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1998 Supreme(Bom) 221
IN THE HIGH COURT OF BOMBAY
A.P. Shah, J.
Oil Natural Gas Commission now called
Oil Natural Gas Corporation Ltd. ..... Petitioner.
Versus
McDermott International INC..... Respondent.
Arbitration Petition No. 233 of 1995 in Award No. 45 of 1995, decided on 4-9-1998.
Advocates appeared :
R.A. Dada with Saraf i/b Vyas and Bhalwal, for petitioner.
D.D. Madon with Burgis Colabawala S.B. Jijina i/b Mulla Mulla, for respondent.
A representative assessee under the Income Tax Act is not liable to pay fluctuation in foreign currency value between the deduction and payment dates.
Headnote:
ARBITRATION - AWARD - SETTING ASIDE - ERROR APPARENT ON THE FACE OF THE AWARD - CLAIM FOR DIFFERENCE IN EXCHANGE RATE - INTERPRETATION OF INCOME TAX ACT - REPRESENTATIVE ASSESSEE - LIABILITY TO PAY FLUCTUATION IN FOREIGN CURRENCY VALUE - JURISDICTION OF COURT TO SET ASIDE AWARD - ERROR OF LAW ON THE FACE OF THE AWARD.
Fact of the Case:
Petitioner, a public sector corporation, awarded a contract to respondent for construction of two offshore well platforms. Disputes arose over amounts due to respondent, leading to arbitration. Umpire partly granted respondent's claims, including claim No. 9 for difference in exchange rate. Petitioner challenged the award, alleging misinterpretation of contract clauses and Income Tax Act provisions.
Finding of the Court:
The Umpire erred in accepting respondent's alternative claim for difference in exchange rate. The petitioner, as a representative assessee under section 162 of the Income Tax Act, held the deducted amount as a depositee for the respondent. The money credited in petitioner's account books belonged to the respondent from 1987. The Umpire's findings were inconsistent and self-contradictory, leading to an erroneous award.
Issues: 1. Whether the Umpire erred in interpreting the Income Tax Act provisions and awarding the respondent the difference in exchange rate. 2. Whether the petitioner, as a representative assessee, is liable to pay fluctuation in foreign currency value between the deduction and payment dates.
Ratio Decidendi: 1. The Umpire erred in interpreting the Income Tax Act provisions. The petitioner, as a representative assessee, held the deducted amount as a depositee for the respondent. The money credited in petitioner's account books belonged to the respondent from 1987. 2. The petitioner, as a representative assessee, cannot be asked to pay fluctuation in foreign currency value between the deduction and payment dates.
Final Decision: The petition was allowed in part. The Umpire's award was set aside regarding claim No. 9 and the interest awarded on that claim. A decree was passed in terms of the award, except for claim No. 9, with future interest at 12% from the date of the decree.
2.The short facts concerning the arbitration award in question may be stated as follows. The petitioner is a statutory public sector corporation engaged in oil exploration, development and production of oil and natural gas. On 6th April, 1985, the petitioner published a tender notice inviting tenders from qualified marine construction contractors. The scope of work for which ONGC sought bids included the design, engineering, procurement, fabrication, inspection, testing, load-out seafastening, tow-out, transportation, installation and pre-commissioning of the BB and BD wellhead platforms as well as optional pipelines and associated risers. Pursuant to the said tender notice, the respondent submitted a bid which was accepted by the petitioner and the contract was awarded to the respondent as per terms and conditions in the contract dated 15th October, 1986. Thereafter disputes have arisen between the petitioner and the respondent over the amounts due and payable to the respondent for construction of two offshore well platforms at south bassein field in the Arabian sea. In all the respondent raised 13 claims, claiming U.S. $ 2,380; 473.88 described as claims A to L in the statement of claims which was referred to the Arbitrators, Mr. R.P. Bhat nominated by the respondent and Mr. K.M. Anjeneyan nominated by the petitioner. Before the Arbitrators, the petitioner filed counter claim against the respondent claiming reduction in post drilling hook-up and short supply of spares claiming U.S. $ 225, 057.00. Oral evidence was recorded by the two Arbitrators who also heard the extensive arguments. There were however differences of opinion between the two Arbitrators regarding the merits of claim of the claimants and thus the matter came to be referred to the Umpire, Shri M.N. Chandurkar. By the impugned award, the Umpire partly granted claim Nos. 1 to 7 and 9 to 11 of the respondent whilst claim Nos. 8 and 12 were not pressed by the respondent. Claim No. 13 of the respondent pertaining to interest which was not granted by the Umpire. However the Umpire allowed interest at the rate of 12% per annum (U.S. $) on the claims allowed by him from the dates mentioned against the amount till payment. Counter claims made by the petitioner were rejected by Umpire in toto.
3.In the petition, the petitioner herein contended that the Arbitrator mis-conducted in mis-interpreting and mis-construing various clauses of the contract pertaining to the work allotted to the respondent of construction of two offshore well platforms at south bassein field in the Arabian sea and also failed to appreciate the oral evidence of Mr. Muthukarupan, who is a Chemical Engineer and on mis-conception of facts and mis-interpretation of documents on record and by failing to consider some of the relevant facts and circumstances, the erroneous and illegal award was made. Some of the findings on the basis of which the impugned award was made, consequent upon mis-reading and mis-interpreting relevant documents and evidences adduced are erroneous on the face of the record and have resulted in misconduct on the part of the Umpire, thereby rendering the award illegal and invalid. In support of such contention reference to various findings of the Arbitrator and the alleged impropriety of such findings with reference to certain facts and materials on record have been indicated.
4.I have heard Mr. Dada for the petitioner and Mr. Madon for the respondent. Out of several criticisms of the impugned award only one pertaining to claim No. 9 was seriously pressed before me by Mr. Dada. I may hasten to add that in respect of the remaining claims, I find no merit in any of the objections raised on behalf of the petitioner. As far as claim No. 9 is concerne
