JUDGMENT:

This Civil Miscellaneous Appeal is filed by the appellant/petitioner-Union of India, represented by its Executive Engineer, Postal Civil Division, Gandhinagar Post Office Building, Gandhinagar, Hyderabad, assailing the order dated 06.06.2007 in O.P.No.1236 of 2005 on the file of the learned Chief Judge, City Civil Court at Hyderabad.

2. Arbitration O.P.No.1236 of 2005 was filed by the appellant herein assailing the award dated 05.07.2003 passed by the second respondent-Sri P.K. Sharma, Sole Arbitrator. The first respondent, who is the beneficiary under the award, has resisted the claim contending that the award was just and proper, cannot be interfered with. The learned Chief Judge, City Civil Court, Hyderabad, upon considering the rival contentions, dismissed the Arbitration O.P.No.1236 of 2005 as devoid of merits.

3. Feeling aggrieved by the same, under the appellant/petitioner has filed this Civil Miscellaneous Appeal alleging that under claim No.1 the learned Arbitrator has granted exorbitant amount of Rs.3,34,177/- on the ground of escalation without any supporting document. The Court below has also failed to see that the contract work should have been completed by 08.07.1995. Whereas, the same was completed on 30.09.1996, more so, the contractor has failed to submit the bills within the stipulated time. The sole arbitrator has awarded an amount of Rs.1,08,900/- under the head of compensation on account of establishment charges without any documentary evidence produced. Further, the sole arbitrator should have seen that the amount of Rs.89,410/- awarded under claim No.4 under the heading of loss of business is also covered under heading No.2. The Court below failed to appreciate that the respondent voluntarily continued the work, though the petitioner expressed inability to provide timely payment due to paucity of funds. If the respondent-contractor had not continued with the work, the appellant would have closed the contract, then itself by which the escalation charges would not have arisen. As such, the findings recorded by the sole arbitrator and confirmed by the learned Chief Judge, have no basis, liable to be set aside.

4. Heard the learned Deputy Solicitor General on behalf of the appellant-Union of India. In spite of granting ample opportunity, none appeared on behalf of the respondent Nos.1 & 2, accordingly, it is treated as heard.

5. In the light of rival contentions, the point for consideration is whether the appellant is entitled for setting aside the award dated 05.07.2003 passed by the second respondent/arbitrator and confirmed by the learned Chief Judge, City Civil Court, Hyderabad, through the orders impugned dated 06.06.2007 in O.P.No.1236 of

2005. Point:

6. The admitted or undisputed facts of the case are that the appellant entered into a contract with the first respondent on 09.04.2004 under which the first respondent/contractor has to construct staff quarters in Section-I, M.V.P. Colony, Visakhapatnam. The amount of contract was Rs.33,08,820/-. The date of commencement of work was 09.04.1994 and the work has to be completed on or before 08.07.1995 i.e., within 15 months from the date of agreement, however, there was delay in execution of the work.

7. The contention of the appellant/petitioner is that the delay was not due to any fault on the part of the appellant. In the next breath, it is further contended by the appellant that the first respondent has agreed not to claim any escalation charges, idling charges etc., for the extended period, as such the claim made by the first respondent is not maintainable and that there is ample material on record to show that in July 2004 itself the appellant decided to stop the work owing to paucity of funds. In fact, on this aspect only, the main claim made by the contractor is revolving around. The first respondent wrote a letter dated 01.12.1994 voluntarily offering that he would not charge cost of idling charges of labour. The petitioner accepted the same.

8.