S. Banerjee, J. - (1.) The petitioner has taken recourse to this Court against an award made under the Arbitration and Conciliation Act, 1996. Four principal grounds have been canvassed: that the award is contrary to the contract; that there has been gross violation of the principles of natural justice in the arbitrator coming to conclusions not on the basis of the case made out by the respondent or on the material brought by the parties before him; that the respondent -claimant had rendered the reference nugatory by submitting that the parties were governed by a letter of intent issued on September 19, 2000 and not by the subsequent work order or agreement executed on February 8, 2001; and, that the arbitrator did not adequately consider the plea raised by the petitioner herein under Sec. 16 of the 1996 Act and erred in rejecting such application out of hand.
(2.) The petitioner herein was awarded the work of installation of a crude oil storage tank at Raava, Andhra Pradesh by Cairn Energy India Pvt Ltd. The award records that the petitioner's offer following a notice inviting tender was accepted by the principal employer on September 5, 2000 and the formal agreement was executed on October 16, 2000. The petitioner awarded a sub -contract to the respondent for the installation of a granular pile foundation, tank pad and associated civil work. The award says that the respondent's part of the work involved setting up 2725 stone columns of 600 mm nominal diameter of a specified type. On September 19, 2000 a letter of intent was issued by the petitioner to the sub -contractor indicating that the "total lumpsum value" of the work was to be Rs. 2.85 crore. A break -up of the contract price was shown in a sheet appended to the letter of intent. The salient technical and commercial conditions were agreed to between the parties at a meeting held on the same day. The minutes of the meeting, running into eight points covering a page and a half, were referred to in the letter of intent. The sub -contractor was advised to gear up its "mobilisation activities and start the work at right earnest" on the strength of the letter of intent and informed that a "formal Work order will be issued shortly." The break -up of the contract price referred to an amount being allocated for conducting a vertical load test. The only point of note in the minutes of the meeting of September 19, 2001 is that it stipulated that the "time of completion has been agreed as 4 months which may be extended by another 15 days."
(3.) The award finds that the sub -contractor completed the work of installing the stone columns and the initial testing thereof by April 24, 2001 and that the routine testing was done by July 4, 2001. Disputes arose between the parties at the time of final settlement of accounts. The primary disagreement was upon the petitioner herein deducting 10 per cent of the value of the contract by way of liquidated damages. In the reference the sub -contractor claimed reimbursement of the sum of Rs. 28.50 lakh deducted on account of liquidated damages. The arbitrator awarded such amount in full. Three other heads of claim - Rs. 15 lakh for mobilising three additional rigs, Rs. 5 lakh for bringing in additional tools and tackles and Rs. 23 lakh towards overrun expenses - taken to the reference by the sub -contractor were rejected in full. In respect of a further claim of Rs. 5 lakh for delay in making payment of the running account bills, the arbitrator allowed damages of Rs. 1,48,000/ -. Against the sixth head of claim of Rs. 7,40,662/ - on account of final payment of the sub -contractor's bill that had not been made despite being certified for payment, the arbitrator awarded Rs. 6,93,721/ -. The arbitrator awarded interest at the rate of 10 per cent from July, 2003 to August, 2009 and quantified it to be Rs. 20,88,000/ -. The total quantum of the award was rounded off to Rs. 57,79,700/ -. The petitioner was directed to pay such sum within 60 days of the date of the award which was published on September 4, 2009. In default, the petitioner was required to pay interest at 12 per cent per annum on a sum of Rs. 34.80 lakh from the date of the award till the date of payment or realisation. The counter -claim of the petitioner was rejected in its entirety. The petitioner had claimed Rs. 1,80,32,000/ - on account of liquidated damages imposed on it by the principal employer and a further sum of Rs. 3.50 crore towards compensation for loss of business. The arbitrator required the parties to bear their respective costs.;