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Bombay High Court
Oil And Natural Gas Corporation Limited vs Enterpose Gtm Four Les Travaux on 26 May, 2025
Author: A.S. Chandurkar
Bench: A.S. Chandurkar
2025:BHC-OS:8257-DB
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO. 656 OF 2014
IN
ARBITRATION PETITION NO. 584 OF 2008
Acergy France and Volker Stevins
Beggermaatschappy N V (Consortium) ..... Appellant
VERSUS
Oil and Natural Gas Corporation Ltd. ..... Respondent
ALONGWITH
NOTICE OF MOTION NO. 641 OF 2016
IN
APPEAL NO. 656 OF 2014
Enterpose Gtm Four Les Travaux
Petroliers Maritimes and Volker
Stevins Baggermaatschappy N V ..... Applicant
VERSUS
Oil and Natural Gas Corporation Ltd. ..... Respondent
ALONGWITH
APPEAL NO. 83 OF 2015
IN
ARBITRATION PETITION NO. 584 OF 2008
Oil and Natural Gas Corporation Limited ..... Appellant
VERSUS
Enterpose Gtm Four Les Travaux
Petroliers Maritimes and Volker
Stevins Baggermaatschappy N V ..... Respondent
-----------------------------
Mr. Hiroo Advani a/w. Ms.Sanjana Khatri, Mr.Navdeep Dahiya i/b.
Advani & Co. for the Appellant in APP/656/2014 and for the
Respondent in APP/83/2015.
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Mr. Pradeep Sancheti, Senior Advocate a/w. Ms. Pallavi Bali, Ms. Usha
Singh, Mr.Kundanlal Patil i/b. Vyas & Bhalwal for the Appellant in
APP/83/2015 and for the Respondent in APP/656/2014.
-----------------------------
Coram : A.S. Chandurkar & Rajesh S. Patil, JJ.
Date on which the arguments concluded : 2nd MAY 2025
Date on which the judgment is pronounced : 26th MAY 2025
JUDGMENT ( PER - RAJESH S.PATIL, J.) :
1. These cross appeals have been filed by the original claimants
and by the original respondent – ONGC, under Section 39 of the
Arbitration Act, 1940 thereby challenging the judgment passed by the
learned Single Judge dated 12th August 2014 which had partly
allowed the ONGC’s Arbitration Petition filed under Section 30 of the
Arbitration Act 1940.
2. The parties are hereafter referred for convenience as per their
nomenclature before the Arbitral Tribunal.
3. The respondent- ONGC had invited tenders for the detailed
design and construction of 26″ submarine gas-cum-oil pipeline and
24″ submarine oil trunk pipeline between Uran shore refinery and the
HRA platform by a tender notice dated 25 th December 1987. The
claimant submitted its bid for the work contemplated under the said
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tender. The bid of the claimant was accepted and the claimant was
awarded the order by a communication dated 7 th April 1989. Pursuant
to which a contract was executed between the claimant and the
respondent – ONGC on 6th November 1989 for four works viz.
i) Installation of 24″ dia (diameter) oil pipeline from
HRA to Uran.
ii) Installation of 26″ dia, gas-cum-oil (referred to
hereinafter as the “gas pipeline”) from HRA to Uran.
iii) Modification of the HRA platform including hook-
up with existing facilities for both oil and gas facilities.
iv) Uran modification, including hook-up with existing
facilities for both oil and gas facilities.
4. As per the contract Clause no.18.15, the scheduled date for
completion of the entire works was 15th May 1990. However, there
was a provision for a grace period of one month or thirty days from
the extended date of completion if the completion date was extended
due to excusable delay under the provisions of the contract and the
period of thirty days was granted for deferring the levy of liquidated
damages. According to the statement of claims, the claimants
commenced works as per the contract and completed them as follows:
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i) Oil pipeline and all related facilities at HRA and
Uran on 7th July 1990.
(ii) Gas pipeline and all related facilities at HRA and
portion of related Uran facilities on 1st August 1990.
iii) Balance Uran facilities of Gas system on 8 th August
1990.
5. The respondent ONGC on 30th November 1990 issued Partial
Completion Certificate, for the works carried out by the Claimants.
The Claimants on the same date issued a letter to the Respondent
requesting them to issue the Final Certificate and also informing about
day to accept the entire work as per Clause No.8.6.2. The Respondent
– ONGC by their letter dated 7 December 1990, addressed to the
claimant informed that the works carried out by the claimant have not
been completed as stipulated under the contract, therefore the final
certificate was not issued.
