Oil And Natural Gas Corporation Ltd vs Sapura Fabrication Sdn Bhd

2026:BHC-OS:12621
Katkam CARBP 720-2024
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION PETITION NO. 720 OF 2024
Oil and Natural Gas Corporation Limited ….. PETITIONER
:VERSUS:
Sapura Fabrication SDN BHD
now known as
VTEB Fabrication SDN BHD …. RESPONDENT
Mr. Zubin Behramkamdin, Senior Advocate with Ms. Sana Khan, Ms.
Sakshi Kashyap, Ms. Arundhati Korale and Mr. Paras Gupta i/b Jurisperitus
Mumbai for the Petitioner.
Mr. Naresh Thacker with Mr. Alok Jain, Mr. Samarth Saxena, Ms. Ria Garg
and Ms. Vanshika Kainya for Respondent.
CORAM: SANDEEP V. MARNE, J.
RESERVED ON: 27 APRIL 2026
PRONOUNCED ON: 9 JUNE 2026
JUDGMENT:
1. This is a Petition filed under Section 34 of Arbitration and
Conciliation Act, 1996 (Arbitration Act) challenging the Award made by
the three-member Arbitral Tribunal dated 4 May 2024, as modified vide
Section 33 Order dated 29 June 2024. By the impugned Award, the Arbitral
Tribunal has rejected one claim, partly allowed two claims and has fully
allowed three claims raised by the Respondent in relation to performance
of contract for redevelopment of ONGC’s Mumbai High South Field.
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2. Petitioner-ONGC awarded contract to the Respondent for
redevelopment of its Mumbai High South Field located about 160 km west-
northwest of Mumbai, which included various works such as installation of
Wellhead Platforms RS-18, RS-20 and RS-21, installation of clamp-on
structures on Platforms RS-2 and RS-11, laying of submarine pipeline for
115.9 km, laying submarine cables etc. Respondent completed the work on
time and Petitioner paid USD 214.71 million, Euro 7.81 million and INR
344.42 crores to the Respondent after completion of contract. Respondent
claims to have performed additional works ( amounting to Change Order
under the contract ) and raised six claims against Petitioner. Petitioner
admitted that two claims related to additional work/change order, but
according to Respondent, lesser amount is paid against those two claims
than the one envisaged in the contract. Rest of the four claims were
rejected by the Petitioner as not constituting additional work/change order.
In the arbitration, the Tribunal has delivered Award dated 4 May 2024 ( read
with order dated 29 June 2024 ) rejecting one claim, partly allowing two
claims and fully allowing three claims. Petitioner has accordingly filed the
present Petition challenging the Award under Section 34 of Arbitration Act.
ACTS
F

3. Petitioner-Oil and Natural Gas Corporation (ONGC) is a public
sector undertaking and a company incorporated under the Companies Act,
1956, which is engaged in the business of exploration and extraction of oil
and natural gas within territory of India. Among others, Petitioner has
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large scale petroleum operations at Mumbai High Field, which is India’s
natural gas and oil asset on the offshore of Mumbai coast.
4. Petitioner issued Invitation for Bids (IFB) on 19 December
2014 for carrying out the work of redevelopment of Mumbai High South
Field located 160 km west-northwest of Mumbai in the Arabian Sea on the
continental shelf of Western India. The redevelopment envisaged under the
IFB was part of redevelopment of Phase III of Mumbai High South field
(MHSRD-III) .
5. Kencana HL Sdn. Bhd. is a predecessor of the Respondent, who
submitted its bid on 16 March 2015 in response to the IFB. ONGC awarded
contract to Kencana HL Sdn. Bhd. by way of Notification of Award dated 26
May 2015 at a total lump sum price of USD 211,952,770/-, Euro 7,716,347/-
and INR 3,413,551,315/-. The effective date for the contract was 26 May
2015. The contract was entered into on 27 June 2015 between ONGC and
Kencana HL Sdn. Bhd. The contract was amended twice - on 26 October
2015 and 12 September 2017 to reflect the change of name of the
contractor from "Kencana HL Sdn. Bhd." to "SapuraKencana HL Sdn. Bhd."
and finally to "Sapura Fabrication Sdn. Bhd." ( Sapura )
6. The General Conditions of Contract (GCC) set out the scope of
work, which inter alia included surveys, design, engineering, procurement,
fabrication, load-out, tie-down/sea-fastening, tow-out/sail-out,
transportation, installation, hook-up, testing, pre-commissioning and
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commissioning of the entire facilities as described in the IFB for the
following facilities:
(a) Installation of well head platforms RS-18, RS-20 and RS-21
(b) Installation of clamp-on structures on well head platforms RS-2 and
RS-11
(c) Laying of 15 submarine pipeline segments of 115.9 km pipelines
(d) Laying of 11kV 1.5 MW submarine cable of 7.54 km from SLQ to SCA
(e) Top side modifications on existing 18 platforms
(f) Replacement of 2 Waste Heat Recovery Units ("WHRU") at ICPR
platform
(g) Installation of Intruder Detection cum Deterrence System ("IDDS")
(h) Pile Remedial work at D1-C platform
7. The works were to be completed by 30 April 2017. The works
were completed within the scheduled completion date and ONGC released
the performance bank guarantee of the Respondent after being fully
satisfied with the work performed. ONGC did not levy any liquidated
damages towards performance of contract. ONGC paid to Respondent USD
214.71 million, Euro 7.81 million and INR 344.42 crores.
8. After completion of the work under the contract, Respondent
raised 6 claims upon the Petitioner for alleged extra work. Petitioner-ONGC
partly allowed two claims and rejected four claims. The details of the six
claims raised by the Respondent are as under:
Claim Particulars Amount Claimed Amount
paid/allowed
Claim 1 SCA Jacket V bracing Claim amount USD
Partially allowed
2,278,933.56
in the sum of
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USD 917,605 +
INR 280,187
Claim 2 Additional work of MHNRD
Claim amount USD
Paid amount
III PLP – N23 Platform
14,347,788.47
USD 3,260,618 +
INR 5,754,428 +
SGD 857
Claim 3 Topside modification on
Claim amt USD
Paid amount –
SCA Platform
6,618,531.08 + GST
nil
Claim 4 Intruder Detection cum
Claim amount USD
Paid amount –
Deterrence System
8,106,866.15 + GST
nil
Claim 5 Standby charges for SK900
Claim amount USD
Paid amount –
on account of Rig GD
2,638,229.18 + GST
nil
Chaaya
Claim 6 Topside modification of
Claim amount – USD
Paid amount –
RS11 platform
2,224,375 + GST
nil
This is how ONGC partly allowed two claims and rejected four claims of the
Respondent.
9. Respondent issued notice under Section 21 of Arbitration Act
on 28 December 2021. By its reply dated 24 February 2022, ONGC agreed to
refer the dispute to arbitration with seat as Mumbai. Accordingly, a Three-
member Arbitral Tribunal comprising of Justice (Retd.) A.P. Shah, Presiding
Arbitrator, Dr. Justice (Retd.) Ferdino Rebello, Co-Arbitrator and Justice
(Retd.) Anoop V. Mohta, Co-Arbitrator was constituted on 30 March 2022.
However, on unfortunate demise of one of the co-arbitrator Justice Anoop
V. Mohta, Arbitral Tribunal was reconstituted on 17 February 2023 with all
stakeholders agreeing to continue the arbitral proceedings. Justice R. G.
Ketkar was substituted as the co-arbitrator.
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10. Respondent filed its Statement of Claim on 31 May 2022 and
ONGC filed its Statement of Defence on 5 August 2022. Respondent filed its
rejoinder on 17 September 2022. Based on pleadings, the Arbitral Tribunal
framed 9 issues. Parties led evidence. Respondent examined Mr. Sanket
Sant (CW1) and Petitioner examined Mr. Amritsinghpal Chawla (RW1).
Parties also filed rebuttal affidavit of evidence of CW1 and RW1. Cross-
examination of witnesses was recorded on 24 and 25 April 2023.
11. After considering the pleadings, documentary and oral
evidence, the Arbitral Tribunal has delivered a unanimous Award on 4 May
2024 rejecting one claim, partly allowing two claims and fully allowing
three claims against of the Respondent. The errors in the award are
corrected by passing order under Section 33 of Arbitration Act on 29 June
2024. The Arbitral Tribunal has decided the 6 claims raised by the
Respondent as under:
Claim Particular Awarded Amount
Claim 1 SCA Jacket V Bracing USD 1,927,254.54 + GST
Claim 2 Additional work of MHNRD III PLP –
USD 9,920,000 + GST
N23 Platform
Claim 3 Topside modification on SCA Platform USD 2,229,859.56 +
GST
Claim 4 Intruder Detection cum Deterrence
USD 8,011,865.15 +
System
GST
Claim 5 Standby charges for SK900 on account
USD 2,638,229.18 +
of Rig GD Chaaya
GST
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Claim 6 Topside modification of RS11
Rejected
platform
12. The Tribunal has rejected the claim for pre-award / pendente
lite interest but has awarded post-award interest at the LIBOR rate as
prevailing on date of Award plus 2 % simple interest per annum. The
Tribunal has also awarded costs in the sum of INR 1,87,82,866/- in favour of
the Respondent together with 9% interest per annum from the date of the
Award.
13. Petitioner-ONGC is aggrieved by the Award dated 4 May 2024
(as corrected vide order dated 29 June 2024) and has accordingly filed the
present Petition under Section 34 of the Arbitration Act.
14. By order dated 1 December 2025, this Court recorded a
statement on behalf of Petitioner that entire awarded sum together with
interest shall be deposited with the Court. Accordingly, the awarded sum
together with interest is deposited in this Court, which is directed to be
invested in interest-bearing deposits. This Court has stayed the execution
and operation of the Award during pendency of the Arbitration Petition.
During pendency of Petition, the name of the Respondent has further
undergone a change from "Sapura Fabrication Sdn. Bhd." (Sapura) to
"VTEB Fabrication SDN BHD" w.e.f. 27 March 2026 and accordingly, the
Petition was permitted to be amended for effecting change in the name of
Respondent. With the consent of learned counsel appearing for the parties,
the Arbitration Petition has been heard for final disposal.
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S UBMISSIONS O N B EHALF O F P ETITIONER
15. Mr. Behramkamdin, the learned Senior Advocate appearing for
Petitioner-ONGC has canvassed extensive submissions in support of
challenge to the impugned Arbitral Award. He submits that the Arbitral
Tribunal has erroneously awarded five claims in favour of the Respondent
and that award of the said claims is clearly contrary to the contractual
stipulations agreed between the parties. He first attacks award of Claim
no.4 for Intruder Detection cum Deterrence System (IDDS) submitting that
installation of IDDS works was within the scope of contract as per clause-
2.1.1. That as per clause- 2.2.7.3 of Section 2A (Description of work) Part
IV of the Bidding Documents, the Petitioner provided broad specifications
for execution of works for which Respondent had quoted lump sum price of
USD 1,200,000/- and INR 30,000,000/- for the material and USD 430,306/-
and INR 10,599,388/- for the services. That therefore there was no
additional work done and the same was covered under costs quoted by
Respondent as a lump sum price. He submits that all the work is done by
the Respondent as per the contractual provisions. That the Tribunal has
erred in going into minute details of IDDS for holding that connecting
High-Volume Long-Range monitor (HVLR) to both the firewater headers
was never a contractual requirement by placing reliance on Notes to Clause
2.2.7.2 of the Bidding Documents, which merely mentioned modification
and extension of firewater network and routing the same for hookup with
HVLRs as a broad specification. That this clearly shows that the work was
within the scope of contractual work, but the Tribunal failed to appreciate
the broad and indicative nature of bidding document without containing
all the necessary requirements. That specific requirements can always be
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narrowed down after award of contract through site surveys and detailed
engineering. That even after giving specifications, the Petitioner still had
authority to instruct the Respondent for further specifications in order to
ensure proper execution of the works as per clause 5.3.1 of GCC. That
though the Arbitral Tribunal has noted clause 5, it has not afforded proper
reasoning for the grant of the claim despite the said clause.
16. Mr. Behramkamdin submits that Tribunal has erred in holding
that deck extension for the foam tanks amounted to a “Change Order”
under Clause 8 without appreciating the position that the need for deck
extension is a mere offshoot of broad scope of work mentioned. That the
Tribunal has erroneously held that Respondent was entitled to costs
associated with multiple pre-engineering surveys without appreciating the
position that conduct of pre-engineering surveys was a part of scope of
work as per clause 5.4.1. That Petitioner had asked for particulars of alleged
additional work done with respect to IDDS and documents pertaining to
the same on multiple occasions. However, no documents were produced by
the Respondent despite multiple reminders. Despite failure to prove use of
additional manpower to complete the work, the Tribunal has erroneously
awarded this claim. He submits that Claim No.4 was otherwise barred by
limitation as the same was rejected on 18 January 2018, whereas
arbitration was invoked on 28 December 2021.
17. Mr. Behramkamdin then criticises the award in respect of
Claim No. 5 for standby charges for SK900. He submits that the Arbitral
Tribunal has erroneously assumed that the date for work at D1-C Platform
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was mutually preponed. That the correct factual position is that
preponement was done at the request of the Respondent and the same was
subject to condition of carrying out simultaneous operations (SIMOPs) .
That Respondent was well aware of drilling work going on through Rig GD
Chaaya and it agreed for carrying out SIMOPs. That the Arbitral Tribunal
failed to appreciate the communication placed on record by the Petitioner
which shows that on 13 January 2017, the Respondent was informed of
drilling activities in progress and constant coordination required between
SK900 and Rig GD Chaaya. In the letter, it was stated that if the
simultaneous operations could take place to avoid standby, then only
SK900 could proceed to location for the pile remedial work. That the
Tribunal ignored letter dated 13 January 2017 and erroneously concluded
that Respondent was not informed about presence of Rig GD Chaaya. Thus,
the Tribunal has erred in holding that Respondent was entitled for standby
and idling charges for the Barge SK900 for lack of coordination. That the
Tribunal ignored clauses 5.23(a) and 5.19 of GCC which provided for
effecting concurrent jobs at the site not having any cost/time impact on the
Petitioner and mere drilling work not stalling other offshore activities.
