Judgment :- O.P. 15 of 1984 was filed under Sections 28(1), 14(2) and 17 of the Arbitration Act of 1940 by one P. Shanmugha Sundaram against Bharat Petroleum Corporation (a) to grant extension of time with retrospective effect so as to validate the award, (b) to direct the second respondent Arbitrator to file the award dated 1.11.1983 and (c) to pass a decree in terms of the award together with further interest on the award amount. 2. O.P. No. 307 of 1984 was filed by M/s. Bharat Petroleum Corporation Limited, Madras against the petitioner in O.P. 15 of 1984 under Section 30 of the Indian Arbitra tion Act to set aside the award dated 1.11.1983 passed by the Arbitrator and for costs. 3. The facts in brief are as follows:— Bharat Petroleum Corporation Limited, which is a Government of India Corporation is engaged in distributing Petrol and Petroleum products. For the carrying out of its function, the Bharat Petroleum Corporation Limited (in short Corporation) called for tenders for the fabrication and erection of storage tanks and fabrication, welding and laying* pipelines at Warangal in Andhra Pradesh. The petitioner in O.P. No. 15 of 1984, Mr. P. Shanmugha Sundaram was one of the ten derers and was granted the contract as outlined in an agreement entered into between the Corporation and the petitioner in O.P. 15 of 1984 (hereinafter called as Contractor) on 15th December 1979. Accord ing to the Corporation, the consideration for the work and the time to be taken for completing the same were indicated in the agreement itself and that the contractor after completing the work received his full and final payment as per the agreement and that the payment was accepted without demur by the contractor. After sometime, for reasons best known to him, the contractor raised certain demands, which according to the Corporation were not at all within the ambit of the agreement. For the claim made by the contractor, the Corporation made a payment of Rs. 24,400/on 26.2.1982 purely on sympathetic grounds. It was made clear that such payment could not be regarded as a precedents at any time in the future and that no further claim could be entertained. Despite this, the Contractor started to raise fu rther claims which according to the Corporation were not at all either considered nor covered by the agreement entered into between the parties. It was made clear that such payment could not be regarded as a precedents at any time in the future and that no further claim could be entertained. Despite this, the Contractor started to raise fu rther claims which according to the Corporation were not at all either considered nor covered by the agreement entered into between the parties. The Corporation was unable to accede to the request since the agreed amount had already been paid to the Contractor and paying of any further amount would only result in an unjust enrichment of the Contractor. At this juncture, the Contractor has sought to invoke the Arbitration Clause in the agreement which inter-alia covers, “any dispute or differences at any time arising between the company and the contractor touching the construction, meaning or effect of these presents or any clause or thing hereunder contained or the rights or liabilities of the company or the contractor under the presents or otherwise however in relation to the presents”. According to the Corporation, it was clearly pointed out to, the Contractor that the question of escalation costs was not in any manner referred to in the agreement and hence was totally outside the contract. Such being the case, the question of referring for Arbitration would be totally outside the purview of the agreement entered into between the parties and hence Clause-16 of the agreement, viz., the Arbitration Clause w ould have no relevance whatsoever. However, the Contractor appointed an Arbitrator and sought to have the question of escalation costs referred to the decision of an Arbitrator. However, the Corporation clearly pointed out that the work itself had been completed and the remittance under the agreement had been accepted and received by the Contractor as full and final settlement thereof. It was only after the receipt of the final settlement and after the passage of sometime and as an afterthought, the Con tractor sought to raise the question of an enhanced payment under the head, ‘escalation costs’. According to the Corporation, the question of referring such a question to Arbitration only arose as an afterthought, and the Contractor not even contemplated it at the first instance. The fact remains that the Corporation at no point of time took part in such a proceeding carried on by the Arbitrator. According to the Corporation, the question of referring such a question to Arbitration only arose as an afterthought, and the Contractor not even contemplated it at the first instance. The fact remains that the Corporation at no point of time took part in such a proceeding carried on by the Arbitrator. According to the Corporation, its stand was made very clear from the beginning to the Contractor and to the Arbitrator and despite this, the Arbitrator has entered into this question and passed an Award against the Corporation for the payment of a sum of Rs. 2,28,203/together with costs. Since the Corporation has all alone maintained that the Arbitrator was acting without jurisdiction, they did not appoint their own arbitrator as provided for under Clause-16 of the Agreement. It was the stand taken by the Corporation all along that therewas no dispute or difference that had arisen between the Corporation and the Contractor which was reierable to Arbitration. It was further contended by the Corporation that since the Contractor had accepted the final payment without any demur and without any reservation and that the agreement itself had come to an end by performance, the question of referring to the Arbitration Clause in the Agreement could not arise at all inasmuch as the agreement itself had determined and once the agreement itself ceased to subsist, the question of resorting to a Clause thereunder could not arise. It was thus contended by the Corporation that the arbitration was carried on without jurisdiction and the award in such a proceedings cannot in any way be enforced against the Corporation. However, the Corporation, without prejudice to the aforesaid contention, on merits of the case, submitted that the work was carried out by the Contractor with such delays and that the question of enhanced payment under any account whatsoever especially those which were not covered by the agreement cannot be claimed by the Contractor, when the work itself completed and full and final payment was accepted therefor without any demur by the Contractor. It was further submitted by the Corporation that the alleged demands and their reference to arbitration were made only as an afterthought and out of a desire to get an additional payment. Thus, it was contended by the Corporation that the Contractor was not at all entitled for seeking any additional payment pursuant to the arbitration award. 4. It was further submitted by the Corporation that the alleged demands and their reference to arbitration were made only as an afterthought and out of a desire to get an additional payment. Thus, it was contended by the Corporation that the Contractor was not at all entitled for seeking any additional payment pursuant to the arbitration award. 