ORDER : 1. The instant petition has been filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the Arbitral Award dated 19.12.2014, passed against the petitioner. 2. The brief facts leading to the filing of the instant petition are as follows: (a) The work of Gauge Conversion between Pollachi Palghat - Screening salvaged ballast, Marking of High Flood Level and Danger Level in Minor Bridges, Transportation of Ballast was awarded to the petitioner by the first respondent. The Letter of Acceptance dated 2.2.2012 was issued to the petitioner. The total value of the work was fixed at Rs.1,06,06,096/-. The time for completion was three months i.e., on or before 1.5.2012. Subsequently, an agreement dated 28.4.2012 was executed between the parties. (b) On receipt of the Letter of Acceptance, the petitioner had commenced the work. According to the petitioner, the nature of the work was such that the work could not be carried unless the formation was made ready. According to the petitioner, this work of making formation ready was given to some other contractor. However with the available space the petitioner completed as much work as possible. (c) The currency of the contract was extended up to 31.12.2012 under clause 17 A (ii) of the General Conditions of Contract. While ordering extension of the currency of the contract up to 31.12.2012, the first respondent has recorded that the balance work could not be completed on account of rains and the formation not being ready. By letters dated 20.10.2012 and 2.12.2012, the petitioner highlighted the following aspects: (1) The earth work and the formation of bank has not been completed. (2) Continuous rains resulting in stagnation of water hampered the progress of work relating to screening of salvaged ballast. (3) No space is available for stacking the salvaged ballast and the salvaged ballast had to be kept within the formation only. On account of lack of space, the lorries, tractor with trailer could not be used for transportation of ballast. (4) The nearby areas being agricultural area, the salvaged ballast could not be stacked. If lorries were pressed into service, they would have to run over the stack of ballast only on account of want of space. No path was available for movement of vehicles. (4) The nearby areas being agricultural area, the salvaged ballast could not be stacked. If lorries were pressed into service, they would have to run over the stack of ballast only on account of want of space. No path was available for movement of vehicles. (d) As there was no perceptible and positive response beyond writing letters to the petitioner, the petitioner did not want to pursue the work any more. By letter dated 9.2.2013, the petitioner called upon the first respondent to foreclose the contract, the currency of the contract expired on 31.12.2012. According to the petitioner, the currency of the contract was not extended by the first respondent beyond 31.12.2012, but without extending the currency of the contract beyond 31.12.2012, the respondent insisted that the petitioner should apply for extension. The petitioner repeatedly requested the first respondent to foreclose the contract, pay for him, the work done by him, refund the security deposit as well as the performance guarantee. (e) Having found that the first respondent did not pay any heed to his demands and requests, the petitioner by his letter dated 9.5.2013, addressed to the General Manager, Southern Railway requested the first respondent to appoint an Arbitrator to resolve the disputes raised by him. The copy of the said letter dated 9.5.2013 was also addressed to the Chief Engineer, Construction, Southern Railway, Egmore. The letter invoking the Arbitration clause was received by the General Manager, Southern Railway on 9.5.2013. This is evident from the letter dated 22.10.2013 written by the General Manager, Southern Railway to the petitioner appointing the Arbitrator. In the letter dated 22.10.2013, there is reference to the receipt of the petitioner's letter seeking appointment of Arbitrator on 9.5.2013. Therefore, with effect from 9.5.2013, according to the petitioner the Arbitral proceedings shall be deemed to have commenced in terms of Section 21 of the Arbitration and Conciliation Act, 1996. (f) According to the petitioner, with reference to the letter dated 9.5.2013, the contract was terminated by letter dated 4.6.2013, under clause 62 of the General Conditions of Contract. According to the petitioner, only during the pendency of the Arbitral proceedings the contract was illegally terminated by the first respondent by letter dated 4.6.2013. Thereafter, by letter dated 6.1.2014, the terms of the reference were formulated and communicated to the petitioner. According to the petitioner, only during the pendency