That it was the decision of Respondent to prepone the date of
commencement of its work at D1-C platform from 1 April 2017 to 15
January 2017 and Petitioner cannot be blamed for the alleged delay in
informing presence of Rig GD Chaaya at the platform. He submits that the
rate applied by Arbitral Tribunal is also erroneous. He submits that Claim
No. 5 was otherwise barred by limitation.
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18. In respect of Claim No. 3 (Topside Modification of SCA
Platform), Mr. Behramkamdin submits that the contract was on turnkey
basis, requiring the bidders to quote lump sum price for different types of
material, equipment, services, and labour for major component of contract
and that the scope of work included cost of all surveys. That therefore it
was incumbent for Respondent to bear the cost of all surveys. That the
third survey was conducted due to lapse on part of the Respondent in not
providing hazard identification report. That clause 5.3.1 gave Petitioner
authority to seek further specifications necessary for proper and adequate
execution of works in accordance with the contract. That therefore third
survey cannot be treated as an extra work. That modification of deck
extension was possible only post proper surveys since the deck extension
size and locations were merely indicative in nature. That conduct of
surveys was necessary to seek the actual parameters basis which
Respondent was obliged to finish the work without any cost or time impact
on the Petitioner. That therefore surveys were not additional and that no
cost impact was involved due to conduct of multiple surveys. He relies on
clause 5.4.1. That the Tribunal has contradicted itself by holding that
change in deck extension location was not a variation and thereby rejecting
Respondent’s claim for additional costs citing absence of additional
documentation. That ABS certification relied upon by the Tribunal applied
to quantity of material/services deployed but did not show the prices at
which the materials were procured.
19. Mr. Behramkamdin further submits that the findings recorded
by Arbitral Tribunal qua Claim No. 3 are contrary to public policy. That the
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Tribunal has recorded a perverse finding that there was significant change
in contractor's job with respect to installation leading to costs incurred by
the Respondent. That while recording such finding, the Tribunal has failed
to appreciate the fact that the change in work was essentially to reduce the
shutdown time from 8 days to mere 24 hours. That Respondent had agreed
for the change in work without raising any objection. He relies on clause
2.3.4.2 for showcasing the shutdown requirements. That Tribunal erred in
holding that Petitioner’s decision to reduce shutdown time amounted to a
new and different philosophy. That the Tribunal failed to consider clauses
2.3.1.2 and 2.3.1.3 by which Respondent was made aware of all risks,
contingencies and circumstances affecting its obligations and
responsibilities under the contract. That therefore Petitioner’s decision to
reduce the shutdown time did not mean entitlement for the Respondent to
raise a claim over and above the lump sum price agreed under the contract.
That clause 2.3.4.2 lays down the timeline for shutdown proposal, which is
to be submitted by the contractor to ONGC at least 4 months in advance
and approval to such final shutdown to be given by ONGC not later than 1
month prior to the actual shutdown schedule. That therefore it is incorrect
to hold that Respondent was informed at the very last moment that the
shutdown cannot take place. That the claim is otherwise barred by
limitation as the same was rejected on 18 January 2018.
20. In respect of Claim No.1 (SCA Jacket V Bracing) and Claim
No.2 relating to additional work at N23 platform, Mr. Behramkamdin
submits that ONGC does not dispute that the same is an additional work.
However, he questions the basis and rate at which the claims are awarded
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under these subheads. He submits that Petitioner had never agreed to
Annexure-C rates as claimed by the Respondent. That as per Note 5 to Item
III to Annexure-C, Petitioner was entitled to apply the actual rates
prevailing at a particular time. That by letter dated 10 October 2016,
Petitioner had instructed the Respondent to proceed ahead with the work
of strengthening of SCA-Jacket members, clarifying that the payment for
the same would be made on actuals. That Petitioner has rightly applied
rates for B-127 contract. That the same barge (SK900) was used in the
contract in question, as well as, for performing B-127 contract. That B-127
contract was performed at the rate of USD 103,000/- per day while
Respondent claimed exorbitant rate of USD 275,000/- per day (being fixed
rate under the contract). That since Annexure-C to the Contract applies to
the work, Note 5 to Item III is also applicable. That nowhere in the contract
it was agreed that variation would be paid as per Annexure C of the
contract. That Petitioner treated SK900 consistently across both claims.
That both the claims were barred by limitation.
21. On above broad submissions, Mr. Behramkamdin would pray
for setting aside the impugned award.
UBMISSIONS N EHALF F ESPONDENT
S O B O R
22. Mr. Thacker, the learned counsel appearing for the Respondent
opposes the Petition submitting that the Arbitral Award is challenged as if
the present Petition is an appeal in disguise. He submits that this is an
international commercial arbitration under Section 2(1)(f) of the
Arbitration Act since Sapura is a company incorporated in Malaysia. That
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therefore the ground of patent illegality under Section 34(2A) is not
available for challenging the impugned Award. That none of the objections
sought to be raised fall within the parameters of various grounds
enumerated under Section 34 of the Act for challenging the Award. He
relies on judgment of the Apex Court in Ssangyong Engineering &
1
Construction Company Limited vs. National Highways Authority of India ,
2
Associate Builders vs. Delhi Development Authority , Punjab State Civil
3
Supplies Corpn. Ltd. vs. Sanman Rice Mills and Prakash Atlanta JV vs.
4
NHAI . He submits that the views of the Arbitral Tribunal on the matters of
contractual interpretation are correct or at the very least, plausible. He
submits that evidentiary findings are otherwise conclusive and rational.
That no interference is warranted in exercise of jurisdiction under Section
34 of the Act.
23. Mr. Thacker further submits that ONGC has erroneously
contended that this is a lump sum contract disentitling Sapura in respect of
claims for additional works. That the case set out by ONGC is contrary to
Clause 8 of GCC providing for variations and ONGC’s own admission that
Claims 1 and 2 are additional works for which Sapura is entitled to be
compensated. If it was a lump sum contract, ONGC would have never
agreed for compensating Sapura for any additional work.
1
(2019) 15 SCC 131
2
(2015) 3 SCC 49
3
2024 SCC OnLine SC 2632
4
2026 SCC OnLine SC 98
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24. In respect of Claim No.1 ( SCA Member Jacket V Bracing ), Mr.
Thacker submits that the Tribunal has rightly interpreted the letter dated
10 October 2016 to mean that payment was to be made on the basis of work
actually performed and volumetrically measured. That the letter had no
significance to adopting rates other than those contractually agreed. That
reliance by the Petitioner on Note 5 to Item III of Annexure-C is misplaced
and the Tribunal has rightly held that Note 5 does not override rates in
Annexure-C Item III. That the Tribunal has rightly read Note-5 holistically
and together with clause 8.1.1.4 (iii). That Note 5 triggers only when
parties agree under clause 8.1.1.4 (iii). That rates in Annexure-C Item III
are not applicable. That ONGC never invited Respondent to negotiate the
rates and proceeded to unilaterally apply the rates. That ONGC had given
up the argument on Clause 8.1.1.4 (iii) and it cannot now contend that
Note 5 is to be read as overriding the rates under Annexure-C read with
clause-8.1.1.4 (ii). That this issue was never raised before the Tribunal and
contradicts ONGC’s own case in arbitration. He further submits that ONGC
has incorrectly applied rates for B-127 contract, which was not concurrent
or comparable. That ONGC’s witness admitted that he wasn’t aware about
bidding documents of B-127 contract and had not compared the scope of
work under the two contracts. That the claim is within limitation as rightly
held by the Arbitral Tribunal.
25. In respect of Claim No.2 ( pipe laying linked to N23 platform ),
Mr. Thacker submits that the work is admitted as being additional by ONGC
and the only dispute is about the amount payable to Sapura. That the
reasonings adopted for allowing Claim No.1 apply to Claim No.2 as well.
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That ONGC’s reliance on letter dated 9 February 2017 is misplaced as the
Tribunal has rightly interpreted the said letter to mean that it referred to
the time usage of the vessel and not to the rates. He submits that the
Tribunal has considered the evidence, contractual terms and has arrived at
plausible findings that the claim is within limitation.
26. In respect of Claim No.3 ( deck extension of SCA platform ), Mr.
Thacker submits that the main claim of Sapura about change in location
amounting to variation is already rejected by the Arbitral Tribunal. That
only the claim for wasteful expenditure towards unnecessary pre-
engineering surveys (relating to third survey) is allowed by Arbitral
Tribunal. That the third survey was insisted upon by ONGC even after it
had agreed for deck extension on eastern side. That ONGC has erroneously
stated in its written submissions that Sapura did not provide hazard
identification report which necessitated conduct of additional survey. That
this contention is different from Para 36 of the Statement of Defense, in
which no such allegation was leveled. In fact, ONGC’s demand for another
survey for assessing south side location was raised during hazard
identification and hazard operability meeting. That ONGC has now
completely twisted the case to suggest that no hazard identification report
was supplied by Sapura.
27. Mr. Thacker further submits qua Claim No.3 that the Tribunal
has rightly held that ONGC cannot order multiple pre-engineering surveys
merely because conduct of such surveys was Sapura’s responsibility. That
the Tribunal has not awarded costs of second and fourth survey. That only
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third pre-engineering survey was held unnecessary in the light of second
survey already confirming suitability of deck extension on eastern side.
That ONGC’s case of reduction of shutdown time for change in installation
philosophy is completely misplaced as Sapura had given shutdown
schedule 4 months in advance and it was not reasonable for ONGC to
change installation philosophy without bearing costs thereof. That the
findings of the Tribunal on the quantum of claim are well supported by the
material on record. That the claim is correctly held to be within limitation
since the same was rejected on 21 May 2019 and the arbitration was
invoked on 28 December 2021.
28. In respect of Claim No.4 ( IDDS ), Mr. Thacker submits that
ONGC has erroneously cited the pretext of contract being lump sum for the
purpose of avoiding payment for additional work associated with IDDS.
That notes to Section 2.2.7.2 of Volume-II of bidding documents clearly
stated that preference was to be given to firefighting over HVLR operations
and both systems were not to be operated simultaneously. That therefore
the two connections were never envisaged in the fundamental aspects of
IDDS. That ONGC admitted in minutes of meeting dated 11 May 2016 that
deck extensions were not envisaged in the contract scope. That excess steel
usage is certified by ONGC’s own inspection agency. That the Tribunal has
correctly awarded cost of surveys under Clause 5.4.1 since the same were
conducted on account of ONGC’s additional demands which were dropped
subsequently. That the claim was clearly within limitation as it was
rejected on 18 January 2018 but on account of COVID-19 exclusion period
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from 15 March 2020 to 28 February 2022, the claim is within limitation as
arbitration was invoked on 28 December 2021.
29. In respect of Claim No.5 ( standby charges for SK900 ), Mr.
Thacker submits that the Tribunal has rightly arrived at the conclusion that
preponement schedule was mutual since it was agreed by ONGC. That the
Tribunal has rightly held that the condition of SIMOPs was imposed only
on 13 January 2017 i.e., a day before Sapura was to begin the work. That the
condition of SIMOPs was not imposed when the request to prepone the
work had been accepted by ONGC in the year 2016. That the Tribunal has
correctly drawn adverse inference. That the real issue is about ONGC’s
failure to inform Sapura in a timely manner for avoiding the standby. That
Sapura would not have known in advance about the workfront situation.
That the Arbitral Tribunal has correctly considered Clauses-2.2.2.2, 5.3.5,
5.19 and 5.23 for holding that the express language of the Contract
supports its views that Clause-5.19 is a non obstante clause. That the rate
applied by the Arbitral Tribunal is correct. That the claim is within
limitation after considering COVID-19 exclusion period.
30. On above broad submissions, Mr. Thacker prays for dismissal
of the Petition.
R EASONS A ND A NALYSIS
31. Respondent was awarded the work for redevelopment of the
Mumbai High South Field which comprised of setting up various facilities
as enumerated above. So far as the work assigned to the Respondent is
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concerned, there is no dispute about quality or quantity of the said work
and even in respect of completion thereof within the contract period. The
work, as envisaged in the contract, has been completed within the
stipulated time and to the satisfaction of Petitioner-ONGC. ONGC has
accordingly released the performance bank guarantee submitted by the
Respondent after being satisfied with the work performed. There is neither
any allegation of delay nor any allegation of unsatisfactory performance,
and Petitioner has not imposed any liquidated damages on the
Respondent.
32. Though the entire assigned work is completed within the
stipulated time by the Respondent and to the satisfaction of the Petitioner,
disputes still arose between ONGC and Sapura in respect of certain facets
of work, which according to the Respondent, was either additional work or
a part of Change Order. Accordingly, Respondent raised six claims against
the Petitioner. Out of those six claims, Petitioner admitted that two claims
relating to SCA Jacket V Bracing (Claim No.1) and for additional work on N-
23 platform (Claim No.2) did amount to additional work and Petitioner has
accordingly sanctioned part of those claims. The dispute in respect of
Claim Nos. 1 and 2 is mainly about applicability of rates at which payments
are required to be made to the Respondent. Petitioner had paid rates
applicable to other contract (B-127 contract), whereas the Tribunal has
upheld Respondent’s entitlement towards rates prescribed in Annexure-C
Item III of the contract executed with Respondent. ONGC is aggrieved by
applicability of Annexure-C Item III rates.
