17. The award comports with principles of law governing price escalation firmly established by the decisions of this Court. For these reasons, we find merit in the contention of the learned counsel appearing on behalf of the claimant that the award does not suffer from any error apparent on the face of the record insofar as the aspect of price escalation is concerned.

18. The High Court has also adverted to the decision of this Court in Northern Railway v. Sarvesh Chopra [Northern Railway v. Sarvesh Chopra, (2002) 4 SCC 45] in support of the principle that if a party to a contract does not rescind it by invoking Sections 55 and 56 of the Contract Act, 1872 and accepts the belated performance of reciprocal obligations, the other party would be entitled to make a claim for damages.

21. The next aspect of the matter relates to the award of interest for the period from 7-3-1986 to 31-12-1997. The arbitrator awarded a lump sum of Rs 20 lakhs for a period of 11 years. The High Court set aside the award of interest on the ground that Section 29 of the Arbitration Act, 1940 contemplates the award of interest only from the date of the decree. The issue as to whether interest could be awarded for the pre-reference period and pendente lite under the Act of 1940 is not res integra. In Irrigation Deptt., State of Orissa v. G.C. Roy [Irrigation Deptt., State of Orissa v. G.C. Roy, (1992) 1 SCC 508], a Constitution Bench of this Court held that: (SCC pp. 533-34, para 44)

“44. … Where the agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute (along with the claim for principal amount or independently) is referred to the arbitrator, he shall have the power to award interest pendente lite. This is for the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties and therefore when the parties refer all their disputes — or refer the dispute as to interest as such — to the arbitrator, he shall have the power to award interest. This does not mean that in every case the arbitrator should necessarily award interest pendente lite. It is a matter within his discretion to be exercised in the light of all the facts and circumstances of the case, keeping the ends of justice in view.” (Emphasis supplied)

19. Mr. Sinha further submitted that even in the absence of specific provision of escalation charges, when the arbitral tribunal came to a finding that the claimant has not committed breach of conditions of contract rather the performance on his part of the contract was entirely dependent on the performance of the appellant and the delay caused was because of the slackness of the officers of the appellant department, so it was well within the jurisdiction of the arbitral tribunal to award both escalation charges as well as interest pendente lite for the period from 20.05.2010 to 14.10.2011.

20. Mr. Sinha then relied upon the judgment of Hon’ble Supreme Court of India in the case of Associate Builders Vs. Delhi Development Authority reported in (2015) 3 SCC 49 paragraphs-48, and 60 of which read as under:-

48. “The Division Bench while considering Claims 9, 10, 11 and 15 found fault with the application of Hudson's formula which was set out by the learned arbitrator in order to arrive at the claim made under these heads. The Division Bench said that it was not possible for an arbitrator to mechanically apply a certain formula however well understood in the trade. This itself is going outside the jurisdiction to set aside an award under Section 34 inasmuch as in McDermott case [McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181], it was held: (SCC pp. 222-24, paras 104-06)

“104. It is not in dispute that MII had examined on