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2023 Supreme(Online)(DEL) 13692
DELHI HIGH COURT
JSIW INFRASTRUCTURE PVT LTD – Appellant
Versus
ONGC LTD – Respondent
OMP_(COMM)-148_2021
An unambiguous contractual provision must be given effect to, and external aids can only be used to resolve an ambiguity if internal aids prove insufficient.
Headnote:
CONTRACT INTERPRETATION - AMBIGUITY - EXTERNAL AIDS - PRECEDENCE OF DOCUMENTS - ENTIRE AGREEMENT CLAUSE - [CONTRACTUAL INTERPRETATION] - [AMBIGUITY] - [EXTERNAL AIDS] - [PRECEDENCE OF DOCUMENTS] - [ENTIRE AGREEMENT CLAUSE]
Fact of the Case:
The petitioner and respondent entered into two contracts for pipeline replacement projects. Disputes arose regarding the petitioner's claim for reimbursement of excise duty. The petitioner contended that the amended clause 3.4.1.5 of the General Conditions of Contract (GCC) allowed for reimbursement of excise duty on line pipes, while the respondent argued that the amendment was only valid for reimbursement of CVD on imported line pipes.
Finding of the Court:
The court found that the learned arbitrator had erred in interpreting clause 3.4.1.5 of the GCC. The court held that the clause was unambiguous and that the learned arbitrator had improperly relied on external aids, such as prior correspondence between the parties, to create an ambiguity. The court also held that the learned arbitrator had disregarded the precedence of documents established by the contract itself, which gave priority to the GCC over the letter dated 27.08.2008. Finally, the court held that the learned arbitrator had contravened clause 1.2.5 of the GCC, which stated that the contract was an entire agreement and superseded all prior discussions and agreements.
Issues: 1. Whether the learned arbitrator erred in interpreting clause 3.4.1.5 of the GCC.2. Whether the learned arbitrator improperly relied on external aids to create an ambiguity in clause 3.4.1.5 of the GCC.3. Whether the learned arbitrator disregarded the precedence of documents established by the contract itself.4. Whether the learned arbitrator contravened clause 1.2.5 of the GCC.
Ratio Decidendi: 1. An unambiguous contractual provision must be given effect to.2. Only if there is an ambiguity in a contractual provision will it be permissible to resort to internal aids to resolve the ambiguity.3. Only if internal aids prove insufficient, recourse to external aids is permissible.4. The precedence of documents established by a contract must be followed.5. An entire agreement clause supersedes all prior discussions and agreements.
Final Decision: The impugned arbitral awards were set aside.
$~J-35 & 36
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IN THE HIGH COURT OF DELHI AT NEW DELHI
Pronounced on: 20.12.2023
+
O.M.P. (COMM) 148/2021
JSIW INFRASTRUCTURE PVT LTD.
.... Petitioner
Through:
Mr. Aayush Agarwala, Ms. Bhumika
Sharma and Mr. Auritro Mukherjee,
Advs.
versus
ONGC LTD .
.... Respondent
Through:
Mr. Saurav Agrawal, Ms. Akriti
Dawar, Ms. Kavya Pahwa, Mr.
Anshuman
Chowdhary
and
Mr.
Vibhu Anshuman, Advs.
+
O.M.P. (COMM) 149/2021
JSIW INFRASTRUCTURE PVT LTD.
.... Petitioner
Through:
Mr. Aayush Agarwala, Ms. Bhumika
Sharma and Mr. Auritro Mukherjee,
Advs.
versus
ONGC LTD .
.... Respondent
Through:
Mr. Saurav Agrawal, Ms. Akriti
Dawar, Ms. Kavya Pahwa, Mr.
Anshuman
Chowdhary
and
Mr.
Vibhu Anshuman, Advs.
CORAM:
HON'BLE MR. JUSTICE SACHIN DATTA
1.
O.M.P. (Comm.) 148/2021 assails an arbitral award dated 10.01.2020
issued in background of disputes between the parties arising out of contract
for “two pipeline replacement project for Ahmedabad and Mehsana Asset”.
JUDGMENT
Digitally Signed
By:KAMLA RAWAT
Signing Date:21.12.2023
18:10:06
Signature Not Verified
The said contract was awarded to the petitioner vide notification of award
dated 25.06.2008.
2.
O.M.P. (Comm.) 149/2021 assails an arbitral award dated 10.01.2020
issued in background of disputes between the parties arising out of contract
for “two pipeline replacement project for Ankleshwar Asset”. The said
contract was awarded to the petitioner vide notification of award dated
30.06.2008.
3.
The disputes between the parties in both the contracts pertains to
petitioner’s claim of reimbursement of excise duty in terms of clause 3.4.1.5
of the General Conditions of Contract (GCC). Both the impugned awards
are identical.
4.
After notification of award/s, the petitioner and the respondent have
exchanged certain communications, wherein the petitioner sought certain
clarifications from the respondent in respect of the contract. In the said
communications, the petitioner highlighted the difficulty in procuring line
pipes domestically, and informed the respondent that the petitioner would
probably have to import line pipes required for the project instead of
purchasing them from domestic supplier. The petitioner also highlighted the
fact that on import of materials, CVD (countervailing duty) will be imposed
in lieu of excise duty at the same rate of excise duty. The petitioner
requested the respondent that for import of line pipes, the CVD, as would be
payable by the petitioner should be reimbursed to the petitioner instead of
excise duty. It was also mentioned that there will not be any financial
implication on the respondent, as reimbursement of CVD will be restricted
to excise duty. Although, initially the respondent rejected the said request of
the petitioner, subsequently, vide letter dated 27.08.2008 the respondent
Digitally Signed
By:KAMLA RAWAT
Signing Date:21.12.2023
18:10:06
Signature Not Verified
accepted the said request which resulted in a certain amendments to the
contract. The said letter dated 27.08.2008 reads as under:-
“No.: DLH/OES/2PLRP/AMD-MEN/Contr/2008 dated 27.08.2008
In response to your persistent request for reimbursement of CVD vide
above mentioned letters ONGC, as special case, has agreed to make the
modifications in the contract condition, as below:
1.
To allow reimbursement of only CVD (Countervailing Duty)
portion of Custom Duty, for import of line pipes, equivalent to Central
Excise Duty leviable on a like product manufactured in India. The CVD
reimbursement shall be limited to amount of ED quoted in your price
offer for import of line pipes only,
and “Milestone Payment formula” to facilitate reimbursement of CVD.
payment of CVD) for 2PLRP (AMD-
Digitally Signed
By:KAMLA RAWAT
Signing Date:21.12.2023
18:10:06
Signature Not Verified
(emphasis supplied)
However, only for line pipes,
company shall reimburse the
Excise Duty paid by the
man
