JUDGMENT SANJIB BANERJEE, J. 1. The employer assails the award in excess of Rs. 10 crore, inclusive of interest, obtained by the contractor in the construction of an office building that is a prominent landmark near the Ultadanga Crossing in the city. Videsh Sanchar Nigam Limited (the employer or the petitioner) complains that Shapoorji Pallonji & Company Limited (the contractor or the respondent) failed to finish the work within the time permitted despite the original time being extended and the Arbitral Tribunal completely misdirected itself not only in assuming that it had authority to grant further extension of time till the date of virtual completion of the construction, but also to compensate the contractor for the contractor having to overstay at the site. The employer assails every bit of the award beginning the procedure adopted by the Arbitral Tribunal, right up to the quantum of interest awarded. 2. A letter of intent was issued by the petitioner on March 28, 1995 for construction of the building. It stipulated that the work was to commence upon issuance of such letter and was to be completed within 21 months therefrom. The formal agreement was executed sometime in August, 1996. On April 26, 1996, the contractor requested that the date of commencement of work should be reckoned to be July 1, 1995 as the mobilisation advance was paid by the petitioner only on May 29, 1995 and the contractor lost a further month on account of labour unrest. The employer responded by a letter of May 21/22, 1996, indicating that it was agreeable to extend the date of completion of the contract by two months rather than push back the date of commencement by about 14 weeks as sought by the contractor. The employer stipulated that no bonus could be claimed by the contractor for the extended period of two months. Thus, the original date of completion now became February 27, 1997. 3. Shortly before the extended date of completion, the contractor sought a further extension by its letter of January 9, 1997. The contractor requested for extension for a period of six months beyond the stipulated date and cited a loss of 511 work days as the basis for the request. The contractor asserted that guided by its past experience, it was of the view that it needed "at least 180 days against 511 days ... lost ... The contractor requested for extension for a period of six months beyond the stipulated date and cited a loss of 511 work days as the basis for the request. The contractor asserted that guided by its past experience, it was of the view that it needed "at least 180 days against 511 days ... lost ... provided there is no hold-up from the CMC in according House Drainage Plan sanction, non-obstruction front is available and ... timely payments (made by) VSNL as per terms of Contract." In issuing such letter, it would appear that the contractor took into account all the obstructions that it may have suffered prior to that such date and it only sought an extension of six months from the stipulated date of completion. The contractor thus represented that it would complete the work by the extended period of six months, subject to the house drainage plan being sanctioned by the corporation, there being no obstruction in obtaining work fronts and timely payments in accordance with the agreement being made by the petitioner. 4. The petitioner's response to such request was issued on the stipulated date of completion of the work, February 27, 1997. Such letter referred to various correspondence exchanged between the parties between November, 1996 and early February, 1997 and the petitioner agreed to extend the period not exceeding 180 days subject to the two conditions that the contractor would not be entitled to payment of bonus as per clause 9.10 of the agreement should it complete the work before the extended period and the contractor would not claim for idle labour charges, if any, incurred by it upto December 27, 1996. Though the petitioner's letter of February 27, 1997 would imply that the time stood extended by a period of six months or 180 days from February 27, 1997, the parties and the Arbitral Tribunal proceeded as if the extension was till end June, 1997. But the petitioner accepts (at page 7, paragraph 7 of the setting aside petition) that the period was extended for 180 days beyond 27th February, 1996 (should be 1997) while the contractor's last letter for extension issued on April 28, 1999 reveals that it understood the period to have been extended till June, 1997. But the petitioner accepts (at page 7, paragraph 7 of the setting aside petition) that the period was extended for 180 days beyond 27th February, 1996 (should be 1997) while the contractor's last letter for extension issued on April 28, 1999 reveals that it understood the period to have been extended till June, 1997. It is also not clear as to whether the contractor accepted the two conditions imposed by the petitioner's letter of February 27, 1997 or the petitioner subsequently insisted that such conditions stood accepted by the contractor's conduct. The first of the conditions is irrelevant as the work was neither completed within the further extended period of 180 days nor was the contractor eligible for any bonus for early completion. The second condition does not appear to have been pressed by the petitioner nor has the award on account of compensation been challenged to the extent it falls foul of such second condition. What is significant, however, is that, implicit in the second condition was the petitioner's acceptance of the contractor's entitlement to idling charges. 5. The building was not completed by August, 1997 and the work continued thereafter. The parties’ versions as to what happened thereafter differ. The contractor claims that it proceeded to complete the work beyond the agreed extended date of completion on the employer's representation that the tenure would be extended till the date of actual completion without imposition of any liquidated damages that the contract permitted the employer to levy if the work spilled over beyond the agreed date of completion. The employer suggests that there was no representation of such nature and an odd sentence in a particular letter cannot be read out of context to imply that the employer had altogether abandoned its contractual rights and had submitted to the contractor taking as much time as it chose to make the building ready. The letters referred to above and the subsequent correspondence between the parties referred to immediately hereinafter have all been noticed in the award. The award refers to 18 letters or documents and the petitioner suggests that the validity of the award should be tested on the material that the Arbitral Tribunal based its findings and not on the several thousands of pages running into more than six healthy volumes that formed the material before the Arbitral Tribunal. 6. The award refers to 18 letters or documents and the petitioner suggests that the validity of the award should be tested on the material that the Arbitral Tribunal based its findings and not on the several thousands of pages running into more than six healthy volumes that formed the material before the Arbitral Tribunal. 6. The award refers to the following documents:- (i) Letter of Intent issued by the petitioner. (ii) Agreement of August 19, 1996 between the parties. (iii) The contractor's letter of April 26, 1996 by which the contractor sought the date of commencement to be deferred to June 1, 1995 and suggested that it would be the contractor's endeavour to complete the work by the end of 1996. (iv) The contractor's letter of January 9, 1997 by which the contractor sought an extension of 180 days on the ground that though 511 days were lost to the contractor, it could finish the work within a further extended period of six months. (v) The contractor's letter of May 27, 1998 in which the contractor computed the number of work days lost for reasons beyond the contractor's control and detailed the further time necessary for additional work. According to the contractor, a total of 753 days had been lost and the contractor sought an extension of 550 days. (vi) The petitioner's letter of June 9, 1998 by which it sought details of the major jobs that the contractor assured would be completed by June 30, 1998 and the target dates for the completion of the balance work. (vii) The contractor's letter of April 28, 1999 after virtual completion of work seeking extension, ex post facto, till March 31, 1999. According to the contractor, the total additional time required for completion was 905 days. The break up for delays under various heads was provided and the principal ground for seeking extension was for execution of more quantum of work than given in the tender documents. Out of the additional 905 days that the contractor said had been lost, it claimed to have managed to bring down the number of days lost to 823 days and required an extension for 823 days. Out of the additional 905 days that the contractor said had been lost, it claimed to have managed to bring down the number of days lost to 823 days and required an extension for 823 days. (viii) The petitioner's cryptic letter of December 27, 1999 by which it informed the contractor that the date of completion had been extended up to December 31, 1997, but did not assign any reasons for turning down the request for extension till March 31, 1999. (ix) The petitioner's letter of February 10, 1999 by which the petitioner demanded that the contractor submits its case for extension of time beyond August 31, 1998. (x) The petitioner's letter of March 25, 1999 by which the contractor was informed that the project management consultant's services had been extended only till March 31, 1999. (xi) The petitioner's letter of September 1, 1998 by which the contractor was reminded of the provisions of section 55 of the Contract Act and the employer protested that despite the time for completion of the work being "reasonably extended for 180 days beyond 27.12.1996", the work still remained incomplete. (xii) Site order book and correspondence exchanged between the parties (the correspondence exchanged between the parties are contained in volumes I, IV and V filed before this Court). (xiii) The petitioner's letter of February 6, 1999 relating to certain payments claimed by the contractor and disputed by the employer. (xiv) The drawing register, which details the drawings, dates of revision thereof, if any, and such matters, which is included in volume 2 of the papers filed before Court. (xv) Details and particulars of the claim relating to compensation for losses said to have been suffered by the contractor which are found at pages 139 to 394 of volume III filed before Court. (xvi) "Several documents evidencing such losses" (at page 11 of the award] which is probably what is found at pages 140 to 390 of volume III filed before Court. (xvii) Clause 2.17A(d) of the Special Conditions of the contract. (xviii) The petitioner's letter of December 20, 1996, in the closing lines whereof the employer confirmed ''VSNL’s agreement to revalidate contract till the project is completed." 