Delhi High Court
Directorate General Of ... vs Overseas Drilling Limited on 6 December, 2017
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 27th November, 2017
Pronounced on: 06th December, 2017
+ O.M.P. 23/2010
DIRECTORATE GENERAL OF
HYDROCARBONS OF INDIA ..... Petitioner
Through : Mr.K.R.Sasiprabhu and
Mr.Somiran Sharma, Advocates.
versus
OVERSEAS DRILLING LIMITED ..... Respondent
Through : Mr.Neeraj Sharma, Mr.Alok
Tiwari, Mr.Raviner Prasad,
Ms.Dakshani Saxena and
Mr.Adhish Rajvanshi, Advocates.
CORAM:
HON'BLE MR. JUSTICE YOGESH KHANNA
YOGESH KHANNA, J.
1. Petitioner by this petition under Section 34 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred as „the Act‟) impugns the
arbitral award dated 29.08.2009.
2. The facts leading up to the filing of the present petition are set out
hereunder:
(i) the Petitioner is a government body established by the Ministry
of Petroleum and Natural Gas, Government of India and has its
office at C-139, Opposite Fortis Hospital, Sector 63, Noida-
201301, Uttar Pradesh;
(ii) the Respondent is a company incorporated under the laws of the
Cayman Islands with its offices at c/o Walkers SPV Limited,
Walker House, 87 Mary Street. George Town, Grand Cayman,
KYI - 9002, Cayman Islands. The Respondent is engaged in the
business of rendering services in the field of, inter alia, scientific
research, drilling vessel and providing equipment and services for
offshore scientific research;
(iii) the Petitioner had acquired oil and gas exploration rights from
the Government of India for conducting Scientific Research and
Development Programme under the National Gas Hydrate
Programme for drilling / coring, logging and analytical activities to
assess the characteristics of Gas Hydrates deposits in the Indian
offshore ("Project");
(iv) the Respondent owned and operated a research vessel known as
'JOIDES Resolution' ("Vessel") which had the requisite
capabilities for conducting research under the Project;
(v) the Petitioner, under the aegis of the Ministry of Petroleum and
Natural Gas, Government of India, sought a consolidated proposal
from the consortium consisting of the Respondent and Fugro
McClelland Marine Geosciences Inc. ("Fugro") to undertake
certain work under the Project;
(vi) the Respondent, on behalf of the consortium, submitted a
proposal on 06.12.2005 to provide a full service gas hydrate
investigative programme. In terms thereof, the Respondent and
Fugro were to work with Integrated Ocean Drilling Programme
("lODP"), U.S. Geological Survey ("USGS"), U.S. Department of
Energy and Lament Doherty Earth Observatory ("LDEO") of
Columbia University;
(vii) an agreement dated 09.03.2006 was entered into between the
Petitioner, Respondent and Fugro in respect of the Project
("Agreement"). Under the Agreement, the Respondent and Fugro
were to act along with primary sub-contractors GEOTEK and
LDEO. The Agreement further provided the Respondent would act
as the leader of the consortium. A copy of the Agreement dated
09.03.2006 is annexed herewith and marked as Annexure P-2;
(viii) in terms of the Agreement, the Respondent was obligated to
mobilize the Vessel together with the required scientific equipment
and the scientific support staff to India for the purpose of
conducting the scientific initiatives according to an approved
scientific program contemplated in the Agreement. The Vessel was
to be mobilized from Galveston, USA to Mumbai, India. The
project involved research drilling, coring, logging and scientific
analysis activities at ten (10) pre-defined sites in India. The
analysis of the geologic data and samples collected during the gas
hydrate research drilling/coring project was to continue after the
completion of the program in collaboration with USGS. The
scientists and technicians were to be provided through the series of
subcontracts managed by Fugro and GEOTEK and developed in
consultation with USGS and the Petitioner;
(ix) under the Agreement, certain cores and samples which were to
be stored in Mumbai were to be offloaded from the Vessel by the
Petitioner at the end of the expedition and it was the responsibility
of the Petitioner to transport the same to Mumbai. However,
certain samples were to be studied by international scientific
parties including USGS and it was the responsibility of the
consortium to transport the said samples to USGS laboratories in
the USA and Canada and to other international scientific parties.
