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2022 Supreme(Bom) 2085
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
G.S. Kulkarni, J.
Ocean Sparkle Limited – Appellant
Versus
Oil And Natural Gas Corporation Ltd & Ors. – Respondents
Commercial Arbitration Petition No. 135 of 2022
Decided On : 06-06-2022
Mr. Prathmesh Kamat With Ms.Ashwini Sinha I/B. Bhatt & Saldana, for the Appellant; Mr.Vishal Kanade With Nishit Dhruva, Kushbu Chhajed And Atharva Diwe I/B. Mdp & Partners, for the Respondent.
The court emphasized the importance of honoring undisputed invoice amounts and the limitations on invoking a performance bank guarantee after the contract has been fully performed.
Headnote:
Arbitration and Conciliation Act,1996 - Section 9 - Disputed Invoices - Performance Bank Guarantee - The court directed ONGC to deposit the amount payable to the petitioner under the unpaid invoices and restrained ONGC from invoking the performance bank guarantee.
Fact of the Case:
The petitioner, a vessel charterer, raised invoices for services rendered to ONGC. ONGC withheld payment citing damages caused by the petitioner's vessel to its platform. The petitioner sought deposit of the unpaid invoice amounts and restraint on invoking the performance bank guarantee.
Finding of the Court:
The court found that the petitioner's claim for unpaid invoices was undisputed and justified. It also ruled that the performance bank guarantee could not be invoked as the contract had been fully performed and the vessel dehired.
Issues: The main issues were the withholding of payment by ONGC and the invocation of the performance bank guarantee by ONGC.
Ratio Decidendi: The court held that the undisputed invoice amounts should be deposited and restrained ONGC from invoking the performance bank guarantee as the contract had been fully performed.
Final Decision: The court directed ONGC to deposit the unpaid invoice amounts and restrained ONGC from invoking the performance bank guarantee.
JUDGMENT
1. This is a petition filed under Section 9 of the Arbitration and Conciliation Act,1996 (for short 'the Act') whereby the petitioner has prayed for interim reliefs pending the arbitral proceedings.
2. Perusal of the memo of the petition shows that the disputes and differences between the parties have arisen under the contract agreement dated 14 June 2018 (referred to as 'the contract agreement')as awarded by respondent No.1 - Oil and Natural Gas Corporation Ltd (for short 'ONGC') to the petitioner, under which the petitioner chartered its vessel i.e. 'OSL Glory' (for short 'the said vessel') to ONGC for a period of three years (1095 days), commencing from 20 March 2018 at 12.18 hours. The parties agreed that the contract agreement would stand completed unless automatically extended for a period not exceeding 30 days under the same rates to the satisfaction of the ONGC.
3. It is the case of the petitioner that in furtherance of the contract agreement, the said vessel as chartered to the ONGC was to be utilized for the purpose of its off shore activities which were detailed in 'Schedule C' to the contract agreement. The contract agreement provides that the petitioner would raise invoices at the end of each month alongwith the photo copies of the relevant documents. The petitioner accordingly raised monthly invoices claiming charter-hire/remuneration as per the terms of the contract agreement. The petitioner has contended that the petitioner had raised invoices from 1 April 2019 upto May, 2021. The invoices raised by the petitioner from September, 2019 to March, 2020 were cleared by the ONGC without any demur.
4. It is contended by the petitioner that there is some significance in the ONGC clearing the petitioner's invoices after September,2019, for the reason that on 1 September 2019 an incident took place namely that the petitioner's said vessel (whilst on the ONGC charter) collided with the ONGC unmanned platform 'RS-21' when the vessel was approaching Rig Jindal Explorer.
5. The P&I Club of the petitioner [Shipowners' Protection and Indemnity Association (Luxembourg)] appointed one 'UBA Insurance and Surveyor and Loss Assessors LLP' (for short 'UBA') to survey the cause of incident between between the ONGC's platform RS-21 and the petitioner's vessel. On 18 October 2019, UBA submitted its preliminary report to the petitioner under which the probable cause, interalia, was attributed to the Power Management System module of A/E 3 of the petitioner's vessel having malfunctioned. The report recorded that the module appeared to have sensed wrong frequency voltage and reduced the speed of A/E 3. This malfunctioning had caused the incident. On 5 December 2019 UBA submitted its damage survey Report, whereunder it was interalia observed by UBA that the joint inspection of Spyder Deck, Boat Landing was carried out and no apparent damages were noted. UBA also found that prevailing repair rate of an offshore contractor and the repair estimates were in the range of USD 30,000.
6. The ONGC, however, by its letter dated 17 December 2020 made a claim against the petitioner for a sum of USD 616,490/- towards the repair cost which would be payable by the petitioner to the ONGC for the damages to RS-21 which had occurred due to the incident involving the petitioner's vessel. ONGC alleged negligence on the part of the petitioner. The said letter of the ONGC was replied by the petitioner through its Advocate's letter dated 12 January 2021 denying the allegations of the ONGC of any negligence and wilful misconduct on the part of the petitioner. The petitioner making a reference to Clause 16(B) and Clause 17(2) of the Contract Agreement contended that the petitioner was absolved of any liability. The petitioner, accordingly, denied its liability to make payment of such amount as claimed by the ONGC.
7. On 18 February 2021 the petitioner and ONGC executed a Contract Information Letter by which the contract agreement was extended from 20 March 202
