w w w . L a w y e r S e r v i c e s . i n

Oil & Natural Gas Corporation Ltd. v/s Birla Techneftegas Exploration Ltd.

Company & Directors' Information:- OIL AND NATURAL GAS CORPORATION LIMITED [Active] CIN = L74899DL1993GOI054155

Company & Directors' Information:- BIRLA CORPORATION LIMITED [Active] CIN = L01132WB1919PLC003334

Company & Directors' Information:- INDIA NATURAL GAS COMPANY PRIVATE LIMITED. [Dissolved] CIN = U23200MH1999PTC120457

Company & Directors' Information:- BIRLA TECHNEFTEGAS EXPLORATION LIMITED [Strike Off] CIN = U29249WB2002PLC094696

Company & Directors' Information:- BIRLA TECHNEFTEGAS EXPLORATION LIMITED [Amalgamated] CIN = U11100DL1990PLC040351

Company & Directors' Information:- NATURAL GAS COMPANY PRIVATE LIMITED [Active] CIN = U23200MH1937PTC002629

Company & Directors' Information:- S P OIL EXPLORATION PRIVATE LIMITED [Active] CIN = U11200MH2005PTC154716

Company & Directors' Information:- M & T EXPLORATION COMPANY PRIVATE LIMITED [Strike Off] CIN = U14220TG2010PTC070323

    First Appeal No. 3256 of 2001

    Decided On, 07 April 2016

    At, High Court of Gujarat At Ahmedabad


    For the Appellant: R.R. Marshall, Trivedi & Gupta, Advocates. For the Respondent: P.C. Kavina, Learned Sr. Advocate, Anshin H. Desai, Advocate.

Judgment Text

S.R. Brahmbhatt, J

1. The appellant, who happen to be the applicant in Civil Misc. Application (Arbitration) No. 216 of 2000 in the Court of District Judge at Vadodara, have taken out this Appeal under Section 96 of the Code of Civil Procedure as well as under the provisions of the Arbitration and Conciliation Act, 1996, challenging the judgment, order and decree dated 5.5.2001 passed in Civil Misc. Application (Arbitration) No. 216 of 2000 for the grounds mentioned thereunder.

2. Facts in brief, as could be culled out from the proceedings deserve to be set out in brief for appreciating the controversy between the parties.

3. The appellant being a Public Limited Company substantially owned by Union of India, engaged in Oil and Gas Exploration and has one of the offices at Ankleshwar known as 'Ankleshwar Project'. The respondent was awarded contract for the work of drilling of oil wells on meter rate basis in Gandhar belt in Gujarat. The contract was executed on 18.2.1993. On account of dispute arose between the parties in respect of contract work in the payment, the same was referred to Arbitrators, who in tern, nominated the Presiding Arbitrator, who rendered the award on 28/30.6.2000, awarding an amount of Rs. 33,19,822/- against the claim No. 1 and Rs. 1,07,18,461.99ps as regards the claim No. 2 and Rs. 71,87,638.02ps as interest on both the aforesaid claims @ 15% p.a. till the date of the award. The Tribunal also awarded interest at the rate of 18% p.a. over Rs. 2,12,25,922.10ps (total of three items aforesaid), from the date of award till the date of payment in favour of the respondent and against the appellant.

4. The said award was assailed in the proceedings of Civil Misc. Application being Civil Misc. Application (Arbitration) No. 216 of 2000, which came to be rejected by the concerned Court vide its judgment, order and decree dated 5.5.2001, which also the subject matter of challenge in the present proceedings.

5. The learned Arbitrators in their Award have summarized the gist of claim and recorded that there was no counter claim which could be seen from the following:

"The claimants filed their State of Claim on 4.7.1998. Respondents filed their reply to the Statement of Claim on 3.8.1998. The Claimants filed their rejoinder on 18.8.1998. The Claimants have made four claims in their Statement of Claim. The Respondents have not made any counter claim. Claim No. 1 pertains to deduction by the Respondents of Rs. 25,36,497/- from the invoices of the Claimants for the month of February and March, 1997 and the consequent deduction of Rs. 7,83,325/- towards reimbursement of bit cost for Well No. GNOI. The second claim pertains to increase in the price of High Speed Diesel (HSD) during the execution of the contract. The third claim is relating to interest and the fourth claim is the cost of arbitration. Thus, there were two claims which required to be adjudicated on the basis of evidence led by the parties. However, claim No. 3 and 4 would follow the determination of Claim Nos. 1 and 2. Consequently, the Tribunal, after the pleadings were completed, framed only two points for determination on 22.8.1998, which were as follows:

"1. Whether the Claimants establish that the operating cost had increased substantially because of the increase in the price of High Speed Diesel Oil after the opening of the price bid?

