M/S. M.B. Patel & Co vs Oil & Natural Gas Commission

REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7340 OF 2002

M/S. M.B. PATEL & CO. ... APPELLANT

VERSUS

OIL & NATURAL GAS COMMISSION ... RESPONDENT

ORDER

This appeal is filed against the judgment and order dated 11.07.2000 of

the High Court of Gujarat at Ahmedabad in First Appeal No.418 of 1986 whereby

the High Court set aside the award dated 03.05.1985 passed by the Arbitrator. The

High Court set aside the aforesaid award on the following reasonings :

(a) that an arbitrator or umpire has misconducted himself in the

proceedings;

(b) that there appears to be an error on the face of the record

inasmuch as the Umpire has overlooked clauses 14 & 18 of the Arbitration

Agreement;

(c) that the Umpire has traveled beyond the scope of the contract

between the parties on certain items and claims and

(d) that he has rendered lump sum award making it totally

unintelligible.

2

On the aforesaid premises the award was set aside.

In the present case the contractor claimed Rs.30,425/- for abandonment

of contract. This was the first claim. The second claim was for Rs.30,213/- for illegal

deductions made by ONGC. The third claim was for Rs.2,00,000/- for not supplying

the material in time by the ONGC. The fourth claim was loss occasioned by the

contractor for keeping his establishment alive and on this head the claim was for

Rs.3,50,000/-. The fifth claim was loss of profit at the rate of 20 percent amounting

Rs.1,80,000/-. Last claim was interest at the rate of 18% p.a.

As already pointed out that the Arbitrator awarded Rs.5,98,438/- as

lump sum, we agree with the reasoning of the High Court that the award is

unintelligible.

Clause 14 of the Arbitration Agreement reads as under :

"DELAY IN CONSTRUCTION (COMMISSION'S DEFAULTS);

The Commission will make every reasonable affect to furnish the materials under the contract and the right of user including the permits required to be furnished by the Commission under the contract in due time so as not to delay the construction related work of reconditioning. In case of any hold up to site work of the CONTRACTOR on account of non-availability of any one of these terms, no compensation by way of claims is admissible but only corresponding extension of time limit would be granted."

Under the aforesaid clause no claim for compensation is admissible

even that foul of the Commission. Clause 18 of the Arbitration Agreement reads : 3

"INTEREST ON AMOUNTS

No interest will be payable on the security deposit or any other amount payable to the CONTRACTOR under the contract."

The Arbitrator has awarded the interest at the rate of 12% on the

amount with effect from 09.02.1984 to 03.05.1985 (pendente lite). He has also

awarded interest from the date at the rate of 12% on the amount as shown in 1 & 3

above till the date of decree or actual date of payment, whichever is earlier.

In view of the aforesaid premises, the Arbitrator has not at all

considered clause 14 of the Arbitration Agreement. The interest has been awarded

in violation of clause 14 of the Agreement. Apart from others these two legal aspects

have not been considered by the Arbitrator. We are, therefore, in full agreement with

the reasoning given by the High Court. The Arbitrator may now proceed with the

arbitration but in the light of the judgment of the High Court. We direct the

Arbitrator to consider the matter afresh in the light of the reasoning of the High

Court.

Subject to the aforesaid, the appeal is dismissed.

............................J. ( H.K. SEMA )

............................J. ( MARKANDEY KATJU ) NEW DELHI, MAY 08, 2008.