4. On behalf of the Contractor, it was contended that the Contractor had received payment not in full and final satisfaction after completion of work and in fact the Contractor even during the progress of the work was requesting for extrapayment on the ground that the Corporation nad not handed over a site in a proper manner so that the Contractor could proceed with the work in an exclusive and un-interrupted manner thereby resulting in an inordinate delay in executing the work. Further, it was submitted that the Contractor had made certain claims even before the purported final payment was made. It was further contended that the Contractor is entitled to claim extra-payment by way of damages since the Corporation was initially responsible for the delay in executing the work in a contract which consists of reciprocal promises and obligations on the parties. At no point of time, the petitioner had ever denied that the Contractor is not entitled to claim additional payment. It is further pertinent to note that a payment of Rs. 24,400/was made by way of cheque on 26.2.1982. Only subsequent to the said payment, the Corporation wrote a letter informing the Contractor that the payment was made in full and final satisfaction of all the claims. The Contractor on the date when the cheque was handed over was made to believe by the Corporation that the payment was made in part satisfaction of his claims and the claims of the Contractor would be settled in full after having a conference with the Chairman of the C orporation at Bombay. In fact, the Contractor sent a reply informing the Corporation that the payment was received without prejudice to the other claims. According to the Contractor, the disputes and differences raised by the Contractor during the course of the execution of work or even after its completion are referable to arbitration inasmuch as Clause-16 of the agreement postulates that machinery of the Arbitration could be set in motion ‘at any time’. According to the Contractor, the disputes and differences raised by the Contractor during the course of the execution of work or even after its completion are referable to arbitration inasmuch as Clause-16 of the agreement postulates that machinery of the Arbitration could be set in motion ‘at any time’. Further, the Arbitration Clause survives indepen dently to be finalised only by the process of arbitration and not by the Corporation unilaterally as presumed. It was further contended by the contractor that though the survival or the Arbitration Clause was Brought to the notice of the Corporation, the Corporation had only sent a cryptic reply dated 21st March 1983 informing that the Arbitration Clause cannot be invoked. It was further contended that Clause-16 of the Agreement contemplates appointment of two arbitrators, one to be appointed by each party. Hence, invoking the provisions of the Indian Arbitration Act, the second respondent in O.P. No. 307 of 1984 was declared to be the sole arbitrator after complying with the various formalities as required under the law, since the Corporation was obstructive in appointing its Arbitrator leaving no scope for condonation of the default committed by the Corporation. 5. The Arbitrator, a retired Superintending Engineer and Engineering Consultant after complying with the legal formalities, entered the reference and had passed the award after giving ample opportunities to the Corporation to take part in the proceedings. The Corporation did not participate in the proceedings without any lawful cause or excuse. It was also contended that once an award had been passed, it is not open to the Corporation to question the same either on facts or on law unless there is an error apparent on the face of the award. The Corporation ought to have participated in the proceedings and put forth the defence, if any and it is not open to the Corporation to question the same on merits other than the grounds mentioned under Section 30 of the Arbitration Act. It was further contended that it is only the Corporation which had committed the initial breach and as the contract is one consisting of reciprocal promises, the Contractor was unable to proceed further and execute the work within the period envisaged by the agreement. 6. It was further contended that it is only the Corporation which had committed the initial breach and as the contract is one consisting of reciprocal promises, the Contractor was unable to proceed further and execute the work within the period envisaged by the agreement. 6. It is also seen from the records that the Corporation had chosen to file O.P. No. 307 of 1984 before the award was filed in this Court and even without perusing a copy of the same which would clearly indicate that the Corporation had been trying to thwart the Arbitration Proceedings, which clearly indicate the attitude of the Corporation in evading to settle the lawful dues of the Contractor on some pretext or the other and without even respecting or responding to the Various notices issued by the Contractor before Arbitration and even after the receipt of various letters and reminders from the Arbitrator to appear before him and contest the proceedings. 7. As stated above, O.P. No. 15 of 1984 was filed under Sections 28(1), 14(2) and 17 of the Arbitration Act 1940. The Arbitrator, pursuant to his appointment, entered into the reference on 8.4.1983 being the date on which the Arbitrator called upon the Contractor to file his Claim statement. The award was not passed within the statutory period due to the non-cooperative attitude of the Corporation and hence the same was passed on 1.11.1983. Before the expiry of the statutory period, the Contractor gave his consent for extension of time to pass the award by four months and the Corporation did not give its consent for such extension even after calling upon it to do so. Hence, the Contractor has prayed to grant extension of time with retrospective effect so as to validate the award and to direct the second respondent, Arbitrator, to file the award into Court and to pass a decree in terms thereof. Pursuant to the notice of this Court in O.P. No. 15 of 1984, the Arbitrator has filed a memo dated 12th October 1987 praying to receive the award in the dispute between the Contractor and the Corporation and take the same on file. Pursuant to the notice of this Court in O.P. No. 15 of 1984, the Arbitrator has filed a memo dated 12th October 1987 praying to receive the award in the dispute between the Contractor and the Corporation and take the same on file. A Counter-affidavit was filed by the Corporation in O.P. No. 15 of 1984 stating that the Corporation has not at any stage recognized the Arbitration Proceedings since the same was carried on without any jurisdiction and hence prayed this Court to declare the award passed on 1.11.1983 as null and void. The Corporation has raised similar contentions as raised by them in O.P. 307 of 1984 filed under Section-30 of the Arbitration Act to set aside the award. To the Counter-affidavit filed by the Corporation, the Contractor filed a reply stating that the Arbitrator had perfect jurisdiction and the award passed by him is valid and binding on the Corporation. It was further reiterated that at no point of time the Contractor has received any amount from the Corporation in full and final settlement of his dues. Since the Corporation had been denying the jurisdiction of the Arbitrator, the Arbitrator had to proceed further in passing the award ex.