(x) the Petitioner was required to pay mobilization fees,
demobilization fees, science support services fees, logging while
drilling fees and logging fees and appropriate day rate amounts to
the members of the consortium. Further, if the Petitioner requested
the members of the consortium to provide additional services
above and beyond those provided in the Agreement, the fees for
the same was to be agreed between the members of the consortium
and the Petitioner.
3. As per the tri-partite agreement dated 09.03.2006, the term
„Consortium‟ was defined as under:-
"b) THE CONSORTIUM means ODL and
FUGRO, acting therein with primary
subcontractors GEOTEK, LDEO and others,
which shall include, but not be limited to all
subcontractors of OLD, FUGRO, GEOTEK, &
LDEO (Lamont Doherty Earth Observatory),
which shall include Schlumberger and affiliated
companies, and other subcontractors providing
science support services."
4. The work was divided into three phases, per appendix A to the
agreement containing of Statement of Work to be completed in three
distinct phases as follows:-
"A, Phase-I
Mobilization of a Scientific Ocean Drilling
Capability consisting of the mobilization of the
scientific ocean research' vessel, the "JOIDES
Resolution", and the required scientific equipment
and the scientific support staff to India for the
purpose of conducting the proposed scientific
initiatives according to an approved Scientific
Programe. The "JOIDES Resolution" would be
mobilized from the port of Galveston, Texas, USA
to the port of Mumbai, India.
B. Phase-II
Field Project Management Operations and
Research consisting of a collaborative field
program of research drilling coring (pressurized
and non-pressurized) logging (logging While
drilling and wireline logging) and scientific
analysis activities during the hydrate project at ten
(10) predefined sites consisting of 1 site off the
West Coast of India, in which drilling coring and
logging, but not logging while drilling (LWD) will
occur, seven (1) sites off the East Coast of India In
which LWD, drilling, coring and wireline logging
will occur, and two (2) sites off the Andaman
Islands in which drilling, coring and wireline
logging, but not logging while drilling (LWD) will
occur.
C. Phase-III.
Demobilization of the Scientific Ocean Drilling
Capability and Collaborative Post Field Project
Analysis of Geologic Data and Samples shall be as
follows. After completing the drilling and coring
activities of Phase II, the „JOIDES Resolution"
would proceed to Port Blair where the cores would
be removed from the vessel and delivered to DGH.
The vessel would then be prepared for and be
demobilized from Indian waters.
Collaborative post field analysis of the geologic
data and samples collected during the gas hydrate
research drilling / coring project will continue
after the completion of the programme in
collaboration with USGS and other identified
agency."
5. The pricing is given in Appendix B of the agreement and as per
the price schedule the mobilization fee was USD7,145,000;
demobilization fee was USD7,297,300; the overseas drilling limit (ODL)
for JOIDES Resolution and crew was USD5,980,000.
6. The vessel namely JOIDES Resolution was to come from the Port
of Galveston, Texas, USA to the port of Mumbai, India and was to
demobilize from the Indian waters.
7. The demobilization fee was to be paid to ODL and FURGO in line
with the table provided in Appendix B and since the respondent was
likely to get a gas hydrate agreement from Chinese authorities and so it
was agreed between the parties in case the China Gas Hydrate
Programme materializes and vessel JOIDES Resolution mobilize to
China from Port Blair in that event the petitioner shall have to pay USD
3,042,000 only as demobilization fee to the consortium. It is alleged by
the petitioner that such reduction in demobilization charges then offered
was as the distance covered by the vessel from Texas, USA to Port Blair
was more than the distance between the Port Blair and China and it was
only for this reason the respondent had agreed to receive less
demobilization charges.
