Judgment 1. This petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the award dated 26.09.2010 passed by the second respondent herein in Arbitration Case No.1 of 2010. 2. M/s.Lakshmi Export, the first respondent herein, was the claimant and Tamil Nadu Civil Supplies Corporation Ltd., the petitioner herein, was the respondent in the arbitral proceedings before the sole arbitrator, namely the second respondent. The second respondent/arbitrator, at the conclusion of the arbitral proceedings, passed the impugned award allowing the claim of the first respondent in part and rejecting the rest of the claim. Aggrieved by the part of the award by which a part of the claim of the first respondent has been allowed by the arbitrator, the petitioner Corporation has filed the present petition. 3. The brief facts leading to the filing of the present petition are as follows: (i) Tamil Nadu Civil Supplies Corporation Limited, the petitioner herein, invited tenders from Registered contractors on 15.12.2006 for the supply of 5000MTs of Dhall (Toor Dhall and Masoor Dhall) for the welfare scheme named "Puratchi Thalaivar MGR Nutritious Meal Programme". M/s. Lakshmi Export, the respondent herein, having quoted the lowest price, emerged as the successful tenderer and its tender was accepted. Pursuant to the acceptance of its tender, an agreement was entered into between the petitioner Corporation and the first respondent on 09.01.2007. The terms and conditions of the tender permit the contractor to supply 1/3rd part of the total quantity of Dhall in Masoor Dhall variety and the balance quantity in Toor Dhall variety. The agreed rate for both the Toor Dhall and Masoor Dhall was same, namely Rs.22,154/- per MT. On the date of agreement, namely on 09.01.2007 itself, the petitioner Corporation issued the purchase order requiring the first respondent to supply 5000 MTs of Dhall splitting the same into two spells which were to be completed by 22.02.2007 and 06.04.2007 respectively. A condition was also stipulated that the supply should be regulated in such a way that regular supply of proportionate quantities should be made instead of supplying the entire quantity in a single lot at the fag end of the spell. Pursuant to the said order, the first respondent herein supplied 100.482.070 MTs of Masoor Dhall upto 24.01.2007 and 963.173.880 MTs of Toor Dhall upto 23.03.2007. Pursuant to the said order, the first respondent herein supplied 100.482.070 MTs of Masoor Dhall upto 24.01.2007 and 963.173.880 MTs of Toor Dhall upto 23.03.2007. Thus, the total quantity of dhall supplied by the first respondent was 1063.655.950 MTs. Thereafter problem arose since the officers of the petitioner Corporation refused to accept supply of Masoor Dhall and insisted upon supplying Toor Dhall alone. The first respondent informed the petitioner Corporation that it had invested huge amount and purchased Masoor Dhall to effect supply of Masoor Dhall, which would account for 1/3rd of the total quantity of Dhall to be supplied as per the agreement and expressed difficulty in arranging the funds for the supply of Toor Dhall, which would account for the balance quantity of the dhall agreed to be supplied as per the contract. The first respondent was also repeatedly requesting the petitioner Corporation to accept the supply of Masoor Dhall and to extend the time for the supply of Toor Dhall. The petitioner Corporation chose to extend the time for completion of the supply of Toor Dhall but at the same time refused to accept the supply of Masoor Dhall. In such circumstances, difference of opinion arose, which lead to the issuance of a show-cause notice dated 04.06.2007 calling upon the first respondent to show-cause why the proposals found in the show-cause notice should not be given effect to. The proposals made in the show-cause notice are as follows: 1) To cancel the orders for the supply of the balance quantity of 2286.482.000 M.Ts of Toor Dhall and to terminate the contract as per the provisions contained under clause-10(i) of the agreement dated 09.01.2007 for violation of agreement clause 6(iii). 2) To forfeit the Security Deposit amount of Rs.33,23,100/-remitted by them as per the provisions contained under clause -10(i) and clause No.8 of the agreement dated 09.01.2007 for nonfulfilment of contract. 3) To purchase the undelivered quantity of 2286 M.Ts of Toor Dhall through alternative sources at their risk and cost and to claim the consequential financial loss sustained by the Corporation, as per the provisions contained in clause No.10(i) of the agreement dated 09.01.2007. 