-parte after giving several opportunities to the Corporation to take part in the proceedings and the Corporation defaulted to appear on several adjourned dates. It was further contended that the delay in passing the award, if any, was not due to the fault of the Contractor but due to the fault of the Corporation in not appearing before the Arbitrator. 8. I have heard elaborate arguments of Mr. Bijai Sundar, learned Counsel appearing for the Contractor and Mr. V. Aravamudhan learned Counsel for the Corporation. Two points will arise for consideration as contended by the learned Counsel for the Contractor. The first point to be considered is whether the Contractor is entitled to escalation costs and the second point is whether the Arbitrator has jurisdiction to entertain the reference, after the payment of final bill and whether the dispute is not referable to Arbitration as contended by the Corporation. It is relevant at this juncture to refer to Clause 16 of the Contract. Clause-16 of the Agreement which relates to Arbitration is extracted hereunder. It is relevant at this juncture to refer to Clause 16 of the Contract. Clause-16 of the Agreement which relates to Arbitration is extracted hereunder. ARBITRATION: In the event of any dispute or differences at any time arising between the Company and the Contractor touching the construction meaning or effect of those presents or any clause or thing hereunder contained or the rights or liabilities of the Company or the Contractor under these presents or otherwise however in relation to the premises such dispute or difference shall be referred to the arbitrators and to be named by each party to the reference and to an umpire to be appointed by the arbitrators in writing before entering on the business of the reference and these present, shall be deemed to be submission to the arbitration of the arbitrators within the meaning of the Indian Arbitration Act of 1940, and all provisions, of that Act (except as hereby expressly varied) or of an Act, the Legislature passed in substitution thereof and modification thereof and the time being in force. It is seen from the above Clause-16 of the Agreement, any dispute or differences which had arisen between parties are referable to arbitration at any time. It is seen from the said Clause that the damages caused as a result of the breach of the contract by the Corporation is an issue subject to arbitration. It is further seen from the Claim Statement filed by the Contractor that he had claimed damages under two heads, (1) Escalation of rates and (2) Idle Labour Charges. The learned counsel for the contractor has submitted that even assuming but not admitting that the final settlement had been arrived at, still the Arbitration Clause would be applicable, notwithstanding the plea that there was a full and final settlement, since according to the learned counsel for the contractor, the same is also a dispute arising out of the contract. I see some force in the said contention and that the said contention is well-founded. I see some force in the said contention and that the said contention is well-founded. It is also seen from the records that the disputes and differences raised by the Contractor during the course of the execution of the work or even after its completion, are referable to arbitration inasmuch as Clause-16 of the Agreement postulates that the machinery of the Arbitration could be set in motion at any time, it is also seen from the proceedings that extension of time was granted by the Corporation to the Contractor for completion of the work. In my view, that will not preclude the Contractor from claiming damages by way of escalation of rates and idle labour charges. In my opinion, Arbitration Clause is distinct from other clauses of the contract. In my opinion, the Arbitration Clause survives as rightly contended by the learned counsel for the, contractor. As per Clause-16 of the Agreement, it contemplates appointment of two arbitrators, one to be appointed by each party. In spite of repeated requests, the Corporation had not appointed its own arbitrator. Hence, invoking the provisions of the Indian Arbitration Act, the second respondent was declared to be the sole arbitrator after complying with the formalities as required under the Law. 9. The Arbitrator has passed the reasoned award. It is seen from the award that the Arbitrator has given ample opportunity to both parties, viz., the Contractor and the Corporation. The Arbitrator has also referred to the various claims made by the Contractor and also referred to the various letters and correspondence exchanged between the parties. In considering the question of escalation of costs, the Arbitrator has considered the justification and the reasonableness of the claims made by the Contractor and has passed the reasoned award. While considering the case of the Corporation, the Arbitrator has pointed out that the Corporation did not attend to any of the proceedings that took place on 13th, 27th and 29th December 1983, nor did they submit their Counter-Statement to the Arbitrator in reply to the Claim-Statement made by the claimant. While considering the case of the Corporation, the Arbitrator has pointed out that the Corporation did not attend to any of the proceedings that took place on 13th, 27th and 29th December 1983, nor did they submit their Counter-Statement to the Arbitrator in reply to the Claim-Statement made by the claimant. Though the Corporation has been very categorical on the issue that the question or arbitration in any matter relating to the work does not and cannot arise, as according to the Corporation, the work has been completed and paid for, thereby extinguishing any contractual relationship between the parties, they did not care to appear before the Arbitrator and put forth their view-points on the various notices issued by the Arbitrator as the Sole Arbitrator under Section 9(b) of the Indian Arbitration Act 1940 (appointed?) by the claimant after due process of Law. The Arbitrator conducted the proceedings ex-parte, the Corporation being absent throughout. However, by way of courtesy and abundant caution, the Corporation had been informed of the ex-parte proceedings. The Arbitrator framed three issues for consideration. “Issue No. 1) The stand of the Respondent in that, in so far as the work has been completed and fully paid for the question of invoking any clause in the agreement does not arise, at that stage; Is this tenable and legally sustainable? Issue No. 2) Can the agreement rate be revised increasing the same due to the increase in cost of work executed beyond the contract period of 200 days the extension of time being due to circumstances beyond the control of either the claimant or both the claimant and the respondent, and in the absence of any escalation clause provided for in the contract agreements? Issue No. 3) Has there been any breaches of fundamental nature, lapses defaults, by the employer, i.e., Respondent, preventing and disabling the claimant, in performing the contract or in the completion of the work in time, entitling the latter to claim compensation and damages for the loss.” The Arbitrator has also considered the arguments advanced by the learned Counsel for the Contractor in regard to his clients entitlement to get enhanced costs for the work done. The learned Counsel has also advanced arguments before the Arbitrator that the Arbitration Clause continues to subsist even after the receipt of