S. S. CHADHA, J. ( 1 ) THIS judgment will dispose of a batch of first appeals arising out of a common judgment determining the objections against the award dt. Sept. 24, 1985 of the sole arbitrator relating to fuel adjustment charges in the electricity Tariff of the Delhi Electric Supply Undertaking. ( 2 ) THE Municipal Corporation of Delhi is a body corporate established under S. 3 of the Delhi Municipal Corporation Act, 1957 (hereinafter called the Act) and is charged with the Municipal Government of Delhi under its statutory provisions. Under S. 42 of the Act, one of the obligatory functions of the Municipal Corporation of Delhi (for short called the Corporation) is the construction or purchase, maintenance, extension, management and conduct of any undertaking for the generation or supply and distribution of electricity to the public. For the efficient performance of its functions, a number of municipal authorities under the Corporation are constituted including the Delhi Electric Supply Committee (for short called D. E. S. C. ). The D. E. S. C. is responsible for the conduct and management of the Delhi Electric Supply Undertaking (for short called DESU) and for the efficient discharge of such responsibility is to exercise such powers and perform such functions as are conferred or imposed by or under the Act. The provisions relating to the electric supply are contained in Chap. XIII, Ss. 274 to 286 of the Act. In addition to the provisions of the Act, the provisions of the Electricity Act, 1910, the Electricity Rules, 1956 framed thereunder and the Electric (Supply) Act, 1948 are relevant. S. 275 lays down the duty of the D. E. S. C. to develop and maintain an efficient coordinated and economical system of electric supply for the whole of the Union Territory of Delhi. In the discharge of its functions in relation to electric supply, the D. E. S. C. , inter alia, is to promote the use of all economical methods of generating, transmitting and distributing electricity. By virtue of S. 277 the Corporation have all the powers and obligations of a licensee under the Electricity Act, 1910. According to sub-sec. In the discharge of its functions in relation to electric supply, the D. E. S. C. , inter alia, is to promote the use of all economical methods of generating, transmitting and distributing electricity. By virtue of S. 277 the Corporation have all the powers and obligations of a licensee under the Electricity Act, 1910. According to sub-sec. (2) of S. 278 the General Manager (Electricity) is authorised on behalf of the Corporation to exercise all powers and be subject to all the obligations of a licensee under the Electricity Act, 1910 or any other law for the time being in force relating to the generation or supply of electricity. Section 281 contains the powers of the Corporation to make arrangements with licensees and for that purpose enter into agreements with them without showing any undue preference to any licensee. Section 283 makes provisions for the charges for the supply of electricity and reads as under :- "subject to the provisions of any law for the time being in force, charges shall be leviable for the supply of electricity by the Corporation at such rates as may, from time to time, be fixed by the Delhi Electric Supply Committee with the approval of the Corporation. "in exercise of the powers conferred by S. 283 of the Act, charges for supply of electricity, called electricity Tariff, are fixed from time to time almost yearly. The Tariff divides the consumers for the purposes of charging them in different categories like domestic, non- domestic, industrial load, agriculture, street lighting, night load tariff, railway traction, temporary supply etc. It also includes general conditions of application, one of which is that the supply of electricity in all cases is subject to the execution of agreements including compliance of commercial formalities by the consumers. The industrial consumers are further sub-divided into small industrial power consumers and large industrial power consumers. We are concerned in these cases with the bulk consumers called Large Industrial Power (LI. P.) consumers. ( 3 ) ON Feb. 15,1982, the Commissioner of the Corporation (while exercising the powers of the Delhi Electric Supply Committee/ Standing Committee/corporation) fixed and approved the charges for the supply of electricity for the year 1982-83. We are concerned in these cases with the bulk consumers called Large Industrial Power (LI. P.) consumers. ( 3 ) ON Feb. 15,1982, the Commissioner of the Corporation (while exercising the powers of the Delhi Electric Supply Committee/ Standing Committee/corporation) fixed and approved the charges for the supply of electricity for the year 1982-83. With regard to the L. I. P. consumers, the provisions in the Tariff was as follows : "b Large Industrial Power (L. I. P.) (a) Availability : Available as primary power to large industrial consumers having connected load above 100 K. W. (b) Character of Service : A. C. 50 Cycles, 3 phase, 11 K. V. (c) Tariff First 500 K. W. of bill- Rs. 20. 00 per K. W. ing demand for the or part thereof month Next 1000 K. V. A. of Rs. 16. 50 per KVA billing demand for the or part thereof month Next 5000 K. V. A. of Rs. 16. 00 per KVA billing demand for the or part thereof month All in excess of above Rs. 15. 50 per KVA billing demand or part thereof. Plus Energy charges : First 5,00,000 units per month at 27. 5 paise per unit. Next 5,00,000 units per month at 27. 0 paise per unit. Next 10,00,000 units per month at 26. 5 paise per unit. All above 20,00,000 units per month at 026. 0 paise per unit. Subject to : 1. An adjustment of energy charges as under: (i) The above energy charges are based on the basic average fuel and purchase cost of 15. 