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2016 Supreme(Mad) 3147
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RAJIV SHAKDHER, J.
M/s. Hardy Exploration & Production (India) Inc. - Petitioner
Vs.
M/s. Samson Maritime Limited & Ors. - Respondents
Original Petition No. 111 of 2016
Decided On : 04-10-2016
For the Petitioners: Mr. V. Vijay Narayanan, S.C. for M/s. Vinod Kumar.
For the Respondents: Mr. AR.L. Sundaresan, S.C. for Mr. P. Giridharan.
Headnote:
Arbitration and Conciliation Act, 1996 - Section 34 - Finance Act, 1994 - Section 65(105)(zzzzj) - Sale of Goods Act, 1930 - Section 64A - Bar of limitation – Arbitration Agreement – Award – Challenged - Petitioner has assailed aforementioned awards on just two (2) ground - First, on ground of bar of limitation - Second, on ground that Arbitral Tribunal has exceeded its jurisdiction, inasmuch as it has held that petitioner is liable to reimburse component of service tax levied on first respondent, contrary to plain terms of contract, obtaining between parties - Held, Purpose of Section 21 is to fix date of commencement of arbitration proceeding - Insofar as petitioner was concerned, it was put to notice, when, the first notice was issued, i.e., 09.10.2012, that dispute had to be referred to an Arbitrator - The defect in the notice, if it could be called one, at best, can be termed as an irregularity - The error of roping in petitioners Joint Operating Partners did not derogate from fact that insofar as petitioner was concerned, arbitration commenced from date when, the first notice was issued, i.e., 05.10.2012 - If, this date is taken into account, concededly, claims of the first respondent would be within time and, thus, cannot be held to be barred by limitation – Petition dismissed.
1. This is a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 1996 Act), to lay a challenge to the award dated 25.08.2015 and the additional award dated 25.10.2015.
2. I must state at the very outset that the petitioner has assailed the aforementioned awards on just two (2) grounds. First, on the ground of bar of limitation. Second, on the ground that the Arbitral Tribunal has exceeded its jurisdiction, inasmuch as it has held that the petitioner is liable to reimburse the component of service tax levied on the first respondent, contrary to the plain terms of the contract, obtaining between the parties.
2.1. I have indicated the broad contours of the challenge right at the beginning, as in the petition, there are other grounds raised, which the petitioner's counsel, during the course of arguments, did not touch upon, making it clear, in no uncertain and explicit terms, that the challenge was confined to the grounds adverted to above.
2.2. It would be relevant to note at the outset that I would be referring to the petitioner and first respondent collectively as parties.
3. Before I proceed further, let me, therefore, sketch out the broad facts, in the background of which, challenge has been laid to the aforementioned awards.
Prefatory facts:
4. The petitioner is a Corporation, which is registered in Delaware, USA and engaged in the business of off shore oil and gas exploration and production.
4.1. In furtherance of its business, the petitioner executed a Production Sharing Contract (in short "PSC") dated 30.12.1994 with the Government of India (in short "GOI"). Under the contract, the petitioner was designated as the operator of a particular block in the Cauvery Basin, in India.
4.2. Evidently, the petitioner, thereafter, executed a Joint Operating Agreement (JOA) dated 05.12.1995 with three (3) entities; these being: Oil and Natural Gas Corporation Limited (ONGC), Hindustan Oil Exploration Co. Ltd. (HOEC), and Tata Petrodyne Limited (TPL).
5. The petitioner, for the purpose of its business, required off shore support/supply vessels. It is, for this purpose, that the petitioner, from time to time, chartered different vessels, owned by the first respondent, from 1997 onwards; resulting, Charter Party Agreements being executed between them.
6. In so far the instant petition is concerned, parties entered into a Charter Party Agreement in respect of two (2) vessels, i.e., M.V. Jade (hereafter referred to as "Jade Charter") and M.V. Ocean Tanzanite (hereafter referred to as "Tanzanite Charter"). The said Charter Party Agreements were executed between 2007 and 2009.
7. More specifically Jade Charter, it was executed on 26.07.2007. Jade Charter had a fixed tenure, which ended on 31.07.2010. Under the terms of Jade Charter, the tenure was extendable at the petitioner's option for two (2) periods of one year each. Jade Charter, was, as a matter of fact, extended by the petitioner on two (2) occasions, i.e., 30.06.2010 and 01.07.2011.
7.1. Consequently, the Jade Charter stood extended till 31.07.2012.
8. As against this, Tanzanite Charter was executed on 21.12.2009, with a firm tenure, which expired on 31.12.2012.
8.1. Both Charter Parties, provide for early termination, upon issuance of notice to that effect. Concededly, hire charges were payable for the notice period, which was pegged at 90 days, unless vessels were employed for alternate work.
9. Admittedly, both vessels were made available to the petitioner. M.V. Jade was made available to the petitioner on 07.08.2007, while M.V. Ocean Tanzanite was made available to the petitioner on 13.01.2010.
10. The petitioner, however, brought about, early termination of the aforementioned Charter Parties on 16.03.2012, with the request for waiver of notice period.
11. Pertinently, during the subsistence of the two (2) Charter Parties, on 16.05.2008, Section 65(105)(zzzzj) was inserted in the Finance Act, 1994. The insertion of Section 65(105)(zzzz
