Vedanta Limited, & Anr. vs Government Of India, Through Jt. Secretary, Ministry Of Petroleum And Natural Gas,

$~J
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 20.03.2026
Judgment pronounced on: 01.07.2026
+ O.M.P.(EFA)(COMM.) 5/2017, EX.APPL.(OS) 279/2020,
EX.APPL.(OS) 3804/2022, EX.APPL.(OS) 82/2023, EX.APPL.(OS)
195/2024, EX.APPL.(OS) 197/2024, EX.APPL.(OS) 1105/2024,
EX.APPL.(OS) 1106/2024, EX.APPL.(OS) 1593/2024,
EX.APPL.(OS) 702/2025, I.A. 11351/2017, I.A. 14824/2018, I.A.
7674/2019
VEDANTA LIMITED, & ANR. ……Petitioners
Through: Mr. Akhil Sibal, Sr. Adv., Ms.
Shruti Sabharwal, Ms. Surabhi Lai, Mr.
Rachit Bansal, Advs.

versus

GOVERNMENT OF INDIA, THROUGH JT. SECRETARY,
MINISTRY OF PETROLEUM AND NATURAL GAS
……Respondent
Through: Mr. Vikramjeet Banarjee, ASG,
Mr. Abhishek Singh, Ms. Anuja Tiwari, Mr.
Amitesh Chandra Mishra, Ms. Vishakha,
Mr. Mrityunjai Singh, Ms. Aparna Tiwari,
Mr. Shikhar Thukral, Mr. Harshit S Gahlot,
Advs.

CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH

J U D G M E N T
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1. This is an enforcement petition filed under Sections 47 and 49 of the
Arbitration and Conciliation Act, 1996 (“ 1996 Act ”) seeking
enforcement of Partial Award dated 12.10.2004 (“ Partial Award ”) in
the arbitral proceedings titled as “ Cairn Energy India Pty Limited and
Ravva Oil (Singapore) Pte Limited vs. The Government of India ” and
Final Award dated 26.10.2016 (“ Final Award ”) in the arbitral
proceedings titled as “ Cairn India Limited (Legal Successor to Cairn
Energy India Pty Limited) and Ravva Oil (Singapore) Pte Limited vs.
The Government of India ” passed by the Arbitral Tribunal (“ AT ”).
2. The petitioners were claimants in the arbitral proceedings, and the
respondent was the respondent therein.
3. The respondent has preferred an application i.e., I.A. No. 11351/2017
via which it has raised its objections under Section 48 of the 1996 Act.
FACTUAL MATRIX AS PER THE PETITIONERS
4. The petitioner No.1 i.e., Vedanta Limited, is an Indian company
registered under the Companies Act, 1956 and the petitioner No.2 i.e.,
Ravva Oil (Singapore) Pte. Limited, is a Singapore based corporation.
5. The respondent is the Government of India through, Ministry of
Petroleum and Natural Gas, Shastri Bhawan, Dr. Rajendra Prasad
Marg, New Delhi - 110001.
6. In 1994, the respondent entered into a Production Sharing Contract
dated 28.10.1994 (“ PSC ”) with Videocon Petroleum Ltd.
(“ Videocon ”), Oil & Natural Gas Corporation Ltd. (“ ONGC ”),
petitioner No. 2 and Command Petroleum (India) Pty. Ltd, who later
came to be known as Cairn Energy India Pty. Ltd. (said name change
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was acknowledged vide an Addendum dated 31.07.1998). In 2012,
vide Amendment No. 3, Cairn Energy India Pty. Ltd. assigned its
interest in the PSC to its affiliate i.e., Cairn India Ltd. Later, in 2017,
Cairn India Ltd. and Vendanta Ltd. amalgamated and every interest of
Cairn India Ltd. stood vested with Vendanta Ltd. i.e., petitioner No.1,
including Cairn India Ltd.‟s interest in PSC.
7. The objective behind executing the PSC was to invite private equities
to invest in development of Ravva Oil Field in Krishna Godavari
Basin. As per the terms of the PSC, the petitioners and Videocon are
collectively referred to as “the Companies” (Article 1.19 of the PSC)
and with ONGC also combined they are referred to as “the
Contractor” (Article 1.25 of the PSC).
8. The PSC contains the arbitration clause being Clause No. 34.3, which
reads as under: -
“34.3 Unresolved Disputes
Subject to the provisions of this Contract, the Parties hereby
agree that any matter, unresolved dispute, difference or
claim which cannot be agreed or settled amicably within
twenty one (21) days may be submitted to a sole expert
(where Article 34.2 applies) or otherwise to an arbitral
tribunal for final decision as hereinafter provided.”
9. Since disputes arose between the parties pertaining to interpretation of
the terms of the PSC, arbitration was invoked vide Notice of
Arbitration dated 16.08.2004 (“ NoA ”). The venue of the arbitration
proceedings was Kuala Lumpur, Malaysia. The following issues were
framed by the AT, wherein issue no. (a) is referred to as the “ONGC
Carry Issue”: -
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“a. Are the companies entitled to include in the accounts,
for the purposes of the PTRR calculation (in accordance
with Article 16 and Appendix D of the PSC) sums paid by
the Companies in accordance with Article 3.3 of the PSC?
b. Should the PTRR calculation be performed individually
for each Company or on a joint basis?
c. In the calculation of "notional income tax" in the
computation of PTRR (in accordance with Paragraph 2(viii)
of Appendix D), should an allowance be made for tax
pursuant to Section 115-0 of the Income Tax Act 1961?
d. Should provisions made by a Company in its accounts for
future Site Restoration costs be treated as Contract Costs
for the purposes of the PSC and, if so, are the amounts of
those provisions (i) properly included in the estimates of
Cost Petroleum under Article 15 of the PSC, and (ii) to be
taken into account for the purposes of the PTRR calculation
under Article 16 and Appendix D of the PSC?
e. Should the cost of certain items that were purchased by
the Contractor for use in Petroleum Operations but which
were subsequently not immediately used in Petroleum
Operations, be recoverable/allowable as Contract Costs at
the time of purchase, for the purposes of Articles 15 and 16
and Appendix D of the PSC?
f. Should certain monies deposited or paid by the
Contractor in advance for goods and services in connection
with Petroleum Operations, be treated as Contract Costs at
the time of payment for the purposes of Articles 15 and 16 of
the PSC?”
10. After hearing both parties, the AT passed the Partial Award, wherein
two issues were decided in favour of the petitioners and four in favour
of respondent. The issue of quantification was left open, so that parties
have an opportunity to come to an agreement, while AT reserved
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jurisdiction to decide the same if parties fail to come to an agreement.
11. Consequently, the parties held meeting to resolve the quantification
issue and for the four issue decided against the petitioners, the
petitioners made payments with interest to the respondent, which were
acknowledged by the respondent as “full and final” settlement of
Partial Award except ONGC Carry Issue, vide letter dated 23.01.2006.
12. Later, the respondent challenged the Partial Award, which was set
aside by the Kuala Lumpur, Malaysia High Court vide judgement
dated 12.01.2009 and later, in appeal filed by the petitioner the
Malaysian Court of Appeal vide judgment dated 15.09.2009 upheld
the Partial Award, which was later also upheld by the Malaysian
Federal Court vide judgment dated 11.10.2011.
13. The respondent issued a Show Cause Notice dated 10.07.2014
(“ SCN ”) claiming USD 64 million and USD 35 million against the
petitioner No.1 and 2, respectively, otherwise the same would be
recovered from sale proceeds payable by Oil-Marketing Companies
(“ OMCs ”) to the petitioners. The petitioners duly replied to the SCN.
14. Subsequently, the petitioners approached the AT for award on
quantification, and the Final Award was passed in favour of
petitioners. The Final Award was challenged by the respondent before
Courts in Malaysia and has been upheld by all Courts, including the
Malaysian Federal Court vide judgement dated 28.02.2019.
15. Later, vide Addendum No. 2 dated 24.10.2019 the parties extended the
duration of the PSC by a further period of 10 years till 28.10.2029.
16. Hence, the present petition seeking enforcement of the Partial Award
and the Final Award (collectively referred to as “ impugned Awards ”).
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OBJECTIONS ON BEHALF OF THE RESPONDENT
17. Mr. Banarjee, learned ASG for the respondent, submits that the
impugned Awards are in conflict with the Public Policy of India as
they are in violation of the Fundamental Policy of Indian law and most
basic notions of morality/ justice and also patently illegal, and shocks
the conscience of the Court and therefore, should not be permitted to
be enforced in India under Section 48(2) of the 1996 Act. Reliance is
placed on Vijay Karia and Others v. Prysmian Cavi E Sistemi SRL
and Others, 2020 SCC OnLine SC 177; Shri Lal Mahal Limited v.
Progetto Grano SPA, (2014) 2 SCC 433 and ONGC Ltd. v. Western
Geco International Ltd. (2014) 9 SCC 263.
18. Also, in response to petitioners‟ contention that interpretation of a
contract in a foreign award lies outside the ambit of the enforcing
Court, reliance has been placed on Technology Information
Forecasting & Assessment Council (IFAC) v. Strategic Engineering
(P) Ltd. , 2025 SCC OnLine Del 9486 , wherein it has been held that
interpretation of contractual terms lies under ambit of an arbitrator,
however, the same does not permit substitution or modification of the
terms of the contract. The leaned counsel has placed heavy reliance on
the dissenting opinion in the Partial Award.
Present Petition is Barred by Limitation
19. The petitioners‟ reliance on the judgment of Union of India v.
Vedanta Ltd., (2020) 10 SCC 1, to argue that the limitation period
starts from issuance of SCN is misplaced, as in said judgment the
Hon‟ble Supreme Court did not, as a matter of law, ruled on
interpretation of the expression “from when the right to apply accrues”
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in Article 137 of the Limitation Act, 1963 (“ the Limitation Act ”) and
only on facts observed that right to apply accrued upon issuance of
SCN and also noted that any delay was liable to be condoned given
the vagueness prior to the judgment. Further, in response to
petitioners‟ contention that limitation began only on issuance of SCN
as prior to that there was no dispute to the award, it is submitted that
Vedanta (supra), does not lay down when the limitation period starts
and only that Article 137 of the Limitation Act and not Article 136 of
the Limitation Act applies to foreign awards.
20. In response to petitioners‟ submission that cause of action triggering
limitation period is action of refusal/denial by respondent, it is
submitted that there were three such occasions/strikes before 2014,
namely: (i) respondent‟s letter dated 14.04.2005 to AT expressing its
disagreement with approach to ONGC carry issue; (ii) meeting held
on 06.06.2005 wherein parties agreed upon quantification for other
five issues but excluded quantification of ONGC Carry Issue; and
lastly (iii) letter dated 23.01.2006 of respondent iterating its position.
Further, petitioners‟ contention that they did not seek enforcement
because of the pending challenge to the Partial Award before Court in
Malaysia is also meritless as pendency of a challenge does not bar
execution.
21. The petitioners‟ reliance upon Rajeev Gupta and Others v. Prashant
Garg and Others, 2025 SCC OnLine SC 889; Khatri Hotels (P) Ltd.
v. UOI, (2011) 9 SCC 126; Shakti Bhog Food Industries Ltd. v.
Central Bank of India, (2020) 17 SCC 260 and Hari Shankar
Singhania & Ors. v. Gaur Hari Singhania and Ors., (2006) 4 SCC
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658 are irrelevant, as these judgments concern Section 58 of the
Limitation Act. Reliance is placed on Rinkoo Aggarwal v. Gaurav
Sabharwal, 2025 SCC OnLine Del 3658 and State of Orissa and Anr
v. Damodar Das, (1996) 2 SCC 216 , to content that under Section 137
of the Limitation Act limitation period starts from when cause of
action first arises (maximum period of 3 years). Lastly, it is submitted
that not only have the petitioners failed to explain the inordinate delay
and without a formal application the same cannot be condoned. Lastly,
petitioners argument that IMAX Corpn. v. E-City Entertainment (I)
(P) Ltd., 2024 SCC OnLine Bom 3555, has already been dealt with in
the Vedanta (supra) is also incorrect as Vedanta (supra) was passed
in 2020 whereas IMAX (supra) was passed in 2024.
