Oil And Natural Gas Corpn.Ltd. vs Great Eastern Shipping Co.Ltd.

CNR No : HCBM020030402013

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.212 OF 2013
Oil and Natural Gas Corporation Ltd.
A Public Sector Undertaking as also
Public Limited Company having its
Registered Office at Jeevan Bharati Tower II,
124 Indira Chowk, New Delhi – 110 001
and one of its Mumbai Regional Business
Centre Offices at 15-E, Maker Towers,
Cuffe Parade, Mumbai – 400 005 …. Petitioner
Vs.
M/s Great Eastern Shipping Co. Ltd.
(Now M/s Great Offshore Ltd.)
A Company incorporated under the
provisions of the Companies Act, 1956
having its Registered Office
at Ocean House, 134/A,
Dr. Annie Besant Road, Worli,
Mumbai – 400 018 .... Respondent
WITH
ARBITRATION PETITION NO.211 OF 2013
The Great Eastern Shipping Co. Ltd.
having its Registered Office
at Ocean House, 134/A,
Dr. Annie Besant Road, Worli,
Mumbai – 400 018 and presently
GOL Offshore Limited)
having its Registered Office at
Energy House, 81, D.N. Road,
Mumbai – 400 001. .... Petitioner
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Vs.
The Oil and Natural Gas Corporation Ltd.
Having its Registered Office at
Jeevan Bharati Tower II, 124 Indira Chowk,
New Delhi – 110 001
and its Mumbai Regional Business Centre
Offices at 15-E, Maker Towers,
Cuffe Parade, Mumbai – 400 005 …. Respondent
Senior Advocate, Mr. Pradeep Sancheti , a/w Adv. Pallavi Bali, Adv.
Subhash Bhalwal, Adv. Kundanlal M. Patil and Adv. Pritesh Haridas
Bodekar i/b Vyas & Balwal for Petitioner in ARBP 212 of 2013 and
for Respondent in ARBP 211 of 2013.
Adv. Akshay Patil a/w Adv. Jatin Pore, Adv. Suddhasattwa Roy and
Adv. Vishal Mandal i/b Legal DSK, for Petitioner in ARBP 211 of
2013, and for Respondent in ARBP 212 of 2013.
CORAM : ARUN R. PEDNEKER, J.
th
RESERVED ON : 26 October 2026
nd
PRONOUNCED ON : 2 November 2026
JUDGMENT :
1. Heard learned Counsel for the parties.
2. By the present Petitions, the Petitioners challenge the Arbitral Award
th
dated 14 October 2012, passed by the Arbitral Tribunal.
3. The brief facts giving rise to the present Petitions are noted as under :
rd
On 23 July 1999, the Petitioner, Oil and Natural Gas Corporation
Limited (hereinafter referred to as “ONGC”) in Arbitration Petition No.212
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of 2013, invited tenders for the execution of the work relating to the
fabrication, transportation and installation of the NG Flare Tripod Structure
at an offshore location in the Bombay High Field. The Respondent, M/s
Great Eastern Shipping Co. Ltd., emerged as the successful bidder and was
accordingly awarded the contract. The scope of work entrusted to the
Respondent, inter alia , comprised carrying out the Pre-Engineering Survey,
Residual Engineering, procurement and supply of all requisite materials and
consumables, fabrication, load-out, tie-down, transportation, installation,
hook-up, testing and pre-commissioning of the NG Flare Tripod Structure.
The contractual scope further included the cutting and removal of the
existing NG Flare Tripod superstructure, pipe flare tip, upper portion of the
riser, horizontal bracing members, heat shields situated at EL+4.877M, the
existing boat landing and other associated components, as part of the revamp
of the NG Flare Tripod Structure at the Bombay High offshore facility.
4. The work awarded to the Respondent comprised three components:
(i) Fabrication of Tripod Structure- to be carried out at
Ratnagiri (Bharati Shipyard Limited;
(ii) Load-out, tie-down at Ratnagiri and transportation of Tripod
Structure from Ratnagiri to the installation site at Bombay
High.
(iii)The existing Tripod Structure had to be dismantled and
removed from the ‘NG’ Flare Platform at Bombay High and
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it was to be replaced by installation of the new Tripod
Structure.
5. The scope of work comprised the removal and replacement of the
Tripod Structure, which necessitated the shutdown of the entire platform
and, consequently, the suspension of production at Bombay High. Given the
significant operational and production implications arising from such
shutdown, the Contract prescribed specific timelines for the execution and
completion of the work. The relevant contractual provisions mandated the
periodic submission of work programmes, sequences, procedures and
schedules for approval, besides requiring the issuance of prior notices at
various stages of the Contract in relation to the respective activities.
According to the Petitioner, the work was required to be completed within
the contractually stipulated period.
6. The parties mutually discussed and agreed upon the work programme,
bar chart, and fixed construction schedule. The pre-project date was
st
stipulated as 1 November 1999 in Annexure ‘D’, read in conjunction with
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Clause 1.1.7. Further, Annexure ‘D’ expressly stipulated 24 January 2000
as the scheduled date for completion of fabrication at Ratnagiri.
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7. The load-out and transportation was scheduled between 25 January
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2000 and 28 January 2000. The offshore installation work at the N.G. Flare
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Tripod Platform was scheduled to commence on 29 January 2000, with the
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overall completion of the work stipulated for 15 February 2000.
Accordingly, the completion date, in terms of Clause 2.2.5 of the Contract
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read with Annexure 'D', was 15 February 2000. However, in the present
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case, the offshore work commenced only on 11 February 2000 and was
thereafter completed within the stipulated extended period. The challenge in
the present Petition relates to the charges awarded for the spread for the
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period between 25 January 2000 and 10 February 2000.
8. The Arbitral Tribunal has held the Petitioner responsible for the delay
and has awarded charges of the spread accordingly. The Petitioner's case,
however, is that the delay was attributable to the Respondent-Claimant, as
the requisite notices contemplated under the Contract were not issued by the
Claimant. Consequently, the shutdown could not commence, thereby
preventing the Claimant from carrying out the contracted work.