the final payment from the Corporation. The learned Counsel has also advanced arguments before the Arbitrator that the Arbitration Clause continues to subsist even after the receipt of the final payment from the Corporation. The Arbitrator while considering the said point has found that the views expressed by the learned Counsel for the Contractor with regard to the maintainability of the Arbitration Proceedings as correct and fully endorsed his views that the disputes and differences raised by the Contractor, are within the jurisdiction or the Arbitrator. The Arbitrator, while considering Issue No. 2, which was elaborately argued by the Learned Counsel for the Contractor has found that the Claimant/Contractor is not responsible for any delay and that the lapse and breaches in not executing the contract in a period of 200 days reckoned from September 1980 and that the Contractor has discharged his responsibilities and completed the work in time when he was given the same. The Arbitrator has found that as the work had been carried out beyond the agreed time by the claimant, involving extra expenses due to the hike in cost of labour and materials, as proved with documentary evidence, the claimant is entitled to enhanced compensation. The Arbitrator has also held that the non-provision of escalation costs in the Agreement does not extinguish the right of the claimant to claim for damages when time is the essence of the contract, with liquidated damages for the delay by the claimant and when the work had been forced by the Corporation to be carried out by the claimant beyond the agreement period for no fault of his. Thus, the Arbitrator has answered the Issue No. 2 in favour of the Claimant/Contractor. 10. While considering the Issue No. 3, which is inter-linked with Issue No. 2, the Arbitrator has found that the delay is attributable only to the Corporation which constituted a fundamental breach of not handing over the site in time. Though several claims were made before the Arbitrator for payment of compensation and damages, categorised as, A, Bl, B2, C1, C2, Dl and D2 in the Claim Statement, the Arbitrator considered the Claims under heads, Bl, C1, C2, in favour of the claimants which was supported by documentary evidence. As regard Claim-A, B, B2, Dl, and D2, the Arbitrator has rejected those claims. As regard Claim-A, B, B2, Dl, and D2, the Arbitrator has rejected those claims. As regards Claim C1, C2, the Arb itrator has awarded extra rates for materials based on the documentary evidence and allowed the claim under head Cl to the extent of Rs. 1,26,425/and on Claim C2, extra rate for labour-Sub-contract based on similar documentary evidence, the Arbitrator has allowed the claim to the extent of Rs. 1,25,550/-. But the claimant himself under Ex. C7 dated 4.1.1982 sent after the completion of the work, had requested an increase of 30% on the quoted rate and value, the claim was restricted to Rs. 1,48,403/which alone was asked for. Thus, a mere perusal of the award will/clearly establish that the Arbitrator has afforded ample and sufficient opportunities to the Corporation and to the Claimant and has passed a reasoned award on the basis of the evidence tendered by the claimant. 11. The learned counsel for the Contractor/Claimant has also drawn my attention to the various correspondences that were exchanged between the Corporation and the Contractor, particularly, the letters dated 1.4.1982, 5.6.1982, 5.8.1982, 5.10.82, 30.11.1982, 7.12.82. The Contractor has in these letters requested the Corporation to nominate their Arbitrator and also to refer all the disputes between them in relation to work in question to arbitration. The Contractor by his letter dated 30.11.1982, addressed to the Area Distribution Manager of the Bharat Petroleum Corporation Limited has specifically requested the Corporation to nominate their own Arbitrator. It was also mentioned that the Contractor had already appointed an Arbitrator as notified in his letter dated 5.8.1982, 5.10.82 and 30.11.82 and that he will be at full liberty to declare the Arbitrator appointed by him to act as Sole Arbitrator in the reference. In spite of the various letters sent by the Contractor, the Corporation has been taking a stringent attitude and they refused to participate in the Arbitration Proceedings by saying that the matter in dispute was not at all referable to arbitration. 12. It is also useful to refer the number of letters sent by the Arbitrator himself to the Bharat Petroleum Corporation Limited and to the Contractor/Claimant. By proceedings dated 8.4.1983, the Arbitrator, after taking up the reference gave notice to both parties as a preliminary, step to accept the reference before the preliminary meeting is held. 12. It is also useful to refer the number of letters sent by the Arbitrator himself to the Bharat Petroleum Corporation Limited and to the Contractor/Claimant. By proceedings dated 8.4.1983, the Arbitrator, after taking up the reference gave notice to both parties as a preliminary, step to accept the reference before the preliminary meeting is held. Again, the Arbitrator sent another letter on 9.6.1983, to the Corporation and to the Contractor requesting both parties to be present on 25.6.83 for the preliminary meeting to decide the venue and the date of further proceedings and other matters that are raised in the preliminary meeting. In the proceedings dated 6.8.83, the Arbitrator has again gave another opportunity to the Corporation to participate the proceedings to be held on 16.7.1983 at the venue mentioned in the said letter. On 20.8.1983, the Sole Arbitrator has again sent a letter requesting the Bharat Petroleum Corporation to appear and attend the hearing. It was specifically mentioned that any default of the appearance of the Bharat Petroleum Corporation, the Arbitrator will proceed with the matter ex-parte. The Arbitrator has also sent two other communications dated 20.8.1983 requesting the Bharat Petroleum Corporation to attend the proceedings. It is seen from the records that in spite of sufficient opportunity being given to the Bharat Petroleum Corporation, the said Corporation has not chosen to appear before the Arbitrator and contest the proceedings, which resulted in the Arbitrator passing the Award on the basis of the documents produced by the Contractor. 13. It is well-settled principle of Law that an Award made by an Arbitrator is final as a judgment between the parties and is not liable to be set aside on the ground that it is erroneous in fact or in law. It cannot be set aside on any ground other than those mentioned in Section-30. In the instant case, it has not been proved that the Arbitrator has misconducted himself or the proceedings 14. Where a matter in difference is referred to an Arbitrator, he is constituted the sole and final judge of all questions both of law and of facts. It cannot be set aside on any ground other than those mentioned in Section-30. In the instant case, it has not been proved that the Arbitrator has misconducted himself or the proceedings 14. Where a matter in difference is referred to an Arbitrator, he is constituted the sole and final judge of all questions both of law and of facts. The only exception to that rule is where an award is the result of corruption or fraud or where the question of law arises on the face of award and if there is no error of law on the face of the award, the same is not liable to be set aside. In the instant case, the