3) To purchase the undelivered quantity of 2286 M.Ts of Toor Dhall through alternative sources at their risk and cost and to claim the consequential financial loss sustained by the Corporation, as per the provisions contained in clause No.10(i) of the agreement dated 09.01.2007. The first respondent viewed the said act on the part of the petitioner Corporation to be a unilateral alteration of the terms of the agreement and expressed its intention to invoke the arbitration clause found in the agreement, namely Clause No.18 of the agreement dated 09.01.2007. Accordingly, the second respondent herein, a retired District Judge, was appointed as the sole arbitrator before whom the first respondent filed a claim statement claiming the following reliefs: "i) To declare the order dated 04.04.2007 thereby cancelling the 1/3rd quantity of Masoor Dhall as unilateral, illegal, arbitrary and in violation of the terms of the agreement. ii) To set aside the show cause notice dated 04.06.2007 issued by the respondent Corporation and consequently direct the respondent Corporation to refund the sum of Rs.33,23,100/- being the amount deposited by the claimant towards security deposit lying with the respondent. iii) To direct the respondent Corporation to pay sum of Rs.2,98,81,500/- being the loss suffered by the claimant due to the unilateral cancellation of the 1/3rd quantity of Masoor Dhall that have been purchased and stored by the respondent pursuant to the orders placed by the respondent Corporation. iv) To award interest at 24% p.a on the amounts claimed in para (ii) and (iii) of the above. v) To award all cost of the proceedings and vi) Grant such further or other reliefs that the claimant is entitled to in the facts and circumstances of the case and thus render justice." (iii). The petitioner herein, who figured as the respondent before the arbitrator, filed a counter statement refuting the claim of the first respondent herein and contending that it was the first respondent who committed breach of contract and thus the first respondent had incurred forfeiture of amount of Rs.33,23,100/-paid as security deposit. The petitioner herein, who figured as the respondent before the arbitrator, filed a counter statement refuting the claim of the first respondent herein and contending that it was the first respondent who committed breach of contract and thus the first respondent had incurred forfeiture of amount of Rs.33,23,100/-paid as security deposit. The petitioner Corporation in its counter also contended that as per clause 14(i) of the agreement dated 09.01.2007, the Corporation had the right to waive or alter any of the terms and conditions of the agreement with the written consent of the claimant and that the claimant, namely the first respondent had given written consent for cancellation of the order for the unsupplied quantity of the Masoor Dhall and hence the contention of the first respondent herein (claimant) that a contractual clause was unilaterally altered by the petitioner herein was not correct. Based on the said averments the petitioner herein had prayed for the rejection of the claim of the first respondent herein in toto. (iv) The second respondent/sole arbitrator, at the conclusion of the arbitral proceedings, allowed the claim of the first respondent herein in part alone and rejected the rest of his claim to be precise. The operative part of the award is reproduced hereunder: "A. The Respondent Corporation is directed to refund the Security Deposit amount of Rs.33,23,100/- to the claimant within two months from the date of this Award, failing which the respondent is liable to pay interest at 9% p.a after that time, till the date of payment. B. The Respondent Corporation is directed to pay a sum of Rs.20,76,985.47 being the bill amount raised by the claimant for the supply of Toor Dhall and Masoor Dhall to the Respondent Corporation as per Bill Nos.057 and 058 dated 26.3.2007. Since it is a commercial transaction, the Respondent Corporation is liable to pay interest at the rate of 9% p.a from 26.03.2007. C. The claim of claimant for the loss suffered due to the cancellation of supply of 1/3 quantity of masoor dhall for a sum of Rs.2,96,81,500/- is rejected as not sustainable. D. Both the parties are permitted to bear their own costs. E. Arbitration fees and other expenses will be borne by both the parties in equal moities. 4. C. The claim of claimant for the loss suffered due to the cancellation of supply of 1/3 quantity of masoor dhall for a sum of Rs.2,96,81,500/- is rejected as not sustainable. D. Both the parties are permitted to bear their own costs. E. Arbitration fees and other expenses will be borne by both the parties in equal moities. 4. The present original petition has been filed under Section 34 of the Arbitration and conciliation Act, 1996 for setting aside the said award on the ground alleged in the petition. The point that arises for consideration in this petition is "whether the award of the second respondent/arbitrator is liable to be set aside?" 