Judgment :

Sanjeev Kumar, J.

1. This is an application by the petitioners filed under Section 34 of the Jammu and Kashmir Arbitration & Conciliation Act, 1997 [for short ‘the Act of 1997’ hereafter] for setting aside the award dated 01.09.2006 passed by Shri A. N. Saraf, retired District & Sessions Judge, sole arbitrator, awarding a sum of Rs. 13.39 lacs on account of escalation costs along with 9% per annum interest from 27.04.2002 till its realization.

2. With a view to appreciating the grounds of challenge taken by the petitioners to assail the impugned award, it is necessary to notice material background facts.

3. In the year 1991, the petitioners awarded the contract of ‘construction work of Tourist Bungalow Sanasar’ in favour of the predecessor-in-interest of the respondents, late Shri J. N. Dhar ( for short ‘the contractor’ hereafter) vide allotment letter dated 09.10.1991. A formal agreement bearing No. 45 dated 31.12.1991 was executed between the petitioners and the contractor, laying down terms and conditions of the contract. As per clause 6 of the terms and conditions of the contract, the time period for completion of the work was stipulated as 9 working months. While the