Dr. Sanjeeb K Panigrahi, J.

1. Since both the appeals arise out of arbitral award relating to the contract executed by the same party and involve common questions concerning the scope of interference under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 (for short “the Act”), they are taken up together and are being disposed of by this common judgment.

2. The present appeals arises out of judgment dated 12.9.2019 passed in ARBP No.161 of 2017, wherein the learned District Judge, Dhenkanal partly allowed the said application and set aside the award in respect of refund of royalty amounting to Rs.61,17,354/-, while affirming the remaining claims allowed by the Arbitrator. Aggrieved by the interference with the award on that limited aspect, the contractor as well as the State have preferred the present appeals under Section 37 of the Act. However, for the sake of convenience and effective adjudication, ARBA No.35 of 2019 is treated as the lead case.

I. FACTUAL MATRIX OF THE CASE:

3. The dispute traces its origin to a contract awarded by the Government of Odisha for execution of irrigation infrastructure works. The Chief Engineer and Basin Manager, Brahmani Left Basin, Samal, Angul, on behalf of the Government, invited item-rate bids for the work described as “Balance work for construction of structured system in the command area of Bhairpur Branch Canal with provision of minors and sub-minors including all structures of Baruan Distribution System of O.E.C.F. Package No.12(E)”.

4. The appellant contractor participated in the tender process and submitted its bid for execution of the said work. Upon evaluation of the bids received, the bid of the appellant was accepted by the authorities through Letter No.3000 dated 22.5.2008. Consequent upon acceptance of the bid, a formal agreement was executed on 16.6.2008 between the Governor of Odisha acting through the Executive Engineer, OECF Division No.III, Jiridamali, and the appellant contractor.

5. Under the said agreement, the work was registered as Agreement No. LCB-I of 2008–2009 and the total contract value was fixed at Rs.10,32,97,050/-. The contract stipulated that the work would commence on 16.6.2008 and would be completed within a period of twenty-four months, the scheduled date of completion being15.6.2010.

6. The nature of the work primarily involved excavation of earth, transportation of the excavated material, and formation of canal embankments as part of the irrigation infrastructure. Among the various items of work incorporated in the Bill of Quantities, Item No.5 related to “Earth work in canal embankment”. For this item the appellant quoted a rate of Rs.60/- per cubic metre, which was accepted by the departmental authorities at the time of finalization of the contract.

7. According to the appellant, prior to submission of bids a pre-bid meeting was convened by the departmental authorities to clarify the scope and conditions of the work. It is the case of the contractor that during the said meeting the Executive Engineer informed the participating contractors that no royalty would be levied on earth excavated from the canal for the purpose of forming the canal embankment. It was further indicated that in the event additional earth was required beyond the excavated quantity, the same would be obtained from nearby Government land identified as approved borrow areas. Relying on this understanding, the appellant claims to have quoted the rate for BOQ Item No.5 without including any component towards royalty. The contractor asserts that the departmental authorities also accepted the rate on that basis.

8. After commencement of the work, the appellant undertook excavation and embankment formation in accordance with the specifications of the agreement. During the course of execution, the appellant addressed a letter dated 4.2.2009 to the Executive Engineer requesting that no deduction towards royalty be made from the bills submitted for earthwork, as such deducti