M/S. M.B. Patel & Co. Vs. Oil & Natural Gas Commission  INSC
844 (8 May
REPORTABLE IN THE SUPREME COURT OF
INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.7340 OF 2002 M/S. M.B. PATEL
& CO. ... APPELLANT VERSUS ORDER This appeal is filed against the judgment
and order dated 11.07.2000 of the High Court of Gujarat at Ahmedabad in First
Appeal No.418 of 1986 whereby the High Court set aside the award dated
03.05.1985 passed by the Arbitrator. The High Court set aside the aforesaid
award on the following reasonings :
(a) that an arbitrator or umpire
has misconducted himself in the proceedings;
(b) that there appears to be an
error on the face of the record inasmuch as the Umpire has overlooked clauses
14 & 18 of the Arbitration Agreement;
(c) that the Umpire has traveled
beyond the scope of the contract between the parties on certain items and
claims and (d) that he has rendered lump sum award making it totally
2 On the aforesaid premises the
award was set aside.
In the present case the contractor
claimed Rs.30,425/- for abandonment of contract. This was the first claim. The
second claim was for Rs.30,213/- for illegal deductions made by ONGC. The third
claim was for Rs.2,00,000/- for not supplying the material in time by the ONGC.
The fourth claim was loss occasioned by the contractor for keeping his
establishment alive and on this head the claim was for Rs.3,50,000/-. The fifth
claim was loss of profit at the rate of 20 percent amounting Rs.1,80,000/-.
Last claim was interest at the rate of 18% p.a.
As already pointed out that the
Arbitrator awarded Rs.5,98,438/- as lump sum, we agree with the reasoning of
the High Court that the award is unintelligible.
Clause 14 of the Arbitration
Agreement reads as under :
"DELAY IN CONSTRUCTION
The Commission will make every
reasonable affect to furnish the materials under the contract and the right of
user including the permits required to be furnished by the Commission under the
contract in due time so as not to delay the construction related work of
reconditioning. In case of any hold up
to site work of the CONTRACTOR on
account of non-availability of any one
of these terms, no compensation by
way of claims is admissible but only corresponding extension of time limit
would be granted."
Under the aforesaid clause no
claim for compensation is admissible even that foul of the Commission. Clause
18 of the Arbitration Agreement reads :
3 "INTEREST ON AMOUNTS No
interest will be payable on the security deposit or any other amount
payable to the CONTRACTOR under
The Arbitrator has awarded the
interest at the rate of 12% on the amount with effect from 09.02.1984 to
03.05.1985 (pendente lite). He has also awarded interest from the date at the
rate of 12% on the amount as shown in 1 & 3 above till the date of decree
or actual date of payment, whichever is earlier.
In view of the aforesaid premises,
the Arbitrator has not at all considered clause 14 of the Arbitration
Agreement. The interest has been awarded in violation of clause 14 of the
Agreement. Apart from others these two legal aspects have not been considered
by the Arbitrator. We are, therefore, in full agreement with the reasoning
given by the High Court. The Arbitrator may now proceed with the arbitration
but in the light of the judgment of the High Court. We direct the Arbitrator to
consider the matter afresh in the light of the reasoning of the High Court.
Subject to the aforesaid, the
appeal is dismissed.
( H.K. SEMA )
( MARKANDEY KATJU ) NEW DELHI, MAY