Arbitration awards may be set aside if contrary to public policy or fundamental legal principles, emphasizing the importance of adhering to contractual terms regarding extensions and compensations.

1. In this appeal preferred under S.37 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997 (herein - after referred to as 'the Act'), the appellant has assailed the validity of order dated 2-4-2016 passed by the trial Court by which the application preferred by the appellant under S.34 of the Act has been rejected and the award passed by the Arbitral Tribunal dated 28-12-2014 has been modified insofar as it pertains to grant of interest for the post award period to 6%. In order to appreciate the appellant's challenge to the impugned award, few facts need mention which are stated infra:

2. The appellant issued Notice Inviting Tenders (NIT) on 15-3-2005 by which Tenders were invited for grant of contract for construction of Mughal Road from Bafliaz, District Poonch to Shopian (Pulwama) in the State of Jammu and Kashmir. The last date of submission of bid was 14-6-2015. The respondent submitted his bid in response to the aforesaid Notice Inviting Tenders (NIT), which was accepted and letter of acceptance was issued on 14-9-2005. Thereafter an agreement dated 8-2-2006 was executed. Under the agreement, the date of commencement of the work in question was 1-3-2006 and the contract was to be executed within a period of three years i.e. upto 28-2-2009. The total contract price as per the original agreement was Rs. 214,40,00,000/-. The relevant extract of general conditions of the contract are reproduced below :

"2. The Intended Completion Date for the whole of the works is 3 years after the start of work." (Cl. 1-1-17 and 27)

"Clause 3.1 of Part I - GCC. "The language of contract and the law governing the Contract are stated in Contract Data.""

"Clause 8(a) of Contract Data reads as "the law which applies to the Contract is the law of Union of India (Cl.3.1).""

"Clause 11 Employer's Risks.

11.1 The Employer is responsible for the excepted risks, which are (a) insofar as they directly affect the execution of the works in the Employer's country the risks of war invasion act of foreign enemies, rebellion, revolution, insurrection or military or usurped power civil war riot commotion or disorder (unless restricted to the Contractor's employees) natural calamities and contamination from any nuclear fuel or nuclear waste or radioactive toxic explosive or (b) a cause due solely to the design of the Works other than the Contractor's design."

"Clause 17. The works to be completed by the Intended Completion Date.

17.1 The Contractor may commence execution of the works on the start date and shall carry out the works in accordance with the programme submitted by the Contractor as updated with the approval of the Engineer and complete them by the Intended Completion Date."

"Clause 21. Possession of the site.

21.1 The Employer shall give complete possession of the site to the contractor fifteen days in advance of the construction programme."

"Clause 27. Extension of the Intended completion date.

27.1 The Engineer shall extend the intended completion date if a compensation event occurs or a variation is issued which makes it impossible for completion to be achieved by the intended completion date without the contractor taking steps to accelerate the remaining works which would cause the contractor to incur additional cost."

"Clause 40. Compensation Events.

40.1 The following shall be compensation events unless they are caused by the contractor:

a) The Engineer orders a delay or delays exceeding a total of 30 days.

b) The effects on the contractor of any of the Employer's Risks.

40.2 If a compensation event would prevent works being completed before the Intended completion date the Intended compl