7. Apart from the three omnibus references covered by item numbers (xii), (xv) and (xvi), there are specific documents referred to in the award. 8. (xviii) The petitioner's letter of December 20, 1996, in the closing lines whereof the employer confirmed ''VSNL’s agreement to revalidate contract till the project is completed." 7. Apart from the three omnibus references covered by item numbers (xii), (xv) and (xvi), there are specific documents referred to in the award. 8. But before the merits of the award can be addressed, to the extent they can in proceedings of such nature, it is another aspect, more in the nature of a point of order that the petitioner raises. According to the employer, the nature of the claims was such that it was incumbent on the contractor to adduce oral evidence in support of its case. The petitioner complains that the petitioner sought to adduce oral evidence on its understanding that during the first few months of the reference up to the 14th hearing held on December 5, 2002, the claimant in the reference had merely introduced its case to the Arbitral Tribunal and that only upon the issues being settled by the Arbitral Tribunal at the 14th hearing, would the question of oral evidence arise. The petitioner submits that it was up to the claimant to note adduce oral evidence in support of its case, but the employer wanted to examine its officers, not only to defend the claim but in support of the counter-claim that it put forth before the Tribunal. The petitioner asserts that in shutting out oral evidence, the Arbitral Tribunal misguided itself, and adopted a procedure unknown to the rules of the Indian Council for Arbitration apart from causing serious prejudice to the petitioner. 9. According to the petitioner, the minutes of the proceedings before the Tribunal preceding the 14th hearing, do not record that the parties had agreed that no oral evidence would be adduced and, in any event, such a stage had not been reached before the issues were finalised at the 14th hearing. In support of such contention, the petitioner refers to the rules of the Council, particularly to Rules 44, 51 and 52 thereof to suggest that they postulate oral evidence being received. In support of such contention, the petitioner refers to the rules of the Council, particularly to Rules 44, 51 and 52 thereof to suggest that they postulate oral evidence being received. The petitioner relies on section 19 of the Arbitration and Conciliation Act, 1996 (the 1996 Act) and submits that though such section that contemplates that the parties are free to agree on the procedure to be followed by the Arbitral Tribunal in conducting its proceedings, but there was no agreement in the proceedings before the Tribunal that oral evidence would not be adduced. The petitioner places section 24 of the 1996 Act to show that if the parties cannot agree then the arbitrator needs to decide whether to receive oral evidence. The proviso to section 24(1) of the 1996 Act is stressed upon in support of the contention that upon a request made by a party, the Arbitral Tribunal is required to receive oral evidence. 10. The petitioner challenges the orders of January 14, 2003 and February 15, 2003 on the aspect of oral evidence. The minutes prior to the 15th hearing suggest that the claimant before the Tribunal was not merely opening the case or introducing the facts to the Tribunal. The minutes of the meeting of December 12, 2002 show that several cases were cited on behalf of the contractor and the law in support of the contractor's case was placed. Surely, this was no ordinary opening where the facts were placed, case laws presented and legal provision cited over fourteen sittings. True, the issues were settled or taken on record only on December 5, 2002, but an Arbitral Tribunal is neither strictly required to frame issues nor is the procedure of trial as laid down by the Code of Civil Procedure needed to be adhered to in arbitration. It would anoear from the minutes preceding the 15th hearing that the claimant was aware what the claimant was required to establish and went about its business with the impression that all the evidence was before the Tribunal. The procedure before an Arbitral Tribunal is informal and the rules of the Council, however strict, cannot rob the proceedings of such informality. It is precisely the informality in the conduct of proceedings that the parties chose in opting for resolution of their disputes outside Court. The procedure before an Arbitral Tribunal is informal and the rules of the Council, however strict, cannot rob the proceedings of such informality. It is precisely the informality in the conduct of proceedings that the parties chose in opting for resolution of their disputes outside Court. Rules 44, 51 and 52 referred to by the petitioner relate to fast track arbitrations. It is not in dispute that the subject reference was in the nature of fast track arbitration where the rules of procedure from Rule 43 to Rule 57 would apply. Though it is irrelevant in the context, even if it was a fast track arbitration, the mere fact that the rules of procedure had not been strictly adhered to would not have rendered the award nugatory. The contractor has relied on Rule 58 of the Councils Rules and on the guidelines appended to the rules as a guide for expeditious conduct of proceedings. If the rules were to be strictly applied, either party could make out a case in its support. While clause 6 of the guidelines would surest that oral evidence need be adduced only after issues have been settled, and thus support the petitioner's challenge, it has to be appreciated that the guidelines are, as they suggest, meant to be a guide for parties and arbitrators and not to be applied or construed as a statute. Upon an arbitration agreement providing for arbitration to be conducted by a particular body, the rules of such body become the agreement as to procedure to be followed in course of the reference, but unlike a statutory provision, such rules are subject to modification by conduct of parties. 11. It appears that on January 14, 2003 the petitioner submitted for the first time in course of the reference that it would adduce oral evidence and invited the Arbitral Tribunal to give directions for filing affidavit in lieu of examination-in-chief and counter affidavit, if any. The order of January 14, 2003 records that the claimant opposed such submission on the ground that the parties had "all though out proceeded that no affidavit evidence or oral evidence would be adduced" and to permit oral evidence to be received at the very end of the claimant's arguments would seriously prejudice the claimant. The order of January 14, 2003 records that the claimant opposed such submission on the ground that the parties had "all though out proceeded that no affidavit evidence or oral evidence would be adduced" and to permit oral evidence to be received at the very end of the claimant's arguments would seriously prejudice the claimant. The Arbitral Tribunal recorded that the parties had proceeded "from the very beginning that no oral evidence or affidavit evidence would be adduced,.. although it was not formally recorded earlier ...". The arbitrators agreed with the submission made on behalf of the contractor and rejected the petitioner's request for adducing oral evidence. The petitioner did not rest upon such order being made. On February 15, 2003, at the 19th hearing, the petitioner attempted to file an affidavit of evidence by one of its officers that the Tribunal did not permit. The petitioner participated in the reference thereafter without prejudice to its contention that oral evidence sought to be adduced on its behalf should have been received by the Tribunal. 