Fugro Survey (India) Pvt. Ltd vs Oil And Natural Gas Corporation ...
2016 Latest Caselaw 4176 Bom

    PVR                                   1/11                                                app409-16.doc


                   IN THE HIGH COURT OF JUDICATURE AT BOMBAY

                         ORDINARY ORIGINAL CIVIL JURISDICTION




                                                                                                 
                               APPEAL NO. 409 OF 2016




                                                                         
                                         IN
                        ARBITRATION PETITION NO. 1363 OF 2010


    Fugro Survey (India) Pvt. Ltd.                             )




                                                                        
    Fugro House, D-222/30, TTC Industrial                      )
    Area, MIDC, Nerul, Navi Mumbai-400706                      )
    rep. By its Authorised representative                      )
    Mr.Anant Keshav.                                           )...Appellant




                                                   
                     versus        
    Oil And Natural Gas Corporation Ltd.                       )
    having its office at 11 High, 7th Floor                    )
                                  
    Bandra-Sion Link road, Sion,                               )
    Mumbai-400017.                                             )... Respondent
                                      ---
       

    Mr.Rajiv K.Pandey i/b. PRS Legal, for the Appellant.
    



    Mr.Pradeep Sanchedi, Senior Counsel with Mr.Subhash Bhalwal i/b. Vyas 
    Bhalwal, for the Respondent.
                                     ----
                                 CORAM :  ANOOP V. MOHTA & 





                                            G.S. KULKARNI, JJ.

                          Reserved on  :                       25th July, 2016.
                       Pronounced on  :                        27th July, 2016
                                    ----





    JUDGMENT: (Per G.S.Kulkarni, J.)

1. This appeal under Section 37 of the Arbitration and

Conciliation Act,1996 (for short 'the Act'), arises from the order dated 6

May 20165 passed by the learned Single Judge whereby the

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Appellant's/Claimant's petition under Section 34 of the Arbitration Act

challenging the award of the Arbitral Tribunal, has been dismissed.

2. The Appellant is the original claimant and the Respondent is

the original Respondent before the Arbitral Tribunal. The dispute

between the parties arose in respect of a contract awarded to the

Appellant by the Respondent for which tenders were invited namely the

contract of "Current Wind and Wave Observations at 6 locations on the East

Coast in India namely KG-KD 8, KG-KD 9, KG-KD 10, KG-KD 11, GD-SW

and GD-NW". The Appellant's offer was accepted by what is termed as a

notice of Award dated 29 October 2003 for the said work of "Current,

Wind and Wave Observation." On 23 December 2013 the parties signed a

formal contract. There is no dispute that the contract which was awarded

was a lump sum/fixed price contract. The agreement in clause 1.1.1

recites that it shall be deemed to have come into effect on the date of

notice of award i.e. 29 October 2003.

3. The Appellant has relied on certain events which have taken

place prior to the execution of the formal contract namely meeting held

on 12 December 2003 between the Appellant and Mr.Bhatnagar, the

representative of the Respondent. This meeting was called as "Basin

PVR 3/11 app409-16.doc

Group Meeting". The case of the Appellant was that a detailed schedule

of the work was prepared in Basin Group Meeting keeping in mind the

actual dates on which drilling operations were to commence at each of the

locations where wind, wave and current operations were to be carried

out, as observations were required to be undertaken prior to

commencement of the drilling work.

4. Also a further event dated 16 December 2003 is relied upon

to state that a team of officers of Indian Navy inspected the vessel to be

used by the Appellant for the work contracted at Vishakapatnam. The

Appellant states that the naval team did not give clearance to the vessel

immediately but stated that such clearance would have to be obtained

from naval headquarter, Ministry of Defence, Delhi. The Appellant's case

is that on 9 January 2004 the naval team once again inspected the

Appellant's vessel and granted partial clearance for wind and wave

observation work and for current observation work upto a maximum

observation period of 48 hours. On 10 January 2004 the naval team also

cleared the deployment of wave buoys. On 11 January 2004 the vessel

hired by the Appellant set sailed for carrying out wind and wave

observation work at the KG-KD-8 and KG-KD-9 locations. Thereafter on 9

February 2004 again the Naval authorities granted clearance for carrying

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out current observation work for 30 days period as per the terms of the

agreement between the parties. Accordingly, on 10 February 2004 the

vessel hired by the claimant set out to sail at KG-KD-10 location for

deploying equipment for "current" observation work at that location. On

11 February 2004 by a fax letter of the Respondent, the Appellant was

informed that drilling operations at KG-KD-10 were to commence by 19

February 2004 and therefore, the Appellant was asked to discontinue the

"current" observations work latest by 18 February 2004. The Appellant

thereafter deployed the observations equipment and moorings at the other

locations. The contract was accordingly performed by the Appellant

during the stipulated period. The Appellant raised invoices dated 1 st/3rd

June 2004 and 22nd June,2004 which were duly paid by the Respondent.