9. Owing to the delay in the commencement and completion of the work,
the Respondent-Claimant raised a monetary claim of US$ 1,185,500, which
remained unpaid by the Petitioner. The dispute was referred to an Arbitral
Tribunal comprising Mr. Justice M.H. Kania (Retired), Mr. Justice P.N.
Bhagwati (Retired), and Mr. Justice S.P. Kurdukar (Retired). Upon
considering the material placed before it and oral evidence, the Arbitral
Tribunal directed the Petitioner to pay a sum of US$ 1,134,500, together
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with interest thereon at the rate of 9% per annum from the date of the award,
as well as an amount of Rs. 10,00,000/- towards the costs of the arbitration
proceedings.
10. The ONGC has primarily challenged the Award in Arbitration Petition
No.212 of 2013. The Claimants have also challenged the Award in
Arbitration Petition No. 211 of 2013, but only to the extent that it relates to
the grant of pre-award interest. The said challenge will be dealt with
separately.
11. The learned Senior Counsel, Mr. Sancheti , appearing for the
Petitioner, ONGC, submits that the Arbitral Tribunal has rendered its award
by ignoring or bypassing relevant contractual provisions, particularly
Clauses 2.2.2.1, 2.2.2.3, 2.3.3.1 and 2.3. He contended that all contractual
clauses must be construed harmoniously and that no provision should be
rendered nugatory or otiose. He further submitted that Clause 2.3.4, which
deals with the construction schedule and its approval, expressly stipulates
that such approval does not relieve the Contractor of its contractual
obligations. Accordingly, compliance with the requirements of Clauses
2.2.2.1 and 2.2.2.3 could not be dispensed with by placing reliance on
Clause 2.3.4.
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12. The learned Counsel for the Petitioner submis that the notice dated
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18 January 2000 was not a valid notice under the Contract. The notice dated
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21 January 2000, which was received on 22 January 2000 at 16:06 hours,
could, at best, constitute notice for the commencement of transportation
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work from 30 January 2000, and no claim could, therefore, be entertained
for any earlier period. Further, the said notice did not refer to the
commencement of load-out or sea-fastening. The subsequent notice dated
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24 January 2000 merely informed the Petitioner, ONGC, of the proposed
commencement of load-out and requested the deployment of its
representative at the site. Consequently, the contractual notice requirements
had not been satisfied for the period claimed.
13. The Petitioner's learned Counsel submits that the Respondent had
failed to submit a work plan for the installation work along with the relevant
notices, notwithstanding the Petitioner's requests made through letters dated
nd th th
2 February 2000 and 5 February 2000. In its letter dated 9 February
2000, the Respondent stated that a work plan providing for completion
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within 23 days had been submitted at the meeting held on 7 February 2000,
but had not been accepted by the Petitioner. Thereafter, a revised work plan
envisaging completion within 18 days was submitted under cover of the
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letter dated 9 February 2000, which was received on 10 February 2000.
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The Petitioner's Counsel contended that these circumstances established the
Respondent's failure to comply with the requirements of Clause 2.2.2.3.
14. The Petitioner’s learned Counsel contends that the arbitral award was
vitiated by irrationality and perversity, as standby charges had been awarded
even for periods when the work had commenced or the relevant vessel had
become available for deployment. In particular, although the Petitioner had
approved the commencement of load-out operations on Bhagiratha III from
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3 February 2000, the Tribunal nevertheless awarded standby charges for
that date. Likewise, GAL Constructor arrived at approximately 23:30 hours
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on 9 February 2000 and came alongside the NG Flare Platform on 10
February 2000, on which date the shutdown was also provided. Despite
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these circumstances, standby charges were awarded for 10 February 2000
as well. The Petitioner therefore argued that compensation under Clauses
2.2.2.2, 5.3.3.5 and 5.1.9 was payable strictly for the actual period of
standby and could not be extended to operate as damages for any alleged
disruption or delay in the contractual schedule.
15. The learned Counsel for the Petitioner submits that the Respondent's
claim was based on the alleged suspension of work under Clause 8.2, read
with Clause 2.2.2.1. Since the claim for damages had been expressly
rejected, the Respondent could not obtain compensation on any alternative
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contractual, equitable, legal or other basis beyond the period for which
standby compensation was contractually permissible. The Petitioner further
contended that the question of suspension could arise only after the expiry of
the seven-day notice period under Clause 2.2.2.2 and, therefore, no
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suspension could be considered before 30 January 2000. In any event, the
Petitioner had expressly permitted the commencement of work by its letter
nd rd
dated 2 January 2000, and load-out had actually commenced on 3 January
2000. Accordingly, there was no suspension of work thereafter.
16. The Petitioner’s contention is that the arbitral award suffers from
patent inconsistency and irrationality in its assessment of standby charges for
the two vessels. Although standby charges were awarded for Bhagiratha III
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on 3 February 2000, despite cargo loading having commenced on that day,
the Tribunal deducted US$ 12,000 per day from the claim relating to GAL
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Constructor for 4 and 6 February 2000, reasoning that Bhagiratha III was
performing the contractual work on those dates. The Petitioner argued that
these conflicting approaches to the same underlying circumstances rendered
the award internally contradictory and, therefore, susceptible to challenge.
17. The Petitioner’s contention was that GAL Constructor was actively
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engaged in contractual transportation work between 6 and 9 February
2000 while transporting the Tripod-superstructure. The transfer of cargo
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from Bhagiratha III to GAL Constructor, necessitated by adverse weather
conditions and safety considerations, fell within the Respondent’s
responsibilities under Clauses 2.1 and 2.3.2.2 of the Contract. Accordingly,
the Petitioner argued that, since GAL Constructor was performing
contractual obligations during the relevant period, the Respondent was not
entitled to claim standby charges for those days.
18. The Petitioner further submits that, according to the Respondent’s own
case, the transportation time from Bhagiratha III to the NG Flare Platform
ordinarily took approximately 30 hours. Accordingly, at least 30 hours
(equivalent to approximately 1½ days) ought to have been excluded from the
standby charges claimed in respect of GAL Constructor, over and above the
time attributable to the diversion via Mumbai.