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33. So far as the balance of four claims (Claim Nos.3 to 6) are
concerned, Petitioner-ONGC flatly refused to treat them as additional
works / Change Order and has denied liability to make any payment. Out of
those four claims, one claim (Claim No. 6) is rejected by the Arbitral
Tribunal. Respondent has not challenged the award regarding rejection of
Claim No.6 and has accepted rejection of the said claim. Since the Arbitral
Tribunal has found ONGC liable for paying the sums under Claim Nos. 3 to
5, ONGC is aggrieved by the said decision.
34. ONGC is thus aggrieved by partial award of Claim Nos.1 and 2
and full award of Claim Nos.3 to 5, and has accordingly filed the present
Petition under Section 34 of the Arbitration Act.
W HETHER THE G ROUND O F ‘P ATENT I LLEGALITY ’ I S A VAILABLE F OR
C HALLENGING THE A WARD ?
35. This is an international commercial arbitration within the
meaning of Section 2(1)(f) of the Arbitration Act since Respondent is a
company incorporated in Malaysia and since the arbitration relates to
disputes arising out of legal relationship considered as commercial under
the laws in force in India. However, since the place of arbitration is in
India, Part-I of the Arbitration Act would apply to the instant arbitration
under Section 2(2) of the Arbitration Act. This is why the Award is
challenged under Section 34 of the Act. However, the ground of patent
illegality under Section 34(2A) is not available while challenging the
arbitral award arising out of international commercial arbitrations. Sub-
Section (2A) of Section 34 of the Arbitration Act provides thus:
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(2A) An arbitral award arising out of arbitrations other than
international commercial arbitrations , may also be set aside by the
Court, if the Court finds that the award is vitiated by patent illegality
appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an
erroneous application of the law or by reappreciation of evidence
(emphasis and underlining supplied)
36. Thus, Sub-section (2A) of Section 34 of Arbitration Act does
not apply to international commercial arbitrations. The instant Award
therefore cannot be challenged on the ground of patent illegality.
However, an Award made by a domestic seated arbitral tribunal even in
international commercial arbitration can be challenged under Section 34 of
the Arbitration Act, albeit only on the grounds under Sub-Section (2). One
of the grounds for setting aside the award made even in international
commercial arbitration is where the award is in conflict with the public
policy of India under Section 34(2)(b)(ii).
37. Without appreciating the position that the Award is made in
an international commercial arbitration, the Petitioner has filed and
argued the present Petition as if the ground of patent illegality is also
available for challenging the Award. The ground of perversity is repeatedly
pleaded in the Petition and the elements of perversity in the findings
recorded by the Arbitral Tribunal are repeatedly sought to be demonstrated
on behalf of the Petitioner during the course of submissions. However, the
vice of perversity is relatable to the ground of patent illegality under
Section 34(2A) of the Arbitration Act, which ground is not available for
challenging the Award made in an international commercial arbitration.
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5
38. In ONGC Vs. Western Geco International Ltd . , a three Judge
Bench of the Supreme Court had interpreted provisions of Section 34 of the
Arbitration Act as it stood before amendment and gave wider meaning to
the expression ‘public policy of India’ by relying on its judgment in ONGC
6
Vs. Saw Pipes and held that the expression would refer to three distinct
and fundamental juristic principles viz. (i) duty to adopt judicial approach,
(ii) following of principles of natural justice, and (iii) decision must not be
perverse or irrational. Thus, the observations in ONGC Vs. Western Geco
International Ltd . (supra) do seek to create an impression as if the ground
of perversity is covered by the expression ‘public policy of India. However,
in Associate Builders (supra), the Apex Court clarified that the expression
‘public policy of India’ would mean ‘fundamental policy of Indian law’,
which needs to be understood as per the judgment in Renusagar Power
7
Co. Ltd. Vs. General Electric Co. Ltd.
39. However, after the 2015 amendments to the Arbitration Act,
the ground of patent illegality came to be added in relation to the awards
made in domestic arbitrations under Section 34(2A). At the time of
effecting the 2015 amendments, the Law Commission had observed in its
supplementary report that the judgment in ONGC Vs. Western Geco
(supra) would expand Court’s power contrary to international practice and
that a clarification needed to be incorporated to ensure that the term
‘fundamental policy of Indian law’ is narrowly construed. In Ssangyong
5
(2014) 9 SCC 263
6
(2003) 5 SCC 705
7
1994 Supp (1) SCC 644
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Engg & Construction Ltd. Vs. NHAI (supra), the Supreme Court dealt with
the effect of 2015 amendment and held as under:
“34. What is clear, therefore, is that the expression “public policy of
India”, whether contained in Section 34 or in Section 48, would now mean
the “fundamental policy of Indian law” as explained in paras 18 and 27
of Associate Builders i.e. the fundamental policy of Indian law would be
relegated to “Renusagar” understanding of this expression. This would
necessarily mean that Western Geco expansion has been done away with.
In short, Western Geco , as explained in paras 28 and 29 of Associate
Builders , would no longer obtain, as under the guise of interfering with an
award on the ground that the arbitrator has not adopted a judicial
approach, the Court's intervention would be on the merits of the award,
which cannot be permitted post-amendment. However, insofar as
principles of natural justice are concerned, as contained in Sections 18
and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge
of an award, as is contained in para 30 of Associate Builders.
35. It is important to notice that the ground for interference insofar as it
concerns “interest of India” has since been deleted, and therefore, no
longer obtains. Equally, the ground for interference on the basis that the
award is in conflict with justice or morality is now to be understood as a
conflict with the “most basic notions of morality or justice”. This again
would be in line with paras 36 to 39 of Associate Builders, as it is only
such arbitral awards that shock the conscience of the court that can be set
aside on this ground.
36. Thus, it is clear that public policy of India is now constricted to mean
firstly, that a domestic award is contrary to the fundamental policy of
Indian law, as understood in paras 18 and 27 of Associate Builders, or
secondly, that such award is against basic notions of justice or morality as
understood in paras 36 to 39 of Associate Builders. Explanation 2 to
Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was
added by the Amendment Act only so that Western Geco, as
understood in Associate Builders, and paras 28 and 29 in
particular, is now done away with.
37. Insofar as domestic awards made in India are concerned,
an additional ground is now available under sub-section (2-A),
added by the Amendment Act, 2015, to Section 34. Here, there must
be patent illegality appearing on the face of the award, which refers
to such illegality as goes to the root of the matter but which does not
amount to mere erroneous application of the law. In short, what is
not subsumed within “the fundamental policy of Indian law”,
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namely, the contravention of a statute not linked to public policy or
public interest, cannot be brought in by the backdoor when it comes
to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that reappreciation of evidence, which is
what an appellate court is permitted to do, cannot be permitted under the
ground of patent illegality appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders, namely, a mere
contravention of the substantive law of India, by itself, is no longer a
ground available to set aside an arbitral award. Para 42.2 of Associate
Builders, however, would remain, for if an arbitrator gives no reasons for
an award and contravenes Section 31(3) of the 1996 Act, that would
certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really
follows what is stated in paras 42.3 to 45 in Associate Builders, namely,
that the construction of the terms of a contract is primarily for an
arbitrator to decide, unless the arbitrator construes the contract in a
manner that no fair-minded or reasonable person would; in short, that the
arbitrator's view is not even a possible view to take. Also, if the arbitrator
wanders outside the contract and deals with matters not allotted to him,
he commits an error of jurisdiction. This ground of challenge will now fall
within the new ground added under Section 34(2-A).
41. What is important to note is that a decision which is perverse, as
understood in paras 31 and 32 of Associate Builders, while no longer
being a ground for challenge under “public policy of India”, would
certainly amount to a patent illegality appearing on the face of the
award. Thus, a finding based on no evidence at all or an award which
ignores vital evidence in arriving at its decision would be perverse
and liable to be set aside on the ground of patent illegality .
Additionally, a finding based on documents taken behind the back of the
parties by the arbitrator would also qualify as a decision based on no
evidence inasmuch as such decision is not based on evidence led by the
parties, and therefore, would also have to be characterised as perverse.
42. Given the fact that the amended Act will now apply, and that the
“patent illegality” ground for setting aside arbitral awards in
international commercial arbitrations will not apply , it is necessary to
advert to the grounds contained in Sections 34(2)(a)(iii) and (iv) as
applicable to the facts of the present case.
(emphasis and underlining supplied)
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40. Thus, in Ssangyong Engg & Construction Ltd. Vs. NHAI, the
Apex Court has given narrower meaning to the expression ‘fundamental
policy of Indian law’ and has held that the ground of decision being
perverse is no longer a ground for challenge under ‘public policy of India’.
It is held that the perversity is a ground constituting patent illegality under
Section 34(2A) of the Arbitration Act.
8
41. In Vijay Karia v. Prysmian Cavi E Sistemi SRL and Others , it
is held by the three Judge Bench of the Apex Court that the challenge to a
foreign award under Section 48 of the Act is now similar to a challenge to
an award made in international commercial arbitration held in India under
Section 34 so far as the ground of ‘public policy of India’ is concerned. It is
held thus:
42. It will be noticed that in the context of challenge to domestic
awards, Section 34 of the Arbitration Act differentiates between
international commercial arbitrations held in India and other
arbitrations held in India. So far as “the public policy of India” ground
is concerned, both Sections 34 and 48 are now identical, so that in an
international commercial arbitration conducted in India, the ground of
challenge relating to “public policy of India” would be the same as the
ground of resisting enforcement of a foreign award in India. Why it is
important to advert to this feature of the 2015 Amendment Act is that all
grounds relating to patent illegality appearing on the face of the award
are outside the scope of interference with international commercial
arbitration awards made in India and foreign awards whose enforcement
is resisted in India. In this respect, it is important to advert to paras 41
and 69 of Ssangyong …
xxx
This statement of the law applies equally to Section 48 of the Arbitration
Act.
8
(2020) 11 SCC 1
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42. The principle that a perverse decision cannot be a ground for
challenge under ‘public policy of India’ is further clarified by the Apex
Court in PSA Sical Terminals (P) Ltd. v. V.O. Chidambranar Port Trust
9
and others , in which it is held thus:
41.   A decision which is perverse, though would not be a ground for
challenge under “public policy of India”, would certainly amount to
a patent illegality appearing on the face of the award. However, a
finding based on no evidence at all or an award which ignores vital
evidence in arriving at its decision would be perverse and liable to be
set aside on the ground of patent illegality.
42. To understand the test of perversity, it will also be appropriate to refer
to paras 31 and 32 from the judgment of this Court in Associate Builders 
“31. The third juristic principle is that a decision which is perverse or
so irrational that no reasonable person would have arrived at the same
is important and requires some degree of explanation. It is settled law
that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account something irrelevant to
the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision,
such decision would necessarily be perverse.
(emphasis and underlining supplied)
43. The restrictive meaning to the expression ‘public policy of
India’ is further highlighted by the Apex Court in three Judge Bench
decision in OPG Power Generation Private Limited v. Enexio Power
10
Cooling Solutions India Private Limited and another , in which it is held
that the phrase ‘in conflict with the public policy of India’ must be
accorded a restricted meaning in terms of Explanation 1 as the expression
‘in contravention with the fundamental policy of Indian law’, by use of the
9
(2023)15 SCC 781
10
(2025) 2 SCC 417
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word ‘fundamental’ before the phrase ‘policy of Indian law’ made the
expression narrower in its application than the phrase ‘in contravention
with the policy of Indian law’. The Court held thus:
55. The legal position which emerges from the aforesaid discussion is that
after “the 2015 Amendments” in Section 34(2)(b)(ii) and Section 48(2)(b)
of the 1996 Act, the phrase “in conflict with the public policy of India”
must be accorded a restricted meaning in terms of Explanation 1. The
expression “in contravention with the fundamental policy of Indian law”
by use of the word “fundamental” before the phrase “policy of Indian law”
makes the expression narrower in its application than the phrase “in
contravention with the policy of Indian law”, which means mere
contravention of law is not enough to make an award vulnerable. To bring
the contravention within the fold of fundamental policy of Indian law, the
award must contravene all or any of such fundamental principles that
provide a basis for administration of justice and enforcement of law in
this country.
56. Without intending to exhaustively enumerate instances of such
contravention, by way of illustration, it could be said that:
(a) violation of the principles of natural justice;
(b) disregarding orders of superior courts in India or the binding
effect of the judgment of a superior court; and
(c) violating law of India linked to public good or public interest,
are considered contravention of the fundamental policy of Indian law.
However, while assessing whether there has been a contravention of the
fundamental policy of Indian law, the extent of judicial scrutiny must not
exceed the limit as set out in Explanation 2 to Section 34(2)(b)(ii).
44. The principle of narrower and restrictive meaning to the
expression ‘in conflict with public policy of India’ is also recognised in
paragraph 33 of the recent judgment in Prakash Atlanta (JV) Vs. NHAI
(supra).
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45. The conspectus of the above discussion is that the ground of
patent illegality is not available for challenging the impugned award which
is made in an international commercial arbitration held in India. Also,
perversity, if any, in findings recorded by the Arbitral Tribunal would
constitute the vice of patent illegality and would not come in the ambit of
the expression ‘in conflict with public policy of India.’
46. After having outlined the limited scope of interference in
Award made in an international commercial arbitration, I proceed to
examine whether the Petitioner has made out any of the enumerated
grounds under Section 34(2) of the Arbitration Act while challenging the
Arbitral Award relating to grant of Claim Nos. 1 to 5.
C LAIM N O .1-SCA J ACKET -V B RACING
47. ONGC entrusted to Sapura additional scope of work for
strengthening five members/components of the Jacket of SCA Platform and
the work was to be performed by injecting grout (a mixture of cement, sand
and chemical) into the hollow section of the members of the jacket under
water. A jacket structure in a platform is a steel structure used to support
oil and gas production equipment, which comprises four legs pinned to the
seafloor. The legs are connected with each other by bracings or members.
