Delhi High Court
Uem India Pvt. Ltd. vs Ongc Ltd. on 8 February, 2019
$~12
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. (COMM) 393/2018 & IA No. 12438/2018
Date of Decision : 8th February, 2019
UEM INDIA PVT. LTD. ..... Petitioner
Through: Mr.Arvind Nayar, Sr. Adv. with
Ms.Iti Agarwal, Ms.Tamanna
Goyal, Advs. alongwith
Mr.Anil Chauhan, VP Finance
versus
ONGC LTD. ..... Respondent
Through: Mr.Sandeep Sethi, Sr. Adv.
with Mr.Abhishek Puri,
Ms.Surbhi Gupta and
Mr.V.Sidddharth, Advs.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
NAVIN CHAWLA, J. (Oral)
I.A.No.12441/2018
1. This application has been filed by the petitioner under Section
34 (4) of the Arbitration and Conciliation Act, 1996 (hereinafter
referred to as the 'Act') praying for the following relief:
"(a) Allow the present application and remand
the matter to the learned Arbitral Tribunal for
rectifying the errors made in the Para 474 and
475 of the Impugned Award; and
OMP(Comm.) No.393/2018 Page 1
(b) Defer the proceedings under Section 34 before this
Hon'ble Court until the grounds for setting aside are
rectified by the learned Arbitral Tribunal".
2. It is a peculiar case where the party challenging the Arbitral
Award itself has filed an application praying for the adjournment of
the challenge in order to allow the Arbitral Tribunal an opportunity to
resume the arbitral proceedings so as to eliminate the grounds for
setting aside the Arbitral Award.
3. The reason for moving this application, however, is that
according to the petitioner the Arbitral Tribunal, while rejecting the
Counter Claim No.7 of the respondent, should have allowed the refund
of the amount of Rs.11,93,45,835/-, which is the amount of the
Performance Bank Guarantee.
4. Learned senior counsel for the petitioner submits that in the
final direction passed by the Arbitral Tribunal, due to inadvertence,
this relief was not granted in favour of the petitioner. He submits that
the petitioner, in fact, moved an application under Section 33 of the
Act before the Arbitral Tribunal, however, the Arbitral Tribunal has
rejected the same on the ground that it was beyond the period
prescribed in Section 33(1) of the Act. He submits that in case this
correction is made in the Award, he is not aggrieved with the
remaining finding of the Award and therefore, has been forced to
challenge the Award merely because of this error that has crept in the
Award.
OMP(Comm.) No.393/2018 Page 2
5. On the other hand, learned senior counsel for the respondent
submits that the Arbitral Tribunal has partially rejected the Claim
No.E(ii) of the petitioner which was a challenge to the invocation of
the Bank Guarantee(s). He further submits that the Arbitral Tribunal
has allowed the respondent to retain the amount received on
encashment of the Performance Bank Guarantee as damages over and
above the liquidated damages as prescribed in Clause 6.3.2 of the
Agreement, which have been separately allowed in favour of the
respondent under Counter Claim No.5. He submits that therefore, no
useful purpose would be served by remanding the matter back to the
Arbitral Tribunal on this issue.
6. I have considered the submissions made by the learned counsels
for the parties. The findings of the Arbitral Tribunal that would bear
relevance to the submissions made are reproduced hereinbelow:
"371. The Claimant has failed to bring on record any
material to show that the invocation/encashment of the
Performance Bank Guarantee was, in any manner,
illegal or contrary to the terms thereof.
xxxx
424. The Tribunal has opined heretobefore that clause
6.6 read with claim 6.2 of the Contract would apply both
to the claims of Claimant as also the Respondent.
425. In that view of the matter, in the opinion of the
Tribunal, the Counter Claimant is not entitled to any
damages or any consequential loss or damage, loss of
use, loss of production or loss of profits or interest costs
except Liquidated Damages.
OMP(Comm.) No.393/2018 Page 3
426. Mr. Sharma however, has submitted that having
regard to the nature of breaches committed by the
Claimant, in the matter of execution of the Contract, it
must be held to have committed willful misconduct. The
Tribunal has already dealt with this aspect of the matter
and as such the aforementioned submissions of
Mr.Sharma cannot be accepted.
xxxx
Counter Claim no. 2:
Claim of Rs. 15,19,78,222.33 towards production and
revenue loss on account of non-performance and
various acts of default on the part of the Claimant
439. The purported counter claim towards loss of
revenue, in the opinion of the Tribunal, cannot be
entertained having regard to the fact that production of
oil had not started.
440. In that view of the matter, it is difficult to conceive
as to on what basis the alleged loss of revenue to the
extent of Rs.4.000/- towards price of crude oil was
arrived at, in support whereof, the Counter-Claimant
has not adduced any evidence to prove the same.