19. The Petitioner argued that the Tribunal had incorrectly reduced the
standby charges attributable to Bhagiratha III instead of those attributable to
GAL Constructor, the vessel allegedly in actual use. Since the applicable
daily standby rates differed significantly US$ 87,500 for GAL Constructor
and US$ 12,000 for Bhagiratha III—the Petitioner contended that the
Tribunal’s approach was inconsistent with the factual circumstances and
resulted in an erroneous assessment of the claim.
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st
20. The Petitioner’s Counsel relied on the Respondent’s letter dated 31
January 2000, which stated that the vessel was scheduled to arrive at the
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shipyard on 2 February 2000 and that load-out would commence on 3
February 2000, coinciding with the high tide. The Petitioner contended that
the Tribunal had improperly disregarded this contemporaneous admission
and instead relied on general observations based on its own experience,
particularly the observation in paragraph 47 of the award that tide conditions
did not necessarily make load-out impossible. It was further argued that the
Tribunal failed to distinguish between the water depth required for an empty
vessel to enter the shipyard and that required for a vessel carrying cargo,
whose increased weight would result in a greater draft and potentially affect
the feasibility of load-out.
21. The learned Counsel for the Petitioner submis that neither Bhagiratha
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III nor GAL Constructor was available at the NG Flare Platform on 7
February 2000. Instead, the Respondent had informed the Petitioner that
Malviya V would transport the cargo following clearance and that the vessel
reached the site only at 11:30 hours on that date. Since transportation of the
cargo to the worksite formed part of the contractual scope of work, the time
spent transporting the vessel to the site could not be treated as standby time.
The Petitioner contended that, although the Tribunal’s observations in
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paragraph 86 supported this position, it had failed to deduct the
corresponding standby charges. Accordingly, the award of standby charges
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for 7 February 2000, when none of the Respondent’s vessels were available
at the site, was contrary to the terms of the Contract and demonstrated
irrationality and perversity in the Tribunal’s award.
22. In addition, the award is also challenged on the grounds as noted
below :
(a) The Arbitral Tribunal has erred in awarding USD 11,34,500
together with interest thereon @ 9% per annum from the date
of present Award and also erred in directing the Petitioner to
pay to the Respondent a sum of Rs. 10,00,000 by way of cost
of arbitration proceedings.
(b) The Arbitral Tribunal has disregarded the terms of the
contract leading to a jurisdictional error which is ultimately
required to be decided by this Court U/s 34 of Arbitration and
Conciliation Act, 1996.
(c) The Award passed by the Ld Arbitrators is based on the
project key dates / construction schedule annexed to the
Agreement. However, the Ld Arbitrators have failed to
appreciate that firstly, the Respondent themselves had
slippages from the project key dates / construction schedule
and thus the project key dates / construction schedule as
annexed to the Agreement could not be strictly relied on.
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(d) The Agreement Clause 2.3.4.1 dealing with mutual
agreement / approval project key dates itself mandated that
approval by company's representatives of a programme shall
not relieve the contractor of any official duties or
responsibilities under the contract. The Respondent have
failed and neglected to comply with its duties as regards
giving proper / requisite notice, taking proper approval etc as
mandated under various clauses of the contract that is Under
Clause 2.2.2.1, 2.2.3 and 2.3 and 4.1.
(e) The observations of the Arbitral Tribunal that in view of the
approval of the project key dates; other requirements were
not mandatory is patently perverse, the learned Arbitrators
have clearly out stepped the contractual terms which are
creatures of the Contract.
(f) In the absence of due and proper compliance of above
requirements, which are duly spelt out in the Contract, any
shutdown by ONGC (based merely on Project key dates etc.)
is not only unwarranted, but is fraught with huge risk of the
country suffering production loss of precious oil and gas as
well as monetary loss.
(g) The Arbitral Tribunal ought to have appreciated that neither
Bhagiratha III nor Marine Spread nor GAL Constructor was
actually on standby and the claim for damages as per the
stand by rate is contrary to the settled law for breach of
contract and also contrary to the terms of the contract.
(h) That the day rate as defined in the contract clause 1.1.1.6 is
applicable for each item actually deployed and that
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compensation per spread is subject to the maximum limit of
day rate is compensation is subject to this maximum limit,
but not day rate by itself. The Arbitral Tribunal could not
have awarded a blanket rate of compensation at the maximum
day rate.
(i) That the Mobilisation of Marine Spread is defined in Clause
1.1.26 to mean and include performance by the contractor of
all things necessary (a) for the spread fully to be ready to
execute work (b) at the site (c) satisfaction of work
perquisites stipulated in the contract. The Arbitral Tribunal
has failed to consider that in the absence of all the above
conditions, the Marine Spread cannot be said to have been
mobilized.
(j) Bhagiratha - III was actually deployed for (load out) of the
tripod structure from 03.02.2000 onwards. On 06th February,
2000 the Tripod structure was transferred from Bhagiratha-III
to GAL Constructor. The said facts are admitted by the
Respondent. Thereafter, the work of transportation was
carried out by the GAL Constructor and Bhagiratha-III was
not at all employed by the Respondent under this Contract.
Thus, under no circumstances could any standby rates be
granted for Bhagiratha-III for the period from 03-02-2000 to
10-02- 2000. Despite the above, the Arbitral Tribunal has
excluded the rental for Bhagiratha III only for period only
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from 3 February 2000 to 6 February 2000.