6. In view of the delay caused by the Claimant in completing the
work as per the contract, the Respondent – ONGC exercised its right to
levy liquidated damages. By its communication dated 31 March 1995
the Respondent – ONGC sought to encash the bank guarantee in view
of the breaches committed by the Claimants. In order to stop the
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respondent-ONGC from encashing the bank guarantee, the claimant
filed a suit before the Civil Judge Senior Division at Panvel. In the said
suit an interim application was made wherein order was passed by the
trial Court restraining the respondent-ONGC encashing the bank
guarantee. Being dissatisfied with the order passed by the trial Court,
the respondent- ONGC filed Civil Revision Application before the High
Court. In the said Civil Revision Application, learned Single Judge of
this Court by the order dated 23rd February 1998 directed the Bank of
claimant to pay an amount claimed by the respondent-ONGC under
the bank guarantee and further held that in the event of the Arbitrator
holding that ONGC was not entitled to invoke the bank guarantee, the
said amount should be refunded to the claimant along with interest at
the rate of 15 % p.a. from the date of payment till the date of refund.
A punch list was prepared on 29 th August 1998 thereby displaying the
works still pending to be done by the claimant.
7. In view of both the parties not arriving at a settlement and there
being dispute between them both the parties appointed one arbitrator
each as per Clause 16.2 of the contract.
8. The Claimants filed their Statement of Claims, before the
Arbitrators along with the relevant documents. The Respondent –
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ONGC filed their reply to the statement of the claim and also filed
their Counter Claim.
9. The Claimants in its Claim Petition claimed a total a sum of {i}
US dollars 6,330,702.22, {ii} a sum of DFL 1,766,167.00, {iii} a sum
of FRF 2,105,604.17 and {iv} a sum of Rs.53,08,190.62, from the
respondent and further sought that the Claimants are entitled to
extension of the schedule completion date, and are not liable to pay
any liquidated damages under Clause No.8.5.3. of the contract and
further a direction was sought to the respondent that they are not
entitled to encash the Bank Guarantee. The said Bank Guarantee
dated 18 August 1989, be returned to the claimant and the claim any
made by the respondent pursuant to the Bank Guarantee be waived
and the respondent to be refrained from making any claim thereunder.
10. The respondent-ONGC filed their reply to the claim thereby
opposing the claim made by the claimant and also filed their counter
claim pursuant to which the ONGC sought liquidated damages of US
Dollars 780,245.50, FRF 3,314,211.14, DGL 580,796.46 and Indian
Rs.169,243.01 and also sought expenses incurred by the respondent-
ONGC in defending the legal proceedings initiated by the claimant in
Paris.
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11. Before the Arbitrators Issues were not framed and matter
proceeded further. The claimant in all examined two witnesses in
support of their claim. Both the witnesses were cross examined by the
counsel appearing for the respondent-ONGC. In response the
respondent-ONGC examined two witnesses. The said two witnesses of
the ONGC were cross examined by the counsel appearing for the
claimant. As there was difference of opinion between the Arbitrators,
by Order dated 29th May 1999, the Arbitrators informed the parties
that they were unable to agree on the award and both the arbitrators
advised the parties to appoint an Umpire.
12. Before the Umpire a further affidavit of witness No.2(Mr.
Jacques Menochet) was filed on behalf of the claimant. The said
witness no.2 was further cross examined by the counsel appearing on
behalf of the respondent-ONGC. Further an affidavit of examination
chief, of witness no.3 (Mr. Yves Allegre) on behalf of the claimant was
filed. The said witness was cross examined by the counsel appearing
on behalf of the respondent-ONGC. Thereafter both the counsel on
behalf of their respective parties argued their matter. After hearing
both the parties, the learned Umpire passed his Award dated 10 th
December 2007. By the said Award the claimant’s claim Petition was
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partially allowed.
13. Being dissatisfied with the Award , partially allowing the claim,
the respondent-ONGC filed Arbitration Petition under Section 30 and
33 of the Arbitration Act, 1940 before the Single Judge of this Court.
The original Claimants chose not to challenge the award by which
certain claims got rejected. Therefore, the claims which were rejected
by the Umpire, attained finality, being not challenged by the original
Claimant. Therefore, the Single Judge of this Court while dealing with
the Arbitration Petition filed under Section 30 and 33 of the
Arbitration Act, 1940 was only supposed to deal with those claims
which were allowed by the learned Umpire. The Single Judge of this
Court, after hearing both the parties by the judgment dated 12 th
August 2014 partially allowed the Arbitration Petition.
14. Being dissatisfied with the judgment dated 12 th August 2014
passed by the Single Judge of this Court, thereby allowing few of the
claims, the respondent-ONGC has filed Appeal No.83 of 2015. So also
the original claimant being dissatisfied with the judgment dated 12
August 2014, whereby certain claims which were allowed by the
Umpire being set aside by the Single Judge, the claimants have filed
Appeal No.656 of 2014. Both the Appeals are clubbed together and
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heard.