Post Tax Rate of Return (“PTRR ”) Was Depressed
22. It is submitted that Partial Award by permitting inclusion of ONGC
Carry Cost in PTRR calculations rewrote the terms of the
PSC.“ONGC Carry Costs” is the cost parties to the PSC, except
ONGC, had to bear till it was equivalent to 60% of total cost incurred
by ONGC post the PSC and the upper ceiling of the said cost was
USD 33 million under Article 3.3 of the PSC. This way, parties paid
the Past Costs to ONGC. Further, after deducting Cost-Petroleum all
petroleum produced was Profit-Petroleum and as per Article 16 of
PSC, Profit-Petroleum was to be shared between respondent and the
Contractor, in ratio of PTRR achieved by parties to the PSC other than
ONGC in the preceding year. Appendix D of the PSC explained how
to calculate PTRR and the same did not include ONGC‟s Past Costs.
Therefore, respondent‟s Profit Petroleum had no nexus to the
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Companies‟ profitability rate, contrary to the Contractor‟s profitability
rate, which excluded ONGC‟s profitability rate and costs incurred by
ONGC under Appendix D. Hence, the Companies had motive to
depress PTRR to lower respondent‟s share of Profit Petroleum and
increase theirs. Adding ONGC‟s Carry Cost in PTRR calculations and
adding Past Costs Payments to ONGC as Exploration, Development
and Productions Costs (“ EDP Costs ”) was in complete violation of the
PSC‟s terms, which reduced respondent‟s Profit Petroleum by USD 99
million.
23. It is further submitted that, as per Article 16 and Appendix D of the
PSC, PTRR measures companies‟ profitability and is calculated with
respect to the Companies and not for the Contractor, which includes
ONGC. ONGC incurred USD 49 million as Past Cost, out of which
the Companies had to incur USD 29.39 million, as per Article 3.3 of
PSC. Therefore, the Companies carried ONGC‟s 40% share in
Contract Cost to make good of their 60% Participating Interests (“ PI ”)
in the Past Cost, and these payments are not Companies‟
EDP/Contract Costs, as is evident from wordings of Article 3.3,
Article 16 and Appendix D of the PSC. The same was also observed
in the dissenting opinion of the Award.
24. Combined reading of Article 16.1, Article 16.4 and paragraph 1 of
Appendix D of PSC shows that Profit Petroleum had to be calculated
on basis of PTRR actually achieved by the Companies as computed by
the Companies‟ net cash flows in paragraph 2 of Appendix D, under
which only 4 item were deductible namely: (i) Companies‟ share of
Production Costs; (ii) Companies‟ share of Exploration Costs; (iii)
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Companies‟ share of Development Costs; and (iv) notional income
tax. Neither does Article 16 nor Appendix D mentions “Past Costs” or
“Payments under Article 3.3” nor definitions of EDP Costs in Articles
1.67, 1.40 and 1.30 of the PSC, include Companies‟ payments towards
ONGC‟s Past Costs under Article 3.3 of the PSC. Hence, if Past Costs
reimbursement under Article 3.3 of PSC was a deductible item under
paragraph 2 of Appendix D of PSC it would have been so stated.
PI Of Companies’ Contract Cost Contribution Was Never 100%

25. It is submitted that from the effective date of PSC, PI of the parties has
been 40% of ONGC and 60% of the Companies and no clause of the
PSC stated that only after discharge of Past Costs under Article 3.3 of
the PSC, the PI of parties would come into effect. Hence, the majority
AT holding in paragraph No. 238 of the Partial Award that “ Article
3.3 makes it clear that, under the agreement, the Companies‟ share of
Contract during the relevant period was 100 per cent and ONGC had
no responsibility or obligation to share in those costs during that
period .” is wrong and if that was the case, the PSC would have stated
so. In doing so, the majority AT amended/rewrote the terms of PSC
and hence, violated fundamental principle of Indian law. Reliance has
been placed on Ssangyong Engg. & Construction Co. Ltd. v. NHAI,
(2019) 15 SCC 131; Nabha Power Ltd. v. Punjab SPCL, (2018) 11
SCC 508; Delhi Development Authority v. Jitender Pal Bhardwaj,
(2010) 1 SCC 146 and Travancore Devaswom Board v. Thanath
International (2004) 13 SCC 44.
Impugned Awards Are Contrary To The Public Policy Of India -
Violated Doctrine of Public Trusteeship (“DPT”)
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26. PSCs are public contract and DPT is intrinsic for their interpretation.
Petitioners‟ contention that PSC is not “special contract” is unsound,
as applicability of DPT to PSC‟s interpretation accentuates such
contracts‟ special nature of being executed in public interest. Further,
in a different proceeding pending before the Andhra Pradesh High
Court (WP (C) No. 19705/2019), petitioners have taken the stance that
PSC is a statutory and binding contractual framework with the
Government of India (“ GoI ”) under the Oilfields (Regulation and
Development) Act, 1948. Recently, the Hon‟ble Supreme Court in
State Bank of India v. Union of India, 2026 SCC OnLine SC 202 ,
reaffirmed DPT‟s applicability to contracts of natural resources and
held that such transactions are part of sovereign privilege vested with
GoI. Similarly, in the present case, PSC is a special contract, as it is a
contract with GoI for exploitation of natural resources and
consequently, DPT is applicable.
27. It is submitted that PSC should be interpreted in furtherance of DPT,
which is not limited to just environmental cases, but mandates
protection of public‟s interest in all resources like oil and gas,
exploited through commercial contracts like PSCs, reliance is placed
on Reliance Natural Resources v. Reliance Industries Ltd., (2010) 7
SCC 1, upheld in Natural Resources Allocation, In re, Special
Reference No. 1 of 2012, (2012) 10 SCC 1, wherein the Hon‟ble
Supreme Court also held that strict judicial scrutiny is required over
contracts of natural recourses. In the present case, the majority AT has
passed the impugned Awards in favour of petitioners at cost of the
people of India. Reliance has been placed upon Union of India v.
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Reliance Industries Ltd., 2025 SCC OnLine Del 841 , wherein this
Court held that the interpretation of PSC cannot bestow a benefit
neither contemplated nor intended by the PSC or the parties. By
treating PSC like a commercial contract, the AT (majority view)
ignored PSC‟s public nature and adopted an interpretation favouring
unjust enrichment of private party.
28. It is submitted that Article 14 of the Constitution of India espouses
principle of equality, which in reference to PSC means equality
between people of India and private party, with whom GoI executes
the PSC. However, the calculation of PTRR adopted by the AT,
reduces respondent‟s profit share on the principle of actuality. Thus,
the AT has without any reasonable classification created two class
within the parties, who stand on equal footing under the PSC. The
same is violative of both provision of the PSC and Article 14 of the
Constitution of India. Reliance has been placed on Reliance Natural
Resources (supra) and Natural Resources Allocation (supra).
29. It is submitted that the interpretation of the PSC should be the one that
optimizes GoI‟s return. The State, petroleum resource‟s sovereign
owner, has vested right to lion‟s share of the profit, while private oil
corporation are entitled to adequate economic benefits, refer to
Reliance Natural Resources (supra). Hence, when private
corporations capitalize on State‟s resources, Articles 14 and 39(b) of
the Constitution of India allow the State to optimize public revenue
and forestall exploitation of national resources at hands of private
parties to prevent transfer of national wealth, reliance has been placed
on Natural Resources Allocation (supra). In the present case, the said
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principles have been being ignored and the AT has allowed the
Companies to recover and earn profit on Past Cost. Further, the
reliance placed upon Vedanta (supra), is misplaced, as in the said
judgment the Hon‟ble Supreme Court did not rule on the issue of
public policy, as raised herein by the respondent and also is
differentiable on facts and issues. The said judgment was based on
Article 15.5(e)(iii)(dd) of the contract and not if Past Cost could be
incorporated into PTRR cash flow.

30. In response to petitioners‟ contention that the objection of violation of
DPT has been raised for the first time in oral arguments, it is
submitted that the respondent did raise the issue of public interest in
its reply and the learned counsel for the petitioners addressed the said
objection in its pleadings, thereby the issue is duly mentioned in the
pleadings of the parties. Further, under Order 6 Rule 2 of the CPC,
1908, pleadings are only to contain concise form of the material facts
and not detailed evidence or law on the subject. As for the argument
of DPT not being raised before AT, it is submitted that firstly, just
because the seat Court upheld the impugned Awards does not bar the
enforcement Court from rejecting enforcement since the Awards are in
violation of the public policy of India, as enforcement court follows
enforcement jurisdiction‟s law. Secondly, the jurisprudence of DPT
concerning PSC first came through the judgment of Reliance Natural
Resources (supra), upheld in Natural Resources Allocation (supra),
hence, respondent pleaded the same during enforcement proceedings.
31. Lastly, it is submitted that the end result of Awards is the GoI, faces a
loss of USD 99 million and results in a huge windfall gain for the
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petitioners and hence, enforcement of the impugned Awards of this
nature is contrary to the public policy of India.
AT Was Rendered Functus Officio
32. It is submitted that Final Award was passed by a reconstituted AT
after original AT become functus officio . The original AT in Partial
Award stated that its jurisdiction on quantification issue could be
invoked by either party on or before 12.04.2005, however, neither
party invoked the jurisdiction by then. Even if petitioners‟ request of
180 days extension is accepted, yet they did not invoke AT‟s
jurisdiction during that period and hence, jurisdiction of the AT ceased
to exist.
33. Even the reasoning given by the reconstituted AT in the Final Award
to assume jurisdiction i.e., in lieu of the Federal Court‟s decision, is
wrong as the said decision came in October 2011 and petitioners
waited till 26.09.2014 to approach AT. Additionally, the letter of the
then Secretary of original AT‟s dated 04.05.2005 stating that “ the
Tribunal Would await the request from one of the parties before
commencing the quantum phase of the arbitration ” cannot be
construed to mean that AT would await indefinitely. The reconstituted
AT to exercise jurisdiction also relied upon the letter dated
04.05.2005, wherein it stated that upon either party‟s request it will
commence quantification, however, respondent never consented to
extension of the original AT‟s jurisdiction. It is further submitted that
the illegally reconstituted AT rejected respondent‟s jurisdictional
objection and proceeded on the ground that jurisdiction once vested
remains vested, irrespective of time, until AT declares that arbitration
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proceedings have concluded. The said interpretation is in violation of
most basic notion of justice and morality.
34. Further , the dispute of quantification of ONGC Carry Issue for which
AT was revived was just a pretext, whereas the actual issue was self-
enforcement of the Partial Award, by diversion of USD 99 million by
petitioners, which award was yet to be recognised in India. The AT in
the Final Award only reaffirmed the PTRR calculation as per the
Partial Award and thereby, in guise of quantification exercised
jurisdiction and passed the Final Award to enforce Partial Award,
which was time-barred. The parties took no actions for almost 8 years
and the agreement to arbitration stood abandoned and hence, AT lost
its jurisdiction on ground of undue delay. Even the petitioners failed to
seek enforcement of the Partial Award within limitation and instead
revived the original AT, with the only objective to sneak out of the
limitation issue. Lastly, resumption of the AT was contrary to Article
34(2) of the UNCITRAL Rules, as it stood terminated in the year 2006
as a result of petitioners‟ failure to seek its claims.
Enforcement Of A Foreign Award Is Mandatory And Petitioners
Self- Enforced the Partial Award
35. It is submitted that a foreign award become binding and enforceable in
India only after recognition by Indian court, as provided in Sections
44 to 49 of the 1996 Act and is not on the discretion of the award-
holder, reliance has been placed on Fuerst Day Lawson Ltd. v. Jindal
Exports Ltd., (2001) 6 SCC 356 . Petitioners‟ contention that there was
no occasion to seek Partial Award‟s enforcement until 2014 is
unsustainable and without having Partial Award enforced, they should
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not have recovered any amount in lieu of the Partial Award.
36. After the Court of Appeal‟s decision to uphold the Partial Award,
petitioners did not seek enforcement or approached AT, instead they
recovered USD 99 million by not paying respondent‟s share of Profit
Petroleum and thereby, self-enforced a foreign unrecognised award.
Even after Federal Court of Malaysia affirmed Court of Appeal‟s
decision, petitioners did not seek enforcement of the Partial Award
under Sections 46 to 49 of the 1996 Act, due to which the respondent
could also not raise objections under Section 48 of the 1996 Act. Once
the Partial Award became time barred, respondent rightly issued the
SCN. Further, by the filing the present petition, the petitioners
concede to the statuary requirement of judicial enforcement of foreign
award.
37. It is further submitted that both parties by their actions i.e., respondent
by recovering USD 99 million through OMCs and petitioners by
recovering USD 99 million back by adjusting respondent‟s Profit
Petroleum dues, agreed that quantification of ONGC Carry issue is
USD 99 million and hence, no quantification was required. Further,
petitioners did not approach AT for quantification and both parties‟
abandoned arbitration by 2006.
