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31. McDermott International Inc. v. Burn Standard Co. Ltd. (2006) 11 SCC 181 has been relied upon by ABG for the proposition that the conduct of the parties would be a relevant factor in the matter of construction of a contract and further that the construction of the contract is within the jurisdiction of the Arbitrator. In McDermott International, the Supreme Court, relying on D.D. Sharma v. Union of India (2004) 5 SCC 325, opined that once it is held that the Arbitrator has the jurisdiction, no further question shall be raised unless it is found that there exists any bar on the face of the Award. There cannot be any dispute as to this proposition. A distinction must, however, be drawn as to what is meant by "construction of contract" as opposed to "terms of contract". Under Section 28(3) of the Act, the Arbitrator is duty- bound to take into account terms of a contract between the parties and is accordingly required to decide the matter in accordance with the terms of the contract. The distinction between "construction of a contract" and "terms of a contract" becomes relevant where the Arbitrator fails to identify the terms of a contract from a plain and meaningful reading thereof and instead takes into account documents and materials which do not indicate what the parties intended. If the Arbitrator, as in the present case, takes recourse to the latter, the Award must fail on the ground of perversity. Section 28(3) of the Act makes it mandatory on the Arbitral Tribunal to take into account the "terms of the contract". The law is that construction of the terms of a contract is within the exclusive domain of the Arbitrator. The thrust of the 1996 Act is on intention of the parties as evident from the contract. The emphasis on the phrase "terms of the contract" under section 28(3) is to prevent an Arbitrator travelling beyond what the parties intended under the contract. The assumption is that the Arbitrator would construe the intention of the parties in accordance with a correct understanding of the terms of the contract. In the present case, the Arbitrator has disregarded the unambiguous intention of the parties to be bound by the tender conditions as stipulated in several documents including the Offer Letter, Letter of Acceptance and the agreement of 2 April, 2004 and has instead relied on an isolated letter which does not find mention in any of the relevant correspondence exchanged between the parties and is also contradictory to the clear terms of the contract. Hence, where an Arbitrator fails to identify the correct terms of a contract, it cannot be said that the view taken by the Arbitrator is a plausible view and would accordingly pass the test of section

34. If an arbitrator has failed to identify the correct terms of a contract and has consequently misconstrued the contractual terms, a Court can revisit the terms to ascertain whether the construction is irrational and should be integrated with.

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32. McDermott International opined that the component of public policy would depend on the nature of transaction where the pleadings of the parties and the materials on record would be relevant. This position was repeated in Centrotrade Minerals & Metals Inc v. Hindustan Copper Ltd. (2006) 11 SCC 245. McDermott has also been relied upon by ABG on the point of conduct of parties and correspondence exchanged being a vital tool for construction of a contract. On this score, the distinction between construction of contract and terms of contract are reiterated with the additional point that the contract between the parties was clearly meant to be based on the terms of tender (clause 3 of the formal agreement dated 2 April, 2004). Godhra Electricity Co. Ltd. v. State of Gujarat AIR 1975 SC 32, relied on by the Arbitrator makes it clear that the conduct of the parties and correspondence exchanged becomes relevant only where the terms of a contract are ambiguous. Notably, the Arbitrator failed to refer to this decision in its proper perspective.

33. The law as pronounced in McDermott International Inc v. Burn Standard Co. Ltd. (2006) 11 SCC 181 read with Godhra Electricity Co. Ltd. vs. The State of Gujarat AIR 1975 SC 32 that conduct of the parties would be an aid in the construction of the contract where the contractual terms do not lend clarity to what the parties intended has to be seen in the foreground of the findings of the Arbitrator in reliance of the documents shown by ABG. The pre-contract negotiations do not refer to the controversial letter dated 6 October, 2003 in which KoPT allegedly agreed to pay Service Tax at 8%. The formal agreement of 2 April, 2004 also stipulated that ABG would implement the project strictly in accordance with the conditions contained in the tender document. The Arbitrator, however, erroneously construed the pleading of KoPT in its counter-statement as the controversial letter of 6 October, 2003 being issued through inadvertence. Rashtriya Ispat Nigam Limited v. Dewan Chandra Ram Saran (2012) 5 SCC 306 was a decision on the liability to pay service tax where the Supreme Court held that since service tax is an indirect tax, it is possible for an assessee to enter into a contract to shift the liability of service tax.