2. Whether the respondents establish that the complications in Well GNOI that arose between 16.2.1997 and 19.3.1997 were due to the negligence of the Claimant in drilling the Well upto 3050 meters?"

6. The Arbitrators have also recorded that though in reply, there was no plea of limitation was taken so far as claim No. 2 i.e. for HSD price increase during the course of proceedings and at the time of recording of evidence, an application came to be filed taking up the said objection and Tribunal permitted the same vide its order dated 30.10.1998. The said plea and submission thereon are articulately stated by the Tribunal in Award, which reads as under:

"That the Claimant BTEL's claim's have become time barred (i.e. filed after the period of limitation) and therefore cannot be entertained by the Ld. Arbitrators. Arbitration was invoked by the Claimant's Advocate Shri Atul Sharma by letter dated 18.1.1998. That without prejudice to the reply to Claim No. 2 in particular it is submitted that most of the items mentioned in Appendix A to Invoice No. BTEL/HSD/1/96-97 dated 25.9.1996 have become time barred and therefore cannot be agitated."

7. The Arbitrators have at length discussed the point on limitation at the outset and relying upon the pleadings of the case, the claim made and provisions of Section 21, held that the suit for recovery of said amount in claim No. 2 would not have been time barred on account of limitation.

8. The Arbitrators have enlisted the submissions made on behalf of claimants, negatived the contentions raised on behalf of respondent and in their ultimate conclusion allowed the claim as under:

9. The District Court, wherein, the challenge was led, as it is stated hereinabove, also did not accept the same and confirmed the award in its totality, resulted into decree passed thereon, which is subject matter of challenge in present First Appeal.

10. Learned counsel appearing for the appellant invited this Court's attention to grounds mentioned in the Appeal Memo and without elaborating on usual stock grounds, which are available for assailing the order and award in arbitration proceedings, emphasis was led upon the fact that there was patent mis-appreciation of facts and law, which has rendered the award against the appellant, the plain and simply reading of contract and arbitration order would clearly indicate that the deduction from the bill was just and proper and it did not leave no room for any challenge on that count.

11. Learned advocate appearing for the appellant submitted that the respondent has submitted his invoices for the alleged rise in the price of HSD after a period of three years for the first time and therefore, the claim regarding alleged price rise was time barred and could not have been entertained at all. Learned advocate for the appellant also submitted that it is trite position of law relating to evidence that the documents which have not been proved in accordance with law, cannot be relied upon and therefore, the learned Arbitrator has committed patent misconduct of arbitral proceedings and also it amounts to serious error of law as well as jurisdiction. Learned advocate for the appellant also submitted that award impugned vitiated on the ground that the very important and vital aspect regarding law of limitation has been totally ignored despite detailed and specific submissions made on the point of limitation.

12. Learned advocate appearing for the appellant submitted that looking to point of determination framed by the Arbitral Tribunal, the entire onus of proving the so called substantial increase in the operating cost, allegedly on account of hike in the price of HSD, was on the respondent and it was for the respondent to prove and establish this factual aspect in accordance with law and by cogent and conclusive evidence and as the respondent having failed to discharge the said onus, the Arbitrators ought not to have entertained and granted the claim of price escalation in favour of respondent. It is also submitted that the respondent failed to prove that (a) there was 'substantial increase' in the operating cost; (b) at it was on account of hike in price of HSD only and (c) the quality of HSD actually used in actual operations, and accordingly, the respondent did not discharge its onus and did not prove, justice and establish its claim. Learned advocate for the appellant also submitted that in the present case Article 23 is not at all attracted and/or applicable and the claim of respondent does not fall within the purview of the said Article.

13. Learned advocate for the appellant submits that there was no provision in the contract to compensate the respondent for increase, if any, in the price of HSD and since no such obligation was cast on ONGC by virtue of the terms of the contract and said claim was not maintainable and the same could not have been awarded by the Arbitrators.

14. It is submitted that rate of interest of very exorbitant and submitted that while considering the claim for price increase, it is the total contract cost which is relevant and which is required to be kept in view and it cannot be bifurcated into pre-operative cost and actual operational cost. It is also submitted that Shri Rastogi of the respondent had in the cross examination clearly stated the commercial principle that although mobilization express are part of pre-operative cost yet they cannot be carved out of the total contract cost because pre-operative expenses are also a part of the total contract cost.