(k) That the learned Tribunal failed to appreciate that the
Installation Barge GAL Constructor was actually brought to
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use from 06.02.2000 and the said facts were admitted by the
Respondent in statement of claim in para 22 that cargo was
loaded on to GAL Constructor on 06.02.2000. Further, the
Log Books for GAL Constructor also clearly reflects the
cargo was loaded on 06.02.2000. The use of GAL
Constructor for transportation purpose was at the Respondent
own volition and neither as per the requirement or as per the
Contract nor as per the terms of the Petitioner. In fact, for
change of transportation of barge, the Respondent were
obliged to take the Petitioner; prior approval, which they
never sought. However, in any case, since the Respondent
themselves used GAL Constructor for the purpose of the
Contract actually from 06-02-2000 onwards, there was no
way in which the Respondent could claim standby charges
for the same. The Arbitral Tribunal have committed an
obvious error by ignoring the admitted position and awarding
standby for the said period.
(l) The Arbitral Tribunal, however, while accepting final
position as mentioned above, have deducted only a sum of
US$ 12,000 per day, whereas, the mobilization day rate for
Marine Spread for GAL Constructor was US$ 87,500 per
day.
(m) The Arbitral Tribunal having observed that the shutdown
operations began on 08-02-2000, as it required 48 hours and
that the shutdown achieved on 10-02-2000; committed a
patent error in coming to the conclusion that the Respondent
are entitled to standby charges for the period between 07-02-
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2000 to 10-02-2000 in complete disregard of the fact that the
Security Clearance by Indian Navy for purging vessel was
obtained only on 07-02-2000 and that the said vessel was
arrived at site only on midnight of 07/08-02-2000.
23. On the foregoing grounds, learned Counsel for the Petitioner submits
that the impugned award was contrary to the express terms of the Contract,
disregarded mandatory notice and work-plan requirements, and awarded
standby charges for periods during which work was being performed or the
vessels were engaged in contractual transportation. It was further contended
that the award suffered from material factual inconsistencies and a lack of
adequate reasoning. Accordingly, the Petitioner submitted that the impugned
award, to the extent challenged, was vitiated by patent illegality, irrationality
and perversity and was liable to be set aside.
24. Per contra , the learned Counsel appearing on behalf of the
Respondent, Mr. Akshay Patil , submits that the claim was rightly allowed, as
the Tribunal has categorically recorded a finding that the Petitioner herein
was responsible for the suspension of work and the consequential delay.
25. The complete schedule of work had been planned well in advance.
Upon completion of the construction work at the onshore site in Ratnagiri,
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Bhagiratha III was scheduled to transport the tripod on 25 January 2000.
However, the Petitioner, for reasons best known to it, sought to delay the
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commencement of the project and communicated that it wished to
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commence the project on 10 March 2000. Since the construction activity at
the shipyard involving Bhagiratha III had already been completed, it was
difficult for the Petitioner to retain the constructed material at the port.
26. The entire activity involving Bhagiratha III had been pre-planned.
Bhagiratha III was required to transport the constructed material from
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Ratnagiri from 25 January 2000 onwards, while GAL Constructor was
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scheduled to join the operation on 29 January 2000.
27. Accordingly, the claim in respect of Bhagiratha III was made for the
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period from 25 January to 3 February 2000, while the claim in respect of
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GAL Constructor was made for the period from 29 January to 3 February
2000, after deducting the period attributable to Bhagiratha III. Thereafter, a
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claim was made in respect of GAL Construction for the period from 4
th
February to 6 February 2000. However, the claim was allowed after
deducting three days attributable to Bhagiratha III. Similarly, the claim in
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respect of the GAL Constructor was made for the period from 7 February to
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10 February 2000, and the same was allowed after deducting 1.25 days
attributable to Bhagiratha III.
28. The relevant contractual clause governing Bhagiratha III and GAL
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Constructor was Clause 8.2 up to 7 February 2000, whereas Clause 8.2.2.2
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applied thereafter. Clause 8.2 dealt with the suspension of load-out and
offshore work, whereas Clause 8.2.2.2 related to the lay-out.
29. Having considered the rival submissions, the core questions that arise
for consideration are as follows:
(i) The legal issues may be framed more clearly as follows:
(a) Whether the Tribunal erred in holding the Petitioner responsible
for the suspension of work, despite the absence of any effective
notice, in accordance with the contractual provisions, requiring
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commencement of load-out with effect from 25 January 2000?
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(b) Whether the notice dated 21 January 2000, which was received
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by the Petitioner only on 22 January 2000, could, at best, have
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required commencement of work with effect from 30 January
2000, and therefore could not have been relied upon to hold the
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Petitioner responsible for suspension of work from 25 January
2000?
(ii) Whether the Claimant failed to furnish the requisite work plan along
with the relevant notices, thereby preventing the Petitioner from
initiating the shutdown in the absence of such work plan?
(iii) Whether the learned Arbitral Tribunal erred in awarding standby
charges despite the fact that the Petitioner had offered to provide a
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shutdown on 7 February 2000 to facilitate the execution of the work,
whereas the Respondent's spread was not available at the site on the
said date?
(iv) Whether the Arbitral Tribunal has erroneously awarded charges for the
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spread for 3 and 10 February 2000?
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(v) Whether the Arbitral Tribunal erred in awarding charges claimed by
GAL Constructor for transporting the Tripod, despite the contractual
obligation requiring the Claimant to bear such charges?
30. Having considered the rival submissions, it is necessary to examine
the Award. The Award records that the essence of the Claimant’s case in the
arbitration was that, just as it was about to complete the fabrication of the
Tripod at the construction yard in Ratnagiri and commence the loading out
and transportation of the Tripod to the platform site, the Petitioner/ONGC
directed it to halt and suspend all further work. The Petitioner/ONGC
informed the Claimant that it had decided to postpone all further work under
the Claimant’s Contract by more than six weeks to accommodate another
contractor, Mazagon Dock Limited, which had fallen behind schedule in
executing work on another project at the BHN Process Platform.
31. The Claimant contended that, as a consequence of the
Petitioner/ONGC’s suspension order, the schedule of the vessels engaged by
it for the project was completely disrupted. Further, even after the
Petitioner/ONGC revoked the suspension order approximately one week
later and permitted the Claimant to resume work, access to the platform was
delayed. Accordingly, the Claimant sought charges for the Spread and
compensation from the Petitioner/ONGC for the period during which its
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work remained suspended and for the subsequent period during which it was
denied access to the platform. In support of its claim, the Claimant relied
upon Clauses 8.2.1 and 8.2.3, which dealt with suspension of work by the
Company, and Clauses 2.2.2.1 and 2.2.2.2, which it invoked in relation to
the denial of access to the platform.