12. A subsequent petition was filed by the petitioner for recalling the order of January 14, 2003 refusing leave for the affidavit of evidence on its behalf to be filed. Such application was disposed of in August, 2003 by an order running into more than five pages. In rejecting the application, the Arbitral Tribunal recorded that its first sitting was held on March 12, 2002 and pleadings were required to be completed by April 19, 2002 before the sitting scheduled for April 22, 2002. On April 22, 2002, the claimant's case was opened and parties were directed to discover documents. The time to file documents was subsequently enlarged. By the third sitting, suggested issues were submitted on behalf of the petitioner herein. At the fourth sitting held on August 7, 2002, the claimant's arguments commenced. The order records that on September 1, September 3, September 9 and September 11, 2002 elaborate arguments were made on behalf of the claimant and all documents tendered till then were relied upon. The issues were settled on December 5, 2002 and the claimant's arguments continued on December 12, 2002 and January 14, 2003 and concluded on January 17, 2003. The order records that on September 1, September 3, September 9 and September 11, 2002 elaborate arguments were made on behalf of the claimant and all documents tendered till then were relied upon. The issues were settled on December 5, 2002 and the claimant's arguments continued on December 12, 2002 and January 14, 2003 and concluded on January 17, 2003. After the petitioner was declined leave to file the affidavit of evidence on January 14, 2003, it filed the application for recalling the order of January 14, 2003 and during the pendency of such application the petitioner proceeded with the matter on six days up to the beginning of May, 2003. The arbitrators concluded that the conduct of the parties revealed that they proceeded on the definite understanding and consensus that no oral evidence would be adduced and the matter would be decided on the basis of documents relied upon and disclosed and submissions made on behalf of the parties. The Arbitral Tribunal opined that it was on such basis that the claimant proceeded and concluded arguments by January 17, 2003 and only a day before the claimant was to conclude arguments, a prayer was made on behalf of the petitioner herein for adducing oral evidence. The Tribunal recorded that even at such time the affidavit of evidence was not ready and such affidavit was affirmed on February 13, 2003 after the claimant's arguments had been concluded. The Tribunal was of the view that when the parties had, by their conduct, accepted that no evidence other than documentary evidence would be adduced, the petitioner could not be permitted to resile therefrom. The Tribunal also noted that the affidavit of evidence presented for being filed was based "on information derived from the records of (the) case and believed to be true" and doubted the need therefor when the petitioner herein had already disclosed its documents. According to the arbitrators, the petitioner herein sought to make out a case beyond its statement of defence and counter-claim, and the arbitrators were of the view that the same could not be permitted at that stage of the proceedings. 13. The petitioner relies on a judgment reported at 2003(7) SCC 492 (Sohan Lal Gupta vs. Asha Devi Gupta) and places paragraphs 21 to 23 thereof:- "21. 13. The petitioner relies on a judgment reported at 2003(7) SCC 492 (Sohan Lal Gupta vs. Asha Devi Gupta) and places paragraphs 21 to 23 thereof:- "21. What would constitute a reasonable opportunity of putting case as also qualification of the right has been stated in Russell on Arbitration, 22nd Edition, paragraphs 5-053 and 5-054 which are in the following terms:- 5-053. A reasonable opportunity of putting case-Each party must be given a reasonable opportunity to present his own case. This means he must be given an opportunity to explain his arguments to the Tribunal and to adduce evidence in support of his case. Failure to comply with this requirement may render the award subject to challenge under section 68 of the Arbitration Act, 1996. It is also a ground for refusing enforcement of the resulting award under the New York Convention. 5-054. Qualification of the right-The need to allow a party a reasonable opportunity to present his case can give rise to difficulties. To what extent can the Tribunal intervene where, for example, a party's submissions or evidence is needlessly long, repetitive, focuses on irrelevant issues or is sought to be made over an extended period of time? What if a party ignores procedural deadlines imposed by the Tribunal but maintains he still has points to put before it in support of his case? Inevitably each situation has to be dealt with in its own context but the following general considerations should be taken into account. 2.2. There cannot, therefore, be any Court that a party does not have an unfettered right. The Arbitrator cannot only ask a party to comply with procedural orders and directions including those imposing limits as to time and content of submissions arid evidence but also the Arbitrator has a right of managing the hearing. In "Russell on Arbitration', 22nd Edition the law is stated thus:- 5.057. Managing the hearing.-Similarly, a Tribunal cannot be expected to sit through extended oral hearings listening to long winded submissions on irrelevant matters. The Tribunal is entitled, and under section 33 is obliged and encouraged, to avoid the unnecessary delay and expense that would be caused by such an approach. The Tribunal should take a grip on the proceedings and indicate to the parties those areas on which it particularly wishes to be addressed and those which it does not consider relevant to the real issues in dispute. The Tribunal should take a grip on the proceedings and indicate to the parties those areas on which it particularly wishes to be addressed and those which it does not consider relevant to the real issues in dispute. If a party fails to heed such guidance, the Tribunal might seek to focus the proceedings by allocating the remaining hearing time between the parties. This the Tribunal is entitled to do, provided it will allow a reasonable time for both parties to put forward their argument and evidence. 23. For constituting a reasonable opportunity, the following conditions are required to be observed:- 1. Each party must have notice that the hearing is to take place. 2. Each party must have a reasonable opportunity to be present at the hearing, together with his advisers and witnesses. 3. Each party must have the opportunity to be present throughout the hearing. 4. Each party must have a reasonable opportunity to present evidence and argument in support of his own case. 5. Each party must have a reasonable opportunity to test his opponent's case by cross-examining his witnesses, presenting rebutting evidence and addressing oral argument. 6. The hearing must, unless the contrary is expressly agreed, be the occasion on which the parties present the whole of their evidence and argument. 14. The Supreme Court judgment was rendered in a matter where the question raised before it was as to what constitutes reasonable notice by an arbitrator. Two groups held several properties, including partnership firms, limited companies and other assets, in equal share. Disputes and differences arose between the two groups and the disputes were referred to the arbitration of a chartered accountant and tax consultant. The Supreme Court noticed that the jurisdiction of the arbitrator was of wide import. During the arbitral proceedings, disputes arose as regards management of some business and the arbitrator's intervention was sought. The arbitrator made two awarded, the first of division between the two groups and the second of division between the members of one group. The internal division made within one group was challenged by several members of such group. The award was set aside on the ground of procedural irregularity holding that no reasonable notice was issued to one of the members of the group in which internal division was directed to be carried out by the second award. The internal division made within one group was challenged by several members of such group. The award was set aside on the ground of procedural irregularity holding that no reasonable notice was issued to one of the members of the group in which internal division was directed to be carried out by the second award. The Division Bench did not interfere with the order of the Single Judge setting aside the award. The Supreme Court noticed the challenges on the ground of procedural irregularity and following earlier judgments held that the mere breach of the principles of natural justice without any serious prejudice being suffered by the complainant was not enough ground for upsetting the award on the count to procedural irregularity. The award as to internal division within one of the groups that was successfully challenged before the High Court, was reinstated by the Supreme Court. 15. The challenge here is again more on the shutting out of oral evidence on behalf of the petitioner rather than any serious prejudice being suffered by it. The petitioner may have suffered for oral evidence on its behalf not being received. But even if the petitioner had made out a case of prejudice on account of oral evidence on its behalf being shut out, the petitioner would have to first overcome the ground put forward by the Arbitral Tribunal in the orders of January 14, 2003 and August 27, 2003 rejecting its plea. It is totally unconvincing that the petitioner herein was under the impression till January 14, 2003 that the stage for receiving oral evidence had not ripened. It is also difficult to appreciate that the petitioner herein would be labouring under the impression that only after the claimant arguments were concluded would it be open for the petitioner herein to seek oral evidence to be adduced on its behalf. Whatever the informality of procedure before the Arbitral Tribunal, it cannot be stretched to make room for oral evidence on behalf of the respondent to be received after conclusion of the claimant's arguments. There is no necessity for a signed agreement to be made between the parties that no oral evidence would be adduced in course of a reference just as there is no strict requirement of the arbitrators recording such an agreement. There is no necessity for a signed agreement to be made between the parties that no oral evidence would be adduced in course of a reference just as there is no strict requirement of the arbitrators recording such an agreement. It can be culled out, as in the instant case, from the conduct of the parties and the manner in which they approach the reference and proceed therein. 