OIL & NATURAL GAS COMMISSION versus WESTERN COMPANY OF NORTH AMERICA

Citation: [1987] 1 S.C.R. 1024 · Decided: 16-01-1987 · Supreme Court of India · Bench: M.P. THAKKAR · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

OIL & NATURAL GAS COMMISSION 
A 
V. 
WESTERN COMPANY OF NORTH AMERICA 
JANUARY 16, 1987 
B 
[M.P. THAKKAR AND K.N. SINGH, JJ.) 
Arbitration Act, 1940-Sections 2(e), 14, 17, 30 and 33-
A ward-Only when transformed into a judgment and decree under 
Section 17 becomes enforceable-New York Convention-Article 
V(l)(e)-Expression 'not yet become binding on the parties'-lnter-
pretation and significance of-Test applicable-Enforceability as per law 
C of the country which governs the award-Arbitration proceedings bet-
ween American Company and ONGC~Award rendered in favour of 
American Company-ONGC invoking juri5diction of Bombay High 
Court under Sections 30 & 33 to set aside award-Held Indian Court 
alone has jurisdiction to pronounce on validity/enforceability of award. 
D 
E 
Arbitration (Protocol and Convention) Act, 1937-Section 7-
Conditions for enforcement of foreign awards-New York Conven-
tion-Article V( I )(e)-Efject of expression 'not yet become binding on 
the parties'-The clause-Recognition and enforcement of award-
When arises. 
Specific Relief Act 1963-Section 4/(b)-Conditions for appli-
cability. 
Word< & Phrases-'Not yet become binding on the parties'. 
F 
A drilling contract was entered into by the appellant and the 
respondent which provided that in the case of differences arising out of 
the aforesaid contract, the matter shall be referred to arbitration, that 
the arbitration proceedings shall be held in accordance with the provi-
sions of the Indian Arbitration Act, 1940, and that the validity and 
interpretation thereof shall be governed by the laws of India. The 
G agreed venue for hearing was London. 
A dispute arose between the parties and it was referred to Arbit-
ration. Consequent upon the inability of the two Arbitrators to agree on 
the matters outstanding in the reference, the Umpire entered upon the 
arbitration and straight away rendered his interim award, without 
H affording any hearing to the parties and the same was lodged in the . 
1024 _, 
/ 
0.N.G.C. v. WEsTERN COMPANY 
1025 
High Court at the instance of the respondent. Subsequently, the Umpire A 
rendered a final award relating to costs. 
About a month after the lodging of the award in the High Court, 
the respondent filed a plaint in the U.S. District Court seeking an order 
confirming the interim and final awards and a judgment against the 
appellant for the payntent of a sum of $ 256,815.45 by way of· interest 
B 
until the date of judgment and costs etc. 
The appellant, however, instituted a Petition under Sections 30 
and 33 of the Arbitration Act for setting aside the aforesaid awards and 
for an interim order restraining the respondent from pr,oceeding 
further with the action instituted in the U.S. Court. 
A Single Judge of the High Court granted exparte interim 
restraint order but vacated the same after hearing the parties. The High 
Court.held that the action to enforce the award as a foreign award in the 
U.S. Court was quite in order and that the mere fact that a Pl'tition to 
c 
set aside the award had already been instituted in the Indian Court and 
D 
was pending at the time of the institution of the action in the V .s. Court 
was a matter of no consequence for the purposes of consideration of the 
question as to whether or not the respondent should be restrained from 
-+ 
proceeding further with the action in the U.S. Court, that it was open to 
the respondent to enforce the award in the V .S. Court and, therefore, it 
would not be appropriate to grant the injunction restraining enforce-
E 
ment, and that it was open to the appellant to contend before the U.S. Court 
J 
that the petition for setting aside the award cannot be said to be vexati-
ous or oppressive. 
In the appeal to this Court it was submitted on behalf of the 
appellant that the award sought to be enforced in the V .S. Court may 
F 
itself be set aside by the Indian Court and in that event, an extremely 
anomalous situation would be created, that since the validity of the 
award in question and its enforceability have to be determined by an 
Indian Court which alone has jurisdiction under the Indian Arbitra-
tion. Act of 1940, the American Court would have no jurisdiction in this 
behalf, that the enforceability of the award must be determined in the 
G 
context of the Indian Law as the Arbitration proceedings are subject to 
the Indian Law and are governed by the Indian Arbitration Act of 1940, 
and that if the award in question is permitted to be e

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