Ongc Ltd vs Garware Shipping Corpn. Ltd

3. The controversy lies within a very narrow compass.

4. The factual background is almost undisputed and is essentially as follows:

5. The present dispute relates to the period beyond ten years so far as relates to the basis for computing the rates for repairs and maintenance. By an order dated 29.4.1993 the charter was extended by a further six years. By an order dated 16.3.1995 and as modified by an order dated 14.9.1995, a committee also presided over by Dr. A.N. Saxena was formed to recommend a suitable formula for the charter rate for the further extended period.

8. Disputes and differences arose between the appellant and inter-alia the respondent and others regarding the method to the adopted for calculating rates payable with reference to the eleventh to the sixteenth years. The respondent, therefore, filed Writ Petition No.2788 of 2001 for various reliefs.

9. By an order dated 7.12.2001 a Division Bench of the High Court recorded that the Writ Petition involved certain contractual disputes and that both the parties had agreed to refer the disputes raised in the Writ Petition to the sole arbitration of Mr. Justice M.L.Pendse (a former Judge of the Bombay High Court and the former Chief Justice of the Karnataka High Court). The order which is a short one, reads as follows:

11. Appellant questioned correctness of learned Arbitrators conclusion by filing an appeal under Section 34 of the Act. Learned Single Judge dismissed the appeal holding that the conclusion was rational. An appeal filed was also dismissed.

16. In support of the appeal, learned counsel for the appellant submitted that both learned Single Judge and the Division Bench failed to notice that the Award made by the Arbitrator was beyond the reference made. The arbitrators view that the corresponding year could be a more appropriate factor is without foundation. The Bench mark of SCI in a particular year could not be departed from. There was no scope for shifting of figures. There is no rule of universal application that the cost of maintenance would be more when the vehicle becomes older. The normative figure for third period remained constant. The order of operation is the operating order and the financial order is defining. Though in the Writ Petition there was challenge to 13 to 16 years, a bare reading of the writ petition shows that it did not relate to the said period.

20. It is to be noted that the anomalies referred to in the subsequent paragraphs relate to the anomaly of lower rates being paid to owners to exercise greater management effectiveness by ensuring lower capital because of lower interest rate and lower rate equality ratio.

Settled cases not to be reopened.

c. For the 11th and 12th years ceiling rates to be paid by ONGC

22. Operating costs are to be calculated on the basis of actual expenditure incurred by SCI in operating SCIs OSVs for full (first) one year period.

24. As the concept of reimbursement is the measure fixed, the year of operation can vary is an irrelevant factor. The repair and maintenance expenses have also been dealt by the Committee.

28. There is no proposition that the courts could be slow to interfere with the arbitrators Award, even if the conclusions are perverse, and even when the very basis of the Arbitrators award is wrong. In any case this is a case where interference is warranted and we set aside the norms prescribed by the Arbitrator as upheld by the learned Single Judge and the Division Bench.

29. The appeal is allowed to the aforesaid extent with no order as to costs.