law, which would result in a less favourable outcome for the party who is favoured by a strict reading of the law. Equity or law as an issue has been present since antiquity. Aristotle had said "an arbitrator goes by the equity of a case, a judge by the law, and arbitration was invented with the express purpose of securing full power for equity." This consideration should not be overlooked in evaluating the applicability of equity to arbitration. In broad sense equity is fairness. If Courts can't escape the basic notions of equity, arbitrators can't either. Just as Courts within law award equitable remedies when a legal remedy is insufficient or inadequate, Arbitrator may also apply equitable principles to do justice. P rivy Council had stressed on this aspect in Ramdutt Ramkissendass v. F.D. Sassoon & Co. , AIR 1929 PC 103, stating that "in a modern arbitration, the principles of equity must be applied just as they would now be applied in a court of law." Though the Code of Civil Procedure, 1908 and the Evidence Act, 1872 are not applicable in arbitration, yet the principle of natural justice, equity and fair play do apply even in such proceedings as, by the award the Tribunal decides the rights for and against the parties. It is true that arbitrators can't violate the express terms of the contract. However, when the terms of the contract are ambiguous or are silent on a particular issue or not fully settled as in the present case, nothing prevents an arbitrator from taking recourse of principles of equity. Arbitrators enjoy a degree of flexibility within four corners of law when they decide and adjudicate or rather arbitrate on the disputes. This must be respected. Highlighting the aspect of fairness and equity, the Supreme Court in F.C.I. v. Joginderpal Mohinderpal , (1989) 2 SCC 347 had observed that :
