1 appeal 407.02 718.02.doc K IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.407 OF 2002 IN ARBITRATION PETITION NO.178 OF 2000 M/s. Jagson International Ltd. ..Appellants. Vs. Oil & Natural Gas Corporation Ltd. ..Respondents. Mr.D.D.Madon, Senior Counsel a/w Mr.H.Toor i/b M/s.Shiralkar & Co. for appellants/claimants. Mr.S.V.Kamdar, Senior Counsel a/w Ms.Snehal Paranjape with Ms.Pooja Patil and Mr. O.Mohandas i/b Little & Co. for respondents/ONGC. AND APPEAL NO.718 OF 2002 IN ARBITRATION PETITION NO.178 OF 2000 Oil & Natural Gas Corporation Ltd. ..Appellants. vs. Jagson International Limited ..Respondents. Mr.S.V.Kamdar, Senior Counsel a/w Ms.Snehal Paranjape with Ms.Pooja Patil and Mr. O.Mohandas i/b Little & Co. for appellants/ONGC. Mr.D.D.Madon, Senior Counsel a/w Mr.H.Toor i/b M/s.Shiralkar & Co. for respondents/claimants. 2 appeal 407.02 718.02.doc CORAM : D.K.DESHMUKH & K.K.TATED, JJ. DATED : 24/01/2011. PC: 1 Heard learned counsel for parties. 2 Both these appeals are disposed of by common judgment as the same arise out of common judgment and decree dated 16th March, 2002 passed by the learned single Judge in Arbitration Petition No.178 of 2000. 3 Appeal No.407 of 2002 preferred by M/s. Jagson International Ltd. (hereinafter referred as ‘the claimant’) and Appeal No.718 of 2002 preferred by Oil & Natural Gas Corporation Ltd. (hereinafter referred as ‘ONGC’). 4 A few facts of the matter are as under: Dispute between the parties was referred to the Arbitration and Award was passed on 18th December, 1999 3 appeal 407.02 718.02.doc directing the payment of various amounts alongwith interest at the rate of 15% per annum from the date the amount became due till payment. The parties entered into a Contract being no.9 of 1989 dated 25th February, 1989 (hereinafter referred as ‘the Contract’). Under the Contract, the claimant was to perform drilling operation with its drilling unit called “Jagson-I” alongwith full complement of personnel. Because of dispute both the parties referred the matter to the Arbitrator. 5 The claimant has preferred, by its Statement of Claim, as many as five claims styled as Claim nos. A, B, C, D and E with interest at the rate of 18% per annum on the amount due from the date these became due till payment. Claim ‘A’ relates to the short payment/non-payment or withheld payment in respect of five Invoices/Bills. Those Bills were bifurcated in Part-I and Part-II. In Part-I, Claim ‘A’ comprises three Bills (Nos. 34 of 1989, 39 of 1989 and 48 of 1989 of July, August, September, 1989 in connection with spudding Well SM-79-1), in respect whereof no payment was made by the ONGC on the ground that it is not liable to make payment as due to the breakdown of the rig no work could be done between 22nd July, 1989 and 3rd September, 1989 and hence zero rate was applicable. In Part-II, Claim ‘A’ comprises two Bills (Nos.131 of 1990 and 213 of 1991 4 appeal 407.02 718.02.doc of June, 1990 and April, 1991) in respect whereof the ONGC admits its liability thereunder but payment has been withheld on the ground that the ONGC had been paid excess amounts by way of foreign exchange fluctuation for which Counter-Claim has been made by the ONGC after adjusting the amounts of these two bills. 6 The Claim ‘B’ relates to what the claimant claims to be wrong deductions of Rs.74,01,065/- made from the claimant’s Bills for services allegedly rendered during the period of 58 days shut-down i.e. from 8th July, 1989 to 3rd September, 1989 by the ONGC or third party as per the ONGC’s letter dated 12th October, 1989. 7 The Claim ‘C’ is against the short payment of five Bills (nos.16 and 16A of 1989, 21 of 1989, 60 of 1989, 160 of 1990 and 209 of 1991) totalling to Rs.16,11,568/-. 8 The Claim ‘D’ is for reimbursement by the claimants of the expenditure incurred due to non-availability of Helicopter which the ONGC was obliged to provide. 5 appeal 407.02 718.02.doc 9 The Claim ‘E’ is against wrong recovery of the charges for transporting potable water by the ONGC up to the rig. 10 The said ONGC also preferred counter claim on the other hand for recovery of excess payment to the claimants on account of foreign exchange fluctuation. 11 The learned Arbitrators by their award dated 18th December, 1999 partly allowed the claim ‘A’. The learned Arbitrators allowed the claim ‘B’ ‘C’ but they rejected the claimant’s claim towards the claim ‘D’. Arbitrators further awarded interest at the rate of 15% per annum till the payment. The learned Arbitrators rejected the ONGC’s counter claim. 12 Being aggrieved by the award passed by the learned Arbitrators dated 18th December, 1999, ONGC preferred Arbitration Petition No.178 of 2000 challenging that there was no agreement in writing between the parties in respect of Single well transaction and consequently award to that extent is without jurisdiction and other claims were barred by limitation; and so far as foreign exchange remittance is concerned, the arbitral tribunal in rejecting the ONGC’s claim acted without jurisdiction. 