Judgment F.I. REBELLO, J.:---Petitioners have approached this Court to quash and set aside the award dated 23rd March, 1999. Whilst answering the challenges to the award an important issue to be decided is the meaning of the expression "the arbitral award is in conflict with the public policy of India" under the Arbitration Conciliation Act, 1996. 2. Some relevant facts may be set out. The petitioners had invited tenders for construction of Sewage Water Reclamation Plant on turn key basis by tender enquiry dated 20th March, 1991. The respondents tender was accepted vide Purchase Order dated 27th February, 1992. Clause 22 of the purchase order is the Arbitral clause. The clause reads as under :--- "All disputes or differences arising, which shall at any time arise between the parties hereto touching or concerning the works or the execution or maintenance thereof or to the rights or construction making operation or effect thereof or to the rights or liabilities of the parties or arising out of or in relation thereto whether during or after completion of the contract or whether before or after determination or closure of the breach of the Contract (other than those in respect of which the decision of any person is by the contract expressed to be final and binding) shall after written notice of either party to the contract to the either of them and to the appointing authority hereinafter mentioned be referred for adjudication of the sole arbitrator to be appointed as hereinafter provided." Clause 3 of the Tender Enquiry dated 29th March, 1991 forming part of the contract, lays down that the rates quoted by the respondents shall be firm until completion of the job and shall not be subject to escalation or increase on any account whatsoever. By letter dated 11th June, 1991, the respondents were called upon to confirm that the price quoted shall be firm until job completion and that no escalation on any ground whatsoever will be sought. The respondents by their reply dated 2nd July, 1991 confirmed that the price quoted would remain firm till the completion of the job. The petitioners by letter dated 27th February, 1992 informed the respondents that the offer had been accepted on firm price contract basis. The purchase order also records the fact that the price quoted shall remain firm until completion of the entire work and no escalation will be entertained. The petitioners by letter dated 27th February, 1992 informed the respondents that the offer had been accepted on firm price contract basis. The purchase order also records the fact that the price quoted shall remain firm until completion of the entire work and no escalation will be entertained. The purchase order also records that the lump sum price fixed was at Rs. 574.35 lakhs. Clause 8 of the notice inviting tenders, stipulates that time is the essence of the contract and all the tenderers were advised to quote according to the time periods specified and that the penalty clause will be rigidly enforced. Tender enquiry dated 20th March, 1991 laid down that the job should be completed within 18 months. It also provided for levy of liquidated damages at the rates specified, if there was delay in completion of the work. Clause 2 of the general conditions of the contract provided that time is the essence of the contract. Clause 6 of the General Conditions provided for extension of time and that the contractor shall apply for extension of time. For various reasons the work could not be completed within the period of 18 months. 3. The respondents applied for extension of time, from time to time, which was granted. While granting extensions the petitioners made it clear to the respondents that all other terms and conditions would remain unaltered. The respondents also did not ask for any increase in price or compensation for the delay. The respondents also did not put the petitioners on notice, regarding their claim for compensation on account of delay, not of their making. The respondents have completed 80% of the work. The same is not disputed. Disputes and differences having arisen, the matter was referred to arbitration of a sole arbitrator. The respondents filed their claim statement. The petitioners filed counter claims. By the impugned award, the arbitrator partly allowed claims totalling Rs. 1,71,32,666/-. The arbitrator, however, totally rejected the counter claim. The claims awarded along with the nature of the claim are as under :--- Claim No. 1 : Compensation for loss of overhead and profit and profitability : Rs. 3, 38,38,460/- Allowed towards loss of overhead, Rs. 78,68,833/- Towards loss of profit/profitability Rs. 78,68,883/- ----------------------- Total Rs. 1,57,37,666/-. Claim No. 2 : Compensation for idle machinery and equipment : Rs. 84,59,615/- Awarded Rs. 3, 38,38,460/- Allowed towards loss of overhead, Rs. 78,68,833/- Towards loss of profit/profitability Rs. 78,68,883/- ----------------------- Total Rs. 1,57,37,666/-. Claim No. 2 : Compensation for idle machinery and equipment : Rs. 84,59,615/- Awarded Rs. 12,00,000/- Claim No. 3 : Compensation for losses incurred due to increased cost of material and labour. Rs. 26,89,638/- Claim rejected as escalation was not permitted as per the contract. Claim No. 4 : Compensation for carrying out extra work Rs. 19,00,225/-. Award as under :--- Item No. 1 Rs. 1,20,000.00 Item No. 2 Nil Item No. 3 Rs. 50,000.00 Item No. 4 Rs. 25,000.00 --------------------- Total Rs. 1,95,000.00 Claim No. 5 : Cost of repairs and rectification : The amount to be assessed. Interest at 18% per annum on all the claims awarded effective from 16th May, 1997. Performance bank guarantee reduced to 50%. Petitioners by the present petition have not impugned the rejection of the counter claim. 4. The petitioners impugned the award principally on the following grounds :--- (a) The Award is liable to be set aside under section 32(2)(a)(iv). The arbitrator has allowed claims, which are contrary to the arbitration agreement. Under section 28(3) the Tribunal was required to decide the claims in terms of the provisions of the contract. The Tribunal has awarded claims contrary to the contract. It is contended that the contract was a fixed rate contract. The respondents had agreed to the fixed rate. (b) The Award is in contravention of section 34(2)(b)(ii) read with section 28(1)(a) and 28(3) being contrary to the substantive law of India and as such against the public policy of India. Further time was the essence of the contract. The arbitrator has ignored section 55 of the Indian Contract Act while awarding damages. (c) In awarding the claim, in a sum of Rs. 1,57,37,666/- under the head of compensation for loss of overhead and profit and profitability, the arbitrator has disregarded the terms of the contract. The arbitrator has, therefore, acted without jurisdiction. The award is, therefore, liable to be set aside under section 34(2)(a)(iv) and section 34(2)(b)(ii). It is further contended relying on a passage from Gajaria's book, in awarding the claim the arbitrator has granted double benefit. The arbitrator has ignored section 73 of the Contract Act pertaining to mitigation of damages while awarding the claim. The award is, therefore, liable to be set aside under section 34(2)(a)(iv) and section 34(2)(b)(ii). It is further contended relying on a passage from Gajaria's book, in awarding the claim the arbitrator has granted double benefit. The arbitrator has ignored section 73 of the Contract Act pertaining to mitigation of damages while awarding the claim. (d) Being a fixed time contract, Part I and III of section 55 of the Contract Act was attracted. No notice given to the petitioner. The arbitral Tribunal proceeded to award the amount under claim "A", without the respondents having complied with the requirements of Part III of section 55 of the Contract Act. (e) The award, it is contended, is against the public policy of India. Public Policy of India would be attracted in as much as the arbitrator failed to follow the substantive law of India. (f) In so far as the Claim No. 2 is concerned, it is based on escalation. Being a fixed rate contract, no compensation/damages could have been awarded for escalation. Claim No. 2 pertained to compensation for idle machinery and equipments. This claim is in fact a claim on account of escalation for increase in price. The arbitrator in awarding the same has acted without jurisdiction and consequently the award would be against the public policy of India. (g) The arbitrator also acted without jurisdiction in granting Claim No. 4 in a sum of Rs. 1,95,000/-. A sum of Rs. 1,20,000/- out of the aforesaid sum is given for transportation or excavation work of earth. Under Clause 15 of the said condition, a duty was cast on the arbitrator to go by the terms of the contract. Clause 15 provided that the respondents would not claim additional amounts to clear the rubbish and vegetation. Clearly the award to that extent is also without jurisdiction. The sum of Rs. 50,000/- awarded under Item No. 3 and Rs. 25,000/- awarded under Item No. 4 was also contrary to the terms of the contract and more specifically Clause 9 of the conditions. In awarding Claim No. 4, the arbitral Tribunal has acted without jurisdiction. 5. In reply, on behalf of the respondents it is contended that the jurisdiction of this Court while considering the challenge under section 34 is limited. In awarding Claim No. 4, the arbitral Tribunal has acted without jurisdiction. 5. In reply, on behalf of the respondents it is contended that the jurisdiction of this Court while considering the challenge under section 34 is limited. The Objects and Reasons clause of the Act of 1996 set out that it is to minimise the supervisory role of courts in the arbitral process and to execute the award of the arbitral Tribunal, as if it is a decree of the Court. The grounds earlier available under the 1940 Act, are not available under the Act of 1996. It is further contended that for the purpose of construing the provisions of the 1996 Act, assistance should be got from UNICITRAL Model Law. In so far as submission regarding section 28(1) and section 28(3) is concerned, it is contended that they cannot be read into section 34. The object of section 28 is to determine the law applicable to arbitration as set out in the section, domestic and international. All that the section provides, is as to what would be the law applicable, in case of domestic arbitration and what would be the law applicable regarding International Commercial Arbitration. Section 28, therefore, cannot be read into section 34. In so far as section 34 is concerned, it is contended that the challenges are limited to examine whether the award is against the public policy of India and not whether the contract was opposed to public policy. Considering the language of the section and the explanation to section 34(1)(b)(ii) the Court cannot act, as an Appellate Court. The jurisdiction of the Court is limited to find out whether the Tribunal's award is against the public policy of India. It is then contended, that apart from the challenge to the award under section 34, the other provisions to challenge the award are under sections 13 and 16. It is contended that under these sections, the arbitral Tribunal has to first decide the objections. A party aggrieved by the said decision can challenge the award under section 34. These, it is pointed out, are provisions independent of section 34 and, therefore, by themselves are grounds to challenge the award. It is contended that under these sections, the arbitral Tribunal has to first decide the objections. A party aggrieved by the said decision can challenge the award under section 34. These, it is pointed out, are provisions independent of section 34 and, therefore, by themselves are grounds to challenge the award. In so far as the awarding of the claims is concerned, it is contended that the Tribunal has given a finding that the contract could not be performed within the time stipulated on account of the failure of the respondents. Fixed rate contract, it is contended, will be, if both the parties perform their part of the contract. In the instant case the petitioner have failed to perform their part of the contract. In these circumstances though the petitioners may not be entitled to compensation in view of the fixed rate, nevertheless they would be entitled to damages for breach of contract in terms of section 73 of the Indian Contract Act. In so far as section 55 is concerned, it is contended that time was not the essence of the contract. In the instant case time has been extended from time to time. Once time was not the essence of the contract, the question of giving notice under section 55 would not arise and consequently the contention as raised by the petitioners must be rejected. Dealing with the contention regarding mitigation of damages under section 73, it is contended that the arbitral Tribunal has given a finding that the petitioners have taken steps to mitigate the damages and considering that no challenge under that head would be available. In conclusion it is contended that the petitioners have failed to make out a case under section 34 of the Act. Once the petitioners have failed to make out a case, considering the mandate of section 5 of the Act, this Court should not interfere. It is also contended that from the facts, time was not the essence of the contract and thus it was within the jurisdiction of the arbitrator to award damages for failure to perform the part of the contract. In the alternative it is pointed out that the challenges as raised do not fall within any of the grounds available under section 32 and consequently must be rejected. In the alternative it is pointed out that the challenges as raised do not fall within any of the grounds available under section 32 and consequently must be rejected. Both parties have placed reliance on a number of judgements, which will be adverted to while dealing with the contentions to the extent necessary. Learned Counsel for the respondents has also taken me through the award and the terms of the agreement which forms part of the record. At the outset it may be noted that the petitioners have not challenged the finding that delay was on their account. 6. For the purpose of deciding a challenge to the award, the true import of sections 28 and 34 of the Indian Arbitration Act will have to be first examined. Let me, therefore, consider the scope and ambit of section 28. This is because of the contention raised on behalf of the petitioners that section 28 by itself is a specific ground to challenge an award and/or alternatively it must be read into section 34(2)(a)(iv) and/or section 34(2)(b)(ii). Section 28(1) provides that where the place of arbitration is situated in India, in cases other than International Commercial Arbitration, the arbitral Tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India. We may skip section 28(1)(b) as it pertains to International Commercial Arbitration. Under section 28(3) a duty is cast on the arbitral Tribunal to act in accordance with the terms of the contract and for that purpose also to take into account usages of the trade applicable to the transaction. Does this section, therefore, provide for an independent challenge to an arbitral award outside section 34. The ground for the challenge to the award being that it is passed contrary to the substantive law of India in cases where either the Tribunal disregards the substantive law of India or disregards the terms of the contract or the practices and usages of the trade in respect of which the arbitral proceedings have been initiated. As set out earlier for the purpose of construing the provisions of the Act of 1996 the proper course is to consider the UNCITRAL Model Law as declared by the Apex Court in the case of (Sunderam Finance Ltd. v. NEPC India Limited)1, 1999(2) S.C.C. 479 . As set out earlier for the purpose of construing the provisions of the Act of 1996 the proper course is to consider the UNCITRAL Model Law as declared by the Apex Court in the case of (Sunderam Finance Ltd. v. NEPC India Limited)1, 1999(2) S.C.C. 479 . The corresponding provisions in the UNCITRAL Model Law is Article 33. It corresponds to section 28 in Chapter VI. Does the section, therefore, provide for an additional ground of challenge under section 34 and/or will it constitute a ground to challenge the award under section 34. In 'a practical approach to, Arbitration Law', Keren Tweeddale Andrew Tweeddale, the learned authors have considered Clause 33 of the UNCITRAL Model Law and have observed as under :- "Article 33 provides for the arbitral Tribunal to apply the law designated by the parties in relation to the substance of the dispute. If no law has been designated, the arbitral Tribunal must determine that law by the conflict of laws rules which it considers are applicable. Only where expressly requested may the arbitral Tribunal act as amiable