JUDGMENT :

S.K. Mishra, J. - This is an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act" for brevity) preferred by the Union of India (hereinafter referred to as to the "UOI" for brevity) assailing the judgment passed by learned District Judge, Khurda at Bhubaneswar, in ARBP No.36/2009, dismissing the petition filed by the UOI under Section 34 of the Act as per the judgment dated 22.12.2011.

2. The facts leading to filing of this appeal may be succinctly stated as follows :-

Pursuant to the invitation of tender by the UOI and submission of the offer by claimant-respondent, the work of construction of Regional Training Centre, C.I.S.F., Mundali, Cuttack (Odisha) S.H.: site Development and Bulk Services (Civil & Electrical) SW: Construction of one lakh litre capacity 20 Mt staging height R.C.C. overhead tank and one lakh litre capacity R.C.C. underground sump was awarded on 5.1.2001 for Rs.22,65,646 with a stipulated date of start of the works on 15.1.2001 and the stipulated date of completion as 14.10.2001, the time of completion being nine months. Within the scope of work the construction of one overhead tank and one underground sump, both of one lakh litre capacity each, were included.

It is further borne out from the record that the work could not be completed within the stipulated period and after expiry of the stipulated date of completion on 14.10.2001, the contract was allowed to be continued without fixing any further date of completion. The contract thereafter was rescinded on 8.4.2004 under Clause-3 of the contract with the aim of completing the balance work by other agencies at the risk and cost of the claimant(respondent in this case). At time of rescission the underground sump was almost complete and the overhead tank was constructed upto first and second bracings. The entire work was got completed through other agencies on or about 2.11.2005, i.e. nearly nineteen months after the rescission.

Though the work of the claimant-respondent was rescinded on 8.4.2004 and the balance work was also got completed on 3.11.2005, yet neither the accounts of the claimant-respondent were finalized nor the final bill of the work done by the claimant-respondent was passed. The claimant respondent invoked the Arbitration clause on 8.6.2004 and the disputes were referred to the Arbitrator on 16.7.2004 for arbitration by the sole Arbitrator.

Additionally, it is noted that as per the terms and conditions of the contract, the appellant (UOI) was to issue 30.98 MT of the steel at the recovery rate of Rs.18,110 per MT from the their Bhubaneswar Stores. The appellant, accordingly, issued about 18,110 per MT from their Bhubaneswar Stores, but they did not have the balance quantity of the various required diameters as per specifications. The UOI, i.e the appellant, at the same time were having a huge quantity of about 50 MT of surplus steel lying at Koraput for a very long time, which were to be brought to Bhubaneswar. Accordingly, they directed the claimant-respondent to transfer the same (entire quantity) to the site of work, for which a separate work order for the transportation was issued to the claimant-respondent(contractor). Accordingly, the surplus steel lying at Koraput was transported to the site of the work and the payment of the transportation was made to the claimant-respondent separately and the same was issued to the claimant-respondent separately.

It is further noted that though the total requirement of steel for the entire work was 30.98 MT, out of which 18 MT was already issued from Bhubaneswar Stores and the only balance quantity of about 13 MT was required to be issued, yet the appellant-UOI in order to avoid the maintaining of their own stores, issued and order to transport the entire surplus quantity lying at Koraput to the site. As such, against the total requirement of 30.98 MT of steel, the respondent issued about 68.8 MT of the steel to the claimant-responden