15. Learned advocate for the appellant submitted that the Arbitrators and court below failed to appreciate and discarded that in order to sustain a claim for R-I rate, the abnormal down hole conditions as contemplated under Article 4.9.1 (iii) of the contract, should be existing and therefore, the award of Claim No. 2 was bad in law and therefore, suffers from misconduct on the part of the Arbitral Tribunal.

16. The other submission which have been made are mainly on the fact that arbitral Tribunal has no jurisdiction to grant compensation for the price of HSD. The provisions of Section 34 of the Act as it was well have to be looked into on the touch stone of the decision as reported in , AIR 2002 SC 2659, wherein, the Supreme Court has upheld the judgment of High Court.

17. Learned advocate appearing for the appellant has relied upon the decision in case of Kaushnuma Begam (smt) and others v. New India Assurance Co. Ltd. and others, reported in , (2001) 2 SCC 9, submitted that looking to current rate of interest, the impugned award be modified accordingly. Learned advocate appearing for the appellant relied upon the decision in case of Bharat Coking Coal Ltd. v. L.K. Ahuja & Co. reported in , (2001) 4 SCC 86, submitted that the arbitrator's award in the present case have to be described as hybrid, which are partly speaking and partly non-speaking awards. The law is well settled that if the award made by the arbitrator is a non-speaking one the difficulty of showing that there is an error apparent on the face of the award becomes insurmountable and ordinarily such award cannot be challenged at all unless it is shown that the arbitrator has wholly travelled outside the contract which gives him the jurisdiction. Learned advocate for the appellant thereafter relied on the decision in case of Seth Mohanlal Hiralal v. State of M.P. reported in , (2003) 12 SCC 144, submitted that misconduct has no connotation of moral lapse. It comprises legal misconduct which is complete if the arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding or arrives at a decision by ignoring very material documents which throw abundant light on the controversy to help reach a just and fair decision. Learned advocate appearing for the appellant thereafter relied on the decision in case of Rashtriya Chemicals and Fertilizers Limited, reported in , (2010) 8 SCC 563, submitted that though courts show deference to findings of fact recorded by arbitrators and even opinions, if any, expressed on questions of law referred to them for determination, yet, arbitrators have no jurisdiction to make an award against specific terms of contract executed between the parties.

18. Learned advocate for the respondent has placed on record the written submissions, which are reproduced in verbatim as under:

"1. Birla Techneftegas Exploration Ltd. (BTEL) was engaged for drilling oil wells on meter basis in Gandhar Belt in Gujarat pursuant to contract dated 18th February, 1993 entered into between ONGC and BTEL.

2. (a) ONGC deducted Rs. 25,36,497/- and Rs. 7,83,325/- (total Rs. 33,19,822/-) from the Invoices of BTEL on the ground of alleged negligence by BTEL at the time of drilling of Oil Well No. GNOI. This was disputed by BTEL.

(b) BTEL also claimed for increased costs on account of increased in price of HSD amounting to Rs. 1,07,18,462/-. This was disputed by ONGC.

(c) BTEL also claimed interest on above.

3. The disputes between BTEL and ONGC were referred to Arbitral Tribunal comprising of one Arbitrator nominated by ONGC, one by BTEL and the third by the two Arbitrators. The Arbitral Tribunal thus comprised of three senior retired High Court Judges as under;-

(a) Mr. Justice Charanjit Talwar (Rtd)

(b) Mr. Justice B.J. Diwan (Rtd)

(c) Mr. Justice J.K. Mehra (Rtd)

4. The Arbitral Tribunal by a unanimous decision gave its detailed, 54 page award dated 28th June, 2000. On both the grounds, the Arbitral Tribunal unanimously held in favour of BTEL i.e. Rs. 33,19,822/- for wrong deductions, and Rs. 107,18,461.99 for increased cost plus also awarded interest at 15% from the date of award i.e. Rs. 71,87,638.02 and further awarded interest at 18% on aggregate of claim from date of award till date of payment. Cost of Arbitration Rs. 3,75,000/- was also payable by ONGC.