16. Again, it is a matter on which the arbitrators may have a last word and unless the arbitrators' ruling thereon is so perverse to meet the exalted test under section 34 of the 1996 Act, the Court would not interfere. In this case the arbitrators accepted the claimant's submission that the matter had progressed to the conclusion of the claimants arguments on the understanding that no oral evidence would be adduced. The proceedings were conducted before the arbitrators and the arbitrators have recorded that there was such an understanding. If there was no understanding of such nature, then the Court in setting aside proceedings, without the benefit of the hearings that the arbitrators had, cannot conclude that there was no such understanding contrary to the arbitrators' impression of there being an implied understanding. Despite the agreement or understanding not being recorded earlier, there are other pointers to substantiate the basis for the arbitrators to conclude that the petitioner herein had given an impression that it would not seek to adduce oral evidence in the reference. 17. The preliminary challenge to the award, on the ground of oral evidence sought to be adduced by the petitioner being arbitrarily shut out, fails. 18. In the setting aside petition, the challenge as to the merits of the award appears to be such grounds as would ordinarily be taken in a first appeal. In course of arguments on behalf of the petitioner, however the challenge has been more refined and in conformity with the tests laid down in section 34 of the 1996 Act. 18. In the setting aside petition, the challenge as to the merits of the award appears to be such grounds as would ordinarily be taken in a first appeal. In course of arguments on behalf of the petitioner, however the challenge has been more refined and in conformity with the tests laid down in section 34 of the 1996 Act. It has been the contractor which has sought to defend the award on the basis of material not specifically referred to in the award in its endeavour to demonstrate that even if the reasons given in support of the various heads are found to be wanting on one or the other score, the Court could taken a look at the materials that were before the arbitrators for a subjective assessment of the claim and the justification of the award. 19. The value of the work in terms of the contract was Rs. 20.57 crore. The contractor had 21 months' time from the date of the issuance of the Letter of Intent to complete the work. The original date of completion was December 27, 1996 as the Letter of Intent was issued on March 28, 1995. The value of the contract was subsequently enhanced to Rs. 25.11 crore including admitted escalation and costs for additional work. The contractor was paid Rs. 23.22 lakh, the remainder of the amount being deducted on account of liquidated damages for the work not being completed within the stipulated time. Initially, the time was extended till February 27, 1997 but following the contractor's further request, the time was extended by six months till the end of June, 1997. 20. The work was virtually completed by March 31, 1999 and the contractor sought extension of the time, ex post facto, by its letter of April 28, 1999 till the date of completion. By the employer's terse letter of December 27, 1999, the date of completion was extended till March 31, 1997 without prejudice to its rights. The employer claimed that there was a delay of 27 months (from January, 1997 to March, 1999) of which the employer had wiped out 12 months at the contractor's request, but there was no reason for the contractor to take 48 months over a work that was to be finished within 21 months. The employer withheld Rs. The employer claimed that there was a delay of 27 months (from January, 1997 to March, 1999) of which the employer had wiped out 12 months at the contractor's request, but there was no reason for the contractor to take 48 months over a work that was to be finished within 21 months. The employer withheld Rs. 1.88 crore on account of liquidated damages, partly against bills passed and partly by invoking a bank guarantee. The award is for the principal sum of Rs. 8.94 crore primarily on account of compensation for delay in the completion of work. The interest awarded takes the award well in excess of Rs. 10 crore. 21. The award lists 18 issues, with nearly half the issues on the question of delay or the reasonableness or justification thereof. The petitioner's principal grounds of challenge are that the award is at variance with the agreement between the parties, that the award does not spell out who was responsible for non-completion of the work within the stipulated extended period and as to how the employer could be held responsible for the delay beyond December 31, 1997 and liable for the consequences thereof. The petitioner suggests that the arbitrators failed to consider the documents on record allowed escalation as claimed without any reason and without testing the claim on such account; proceeded as if delay would automatically lead to escalation and awarded damages without any subjective satisfaction that damages had, indeed, been suffered by the contractor. 22. The petitioner holds out the contractor's letter of April 28, 1999 as the entire basis on which the contractor sought extension of time. According to the petitioner, the arbitrators could not fish out reasons not thought worthy of inclusion in such letter by the contractor in support of their conclusion that the delay was due to reasons beyond the control of the contractor. The petitioner attacks the award on account of delay and the consequences therefor as perverse as the arbitrators had no authority to extend time and the basis for extension was on grounds which were not referred to by the contractor. The petitioner assails such part of the award on the basis of clause 9.4 of the General Conditions of the contract between the parties. 23. The petitioner assails such part of the award on the basis of clause 9.4 of the General Conditions of the contract between the parties. 23. In assailing the extension of time accorded in favour of the contractor, the petitioner submits that the grounds therefor contained in the award do not justify extension, particularly in the absence of any finding on the impact of such grounds on the progress of work. According to the petitioner, the arbitrators did not assess the number of days by which the new grounds put forth in the award, impeded the progress of the work. The petitioner criticises the award in that it does not refer to clause 9.4 of the General Conditions though the written submissions filed by the employer before the arbitrators would show that this was a major plank of the employer's defence in the reference. The petitioner urges that extension of time de hors clause 9.4 of the General Conditions was not possible and the award is perverse and would fail the test that it is now subjected to under section 34 of the 1996 Act. 24. The petitioner argues that section 51(3) of the 1996 Act mandates that an arbitral award "shall state the reason upon which it is based", and in proceedings under section 34 of the 1996 Act such reasons can be tested and the Arbitration Court cannot act as an Appellate Court presiding over a first appeal to supplement its reasons for those that find place in the award. The petitioner claims that the entire basis of the award is erroneous-and the arbitrators exceeded their authority in granting extension beyond the admitted extension till December 31, 1997 and as this is the foundation on which the award stands and the sums awarded in favour of the contractor are based, the award should be set aside in its entirety. 25. The petitioner asserts that the reasons that section 31(3) of the 1996 Act requires an award to carry, are such that would indicate the basis of the award. Reasons, according to the petitioner, are not a mere narration of facts. In the arbitrators failing to find as a matter of fact that there was escalation during the period after December 31, 1997, the petitioner argues, and in making an award on account of escalation, there is error on the face of the award. Reasons, according to the petitioner, are not a mere narration of facts. In the arbitrators failing to find as a matter of fact that there was escalation during the period after December 31, 1997, the petitioner argues, and in making an award on account of escalation, there is error on the face of the award. The petitioner is scathing in its attack on the award on account of time related cost components. The petitioner submits that there is no basis for such award to be found in the statement of claim, nor is there any finding that any of the pending works of the contractor suffered on account of the contractor having to stay back with its men and machines at the petitioner's site. The award on account of time related cost components, according to the petitioner, was suddenly brought up in course of the contractors arguments, probably inspired by a reference to such a head of possible claim in "The Law Relating to Building and Engineering Contracts in India" by G.T. Gajria. The petitioner suggests that the edition of the Gajria book referred to in the award was not the one that was cited and the claim on account of such head in Gajria was imported from Hudson's Building and Engineering Contracts. There was some controversy as to whether Hudson was cited before the arbitrators but such arguments and points of prejudice urged by either side are irrelevant in the ultimate analysis. 26. The petitioner suggests that any claim on account of time related cost components cannot be taken up without considering the caveat that comes with the application of such formula. The award of compensation is challenged on it being contrary to clause 6.43 of the General Conditions read with clauses 2.10 and 2.22 and the related provisions of the Special Conditions. The petitioner says that there was no scope for holding that delay was attributable to the employer as the contractor had admitted in its various letters, particularly in the letter of April 28, 1999 that there was some delay on account of the contractor and delay could not be attributed solely to the petitioner. 