5. The advocates appearing for both the contesting parties have admitted the fact that the documents found in the typed-set are true copies of their originals and that this Court can rely on the said copies and pronounce an order without summoning the originals from the arbitrator. In fact no witness was examined on either side before the arbitrator and both the parties relied on the documents produced by them as Exs.C1 to C15 and R1 to R9 respectively. 6. The arguments advanced by Mr. V. Selvanayagam, learned counsel for the petitioner and by Mr. Venkatachalapathy, learned senior counsel appearing on behalf of the counsel on record for the respondents were heard. The petition and the copies of the documents furnished in the form of typed-set of papers including the claim statement, counter statement and award of the arbitrator were also perused. 7. Admittedly, on the acceptance of the tender submitted by the first respondent for the supply of 5000 MTs of Dhall at the rate of Rs.22,154/-per MT, an agreement in writing came to be entered into between the petitioner and the first respondent on 09.01.2007. The same has been filed as Ex.C4 on the side of the first respondent herein(claimant) and as Ex.R2 on the side of the petitioner herein. On the same day, a purchase order was issued by the Chairman-cum-Managing Director of the petitioner Corporation in his proceedings in BS6/104998/2006 dated 09.01.2007. As per clause 4 (iii), the contractor, namely the first respondent had an option to supply Masoor Dhall Malka (Red Lentil) whole (Indigenous / imported) to the extent of 1/3rd of the total quantity of 5000 MTs at the same rate. As per clause 4 (iii), the contractor, namely the first respondent had an option to supply Masoor Dhall Malka (Red Lentil) whole (Indigenous / imported) to the extent of 1/3rd of the total quantity of 5000 MTs at the same rate. A reading of the said agreement as a whole makes it clear that the agreement between the petitioner and the first respondent was that the first respondent should supply 5000 MTs Dhall; that the entire quantity might be Toor Dhall or 1/3rd portion of the quantity might be Masoor Dhall and the balance quantity should be in Toor Dhall. It shows that out of 5000 MTs 1667 MTs can be Masoor Dhall. As against the said quantity, the first respondent admittedly supplied 100.482.070 MTs of Masoor Dhall upto 24.01.2007. Comparatively a larger quantity, namely 963.173.880 MTs of Toor Dhall was supplied by the first respondent upto 23.03.2007. Thereafter, there was a deadlock, as dispute arose between the petitioner and the first respondent on the refusal of the petitioner to accept the supply of Masoor Dhall. The first respondent contended that it had invested huge amount for purchasing Masoor Dhall for effecting supply to the petitioner Corporation besides supplying sufficient quantity of Toor Dhall; that since officers of the petitioner Corporation refused to accept supply of Masoor Dhall and insisted upon supplying only Toor Dhall, the first respondent was crippled as the funds had got locked and that the same was reason why the first respondent was addressing repeated letters to the petitioner requesting to accept the supply of Masoor Dhall to the extent of 1/3rd of the quantity and extent the time for the supply of the balance quantity in Toor Dhall. The request made by the first respondent for accepting supply of Masoor Dhall to the extent of 1/3rd of the contracted quantity was turned down by the petitioner. However, the time for effecting supply of the balance quantity of Toor Dhall was extended upto 31.05.2007 by a letter dated 03.05.2007 marked as Ex.C11. Again the first respondent made repeated requests by letters dated 08.05.2007 and 31.05.2007 requesting the petitioner to accept the supply of Masoor Dhall accounting for the balance of the 1/3rd of the total quantity and extend the period of supply of Toor Dhall. Again the first respondent made repeated requests by letters dated 08.05.2007 and 31.05.2007 requesting the petitioner to accept the supply of Masoor Dhall accounting for the balance of the 1/3rd of the total quantity and extend the period of supply of Toor Dhall. It is seen from the records that though initially the petitioner insisted upon supply of Toor Dhall to account for the entire balance quantity after deducting the quantity already supplied, subsequently the petitioner cancelled the earlier order for the supply of balance quantity of Masoor Dhall, namely 1566.517.930 MTs by proceedings dated 04.04.2007. In the said proceedings dated 04.04.2007, referring to a Government Order issued in G.O (Ms) No.28 (Social Welfare and Nutritious Meal Programme (NMP-3) Department dated 01.03.2007, the petitioner informed the first respondent that in view of the Government policy it was not in a position to accept any further quantity of Masoor Dhall from the first respondent and hence, it chose