32. The Award is made up of the following claims :
No. Vessel & period Daily Claimed Less Awarded Clause
rate (US$) (US$) (US$) (US$)
12,000 120,000 -- 120,000 8.2
A1 Bhagiratha III,
25 Jan to 3 Feb
2000 (10 days)
75,500 453,000 -- 453,000 8.2
A2 GAL Constructor
spread, net of
Bhagiratha III,
29 Jan to 3 Feb
2000 (6 days)
226,500 8.2
87,500 262,500 36,000
(deduction at
the rate of
Bhagiratha III
for load out,
fastening and
transportation)
A3 GAL Constructor
spread,
4 to 6 Feb. 2000
(3 days)
A4 GAL Constructor
spread
7 to Feb 2000
(4 days)
87,500 350,000 15,000
(deduction for
Bhagiratha
III’s rate for
the normal 30-
hour voyage)
335,000 (8.2
for
7 Feb)
and
(2.2.2.2
(8 to 10
Feb.)
1,134,500
Total 1,185,500 51,000
33. In its Reply, the Petitioner/ONGC raised several defences, some of
which involved factual issues premised on its interpretation of the terms of
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the Contract. The Claimant led the evidence of one witness, Mr. R.N.
Chaudhury, Senior Manager and Project Coordinator for the NG Flare
Project. The Petitioner/ONGC, on the other hand, did not call any witnesses.
34. The Tribunal, upon analysing the evidence on record, observed that,
following detailed discussions between the parties, the formal contract was
th
executed on 18 November 1999, and a schedule setting out the key project
dates was prepared. A detailed project execution plan was also drawn up,
together with an elaborate schedule itemising each component of the
projected activities and specifying the respective commencement and
completion dates. The tripod construction work was to be carried out at the
premises of M/s Bharati Shipyard Ltd., Ratnagiri.
th
35. On 18 January 2000, the Claimant addressed a letter to the
Petitioner/ONGC, notifying it of its readiness to commence the installation
work at the offshore site in accordance with the project schedule and Clause
2.2.2.1 of the contract. The notice was appropriately issued in anticipation of
st
the commencement of the work. Subsequently, on 21 January 2000, the
Claimant informed the Petitioner/ONGC that the fabrication work would be
th
completed by 24 January 2000, in accordance with the key project dates,
and that the subsequent stages, including transportation, pre-construction
th
survey, dismantling and installation, could accordingly commence by 28
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January 2000. The Claimant called upon the Petitioner/ONGC to take the
necessary steps to make the site ready, thereby enabling the Claimant to
proceed with the work and undertake the subsequent stages of execution.
th
36. On 24 January 2000, the Claimant again wrote to the
Petitioner/ONGC, informing it that the fabrication work had been completed
that day and that the tripod structure was ready for loading. The Claimant
stated that the cargo was ready for loading in accordance with the agreed
schedule and requested the Petitioner/ONGC to deploy its representative to
be present during the loading operations.
th
37. On 24 January 2000, the Petitioner/ONGC informed the Claimant
that the schedule for the installation activities had to be worked out in
accordance with the platform shutdown schedule. The Petitioner/ONGC
further stated that the installation schedule would be subject to barge
interference arising from other works to be carried out under different
contracts during the shutdown of the B.H.N. Complex. Accordingly, the
th
Petitioner/ONGC convened a meeting on 27 January 2000 to discuss the
rescheduling of the installation work.
38. The Claimant contended that the proposed rescheduling of the
installation activities was contrary to the terms of the contract. According to
the Claimant, Annexure ‘D’ to the contract expressly stipulated the dates for
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carrying out the installation activities, and those dates could not
subsequently be altered unilaterally by the Petitioner/ONGC.
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39. By another letter dated 24 January 2000, the Claimant confirmed that
it would attend the meeting scheduled for that date. The Claimant also
reaffirmed that it was proceeding with the mobilisation of the tug Sharda M
and the cargo barge Bhagiratha III for the loadout at Bharti Shipyard,
Ratnagiri, in accordance with the contractual schedule.
40. The Claimant was requested by the Petitioner to hold back the load-
th
out of the fabricated material. Accordingly, by letter dated 25 January 2000,
the Claimant recorded that, as advised, it had stopped the mobilisation of the
tug Sharda M and the cargo barge Bhagiratha III for the loadout. The said
vessels were kept on standby, awaiting instructions to proceed to Ratnagiri in
accordance with the revised schedule to be communicated by the Petitioner.
The Claimant also called upon the Petitioner to provide the site and all other
necessary facilities to enable the Claimant to commence its work on time.
th
41. On 27 January 2000, the parties attended the meeting convened by
the Petitioner. At the meeting, the Petitioner postponed the entire project
schedule under the contract by approximately one and a half months, as
another contract awarded to M/s Mazagon Dock Limited at the BHN
location also required the shutdown of the platform. Since Mazagon Dock
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Limited was to decide when the platform shutdown would be required for its
work, the Petitioner decided to postpone the platform shutdown required for
the Claimant's project until Mazagon Dock Limited finalised its own
shutdown schedule.
42. Upon consideration of the documentary material and evidence on
record, the Tribunal concluded that the contract remained suspended until
th
approximately 10 March 2000, whereas the Claimant had proceeded on the
understanding that the platform would be shut down to facilitate the
execution of the contractual works. The Tribunal further found that the
Petitioner’s order suspending the contractual works, coupled with the fact
that the Claimant had substantially fulfilled the requisite conditions, resulted
in the cessation of load-out operations. Accordingly, the Tribunal held that
the circumstances warranted the invocation of Clause 8.2 of the Contract.
th
43. On 24 January 2000, it was noted that the Claimant’s principal
construction vessel, GAL Constructor, had been lying at Bombay Harbour
rd th
since 23 January 2000. In view of the postponement of the work on 26
January 2000, the Claimant decided to sail the vessel southwards to
Ratnagiri, where it could remain stationed pending the resumption of work
by the Petitioner/ONGC. This decision was taken with a view to ensuring
that, upon resumption of the work, the GAL Constructor, together with the
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entire floating spread, could proceed directly to the offshore worksite.