compositeur or apply principles of equity and only if allowed under the lex arbitri." It may be pointed out the Act of 1940, did not provide as to what would be the law applicable to arbitral proceedings. By enacting section 28 based on Article 33 of the UNCITRAL Model Law, the legislature has now made certain as to what will be the law that will have to be applied by the arbitral Tribunal. Not only that, it is further made clear that the arbitral Tribunal shall decide the case ex aequo et bono or as 'amiable compositeur, only if the parties expressly authorise it to do so. The Tribunal in all cases is bound to decide in accordance with the terms of the contract and is bound to take into account the usages of the trade applicable to the transaction. Section 34(1) makes it clear that the award can be challenged on an application made in accordance with section 34(2). Therefore, section 28 by itself does not furnish a ground to challenge the award. What section 28 provides for, is the law which will be applicable and the procedure to be followed by the arbitral Tribunal in disposing of the petition pending before it. Therefore, section 28 by itself does not furnish a ground to challenge the award. What section 28 provides for, is the law which will be applicable and the procedure to be followed by the arbitral Tribunal in disposing of the petition pending before it. The submission on behalf of the respondents that violation of section 28 is not a ground to challenge an arbitral award independent of section 34 must be accepted. At the highest, what possibly can be considered is whether an award of the Tribunal, if passed contrary to section 28 can be challenged under section 34 of the new Act. Under section 28(1)(a) the arbitral Tribunal must decide the dispute according to the substantive law of India. Under section 28(3) the Tribunal must decide the dispute according to the contract and take into account, usages of the trade applicable to the trade. Under which provisions of section 34(2) could the award be challenged if the Tribunal does not follow the substantive law of India or wrongly applies the substantive law, or goes beyond the term of the contract or does not follow the contract or the trade or usages applicable to the contract. That would not attract section 34(2)(a)(i) (ii) or (iii). Will section 32(1)(a)(iv) be attracted. A plain reading would indicate, that it would not, as that covers a situation where the arbitral Tribunal decides a dispute, not contemplated by or not falling within the terms of the submission to arbitration or it contains the decisions on matters beyond the scope of the submissions to arbitration. The proviso is not material for discussion. In so far as section 34(1)(a)(v) is concerned, that deals with a challenge, to the composition of the Tribunal or the arbitral procedure. What that means is that an award is liable to be set aside, if the composition of the Tribunal was not in accordance with the agreement of the parties, unless such agreement was in conflict with the provisions of the Act, from which the parties cannot derogate. A clear example would be section 10 of the Act. What that means is that an award is liable to be set aside, if the composition of the Tribunal was not in accordance with the agreement of the parties, unless such agreement was in conflict with the provisions of the Act, from which the parties cannot derogate. A clear example would be section 10 of the Act. The other situation is when arbitral procedure was not in accordance with the agreement unless such agreement was in conflict with the provisions of Part I, from which the parties cannot derogate or failing such agreement was not in accordance with Part I. An illustration will be of denying an oral hearing as contemplated by provisions of section (1), when there is no agreement between the parties that oral hearing should not be held. Thus section 34(2)(a)(v) also would not be attracted. Section 34(2)(b)(i) would not obviously not be attracted. Conclusion that must follow would be that the challenge if available can only fall under section 34(2)(b)(ii). In other words the arbitral award must be in conflict with the public policy of India. What is the public policy of India under the Municipal Law, will be an issue to be considered and decided. 7. We will now deal with the contention of the respondents that section 13(5) and section 16(6) are independent grounds of challenge outside section 34(2). What section 13(4) sets out is that if the challenge raised to the appointment of an arbitrator fails on the Tribunal deciding the same under section 13(3), the arbitral Tribunal is bound to continue the arbitral proceedings and make an arbitral award. Such a decision rendered under section 13(3) is not rendered final. The award passed can be challenged in accordance with section 34. Similarly section 16, is a power conferred on the Tribunal to rule on its own jurisdiction including ruling as to the existence or validity of the arbitration agreement. That plea must be decided under section 16(5). If the plea is rejected the arbitral Tribunal must continue the arbitral proceedings and make an arbitral award. Such an award passed after the decision as to the existence or validity of the arbitration agreement can be challenged in accordance with section 34. We are concerned with the import of sections 13(5) and section 16(6) which provides that the party may make application for setting aside such an arbitral award in accordance with section 34. Such an award passed after the decision as to the existence or validity of the arbitration agreement can be challenged in accordance with section 34. We are concerned with the import of sections 13(5) and section 16(6) which provides that the party may make application for setting aside such an arbitral award in accordance with section 34. A perusal of section 34(2)(a) would indicate that it does not fall within any of the predicates as set out thereunder. It would also not fall under section 34(2)(b)(i). Would, therefore, the challenge to such an order be maintainable as an independent challenge out side section 34 or would it fall within the expression that the award is in conflict with the 'public policy of India'. On behalf of the respondents it is contended that this would be an independent ground by itself. Such a submission has to be rejected, considering the express language of section 34. Section 34(1) mandates that recourse to a Court against an arbitral award may be made only by an application for setting aside such an award in accordance with sub-section (2) within the period as set out under sub-section (3). Sub-section (2) sets out that the award may be set aside for reasons set out therein. Therefore, clearly sections 13(5) and 16(6) cannot be independent grounds of challenge. It may be still possible to contend that under section 34, the challenge is to the award, whereas under section 13 or 16, it is an order rejecting a plea. However, both under section 13(5) and under section 16(6), the challenge is not to the order or decision, but to the award itself. What that means is that the decision gets merged or incorporated into the award and what has to be challenged is the award. The decision, as merged is subject to challenge. There is, however, a difference. A decision on a plea under section 16(2) or 16(3) if accepted is appealable under section 37(2). An appeal is not available under section 13(3) if the plea is accepted. However, if the plea under both sections are rejected they can be challenged in accordance with section 34. It must therefore, follow that they would be challenges which are capable of being raised in a challenge to an award under section 34(2). Such a challenge can only fall under section 34(2)(b)(ii). However, if the plea under both sections are rejected they can be challenged in accordance with section 34. It must therefore, follow that they would be challenges which are capable of being raised in a challenge to an award under section 34(2). Such a challenge can only fall under section 34(2)(b)(ii). This by itself would give an indication that an award of an arbitrator on a ruling as to jurisdiction or competence must fall within the expression the public policy of India as there is no other head under which the award into which is merged or incorporated the decision under section 13(4) or 16(5) rejecting the plea can be challenged. To what extent the Court would interfere is a matter which would depend on the facts of each case and the meaning to be assigned to the expression public policy. In the present petition the issue as to what happens, if the plea was not raised at the first instance under section 13 or 16, but raised for the first time at the final hearing is not being examined. Such an issue had come up for consideration before the Apex Court in the case of (Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khetan and others)2, 1999(4) Bom.C.R. (S.C.)355 : A.I.R. 1999 S.C. 2102. That question was formulated in para 20 of the judgment. However, in para 23, the Court proceeded on the assumption that the appellant before it, was not precluded from raising those questions at the stage of section 34 though those issues had not been raised before the Tribunal as per sub-clauses (2) and (3) of section 16. Since we have referred to the judgment, we may also refer to one paragraph which may be helpful in the discussion ahead. "17. Section 34 of the Act is based on Article 34 of the UNCITRAL Model Law and it will be noticed that under the 1996 Act the scope of the provisions for setting aside the award is far less the same under section 30 or section 33 of the Arbitration Act of 1940." Though I have re-produced the paragraph, both sides rely on the same for their respective views. However, what is clear is, that the challenge under sections 13(5) and 16(6) are not independent, they are challenges within section 34(2). 8. However, what is clear is, that the challenge under sections 13(5) and 16(6) are not independent, they are challenges within section 34(2). 8. When can, therefore, an award be set aside, on the ground that the award is in conflict with the public policy of India. What is the meaning of the expression, public policy of India? For the purpose of discussion, it is necessary to reproduce section 34(1) (2), which read as under :--- "34. Application for setting aside arbitral Award.---(1) Recourse to a Court against an arbitral Award may be made only by an application for setting aside such Award in accordance with sub-section (2) and sub-section (3). (2) An arbitral Award may be set aside by the Court only if--- (a) the party making the application furnishes proof that - (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force ; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case ; or (iv) the arbitral awards deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration : Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral Award which contains decisions on matters not submitted to arbitration may be set aside ; or (v) the composition of the arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this part ; or (b) the Court finds that -- (i) the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. Explanation.---Without prejudice to the generality of sub-clause (ii) of Clause (b), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81. Sub-section (2)(a) contains specific heads of challenge which are clear and discernible. In so far as sub-section (2)(b) is concerned, there are two different grounds as reproduced above. Firstly, that the subject matter of dispute is not capable of settlement by arbitration under the law for the time being in force. In the present case we are not concerned with that head. We are concerned with the latter head which is, that the arbitral award is in conflict with the public policy of India. 9. What then is the meaning of the expression "that the award is against the public policy of India". Does it have the same meaning as assigned to the expression under section 23 of the Indian Contract Act. Under section 23 of the Indian Contract Act the consideration or object of an agreement is lawful, unless; it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law, or is fraudulent; or involves or implies injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. Therefore, the section itself indicates that the expression opposed to public policy is used independently of the expressions "forbidden by law" or would defeat the provisions of any law or is fraudulent or implies injury to the person or property of another or the Court regards it as immoral. In examining whether the consideration of the agreement is lawful, one of the tests, is whether it is opposed to public policy. Some of the other heads are fraudulent or immoral. Therefore, do we import this concept of the contract being opposed to public policy as seen and understood under section 23, of the Indian Contract Act, considering that under section 23 an agreement is void, for reasons set out therein, including if the consideration is opposed to public policy. Consideration based on acts which are fraudulent or immoral are independent of public policy. Consideration based on acts which are fraudulent or immoral are independent of public policy. Immediately one notices, that whereas under section 23 the expressions used is that the agreement is contrary to public policy of India, under section 34(2)(b) the expression used is that the arbitral award is in conflict with the public policy of India. Thus it is no longer confined to the realm of contract, but transcends the contract. In other words, the adjudication by the arbitral Tribunal and its decision thereon must be in conflict with the public policy of India. This aspect is important because under section 23 of the Contract Act, there are independent heads, which render the consideration of a contract to be unlawful apart from public policy. Will an award procured by a fraudulent act or corruption be allowed to stand. Would, therefore, an award, based on a contract which is void, for reasons other than public policy be enforced or executed. The expression would indicate that the challenge is to the adjudication and the consequent award being against the public policy of India. If a void contract other than on the ground of public policy, culminates into an award, would such an award be enforced or would it liable to be set aside under section 34 as being an award which is in conflict with the public policy of India. Would not that be the subject matter of a challenge. By an explanation to section 34(2)(b)(ii), without prejudice to the generality of sub-clause (ii) of Clause (b) for the avoidance of any doubt, an award is said to be in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81 of the Act. This has nothing to do with the contract. Sections 75 and 81 fall under Part III, in the Chapter "Conciliation". It provides that notwithstanding anything contained in any other law for the time being in force, the conciliator and the parties shall keep confidential, all matters relating to the conciliation proceedings. Confidentiality shall extend also to the settlement agreement, except where its disclosure is necessary for purposes of implementation and enforcement of the settlement agreement. This ground at first blush could not have been said to be against the public policy of India. Confidentiality shall extend also to the settlement agreement, except where its disclosure is necessary for purposes of implementation and enforcement of the settlement agreement. This ground at first blush could not have been said to be against the public policy of India. All that the section sets out is that the conciliator and the party shall keep confidentiality of matters relating to the conciliation proceedings. Under Part III on Chapter on Conciliation, the conciliator is empowered to bring out in conciliation, a settlement signed between the parties and authenticate the settlement. The settlement by virtue of section 74, has the same status and effect, as if it is an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral Tribunal under section 30. Similarly under section 81 the parties shall not rely on or introduce as evidence in arbitral or judicial proceedings, what is set out therein, whether or not such proceedings relate to the dispute that is the subject of the conciliation proceedings. Reference has been made to these two sections in view of the explanation to section 34(2)(b)(ii). Explanation as normally construed does not add to the section. It explains the section. Both sections 75 and 81 are in the Chapter on Conciliation proceedings. By themselves, they are generally not known heads of public policy. The explanation, however, states that such an award is against the public policy of India. In the case of (Dattatraya Govind Mahajan others v. The State of Maharashtra another)3, A.I.R. 1977 S.C. 915 the Apex Court has explained the meaning of an explanation as under :--- "It is true that the orthodox function of an explanation is to explain the meaning and effect of the main provisions to which it is an explanation and to clear up any doubt or ambiguity in it." Similarly, in decisions rendered under section 13 or 16, a party aggrieved can challenge the decision as merged in the Award, while challenging the Award. From the discussion above, we can now identify some heads to challenge an award, as being an award against the public policy of India. From the discussion above, we can now identify some heads to challenge an award, as being an award against the public policy of India. They can partly be summarised as under (a) Bias; (b) Jurisdiction of the Tribunal or Tribunal exceeding scope of its authority, (c) the member or members not possessing qualification ; (d) an award procured by fraud; (e) by corruption; (f) in violation of section 75 or 81. These heads easily identifiable, are challenges available under the head of "public policy of India" under section 34(2)(b)(ii). In that context, will mere contravention of the substantive law or terms of the contract or trade or usage, constitute a challenge. Would a challenge be available if the award "shocks the conscience of the Court" or if the award is in total disregard of the law or in total disregard of the terms of the contract or if trade and usage formed part of the contract, the award was passed in total disregard of such trade or usage to the extent relevant. In other words would non-application of the law or trade or usage or an award based on no material or material not on record, constitute a ground to challenge the award as being in conflict with the public policy of India. This must also be read with section 31(3), which states that the arbitral award shall state the reasons upon which it is based unless parties have agreed that no reasons need be given. 