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HIGH COURT OF CALCUTTA
Shyamal Kumar Sen, J.
Oil and Natural Gas Corporation Ltd.
vs.
Dowell Schlumberger (Western) S.A.
A.P. No. 21 of 1995
Decided on : October 4, 1996. "'
ARBITRATION - SETTING ASIDE OF AWARD - GROUNDS - MISCONDUCT OF ARBITRATORS - ERRONEOUS FINDINGS OF FACT - MISCONSTRUCTION OF CONTRACT - JURISDICTION OF COURT.
Fact of the Case:
The petitioner, Oil & Natural Gas Corporation Ltd. (ONGC), sought to set aside an arbitral award dated June 10, 1995, on the grounds of misconduct of arbitrators, erroneous findings of fact, and misconstruction of the contract.
Finding of the Court:
The Court held that the arbitrators did not commit any misconduct or misconducted themselves. The findings of fact by the arbitrators were not erroneous and were based on the evidence before them. The arbitrators had the jurisdiction to construe the contract and their interpretation was plausible and not erroneous.
Issues: 1. Whether the arbitrators committed any misconduct or misconducted themselves. 2. Whether the findings of fact by the arbitrators were erroneous. 3. Whether the arbitrators misconstrued the contract.
Ratio Decidendi: 1. The Court held that the arbitrators did not commit any misconduct or misconducted themselves as they acted within their jurisdiction and there was no evidence of any improper behavior or bias. 2. The Court held that the findings of fact by the arbitrators were not erroneous as they were based on the evidence before them and were not patently unreasonable or demonstrably incorrect. 3. The Court held that the arbitrators had the jurisdiction to construe the contract and their interpretation was plausible and not erroneous.
Final Decision: The Court dismissed the application to set aside the arbitral award and held that the award was valid and binding on the parties.
1. The Court: This is an application by Oil & Natural Gas Corporation Ltd. in short ONGC for setting aside an award dated June 10, 1995.
2. Principal grounds for setting aside of the said award in short are :
(i) The arbitrators in making the said award manifestly disregarded the express terms of the contract dated 26th December, 1988 as varied by an Addendum dated 30th Nov. 1989.
(ii) The arbitrators travelled beyond and outside the bounds of the said contract and acted without jurisdiction thereby misconducted themselves.
(iii) The award is based on erroneous finding of facts which is apparent on the face of the award itself.
(iv) The arbitrators arrived at erroneous conclusions of law from the admitted facts thereby misconducted themselves.
(v) In examining the provisions of the contract the arbitrators reached at incorrect and erroneous conclusions which are apparent from the award and the documents expressly referred to and relied therein and adjudicated beyond the contract.
3. By a contract in writing dated December 26, 1988 the respondent agreed to let on hire the following equipments :-
(i) Production Testing and Wireline Services (PTS & WL);
(ii) Nitrogen (N2);
(iii) Coiled Tubing Unit (CTU);
(iv) Drill Stem Testing (DST);
for production testing on shore and offshore rigs for one year from 26th December, 1988 with option to renew the same.
4. Ld. Advocate for the petitioner has referred to Clauses 2.9, 6.1 and 8.4 and has submitted that under the terms of the contract the respondent was obliged to keep the said equipments in full readiness at the location specified by ONCC to enable it to test the rigs and the rent for the said equipments was payable only if the respondent fulfilled its said obligations, and not otherwise.
5. Ld. Advocate has further referred to Clause 9.2 of the contract which provides that the said equipments will be transported from one location to another by inland transportation i.e. by road transportation, by a contractor to be engaged by the respondent with the approval of ONGC.
6. Clause 21 of the contract has also been referred to which provides for a Force Majeure Clause.
7. The period of the contract was varied by the Addendum dated 30th November, 1989 upto 1st June, 1990 or till the completion of testing of SME-4 of Calcutta Offshore Project at Haldia.
8. The contention of the ld. Advocate for the petitioner is that from the correspondence referred to in the said award the admitted fact is that on 6th March, 1990, ONGC requested the respondent to arrange for transportation by road of the equipments from Agartala to Haldia by approved contractor and on 19th March, 1990 in terms of the said contract ONGC approved the transporter. ONGC also impressed upon the respondent that the said equipments were urgently required for the rig testing at Haldia and that the same should be transported to and received by ONGC at Haldia within 20 days, which was accepted.
9. In this connection he has referred to following correspondence
Letter dated 6.3.90 from petitioner to the respondent.
Letter dated 16.3.90 from respondent to the petitioner.
Letter dated 19.3.90 from petitioner to the respondent.
Letter dated 22.3.90 from the petitioner to the respondent.
Letter dated 20.3.90 from petitioner to respondent.
Letter dated 5.4.90 from respondent to Carrier.
Letter dated 6.4.90 from Carrier to the respondent.
10. Further contention of the ld. Advocate for the petitioner is that the correspondence referred to above bears out a very important fact that had the respondent diligently complied with the instruction of ONGC, the equipments could have crossed Manas Bridge in Agartala long before April 11, 1990 and reached Haldia, long before the closure of Manas Bridge, referred to hereafter, by first week of April, 1990. It is an admitted fact that by reason of riot and revolt by Bodo rebels on 11th April, 1990, the said Manas Bridge by which the said equipments were to be taken by transport was damaged. On 7th September, 1990 adm
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