5. ONGC challenged the award and filed Civil Miscellaneous Application (Arbitral) No. 216/2001 before the District Judge, Vadodara. After prolonged hearing ONGC challenge was rejected and the case was dismissed with cost by the District Judge by a reasoned and detailed judgment dated 5th May, 2001. ONGC again filed an appeal in the High Court at Ahmedabad being first appeal No. 3256 of 2001. The appeal was admitted but the application for stay of the Award was rejected. ONGC was asked to deposit award money in the Court which BTEL was permitted to withdraw after furnishing Bank Guarantee.

6. In the present appeal by ONGC before this Hon'ble Court, various grounds have been stated, which include the following:--

"(a) The award is against the law of limitation as some Invoices for price increase were raised more than 3 years after the increase took place.

(b) Arbitrators have taken on record various documents, which had not been proved. The award is, therefore, contrary to the provisions of Evidence Act.

(c) The Arbitrators have accepted the increase in cost without the amount of increase having been proved by BTEL. There was no Gazette Notification for alleged increase in price of HSD. The award is, therefore, contrary to the provisions of the Evidence Act and beyond terms of the Contract.

(d) Expert opinion on issue of negligence ignored.

(e) There was no provision in the contract for payment of interest. The award of interest was contrary to provisions of the Contract.

(f) For above reasons along with others in the ground of appeal, the Arbitrators have mis-conducted the proceedings and the award is against public policy."

7. List of Dates:

To repeated letters from BTEL for payment of its invoices for increase in price of Diesel, ONGC denied the claim on the ground that impact of increase on operating cost was negligible. ONGC never challenged the quantum of increase claimed by BGEL.

8. None of the grounds raised by ONGC in the present appeal before Hon'ble High Court have any merit.

(i) Preliminary:

The award is a reasoned detailed and speaking award covering 54 pages, unanimously agreed by all 3 Arbitrators, retired senior Judges of the High Court. Challenge to the Award was dismissed with costs by District Judge and Stay Application was rejected by Ahmedabad High Court.


(i) Steel Authority of India Ltd. v. Gupta Brothers Steel Tubes Ltd. , (2009) 10 SCC 63 (Head-note-C, Paragraph-29 and 36).

"...The courts below have currently held that the arbitrator has gone into the issues of facts thoroughly, applied his mind to the pleadings, evidence before him and the terms of the contract and then passed duly considered award and no ground for setting aside the award within the four corners of Section 30 has been made out.... In what we have already discussed above, the view of the arbitrator in this regard is a possible view. Consequently, appeal has no merit and must fail. The same is dismissed with no order as to costs."

(ii) Sumitomo Heavy Industries Ltd. v. Oil & Natural Gas Commission of India , (2010) 11 SCC 296 (Head -note-B, Paragraph-36 to 44)

"...award was not only a plausible one but a well reasoned award. In the circumstance the interference by the High Court was not called for. In that view of the matter we allow this appeal and set aside the judgment of the learned Single Judge, as well as that of the Division Bench...."

(iii) Rashtriya Ispat Nigam Ltd. v. M/s. Dewan Chand Ram Saran reported as , 2012 (5) SCC 306, (Head-note-B, Paragraph-43)

"...There was no reason for the High Court to interfere in the view taken by the arbitrator which was based, in any case on a possible interpretation of clause 9.3. The learned single Judge as well as the Division Bench clearly erred in interfering with the award rendered by the arbitrator. Both those judgments will, therefore, have to be set-aside. Accordingly, the appeal is allowed and the impugned judgments of the learned Single Judge as well as of the Division Bench, are hereby set aside...."

(iv) Reported as , 2011 (5) SCC 758, in the case of J.G. Engineers Pvt. Ltd. Vs./Union of India & Anr. (Head-note-E, Paragraph-10 & 27).

(v) First Appeal No. 137 of 1992, in the case of State of Gujarat & Anr. v. Nitin Construction Company, judgment dated 22.03.2013 of the Hon'ble High Court of Gujarat.

(vi) First Appeal No. 3688 of 2012, in the case of State of Gujarat v. Vijay Mistri Construction & Anr., judgment dated 22.03.2013 of the Hon'ble High Court of Gujarat.

(vii) Reported as , 2000 (4) GLR 3652 in the case of Oil & Natural Gas Corporation Limited v. Essar Steel Limited, (Paragraph-8).

(viii) Reported as , 1999(9)SCC 449, Arosan Enterprises Limited v. Union of India & Anr. (Head-note-F, Paragraph-34 to 37).

(ix) Reported as , 2003 (8) SCC 4, Continental Construction Limited v. State of U.P. (Paragraph-14, 16 to 19 and 22).