8. Admittedly the vessel was to reach initially at Port Blair, but due to
custom clearance issues, both the parties agreed the port of landing to be
at Chennai for which an additional mobilization charge for 2.6 days for
the time taken in reaching Chennai was agreed to be given to the
respondent.
9. It is argued, the respondent for the first time vide its letter dated
03.07.2016 had informed that after demobilization they shall take vessel
to Singapore instead to USA, so, the petitioner wrote a letter dated
25.07.2006 to the respondent asking them to further reduce the
demobilization charges since the distance between the two countries was
far less than distance from Chennai to America but the respondent in its
letter dated 25.07.2016 refused to decrease the demobilization charges on
the plea nowhere was the distance a criteria to fix the demobilization
charges and the concession, earlier in charges was being offered by the
respondent only in the event of its getting China Gas Hydrate Programme
- which unfortunately could not materialize and hence such offer of
concession could not be relied upon.
10. Admittedly Phase - I in Appendix A show the mobilization
charges as also such other charges payable and the vessel was to come
from Texas, USA to Port Blair, India, but there was no corresponding
provision in Phase - III as to where the vessel would proceed on
demobilization and hence it cannot be said the pricing of the mobilization
and demobilization was based on actual nautical miles the vessel need to
cover. The offer of reduction given by the respondent was thus only in an
event of materialization of China Gas Hydrate Programme - which never
happened and hence charges were never based on exact nautical miles.
11. The learned arbitral tribunal has also dealt with this issue and has
given the same logic as under:-
"Demobilization fees:
Whatever might have been the basis on
which the parties negotiated to contract, once the
contract was finalized and signed on behalf of the
parties, the terms of the contract can only be
ascertained from the written contract. Barring the
exceptional case of any ambiguity in a term, it
would not be permissible to look into or consider
extrinsic evidence for interpreting the contract.
Apart from this legal position, Clause 1306 of the
Agreement expressly provides that the agreement,
including Appendices A to G appended to the
Agreement "supersedes and replaces any oral or
written communications heretofore made between
the parties relating to subject matter hereof. In this
view of the matter, all the claims have to be
adjudged on the express terms of the contract,
which is fairly extensive one and contains
meticulous details of the terms.
Appendix 8 to the agreement deals with
"Pricing". This appendix gives the breakup of the
fees under the heads:
Demobilization fees $7,297,300
Overseas Drilling Limited (ODL) $5,980,000
for JOIDES Resolution and Crew
Fugro for Science support $167,300
equipment and personnel
Logging Demobilization fees (via $1,150,000
ODL) broken down as follows:
Logging While Drilling (LWD) $770,000
Wireless Logging $225,000
LDEO $155,000
The contract [vide Appendix A.1 (A)] is
specific about the fact that the vessel JOIDES
RESOLUTION would be mobilized from the port
of Galveston Texas, USA to the port of Mumbai,
India. As to demobilization, the contract only says:
"after completing the drilling and coring activities
of Phase II, the JOIDES RESOLUTION would
proceed to Port Blair where the cores would be
removed from the vessel and delivered to DGH.
The vessel then be prepared for demobilize from
Indian Waters‟. Significantly, the contract
nowhere specifies that after demobilization the
vessel would proceed to any particular port. In the
teeth of this term, the Tribunal is unable to accept
the Contention of the Respondent that the
demobilization fee payable to the Respondent for
the vessel and its crew at USD 5,980,000 was fixed
on the footing that after demobilization the vessel
would proceed to Galveston, USA.
The pricing contract in Appendix B clearly
stipulates that the Respondent and Fugro were to
be separately paid demobilization fees in line with
the above table and the details in the Appendix B.