15. We have heard counsel for both the sides and with their help
have carefully considered the material produced on record before us.
16. We are mindful of our limitations in appeal, and in particular,
those enunciated by the Supreme Court in Wander Limited v Antox
India Pvt Ltd. 1990 (Supp) SCC 727. In paragraph 14, the three-Judge
Bench of the Supreme Court said:
“14. The appeals before the Division Bench were against the
exercise of discretion by the Single Judge. In such appeals,
the Appellate Court will not interfere with the exercise of
discretion of the court of first instance and substitute its own
discretion except where the discretion has been shown to
have been exercised arbitrarily, or capriciously or perversely
or where the court had ignored the settled principles of law
regulating grant or refusal of interlocutory injunctions. An
appeal against exercise of discretion is said to be an appeal on
principle. Appellate Court will not reassess the material and
seek to reach a conclusion different from the one reached by
the court below if the one reached by the court was
reasonably possible on the material. The appellate court
would normally not be justified in interfering with the
exercise of discretion under appeal solely on the ground that
if it had considered the matter at the trial stage it would have
come to a contrary conclusion. If the discretion has been
exercised by the Trial Court reasonably and in a judicial
manner the fact that the appellate court would have taken a
different view may not justify interference with the trial
court’s exercise of discretion. After referring to these
principles Gajendragadkar, J. in Printers (Mysore) Private Ltd.
v. Pothan Joseph: (SCR 721) :
“… These principles are well established, but as has been
observed by Viscount Simon in Charles Osention & Co. v.
Johnston ‘. …the law as to the reversal by a court of appeal of
an order made by a judge below in the exercise of his
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due only to the application of well settled principles in an
individual case.”
The appellate judgment does not seem to defer to this
principle.”
(Emphasis added)
17. In the recent decision of 14th March 2022 in Shyam Sel & Power
Ltd & Anr v Shyam Steel Industries Ltd, 2022 SCC OnLine SC 313 the
Supreme Court reiterated the law in Wander Ltd and Monsanto in
paragraphs 11, 29, 31,34,35,36. The Supreme Court went on to hold
that the appellate court must assess whether the discretion exercised
by the learned Single Judge was arbitrary, capricious or perverse.
18. The main issues in the present proceeding are (i) whether the
claimants were responsible for the alleged delay in completion of the
project or whether the delay was held on account of the fault of the
respondent – ONGC, and what is the quantum of this delay. (ii)
Further, whether any liquidated damages are to be paid to the
Claimants or to the Respondent. (iii) Further, whether respondent-
ONGC is right by claiming that, they have compensated the claimant
by adjusting the amount claimed by the claimant, in the assessment of
the liquidated damages and/or by granting extension of time in the
computation of the liquidated damages.
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19. The three work projects which the claimants were supposed to
complete; was to construct two pipeline viz. Gas pipeline and Oil
Pipeline, and the third work project was tie-in the platform in Bombay
(High Sea) to Uran (Land). The project was to be completed by 15
June 1990 i.e., after schedule completion day calculating the grace
period as per the contract.
20. As regards the oil pipeline to Uran, the same was completed on
9th June 1990. With regard to the gas pipeline the same was
completed on 1st August 1990 and third work project being tie-in was
completed on 8th August 1990. Accordingly, the oil pipeline was
completed in time. However, as regards the gas pipeline there was
delay of 47 days. The Umpire awarded time extension of 24 days for
the gas pipeline. Therefore, what was not allowed was 23 days delay
in completing the gas pipeline. Hence, liquidated damages at the rate
of USD 32,669 per day was granted which amounted to total of USD
751,387.
21. As regards the tie-in platform was concerned there was delay of
54 days. The Umpire awarded time extension of 24 days and
additional 3 days extension since the work could not be completed
before the gas pipeline was completed. Out of the delay caused for tie-
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in the liquidated damages levied by the Umpire at the rate of USD
2,084 per day, which amounted to total USD 8,336. Therefore, the
total of the liquidated damages awarded by the Umpire was USD
7,59,723..
22. It is a matter of record that in the original arbitration
proceedings “Issues” were not framed. The learned Umpire in its
award dated 10th December 2007, in paragraph 77 has held that
“issues have not been formally drawn nor was it possible to frame
issues properly in view of the manner in which the statement of claim
and the pleadings have been drawn, as I have already pointed out.
The counsel for the neither parties even suggested that issues or points
for determination should be framed by me presumably as almost the
entire evidence was led before the learned arbitrators who differed .”
