JUDGMENT :

1. Union of India through Chief Engineer (P) Sampark is in appeal under Section 39 of J&K Arbitration Act, 2002 (1945 A.D.) [“the Act”] against the order and judgment of the Principal District Judge, Jammu [“the Court below”] dated 11.01.2014 passed in File No.42/Award titled M/s D Khosla and Company v. Chief Engineer (P) Sampark. The Court below vide its judgment dated 11.01.2014, impugned in this appeal, has dismissed the application of the Union of India filed under Section 30 and 33 of the Act for setting aside the arbitral award dated 04.01.2008 passed by Brig (Retd.) B.V. Ahuja, the sole arbitrator.

2. Before adverting to the grounds of challenge pleaded and urged by the appellant-Union of India to sustain challenge to the impugned order of the Court below, it would be necessary to allude to the background facts leading upto the filing of instant appeal.

Pursuant to an NIT issued by appellant for allotment of work of “Design and Construction of Permanent Bridge Over River Niara Tawi at 65.51 on Akhnoor-Poonch Road in J&K State under Project Sampark” the respondent-the contractor was found to be the successful bidder and accordingly, a contract agreement was entered into between the Union of India and the contractor on 14.06.1987. The lumpsum value of the contract to be executed by the contractor was Rs.90,59,000/- with the completion period of 24 months. The date of commencement of the work was stated as 8th August, 1988 and was to be completed and handed over by the contractor by or before 7th August, 1990. It appears that on account of certain delays and technical problems, the work could not be completed within the stipulated period. On the request of the contractor, time to complete the work in question was extended from time to time and as per the last extension granted, the contractor was to complete the work by 31st March, 1993. It appears that the contractor during the currency of the contract approached the appellant for interim arbitration on the ground that certain disputes between the parties were affecting both, progress of the work and the payments. The Union of India did not oblige in the beginning but later agreed to interim arbitration, which, however, did not materialize thereafter. But, instead, the contract was terminated on 14.06.1993. Feeling aggrieved by the termination of the contract agreement by the appellant, the contractor approached the designated authority (Director General of Border Roads) for appointment of an arbitrator under Clause-70 of the General Conditions of the contract. The designated authority did not act on the request of the contractor, which constrained him to approach the Court of Principal District Judge, Jammu for appointment of an arbitrator in terms of Clause 70 of the General Conditions of Contract to adjudicate upon the disputes between the parties arising out of the contract. While the matter was pending consideration of the Court below, the designated authority appointed Brig. Sudhir Kumar as sole arbitrator to arbitrate the dispute between Union of India and the contractor. The Civil Court, however, did not accept the appointment of the arbitrator made by the designated authority under the contract agreement and appointed Brig. (Retd.) B.V.Ahuja, as sole arbitrator in the matter. The order of the Court below appointing Brig. B.V.Ahuja as sole arbitrator was called in question by the Union of India before a Single Judge of this court and after having failed before the Single Judge, before the Division Bench of this Court. In short, the order passed by the District Judge, appointing Mr. B.V.Ahuja as sole arbitrator was upheld.

The sole arbitrator entered the reference and issued notices to Union of India and the contractor on 16th August, 1996 to put forth their respective claims and counter claims. Both the parties filed their statement of claims/counte