Respondent was asked to strengthen the part of the jacket which is under
water and such repair exercise required a saturation diving spread. The
divers were required to work under a very high hydrostatic pressure.
Saturation diving involves specialised diving equipment keeping the divers
in a saturated state when they come out of the water, when they are
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required to be kept in a specialised room where the pressure is maintained.
Therefore, saturation diving spread includes vessels capable of supporting
saturation divers to execute the work.
48. On 16 September 2016, ONGC requested Sapura to provide a
proposal for execution of the work and the response was given by Sapura
on 26 September 2016 showing willingness to execute the work based on
prices as indicated in Section III for unit rate of vessels and Section IV for
cost plus items from Annexure-C of the contract. In its proposal,
Respondent had identified not only the marine spread to be utilized for the
work but had also indicated details of specialized crew from Nautic
Offshore Pte Ltd, as well as specialised material. The proposal was accepted
by ONGC vide letter dated 10 October 2016 indicating that “ change order
shall be issued as per the terms of the contract on completion of the scope
based on actual work carried out ”.
49. The work was accordingly executed by the Respondent, who
presented its claim for USD 2,271,706.94/-. After substantial gap, ONGC
approved the claim, only partially, for USD 917,605/- and INR 280,187/-
(excluding GST) without assigning any reasons. After some insistence by
Respondent, calculation sheet was provided to the Respondent, which
revealed that ONGC had applied different unit rate for marine spread used
for the work. The unit rate applied by ONGC was picked up from ‘B-127
Contract’, rather than applying the rates as prescribed in Annexure-C of
the contract executed with Respondent.

50. Thus, the main dispute in respect of Claim No.1 is about
applicability of unit rate for marine spread used for completion of the work.
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The issue before the Tribunal was whether unit rate indicated in Annexure-
C could be applied or whether ONGC is justified in applying unit rate in
respect of another contract (B-127).
51. In the Arbitral Award, the Tribunal has held that the
Respondent was justified in applying contractual rates for the marine
spread used and that ONGC was not justified in applying unit rate from B-
127 contract.
52. ONGC essentially relied upon two materials for justifying
application of unit rate from B-127 contract. Firstly , it contended that in
the communication dated 10 October 2016, it had made it clear that
payment shall be based on “actuals”. Secondly , Note 5 for item III reserved a
right for ONGC to arrive at applicable rates depending on type of marine
spread used and market conditions.
53. So far as letter dated 10 October 2016 is concerned, the
Arbitral Tribunal has made reasonable interpretation of the word “actuals”
appearing in the said letter to mean that the payment for variation would
be as per work and that “as per actuals” did not empower ONGC to apply
differential or discriminatory rates. The Arbitral Tribunal has held in
paragraph 148 of the Award as under:
148. The Tribunal now takes up the issue ·with regard to the Respondent's
position that it had agreed to pay for the variation as per actuals, as
contained in its communication dated 10.10.2016. The Tribunal finds this
declaration to be without any merit at all. Even if the phrase, "as per
actuals" is taken at face value, it could only be reasonably interpreted to
mean that the payment for the variation would be as per work; in other
words, the variation would be measured and duly compensated, as per
applicable rates. Employing the phrase "as per actuals" does not empower
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the Respondent to apply differential or discretionary rates, as it has
attempted to do in the present case.
54. I do not find that the above finding recorded by the Arbitral
Tribunal qua communication dated 10 October 2016 to be such that no
fair-minded person would ever record the same. The communication dated
10 October 2016 stated as under:
" amount of payment shall be based on the actuals and shall be limited to
the amount incurred for actual work as per your proposal or the maximum
ceiling limit of US$ 4,606,730 whichever is less "
55. The Tribunal has correctly interpreted contents of letter dated
10 October 2016 to mean that the phrase “as per actuals” appearing therein
would only mean that the payment for variation would be as per work. The
letter dated 10 October 2016 did not refer to application of any particular
unit rate in any manner. The finding recorded by Arbitral Tribunal is thus
plausible, not requiring any interference under Section 34 of the
Arbitration Act.
56. Coming to the second aspect of applicability of Note 5, the
Arbitral Tribunal has taken into consideration clauses 8.1.1.1 and 8.1.1.4 in
paragraph 131 of the Award. It would be necessary to cull out clause
8.1.1.4, which reads thus:
8.1.1.4
i) Any change order as stated in 8.1.1.1 comprising an alteration which
involves change in the cost of the Works (which sort of alteration is
hereinafter called a "Variation") shall be the subject of an amendment to
the Contract by way of an increase or decrease in the Contract price and
adjustment of the construction schedule if any.
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ii) If the Contract provides applicable rates in accordance with Annexure
'C' of the Contractor for the valuation of the variation in question the
Contract price shall subject to 8.1.1.4 (iii) be increased or decreased in
accordance with those rates.
iii) If parties agree that the Contract does not contain applicable rates or
that the said rates are inappropriate or the said rates are not precisely
applicable to the variation in question, then the parties shall negotiate a
revision of the Contract Price which shall represent the change in cost of
the Works caused by the Variations. Any change order must be duly
approved by the Company in writing.
57. Thus, under clause 8.1.1.4(ii), if the contract provided for
applicable rates in accordance with Annexure-C, for valuation of the
variation, the contract price shall be increased or decreased accordingly.
However, clause 8.1.1.4 (iii) provides that the contract price would be
reviewed through negotiations if (i) contract does not contain applicable
rates, ii) the rates are inappropriate, or (iii) the rates are not precisely
applicable to the variation in question.
58. Annexure-C ( Proforma for Price Schedule ) spells out inter alia
the schedule of prices applicable for clause 8.1.1.4 (ii). Under Entry No.7 in
the Table with a heading “DETAILS OF MARINE SPREAD”. The rate for
saturation driving spread is indicated as USD 275,000 per day. However, in
respect of clause 8.1.1.4 (iii), Special Notes are included in Annexure-C
which read thus:
NOTES FOR ITEM (III)
1. Deleted
2. Mobilizations / demobilizations charges of above spreads are included
in lump sum price I.A.
3. Adjustment shall be computed, wherever applicable on pro-rata basis
for actual time/effort spent.
4. All spreads are inclusive of towing/Anchor handling tugs, work boats,
supply boats, material barge, man power etc. as required.
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5. Company reserves the right to mutually discuss and arrive at the
applicable rates depending upon the type of marine spread actually
used/ deployed and market conditions.
(emphasis supplied)
59. Under Note 5, the ONGC reserved the right to mutually discuss
and arrive at applicable rates depending on type of marine spread "actually
used" and market conditions. However, Note 5 becomes applicable only
when clause 8.1.1.4 (iii) kicks in. In the present case, the contract clearly
provides for rates applicable for Saturation Diving Spread and therefore,
the case is governed by clause 8.1.1.4 (ii). In my view therefore, Note 5 has
no application to the present case. This is exactly what is held by the
Arbitral Tribunal. The interpretation made by the Arbitral Tribunal in
respect of contract clauses is not only plausible but also a correct
interpretation. I find no reason to interfere in the findings recorded by the
Arbitral Tribunal in respect of second issue of non-applicability of Note 5
in the present case.
60. Thus, both the justifications sought to be canvassed by ONGC
for applying unit rates of B-127 contract are totally baseless and are rightly
rejected by the Arbitral Tribunal. Award of Claim No.1 therefore appears to
be in order, and no case is made out by Petitioner to interfere in the same
in exercise of jurisdiction under Section 34 of the Arbitration Act.
61. Some grievance is also sought to be raised about allowing cost
of specialised crew and DG rent by the Arbitral Tribunal by contending that
Note 4 of Item (III) of Annexure-C provides that all spreads are inclusive of
towing/anchor handling tugs, work boats, supply boats, material barge,
manpower etc. as required.
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62. However, it appears that the claim for supply of vessel was
withdrawn by Sapura in accordance with Note 4 and has not been awarded
by the Tribunal. The claim for grouting spread, lab and crew was agreed
upon in the Award as it is specialised equipment and crew and ONGC now
cannot resile from it. About DG set rental, the Arbitral Tribunal has
recorded cogent findings for award of this element of claim.
63. The Arbitral Tribunal has recorded reasons in paragraph 160 of
award for awarding GST and Petitioner is unable to make out an element of
violation of fundamental policy of Indian law in those findings. The
objection of limitation sought to be raised by the Petitioner qua Claim No.1
deserves outright rejection. The claim was partially sanctioned and
partially rejected on 15 January 2019 and was well within limitation as
arbitration is invoked on 28 December 2021.
64. Petitioner is thus unable to make out a valid ground under
Section 34(2) of the Arbitration Act qua award of Claim No. 1. In my view
therefore, no case is made out by the Petitioner for interference in respect
of award of Claim No.1 relating to SCA Jacket V Bracing which is awarded
in the sum of USD 1,927,254.54/- along with GST. Therefore, award of
Claim No.1 by the Arbitral Tribunal cannot be invalidated.
LAIM O DDITIONAL ORK OF LATFORM
C N .2 –A W MHNRD III PLP–N23 P
65. A separate contract dated 19 September 2014 (MHNRD III PLP
Contract) was apparently awarded to another contractor previously and
that contractor did not finish the scope of laying pipelines and therefore
ONGC instructed Respondent to carry out the balance unfinished work,
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which was carved out from MHNRD III PLP Contract and was awarded to
the Respondent. The work involved transportation of pipes and bends
(supplied by ONGC) using a transportation vessel, laying of pipes using
pipelay vessels, performing tie-ins and other work using a saturation diving
vessel and performing pre-commissioning works using a hydro test vessel.
66. After receiving instructions from ONGC containing broad
scope of work, Sapura submitted its proposal on 27 September 2016 and
after series of negotiations, Sapura made final offer on 30 January 2017,
which was accepted by ONGC on 9 February 2017 stating that the subject
work would be treated as additional work. After completion of the work,
Respondent presented its claim for USD 14,373,208.69/-, which was revised
to USD 14,347,788.47/-. ONGC only partially approved the claim for USD
3,260,618/-, INR 5,754,428/- and SGD 857/-. After receipt of calculation
sheet on 21 January 2019, it was revealed that a different unit rate was
applied by the Petitioner for the marine spread used for the work. On 2
March 2020, ONGC communicated that unit rates from B-127 Contract
were applied. This led to dispute amongst the parties. The difference in the
rates is indicated by the Arbitral Tribunal in the following table:
SI. Marine Spread Vessel Sapura ONGC
1 Rigid Pipelay
Barge Spread
SK1200 USD
475,000
USD
175,000
2 Saturation
Diving Spread
SK900, Kreuz
Supporter and
Kreuz Installer
USD
275,000
USD
103,000
3 Transportation
Spread
Sagar 250 and
Sagar 5
USD
75,000
USD
10,620
4 Hydro Test
spread
MV Emerald USD
155,000
USD
38,500
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67. ONGC relied on Note 5 for Item III in Annexure-C to justify
applicability of unit rate from B-127 Contract on the ground that no rates
were available in the contract for the additional work. The Tribunal did not
agree with Petitioner’s stand and held that the contract contains pipe
laying work in clause 2.1.1 of the GCC and that the rates in Annexure-C can
apply to the additional work of the similar nature. The Tribunal referred to
clause 8.1.1.4 (ii) of the GCC and found that the type of marine spread to be
used for the additional work was found in item III of Annexure-C.
68. Petitioner has sought to criticise the finding recorded by the
Arbitral Tribunal about applicability of Annexure-C rates for additional
work of laying pipes contending that ONGC never agreed for application of
Annexure-C rates and that contract did not provide for any rates for the
additional work. However, Tribunal has held that contract already contains
pipe laying work under clause 2.1.1, which specifically includes within
‘scope of work’ the work of ‘laying of submarine pipelines’. The finding
recorded by the Arbitral Tribunal about Annexure-C providing unit rates
for the work of laying of submarine pipelines is as per the contractual
arrangement between the parties. The Petitioner erroneously applied rates
in relation to B-127 Contract by referring Note 5 of Item III of Annexure-C.
For the reasons discussed while upholding award of Claim No.1, in my
view, award of Claim No.2 by Arbitral Tribunal deserves to be upheld.
69. Here, by applying Annexure-C rates, the Respondent’s claim
was reaching upto USD 12,007,627.33/-. However, the Tribunal applied the
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ceiling limit as set out in clause 8.1.1.7 (f) and has upheld the claim upto
the ceiling limit of USD 9,920,000/-. I find no reason to interfere in the
award in Claim No.2.
LAIM O OPSIDE ODIFICATION ON LATFORM
C N .3 – T M SCA P
70. This claim involves incurring of additional expenses and
spending of more time by the Petitioner in effecting the work of deck
extension in respect of the SCA platform.
71. ONGC had proposed deck extension of SCA platform on the
southern side. Respondent conducted first pre-engineering survey in
August and November 2015 and intimated to ONGC that the deck
extension at the southern side of the SCA platform was not feasible and
that deck extension on the east side be carried out. Accordingly, ONGC
approved for construction the proposed drawings for deck extension on the
east side. On 25 February 2016, Respondent submitted installation
philosophy of deck extension for the purpose of suggesting minimum
shutdown while the work of deck extension was to go on. Respondent
informed ONGC that it would reroute the High Pressure (HP) and Low
Pressure (LP) flare headers first, requiring the shutdown time only to 10
days.