23. So also, in paragraph no.22 of the award it was held by the
learned Umpire “Before coming to the reply to the statement of
claimant, I must point out that the statement of the claim is devoid of
several material particulars which one would normally expect in a
statement of claim. In considering the claim, it is often difficult to
determine as to which allegation or averment in the statement of
claim pertains to which particular claim, and it is only in the course of
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oral argument this became somewhat clear. The material on the basis
of which claims are made, has again generally not been disclosed in
the statement of claim and during the hearing at several times
summaries/synopsis prepared and submitted by the claimant from
some of the documents on record had to be resorted to, to understand
the claims. In his arguments, the learned counsel for the claimants
argued the claim as based on summaries contained in Volume I and
Volume II of the claim. The summaries, however, have, admittedly not
been proved and they cannot be exhibited or relied upon except to
understand the claim. There is no evidence as to how the summaries
were prepared or showing that they are correct. ….”
24. The Learned Single Judge while hearing the arbitration petition
under Section 30 of the Arbitration Act, has not interfered with the
findings as recorded by the Learned Umpire with regard to claims as
made in paragraph no.11 (g), paragraph no.11 (h) read with
paragraph no.9(h) and 9(ii)(c), paragraph no.11(m), paragraph
no.11(u) and paragraph no.11(w). The learned Umpire considered
the claim for time extension of 1.299 days for completion of the
project along with cost compensation. ONGC had claimed that it had
adjusted the cost in calculating liquidated damages. This stand of the
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ONGC was not accepted by the learned Umpire. As regards the claim
for liquidated damages, the same was allowed partially. The learned
Single Judge on a reconsideration of the matter held that there was no
perversity in these findings recorded by the learned Umpire
warranting interference under Section 30 of the Arbitration Act, 1940.
These are concurrent findings of facts recorded at two stages. We find
no reason to interfere with the said findings.
25. As regards claim no.1 which is mentioned in paragraph no.9 (1)
(b) of the statement of claim, the claimant has claimed USD 1,50,000
and the time extension of 12.670 days for carrying out repairs due to
damage caused to the pipeline by the drilling rig ED-HOLT. The
learned Umpire held that the damage was caused by vessels belonging
to respondent-ONGC contractor and not belonging to the claimant.
The contention of the respondent-ONGC was that there should have
been personnel and patrol all along the pipeline to protect it.
However, the learned Umpire rejected the said explanation and
granted extension of 6 days for delay caused. However, the Single
Judge held that the monetary claim of USD 1,50,000 was rejected for
want of evidence. The learned Single Judge held that as per Clause
41.8 of the contract it was responsibility of the claimant to protect the
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pipeline. The learned Umpire rejected the claim for cost of repairs.
Therefore, liability could not have been imposed on the respondent-
ONGC. The claim for extension of time was prohibited by Clause 41.8
and it could not have been granted by the learned Umpire.
26. According to us, going by the terms of the contract more
particularly clause no.41.8 which reads as under :
Clause no.41.8 Damages/Defects in coated Linepipes
a) Contractor shall have the responsibility of rectifying all the damages/ defects
caused to the coated linepipes for any reasons whatsoever including the extra quantity
of coated linepipes after taking the delivery from the coating contractor including but
not limited to the following phases of work:
i) During offshore transportation of coated line-pipes
ii) During laying / installation at offshore
iii) During handing over to the company at the company’s designated warehouse
at bombay .
iv) During handling by the contractor at all the places
Company will not accept any extra coated line-pipes if it is found to be damaged /
defective while taking delievery at yard. If the contractor delivery’s damaged /
defective coated line-pipes, company shall deduct the money from any payment due to
the contractor in lieu of damaged / defective coated line-pipes.
b) During the laying of the pipelines if any damage(s) occur to the pipelines , then
the contraactor shall replace the damaged pipelines segment without any time and cost
efffect to the company. However , contractor can utilise extra coated line-pipes supplied
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of damaged segment and company shall deduct the cost of such coated line-pipes from
the contractor’s invoices. If , however, the quantity of coated line-pipes for rectification
works falls short, the contractor shall arrange coated line-pipes and complete the
rectification without any time and cost effect to the company.
27. In such a situation, when Clause 4.18 specifically states about it
being the responsibility of the claimant to protect the pipeline with a
further stipulation that in case of any damage to the pipelines, the
contractor would replace the damaged pipeline segment without any
time and cost effect to the ONGC, according to us, there is no
perversity in the finding recorded by the learned Single Judge that the
said part of the award was liable to be set aside. We agree with what
has been held by the learned Single Judge in paragraphs 24 to 30 of
the judgment.
28. As regards the claim no.2, which is referred in paragraph no.11
(1) read with paragraph no.9(f), the claimant claim a sum of USD
1,413,677.80 and extension of time of 7.583 days as the works as
sleep into monsoon season due to obstruction caused by the barge
HHI which did not belong to claimant as per their case. The learned
Umpire was granted USD 400,300 and time extension of 4 days. The
Umpire held that the respondent-ONGC had not factually denied that
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the claimant’s barge DLB-801 was prevented from mooring in the
correct manner on account of HHI barge. The learned Single Judge set
aside both the claims of USD 4,00,000 and time extension and held
that the respondent has specifically denied the same in its written
statement.