27. The petitioner is aggrieved by the a ward of interest both as to quantum and on account of the award on interest being apparently vague. 27. The petitioner is aggrieved by the a ward of interest both as to quantum and on account of the award on interest being apparently vague. The petitioner assails the rejection of its counter-claim on the twin grounds: that the arbitrators did not take the counter-claim seriously once it was found that the contractor was entitled to enlargement of time for completion of construction; and, there was as much basis and material in support of the counter-claim as the contractor had put forward in support of its claims and the arbitrators applied a different yardstick to test the counter-claim than the one used for the contractors claims. 28. The award runs into 17 pages with two pages taken up for setting out the 18 issues. The arbitrators clubbed the first seven issues as being on the question of delay and extension of time. Issue numbers 8 to 11 [except 11(d)] depended on the answer to the question of delay and enlargement of time. Issues 12 to 17 covered the counter-claim. Apart from the award, there were orders passed by the arbitrators in course of the reference and minutes of the proceedings. The minutes record, in some detail, the arguments made and the orders are either rulings on certain points sought by the parties or setting down the next dates of hearing. 29. On the ground of delay, the short letter of December 27, 1999 weighed much with the arbitrators. It appears from the minutes of the proceedings that the arbitrators continually raised a query as to why no reasons were assigned by the employer in refusing the time sought by the contractor for extension of time till the date of virtual completion. It also appears from the minutes that an impression was given that such query would be adequately answered at a later stage but ultimately it was submitted (as would again appear from the minutes) that the employer suggested that it was not bound to disclose any basis therefor. Neither were reasons proffered as to why extension was granted till December 31, 1997, nor were reasons given as to why the employer thought that extension beyond such period was not justified. 30. What next weighed with the arbitrators was a line in the petitioner's letter of February 10, 1999. Neither were reasons proffered as to why extension was granted till December 31, 1997, nor were reasons given as to why the employer thought that extension beyond such period was not justified. 30. What next weighed with the arbitrators was a line in the petitioner's letter of February 10, 1999. The employer advised the contractor to submit its case for extension of time beyond August 31, 1998, and the arbitrators construed such requirement to be that the employer was minded to permit time to be enlarged till August 31, 1998 and was only seeking specific grounds for extension beyond August 31, 1998. The arbitrators also noticed another letter issued by the employer on March 25, 1999 by which it informed the contractor that the services of the project management consultant could not be indefinitely extended, but such services would be available till March 31, 1999. On its interpretation of the letters of February 10, 1999 and March 25, 1999, in the background of the other correspondence between the parties, the Arbitral Tribunal concluded that such letters gave a clear indication that the employer was prepared to grant extension of time up to the close of the contract and "it was in the definite contemplation of the parties that the project work involving 14-storeyed building would be completed by 31st March, 1999." The arbitrators held that the contractor's letter of April 28, 1999 was to formalise the extension and the fact that in such circumstances, the employer chose to extend the time only till December 31, 1997 without assigning any reason, would show that the employer sought to levy liquidated damages from January 1, 1998 and unfairly avoid payment on account of escalation for the period after December 31, 1997. The arbitrators thereafter proceeded to sum up their conclusion upon "perusal of the documents on record, including the Site Order Book as also the correspondence exchanged between the parties" that there were events in course of execution of the contract which would justify the contractor's claim for extension of time till March 31, 1999. The arbitrators have referred to work fronts not being made available to the contractor, of work on false ceilings being impeded by the employer and of drawings being altered (65 new drawings) between December 31, 1997 and September 3, 1998. The arbitrators have referred to work fronts not being made available to the contractor, of work on false ceilings being impeded by the employer and of drawings being altered (65 new drawings) between December 31, 1997 and September 3, 1998. The arbitrators justified the contractor's contention for extension of time, inter alia, on new drawings and revision of drawings being made available at a belated stage and well after the time till which the contract had been extended by the petitioner herein, on delay in making payments by the employer and on non-availability of work fronts, including hindrance on account of damage to and reconstruction of the false ceilings. 31. The petitioner urges that such grounds as new drawings and revision of drawings and delay in making payment and other agencies not making available the work fronts to the contractor, were not cited as reasons in the contractor's letter of April 28, 1999 and it is only the reasons relied in such letter that can be considered as such letter was the final request for extension of time and it is the consideration of such request that was being adjudicated upon by the arbitrators upon the petitioner's rejection of the extent of enlargement of time sought by the contractor. The letter of April 28, 1999 lists seven heads, the single-most important being on account of execution of additional work. The contractor invoked clause 9.4 of the General Conditions in seeking such extension. Apart from additional work, the other heads mentioned are labour agitation, adverse weather, gate blockadel Bengal bandh, diversion of resources for the fifth floor and other reasons. The days of delay claimed under most of the heads have been explained in the several annexure to the contractor's letter. According to such letter, there was a delay of905 days but the contractor managed to curtail the number of days lost to 823 days by working simultaneously on various fronts and working extended hours. At the foot of the letter the contractor referred to payments not being made in time against the running account bills raised and the contractor claimed escalation while complaining that the escalation already given in accordance with the wholesale price index formula did not match the actual expenses incurred on account of escalation. 32. At the foot of the letter the contractor referred to payments not being made in time against the running account bills raised and the contractor claimed escalation while complaining that the escalation already given in accordance with the wholesale price index formula did not match the actual expenses incurred on account of escalation. 32. The other question raised by the petitioner is as to the arbitrators' authority to grant extension of time for completion of the work. The petitioner suggests that clause 9.4 of the General Conditions stipulate that if on account of additional work or other special circumstances the contractor is found to be fairly entitled to extension of time for completion of the work, the engineer shall determine the amount of such extension provided that a claim for extension is made within 30 days after such additional work has been undertaken or such special circumstance has arisen. Clauses 9.3 and 9.4 of the General Conditions are relevant in the context:- "9.3. Time of completion-Subject to any requirement in the contract as to completion of any portion of the works before completion of the whole of the works shall be completed within the time stated in the Appendix calculated from the date of the employer's issue of Letter of Intent or such extended time as may be allowed under Clause 9.4 hereof. 9.4. Extension of time for completion-Should the amount of extra or additional work of any kind or other special circumstances of any kind whatsoever which may occur be such as fairly to entitle the contractor to an extension of time for the completion of the work, the engineer shall determine the amount of such extension, provided that the engineer is not bound to take into account any extra or additional work or other special circumstances unless the contractor has within 30 days after such work has been commenced or such circumstances have arisen or as soon hereafter as is practionable but not later than 30 days delivered to the engineer full and detailed particulars of any claim for extension of time to which he may consider himself entitled in order that such claim may be investigated at the time." 33. There are three points urged by the petitioner in this context. There are three points urged by the petitioner in this context. First, that the reason put forward for extension should be only on the ground of additional work or special circumstance; secondly, the engineer must be approached and the assessment by the engineer is final; and, thirdly, the request should be made within the period of 30 days or, on a liberal construction of clause 9.4, within a period of 60 days for such grounds being looked into. The petitioner submits that the contractor may have complied with the first condition and sought extension on account of additional work and what it cited as special circumstances, but did not comply with the other two conditions. 