The court held that undisputed claims made by a contractor cannot be offset by related entity liabilities where no jurisdictional linkage is established.

JUDGMENT :

(Sandeep V. Marne, J.)

1) These Appeals are filed by the Appellant challenging the common judgment and order dated 28 April 2015 passed by the learned Single Judge dismissing Arbitration Petition Nos. 587 of 2014, 767/2014, 768/2014 and 1045/2014 filed under the provisions of Section 34 of the Arbitration and Conciliation Act, 1996 challenging Arbitral Award dated 9 October 2013.

2) Brief facts leading to filing of the Appeals are that, the Oil and Natural Gas Corporation Ltd. (ONGC) floated a tender for charter hire of a Floating Production Storage and Off-loading vessel (FPSO) in October 2005. M/s. Discovery Enterprises Pvt. Ltd. (Discovery) submitted its bid. On 22 March 2006, ONGC awarded the contract in favour of Discovery. Pursuant to the said contract, according to ONGC, Discovery imported the vessel FPSO (Crystal Sea) for oil and gas processing in the Bombay High in the offshore fields of ONGC. ONGC paid customs duty on the said vessel on behalf of Discovery of Rs.55,78,12,857/- with an understanding that the vessel would be exported under the duty drawback scheme and that Discovery would complete all the formalities for claiming the duty drawback. Discovery allegedly failed to comply with their part of obligation and accordingly the contract was terminated on 12 November 2006. ONGC issued notice dated 12 February 2007 to Discovery and demanded various amounts towards compensation. The dispute between ONGC and Discovery was accordingly referred to the Arbitral Tribunal.

3) In the arbitration proceedings between ONGC and Discovery, ONGC impleaded M/s. Jindal Drilling and Industries Limited (Jindal)-the present Respondent. Jindal filed an application on 23 August 2008 in the arbitration proceedings under Section 16 of the Arbitration and Conciliation Act, 1996 (the Act) praying for deletion of its name from the arbitration proceedings by raising the issue of jurisdiction. By order passed by the Arbitral Tribunal on 27 October 2010, the plea of Jindal was accepted and ONGC was directed to strike off Jindal’s name from the array of the parties. Aggrieved by the order dated 27 October 2010, ONGC filed Appeal under Section 37 of the Act which came to be dismissed by this Court vide order dated 27 June 2012. ONGC filed Special Leave to Petition against the order dated 27 June 2012 before the Supreme Court which remained pending. In the meantime, the Arbitral Tribunal passed final award dated 6 June 2013 in favour of ONGC and against Discovery. Discovery has apparently not challenged the said final award dated 6 June 2013.

4) In the meantime, ONGC entered into agreement with Jindal on 2 December 2006 and took on hire the drilling unit RIG Noble Charlie Yester from Jindal to conduct drilling operations in the offshore waters of India. Three contracts were executed with Jindal on 9 December 2004, 17 August 2006 and 23 December 2003 for three other works. The four contracts awarded to Jindal by ONGC were independent contracts not relating to each other and according to Jindal, not having any connection with the contract between ONGC and Discovery. Jindal apparently executed the works awarded under the said four contracts and submitted various bill