JUDGMENT :

R.F. NARIMAN, J.

1. Leave granted.

2. These appeals arise out of applications under Section 11 of the Arbitration and Conciliation Act, 1996 ["Arbitration Act"]. On 02.09.2000, the appellant before us, Secunderabad Cantonment Board ["Appellant"], floated a notice inviting tender ["N.I.T."] for an annual term contract for:

1. Repairs to Main Roads (Resurfacing with Centralised with Hot Mix Plant and Paver);

2. Repairs to Main Roads (Widening of Roads with Centralised Hot Mix Plant and Paver);

3. Repairs to Internal Roads (Resurfacing with Hot Mix Paver and Plant).

3. Pursuant to the aforesaid N.I.T., three agreements were entered into with the respondent, M/s Ramachandraiah and Sons ["Respondent"], the first one dated 23.09.2000 and the other two dated 17.09.2001. Clause 5 of each of the aforesaid agreements, which is in identical terms, is important and reads as follows:

"5. Final Bill: The Contractor shall submit his final bil of the work with full and complete measurements showing the deductions on account of part payments received and stores supplied by the Board cost of water and any other items received by him under the contract within 08 days from the date of completion and handing over the work. The contractor shall also submit alongwith his bill a no claim certificate stating that there are no claims from the cantonment board on account of the work undertaken and completed by him under the contract and that no claim thereafter shall be entertainable. The bill shall also contain a statement showing the justification of cement consumed by the Contractor."

4. The arbitration clause contained in Clause 17 of each of the aforesaid agreements reads as follows:

"17. LAW Governing the Contract: The Contract shall be governed by the Indian Law. [A]ll disputes between the parties to this contract or being out of relating to the contract other than those for which the decision of the accepting officer is final and conclusive shall after the written notice given by either party to the other be referred to the sole arbitrator as appointed by the [President Cantonment Board [S]ecunderabad. The award of the Arbitrator shall be final, conclusive and binding on both parties to the contract"

5. Work orders were issued with respect to the aforesaid works. The Appellant argued that the Respondent had failed to complete the work within the stipulated period, but vide its meeting dated 05.10.2002, it resolved to grant an extension of time upto 31.12.2002 on an undertaking from the Respondent that the Appellant would be at liberty to impose penalty as provided in the contracts and as decided by the Appellant in case balance works were not completed by 31.12.2002. On 30.10.2002, the Respondent submitted the required undertaking.

6. It is not disputed that vide the final contract certificates issued by the Appellant on 18.02.2003 and 26.03.2003, final payment was received by the Respondent in respect of the works in question. After a hiatus of about six months, the Respondent then started making demands towards reimbursement on account of variation in prices of material, labour and fuel. These demands were made vide letters dated 08.09.2003, 24.07.2004 and 12.10.2004.

7. After a silence of over two years, the Respondent then issued a letter dated 07.11.2006 by which the Respondent requested for the appointment of an arbitrator in respect of the claim of reimbursement on account of price variation in all the three contracts. It was specifically stated that necessary steps should be taken by the Appellant within 15 days of receipt of the letter. Receiving no reply from the Appellant, the Respondent issued yet another letter dated 13.01.2007, in which it spoke of a fundamental breach of contractual obligations and then stated that it had no option but to rescind the contracts and have an arbitrator appointed within 30 days, in conformity with the arbitration clause provided in the contracts.

8. To this letter, a laconic reply was received fro