to cancel the orders for the remaining quantity of Masoor Dhall accounting for 1566.517.930 MTs. By the said proceedings, the order was restricted to the purchase of Toor Dhall upto 3433.482.070 at the rate of Rs.22,154/- per MT. 8. Pointing out the fact that the said Government Order came to be passed only on 01.03.2007 and on the other hand, the officers of the petitioner Corporation refused to accept the supply of Masoor Dhall even prior to the said date and they created a situation whereby the funds of the first respondent got locked as required quantity of Masoor Dhall had already been purchased, the first respondent challenged the said proceedings by which the purchase order to the tune of 1566.517.930 MTs was cancelled. In the course of exchange of communications between the petitioner and the first respondent, the first respondent also expressed its difficulties in arranging the funds for the purchase of Toor Dhall to effect supply to the petitioner Corporation and held out that such difficulty had been caused due to the refusal on the part of the officers of the petitioners to accept the supply of Masoor Dhall even prior to the issuance of the above said Government Order. Under such circumstances, citing the failure to supply the agreed quantity of Toor Dhall, the impugned show-cause dated 04.06.2007 came to be issued. Under such circumstances, citing the failure to supply the agreed quantity of Toor Dhall, the impugned show-cause dated 04.06.2007 came to be issued. Pursuant to the same, the respondent invoked the arbitration clause found in the agreement, namely clause 18 of the agreement dated 09.01.2007, which was in accordance with the clause 16 of the terms and conditions of the tender. 9. The first respondent in the claim before the arbitrator claimed that he was entitled to the refund of the security deposit with interest and also the proportionate price of the quantity of Dhall supplied till the date on which the dispute arose, namely 26.03.2007. There is no dispute that the cost of the dhall supplied upto the date on which the dispute arose if worked out at the agreed rate of Rs.22,154/-per MT, would come to Rs.20,76,985.47. It is also not in dispute that the petitioner had not paid the said amount towards the quantity of dhall supplied by the first respondent. Thus the claim for refund of the security deposit of Rs.33,23,100/-and Rs.20,76,985.47 was upheld by the arbitrator. In addition, the first respondent has also made a claim of Rs.2,96,81,500/-as compensation for the alleged loss suffered by the first respondent due to the cancellation of the purchase order to the extent of 1/3rd part of the total quantity agreed to be purchased. The arbitrator negatived the said claim. So far as the claim of interest is concerned the arbitrator awarded interest on the Security Deposit at the rate of 9% p.a from the date of the award and on the sum of Rs.20,76,985.47, being the bill amount raised by the claimant for the supply of Toor Dhall and Masoor Dhall before the dispute arose, at the rate of 9% p.a from 26.03.2007, namely the date of bill. The arbitrator also directed the parties to bear their respective costs. 10. It is the contention of the learned counsel for the petitioner that the petitioner Corporation was justified in cancelling the purchase order placed for the supply of Masoor Dhall accounting for 1/3rd of the total quantity of Dhall to be supplied under the agreement, since it was based on the Government order prohibiting the purchase of Masoor Dhall for "Puratchi Thalaivar MGR Nutritious Meal Programme" and such cancellation due to frustration cannot be termed as unilateral and autocratic act of alteration of a condition of the contract. It is his further contention that though the petitioner Corporation would have cancelled the order relating to the supply of Masoor Dhall, the first respondent ought to have supplied the agreed quantity of Toor Dhall; that because of the failure on the part of the first respondent to supply the required quantity of Toor Dhall in time, the petitioner had to purchase the same in the open market at a high rate and hence, it incurred a loss of Rs.2,31,20024/-; that the security deposit of Rs.33,23,100/- and the bill amount of Rs.20,76,985,47/-should be set off against the said loss and that the award of the arbitrator passed without taking into consideration the above said aspect would amount to recognition and enforcement of the supposed right of the first respondent much against the public policy. 