44. As regards the first submission advanced by the Petitioner, it is
contended that the Arbitral Award was rendered by disregarding and/or
bypassing the relevant and material provisions of the contract, including
Clauses 2.2.2.1, 2.2.2.3, and 2.3.3.1. For the sake of ready reference, the
relevant contractual clauses are reproduced hereinbelow.:
“ 2.2.2.1 The Company's Representative upon receipt of
request from the Contractor intimating commencement of
installation/construction work at offshore site shall give to the
Contractor access to as much of the Site as may be necessary to
enable the Contractor to commence and proceed with the
construction/installation of the Works in accordance with the
programme of Work in terms of Clause 2.3.4. Any reasonable
proposal of the Contractor for access to Site to proceed with the
construction/ installation of work in accordance with the
programme of work in terms of Clause 2.3.4 will be considered
and shall not be unreasonably withheld by the Company. Such
requests must be made to the Company's Representative in
writing at least 7 days prior to start of the Work.
2.2.2.2 If the Company falls to give access to Site in
accordance with the terms of this Section, resulting in delay or
expenses for the Contractor, the Contractor shall subject to
provision of Clause 5.19 (Diversion of Marina spread) be
entitled to appropriate extension of time for completion of the
Works and compensation in accordance with applicable
schedule of rates, or if no such rates are available then at the
rates as may be mutually agreed.
2.3.3.1. The Contractor is bound to carry out, complete and
maintain the works only according to the Contract provisions
and Specifications.
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2.3.4.1 Within twenty one days after the award of the work
under this Contract or prior to kick-off meeting whichever is
earlier, the Contractor shall submit to the Company for its
approval a detailed programme showing the sequence,
procedure and method in which he proposes to carry out the
Works as stipulated in the Contract and shall, whenever
reasonably required by the Company's Representative or the
Engineer's Representative furnish in writing the arrangement
and methods proposed to be made for carrying out the Works.
The programme so submitted by the Contractor shall conform to
the duties and periods specified in the Contract. The Company
and the Contractor shall discuss and agree upon the Work
procedures to be followed for effective execution of the Works.
The Constructional Plant and Equipment and Temporary Works
which the Contractor intends to deploy shall be clearly
specified. Approval by the Company's Representative of a
programme shall not relieve the Contractor of any of his duties
or responsibilities under the Contract.
The relevant contractual provision relied upon by the Claimant in
support of its claim for compensation for the period during which the
work remained suspended was Clause 8.2, the relevant portions of
which are reproduced below:
8.2.1 The Company may by notice in writing to the Contractor
order the contractor to suspend performance of all Works or part
of the Works under the Contract. Such notice shall specify all
Works or part of the Works of which performance is to be
suspended, its effective date and the reasons therefore. The
Contractor shall thereupon suspend performance of such Works
or part of the Works until ordered in writing to resume such
performance by Company.
8.2.3 For the purpose of calculating costs incurred by the
Contractor during the suspension of Work as mentioned above,
day rate or rental rate schedules specified in the Contract shall
be applied and details of the Contractor's spread affected by
such suspension pursuant to this clause be recorded and
submitted to the Company.”.
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45. Annexure ‘D’ pertains to the construction schedule. It is respectfully
submitted on behalf of the Petitioner that Annexure ‘D’ has not been
comprehensively considered in conjunction with Clauses 2.2.2.3 and 2.3.4 of
the Agreement. Accordingly, Annexure ‘D’ cannot be construed as
constituting a waiver, whether express or implied, of the rights and
entitlements available to the Petitioner under the aforesaid clauses.
46. The Petitioner's above submission, to the effect that the Award
disregards the relevant clauses of the Contract relating to notice, cannot be
accepted. In this regard, it is pertinent to note that, upon consideration of the
evidence, the Tribunal specifically observed that the load-out of Bhagiratha
th
III was scheduled to commence on 25 January 2000, in terms of Annexure
‘D’; however, the same was put on hold by ONGC.
47. The Tribunal further observed that the Claimant had been awarded the
tender and that a kick-off meeting was held between the representatives of
st
both parties on 1 November 1999. At the said meeting, a detailed execution
plan was submitted, setting out an elaborate schedule itemising each
component and the activities to be undertaken in respect thereof. The
Petitioner accepted the said schedule, which was thereafter incorporated into
th
the Project Key Dates forming part of the formal contract executed on 18
November 1999.
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48. The Tribunal also took note of the communications dated 18 January
st
2000 and 21 January 2000, whereby the Claimant informed the Respondent
th
that the fabrication work would be completed by 24 January 2000 and that
th
the subsequent stage of installation would accordingly commence on 28
th
January 2000. However, on 24 January 2000 itself, the Petitioner informed
the Claimant that the installation schedule would have to be worked out in
accordance with the platform shutdown schedule. It was further stipulated
that the schedule would be subject to the barge interface requirements
arising from other works to be undertaken during the shutdown of the BHN
Complex under separate contracts.
49. Upon an assessment of the evidence on record, the Tribunal observed
th
that the meeting convened by the Petitioner on 27 January 2000 was not
intended to discuss the schedule as such, but rather to defer the work
programme by approximately one and a half months. This postponement
arose on account of another contract awarded to M/s Mazagon Dock Limited
in respect of works at the BHN location, which also required a shutdown of
the platform. Since the timing of the shutdown was to be determined by
Mazagon Dock Limited in accordance with its own work requirements, the
Petitioner decided to postpone the platform shutdown required for the
Project in question.
