Oil and Natural Gas Corporation Ltd. vs Nippon Steel Corporation Ltd.

S.C. Dharmadhikari, J.—In this matter the arguments concluded and Judgment was reserved. It could not be pronounced earlier because of the reasons that are set out in my order dated 3rd April 2009.

By this petition u/s 30 of the Arbitration & Conciliation Act, 1996, the Award dated 2nd March 1940 is challenged by the petitioner Oil & Natural Gas Corporation (ONGC for short).

This petition was filed in this Court on 12th July 1996.

It was placed before a Learned Single Judge of this Court, who by his Judgment and order dated 6th January 1997 held that the petition is time barred and, therefore, required to be rejected at the admission stage. He rejected it at the admission stage itself.

This order was challenged in Appeal being Appeal No. 321 of 1997. This appeal was admitted on 19th June 1997. It was directed that pending hearing and final disposal of the Appeal the appellants/petitioners are directed to deposit the principal amount awarded by the Arbitrator and it would be open for the respondents to withdraw the same by furnishing a Bank Guarantee of a Nationalised Bank. Further proceedings were stayed.

The appeal was then placed for hearing and final disposal before a Division Bench of this Court. The Division Bench by its Judgment and order dated 6/8th December 2005 dismissed the said appeal.

The petitioner challenged this Judgment and order of the Division Bench by filing a SLP before the Supreme Court and after the necessary leave was granted, it came to be numbered as Civil Appeal No. 4699 of 2006. By a Judgment and order delivered on 7th November 2006, the Supreme Court allowed the appeal, set aside the Judgment and order of the Division Bench and directed that the arbitration petition being not time barred should be heard on merits and in accordance with law. Pursuant to the order and direction of the Supreme Court, this Arbitration Petition was placed before me.

It is not in dispute that the respondent � original claimants invoked the jurisdiction of the Arbitrators pursuant to the Agreement between the parties. It is further not in dispute that in or about July 1983, a bid came to be issued by the petitioners for transportation and installation of the South Bassein field Central Facilities Complex, Bombay Offshore project. There was an adendum to the to the said bid/tender. A proposal was forwarded on 16th may 1984 by the respondents for the said works on lumpsum basis. There were five other bids received by the petitioner. After the joint meeting and discussions between the parties a Letter of Intent was issued and, thereafter, the respondents started work on the project. The petitioner further states that a contract was signed on 28th December 1985. Petitioners state that some issues were raised during the course of carrying out the work under the Contract. It is stated by the petitioner that works were completed in or about December 1986. It is also the case of the petitioner that extra sums were claimed by the respondents. It was the case of the respondent that there were certain works carried out and thus there is an increase in the scope of work. There were claims raised by the respondents and it is the case of the petitioner that discussion took place in April 1987. Respondents agreed to restrict the claim under the change order proposals to Japanese Yen (JY for short) 64,40,67,372. However, in correspondence the respondents tried to set up that there was no such agreement. It is stated that the petitioner informed respondent that an amount of JY 22,53,11575 would be paid in full and final settlement of all change order claims. Respondents stated that this sum was not acceptable. However, petitioners remitted to the respondents� bankers in Tokyo, Japan a sum of JY 203343696. This was after deduction of taxes and charges from the above sum to be paid in full and final settlement. This amount was accepted but the respondent purported to state that it is without prejudice.

It is the case of the petitioner that at no stage the amount was returned nor an offer was made to return the same. Thus, the petitioner contended that the amount was accepted in full and final settlement. There is complete accord and satisfaction of all claims. In such circumstances, there is no question of accepting the amounts under protest or tentatively or without prejudice. This being the position, the petitioner contended that there is no dispute which could be referred to arbitration. The respondents contended to the contrary. Therefore, petitioners were surprised to receive a communication from the Advocate for respondents with regard to commencement of Arbitration proceedings under Clause 16.2 of the General Conditions of Contract. The respondents purported to nominate their Arbitrator. Ultimately, the disputes were referred to arbitration of Hon�ble Mr. Justice D.V. Patel (Retd. Judge of this Court) and Dr. S.R. Jain, Consulting Engineer. The learned Arbitrators, after due notices took on record claims and counter claims. They allowed parties to lead evidence and produce documents. They made the impugned award rejecting the preliminary objections of petitioners and directing petitioners to pay to the respondents a sum of JY 95,286,240/-. The amount was to carry interest.

It is this Award which is subject matter of challenge in this petition.

Mr. Zaiwala, learned Senior Counsel appearing for petitioner contended that the Award is vitiated by serious errors apparent on the face of it and the Arbitrators have, over looking the objections and specific clauses of the contract, awarded the claims which should not have been done by them. Thus, the jurisdiction u/s 30 of the Arbitration Act ought to be exercised in this case.

He submits that even if the Award is reasoned still it can be set aside if it is vitiated by errors apparent on the face of it. He submits that if the Arbitrators have chosen to assign the reasons, then, they cannot ignore vital pleas and objections raised by parties. More so, when they pertain to the maintainability of the reference itself or Arbitrability of the disputes referred. He submits that in this case, a preliminary objection was specifically raised by the petitioners but while rejecting the same no reasons have been assigned.