10. Let us then examine what is meant and understood under the expression "Public Policy" W.S.M. knight in an article "Public Policy" in English Law" has explained the early antecedents of the expression under various heads, which include such heads as, Generalities in the Eighteenth and Nineteenth Century which position emerged with the judgment in the case of Egerton v. Brownlow. The period of Skepticism and Hesitation, following the judgment in Egerton v. Brownlow and the position emerging after the judgment in the case of (Nordenfelt v. Maxim-Nordenfelt Gun and Ammunition Co.)4, 1894 A.C.P. 553, and Modern Return to Earlier Generalities. Summing up, the learned Author sets out that the expression would mean 'acting against the commonwealth', 'the public health', and 'the general arrangement of justice'. Public Policy forbids the doing of acts that will or may be to the advantage of the enemy State. Summing up, the learned Author sets out that the expression would mean 'acting against the commonwealth', 'the public health', and 'the general arrangement of justice'. Public Policy forbids the doing of acts that will or may be to the advantage of the enemy State. The word public interest maintaints its position, not only in reference to restraint of trade, but also in relation to an attempt, by contract, so as to restrict a man's liberty of action as almost to enslave him. The Author also dealt with the expression whether the word "public policy" and "policy of law" were one and the same. In Egerton v. Brownlow, all the Judges, save one, whose opinions were taken by the Law Lords, held firmly to the view that public policy and the policy of the law were one and the same conception, the more correct term of the two being the latter. Thus Alderson B., representing the majority, was prepared readily to accept public policy as a rule of law, if it were to be taken as meaning the object and policy of a particular law. In 1853 the House of Lords laid down that the expression 'public policy' had an entirely different meaning from policy of the law and one much more extensive. As noted in the article the two terms have always been considered to be distinct, except for a brief period of confusion. Thus public policy transcends the policy of the law. The law relating to public policy is not static. It changes with passage of time. A contract which has tendency to injure public interest or public welfare is one against public policy. What would constitute an injury to the public policy or welfare would depend upon the period when the matter is being considered. The social milue in which the contract is sought to be enforced, would decide the factum, the nature and the degree of injury. It would be contrary to the concept of public policy to contend that it is immutable since it must reflect the changing needs of the time. These values may some time get incorporated in legislative measures but some time they may not, as legislatures many a time are prone not to head the needs of the times or bring in legislation to encompass the needs. The courts have, however, refused to enforce contracts tainted with illegality. These values may some time get incorporated in legislative measures but some time they may not, as legislatures many a time are prone not to head the needs of the times or bring in legislation to encompass the needs. The courts have, however, refused to enforce contracts tainted with illegality. Lord Minsfield on "The principle of public policy" observed thus :- "ex dolo malo non oritur actio'. No Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act. If on the plaintiff's own stating or otherwise the cause of action appears to arise 'ex purti causa' or the transgression of a positive law of the country, then the Court says, he has no right to be assisted. This follows from the principle that no polluted hand should touch the pure fountains of justice. Whoever is a party to an unlawful contract, if he has once paid the money stipulated to be paid in pursuance thereof, he shall not have the help of the Court to fetch it back again. This principle is based on the concept of public morality. Lord Devlin observed that "when the grant of justice would cause public scandal, the merits of the individual case must yield to the necessities of the law. The law needs moral support and in return it must be prepared to support public morality, and where that would be outraged by the use of the law, then, but only then, should the law refuse its aid." 11. While considering this aspect, we may also touch on the broader concept where a rule or provision which is contrary to the principles of natural justice or fair play or which affects the right to livelihood can be said to affect the public policy. In fact the principle developed as an outcome of 'restraint of trade'. In English law it has been accepted as a well recognised principle of being against public policy. In the case of (Nagle v. Feilden and others)5, 1966 S.B. 633, the issue arose out of the refusal by the Jockey Club to issue a license to a woman trainer. Under the rules framed by the Stewards of the Jockey Club which controlled horse racing throughout Great Britain, no person was allowed to train horses for racing unless he held a licence. Under the rules framed by the Stewards of the Jockey Club which controlled horse racing throughout Great Britain, no person was allowed to train horses for racing unless he held a licence. The plaintiff therein a woman had trained horse for many years. It was the practice of the stewards to refuse to grant a trainer's licence to a woman in any circumstances. The plaintiff had frequently applied for and had been refused a trainer's licence, although the stewards had granted licenses to men servants employed by her. The plaintiff, brought an action on the ground that the action of the stewards in refusing the trainer's licence to any woman was void as being against public policy. The claim was dismissed on the ground that, the plaint disclosed no cause of action. In Appeal, the Court held that though there was no contractual relationship between the parties, the plaintiff had an arguable case for claiming the relief sought on the ground that the practice of refusing a trainer's licence to a woman might be void as being contrary to public policy. Lord Denning M.R., observed as under :- The common law of England has for centuries recognised that a man has a right to work at his trade or profession without being unjustly excluded from it. He is not to be shut out from it at the whim of those having the governance of it. If they make a rule which enables them to reject his application arbitrarily or capriciously, not reasonably, that rule is bad. It is against public policy." In the same judgment, Danckwerts, L.J., observed as under :- "But this case seems to me to involve matters of public policy. As was suggested by me in Martell v. Consett Iron Co. Ltd., the law relating to public policy cannot remain immutable. It must change with the passage of time. The wind of change blows upon it." The learned Judge thereafter referred to the classic exposition of this branch of the law as is to be found in Lord Maenaghten speech in Nordenfelt v. Maxim Nordenfelt Guns Ammunition Co. :- "All interference with individual liberty of action in trading, and all restraints of trade of themselves, if there is nothing more, are contrary to public policy and therefore void. This is the general rule. :- "All interference with individual liberty of action in trading, and all restraints of trade of themselves, if there is nothing more, are contrary to public policy and therefore void. This is the general rule. But there are exceptions: restraints of trade and interference with individual liberty of action may be justified by the specified circumstances of a particular case. It is a sufficient justification, and indeed it is the only justification, if the restriction is reasonable, that is, in reference to the interests of the parties concerned and reasonable in reference to the interest of the public." 12. The law laid down in Nagle v. Feliden others (supra) came up for consideration in the case of (Edwards v. Society of Graphical and Allied Trades)6, 1971(1) Ch. 354. A question posed there was as under :- "Can a rule giving powers so contrary to natural justice be valid? Does it offend public policy as being in restraint of trade? The issue there was of admission to membership of a Union and consequential employment. Examining the facts of that case the Court relying on the case of Nagle v. Feilden others (supra) held that any rule which arbitrarily, permits refusal to admit or readmit to the union a duly qualified craftsman of good character which has effect of precluding him from full opportunity to exercise his skills was invalid, being contrary to public policy. In the case of (Swansea City and County v. Johnson)7, 1999(1) All.E.R. 863 the issue arose of payment of pension under the Injury Allowance Scheme. In the case of (Lemenda Trading Co. Ltd. v. African Middle East Petroleum Co. Ltd.)8, 1988(1) Q.B. 448, the issue was whether a contract to use personal influence to obtain a benefit is against public policy, if pecuniary interest is not apparent. The Court held that :- (i) It is generally undesirable that a person in a position to use personal influence to obtain a benefit for another should make a financial charge for using such influence, particularly if his pecuniary interest was not apparent : (ii) It is undesirable for intermediaries to charge for using influence to obtain contracts or other benefits from persons in a public position. On that ground the Court held that :- "That English courts would not enforce an English law contract which fell to be performed abroad where the contract related to an adventure which was contrary to English public policy founded on general principles of morality, and the same public policy applied in the country of performance." The Court also noted that there is a clear distinction between the acts which infringe public policy and act which violates provisions of law. In the case of (Westacre Investments Inc. v. Jugoimport-Spdr Holding Co. Ltd. others)9, 1998(3) W.L.R. 770, an award obtained in Geneva was sought to be enforced in England. The 1st defendant therein appointed the plaintiffs as consultants for the procurement of contracts for the sale of military equipment to Kuwait. The contract provided for settlement of disputes in accordance with the Arbitration Rules of the International Chamber of Commerce. The defendants in the arbitration proceedings contended that the arrangement with the plaintiff was contrary to public policy because it had been for procuring sales, by fraud through bribery or alternatively by illicit personal influence of other kinds. The arbitrators rejected the contention and found in plaintiffs favour. An appeal was preferred to the Swiss Federal Tribunal on the ground that the award was contrary to public policy and the consultancy agreement was contrary to Kuwaiti law. The plaintiff obtained leave, ex parte, to enforce the award in England and subsequently brought an action on the award. The defendants applied to set aside the leave to enforce and by their points of defence alleged that the enforcement of the award would be contrary to public policy because it had been the intention of the parties that the plaintiffs would exercise personal influence over Kuwaiti officials in order to procure contracts, without disclosing that they had a pecuniary interest in their procurement, bribe Kuwaiti officials, and perform the contract in a manner which violated Kuwaiti law and was contrary to Kuwaiti public policy. A preliminary issue was framed for the purpose determining that since the award had been obtained by fraud and/or manifestly dishonest evidence, it is contrary to public policy to enforce it. The contention was rejected on the ground that, that issue having been determined by high calibre I.C.C. arbitrators, it was inappropriate that the Court should retry that issue. A preliminary issue was framed for the purpose determining that since the award had been obtained by fraud and/or manifestly dishonest evidence, it is contrary to public policy to enforce it. The contention was rejected on the ground that, that issue having been determined by high calibre I.C.C. arbitrators, it was inappropriate that the Court should retry that issue. That in all the circumstances, the public policy of sustaining international arbitration awards outweighed the public policy of discouraging international commercial corruption. That even if it were shown that the contract was contrary to public policy in Kuwait, enforcement of the award, which was valid under the curial law, would not offend international comity so as to be contrary to English public policy. In (Solemany v. Solemany)10, 1998(3) W.L.R. 811 the plaintiff purchased quantities of carpets and exported them, illegally, out of Iran to be sold by the defendant in the United Kingdom or elsewhere. Disputes arose between the parties over the division of the proceeds of sale. The parties made an agreement to arbitrate their disputes before the Both Din which applied Jewish law. The plaintiff applied to the High Court to register the award as a judgment. The Master granted leave to enter judgment for the sum of 576,574 sterling and gave leave to enforce the award. The defendant applied to set aside the order on the grounds that illegality rendered the plaintiff's claim void or unenforceable in an English Court and that it would be contrary to public policy for an award founded on an illegal agreement or transaction to be enforced as a judgment of the High Court. The Judge refused the defendant's application holding, inter alia, that a contract, otherwise unenforceable for illegality, became enforceable if the procedural law of the arbitration attached no significance to the illegality. That is how the matter was taken up in appeal. The appeal was allowed on the ground that it was apparent on the face of the award that the arbitrator was dealing with an illicit enterprise. That an English Court in enforcing an award whether domestic or foreign would not enforce it, if it will be contrary to public policy and the interposition of an arbitration award did not isolate the successful party's claim from the illegality which gave rise to it. The Court was considering the illegality of contract under English law. There are two general principles. The Court was considering the illegality of contract under English law. There are two general principles. The first is that a contract which is entered into with the object of committing an illegal act is unenforceable. The other the effect of illegality is to avoid the contract ab initio and that arises if the making of the contract is expressly or impliedly prohibited by statute or is otherwise contrary to public policy. In that case the Court was considering only initial illegality present when the underlying contract was made. The Court observed that nothing they have said touches on supervening illegality. The Court then went on to observe that the rule applies as much to the enforcement of an arbitration award as to the direct enforcement of a contract in legal proceedings. These two cases, which are lastly referred to are in the matter of enforcement of Foreign Awards in England. They have been referred to for the purpose of discussion. For the sake of understanding, the challenges available in England law, as reflected by judgments have been considered as now that law is also based on the UNCITRAL Model Law, though there are clear distinctions. 