The learned Single Judge has found that though in paragraph
132 of the award the learned Umpire had held that no cogent
evidence in this regard was produced by the claimant. Despite this
finding, the claim of USD 400000 by way of cost compensation and
extension of four days was granted. It has been held that the learned
Umpire did not interpret any terms of the contract but had decided
contrary to the terms of the contract and had allowed the claim
without any evidence. The main contention of the claimant is on the
basis of daily status report. It was found that in the statement of claim,
the claimant did not rely on the daily status report. We are of the view
that the daily status report has not been proved by way of evidence.
Therefore, according to us, the view taken by the learned Single Judge
is the correct view. The daily status reports did not indicate that the
parties had agreed to the contents of the entries and /or data
mentioned therein.
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29. As regards the claim no.3, which is mentioned in paragraph
no.11 (t), the claimant has claimed USD 23,750.888 as cost of standby
of vessel “Big Orange”, due to the spillage of oil, gas leak and fire
caused by ONGC for its contractor which prevented the vessel “Big
Orange”, access to the sight. The learned Umpire held that the factual
basis of the claim was not disputed as the quantum was done as per
contract rate. The learned Umpire allowed the claim. However, the
learned Single Judge overruled this claim based on the fact that
respondent-ONGC had denied the liability to pay the said claim in
paragraph 51 of their statement of defence. It was held that the basis
of allowing the claim by the learned Umpire on the alleged admission
was a patent error on the face of the award being contrary to and in
ignorance of the written statement.In our opinion the view taken by
the learned Single Judge is a plausible view, which is supported by
cogent reasons in paragraphs 56 to 60 which we respectfully affirm.
30. As regards the claim no.4, which is mentioned in paragraph
no.11(d) read with paragraph no.9 (I) (a), the claimant has claimed
DFL 490,800 and time extension of 9 days due to the standby of
dredging vessel “Hardinxveld”, as pilots were not provided by Bombay
Port Trust, due to dispute between the Bombay Port Trust and the
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respondent-ONGC. The learned Umpire held that the ONGC admitted
there was a delay of 12.375 days due to non giving of pilots by
Bombay Port Trust. Based on Clause no.8.2.2 of the contract the
learned Umpire granted time extension 9 days, as there was failure to
give access to site and that the delay taken collectively would affect on
the critical path.
The learned Single Judge found that in the written statement there
was no admission on the part of the ONGC that the delay of 12.375
days was due to non-provision of pilots by the Bombay Port Trust. The
claim for extension of 9 days was on the basis of alleged admission of
delay by the ONGC. It was further found that admissions of the
witness examined by the claimant that the ONGC had denied its
liability in that regard had been ignored by the learned Umpire. On
the ground that the extension of 9 days was allowed without there
being any evidence, the same was set aside. In our opinion the view
taken by the learned Single Judge is supported by material on record.
The reasons assigned in paragraphs 70 to 73 are thus sufficient to
sustain the same.
31. As regards the claim no.5, which is mentioned in paragraph
no.11(x) of the claim petition, the claimant claim USD 64,906 on
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account of standby resources due to oil/water leak at the Uran site
caused by negligence of the ONGC’s personnel and for the assistance
provided by the claimant. The learned Umpire held that there was no
requirement of providing blinding arrangements and if the ONGC
required the same, they were required to give instructions as per
Clause 5.8.2 of the contract. The learned Umpire accordingly granted
the entire claim.
The learned Single Judge referred to the written statement and
specially paragraph 55 to hold that the ONGC had not admitted any
alleged negligence. He further held that the statement of claim was
vague without any breakup or proof in support of that claim.
Reference was made to the deposition of the witness examined by the
ONGC that it was the obligation on the part of the claimants to
provide the blinding arrangement to which there was no cross-
examination. On the ground that the learned Umpire relied upon
unproved and disputed documents while ignoring the oral evidence,
that part of the award was set aside.
Similar contentions as raised before the learned Single Judge
are reiterated. We do not find any reason whatsoever to take a
different view of the matter in view of what has been observed in
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paragraph 79 to 83 of the impugned order.
