JUDGMENT : S. VAIDYANATHAN, DR. G. JAYACHANDRAN, JJ. (Prayer: Civil Miscellaneous Appeal filed under Section 37(1) & (2) of Arbitration Act, to set aside the order, dated 08.11.2016, passed in Arbitration Original Petition No.1 of 2014, on the file of the Principal District Judge, Madurai.) 1. This Civil Miscellaneous Appeal is filed under Section 37 of the Arbitration Act, being aggrieved by the order of the Principal District Judge, Madurai, made in Arbitration Original Petition No.1 of 2014, dated 08.11.2016, confirming the Award of the sole Arbitrator, dated 01.11.2013. 2. The brief facts of the case is that the appellant herein invited tender for the work of widening of four lane NH 49 from KM.5/2 - 6/0 and for KM., 10/2 - KM 16/6 and for improving the riding quality in NH 49, on the point from 6/0 - 10/2; 39/0 - 43/0; 77/6 - 88/0 KM. The respondent herein was the successful bidder for contract price of Rs.20,11,95,351/-. Vide letter dated 01.03.2011, the respondent was asked to furnish performance security for an amount equivalent to Rs.1,00,63,000/- within 21 days and sign the contract. Accordingly, on the same day, the performance guarantee was furnished by the respondent. The appellant and the respondent entered into an agreement. As per the terms of agreement, the time for completion of contract was 11 months from the date of handing over of the site. The site was handed over to the respondent on 14.05.2011, (i.e.) after a delay of 2 months and 13 days from the date of entering into agreement. This delay was due to the Notification of General Election Code of Conduct. It is also an admitted fact that there was in interim order by the Court restraining the parties from felling trees on the road margin. In the said circumstances, on 15.06.2011, the respondent herein made a claim for price adjustment and extension of time. In the claim dated 15.06.2011, the respondent herein made out a case for increase of contract price, on the ground that due to the delay in handing over the site, there was increase in the bitumen price upto 14.97% and therefore, requested for early order for supplemental agreement and informed the appellant that in anticipation of the approval he is proceeding with the work. 3. 3. The claim of the respondent was considered by the Divisional Engineer, NH Madurai and recommended for revision of contract price, due to increase in cost of bitumen between the date of agreement and the date of handing over of the site. However, the Chief Engineer, National Highways declined the request and held that the work proposed during the delay in handing over the site does not involve in any bitumen item and therefore, it may not be appropriate to consider compensation for rise in the price of bitumen during the period. However, the respondent was permitted to complete the work within the extended period of time. Thus, the request for revision of contract price was declined on the ground that the modification in the standard bidding document does not permit for modification of the price by the Regional office. As a result, the claimant's plea was partially rejected. The operative portion of the Superintending Engineer, Communication, dated 27.03.2012 reads as follows:- “ ..... the contractor has requested to extend the tender completion date and since intended completion period is increasing from 11 months to 15 months, the price variation clause may be included in the agreement. 2. In this connection, it is to mention that since there is no provision of price variation in the contract agreement, request for inclusion of price variation clause in contract agreement after award of the work may leads to modification in SBD, therefore not advisable. However, regarding the compensation events, necessary action may be taken as per clause 44 of the contract agreement.” 4. In the said circumstance, invoking the provision of Clause 25.2 of the General Condition of the Contract (GCC), the respondent requested the Superintendent Engineer, National Highway, to refer the dispute for arbitration. Thus, Thiru.P. Sridharan, Chief Engineer (Retired) came to appoint as sole arbitrator. 5. The sole Arbitrator, on considering the submissions and the materials placed before him and in the light of the terms of the agreement, particularly, clause 42.2 and 44.2 held that the claimant is entitled to receive monetary value of the claim made out under claim No.1 and also held that the claimant is entitled for payment of interest on the claim amount, as per the clause 43.1 r/w 43.2 of the GCC and Section 31 clause 7 of Arbitration and Conciliation Act, 1996. 6. 6. The said Award of the Arbitrator was challenged by the appellant before the Principal District Court, Madurai, under Section 34 of the Arbitration and Conciliation Act, 1996. The Principal District Judge in Arbitration O.P.No.1 of 2014, referring clause 28 of GCC held that admittedly, the site was handed over belatedly and therefore, the compensation event gets attracted. The Engineer, who has extended the completion date ought to have compensated the additional costs incurred by the contractor. The court concluded that there is no irregularity in the order of the Arbitrator. In the said circumstances, the above appeal is filed under Section 37(1) & (2) of the Arbitration Act. 7. Ms. L.Victoria Gowri, the learned Assistant Solicitor General of India appearing for the appellant would submit that the learned Principal District Judge, has failed to appreciate the fact that the Arbitrator has failed to properly interpret the agreement clauses. Since the delay in handing over of the site to the contractor was beyond the control of the appellant, the compensation event will not get attracted. Even otherwise, as per the terms of contract, the contractor is entitled for compensation event or for extension of time but not both. Having elected for extension of time, he cannot seek for compensation also. The learned Assistant Solicitor General would further submit that the learned Judge has wrongly interpreted the clause 44.2, by allowing the compensation for the escalation of price. Further, the learned Assistant Solicitor General would also submit that allowing the claim with interest at 12% p.a., is penal in nature and therefore, illegal. 