11. Per contra, learned counsel for the first respondent submitted that the contract was frustrated not because of the policy of the Government as contended by the petitioner but because of the hostile attitude shown by the officers of the petitioner even prior to the passing of the Government Order which the petitioner relied on for cancelling the purchase order for the supply of Masoor Dhall. It is the further contention of the learned counsel for the first respondent that the said Government Order referred to by the first respondent was passed only on 01.03.2007, but even prior to the said date, the officers of the petitioner Corporation refused to accept the supply of Masoor Dhall and such act on the part of the officials of the first respondent led to the frustration of the contract. 12. The above said aspects pertain to the merits of the case. The only relevant question is whether the enforcement of the award shall amount to an enforcement of the contract that is against public policy. The same will be considered after the consideration of the scope of Section 34 of the Arbitration and Conciliation Act, 1996 dealing with the application for setting aside the arbitral award. The grounds on which an arbitral award can be set aside are found listed in Section 34 of the Arbitration and Conciliation Act, 1996. For better appreciation the entire section is reproduced hereunder: 34. The grounds on which an arbitral award can be set aside are found listed in Section 34 of the Arbitration and Conciliation Act, 1996. For better appreciation the entire section is reproduced hereunder: 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 award 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. 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. (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 arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter. (4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award." 13. As per sub-section 2(a)(i) of Section 34, if a party to the arbitral award was under some incapacity, the award may be set aside by the Court. In this case, there is no plea that any of the parties, especially the petitioner Corporation was under some incapacity. As per clause 2(a)(ii), an arbitral award can be set aside if the Court finds that the arbitral agreement is not valid in law. It is not the case of the petitioner that the agreement containing the arbitration clause, especially that part of the agreement dealing with the resolution of the dispute by arbitration is not valid in law. It is also not the case of the petitioner that the petitioner was not given proper notice of appointment of the arbitrator or that the petitioner was otherwise unable to present its case. It is also not the case of the petitioner that the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration. It is also not the case of the petitioner that the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration. It is also not the contention of the petitioner that there was any defect in the composition of the arbitral tribunal. Therefore, none of the grounds enumerated in Clause 2 Sub-clause (a) (i) to (v) of Section 34 is available for the petitioner to successfully challenge the arbitral award and seeking an order setting aside the same. 14. Sub-Clause (1) of Clause (b) of Section 34(2) says that the Court may set aside the award if the subject mater of the dispute is not capable of settlement by arbitration under the law for the time being in force or that the arbitral award is in conflict with the public policy of India. No case has been made out by the petitioner that the subject matter of the dispute dealt with by the arbitrator is not capable of settlement by arbitration by any law for the time being in force. As such the petitioner mainly relies on Sub-clause (ii) of Clause (b) of Sub-section 2 of Section 34 of the Arbitration and Conciliation Act. It says that the Court may set aside the award if the arbitral award is in conflict with the public policy of India. The public policy projected by the petitioner is that considering the welfare of the children, Government has taken a policy decision that only Toor Dhall shall be used and masoor dhall shall not be used in the "Puratchi Thalaivar MGR Nutritious Meal Programme" since consuming of Masoor Dhall could cause neuro lathyrism and effect nervous system and also cause various deformities. The Government Order relied on by the petitioner was issued in G.O (Ms) No.28 (Social Welfare and Nutritious Meal Programme (NMP-3) Department dated 01.03.2007. The same was produced before the arbitrator as Ex.R4. The contents of the said G.O are as follows: "Order The Collector of Karur District in his letter second read above has stated that Masoor Dhall being supplied for the Noon Meal Programme in Karur District by the Tamil Nadu Civil Supplies Corporation Ltd., contain Beta Oxalyl alanine a neuro toxin, which on sustained consumption can cause neuro lathyrism, and affect the nervous system and cause various deformities. The collector has also stated that a sample of the masoor dhall being supplied in Karur District was taken and sent for analysis to the Public Health Lab in Chennai, and the report confirms presence of the toxin in the dhall tested. He has therefore requested the Government to withdraw the supply of masoor dhall for the noon meal programme and consider using with Toor Dhall at the earliest. 