32. As regards the claim no.6, which is mentioned in paragraph
no.11(o) and (p) and paragraph no.9 (2) (c) of the claim petition, it
was comprising of three items. The first was time extension for
completion of the work, the second was claim for USD 45,433.60 on
account of disruption caused by the ONGC’s causing an oil spillage
over the platform and the third was cost amounting to USD
41,313.30 towards standby charges due to non issuance of hot work
permit. The respondent-ONGC has challenged the part of the award
wherein the learned Umpire granted USD 41,313.30 towards standby
charges due to non issuance of hot work permit. The learned Umpire
held that the factum of all these issues were not denied. The
respondent-ONGC has barely granted time extension of 0.167 days
adjusting it in the liquidated damages and in view of this admission,
the learned Umpire granted time extension of 0.167 days. As regards
the grant of claim for stand by charges due to non issue of hot work
permits due to gas leak during break down, the learned Single Judge
noted that such permit was not given or was cancelled in conformity
with Clause 35 and 42.4 (iv) of the contract. This deposition of
ONGC’s witness was not considered by the learned Umpire nor were
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any reasons given in the award. The claim was found to have been
allowed in the absence of any evidence.
We do not find any justifiable reason to interfere with this
finding which has been recorded on the basis of material on record.
The reasons contained in paragraphs 89 to 91 are sufficient to sustain
the same. The learned Single Judge also observed that the daily status
report and standby rates on which reliance was placed were neither
pleaded in the statement of claim nor they were proved in the
evidence. In our view, the view taken by the learned Single Judge is
the only possible view and hence the same need not be set aside.
Hence, no case is made out to set aside the said view taken by the
learned Single Judge of this Court.
33. As regards clause No.9 (1) (b) averments made in the statement
of claim are vague no particular as such has been given as regards the
said claim. There is no reliable evidence as to how the damage was
caused to the pipeline was ascertained. Clause 41.8 of the contract
mentions that it is the responsibility of claimant to rectify the damage
and effect caused to the pipes. So also the witness of the claimant in
his cross examination at page 826 volume (iii) admitted that the
insurance company has paid them compensation in respect of the
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pipeline and also compensated for the time effect. Even with this kind
of evidence before the learned Umpire the extension of time of 6 days
as against the claim of 12.67 days. In our view, Clause no.41.8 (b) and
the evidence laid by the witness of the claimant as regards the
insurance, the learned Single Judge of this Court was right in setting
aside the said award with regard to claim as mentioned in paragraph
no.9(1)(b) of statement of claim.
34. As regards interest @ 10% per annum awarded by the learned
Umpire, the same has been confirmed by the Learned Single Judge by
holding it to be reasonable. It has been further clarified in paragraph
no. 115 of the judgement dated 12 th August 2014, that the rate of
interest awarded by the Learned Umpire would be only on the claims
awarded by the Learned Umpire. We are agreeing by the view taken
by both the learned Umpire and the learned Single Judge.
35. The Learned Umpire and the Learned Single Judge, have
concurrently held that the claims were not barred by the law of
limitation since the second completion certificate is dated 09 th
December 1993, and the notice invoking the Arbitration Agreement
was issued by the claimants in the month of May 1995. We are of the
opinion that the findings of the Learned Single Judge on the issue of
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limitation is concerned in the correct view and the same does not call
for any interference.
36. As per Clause no.8.5.2 of the contract, if the
contractor/claimant fails to complete the entire works before the
respective scheduled completion dates, he was liable to pay liquidated
damages. The said Clause no.8.5.2 of the Contract reads as under :
” 8.5.2. If the Contractor fails to complete the entire Works or any
part thereof comprising the total turnkey project before the respective
Scheduled Completion Dates fixed for the entire Works or part thereof or at
any time repudiates the Contract before completion of the Works, the
Company may without prejudice to any other right or remedy available to
the Company under the Contract,
i) recover from the Contractor as ascertained and agreed, liquidated
damages, and not by way of penalty, a sum equivalent to 3% of the
total Contract Price for each month’s delay (prorata for part thereof)
beyond the Scheduled Completion Date subject to a maximum of 10%
of the total Contract Price even though the Company may accept delay
in completion after the expiry of the Scheduled Completion Date,
AND/OR
ii) arrange for the Works or part of the Works in default by Contractor
to be carried out elsewhere on the account and at the risk and cost of
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on the Contractor. The Company, in such event, may not terminate the
Contract ;
AND/OR
iii) terminate the Contract or a portion of part of the Work
thereof and if so desired arrange for the Work in default by Contractor
to be carried out elsewhere.”
The learned Umpire by his Award dated 10 th December 2007 in
paragraph no.198 held that the claimant is entitled to total claim of
USD 17,56,569 plus Euros 7,66,860 and INR 1,69,143. It is further
held that the respondent-ONGC, by way of Liquidated Damages is
entitled to recover USD 7,59,723. After subtracting the amount
receivable by the respondent-ONGC from the claimant’s claim the
amount payable to the claimant will be USD 9,86,846 plus Euros 7,66,
860 and INR 1,69,143.