AT Went Beyond the Submissions and Issues
38. It is submitted that petitioners‟ submission was that its application was
based on paragraph 4(a) of the Agreed Terms of Reference, instead,
the reconstituted AT held that the submission was made under
paragraph 4(b) of the Agreed terms of Reference. Thus, the Final
Award is liable to be set aside under Section 48(1)(c) of the 1996 Act.
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Further, it was only due to the SCN, the petitioners referred the matter
to the AT, which was beyond the jurisdiction of AT.
39. It is further submitted that in the Partial Award the ONGC Carry issue
was whether the Companies can include sums paid by them in PTRR
calculation as per Article 3.3 of the PSC, whereas in Final Award, the
ONGC Carry Issue was “ should certain monies deposited or paid by
the Contractor in advance for the goods and services in connection
with Petroleum Operation be treated as Contract costs at the time of
payment for purposes of Article 15 and 16 of the PSC ”, which is
different from original ONGC Carry Issue agreed by parties and the
initial AT. Further, the majority AT also went into calculation of total
Profit Petroleum after recovery of Contract Cost and Past Cost
(paragraph Nos. 252 to 260 of Partial award), which was not a dispute.
Even the formula for computing the cash flow was amended by
majority AT by applying its own „commercial sense‟ (paragraph No.
261 of Partial Award).
SUBMISSIONS ON BEHALF OF THE PETITIONERS
40. Mr. Sibal, learned senior counsel for the petitioners, has made the
following submissions.
Present Petition Is Within Limitation
41. It is submitted that the Hon‟ble Supreme Court in Vedanta (supra) ,
held that the limitation of an enforcement petition under Sections 47
and 49 of the 1996 Act is governed by Article 137 of the Limitation
Act, as per which it is 3 years from when the right to apply accrues
and it does not necessarily accrue on passing of an award. The present
petition is within limitation as it was filed on 18/22.05.2017 and the
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right to apply in the present petition arose on 10.07.2014 i.e., date of
SCN. Further, right to seek Partial Award‟s enforcement also arose
when Final Award was passed and on 28.02.2019 when the Federal
Court of Malaysia dismissed the challenge to the Final Award.
42. It is further submitted that the petitioner had no cause to seek
enforcement of Partial Award earlier, as firstly the Partial Award
approved petitioners‟ interpretation of the PSC in calculating PTRR
and the amounts stood satisfied as per petitioners and secondly, the
AT reserved the jurisdiction to decide on the quantification issue in
case the parties failed to come to an agreement.
43. Further, even assuming that the present petition is barred by
limitation, it is submitted that there are sufficient causes for
condonation of delay. Firstly, AT retained jurisdiction to pass the
Final Award. Secondly, the four issues decided in respondent‟s favour
were implemented when respondent accepted payments from
petitioners and the respondent never challenged the fifth issue decided
in petitioners‟ favour. As for the sixth issue i.e., ONGC Carry Issue
which was challenged by the respondent, the same was finally
dismissed by Federal Court of Malaysia and the Partial Award
attained finality. Hence, no cause ever arose which could have led to
petitioners seeking enforcement of the Partial Award and even the
respondent never elevated any quantification issue until SCN, because
of which petitioners approached the AT for Final Award, after passing
of which the petitioners instituted the present petition. Hence, it was
issuance of SCN which accrued the “right to apply” upon the
petitioners. Additionally, the delay in filing of enforcement petition
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can be condoned even without an application as Court exercise
discretion in such matters under Section 5 of Limitation Act, reliance
is placed on Sesh Nath Singh v. Baidyabati Sheoraphuli Co-
operative Bank Ltd, (2021) 7 SCC 313.
44. It is also stated that respondent on one hand argued that the present
petition is barred by limitation and on the other hand, argued that the
petition is premature as when the petition was filed, challenge to Final
Award was pending before Courts in Malaysia. The contention that
petition is premature shows that the petition is within limitation as the
right to seek enforcement of the Awards arose after the challenge to
the Final Award was decided.
45. In response to respondent‟s argument of „three strikes‟ i.e., cause of
actions that accrued right to enforce Partial Award, it is submitted that
the same were mere intentions to challenge the Partial Award and not
attempt to recover amounts deducted by the petitioners. Additionally,
as per Article 137 of the Limitation Act, limitation starts from when
“right to apply accrues” and not when “right to apply first accrues”,
reliance is placed on Rajeev Gupta (supra); Khatri Hotels (supra);
Shakti Bhog Food Industries (supra) and Hari Shankar Singhania
(supra). Regardless, the said argument was not raised in the objections
and could not be raised at such later stage of submission. Further,
respondent‟s contention that right to apply for enforcement accrued on
the passing of the Partial award was dealt with in Vedanta (supra) and
is covered by the same.
46. In response to respondent‟s contention that petitioners are barred from
seeking enforcement of the Partial Award as they failed to do so
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despite their submission in arbitral proceedings that the award was per
se enforceable, it is submitted that the submission made in the arbitral
proceedings was not in particular about the Partial Award in question
but in the general context. Also, the submission was that a partial final
award would be enforceable “in the normal way in India” easily and
not an admission by petitioners that formal enforcement proceedings
are necessary for enforcement.
Respondent’s Objection That Petitioners Depressed PTRR Is
Misconceived
47. It is submitted that there is a difference between Past Costs under
Article 1.63 of the PSC and costs incurred under Article 3.3 of the
PSC, which are EDP Costs incurred after effective date and paid by
petitioners and hence, deductible under Appendix D for calculating
PTRR. Respondent‟s objection that AT rechristened “Past Costs” as
“Contract Costs” and that PTRR was depressed by including costs
paid by petitioners under Article 3.3 of the PSC, which was
impermissible as they were Past Costs and not Contract Costs is
wrong. It is further submitted that for costs not included under
Contract Costs and Past Costs, there is Articles 18.1 and 18.3 of PSC.
Hence, the costs incurred under Article 3.3 of the PSC needed to be
included in calculation of PTRR, as there is no exclusion for it.
48. Further, the AT rightly held that Article 3.3 forms part of the PSC and
that respondent being a signatory to the PSC agreed to the said clause.
Respondent‟s argument that Article 3.3 of PSC is an intra-contractor
arrangement and does not affect respondent‟s share of Profit
Petroleum has been dealt with and rejected by the AT in paragraph
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No. 250 of the Partial Award and the same needs no interference.
No Alteration of PI of Parties or Fudging Of Accounts By AT
49. It is submitted that the purpose of Article 3.3 of PSC was that parties
to the PSC bear the overall cost proportionate to their respective PI
and Partial Award achieved the same. The outcome of the Partial
Award is in accordance with Article 3.3 of the PSC, which was to
ensure that the overall cost would be borne by ONGC and by the
petitioner along with the other parties to the PSC in proportion to their
respective PI and to ensure that all of them have been involved in
development of Ravva Oil field from day one. Reliance is placed upon
paragraph Nos. 227 and 239 of Partial Award.
50. Further, respondent‟s contention that AT has allowed fudging of
accounts leads to re-interpretation of the PSC and the Partial Award
follows principle of equalisation, as founded in the PSC.
No Violation Of Fundamental Policy Of Indian Law/ Public Policy
51. It is well settled law that the expression “fundamental policy of Indian
law” is very narrow and under Section 48(2)(b) of the 1996 Act merits
of a foreign award is not to be interfered with and contentions raised
by respondent require interpretation of the PSC, which is in exclusive
domain of the AT and the same cannot be interfered with by adopting
an alternative interpretation. Reliance is placed on EIG (Mauritius)
Limited v. McNally Bharat Engineering Company Limited, 2021
SCC OnLine Cal 2915, Ssangyong Engineering (supra) and Shri Lal
Mahal (supra). Further, interpretation of a contract is outside the
scope of the Court in enforcement proceedings, reliance is placed on
Vijay Karia v. Prysmian Cavi E Sistemi SRL, (2020) 11 SCC 1.
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52. In response to respondent‟s submission that the impugned Awards are
violative of public policy as AT failed to apply DPT, it is submitted
that the said submission ought to be rejected. Firstly, it was not raised
before the AT or Courts in Malaysia or in respondent‟s objections and
has been argued for the first time in oral arguments before this Court,
reliance is placed on Ssangyong Engineering (supra). Secondly, DPT
has no relevance to the findings in the impugned Awards and the
judgements relied upon by respondent in furtherance of its DPT
arguments are also irrelevant as even they do not state that the GoI has
right to bypass the terms of PSC.
53. Additionally, the Hon‟ble Supreme Court in Vedanta (supra)
(wherein the parties and PSC were same as herein) rejected
respondent‟s similar arguments attempting to classify PSC as „special
contracts‟. Lastly, it is submitted that post PSC, companies induced
huge investments of minimum USD 188.98 million for development
of Ravva Oil Field and till today are paying such costs and the Partial
Award has also duly taken note of the same.
Respondent’s Objection That AT Become Functus Officio From
12.04.2005 Is Meritless
54. It is submitted that in the Partial Award, AT gave 6 months to parties
to arrive at agreement over the quantification issue, however, the same
did not end AT‟s jurisdiction, which is further evident from Agreed
Terms of Reference and the Dispositive Provisions of Partial Award
(paragraph Nos. 220 and 325 of Partial Award). Even the curial Courts
in Malaysia rejected the said submissions.
55. AT vide letter dated 04.05.2005 informed parties that on request from
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either party it will proceed to decide quantification and respondent
never objected to the said letter and cannot now say that it never
agreed to this proposition. Lastly, it is wrong to contend that inaction
of the parties resulted in abandonment of the arbitration agreement, as
the said letter itself shows that the parties were cognizant that the AT
continues to retain the jurisdiction.
Respondent’s Objection That There Was No Dispute On
Quantification and That SCN Did Not Demonstrate Existence Of
Dispute On Quantification Is Meritless
56. It is submitted that respondent by issuing the SCN seeking recovery of
USD 99 million from the OMC‟s itself affirmed that there were
disputes pertaining to quantification of ONGC Carry Issue. Also, the
parties never reached any agreement on quantification of ONGC Carry
Issue and the same was the respondent‟s stance before the AT. The
AT rejected respondent‟s objection to it exercising jurisdiction over
SCN and the Malaysian Courts have upheld the said finding of AT.
Further, respondent only challenged the ONGC Carry Issue and hence,
the issue of quantification of the ONGC Carry Issue was naturally
adjudicated by the AT.
57. In response to respondent‟s objection that SCN was issued on account
of petitioners‟ recovering USD 99 million without seeking
enforcement of the Partial Award and not due to quantification issue,
it is submitted that petitioners did not self-enforce the Partial Award
and it was only after the Malaysian Court of Appeal upheld the Partial
Award, the petitioners recovered USD 99 million from respondent and
once petitioners recovered the amounts, it stopped making adjustments
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against Profit Petroleum payments. Hence, the issue of USD 99
million recovery was resolved and the only reason SCN could have
been issued was for ONGC Carry issue quantification.
58. Further, in response to respondent‟s allegation that petitioners self-
enforced the Partial Award it is submitted that the respondent did the
same when it accepted payments in furtherance of four issues decided
in their favour, without formal enforcement proceedings. Additionally,
the parties have contracted under the Malaysian law and UNCITRAL
Arbitration Rules, where there is an obligation to satisfy the award
without enforcement proceedings.
59. The petitioners did not violate any terms of the PSC by recovering
USD 99 million and only attained status quo ante as it was when the
Partial Award was passed. Also, the Partial Award is not causing loss
of USD 284 million to GoI, only USD 99 million is the amount for
ONGC Carry Issue and the same is based on interpretation of PSC for
calculation of the PTRR.
60. In response to respondent‟s objection that no dispute on quantification
qua ONGC Carry Issue existed, it is submitted that as per the
respondent USD 99 million were due as evident from SCN, whereas
as per the petitioners no amount was due, hence, clearly there is a
dispute. Petitioners recovering USD 99 million from respondent did
not amount to an agreement on quantification and it was respondent‟s
own stand before AT that parties had failed to reach an agreement.
Further, USD 292 million and USD 162 million were recovered by
respondent from the petitioner Nos. 1 and 2, respectively and hence, it
is misleading to say that only USD 99 million was recovered by
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respondent towards ONGC Carry Issue.
Respondent’s Objection That AT In Final Award Exercised
Jurisdiction Over SCN Is Misleading
61. It is submitted that respondent‟s objection that the Final Award is not
enforceable as the AT lacked jurisdiction over the SCN is misleading.
