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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

ARBITRATION APPEAL NO. 8 OF 2009

IN

APPEAL NO. 798 OF 2005

IN

AWARD DATED 19TH JUNE, 2005

Union of India,

Through the Chief Engineer (AF),

Camp Hanuman, Ahmedabad through

Shri. R.N. Singh, (CWE (AF) Lohogaon,

Pune) authorized signatory on behalf of

Chief Engineer (AF), Ahmedabad

… Appellants

Versus

1. M/s. KR. Traders,

G-3/4, Camellias Green Acres,

Salunke Vihar Road, Kondhwa,

Pune.

2. Shri. S.G. Mahajan,

Sole Arbitrator,

15, Swastishree Society,

Ganesh Nagar, Pune

… Respondents

Mr. S.R. Rajguru with Mr. A.R. Varma for the appellant.

Mr. A.A. Kumbhakoni, Mr. Ashutosh Gawnekar and Mr. Abhay Anturkar i/by

Mr. L.M. Acharya for respondents.

CORAM : R.D. DHANUKA, J.

RESERVED ON : NOVEMBER 23, 2012.

PRONOUNED ON : JANUARY 22, 2013.

ORAL JUDGMENT :

1.

By this appeal filed under section 37 of the Arbitration &

Conciliation Act, 1996 (for short hereinafter referred to as Act), the appellant

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seeks to challenge the order and judgment dated 23^rd October, 2008 passed

by the District court, Pune rejecting the Arbitration Application filed by the

appellant under section 34 of the Act. The appellants are hereinafter referred

to as UOI and respondents are hereinafter referred to as Contractors for the

sake of convenience. The UOI had impugned the award dated 19^th June,

2005 made by the learned arbitrator allowing some of the claims with interest

of the contractor and rejected the counter claims made by the UOI. The

contractor was claimant in the arbitral proceedings and the UOI was

respondent. Some of the relevant facts which are necessary for the purpose

of deciding this appeal are as under :

(a)

Some time in the year 1992, the UOI invited tenders for

providing specialized technology accommodation at Air Force Station,

Pune. The contractor submitted its tender for the said work. The bid of

the contractor was accepted by UOI for the contract amount of

Rs.4,75,27,093.05. Both the parties accordingly entered into formal

contact on 28^th September, 1992. The UOI issued work order in

furtherance of the said contract on 10^th October, 1992. The stipulated

date for commencement of the work was 13^th October, 1992 and the

stipulated date for completion was 12^th October, 1994. Time to

complete the work was extended from time to time by UOI on the

request made by the contractor. The last extension was granted till

20^th April, 1997. The contractor completed the said work on 20^th April,

1997. The work was certified by the UOI by its letter dated 27^th April,

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1997.

(b)

The contractor used to submit running account bills from

time to time. The contractor by its letter dated 23^rd March, 2001 called

upon the UOI to pay various outstanding dues payable to the

respondent. The contractor by its letter dated 25^th July, 2001 invoked

arbitration clause and requested for appointment of the arbitrator to

adjudicate the disputes which had arisen between the parties. The UOI

however, did not appoint the arbitrator. The contractor thereafter filed

an application being Arbitration Application (4 of 2002) under section 11

of the Act in this court for appointment of the arbitrator. It is the case of

the contractor that inspite of the assurances given by the UOI before

this court to appoint sole arbitrator, the UOI did not appoint any

arbitrator. The contractor filed another arbitration application before

this court for appointment of the arbitrator. By consent of both the