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50. Thus, the Tribunal's findings indicate that, notwithstanding the agreed
execution schedule and the incorporation of the relevant milestones into the
formal contract, the commencement of the subsequent stage of work was
deferred on account of the platform shutdown requirements arising from
other contractual works of the Petitioner. The delay, therefore, was
attributable to the postponement of the platform shutdown by the Petitioner,
rather than to any failure on the part of the Claimant to adhere to the agreed
work programme.
51. The learned Counsel for the Petitioner did not advance any argument
before this Court to the effect that the shutdown was not required on account
of M/s. Mazagon Dock operating beyond schedule, or that the complete
th
stoppage of work was not required to continue until 10 March 2000. The
apparent intention for delay was merely to coordinate the shutdowns of the
two works so that they could be undertaken either simultaneously or
sequentially.
52. In the facts and circumstances of the case, the Tribunal observed that
the Petitioner’s order to defer the work amounted to a suspension of work
under the Contract. A written communication to this effect was substantially
th
conveyed by the Petitioner to the Claimant by its letter dated 20 January
2000. Consequently, the suspension of work had already been
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communicated, and the position concerning 24 and 25 January 2000 stood
confirmed by the Petitioner/ONGC’s project records (evidence of witness).
Accordingly, Clause 8.2 of the Contract was attracted.
53. The aforesaid findings of the Tribunal are based on the documentary
and oral evidence available on record. The Petitioner had not led any
evidence on its behalf. In these circumstances, the contention that the other
clauses of the contract ought to have been taken into consideration is devoid
of merit, particularly when the Petitioners themselves had sought to
th
postpone the entire work until 10 March 2000. It was due to subsequent
intervening circumstances, namely, the legal notice issued by Bharati
Shipyard requiring the removal of the construction Tripod, that the Petitioner
was compelled to grant shut down of the NG Flare Platform to commence its
work.
54. The Tribunal, while considering the defence, has arrived at a clear
finding that the work was suspended by the Petitioner. Accordingly, under
Clause 8.2 of the Contract, being the relevant charging provision, the
Claimants were held entitled to the reliefs claimed.
55. The Tribunal’s finding, based on the evidence on record, is that the
suspension of work was attributable to the Petitioner immediately prior to
the scheduled load-out. The Petitioner appears to have attempted to schedule
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the shutdown at a time of its own choosing, with a view to avoiding potential
losses. Consequently, the Tribunal held the Claimants entitled to the reliefs
arising from the suspension of work, including the applicable standby
charges standby charges would be dealt later in this Judgment.
56. Similarly, the Petitioner cannot raise any grievance regarding the non-
submission of the work plan, since the work plan was already in force in
th
terms of Annexure ‘D’, and the Claimants were ready to sail out on 25
th
January 2000. It was the ONGC's letter dated 24 January 2000 that
stipulated that the work was required to be carried out in accordance with the
shutdown schedule, owing to other works being undertaken pursuant to
separate contracts. This aspect is of considerable significance and warrants
th
particular attention. The relevant portion of the letter dated 24 January 2000
is reproduced below:
“ 1) This has reference to GESCO's letter No:
GESCO/PRJT/NG/132, dt. 21.01.2000 & our letter No.
MRBC/E&C/NG Flare/04/99/55 dt. 20.01.2000.
2) Please note that, since the installation activities of the
subject project are required to be carried out under platform
shutdown, the schedule for the installation activities has to be
worked out according to the platform shutdown schedule. Further
the Barge interface due to other works to be carried out during the
shutdown on BHN Complex under different contracts is also to be
considered.
As such, offshore installation preceded by load out,
3)
transportation etc. for the subject project may be scheduled
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keeping in view the platform shutdown schedule and the barge
interface amongst different projects to keep the shutdown period
to the minimum possible.
4) To discuss the above it is proposed to hold a meeting
between ONGC/EIL & GESCO on 27.01.2000 at 1500 Hrs. at
Maker Towers.
5) In the meantime Company has already convened a meeting
on 24.01.2000 at 2.30 PM where all the Installation Contractors
of the concurrent projects have been invited to discuss barge
interface issues .”
th
In the meeting held on 27 January 2000, ONGC had deferred the work
th
schedule till 10 March 2000. However, on account of Bharati Ship Yard
directions (Shipyard chosen by ONGC), that the Claimant was forced to
remove the Tripod and the Petitioner was forced to give shutdown, which it
th th
has given on 10 February 2000, resulting in commencing of work on 11
February 2000.
57. It is also submitted that permission to commence the work was
nd
granted by the Petitioner's letter dated 2 January 2000, and the load-out
rd
operations actually commenced on 3 January 2000. Therefore, there was no
rd
suspension of work after 3 January 2000.
58. It is further submitted that the GAL Constructor arrived at 11:30 p.m.
th th
on 9 February 2000 and came alongside the NG Flare Platform on 10
th
February 2000. The shutdown was also provided on 10 February 2000. In
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these circumstances, the award of standby charges for 10 February 2000 is
equally unjustified and demonstrates a failure to properly appreciate the
relevant facts and circumstances. The Petitioner, therefore, has submitted
that the award of standby charges for the aforesaid period is irrational,
perverse and unsustainable in law.
59. The reasoning adopted by the Tribunal is that Bhagiratha III could
th
have commenced the load-out operations on 25 anuary 2000. An
appropriate deduction has been made by the Tribunal in respect of
Bhagiratha III for the load-out operations. The rates applicable to Bhagiratha
th th
III were deducted for the period from 4 February 2000 to 6 February 2000,
during which Bhagiratha III was engaged in load-out activities. There is
rd
evidence no record to establish that Bhagiratha III was working on 3
February 2000. This finding is purely based on evidence.
60. As regards the Bhagiratha III, payment ought not to have been made
rd
for 3 February 2000. The ONGC’s own submissions before the Tribunal
were confined to the period from 4 to 6 February 2000, and the Tribunal
accepted those submissions. The Tribunal has considered the material on
record in detail. In the absence of evidence led by the Petitioner on this
aspect, this Court cannot return independent findings or undertake a
reassessment of the evidence.