In paragraph No. 142 of the Final Award the AT itself observed that it
has not exercised jurisdiction as asserted by respondent on the SCN
but has adjudicated the issue of “quantification”. The said observation
has been affirmed by Malaysian High Court.
Respondent’s Objection That AT Rendered Partial Award On Its
"Commercial Sense" Is Misconceived
62. It is submitted that the said objection of the respondent is based upon
fallacious interpretation of paragraph Nos. 258 and 261 of the Partial
Award. The interpretation of the PSC given in the said paragraphs by
the AT is not based on its own notions of “commercial sense” but is in
conformity with the PSC terms and “commercial sense” reference
only meant that the interpretation is consistent with commercial
considerations. Further, the said argument was also rejected by the
Curial Courts in Malaysia.
63. Hence, in view of the aforesaid submissions, it is urged that the
impugned Awards be enforced and the Bank Guarantees maintained
by petitioners pursuant to the order dated 29.10.2018 be released.
ANALYSIS AND FINDINGS
64. I have heard learned counsels for the parties and perused the
documents on record.
I. Present Petition Is Not Barred By Limitation
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65. The first and foremost issue which needs to be decide is whether the
present enforcement petition is barred by limitation and the said issue
is squarely covered by the judgment of Vedanta (supra) , which was
between the same parties as herein and in relation to the same PSC.
66. On the issue of limitation, the Hon‟ble Supreme Court in Vedanta
(supra) observed as under:-
“61. On this issue, divergent views have been taken by some
High Courts with respect to the period of limitation for
filing a petition for enforcement of a foreign award under
the 1996 Act. It has therefore become necessary to settle the
law on this issue.
xxxxxxxx
65. The limitation period for filing the
enforcement/execution petition for enforcement of a foreign
award in India, would be governed by Indian law. The
Indian Arbitration Act, 1996 does not specify any period of
limitation for filing an application for
enforcement/execution of a foreign award. Section 43
however provides that the Limitation Act, 1963 shall apply
to arbitrations, as it applies to proceedings in court.
66. The Limitation Act, 1963 does not contain any specific
provision for enforcement of a foreign award. … Article 136
provides that the period of limitation for the execution of
any decree or order of a “civil court” is twelve years from
the date when the decree or order becomes enforceable.
67. Article 137 is the residuary provision in the Limitation
Act which provides that the period of limitation for any
application where no period of limitation is provided in the
Act, would be three years from “when the right to apply
accrues”.
69. Section 36 of the Arbitration Act, 1996 creates a
statutory fiction for the limited purpose of enforcement of a
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“domestic award” as a decree of the court, even though it is
otherwise an award in an arbitral proceeding.… The
deeming fiction is restricted to treat the award as a decree
of the court for the purposes of execution, even though it is,
as a matter of fact, only an award in an arbitral
proceeding.…
xxxxxxxx
71. In Bank of Baroda v. Kotak Mahindra Bank [Bank of
Baroda v. Kotak Mahindra Bank, (2020) 17 SCC 798] this
Court took the view that Article 136 of the Limitation Act
deals only with decrees passed by Indian courts. … The
legislature has omitted reference to “foreign decrees” under
Article 136 of the Limitation Act. The intention of the
legislature was to confine Article 136 to the decrees of a
civil court in India. The application for execution of a
foreign decree would be an application not covered under
any other Article of the Limitation Act, and would be
covered by Article 137 of the Limitation Act.
72. Foreign awards are not decrees of an Indian civil court.
By a legal fiction, Section 49 provides that a foreign award,
after it is granted recognition and enforcement under
Section 48, would be deemed to be a decree of “that court”
for the limited purpose of enforcement. The phrase “that
court” refers to the court which has adjudicated upon the
petition filed under Sections 47 and 49 for enforcement of
the foreign award. In our view, Article 136 of the Limitation
Act would not be applicable for the enforcement/execution
of a foreign award, since it is not a decree of a civil court in
India.
73. The enforcement of a foreign award as a deemed decree
of the High Court concerned [as per the amended
Explanation to Section 47 by Act 3 of 2016 confers exclusive
jurisdiction on the High Court for execution of foreign
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awards] would be covered by the residuary provision i.e.
Article 137 of the Limitation Act. ….
74. The exclusion of an application filed under any of the
provisions of Order 21 CPC from the purview of Section 5
of the Limitation Act, was brought in by the present
Limitation Act, 1963. …
xxxxxxxx
76. In view of the aforesaid discussion, we hold that the
period of limitation for filing a petition for enforcement of a
foreign award under Sections 47 and 49, would be governed
by Article 137 of the Limitation Act, 1963 which prescribes
a period of three years from when the right to apply
accrues.
77. The application under Sections 47 and 49 for
enforcement of the foreign award, is a substantive petition
filed under the Arbitration Act, 1996. It is a well-settled
position that the Arbitration Act is a self-contained code.
The application under Section 47 is not an application filed
under any of the provisions of Order 21 CPC, 1908. The
application is filed before the appropriate High Court for
enforcement, which would take recourse to the provisions of
Order 21 CPC only for the purposes of execution of the
foreign award as a deemed decree. The bar contained in
Section 5, which excludes an application filed under any of
the provisions of Order 21 CPC, would not be applicable to
a substantive petition filed under the Arbitration Act, 1996.
Consequently, a party may file an application under Section
5 for condonation of delay, if required in the facts and
circumstances of the case.
78. In the facts of the present case, the respondents
submitted that after the award dated 18-1-2011 was passed,
the cost account statements were revised, and an amount of
US $22 million was paid to the Government of India. On 10-
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7-2014, a show-cause notice was issued to the respondents,
raising a demand of US $77 million, being the
Government's share of profit petroleum under the PSC. It
was contended that the cause of action for filing the
enforcement petition under Sections 47 and 49 arose on 10-
7-2014. The enforcement petition was filed on 14-10-2014
i.e. within 3 months from the date when the right to apply
accrued. We hold that the petition for enforcement of the
foreign award was filed within the period of limitation
prescribed by Article 137 of the Limitation Act, 1963. In any
event, there are sufficient grounds to condone the delay, if
any, in filing the enforcement/execution petition under
Sections 47 and 49, on account of lack of clarity with
respect to the period of limitation for enforcement of a
foreign award.”
(Emphasis added)
67. A perusal of the paragraphs, reproduced above, shows that the
Hon‟ble Supreme Court held that limitation of enforcement of a
foreign award as a deemed decree of the High Court concerned is to
be governed by Article 137 of the Limitation Act, as per which it is 3
years from when the right to apply accrues. Applying the said law to
the facts of the case, the Hon‟ble Supreme Court agreed with the
respondents‟ contention that the cause of action arose on 10.07.2014
i.e., when SCN was issued and not on 18.01.2011 i.e., date of the
award and hence, the enforcement petition which was filed on
14.10.2014 was considered within the period of limitation of 3 years.
Applying the said principles to the present case, the date of issuance of
SCN is 10.07.2014, same as Vedanta (supra), and the present
enforcement petition was filed on 18/22.05.2017 is within 3 years
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from date of the SCN. Hence, the present enforcement petition is
within the limitation period as per Article 137 of the Limitation Act, as
the clock of the limitation period began to run from the date of
issuance of SCN i.e., 10.07.2014.
68. The respondent has contended that in Vedanta (supra) the Hon‟ble
Supreme Court did not rule on law and only on facts of that case held
that right to apply accrued upon issuance of SCN and noted that delay
was liable to be condoned given the vagueness in law. While, it is true
that the Hon‟ble Supreme Court in Vedanta (supra) did observe that
there were sufficient grounds to condone the delay “ on account of lack
of clarity with respect to the period of limitation for enforcement of a
foreign award. ”, however, the same does not dilute the applicability
of Vedanta (supra) considering similarity in facts of the both the
cases. In the present case, the right to apply is the same as in Vedanta
(supra) i.e., the issuance of SCN dated 10.07.2014, when the
respondent sought to recover the amounts, adjusted by the petitioners.
Hence, the present enforcement petition filed on 18/22.05.2017 i.e.,
within the 3 years from SCN dated 10.07.2014, is within the period of
limitation under Article 137 of the Limitation Act. In view of the said
observation, the argument of the respondent regarding “three strikes”
i.e., occasions before SCN when the right to seek enforcement accrued
due to respondent‟s alleged refusal/denial has become immaterial.
69. Further, reliance on the judgments of Rinkoo Aggarwal (supra) and
Damodar Das (supra) is inapposite as this Court is bound by the
judgment of Vedanta (supra) by the Hon‟ble Supreme Court. Rinkoo
Aggarwal (supra) was a petition filed under Section 11(6) of the 1996
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Act for appointment of an arbitrator and the issue was when the
limitation period for filing such petition begins. In Damodar Das
(supra), it was observed that the limitation period commences from
the date when cause of arbitration is accrued i.e., when dispute arises
due to unequivocal refusal of one party‟s claim by the other party
resulting in claimant‟s right to refer the dispute to arbitration.
Although both these judgements are discussing right of accrual under
Article 137 of the Limitation Act, however, they are not related to
enforcement of foreign award, like in the present case. The respondent
has also placed reliance on IMAX (supra), however, the facts are
distinguishable. In IMAX (supra) , there was no show cause notice and
hence, the period of limitation began from the date of the award. Once
Vedanta (supra) , in similar circumstances has held the period of
limitation to begin from the date of show cause notice seeking
recovery, I am bound by the same.
70. Since, the present enforcement petition is within limitation,
respondent‟s contentions that the petitioners have failed to explain the
inordinate delay or have not filed any application seeking condonation
of delay, is irrelevant.
71. The arguments of the respondent is that the dispute of quantification
of ONGC Carry Issue was a mere pretext as the AT in the Final
Award only reaffirmed PTRR calculation as per the Partial Award and
since, the petitioners failed to seek enforcement of the Partial Award,
the entire exercise is time barred. Though the argument is attractive
but I am bound by the judgement of the Hon‟ble Supreme Court in
Vedanta (supra) holding that the issuance of SCN gives the party the
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right to apply for enforcement.
II. Scope of Interference Under Section 48 of the 1996 Act
72. Having held that the present enforcement petition is within limitation,
I will now be dealing with merits of the matter.
73. Learned ASG‟s primary objection on merits is issue regarding the
ONGC Carry Issue, which emanates from the interpretation of the
terms of PSC leading to calculation of the PTRR. Respondent‟s
objections are to be judged on the grounds laid down in Section 48 of
the 1996 Act . Here, I agree with learned senior counsel for the
petitioners, that the scope of the enforcing Court under Section 48 of
the 1996 Act is very narrow and the enforcement court must be
circumspect to interfere expect for the grounds mentioned in Section
48 of the 1996 Act.
74. At this juncture it is relevant to look at the Section 48 of the 1996 Act,
which reads as under: -
“48. Conditions for enforcement of foreign awards.—
(1) Enforcement of a foreign award may be refused, at the
request of the party against whom it is invoked, only if that
party furnishes to the Court proof that—
(a) the parties to the agreement referred to in Section 44
were, under the law applicable to them, under some
incapacity, or the said agreement is not valid under the
law to which the parties have subjected it or, failing any
indication thereon, under the law of the country where
the award was made; or
(b) the party against whom the award is invoked was not
given proper notice of the appointment of the arbitrator
or of the arbitral proceedings or was otherwise unable to
present his case; or
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(c) the award deals with a difference not contemplated by
or not falling within the terms of the submission to
arbitration, or it contains decisions on matters beyond
the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to
arbitration can be separated from those not so submitted,
that part of the award which contains decisions on
matters submitted to arbitration may be enforced; or
(d) the composition of the arbitral authority or the
arbitral procedure was not in accordance with the
agreement of the parties, or, failing such agreement, was
not in accordance with the law of the country where the
arbitration took place; or
(e) the award has not yet become binding on the parties,
or has been set aside or suspended by a competent
authority of the country in which, or under the law of
which, that award was made.
(2) Enforcement of an arbitral award may also be refused if
the Court finds that—
(a) the subject-matter of the difference is not capable of
settlement by arbitration under the law of India; or
(b) the enforcement of the award would be contrary to the
public policy of India.
Explanation 1.—For the avoidance of any doubt, it is
clarified that an award is in conflict with the public policy
of India, only if,—
(i) the making of the award was induced or affected by
fraud or corruption or was in violation of Section 75 or
Section 81; or
(ii) it is in contravention with the fundamental policy of
Indian law; or
(iii) it is in conflict with the most basic notions of
morality or justice.
