OIL & NATURAL GAS CORPORATION. LTD. versus WESTERN GECO INTERNATIONAL LTD.

Citation: [2014] 12 S.C.R. 1 · Decided: 04-09-2014 · Supreme Court of India · Bench: T.S. THAKUR · Disposal: Appeal(s) allowed

Cited by 9 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

' 
[2014] 12 S.C.R. 1 
OIL & NATURAL GAS CORPORATION. LTD. 
A 
v. 
WESTERN GECO INTERNATIONAL LTD. 
(Civil Appeal No. 3415 of 2007 
SEPTEMBER 04, 2014 
[T.S. THAKUR, C. NAGAPPAN, 
ADARSH KUMAR GOEL, JJ.] 
Arbitration and Conciliation Act, 1996 - s. 34 - Application 
B 
for setting aside of arbitral award-Award of contract in favour C 
of respondent by appellant-Corporation whereby vessa/ 
handed over to respondent for carrying modernization and 
upgradation work -
Vessa/ could not be returned to the 
appellant on the stipulated date -
Payment made by 
appellant - Deduction of certain amount towards excess D 
engagement charges, change in tax law, correction for price 
charges inclusive of income tax - Disputes between parties, 
referred to arbitral tribunal - Tribunal holding that delay post 
21.10.2001 could not be attributed to the respondent, that the 
deduction towards excess engagement charges from E 
01.11.2001to22.03.2002 by the appellant not justified as a/so 
deduction on account of taxes - Petition u/s.34 by the 
appellant that the award in conflict with the 'public policy of 
India u/s. 34(2)(b)(ii) - Dismissed by the Single Judge of the 
High Court however, partly allowed by the Division Bench by F 
deleting pendente lite and future interest from the award made 
- On appeal, held: If the arbitrators on facts proved before 
them fail to draw an inference which ought to have been drawn 
or if they have drawn an inference which is untenable resulting 
in miscarriage of justice, the award would be open to 
challenge - On facts, arbitrato~ erred in holding the appellant-
G 
Corporation responsible for the delay post 21.10.2001, 
resulting in miscarriage of justice - They also failed to 
appreciate and draw inferences that logically flow from such 
1 
H 
2 
SUPREME COURT REPORTS 
[2014] 12 S.C.R. 
A proved facts - Out of the period of 4 months and 22 days 
which the arbitrators have attributed to the appellant, period 
of 56 days reduced - Deductions made by the appellant for 
the said period upheld - Award made by the arbitrators 
modified to that extent. 
B 
Allowing the appeal, the Court 
HELD: 1.1. There was delay of 9 months and 28 days 
from 9th July 2001 to 6th May 2002 in the return of the 
vessel to the Corporation after upgradation. As regards 
C the period between 01.11.2001 to 22.03.2002 which comes 
to 4 months and 22 days the Arbitrators have found the 
delay to be attributable to the appellant-Corporation. The 
arbitrators held that delay in taking a decision whether 
or not any formal application should be made to U.S. 
D Authorities for the issue of license and a formal rejection 
obtained by the respondent was attributable only to the 
appellant-Corporation. Deduction made by the appellant 
for the first interval that comprises period between 1st 
November, 2001 and 25th November, 2001, both days 
E inclusive, cannot, therefore, be sustained and the arbitral 
award to that extent cannot be faulted. The second 
interval comprising period between 26th November, 2001-
the date when the appellant-Corporation issued 
instructions for making of a formal applicati~n for the 
F grant of a license and 8th January, 2002-when such an 
application was actually made by the respondent-
company, must be attributed to the respondent-claimant. 
The tribunal failed to appreciate this aspect , thus, fell in 
a palpable error leading to miscarriage of justice. The 
G period between 8th January, 2002 and 8th March, 2002 
comprising the third interval during which the U.S. 
authorities decided the. application for the grant of a 
license has been rightly counted against the appellant-
Corporation as it was at the instance of the Corporation 
H that a formal application was made. The arbitral tribunal, 
OIL & NATURAL GAS CORPORATION. LTD. v. WESTERN 
3 
GECO INTERNATIONAL LTD. 
rightly held that deduction for this period was not A 
justified. There is no valid reason why the fourth interval 
comprising the period between 8th March 2002 and 22nd 
March 2002 when the rejection of the application was 
conveyed to the appellant-Corporation should not be 
counted against the respondent, who could and indeed 
B 
should have conveyed the rejection to the appellant 
forthwith, instead of taking nearly two weeks to do so . 
. [Para 18, 20, 21, 23] [15-C-D, 17-B-H; 18-B-D, F] 
1.2. The expression 'Fundamental policy of Indian 
Law' include all such fundamental principles as providing C 
a basis for administration of justice a

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