6 appeal 407.02 718.02.doc 13 The learned Single Judge by an oral judgment dated 30th October, 2001 partly set aside the Award pertaining to claim “B” and decreed in terms of claim A-part two, C and E and counterclaim was dismissed. However, the interest on the amount awarded was reduced from 15% to 10% per annum. 14 Being aggrieved by the oral judgment dated 30th October, 2001 claimant preferred Appeal No.407 of 2002 against setting aside the Award pertaining to claim “B” and ONGC preferred Appeal No.718 of 2002 against decree in terms of Claim A-part two, C and E and dismissal of the counterclaim. 15 Heard both the counsel at length. 16 We perused the papers, proceedings and record of award no.8 of 2000. 17 The learned counsel appearing on behalf of the claimant submits that learned Single Judge failed to consider the various correspondence between the parties at the time of passing the impugned oral judgment dated 30th October, 2001. He submits that the learned Single Judge erred in coming to the conclusion that there was no arbitration agreement between the parties in 7 appeal 407.02 718.02.doc respect of single well programme especially in the light of the observations of the Arbitrators Tribunal as stated in the Award which observations are in the nature of a finding of fact. He further submits that the learned Single Judge erred in holding that the parties were not ad-idem on the fact that the single well programme was to be treated as part and parcel of the oral agreement dated 25th February, 1989 especially in the light of the fact that there was no other agreement valid and subsisting between the parties as far as the single well programme was concerned and the parties had expressly agreed to treat the single well programme as an integral part of the original agreement dated 25th February, 1989. He submits that the learned Single Judge failed to appreciate that the ONGC had expressly accepted and agreed to be governed by the original contract dated 25th February, 1989 vide their letter dated 25th July, 1989 by referring to the same while threatening to terminate the contract pertaining to the single well programme under the relevant termination clause of the original and the only contract between the parties dated 25th February, 1989. 18 He further submits that the learned Single Judge ought to have appreciated that ONGC had made various payments in respect of single well programme to the claimant as per the 8 appeal 407.02 718.02.doc rates mentioned in the original contract dated 25th February, 1989. He submits that the learned single Judge ought to have appreciated that even the moving charges for shifting to the well to be drilled during the monsoon (one well programme) were borne by ONGC which could only have been done had the drilling been carried out under the original agreement. 19 His main and only contention is that the learned Single Judge failed to appreciate the correspondence exchanged between the parties which shows that the claimant is entitled to claim ‘B’ in full. On the basis of this submission, the learned counsel appearing on behalf of the claimant submits that the judgment and decree passed by the learned Single Judge is liable to be partly set aside. 20 Appeal No.718 of 2002 is filed by ONGC. The learned senior counsel appearing on behalf of ONGC submits that the learned Single Judge erred in exercising the jurisdiction vested in him under section 30 of the Arbitration Act, 1940 by impliedly confirming the finding of learned Arbitrators in their Award dated 18th December, 1999 and thereby rejecting the counter- claim made by the ONGC before the Arbitrators and by confirming the claims ‘A’ (Part), ‘C’ and ‘E’. He further submits 9 appeal 407.02 718.02.doc that the learned single judge failed in exercising his jurisdiction to give reasons for rejecting the counter-claim and contentions in support thereof made by the ONGC on the basis of evidence on record and admission of the claimant at the time of hearing of the Petition. He submits that the claimant had failed to render the true account of payment made to them for purchase of foreign exchange and the remittance of such foreign exchange to the collaborators for their salaries and other materials and equipments purchased for execution of the drilling work undertaken by them and the said error vitiated part of the award which resulted in rejecting the counter-claim. With these submissions, the learned senior counsel appearing on behalf of ONGC submits that the judgment and decree passed by the learned Single Judge is liable to be set aside partly which is against them. 21 Though the learned counsel appearing on behalf of the the claimants raised ground in Appeal No.407 of 2002 about the interest, at the hearing he made a statement that the claimants did not press the issue about reduction of rate of interest. 22 The main contention raised by both the counsel appearing on behalf of claimants and ONGC in respective appeals is about 10 appeal 407.02 718.02.doc the appreciation of documentary evidence and i.e. also particularly letters on record. 