13. Further for the sake of discussion we may reproduce Article 34(1)(2) and (3) of the Uncitral Model Law on International Commercial Arbitration, which reads as under :- "(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (3) of this article. (2) An arbitral award may be set aside by the Court specified in Article 6 only if. (2) An arbitral award may be set aside by the Court specified in Article 6 only if. (a) the party making the application furnished proof that : (i) a party to the arbitration agreement referred to in Article 7 was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of this State; or (ii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or (iv) the composition of the arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with this law, or (b) the Court finds that : (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or (ii) the award is in conflict with the public policy of this State. (3) An application for setting aside, may not be made after three months have elapsed from the date on which the party making that application had received the award or, if a request had been made under Article 33, from the date on which that request had been disposed of by the arbitral Tribunal." 14. (3) An application for setting aside, may not be made after three months have elapsed from the date on which the party making that application had received the award or, if a request had been made under Article 33, from the date on which that request had been disposed of by the arbitral Tribunal." 14. The need of application of public policy under English Common Law has been explained by Sir Willam Holdsworth- "In fact, a body of law like the common law, which has grown up gradually with the growth of the nation, necessarily acquires some fixed principles and if it is to maintain those principles it must be able, on the ground of public policy or some other like ground, to suppress practices, which, under even new disguises, seek to weaken or negative them". (quoted from the judgment in Renu Sagar Power Co. Ltd.). Bearing this in mind, Judges in England have been reluctant to invoke the doctrine of public policy in domestic law, as the doctrine of public policy is somewhat open textured and flexible. There are two views, the narrow view and the broader view. The narrower view is that courts cannot create new heads of public policy. The broader view countenances judicial law making. If these aspects are borne in mind one can understand what is public policy and how it has been developed. In England it was developed to maintain the principles which had developed under the head "common law" and to suppress practices under ever new disguises seeking to weaken or negative them. Applying that yardstick, what must follow is that any act which is contrary to our law or tends to weaken it or defeat it, will be struck down on the ground of being contrary to public policy depending on whether one takes the broader view or the narrower view. Applicability of the doctrine in domestic law as followed by English courts has not necessarily to be followed in India, bearing section 23 of the Contract Act, which deals with void contracts opposed to public policy and Article 14 which strikes at arbitrariness in State actions and Article 21 which guarantees the right to life. Broadly English Public Policy had developed in the field of contract and/or restrictions on a person carrying on trade or profession. Broadly English Public Policy had developed in the field of contract and/or restrictions on a person carrying on trade or profession. It is a power conferred on the Court to refuse to recognise or strike down what may have been legal but which the Court finds offensive or immoral depending on public's perceptions of what is right or wrong. 15. Now the case law on "public policy, as expounded by the courts in India" may be considered as public policy has not been defined and assistance for finding out what it is, can be got from judgments of courts. A Single Judge of the Andhra Pradesh High Court in the case of (Kalaparti Venkatareddi v. Kalaparti Venkatachalam)11, A.I.R. 1964 A.P. 465 equated "public policy" to the "Policy of the law". The learned Judge held that the term 'public policy' does not admit of any definition. It is a variable quantity, which must vary and does vary, with the habits, capacities and opportunities of the public. What is the policy of the public at one time, may not be a policy at another time. It is equivalent to the "policy of the law". It is applicable to the spirit as well as the letter. Whatever tends to cause injustice is in restraint of liberty, commerce and natural or legal right; whatever tends to cause obstruction of justice or to the violation of a statute and whatever is against the good morals-when made the object of a contract is against public policy and therefore void and not susceptible of enforcement. It may be noted at once, that this view in England had held the field for a very short time but was departed from, by the English courts, which have distinguished clearly between public policy on the one hand and policy of the law on the other, though at one point of time, there was a view that both are the same. I have referred to this judgment, as some commentaries have referred to the same. I have referred to this judgment, as some commentaries have referred to the same. In (Murlidhar Agarwal and another v. State of Uttar Pradesh and others)12, A.I.R. 1974 S.C. 1924, Mathew, J., speaking for the Court, observed that :- "the expression 'public policy' has an entirely different meaning from 'policy of the law' and one much more extensive." The Court quoting Percy H. Winfield, observed as under :- "public policy, "has been defined by Winfield" as a principle of judicial legislation or interpretation founded on the current needs of the community." In that case the Court was examining a provision of the Rent Control Legislation. Section 3 provided that a person could not be evicted without permission under that section. There was a contract between the parties whereby it was agreed that the parties would not have benefit of the Act and the provisions of the Act would be inapplicable. The Court held that section 3 was founded on public policy and could not be waived. The following passage from the judgment is being reproduced:- "The courts have often repeated Mr. Justice Burrough's metaphor about public policy being an unruly horse. Some Judges appear to have thought it more like a tiger and have refused to mount it at all, perhaps because they feared the fate of the young lady of Riga. Otherwise have regarded it like Balsam's ass which would carry its rider nowhere. But none, at any rate at the present day, has looked upon it as a Pegasus that might soar beyond the momentary needs of the community. There is nothing remarkable in this because the topic itself is so elusive." In (Central Inland Water Transport Corporation Ltd. another v. Brojo Nath Ganguly another)13, A.I.R. 1986 S.C. 1571 what was in issue before the Apex Court was a provision in the contract, for termination the services of permanent employee, working with a Government Corporation. Referring to the expression "public policy" and the Contract Act the Court observed as under :- "The Contract Act does not define the expression "public policy" or "opposed to public policy". From the very nature of things, the expressions "public policy", "opposed to public policy", or "contrary to public policy" are incapable of precise definition. Public Policy, however, is not the policy of a particular Government. It connotes some matter which concerns the public good and the public interest. From the very nature of things, the expressions "public policy", "opposed to public policy", or "contrary to public policy" are incapable of precise definition. Public Policy, however, is not the policy of a particular Government. It connotes some matter which concerns the public good and the public interest. The concept of what is for the public good or in the public interest or what would be injurious or harmful to the public good or the public interest has varied from time to time. As new concepts take the place of old, transactions which were once considered against public policy are now being upheld by the courts and similarly where there has been a well-recognized head of public policy, the courts have not shirked from extending it to new transactions and changed circumstances and have at times not even flinched from inventing a new head of public policy." The Court, proceeding further observed :- "It is thus clear that the principles governing public policy must be and are capable, on proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the Court must in consonance with public conscience and in keeping with public good and public interest declare such practice to be opposed to public policy. Above all, in deciding any case which may not be covered by authority our courts have before them the beacon light of the Preamble to the Constitution. Lacking precedent, the Court can always be guided by that light and the principles underlying the Fundamental Rights and the Directive Principles enshrined in our Constitution". (emphasis supplied). A Constitution Bench of the Apex Court was considering a similar provision in the case of (Delhi Transport Corporation v. D.T.C. Mazdoor Congress others)14 A.I.R. 1991 S.C. 101. Ramaswamy, J., in his judgment, has quoted the following passage from the Law of Contract by G.H. Treitel, 7th Edition at page 366:- "Public Policy is a variable notion, depending on changing manners, morals and economic conditions. In theory, this flexibility of the doctrine of public policy could provide a judge with an excuse for invalidating any contract which he violently disliked. In theory, this flexibility of the doctrine of public policy could provide a judge with an excuse for invalidating any contract which he violently disliked. On the other hand, the law does adapt itself to change in economic and social conditions, as can be seen particularly from the development of the rules as to contracts in restraint of public policy has often been recognised judicially. Thus Lord Haldane has said : "What the law recognised as contrary to public policy turns out to vary greatly from time to time". And Lord Denning has put a similar point of view "with a good man in the saddle, the unruly horse can be kept in control. It can jump over obstacles". The present attitude of the courts represents a compromise between the flexibility inherent in the notion of public policy and the need for certainty in commercial affairs." In my opinion the following two paragraphs are relevant for the purpose of discussing the expression the award is in conflict with the public policy of India. "255. From this perspective, it must be held that in the absence of specific head of public policy which covers a case, then the Court must in consonance with public conscience and in keeping with public good and public interest invent new public policy and declare such practice or rules that are derogatory to the constitution to be opposed to public policy. The rules which stem from the public policy must of necessity be laid to further the progress of the society in particular when social change is to bring about an egalitarian social order through rule of law. In deciding a case which may not be covered by authority courts have before them the beacon light of the trinity of the constitution and the play of legal light and shade must lead on the path of justice, social, economical and political. Lacking precedent, the Court can always be guided by that light and the guidance thus shed by the trinity of our constitution." Public Policy thus can be drawn from the constitutional provisions. "256. Sutherland, in his statutes and Statutory Construction Third Edition Vol. 3 paragraph 5904 at pages 131-132 has stated that the most reliable source of public policy is to be found in the Federal and State Constitutions. "256. Sutherland, in his statutes and Statutory Construction Third Edition Vol. 3 paragraph 5904 at pages 131-132 has stated that the most reliable source of public policy is to be found in the Federal and State Constitutions. Since constitutions are the superior law of the land, and because one of their outstanding features is flexibility and capacity to meet changing conditions, constitutional policy provides a valuable aid in determining the legitimate boundaries of statutory meaning. Thus public policy having its inception in constitutions may accomplish either a restricted or extended interpretation of the literal expression of a statute. A statute is always presumed to be constitutional and where necessary constitutional meaning will be inferred to preserve validity. Likewise, where a statute tends to extend or preserve a constitutional principle, reference to analogous constitutional provisions may be of great value in shaping the statute to accord with the statutory aim or objective. Article 14 sheds the light to public policy to curb arbitrariness." Gainful reference may also be made to the observations of the Apex Court in the case of (Rattan Chand Hira Chand v. Askar Nawazjung (dead) by L.Rs. and others)15, A.I.R. 1991(3) S.C. 67:- "The contract such as the present one which, as found by the City Civil Court, as well as the High Court, to have been entered into with the obvious purpose of influencing the authorities to procure a verdict in favour of 'S' was a "carrier" contract. To enforce such a contract although its tendencies to injure public weal is manifest is not only to abdicate one's public duty but to assist in the promotion of a pernicious practice of procuring decisions by influencing authorities when they should abide by the law. To strike down such contracts is not to invent a new head of public policy but to give effect to its true implications. A democratic society is founded on the rule of law and any practice which seeks to subvert or circumvent the law strikes at its very root. When the Court discoutenances such practice, it only safeguards the foundation of the society. Even assuming, therefore, that the Court finds a new head of public policy to strike down such practice, its activism is not only warranted but desired." 16. We may, however, note at this stage the provisions of the Foreign Awards (Recognition and Enforcement) Act. When the Court discoutenances such practice, it only safeguards the foundation of the society. Even assuming, therefore, that the Court finds a new head of public policy to strike down such practice, its activism is not only warranted but desired." 16. We may, however, note at this stage the provisions of the Foreign Awards (Recognition and Enforcement) Act. Reference is made to this enactment as reliance has been placed therein to contend that similar language has been used under section 7, which to the extent necessary is reproduced below:- 7. Conditions for Enforcement of Foreign Awards : (1) A Foreign Award may not be enforced under this Act (a) ........ (b) if the Court dealing with the case is satisfied that (i) the subject matter of the difference is not capable of settlement by arbitration under the law in India; or (ii) the enforcement of the award will be contrary to public policy. We may, therefore, at once see the distinction. Under the Foreign Awards Act, the Award cannot be enforced if it is contrary to 'public policy'. In so far as section 34(2) is concerned, an arbitral award can be set aside if it is in conflict with the public policy of India. The terminology is not the same. In fact the language of section 7 of the Foreign Awards Act is similar to section 48 of the 96 Act. A foreign Award, therefore, will not be enforced in India, if it is against the public policy. What therefore is the meaning of "public policy" under that Act. We need not detain ourselves on the matter as the expression 'public policy' under the Foreign Awards Act stands concluded, by the judgment of the Apex Court in the case of (Renusagar Power Company Ltd. v. General Electric Co.)16, A.I.R. 1994 S.C. 860. Can the judgment of the Apex Court in the case of Renusagar Power Co. Ltd. (supra) be applied to Part I of the Arbitration Conciliation Act, 1996 is concerned. This is because the Apex Court itself has held that while enforcing a Foreign Award, the expression public policy, would mean the public policy of India, and not the public policy of the country where the award was made. Ltd. (supra) be applied to Part I of the Arbitration Conciliation Act, 1996 is concerned. This is because the Apex Court itself has held that while enforcing a Foreign Award, the expression public policy, would mean the public policy of India, and not the public policy of the country where the award was made. The question before the Apex Court was whether the narrower concept of public policy, as followed in the field of private international law should be applied or the wider concept of public policy as applicable in the field of Municipal law. In Para 65 the Court held that : the concept of Public policy which is permissible under section 7(1)(b)(ii) of the Foreign Awards Act should be construed narrowly. The Apex Court observed as under :- "This would mean that "public policy" in section 7(1)(b)(ii) has been used in a narrower sense and in order to attract the bar of public policy the enforcement of the award must invoke something more than the violation of the law of India. Since the Foreign Awards Act is concerned with recognition and enforcement of foreign awards which are governed by the principles of private international law, the expression "public policy" in section 7(1)(b)(ii) of the Foreign Awards Act must necessarily be construed in the sense the doctrine of public policy is applied in the field of private international law. Applying the said criteria it must be held that the enforcement of a foreign award would be refused on the ground that it is contrary to public policy if such enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morarlity." A few other observations may also be referred to. In para 85, the Apex Court has observed as under :- "It is the fundamental principle of law that orders of courts must be complied with, for any action which involves disregard for such orders would adversely affect the administration of justice and would be destructive of the rule of law and would be contrary to public policy........" From the above it is clear that the Apex Court itself has noted that the concept of public policy would vary, depending as to what is being interpreted, whether on the touch stone of private international law or Municipal law. Therefore, at the highest the ratio of the judgment in Renu Sagar can be applied to section 48(2)(b) of the Act of 1996. In so far as the Arbitration Conciliation Act, 1996 is concerned bearing in mind section 28 of the Act and section 34(2)(b)(ii), it is clear that the expression public policy under section 34(2)(b)(ii) to the extent relevant would be the public policy as known to Municipal law. The ratio of Renu Sagar would be inapplicable. 17. The concept of public policy as now understood, will, therefore, depend on whether we accept the broader view or the narrower view. In enforcing foreign awards, the Apex Court has accepted the narrower view. Will that be the view to be followed in applying the concept of "public policy" whilst applying the Municipal law or must it be the broader view. It may also be noted that in Renusagar Power Co. Ltd. (supra) the Court has held that the scope of inquiry, before the Court, before which the award is sought to be enforced, is confined to examine whether the contentions as raised, are to the enforceability of the award, and does not enable the party to impugn the award on merits. The language used in section 7 of the Foreign Awards (Regulations Enforcement) Act as stated earlier is similar to section 48 of the Arbitration Conciliation Act, 1996. The award may be set aside, if the arbitral award, is in conflict with the public policy of India. The narrower view of public policy as understood and explained by the Apex Court is that, a foreign award would not be enforced if it is contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality. The broader view naturally cannot be further restrictive. In the field of domestic law, the Apex Court has followed the broader view" See Murlidhar Agrawal (supra); Central Inland Water Transport Corporation (supra) and Delhi Transport Corporation (supra). The expression public policy is not defined in the Act, save and except and to the extent as contained in the explanation to section 34(2)(b)(ii). Public policy of India considering the explanation would include an award induced or affected by fraud or corruption or in violation of section 75 or section 81. The expression public policy is not defined in the Act, save and except and to the extent as contained in the explanation to section 34(2)(b)(ii). Public policy of India considering the explanation would include an award induced or affected by fraud or corruption or in violation of section 75 or section 81. The inclusion of section 75 or section 81 to challenge an award under the head of public policy of India, would then necessarily include a challenge to an award being contrary to substantive law of India i.e. made in violation of the express provisions of section 75 or 81 of the 1996 Act. We have already noted what is the meaning to be given to an explanation in the section. This, therefore, must shed light as to the nature of the challenge available under the head "public policy of India", considering section 28, which states that the law to be applied by the Arbitral Tribunal in domestic arbitration is the substantive law for the time being in force in India. 18. Under the common law of England a rule made by those in authority which has the effect of unjustly interfering with the individual liberty of the right of a person to work at a trade or profession has been held to be against public policy. Taking undue advantage of one's influence, to obtain a contract for another or intermediaries charging a person to use personal influence to obtain contracts from persons in public position have been held to be against public policy. English courts have also applied the principle in respect of contract performed abroad, which were contrary to English Public Policy based on morality and the same public policy also applied in the Country of performance. Earlier we have set out, how our courts understood the concept of public policy. A contract which has the effect of defeating a provision of law, enacted for the benefit of class of under privileged sections of the society has been held to be contrary to public policy. A contract which has the effect of affecting public good and public interest, or injurious or harmful to public good or interest is contrary to public policy. A practice or rule derogatory to the Constitution has been held to be opposed to public policy. Public Policy can be drawn from the Constitution. Article 14 can help to shed light on public policy. A practice or rule derogatory to the Constitution has been held to be opposed to public policy. Public Policy can be drawn from the Constitution. Article 14 can help to shed light on public policy. An arbitrary action, violative of constitutional principles would be, therefore, contrary to public policy. Contracts entered into by influencing public men have been held to be contrary to public policy. One thing from this is clear, public policy is not static but elastic. It can soar like a Pegasus beyond the momentary needs of the community. It can also be reined in with the interpretation given in Delhi Transport Corporation (supra), applying the fountainhead of constitutional principles. Constitutional principles, therefore, are a surer method of understanding public policy, as constitutions are not designed for the day, but for all times. This view has found favour with the Apex Court. Similarly, any action which involves, disregard of orders of the Court would adversely affect the administration of justice and would be destructive of the rule of law and would be contrary to public policy. 19. Would, therefore, an award, which is perverse or mala fide meaning thereby suffering from legal mala fides or arbitrary, be allowed to be executed. Arbitrariness and mala fides are the two sides of the same coin. Would an award, which a High Court in the exercise of extra ordinary jurisdiction would quash being in excess of its jurisdiction, be saved. Would that not be destructive of the rule of law. Under section 28 of the 1996 Act, an arbitral Tribunal must follow the substantive law of India. What happens if the arbitral Tribunal does not follow the substantive law or does not apply the law. Would that not amount to an award being contrary to the public policy of India. Outside section 34(2)(b) there is no other ground to challenge such an award. Can it be the contention that even such an award cannot be interfered with. Such a submission would be destructive of the rule of law. An award contrary to the principles of natural justice and fair play is arbitrary and as such against the public policy of India. An award by an arbitral Tribunal against which bias is alleged if not waived, is void and, therefore, contrary to public policy. Such a submission would be destructive of the rule of law. An award contrary to the principles of natural justice and fair play is arbitrary and as such against the public policy of India. An award by an arbitral Tribunal against which bias is alleged if not waived, is void and, therefore, contrary to public policy. An award by an arbitral Tribunal having no jurisdiction, or exercising jurisdiction, beyond the scope of its authority or to the very existence of the arbitration agreement would be contrary to the public policy of India. These grounds under the head of public policy are apart from the challenges available under section 34(2)(b)(i), (ii), (iii), (iv) and (v) and section 34(2)(b)(i). Another important aspect, unlike the Act of 1940 , is section 31(3). Unless the parties otherwise agree, the arbitral award shall state the reasons. What would be the import of this section in construing the provisions of the expression "public policy of India'. Would an award in which reasons are required to be given, if based on extraneous material not on record, or reasons which are per se perverse, or no reasons are given be allowed to be executed, as it does not fall within the expression public policy of India? The Act requires reasons to be given to enable a Court to consider the challenge to an award. It is not an idle or empty formality. In so far as section 34(2) is concerned, the reasons would be material except in the context of those contentions which were raised before the Tribunal and were rejected at a stage before passing the award. The reasons if and at all would be material to decide the challenge under section 34(2)(b)(ii). The section which provides that the Tribunal must give reasons for the award must be given its legislative intent. It cannot be rendered otiose. Looking at sections 13, 16 24 and 29, it would not have been the intent of Parliament, that under the Municipal law, awards which otherwise would not be enforced by Municipal Courts merely because they are awards of a Tribunal can be enforced. This itself would be destructive of the rule of law and constitutional principles. Judgment of courts, trained to dispose of legal matters are subject to further judicial review. It may be that an arbitral Tribunal may consist of some experts on occasions. This itself would be destructive of the rule of law and constitutional principles. Judgment of courts, trained to dispose of legal matters are subject to further judicial review. It may be that an arbitral Tribunal may consist of some experts on occasions. Would an award for example by a retired Judge be holier than a judgment of a sitting Judge. This, therefore, could not have been the legislative intent. On the contrary by introducing the expression "public policy of India" the challenges are not confined to public policy as understood at the relevant moment, but beyond the monetary needs of the community. They are ever expanding as the needs of the times and the hour. The need on the one hand is to bear in mind section 5 of the 1996 Act and on the other hand the rule of law which is the high water mark in our understanding of public policy. Section 5, is merely a restriction on the Court exercising jurisdiction if it does not have. In other words it excludes intervention by courts unless the Act itself provides for intervention. It is not a provision, restricting the challenge to an award. The challenge to an award are found under section 34(2). Once that be so it is clear that section 5 is not an embargo on Court to examine the award. The challenge to the award is thus to be considered under section 34(2). The principles embodied in our Constitution must be the basis on which to test as to what is the public policy of India. This is now judicially recognised. See Central Inland Water Transport Corporation (supra) and Delhi Water Transport Corporation (supra). No award, therefore, which cannot stand the scrutiny of the constitutional mandate of non-arbitriness will be allowed to stand and it must be held that an award which is arbitrary and/or mala fide would be against the public policy of India. Would a Constitutional Court before whom a party could challenge the order of a Tribunal or other authority, allow an order or award to stand, if it does not meet the requirements of Article 226 and/or Article 227. Would a Constitutional Court before whom a party could challenge the order of a Tribunal or other authority, allow an order or award to stand, if it does not meet the requirements of Article 226 and/or Article 227. Therefore, in considering whether the order or award is against public policy, would it be possible for this Court to apply as a yard stick, the challenges available under Articles 226 and 227 of the Constitution whilst considering the challenges to an award under section 32(2)(b)(ii) of the Act of 1996. If this interpretation can be applied it will be possible, atleast for the time being for courts to judicially reign in the "unruly horse" represented by arbitrary awards. 20. It may be remembered and noted that the Act of 1996, is based on the UNCITRAL Model Law though there are differences, which to my mind are material for the purpose of discussing the challenges and the reliefs. Under section 11 on failure of the parties to appoint an arbitrator as provided in the matter of domestic arbitration, power is conferred on the Chief Justice of the High Court or any person or institution, designated by the Chief Justice to appoint an arbitrator. The corresponding provision under section 11(5) of the Uncitral Model Law does not vest the power in a persona designata but in the Court or other authority specified in section 6 of the Uncitral Model Law. There is an express provision in the Uncitral Model Law. Section 11(5), barring an appeal. In so far as Act of 1996 is concerned decision under section 11(6) is final under section 11(7). The Apex Court has now recognised that the decision under section 11(7) though final is subject to writ jurisdiction and a mandamus can be directed. See (Konkan Railway Corporation v. M/s. Mehul Construction Co.)17, 2001(1) Bom.C.R. (S.C.)771 : A.I.R. 2000 S.C.W. 2960. No doubt the matter is now placed before a larger Bench. However, for the purpose of the present discussion and issues involved herein it would be immaterial. Unlike section 13(3) or section 16(3) of 1996 Act if a challenge is not successful it is open to the party under Uncitral Code to move the Court or authority referred to in Article 6 to decide the questions which decision shall be subject to no appeal. Unlike section 13(3) or section 16(3) of 1996 Act if a challenge is not successful it is open to the party under Uncitral Code to move the Court or authority referred to in Article 6 to decide the questions which decision shall be subject to no appeal. At the same time proceedings are not stayed and the Tribunal can proceed to pass an award. The decision under section 13(3) or 16(5) is by the Tribunal and not Court. That decision under Uncitral Law is not made subject to challenge under section 34 unless the Tribunal answers the question while passing the award on merits unlike the Act of 1996. Therefore, clearly those decisions under the Uncitral Model Law generally are not subject to challenge under section 34(2)(b)(ii) except as set out above. Therefore, though in interpreting the 1996 Act the Uncitral Model Law may have to be borne in mind it is apparent that the challenges are different both in point of time and nature. Whilst on the subject it may be noted that there are other differences. Section 10(1) of the 1996 Act is couched in totally different language than section 10(1) of the Uncitral Model Law. Even sub-section (2) of section 10 is different. There are other differences which are not necessary for the purpose of deciding the points in controversy. Suffice it to say that there are substantial differences. It is true that public policy is not immutable. However, what is further true, is that the rule of law cannot be short circuited on the ground that the award is made by an arbitrator either appointed by the parties or by intervention of the Court. Atleast I would be reluctant to uphold an award on that ground. If that be the basis, then there can be no challenge to an award on merits as the challenge on the ground of public policy would be limited and restricted to the grounds available only under conflict of laws or whilst considering the enforcement of a foreign award. It is settled law that while executing a foreign decree or a foreign award, a challenge on merits or on facts is not available (as the Court is examining only the issue of enforcement). It must be remembered that the arbitral Tribunal is no longer a private arbitrator as was considered in the Act of 1940. It is settled law that while executing a foreign decree or a foreign award, a challenge on merits or on facts is not available (as the Court is examining only the issue of enforcement). It must be remembered that the arbitral Tribunal is no longer a private arbitrator as was considered in the Act of 1940. It is a part of the administration of justice, being an alternative system of redressal of disputes. A party now can be held guilty of contempt of the arbitral Tribunal during the conduct of the arbitral proceedings, under section 27(5) of the 1996 Act. In the case of (M/s. Anuptech Equipments Pvt. Ltd. v. M/s. Ganpati Co-operative Housing Society Ltd. others)18, 1999(2) Bom.C.R. 331 , I had an occasion to consider the legal status of the arbitral Tribunal under the Act of 1996. Although it has all the trappings of a Tribunal, I had hesitated to say so, whilst proceeding to hold that it would atleast be a person to whom a writ could go. Considering the Uncitral Model Law and the Act of 1996 the challenges available, it is clear that the challenge to an Award under the Uncitral Model Law are not the same as in the Act of 1996. As already pointed out, dispute under sections 13 and 16 of the Uncitral Model Law can be raised before the Court, unlike the Act of 1996 wherein the decision by the Tribunal can only be challenged while challenging the award under section 34. Therefore, section 34 has to be understood in the context of the changes of law brought in the Uncitral Model Law by the Parliament. 