8. Mr. V.R.Shanmuganathan, the learned counsel appearing for the respondent would submit that if a compensation event occurs or variation is issued, which makes it impossible for completion, the Engineer is empower to extend the intended completion date. Clause 44 enumerates the compensation event, which includes delay in handing over of price or delay in giving access to the part of the site. Extension of time and increase in contract price are not mutually exclusive, but supplementary to each other. The Arbitrator has rightly considered the terms of the contract and has awarded the claim with 12% interest, as envisaged under Clause 43.1 and therefore submitted that the appeal is devoid of merits and the same is liable to be dismissed with costs. 9. The Arbitrator has rightly considered the terms of the contract and has awarded the claim with 12% interest, as envisaged under Clause 43.1 and therefore submitted that the appeal is devoid of merits and the same is liable to be dismissed with costs. 9. After hearing the learned counsels and perusing the records, this Court found that the contract entered between the appellant and the respondent, dated 01.03.2011, was supposed to be completed within a period of 11 months, but the work was commenced only after 14.05.2011 on handing over the site. The appellant admits that the delay was because of the Election Code of Conduct, which came into force due to the General Election and the interim orders passed by this Court against felling of the tree on the road margin. It is also admitted by the appellant that there was price increase in respect of bitumen during this period. Since the appellant agreed to extend the time, but refused to increase the rate, the respondent herein had invoked the arbitration clause. The respondent herein has raised a dispute before the arbitrator and the arbitrator has given his finding that the appellant is liable to pay claim-1 with interest at 12%. Clause 28(1) of GCC., reads as below:- “28.1 The Engineer shall extend the Intended Completion Date if a Compensation Even occurs or a Variation is issued which makes it impossible for Completion to be achieved by the Intended Completion Date without the Contractor taking steps to accelerate the remaining work and which would cause the Contractor to incur additional cost.” A careful reading of the above clause indicates that the intended completion date can be extended by the Engineer provided a compensation event occurred. But it does not say that the compensation has to be awarded whenever there is an extension of time. 10. Clause 44, which deals with compensation event indicate that delay in handing over the site is one among the various events, which may give right to the contractor for claiming compensation. The relevant clause in the contract is Clause 44.2, reads as below:- “44.2. If a Compensation Even would cause additional cost or would prevent the work being completed before the Intended Completion Date, the Contract Price shall be increased and/or the Intended Completion Date is extended. The relevant clause in the contract is Clause 44.2, reads as below:- “44.2. If a Compensation Even would cause additional cost or would prevent the work being completed before the Intended Completion Date, the Contract Price shall be increased and/or the Intended Completion Date is extended. The Engineer shall decide whether and by how much the Contract Price shall be increased and whether and by how much the Intended completion Date shall be extended.” (emphasis added) 11. Thus, the compensation event per se will not give rise to claim compensation, but it only give rights to extension of time. Compensation or/for a price increase can be granted, if the compensation event leads to additional costs. A careful scrutiny of this clause would show that the contract price shall be increased and/or the intended completion date may be extended. Therefore, extension of completion date and increase of contract price can co-exists and they are not mutually exclusive, as contended by the appellant in this appeal. 12. It is also incorrect to contend that the price increase cannot be made unless modification in the standard bidding document is done. Reading of clause 44.2 it is amply clear that the Engineer himself can decide whether by how much the contract price can be increased and whether by how much the intended completion date can be extended. In the case on hand, the Engineer has decided the period of extension of completion date whereas, he has declined to decide the increase of contract price, as if he is not empowered to increase the contract price. Therefore, rightly the arbitrator as well as the court below has held against the appellant. 13. Regarding the interest portion, being a commercial contract, the arbitrator has fixed the interest at 12% p.a., for the delayed payment by invoking clause 43.1. However, after hearing the counsels and perusing the record, the Court has found that there is no merit in the appeal, but there can be some interference in the rate of interest, expressed its view to the counsel. However, after hearing the counsels and perusing the record, the Court has found that there is no merit in the appeal, but there can be some interference in the rate of interest, expressed its view to the counsel. As a result, a memo was filed on behalf of the respondent without prejudice to their rights under the contract and under the Award passed by the Arbitrator, as confirmed by the learned Principal District Judge that they agree to receive the claim amount with reduced interest at 10% p.a., instead of 12% p.a., as fixed by the Arbitrator and confirmed by the Court. 14. In the light of the above discussion and in the light of a memo filed by the respondent, this Court holds that, (i) the appeal filed under Section 37 of the Arbitration Act, deserves to be dismissed as devoid of merits. (ii) The substantial questions of law, as framed by the appellant are answered in negative against the appellant. (iii) The Award of the Arbitrator, dated 01.11.2013, as confirmed by the Arbitration Tribunal, the Principal District Judge, Madurai in Arbitration Original Petition No.1 of 2014, dated 08.11.2016, is confirmed insofar as the claim amount. (iv) Regarding the rate of interest, it is reduced to 10% p.a., from 12% p.a. 15. With the said modification in the interest rate, as stated above, the award of the sole Arbitrator is confirmed. The Civil Miscellaneous Appeal is disposed of with costs. Consequently, the connected miscellaneous petition is closed.