1. The Tamil Nadu Electricity Board/petitioner herein invited international competitive bids for the Asian Development Bank (ADB) aided External Coal Handling System (ECHS) Tuticorin Phase-II Power Plant Project at Tuticorin in Tamil Nadu in October, 1991. Tata Consulting Engineers, Bangalore were retained by the petitioner as Consulting Engineers for the project. Tamil Nadu Electricity Board, in short, TNEB, divided the entire execution into three packages i)Design and Supply of Mechanical/Electrical Equipment and the required steel for structures, ii)Erection of steel structures and erection, testing & commissioning of Mechanical/Electrical equipment and Fabrication and iii) Entire associated civil works.

2. The first respondent herein was awarded a contract with reference to packages (i) and (ii) and the third package, viz., associated civil works, was given to another agency. The cost of the two contracts were of a value of US$ 137,51,525 + Rs.10,00,000/-and Rs.12,37,59,000/- respectively. Both these contracts were to be completed within a period of twenty four months from the date of issuance of the Letter of Intent. The Letter of Intent for the supply contract as well as for the erection contract were issued on 12.8.1994. The execution was to be completed on or before 11.8.1996. The contract contemplated design, manufacture, supplying, including structural work, erection, commissioning and carrying out of the performance test at the site. The contract contained the terms of payment, payment of initial advance, supply of equipments, contract performance guarantee, liquidated damages and terms on resolution of disputes. Admittedly, the execution went beyond 24 months and there was a delay of further 16 months in the execution of the contract. The execution and the performance guarantee test were completed only on 25.11.1999. The one year further guarantee period from the date of performance guarantee test, expired on 24.11.2000. In the meantime, on account of the delay in the execution, the petitioner deducted the claims related to liquidated damages and interest on the advance amount from the running account bills. The petitioner states that the first respondent sought for time extension without levy of liquidated damages in its letter dated 29.3.2000 long after the execution of the contract and raised a dispute on the deduction of liquidated damages and interest on advance payment. The first respondent wrote a letter on 5.4.2000 and made a claim for Rs.2,72,43,910/- followed by a further letter dated 09.02.2001, making reference to the letter dated 29.3.2000 and laid a claim for compensation, alleging that the delay was on account of the petitioner only. After a series of exchange of letters thereon, the first respondent wrote a letter on 16.2.2001 and invoked Clause 27.1 of the General Conditions of Contract (hereinafter referred to as GCC) and called upon the petitioner and the Engineer, to resolve the difference to release the payment and bank guarantee on 12.4.2001. As there was no reaction to the demand by the first respondent, it invoked the arbitration clause in terms of Clause 27.6.1 of the General Conditions of Contract. Thus the disputes between the parties went before the Arbitral Tribunal for resolution.

3. The petitioner also made a counter claim. On a consideration of the rival claims of the parties, the Arbitral Tribunal passed the following award:

Summary of Net Amount Payable

Total (Principal + Interest)

in favour of EPI Rs.36,05,45,199.00

Total (Principal + Interest)

in favour of TNEB Rs.11,36,76,980.00

Net Amount payable by

TNEB to EPI as on date of

award i.e., 24.08.2006 Rs.24,68,68,219.00

(RUPEES TWENTY FOUR CRORES SIXTY EIGHT LAKHS SIXTY EIGHT THOUSND TWO HUNDRED AND NINETEEN ONLY)

4. Aggrieved by the award granted in favour of the first respondent and the rejection of the claim of the petitioner, the Tamil Nadu Electricity Board has filed this petition under Section 34 of the Arbit