award is a reasoned one. Under the law, the Arbitrator is made as the final Arbitrator of the dispute between the parties. The award is not open to challenge on the ground that the arbitrator has reached a wrong conclusion or has failed to appreciate the facts. The Court has no jurisdiction to deal with the merits of a case determined by the Arbitrator. It is not the function of this Court to scrutinize the award on merits as if it is sitting in appeal on the verdict of the arbitrator. There is no scope for this Court to invoke the aid of Section-30 of the Act for setting aside the award. Unless the Court sees cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, a definite and a positive result must follow and that is set out by the Statute under Section-17. Under these circumstances, this Court has no option except to pronounce the judgment according to the award which shall be followed by a decree. As stated above, the learned counsel for the contractor has raised two questions for consideration. The first point for consideration is whether the contractor is entitled to escalation costs. The second point for consideration is whether the Arbitrator has jurisdiction to entertain a reference after the payment of final bill and that the dispute is not referable to arbitration as contended by the learned counsel for the Corporation. As regards the first point, the learned Counsel for the Contractor has invited my attention to the judgments reported in the following cases. As regards the first point, the learned Counsel for the Contractor has invited my attention to the judgments reported in the following cases. In Hyderabad Municipal Corporation v. N. Krishnaswami1 , the only question that was argued by the Counsel for the appellant in that the appeal was that the respondent/plaintiff was not entitled to claim 20% extra over and above the rates originally agreed upon between the parties under the suit contract Ex. A. 1. The Supreme Court after considering the relevant material on record was of the view that both in equity and in law, the Contractor was entitled to receive extra-payment and confirmed the finding of the High Court in deciding the question in favour of the respondent/plaintiff in the said appeal. It is useful to refer the verdict of the Supreme Court in the above case. “After considering the correspondence exchanged between the parties and the other material on record, the High Court has taken the view that the Government was liable to make extra payment for the work done as there was no dispute that the rates of material, etc., had increased during the extended period of two years and plaintiff was entitled to such extra payment. After considering the relevant material on record, we are of the view that both in equity and in law, the plaintiff-Contractor is entitled to receive extra-payment and the High Court was right in deciding the question in respondentplaintiffs favour. Since subsequent to the entering into the agreement, Ex. A.1, the Drainage Division was transferred from P.W.D. to Hyderabad Municipal Corporation the liability to make this extra payment in our view has been properly saddled on the appellant Corporation.” The decision reported in P.M. Paul v. Union of India 2 is also a case of delay in completion of the building contract and the payment of further sum by way of escalation. The Supreme Court in considering the award of the arbitrator allowing escalation has held that the arbitrator has not committed any misconduct and that the award could not be set aside on that ground. In the words of the Supreme Court. “It is well-settled that an award can only be set aside under S. 30 of the Act, which enjoins that an award of an arbitrator/umpire can be set aside, inter alia, if he has misconducted himself or the proceeding. In the words of the Supreme Court. “It is well-settled that an award can only be set aside under S. 30 of the Act, which enjoins that an award of an arbitrator/umpire can be set aside, inter alia, if he has misconducted himself or the proceeding. Adjudicating upon a matter which is not the subject-matter of adjudication, is a legal misconduct for the arbitrator. The dispute that was referred to the arbitrator was, as to who is responsible for the delay, what are the repercussions of the delay in completion of the building and now to apportion the consequences of the responsibility. In the objections filed on behalf of the respondent, it has been stated that if the work was not completed within the stipulated time, the party has got a right for extension of time. On failure to grant extension of time, it has been asserted, the contractor can claim difference in prices.” “In the instant case, it is asserted that the extension of time was granted and the arbitrator has granted 20% of the escalation cost. Escalation is a normal incident arising out of gap of time in this inflationary age in performing any contract. The arbitrator has held that there was delay, and he has further referred to this aspect in his award. The arbitrator has noted that claim-I related to the losses caused due to increase in prices of materials and cost of labour and transport during the extended period of contract from 9.5.1980 for the work under Phase-I and from 9.11.1989 for the work under Phase-II. The total amount shown was Rs. 5,47,618-50. After discussing the evidence and the submissions, the arbitrator found that it was evident that there was escalation and, therefore, he came to the conclusion that it was reasonable to allow 20% of the compensation under Claim-I, he has accordingly allowed the same. This was a matter which was within the jurisdiction of the arbitrator and, hence, the a rbitrator had not misconducted himself in awarding the amount as he has done”., The Supreme Court also held in the judgment that once it is found that the Arbitrator has jurisdiction to find that there was delay in execution of the contract due to the conduct of the corporation, the Corporation was liable for the consequences of the delay, namely, increase in prices. Therefore, the Supreme Court held that the Arbitrator had jurisdiction to go into this question and in fact the arbitrator in the said case gone into that question and has awarded as he did. In my view, the two judgments referred to above are strictly and directly applicable to the facts and circumstances of the present case. The Arbitrator in the instant case has also awarded escalation costs in favour of the Contractor which was within his jurisdiction. Hence, it cannot be held that the Arbitrator has mis-conducted himself in awarding the amount in favour of the Contractor. A.I.R. 1980 Delhi/266 is a judgment rendered by a Division Bench of the Delhi High Court. The Delhi High Court in considering an identical claim for payment of enhanced rates in prices of materials and wages during progress of work, held that the award of damages by the Arbitrator was proper. An argument was advanced by the counsel for the appellant in the said case that the award in regard to Claim No. 1 was contrary to Clause-IOC of the agreement between the parties, that the error was apparent on the face of the award and that the Arbitrator committed misconduct in granting the said claim to the appellant M/s. Metro Electric Company, which was beyond his jurisdiction; 15. Rejecting the said contention ad vanced on behalf of the Dehli Development Authority, New Delhi, the Division Bench of the Delhi High Court held in