of the Arbitral proceedings the contract was illegally terminated by the first respondent by letter dated 4.6.2013. Thereafter, by letter dated 6.1.2014, the terms of the reference were formulated and communicated to the petitioner. (g) The following claims were preferred by the petitioner against the first respondent before the Sole Arbitrator. (1)Declaration that the contract stood foreclosed. (2)Payment for work done Rs.2,50,000/- (3)Earnest Money Deposit to be refunded Rs.2,04,010/- (4)Security Deposit to be refuned Rs.2,51,996/- (5)Expenses towards consultancy & legal charges Rs.25,000/- (h)The first respondent filed its counter and raised counter claim against the petitioner before the Sole Arbitrator. The Sole Arbitrator after considering the materials available on record and after hearing the submissions of the parties, passed an Arbitral Award dated 19.12.2014 for a sum of Rs.2,00,658/- in favour of the petitioner towards the work done but disallowed all other claims. The Sole Arbitrator also held that the termination by the first respondent was legal and their counter claim of the first respondent was allowed. Considering the facts that claim Nos.2, 3, 4 and 5 of the petitioner have been rejected, the Arbitral Tribunal held that consequential benefits would flow to the first respondent. (i) Aggrieved by the Award dated 19.12.2014, the instant petition has been filed by the petitioner to set aside the Award under Section 34 of the Arbitration and Conciliation Act, 1996. 3. Heard. Mr.S.Raghavan, learned Counsel for the petitioner and Mr.C.V.Ramachandramurthy, learned Senior Panel Counsel for the first respondent. 4. The learned Counsel for the petitioner submitted that the petitioner could not complete the work since the formation was not made ready by the first respondent. The contract for making formation ready was given to some other contractor by the first respondent. 5. The learned Counsel for the petitioner drew the attention of this Court to the extension of contract sanctioned by the first respondent on 25.06.2012, after granting extension up to 31.12.2012. He then drew the attention of this Court to Sl.No.12 in the application for extension of time which is reproduced hereunder: Reason for extension: As on date 25% of the work Completed. He then drew the attention of this Court to Sl.No.12 in the application for extension of time which is reproduced hereunder: Reason for extension: As on date 25% of the work Completed. The balance works could not be completed due to rain and formation is not ready for dumping the ballast etc., In order to complete the works the Currency of the contract is extended Upto 31/12/2012 under same terms and Conditions of the contract. 6. According to the learned Counsel, as seen from the application for extension of time, it is clear that the formation was not made ready by the first respondent and the extension was granted up to 31.12.2012 only on that account. According to the learned Counsel for the petitioner, there was no default on the part of the petitioner and no breach of contract was committed by him. 7. The learned Counsel also drew the attention of this Court to the various letters sent by the petitioner to the first respondent informing them that the work could not be completed since the formation was not made ready. 8. The learned Counsel for the petitioner drew the attention of this Court to the letter dated 09.02.2013, sent by the petitioner to the first respondent, requesting them to foreclose the contract, since the currency of the contract expired on 31.12.2012. According to the learned Counsel for the petitioner, it is significant to note that the first respondent did not extend the currency of contract beyond 31.12.2012. Therefore, without extending currency of contract beyond 31.12.2012, the first respondent insisted that the petitioner should apply for extension. 9. The learned Counsel for the petitioner then drew the attention of this Court to the letter dated 09.05.2013, addressed to the first respondent to appoint an Arbitrator to resolve the dispute. 10. He drew the attention of this Court to the letter dated 22.10.2013, sent by the first respondent appointing the Arbitrator on the request made by the petitioner. In that letter, there is reference to receipt of the petitioner's letter seeking appointment of Arbitrator on 09.05.2013. Therefore, according to the learned Counsel for the petitioner, the Arbitral proceedings shall be deemed to have commenced in terms of the Section 21 of the Arbitration and Conciliation Act, 1996, on 09.05.2013. In that letter, there is reference to receipt of the petitioner's letter seeking appointment of Arbitrator on 09.05.2013. Therefore, according to the learned Counsel for the petitioner, the Arbitral proceedings shall be deemed to have commenced in terms of the Section 21 of the Arbitration and Conciliation Act, 1996, on 09.05.2013. 