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Explanation 2.—For the avoidance of doubt, the test as to
whether there is a contravention with the fundamental
policy of Indian law shall not entail a review on the merits
of the dispute.”
75. Perusal of Section 48(2) of the 1996 Act shows that the objections do
not include the merits of the dispute. Explanation 2 to Section 48(2) of
the 1996 Act, as reproduced above, explicitly excludes objections on
merits of the dispute.
76. The Hon‟ble Supreme Court in the judgment of Avitel Post Studioz
Ltd. v. HSBC PI Holdings (Mauritius) Ltd., (2024) 7 SCC 197 ,
while relying upon Vijay Karia (supra), Shri Lal Mahal (supra) and
Vendata (supra), held as under:-
“24. The above decision in Parsons & Whittemore Overseas
Co. [Parsons & Whittemore Overseas Co. Inc. v. Societe
Generale de L'industrie du Papier, 508 F 2d 969 (2d Cir
1974)] has been followed in various jurisdictions including
the Supreme Court of India in Renusagar Power Co.
Ltd. v. General Electric Co. [Renusagar Power Co.
Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] The
articulation of the “forum State's most basic notions of
morality and justice” has been legislatively adopted in the
Indian Arbitration Act, 1996. The legal framework
concerning enforcement of certain foreign awards in
international commercial arbitration is contained in Part II
of the said Act. In this jurisdiction, we must underscore that
minimal judicial intervention to a foreign award is the norm
and interference can only be based on the exhaustive
grounds mentioned under Section 48. [Union of
India v. Vedanta Ltd., (2020) 10 SCC 1] A review on the
merits of the dispute is impermissible [Shri Lal Mahal
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Ltd. v. Progetto Grano SpA, (2014) 2 SCC 433 : (2014) 2
SCC (Civ) 1] .
25. This Court in Vijay Karia v. Prysmian Cavi E Sistemi
SRL [Vijay Karia v. Prysmian Cavi E Sistemi SRL, (2020) 11
SCC 1 : (2021) 1 SCC (Civ) 389] , had noted that Section
50 of the Indian Arbitration Act, 1996 does not provide an
appeal against a foreign award enforced by a judgment of a
learned Single Judge of a High Court and therefore the
Supreme Court should only entertain the appeal with a view
to settle the law. It was noted that the party resisting
enforcement can only have “one bite at the cherry” and
when it loses in the High Court, the limited scope for
interference could be merited only in exceptional cases of
“blatant disregard of Section 48”. This principle of pro-
enforcement bias was further entrenched by the Supreme
Court in Union of India v. Vedanta Ltd. [Union of
India v. Vedanta Ltd., (2020) 10 SCC 1] , Shri Lal Mahal
Ltd. v. Progetto Grano SpA [Shri Lal Mahal Ltd. v. Progetto
Grano SpA, (2014) 2 SCC 433 : (2014) 2 SCC (Civ) 1]
and Vedanta Ltd. v. Shenzhen Shandong Nuclear Power
Construction Co. Ltd. [Vedanta Ltd. v. Shenzhen Shandong
Nuclear Power Construction Co. Ltd., (2019) 11 SCC 465 :
(2019) 4 SCC (Civ) 724]
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27. The Indian Supreme Court in Renusagar [Renusagar
Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC
644] had noted that there is no workable definition of
international public policy, and “public policy” should thus
be construed to be the “public policy of India” by giving it a
narrower meaning. Later on, in Shri Lal Mahal
Ltd. v. Progetto Grano SpA [Shri Lal Mahal Ltd. v. Progetto
Grano SpA, (2014) 2 SCC 433 : (2014) 2 SCC (Civ) 1] , the
Supreme Court held that the wider meaning given to “public
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policy of India” in the domestic sphere under Section
34(2)(b)(ii) would not apply where objection is raised to the
enforcement of the award under Section 48(2)(b) of the
Indian Arbitration Act. This would indicate that the grounds
for resisting enforcement of a foreign award are much
narrower than the grounds available for challenging a
domestic award under Section 34 of the Indian Arbitration
Act.”
(Emphasis added)
77. A perusal of the paragraphs, reproduced above, shows that the
respondent‟s objections with respect to the impugned Awards, are to
be strictly assessed within the boundaries of Section 48 of the 1996
Act.
III. ONGC Carry Issue Rightly Interpreted by the AT
78. In a nutshell what respondent is contending is that there is a difference
between Contract Costs and Past Costs. Article 16 and Appendix D of
the PSC, provides the formula to calculate the PTRR and deals only
with EDP costs incurred after the Effective Date, which should be
divided as per PI of the parties. Payments made under Article 3.3 of
PSC are intra-contractor adjustments towards Past Costs and are
Contract Costs of ONGC and hence, should not be included while
computing the PTRR of the Companies. However, the AT in the
Partial Award by including ONGC‟s Carry Cost in PTRR calculations
rewrote the terms of the PSC, which also reduced respondent‟s Profit
Petroleum by USD 99 million. In addition, the respondent also asserts
that AT in the Partial Award has wrongly held that PI of Companies‟
contract cost contribution was 100%, since from the effect of PSC, PI
of parties is 40% of ONGC and 60% of Companies and no clause of
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the PSC states that only after discharge of Past-Costs, PI of parties
would come into effect.
79. Articles 3.3, 15(1) and (6), 16(1) and Appendix D of the PSC, are
extracted as under:-
“3.3 ONGC Carry
In consideration of ONGC having paid the Past Costs, the
Companies covenant to ONGC that they shall:
(a) during the Transfer Period, pay the share of
Exploration Costs, Development Costs and Production
Costs incurred by the Operator; and
(b) after the Transfer Period, pay the share of Contract
Costs,
that would otherwise be payable by ONGC, in the
proportion that their respective Participating Interests bear
to their total Participating Interests, until such time as the
amount paid by the Companies pursuant to this Article 3.3
equals the amount that is equivalent to the Companies' total
Participating Interest share of the difference between Past
Costs and Transfer Period Net Revenue PROVIDED THAT
the Companies' obligations under this Article 3.3 shall not
exceed the sum of thirty three million US Dollars (US$33
million) less an amount equivalent to the Companies' total
Participating Interest share of Transfer Period Net Revenue
to which but for Article 7.5(c) the Companies would
otherwise be entitled. Thereafter, Contract Costs shall be
borne and paid by the Companies and ONGC in proportion
to their Participating Interests.
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15.1 Contractor Entitled to Recover Contract Costs and
Past Costs
The Contractor shall be entitled to 100% of the total
volumes of Petroleum produced and saved from the
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Contract Area in accordance with the provisions of this
Article until the value of such Petroleum entitlement after
deduction of all applicable levies including all Royalty and
Cess paid in respect of Petroleum produced and saved from
the Contract Area, is equal to Contract Costs together with
Past Costs. For the avoidance of doubt, it is agreed that
Past Costs shall not exceed the sum of fifty five million US
Dollars ($US55 million) for the purposes of cost recovery.
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15.6 Recovery of Contract Costs
The Contractor shall be entitled to recover in full during
any Year the Contract Costs incurred in the Contract Area
in that Year out of the Cost Petroleum. If during any Year
the Cost Petroleum is not sufficient to enable the Contractor
to recover in full the Contract Costs due for recovery in that
Year in accordance with the provisions of Articles 15.1 to
15.5 then, subject to the provisions of Article 15.1:
(a) recovery shall first be made of the Production Costs;
and
(b) recovery shall next be made of the Exploration Costs;
and
(c) recovery shall then be made of the Development Costs.
The unrecovered portions of Contract Costs shall be carried
forward to the following Year and the Contractor shall be
entitled to recover such costs in such Year or the subsequent
Years as if such costs were due for recovery in that Year, or
the succeeding Years, until the unrecovered costs have been
fully recovered out of Cost Petroleum from the Contract
Area.
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16.1 Profit Petroleum Determined by PTRR Method
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(a) The Contractor and the Government shall share in the
Profit Petroleum from the Contract Area in accordance with
the provisions of this Article.
(b) The share of Profit Petroleum, in any Year, shall be
calculated for the Contract Area on the basis of the Post Tax
Rate of Return actually achieved by the Companies at the
end of the preceding Year for the Contract Area as provided
in Appendix D.
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APPENDIX D
(ARTICLE 16.4)
CALCULATION OF THE POST TAX RATE OF RETURN
FOR PRODUCTION SHARING PURPOSES
1. In accordance with the provisions of Article 16, the
share of the Government and the Contractor respectively of
Profit Petroleum from any Field in any Year shall be
determined by the Post Tax Rate of Return (hereinafter
referred to as PTRR) earned by the Companies from the
Contract Area at the end of the preceding Year. These
measures of profitability shall be calculated on the basis of
the appropriate net cash flows as specified in this Appendix
D.
2. In order to assess the PTRR earned by the Company
(ies) in the Contract Area over any period up to the end of
any particular Year, the following net cash flow of the
Company (ies) arising from the Contract Area for each Year
separately will first be calculated as follows:

(i) Cost Petroleum entitlement of the Companies as provided
in Article 15;
plus
(ii) Profit Petroleum entitlement of the Companies as
provided in Article 16;
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plus
(iii) the Companies' share of all incidental income (of the
type specified in Section 3.4 of the Accounting Procedure)
arising from Petroleum Operations;
less
(iv) the Companies' share of those Production Costs
incurred on or in the Contract Area;
less
(v) the Companies' share of those Exploration Costs (if any)
incurred in the Contract Area;
less
(vi) the Companies' share of Development Costs in the
Contract Area, which, for the purposes of this paragraph 2
(vi), shall be all of the Development Costs without regard to
the provisions of Article 15.5(b);
less
(vii) the notional income tax, determined in accordance with
paragraph 7 of this Appendix, payable by the Companies on
profits and gains from the Contract Area.
provided, however, that any costs or expenditures which are
not allowable as provided in Section 3.2 of the Accounting
Procedure shall be excluded from Contract Costs and
disregarded in the calculation of the annual net cash flow.
3. In order to determine what PTRR has been earned by
the Companies from the Contract Area, the aggregate value
for each Year of the net cash flow determined as specified in
paragraph 2 above and earned during the Year shall be
calculated and the amount obtained shall be called The Net
Cash Balance. To this amount, at the end of each Year, shall
be added The Opening Balance (which shall be deemed to
be zero in the case of the first year for which the
calculations are being made). The aggregation of The
Opening Balance and The Net Cash Balance in any Year
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shall be called The Closing Balance for the Year in
question.
4. The Closing Balance for the Year shall then be
compounded forward at the rates of return specified in
Article 16 of this Contract and the results shall form The
Opening Balance for the subsequent Year's calculations. A
separate set of calculations (of Closing and Opening
Balances) will thus be performed for each of the rates of
return specified in Article 16.
5. When the Opening Balance for a Year at a particular
PTRR is negative and the Closing Balance for the Year
becomes positive at that PTRR, the Companies shall be
regarded as having achieved that PTRR during the Year. The
Profit Petroleum shares shall then be determined pursuant
to Article 16, depending on which PTRR has been achieved,
and that split shall apply from the start of the subsequent
Year and shall remain in force until a higher PTRR is
earned which, in accordance with Article 16, triggers a
different Profit Share.
6. If, in any later Year, costs are incurred by the
Contractor, after the approval of the Management
Committee, in connection with secondary recovery or
enhanced oil recovery operations in respect of an Oil Field
or a Gas Field, and such costs create a negative Net Cash
Balance for the Year, then, if the Closing Balance for the
previous Year was positive, the Opening Balance for that
Year shall be deemed to be zero and the calculations
itemised at paragraphs 3, 4 and 5 above shall commence
again.
7. General
In determining the amount of notional income tax to be
deducted in the applicable cash flows specified in
paragraph 2 of this Appendix, a notional income tax
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liability in respect of the Contract Area shall be determined
for each Company comprising the Contractor, as if the
conduct of Petroleum Operations by the Company in the
Contract Area constituted the sole business of the Company
and as if the provisions of the Income Tax Act, 1961, with
respect to the computation of income tax were accordingly
applicable separately to the Contract Area, disregarding
any income, allowances, deductions, losses or set-off of
losses from any other contract area or business of the
Company.”