2. The Government have examined the request of the Collector of Karur District in consultation with the Tamil Nadu Civil Supplies Corporation Ltd. The Chairman-cum-Managing Director, Tamil Nadu Civil Supplies Corporation Ltd., in his letter fourth read above has stated that enquiries from various sources reveal that the Kesari Dhall is a weed plaint mostly grows along with Masoor Dhall. As the size of the grain is normally similar to Masoor Dhall, it is said to be very difficult to remove the entire seed from Masoor Dhall and hence presence of Kesari Dhall at 0.02 – 0.03% in the Masoor Dhall is inevitable. As per the norms, even presence of one seed in a bag is considered unacceptable. In order to avoid above problem, the Board of Tamil Nadu Civil Supplies Corporation Ltd. under item 115 of the 386th meeting has resolved that necessary proposals may be sent to Government for purchase of Toor Dhall only for Nutritious Meal Programme Centres as suggested by the Collector, Karur District in future and in the event of supplying exclusively Toor Dhall the additional expenditure for a year will be around Rs.1.21 Crores. 3. After careful examination and in view of the concerns expressed against the usage of Masoor Dhall, the Government permit to supply the Toor Dhall instead Masoor Dhall to the Nutritious Meal Programme with immediate effect. The Tamil Nadu Civil Supplies Corporation Ltd., is requested to withdraw the supply of Masoor Dhall from the Nutritious Meal Programme in schools and anganwadi centres and supply Toor Dhall only. 4. The expenditure on the purchase of Toor Dhall shall be debited to the respective head of account. 5. The expenditure sanctioned towards the supply of Toor Dhall is an item of "New instrument of Service" and the approval of the legislature will have to be obtained in due course. 4. The expenditure on the purchase of Toor Dhall shall be debited to the respective head of account. 5. The expenditure sanctioned towards the supply of Toor Dhall is an item of "New instrument of Service" and the approval of the legislature will have to be obtained in due course. Pending approval of the legislature, the expenditure will be met initially by an advance drawn from the contingency fund, for which necessary orders will be issued by the Government in Finance Department. The Commissioner of Civil Supplies is requested to apply to the Government in Finance (BG.I) Department in the prescribed proforma for sanction of advance from the contingency fund. 6. This order issues with the concurrence of Finance Dept. vide its U.O.No.66/DS (BK)/2007, dated 01.03.2007. (BY ORDER OF THE GOVERNOR) N.S.Palaniappan Secretary to Government" 15. Of course it is obvious from the said Government Order that the Government had taken a policy decision and passed the above said Government Order directing Tamil Nadu Civil Supplies Corporation (petitioner herein) to withdraw all the Masoor Dhall supplied to the "Puratchi Thalaivar MGR Nutritious Meal Programme" in the school and anganvadi centres and supply Toor Dhall in its place. The Government Order came into effect only from 01.03.2007. The contract under Ex.C4 agreement, which was entered into on 09.01.2007 itself permitted the first respondent to supply Masoor Dhall accounting for 1/3rd quantity of 5000 MT to be supplied as per the agreement. It is also obvious that upto 24.01.2007 the supply of Masoor Dhall to the extent of 100.482.070 MT alone was made. It is the contention of the first respondent that though the first respondent was ready with the stock of Masoor Dhall to effect supply to the petitioner as per the agreement, even prior to the passing of the Government Order in which the policy of the Government has been spelt out, the officers of the petitioner Corporation showed apathy and refused to accept the supply of Masoor Dhall and thereby the first respondent's financial position was crippled. 16. Of course it is true that the petitioner Corporation was not in a position to accept the supply of Masoor Dhall after the passing of the above said Government Order incorporating its policy decision not to use Masoor Dhall for the Puratchi Thalaivar MGR Nutritious Meal Programme. 