BOC INDIA LTD. versus BHAGWATL OXYGEN LTD.

Citation: [2007] 3 S.C.R. 915 · Decided: 12-03-2007 · Supreme Court of India · Bench: AR. LAKSHMANAN · Disposal: Dismissed

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Judgment (excerpt)

BOC INDIA LTD. 
A 
v. 
BHAGWA Tl OXYGEN LTD. 
MARCH 12, 2007 
[DR. AR. LAKSHMANAN AND TARUN CHA TIERJEE, JJ.] 
B 
•• 
, 
Arbitration Act, 1940-Sections 30, 33 and 8-Works contract-Lump 
sum price fvced-Party raising invoices against indigenous supply and 
realising excess amount-Claim of refund by other party-Award by· the c 
arbitrator allowing the claim-Interference with-Held: Arbitrator took a 
plausible view on interpretation of contract-Award was not based upon an 
erroneous proposition of law or error of law appeared from the award or 
from any document-Award was passed considering the terms of contract, 
arbitration clause, materials on record and the statement of claim-Figure 
in dispute was only a mark upto which parties agreed to keep in contract D 
for rendering of service-Thus, award calls for no interference. 
Appellant and NSKK entered into an agreement to facilitate the 
respondent to import components for setting up Oxygen plant. Appellant and 
respondent entered into a contract for erection, installation and commission 
of the plant. Respondent issued purchase orders in favour of the appellant for E 
supply, installation and commissioning of oxygen plant at a lump sum price 
of Rs.347.40 lacs. The fixed price was subject to variation of importation of 
the contract and exchange rates. Due to variation in exchange rate and 
customs duty, the lump sum price of Rs.347.40 lacs was increased to 
Rs.4,62,60,543. Appellant submitted its bill inclusive of taxes as per the F 
- )-
contract. In view of the arbitration clause respondent raised claims after 
payment. Since the appellant did not refund the amount, respondent filed an 
application for the appointment of an arbitrator under sections 8 and 33 of 
the Arbitration Act, 1940 and submitted its claim before the arbitrator under 
12 heads. Appellant also submitted its counter claim. Arbitrator was appointed 
and he passed an award in favour of the respondent allowing five claims of the G 
~. 
respondent. However, it rejected the counter claim of the appellant. Appellant 
-~ 
then filed an application for setting aside the award. Appellant raised objection 
that the award suffered errors apparent on the face of it; and that the arbitrator 
erred in awarding the claim of the respondent for a sum of Rs. 17,95,710/-
915 
H 
916 
SUPREME COURT REPORTS 
[2007] 3 S.C.R. 
A relating to claim no. 9 although the arbitrator held issue no. 4 in favour of 
the appellant. High Court rejected the objection filed and upheld the award. 
Aggrieved appellant filed an appeal. Division Bench of High Court dismissed 
the same. Hence the present appeal. 
Dismissing the appeal, the Court 
B 
HELD: 1.1. When the Arbitrator had taken a plausible view on 
interpretation of contract, it is not open to the court to set aside the award on 
the ground that the Arbitrator had misconducted himself in the proceedings 
and therefore, the award was liable to be set aside. !Para 251 1927-GI 
c 
l.2. The Arbitrator came to a conclusion that the figure of 
Rs. 17,95,710/-, was included as lump sum contract price as consideration 
payable to the respondent for service rendered by them for importation of plants 
and components. The Arbitrator in his award also considered that the break-
up and the sum ofRs.17,95,710/-, the appellant had recovered under the bill 
D 
issued against indigenous supply and the respondent paid the amount without 
any objection. While the Arbitrator has considered the fact that the appellant 
had realised the differential amount of Rs.17,95,710/- from the respondent 
against indigenous supply, it cannot be said to mean that the value of 
indigenous supply had gone up from Rs.SO lacs to Rs.67,95,710/- as according 
to the terms of the contract the value of indigenous supply remained at 
E Rs.67,95,710/- and the appellant realised the differential amount of 
Rs.17,95,710/- against indigenous supply. Accordingly the Arbitrator was 
justified in holding that the said sum of Rs.17,95,710/- was on account of 
expenses that might have been incurred by the respondent in executing the 
contract. (Paras 21, 22 and 261 (925-C, F, GI 
F 
1.3. The award of the Arbitrator cannot at all be interfered with as the 
award was not based upon either a proposition of law which is unsound or an 
erroneous proposition of law was established to have vitiated the decision. The 
Arbitrator had considered all aspects of the matter including the terms of 
the contract, arbitration clause, all the

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