The payment schedule provided in the contract is
that the Claimant's demobilization fee of USD
5,980,000 shall be invoiced upon completion of the
scientific programme once the vessel has departed
the final port in India. It further provides that the
Respondent shall pay the invoice within 20 days
after receipt of the invoice. The only contingency
under which the demobilization fee was to be
reduced is indicated in the last paragraph in the
Appendix B. It provides that in case the China gas
hydrate programme materialized, and the vessel
mobilized to China from Port Blair, the
Respondent would pay only USD 3,042,000 as the
total demobilization fees to the consortium. Even
prior to the commencement of the agreement and
the contractual work, by the email dated February
15, 2006, the Claimant had informed the
Respondent that China had not accepted its
proposal for the Chinese hydrate programme,
which was not likely to come through. Thus, the
only contingency for reduction of the
demobilization fees payable to Claimant never
arose.
The Respondent contends that there is
difference in the quantum of the mobilization fees
and the demobilization fees stipulated as payable
to the Claimant, which indicates that the
mobilization and demobilization fees were
proportionate to the distance to be travelled by the
vessel. The Tribunal is unable to accept this
contention. In the first place, this is not a haulage
contract in which the fees payable would be partly
fixed and partly proportionate to the distance of
haulage. Secondly, if it was the intention of the
parties that the mobilization fee or de
demobilization fee was to be linked to the distance
travelled by the ship, then the parties would have
definitely stipulated mobilization demobilization
fees linked to the distance covered by the vessel.
Lastly, the terms of the contract as to payment of
demobilization fee are clear and unambiguous
leaving no room for interpretation. Thus, Tribunal
is, therefore, unable to accept the contention of the
Respondent that since after demobilization the
vessel travelled only up to Singapore, the
demobilization fee payable to the Claimant could
be pro-rata reduced, as the distance between
Chennai-the port of demobilization and Singapore
was shorter than the distance between Chennai
and Galveston.
The Tribunal is of the view that whatever
might have been the factors present in the minds of
the parties when they negotiated the contract, the
contractual terms have to be interpreted in
accordance with the language used in the contract.
The Tribunal finds no ambiguity in the terms of the
contract pertaining to demobilization fees. Hence,
there is no room for interpreting the terms in the
light of the extrinsic evidence of oral deposition of
the Respondent's witness. Hence, the Tribunal is of
the view that the Claimant is entitled to the amount
of USD 5,98,0000 as demobilization fees less the
amount of USD 834,270 which is admitted to have
been paid to the Claimant by the Respondent.
Article VIII of the contract details the
procedure for payment of charges. Article VIII
section 802 provides that the Respondent shall pay
all invoices within 20 days after the receipt
thereof. If any item in the invoice is disputed, the
Respondent is required, within 15 days after
receipt of the invoice, to notify the members of the
consortium of the disputed amount, specifying the
reasons for the dispute. Thereafter, the payment of
the disputed amount would carry no interest until
payment after paying of the undisputed portion of
the invoice. This clause also stipulates that any
sums excluding, amounts not paid within 30 days
after receipt of notice bear interest @ 1% over the
prevailing Libor rates per annum, from the 30th
day until paid.
The Claimant points out that, for the first
time, by its letter dated July 25, 2006, the
Respondent claimed that it was "perceived in the
contract that the demobilization fee mentioned in
the contract would have to be reduced
proportionately as the ship was going to Singapore
after demobilization, and not to Galveston. The
demobilization invoice No. 00684-00010197 was
raised on 19th August, 2006. There was no dispute
raised with regard to the payment of
demobilization fees within the period of 15 days
after receipt thereof, as stipulated in Article VIII
(802) of the contract, nor was the invoice paid
within the stipulated period of 20 days. On the
other hand, the email dated 19th September, 2006
from the Respondent assured the Claimant that the
Respondent was in the process of releasing
payments of the pending invoices and that the
payments would be made in a couple of days. The
Claimant was informed that the payment details
would be forwarded after releasing the payments.
