The main legal point established in the judgment is that the power of the arbitrator to award interest is regulated by the agreement between the parties, and the agreed clauses in the contract prevail over the provisions of the Arbitration & Conciliation Act, 1996.

Rule, returnable forthwith. By consent of the parties, heard finally.

2. The petitioner has challenged the Award dated 2nd April, 2008 (“the Award”) under Section 34 of the Arbitration & Conciliation Act, 1996 (“the Act”) passed by the Arbitral Tribunal.

3. The basic facts as per the petitioner are as under:

(a) The petitioner is the owner of the Vessel named “Sindhu 14” (hereinafter referred to as “the vessel”).

(b) In response to the Tender Notice No.MRBC/MM/TECH/O and M/10(18) 99 (`Tender’) dated February 19, 1999 issued by the petitioner, the Respondent submitted its bid for rendering the services of manning, running, operation, victualising and maintenance for the aforesaid vessel. The bid of the Respondent was accepted by the petitioner which was communicated to the Respondent by the Letter of Intent (LOI) dated August 11, 1999 which was then eventually culminated in Contract dated November 29, 1999 between the parties (the contract).

(c) The vessel was handed over to the Respondent on August 22, 1999 by the outgoing operator M/s. Seaspan Shipping Ltd. The Contract was valid for two & half years with effect from August 22, 1999 till February 21, 2002.

(d) The Contract envisaged maintenance to seaworthiness by the Respondent along with the other necessary incidental repairs and maintenance needed for effective functioning of the vessel. The process of delivery of the said vessel by the outgoing operator and taking over thereof by Respondent technically known as “Handing over – Taking over” ( HOTO’) was done under clause 3 of the contract. The HOTO process and formalities thereto consisted of a Protocol signed by both the parties. An independent survey Agency appointed by the petitioner to evaluate the condition and to prepare a condition report. The Protocol provided for preparation of a list of defects in the hull, machinery and equipment of the said vessel. The defects were noticed in the presence of the representatives of both the parties and a list (“HOTO list”) was prepared by the independent surveyors Messrs Metcalf Hodkingon Pvt.Ltd., containing 221 defects on August 22, 1999.

(e) After the HOTO list was prepared, petitioner desired to know the estimated costs of rectification of the listed defects and vide contract No.MRBC/LOG/MP/HOTO/ESTM/2000 dated March 23, 2000, the petitioner appointed J. Basheer and Associates Surveyors Pvt.Ltd for the purpose of estimation of cost for rectification of HOTO defects of the vessel as detailed in the tender. The report of the said J. Basheer and Associates is of January 25, 2001.

(f) However the petitioner processed the invoice submitted by Respondent as agreed in the contract which resulted in deduction of payment which was outside the scope of the work contract.

(g) In the said arbitral proceedings, respondent sought for an award interalia praying that the petitioner herein be directed to pay the Respondent a sum of Rs. 24,77,121 along with interest at the rate of 18% per annum from October 12, 2002 and also prayed for costs thereto.

4. There were eight claims raised by the respondent supported by the documents. The petitioner resisted the same by placing on record documents as well as relevant clauses of the Agreement between the parties. The learned Tribunal, considering the details of respective claims and the defence so raised and after giving opportunity to both the parties, gave the findings on individual claim and concluded in the following words:

“(A) The Oil and Natural Gas Corporation, the Respondents herein are ordered and directed to pay to Dolphin Offshore Enterprises (I) Ltd., the claimants herein, the sum of Rs.22,29,226.00 (Rupees twenty-two lacs twenty-nine thousand two hundred twenty-six only) with interest thereon at the rate of 12% per annum from 12.10.2002 till payment or realisation whichever is earlier.

(B) Oil and Natural Gas Corporation Ltd., the Respondents herein are ordered and directed to pay to Dolphin Offshore Enterprises (I) Ltd