25 paise per KWH (ii) The actual cost of fuel used during any period shall be the amount in rupees of the cost of all types of fuel burnt in. the undertaking Thermal Generating Plants in that period. (iii) The actual cost of energy purchased shall be the amount paid in rupees for import of energy for that period (iv) The cost of energy per KWH sold shall be quotient computed on dividing the sum of (ii) and (iii) by the KWH sold during the period (v) The increase or decrease in cost of per KWH sold shall be the difference of (iv) and (i) above subtracted to the above energy rates. Final adjustment on account of variation in energy charges will be made as soon as possible after the close of the period of account but adjustment as may be provisionally fixed by the DESU Management from time to time will be incorporated as a part of the monthly bill and shall be payable by the consumer. Such provisional rates as and when finalised shall have retrospective effect from the beginning of that financial year. " ( 4 ) M/s. D. C. M. Ltd. had earlier entered into an agreement on Sept. 26, 1972 with DESU for the supply of electrical energy as a registered consumer of Large Industrial Power connection No. XI-01-9000030 L Identical agreements have been entered into by other L. I. P. Consumers before us. Clause 15 (a) of the said agreement reads as under : "15 (A ). The Consumer shall pay each month to the undertaking for electrical energy, supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule LIP attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The Consumer shall be eligible for whatever reduction or rebate as may be granted on the rates and shall be liable to pay for whatever surcharge or increase in those rates as may be from time to time be levied or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable. " ( 5 ) THE rate schedule of L. I. P. Consumers which was annexed to the said agreement has not been placed on record but it is the admitted case of the parties that the Tariff was identical (except to the rates) to the Tariff which was fixed by respondent 2 for the year 1982-83. One of the Clauses of the said agreement contains an arbitration agree- ment. ( 6 ) THE Tariff provides for the payment of energy charges which are payable by all consumers at the rates specified therein. The L. I. P. consumers have to pay demand charges plus energy charges. The demand charges depend upon the quantum ofthe electricity consumed as also the energy charges. However, the energy charges are adjustable according to the formula laid down in the Tariff. It is more commonly known as the fuel adjustment charges. The L. I. P. consumers have to pay demand charges plus energy charges. The demand charges depend upon the quantum ofthe electricity consumed as also the energy charges. However, the energy charges are adjustable according to the formula laid down in the Tariff. It is more commonly known as the fuel adjustment charges. The energy charges are based on the basic average fuel and purchase cost of 15. 25 paise per KWH which is liable to variation as per calculations made in terms of sub-paras (ii) to (iv ). The cost of the energy per KWH sold is the quotient computed on dividing the sum of the actual cost of fuel used and the actual cost of energy purchased . The increase or decrease in the cost per KWH sold is the difference between the quotient computed and basic average of Rs. 15. 25 paise per KWH. The formula also provides for final adjustment on account of variation in the energy charges as soon as possible after the close of period of account. It also authorises DESU to make adjustment as may be provisionally fixed by them from time to time. ( 7 ) CERTAIN disputes arose between the appellants and DESU regarding payment of increased fuel adjustment charges. The main dispute is that the basic average fuel and purchase cost in fuel adjustment clause would mean only the invoice price of coal as fuel and will not include any related expenses. Petitions under S. 20 of the Arbitration Act were filed in this Court. B N. Kirpal, J. who was seized of the suit, including suit No. 518- A/83, in his judgment dt. May 24, 1984 (reported in ILR (1984) 2 Delhi 758), noticed the dispute in these words : "in the exercise of its statutory power the Corporation has fixed the rates and specified a formula on the basis of which the amount to be charged by way of fuel adjustment charges can be varied. The dispute in the present case is really as to whether the variation of fuel adjustment charges has been done in accordance with the formula or not. The petitioners are ready and willing to pay the energy charges which are fixed in accordance with the said formula. The dispute in the present case is really as to whether the variation of fuel adjustment charges has been done in accordance with the formula or not. The petitioners are ready and willing to pay the energy charges which are fixed in accordance with the said formula. To my mind, though it is not open to the petitioners to challenge the correctness of the rates fixed or the formula which is laid down for computing the amount of the energy charges, but it is open to them to contend that in working out the formula, irrelevant or extraneous considerations have been taken into account or that the formula has not been properly followed while computing the fuel adjustment charges which are now being demanded. While considering whether the said charges have been worked out in accordance with the formula or not, it is not open to challenge the correctness of the accounts or the figures of the respondent No. 2, but as already noted, it can be contended that some relevant factors have not been taken into consideration or irrelevant. factors have been taken into account. "it was further observed : ". . . . . . . IN the arbitration proceedings it will be open to the petitioners to contend before the arbitrator that the fuel adjustment charges have not been computed in accordance with formula. Such a dispute would be one which would be connected with the agreement because it would pertain to the liability of the petitioners to pay charges for the consumption of electricity. It will, of course, not be open to the petitioners to contend before the Arbitrator that the rate fixed in the Tariff is high and nor will it be open to the petitioners to challenge the formula which, has been laid down. It will, of course, not be open to the petitioners to contend before the Arbitrator that the rate fixed in the Tariff is high and nor will it be open to the petitioners to challenge the formula which, has been laid down. It will also be outside the scope of the Arbitration to ask the Arbitrator to enquire into the correctness of the accounts of D. E. S. U. "b. N. Kirpal, J. allowed the petitions and directed that the arbitration agreement be filed in Court and the following dispute was referred to the arbitration : "whether the fuel adjustment charges have been fixed and are being demanded by respondent 2 from time to time in accordance with the tariff for the year in question?"this reference was felt