23 We have gone carefully through the judgment and decree passed by the learned single judge and the award passed by the Arbitrators’ Tribunal. On the face of it, it is crystal clear that the learned Single Judge considered the correspondence on the record. The paragraph nos. 2 to 7 of the oral judgment of the learned Single Judge show that he considered all the correspondence between the parties at the time of deciding the matter. In any case, the present appeal being the appeal under section 39 of the Arbitration Act, 1940 its scope is limited by section 30 (a) of the Arbitration Act which alone is relevant for our purpose. That section is quoted below: “Section 30. Grounds for setting aside award.- An award shall not be set aside except on one or more of the following grounds, namely:- (a) that an arbitrator or umpire has misconducted himself or the proceedings; (b) that an award has been made after the issue of an order by the court superseding the arbitration or after arbitration proceedings have become invalid under section 35; (c) that an award has been improperly procured or is otherwise invalid.” 24 It is crystal clear from bare reading of section 30 (a) of the Arbitration Act that appeal is maintainable only on question of 11 appeal 407.02 718.02.doc law. Mere appreciation of facts, the documentary evidence or a meaning of entries and the contents of the documents cannot be held to be a question of law. Where the learned Single Judge is shown to have exercised his discretion in the judicial manner, it cannot be termed to be an error either of law or of procedure requiring interference in appeal under section 39 of the Arbitration Act, 1940. In a proceeding to set aside Award appellate court cannot sit in appeal over the conclusion of the Arbitrators by re-examining and reappraising the evidence considered by the Arbitrators and the learned Single Judge, and hold that the conclusion reached by them is wrong. Recently Apex Court in the matter of Oil & Natural Gas Corporation vs. Wig Brothers Builders & Engineers Pvt. Ltd. reported in 2010 DGLS (Soft.) 2205 = 2010 (11) JT 146 held that while considering a challenge to an award, the Court does not examine the Award, as an appellate court nor it will re-appreciate the material on record. Para 4 reads thus: “4. It is now well settled that a court, while considering a challenge to an award under sections 30 and 33 of Arbitration Act, 1940, does not examine the award, as an appellate court. It will not reappreciate the material on record. An award 12 appeal 407.02 718.02.doc is not open to challenge on the ground that the arbitrator had reached a wrong conclusion or had failed to appreciate some facts. But if there is an error apparent on the face of the award or if there is misconduct on the part of the arbitrator or legal misconduct in conducting the proceedings or in making the award, the court will interfere with the award. Keeping the said principles in view, we will consider the challenge.” 25 In the present case, the learned Single Judge considered all the correspondence exchanged between the parties and also the agreement dated 25th February, 1989. 26 The submission of the claimant that ONGC have expressly accepted and agreed to be governed by the original contract dated 25th February, 1989 vide their letter dated 25th July, 1989 by referring to the contract pertaining to the single well programme that same will be part and parcel of original agreement is not acceptable. The learned counsel appearing on behalf of ONGC pointed out that the draft contract in respect of single well programme was prepared and forwarded to the claimant for approval but because of inaction on the part of the 13 appeal 407.02 718.02.doc claimant the same was not executed. As the parties failed to execute the agreement for the work not covered by the original agreement, though the draft was forwarded to the claimant, the claimant had no right to claim payment on the basis of the original agreement, and part of the claim which was not covered by the original agreement. The dispute in that regard could not be referred to arbitration as there was no agreement between the parties to refer the said dispute to arbitration. Hence the Single Judge is right in holding that the Arbitrators had no jurisdiction to arbitrate in that respect and rightly disallowed part of the claim. 27 In any case, the main contention of the claimant about the appreciation of letters on record is not a question of law under section 30 of the Arbitration Act, 1940. 28 As the appellants in both the appeals failed to point out any substantial question of law involved in these appeals, we do not find any substance in both the appeals and same are dismissed. Considering the facts and circumstances of the present case, no order as to costs. 14 appeal 407.02 718.02.doc 29 The Bank Guarantee and security furnished by the ONGC at the time of withdrawal of the amount to continue for four months from today. (D.K.Deshmukh, J.) (K.K.Tated, J.)