Mr. Zaiwala submits that the Arbitrators have failed to consider an important aspect of the plea raised with regard to payment of a sum by the petitioners in full and final settlement. Although, the sum is accepted without prejudice by the respondents, yet, the retention of the said amount which was directly remitted to the bank account of the respondent has some significance in law. This fact has to be considered and cannot be brushed aside. In these circumstances, the Award cannot be sustained and must be set aside.

Without prejudice and arguing the matter claim wise, Mr. Zaiwala would urge that as far as Claim No. A(i)(A) is concerned, the Arbitrators rely upon Clause 25.1.4 of the Contract. However, they have ignored the proviso to the same completely. He submits that the claim under this head was akin to extra payment. If there is variation in the work executed, then, there could be something which affords a basis for making the claim. However, the stand of O.N.G.C. is clear and deduction is permissible and, therefore, ignoring this aspect, the claim could not have been awarded. Inviting my attention to the statement of claim Mr. Zaiwala urged that there is an error in the reasoning on the face of it.

As far as claim A(i)(b) is concerned, Mr. Zaiwala urges that if this claim is rejected, then, there was no reason to allow the cost of 12 extra splices to the extent of JY 92400000/-. Similarly with regard to claim (2) is concerned, Mr. Zaiwala has invited my attention to para 11 page 37 of the Award and contended that if the finding is that there is no evidence and there being serious objections raised, the claim under this head could not have been awarded. There is absolutely no basis for the claim inasmuch as the work was not necessary, according to O.N.G.C. There is

no finding of any actual loss for the work allegedly carried out. Everything is arrived at and awarded on ad hoc basis. He submits that even with regard to Claim A-11, the same is awarded without any basis and evidence. If work is done allegedly but there is no quantification, then, some ad hoc sum could not have been awarded.

Mr. Zaiwala contended that as far as claim B-ii is concerned, once again the claim is awarded on the basis of equity. There is no question of granting any claims in equity. Unless there is clear proof the claim should have been awarded. In some cases (Claim No. B-iii), the Arbitrators have travelled beyond the contract which is impermissible in law. As far as claim B-2 is concerned, he submits that all arguments of the petitioners are accepted but still the amount is awarded to the respondents arbitrarily and when there being no basis for the claim. The findings are patently contradictory. With regard to several claims i.e. Claim No. B-VIII to XVI, XVII and XXI, Mr. Zaiwala submits that the same are awarded on the basis of guess work. If the claim is not accepted in part by ONGC, then, awarding the entire sum was impermissible. In some cases when there is no proof or material produced by the claimants � respondents, yet the sums have been awarded. At times when there is no quantification some ad hoc figure is determined and awarded. That is also not justified and permissible in law. As far as Claim B-XXII is concerned, the procedure in the contract was not followed. The claims under this head had absolutely no basis nor was there any material to support them. Yet, the award in that behalf came to be made.

Mr. Zaiwala then urged that Claim No. E-I to E-V and E-IV(ii) is concerned, the Award is based on some calculations which themselves were ad hoc. If substantial portion of the claim is disallowed, then, awarding some amount on guess work is not at all permissible and justified. He submits that all claims must be established by the claimants/respondents as the burden was on them. Similarly, wherever there was some shift in the same, all materials should have been properly weighed and just because a claim is made does not mean the same must be awarded. These are matters which pertain to public monies and the Arbitrators should have been careful while scrutinising the claims. There should not be any sympathy under any liberal principles. Unless strict proof was furnished, there is no justification for awarding the claims. He submits that with regard to claims under Clause F when part of the claim has been rejected, then, without any independent proof, no amount could have been directed to be paid to the respondents. They should have furnished independent proof and not relied upon some correspondence or entries. In these circumstances, the claims awarded having not been at all proved, the Award must be set aside.

Lastly Mr. Zaiwalla urged that rejection of the counter claim to the extent indicated is also vitiated by errors apparent. He submits that there is nothing like symbolic damages. If the breach and the loss sustained is proved, the entire sum should have been awarded. No reasons have been assigned as to why this approach has been adopted to award some ad hoc figure. The approach is totally perfunctory. He submits that insofar as award of interest is concerned as well, Clause 12.2.4 of the Contract has been ignored. For disputed amount, there is no question of awarding any interest. The interest could have been awarded only if the undisputed sum had been withhold without any justification. In that case, interest could have been awarded as measure of compensation. Overlooking the fundamental principles with regard to award of interest, the Arbitrators proceeded to grant interest on the claims awarded. Therefore, the award as a whole is required to be set aside.

Mr. Zaiwala has placed reliance upon the following decisions in support of his above contentions:

(A) Oil and Natural Gas Corporation Ltd. Vs. SAW Pipes Ltd., .

(B) Alopi Parshad and Sons Ltd. Vs. Union of India (UOI),

(C) Tamil Nadu Electricity Board Vs. M/s. Bridge Tunnel Constructions and others, .

(D) Associated Engineering Co. Vs. Government of Andhra Pradesh and another, .

Mr. Bharucha, learned Senior Counsel appearing for respondents on the other hand supported the Award. He submitted that this petition is not an appeal against the Award. The award can be challenged on limited grounds. However, the present petition is an attempt to reopen the arbitral proceedings. He submits that there is no prohibition in the contract which has been pointed out so as to arrive at a conclusion that the Arbitrator had no jurisdiction to go into the disputes and make an Award. Even otherwise, the petitioners have accepted the Award. In this behalf, he invites my attention to page 134 (Exh.1 and 2) to the affidavit in reply of the respondents. He submits that the Award is made in March 1996 and the Letters of ONGC are of July 1996. ONGC has agreed to pay the award amount and thus accepted the award completely. In these circumstances, the petition is not maintainable at all and should be dismissed on the above ground alone.