(ii) Limitation:

(a) Has been dealt with in detail in the Award (Pages 3 to 6). The plea of limitation was invoked in respect of Invoices of different dates raised from 25-09-96 to 24-10-97, which relate to increase in price of Diesel during the period 27-01-92 to July 96.

(b) Though the arbitration was invoked much within 3 years from the date of first Invoice, but the ground raised is that Arbitrators should have considered not the date of Invoice but the date when the increase took place and the claim arose.

(c) Articles 10.2 deals with time of raising of Invoices for items set out in Annex D-1. (Mobilization charges etc., at page 65 of the Contract) and Annex D-2 (food charges etc. at page 70 of the Contract). Invoices for variation in operating cost could be submitted in terms of Article 23, which reads as under:--



If there is a change in or enactment of any law in India or interpretation of existing law in India after the date of opening the Priced Bid, which result in substantial variation in operating costs (Increase or Decrease) to Contractor under this agreement, the variation in costs (Increase or Decrease) will be discussed and mutually agreed to between the two parties and the increase/reduction in cost will then be borne by/or reimbursed to operator. This, however, shall not apply to laws concerning corporate, Personal Taxes and Liabilities of the contractor under these Laws".

(d) As per above provision every increase was not payable.. Only such increase was payable, which resulted in substantial variation in operating costs. The claim for increase in price could, therefore, be made not when increase took place, but when it was known that the increase had substantial impact on operating costs. This could be known at the end, or near the end of the Contract when the total operating costs became known. The Invoices for price increase were submitted as soon as total (or near total) operation costs and the substantial impact of such increases on operating costs could be ascertained.

(e) In this connection, reference may be made to ground of appeal by ONGC in the Ahmedabad High Court in which they have written as under;-

"That while considering the claim for price increase, it is t he total contract cost, which is relevant and which is required to be kept in view of" (Please refer ground No. 6-J).

(f) The ground of limitation was not raised in written opposition before the Arbitrators. For the first time this question was raised at the time of recording of evidence. However, the Arbitrators have extensively dealt with the plea of limitation on pages 3-6 of the Award (refer Section 23 of Arbitration Act).

(g) The Contract came to end in May 1997 and the Invoices were submitted on different dates between September 1996 to March 1997, much within the validity period of the Contract.

(h) The plea of limitation is misconceived.

(iii) Evidence Act:

(a) Taking on record unproved documents.

(b) Accepting increase in cost of HSD without increase having been proved.

(c) No Gazette Notification of increase.

In reply to plea of non-compliance of provision of Evidence Act, reference may be made to Section 19 and Section 4 of the Arbitration Act.

(a) According to Section 19, the Arbitration Tribunal is not bound by the Code of Civil Procedure or Indian Evidence Act.

(1) The arbitral tribunal shall not be bound by the Code of Civil procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872).

(2) Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceeding.

(3) Failing any agreement referred to in sub-section (2), the arbitral tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate.

(4) The power of arbitral tribunal under sub-section (3) includes the power of determine the admissibility, relevance, materiality and weight of any evidence".

(b) According to Section 4, if a Party had objection that any provision of the Act or the Agreement had not been complied with, and the aggrieved Party has proceeded with the Arbitration without raising objection within reasonable time, such objection shall be deemed to have been waived.

(c) The Award running into 54 pages has dealt with each and every objection of ONGC including those which had not been raised in their written opposition.

(d) ONGC at no stage of the proceedings had questioned the quantum of increase except at the time of arguments. The only issue in their opposition was that the quantum of the increase did not result in substantial variation of the operating cost. No issue about quantum was framed and no objection was raised (refer Page 35 of the Award).

(e) In correspondence between BTEL and ONGC prior to reference for arbitration, ONGC only relied on Clause 23 of the Contract and SADCO decision that the quantum of increase claimed by BTEL did not result in substantial increase in operating cost.

(f) If during Arbitration Proceedings the quantum was never in question, after the arbitration is complete this question cannot be agitated (refer Page 35 of the Award).

(g) In terms of above position, Arbitrators were entitled to conduct the proceeding lawfully in the manner considered appropriate by them.

(h) ONGC had never questioned the quantum of increase in price of diesel, either in their letters to BTEL or in their written opposition, or in the course of entire arbitration proceedings.