37. In the Arbitration Petition filed by the Respondent-ONGC
challenging the Award dated 10th December 2007, passed by the
Learned Umpire, the Learned Single Judge by its judgment dated 12
August 2014 set aside, part of the claims granted to the claimants, in
total of USD 6,79,970.30. The Learned Single Judge set aside the
claim no. 9(1)(b), claim no. 11(1) read with 9(f), claim no. 11(t),
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11(x), 11(o), 11(p) & 9(II)(c).
38. The learned Single Judge while considering the challenge to the
award on the question whether Respondent-ONGC has proved its
claim for Liquidated Damages, has held that considering the oral
evidence led by the parties, the view taken by the Learned Umpire is
not a perverse finding and cannot be interfered with, under Section 30
of the Arbitration & Conciliation Act, 1940. In our opinion, this
concurrent finding recorded is a plausible view after considering the
evidence led by the parties. Therefore, we are of the view that no
interference is warranted.
39. On behalf of the Claimant the following judgments were
referred :-
(a) Associate Builder V/s. Delhi Development Authority
reported in (2015) 3 SCC 49
(b) Atlanta Limited V/s. Union of India reported in (2022) 3
SCC 739.
(c) Trammo AG V/s. MMTC Limited reported in (2019) SCC
Online Del.7337
(d) State of UP V/s. Allied Constructions reported in (2003) 7
SCC 396.
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(e) NTPC Limited V/s. Deconar Services Private Limited
reported in (2021) 19 SCC 694.
(f) Karamchand Thapar v/s. MTC Limited decided by the
Single Judge of Delhi High Court reported in
Manu/DE/1064/2022.
(g) Peak Chemical Corporation INC V/s. National Aluminum
Company Limited reported decided by the Single Judge of Delhi
High Court in OMP/160/2005.
(h) Hindustan Construction Company Limited V/s. National
Highways Authority of India reported in (2024) 2 SCC 613.
40. As regards the judgments referred by the claimants are
concerned:-
(i) In Associate Builder (supra), the Supreme Court held that none
of the grounds contained in Section 34(2)(a) deal with the merits of
the decision rendered by an arbitral award. It is only when an arbitral
award is in conflict with public policy of India as per Section 34(2)(b)
(ii), that merits of an arbitral award are to be looked under certain
specified circumstances.
(ii) Atlanta Limited (supra) – The Supreme Court held that by
interpreting the clauses of the contract and by going to great lengths
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its plea that it was entitled to extension of time to execute the
contract, the Division Bench of the High Court under Section 39 ought
not to have sat over said decision as an Appellate Court seeking to
substitute its view for that of the Arbitrator.
(iii) Trammo AG (supra) – In Trammo, the learned Single Judge
of Delhi High Court held that in awards where amounts claimed and
awarded are in foreign currency, while not specifying the rate of
conversion in the award may not invalidate the award, it is an
essential good practice for awards to specify the rate of conversion
applicable, unless there are extenuating circumstances. Both the
parties would then be aware of their respective liabilities or
entitlements and the same would be crystalized on that date.
(iv) Allied Constructions (supra) – The Supreme Court held that the
power of Court to interfere is restricted by virtue of Section 30 – the
Court cannot reappraise the evidence – Interpreting a contract is
matter within the jurisdiction of the Arbitrator – Unless one or the
other condition under Section 30 of the Act is satisfied, the award
cannot be set aside.
(v) In Hindustan Construction Company Limited (supra) the
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primary contract interpretation, thus, create pathways to the kind of
review which is forbidden under Section 34. The Division Bench’s
approach, of appellate review, so to say (under Section 37), and
conclusion drawn by it, resulted in displacing the majority view of the
Tribunal, and in many cases, the unanimous view, of other Tribunals,
and substitution of another view. As long as the view adopted by the
majority was plausible, such a substitution was impermissible.
(vi) In NTPC Limited (supra) the Supreme Court held that the
Court does not sit in appeal over an award passed by an Arbitrator.
Further, where the Arbitrator has taken a possible view, although a
different view may be possible on the same evidence, the Court would
not interefere with the award. For the objector/appellant in order to
succeed in their challenge against an arbitral award, they must show
that the award of the Arbitrator suffered from perversity or an error of
law or that the Arbitrator has otherwise misconducted himself.
41. In the present proceedings, admittedly, Issues were not framed,
and it was held by the Umpire that it was not possible to frame issues
properly in view of the manner in which the statement of claim and
pleadings being drawn. The learned Single Judge has confirmed
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certain claims as decided by the Umpire, and has set aside certain
claims as decided by the Umpire, based on his findings that the same
suffered from perversity. There cannot be any dispute about the
principles of law as held by the Supreme Court in the above citations.
However, in the present proceedings, considering the reasons given by
the learned Single Judge while reversing few of the claims we find
that cogent reasons have been given in that regard. We are in
agreement with the said reasoning of the learned Single Judge in the
present proceedings.