As far as the merits are concerned, Mr. Bharucha submits that there is no accord and satisfaction. The matter of accord and satisfaction is for the arbitrators to decide. As to whether the claim has been accepted or not can be decided on the basis of the documents produced. There is nothing in the record which would indicate that the respondents have accepted any sum in full and final settlement. On the other hand, the petitioner adopted unique method of directly remitting some amount in the bank account of respondents. Merely because that amount is retained in the said bank account and the bank account is that of the respondents does not mean that there is any acceptance much less accord and satisfaction of all claims. Therefore, it is for the Arbitrators to decide as to whether claims are arbitrable on the basis of the entire materials. They have held that they are so arbitrable. In these circumstances, their conclusion cannot be faulted and should not be interfered with. Further, reasonableness or adequacy of the reasons is not for this Court to decide. Sufficiency or otherwise of the reasons assigned is not a ground to set aside the Award. If the Award and the conclusions are plausible and some reasons are being assigned to reach that conclusion, then, the Award cannot be interfered with. More so, when the view taken is not perverse. He submits that the entire correspondence must be seen on the aspect of accord and satisfaction and if so seen it is apparent that the claims of respondents was satisfied. They had not accepted any amount in full and final settlement. Therefore, the award is justified.

Mr. Bharucha submits that it is not necessary to go claim wise as has been attempted by Mr. Zaiwala. He submits that the petitioners are calling upon this Court to re-appreciate this evidence. They are seeking reappraisal of the same. This is not permissible in law. Once there is some material and evidence before the Tribunal, then, the Award granting the claim is not liable to be set aside. Merely because the reasons are not elaborate or detailed is no ground to interfere. Once the Court is satisfied that the necessary documents have been considered so also parties have been permitted to place their case, then, ultimate Award must be upheld.

As far as some claims are concerned and more particularly those at paras 80 and 85 of the Award, Mr. Bharucha would urge that the amounts are awarded on admission of ONGC. The award is restricted to the admitted amount. Everything claimed more than that is rejected. As to why the amount is awarded and whether the evidence was sufficient or not cannot be seen by this Court as that is not permissible in law. In such circumstances, the Award cannot be disturbed. Even as far as the counter claim is concerned, reasons have been assigned for partly granting it.

Mr. Bharucha was at pains to point out that Clause 25.1.4 has been construed and interpreted by the Arbitrators properly. Their interpretation is reasonable and plausible. There is no issue that no work was done as per the approved drawings and specifications. If that is the case, then, no fault could be found with the conclusion of the Arbitrators. As far as the work beyond the scope of the contract is concerned, Mr. Bharucha invites my attention to Clause 25 and urges that the Arbitrators have neither ignored the contract nor travelled beyond the same. In such circumstances, their conclusion is not liable to be set aside. Any scope for interpretation or construction of a particular clause to resolve any ambiguity therein is also not permissible and if the Arbitrators placed a construction thereof which is possible, even then, the Award cannot be set aside.

There is no prohibition in law to grant interest and Clause 12.2.4 is clear. The Arbitrator has power to Award interest at all three stages as that is the law of the land. The clauses in question, do not prohibit grant of interest. On the other hand, it provides the manner in which the same should be granted or awarded.

Merely because the clause provides for interest for delayed payment, does not mean that it cannot be awarded in other cases. This is not a case of clear prohibition for considering or granting the claim. In these circumstances, the Award deserves to be upheld and consequently the petition must be dismissed.

A brief rejoinder was given by Mr. Zaiwala where he reiterated that interest should not have been awarded where the undisputed amount has been paid already. That aspect must be taken into consideration and if the amount is crystalised by the Award, does not mean that the petitioner is liable to pay interest from the time the same is claimed. In other words, from the time the claim is lodged till the amounts are crystalised and awarded, interest should not have been awarded. Interest can only be for the post Award period, in the present case and not pre-award. In the instant case, the claim is for 12% whereas the Arbitrators have awarded 16%.

Mr. Zaiwala reiterates the contentions with regard to the claim being settled in full and complete accord and satisfaction. He submits that Clause 12.2.6 of the contract is clear. Retention of the money in this case is acceptance of the same. There is no return of the same and, therefore, a conclusion is inevitable that the amount has been accepted without any demur or protest. There is a strong presumption about this fact which should have been given weightage. It is rather ignored and, therefore, the Award is vitiated. He submits that Clause 1.1.6 and Clauses 1.1.3, 5.12.9, 5.14.1 and 5.16 should have been noticed when considering the claim for extra work. There is no invoice submitted for extra work. On the other hand, all incidental and ancillary works which are necessary for the installation have to be performed by the contractor and there is no question of paying any extra amount for the same. This is not the case of extra work. Clause 1.2 outlines the scope of work and all works stipulated therein are part of installation. They are within the job assigned to the contractors. Clause 29 has no application in this case. Once the scope of work is very widely set out and all jobs and works are included, then, no claim for extra amount can be entertained and granted.