21. Public policy has to take into consideration, the social milieu and probity in public life when the award is made and/or is enforced. Courts in this country cannot say, I will not see, hear or speak. Speak, they must after hearing and seeing, if the rule of law has to be upheld. Awards under the Act of 1940 and specifically in the matter of Government contracts and contracts of public sector undertakings, local authorities and other Governmental companies had left much to be desired. Government and Government related organisations are the biggest litigants. Therefore, the new law cannot be considered de hors the position prevailing before the Act of 1996 was enacted. Awards under the Act of 1940 and specifically in the matter of Government contracts and contracts of public sector undertakings, local authorities and other Governmental companies had left much to be desired. Government and Government related organisations are the biggest litigants. Therefore, the new law cannot be considered de hors the position prevailing before the Act of 1996 was enacted. It could never have been the mandate of Parliament that now under the Act of 1996, the award could not be challenged on merits. When I say merits let me make it clear that I do not mean like in an appeal. It cannot be countenanced that the Act of 1996, seeks to remedy a mischief if that rule of interpretation is applied. Sustaining an award which is contrary to law cannot be said to avoid the mischief, Parliament sought to avoid, in enacting section 34 of the 1996 Act. All that has happened under the new law is that the stage of intervention by courts the procedural law, time to pass the award, executing the award as a decree after the time to challenge the order is over, have been made effective. Reasons have to be given. It is made certain as to which law must be applied. It must be borne in mind that section 28 has made it clear that the Tribunal is bound to follow the substantive law of India in the matter of domestic arbitration. Once Parliament itself has made it mandatory that the Tribunal follow the substantive law of India, the challenge on the ground of public policy must also bear that fact in mind. In Konkan Railway Corporation, the Apex Court was considering the nature of the order under section 11(6). Whilst doing so the Court observed as under :--- "A bare comparison of different provisions of the Arbitration Act of 1940 with the provisions of the Arbitration and Conciliation Act, 1996 would unequivocally indicate that 1996 Act limits intervention of Court with an arbitral process to the minimum and it is certainly not the legislative intent that each and every order passed by an authority under the Act would be a subject matter of judicial scrutiny of a Court of Law. Under the new law the grounds on which an award of an arbitrator could be challenged before the Court have been severely cut down and such challenge is now permitted on the basis of invalidity of the agreement, want of jurisdiction on the part of the arbitrator or want of proper notice to a party of the appointment of the arbitrator or of arbitral proceedings. The powers of the arbitrator have been amplified by insertion of specific provisions of several matters. Obstructive tactics adopted by the parties in arbitration proceedings are sought to be thwarted by an express provision inasmuch as if a party knowingly keeps silent and then suddenly raises a procedural objection will not be allowed to do so. The role of institutions in promoting and organising arbitration has been recognised. The power to nominate arbitrators has been given to the Chief Justice or to an institution or person designated by him. The time limit for making awards has been deleted. The existing provisions in 1940 Act relating to arbitration through intervention of Court, when there is no suit pending or by order of the Court when there is a suit pending, have been removed. The importance of transnational commercial arbitration has been recognised and it has been specifically provided that even where the arbitration is held in India, the parties to the contract would be free to designate the law applicable to the substance of the dispute. Under the new law unless the agreement provides otherwise, the arbitrators are required to give reasons for the award. The award itself has now been vested with statute of a decree, in asmuch as the award itself is made executable as a decree and it will no longer be necessary to apply to the Court for a decree in terms of the award. All these aim at achieving the sole object to resolve the dispute as expeditiously as possible with the minimum intervention of a Court of law so that the trade and commerce is not affected on account of litigations before a Court. When United Nations established the Commission on International Trade Law it is on account of the fact that the General Assembly recognised that disparities in national laws governing international trade created obstacles to the flow of trade. When United Nations established the Commission on International Trade Law it is on account of the fact that the General Assembly recognised that disparities in national laws governing international trade created obstacles to the flow of trade. The General Assembly regarded the Commission on International Trade Law as medium which could play a more active role in reducing or removing the obstacles. Such Commission, therefore, as given a mandate for progressive harmonization and unification of the law of International Trade. With that objective when Uncitral Model has been prepared and the Parliament in our country enacted the Arbitration and Conciliation Act of 1996 adopting Uncitral Model, it would be appropriate to bear the said objective in mind while interpreting any provision of the Act. The Statement of Objects and Reasons of the Act clearly enunciates that the main objective of the legislation was to minimise the supervisory role of courts in the arbitral process." The issue of public policy was not in issue. The procedural aspects and intervention of the Court was, what was being considered. In fact the real issue before the Apex Court was the nature of the order or decisions taken under section 11(6). 22. Normally an award of a Tribunal or authority would have been subject to the extra ordinary jurisdiction of the High Courts, unless an alternative remedy was provided. Under the Act, specific forums have been provided to challenge the award. Recourse, therefore, has to be had to the forums so provided. That does not mean that the challenges which would have been available if no forum was provided have to be given up, unless it is so possible to hold whilst considering the language of section 32 of the Act of 1996 and that it was the intent of Parliament to exclude such challenges. Such a conclusion is impossible of acceptance, as by using the expression 'public policy' Parliament has made the challenge broader and to cover also future development of law. Any other view would be detrimental to the rule of law. Courts in India cannot remain passive spectators and take the narrow view. Parliament in its wisdom has left the challenges open under the head of public policy, which includes morality and the rule of law. Parliament in enacting section 34(2)(b) has chosen to soar even beyond the present needs of the community. Courts must give effect to its intent. Courts in India cannot remain passive spectators and take the narrow view. Parliament in its wisdom has left the challenges open under the head of public policy, which includes morality and the rule of law. Parliament in enacting section 34(2)(b) has chosen to soar even beyond the present needs of the community. Courts must give effect to its intent. The two constitutional wings must start acting together, to uphold the trust of the founding fathers. Any other view knowing public morality for the moment and the state of our institutions, would amount to abdication of the trust reposed by Parliament in the courts. Apart from that, the only institution under the Constitution at present which can dispel the gloom all around, and light the way ahead atleast in the public mind are the courts. If new heads have to be invented to strike down awards, which the courts judicial conscience feel must be struck down or which a Constitutional Court if the matter had come before it under Article 226 or 227, would not allow to stand there can be no difficulty, in finding new heads to strike down arbitrary awards. As Lord Devlin put it, law needs public support and in return it must be prepared to support public morality and when that would be outraged by the use of law, the courts should refuse to lend its aid. Article 226 is the extra ordinary jurisdiction conferred in the High Court to keep authorities under the four corners of law, whilst Article 227 is the supervising power to keep Tribunals, within bounds. Therefore, the challenge available under Article 226 and/or Article 227 can be read into section 32(2)(b)(ii). Courts have not hesitated in the past in the field of company law and other matters to lift the veil. In the instant case if the veil has to be lifted to deprive the enrichment of these who otherwise are not entitled to the assistance of the Court so be it. This intervention is further fortified by the principle that no man should profit from his own wrong or whose action is founded on an immoral or illegal act. In the instant case if the veil has to be lifted to deprive the enrichment of these who otherwise are not entitled to the assistance of the Court so be it. This intervention is further fortified by the principle that no man should profit from his own wrong or whose action is founded on an immoral or illegal act. The Arbitration Conciliation Act, 1996 should not be interpreted to give the dishonest, the benefit of an award which was procured, but on the face of it does not seem to be so, on the ground that there is no head presently recognised under the head of public policy of India to challenge such awards on merits. If new heads of public policy have to be invented, then I find no hesitation considering the social milieu to invent as challenges, the same grounds which this Court considers, while exercising its extra ordinary jurisdiction under Articles 226 and/or 227 of the Constitution. The Apex Court has recognised that anything derogatory to the Constitution is opposed to public policy, both in Central Inland Water Transport Corporation (supra) as also in Delhi Transport Corporation (supra). It is presumed that Parliament when it enacted the Act of 1996 was fully aware of the law declared by the Apex Court as to what is public policy. An award which a Constitutional Court, whilst exercising its extra ordinary jurisdiction, would strike down, will be an award against public policy. To my mind, therefore, considering the times, the grounds available to a writ Court exercising its extra ordinary jurisdiction, must atleast be available to courts, while considering a challenge to an award under section 34(2)(b)(ii), under the head of public policy. As the expression is incapable of precise definition, those challenges would be available, if the Court finds the award obnoxious to its sense of justice, based on settled principles of law, whether as to the conduct of the arbitrator or arbitral proceedings or the award itself. Justice is the beginning and the end. Law must ultimately reach out to justice. Public Policy contemplates that courts must reflect it. 23. Let us further discuss the issue whether this interpretation would be contrary to the objects and aims of the Arbitration Conciliation Act, 1996. Justice is the beginning and the end. Law must ultimately reach out to justice. Public Policy contemplates that courts must reflect it. 23. Let us further discuss the issue whether this interpretation would be contrary to the objects and aims of the Arbitration Conciliation Act, 1996. The Objects and Reasons clause to the Act of 1996 nowhere reflects that the object of the Act is to restrict the challenges to an award. On the contrary the objects clause would indicate that aim was to ensure that the arbitral procedure would be fair, efficient and capable of meeting the needs of the specific arbitration, to provide that the arbitral Tribunal gives reasons for its arbitral award and to ensure that the arbitral Tribunal remains within the limits of its jurisdiction and further to minimise the supervisory role of courts in the arbitral process. Section 5 of the Act 1996 which restricts intervention by judicial authorities only provides that courts should not intervene unless the Act so provides. The intervention by the courts can be seen in sections 8, 9, 11(4), 11(9), 14(2), 27, 34, 34(4) and 37 and some other like provisions. Section 5 nowhere determines or decides the scope of interference under section 34(2). The power of the Court to interfere with the award is found under section 34(2) of the Act, 1996. The only question, therefore, is the extent of the power of the Court to interfere with the award. In the Act of 1940 the power to challenge an award was contained in section 30, while considering the challenges under the Act of 1940 the courts have held that the award would be interfered with if the arbitrator misconducted himself or the proceedings, the award discloses error apparent on the face of the record, the award was without jurisdiction and the award was beyond the scope of the arbitration itself as also if the award was a non-speaking award where reasons had to be given. An examination of the provisions of the Act of 1996 and more specifically sections 12, 13, 14, 16, 18, 19, 23, 24, 25, 28 and 31 would indicate that all those challenges are available. Some of them can be decided at the interim stage against which an appeal is provided under section 37. Once those challenges are decided under section 37 which are accepted. Some of them can be decided at the interim stage against which an appeal is provided under section 37. Once those challenges are decided under section 37 which are accepted. However, if the challenge is rejected and in respect of the other challenges they could only be challenged while challenging the award under section 34(1). If they do not fall within the ambit of section 34(2)(a) then the only ground available would be section 34(b)(ii). It is, therefore, clear that the Act of 1996 in so far as the challenges to the award are concerned has not restricted the challenge to