72. SCA Survey-II was carried out in February 2016 and the
Petitioner-ONGC took a position that deck extension on the south side was
found feasible. Such stance adopted by Petitioner-ONGC forced the
Respondent to conduct SCA Survey-III in April 2016, which again
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confirmed the findings of first SCA Survey regarding non-feasibility of deck
extension on south side and feasibility on the eastern side. Finally in
meeting held on 11 May 2016, ONGC instructed Respondent to execute
deck extension on the eastern side. However, on 23 June 2016, ONGC again
instructed Respondent to carry out SCA Survey-IV to confirm the sizes of
the members through a physical check. The requirement of Survey-IV was
reiterated by ONGC on 4 July 2016. Accordingly, SCA Survey-IV had to be
conducted in July 2016, which confirmed the sizes of the members assumed
by Sapura. On 11 July 2016, Respondent informed ONGC of required
shutdown time of eight days for rerouting the HP and LP headers. However,
when Respondent reached SCA platform to reroute HP and LP flare headers
on 8 November 2016, ONGC changed the installation philosophy for
reducing the shutdown duration. According to the Respondent, additional
material was required to be procured ( certified by appointed certification
agency-ABS ) as well as additional time of 11 days to perform the work
( again certified by ABS ).
73. In the above manner, Respondent completed the work of deck
extension on east side on 31 March 2017. It raised claim on 25 May 2017 for
USD 7,610,900/-, which was rejected by ONGC on 21 May 2019. The claim
raised by Respondent for executing the work of deck extension on SCA
platform on eastern side comprised of three elements:
i) USD 4,195,200/- due to substantial change in location of deck
extension leading to significant increase in offshore installation
time.
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ii) USD 175,131.32/- due to multiple pre-engineering surveys, and
iii)Claims due to change in installation philosophy.
74. The Arbitral Tribunal has rejected the first element of claim
relating to substantial change in the location of deck extension holding
that the same did not amount to variation or change order. However, the
second and the third element relating to multiple surveys and change in
installation philosophy are partially allowed.
75. So far as element of claim relating to multiple surveys is
concerned, here also, the Tribunal has sanctioned the claim only in respect
of the third pre-engineering survey and has rejected the claims towards
second and the fourth pre-engineering surveys. Petitioner has attempted to
justify the conduct of third pre-engineering survey on the ground that it
was conducted due to lapse on the part of the Respondent in not providing
a hazard identification report. Petitioner also claims that clause 5.3.1 gave
authority to it to seek further specifications, which are felt necessary for
proper and adequate execution of works in accordance with the contract. It
is contended that the third survey was carried out keeping in mind the
proper and adequate execution of the works, which cannot be deemed as
unjustified particularly considering overarching clause like 5.3.1. It is also
sought to be suggested that modification of deck extension was possible
only post proper surveys and conduct of surveys was necessary to see
actual parameters on the basis of which Respondent was obliged to finish
the work without any costs or time impact on ONGC.
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76. On the other hand, the Tribunal has held that conduct of third
survey was not necessary. It has held in paragraphs 314 and 315 of the
Award as under:
314. With the first survey having rejected the south side as the possible
location for the deck extension, and with the second survey having
confirmed the east side as the preferred location for the same, the
Tribunal is of the view that there was no practical need to again re-assess
the infeasibility of the south side by way of a third survey. It is important
to note that nothing prevents the Respondent from commissioning or
demanding such a third survey, and it is also accurate that surveys were
the responsibility of the contractor. However, the Respondent cannot be
permitted to direct multiple surveys without necessity. When the survey
in question itself is unnecessary, futile, and involves wasteful expenditure,
and does not in any way further the work required to be undertaken, the
Respondent must pay the costs incurred for the survey to the contractor.
315. Therefore, in response to the question as to whether the third survey
was essential is relevant, the Tribunal is of the considered opinion that
this third survey was really not necessary or justified, more so because the
findings of the survey merely reinforced the findings of the first survey.
Given that the data from the first survey was already available at hand,
there was no need for this third survey to be conducted. The Tribunal is of
the view that the Respondent should, therefore, bear the costs of the third
survey, as this was undertaken at its behest.
77. It appears that ONGC had contended before the Arbitral
Tribunal ( which contention is noted in paragraph 309 of the Award ) that
Respondent had failed to provide any data on alternative locations which
was agreed upon during HAZID/HAZOP (hazard identification and hazard
& operability study) meeting and that therefore a third survey had to be
conducted. It is sought to be suggested that the said point is not dealt with
by the Arbitral Tribunal. The Respondent, on other hand, points out that in
paragraph 36 of the Statement of Defence filed by ONGC, it never raised
the contention about Sapura not providing hazard identification report. It
is further contended that the ONGC’s demand for another survey to assess
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alternate location was raised during a hazard identification and hazard
operability meeting. It would be relevant to quote the entire defence taken
in paragraph 36 of the Statement of Defence, which reads thus:
… After 2nd survey, the Claimant had also failed to provide any data on
alternative locations which was agreed upon during HAZID/HAZOP
(hazard identification and hazard & operability study) meeting, and
therefore, 3rd survey had to be conducted. The Claimant then conducted
3rd Pre-engineering survey of the alternative location for deck extension
and submitted the deck extension proposal alongwith structural
feasibility study report for SCA platform by its letter No. L-1362 dated
09/06/2015 (C-52) in which the Claimant admitted that certain
dimensions were missing and the proposal was based on certain
assumptions…
78. On the contrary, what is contended in paragraph 41 of the
Written Submissions of ONGC is as under:
41. It is pertinent to highlight that the third survey was conducted due to
the lapse on the part of the Respondent in not providing a hazard
identification report as well as giving alternative locations which was
mutually agreed upon during the HAZID study. (309/181-Petition) . The
same therefore made the third survey necessary and crucial.
79. Thus, what is pleaded in paragraph 36 of the Statement of
Defence is that the third survey was required to be conducted on account of
non-provision of data on alternative locations. Statement of Defence
admits that the agreement for provision of data on alternate locations was
identified during HAZID/HAZOP meeting. Petitioner has thus clearly
twisted its stand before this Court by falsely contending that there was
lapse on the part of the Respondent in not providing hazard identification
report. What is alleged to be not provided in HAZID/HAZOP meeting is
“data on alternative locations” and not “hazard identification report”. This
Court does not appreciate twisting of its stand by the Petitioner in this
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regard. Thus, the words “a hazard identification report” are clearly added
by way of afterthought in the Written Submissions, which was not the
pleaded case in the Statement of Defence.
80. So far as reliance on clause 5.3.1 enabling ONGC to seek
further specifications is concerned, the Arbitral Tribunal has arrived at a
factual conclusion that there was no practical need to reassess the
infeasibility of southern side by way of a third survey. The Tribunal has
noted the authority vested in favour of ONGC in demanding the third
survey coupled with responsibility of contractor to conduct the same. The
Tribunal has however held that ONGC cannot be permitted to direct
multiple surveys without the necessity. Though it is sought to be
contended that third survey was conducted to ensure proper and adequate
execution of the works, no material is placed before me to conclude so.
Therefore, reliance by Petitioner on clause 5.3.1 of the contract is
misplaced.
81. ONGC’s contention of verifying the actual parameters by
which Respondent was obliged to finish the work without cost/time impact
on it again appears to be completely misplaced. It has come on record that
the third survey was directed to be conducted after ONGC had already
approved the proposed drawings for deck extension on east side and had
merely suggested installation philosophy by conduct of second survey.
Despite this, ONGC suggested the alternative of executing the deck
extension on south side, which was already ruled out in the first survey. It
therefore cannot be contended that the third survey was necessary to verify
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the actual parameters on the basis of which Respondent was to finish the
work without cost/time impact on ONGC. I am therefore not inclined to
interfere in the award of element of claim relating to the third survey.
82. Coming to the next element of claim for installation
philosophy, it is seen that the claim was raised essentially on account of
Petitioner changing the installation philosophy (for reduction of shutdown
duration) at the last moment when Respondent approached the SCA
Platform for rerouting HP and LP flare headers on 8 November 2016. The
installation philosophy of rerouting HP and LP flare headers first was
submitted by Respondent to ONGC on 25 February 2016. ONGC had time
from 25 February 2016 till 8 November 2016 to suggest changes in the
installation philosophy. However, sudden change in installation philosophy
was directed by ONGC, which has given rise to claims towards re-
engineering, additional material and additional time spent for rerouting
HP and LP flare headers. The Tribunal has allowed claims only in respect of
additional material and additional time of 11 days rejecting part of the
claim towards re-engineering.
83. Petitioner has sought to make out a case of perversity and
conflict with public policy contending that the Tribunal did not appreciate
the reasons for changing the installation philosophy which drastically
reduced the shutdown time from 8 days to mere 24 hours. Reliance is
placed on clause 2.3.4.2 in support of the contention that final decision
with respect to shutdown duration was with Petitioner. Reliance is also
placed on clauses 2.3.1.2 and 2.3.1.3 to suggest that Respondent was aware
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of risks, contingencies and circumstances affecting its obligations and
responsibilities under the Contract and when read together, the two
clauses make it clear that both parties had to endeavour to reduce the
shutdown time as much as possible and that changes made in the plans
were required to be followed by Respondent within the initial lump sum
consideration.
84. Petitioner’s authority to change installation philosophy or its
objective behind changing the same (reduction of shutdown time) cannot
be disputed. No doubt, the change in philosophy resulted in reduction of
shutdown time from 8 days to 24 hours. The issue however is whether
Petitioner was justified in changing the installation philosophy at the last
moment. This aspect is conveniently ignored by the Petitioner-ONGC. As
observed above, the installation philosophy was provided to the Petitioner
more than four months in advance and there is no justification as to why
no changes in the philosophy were suggested until Respondent arrived at
the site for execution of the work. The new rerouting process (due to
change in installation philosophy) entailed procurement of additional
material and spending of additional time of 11 days of marine spread to
perform the work. Both procurement of additional material as well as
requirement of additional time are certified by Petitioner’s agency viz. ABS.
Considering this position, I do not find that findings recorded by Arbitral
Tribunal qua the element of Claim No.3 relating to change in installation
philosophy to be conflicting the public policy doctrine.
85. The contention that Claim No. 3 is barred by limitation does
not appeal to this Court. It is contended by the Petitioner that the claim
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was raised on 30 November 2016 and was rejected by the Petitioner on 18
January 2018. However, there is no material on record to indicate that the
claim was actually rejected on 18 January 2018. However, as per clause
8.1.1.7(h) of GCC, in the event of dispute as to whether work is a variation
or not, Respondent was to perform the work and the cost effect was to be
recorded. The work was completed in April/May 2017 and the claim was
finally rejected on 21 May 2019, which is clear from ONGC’s letter dated 21
May 2019 (Exhibit-C69). Since arbitration is invoked on 28 December 2021,
the claim is filed within limitation. Even otherwise, the Tribunal is justified
in excluding COVID-19 pandemic period from 15 March 2020 to 28
February 2022. The plea of limitation sought to be raised on behalf of
Petitioner is thus totally misplaced.
86. Thus, Award of elements of claims towards wasted expenditure
on third pre-engineering survey, additional material utilized and additional
time required on account of change in installation philosophy totally
aggregating USD 2,128,331.08/- does not warrant any interference in
exercise of jurisdiction under Section 34 of the Arbitration Act.
C LAIM N O .4 – I NTRUDER D ETECTION CUM D ETERRENCE S YSTEM (IDDS)
87. Award of this claim is mainly sought to be contested by Mr.
Behramkamdin, who has preferred to change the order of claims in his
written submissions and Claim No.4 figures at the top of his written note of
submissions indicating that emphasis in the Petition is mainly on award of
Claim No.4. One of the facilities required to be installed while carrying out
the work of redevelopment of Mumbai High South Field was installation of
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Intruder Detection cum Deterrence System (IDDS). For augmenting
security of the existing offshore installations, ONGC decided to install
High-Volume Long-Range (HVLR) system as first line of intruder
deterrence system. It was decided to provide HVLR system alongwith
Intruder Protection Doors (IPDs) and high-resolution video cameras at
MHN complex and IC complex of Mumbai High North and South
respectively. It was decided to install HVLR monitors and IPDs at access
locations of all boat landings and bridge-connected platforms of those
complexes.
88. HVLR is similar to those used by police to disperse mobs. Thus,
high-volume and long-range foam and water was to be used for deterring
an intruder attempting to enter at MHN complex of Mumbai High North or
IC complex of Mumbai High South. The claim towards IDDS arose
essentially on account of ONGC requesting particular specifications for
installation of IDDS and the issue before the Tribunal was whether certain
requests made by ONGC constituted additional scope of work or not.
89. Respondent carried out IDDS Survey-I from 11 August 2015 to
19 August 2015 at IC complex and from 31 August 2015 to 9 September
2015 at the MHN Complex. During the course of the survey, ONGC made
certain requests in relation to IDDS which included:
a. Using High-Volume Long-Range foam-cum-water monitor for both
intruder and fire protection,
b. High-Volume Long-Range foam-cum-water monitor to cover escape
path,
c. Intruder protection door to be operable remotely,
d. For MHN Complex, High-Volume Long-Range foam-cum-water monitor
to cover entry points at jacket level, and
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e. For MHN Complex, High-Volume Long-Range foam-cum-water monitor
to be connected to both firewater headers.
It appears that in the meeting held on 11 May 2016, ONGC dropped most of
the requirements admitting that the same were not envisaged in the
contract scope.
90. It is not necessary to go into minute details of Claim No. 4 and
suffice it to observe that Claim No. 4 essentially arose because of
Respondent fulfilling two demands of ONGC viz.:
a. High-Volume Long-Range foam-cum-water monitor to be
connected to both firewater headers, and
b. Deck extensions for foam tanks which led to structural steel
tonnage exceeding the cap set in the Contract.
91. Respondent claimed that the above-quoted two demands of
ONGC constituted Change Order since Respondent was required to spend
more time and cost during offshore installation than envisaged. On the
other hand, ONGC contends that the specifications of IDDS were broadly
spelt out in the contract and since a lump sum bid was submitted for entire
scope of work, Respondent was not entitled to raise a claim for any
additional elements while installing the IDDS. Respondent raised a claim
of USD 8,056,125/- on 25 May 2017 which was rejected by ONGC on 18
January 2018.