11.The learned Counsel for the petitioner drew the attention of this court to the letter dated 04.06.2013, sent by the first respondent to the petitioner terminating the contract Awarded to the petitioner under clause 62 of the General Conditions of the Contract. 12. He drew the attention of this Court to clause 62 of the General Conditions of Contract is reproduced hereunder: 2. 12. He drew the attention of this Court to clause 62 of the General Conditions of Contract is reproduced hereunder: 2. Determination of contract owing to default of Contractor: ...then and in any of the said cases, the Engineer on behalf of the Railway may serve the Contractor with a notice (Proforma at Annexure III) in writing to that effect and if the Contractor does not within seven days after the delivery to him of such notice proceed to make good his default in so far as the same is capable of being made good and carry on the work or comply with such directions as aforesaid to the entire satisfaction of the Engineer, the Railway shall be entitled after giving 48 hours' notice (Proforma at Annexure IV) in writing under the hand of the Engineer to rescind the contract as a whole or in part or parts (as may be specified in such notice) and adopt either or both of the following courses: (x)to carry out the whole or part of the work from which the Contractor has been removed by the employment of the required labour and materials, the costs of which shall include lead, lift, freight, supervision and all incidental charges; (y)to measure up the whole or part of the work from which the Contractor has been removed and to get it completed by another Contractor, the manner and method in which such work is completed shall be in the entire discretion of the Engineer whose decision shall be final; and in both the cases (x) and (y) mentioned above, the Railway shall be entitled (i) to forfeit the whole or such portion of the Security Deposit as it may consider fit, and (ii)to recover from the Contractor the cost of carrying out the work in excess of the sum which would have been payable according to the certificate of the Engineer to the Contractor if the works had been carried out by the Contractor under the terms of the contract, such certificate being final and binding upon the Contractor. Provided, however, that such recovery shall be made only when the cost incurred in excess is more than the Security Deposit proposed to be forfeited and shall be limited to the amount by which the cost incurred in excess exceeds the Security Deposit proposed to be forfeited. Provided, however, that such recovery shall be made only when the cost incurred in excess is more than the Security Deposit proposed to be forfeited and shall be limited to the amount by which the cost incurred in excess exceeds the Security Deposit proposed to be forfeited. The amount thus to be forfeited or recovered may be deducted from any moneys then due or which at any time thereafter may become due to the Contractor by the Railway under this or any other contract or otherwise. Provided always that in any case in which any of the powers conferred upon the Railway by sub-clause (1) of clause 62 hereof shall have become exercisable and the same shall not be exercised, the non-exercise thereof shall not constitute a waiver of any of the conditions thereof and such powers shall notwithstanding be exercisable in the event of any future case of default by the Contractor for which his liability for past and future shall remain unaffected. 13. Referring to the said clause, the learned Counsel for the petitioner submitted that neither 7 days notice calling upon the petitioner to make good his default nor the 48 hours notice thereafter was issued to comply with the requirements of clause 62 of the General Conditions of Contract. Further, the learned Counsel for the petitioner submitted that the first respondent did not extend the currency of the contract beyond 31.12.2012 and without extending the currency of the contract beyond 31.12.2012, the first respondent insisted that the petitioner should apply for extension. This will clearly indicate that no breach of contract was committed by the petitioner but only due to formation not being kept ready, the petitioner could not complete the work on time. 14. The learned Counsel for the petitioner drew the attention of this Court to the letter dated 16.02.2013, sent by the first respondent to the petitioner, which is in response to the letter dated 09.02.2013, sent by the petitioner. In that letter, the first respondent has admitted in paragraph 2 of the letter that earth work (formation) not completed. The extract from the letter dated 16.02.2013 is reproduced hereunder: 1... 