Mr. Zaiwala then urged that Clause 12.2.5 has been ignored. The price has been confirmed and, therefore, the Award to the extent urged above be set aside. He urged that the contract price is fixed and there is no scope for escalation. However, assuming that any such claim could have been made, yet, in this case, no amount was payable. O.N.G.C. has been fair to the contractor and there is no wrongful deduction in any event. For all these reasons, if the party could not satisfy the Arbitrator that the claim was capable of being allowed in terms of the contract, then, the Arbitrator could not have awarded him any sum. In the present case, the contract itself has not been considered and is rather ignored. If all works are within the scope of the contract and the contract contemplates no payment under the various heads or claims then awarding the same means that the award is liable to be set aside even within the limited jurisdiction of this Court u/s 30 of the Arbitration Act, 1940.

With the assistance of both the learned Senior Counsel appearing for respective sides, I have perused the petition and the impugned Award. To the extent relevant and relied upon, I have also perused the relevant documents. The principles which are enunciated in the Supreme Court�s decisions with regard to the scope of this Court�s powers to set aside the Award are well settled. In Sudarsan Trading Co. Vs. Government of Kerala and Another, the Supreme Court held that the Award can be set aside if the Arbitrator had mis-conducted himself or the proceedings and had proceeded beyond his jurisdiction. These are separate and distinct grounds for challenging the Award. Where there are errors apparent on the face of the Award it can only be set aside if in the award there is any proposition of law which is apparent on the face of the Award, viz., in the Award itself or in the documents incorporated in the Award. Although, in a speaking award, the Court can look into the reasoning of the Award, it is not open to the Court to probe the mental process of the Arbitrator as to what impelled the Arbitrator to arrive at a particular conclusion if no reasons are assigned. Thus, the scope is very limited, inasmuch as this Court does not sit as a Court of Appeal and reappraise and re-appreciate the materials before the Arbitrator. As is well settled, the Arbitrator being a creature of the contract, must operate within the four corners of the same and, he cannot award any amount which is ruled out or prohibited by the Agreement.

However, at the same time it is equally well settled that an Arbitrator acting beyond his jurisdiction is a different ground from the error apparent on the face of the Award. Further, one of the misconduct enumerated is a decision by the Arbitrator on a matter which is not included in the Agreement or reference. But in such case, one has to determine the distinction between the error ''Within Jurisdiction'' and an error ''in excess of the jurisdiction''. The Court cannot examine different claims with an intent to conclude that the Arbitrator had acted correctly or incorrectly. This, the Court has no jurisdiction to do. The Court cannot substitute its own evaluation of the conclusion of law or fact and record a finding that the Arbitrator had acted contrary to the bargain between the parties. Whether a particular amount was liable to be paid or damages liable to be sustained was a decision within the competency of the Arbitrator. By purporting to consider the contract the Court could not take upon itself the burden of saying that this was contrary to the contract and as such beyond jurisdiction. Thus, when the claims clearly fell within the purview of the contract, then, the Arbitrator awarding them is something which is not permissible to be scrutinised as if this is an Appellate Court entertaining an Appeal from the Award.

In the instant case, one aspect is peculiar and that is, the petitioner itself had forwarded some amount to the respondents towards the claims raised by the respondents. Thus, the petitioner�s case is that claims can be raised but the amount offered is the only sum due and payable. In these circumstances, the scope of adjudication was not as to whether the respondents were disentitled from claiming any amount pertaining to the contract work. The adjudication was more or less in the realm of finding out whether the amounts paid by the petitioner were in full and final settlement or not and whether some of the claims were maintainable or not. Further, it is undisputed that the Arbitrators have given a reasoned award. They have not accepted the version of the petitioners qua some claims. However, whenever they have accepted the same, the Arbitrators have proceeded to reject the claims of the respondents. In these circumstances, applying the principles which has been referred to above and reiterated once again in the case of M.P. Housing Board Vs. Progressive Writers and Publishers, that the Award of the Arbitrators is ordinarily final and the courts hearing the applications u/s 30 do not exercise any Appellate Jurisdiction, that I have decided this petition. Re-appraisal of the evidence by the Court is also not permissible. (See paras 28 to 30, 45 and 46).

The undisputed facts are that the contract has been awarded to the respondents. That, the respondents performed certain works at the contract site and during such performance raised claims which would fall within the agreement to refer to arbitration. In other words, the objection to the claims being entertained and allowed by the Arbitrator apart, it is not in dispute that the contract contained an Arbitration clause and the claims raised are otherwise within the scope of the same and could have been entertained by the Arbitrator.

Before proceeding further, it would be advantageous to deal with the preliminary objections.