(vii) In Peak Chemical Corporation INC (supra) the learned Single
Judge of Delhi High Court was considering an arbitration petition filed
under Section 34 of the Arbitration & Conciliation Act, 1996, wherein
there was a delay of four years in pronouncing the award by the
Arbitral Tribunal. The learned Single Judge held that the impugned
award cannot be set aside on the sole ground of delay in
pronouncement of the award. In the present proceedings, there was a
delay in pronouncement of the award by the learned Umpire after
proceedings were closed for passing of the award, however, on the
said ground, the award has not been set aside. There is no reason to
take a different view of the matter.
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42. In paragraph 90 of the award, the learned Umpire, has
considered the issue of exchange rates of foreign currency. The
reasons for adopting that course has been indicated in the Award. The
said view of the learned Umpire does not call for interference.
43. The respondent-ONGC the following judgments were referred :-
(i) Seth Mohanlal Hiralal V/s. State of M. P. reported in (2003) 12
SCC 144.
(ii) K. P. Poulose V/s. State of Kerala & Anr reported in (1975) 2
SCC 236.
(iii) Maa Ashish Textile Industries Private Limited V/s. National
Insurance Company Limited reported in 2019 SCC OnLine Bom 887.
(iv) Unibros V/s. All India Radio reported in 2023 SCC OnLine SC
1366.
(v) State of Rajasthan & Anr V/s. Ferro Concrete Construction
Private Limited reported in (2009) 12 SCC 1.
(vi) Food Corporation of India V/s. Chandu Construction & Anr
reported in (2007) 4 SCC 697.
44. We are now considering the judgments referred on behalf of the
respondent – ONGC :
(i) In Seth Mohanlal Hiralal (supra), the Supreme Court held that
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Misconduct is complete if the Arbitrator on the face of the award
arrives at an inconsistent conclusion.
(ii) In K. P. Poulose (supra), the Supreme Court held that award can
be set aside when the Arbitrator has misconducted himself or the
proceedings.
(iii) Similarly, in Unibros (supra), the Supreme Court held that
public policy of India, includes amongst others compliance with
fundamental policy of Indian law, need for judicial approach,
compliance with natural justice, Wednesbury Principles of
reasonableness and patent illegality.
(iv) In Ferro Concrete Construction Private Limited (supra), the
Supreme Court held that if the award is not based on any evidence, it
amounts to misconduct.
(v) In Food Corporation of India (supra), the Supreme Court held
that the word ‘misconduct’ has not been defined in the Act.
Nonetheless, the word ‘misconduct’ in Section 30(a) of the Act does
not necessarily only comprehend or include misconduct or fraudulent
or moral lapse but does comprehend and include actions on the part
of the Arbitrator which on the face of the award are opposed to all
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rational and reasonable principles resulting in an excessive award or
unjust result.
(vi) Similarly, the learned Single Judge of this Court in Maa Ashish
Textile Industries Private Limited (supra) held that the scope for
interference under Section 34 is very narrow and unless the Court
comes to a conclusion that the decision was perverse, the Court should
not interfere with the award. The finding of the Arbitrator was
perverse as he has taken into account something irrelevant and has
ignored the vital evidence to arrive at a decision.
45. The principles of law as cited in the above judgments have been
borne in mind while deciding the present proceedings. The learned
Single Judge has considered the law as laid down by the Supreme
Court and has accordingly while dealing with the present proceedings,
considered the evidence on record. We find no perversity in the said
findings of the learned Single Judge.
46. Keeping in mind the law laid down as discussed above, and the
fact that we are dealing with an appeal under Section 39 of the
Arbitration Act, 1940, once we find that the decision of the learned
Single Judge is a plausible one – not arbitrary, capricious or perverse –
then we would not be justified in substituting our view for that of the
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learned Single Judge.
47. Returning to the Wander v Antox principle, we find that view
the learned Single Judge was not merely plausible. It was the only
possible view in the circumstances of the case, and one with which we
are entirely in agreement.
48. After a careful consideration of the rival submissions and
material on record, we are not persuaded that the impugned order
calls for interference.
49. Taking an overall view of the matter within the scope
permissible, we find that the learned Single Judge has taken a possible
view of the matter which cannot be said to be a perverse view or a
view that is totally impossible.
50. We see no substance in both the Appeals. Hence, they are
dismissed with no order as to costs. In sequel Notice of Motion No.641
of 2016 filed by ONGC seeking dismissal of Appeal No.656 of 2014,
also gets dismissed.
[ RAJESH S. PATIL, J. ] [ A.S. CHANDURKAR, J. ] Signed by: Diksha Rane Designation: PS To Honourable Judge Date: 27/05/2025 16:41:03
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