2. For Reach II earth work, LOA is already issued for Km.22/500 to 39/0. The contractor has already commenced the work of earth work. For the balance length LOA will be issued shortly. Hence, you are requested to commence the work immediately. The extract from the letter dated 16.02.2013 is reproduced hereunder: 1... 2. For Reach II earth work, LOA is already issued for Km.22/500 to 39/0. The contractor has already commenced the work of earth work. For the balance length LOA will be issued shortly. Hence, you are requested to commence the work immediately. 3. The Agreement cannot be foreclosed at this juncture. Hence, kindly arrange to start the work immediately, duly giving a request for extension of currency. 15. According to the learned Counsel for the petitioner, as seen from the letter dated 16.02.2013, even after the extension period which ended up to 31.12.2012, the earth work (formation) was not completed by the first respondent. Only for this reason, the petitioner requested the first respondent to foreclose the contract. The learned Counsel for the petitioner then drew the attention of this Court to the findings of the Arbitral Tribunal for rejecting the claim made by the petitioner for refund of Earnest Money Deposit and Security Deposit and expenses towards consultancy and legal charges. 16.The learned Counsel for the petitioner submitted that the claims made by the petitioner towards the refund of Earnest Money Deposit and Security Deposit was rejected even though, the first respondent in its reply statement before the Arbitrator has admitted that the formation was not kept ready. Further, according to the learned Counsel for the petitioner, the contract can be terminated only under clause 62 of the General Conditions of Contract, which requires 7 days notice and thereafter 48 hours notice to be issued to the petitioner before issuing the termination letter. Instead of relying upon clause 62 of the General Conditions of Contract, the Arbitrator has relied upon the internal circular of the Railways which reads as follows: “A doubt has been raised by one of the Zonal Railways as to whether a contract is required to be necessarily terminated even after the expiry of the date of completion in the event the contractor has not sought for extension and the Railway has not taken necessary action for terminating the same within the validity period. The issue has been examined in detail in Board's office. In normal circumstances, no such contingency should arise and the contract signing authority is expected to take necessary action well in time. The issue has been examined in detail in Board's office. In normal circumstances, no such contingency should arise and the contract signing authority is expected to take necessary action well in time. However, in very rare cases, the reasons for which should be recorded, if such eventuality does arise, it is advised that a notice (sample copy enclosed) claiming damages also for the failure on the part of the contractor should be issued to the contractor who has not sought/is not willing to seek extension even after the expiry of the date of completion and the contract has ceased to exist with effect from the date of expiry, original or extended, as the case may be”. The instructions of Railway Board contained in letters dated 18.12.1987 and 17.05.2004 supra have been meticulously followed by the Railway Administration in issuing the Termination Notice dated 04.06.2013. Consequently, I hold that the Termination Notice dated 04.06.2013 is legally valid and enforceable. 17. In fact the termination letter dated 04.06.2013, also refers to only clause 62 of the General Conditions of Contract, but does not refer to the internal circular of the Railways which was relied upon by the Arbitrator in his findings. According to the learned Counsel for the petitioner, the termination of the contract is invalid since clause 62 of the General Conditions of Contract were not fulfilled by the first respondent. 18. The learned Counsel for the petitioner further, on instructions submitted that the petitioner is satisfied if the Earnest Money Deposit and Security Deposit is directed to be refunded by the first respondent to the petitioner and is not pressing the claims disallowed by the Arbitrator. Therefore, according to the learned Counsel for the petitioner, the Award dated 19.12.2014, will have to be modified and the first respondent be directed to pay a sum of Rs.2,04,010/- towards the refund of Earnest Money Deposit and Rs.2,51,996/- towards the refund of Security Deposit and a direction also be issued to the first respondent to release the performance guarantee given by the petitioner. 