JUDGMENT : 1. Both these appeals challenge the judgment and order passed by the learned District Judge, Nagpur in Misc. Civil Application No. 131 of 2003 on 12.8.2003, thereby rejecting a challenge raised under Section 34 of the Arbitration and Concillation Act, 1996 (for short, the “Act of 1996”) to the legality and correctness of the arbitral award dated 4.12.2003 with modification regarding rate of interest awarded by the sole arbitrator. First Appeal No. 580 of 2003 has been filed by the original respondents, M/s Raipur Alloys & Steel Limited (now, M/s Sarda Energy and Minerals Limited) (for short, “RASL), in the arbitration proceedings, being aggrieved by dismissal of its application filed under Section 34 of the Act of 1996 by the learned District Judge and First Appeal No. 643 of 2003 has been filed by the original petitioner, M/s Environmental Engineers Incorporation (for short, “EEI”), in the arbitration proceedings being dissatisfied with the order of the learned District Judge in reducing the interest rate from 18% per annum to 12% per annum on the principal amount adjudged by the sole arbitrator. 2. The facts of the case, in brief, are as under. (a) In the year 1994, RASL intended to set up a 300 Megawatt coal fuel thermal power project at Korba, District Bilaspur, then in the State of Madhya Pradesh and presently in the Chhatisgarh State. The thermal power station was planned to be erected and commissioned in two stages viz. StageI of 90 MW power station and Stage-II of 210 MW power station. For setting up of the power project, Environmental Impact Assessment (EIA) study was required to be made and the relevant data in respect of conditions of air, water, soil and noise were also required to be collected and submitted to the Government of Madhya Pradesh Pollution Control Board (for short, the “MPPCB”) and Ministry of Environment and Forests, Government of India with a view to obtain their clearances. For completing this task, appointment of an expert agency was necessary and the respondent being expert in the field, was entrusted with the job of submission of necessary EIA study report and report in respect of relevant data and also obtain environmental clearances from the State Government, Central Government and the concerned agencies. The consideration for the job so entrusted to the EEI was of Rs. 13,00,000/-. The consideration for the job so entrusted to the EEI was of Rs. 13,00,000/-. It was entrusted to EEI upon certain terms and conditions as stipulated in the Letter of Intent dated 16.1.1995. There was, however, no formal agreement executed on the stamp paper between the parties and the Letter of Intent was eventually treated as an agreement by the sole arbitrator which served as a reference point for adjudication of various issues arising in the dispute between the parties. (b) It appears that some studies were conducted by EEI and certain reports were submitted by it to various Departments and NOC from MPPCB was also obtained by it. Before entrustment of the job, EEI was paid by RASL an amount of Rs. 3,25,000/- as advance. EEI raised a bill for Rs. 7.15 lacs on 15.12.1995. But RASL paid only Rs. 3,25,000/- after a period of six months. Then EEI raised a final bill of Rs. 2.60 lacs on 25.4.1997 which remained outstanding in its entirety. Thus, an amount of Rs. 6,50,000/- remained unpaid to EEI under the terms of agreement. It was the contention of the RASL that the EEI did not complete the job entrusted to it and that due to change in policy of the Government, the work that was required to be carried out by the EEI under the agreement was also reduced which lowered the liability of RASL to pay the amount as per the terms of agreement. (c) These differences over quantum of payment assumed colour of dispute and ultimately, an application bearing Misc. Civil Application No. 62 of 2000 came to be filed for appointment of sole arbitrator and it was granted by this Court on 9.6.2000. RASL, however, challenged the jurisdiction of the sole arbitrator by filing a writ petition bearing WP No. 3139 of 2000. But, this Court left the issue of territorial jurisdiction in the matter to be decided by the Sole Arbitrator, which was decided by him affirmatively. (d) On merits of the case, learned sole arbitrator found that RASL illegally withheld amount of Rs. 6,50,000/- out of total agreed amount of Rs. 13,00,000/- rightfully belonging to EEI and thus, directed RASL to pay the same together with interest @ 1.50% per month by his award rendered on 4th December 2002. (d) On merits of the case, learned sole arbitrator found that RASL illegally withheld amount of Rs. 6,50,000/- out of total agreed amount of Rs. 13,00,000/- rightfully belonging to EEI and thus, directed RASL to pay the same together with interest @ 1.50% per month by his award rendered on 4th December 2002. In the challenge made to the award under Section 34 of the Act of 1996 by RASL, the learned District Judge dismissed the application which dismissal was, however, with modification of rate of interest resulting in its reduction from 18% per annum to 12% per annum on the principal amount adjudged by the learned Arbitrator by his order passed on 12th August 2013. RASL is aggrieved by the arbitral award and EEI by the judgment and order of learned District Judge and hence before this Court in these appeals. 