an award. The object achieved by the Act of 1996 as has been set out in the Objects and Reasons clause itself is to ensure that the awards are passed at the earliest without interference by courts at stages where intervention is not provided for and to ensure that the arbitral Tribunal while passing the award, gives reasons for the award unless the parties themselves agree that no reasons need be given. Therefore, I have no hesitation in holding that the Act of 1996 has not in any way limited the challenges which were earlier available under the Act of 1940. It is true that courts in India even under the Act of 1940 have refused to interfere with wrong findings or conclusions of fact and law unless the award discloses error apparent on the face of the record or the like. This was to ensure that the enforcement of arbitral awards without undue delay as the parties themselves had voluntarily sought arbitration, by naming the arbitrator or moving the arbitrator provided for under the contract or arbitrator appointed jointly by the parties or appointment made by the Court. In England in so far as the awards are concerned, challenges on pure mistake of fact and law on the face of the award were first excluded by section 1(1) brought about by the amendment Act of 1979 to the Act of 1950. That position was reiterated in the Act of 1996 by providing section 81(2). The new Act thus only provided or ensured that the challenges which were not available in the old Act would also not be available under the new Act. In other words that means is that, their Parliament ensured that under the new Act challenges which had been excluded would not be available. The new Act thus only provided or ensured that the challenges which were not available in the old Act would also not be available under the new Act. In other words that means is that, their Parliament ensured that under the new Act challenges which had been excluded would not be available. A look at the provisions of the law in England to challenge an award which is also based on the UNCITRAL Code will indicate that the challenges available or atleast set out are wider in the context of the language used therein. Therefore, these would be clear indications that Act of 1996 does not in anyway restrict the challenges which were earlier available under the Act of 1940. On the contrary as discussed earlier by using the expression public policy, Parliament has chosen to provide that new challenges, which were not available when the Act came into force, would be available to courts of law at future point of time. Thus the interpretation of public policy as discussed earlier, is neither in conflict with the objects clause of the Arbitration Conciliation Act, 1996 or section 5 of the Act of 1996 or the various provisions of the Act itself. Section 5 cannot if the arbitral Tribunal is subject to the supervisory jurisdiction of the High Court under Article 227 take away that jurisdiction. That is settled law. 24. With the above discussion and applying the above tests we now proceed to discuss the various grounds raised to challenge the award and if a case is made thereunder. As set out earlier, it may be noted that what the tribunal has allowed are (i) compensation towards loss of overhead and loss of profit and profitability; (ii) for idle machinery and equipment; (iii) for carrying out extra work. In so far as cost of repairs and rectification is concerned it is held that the amount has to be assessed. Interest has been awarded at 18% per annum. The Tribunal has specifically rejected compensation for losses incurred due to increase in costs of material and labour on the ground that escalation was not permitted as per the contract. The finding of the Tribunal that it was the petitioners herein who did not perform their part of the contract within time has not been assailed. 25. The Tribunal has specifically rejected compensation for losses incurred due to increase in costs of material and labour on the ground that escalation was not permitted as per the contract. The finding of the Tribunal that it was the petitioners herein who did not perform their part of the contract within time has not been assailed. 25. It has been contended on behalf of the petitioners that the contract is a fixed rate contract. In other words a firm contract and there was no provision for escalation. What in fact the Tribunal has done by awarding the claims for Claim No. 1 and Claim No. 2 is awarding the amounts for escalation. It is further pointed out that whenever the respondents sought time they were clearly informed that the price quoted by them would remain firm till the completion of the job. In fact the various letters exchanged between the parties would indicate that. The record would also indicate that the respondents proceeded to go ahead with the job in the extended time after being clearly informed that there would be no escalation. It is contended that there would be no escalation. It is contended that the claim for loss of overheads, profit and profitability is only a camouflage. It is only a cover and a form. In substance the claim is for escalation in prices. The claim has been discussed by the arbitration at pages 10, 11 and 12 of the award. The case of the respondents all throughout was that on account of the delay the overheads had gone up. The arbitrator had accepted that the original contract period was for 18 months and the extended period comes to 31 months. The respondents have provided for 22 months over heads in their estimates and that he is allowing three months for internal administrative process of the petitioners and grants relief for the remaining 24 months delay allegedly attributable to the petitioners. The reasoning given by the arbitrator and the evidence brought by the respondents would clearly show that in substance the claim is a claim for escalation or increase in profit. The reasoning given by the arbitrator and the evidence brought by the respondents would clearly show that in substance the claim is a claim for escalation or increase in profit. In short from letter dated 4th July, 1996 it is clear that the respondents have clearly claimed that they have incurred heavy expenditure due to the increase in the price of the raw material and labour and they had provided in the tender only for 22 months of site and head office overheads, etc. In answer it is contended on behalf of the respondents that what the contract prohibits the respondents from, is making claims on account of price escalation. The contentions of the petitioners that price escalation has in fact been awarded by the arbitrator under the garb of damages is contrary to the record. The arbitrator in fact had rejected the respondents claim for loss incurred due to increase in costs of material and labour totally, on the ground that escalation is not permissible as per the contract. It is then contended that the pricing on the construction contract would be either fixed or based on fluctuation. In the former case the employer pays to a contractor fixed sum of money performing work whereas in the latter case the contractor is paid on the basis of the actual bills produced. Pricing may also be both fixed as well as fluctuating i.e. part of the cost is fixed and a part is to be paid for the actual money spent. In the case of fixed price construction contracts the reason for increase in cost during the duration of the contract is borne by the conractor. The escalation in relation to construction contract is a term used to denote increase in the cost of raw materials and labour during the duration of the contract. The escalation clauses are common to model construction contracts. It is normally provided as to the additional price and if it is employer, then the clause may prescribe the form in computing the escalated amount as the case may be. It is then contended that the term "escalation" is not synonymous with the term damages. On the contrary it is entirely distinct and different. For that purpose reliance is placed in law relating to Building and Engineering Contracts in India, 24th Edition by G.T. Gajria at pages 625 to 632. It is then contended that the term "escalation" is not synonymous with the term damages. On the contrary it is entirely distinct and different. For that purpose reliance is placed in law relating to Building and Engineering Contracts in India, 24th Edition by G.T. Gajria at pages 625 to 632. From the above, we will now examine whether in fact the Tribunal has awarded damages for escalation. As already set out escalation in relation to construction contract is a term used to denote increase in the cost of raw materials and labour during the duration of the contract. This would contemplate the performance of the contract within the time as set out or provided. What happens if either of the parties does not perform his contract or part of the contract or fails to perform within the time schedule. Would losses suffered by either of the parties on account of their failure to perform their contract be covered by clause pertaining to escalation or be covered by way of awarding compensation by damages for breach of contract. In the case of (The Delhi Cloth General Mills Co. Ltd. another v. The Rajasthan State Electricity Board and another)19, A.I.R. 1986 S.C. 1126 the Apex Court was considering several issues before it pertaining to the Electric (Supply) Act one of the issues pertained to the expression escalation clause. It held that :--- "An 'escalation clause' according to its accepted legal connotation means a clause which takes a care of the rise and fall of prices in the market, whereas the right to review confers the power to revise the rate of supply." Referring to American Jurisprudence, 2nd Edition, Volume 1 page 786 it stated that the said expression has been succinctly brought out in the following terms :-- "In some contracts, there is what is known as an escalator of fluctuation clause, which is defined as one in which the contracts fixes a base price but contains a provision that in the event of specified cost increases, the seller or contractor may raise the price up to a fixed percentage of the base, and such escalator clauses are generally held to be sufficiently definite for enforcement." It then referred to Corpus Juris Secundum, Vol. 1 page 806 and considered the law on the subject as stated therein thus :--- "(A). 1 page 806 and considered the law on the subject as stated therein thus :--- "(A). Contract giving one of the parties the right to vary the price is not unenforceable for lack of mutuality where the right is not an unlimited one, as where its exercise is subject to express or implied limitation, such as that the variation must be in proportion to some objectively determined base, or must be reasonable; and this rule has been applied to contracts containing so called "Escalator" clauses." In the case of (U.P. State Electricity Board v. M/s. Om Metals and Minerals (Pvt.) Ltd.)20, A.I.R. 1995 Allahabad 246 in a similar case like one here the Court held that a claim based on escalation is distinct and different from the claim for general damages. Before it what was in issue was issue No. 39 of the contract which prohibited a claim against escalation as in the present case. Therein the claimant had made a claim for damages which the opponents-applicants therein contended was contrary to the contract. The Court observed that it was submitted on behalf of the respondents that the claim No. 1 is based on such delays which are though not covered under Clauses 7.06, 39.00 and 45.10 of the special conditions of the contract, hence the arbitrators acted within their jurisdiction by considering the same. The Court answering that contention held that on consideration of the various judgments cited before it and the contentions on the facts and circumstances of the case the award is not vitiated on the ground that the arbitrators exceeded their jurisdiction by taking into account claim No. 1 as set up by the claimants. In the case of (M/s. Kapoor Nilokheri Co-operative Dairy Farm Society Ltd. v. Union of India and others)21, A.I.R. 1973 S.C. 1388 the Apex Court observed that :-- "Where an arbitrator is called upon to decide the effect of the agreement, he has really to decide a question of law, i.e. of interpreting the agreement, and hence, his decision is not open to challenge". In the case of (State of Andhra Pradesh another v. R.V. Rayanim etc.)22, A.I.R. 1990 S.C. 626 the Apex Court observed that :--- "In the matter of challenging the award, there are often two distinct and different grounds. In the case of (State of Andhra Pradesh another v. R.V. Rayanim etc.)22, A.I.R. 1990 S.C. 626 the Apex Court observed that :--- "In the matter of challenging the award, there are often two distinct and different grounds. One is an error apparent on the face of the record and the other is that the arbitrator has exceeded his jurisdiction. In the latter's case the Court can look into the arbitration agreement but under the former it cannot, unless the agreement was incorporated or recited in the Award." Considering the case before it, the Court went on to hold that the arbitrator therein had not awarded any amount on account of escalation of cost and expenses. The Court then observed that under those circumstances in their opinion on the basis of well settled principles of law such an award, especially in view of the fact that excluding Item No. III the remaining items would also be well over the claim set out therein it is not discernible on the face of the record that the arbitrator has exceeded his jurisdiction in awarding the claim on account of escalation the charges and expenses. In the case of (P.M. Paul v. Union of India)23, 1989 Supp. (1) S.C.C. 368 the issue before the Apex Court was that whether the arbitral Tribunal travelled beyond its jurisdiction in awarding escalation costs and charges. While answering the issue the Court held that once it was found that the arbitrator had jurisdiction to find that there was delay in execution of the contract due to the conduct of the respondents the respondent was liable for consequences of the delay namely increase in price. 26. On the other hand the petitioners have invited the attention of the Court to the judgment of the Apex Court in the case of (New India Civil Erectors (P) Ltd. v. Oil Natural Gas Corporation)24, A.I.R. 1997 S.C. 980. In that case a claim is made on account of escalation. The claim was resisted on the basis of a stipulation in the Corporation's acceptance letter. The claimants stated that the price is firm and not subject to any escalation under whatsoever ground, till the completion of the work. The Court held that the above provided clearly that there shall be no escalation on any ground whatsoever and the said prohibition is till the completion of the work. The claimants stated that the price is firm and not subject to any escalation under whatsoever ground, till the completion of the work. The Court held that the above provided clearly that there shall be no escalation on any ground whatsoever and the said prohibition is till the completion of the work. The Court then proceeded to observe that the case before it, was not a case of the arbitrators construing the agreement. It is a clear case of the arbitrators acting contrary to the specific stipulation/condition contained in the agreement between the parties. The Court, therefore, set aside the award in so far as the claim is concerned. In the case of (Continental Construction Co. Ltd. v. State of Madhya Pradesh)25, A.I.R. 1988 S.C. 1166, there again was an issue of claiming barred extra claims in the event of price escalation. The Court considering its earlier judgments held that if no specific question of law is referred the decision of the arbitrator that question is not final. However, it may be within arbitrator's his jurisdiction and indeed essential for him to decide the question incidentally. On the facts of that case the Court held that the contractor having contracted, he cannot go back on the agreement simply because it does not suit him to abide by it. The awarding of the claim on account of price escalation was set aside. It was also submitted on behalf of the petitioners that the arbitrator cannot travel beyond the jurisdiction, once there was an agreement between the parties that there would be no price escalation and the respondent herein thereafter had sought extension of time to complete the job. Even at that time, the petitioners had agreed to extend the time on condition that the respondents would not be given any price escalation and the respondent had accepted the same. It was not open to the arbitrator to award damages on the ground that it was the petitioner who was responsible for failure to perform the contract in time. It is contended that the arbitrator could not have gone into that issue and that will be beyond his jurisdiction. The parties having