80. The majority AT has dealt with all these contentions and provided its
interpretation of the said clauses of the PSC in paragraph Nos. 226-
261 of the Partial Award, under the ONGC Carry Issue. The relevant
portions of the said paragraphs are extracted below: -
“226. At the time the PSC was negotiated and signed ONGC
had carried out a significant amount of work in construction
of development and production facilities for the Ravva field
costing in the vicinity of US$ 55 million. Further
exploration and development works were required after the
Effective Date. The costs of these further works were to be
borne by the Contractors according to their participating
interest (that is, ONGC 40 per cent, the Companies 60 per
cent). Unless there was to be recompense to ONGC it would
have paid 100 per cent of those costs incurred prior to the
Effective Date and 40 per cent thereafter while the
Companies paid only 60 per cent of the costs incurred after
the Effective Date.
227. In order to equalise the obligations Article 3.3 was
included in the PSC whereby the companies undertook to
pay 100 per cent of Contract Costs after the Effective Date
until they had, in effect, paid for 60 per cent of the pre-
Effective Date costs - the result being that when that
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occurred the cost obligations of ONGC and the Companies
would be strictly in accord with their participating interests,
both as to pre and post-Effective Date.
228. In these circumstances it is said by the Respondent that
the recompense of Past Costs under Article 3.3 is, in
substance, itself Past Costs, that those costs are not
mentioned in Article 16 and Schedule D and should be
disregarded in assessing the PTRR and the Respondent's
entitlement to profit costs.
xxxxxxxx
230. … "Contractor" (Art 1.25) means the companies and
ONGC collectively. "The Companies" (Art 1.19) means the
companies other than ONGC collectively. "Contract Costs"
(Art 1.23) means costs incurred by the Contractor in
accordance with the provisions of this Contract in
connection with Petroleum Operations including, without
limitation, Exploration Costs, Development Costs and
Production Costs, and all payments made by the Contractor
pursuant to Article 17.2 (royalty and CESS).
231. ... It is sufficient to explain that they do not include
"Past Costs" which expression is itself defined to mean "the
costs incurred by ONGC in the construction of development
and production facilities to achieve the level of Crude Oil
production from the contract area current as at the Effective
Date, net of associated production costs, royalty and CESS".
232. The effect of Article 15(1) is clear. The Contractor is to
be entitled to all the Petroleum produced after the Effective
Date (after the deduction of royalty and CESS) until the
value of that petroleum is equal to Contract Costs together
with Past Costs. In other words, until the sum of Contract
Costs and Past Costs has been recovered the petroleum is
available to the Contractor in reimbursement of those costs.
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It should be emphasized, however, that Article 15 is
concerned with the subject of cost recovery.
233. Profit sharing between the Contractor and the
Government is dealt with in Article 16 of which it is only
necessary to set out Article 16(1) which reads: …
234. … It should be observed that there is no reference to
Past Costs in Article 16. Profit Petroleum is simply that
petroleum which is left after the Contractor has taken the
Cost Petroleum. This is a subject to which it will be
necessary to return.
xxxxxxxx
238. That is, the Companies between them would pay the
share of Contract Costs that would otherwise have been
payable by ONGC. In short, Article 3.3 placed the
obligation to pay all costs for the relevant period on the
Companies in the stated proportions. Thus Article 3.3 makes
it clear that, under the agreement, the Companies' share of
Contract Costs during the relevant period was 100 per cent
and ONGC had no responsibility or obligation to share in
those costs during that period. The description of those
costs as carry costs in the headings is not to be taken
account of in the interpretation of terms of the contract (see
Article 35.6). It follows that expression can not alter the
plain meaning of the words in Article 3.3 or indeed any term
in the PSC.
239. In short, the general principle was that each of the four
Companies would pay the Contract Costs in proportion to
their participating interests except for the period to which
reference is specifically made in Article 3.3 in which the
Contract Costs would be borne by the Companies
(excluding ONGC) until the time was reached when there
had been an effective recompense of 60 per cent of the pre-
Effective Date costs (the equalisation point).
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248. Appendix D(2)(iv) - (vi) refer in each instance to the
Companies' share of the relevant costs. That share,
considered in the context of the agreement as a whole, is not
the same throughout the life of the PSC. Article 3.3 provides
that until the effective equalisation is achieved the
Companies' share is to be 100 per cent. Once the
equalisation point is reached then the Companies' share is
calculated consistently with the participating interests of the
three companies which together constitute "the Companies".
249. That, as a matter of plain language, results from the
words used in Appendix D(2) and Article 3.3. There is
nothing in the agreement which provides an indication that
the relevant sub-clauses should not be interpreted according
to their plain meaning. Nor is there any reason in principle
or to be found from the words of the agreement to support
the view that ''the Companies' share" should be treated as
the same through the term of the contract notwithstanding
other provisions in the agreement. There simply is nothing
which would support the proposition that the share must
always be treated as though ONGC was contributing a
share in accordance with its participating interest despite
the fact that it was not.
250. The answer to this approach which is propounded by
the Respondent is that Article 3.3 is, in essence, irrelevant to
the rights and obligations of the Respondent itself. It is no
more than an agreement between the contracting companies
which is of no concern to the Respondent. During its oral
submissions senior counsel went so far as to say that the
clause should be treated no differently than a totally
independent contract between the contracting parties to
which the Respondent was not a party. There is no difficulty
in accepting that if the companies which constitute the
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Contractor had entered into a totally independent
agreement to vary their obligations as between themselves
under the PSC that agreement could have no effect on either
the Contractors' or the Companies' obligations to the
Respondent under the PSC but it is not legitimate to treat an
independent agreement between parties other than the
Respondent as a true analogy in the present situation.
Article 3.3 is part of the PSC. At the very least its provisions
put the Respondent on notice that until the equalisation
point is reached the Companies would be paying 100 per
cent of the relevant costs. However, that is not all that
Article 3.3 does. It sits in an agreement as an article to
which the Respondent expressly, by its signature, agreed and
it must be taken that not only did the Respondent know that
the Companies would be paying 100 per cent for the stated
period but the Respondent agreed to that proposition.
251. In these circumstances where the plain language does
not preclude the "Companies"' share being different
depending upon the period concerned and the Respondent
knows and agrees to that being the case the argument of the
Claimants should prevail. If the parties had intended that
Article 3.3 would have no effect on other provisions of the
PSC or, more specifically, that the "Companies' share"
should be treated always in accordance with their
participating interest then, no doubt, they would have
included a provision giving effect to that intention.
252. There are other considerations which support this
conclusion. The Respondent's submissions are based on a
dichotomy between cost recovery (Article 15) and profit
sharing (Article 16). The Respondent concedes that as a
matter of cost recovery the Contractor is entitled to 100 per
cent of the Petroleum produced until there has been cost
recovery which includes Past Costs. But, when it comes to
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profit division it argues that the strict working out of
definitions, in particular the definition of Contract Costs,
leads to the conclusion that Past Costs are totally irrelevant.
What is clear from Article 15(1), however, is that the
Contractor is entitled to all the Petroleum until the relevant
recovery has been effected. If the Respondent is correct in
its argument that Past Costs are to be disregarded for the
purposes of profit sharing then the consequence would be
that during the time when the Claimants had not recovered
all their costs (and were thus entitled to 100 per cent of the
Petroleum) they would nevertheless have been obliged to
share profit petroleum calculated in accordance with
Appendix D. In its submission of 10 April 2004 the
Respondent put forward calculations which demonstrate
that for the financial year ended 31 March 1999 the
Companies still had unrecovered costs at year end but were
nevertheless deemed to have earned a greater than zero
PTRR in that year due to the fact that costs paid by them
under Article 3.3 had been excluded from the PTRR
calculation.
253. The notion that the Companies were entitled to all the
Petroleum for the relevant period yet were nonetheless
required to share some of the Petroleum to which they alone
were entitled is not an easy one to grasp.
xxxxxxxx
255. There is an initial difficulty with the submission in the
light of the concluding words of the definition of Cost
Petroleum- in recovery of "Contract Costs as provided by
Article 15". That problem, however, can be put to one side
because there are more significant difficulties of substance
with the submission. The Respondent, in essence, relies on a
strict reading of the definitions and Article 16 while denying
the relevant parts of Appendix D(2) their plain meaning.
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256. The reason why this approach should be adopted,
according to the Respondent, is that Article 3 .3 is an Article
which does not affect the Respondent and should be
disregarded in the consideration of Appendix D(2).
257. It has already been pointed out that there is no basis to
disregard Article 3.3 in the Agreement. That view is
reinforced by reference to Article 18, in which there is
another provision dealing with the Companies and ONGC.
In this Article there is a provision which is noticeably absent
from Article 3. That is, Article 18(3) which makes it clear
that payments under Article 18(1) are not recoverable as
Contract Costs or creditable against Profit Costs. In these
circumstances the absence of any clause in Article 3
excluding payments under Article 3.3 from profit division
consideration is of note.
258. The fundamental difficulty with the Respondent's
argument, however, is that it appears to strike at the scheme
of the Agreement and to do so in a way which presents as
bearing little commercial sense. The scheme of Article 15(1)
is, as pointed out, simple. Until the equalisation point is
reached the Contractor is entitled to all Petroleum
produced. That is, there is no Petroleum left to divide
between the Contractor and the Respondent. Article 16 is
concerned only with the division of Profit Petroleum. The
Respondent's argument requires that some Petroleum be
assigned to the Respondent before the equalisation point is
reached even though Article 15 grants 100 per cent of the
Petroleum produced to the Contractor.
259. The Respondent can maintain the submission only by
drawing a clear distinction between Cost Recovery and
Profit Sharing, contending that they should be regarded as if
they were entirely independent of one another. Both in the
PSC and commercially there is a clear relationship. For
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instance, after the equalisation point is reached Profit
Petroleum is dependent on the extent of Cost Petroleum,
being Petroleum to which the Contractor is entitled as a
matter of Cost Recovery.
260. The Claimants' submissions propound a scheme
whereby they are entitled to all petroleum until the
equalisation point is reached and thereafter Petroleum is
shared in accordance with Article 16. The Respondent's
response is that, despite the Claimants' entitlement to 100
per cent of the Petroleum until the equalisation point, some
of that Petroleum can be clawed back for Profit Sharing
purposes. This argument is contrary to the general scheme
to be gleaned from Articles 15 and 16, and, as pointed out,
requires the reading, for instance, of Appendix D(2)(iv) as
though the words "in accordance with their participating
interests" appeared in it. This despite the fact that where the
Parties intended that the share should be understood as
participating interest share they said so (see, for instance,
Articles 3.3, 3.4, 17.4, 19.2, 19.3, 19.5, 19.6, and 22.7(C)).
261. The conclusion is that granting the words in Appendix
D(2)(iv)-(vi) their natural meaning accords with the general
scheme of Articles 15 and 16 and, as well, commercial
sense. There is simply no basis for reading Post Tax Rate of
Return as excluding those expenses incurred by the
Companies under Article 3.3 after the Effective Date.”
81. The respondent seeks this Court to interfere with the majority AT‟s
conclusion, which is that the PTRR includes the costs incurred by
Companies under Article 3.3 of the PSC after the Effective Date and
the same is based on AT‟s interpretation of Article 3.3, 15(1) and (6),
16(1) and Appendix D of the PSC. The AT‟s finding that until the
equalisation point is reached the Contractor is entitled to all Petroleum
produced and respondent‟s argument that some petroleum be assigned
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before equalisation point is achieved despite Article 15 of the PSC
granting 100% of the Petroleum produced to the Contractor, are in my
considered opinion issues in sole and exclusive province of AT.
82. Similarly, respondent‟s objections that PI of Companies‟ contract cost
contribution was 100%, since effect of PSC and no clause provides
that only after discharge of Past-Costs will PI of parties come into
effect, are aspects which if delved into will lead to examination of
merits of the matter and the same is outside the scope of Section 48 of
the 1996 Act. Additionally, the objections as to how the PTRR should
be calculated in terms of Article 3.3, 15, 16 and Appendix D of the
PSC, were also raised before the AT and has been dealt with in the
Partial Award (in the paragraphs reproduced above from the Partial
Award).
83. Interpretation of the terms of the PSC in light of the facts and
circumstances of the case and approach to decoding the intentions of
parties for executing the contract, sans perversity, lies within the sole
and exclusive domain of the AT. This Court under Section 48 of the
1996 Act, is not to substitute its view as to what is the best way to
interpret terms of the PSC. Once parties have vested the AT with
jurisdiction to adjudicate disputes between them, they have provided
the AT right to interpret the terms of the contract and the Court under
Section 48 of the 1996 Act is not to interfere with the interpretation of
the AT until and unless the same are perverse and of such a nature that
no reasonable same person could have arrived at the same.