as comprehensive enough to include all questions which could be raised before the arbitrator, including the question as to whether the provisional revision of such charges can be made, from time to time, with retrospective effect. His Lordship appointed Shri S. N. Andley, a retired Chief Justice of this Court as the sole arbitrator. ( 8 ) SHRI S. N. Andley made and published his award on Sept. 24, 1985. The learned arbitrator noticed that the real dispute between the parties arose because the energy charges are subject to adjustment according to the formula set out in the Tariff. In his reasoned award, he held that provisional adjustment can be retrospective. He next dealt with the question about the adjustment of energy charges. He felt that for this purpose, it is necessary to determine (1) actual cost of fuel, (2) actual cost of energy purchased and (3) the energy sold. He understood the reference as to what is to be determined is as to whether in arriving at the actual cost of fuel irrelevant factors have been taken into consideration. He referred to the statement (Annexure 16), at page 31 to the affidavit of Shri D. C. Seth dt. Jan. 4, 1985 which had given the average rate for coal cost for the year 1981-82 which comprises of 10 items, namely, (i) Cost, (ii) Freight, (iii) Octroi, (iv) Siding charges, (v) Loading charges, (vi) Unloading charges, (vii) Demurrage charges, (viii) Salary and wages of Coal handling Loco Staff and Railway Siding Staff, (ix) Interest and maintenance, and (x) Audit fee. 4, 1985 which had given the average rate for coal cost for the year 1981-82 which comprises of 10 items, namely, (i) Cost, (ii) Freight, (iii) Octroi, (iv) Siding charges, (v) Loading charges, (vi) Unloading charges, (vii) Demurrage charges, (viii) Salary and wages of Coal handling Loco Staff and Railway Siding Staff, (ix) Interest and maintenance, and (x) Audit fee. In these appeals, we are concerned only with the component demurrage charges . According to D. E. S. U. , the demurrage charges accrue because of various factors enumerated in para 10 of the affidavit dt. May 13, 1985 of D. C. Seth and shortly stated the circumstances are the time taken for unloading of wagons and clearing of the tracks which, according to D. E. S. U. , are unavoidable. This contention did not find favour with the learned arbitrator. He observed that it is for D. E. S. U. to make necessary arrangements for unloading of the wagons and clearing of tracks and that their inadequacy cannot justify the inclusion of the demurrage charges in calculating the actual cost of fuel nor can the consumers be penalised or burdened because of such inadequacy. He held that the demurrage charges incurred by D. E. S. U. are not relevant for determining the actual cost of fuel for the purpose of adjustment formula. ( 9 ) THE learned arbitrator also dealt with transmission and distribution losses shown as an item in the statement showing the fuel and purchase surcharge during the years 1977-78 to 1982-83 which is Annexure 2 to the affidavit dt. May 13,1985 of Shri D. C. Seth. He noticed. that for adjustment of energy charges according to the formula, three items are specified which are to be taken into consideration, namely, (1) the actual cost of fuel used during any period, (2) the actual cost of energy purchased and (3) the cost of energy per KWH sold. He expressed the view that as a separate and distinct item transmission and distribution losses cannot come under any of the aforesaid two costs under the adjustment formula and if transmission and distribution losses are covered in the process of arriving at the quotient according to the formula, so much more reason not to consider them as an additional and separate item. He, however, held that "the energy sold is not the energy generated by DESU or the energy purchased by it. Energy sold is the energy consumed by the consumer as recorded in his meter for which he pays DESU". He, therefore, held that transmission and distribution losses cannot be a separate item of charge under the adjustment formula and is not a relevant. charge. ( 10 ) THE award was filed in this Court and registered as Suit No. 1862-A/85 in M/s. D. C. M. Ltd. case. Objections for setting aside the award were filed. The parties went to trial on the following issues : "1. Whether the objections filed by the respondents (M. C. D. and D. E. S. U.) do not disclose any cause of action? 2. Whetherthe award is liable to be set aside/modified in respect of demurrage charges when the arbitrator says that this cannot be taken into consideration while working out the adjustment formula? 3. Whether the award is liable to be set aside/modified/remitted when the arbitrator says that transmission and distribution losses cannot be taken into consideration? 4. Whether any specific question of law was referred to the arbitrator and if so, whether the award cannot be challenged on that account? 5. Relief. "it was agreed by the counsel for the parties that the arbitration proceedings as well as the pleadings and documents filed in the suit under S. 20 of the Arbitration Act be read as evidence and no oral evidence was led. D. P. Wadhwa, J. in the judgment dt. Jan. 16, 1986 under appeal dealt with Issue No. 4 first. It was held that no specific question of law was referred to the arbitrator as such, though it might be said that questions of law were referred generally as applicable to certain admitted facts, even though involving interpretation/construction of the adjustment formula. Issue No. 4 was held against the appellants. The learned single Judge noticed while dealing with other issues that the energy charges were based on the basic average fuel and purchase cost of 15. 25 paise per KWH and the components/items which went into the computation of the figure 15. Issue No. 4 was held against the appellants. The learned single Judge noticed while dealing with other issues that the energy charges were based on the basic average fuel and purchase cost of 15. 25 paise per KWH and the components/items which went into the computation of the figure 15. 25 paise were the very basis of the reference and the arbitrator was only required to adjudicate in effect, if any other item was also taken into account for the subsequent years to arrive at the cost of fuel and if that particular item was relevant or not. He upheld the contention that the arbitrator went beyond the term of reference when the arbitrator in effect went into the ten items comprised in computing the cost of fuel for the year 1977-78, which the Court had said could not be challenged. He held that the elements which went into in arriving at the figure of 15. 