JUDGEMENT

JYOTI SINGH, J.

1. This petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘1996 Act’) assailing the arbitral award dated 14.12.2021 passed by the learned sole Arbitrator.

2. Facts to the extent necessary and relevant are that Petitioner is a proprietorship firm carrying on business of sale and purchase of rice/cereals/ food grains etc. and supplies are made to various Public Sector Undertakings. In the month of May, 2017, Petitioner along with other whole-sellers who were rice vendors, was invited by the Respondent to attend a meeting in relation to supply of different qualities of rice, particularly, Sharbati rice for the consumption of the Army. Tender dated 13.06.2017 was floated by the Respondent for procurement of 16900 MT rice (Sharbati or equivalent) on NeML portal through reverse auctioning. Corrigendum-I was issued on 10.07.2017 in respect of Request for Proposal (‘RFP’) dated 13.06.2017. Finally, the contract for supply of 2000 MT rice (Sharbati or equivalent) @ Rs.44,625/- per MT was executed with the Petitioner on 04.08.2017. Pursuant to the award of contract, Petitioner furnished an unconditional Bank Guarantee of Rs.89,25,000/- which, as per Clause 1 of Part-IV (A) of RFP, was to be forfeited if there was a breach of contract. Stipulated Delivery Period (‘DP’) was 05.08.2017 to 03.09.2017 and auto-extended DP was 04.09.2017 to 03.10.2017.

3. As the record goes, Petitioner vide letter dated 22.09.2017 requested for additional extension of time due to flood situation in Assam. By a letter dated 08.09.2017, Respondent asked the Petitioner to submit a certificate from the Civil District Administration in support of the claim that rice could not be transported on account of floods. According to the Respondent, there was no response from the Petitioner on this aspect.

4. Petitioner states that vide letter dated 22.09.2017, another extension was sought in the DP after the date of expiry of auto-extended DP, as Petitioner was unable to transport the rice due to conditions beyond its control. Respondent, however, took a decision not to extend the DP and the decision was communicated to the Petitioner vide letter dated 31.10.2017. Due to the alleged breach of contract by the Petitioner by not supplying the contracted quantity of 2000 MT rice, the contract was cancelled on 24.10.2018 and action was initiated for forfeiture of the PBG. However, Petitioner filed a petition under Section 9 of the 1996 Act seeking a stay of invocation and encashment of PBG as well as for appointment of Arbitrator under Section 11(5) and (6) of the 1996 Act. Court vide order dated 13.11.2017 restrained the Respondent from invoking the PBG, subject to the condition that the same shall be kept alive by the Petitioner. Subsequent thereto, Petitioner filed a petition under Section 11 of the 1996 Act being Arb. P. No.98/2018 for appointment of an independent sole Arbitrator. Petition was disposed of on 22.03.2018 recording the statement of the Respondent that a sole Arbitrator had already been appointed. After some litigation pertaining to the appointment of the Arbitrator, the present Arbitrator was appointed and Petitioner consented to the said appointment.

5. On 30.06.2020, an application was filed by the Petitioner under Section 17 of the 1996 Act for interim relief and vide order dated 09.07.2020, the Arbitrator permitted the Respondent to encash the PBG. Petitioner filed its Statement of Claim seeking direction to the Respondent to return the PBG along with payment of renewal charges @ 1% of total amount of Bank Guarantee with permission to the Petitioner to encash the same along with interest @ 18% per annum for loss of interest suffered by the Petitioner on the amount of Bank Guarantee from the date of furnishing the same till realisation. Rs.2,00,000/- was claimed towards cost of litigation. Counter Claims were filed by the Respondent seeking Rs.89,25,000/- as damages suf