92. The Arbitral Tribunal took up two issues for consideration viz.
i) whether the work in question constituted additional work, and ii) if it was
indeed an additional work, whether adequate proof was produced by the
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Respondent to support the valuation of claim / elements of claim. After
considering the contractual terms, the Arbitral Tribunal has concluded that
the contractual intention was only to provide single firewater header
connection and that there was no requirement or expectation of providing
connection to two firewater headers. This conclusion is drawn by the
Arbitral Tribunal on the basis of ‘Note’ to Section 2.2.7.2 of volume II of the
Bidding Documents and also on account of ONGC approving for
construction the piping and instrumentation diagram on 3 December 2015
with a single connection. Therefore, the Arbitral Tribunal held that ONGC’s
instructions for connection of HVLR to both firewater headers constituted
additional work and was therefore a variation/Change Order under Clause
8.1.1.1 of the GCC. The Tribunal has therefore upheld the entitlement of
Respondent for additional cost of material and also for additional offshore
installation time associated with providing additional connection. Arbitral
Tribunal has concluded in para 446 and 447 as under:
446. The Tribunal is of the view that connecting the HVLR to both
firewater headers was never a contractual requirement, as the HVLR was
to be used for intruder deterrence or firefighting. This is borne out by the
Notes to Section 2.2.7.2 of Volume II of the Bidding Documents, and also
the fact that ONGC approved for construction the Piping and
Instrumentation Diagrams on 03.12.2015 with a single connection.
Therefore, the Respondent's instructions to the Claimant to connect the
HVLR to both firewater headers constitutes additional work, and clearly
constitutes a variation or Change Order under Clause 8.1.1.1 of the GCC.
447. By extension, the Tribunal is of the view that the Claimant is
therefore entitled to the additional cost of material and also to the
additional offshore installation time associated with providing this
additional connection.
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93. The Arbitral Tribunal has thereafter held that claim for
additional material is certified by ONGC’s certification agency-ABS and
was supported by Purchase Orders and inward material inspection reports.
It appears that for accommodating the foam tanks, Respondent was
required to create deck extensions, and this again is considered as a change
order in para 449 of the Award, which reads thus:
449. The Tribunal also notes that the ONGC's instructions to create deck
extensions for the foam tanks clearly amounted to a Change Order, which
is admitted as much by ONGC itself in the minutes of meeting held on
11.05.2016, which records that "Deck extensions, that are not envisaged in
contract scope, are required at 18 locations." (emphasis supplied). Having
conceded that these deck extensions are not envisaged in the contract
scope, the Tribunal is of the view that the Respondent must therefore
treat these instructions as being a change order.
94. The Arbitral Tribunal has accordingly awarded sum of USD
141,255.93/- in favour of Respondent. The Tribunal has thereafter
considered elements of claim for additional structural steel by awarding
USD 84,168.70/- for additional structural steel used in deck extension
installed for IDDS. So far as additional offshore installation time is
concerned, the Tribunal has ruled that offshore installation was increased
by 40 days as per ABS and awarded USD 7,600,000/- in favour of
Respondent. The Tribunal has thereafter considered elements of claim for
additional time spent for additional surveys and has awarded USD
186,441.52/- to the Respondent. The Arbitral Tribunal has not awarded the
element of claim towards multiple rounds of re-engineering allegedly
performed by the Respondent.
95. This is how the Arbitral Tribunal has awarded the claim in sum
of USD 8,011,865.15/- towards Claim No. 4.
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96. Award of Claim No. 4 by the Arbitral Tribunal is sought to be
contested by the Petitioner by submitting that Respondent was awarded a
turnkey contract providing broad specifications for execution of work and
submitted its bid of USD 1,200,000/- and INR 30,000,000/- for materials
and USD 430,306/- and INR 10,599,388/- for the services. It is therefore
contended that since IDDS is a subject matter of contract and since
specifications for the same were provided in bidding documents ( Clause
2.1.1.1 of GCC and 2.7.1 of Bidding Documents ), the Respondent was not
entitled to claim for any additional cost in relation to installation of IDDS.
No doubt, clause 2.1.1 of the GCC included in the scope of work the facility
of “installation of IDDS at MHN complex and IC complex”. In Clause 2.2.7.3
of GCC of the Bidding Documents, the broad specifications for High-
Volume Long-Range foam-cum-water monitor (HVLR) were indicated as
under:
2.2.7.3 Broad Specifications
The broad specifications of HVLR are given below -
• Each HVLR monitors shall be capable of discharging 500 USGM
(113.5m3/hr) water with single nozzle at inlet pressure of 7.0 kg/cm2g.
• The HVLR monitor shall be designed for mounting on stand post of
elevated platform at fixed location.
• The HVLR monitor shall have traversing mechanism to give 340 degree
in either direction in horizontal plane and +90 degree and - 15 degree in
vertical plane.
• All the operations of HVLR monitor viz. horizontal movement, vertical
movement, operation of inlet valve & foam inducting system, etc., shall
be possible manually from monitor (without use of power) as well from
remote using remote control panel. The remote control system shall be
electrically operated.
• HVLR monitor shall be designed for corrosive salt laden marine
environment.
• HVLR monitor shall be selected meeting requirement of as per
applicable code & standard.
• Motor of HVLR monitor shall be selected meeting requirement of ONGC
Func. Spec. 4008.
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• The typical specifications of HVLR monitor are placed at ANNEXURE-1.
• The broad specifications of video cameras are given below -
• All the operation of the high resolution video cameras viz. Horizontal
movement, vertical movement, zoom in/out, etc. shall be possible from
remote using remote control panel and shall be integrated with that of
HVLR monitor.
• The video cameras shall have traverse mechanism to give 340 degree in
either direction in horizontal plane and +90 degree and -15 degree in
vertical plane.
• The video cameras shall be selected meeting requirement of ONGC
Functional Spec. 4032
97. The IDDS specifications were spelt out in Volume II of the
Bidding Documents at Section 2.2.7, which are as under:
2.2.7.1 BACKGROUND
For augmenting security of its existing offshore installations, it has been
envisaged to install High Volume Long Range Foam-cum-Water Monitor
(HVLR) as first line of intruder deterrence system. HVLR system along
with Intruder Protection Doors & high resolution video cameras shall be
provided at MHN complex and IC Complex of Mumbai High North &
South respectively. HVLR monitors and Intruder Protection Doors will be
installed at access location of all boat landings of bridge connected
platforms of these complexes.
2.2.7.2 Broad Scope of Work
The broad scope of work shall include -
The broad scope of work shall include -
i) Intruder protection system through provision of door at boat landing on
NA, BHF, MNW, MNP & MLQ Platforms (MHN Complex)
ii) Intruder protection system through provision of door at boat landing
on ICD, ICP, ICW, ICG & ICP-R Platforms (IC Complex)
iii) Intruder protection system through provision of HVLR along with high
resolution (night vision) video cameras at boat landing on NA, BHF, MNW,
MNP & MLQ Platforms (MHN Complex)
iv) Intruder protection system through provision of HVLR along with high
resolution (night vision) video cameras at boat landing on ICD, ICP, ICW,
ICG & ICP-R Platforms (IC Complex)
v) Infra-red (IR) based Intruder detection system on NA, BHF, MNW, MNP
& MLQ Platforms (MHN Complex)
vi) Infra-red (IR) based Intruder detection system on ICD, ICP, ICW, ICG &
ICP-R Platforms (IC Complex)
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vii) Intruder Monitoring System on ICW Platform (IC Complex) & MNP
Platform (MHN Complex) (Refer NOTE-1)
NOTE-1 -ICW Platform (IC Complex) shall have integrated Intruder
Monitoring System for RS-20 Platform (New) as well as for intruder
detection-cum-deterrence system to be installed on ICD, ICP, ICW, ICG &
ICP- R Platforms
...
Notes:
• Preference shall be given to firefighting over the HVLR operation
and both the systems will not be operated simultaneously.
• HVLR operation is considered for maximum 2 monitors at a time.
• Construction of elevated platforms at spider deck near access location of
boat landing for installation of HVLRs and high resolutions video cameras
- one on each boat landing. Access platform shall also be provided around
HVLRM and video cameras for maintenance purpose.
• Procurement, installation & commissioning of 18 nos. Remote
controlled operated High Volume Long Range Foam-cum- Water Monitors
(HVLRs) along with associated piping & instrumentation.
• Procurement, installation & commissioning of18 nos. High resolution
day/night short range remote control operated video cameras for
detection of intruder and automatic actuation of HVLR on detection of
the same.
• Procurement & installation of 18 nos. Intruder Protection Doors at each
access point from the boat loading.
• Modification/extension of existing fire water network and routing of the
same for hook up with HVLRs
• Installation of HVLRs related control and monitoring system in
ICP/MNP control room for remote operation of the same. PLC based
remote control system along with HMI & Joystick shall be provided for
remote monitoring & control of the HVLR system
• Installation, routing and hook-up of electrical and instrumentation
cables between new facilities (i.e. HVLRs & video cameras) and existing
electrical and instrumentation system.
• Integration of HVLR operation & control logic with existing fire water
system. Provision of hooter/alarm in case of actuation of HVLR to
sensitize/alert on-board personal.
(emphasis supplied)
98. It appears that ONGC envisaged modification and extension of
firewater network and routing the same for hookup with HVLR as a part of
broad specification. Thus, under the first Note to clause 2.2.7.2 of the
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Bidding Documents, it was specifically provided that preference was to be
given to firefighting over HVLR operations and that both systems were not
to be operated simultaneously. On the other hand, ONGC has relied upon
clause 5.3.1 of GCC in support of its contention that ONGC had full power
and authority to supply to the contractor or instruct it to prepare further
specifications or drawings or job instructions necessary for providing
adequate execution of the works in accordance with the contract and the
costs of such work was deemed to be already included in the contract price.
Clause 5.3.1 provides thus:
The Company's Representative on behalf of the Company shall have full
power and authority to supply to the Contractor or to instruct the
Contractor to prepare further specifications, drawings or job instruction
necessary for the proper and adequate execution of the Works in
accordance with the Contract and the cost of such Work shall be deemed
to be already included in the Contract Price.
99. The Respondent, however, contends that clause 5.3.1 would
operate only when instructions given by ONGC were for proper and
adequate execution of works in accordance with the contract. Respondent
contends that the instructions in the meeting dated 11 May 2016 to
connect HVLR to both firewater headers were not for proper or adequate
execution of work (methodology for carrying out the work) but were in fact,
instructions leading to clear addition in scope of work. As observed above,
the Tribunal has held that connecting HVLR to both firewater headers was
never a contractual requirement. This conclusion is drawn on the basis of
the Notes to clause 2.2.7.2 of Volume II of Bidding Documents and on
account of ONGC’s conduct in approving the diagrams for construction of
piping and instrumentation with a single connection. Thus, the Tribunal
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has recorded a finding of fact, both upon interpretation of contractual
covenants and conduct of ONGC that original contractual requirement was
only to connect HVLR to single firewater header. This Court cannot
interfere in this finding of fact. The Tribunal’s interpretation of Notes to
Section 2.2.7.2 of the Volume II of Bidding Documents is a plausible
interpretation and it cannot be contended that interpretation is such that
no fair-minded person would ever draw the same. The Tribunal has also
rightly relied upon ONGC's own conduct in approving the construction of
piping and instrumentation diagrams on 3 December 2015 with a single
firewater header connection.
100. Petitioner cannot be permitted to add additional work under
the guise of power conferred on ONGC's representative to supply/instruct
to prepare further specifications drawings or job instructions. The power to
demand further specifications or drawings or to give job instructions was
limited only for proper and adequate execution of work ‘in accordance with
contract’. The moment it is found that a particular work is over and above
the scope of contract, the same would amount to a Change Order. I am
therefore not impressed by submissions canvassed on behalf of ONGC that
all requirements could not have been a part of Bidding Documents and that
the narrower requirements could be specified only after conduct of surveys.
The Tribunal has not committed any error by going into minute details of
IDDS for holding that connecting HVLR to both firewater headers was
never a contractual requirement.
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101. So far as deck extension required to accommodate foam tanks
is concerned, it is contended on behalf of the Petitioner that deck
extensions were also within the broad scope of work as contained in clause
2.2.7.3 of Section 2A (Description of Work) Part IV of the Bidding
Documents. It is contended that the need for deck extension is an offshoot
of broad scope of work. I am unable to agree. Clause 2.2.7.3 did not include
the work of deck extensions for accommodating foam tanks. ONGC
instructed Respondent to create deck extensions for foam tanks. It appears
that ONGC admitted in minutes of meeting dated 11 May 2016 that the
work of creation of deck extensions was not envisaged in the contract
scope. This is clear from following part of minutes of meeting held on 11
May 2016:
"SKHL informed that during survey it was observed that there is no space
for placing Foam Tanks. Deck extensions, that are not envisaged in
contract scope , are required at 18 locations. ONGC Asset informed that
SKHL to depute their representatives for joint survey along with Asset
representative to identify space for Foam Tanks with the objective of
minimizing additional requirement of Deck Extensions at platforms. SKHL
agreed for the same."
(emphasis supplied)
102. Having admitted that the work of creation of Deck Extensions
was not in the contract scope, ONGC cannot now turn around and contend
that the need for Deck Extensions was an offshoot of the broad scope of
work mentioned. In view of the admission given in minutes of meeting held
on 11 May 2016, it was not necessary for the Respondent to produce any
additional evidence or material to prove that the work of Deck Extension
amounted to Change Order. I am therefore of the view that Petitioner has
failed to make out any of the enumerated grounds under Section 34 of the
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Arbitration Act in respect of award of claim of USD 141,255.93/- for
elements of providing HVLR to both firewater headers and additional work
of deck extension to accommodate the foam tanks.