3. I have heard Shri Amol Patil, learned counsel for RASL and Shri V.R. Mundra, learned counsel for EEI. I have carefully gone through record of the case including the impugned judgment and order as also impugned award. Following points arise for my consideration :- I. Whether the impugned award dated 4th December 2002 and impugned judgment & order dated 12th August 2003 passed in MCA No. 131 of 2003 do reflect non-application of mind to the material issues involved in the matter and thus, are against the fundamental policy of Indian Law ? II. Whether the impugned judgment and order of the District Judge dated 12th August 2003 are patently illegal insofar as they reduce the rate of interest on the adjudged amount from 18% per annum to 12% per annum ? My answer to first point is in the affirmative and to the second point is in terms that the issue of interest shall be decided by the arbitral tribunal in accordance with law, for the reasons stated in the foregoing paragraphs. 4. Both these appeals have been filed drawing their strength from one of the grounds for challenging the arbitral award, the ground of award being in conflict with the public policy of India available under Section 34(2)(b)(ii) of the Act of 1996. 5. 4. Both these appeals have been filed drawing their strength from one of the grounds for challenging the arbitral award, the ground of award being in conflict with the public policy of India available under Section 34(2)(b)(ii) of the Act of 1996. 5. According to learned counsel for RASL, neither the learned Arbitrator nor the learned District Judge considered the main issue as to whether or not the contracted work was completed and if so, upto what stage it was completed and when was it completed. He maintains that no evidence in this regard was led by EEI and without there being any evidence, the learned Arbitrator found that the entire work that was awarded to EEI was completed by it, which finding has been accepted by the learned District Judge in a perverse manner. 6. He also submits that there were other important objections of RASL which were not considered though they found their reflection in the impugned award. He submits that these objections related to the offer of EEI to reduce its claim for receipt of payment of the work done by it to the extent of Rs. 75,000/- and non-entitlement of EEI to receive interest for the period when the arbitral proceedings were at a standstill i.e. during the period between 21.1.2001 when an objection to the jurisdiction of the learned Arbitrator was taken and 8.3.2002 when the date was fixed for proceeding in the arbitration proceedings. He points out from the impugned award that there is not even a whisper about these objections. According to him, the approach adopted by the learned Arbitrator was not judicial and the learned Arbitrator has committed patent illegality and even perversity in passing the impugned award. He has also taken an exception to the grant of interest on the amount adjudged by the learned Arbitrator in violation of the settled principles of law. 7. On the other hand, learned counsel for the EEI submits that the Act of 1996 is a Code in itself and under Section 5, no judicial authority can interfere with the award except as provided in the Act itself. 7. On the other hand, learned counsel for the EEI submits that the Act of 1996 is a Code in itself and under Section 5, no judicial authority can interfere with the award except as provided in the Act itself. He submits that the scope of interference of the courts has been restricted under Section 34(2) of the Act of 1996 and the grounds taken by RASL which are stated by it to be constituting breach of fundamental policy of Indian law, could be seen to be well considered by the learned Arbitrator on the basis of evidence available on record. He submits that this Court while examining the impugned award, does not sit in appeal and has no authority under the law to interfere with any finding of fact, even if it is erroneous, as long as the same is based upon the evidence available on record. He further submits that to this extent, the impugned award could not be faulted with and, therefore, the appeal of RASL is liable to be dismissed with costs. He is, however, of the opinion that the learned District Judge has reduced the rate of interest awarded by the Arbitrator by contravening the express provision of law made in Section 31(7) of the Act of 1996 which mandates, as it stood before the amendment introduced by an Amending Act with effect from 23.10.2015, that an arbitral award shall, unless the award otherwise directs, carry interest at the rate of 18% per annum from the date of the award to the date of full repayment. Thus, he submits that the modification carried out by the learned District Judge in the rate of interest needs to be quashed and set aside and the position as it emerged from the impugned award as regards the rate of interest, is required to be restored by allowing the appeal of EEI. 8. Under Section 34(2)(b)(ii) of the Act of 1996, an arbitral award can be interfered with if it is in contravention with the fundamental policy of the Indian Law. In order to find out whether or not there is a contravention of the fundamental policy of the Indian law, however, a review on merits is barred. This is clear from second explanation to this provision. In order to find out whether or not there is a contravention of the fundamental policy of the Indian law, however, a review on merits is barred. This is clear from second explanation to this provision. This would mean that it is only when the Court is satisfied that the illegality or breach of fundamental policy of the Indian law is very much apparent on the face of record that it would be justified in setting aside the arbitral award. A court cannot examine the findings recorded by the Arbitrator by re-appreciating the evidence available on record and see whether or not the award violates public policy of India. A court can also not sit with a lens in its hand and microscopically scan the award to find out if there is any fault in it or not and the illegality must be manifest on the face of the award. 