accepted the contract and performed it. It was not open to the arbitrator to award damages on the ground that it was the petitioner who was responsible for failure to perform the contract in time. It is contended that the arbitrator could not have gone into that issue and that will be beyond his jurisdiction. The parties having accepted the contract and performed it. Thus though the Tribunal in fact had awarded damages for breach of contract yet in fact what was really done was awarding price escalation during the said period of whatever name the claim was made. For that purpose reliance was placed on the judgment of the Apex Court in the case of (Rajasthan State Mines Minerals Ltd. v. Eastern Engineering Enterprises and another)26, A.I.R. 1999 S.C.W. 3644. Some of the principles set out therein and drawn from the resume of decisions of the Apex Court are as under :--- -- To find out whether the arbitrator has travelled beyond his jurisdiction, it would be necessary to consider the agreement between the parties containing the arbitration clause. Arbitrator acting beyond his jurisdiction -- is a different ground from the error apparent on the face of the award. -- In order to determine whether arbitrator has acted in excess of his jurisdiction what has to be seen is whether the claimant could raise a particular claim before the arbitrator. If there is a specific term in the contract or the law which does not permit or give the arbitrator the power to decide the dispute raised by the claimant or there is a specific bar in the contract to the raising of the particular claim then the award passed by the arbitrator in respect thereof would not be in excess of jurisdiction. -- The award made by the arbitrator disregarding the terms of the reference of the arbitration agreement or the terms of the contract would be a jurisdictional error which requires ultimately to be decided by the Court. He cannot award an amount which is ruled out or prohibited by the terms of the agreement. Because of specific bar stipulated by the parties in the agreement, that claim could not be raised. Even if it is raised and referred to arbitration because of wider arbitration clause such claim amount cannot be awarded as agreement is binding between the parties and the arbitrator has to adjudicate as per the agreement .......... Because of specific bar stipulated by the parties in the agreement, that claim could not be raised. Even if it is raised and referred to arbitration because of wider arbitration clause such claim amount cannot be awarded as agreement is binding between the parties and the arbitrator has to adjudicate as per the agreement .......... -- The arbitrator could not act arbitrarily, irrationally, capriciously or independently of the contract. A deliberate departure or conscious disregard of the contract not only manifests the disregard of his authority or misconduct on his part but it may tantamount to mala fide action. -- The arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks just and reasonable; the arbitrator is a Tribunal selected by the parties to decide the disputes according to law." 27. From the case law as cited, could the arbitrator have awarded damages under the head compensation of loss of overhead loss and profit and profitability and compensation of idle machinery and equipments? In the instant case as already pointed out the petitioners have not challenged the finding of the arbitrator that the contractor could not perform the contract within the time stipulated on account of the acts of the petitioner herein. In such cases where the employer's conduct causes delay, the contractor is similarly entitled to the extra costs which he would not have incurred but for the delay. Gajaria in his book referring to this aspect of the matter has observed that in the case of delay in completion of work within the stipulated period due to the defaults, delays and breach of contract by the employer, the question about the liability of the employer, for compensating the contractor for the increase in the prices of the controlled materials and increase in the wages of labour made by the Government is invariably raised, as one of the items of damages. But the completion of the work by the stipulated date is delayed, as a result of the breaches of the contract committed by the employer, the contractor generally suffers loss in extra infructuous overheads, extra cost due to rise in the prices of materials and wages of labour, reduced profit, etc. But the completion of the work by the stipulated date is delayed, as a result of the breaches of the contract committed by the employer, the contractor generally suffers loss in extra infructuous overheads, extra cost due to rise in the prices of materials and wages of labour, reduced profit, etc. The element of the time stipulated for the completion of the work in the contract is very important for the purpose of determining the extent of the liability of the party who is guilty of the breach of contract. If a contractor is required to do the work within certain time and he cannot perform it on account of delay by the employer the contractor is entitled to claim damages. It is, therefore, clear that it was within the jurisdiction of the arbitrator to decide the issue. The arbitrator has given a finding that it is the petitioners who had committed the default and consequently awarded damages. The decision, therefore, is within jurisdiction. Even if the decision can be said to be erroneous decision it was a decision that cannot be questioned in the present petition, as it was within the jurisdiction of the arbitrator and more specifically in the present case the petitioners have chosen not to challenge the finding that delay was on their count. That contention, must, therefore, be rejected. 28. It is then contended that time was essence of the contract and considering sections 55 and 73 of the Indian Contract Act the claims as awarded are clearly outside jurisdiction. Under section 55 of the Indian Contract Act when a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, become voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract. If it was not the intention of the parties that time should be essence of the contract the contract does not become voidable by the failure to do such thing at or before the specified time, but the promisee is entitled to compensation from the promiser for the loss occasioned to him on such failure. If it was not the intention of the parties that time should be essence of the contract the contract does not become voidable by the failure to do such thing at or before the specified time, but the promisee is entitled to compensation from the promiser for the loss occasioned to him on such failure. If, in case of a contract voidable on account of the promiser's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time, other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance, he gives notice to the promiser of his intention to do so. It is submitted on behalf of the petitioners that Parts I and II of section 55 of the Contract Act are attracted to the facts of the present case. The petitioners and respondents had agreed to the extention of time specifically on the condition that the contract is performed on the same terms and conditions. Reliance is placed on Exhibit F-3. In any event it is contended that respondent did not put petitioners to the notice of their claim to compensation on account of alleged delay as contemplated by section 55 of the Contract Act. It is, therefore, contended that arbitrator could not have granted the claim in the absence of such a notice being given by the respondent to the petitioner. The grant of such claim, therefore, is in violation of the provisions of section 55 and, therefore, the same is a jurisdictional error. It is then contended that the respondents have attempted to give a feeble answer on the ground that time was not the essence of the contract. It is contended that in view of the provisions of the contract itself it is too late in the day to the respondents to contend that time was not the essence of the contract. It is contended that in the entire pleadings the respondents have nowhere contended that time was not the essence of the contract. In the absence of any such attack the apparent tenor of the contract which stipulates that the time is essence must prevail and the arbitrator could not have granted compensation unless the requirement of section 55 were complied with. 29. In the absence of any such attack the apparent tenor of the contract which stipulates that the time is essence must prevail and the arbitrator could not have granted compensation unless the requirement of section 55 were complied with. 29. It is contended on behalf of the respondents that extension granted without giving notice as contemplated by section 55 of the Contract Act cannot be raised for challenging the award. This Court, it is contended, cannot go into the merits whether the conditions or ingredients of section 55 of the Contract Act have been complied with as the entire correspondence between the parties including loss regarding delay was before the arbitrator and had been considered by the arbitrator. The extension letter itself makes a reference to the breaches committed by the petitioner. If such a plea is allowed it would mean that under the Act of 1996 the Court will be sitting in appeal and deciding a challenge to the award as if it is a First Appeal. The contention that the alleged violation of substantive law, or the terms of the contract results in violation of public policy is totally untenable. The contention that the arbitrator has awarded amounts contrary to section 55 of the Contract Act cannot be a matter of public policy. Erroneous decision on law cannot be a matter of public policy. At any rate it is contended that looking at the provisions of section 55 itself would indicate that the petitioners having extended time in the instant case, time was not the essence of the contract. 30. The petitioners have relied on the judgment of the Apex Court in the case of (State of Andhra Pradesh v. Associated Engineering Enterprises)27, A.I.R. 1990 A.P. 294. In that case the Division Bench of the Andhra Pradesh High Court was seized of the issue as to whether on failure of the contractor before it to give notice of his intention to claim compensation he could claim damages. On the record before the Court, it was disclosed that the contractor did not choose to terminate the contract on account of Government delay in handing over the site. On the contrary he requested for extension of period of contract and completing the work. The Division Bench noted that it was open under that section to the contractor to avoid the contract, but he did not do so. On the contrary he requested for extension of period of contract and completing the work. The Division Bench noted that it was open under that section to the contractor to avoid the contract, but he did not do so. If that be the case he was precluded from claiming compensation for any loss occasioned by such delay, unless of course, at the time of such delayed acceptance of the sites, he had given notice to the Government of his intention to claim compensation on that count. The Court noted therein that they were not going into the issue of the merits of the decision of the arbitrator. What the Court was deciding was such a claim for compensation in such a situation was barred. 31. On the other hand on behalf of the respondents reliance is placed on the judgment in the case of (M/s. Arosan Enterprises Ltd. v. Union of India another)28, J.T. 1999(7) S.C. 122. In para 9 of the judgment the Court posed a question as to whether time was the essence of the contract or not. The Court then went on to proceed to hold as under:--- "In the event the time is the essence of the contract, question of their being any presumption or presumed acceptance of a renewed date would not arise. The extension if there be any, should and ought to be categorical in nature rather than being vague or in the anvil of presumptions. The extension if there be any, should and ought to be categorical in nature rather than being vague or in the anvil of presumptions. In the event the parties knowingly give a go by to the stipulation as regards the time---the same may have to several effects: (a) parties name a future specific date for delivery and (b) parties may also agree to the abandonment of the contract---as regards (a) above, there must be a specific date within which delivery has to be effected and in the event there is no such specific date available in the course of conduct of the parties, then and in that event, the courts are not left with any other conclusion but a finding that the parties themselves by their conduct have given a go by to the original term of the contract as regards the time being the essence of the contract." The Court then observed as under:--- "Incidentally the law is well settled on this score on which no further dilation is required in this judgment to the effect that when the contract itself provides for extention of time, the same cannot be termed to be the essence of the contract and default however, in such a case does not make the contract voidable either. It becomes voidable provided the matter in issue can be brought within the ambit of the first paragraph of section 55 and it is only in that event that the Government would be entitled to claim damages and not otherwise." The case of Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khetan and others, A.I.R. 1999 S.C. 2102 was a case under the provisions of the Arbitration Conciliation Act, 1996. The issue involved therein was that the term which provided that time-schedule for payments by the purchasers and said time was to be the essence of the contract and it was stated that failure to pay would entail termination of the agreement. One of the questions posed before the Apex Court was whether the appellant could question factual findings relating to default, time being essence, readiness and willingness, etc., before the arbitrator under section 34 of the Act. The Court held that the issue between the parties of the merits of the award relating to default is a question of fact. One of the questions posed before the Apex Court was whether the appellant could question factual findings relating to default, time being essence, readiness and willingness, etc., before the arbitrator under section 34 of the Act. The Court held that the issue between the parties of the merits of the award relating to default is a question of fact. The Court held that "The factual points raised in the case before us, to which we have referred to earlier, do not fall within section 34(2)(ii) nor it was argued that the arbitral award is in conflict with the public policy of India. It is, therefore, clear that it was open to the Arbitral Tribunal on the facts before it to give finding whether time was essence of the contract. This is purely a finding of fact. This Court cannot sit in appeal over the said finding atleast while exercising the jurisdiction under section 34. That contention, therefore, must be rejected. 32. It was then contended that even whilst awarding damages the respondents ought to have pleaded and shown as to what steps they had taken to mitigate the damages. For that purpose reliance if placed on section 73 of the Contract Act. In support reliance is placed on the judgment of the Apex Court in the case of (M/s. Murlidhar Ghiranjilal v. M/s. Harishchandra Dwarkadas another)29, A.I.R. 1962 S.C. 366. I need not advert to the facts of that case nor is there any dispute that under section 73 there is a duty cast on the person claiming damages to show what steps he had taken to mitigate the damages. In the instant case the Tribunal itself has given a finding that the petitioners have taken steps to mitigate the damages. Once the Tribunal itself has given the finding and on the facts of the present case itself while awarding the damages has so considered, that again will be purely a question of fact. The issue was open before the arbitrator. The arbitrator has decided. That decision cannot be interfered with on the ground either of error of fact or law. Consequently that ground of challenge must be rejected. 33. The challenges as raised must, therefore, fail. 34. For the reasons aforesaid the petition dismissed. However, there shall be no order as to costs. The issue was open before the arbitrator. The arbitrator has decided. That decision cannot be interfered with on the ground either of error of fact or law. Consequently that ground of challenge must be rejected. 33. The challenges as raised must, therefore, fail. 34. For the reasons aforesaid the petition dismissed. However, there shall be no order as to costs. Both parties to act on the ordinary copy of this order duly authenticated by the Associate of this Court. Petition dismissed. -----