By the email of 20th September, 2006 Mr.Murali,
on behalf of the Respondent, informed the
Claimant that all the bills had been received and
were under the process, and that in a couple of
days, the payment would be released together with
the details of the payments. By another email of
21st September, 2006, for the first time, Mr.Murali
informed Mr. Brent Shoemaker of the Claimant
that all other payments were released except the
demobilization fees, which had been withheld as
they were under process. Even by his email dated
23rd September, 2006, Mr. Murali explained: "In
my email I had indicated that these two invoices is
under process and did not indicate that the same
had been withheld". Thus, it would appear that the
Respondent did not follow the procedure and the
time schedule for payments fixed in Article VIII
(801 to 803). The Tribunal, therefore, is of the
opinion that the amount found due towards
demobilization fee should carry interest @ 1%
over the prevailing Libor rate per annum from the
30th day i.e. from 19th September, 2006 until
paid."
12. The reasoning given by the learned arbitral tribunal is similar to
what has been observed by me above and is in consonance with the terms
of the contract dated 09.03.2006 and need not be interfered. The learned
arbitrator rather analyzed various clauses qua mobilization/
demobilization, pricing and interest and rightly come to the conclusion
the contract was not that of haulage and thus delayed payments would
also attract interest.
13. The second limb of argument raised by the petitioner is the learned
arbitrator has wrongly given compensation for the period from
19.08.2006 to 23.10.2006 which ought not to have been awarded and is
against the terms of the contract.
14. Admittedly the Vessel carried the work from 28.04.2006 to
19.08.2006 in terms of the Agreement and collected extensive samples.
Prior to demobilization, the standard cores and all Indian samples were to
be offloaded at Port Blair and from there five (5) pressure cores were to
be transported to Mumbai by the Petitioner itself. However such cores
were retained on the Vessel at the suggestion of Dr. Collett (who was a
key member of the consortium) as it was felt that they could be damaged
during the long road transport journey due to unsatisfactory road
conditions, hence it was suggested by Dr.Collett that it be taken to
Singapore and from there it be air-lifted to Mumbai and that the cost of
storage and transportation of it shall be borne through the science fund of
the program."
15. In order to substantiate his plea, the learned counsel for the
petitioner referred to cross-examination of Mr.Brent Shoemaker,
conducted on 17.07.2008, wherein he deposed that Dr.Tim Collett was a
key member of his team under the MOU between the USGS and DGH.
The petitioner also referred to cross-examination of Mr.Arun Kumar
Sethi who admitted it was the responsibility of DGH to carry all cores to
Mumbai from Port Blair, however, in view of the change in port of
demobilization on information of bad road conditions through the agent
of ODL, it was agreed by Dr.Collett the Chief Science Coordinator that
the precious pressure core samples will be taken by him to Singapore and
dispatched to Mumbai by air or by sea through the science budget of the
programme without any additional cost to DGH, hence it was argued that
the petitioner cannot be made liable for additional work/storage charges.
16. All these submissions of the petitioner are based on oral assurances
of Dr. Collett who was neither an authorized person to commit anything
for the petitioner or for the respondent. Though the petitioner sought
support from some portions of cross-examination of Mr. Brent
Shoemaker and Arun Kumar Sethi but admittedly the parties never
entered into any written agreement relating to transportation of the cores
from Chennai port to Singapore. If the cores were transported to
Singapore on an alleged assurance of Dr.Collett then the petitioner could
have claimed additional charges on the science fund and ought not to
have asked the JOIDES to grant free service. Hence the tribunal was right
in awarding the claim for storage for five pressure cores. The extract of
the relevant portion of the award in this regard is as follows:-
"Claim for storage of five pressure cores :
Appendix A to the contract styled "Statement
of Work" stipulates the details of the work to be
done by the consortium of which the Respondent is
a party. Clause A.2.2.2 stipulates the manner of
handling and preservation and on board scientific
studies of cores. It provides that the consortium
shall provide all the necessary services, materials,
laboratory facilities, other equipments and trained
technicians and experienced scientific staff for
core handling, preservation and on board
scientific studies "during the operational period".
