1. The petitioner/contractor participated in the tenders called for by the respondent/Southern Railways for the Gauge Conversion between Pollachi and Podanur Section and was successful, which resulted in Letter of Acceptance dated 15.09.2010 at a value of Rs.10,24,33,668/-. A formal contract of agreement was executed on 02.02.2011 with a ten month period prescribed to complete the work up to 14.07.2011.

2. The petitioner claims to have mobilized resources to commence the work, as the contract was to be completed within 10 months from the date of the agreement. There were various special and general conditions of contract that governed the contract. The Letter of acceptance is dated 15.09.2010, and Note (ii) of Clause 1 deals with the issue of Vitiation and Variation. The said clause reads as under:-

“(ii) Vitiation and Variation if any will apply as per Clause 44 & 43 of Special Conditions of Contract respectively. Vitiation will be calculated comparing the rates of eligible L2 and L3 i.e., M/s. RSV RAILONE (JV) and M/s..V.K.Engineering Constructions (JV). Vitiation will be worked out and deducted from each and every part bill.”

A reading of the Agreement inter se the parties