25 paise could not be subject matter of challenge before the arbitrator. Issue No. 2 was decided against the appellants. ( 11 ) ON the question of transmission and distribution of losses, the learned single Judge referred to the issue formulated by the arbitrator as to whether transmission and distribution losses can be included while computing the actual cost of fuel used and/or actual cost of energy purchased. The learned single Judge opined that to work out the formula, three figures are relevant, namely, (1) cost of fuel, (2) cost of energy purchased and (3) number of units sold, and the figures of No. 1 plus No. 2 are to be divided by figure of No. 3; that transmission and distribution losses are, therefore, not a separate item of charge under the adjustment formula, that while working out the adjustment for the year 1977-78 and to arrive at a figure of 15. 25 paise which figure is variable and transmission and distribution losses have similarly been taken into account while arriving at the figure of units sold and that the arbitrator could not hold that transmission and distribution losses were irrelevant when they were so relevant for the year 1977-78. He held Issue No. 3 against the appellants. An error apparent on the face of the record was found because of decision on Issues 2 and 3. He held Issue No. 3 against the appellants. An error apparent on the face of the record was found because of decision on Issues 2 and 3. The award on the question of demurrage charges and transmission and distribution losses was set aside in so far as it held that these two items could not be taken into consideration in working out the adjustment formula. The award, as modified, was made rule of the Court and a decree in terms thereof was passed. ( 12 ) MR. M. C. Bhandare, Sr. Advocate who led the arguments of the appellants followed by Mr. Harish Salve, Mr. K. K. Jain and Mr. S. K. Dholakia questioned the decision of the learned single Judge firstly on Issue No. 4 as to whether any specific question of law was referred to the arbitration and if so, whether the award cannot be challenged on that account. It is contended that the learned single Judge misdirected himself in taking the view that as the question of law referred was not specific, the award of the arbitrator was open to challenge as being vitiated by errors of law. The scope of the reference is to be construed from the order of B. N. Kirpal, J. dated May 23,1984 allowing the petition under S. 20 of the Arbitration Act. It is urged that the specific legal issue referred to the arbitrator was whether the computation of the fuel adjustment charges and the demand for the fuel surcharge was in accordance with the formula. The legal issue referred was the true construction of the formula contained in the Tariff. It is conceded that the correctness of the basic rate of 15. 25 paise was beyond the pale of the challenge, but it was open to the appellants to urge as to what is the "actual cost of fuel" unconnected with any factual dispute, that is, what elements are to be included in it and that is a question of law. Relying on "m/s. Tarapore and Co. 25 paise was beyond the pale of the challenge, but it was open to the appellants to urge as to what is the "actual cost of fuel" unconnected with any factual dispute, that is, what elements are to be included in it and that is a question of law. Relying on "m/s. Tarapore and Co. v. Cochin Shipyard", AIR 1984 SC 1072 , it is submitted that if a question of law is specifically referred and it becomes evident that the parties desired to have a decision on the specific question from the arbitrator about that rather than one from Court, then Court will not interfere with the award of the arbitrator on the ground that there is an error of law apparent on the face of the award, even if the view taken by the arbitrator does not accord with the view of the Court. ( 13 ) THE main emphasis of Mr. V. P. Singh, the learned counsel for DESU in reply is that the Tariff has been fixed in exercise of the powers conferred by S. 283 of the Act. The Tariff has been notified and the charges leviable for the supply of electricity have been fixed by the D. E. S. C. with the approval of the Corporation. It contains a clause that the energy charges are based on the basic average fuel used and purchase cost of 15. 25 paise per KWH. It is urged that the delegate of the legislature must be attributed that it had gone into the elements in fixing the basic. average fuel cost of 15. 25 per KWH and that it had also considered the reasonableness of the parameters in determining the actual cost of energy used. The submission is that if the determination of the fuel adjustment charges or the computation of the actual cost of the fuel is on the elements which have been gone into in fixing the energy charges of 15. 25 paise, then it is not open to the arbitrator to re-open or question those elements. By way of an illustration, it is urged that the administration charges in planning and placing the orders for the fuel used, if included, may or may not be extraneous and this question could be gone into by the arbitrator but not the factors in arriving at the figure of 15. 25. By way of an illustration, it is urged that the administration charges in planning and placing the orders for the fuel used, if included, may or may not be extraneous and this question could be gone into by the arbitrator but not the factors in arriving at the figure of 15. 25. These ingredients are germane to the determination of the energy charges and thus beyond the scope of reference as there was no dispute to it. He submits that if demurrage charges excluded by the arbitrator are allowed to be excluded, then the basic Tariff of 15. 