As far as the respondents are concerned, the objection raised in this petition is that the petitioner cannot challenge the subject award. They have accepted the award and their petition must be dismissed on this ground alone. Mr. Bharucha urged that Exhs.1 and 2 to the affidavit in reply of the respondents in this petition would demonstrate that the Award has been accepted and, there is no question of challenging it. In this behalf, if these Exhibits are perused it would be apparent that they are letters post-award. On 31st May 1996, petitioners� Advocate addressed a letter to the Arbitrators and in para 1 of the same they very clearly stated that the Award has been filed in Court on behalf of the Arbitrators together with necessary papers within the prescribed time. The next part of the letter is that petitioner has worked out the approximate Rupee equivalent of the amount awarded and, according to them, the amount payable is Rs. 27314710/-. According to the petitioner, this is approximately 5.49% of the original claim. Thereafter, clarification is sought with regard to payment of costs as directed to be paid under the Award. I fail to understand as to how the letters dated 31st May 1996 and 9th July 1996 would demonstrate that the petitioner has accepted the Award. In fact, while relying upon these letters all that was urged by the respondents at the relevant time was that the petitioners were aware of filing of the Award and, therefore, their objections to the Award by the present petition are time barred. For the purpose of supporting the arguments on the plea of limitation that the letters were relied upon. Now that aspect is concluded by the decision of the Supreme Court in this very case. Therefore, by merely relying upon these letters, it cannot be held that the petitioners are estopped from challenging the Award. These letters do not in any manner demonstrate that the petitioners have accepted the award. More so, considering para 17 of the this very affidavit in reply. Hence, the preliminary objection of the respondent is overruled.

Now, the preliminary objection that has been raised before the Arbitrators and reiterated before me by the petitioners is that the Arbitrators should have held that the entire claim is untenable and not maintainable, inasmuch as, the respondents have accepted the sum of JY 225311575 in full and final settlement of the claims. The contention of Mr. Zaiwala is that the Arbitrators ought to have held that the parties have settled the dispute after completion of the work and the petitioner on 1st April 1989 informed the respondents that this sum would be paid in full and final settlement of all the change orders claimed by the respondents. On 26th May 1986, the petitioner remitted to the respondents through their bankers in Tokyo Japan a sum of JY 203343696, after deduction of the taxes and charges from the above quantified sum. It is urged by Mr. Zaiwala that although the respondents addressed letter dated 5th April 1989 to the petitioner informing them that the amount was not justifiable or acceptable, yet, proceeded to retain it and utilise it in complete disregard to the condition attached to it. Having retained the same and utilised it, respondents were estopped from claiming any sums before the Arbitrators. Mr. Zaiwala submits that the preliminary objection has been erroneously rejected. Mr. Bharucha refutes this position and contends that the amount has not been accepted without any demur or protest. Its retention in the bank account is because it was remitted straight to the bank account of respondents. Respondents could not have controlled the action of petitioner remitting the same straight away to their bankers. However, it was amply clarified that this amount has not been accepted in full and final satisfaction of the claims nor it was ever stated that the dispute is fully and finally settled.

There is much substance in the contention of Mr. Bharucha. All through out it has been the case of the respondents that they did not at any time, state that there is accord and satisfaction. On the other hand, their letter dated 5th April 1989 communicates refusal to accept the conditions and the amount in full and final settlement. Despite this letter, the petitioner remitted the sums and the bankers unilaterally credited the account. The Arbitrators were aware of all this correspondence and after perusing it so also considering the contentions based upon the same, held that mere retention of the amount cannot prevent the respondents/claimants from urging that the Arbitrators should make an award in respect of the claims raised. Further, the Arbitrators were right in holding that there was a protest by the respondents and mere retention of the amounts would not prevent them from seeking an adjudication in respect of their claims. The Arbitrators have been fair in concluding that the amount retained would be excluded from the final quantified sum if payable. In these circumstances, I do not see as to how Mr. Zaiwala can once again raise the very same pleas. The self-same pleas being raised and rejected by the Arbitrators by assigning cogent and satisfactory reasons, I do not see any merit in the preliminary objection of the petitioner.

Having disposed of both the preliminary objections, I now proceed to consider the contentions raised on merits. It must be clarified at the out set that Mr. Zaiwala does not challenge the entire award. The award is a reasoned award and Mr. Zaiwala has picked up certain claims and has urged that the award insofar as these claims are concerned, must be set aside. In his submission the claims are substantial.

The first claim with regard to which serious grievance is made is Claim No. A(i)(A). This is with regard to the work of penetration of piles. This claim is in Volume C-I page 31. The Arbitrators have referred to the contract clauses and concluded that the penetration in some cases was actually more and in some cases less. The petitioner claims that where penetration was less cost should be deducted from the contract price. Reliance was placed upon Clause 25.1.4 of the contract and the argument is that this clause has been ignored completely. It is well settled that the Arbitrators can construe or interpret the Contract. Such a matter is within the scope of reference. The Court cannot sit in Judgment over the construction and interpretation of a particular clause of the contract unless of course the aforementioned principles are attracted.

Clause 25.1.4 states that unless otherwise provided for in the contract all Items of Work executed on lumpsum basis are not subject to measurement and adjustment of contract price, provided the work is executed in accordance with approved drawings and specifications. However, contract price in respect of lumpsum items will be subjected to variation only upon variation in specifications of identifiable components of the lumpsum item and such variation shall be mutually agreed. As far as this claim is concerned, the argument of the respondents was as per AFC drawings provided by ONGC (respondents) carried out extra pile splicing and extra Pile driving beyond the extent provided in the Bid Package Drawings. They gave details of the same. They also gave the figures by elaborating the nature of work carried out. The only answer given was that with regard to the extent of 1478 extra pile driving, which is more than what is provided for in the bid package the claim is incorrect. However, with intention of settling all the claims in full and final settlement, the petitioners agreed to pay to the respondents the additional sums and this was in full and final settlement. The payment has been accepted. The amount has been quantified and computed by the petitioners correctly. The petitioners then proceeded to dispute the figures. Thus, while not totally denying the fact that such a claim could be raised, all that was urged was that the amount paid was in full and final settlement. Further, the basic argument before me virtually in respect of all claims that there is no basis to award the same. The materials utilised by the respondents were altogether different and the respondents sought to change the entire design and virtually substitute it. This was unacceptable to the petitioners and to the Fabrication Contractor and, therefore, nothing should be awarded under this head. Thus, technical aspects of the claim were put in issue.

