Back
1999 Supreme(Bom) 581
IN THE HIGH COURT OF BOMBAY
(O.O.C.J.)
S. Radhakrishnan, J.
Oil Natural Gas Commission..... Petitioners..
Versus
McDermott International Inc. ..... Respondents.
Arbitration Petition No. 53 of 1994 in Award No. 211 of 1993, decided on 10 11-8-1999.
Advocates appeared :
R.A. Dada with C. Balsara B. Shroff i/by Little Co., for the petitioners.
D.D. Madon with B. Colabawala Jijina i/by Mulla Mulla Craigie Blunt Caroe, for the respondents.
Headnote:Section 30-Petitioners Indian Company deducted US $ 2,57,317 from IJK Project account of Respondents a foreign company for payment to Income Tax Authorities-Petitioners computed tax liability of Respondents in terms of rupees and paid in rupees-Petitioners cannot be asked to pay fluctuation in value of foreign currency between date of deduction of payment and date of payment - Award for loss of foreign exchange due to fluctuation in foreign exchange rate by arbitrator being bad in law set aside.
Order XXXI- Rule 1 and Sections 144, 151 and Arbitration Act (10 of 1940), Section 30-Petitioner challenged onward by Arbitration petition on 28th December, 1993-Amount of 2,532,522.00 US Dollars deposited by petitioner under Order XXIV, Rule 1, Civil Procedure Code on their own without prejudice to their rights and contentions-Minutes recorded by Court to that effect on 15.3.1994Award set aside after 5 and half years -Respondents directed to refund to petitioners 2,532,522.00 US Dollars along with interest @ 12% per annum from 15th March, 1994 till payment or realisation.
Interest Act, 1978
Section 3-Arbitration-Contract providing for interest on undisputed amount-As such interest on disputed amount for pre-reference period could not be awarded.-Under terms of the contract interest could be awarded only with regard to the undisputed amount. Where there is a dispute, the amount is not a debt. The disputed amount can ever be a debt; the debt has to be a fixed amount or an ascertained amount. When there is a dispute there can never be a fixed amount or an ascertained amount and therefore, interest for pre-reference period could not be awarded.
S. RADHAKRISHNAN, J.:---Heard the learned Counsel for the petitioners and the learned Counsel for the respondents at length. By this petition, the petitioners- the Oil and Natural Gas Corporation Limited, is challenging an Award dated 30th September, 1993 on various grounds. The brief facts leading to this case are as follows:
2. Sometime in the mid of 1970, the petitioners herein, viz. the ONGC, had started the development of its Bombay High Field, and as a part of its continuing development, the petitioners herein, on 17th June, 1985 had published its tender notice No. BOP/SP/PPL/IJK/11(1)/85 inviting bids on the design, procurement, fabrication, inspection, testing and pre-commissioning load out sea fastening tow out, transportation, and installation at offshore site and pre-commissioning and any other work necessary for the final completion of the wellhead platforms II. IJ and Ik (collectively) known as "IJK" Platforms in the Bombay High field.
3. The petitioners herein, viz., the ONGC by its initial tender notice had invited two separate bids for the total work to be performed in the construction of the IJK Platforms. Part I of the said tender was for the supply, fabrication, transportation and installation of jacket piles and appurtenances, including installation engineering, but excluding detailed design for jacket piles and appurtenances. Part II of the said tender was for supply, fabrication, transportation, installation, hook up, precommissioning and commissioning, including design detailed engineering transportation and installation, engineering of the platform debts. The aforesaid Part II also covered the pre-construction survey of pipeline routes, supply corrosion and weight coating with anode installation on the pipelines and the transportation, installation of flow lines and risers, hook up testing and commissioning and burial of the pipelines.
4. It appears that on 12th July, 1985, the petitioners had published an addendum to the tender notification and invited bids on a turnkey basis for the entire works in addition to separate bids for Part I and Part II. Therefore, the Commercial and Technical bids were submitted on 13th September, 1985. It appears that the petitioners had also published an addenda to the bid package, which extended the date for submission of bids to 18th November, 1985. The respondents herein, therefore submitted its revised commercial bid on 18th November, 1985. Thereafter, by reveiwing the competing bid and meeting with the prospective contractors, the petitioners-ONGC sent a telex of intent on 11th July, 1986 awarding the respondents herein, the said contract for the entire scope of work. The said contract was duly signed by both the parties on 18th November, 1986.
5. While executing the said contract, certain disputes had arisen between the parties and therefore, in accordance with clause 16.2 of the terms of the contract, the disputes were referred for arbitration. Before the learned Arbitrators, the respondents herein had filed their claim and the petitioners had also filed their counter claim. Finally, after recording evidence and perusing various documents produced before them, the learned Arbitrators, passed the aforesaid Award dated 30th September, 1993 which is being challenged in the present petition.
6. The learned Arbitrators had formulated as many as 16 issues and made and published the aforesaid Award on 30th September, 1993. The petitioners herein have challenged the said impugned Award in the following three aspects, broadly :-
A. The claim regarding loss incurred due to fluctuation in foreign exchange, in respect of deductions of surtax.
B. The various amounts of interest awarded during the pre-reference period.
C. The mobilization and demobilization costs.
7. With regard to the first objection viz. the claim regarding the loss incurred due to fluctuation in foreign exchange in respect of deductions of surtax, the learned Counsel for the petitioners contended