441. On similar reasoning the purported loss of revenue
claimed by the Respondent due to loss of associated gas
production @ Rs. 12.50 per standard cubic meter at the
average non APM price of gas cannot to have been
made on any factual basis. Moreover, even if the
Contract had been validly terminated, upon taking over
of the Project, the Counter Claimant was obligated to
show as to how much costs are required to be incurred
for removal of effluents and transportation thereof
OMP(Comm.) No.393/2018 Page 4
442. The Counter Claimant, therefore, inter alia for the
reasons stated heretobefore must be held to have not
been able to establish the said counter claim as well
which is accordingly rejected.
xxxx
444. The Tribunal has held heretobefore that having
regard to the provisions contained in clause 6.2 R/w
Clause 6.6 is not entitled to any consequential damages.
xxxx
452. The Tribunal, furthermore, while determining the
question as to whether the termination of the contract
was illegal has arrived at a finding of fact that the
Counter Claimant was entitled to terminate the contract
by reason of breaches on the part of the Claimant
herein.
xxxxx
461. The Tribunal is therefore of the opinion that taking
into consideration the peculiar facts and circumstances
of the case, interest of justice will be served if the
amount of Performance Bank Guarantee furnished by
the Claimant is also treated to be the quantum of
reasonable damages.
462. Keeping in view the fact that the Claimant has only
completed a minuscule fraction of the total work and
keeping in view the economic viability of the Project it,
for all intent and purport, abandoned the Contract.
463. The parties, even have entered into an Agreement
limiting their respective liabilities by reason of Clauses
6.2 and 6.6 of the Contract as discussed hereto before.
xxxx
OMP(Comm.) No.393/2018 Page 5
Counter Claim No. 7:
Claim for Rs.11,93,45,835/- towards performance of
Bank Guarantee dated April 21, 2011.
470. In view of the findings arrived at the Tribunal, the
Counter Claimant must be held to be not entitled to any
amount under the aforementioned head.
xxxx
474. For the reasons aforementioned the Claimant is
entitled to the following sums:
(i) Claim for Services Rendered; Soil Bearing Capacity=
Rs.13,56,376/-
(ii) Return of Advance Bank Guarantee of Rs.
2,95,00,484/-
(iii) Interest @ 12% per annum (on Rs.2,95,00,484)
from the date of encashment of Bank Guarantee i.e.
27.01.2014 till the filing of the Statement of Claim i.e
09.02.2015.= Rs. 36,75,840/-.
(iv) Interest for SBC denied.
(v) Pendente lite interest on the aforementioned amount
@ 9% per annum on (Rs.13,56,376 + Rs. 2,95,00,484)
from the date of filing of Statement of Claim
(09.02.2015) till the date of award i.e. 14.12.2017= Rs.
79,12,879/-
TOTAL= Rs. 4,24,86,800/-
COUNTER CLAIM:-
(i) Liquidated damages Rs.73,58,264/-
OMP(Comm.) No.393/2018 Page 6
(ii) Interest from the date of termination of the Contract
(24.01.2014)@ 12% per annum upto the date of filing of
the counter claim (17.04.2015)= Rs.10,86,800/-
(iii) Pendente lite interest on the aforementioned amount
@ 9% per annum.= Rs.18,86, 940/-.
TOTAL= 1,03,45,264/-
475. The net amount payable by the Respondent to the
Claimant= Rs.,3,21,41,536/-.
476. Respondent is hereby directed to pay the
aforementioned awarded amount by 31.01.2018 failing
which it shall be liable to pay interest @ 12% per annum
from 31. 01.2018 till realization of the full amount
including interest."
7. I may also note that while dismissing the application filed by
the petitioner under Section 33 of the Act, one of the Arbitrators in his
separate opinion has observed as under:
"When read in its entirety, the award must be given a
true and effective meaning. It would not be a reasonable
reading of the Award, if the Tribunal permits an unjust
enrichment by the Respondent.
It is also trite that the plea of limitation must be
reasonably construed.
When a Tribunal exercises its jurisdiction within 30 days
its jurisdiction is not limited but a wide one.
I am, therefore, of the view that the Tribunal, while
considering grant of relief to the applicant, may decide
to do so on the premise that because of another
computation error in the award, it is not entitled
thereto."
OMP(Comm.) No.393/2018 Page 7
8. The above quoted findings of the Arbitral Tribunal leave a
doubt as to whether the Arbitral Tribunal has allowed the amount of
Performance Bank Guarantee in favour of the respondent over and
above the liquidated damages allowed under Counter Claim No.5.
This is more so because in the Award the Arbitral Tribunal has
observed that no damages over and above as prescribed in Clause 6.6
of the Agreement can be allowed in favour of the respondent,
however, at the same time in paragraph 460 the Arbitral Tribunal has
held that amount of the Performance Bank Guarantee furnished by the
claimant cannot be said to be wholly unreasonable and in paragraph
461 it has held that the amount of the Performance Bank Guarantee
furnished by the claimant is also treated as quantum of reasonable
damages. In paragraph 457 the Tribunal has further held that the
respondent is entitled to damages in addition to the liquidated
damages.
9. In view of the above, the present proceedings deserve to be
adjourned, enabling the Arbitral Tribunal to consider the observations
made hereinabove and act in terms of Section 34(4) of the Act, if so
advised.
The application is allowed in the above terms.
O.M.P. (COMM) 393/2018 & IA No. 12438/2018
List on 30th April, 2019.
NAVIN CHAWLA, J
FEBRUARY 08, 2019/Arya
OMP(Comm.) No.393/2018 Page 8