Clause (v) indicates that five each aluminium
pressure cores transfer vessels were to be provided
by the Respondent but they were to be retained by
the Respondent.
The statement of work in Appendix A.1,
Clause C (Phase Ill) stipulates that after
completing the drilling and core activities of Phase
II, JOIDES RESOLUTION would proceed to Port
Blair where the cores would be removed from the
vessel and delivered to the Respondent. The vessel
would then be prepared for and be demobilized
from Indian waters. Clause A.6 also stipulates
that, after completing the activities for the
program, the vessel would return to Port Blair at
which time all the cores recovered from, the
operation would be handed over to the Respondent
in refrigerated conditions after which the vessel
would be prepared and de-demobilized from India.
It further stipulates "all cores and gas hydrate
samples would remain on research vessel to the
end of the expedition port call in Andaman Island
(Port Blair). DGH would be responsible for
transfer of all cores and gas hydrate samples from
the end of expedition port call in Port Blair to
Mumbai. DGH would supply their own
refrigerated Nan at Port Blair for the transport of
cores and gas hydrate samples to NGHP
laboratories in Panvel, Mumbai. However, the
consortium would be responsible for sending
samples to international scientific party". The
evidence of Mr. A.K. Sethi on this issue is quiet
clear. In answer to question No.37, he clearly
admitted that it ·was the responsibility of the
Respondent to carry all cores to Mumbai from
Port Blair. However, in view of the change in the
port of demobilization to Chennai and information
being received about the bad road conditions from
the agent of the Respondent, Dr. Collett, Chief
Science Coordinator of the project, was of the view
that the precious core samples would deteriorate
during the drive from Chennai to Mumbai under
bad, road conditions. He suggested that it would
be taken to Singapore and be dispatched from
there by air to Mumbai through the science budget
of the program without any additional cost to the
Respondent. The Respondent claims that because
of this suggestion, the five pressure cores were not
removed from the vessel and they continued on
board during the onward journey to Singapore.
There is no dispute between the parties that the
concerned five pressure cores were not off loaded
in Chennai, although Chennai was the changed
port of demobilization. They continued on board
the vessel from August 19, 2006 till the vessel
proceeded to Singapore, and even thereafter till
23rd October, 2006, when they were removed from
the vessel and taken charge of by the Respondent.
On 5th October, 2006, the Claimant had
addressed a letter to the Respondent pointing out
that under the agreement between the parties, the
cores were to be removed from JOIDES
RESOLUTION before the demobilization of the
vessel from Indian waters on 19th August, 2006.
However, at the request of the Respondent, they
were carried onwards to Singapore and retained
on board under controlled parameters of
temperature and pressure till removed. The
Respondent had claimed an additional daily fee of
USD 10,500 for doing this additional work.
The Respondent has admittedly paid an
amount of USD 834,270 to the Claimant on 10th
October 2006.
By another letter dated October 11, 2006,
the Respondent pointed out that the five pressure
cores had remained on vessel from August 19,
2006 at 1900 hours till they were removed from
the vessel 1200 hours on October 23, 2006. The
Claimant had stated that it would charge a daily
fee of USD 10,500 and an invoice would be raised
for the total fee of USD 6,794,37.50 towards
expenses incurred on storage and for wages to be
paid to the personnel maintaining the equipments.
Accordingly, an invoice dated 23rd October, 2006
was raised by the Claimant for the sum of USD 6,
794,37.50.
The material on record does show that the
five concerned pressure cores were carried on
board the vessel from 19th August, 2006 till 23rd
October, 2006 when they were finally removed by
the Respondent for being sent to the laboratory at
Panvel.
The Claimant contends that this was an
additional responsibility thrust upon it as its
responsibility was only to handover the concerned
pressure cores to the Respondent at the port of
demobilization and because of the inability and/or
failure of the Respondent to make appropriate
arrangements for refrigerated containers at the
port of demobilization, the five pressure cores
containing gas hydrate samples were carried to
Singapore and retained on board till 23rd
October, 2006. The Respondent's contention is that
they were so carried on the advice of Dr. Collett,
the Chief Coordinator of the scientific project.
