dated 18.12.2014 in O.P.(Arb) No.21/2009 of the District Court, Thalassery, the Union of India has preferred this appeal under the Arbitration and Conciliation Act, 1996.

2. The Executive Engineer, Kannur Central Division of CPWD invited tenders on 12.01.2005 for the work of construction of bulk services and development to RTC.III, CRPF, Peringom, Kerala. The work included construction of internal roads, peripheral roads, culverts, drains, parade ground and one RCC bridge. The estimated cost was Rs.5,30,58,016/-and the time allowed for execution of work was 18 months. The respondent-Claimant was awarded the work. In the agreement executed between the parties, it was agreed that if the prices of materials and/or wages of labour required for execution of the work increase, the Contractor shall be compensated for such increase. However, no escalation shall be paid for work executed in extended contract period. It was also stipulated that no such compensation shall be payable for a work for which the stipulated period is equal