25 is disturbed; its structure is demolished, even though partly and this is not permissible as it is a statutory Tariff by the delegate of the legislature. Relying on "m/s. Prag Ice and Oil Mills v. Union of India", AIR 1978 SC 12 % and "welcome Hotel v. State of Andhra Pradesh", AIR 1983 SC 1015 , he contends that the processual basis of price fixation has to be accepted. The actual cost of fuel used in the Tariff is an ascertainment by a Municipal function of working out the actual expenses incurred and it could by no stretch of imagination be a question of law. ( 14 ) WHETHER a question of law has been specifically referred to the arbitrator has to be determined in the background of the facts and circumstances of each case. We may recall that the energy charges under the Tariff are variable and subject to adjustment. The dispute before B. N. Kirpal, J. was with regard to the adjustment of the energy charges, by increasing the same, which were sought to be made under the Tariff. The fixed charges were based on the basic average fuel and purchase cost of 15. 25 paise per KWH. The energy charges are variable depending upon the actual cost of fuel used plus the actual cost of energy purchased and the quotient computed on dividing the sum of the two by the KWH sold during the period. The increase or decrease in cost of per KWH sold is the difference. If the cost per KWH was worked out more than 15. 25 paise per KWH, then there was increase in the energy charges and vice versa. The increase or decrease in cost of per KWH sold is the difference. If the cost per KWH was worked out more than 15. 25 paise per KWH, then there was increase in the energy charges and vice versa. B. N. Kirpal, J. noticed the differences with regard to the liability to pay the fuel adjustment charges and the quantum of the liability was disputed. The dispute in comprehensive terms was referred to arbitration as to "whether the fuel adjustment charges have been fixed and are being demanded by respondent No. 2 from time to time in accordance with the Tariff for the year in question". The frame of this reference showsthat the Tariff for the year in question is the basis for the calculation or ascertainment of the fuel adjustment charges. It was not open to the arbitrator to go into the rates fixed in the Tariff or to the formula laid down therein. It was also outside the scope of the arbitration to ask the arbitrator to enquire into the correctness of the accounts of the DESU and this is specifically stated in the order. The dispute thus turned on determination of the fuel adjustment charges in accordance with the Tariff. B. N. Kirpal, J. said that it would be open to the appellants to contend that in working out the formula irrelevant or extraneous considerations have been taken into account or that the formula has not been properly followed while computing the fuel adjustment charges which are now being demanded. ( 15 ) IT was a pure question of law, in our view, on the interpretation of various clauses contained in the Tariff. It was wholly unconnected with any disputed question of fact. The figures as contained in the records of the DESU had to be accepted as correct. There was to be no ascertainment of any factual controversy by the arbitrator. The actual cost of energy purchased was the amount paid in rupees for import of energy for that period and there was no dispute on this element. The figures of KWH sold during the period was also contained in the accounts of DESU and on this figure there was no dispute. The actual cost of energy purchased was the amount paid in rupees for import of energy for that period and there was no dispute on this element. The figures of KWH sold during the period was also contained in the accounts of DESU and on this figure there was no dispute. The dispute was as to the "actual cost of fuel" used during any period which was defined as to be the amount in rupees of the cost of all types of fuel burnt in the undertaking Thermal Generating Plants in that period. If the actual cost of fuel as contained in the books of the DESU was sacrosanct, then there is no dispute and the petitions under S. 20 of the Arbitration Act should have all been dismissed. The existence of a dispute is sine quo non or essential for an order of reference. The dispute referred was, in other words, as to what is the "actual cost of fuel used". As to what is "actual" is a pure question of law depending upon the elements. included in it. As to what elements are to be included in the actual cost is again a question of law. The inclusion of any element as to the actual cost has to be determined as to whether it is germane or relevant or extraneous to the determination of the actual cost. The dispute in law was as to what element, ingredient of factor could be included as part of the actual cost of the fuel used. ( 16 ) B. N. Kirpal, J. was not required to say whether a specific question of law was referred or not. The question itself is to be seen to ascertain whether it is or it is not a question of law. The arbitrator was required to ascertain whether the fuel adjustment charges have been fixed in accordance with the Tariff in which the only dispute was the actual cost of fuel used. As to what is actually specified in the Tariff clause is a question of law. ( 17 ) A question arose before the Supreme Court in "s. C. Cambatta and Co. Private Ltd. v. Commr. of Excess Profits Tax, Bombay", 41 ITR 500 : ( AIR 1961 SC 1010 ) on the question of computation of goodwill. As to what is actually specified in the Tariff clause is a question of law. ( 17 ) A question arose before the Supreme Court in "s. C. Cambatta and Co. Private Ltd. v. Commr. of Excess Profits Tax, Bombay", 41 ITR 500 : ( AIR 1961 SC 1010 ) on the question of computation of goodwill. It was ruled that the goodwill of a business depends upon a variety of circumstances or a combination of them, including the location, the service, the standing of the business, the honesty of those who run it and the lack of competition and many other factors go individually or together to make up the goodwill though locality always plays a considerable part It was held whether the goodwill of the subsidiary company was calculated in accordance with law is a question of law. The goodwill of a business is the benefit which arises from its having been carried on for some time but it is a composite thing. Hence to determine the nature of a goodwill, it was necessary to consider various factors whether they could be included in it or not. In "commr. of Wealth-tax, Bombay City III v. Michel Postel" 82 ITR 814 : (1972) Tax LR1108) (SC), the question was whether in computing the break-up value of shares held by the assessee in a company for the purpose of wealth-tax, the additional super- tax payable by the company under S. 23-A of the Income-tax Act, 1922 or S. 104 of I. T. Act, 1961 had to be deducted in addition to the other liabilities