9. In the case of Oil And Natural Gas Corporation Limited v. Western Geco InternationalLimited reported in (2014) SCC 263 the Honourable Apex Court, after considering its judgment in the case of Oil And Natural Gas Corporation Limited v. Saw Pipes Limited reported in (2003) 5 SCC 705 which held that “the phrase 'public policy of India' used in Section 34 in context is required to be given a wider meaning”, observed that this expression includes all such fundamental principles as providing a basis for administration of justice and enforcement of law in this country. Elaborating on the concept of “Fundamental Policy of Indian Law”, the Honourable Supreme Court held that an Authority which determines the rights and duties of the parties must adopt judicial approach which is opposed to what is arbitrary, capricious or something based upon whims and fancies of the arbitral tribunal. It further observed that non-application of mind is a defect that is fatal to any adjudication and application of mind is best demonstrated by the decision taken and reasons recorded in support of the decision. Apart from these dimensions of the concept of fundamental policy of Indian law, the rule of audi alteram partem has also been taken to be an intrinsic part of the concept. 10. Apart from these dimensions of the concept of fundamental policy of Indian law, the rule of audi alteram partem has also been taken to be an intrinsic part of the concept. 10. In the case of State of Orissa v. M/s Samantary Construction Private Limited reported in 2015 OnLine SCC 856, the Honourable Apex Court held that a patent error or perversity in passing the arbitral award would provide a basis for interference with it, though, a care has to be taken while doing so that the court does not reassess or re-appreciate the evidence as if it is sitting in appeal. What is a perverse finding has been expounded by the Honourable Supreme Court in the case of Municipal Committee, Hoshiarpur v. Punjab State Electricity Board reported in (2010) SCC 216 in paragraph 28 of the judgment, when it held thus :- “28. If a finding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the finding so outrageously defies logic as to suffer from the vice of irrationality incurring the blame of being perverse, then the finding is rendered infirm in the eye of the law. If the findings of the Court are based on no evidence or evidence which is thoroughly unreliable or evidence that suffers from the vice of procedural irregularity or the findings are such that no reasonable person would have arrived at those findings, then the findings may be said to be perverse. Further, if the findings are either ipse dixit of the Court or based on conjecture and surmises, the judgment suffers from the additional infirmity of nonapplication of mind and thus stands vitiated. (Vide Bharatha Matha v. R. Vijaya Renganathan, (2010) 11 SCC 483 : AIR 2010 SC 2685 ) 11. It is thus clear that whenever a conclusion reached in the arbitral award is patently illegal or perverse or is the result of non-application of mind to the material aspects of the case, it would be violating the fundamental policy of the Indian Law, a ground available for interference under Section 34(2)(b)(ii) of the Act of 1996. It is thus clear that whenever a conclusion reached in the arbitral award is patently illegal or perverse or is the result of non-application of mind to the material aspects of the case, it would be violating the fundamental policy of the Indian Law, a ground available for interference under Section 34(2)(b)(ii) of the Act of 1996. The test to be applied in such a case is to see whether or not the award is the result of non-application of mind to the material aspects of the case or whether or not the arbitrator adopted non-judicial approach or whether or not there is a patent illegality or perversity committed in the award. 12. In the present case, a careful look at the impugned arbitral award would disclose that it assumes a fact not established by any evidence available on record. The learned Arbitrator has taken for granted that the contracted work was completed by EEI although, no evidence in this regard was adduced by either of the parties. It appears that this assumption has been made by the learned Arbitrator only on the basis that some reports were submitted by the EEI which were accepted by RASL, although no details of these reports were placed on record. In fact, the learned Arbitrator has observed that both the parties failed to produce record of submission of reports from EEI to RASL and, therefore, even held that in the circumstances, it was not possible for him to arrive exactly at the order of activities and events. The Letter of Intent dated 16.1.1995, treated as an agreement between the parties, provided schedule of the stages and the time when or the mode by which each of the stages was to be completed by EEI. There is, however, no finding whatsoever made by the learned Arbitrator in the impugned award regarding the stages of work completed by EEI and the time of completion of each of the stages. There had been a serious objection taken by RASL that only 53.33% of the work was completed, and the rest was left out by the EEI. This objection has also been reproduced in the impugned Award. But, this objection has not been considered at all by the learned Arbitrator and there is a total non-application of mind on his part to this material issue involved in the dispute between the parties. This objection has also been reproduced in the impugned Award. But, this objection has not been considered at all by the learned Arbitrator and there is a total non-application of mind on his part to this material issue involved in the dispute between the parties. The result is that, the learned Arbitrator has recorded a finding of completion of the contracted work without there being any evidence available on record on the one hand and has failed to apply his mind and take a decision one way or the other, on the contention of RASL that only 53.33% of the work was completed, on the other. This is the perversity in the impugned award which clearly stands out from the face of the award. 