19. Per contra, Mr.Ramachandramurthy, learned Senior Panel Counsel for Railways submitted that since the petitioner had abandoned the work, the Security Deposit and the Earnest Money Deposit stands forfeited. According to him, the learned Arbitrator has rightly rejected the claim of the petitioner towards the refund of Earnest Money Deposit and Security Deposit since the petitioner had abandoned the work. 19. Per contra, Mr.Ramachandramurthy, learned Senior Panel Counsel for Railways submitted that since the petitioner had abandoned the work, the Security Deposit and the Earnest Money Deposit stands forfeited. According to him, the learned Arbitrator has rightly rejected the claim of the petitioner towards the refund of Earnest Money Deposit and Security Deposit since the petitioner had abandoned the work. 20. The learned Senior Panel Counsel also drew the attention of this Court to the letters dated 24.11.2013, 13.12.2013, 16.12.2013 and 07.13.2013 and in all those letters, the first respondent had requested the petitioner to complete the work and also apply for extension of contract. According to him, despite those reminders, the petitioner did not complete the work. According to him, not even 1/4th of the work was completed by the petitioner. 21. The learned Senior Panel Counsel for the first respondent then drew the attention of this Court on the request made by the petitioner by his letter dated 09.02.2013 for foreclosure and the reply dated 16.02.2013, sent by the first respondent, wherein the respondent had clearly indicated that the agreement cannot be foreclosed on the request of the petitioner. 22. The learned Counsel for the first respondent submitted that the contract between the parties does not provide for foreclosure. He relied upon the findings of the learned Arbitrator and submitted that the findings of the Arbitrator are perfectly valid and the reasons for rejection of the claim towards the refund of Security Deposit and Earnest Money Deposit are valid reasons. 23. This Court after considering the materials available on record, the findings of the learned Arbitrator under the impugned Arbitral Award and after hearing the submissions of the respective Counsels observes the following: (a)The formation (earth work) was not made ready by the first respondent to enable the petitioner to complete the work. The letters dated 07.03.2013 and 16.02.2013, confirms that the formation (earth work) was not completely made ready by the first respondent. (b)The extension of contract awarded by the first respondent to the petitioner on 25.06.2012, based on an application submitted by the petitioner clearly indicates that the balance work could not be completed by the petitioner only due to not making the formation (earth work) ready for dumping the ballast etc and the rains. As seen from the application for extension of time, there is no breach of contract committed by the petitioner. As seen from the application for extension of time, there is no breach of contract committed by the petitioner. Only due to the formation not being kept ready, the petitioner could not complete the work within time. 24. The termination letter dated 04.06.2013, issued by the first respondent was issued under clause 62 of the General Conditions of Contract, which requires 7 days notice and thereafter 48 hours notice, whereas the learned Arbitrator in his findings has not considered the clause 62 of the General Conditions of Contract but has relied upon an internal circular of the Railways and based on that circular held that the termination is valid. Admittedly, no notice was given to the petitioner in accordance with clause 62 of the General Conditions of Contract. 25. The petitioner has also repeatedly informed the first respondent that formation has not been kept ready which resulted in the delay in execution of the work but, as seen from the evidence available on record, the first respondent has not responded to those letters. 26. Initially, the contract awarded to the petitioner was only for a period of three months i.e. 2.2.2012 to 1.5.2012, which was extended for a further period up to 31.12.2012. The rates agreed upon by the petitioner was only for the contractual period. As evident from the materials available on record, only due to formation not being kept ready, the petitioner was unable to complete the work on time. Therefore, the petitioner should not be made to suffer for no fault of his own and be made to agree to do the work even for the extended period under the rates originally agreed upon between the parties while the contract was awarded. 27. The contract became frustrated because of formation (earth work) not being kept ready by the first respondent and therefore, the petitioner has rightly foreclosed the contract. 