34. Though clause 9.4 has been referred to in detail in the petitioner's written submissions filed before the arbitrators, it does not appear that such argument as now made was urged in course of submission before the arbitrators. The minutes of the sittings on which arguments were made on behalf of the petitioner herein bear a reference to clause 9.4 but do not record the three challenges as have now been pressed. It is an admitted position that the parties did not exchange the written submissions filed before the arbitrators and the contractor says that it is only upon the petitioner's written submission being disclosed in these proceedings that the contractor came to first see it. The respondent suggests that the second and third points now urged in respect of clause 9.4 of the General Conditions should not be countenanced. The respondent submits that correspondence were exchanged between the parties and requests for extensions were made by the contractor to the employer, entertained by the employer and even the partial grant of the final request was made by the employer following the respondent's letter of April 28, 1999 without insisting that it was the engineer which ought to have been approached. There is an Engineer named in the contract and the respondent is right that notwithstanding clause 9.4 it was the employer which had taken upon itself the burden of receiving a request for extension of time for completion of the work and had assessed the matter. There is an Engineer named in the contract and the respondent is right that notwithstanding clause 9.4 it was the employer which had taken upon itself the burden of receiving a request for extension of time for completion of the work and had assessed the matter. The respondent is right that to such extent clause 9.4 stood modified as would be evident from the conduct of the parties and though the Court cannot supplement its reasons for the arbitrators', this count of irregularity that the petitioner urges did not result in any substantive injustice to the petitioner. As to the timing of the request, the respondent is again right in asserting that in entertaining the request, the petitioner had waived the pre-conditions that it now urges and the petitioner did not suffer any prejudice on such count. 35. The letter of April 28, 1999 can neither be read in isolation nor can it be said to be the only basis on which the contractor claimed extension of time for completion of the work. The letter of April 28, 1999 comes upon heaps of previous letters exchanged between the parties and the arbitrators cannot be faulted for not confining themselves to what directly appears from such letter but in going back to the previous letters to find support for the contractor on its claim for extension. The Court while considering an award does not go about substituting its reason or its interpretation for that which is found in the award. If the arbitrators, in course of assessment of a matter, draw an inference from the documents the Court will not correct it if it finds that it was a possible view that could have been taken and is not altogether perverse. 36. Broadly speaking, there are three grounds on which awards may be challenged under the 1996 Act lack of substantive jurisdiction, serious irregularity and substantive injustice. The avowed intent of the 1996 Act is to limit the Court's interference or intervention in matters relating to arbitration to the minimum. Loosely, the tests to be applied in setting aside proceedings remain much the same under the 1996 Act as in the 1940 Act. The matters complained of by the setting aside applicant should be such that would shock the conscience of the Court. Loosely, the tests to be applied in setting aside proceedings remain much the same under the 1996 Act as in the 1940 Act. The matters complained of by the setting aside applicant should be such that would shock the conscience of the Court. Such matters would include an award being opposed to public policy, one that is patently unfair and unreasonable, or one which travels beyond the substantive provisions of law resulting in serious prejudice to the complaining party, or of the Arbitral Tribunal disregarding express provisions of the contract under which it gets its authority. Section 34 of the 1996 Act and the judicial construction of what is opposed to public policy mentioned therein, does not broaden the scope of challenge to an award. It is true that section 28 requires an Arbitral Tribunal adjudicating upon a matter of the present nature to decide the disputes in accordance with the substantive law for the time being in force in India. If the substantive law is disregarded, a challenger would make out a case for interference. But if in applying the substantive law, the Arbitral Tribunal commits an error in its interpretation or application, unless the result shocks the Court's conscience, the Court will not embark on an exercise to correct the error committed by a forum which the parties preferred over the Court in the first place. But it does not follow that the Court presiding over the setting aside proceedings would merely see whether the substantive law was applied without seeking to ascertain how it was applied. It is here that the Court's conscience comes into play so that a party who has been unconscionably dealt with in the reference may not be penalised merely because it chose a forum other than the Court. 37. If at all, section 34 of the 1996 Act, when viewed in the context of the stated purpose of the Act and its attempt to loosen Court's control over arbitration matters, raises the bar and it is a higher threshold that the complaining party needs to cross before it can have an award set aside. 38. On the basis of the legal tests that have to be applied, the arbitrators' finding on extension of time for completion of the work cannot be set aside. 38. On the basis of the legal tests that have to be applied, the arbitrators' finding on extension of time for completion of the work cannot be set aside. It is possible that the Court may have arrived at a different conclusion and may not have interpreted the petitioner's letter of February 10, 1999 in the manner the arbitrators have. It is possible, as the petitioner suggests, that the letter of February 10, 1999 implied that the petitioner was of the view that the contractor had proffered reasons for an extension upto August 31, 1998, but had not elicited much on the extension sought beyond August 31, 1998, prompting the petitioner to seek better reasons for the period beyond August 31, 1998. It is equally likely that the petitioner in informing the respondent by the letter of March 25, 1999 that the project management consultant would remain at site till March 31, 1999 merely stated a fact without intending to convey to the contractor that the close out date had to be March 31, 1999 or that the employer was not averse to extending time for completion till March 31, 1999. But just as the letter of February 10, 1999, the arbitrators chose to read the letter of March 25, 1999 to convey a tentative acceptance of the time for completion of the work by March 31, 1999. The arbitrators' conclusion that the petitioner herein had given an indication that it was prepared to grant extension of time up to the close of the contract, is to be seen not merely on what appears from the two letters if they were read in isolation but on the tomes of documents that were before the arbitrators. The intention of the petitioner herein that the arbitrators gathered from the two letters is just the tip, the culmination of what the arbitrators thought the petitioner herein conveyed to the contractor. The arbitrators had occasion to hear the matter on merits in much greater depth than what can be permitted in setting aside proceedings. Additionally, even if the two letters were to be seen as the only basis for the arbitrators' conclusion on such point, it would not be an altogether absurd conclusion however loathe the Court may be to accept such conclusion on the basis of the two letters. Additionally, even if the two letters were to be seen as the only basis for the arbitrators' conclusion on such point, it would not be an altogether absurd conclusion however loathe the Court may be to accept such conclusion on the basis of the two letters. To add weight to the arbitrators' finding on the question of extension of time for the completion, is the petitioner's refusal to justify why it thought that December 31, 1997 should be the cut-off date and not any other date. The petitioner was not, even after it assumed the Engineer's jurisdiction, obliged to favour the contractor with any reason, but upon the contractor asserting in the reference that it was the petitioner which caused the delay, or, at least, that the delay was not occasioned by the contractor, it was incumbent on the petitioner to disclose the basis for choosing December 31, 1997. This, the petitioner chose not to do and nothing in the contract robs the arbitrators of the authority to adjudicate on such issue upon the contractor asserting that it was entitled to a longer extension than what the employer or its engineer permitted it. 39. The petitioner's challenge as to the arbitrariness of the award on the score of delay fails. There are consequences of the delay, which has been attributed to the petitioner, though the ward in its finding on such count oscillates between finding the contractor not responsible for the delay and ultimately concluding that the delay was attributable to the employer. The two are not the same though the award has used the two interchangeably. But the award ultimately conveys that it was the petitioner which caused the delay and should be liable therefor. The consequences of such delay attributed to the petitioner are that it would no longer be entitled to the liquidated damages and may be liable on account of escalation and on account of time related cost components. 40. As a consequence of the delay being attributed to the petitioner herein, the arbitrators awarded the sum of Rs. 1.88 crore retained by the petitioner, Rs. 83,19,000/- being encashed against the bank guarantee furnished by the contractor and the sums of Rs. 57,68,445/-, Rs. 21,844/-, and Rs. 47,47,801/- being deducted out of three running account bills and the amount certified to be due to the contractor on account of escalation. 