of the Company. The calculation of the break-up of the value of the shares was ruled as a question of law. Thus in the cases before us, the relevancy of a component, element or ingredient in ascertaining the actual cost of the fuel used is a question of law. ( 18 ) IN "bareilly Electricity Supply Co. Ltd v. State of Uttarpradesh". AIR 1977 Cal 328 , the question was whether the reference was on a specifio question of law to the arbitrator. The question referred to arbitrator in that case was whether the managing agents were entitled to draw the expenses claimed or to draw only the actual expenditure incurred on office allowance subject to the ceiling laid down in para XIII (3) of the sixth Schedule of the Electricity Act. The question referred to arbitrator in that case was whether the managing agents were entitled to draw the expenses claimed or to draw only the actual expenditure incurred on office allowance subject to the ceiling laid down in para XIII (3) of the sixth Schedule of the Electricity Act. Sabyasachi Mukharji, J. held that if must be construed and determined by the reference and the undisputed facts. In that case there was no dispute as to facts, there was no dispute as to the quantum of the actual expenditure, there was no dispute as to whether the allowable expenditure exceeded the ceiling but the only dispute was whether on the construction of the relevant clause the claim was justified. The construction of that clause was ruled as a question of law and that specific question of law had been referred to the arbitrator. In the. case before us, it bears repetition that while considering whether the fuel adjustment charges have been worked out in accordance with the formula or not, it is not open to challenge the correctness of accounts or to question the figures of the DESU. The working of the formula depended upon as to what was the actual cost of the fuel used. It was the question on interpretation and scope of the Tariff as to the actual cost of fuel used. B. N. Kirpal J. says that it was open to the arbitrator to go into the question whether some relevant factors have not been taken into consideration or irrelevant factors have been taken into account or irrelevant or extraneous considerations have been taken into account in working out the formula So, the elements which have been gone into in the actual cost of the fuel used and its relevancy was certainly within the scope of the reference and is a question of law. ( 19 ) THE arbitrator took upon himself the task of answering the reference by ascertaining the actual cost of fuel used, the actual cost of energy purchased arid the energy sold. He says "as I understand the reference, what is to be determined is whether in arriving at the actual cost of fuel, irrelevant factors have been taken into consideration". He says "as I understand the reference, what is to be determined is whether in arriving at the actual cost of fuel, irrelevant factors have been taken into consideration". To determine that irrelevant factors had been taken into consideration, the appellants had referred to the statement (Annexure 16) at page 31 to the affidavit of Shri D. C Seth dated Jan. 4, 1985. That gave the cost of fuel for the year 1981-82 which comprised of ten items. In the affidavit dated May 14, 1985, the inclusion of the various components was again justified on merits but it was not urged by DESU that going into the relevancy of those components as actual cost of fuel was beyond the scope of the reference. Later, written propositions were filed before the arbitrator and again the stand is not that it is beyond the scope ofthe reference. It is for the first time taken in the objections to the award before the learned single Judge. ( 20 ) MR. V. P. Singh is right that the Tariff fixed by the D. E. S. C. with the approval of the Corporation in exercise of the powers conferred by S. 283 of the Act. The formula for working out the fuel adjustment charges forms part of the Tariff. The demand charges and energy charges are fixed as provided in the Tariff while the fuel adjustment charges are variable in the sense that provisional rate has been fixed in the tariff. The energy charges are based on the basic average fuel and purchase cost of 15. 25 paise per KWH given in the Tariff and this is not being touched. As we have already noticed it is conceded by the appellants that the correctness of the basic rate of 15. 25 paise by KWH was beyond the pale of challenge. The basic Tariff is thus not disturbed by the arbitrator. R N. Kirpal, J. does not restrict the scope of reference that the relevancy of a component, element or ingredient in ascertaining the actual cost of fuel used as has gone into in fixing the basic average fuel has not to be gone into. The dispute referred for the decision was the fixation or, in other words, the determination of the fuel adjustment charges. The question of the ascertainment of the fuel adjustment charges was submitted to the decision of the arbitrator. The dispute referred for the decision was the fixation or, in other words, the determination of the fuel adjustment charges. The question of the ascertainment of the fuel adjustment charges was submitted to the decision of the arbitrator. He had to investigate into the matter of ascertaining the actual cost of fuel used. ( 21 ) IN our view, a specific legal issue was referred to the effect whether the computation of the fuel surcharge was in accordance with the formula as applied to the facts disclosed by the respondents and thus it is not open to the Court to go into the correctness of the finding of fact or of law by the arbitrator. . Whether a particular item/component/) element in the actual cost of fuel used is| relevant or not is itself a question of law and involves the construction of the Tariff, The arbitrator in his award dt. Sept 24,1985 came to the conclusion that the demurrage charges incurred by DESU are not relevant for considering actual cost of fuel for the purposes of the adjustment formula. Even if the arbitrator had made an erroneous decision this cannot be challenged. If a question of law had been specifically referred to an arbitrator for his decision it would be contrary to well-established principles for a Court of law to interfere with the award even if the Court itself would have taken a different view. This has been settled by a series of decisions, namely, "thawardas Pherumal v. Union of India", AIR 1955 SC 468 , "alopi Parshad and Sons Ltd. v. Union of India", AIR 1960 SC 588 , "union of India v. A. L Rallia Ram", AIR 1963 SC 1685 , Union of India v. Kalinga Construction Co. (P) Ltd. ", AIR 1971 SC 1646 , "m/s. Alien Berry and Co. Pvt. Ltd v. Union of India", AIR 1971 SC 696 : 1971 (1) SCC 295 . In "kapoor Nilokheri Co.