What the Arbitrators have done as far as this claim is concerned is that petitioner is not entitled to deduct any amount from the total cost of penetration as no change in specification is made and the contract does not provide for such deduction. Cost of 131.9 feet deducted by ONGC must be awarded. Therefore, deducting the sum already paid, an amount of JY 64675600 has been awarded. I do not see as to how the award could be interfered with insofar as this claim is concerned because the relevant clause has been correctly interpreted and applied by the Arbitrators. As to how much amount should be awarded is something which is based upon the materials produced before the Arbitrators and completely falls within their domain. Therefore, the Award cannot be set aside as far as this claim is concerned. More so, when there is no substance in the contention of Mr. Zaiwala that this claim is akin to seeking extra payment. Once, on facts the Arbitrators hold that this is a wrongful deduction and not permissible in the light of the specific contract clauses, then, there is no merit in the complaint of Mr. Zaiwala.

As far as Claim No. A(i)(B) is concerned, Mr. Zaiwala�s contention is that if the claim is rejected, then, there is no reason to allow the cost of 12 Extra splices.

What the argument overlooks is that the Arbitrators had before them the statement of claim and the reply of the petitioner so also the documents. While disallowing the substantial claim, the Arbitrators have held that the amount as far as 12 Splices are concerned, can be awarded because the petitioner has accepted the fact of Increased Penetration. The Arbitrators have rejected this claim substantially and what has been awarded is only the accepted amount. In these circumstances, all grievances now raised cannot be gone into as if I am sitting in Judgment as an Appelate Authority on the conclusion of the Arbitrators. Therefore, the arguments of the petitioners are rejected.

As far as claims A(2) are concerned, the learned Arbitrators have observed that the claim to certain extent is exaggerated. The grievance of the petitioner is that there was no evidence at all. One Engineer was examined but he could not prove the claim. Therefore, the claim ought to have been rejected.

In this behalf, the reasoning must be seen in its entirety. The Arbitrators referred to the claim petition, reply and rejoinder. What has been ultimately awarded is the sum towards the work actually performed. That is on the basis of the documentary and oral evidence. What has been observed as exaggerated are the cost calculations and not the entire claim. In these circumstances, I do not find any merit in the contention that the claim has been awarded without any basis. If the complaint before me is that the work was not necessary, according to the petitioner, then, it goes without saying that impliedly the petitioner admits that some work has been carried out and only the actuals have been awarded.

Then, the complaint made is with regard to awarding of claim A-11. This is in relation to extension of stabling guides for the cantilever bridge which was installed offshore. This installation is prior to the facility of installation. The Arbitrators refer to the correspondence between parties and hold that the work has been done and, therefore, the amount has been awarded.

As far as this aspect is concerned, the grievance is that there is pure guess work and some ad hoc figure is determined and awarded, although, there is no substantiation. What has been urged before the Arbitrators was that the same was part of the ordinary scope of work of the Respondents. There was no question of any additional installation, aid. However, if that was the requirement, the claimants/respondents were to bear the costs. ONGC denied that the respondents had actually used the resourses at set out by them under the heading ''Cost Effect''. In rejoinder, respondents reiterated that Clause 3.1 of SPEC 8002A applies only to Jackets and not to bridge. Therefore, no reliance can be placed upon the clause. Thereafter, reliance was placed upon Item 14 of the record note of clarificatory meeting and it was urged urged by the respondents that provisions for stabling guide fell within the Fabrication Contractor�s scope of work which was to be provided by them or by the petitioner after incorporating the inputs provided by the Contractor. This was not done and had resulted in extra/additional work by the Contractor for which it is entitled to be compensated. From a reading of the entire claim and related material, the Arbitrators concluded that the work has been actually done at site and that aspect is not seriously disputed. In such circumstances, it is not as if an amount has been awarded without there being any proof or basis. The Arbitrators have not awarded sums merely because they desire to award some amount. They have rejected quite a lot of claims and while granting some of them, have taken into consideration the materials produced by both sides. In these circumstances and considering the pleadings so also the contract stipulations, I do not find that the amount awarded is on guess work or hypothesis. The contentions in that behalf are, therefore, rejected.

As far as the amount under Claim B(ii), that was for transport of items stated in the bid package. When the bid was made, the respondents made arrangements for seven transportation spreads. Thereafter, they came to the conclusion that six spreads would be enough. Even while awarding the claim under this head, the Arbitrators have gone by the price adjustments and the actual trips made. The claim was to a certain extent exaggerated and, therefore, appropriate deductions have been made and what appears to have been awarded is on the basis of actuals. In these circumstances, the grievance that the claims have been awarded under this head purely on equitable considerations has no merit.

