R.V. Raveendran J. - The first respondent (State of A.P.) entered into an agreement dated 22.6.1987 in regard to execution of the work "Ongole Water Supply Improvement Scheme with NS canals as a source" in pursuance of acceptance of appellants tender on 31.3.1987.

2. By GOM No. 430 dated 24.10.1983, the first respondent issued the following revised procedure in regard to arbitration introduced by GOM dated 31.7.1975. The relevant portions of the revised procedure (paras 2, 3 & 4) are extracted below :

GOM No. 430 [Irrigation (IRA V) Dept, dated 24.10.1983

"x x x x x

2. The question of revising the above procedure has been receiving the attention of government for some time past. The government, after careful consideration of various aspects to issues involved direct the procedure be revised as follows :

Value of Amount Panel of Arbitrators

1. Claims upto Rs. 10,000/- Superintending Engineer of another Circle

2. Claims above Rs. 10,000/- upto Rs. 50,000/- (a) Another Chief Engineer of the same Department.

(b) Where there is only one Chief Engineer

3. Claims above Rs. 50,000/- Court of competent jurisdiction.

3. Claims means all claims in the contract.

4. The orders referred to in p