ONGC LTD. versus GARWARE SHIPPING CORPN. LTD.

Citation: [2007] 11 S.C.R. 1154 · Decided: 14-11-2007 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Case Partly allowed

Judgment (excerpt)

" 
... 
l 
A 
ONGCLTD. 
V. 
GARWARE SHIPPING CORPN. LTD. 
NOVEMBER 14, 2007 
B 
[DR. ARIJIT P ASAY AT AND S.H. KAPADIA, JJ.] 
Arbitration and Conciliation Act, 1996-Section 34-Contractual 
dispute-Issue with regard to computation of rates for repair and 
c maintenance expenses of respondent's offshore vessels chartered to 
appellant-Reference to arbitrator-Arbitration Award-Interference 
with-Held: No proposition that Courts would be slow to interfere with 
arbitrator's award even if the conclusions of arbitrator are perverse, 
and even when the very basis of arbitrator's award is wrong-On facts, 
D norms prescribed by arbitrator for mode of calculation as upheld by 
High Court, not appropriate-Thus, interference under Article 136 
called for and norms by Arbitrator set aside-Constitution of India, 
1950-Article 136. 
E 
Appellant required offshore vessels (OSV) for supplying 
material from its onshore bases to its offshore in~tallations. 
Respondent and shipping Corporation oflndia acquired offshore 
vessels to charter them to the appellant. Appellant took on charter, 
the OSV ofrespondent and the next year, the OSV ofSCL Contract 
F 
was .entered for first five years. It was extended by another five 
;years. Charter was further extended by six years. Dispute arose 
between appellant and the respondent and others with regard to 
computation of the rates for repair and maintenance of offshore 
vessels for 11 to 16 years of their operation. The Committee 
submitted report with regard to a suitable formula for the charter 
G rate for the further extended period. Government oflndia accepted 
the recommendations of the Committee partially. Indian Shipping 
A 
Companies and respondent made representations. Thereafter, _ 
Government oflndia appointed a High Level Working Group which 
gave its recommendations. The dispute was referred to the 
H 
1154 
ONGCLTD. v. GARWARESHIPPINGCORPN.LTD. 
1155 
arbitrator. Arbitrator held the Committee did not recommend that A 
irrespective of the period ofinduction, years should be calculated 
as that of SCI; that the respondent did not question the 
recommendations of High Level Working Group and Committee's 
Report but merely contended that the mode of implementation 
thereof was incorrect; that it was not open for him to go behind the B 
report and the only area of enquiry was whether or not the report 
was correctly implemented; that neither of the Committees 
examined whether the entitlement of each OSV was to be 
determined with reference to the years of actual user or only with 
reference to the calendar years; that for the computation of repairs C 
and maintenance expenses, it was necessary to take into 
consideration the years of operation and not the calendar years; that 
the 12th year of operation of SCl's OSV s should be equated with 
the 13th year of operation of respondent's OSV s and so on; and that 
tile interpretation suggested by appellant would lead to great D 
injustice. 
Appellant filed appeal under section 34 of the Arbitration and 
Conciliation Act, 1996 challenging the award. Single Judge of High 
Court dismissed the appeal. Aggrieved, appellant filed appeal. 
Division Bench of High Court dismissed the same holding that the E 
arbitrator had consi<Jered and construed the reports while arriving 
at his conclusions; that the basis of the calculation adopted by the 
arbitrator was not only logical but just and fair; that the provisions 
of the said reports called for a proper interpretation and construction 
before being applied to the facts of the case and the arbitrator did F 
so; that even if the mode of calculation as applied by the arbitrator 
is not very appropriate in its effect, that could not be a ground for 
exercise of power under s. 34; that the reference did not include the 
13th to 16th year to inspect; and that the arbitrator thought it 
improper to open the same and that a narrow technical reading of G 
the Award cannot be made. Hence the present appeal. 
Appellant contended that the courts below failed to notice that 
the Award made by the Arbitrator was beyond the reference made; 
that the arbitrator's view that the corresponding year could be a more 
H 
1156 
SUPREME COURT REPORTS 
[2007] 11 S.C.R. 
A . appropriate factor is Without foundation; that the Bench mark of SCI 
in a'particuiar yea'r could not be departed from; that there was lio 
scope for shifting of figures; that ~he normative fig1ire for third period 
remained constant; and that though

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