Metro Electric Company v. Delhi Development Authority, New Delhi 1 as follows: “The present case is a case of the total failure of the Delhi Development Authority in completing the civil construction, which was precondition for any electric installations to be made by the contractor. This is not a case of minor hindrance or Impediments which alone are taken care of by Clause-5. Even otherwise, several representations made by the contractor regarding the delay in handing over of the site, had not produced any result. Secondly, even assuming that Clause-5 is applicable in the presen t case that would not stand in the contractors way in claiming damages, as Clause-5 does not bar any such claim, either expressly or by implication. Even otherwise, several representations made by the contractor regarding the delay in handing over of the site, had not produced any result. Secondly, even assuming that Clause-5 is applicable in the presen t case that would not stand in the contractors way in claiming damages, as Clause-5 does not bar any such claim, either expressly or by implication. Hudsons Building and Engineering Contracts (Page 492), 9th Edition) states the principle as follows: “Where the cause of delay is due to breach of contract by the employer, and there is also an applicable power to extend the time, the exercise of that power will not, in the absence of the clearest possible language, deprive the contractor of his right to damages for the breach” In the result, the Delhi High Court allowed the appeal and set aside the order of the learned single judge in regard to claim-1 and made upheld? (sic.) the entire award including Claim-1 for 18%. 16. In regard to the second point argued by the learned Counsel for the Corporation that the Arbitrator has no jurisdiction to entertain the reference after the payment of final bill and that the dispute is not referable to arbitration, the following judgments were cited by the learned counsel for the Contrac tor. The Counsel for the Corporation on this point has submitted that the agreement for the fabrication and the erection works came to an end and upon the completion of the work, the final payment as per the agreement was also made. The Contractor accepted the said payment without any demur and received the payment without any reservation. Therefore, Mr. Aravamudhan, learned Counsel for the Corporation has submitted that the agreement itself had come to an end and hence the question of referring the matter to Arbitration could not arise at all inasmuch as the agreentent itself had determined and once the agreement itself ceased to subsist, the question of resorting to a Clause thereunder could not arise. The learned counsel further submitted that once the contract has itself been discharged, Arbitration Clause cannot be invoked and hence according to the learned counsel, the Arbitration was carried out without jurisdiction and the award in such a proceeding cannot in any way be enforced against the Corporation. The learned counsel further submitted that once the contract has itself been discharged, Arbitration Clause cannot be invoked and hence according to the learned counsel, the Arbitration was carried out without jurisdiction and the award in such a proceeding cannot in any way be enforced against the Corporation. Per contra, the learned counsel for the Contractor has submitted that Clause-16 of the Agreement speaks about the Arbitration in case of disputes and that under the said Clause, the differences and disputes which had arisen are referable to Arbitration for the various reasons set out in the Counter-affidavit filed in O.P. 307 of 1984 by the Contractor. According to the learned counsel for the Contractor, even assuming but not admitting that the final settlement has been arrived at, still the Arbitration Clause would be applicable notwithstanding the plea that there was a full and final settlement since the same is also a dispute that had arisen out of the contract. The disputes and differ ences raised by the Contractor during the course of the execution of work or even after its execution are referable to Arbitration inasmuch as Clause-16 of the Agreement postulates that the machinery of Arbitration can be set in motion ‘at any time’. For the foregoing reasons, the learned Counsel for the Contractor has submitted that the Arbitration Clause survives and even though it was brought to the notice of the Corporation, the Corporation has only sent a cryptic reply informing that the Arbitration Clause cannot be invoked. Though Clause-16 of the Agreement contemplates appointment of two arbitrators, one to be appointed by each party, the Corporation has not nominated its Arbitrator and hence invoking the provisions of the Arbitration Act, the second respondent was declared to be the Sole Arbitrator after complying with the various formalities as required under the law. It is also seen from the award that the second respondent (Arbitrator)was a retired Superintending Engineer and Engineering Consultant who after complying with the legal formalities, entered the reference and has passed the award after giving ample opportunities to the Corporation to take part in the proceedings. The Corporation did not participate in the proceedings only with a view to delay and defeat the lawful claims made by the Contractor. The Corporation did not participate in the proceedings only with a view to delay and defeat the lawful claims made by the Contractor. In support of the second contention, the learned counsel for the Contractor has invited my attention to the following decision reported in Damodar Valley Corporation v. K.K. Kar 1 which case arise under the identical circumstances. In the said case, it was contended by the Corporation that since there had been a full and final settlement under the Contract, the rights and obligations under the Contract did not subsist and consequently the Arbitration Clause also perished along with the settlement. The facts are identical as that of the case on hand. In the said case, the respondent/Contractor was asked to submit his bill along with a receipt stating that he received the payment in full and final settlement of all payments and that there was no other claim. But the respondent while submitting his bill did not give the receipt as desired. The amount of the bill however was paid after receipt of which the respondent claimed further sums from the appellant Damodar Valley Corporation including damages for repudiation of the contract. The said Corporation did not agree to comply with the demands. Thereafter, the respondent served a notice of his intention to refer the matter to the Arbitration under the Arbitration Clause contained in the contract. By that notice, he intimated the Damodhar Valley Corporation that he has appointed J.N. Mullick as his Arbitrator and requested the said Corporation to appoint its own Arbitrator. The appellant Corporation did not agree to it, whereupon the respondent by a further notice intimated by him would be the Sole Arbitrator for adjudicating the dispute between the parties. Soon thereafter, the Sole Arbitrator issued a notice to the Corporation and consequently the Corporation had to file an application under Section 9(b) and Section 33 of the Arbitration Act challenging the validity of the appointment of the Sole Arbitrator. It was stated in the petition that since all claims and demands as between the Corporation and the Contractor standing fully paid