As far as the claim under the head B(iii) is concerned, the grievance is that the Arbitrators have awarded the same for the hours spent at the preparatory stage. As far as the grievance that Clause 5.3.2 of the Contract has been ignored is concerned, there is no merit in the same. The Arbitrators have not awarded anything towards costs for the delays o account of adverse weather conditions/weather down time experience during onshore part of works. As far as Clause 5.3.2 (a to d) is concerned, the Arbitrators have held that the barge was made ready at 8.02 hrs. on 18th November 1986. Therefore, the charges only for 2.34 hours have been awarded. How the contract stipulations have been ignored on account of this has not been demonstrated to me at all. Reliance on the remarks of DPR dated 17th November did not address the sea condition was the specific case and after referring to all materials the claim is awarded in part.

As far as claims following under heading D-II are concerned, the argument is that petitioner�s case has been accepted but still amount has been awarded without there being any evidence or basis for the same. The findings are clearly contradictory, is the submission.

The claim relates to sealing at the ends of conductor pipes in order to maintain buoyancy of the Jackets at the time of upending it in the sea. Arbitrators have held that this is done by wooden block bonded with bonding compound. The leakage test was already performed, according to the respondents, whereas this was denied by the petitioners. Further, the changes also were not approved. However, respondents relied upon oral instructions given while doing this work. The arbitrators have held that the claim is exaggerated but the amount is claimed on the basis that two barges D.B. spreads and C.B.I. spread have been used. However, for the C.B.I. spread no amount is awarded. The amount has been awarded only for D.B. spread and because there was a leakage. In my view, it cannot be said that there was no basis for awarding this claim, inasmuch as reference is made to oral instructions in the correspondence between parties.

The complaint with regard to awarding the sum under the claim DXIII is concerned, is more or less identical. Once again, the claim is made because of certain works have been carried out and details of the same were furnished. The praces which were sent by HHI were without pipe end preparation and the respondents had to carry out grinding work to do the same. Some of the braces were shorter in length or had faulty cutting line. The defects had to be rectified. Amount claimed by the respondents under one head was not accepted but as far as the rectification was concerned, the petitioner accepted the claim. There the amount has been paid in full and final settlement. However, upon materials produced, including work sheets etc. the Arbitrators awarded the amount for grinding work which was carried out. I see no reason and basis for the complaint.

As far as claims D-XVI and D-DVII are concerned, the argument of petitioner is that there is no proof yet the amount is awarded. That does not appear to be the case, inasmuch as the petitioner accepted part of the claim and paid for labour. Therefore, the rectification of eye-plates on anchor pile had to be carried out is more or less admitted and on the basis of the documents produced the claim has been awarded. Similarly, the second part of the claim under the head D-XVII is concerned, it is more or less overlapping with regard to D.B. spread charges but the Arbitrators have taken care and not awarded the entire sum.

The claim under D-XXI is divided into III & IV. As far as this is concerned, the Arbitrators accept that the work was done without consultation with the petitioners. However, substantial part of the claim is rejected and 1/3rd of the amount has been awarded.

As far as the claim under D-XXII is concerned, that is on account of extra cost on the ground of HHI''s fault. This claim also has been considered under the subject heads and while referring to the statement of claim, reply, rejoinder what the Arbitrators have awarded is the actual. In these circumstances, I do not see how any grievance could be made. Fragile items have been considered separately and only compensation for removing them have been awarded. This is once again based upon correspondence and other documents.

As far as the claims under the head E are concerned, they relate to cost of Fabrication of Mudmat and its installation. The submission of Mr. Zaiwala is identical and on the same lines as that of the earlier claims. The Arbitrators have assigned reasons as to why a substantial part of the claim is not awarded. The Tribunal has taken the figures from the documents produced by both sides and made the award on the lesser side. As far as the claim E-IV-2 is concerned, it is for leakage of � inch Valve. There also the Arbitrators have allowed 1/3rd of the cost.

Thus, what I find is while rejecting substantial part of the claims under the sub-heading E and F what the Arbitrators have done is to arrive at a figure on the basis of the materials produced. Some claims are awarded in part and may be on equitable considerations but bearing in mind that there is no prohibition in considering the rival pleas nor awarding any amounts. It is not as if, there is a contract stipulation which does not permit grant of any sums.

As far as the counter claim is concerned, even while considering that aspect what the Arbitrators have done is, they have gone into the rival contentions and assigned reasons which may not appeal ordinarily. They being brief and cryptic on occasions. However, if a balance has been struck and the Arbitrators having held that the counter claim was also maintainable so also they making appropriate deductions I am of the opinion that there cannot be any grievance made by the petitioners merely because the entire amount prayed by way of counter claim has not been awarded.

Ultimately, sufficiency and adequacy of the reasons is not something which the Court can consider in the limited jurisdiction. Further, the reasons not being detailed and elaborate enough also cannot be a reason to interfere with the Award. As long as the Arbitrators apply their mind to all the pleas and have assigned reasons for not accepting them, then, it is not for me to interfere as if this is appellate jurisdiction.