The scientific project was undertaken under
the leadership of the Government of United States
under the USGS. While the USGS might have been
responsible for the scientific study part of the
project, the contract was between the consortium
and the Respondent. The expression "Consortium''
is defined in Article 101 (b) as ODL and Fugro
acting along with the sub-contractors. The USGS
or Dr. Collett were not a part of the consortium;
nor was Dr.Collett authorized to agree on behalf
of the Claimant that the pressure cores would be
carried over to Singapore and retained on board
until taken charge of by the Respondent without
extra remuneration. Maybe, from the point of view
of scientific study that was the most appropriate
thing to do, as otherwise there was a possibility of
deterioration of the samples during transit from
Chennai to Mumbai under bad road conditions.
However, the Claimant had not agreed to do this
extra work without further charges. Nor was the
contract suitably amended to make it part of
Claimant's responsibility. The evidence of
Mr.Arun Kumar Sethi suggests that Dr. Collett had
said that the additional costs would be met from
USGS funds. Even if that be true, it is for the
Respondent to collect the said funds from the
USGS; but, as between the Claimant and the
Respondent, there is no doubt that the Respondent
would be liable to the Claimant for the said
amount. Since the said amount was also not paid,
nor disputed within the period prescribed, the said
amount would also carry interest @ 1% per
annum over the Libor rate from 23rd October,
2006.
Clause 702 of the Agreement provides that
the Claimant shall pay to the members of the
Consortium additional remuneration, which may
be negotiated between the Claimant and them "if
the scope oil the work increases beyond what is
defined in this Agreement, provided DGH requests
the members of the Consortium to provide
additional services". The Tribunal is unable to
accept the contention of the Respondent that the
work of carrying the five pressure cores containing
Gas Hydrate samples to Singapore and
maintaining them from 19th August 2006 to 23rd
October 2006 was within the scope of the original
contract or that such work was not done at the
request of the Claimant. The Tribunal also cannot
accept the Respondent's contention that all
invoices raised on 23rd October 2006 were the
result of afterthoughts and without any basis."
17. Admittedly, the duration of the agreement was 111 days. Notes 1
and 2 of Appendix B pertain to estimated cost for each phases of the
programme based on an operational programme of approximately 108
days, exclusive of all Indian Taxes etc.
18. The contract stipulate pricing policy based on half rates of stand
by; operating day rate, demobilization rates etc. It was not a contract for
haulage but a time charging contract and it was for only this reason the
claimant/respondent charged for extra 2.6 days once the landing port was
changed from Port Blair to Chennai. Moreso during the period of contract
it was the responsibility of the respondent to handle and preserve the core
and on demobilization the aluminum pressure cores were to be handed
over to the petitioner. Admittedly such vessels were not removed at Port
Blair and rather were retained in JOIDES RESOLUTION as the
Consortium has directed to take it to Singapore on an advice of Dr.
Collett who was not an authorized representative, as observed above.
Under the agreement JOIDES was only obliged to deliver such cores at
Port Blair but was directed to further retain/store it and hence was rightly
entitled to be compensated for additional work. Admittedly the cores
remained on vessels from 19.08.2006 to 23.10.2006 till were finally
removed. It was not at all the responsibility of vessel to retain it till the
cores were finally removed to Panvel, Mumbai and till such time
JOIDES was unnecessarily detained despite it was to be demolished on
19.08.2006. The consortium never agreed to do this extra work for free
and rather had made claims during the storage period and hence can‟t be
directed to bear the loss for keeping such cores and of retaining the vessel
till 23.10.2006, thus were rightly directed to be paid by the Learned
Arbitrator per clause 702 of the Agreement which give right to claimant
to charge for extra/additional work. Hence the responsibility given to
respondent to take such hydro pressure cores to Singapore and retain it
till 23.10.2006 till were airlifted by the petitioner, was rightly directed to
be compensated and there is no reason to interfere with the award.