and adjusted, there was no dispute in the absence whereof the entire proceedings in the case do not lie and hence is not maintainable under the Arbitration Act. It was stated in the petition that since all claims and demands as between the Corporation and the Contractor standing fully paid and adjusted, there was no dispute in the absence whereof the entire proceedings in the case do not lie and hence is not maintainable under the Arbitration Act. The Sub judge held that the Damodhar Valley Corporation Act adduced evidence that the Contract had come to an end in order to determine that the Arbitration Clause perished with the contract. The Sub-Judge answered the question raised in the affirmative and held that the Corporation could adduce evidence and establish that the contract had come to an end and that as a consequence, the Arbitration Clause perished with it. The High Court dismissed the petition altogether. On Appeal, the Supreme Court held, in Damodar Valley Corporation v. K.K. Kar 1 as follows: “Where in a contract there is an arbitration clause, notwithstanding the plea that there was a full and final settlement between the parties, that dispute can be referred to the arbitrations. The High Court was in error in directing the dismissal of the appellants petition in toto. The question whether there has been a full and final settlement of a claim under the contract is itself a dispute arising ‘upon’ or ‘in relation to’ or ‘in connection with’ the contract, these words are wide enough to cover the dispute sought to be referred. On the facts of this case when the appellant refused to accept the goods, the respondent could claim damages for breath of contract. Such a claim for damages is a dispute or difference with arises between the respondent and appellant anil is ‘upon’ or ‘in relation to’ or ‘in connection with’ the contract.” The Supreme Court further held, “A contract is the creature of an agreement between the parties and where the parties under the terms of the contract agree to incorporate an arbitration clause, that clause stands apart from the rights and obligations under that contract, as it has been incorporated with the object of providing a machinery for the settlement of disputes arising in relation to or in connection with that contract. The questions of unilateral repudiation of the rights and obligations under the contract or of a full and final settlement of the contract relate to the performance or discharge of the contract. The questions of unilateral repudiation of the rights and obligations under the contract or of a full and final settlement of the contract relate to the performance or discharge of the contract. Far from putting an end to the arbitration clause, they fall within the purview of it. A repudiation by one party alone does not terminate the contract. It takes two to end it and hence it follows that as the contract subsists for the determination of the rights and obligations of the parties, the arbitration clause also survives”. 17. The facts and circumstances in the instant case are identical to that of the judgment referred to above. The claim for damages by the Contractor in the present case, in my opinion, is a dispute or difference which arise between himself and the Corporation and is ‘upon’ or ‘in relation to’ or ‘in connection with’ the contract. 18. The learned Counsel for the petitioner has also referred to the decision reported in Asia Engineering Company, Madurai v. Life Insurance Corporation of India, Bombay 1 . It is as follows: “That being so, it becomes clear that the Contractor is not prevented from raising the dispute, Clause-8(c) of the Contract, if at all, may come in as a defence before the Arbitrator and it is for the Arbitrator to decide whether escalation of prices should be decided and allowed. That is a matter on merits with which the Court is not concerned. In the circumstances, therefore, we are of the considered view that the dispute raised in the instant case does not fall within the excepted category and the power of the Arbitrator is not specifically excluded. That being so, we are of the considered view that the dispute shall be referred to the Arbitrator.” Another decision reported in A.I.R. 1990, Bombay page-45 was also cited by the learned Counsel for the Contractor in support of his above submission. The Division Bench in Union of India v. M/s. Ajit Mehta and Associates, Pune and Others 2 held as follows:— In spite of a full and final settlement of the claim, the arbitration clause in the contract may subsist where the party invoking it alleges that in fact there was no accord and satisfaction for some reasons such as the final bill was submitted or receipt was given under coercion, mistake or misrepresentation, without prejudice, under protest etc. For then that itself becomes a dispute arbitrable under the clause. However, when there is no such allegation made when invoking the arbitration clause, and i t is invoked simpliciter, it will have to be held that the contract itself had come to an end and with it the arbitration clause which was a part and parcel of it”. 19. Yet another decision cited by the learned counsel for the Contractor was reported in M/s. Amar Nath Chand Prakash v. M/s. Bharat Heavy Electricals Limitted 3 “Acceptance under protest of payment in full satisfaction of amount due under contract is no accord or satisfaction in the sense of bilateral consensus of intention and does not discharge the contract so as to disentitle the person accepting payment to enforce the term in the contract to refer the dispute arising under the contract to arbitration.” Similar contention was raised in the instant case by the learned counsel for the Corporation. Complying with the principles laid down in M/s. Amar Nath Chand Prakash v. Bharat Heavy Electricals Limitted 3 , I find that there was no accord or satisfaction in the sense of bilateral consensus of intention. The Contractor has made it very clear that he accepted the money under protest. That could be seen from the correspondence and letters that were exchanged between the parties to the present action. Under these circumstances, it cannot be said that the amount was received by the Contractor in full quit of all his claims against the Corporation. 20. Hence, I have to necessarily reject the contention raised by the learned Counsel for the Corporation on the the two points mentioned supra. 