13. There are other contentions raised on behalf of RASL which have not been considered and accepted or rejected by the learned Arbitrator. It was the submission of RASL that EEI had offered to reduce the amount payable to it by Rs. 75000/- as per its letter dated 28.5.1998. Shri Mundra, learned counsel for EEI submits that there was no need for recording any finding on this offer as it was never acted upon by the parties and that this offer due to subsequent events also met with a natural death. It may be true that the offer may not have been acted upon and may have elapsed owing to some other developments, but the requirement of judicial approach and duty to act judicially necessitated that the learned Arbitrator applied his mind to this submission and considered whether it was worth its salt or not. The learned Arbitrator has maintained a complete silence on this submission in the whole arbitral award. Similarly, there was yet another contention regarding waiver of interest for the period in which the arbitral proceedings, according to RASL, were at the standstill, which has also met with a similar fate in the impugned award. 14. To sum up, I would say, the test laid down by the Honourable Supreme Court in the cases of Western Geco, M/s Samantary Construction Pvt. Ltd. and Municipal Committee, Hoshiarpur (supra) is fully satisfied in this case. Upon examination of the impugned Award, it can be seen on the face of it to be suffering from the vice of perversity inasmuch as it fails on the counts of non-application of mind and duty to act judicially. Upon examination of the impugned Award, it can be seen on the face of it to be suffering from the vice of perversity inasmuch as it fails on the counts of non-application of mind and duty to act judicially. The impugned award thus contravenes the fundamental policy of Indian law. It, therefore, deserves to be quashed and set aside. The learned District Judge has not considered these material aspects of the case and, therefore, the impugned judgment and order passed by the learned District Judge also deserves to be quashed and set aside. 15. Now, what remains to be considered is the issue of grant of interest and the rate of interest determined to be just and proper by the learned District Judge. In support of their respective contentions, Shri Patil and Shri Mundra have placed reliance on some cases. Shri Patil has placed reliance upon the cases of MSK Project India (JV) Ltd v. State of Rajasthan and anr reported in (2011) 10 SCC 573 and Krishna Bhagya Jala Nigam Ltd v. G. Harishchandra Reddy and anr reported in (2007) 2 SCC 720 . Shri Mundra has placed reliance upon the cases of Aditya Mass Communications v. APSRTC reported in (2003) 8 SCALE 37 ; Godrej Properties & Investments Ltd v. Tripura Construction and anr reported in (2003) (2) Mh. L. J. 306; B.W.L. Ltd and ors v. UOI and ors reported in 2016 (3) ARBLR 432 (Delhi) and M/s Hyder Consulting (UK) Ltd v. Governor of State of Orissa, through Chief Engineer reported in AIR 2015 856. As the award itself has been found to be passed in violation of the fundamental policy of Indian law entailing its quashing and remanding back for a decision afresh, any observations made and findings recorded in respect of rival contentions on the point of interest to be awarded or adjudged may turn academic and may even unnecessarily serve as impediments for the Arbitral Tribunal to consider and decide the case afresh in accordance with law. Therefore, it will be appropriate that this issue is left to be decided in accordance with law by the learned Arbitrator who may take into consideration these cases. 16. In the circumstances, First Appeal No. 580 of 2003 deserves to be allowed and First Appeal No. 643 of 2003 deserves to be dismissed. 17. First Appeal No. 580 of 2003 is allowed. 16. In the circumstances, First Appeal No. 580 of 2003 deserves to be allowed and First Appeal No. 643 of 2003 deserves to be dismissed. 17. First Appeal No. 580 of 2003 is allowed. The impugned arbitral award and the impugned judgment and order of the learned District Judge are hereby quashed and set aside. The case is remanded back to the learned Arbitrator for a fresh decision in the matter after considering the evidence already available on record and fresh arguments of the rival parties, in accordance with law. The learned Arbitrator may adjudicate upon the dispute and pass award as early as possible, preferably within six months from the date of this order. First Appeal No. 643 of 2003 stands dismissed subject to the observations made in this judgment. If any amount deposited by the RASL is still held by the Registry on behalf of the RASL, the same is allowed to be withdrawn by it together with interest accrued thereon. The amount permitted to be withdrawn and which has been actually withdrawn by EEI shall be subject to the result of the arbitration proceedings. Parties to bear their own costs in both the appeals.