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61. The period from 8 February 2000 to 10 February 2000 requires
th
separate consideration. Although the suspension period ended on 7
February 2000, ONGC denied access to the work site during the period from
th th
8 February 2000 to 10 February 2000 by failing to shut down its
operations at the NG Platforms. Consequently, GAL Constructor sailed from
Ratnagiri to Bombay, as the shutdown had not yet commenced. The
th
shutdown took place only on 10 February 2000. Accordingly, the work
th nd
could commence only on 11 February 2000 and was completed on 22
February 2000. This position is also borne out by the averments contained in
paragraph 17 of the Reply to the Statement of Claim filed by the Petitioner,
th
wherein it is acknowledged that the work effectively commenced on 11
nd
February 2000 and was completed on 22 February 2000.
62. The next submission of the Petitioner is that the findings are contrary
to the admitted factual position, as evidenced by the Respondent’s own letter
st
dated 31 January 2000, which states that the vessel would arrive at the
nd
Shipyard on 2 February 2000 and that the ‘load-out’ would commence on
rd
3 February 2000, coinciding with high tide. However, this contention has
been rejected on the ground that there is no evidence to establish that the
load-out could not have taken place on the preceding or succeeding days.
The Petitioner’s contention regarding the tidal conditions for Bhagiratha III
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has also been specifically rejected for want of evidence. Further, the
th
Petitioner has contended that, on 7 February 2000, neither Bhagiratha III
nor GAL Constructor was available at the NG Flare Platform. This
contention, too, has been rejected on the ground that there was no shutdown
of the NG Flare Platform.
th
63. As regards the NG shutdown on 10 February 2000, the issue is again
one of appreciation of evidence. The Tribunal has observed that the work
th th
commenced on 11 February 2000, following the shutdown on 10 February
2000.
64. The Tribunal rejected ONGC’s contention that entitlement to standby
charges was conditional upon the vessel remaining physically present at the
work site throughout the relevant period. It held that the contract contained
no such requirement and that the relevant factual finding established that the
Spread remained available and was deployed for commencement of
operations immediately upon completion of the shutdown. Accordingly,
physical presence at the work site throughout the standby period was not a
contractual prerequisite for payment of standby charges.
65. Clause 8.2.3 provides for payment for the period affected by
suspension, while Clause 2.2.2.2 provides for compensation for delays or
expenses arising from the failure to provide access to the work site. It is
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material to note that the vessels had been committed to the Project and were
not required to remain physically present at the work site at all times. Since
ONGC had withheld the work, there was no reason for the Claimant to
mobilise the vessels to the site. The fact that the vessels remained at the
shore did not alter their status, as they had been reserved for the contractual
work, remained available for deployment, and were on standby. Their
physical location, in these circumstances, made no material difference to the
Claimant’s entitlement to standby charges.
66. Both Bhagiratha III and GAL Constructor were available to the
Claimant for the performance of the contractual work. It is also relevant that
GAL Constructor had left the work site more than a day before the shutdown
imposed by ONGC.
th th
67. As regards the period from 6 February 2000 to 10 February 2000, it
is pertinent to note that only the transportation component of the work was
considered, and the applicable barge contract rates were deducted. Under the
contract, the transportation of the tripod formed part of the scope of work
assigned to Bhagiratha III. In contrast, GAL Constructor was engaged to
remove the existing structure and install the new platform, an activity that
could not commence without the requisite shutdown.
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68. During the period from 6 February 2000 to 10 February 2000, it was
not possible for GAL Constructor to undertake the removal of the existing
structure or the installation of the new platform, as the necessary shutdown
had not been provided. The amount attributable to that transportation
component of Bhagiratha III was deducted from the claim relating to the
GAL Constructor spread, thereby avoiding any duplication of compensation.
69. The entire submission of the Petitioner largely pertains to the re-
appreciation of evidence concerning the availability of the spread on
different dates. Such re-appreciation of evidence is impermissible before this
Court in proceedings under Section 34 of the Arbitration and Conciliation
Act, 1996.
70. The Arbitral Tribunal, upon consideration of the documentary material
and evidence on record, has recorded its findings in respect of the
Petitioner’s suspension of work and the closure, which took place only on
th
10 February 2000, thereby enabling the work to effectively commence on
th
11 February 2000. The other minor inconsistencies and contradictions
raised by the Petitioner pertain to matters of evidence, which have been duly
considered and adjudicated upon by the Tribunal against the Petitioner.
71. In view of the above, this Court finds no merit in the submissions
advanced on behalf of the Petitioner that would warrant interference under
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Section 34 of the Arbitration and Conciliation Act, 1996.
72. Accordingly, Arbitration Petition No. 212 of 2013 stands dismissed.
73. With regard to Arbitration Petition No. 211 of 2013, the issue is
confined to the non-grant of interest for the period prior to the date of the
Award. Section 31(7) of the Arbitration and Conciliation Act, 1996, as it
stood prior to the 2015 amendment, provided as follows:
“ Section 31(7) (a) Unless otherwise agreed by the parties, where and
in so far as an arbitral award is for the payment of money, the
arbitral tribunal may include in the sum for which the award is made
interest, at such rate as it deems reasonable, on the whole or any part
of the money, for the whole or any part of the period between the
date on which the cause of action arose and the date on which the
award is made.
[(b) A sum directed to be paid by an arbitral award shall, unless the
award otherwise directs, carry interest at the rate of two per cent.
higher than the current rate of interest prevalent on the date of
award, from the date of award to the date of payment.
Explanation.-- The expression "current rate of interest" shall have
the same meaning as assigned to it under clause (b) of section 2 of
the Interest Act, 1978 (14 of 1978).]… ”
The interest component for the period prior to the date of the award
was discretionary. Since the same has not been awarded, this Court finds no
reason to interfere with the same.
74. No case is made out. The Arbitration Petition No. 211 of 2013 is
accordingly dismissed.
BHALCHANDRA
GOPAL DUSANE
(ARUN R. PEDNEKER, J.)
Digitally signed by
BHALCHANDRA
GOPAL DUSANE
Date: 2026.11.02
19:50:01 +0530
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