19. The scope of intervention, under Section 34 of the Act is no longer
res-intergra. In Navodaya Mass Entertainment Limited vs. J.M. Combines
(2015) 5 SCC 698 it has been held as under:-
"8. In our opinion, the scope of interference of the
court is very limited. The court would not be
justified in reappraising the material on record
and substituting its own view in place of the
arbitrator's view. Where there is an error apparent
on the face of the record or the arbitrator has not
followed the statutory legal position, then and then
only it would be justified in interfering with the
award published by the arbitrator. Once the
arbitrator has applied his mind to the matter
before him, the court cannot reappraise the matter
as if it were an appeal and even if two views are
possible, the view taken by the arbitrator would
prevail. [See Bharat Coking Coal Ltd. v. L.K.
Ahuja (2004) 5 SCC 109; Ravindra & Associates
vs. Union of India (2010) 1 SCC 80; Madnani
Construction Corpn. (P) Ltd. v. Union of India
(2010) 1 SCC 549; Associates Construction vs
Pawanhans Helicopters Limited (2008) 16 SCC
128; and Satna Stone & Lime Co. Ltd. v. Union of
India (2008) 14 SCC 785.]"
20. The Supreme Court in M/s Sudarsan Trading Company vs.
Government of Kerala & Another AIR 1989 SC 890 held as under:-
"29. The next question on this aspect which
requires consideration is that only in a speaking
award the court can look into the reasoning of the
award. It is not open to the court to probe the
mental process of the arbitrator and speculate,
where no reasons are given by the arbitrator, as
towhat impelled the arbitrator to arrive at his
conclusion. See the observations of this Court in
Hindustan Steel Works Con- struction Ltd. v. C.
Rajasekhar Rao, [1987] 4 SCC 93. In the instant
case the arbitrator has merely set out the claims
and given the history of the claims and then
awarded certain amount. He has not spoken his
mind indicating why he has done what he has
done; he has narrated only now he came to make
the award. In absence of any reasons for making
the award, it is not open to the court to interfere
with the award. Furthermore, in any event,
reasonableness of the reasons given by the
arbitrator, cannot be challenged. Appraisement of
evidence by the arbitrator is never a matter which
the court questions and considers. If the parties
have selected their own forum, the deciding forum
must be conceded the power of appraisement of the
evidence. The arbitrator is the sole judge of the
quality as well as the quantity of evidence and it
will not be for the court to take upon itself the task
of being a judge on the evidence before the
arbitrator. See the observations of this Court in
Municipal Corpn. of Delhi v. M/s Jagan Nath
Ashok Kumar & Anr., [1987] 4 SCC 497."
21. In Steel Authority of India Limited vs Gupta Brothers Steel Tubes
Limited : (2009) 10 SCC 63 the Supreme Court held as under:-
"29. The legal position is no more res integra that
the arbitrator having been made the final arbiter
of resolution of disputes between the parties, the
award is not open to challenge on the ground that
arbitrator has reached at a wrong conclusion. The
courts do not interfere with the conclusion of the
arbitrator even with regard to construction of a
contract, if it is a possible view of the matter. The
words "no award shall be set aside" in Section 30
mandate the courts not to set aside the award on
the ground other than those specified in Section
30. In a case such as this, where the arbitrator has
given elaborate reasons that compensation Clause
7.2 is not attracted for the breaches for which the
compensation has been claimed by the respondent
and such view of the arbitrator is a possible view,
we are afraid in the circumstances, award is not
amenable to correction by the court."
22. Thus, in view of the law discussed and in view of the reasoning
given by the learned arbitrator and the award being based on the terms of
the contract entered into between the parties, I see no reason to interfere
with the same.
23. The petition under Section 34 of the Act is dismissed. No order as
to cost.
YOGESH KHANNA, J
DECEMBER 06, 2017
M