1.88 crore retained by the petitioner, Rs. 83,19,000/- being encashed against the bank guarantee furnished by the contractor and the sums of Rs. 57,68,445/-, Rs. 21,844/-, and Rs. 47,47,801/- being deducted out of three running account bills and the amount certified to be due to the contractor on account of escalation. Since the petitioner's challenge to the arbitrators' decision on extension of time has failed, the award for return of such sums of Rs. 83,19,000/-, Rs. 57,68,445/-, Rs. 21,844/- and Rs. 47,47,801/- has to be upheld as a logical consequence of the finding on delay. 41. It is, however, the amount awarded on account of escalation for the extended period between January 1, 1998 and March 31, 1999 for Rs. 1,76,98,518/- that cannot be sustained. For one, there is no reason (at page 9 of the award) as to the basis therefor. For a second, the arbitrators have not assessed the amount claimed and have merely awarded on such head as claimed. Though the respondent asserts that the claim on account of the escalation for the period after December 31, 1997 was made on the same basis as the amount passed by the employer for escalation for the extended period upto December 31, 1997, there has been no adjudication on such aspect by the arbitrators. There is no reason in support of such head nor have the arbitrators alluded to any concession or admission on such count by the petitioner. The award under such head, without any basis in support thereof is opposed to the substantive law of the land and consequently opposed to public policy. It also shocks the Court's conscience that a sum in excess of Rs. 1.76 crore, with the interest awarded later acting as a multiplier thereon, would be made to the serious prejudice of a party without such suffering party being informed of the basis therefor. There may yet be justification for the award on account of escalation for the period after December 31, 1997 flowing from the arbitrators' finding that the period for completion ought to have been extended till March 31, 1999, but it will be open to the contractor to seek a fresh reference for adjudication on such score. 42. The third major plank of the award, and by far the heaviest, is on account of time related cost components. 42. The third major plank of the award, and by far the heaviest, is on account of time related cost components. Contrary to what the petitioner suggests, there are indications in the statement of claim as to compensation on such account, though the expression is not specifically used in the statement of claim. It is a claim in the nature of damages which is written all over the statement of claim. The expression "time related cost components" and the formula therefor are no magic mantra, but merely a tool to help assess damages of such nature which are inherently incapable of precise assessment. There is, of course, the caveat that the petitioner has referred to that appears in Gajria. Since the basis of the claim on account of time related cost components has been acknowledged by Gajria to have been on the basis of Hudson, it- is necessary to appreciate the import of the caveat on the applicability of such formula from Hudson (10th Ed.) at page 599:- "A caveat should, however, be entered in regard to the profit element in the above formula. The formula assumes that the profit budgeted for by the contractor in his prices was in fact capable of being earned by him elsewhere had the contractor been free to leave the delayed contract at the proper time. This itself involves two further assumptions, namely that on average the contractor did not habitually underestimate his costs when pricing, so that the profit percentage was a realistic one at that time, and secondly that there was thereafter no change in the market, so that work of' at least the same general level of profitability would have been available to him at the end of the contract period. There is no doubt that satisfactory evidence on these matters is necessary, and the case of Sunley vs. Cunard White Star 1940, and a number of cases involving the wrongful detention of ships and consequential loss of charter-party profits, indicate that in the absence of such evidence a contractor who has been delayed will only be entitled to interest on capital employed, and not to loss or profit." 43. Ordinarily when there is delay in completion of such a project, the contractor may suffer loss on account of additional overheads during the extended period for which it had not budgeted at the time of submission of its price for the work. A contractor would also have suffered, for such delay, a loss of profit earning capacity for its resources being detained longer than it envisaged. The contractor would also incur additional expenditure on site overheads in addition to escalation. For loss on account of head office overheads and profit for the overstay Hudson has devised a formula that has been applied by the arbitrators. The formula is based on certain assumptions and before its application, the contractor should satisfy that the profit budgeted for by the contractor in the price submitted was capable of being earned by the contractor elsewhere during the period of overstay. The basis of the Hudson formula is not seriously challenged, but the petitioner questions the applicability thereof in the context of the contractors claim and urges that the arbitrators erroneously assumed that overheads and profit constituted a fifth of the value of the contract. The arbitrators have relied on a 20 per cent multiplier and justify the 20 per cent by reference to clause 2.17-A(d) of the Special Conditions. Clause 2.17 relates to valuation of variation and rate for varied work related to clause 11.3 of the General Conditions. The clause has not been applied by the arbitrators in a matter relating to additional or omitted work. The arbitrators have merely relied on it for the acknowledgement therein that there was a 20 per cent component envisaged in the contract value for supervision, transportation, handling, overheads and profits. It is a plausible inference drawn. 44. The contractor here furnished a list of other contracts that were being executed by it during the period and the arbitrators have referred to several documents produced by the contractor evidencing such loss Cat page 11 of the award). The arbitrators recorded that the petitioner herein did not controvert the contention of the contractor that it was entitled to compensation in terms of the Hudson formula. There is no element of perversity either in awarding under such head or using 20 per cent on the basis of clause 2.17-A(d) of the Special Conditions as the multiplier. The arbitrators recorded that the petitioner herein did not controvert the contention of the contractor that it was entitled to compensation in terms of the Hudson formula. There is no element of perversity either in awarding under such head or using 20 per cent on the basis of clause 2.17-A(d) of the Special Conditions as the multiplier. Even though the caveat accompanying the Hudson formula is not noticed or referred to in the award, the arbitrators have taken into account the fact that the contractor was capable of earning profits elsewhere had the contractor been free to leave the delayed contract at the proper time. It was evident from the figure in clause 2.17-A(d) of the Special Conditions that the contractor did not underestimate its cost when pricing and there was an indication as to the percentage of the contract value on account of overheads, profit and the like. Assessment of damages always involves a measure of subjectivity and approximation once the adjudicating authority finds that damages had, indeed, been suffered. The arbitrators found that the contractor suffered damages and had produced material in support thereof and merely because the caveat was not referred to, would not make the award on such head so shocking or unconscionable as to warrant being set aside in the present proceedings. 45. The arbitrators referred to section 54 of the Contract Act for the proposition that a party is entitled to receive compensation from the other for loss suffered by it owing to delay and prolongation of the contract period. The arbitrators referred to decisions cited on behalf of the contractor for the proposition that if there was delay on account of the employer, the contractor was entitled to be compensated for having to maintain its establishment during the period of delay. The petitioner has sought to distinguish such cases on the ground that there was no dispute in the cases cited that the delay was on account of the employer and in one case, on account of breach on the part of the employer, the contract was terminated. The arbitrators have relied on the cases for the proposition that once it was admitted or established that delay was attributable to the employer, the contractor was entitled to reasonable compensation. The arbitrators have relied on the cases for the proposition that once it was admitted or established that delay was attributable to the employer, the contractor was entitled to reasonable compensation. There is no irregularity committed by the arbitrators in placing reliance on such cases, at least no grave error that would invite interference in proceedings of such nature. 