The complaint with regard to the Award of interest also is unfounded. Suffice it to refer to Clause 12.2.4 of the contract. The same in clearest terms states that the petitioner has to arrange the remittance to the contractor/respondent of the undisputed amount of the work within thirty days of the receipt of the invoice. In the event of delay in payment of undisputed amount beyond the aforesaid period, interest at 1% pro-rata for the delayed payment shall be paid by the petitioner to the respondents. In these circumstances, how the award can be faulted insofar as the grant of interest is concerned, is not clear to me at all. It is not the case of petitioner that they made payment of the undisputed amount within the period stipulated. If there is a delay in paying the undisputed sum, then, how no grievance can be made by the petitioner. The clause cannot be interpreted to mean that for disputed amount, no interest can be awarded. The contract does not contain any prohibition and by interpreting it in that manner, I do not feel that the Arbitrators have misconducted themselves. From a bare reading of the clause, it does not prohibit award of interest on the disputed amount which is how it is interpreted by the Arbitrators. In these circumstances, the complaint with regard to award of interest also must be rejected.

Reliance placed by Mr. Zaiwala on the other clauses of the contract and more particularly on the definition of the term ''Fabrication Contractor'' and the plea regarding incidental works of installation to be performed by the contractor is concerned, I am of the view that an attempt is made by the petitioner to urge that interpretation by the Arbitrators of the contract and contract stipulations is erroneous. As long as the Arbitrators act within the contract and do not travel beyond it, their interpretation of the terms and conditions of the contract is not liable to be interfered with is the settled principle. Their interpretation of the contract is not something by which the judicial conscience of this Court is shocked. The interpretation cannot be said to be so erroneous or so outrageous as would demonstrate that no reasonable person can arrive at the same. For example, Clause 12.2.5 dealing with invoice for extra work would itself demonstrate that extra work can be invoiced and payment can be made for the same. If that is how the contract reads, then, within the scope of the clause, what can be awarded and what cannot be is something which must be left to the Arbitrators. That is dealing with individual claims but within the contract stipulations. In such circumstances, there is no basis for the contention that the contract price was confirmed, no escalation was permissible nor any award can be made for extra items. The grievance that the contract is not considered or is rather ignored and brushed aside, thus, has no foundation.

If this is the conclusion that is reached by me, then, I do not see how the judgements relied upon by Mr. Zaiwala are of any assistance to him. The judgements are rendered in the peculiar fact situation. First of all, ONGC v. Saw Pipes Ltd. is a decision of the Supreme Court on the ambit and scope of the Court�s power to set aside an award under the new Act and more particularly Section 34 thereof. That apart, the observations relied upon by Mr. Zaiwala must be seen in the backdrop of the factual situation as highlighted in paras 32 to 34 of the Supreme Court decision. It is in that context that the applicability of Section 74 of the Contract Act and the arguments on quantum meruit have been considered. The decision is, therefore, distinguishable.

Reliance on the decision reported in Alopi Parshad and Sons Ltd. Vs. Union of India (UOI), and more particularly the observations in para 23 thereof, must be once again seen in the backdrop of the facts before the Supreme Court and the particular contract and its wording. The principle of quantum meruit is attracted when work is done for services rendered but the price thereof is not fixed by the contractor. There is no quarrel with regard to the principle but its applicability depends upon the facts of each case. Thus, even this decision is of no assistance to the petitioners.

Another decision relied upon by Mr. Zaiwala is reported in Tamil Nadu Electricity Board Vs. M/s. Bridge Tunnel Constructions and others, . There, the settled principles have been referred to. I have looked into the reasons assigned in the Award by applying the very principles that have been relied upon by Mr. Zaiwala. However, the complaint was not as much about the absence of reasons but the reasons being short or cryptic and not elaborate enough. Further, the argument was that contract stipulations and terms have been ignored and brushed aside. At some stage grievance was made with regard to interpretation of some terms. All these matters can be raised provided the reasons assigned show any wrong proposition of law or error of law. Applying these very principles, I have come to the conclusion that the challenge to the award in question is not substantiated by the petitioners.

Going on by the very principles relied upon by Mr. Zaiwala and applying them to this case, I am of the opinion that the petitioners have failed to demonstrate that the award is vitiated by an error apparent on the face of it. Further, the petitioners have failed to demonstrate as to how the Arbitrators have misconducted themselves by either ignoring/brushing aside the contract or travelling beyond the same. Once the challenge is not substantiated in this manner, then, there is no alternative but to dismiss this arbitration petition. The same is dismissed accordingly. No costs. In the view that I have taken, it is not necessary to make a detailed reference to the decisions relied upon by Mr. Bharucha.

This is a petition u/s 30 of the Arbitration Act, 1940. In terms of the provisions of that Act, upon dismissal of the petition, there will be a Decree in terms of the Award. Let such a decree be drawn and it would be open then for the respondents to execute the same in accordance with law. Needless to state that if any amount is deposited in this Court, the Registry to make appropriate adjustments and deductions.

At this stage, it is prayed that the order dismissing this petition be stayed. This is a petition u/s 30 of the Act, challenging an Award which was made in the year 1996, the petition was pending for all these years. In these circumstances and all that has been done is to reject the challenge to the Award and directing that the award shall be made a rule of the Court, I see no prejudice to the Petitioners of any nature and, therefore, the prayer for stay is refused.

By my order dated 3rd April 2009, certain directions were issued on account of the fact that the original volumes/proceedings before Arbitrators were not placed before me in their entirety. Some volumes were handed in but the entire set could not be traced. There were certain reports which were sought to be given orally but as yet my directions in the order of 3rd April 2009 have not been complied with. Let the steps to comply with the same be taken and a report forwarded as expeditiously as possible within a period of six weeks from today. The report be placed on the Administrative Side of this Court for further action.