5. The Appellant thereafter raised a dispute claiming certain

additional charges and balance amount due and payable to the Appellant

by the Respondent. These claims were rejected by the Respondent and

the dispute in regard to these claims was thereafter referred for

arbitration before a three member Arbitral Tribunal. The Appellant raised

four claims. Admittedly the only issue as urged and considered by the

learned Single Judge was in respect of claim no.(iv) as raised before the

learned Arbitrator. Claim No.(iv) was as under:-

PVR 5/11 app409-16.doc

"(iv) Claim for balance amount of invoices raised for current observation work on KG-KD-10 for

Rs.47,21,772.25 (admittedly, as against the aggregate amount claimed of Rs.58,25,642, the Respondent has paid

an amount of Rs.12,36,950/- as full and final payment for the 8 days of current observation work that was

carried out by the Claimant.)."

6. Before the Arbitral Tribunal, the parties filed their detailed

pleadings as also documents. The parties led oral evidence and the

witnesses were also cross examined. The Arbitral Tribunal taking into

consideration the relevant clauses under the agreement and more

particularly clause 4.1.1 (Annexure II of the contract) held that the

obligation of taking clearance from the Naval authorities and other

Governmental authorities, for the project work was cast upon the

Appellant as the contractor. After considering the evidence which had

come on record the Arbitral Tribunal rejected the contention as raised on

behalf of the Appellant that the delay in obtaining the clearance was on

account of any breach of the obligation of the Respondent. However

considering the stand of the Respondent reasonable, the Tribunal in

rejecting the Claim No.(iv) (supra) has observed as under:-

"49.... ... ... The Respondent is, therefore, justified in its stand that the contract having been breached by the Claimant, the Claimant is not entitled to any part of the

PVR 6/11 app409-16.doc

lump sum consideration agreed for the 30 days current observation work at KG-KD-10. Nonetheless, the

Respondent has taken a reasonable stand and paid pro- rata a sum of Rs.12,36,950/- for 8 days of the said work

done. Although the Claimant accepted it in full and final settlement when the payment was made, the Claimant has

subsequently raised a dispute for the balance amount of Rs.34,84,822/-. In the view of the Tribunal,the claim for the balance amount is also not justified."

The Arbitral Tribunal thus made the following Award in respect of claim

no.(iv):-

"... ... ...

(iv) Claim for balance amount of invoices raised for current observation work on KG-KD-10 for

Rs.47,21,772.25 (admittedly, as against the aggregate amount claimed of Rs.58,25,642/-, the Respondent has

paid an amount of Rs.12,36,950/- as full and final payment for the 8 days of current observation work that

was carried out by the Claimant) stands rejected."

(emphasis supplied)

7. In rejecting the Section 34 petition as filed by the Appellant,

the learned Single Judge agreed in totality to the above findings as

recorded by the Arbitral Tribunal and held that the delay was fully

attributable to the Appellant and therefore claim No.(iv) was not

justifiable.

PVR 7/11 app409-16.doc

8. The Appellant in assailing the impugned order passed by the

learned Single Judge submits that there was an error on the part of the

Tribunal as also the learned Single Judge in interpreting clause 4.1.1 of

the contract. It is submitted that in fact clause 4.1.1 would pertain to

preparation of vessel for the purpose of contract work to be undertaken.

It is submitted that the finding as recorded by the Tribunal, that there was

some delay on the part of the Appellant to secure clearance from the

Naval authorities is not correct, inasmuch as the Appellant had discharged

its obligation and hence, the delay could not have been made attributable

to the Appellant. It is submitted that both the Arbitral Tribunal and the

learned Single Judge have misconstrued the clauses of the contract and

particularly clause 4.4.1. He, therefore, prays that the appeal be allowed.