28. The findings of the learned Arbitrator has not considered the representations made by the petitioner in his letters dated 07.03.2013 and 16.02.2013, that the formation (earth work) was not ready in all respects and also the admission made in the reply statement before the learned Arbitrator that the formation was not ready. 28. The findings of the learned Arbitrator has not considered the representations made by the petitioner in his letters dated 07.03.2013 and 16.02.2013, that the formation (earth work) was not ready in all respects and also the admission made in the reply statement before the learned Arbitrator that the formation was not ready. Without considering the vital documents, based on an internal circular of the Railways dated 17.05.2004, to which the petitioner is not a party, the learned Arbitrator has held the termination notice dated 04.06.2013 issued by the first respondent to be valid. Even though, the termination letter dated 04.06.2013, refers to clause 62 of the General Conditions of Contract, the learned Arbitrator without considering the same has given his findings that the termination is valid based on an internal circular of the Railways. Therefore, the findings of the learned Arbitrator that termination is valid is certainly perverse and shocks the judicial conscience of this Court. This Court after considering the materials available on record, comes to the conclusion that the termination of the contract by the letter dated 04.06.2013 is an invalid termination. 29. The learned Counsel for the petitioner has submitted that the petitioner is satisfied if this Court modifies the Arbitral Award by allowing the claim towards the refund of Earnest Money Deposit and the Security Deposit which is a liquidated and undisputed sum of money. This Court finds force in the submission of the learned Counsel for the petitioner. 30.A learned Single Judge of this Court in the case of Gayatri Balaswamy vs. ISG Novasoft Techonologies Ltd., reported in 2014 (6) CTC 602 has held that modifying an Arbitral Award is permissible under Section 34 of the Arbitration and Conciliation Act. The relevant paragraphs of the said judgment are reproduced hereunder: “51.The expression recourse to a Court against an Arbitral Award is a comprehensive and inclusive expression. Merely because such recourse is to be made in the form of an Application to set aside the Award, it cannot be construed that the power of the Court is limited by Section 34(1), only to set aside the Award and to leave the parties in a position much worse than what they contemplated or deserved before the commencement of the Arbitral proceeding. A statute cannot be interpreted in such a manner as to make the remedy worse than the disease. A statute cannot be interpreted in such a manner as to make the remedy worse than the disease. A narrow interpretation of Section 34(1) would actually spell doom for the Arbitration regime and actually create a mischief. 52.Therefore, in my considered view, the expression recourse to a Court against an Arbitral Award appearing in Section 34(1) cannot be construed to mean only a right to seek the setting aside of an Award. Recourse against an Arbitral Award could be either for setting aside or for modifying or for enhancing or for varying or for revising an Award. The expression Application for setting aside such an Award appearing in Section 34(2) & (3) merely prescribes the form, in which, a person can seek recourse against an Arbitral Award. The form, in which an Application has to be made, cannot curtail the substantial right conferred by the statute. In other words, the right to have recourse to a Court, is a substantial right and that right is not liable to be curtailed, by the form in which the right has to be enforced or exercised. Hence, in my considered view, the power under Section 34(1) includes, within its ambit, the power to modify, vary or revise.” 31. This Court is therefore of the considered view that the Award can be modified by allowing the claim of the petitioner towards the refund of Earnest Money Deposit and the Security Deposit. 32. For the foregoing reasons, this Court is of the considered view that the Arbitral Award dated 19.12.2014, is patently illegal and the findings are perverse. 33. In the result, the Award dated 19.12.2014, shall stand modified by directing the first respondent to pay a sum of Rs.2,04,010/- towards refund of Earnest Money Deposit and Rs.2,51,996/-towards refund of Security Deposit to the petitioner. Insofar as, the other claims made by the petitioner before the learned Arbitrator are concerned, the findings of the Arbitrator that the petitioner is not entitled to their claims is hereby confirmed and remains undisturbed. 34. With the above directions, the original petition shall stand disposed of. However, there shall be no order as to costs.