21. Lastly, the learned Counsel for the Contractor has submitted that in spite of several opportunities being given to the Corporation to take part in the proceedings, the Corporation defaulted to appear on several adjourned dates. Hence, the learned Counsel has submitted that the delay in passing the award, if any, was not due to his fault, but due to the fault of the Corporation in not appearing before the Arbitrator. Hence, he prayed for enlargement of time with retrospective effect so as to validate the award by way of abundant caution and to avoid any technical objection. Hence, he prayed for enlargement of time with retrospective effect so as to validate the award by way of abundant caution and to avoid any technical objection. It was submitted that this Court has ample power to extend the time so as to validate the award whether the award has been made or not and in view of the peculiar circumstances of the case. 22. I see much force in the contention of the learned counsel for the Contractor. In support of his contention, the learned counsel for the Contractor has placed reliance on the Judgment of Ratnam, J., reported in Central Warehousing Corporation v. P. Gunasekaran and Others 4 . It deals with the powers of the Court to extend the time. The learned Judge has held that under Section 28 of the Arbitration Act, the Court has got ample powers to enlarge time either before the award has been made or even after it has been made and there is absolutely no fetter on the power of the Court to enlarge time taking into account the circumstances of each case. The learned Judge held as follows:— “In any event, the petitioner has since filed an application for extending the time under Section 28 of the Act, the Court is empowered whenever it thinks fit to enlarge the time for making the award from time to time irrespective of the fact whether the time for making the award had expired and whether the award has been made or not. The section confers unlimited powers upon the Court to enlarge time and is not subjected to or circumscribed by any period of Limitation. In other words, whenever it appears to the Court to be just and necessary and expedient in the interests of justice, it could always enlarge the time provided the Court is satisfied that its discretion ought to be exercised in favour of enlarging time.” In the instant case, the Contractor has filed O.P. 15 of 1984, not only under Sections 14(2) and 17 of the Arbitration but also under Section 28(1) of the said Act. In my view, the Contractor is entitled to have the extension of time with retrospective effect as prayed for in the said O.P. 23. Next, I shall deal with the award of interest by the Arbitrator for the amount awarded by him under the award in question. In my view, the Contractor is entitled to have the extension of time with retrospective effect as prayed for in the said O.P. 23. Next, I shall deal with the award of interest by the Arbitrator for the amount awarded by him under the award in question. The Arbitrator has awarded interest at 16 1/2% from 3.5.1983 till date of decree or payment as the case may be. It is well settled principles of law and as laid down by the catena of decisions by the highest Court of the land that the Arbitrator has no right to award interest pendente lite . The interest awarded in cases like this covers, (1) Prior to the commencement of the Arbitration proceedings (2) Pendente lite (3) Date of award to date of decree. In the instant case, there is one infirmity in the award which is apparent on the face of the award which in the interest of justice as the law now stands and declared by the highest Court of land, I should correct namely, the question of interest pendente lite . Having regard to the position of law emerging from the decisions of the Supreme Court and Section 29 of the Arbitration Act 1940 and Section 34 of the Civil Procedure Code, I would modify the grant of interest in this case. The Arbitrator has directed that interest to be paid at 16 1/2% from 3.5.1983 upto the date of the decree or payment. Since in this case, the reference to Arbitration was made after the commencement of the Interest Act 1978, the Arbitrator under Section 3(1) (a) of the said Act was entitled to award interest prior to the commencement of the Arbitration proceedings. But, he could not have awarded interest, in view of the decision of the Supreme Court reported in Executive En gineer, Irrigation, (Galimala v. Abnaduta Jena) 1 for the period after the commence ment of the Arbitration proceedings till the date of the publication of the award. But, he could not have awarded interest, in view of the decision of the Supreme Court reported in Executive En gineer, Irrigation, (Galimala v. Abnaduta Jena) 1 for the period after the commence ment of the Arbitration proceedings till the date of the publication of the award. So far as the interest for the period from the date of the award till the date of the decree is concerned, I think that interest should be allowed for this period, on the principle that this Court can once proceeding under Sec tions 15 to 17 are initiated grant interest pending the litigation before it, i.e., from the date of the award to the date of the decree. But, there can be no doubt about my power to grant interest in cases governed by the Interest Act as Section-3 (1) (a) will enable this Court to do this in these proceedings. Thus, I hold that the Contractor/Claimant will be entitled to the interest awarded by the Arbitrator. Prior to the commencement of the Arbitration proceedings and from the date of the award to the date of the decree, interest at 16 1/2% on the amount awarded by the Arbitrator. The principal amount awarded by the Arbitrator is confirmed. But, however, I delete the interest awarded by the Arbitrator for the period pendente lite and confine the interest on the principal sum awarded by the Arbitrator at 16% per annum for the period prior to the commencement of the Arbitration proceedings and from the date of the award to the date of decree and from the date of decree till realisation. The O.Ps. are disposed of in the above terms. 24. Mr. Aravamudhan, learned counsel for the Corporation while concluding his arguments has submitted that a party (Corporation) who has not participated in the Arbitration proceedings, that party should not be penalised especially when the question itself is not referable to arbitration of equity and fairness, the matter should be on the question remitted to the same Arbitrator by giving opportunity to the Corporation to appoint an Arbitrator with a time-bound award. Since, according to the learned Counsel, for many of the items of Claim, the contractor is not entitled to any amount. I am unable to appreciate or accept the said contention. Since, according to the learned Counsel, for many of the items of Claim, the contractor is not entitled to any amount. I am unable to appreciate or accept the said contention. In this case, the Corporation has failed to respond to the request made by the Contractor and his counsel and also to the notices issued by the Arbitrator requesting the Corporation to appoint art Arbitrator and to appear and contest the award, In spite of several letters, the Corporation was very adamant in its attitude and has not nominated any Arbitrator on their side and participated in the Arbitration proceedings. The act of the Corporation in not participating in the proceedings is in my opinion is wanton and willful. The Corporation has not acted prudently. A Public Sector Undertaking, dealing with public money is expected to observe the rule of Law and strictly adhere to the same. The conduct of the Corporation in not participating in the proceedings before the Arbitrator is totally unwarranted. The request made by the learned counsel for the Corporation at this stage is not at all entertainable. The Corporation is also not entitled to any indulgence at this stage. The Corporation has to suffer a decree for its omissions. 25. In the result, O.P. No. 15 of 1984 is disposed of on the above terms and O.P. No. 307 of 1984 is dismissed. 26. The matter was argued by the respective counsel in an able and effective manner. I place on record my appreciation for the manner in which both the counsel have argued this case. The O.Ps. are disposed of with the cost of the Contractor/Claimant in these two O.Ps. I fix the Counsel Fee for Mr. Bijai Sundar, learned Counsel for the Contractor at Rs. 2,500/-, payable by the Bharat Petroleum Corporation Limited.