103. So far as the elements of additional structural steel and
additional offshore installation time are concerned, no submissions are
canvassed by Mr. Behramkamdin and therefore award of sums of USD
84,168.70/- and USD 7,600,000/- for those elements respectively cannot be
found fault with.
104. So far as the last element of cost incurred due to time spent on
additional surveys, Mr. Behramkamdin has submitted that carrying out pre-
engineering surveys was part of scope of work and he has relied upon
clause 5.4.1 of GCC which reads thus:
5.4.1 Pre-Engineering Survey & Pre-Construction/Pre-Installation
Surveys
i) Pre-Engineering Survey
The Contractor shall at his own cost independently carry out pre-
engineering survey of offshore site with his survey equipment like side
scan sonar, multi beam survey and sub-bottom profiler etc. to verify the
locations/ obstructions (if any) of the proposed facilities mentioned i the
scope of work. Such verification shall include but not be limited to
verification of site conditions i.e. water depth, seabed topography at the
proposed location of Well Platforms as well as launch/ installation site etc.
Contractor shall also carry out pre-engineering survey for modifications
on existing platforms. Pre-engineering survey shall e carried out well
before design engineering. Details provided in the Bidding Documents are
only indicative and in the event of some deviations observed by the
Contractor the same shall be discussed with Company's Representative
and mutually agreed. Contractor shall be fully responsible to complete the
Work as per actual parameters found during the survey without any time
and cost effect to the Company other than that indicated in succeeding
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paragraph. However, in case of substantial difference, if any, between the
actual parameters and those given in the Survey details of Bidding
Documents related to sub-soil conditions, suitable time (if it affects
critical path) and cost effect will be compensated by the Company.
105. Relying on clause 5.4.1, it is contended by Mr. Behramkamdin
that all costs of carrying out surveys were to be borne by the Respondent
and that the lump sum price of the contract quoted by Respondent was
inclusive of cost of carrying out such surveys. Once again, the plea of
provision of broad specification in Bidding Documents is raised in support
of the contention that the exact specifications could be narrowed down
only after site surveys and detailed engineering.
106. However, as observed above, while dealing with Claim No.3
(Cost of third Pre-Engineering Survey for Deck Extension of SCA platform
on eastern side), this Court has upheld the award of claim towards cost of
survey if same is found to be unnecessary. Thus, clause 5.4.1 of the GCC
cannot be relied upon when a particular survey is not considered necessary.
IDDS survey II in April 2016 was undertaken to check the feasibility for
additional requirements and it is an admitted position that most of those
additional requirements were dropped later in the meeting held on 11 May
2016, citing that the same is not envisaged in the contract scope or same is
not envisaged in the scope of work. This conduct of IDDS Survey-II is
found to be unnecessary as the same was conducted for checking the
feasibility of additional requirements and it is an admitted position that
those additional requirements were beyond contract scope.
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107. Similar is the position of IDDS Survey III carried out in June
2016 undertaken for minimising Deck Extension for the foam tanks. I have
already upheld the findings of the Arbitral Tribunal that Deck Extensions
for accommodating foam tanks amounts to additional work or Change
Order. Thus, IDDS Survey III is carried out for examining the feasibility of
work beyond contract scope. Thus, it is sufficiently established that IDDS
Survey II and III are carried out beyond contract scope. Arbitral Tribunal
has awarded USD 186,441.52/-, which is certified by ABS – ONGC’s
Certification Agency. The contention raised by Mr. Behramkamdin that the
findings of the surveys resulted in reduction of scope of work of
Respondent in meeting held on 11 May 2016 is completely misplaced for
the reasons recorded above. The meeting of 11 May 2016 resulted in ONGC
dropping most of the requirements as the same were not envisaged in the
contract scope. Thus, the surveys did not result in reduction of scope of
work envisaged in the contract. The IDDS Survey II was carried out for
examining feasibility of execution of work beyond the scope, which was
later dropped in meeting held on 11 May 2016. I therefore do not find any
element of conflict with public policy of India in the Tribunal awarding
claim for surveys in the sum of USD 186,441.52/- in favour of the
Respondent.
108. Mr. Behramkamdin has also contended, without prejudice to
his overall objection to sanction of Claim No.4, that Petitioner had asked
for particulars and documents of additional work done with respect to
IDDS on multiple occasions and that no documents were produced by the
Respondent. It is contended that the Tribunal has ignored this aspect and
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that Respondent couldn’t prove the use of additional manpower to
complete the works. Reliance is placed on ONGC’s letter dated 1 October
2021 calling for details in support of multiple pre-engineering surveys and
engineering surveys, purchase orders and invoices for material for
additional firewater connections and details of materials used for
additional piping, breakdown of costs and calculations. However, the
Tribunal has recorded a finding that valuation of additional material used
for connecting HVLR to both firewater headers has been certified by
ONGC’s certification agency - ABS. The Tribunal has also taken into
consideration the purchase orders and inward material inspection reports.
So far as additional structural steel used for deck extension for foam tanks
is concerned, the same is also certified by ABS. Similar is the position in
respect of 40 additional days for offshore installation, which are again
certified by ABS. The cost of IDDS survey II and III are also certified by ABS.
Therefore, the dispute with regard to quantum of claim sought to be raised
on behalf of Petitioner-ONGC is clearly misplaced. The Tribunal is the best
judge of quality and quantity of evidence before it. This Court cannot sit as
an appellate court by holding that material produced before it was not
sufficient for recording a particular finding.
109. Considering the above position, it is seen that the Petitioner
has not been able to make out any valid ground to interfere in award of
Claim No.4.
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C LAIM N O .5 – S TANDBY C HARGES F OR SK900 O N A CCOUNT O F R IG GD
HAAYA
C
110. Under the contract, Respondent was supposed to perform pile
remedial and clamp installation work at D1-C Platform. For carrying out
pile remedial works at D1-C platform, Respondent had mobilised its barge
‘SapuraKencana 900’ (SK 900) along with its anchor handling and related
marine spread at D1-C location. As per the agreed planning package, the
work was to be executed during 1 April 2017 to 30 April 2017 (30 days).
However, it appears that since the Barge SK900 had finished all other work
on the project and was available in January 2017 for carrying out the pile
remedial work at D1-C platform, Respondent decided to prepone the work
schedule. Accordingly, Respondent requested for preponement of the work
schedule to 15 January 2017 to 29 January 2017. ONGC acceded to the
request of Respondent and preponed the schedule without communicating
interface with any other work or vessel at the site. However, during the
course of interface meeting on 11 January 2017, i.e., 4 days prior to
commencement of the work by Respondent, ONGC informed Sapura that
the Rig GD Chaaya was carrying out drilling operations at D1-C platform.
According to the Respondent, because of the flaring activity caused by the
Rig GD Chaaya, it was unsafe to execute the work from onboard SK900.
Respondent contended that SK900 could not commence the work, and it
suffered standby as it could not be diverted to any other work front. For
idling of SK900, Respondent raised claim towards compensation of USD
2,638,229.18/- as per the day-rates in the Contract, Item III, Annexure C.
ONGC rejected the claim on 18 December 2017.
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111. The Arbitral Tribunal has awarded the claim towards standby
charges of SK900 for 5.5 days on account of presence of Rig GD Chaaya at
D1-C Platform in sum of USD 2,638,229.18/- along with GST.
112. Award of Claim No.5 is contested by ONGC by contending that
the preponement of the work schedule from 1 April 2017 - 30 April 2017 to
15 January 2017 - 29 January 2017 was agreed upon by ONGC subject to
carrying out simultaneous operations (SIMOPs) . Thus, it is ONGC’s case
that Respondent was made fully aware of the presence of the Rig GD
Chaaya at D1-C platform and that preponement of work schedule was
approved by ONGC subject to condition of Respondent’s ability to perform
SIMOPs. ONGC contends that Respondent had agreed to SIMOPs by it
while the Rig GD Chaaya continued performance of drilling activities at
D1-C platform.
113. Petitioner-ONGC has strenuously relied upon letter dated 13
January 2017 in support of its contention of Respondent being informed
about drilling activities in progress by the Rig GD Chaaya. The letter dated
13 January 2017 refers to the Record Notes of the meeting held on 13
January 2017 and in the letter, it was recorded that ‘ it has been agreed in the
meeting to grant access to SK900 at D1-C platform with directions to perform
SIMOPs with rig GD Chaaya ’. Point No. 1 and 2 of Record Notes dated 13
January 2017 are as under:
1. Deployment schedule of SK900 under MHSRD-III Project and scope of
work was presented by PC of MHSRD-III Project. It was discussed that
tentative schedule of deployment is for the period about 14 to 15 days
starting from 15.01.2017. The schedule submitted by SKHL is attached
herewith for ready reference of all.
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2. Drilling executives discussed the work over jobs. It was brought out that
cement drilling work is completed, however during this period activities
such as perforation of well, flaring through rig flare boom, well
stimulation jobs, etc may be required to be carried out at rig GD Chaaya
during this period. SIMOPs shall be required during this period. Prior
program of drilling rig and SK900 shall be discussed at site in advance to
avoid any standby.
(emphasis supplied)
114. Petitioner accuses the Tribunal of not considering letter dated
13 January 2017 while recording finding that Petitioner failed to inform
Respondent of presence of Rig GD Chaaya.
115. Perusal of findings recorded by the Arbitral Tribunal while
deciding Claim No.5 would indicate that it has rejected the defence of
conditional preponement of schedule sought to be raised by Petitioner-
ONGC. The Tribunal has held that Petitioner provided no evidence that
preponement of schedule was conditional or that the conditions were in
fact recorded. The Tribunal has held in para-517 of the Award as under:
517. The Tribunal notes that while ONGC has insisted that it
imposed conditions on the preponement of the schedule, when it
was asked to show proof for the same, it was unable to do so. Pointed
questions directed at the Respondent in the course of sharing document
production requests under the Redfern Schedule were met with the
response from the Respondent that "Contract conditions, correspondence
and minutes of meeting on the subject are part of the compilation
produced by Claimant, and the same will be pointed out at the time of
hearing." In the course of the hearing, however, no such documents,
minutes or correspondence to support this position were pointed out in
the compilation by the Respondent. Indeed, the Respondent provided
no evidence that the preponement of the schedule was conditional,
and that these conditions were in fact recorded .
(emphasis supplied)
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116. The Arbitral Tribunal has thereafter taken note of minutes of
Interface Meeting held on 11 January 2017 when Respondent was made
aware of presence of Drilling Rig GD Chaaya at D1-C Platform. The
Tribunal has however held that Respondent ought to have been informed
about presence of Drilling Rig GD Chaaya when the work schedule was
agreed to be preponed. More importantly, the Tribunal has held that ONGC
did not provide information about presence of Rig GD Chhaya at D1-C
Platform on 4 January 2017 in the offshore schedule against the entry ‘SK
900’ ‘D1C Clamp Installation’ ‘D1C Pile and Grouting’. The information was
given for the first time on 11 January 2017. This is clear from the following
findings at para-518 of the Award:
518. The Respondent attempts to advance an argument, relying on
Clauses 5.3.5 and 5.23 of the GCC, that Sapura had to coordinate / liaise /
interface ·with other contractors and that no time and cost could be
claimed for Sapura's failure to do so. However, it is clear from the
Respondent's actions and communications that it was the Respondent
that had failed to coordinate with the Claimant properly - it failed to
inform Sapura of the presence of drilling rig GD Chaaya. There was clearly
an opportunity to do so when Sapura's schedule to work on D1-C Platform
was already agreed to be the window between 15.01.2017 to 29.01.2017,
but ONGC did not provide any such information about the presence of
drilling rig GD Chaaya. ONGC also did not provide this information on
04.01.2017, as shown in the Offshore Schedule against the entry "SK900"
"D1 C Clamp Installation" "D1 C Pile and grouting", which does not specify
any interface with Rig GD Chaaya in the column dealing with "Interface
With Other Contractor". The first time ONGC informed Sapura of this
interface was as late as 13.01.2017.
117. The Tribunal thereafter proceeded to draw adverse inference
against ONGC for presuming that no condition was imposed of SIMOPs
when the date of the works at D1-C Platform was mutually preponed. The
Arbitral Tribunal has held in para 519 as under:
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519. In the circumstances, the Tribunal is inclined to agree with the
Claimant that adverse inference ought to be drawn as against ONGC; and
in the absence of evidentiary support, the Tribunal presumes that there
was in fact no condition imposed of SIMOPs on Sapura when the date for
works at D1-C platform was mutually preponed.
118. Thus, adverse inference is drawn by the Arbitral Tribunal with
regard to absence of imposition of condition of SIMOPs when mutual
preponement took place in respect of the work schedule. Before me,
Petitioner relies on letter dated 13 January 2017 in support of its
contention of imposition of condition of SIMOPs. However, the said letter
was issued 2 days prior to the commencement of the work on 15 January
2017. Thus, letter dated 13 January 2017 does not render erroneous the
finding of Arbitral Tribunal in para 517 and 519 regarding absence of
SIMOPs condition while approving preponement of work schedule.
119. Though letter dated 13 January 2017 does not bear mention in
Tribunal’s findings qua Claim No.5, it has taken note of the minutes of
Interface Meeting held on 11 January 2017 when Respondent was informed
of presence of Rig GD Chaaya at D1-C platform. After being informed about
presence of the Rig GD Chaaya at D1-C Platform on 11 January 2017, it
appears that Respondent did ultimately agree to perform SIMOPs at D1-C
platform despite noting presence of the Rig GD Chaaya. The Tribunal has
held in para 520 of the Award that Respondent was forced to agree for
performance of SIMOPs on 11 January 2017. It is held in para 520 of award
thus:
520. Since the drilling rig GD Chaaya was to carry out drilling operations,
and Sapura was, perforce, required to agree to SIMOPS on 11.01.2017. This
is buffered by the remarks made by CW-1 in his AOE, who explains that
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this is because SK900 had completed all of the scope under the Contract
and was expected for other jobs. Thus, there was no other work front
where SK900 could be diverted. During SIMOPS, SK900 suffered idling.