46. The counter-claim made by the petitioner herein was primarily for the delay that the petitioner claimed that was caused by the contractor in completing the work. Once such fundamental premise for the counter-claim stood demolished upon the arbitrators holding that the delay of 27 months was attributable to the employer, there is not much to look into the various heads of the counter-claim. To be fair to the petitioner herein, it has attempted to resurrect its counter-claim on the ground that the arbitrators' finding that the delay was attributable to the petitioner or, that such delay was not on account of the contractor, was perverse. The other score on which the rejection of the counter-claim has been challenged is the arbitrators' failure to consider relevant material. No material has however been shown by the petitioner in course of the present proceedings that would make the rejection of the counter-claim absurd even if the arbitrators' finding that delay was attributable to the petitioner herein, is not upheld. The arbitrators have concluded that "the delay in completing the work (was) primarily and largely attributable to the (employer), who (was) directly or indirectly responsible for such delay." On such conclusion, the arbitrators held (at page 16 of the award) that the petitioner herein could not make any claim on account of alleged extra payment to its consultant or extra costs. The arbitrators considered the several heads of counter-claim and expressed their opinion thereon. It was a matter within the arbitrators' domain and the Court need not assess such matter merely because it is asserted that the view taken by the arbitrators, in each case, is erroneous. 47. Finally, the interest awarded has been assailed. Ordinarily, interest is awarded as a measure of compensation for money being withheld from the person entitled thereto for a period of time. Since this is the basic premise on which interest has been awarded by the arbitrators, the same cannot be questioned. What is open to attack, however, is the rate of interest awarded. Ordinarily, interest is awarded as a measure of compensation for money being withheld from the person entitled thereto for a period of time. Since this is the basic premise on which interest has been awarded by the arbitrators, the same cannot be questioned. What is open to attack, however, is the rate of interest awarded. The total quantum of the award is Rs. 8,94,65,783/-. The arbitrators have awarded interest on the unpaid certified amounts against the three running account bills, certified escalation amount and the amount deducted under the bank guarantee at the rate of 18 per cent per annum till the date of reference (June 30, 2002). The arbitrators also awarded interest at the rate of 18 per cent per annum on the compensation awarded and on the additional award made on account of escalation. Interest on the entire quantum awarded carries interest "from the date of reference till the date of the award at the rate of 18 per cent per annum till payment" (at page 17 of the award). The award requires the petitioner herein to pay the entire sum within three months failing which the award sum would carry interest at 6.5 per cent per annum till realisation. There is an apparent error on the face of the award as to the grant of interest. The award docs not justify why interest has been granted at the rate of 18 per cent per annum. The award is contradictory in that at one place it requires the entire sum to carry interest at the rate of 18 per cent per annum till payment and elsewhere it provides for interest at the rate of 6.5 per cent per annum from three months after the award till realisation. 48. Even though the provisions of the 1996 Act permit interest to be awarded at the rate of 18 per cent per annum, there has to be a basis disclosed for award of interest at such rate. The Court can take notice, in the absence of any reason as to the rate being found in the award, that the high interest regime ended by or about the year 2001 and interest rates have come down significantly thereafter. The Court can take notice, in the absence of any reason as to the rate being found in the award, that the high interest regime ended by or about the year 2001 and interest rates have come down significantly thereafter. Since the arbitrators have awarded interest at the rate of 18 per cent per annum on the various heads till the date of the reference on June 30, 2002, it is not necessary to interfere with such part of the award on interest, but it would be in the interest of justice if the interest awarded for the period beginning June 30, 2002 is modified to 6.5 per cent per annum till realisation. 49. On behalf of the petitioner, the judgments reported at 2004(5) SCC 109 (Bharat Colling Coal Ltd. vs. L.K. Ahuja); 2006(4) SCC 445 (Hindustan Zinc Ltd. vs. Friends Coal Carbonisation); 1999(5) SCC 651 (Olympus Superstructures Put. Ltd. vs. Meena Vijay Khetan & other); 2003(8) SCC 154 (Bharat Colling Coal Ltd. vs. Annapurna Construction); 2004(5) SCC 314 [Sathyanarayana Brothers (PJ Ltd. vs. T.N. Water Supply & Drainage Board]; and 2007(2) CHN 441 (Damodar Valley Corporation vs. Central Concrete & Allied Products Ltd.) have been placed. The L.K. Ahuja case has been relied upon for the proposition that a contractor was required to demonstrate that it actually suffered loss of profit before it could claim under such head. The Hindustan Zinc Ltd. case is cited for the principle that the arbitrators have no authority to make an award contrary to the terms of the agreement between the parties. Such principle is pressed both for the award being at variance with clause 9.4 of the General Conditions and with clause 6.43 of the General Conditions read with the clauses 2.22 and 2.10 of the Special Conditions on which the petitioner relied to suggest that no compensation was payable on account of idling charges. Clause 6.43 of the General Conditions provides for contract price and escalation. Clause 6.43.2 deals with escalation but by clause 2.22 of the special conditions, clause 6.43.2 stood superseded. Clause 2.10 deals with commencement time and delays and sub-clause (b) thereof provides that no payment by way of compensation for idling of resources, manpower etc. for any reason shall be made by the employer. Clause 6.43.2 deals with escalation but by clause 2.22 of the special conditions, clause 6.43.2 stood superseded. Clause 2.10 deals with commencement time and delays and sub-clause (b) thereof provides that no payment by way of compensation for idling of resources, manpower etc. for any reason shall be made by the employer. Though it is not clear as to whether such point was urged before the arbitrators and the award does not refer to it, clause 2.10(b) cannot denude the arbitrator of the authority to make an award on account of time related cost components. It is also of some significance that the petitioner's letter of February 27, 1997 granting extension of time for completion by 180 days imposed two conditions, one of which was that the contractor would not be entitled to idle labour charges till December 27, 1996, thereby suggesting that the parties did not understand the agreement to altogether rule out any claim on account of idling. 50. The Olympus Superstructures Put. Ltd., Annapurna Construction, Sathyanarayana Brothers (P) Ltd. and Damodar Valley Corporation cases have been placed for the scope of interference in setting aside proceedings. The petitioner relies on such judgments to urge that the scope of interference by Court in setting aside proceedings remains much the same under the 1996 Act as it was under the 1940 Act. The petitioner has relied on the cases to suggest that if relevant clauses of the contract or material before the arbitrators are not taken into consideration, the arbitrators would be deemed to have misdirected themselves and it would be a serious irregularity warranting interference under section 34 of the 1996 Act. The petitioner asserts that merely, because setting aside proceedings are not appellate proceedings, there is no special umbrella of protection for an award that is found to be erroneous. There is, however, a distinction between an error within jurisdiction and an error of jurisdiction. Since it is found in the present case that the arbitrators have not, except in the matter of escalation for the period after December 31, 1997 and the award of interest in the post-reference period at a high rate, committed any grave error touching upon their authority to adjudicate upon the matters in issue, the nature of the power exercised under section 34 of the 1996 Act would not permit any interference as to the other matters decided by the arbitrators. 51. 51. The respondent has placed the judgment reported at 2006(7) SCC 756 (Jai Narain Parasurampuria vs. Pushpa Devi Saraf); 2006(11) SCC 181 (McDermott International Inc. vs. Burn Standard Co. Ltd. & other); and 2002(1) CRN 13 (Union of India vs. Royal Construction). In the Jai Narain Parasurampuria case, the Supreme Court dealt with the question of estoppel by conduct and the respondent has relied on such principle in support of its contention that the petitioner cannot raise the points urged in support of clause 9.4 of the General Conditions when it had overlooked the strict letter of such provision in its pre-reference dealings. The Royal Construction case has been placed as to adequacy of reasons in an award. The McDermott International case is placed to show that the role of the Court under the 1996 Act is supervisory and under section 34 of the Act the Court would review the arbitral award only to ensure fairness as intervention of Court is envisaged only in limited circumstances. 52. The award on account of escalation for the period between January 1, 1998 and March 31, 1998 is set aside with liberty to the contractor to seek a fresh reference in respect thereof. The remainder of the award except on account of interest for the period after June 30, 2002 is not interfered with. In view of the petition partly succeeding, there will be no order as to costs. 53. Urgent photostat certified copies of this judgment, if applied for, be issued to the parties upon compliance with requisite formalities. Later: 54. The petitioner seeks stay of this order, to the extent it is against the petitioner, for a period of three weeks. Considering the points urged, there will be a stay of operation of this order in its entirety for a period of two weeks from date. Petition succeeded partly.