9. On the other hand, the learned Senior Counsel appearing for

the Respondent in supporting the finding as recorded by the Arbitral

Tribunal as also the learned Single Judge would submit that the Tribunal

has appropriately taken into consideration the consequences which would

flow from the relevant clauses of the contract. It is submitted that the

forums below after taking into consideration the documents and the

evidence as placed on record, have come to a conclusion that the

PVR 8/11 app409-16.doc

Appellant could not have raised Claim no.(iv)(supra), after receipt of full

and final payment. Learned Senior Counsel would submit that the

obligation was clearly on the Appellant under the relevant clauses of the

contract to obtain those clearances in time. Any expenditure incurred in

relation to the same and / or consequences falling thereunder could not

have been the liability on the Respondent under the contract which was a

fixed contract. The learned Senior Counsel has taken us through the

relevant observations as made in the Award as also the clauses in the

contract in support of his submissions.

10. After having perused the findings as recorded by the Tribunal

in regard to claim No.(iv) as also having gone through the relevant

clauses of the contract, more particularly clause 4.1.1 as also the findings

which are recorded by the learned Single Judge, we are surely not

persuaded by the submissions as made on behalf of the Appellant. The

contract in question was admittedly a fixed price contract or a lump sum

contract and thus, it was not subject to any kind of variation. It was,

therefore, quite natural for the Appellant in agreeing to fixed price

contract to take into consideration all consequential heads of expenditure

on all account when the Appellant agreed to enter into a fixed price

contract. A perusal of the contract also does not support the case of the

PVR 9/11 app409-16.doc

Appellant that the Appellant can sustain any independent / separate claim

under any of the heads. As regards Claim no.(iv), the Appellant has

admittedly raised an invoice after the full and final payment was made by

the Respondent of an amount of Rs.12,36,950/-. The Arbitral Tribunal

has observed that in fact the Appellant had accepted the recovery of

liquidated damages by the Respondent from the Appellant in view of

failure on the part of Appellant in obtaining necessary clearances resulting

in delay in mobilization. The Arbitral Tribunal also held in this regard

that the Appellant never took a position that the delay was not

attributable to it but to the Respondent or by any breach on the part of the

Respondent. It is thus quite clear that the Appellant in raising claim No.

(iv) (supra) has taken a reverse position.

11. The submission on behalf of the Appellant as regards

interpretation of clause 4.1.1 also, in our opinion, is untenable. What

would be relevant, is to note sub-clause (iv) under clause 4.1.1 which

reads thus:-

"4.1.1 It shall be the responsibility of the Contractor to fully comply with the following Security Provisions: ... ... ... ...

(iv) The schedule(s) prescribed in the foregoing paras for advance submissions of details regarding vessel/ personnel clearance is (are) indicative only as the

PVR 10/11 app409-16.doc

clearances are to be accorded by the concerned departments of the Govt. of India. Hence, company will

not be liable for any time and cost impact due to any delays on this account or due to change of procedures etc.

in this regard."

In not accepting the contention as urged on behalf of the Appellant, the

Tribunal as also the learned Single judge has, in our opinion,

appropriately interpreted the contract. The delay in seeking appropriate

approvals was clearly a matter with which only the Appellant was

concerned and that there is no evidence to show that there is any breach

whatsoever or an obligation in that regard on the part of the Respondent

in obtaining of the clearances from the Naval Authorities. The

interpretation of the clause as undertaken by the Tribunal and accepted by

the learned Single Judge is a possible interpretation completely in

consonance to the contract clauses and within the framework of the

contract. Further the Arbitral Tribunal has held that there was no dispute

between the parties that after obtaining clearances the observation work

as regards KG-KD 10 commenced from 10 February 2004. As by letter

dated 11 February 2004 the Respondent requested to stop the work at

KG-KD 10 by 19 February 2004. A finding of fact has been recorded that

there was no dispute that work of "current" observation site location was

carried out by the Appellant only for eight days for which the Appellant

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came to be compensated by making payment of Rs.12,36,950/- and thus,

no amount was due and payable to the Appellant as claimed under Claim

no.(iv). Also the contentions as urged on behalf of the Appellant would

amount to re-appreciation of evidence and coming to a different

conclusion which could not have been the scope, of the proceedings,

under Section 34 of the Arbitration Act.

12. In view of the above deliberation, we are of the clear opinion

that the present appeal does not call for any interference. The findings

which are recorded by the Arbitral Tribunal as confirmed by the learned

Single Judge are within the framework of the contract and the law.

13. As a result, we see no merit in the Appeal. It is accordingly,

rejected. No order as to costs.

              (G.S.KULKARNI, J.)                       (ANOOP V. MOHTA, J.)