84. Additionally, the impugned Awards have withstood the judicial
scrutiny before the curial Courts of Malaysia and the respondent
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cannot seek this Court to decide the merits of the dispute because it
disagrees with the majority AT‟s interpretation of the calculation of
the PTTR vis-à-vis Articles 3.3, 15, 16 and Appendix D of the PSC.
Hence, I find no merit in the contention raised by the respondent,
which would persuade me to delve into the merits of the matter by
interpreting the terms of the PSC. The view and interpretation by the
majority AT are both reasonable and plausible.
IV. Objections Pertaining to Violation of Public Policy Are
Meritless
85. First and foremost, we need to see what does “contrary to the public
policy of India” entails under Section 48(2) of the 1996 Act. Section
48(2)(b) of the 1996 Act states that enforcement of a foreign Arbitral
Award can be denied, if the award is found to be in violation of the
public policy of India, which is only if, it is induced by fraud or
corruption, is in contravention with the fundamental policy of Indian
law or is in conflict with the most basic notions of morality or justice.
A Coordinate Bench of this Court in Roger Shashoua v. Mukesh
Sharma, 2025 SCC OnLine Del 5773, has reiterated the jurisprudence
on scope of violation of “public policy of India” under Section 48(2)
of the 1996 Act and observed as under: -
“ 222. The scope of the exception of public policy in the
context of foreign arbitral awards was first considered by
the Supreme Court in Renusagar Power Co. Ltd. v. General
Electric Co. (supra). In the said decision, while considering
the defence of public policy to the enforcement of arbitral
awards, the Supreme Court held that the same must be
construed in a narrow sense while dealing with awards
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containing a foreign element. The relevant portion of the
judgment is extracted hereunder:
“51. A distinction is drawn while applying the said rule
of public policy between a matter governed by domestic
law and a matter involving conflict of laws. The
application of the doctrine of public policy in the field of
conflict of laws is more limited than that in the domestic
law and the courts are slower to invoke public policy in
cases involving a foreign element than when a purely
municipal legal issue is involved. …
223. This observation was consistently followed in the
Indian jurisprudence. The Law Commission in its
246th report7 dated August, 2014 recommended that the
scope of „public policy‟ is restricted in Sections 34 and 48 of
the A&C Act, 1996. It is confined only to the fundamental
policy of Indian law and the most basic notions of justice or
morality. The relevant portion of the report is extracted ….
224. A three Judge Bench of the Supreme Court, in the
judgment, Shri Lal Mahal Ltd. v. Progetto Grano
Spa [(2014) 2 SCC 433] further clarified the scope of the
public policy exception to foreign awards. In this judgment,
the Supreme Court observed that the expression „public
policy of India‟ in Section 48(2)(b) of the A&C Act,
1996 has a narrow scope and meaning attached to it. Unlike
Section 34 of the A&C Act, 1996, which permits a broader
interpretation of public policy in the context of setting aside
domestic awards, Section 48(2)(b) of the Act mandates a
more circumscribed and limited application when it comes
to the enforcement of foreign awards. The Supreme Court in
this judgment observed that the scope of Section 48(2)(b) of
the A&C Act, 1996 did not extend to objections based on
mere errors in foreign awards, including decisions allegedly
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contrary to the agreement between the parties. The relevant
portion of the judgment is as under:
xxxxxxx
45. Moreover, Section 48 of the 1996 Act does not give an
opportunity to have a “second look” at the foreign award
in the award enforcement stage. The scope of inquiry
under Section 48 does not permit review of the foreign
award on merits. Procedural defects (like taking into
consideration inadmissible evidence or ignoring/rejecting
the evidence which may be of binding nature) in the
course of foreign arbitration do not lead necessarily to
excuse an award from enforcement on the ground of
public policy.
46. In what we have discussed above, even if it be
assumed that the Board of Appeal erred in relying upon
the report obtained by the buyers from Crepin which was
inconsistent with the terms on which the parties had
contracted in the contract dated 12-5-1994 and wrongly
rejected the report of the contractual agency, in our view,
such errors would not bar the enforceability of the appeal
awards passed by the Board of Appeal.
47. While considering the enforceability of foreign
awards, the court does not exercise appellate jurisdiction
over the foreign award nor does it enquire as to whether,
while rendering foreign award, some error has been
committed. Under Section 48(2)(b) the enforcement of a
foreign award can be refused only if such enforcement is
found to be contrary to: (1) fundamental policy of Indian
law; or (2) the interests of India; or (3) justice or
morality. The objections raised by the appellant do not
fall in any of these categories and, therefore, the foreign
awards cannot be held to be contrary to public policy of
India as contemplated under Section 48(2)(b).””
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(Emphasis added)
86. Keeping in mind the said principles with respect to restricted judicial
intervention under the ground of public policy, I will now deal with
the contentions of the respondent that the impugned Awards are in
conflict with the public policy of India.
87. The respondent‟s main grievance is with the interpretation given by
the AT with respect to Article 3.3, 15 and 16 and Appendix D of the
PSC. In my view, the interpretation of the majority AT is a reasonable
and plausible view, and enforcement of the impugned Awards cannot
be refused on this ground, as interpretation of the terms of a contract
lies exclusively with the AT and the enforcement court cannot re-
interpret the terms of the PSC, as already observed above.
88. The parties share a contractual relationship and how the PTRR must
be calculated in terms of the PSC, to my mind cannot by any stretch of
imagination lead to alleged violation of public policy of India neither
can the findings arrived by the AT in this regard be said to be against
justice or morality. When disputes arose between the parties, they
were referred to arbitration in terms of the PSC and the majority AT,
has examined the relevant terms of the PSC in the impugned Awards.
It is not contention of the respondent that the AT refused to deal with
or ignored any contention raised by the respondent or that AT defied
procedural due process.
89. Additionally, the respondent has also contended that the PSC is a
“special contract” concerning natural resources of the nation, thereby
related to the public policy of India and hence, its interpretation
should be governed by DPT. The said argument has already been
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adjudicated by the Hon‟ble Supreme Court in Vedanta (supra), and
this Court maintaining the judicial discipline cannot relook into the
same. The Hon‟ble Supreme Court in Vedanta (supra) , held as
under:-
“129. With respect to the submission made on behalf of
the appellants that the production sharing contracts are
“special contracts” pertaining to the exploration of
natural resources, which concerns the public policy of
India, we are of the view that the disputes raised by the
claimants emanate from the rights and obligations of the
parties under the PSC. The award is not contrary to the
fundamental policy of Indian law, or in conflict with the
notions of justice, as discussed hereinabove. The term of
the PSC was for a period of 25 years from 28-10-1994,
which ended on 27-10-2019. We have been informed that
the term of the PSC has since been extended for a further
period of 10 years, through the mutual agreement
between the parties. This itself would reflect that the
performance of the obligations under the PSC were not
contrary to the interests of India.”
90. The respondent in furtherance of its contention of application of DPT
to the interpretation of the PSC and that the majority AT has passed
the impugned Awards in favour of petitioners at cost of the people of
India, has placed reliance upon Reliance Natural Resources (supra),
Natural Resources Allocation (supra), State Bank of India (supra)
and Reliance Industries (supra). However, the said judgements
become irrelevant in view of the admitted fact that the PSC has been
extended for a further period of 10 years, which itself shows that the
terms and obligations of the parties under the PSC are not in violation
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of public policy of India and not leading to unjust enrichment of
private parties at cost of people of India, as also observed by the
Hon‟ble Supreme Court in Vedanta (supra) (in paragraph No. 129,
reproduced above). In my considered view, the dispute between the
parties‟ stem from their rights and obligations under the PSC and the
AT‟s interpretation of the terms of the PSC and calculation of the
PTRR and the same is not in violation of the fundamental policy of
Indian law, or notions of morality or justice, as discussed above.

91. If the contention of the respondent is to be accepted that the impugned
Awards are in violation of public policy and against the people of
India, then no justifiable reason has been given by the respondent for
extending the PSC with the petitioners for another period of 10 years
(after passing of the impugned Awards). The respondent cannot blow
hot and cold at the same time.
V. AT Was Not Rendered Functus Officio
92. Among the objections raised by the respondent, an underlying issue
relates to jurisdiction of the reconstituted AT to pass the Final Award,
since as per the respondent, the original AT became functus officio
due to lapse of time and the reconstituted AT was wrong in holding
that it had jurisdiction in lieu of the Federal Court‟s decision, as the
said decision was passed in 2011 and petitioner approached AT in
2014. It is also contended that the letter of the then Secretary of
original AT‟s dated 04.05.2005 was wrongly construed to mean that
AT would await ad infinitum for parties to approach it.
93. The said objection to the jurisdiction of the reconstituted AT was also
raised by the respondent before the reconstituted AT and the AT dealt
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with the same in paragraph Nos. 123 to 134 of the Final Award, which
read as under: -
“1. The Tribunal‟s Jurisdiction Generally
123 . As a matter of principle, once jurisdiction has been
established in favour of a given arbitral tribunal to
adjudicate certain issues, this jurisdiction cannot disappear
at a later phase of the proceedings in relation to the said
issues. The only possible subsequent event that could
prevent the Tribunal from exercising its jurisdiction has to
be the exhaustion of its jurisdiction either by rendering a
final award on the merits regarding the entire claims
initially submitted to the Tribunal, or through the mutual
consent of the parties to end the task initially entrusted to
the said Tribunal.
2. The Tribunal's Jurisdiction to Pass a Final Award
124. In conformity with the above stated general rule,
Article 21 (3) of the UNCITRAL Rules provides that "a plea
that the arbitral tribunal does not have jurisdiction should
be raised not later than in the Statement of defence[ ... ]". In
the present case, no jurisdictional objections were initially
raised, in the sense that in Respondent's Statement of
Defence submitted in 2003, no jurisdictional objections
existed at that time. Presently, the Tribunal is confronted, in
the second phase of the arbitration, with a jurisdictional
objection that falls clearly outside the scope of Article 21(3)
of the UNCITRAL Rules.
125. More precisely, contrary to the UNCITRAL Rules,
Respondent is presently requesting the Tribunal to refrain
from passing a Final Award, under the pretext that certain
wording in paragraph 4 of the Agreed Terms of Reference
excluded that possibility. In doing so, Respondent does not
address paragraphs 2, 3, and 4 of the Agreed Terms of
Reference as a whole, but quotes only a certain portion of
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paragraph 3 concerning what the Parties expressed in case
the Tribunal issues a "prelimina1y partial award". The text
in question simply refers to the Parties' agreement to be
"allowed a period not exceeding 6 months from the date of
publication of the partial award to arrive to a quantification
of the sums relatable to each of the aforesaid issues". The
making of the monetary award was reserved to the final
stage of the proceedings. The question put to the Tribunal
relates to the interpretation and impact of said agreed text,
and whether it means bringing to an end the Tribunal's
jurisdiction in case the 6 months period ends without a
mutual agreement on the quantification of the amount due
regarding one of the issues dealt with in the preliminary
partial award.
xxxxxxxx
129. The Tribunal also notes that it has not issued an order
for termination of the proceedings at any time and that
Respondent did not object to the Tribunal's letter of 4 May
2005. In fact, none of the Parties ever requested a
termination order from the Tribunal for the termination of
these proceedings. The Tribunal further fails to see why, as
Respondent suggests, its letter of 4 May 2005 should have
lost its relevance in the present proceedings because of the
specific agreement reached by the Parties on 6 June 2005.
As noted, both Parties submitted that they only reached
agreement in respect of the Tribunal's determinations that
were not challenged before domestic courts and that their
agreement on the ONGC Carry Issue was conditioned on
the outcome of this challenge before Malaysian courts. But
it is precisely the ONGC Carry Issue that is at issue in the
present proceedings. Therefore, Claimants cannot be
estopped, as Respondent has argued, from now raising a
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matter that did not form part of the 6 June 2005 agreement
of the Parties.
130. For similar reasons, the Tribunal disagrees with
Respondent's argument that this Tribunal stands functus
officio, i.e. that its mandate has expired due to the arrival of
an expiry date or because its purpose has been
accomplished. Under the UNCITRAL Rules, an arbitral
tribunal's mandate concludes once a final award is made or
a termination order is issued. Therefore, a tribunal cannot
stand functus officio while there are pending issues before it
and while its final award has not been rendered. For the
reasons above, the Tribunal finds that it has retained its
mandate in the Agreed Temrs of Reference and in the letter
to the Parties of 4 May 2005 to rule on any outstanding
issue relating to the determination of quantum between the
Parties. In the absence of a final award on this issue, the
Tribunal's mandate has neither expired nor has its purpose
been accomplished.