16. Of course it is true that the petitioner Corporation was not in a position to accept the supply of Masoor Dhall after the passing of the above said Government Order incorporating its policy decision not to use Masoor Dhall for the Puratchi Thalaivar MGR Nutritious Meal Programme. But, whether the same will give a right to the petitioner Corporation to unilaterally alter the terms of the contract without having a discussion with the first respondent and without obtaining the consent of the first respondent in writing, was the issue raised before the arbitrator. A close scrutiny of the award of the arbitrator will show that the arbitrator does not purport to enforce the contractual clause against the policy decision incorporated in the Government Order by directing the first respondent to accept the supply of Masoor Dhall. On the other hand, it is an admitted fact that a vital part of the contract got frustrated by the passing of the Government Order. The Government Order also contemplates incurring of additional expenditure for supply of Toor Dhall in place of Masoor Dhall. The first respondent submitted quotation quoting uniform rates for Toor Dhall and Masoor Dhall on the understanding that 1/3rd of the total quantity of dhall to be supplied under the contract would be Masoor dhall. From this, it can be inferred that the price of Toor Dhall shall be higher than Masoor Dhall. When such is the case the petitioner should have invited the first respondent for a discussion regarding the consequences of the said Government Order and possible alteration of the clause of the agreement, which the petitioner Corporation has failed to do. Of course the petitioner Corporation was incapacitated from accepting the supply of Masoor Dhall after 01.03.2007 for use in Puratchi Thalaivar MGR Nutritious Meal Programme. While considering the said difficulty, we cannot completely ignore the consequences of withdrawal of the concession given to the first respondent. If it is properly considered, one can come to a conclusion that the frustration of the contract was caused not only regarding the supply of Masoor Dhall but also regarding the supply of Toor Dhall as the terms on which and the price for which Toor Dhall had to be supplied should be worked out taking into consideration the probable loss that would be incurred by the first respondent. The margin in the supply of Toor Dhall will be either nil or minimal compared with the margin in case of supply of Masoor Dhall. In such a situation, the petitioner Corporation ought to have had a discussion and negotiation with the first respondent to fix the price for the Toor Dhall and the quantity of the Toor Dhall to be supplied. In stead of doing it, the petitioner Corporation seems to have assumed unilateral power to alter a term of the contract, much against the expressed stipulation that any of the terms of the agreement can be varied with the written consent of the contractor (supplier). This aspect was taken into account by the arbitral Tribunal. The arbitral Tribunal having formed the view that the contract had been frustrated and hence the first respondent herein was entitled to the refund of the security deposit and also the bill amount for the dhall already supplied. At the same time the Arbitral Tribunal negatived the claim of the first respondent for compensation made on the basis of its claim that it had incurred a heavy loss due to the refusal on the part of the petitioner to accept supply of Masoor Dhall when the first respondent had invested huge amount for purchasing Masoor Dhall. The arbitral Tribunal has also chosen to award interest on the above said amounts only at 9%, that too, from the date of bill for the Dhall supplied and from the date of award for the Security Deposit. 17. The above said finding of the arbitral Tribunal cannot be said to be one in enforcement of a clause in the contract against public policy. If at all the arbitral Tribunal had taken a view that the petitioner Corporation should accept the supply of Toor Dhall to the agreed quantity and pay for the same or to pay damages for the refusal to accept the same, then the view that the award would amount to enforcing a clause in the agreement against public policy shall be possible. In the case on hand, since no such direction is incorporated in the arbitral award, the attempt made on the part of the petitioner to project the award as one directing enforcement of a contractaul clause much against the public policy is bound to be discountenanced. 18. In the case on hand, since no such direction is incorporated in the arbitral award, the attempt made on the part of the petitioner to project the award as one directing enforcement of a contractaul clause much against the public policy is bound to be discountenanced. 18. For all the reasons stated above, this Court comes to the conclusion that there is no merit in the petition and the petition for setting aside the arbitral award deserves to be dismissed. However, considering the facts and circumstances of the case, this Court is of the view that the parties shall be directed to bear their respective costs. In the result, the Original Petition is dismissed. The parties are directed to bear their respective costs.