-op. (P) Ltd. ", AIR 1971 SC 1646 , "m/s. Alien Berry and Co. Pvt. Ltd v. Union of India", AIR 1971 SC 696 : 1971 (1) SCC 295 . In "kapoor Nilokheri Co.-op. Dairy Farm Society Ltd. v. Union of India", AIR 1973 SC 1338 , the appellants there had specifically stated that their claims are based L on the agreements and on nothing else and all that the arbitrator has to decide was as to the effect of the agreement, the arbitrator had really to decide a question of law i. e. of interpreting the document, the agreement of May 6, 1953 and his decision is not open to challenge. In "tarapore and Company v, Cochin Shipyard Ltd. , Cochin", AIR 1984 SC, 1072, the earlier case law was reviewed. The dispute in that case arose out of a claim for compensation on account of the increase in the cost of imported pile driving equipment and technical know-how fees and the respondent there agreed to refer the dispute under two specific heads to the arbitrator. Briefly stated they were (1) whether the claim; for compensation would fall within the purview of first para of arbitration clause and (2) if it does, the quantum of compensation, if any, to which the appellant would be entitled. The issue before the arbitrator was does the claim of the claimant fall within the purview of the first para of Clause 40 of the General Conditions of Contract entered into between the two parties. The conclusion was drawn by the Supreme Court that a specific question of law touching upon the jurisdiction of the arbitrator which is undisputable a question of construction of Clause 40 and, therefore, a question of law was specifically referred by the parties to the arbitrator for his decision and by the terms of Clause 40 agreed to abide by his decision as final and binding: It was ruled: ". . . . . . . . . THEREFORE, on principle it appears distinctly clear that when a specific question of law is referred to an arbitrator for his decision including the one touching upon the jurisdiction of the arbitrator, the decision of the arbitrator would be binding on both the parties and it would not be open to any of the two parties to wriggle out of it by contending that the arbitrator cannot clutch at or confer jurisdiction upon himself by misconstruing the arbitration agreement" ( 22 ) WHERE a question of construction of a clause is the very point referred for arbitration, then the decision of the arbitrator upon that point cannot be set aside by the Court only because the Court would itself have come to a different conclusion. To sum up, the question before the arbitrator in this case was as to the construction of the clause of Tariff as to the actual cost of the fuel used. The arbitrator was called upon to consider whether in ascertaining the actual cost of the fuel used irrelevant or extraneous considerations have gone into. The factors which had gone into in arriving at the actual cost of fuel used were before the arbitrator. He determined the question of relevancy of those elements in computing the actual cost of the fuel used. The appellants contended that demurrage was levied on DESU because of their negligence or laches in not lifting the coal stock in time and the consumer could not be saddled with this charge as that is not the actual cost of fuel The contention was also that the consumer cannot be penalised or burdened for the inefficiency or incompetency of the DESU and no premium could be put on it. The various factors enumerated in para 10 of the affidavit as to the time taken for unloading of the wagons and clearing of the tracks which according to DESU is unavoidable was also taken into consideration. The arbitrator came to a conclusion and drew his inferences that this element of demurrage incurred by DESU was not relevant for considering actual cost of fuel for working out the adjustment formula. We hold a different view but we are not entitled to substitute our view for the view of the arbitrator, for his decision on the question is final and binding on the parties. We hold a different view but we are not entitled to substitute our view for the view of the arbitrator, for his decision on the question is final and binding on the parties. The view taken by the arbitrator is plausible and by no stretch of reasoning, it could be branded as perverse. ( 23 ) HOWEVER, the arbitrator has acted illegally in reaching his decision on the question of transmission and distribution losses. Transmission and distribution losses do not at all figure in the statutory Tariff notified under delegated powers. The energy charges are adjustable depending upon the variation in the actual cost of fuel used during any period i. e. the amount in rupees of the cost of all. types of fuel burnt in the undertaking Thermal Generating Plants in that period and the actual cost of energy purchased i. e. the amount paid in rupees for import of energy for that period- The cost of energy per KWH is thequotient computed by dividing the sum of aforesaid two actual costs by the KWH sold during the period. The figure of the KWH sold during the period could not be varied by the arbitrator by referring to transmission and distribution losses and was beyond the scope of the reference. The arbitrator was required only to ascertain the figure of KWH sold during the period from the records of the DESU. The cardinal principles of construction of statutory provisions or subordinate legislation is to construe the provision according to the plain language. The words should be read in their ordinary natural and grammatical meaning. The intention is to be gathered from the words used, read in their ordinary meaning. The context and the scheme of the working of the fuel adjustment charges in the formula is as to what is the figure of KWH sold. The construction of these words must be determined according to ordinary common sense. Craies on Statute Law, Seventh Edition, say at page 65 : "if the words of the statute are themselves precise and unambiguous, then no more can be necessary than to expound those words in their ordinary and natural sense. The words themselves alone do in such a case best declare the intention of the