131. In addition, the Tribunal considers that its entitlement
to assume jurisdiction in this matter to finally rule on the
issue that is still pending, in implementation of the final
ruling of the Malaysian Supreme Court, is a necessary
consequence of Respondent's ultimately unsuccessful
challenge to the Partial Award before domestic courts.
132. Similarly, the Tribunal disagrees with Respondent's
argument that Claimants have abandoned this arbitration
and that the proceedings have thus become "unnecessary or
impossible" within the meaning of Article 34(2) of the
UNCITRAL Rules. The proceedings have evidently not
become "impossible", and the Tribunal fails to see why the
proceedings have become "unnecessary", considering that
there appears to be considerable debate between the Parties
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about the issues that Claimants brought to the Tribunal's
attention in their letter of 26 September 2014.
133. To the extent that Respondent alleges that Claimants
should have approached the Tribunal immediately after 12
April 2005 and not at this stage, and that consequently
Claimants are barred or estopped from pursuing the present
proceedings, the Tribunal recalls that it was Respondent,
and not Claimants, that challenged the Tribunal's Partial
Award ruling on the ONGC Carry Issue before Malaysian
courts. The failure to reach a settlement within the time
frame initially provided in the Agreed Terms of Reference
was thus a direct result of Respondent's recourse to
domestic courts and is not attributable to Claimants.
Accordingly, the Tribunal rejects Respondent's
characterization of Claimants' present actions as lacking
"bonefide" or as constituting an "abuse of the process of the
64
Tribunal". Therefore, Claimants are not barred or
estopped from pursuing the present proceedings.
134. The Tribunal also disagrees with Respondent's
argument that the Tribunal's mandate to adjudicate the
dispute terminated because it failed in its duty to act
promptly and with diligence. Respondent's argument rests
on Article 14 of the UNCITRAL Model Law, which
contemplates that an arbitral tribunal should act "without
undue delay". Article 14 of the UNCITRAL Model Law takes
effect under Malaysian law through Section 16 of the
Malaysian Arbitration Act 2005 (as amended by the
Malaysian Arbitration (Amendment) Act 2011). While this
legislation is not applicable to the present proceeding, the
Tribunal accepts that arbitral tribunals have a duty to act
without undue delay. However, the Tribunal disagrees that it
did not live up to this standard. As previously explained, on
14 April 2005, Respondent informed the Tribunal of its
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intention to challenge the Partial Award in Malaysia. The
Tribunal then informed the Parties by letter dated 4 May
2005 that it would "await a request from one of the Parties
before seeking to commence proceedings relating to the
65
determination of quantum". Such a request was not
forthcoming until Claimants petitioned the Tribunal to
reinitiate these proceedings in 2014. While the Tribunal did
not anticipate that it would receive this request some ten
years following the issuance of the Partial Award, the delay
was an unavoidable consequence of the fact that
Respondent subjected the Partial Award to lengthy set aside
proceedings before the Malaysian courts.”
94. From a perusal of the paragraphs, reproduced above, the reconstituted
AT provided the following reasons to reject the respondent‟s objection
to its jurisdiction namely: (i) AT retains jurisdiction over a dispute
unless it either finally decides or jurisdiction is terminated by the
parties, which was not the case; (ii) as per Article 21(3) of the
UNCITRAL Rules, respondent failed to raise objection to jurisdiction
in the statement of defence; (iii) the respondent reliance on paragraph
No. 4 of the Agreed Terms of Reference is misleading, as it failed to
read it in its entirety along with paragraph Nos. 2 and 3; (iv) vide letter
dated 04.05.2005 the AT retained jurisdiction over quantification issue
unless resolved, which never specified any time limit and the same
was never objected to by the respondent; (v) the letter of 04.05.2005
did not lose its relevance because of the agreement reached on
06.06.2005, as parties only agreed in respect of AT‟s determinations
not challenged before domestic courts and their agreement on ONGC
Carry Issue was conditional on outcome of the challenge before
Malaysian courts; (vi) pendency of challenge before the Malaysian
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Supreme Court; (vii) respondent‟s reliance on Article 34(2) of the
UNCITRAL Rules is misplaced as the proceedings have not become
“unnecessary” as issue between parties existed; (viii) the delay in
approaching the AT is attributable to respondent, as it was its action of
challenging the Partial Award ruling on ONGC Carry Issue before
Malaysian Courts which lead to failure to reach settlement within the
time frame; (ix) reliance of respondent on Article 14 of UNCITRAL
Model Law to allege that AT did not act promptly is wrong, as the
said Article takes effect under Malaysian law through Section 16 of
the Malaysian Arbitration Act 2005, which was found to be not
applicable to the present proceeding; and lastly, (x) the AT acted as
per procedure, as the request to decide on the ONGC quantification
issue was made in 2014, which was unexpected after about 10 years of
passing of the Partial Award, hence, the delay was inevitable
repercussion of lengthy setting aside proceedings before Malaysian
Courts.
95. Clearly, the respondent has reiterated the same objections pertaining
to jurisdiction it raised before the AT and the AT has dealt with each
one of them, and to my mind the same are plausible and reasonable
views and do not shock the conscience of the court. As already
observed above, the enforcing court under Section 48 of the 1996 Act
has very limited grounds on which it can refuse to enforce a Foreign
Award. For the said reasons, I am not inclined to interfere with
findings of the AT in the Final Award on the issue of jurisdiction.
VI. AT Did Not Travel Beyond the Submissions and Issues
96. It is contended by the respondent that petitioners‟ application was
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based on paragraph 4(a) of the Agreed Terms of Reference, however,
the reconstituted AT held that the submission was made under
paragraph 4(b) of the Agreed terms of Reference and hence, the Final
Award cannot be enforced under Section 48(1)(c) of the 1996 Act.
97. The AT in paragraph Nos. 138 to 143 of the Final Award has
explained as to why it opined that it was paragraph 4(b) of the Agreed
terms of Reference under which issue has to be decided and not under
paragraph 4(a) of the Agreed terms of Reference. The said paragraphs
are extracted below:-
“138. Whether a dispute exists between the Parties that may
form the basis for a final award in this matter must be
considered in light of paragraph 4 of the Agreed Terms of
Reference. Paragraph 4 reads:
“4. After the expiry of the aforesaid period (or earlier if
parties mutually so request), this Tribunal would make
its final award in the following manner:
a. If the parties are able to arrive at a mutually agreed
quantification, the Tribunal can without any further
hearing, and upon intimation by the parties by way of a
joint memo, pass a final award on quantification, or
b. If the parties are unable to arrive at a mutually
agreed quantification, then in respect of such issues of
which there are differences subsisting on quantification,
this Tribunal may resolve the same and then pass a final
award on quantification.”
139. The Tribunal, first, finds itself unable to follow
Claimants' suggestion that it may proceed under paragraph
4(a) in the present circumstances. Under this provision, the
Tribunal may only pass a final award on quantification in
the event of a mutually agreed quantification and "upon
intimation by the parties by way of a joint memo". However,
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since it was Claimants, and not the Parties jointly, that have
approached the Tribunal in the present dispute, the
requirements stipulated in paragraph 4(a) of the Agreed
Terms of Reference are not met and thus paragraph 4(a)
does not confer jurisdiction on this Tribunal to pass a final
award under the present circumstances.
140. With regard to the Tribunal's power to pass a final
award on quantum under paragraph 4(b), Respondent
argues that the Tribunal lacks jurisdiction because no
dispute as to quantum exists between the Parties. In
contrast, Claimants aver that the issuance of the Show
Cause Notice by Respondent on 10 July 2014 triggered a
dispute between the Parties with regard to quantification of
the ONGC Carry Issue. In this regard, it is Claimants' view
that they do not owe anything to Respondent in relation to
the ONGC Carry Issue, i.e., that the value attributable to
the ONGC Carry Issue is zero, while Respondent argues
that Claimants' failure to timely enforce the Partial Award
in Indian Courts results in their duty to pay USD 99 million
to Respondent, i.e., that the value attributable to the ONGC
Carry Issue is USD 99 million in Respondent's favour. For
its part, the Tribunal considers that the quantification of the
ONGC Carry Issue is clearly encompassed by the Tribunal's
mandate in paragraph 4(b) of the Agreed Terms of
Reference and that the Parties' different positions reflect a
dispute on this issue.
141. For these reasons, the Tribunal decides that there is a
dispute pertaining to quantification between the Parties
within the meaning of paragraph 4(b) of the Agreed Terms
of Reference. The Tribunal has jurisdiction under the terms
of this provision.
142. The Tribunal wishes to emphasize that it does not seek
to exercise jurisdiction over the merits of Respondent's
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Show Cause Notice of 10 July 2014. This is a matter that
both Claimants and Respondent agree falls outside the
scope of the Tribunal's jurisdiction. Nonetheless, the
Tribunal considers that, contrary to Respondent's position,
the issue before it does not merely pertain to the
enforcement of the Partial Award, but relates to
quantification. Paragraph 4(b) of the Agreed Terms of
Reference confers jurisdiction upon the Tribunal to rule on
it accordingly.
143. In sum, the Tribunal finds that it is competent to render
a final award pursuant to paragraph 4(b) of the Agreed
Terms of Reference. There is no basis to find that the
Tribunal's mandate was extinguished between the time that
the Partial Award was rendered and the time that this
second stage of the proceedings was commenced. Further,
having established that the Partial Award is binding on the
Parties despite non-enforcement in India, the Tribunal finds
that there is in fact a dispute about quantification. This
dispute is evidenced by the Parties' contrasting submissions
on the subject of quantification.”
98. A perusal of the paragraphs, reproduced above, show that since the
parties failed to arrive at an agreement it was under paragraph 4(b) of
the Agreed terms of Reference that the AT could pass the final award
and not paragraph 4(a) of the Agreed terms of Reference, as paragraph
4(a) of the Agreed terms of Reference was applicable when the parties
had mutually agreed on quantification. I do not find this objection to
be falling under Section 48(1)(c) of the 1996 Act. As per the said sub-
section enforcement of a foreign award can be refused if the award
“ deals with a difference not contemplated by or not falling within the
terms of the submission to arbitration, or it contains decisions on
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matters beyond the scope of the submission to arbitration ”.
99. Additionally, the respondent has also contended that in Final Award,
the ONGC Carry Issue, which was “ should certain monies deposited
or paid by the Contractor in advance for the goods and services in
connection with Petroleum Operation be treated as Contract costs at
the time of payment for purposes of Article 15 and 16 of the PSC ”, is
different from original ONGC Carry Issue agreed by parties and the
initial AT. The same is clearly a clerical mistake as also observed by
the High Court of Malaya at Kuala Lumpur in order/judgment dated
14.05.2018. The relevant paragraphs from the said order/judgment are
extracted below:-
“[235] This is a case where a slip of the tongue or rather
the keyboard is no mistake of the mind. There cannot be any
controversy that the incorrect definition of the ONGC Carry
Issue did not result in the re-determination of the ONGC
Carry Issue itself which remained a matter decided by the
Partial Award.
[236] The 2 issues that were interchanged due to the "slip"
were the issues decided in favour of the Defendants in the
Partial Award i.e. issues under paragraphs 1(a) (i.e. the
ONGC Carry Issue) and 1(f) of the Agreed Terms of
Reference.
[237] I would agree with the Defendants that it is clear from
reading the Final Award as a whole that where the Tribunal
used the phrase "ONGC Carry Issue", it intended to refer to
issue "a.". This is apparent from, inter alia: ...”
CONCLUSION
100. In view of the aforesaid discussion, I find that the substantial
objections raised by the respondent have already been decided by the
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Hon‟ble Supreme Court in Union of India v. Vedanta Ltd., (2020) 10
SCC 1, and the findings in the said judgment are binding on me and
this Court cannot relook or revisit the same. As regards other
objections are concerned, the same concern the merits of the
controversy and interpretation of the AT‟s findings, which being
plausible views, are beyond the scope of interference of this Court.
101. For the said reasons, I find that the objections urged by the respondent
to challenge the enforcement of the impugned Awards are meritless
and without substance. The respondent‟s objections contained in I.A.
No. 11351/2017 are dismissed. Resultantly, the declaratory prayer
made by the petitioners in O.M.P.(EFA)(COMM.) 5/2017 is allowed.
Consequently, pending applications, if any, are disposed of.
102. The bank guarantees submitted by the petitioner(s) shall be released,
not later than 8 weeks from pronouncement of this judgment.
103. The documents handed over in the Court are taken on record.





JASMEET SINGH, J
JULY 01, 2026/ HG
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