Hon’ble Krishna Murari, J.—Heard Sri Syed Farman Ali Naqvi, learned counsel for the appellant and Sri K. K. Tiwari, learned counsel appearing for the respondent.

2. Shorn of unnecessary details facts, relevant for the purposes of the case, are as under:

The appellant, herein, vide “Bid Invitation Notice” dated 6.1.2005 invited offers from parties for collection of toll fee on behalf of Government of India at Km. 34, Village Baretha, Tehsil Mania, District Dholpur (Rajasthan) for Km.8.00 to Km. 51.00 Km on Agra-Dholpur Section of NH No. 1. The offer submitted by the respondent, herein, having been accepted, the parties entered into a contract dated 28.3.2006 for the said purpose. On the basis of certain alleged complaints and alleged in-house investigation into the same, the appellant vide its letter dated 27.7.2006 terminated the contract. The respondent challenged the termination of the contract before the High Court of Madhya Pradesh which was disposed of vide order dated 8.8.2006 directing the appellant to issue fresh show-cause notice to the respondent after supplying copy of the inquiry report. Thereafter a fresh notice dated 22.8.2006 was issued to the respondent and vide order dated 14.11.2006, the contract was terminated with immediate effect and invoking Clause 18 and 34(2) of the agreement, penalty forfeiting the performance security to the tune of Rs. 1,43,87,651/- was imposed. The bank guarantee was also invoked.

3. The respondent challenged the termination order dated 14.11.2006 by filing writ petition No. 63761 of 2006 before this Court. vide order dated 22.11.2006, the said writ petition was disposed of by making the following order:

“There is an agreement clause in the agreement, the correctness of the enquiry report is a factual question and can be appropriately gone into arbitration proceedings.

In the facts and circumstances of the case, it is not a fit case for exercise of discretion under Article 226 of the Constitution.

The writ petition is dismissed. However, the respondent, herein, is at liberty to invoke arbitration clause.”

4. The respondent instead of invoking arbitration clause challenged the order by preferring a Special Leave Petition being SLP (C) 19948 of 2006. Special Leave Petition was disposed of vide judgement and order dated 18.7.2008 by making following observation :

“In view of the above, leaving all questions and contentions, this petition is disposed of by appointing Shri Justice M. N. Rao as a sole arbitrator by consent to decide the said dispute. Having regard to the nature of case, we request the arbitrator to give his award expeditiously. The parties have assured cooperation for early decision.”

5. Subsequently, an application for clarification of the order dated 18.7.2008 filed by the respondent was disposed of, vide order dated 12.5.2009 clarifying the earlier order, with following observations:

“The matter was disposed of by order dated 18.7. 2008. The petitioner has filed an application for clarification.

The order clearly provides that only the disputes relating to forfeiture of performance security amounting to Rs. 1,43,87,751/- and enforcement of the performance of bank guarantee for Rs. 1,43,87,751/- shall be referred to arbitration. Therefore, as agreed between the parties, the arbitrator can only proceed with those two disputes (with issue of interest) and no other dispute.

Therefore, I. A. No. 4 is disposed of as redundant.”

6. After the aforesaid clarification, the arbitrator framed the following issues :

1. Whether the encashment of bank guarantee and performance guarantee by the respondent was justified ?

2. Whether the claimant is entitled for the claim amount of Rs. 1,43,87,651/- with interest arising out of the encashment of bank guarantee of Rs. 1,43,87,651/- by the respondent ?

3. Whether the claimant is entitled for the claim amount of Rs. 1,43,87,651/- with interest arising out of the encashment of performance security of Rs. 1,43,87,651/- by the respond