law-giver. Craies on Statute Law, Seventh Edition, say at page 65 : "if the words of the statute are themselves precise and unambiguous, then no more can be necessary than to expound those words in their ordinary and natural sense. The words themselves alone do in such a case best declare the intention of the law-giver. " "the tribunal that has to construe an Act of a legislature, or indeed any other document, has to determine the intention as expressed by the words used. And in order to understand these words it is natural to inquire what is the subject-matter with respect to which they are used and the object in view". In 1953 Lord Goddard CJ. said : "a certain amount of common sense must be applied in construing statutes. The object of the Act has to be considered. " "where the language of an Act is clear and explicit, we must give effect to it, whatever may be the consequences, for in that case the words of the statute speak the intention of the legislature. " ( 24 ) THERE is no power in interpreting the provisions of the Tariff to substitute words for the words used. In law it is not permissible to substitute words in a statute or statutory notification or subordinate legislation or delegated legislation. The Courts are always reluctant unless there is repugnancy to good sense. None exists here. The formula laid down for calculation of the energy charges is not the quotient computed at by dividing the sum of the actual cost of fuel used plus the actual cost of energy purchased by KWH generated plus KWH purchased i. e. the gross generation and purchase. It is to be divided by the units sold. A plain reading of the formula shows that KWH actually sold and not those which are available for sale at the point of generation or purchase have been taken into consideration for working out the cost per KWH sold. ( 25 ) THE transmission and distribution losses in the statement is only for the purpose of accounting by the DESU and is not a factor for calculating the variable energy charges. The statement showing the fuel and purchase surcharge during the years 1977-78 to 1982-83 which is Annexure2 to the affidavit dt May 13, 1985 of Shri D. C. Seth was filed before the arbitrator. The statement showing the fuel and purchase surcharge during the years 1977-78 to 1982-83 which is Annexure2 to the affidavit dt May 13, 1985 of Shri D. C. Seth was filed before the arbitrator. The transmission and distribution losses have been included as it is a part of accounting. Annexure IV of the Electricity Rules which is based on Rule 26 (3), Items 9, 12, 13 and 20 takes note of the fact that these losses are inherent in the supply of electricity and have to be separately shown. ( 26 ) IN "government of Kelantan v. Duff Development Company Ltd. ", 1923 AC 395, it was held: ". . . . . . I think it follows that, unless it appears on the face of the award that the arbitrator has proceeded on principles which were wrong in law, his conclusions as to the construction of the deed must be accepted. No doubt an award may be set aside for an error of law appearing on the face of it; and no doubt a question of construction is (generally speaking) a question of law. But where a question of construction is the very thing referred for arbitration, then the decision of the arbitrator upon that point cannot be set aside by the Court only because the Court would itself have come to a different conclusion. If it appears by the award that the arbitrator has proceeded illegally for instance, that he has decided on evidence which in law was not admissible or on principles of construction which the law does not countenance, then there is error in law which may be ground for setting aside the award; but the mere dissent of the Court from the arbitrator s conclusion on construction is not enough for that. purpose. . . . . "the above pass age was quoted with approval, by the Supreme Court in Thawardas Pherumal ( AIR 1955 SC 468 ) (supra) in para 11 relied upon by the appellants. It was observed that if a question of law is specifically referred, the Courts will not interfere but there is authority for the view that the Courts will interfere if it is apparent that the arbitrator has acted illegally in reaching his decision, that is to say, if he has decided on principles of construction that the law does not countenance or something of that natupe. The consideration of transmission and distribution losses was outside the scope of the reference and by indirect method could not be brought into the Tariff in place of the units sold. This illegality is writ large in the award of arbitrator. ( 27 ) APART from it, the arbitrator came to the conclusion that "the energy sold is not the energy generated by DESU or theenergy purchased by it. Energy sold is the energy consumed by the consumer as recorded in his meter for which he pays". After arriving at his own finding he comes to an inconsistent conclusion of not working the formula in the Tariff on the basis of units sold as recorded by DESU, but on the total of the units generated and purchased. In "k. P. Poulose v. State of Kerala", AIR 1975 SC 1259 , the arbitrator made significant observations which were inconsistent with his conclusion in the award. The award was considered as rationally inconsistent and thus suffering from a manifest error apparent ex facie. ( 28 ) IN the result, the appeals are partly allowed, We hold that specific question of law was referred to the arbitrator. The award is not liable to be modified in respect of demurrage charges. The award is, however, liable to be modified as regards transmission and distribution losses. The award, as modified is made a rule of the Court and a decree interms thereof is passed. The parties are left to bear their own costs. ( 29 ) DURING the pendency of the appeal, it was directed that DESU should not enforce the demand in respect of the bills sent after the award, that this would be subject to the condition that either party will be liable to pay interest to the other depending on the final decision in the appeal and that the amount of interest as well as the period -for which interest is to be paid will be decided at the time of hearing of the appeal We consider that a reasonable rate of interest would be 12% P. A to be calculated from Feb. 10, 1986, the date of the order of the Division Bench of this Court. The appellant should pay the amounts within 4 weeks from the raising of the modified demand.