This is because the flaring activity caused by GD Chaaya made it unsafe
for executing work from onboard SK900. As SK900 could not be diverted to
another work front, for this idling, on 25.05.2017, the Claimant claimed
compensation as per the day rates in the Contract, Item III, Annexure C.
120. Mr. Behramkamdin has strenuously contended that the letter
dated 13 January 2017 renders the above finding of the Tribunal about
Respondent being forced to agree for SIMOPs completely perverse and on
that count, award of Claim No. 5 must be set aside.
121. On 11 January 2017, Interface Coordination Meeting was held
by ONGC with all its contractors. In that meeting, the schedule of
Respondent on various workfronts in respect of MHSRD-III project was
submitted in OPMAC portal of ONGC. In that schedule, deployment
programme of Respondent’s Barge SK900 for clamp installation, pile and
grouting of D1-C platform was indicated as from 16 January 2017 to 30
January 2017. At the end of the schedule, following interface between Rig
GD Chaaya and vessel SK900 was reflected:
Interface : Interface reported at D1C platform between Rig GD Chaaya and
Vessel SK-900. Contractor and Project group were advised to discuss the
same with Drilling Services for exploring possibility of SIMOPS.
122. Thus, after indicating the interface between the Rig GD
Chaaya and the Vessel SK900, the minutes of meeting recorded the
directions given to Respondent and the project group to discuss exploring
the possibility of SIMOPs. Letter dated 13 January 2017 submitted by the
Respondent indicates that pursuant to the directions issued in Interface
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Meeting of 11 January 2017, discussions were held by Respondent with
representatives of ONGC on 12 January 2017. This is clear from the opening
sentence of letter dated 13 January 2017 which records that “ This has
reference to the above-referred subject and the discussions dated 12th Jan
2017 which CONTRACTOR's representatives had with COMPANY's
representatives from project team … ”. It appears that after holding
discussions on 12 January 2017, Respondent revised its previously approved
anchoring pattern for SK900 at D1-C platform to suit drill Rig GD Chaaya.
Respondent accordingly communicated to the Petitioner that it would
perform diving activities near D1-C platform and requested for six items
from ONGC’s Rig GD Chaaya for coexistence of Respondent’s barge and for
performance of unhindered operations. By letter dated 13 January 2017,
Respondent specifically requested Petitioner to provide necessary access to
its barge SK900 to work at D1-C platform as per the enclosed schedule.
123. The permission sought by Respondent by letter dated 13
January 2017 for grant of access to its Barge SK900 to perform work at D1-C
Platform was granted in the meeting held on 13 January 2017 subject to
adherence of various measures decided in the said meeting. One of the
measures was to have SIMOPs meeting on Rig GD Chaaya on 14 January
2017 before deployment of SK900 at D1-C location. It is not known
whether such meeting was held by the Respondent at the Rig GD Chaaya
on 14 January 2017. In the meeting dated 13 January 2017, the proposed
anchor pattern for SK900 at D1-C location and temporary schedule for
deployment of SK900 was also agreed to. The schedule of deployment of
SK900 agreed in the meeting more or less matched the schedule later
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presented by Respondent vide letter dated 13 January 2017. Letter dated 13
January 2017 reads thus:
Dear Sir,
This has reference to the above-referred subject and the discussions dated
12th Jan 2017 which CONTRACTOR's representatives had with
COMPANY's representatives from project team and RIG Move Cell
regarding the COMPANY's rig "GD CHAAYA" Deployed at D1-C platform.
For the first time, CONTRACTOR has been informed about the presence
of rig "GD CHAAYA" at D1-C location on 11th Jan 2017.
As informed in the interface meeting held in ONGC on 11th Jan 2017,
CONTRACTOR will be mobilising its barge "SapuraKencana 900" along
with its Anchor handling tug and related marine spread at D1C location
on 15th/16th Jan 2017 for the construction/ diving activities related to
pile remedial works at D1-C platform. This is in line with the Installation
work programme / plan, which CONTRACTOR has been submitted to
COMPANY every week, for the past 10 weeks. The barge "SapuraKencana
900" along with its complete marine spread is expected to complete its
activities at SHG platform on 15th Jan 2017 and will be, thereafter,
moving to D1C platform location for further works on 16th Jan 2017
morning. The detailed work schedule along with list of activities to be
performed is enclosed along with this letter in Annexure-1.
CONTRACTOR has revised its previously approved anchor pattern for
SK900 at D1-C platform to suit the drill rig's requirements. Same is
enclosed in Annexure-2.
CONTRACTOR's Installation barge involving "SapuraKencana 900° and its
associated spread will be performing diving activities near the D1-C
platform and the items listed below are required from its COMPANY's rig
"GD CHAAYA" for CONTRACTOR's barge to co-exist and perform
unhindered operations,
1. No Cement, powder and other fluid discharge from height at SK900
location. If required discharge to re-routed to East face of Platform or put
on hold for the duration of diving.
2. Fire water pumps/ Suction pumps to put on manual mode and advise
exact location and elevation of FWP to SK900 prior to commencing of
diving operations.
3. No overhead lifting in vicinity of Diving Operations.
4. Strictly no scaffolding / Tubular works at sides of the Rig.
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5. Any supply vessel, crew boat, Chopper landing at Rig to be informed to
SK900, SK1200 and SK900 as well and take approvals from Vessel Captain
prior arriving.
6. Have Communication with Vessel Master and OCS when
CONTRACTOR's vessels are at location.
CONTRACTOR requests COMPANY to provide necessary access to its
barge "SapuraKencana 900" along with its tugs and related marine spread
to work at D1-C Platform, as per the enclosed schedule. CONTRACTOR
will also give a 24 hour notice period prior deployment of its barge and
will perform SIMOPS exercise prior to start of actual operations at the rig
location.
Assuring you of our best service as always, we remain.
Thanks you and kind regards
For and on behalf of
SAPURAKENCANA HL SDN BHD
124. Thus, in its letter dated 13 January 2017, Respondent
suggested the modalities for conduct of SIMOPs at D1-C platform by
revising previously approved anchor pattern for SK900 at D1-C platform to
suit the drill rig’s requirements. In the letter dated 13 January 2017,
Respondent informed ONGC that SK900 and its associated spread would be
performing diving activities near D1-C platform and listed items were
required from ONGC Rig GD Chaaya to co-exist and perform unhindered
activities. The list contains six items as can be seen from above-quoted
portion. Respondent accordingly requested ONGC to provide necessary
access to its barge SK900 alongwith its tugs and related marine spread to
work at D1-C platform as per the enclosed schedule. Most importantly,
Respondent wrote that “ CONTRACTOR will give 24 hour notice period prior
deployment of its barge and will perform SIMOPS exercise prior to start of
actual operations at the rig locatio n”. The Letter dated 13 January 2017 was
received by ONGC after office hours after conduct of meeting for resolving
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interface issues in which Respondent’s representatives were also present.
ONGC’s letter dated 13 January 2017 indicates that the schedule and issues
pertaining to SK900 operations at D-1C location were also duly deliberated
in the meeting. The record notes of meeting held on 13 January 2017
clearly indicate that Respondent was clearly given idea about performance
of jobs relating to rig flare boom, well, stimulation job etc. It was agreed
that prior program of drilling rig and SK900 was to be discussed at site in
advance to avoid any standby. Detailed methodology was agreed in the
meeting for conduct of SIMOPs.
125. Perusal of Annexure 1 to letter dated 13 January 2017 (detailed
work schedule alongwith list of activities) indicates that activities such as
anchor setup, site preparation etc. were to be performed on 15 January
2017 and thereafter various other activities were to be performed from 16
January 2017 to 29 January 2017. The diving activities were to be conducted
st
from 15 January 2017 to 23 January 2017 in the 1 phase and thereafter on
nd
25 and 26 January 2017 in the 2 phase. Thus, after noticing presence of
Rig GD Chaaya and after being made aware of possible flaring activities,
Respondent still prepared a schedule of performance of work at the
platform by giving the details of various activities. It also revised its
previously approved anchor pattern for SK900 and indicated a fresh pattern
at Annexure 2 to letter dated 13 January 2017. This new pattern was
effected after noticing presence of drilling Rig GD Chaaya on D1-C
platform. Thus, it appears that the Respondent was fully prepared to
execute the work at D1-C platform from 15 January 2017 by factoring in
both presence as well as flaring activities of the Drilling Rig GD Chaaya.
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However, the Arbitral Tribunal appears to have ignored i) Respondent’s
letter dated 13 January 2017, ii) annexures enclosed to said letter, iii) ONGC
letter dated 13 January 2017, and iv) record notes of the meeting dated 13
January 2017.
126. Relying on letter dated 13 January 2017, it is contended on
behalf of ONGC that the Respondent had fair idea about flaring activity by
Rig GD Chaaya before it commenced SIMOPs at D-1C platform on 15
January 2017. Award of Claim No. 5 is thus sought to be questioned on the
ground of perversity.
127. In the light of the above discussion, the issue for consideration
is whether ignorance of some evidence by the Tribunal can be a valid
ground for setting aside the Award qua Claim No. 5. As held by the Apex
Court in Ssangyong Engg. (supra) and PSA Sical Terminal (supra),
ignorance of vital evidence by the Arbitral Tribunal would constitute the
vice of perversity and the decision being perverse would give rise to the
ground of patent illegality under Section 34(2A) of the Arbitration Act. If
the finding in the Award is perverse, the same does not constitute the
ground of conflict with the public policy of India. Perversity in the Award
constituting patent illegality is a ground available only under Section
34(2A) of the Act. As observed above, Section 34(2A) of the Arbitration Act
does not apply to the awards made in international commercial arbitration
held in India. This follows that since the ground of patent illegality is not
available for challenging an award made in international commercial
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arbitration, the award cannot be set aside merely because the arbitral
tribunal has ignored some evidence while making the Award.
128. The Legislature has consciously excluded the ground of patent
illegality in relation of commercial international arbitrations. The
Legislative objective is to give maximum possible latitude to the decision
of the arbitral tribunal in an international commercial arbitration. This
Court will have to respect the legislative objective of minimal interference
with awards made in international commercial arbitrations. Therefore,
though Claim No. 5 appears to have been awarded by ignoring evidence on
record and the Petitioner may be in a position to demonstrate patent
illegality in award of Claim No. 5, hands of this Court are bound by the
language of Section 34(2A) of the Arbitration Act. Had this been a domestic
arbitration, the ground of patent illegality would have been available for
the Petitioner by demonstrating perversity in the findings recorded in the
Award qua Claim No. 5.
129. Thus, award of Claim No. 5 cannot be interfered with only on
the ground of ignorance of evidence in the form of i) Respondent’s letter
dated 13 January 2017, ii) annexures enclosed to said letter, iii) ONGC letter
dated 13 January 2017, and iv) record notes of the meeting dated 13 January
2017. The Tribunal has considered the minutes of Interface Meeting dated
11 January 2017 and has arrived at a conclusion that the Respondent was
not made aware of presence of Drilling Rig GD Chaaya when approval of
preponement schedule was granted by ONGC. The Tribunal has held as
inadequate the notice of interface of SK 900 with Rig GD Chaaya in the
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form of Interface Meeting dated 11 January 2017. The Tribunal has further
held that after being made aware of interface with Rig GD Chaaya on 11
January 2017, Respondent was forced to agree for SIMOPs. Therefore,
though the evidence in the form of letters dated 13 January 2017 and
record notes of meeting of 13 January 2017 do not find mention in the
arbitral award, the said evidence needs to be considered in the light of the
Tribunal’s finding that Respondent was forced to agree for performance of
SIMOPs.
130. To sum up, award of Claim No.5 cannot be interfered with on
the ground of patent illegality on account of exception in Section 34(2A) of
the Arbitration Act. Petitioner has not been able to demonstrate that award
of Claim No. 5 is in conflict with public policy of India. Therefore, award of
Claim No. 5 cannot be interfered with by this Court in exercise of power
under Section 34 of the Arbitration Act.
NTEREST
I
131. The Arbitral Tribunal has not awarded any pre-award/ pendente
lite interest. The interest is granted on the awarded sums only in respect of
post-award period at the rate of LIBOR as prevailing on the date of award
plus 2% simple interest per annum. No submissions are canvassed on
behalf of the Petitioner on the aspect of awarded interest. Award interest
by the Arbitral Tribunal therefore need not be interfered with.
C OSTS
132. So far as costs of arbitration are considered, the entire costs
incurred by Respondent, i.e sum of INR 1,87,82,866/- are awarded in its
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favour. ONGC has been asked to bear its own cost. No submissions are
canvassed regarding the award of costs in favour of Respondent. Since
award of five claims in favour of the Respondent is upheld by this Court,
there is no warrant for interference in the costs awarded by the Tribunal.
However, considering the fact that the Award qua Claim No. 5 is not being
disturbed on account of non-availability of ground of patent illegality for
international commercial arbitrations, I deem it appropriate not to award
costs of the present Petition in favour of Respondent.
O RDER
133. Arbitration Petition is dismissed. There shall be no further
order as to costs.
[SANDEEP V. MARNE, J.]
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PAGE NO. 73 OF 73
Signed by: Sudarshan R. Katkam
Designation: PS To Honourable Judge
Date: 09/06/2026 20:49:20
09 JUNE 2026