(i) Assertion by ONGC that the quantum of increase claimed by BTEL did not have a substantial impact was an admission of the quantum of increase and it is not now open to ONGC to question the same. In any case this could not be a valid ground to challenge the unanimous award.

(j) BTEL had claimed for increase in cost due to Government administered price of HSD which substantially increased the operating cost. The Invoices for such increases gave complete break-up of increased cost claimed.

(k) In the opposition, ONGC disputed that the increased cost of HSD had only an insignificant impact on operating cost and was therefore not payable. Cost increase, as per terms of the Contract was thus admitted. Only dispute was whether increase was substantial.

(l) In the opposition, ONGC did not dispute that the increase was not due to statutory changes or that the quantum of increase had not been proved.

(m) Increase in cost of HSD could take place through notification or administrative order in exercise of powers under Essential Commodities Act (refer Pages 36 to 38, the Award). Such orders, therefore, had the force of law as delegated legislation.

(n) As there was no dispute about the basis or quantum of increase, there was no occasion for production of notifications or other supporting to justify the increases and the claim.

(o) Arbitrators are not bound by the rules of Evidence Act.

(p) Upon evaluation of pleadings and evidence available, the Arbitrators were satisfied about the claim for price increase of HSD.

(q) Raising the plea of non production of Notifications at this stage would be tantamount to reevaluation of evidence before the Arbitrators and questioning the award based on such evidence which is not permissible U/s. 34 of Arbitration Act.

(r) In correspondence between BTEL and ONGC prior to reference for arbitration, ONGC only relied on Clause 23 of the Contract and SADCO decision that the quantum of increase claimed by BTEL did not result in substantial increase in operating cost.

(s) BTEL had claimed for increase in cost due to Government administered price of HSD which substantially increased the operating cost. The Invoices for such increases gave complete break-up of increased cost claimed.

(iv) Contrary to the Terms of the Contract-Interest:

(a) This question has been adequately dealt with in the Award. Section 34 does not give any right to reopen this question or challenge the Award. In SAWPIPE case there was specific provision in the Contract that no interest will be payable. There is no prohibition in ONGC-BTEL Contract for payment of interest.

(b) The Contract specifically provides that Invoices shall be payable within 30 days. According to settled legal principles, there can be no wrong without a remedy. If not paid, interest is payable under Section 73/74 of Contract Act, (refer Clause 10.1 of the Contract and Section 31(7) of the Arbitration Act).

(c) According to settled legal principles, there can be no wrong without a remedy.

(d) In the Supreme Court Judgment dated 17th April, 2003 (ONGC) v. Saw Pipes) in which the award granting interest was challenged, the Contract in question had a specific provision that no interest shall be payable on disputed claim amount. In the present Contract between BTEL and ONGC, there is no such provision, specific or otherwise.

(e) On the contrary in Article 10.1 there is obligation on ONGC to make payment within 30 days from the date of receipt of Invoices. The said article further provides that any dispute shall also be resolved within 30 days and pending resolution of dispute, undisputed portion shall be paid within above specified time. In the absence of a specific provision denying payment of interest, for breach of specified and definite obligation to make payment within 30 days, it is logical that interest at a reasonable rate is payable.

(f) ONGC was required to supply casing pipes. In this respect, some delays were likely and it was therefore, specifically provided that for delayed supplied upto a specific period (30th June, 1996) only, no compensation will be made by ONGC. In the case of delayed payment of Invoices beyond 30 days, there was no such exclusion. (Article 2(ii)).

(g) The Contractor was required to spud the first well within 180 days from the date of signing the contract (Article 3.2). Non-compliance by Contractor of its obligation had the consequence of liquidated damages at 0.5% of the contract price per week (Article 5.1). The proposition that ONGC on its part could breach its specified obligation without compensating BTEL, is contrary to principles of Section 73/74 of the Contract Act.

(h) As stated above, interest was not specifically excluded in the Contract between ONGC and BTEL as in the case of ONGC v. Saw Pipes. On the contrary, interest was implied in the provisions of the Contract. Grant of interest is neither contrary to the terms of the Contract, nor beyond jurisdiction, nor against public policy.

(i) Supreme Court has already settled this issue as under:--

"Where the agreement between the parties does not prohibit grant of interest and where a party claims interest and what dispute (along with the claim for principal amount or independently) is referred to the arbitrator, he shall have the power to award interest pendente lite. This is for the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties". [, AIR 1992 SC 732].

(j) The arbitrator was held empowered to award pre suit, pendente lite and future interest till award was made a rule of Court, unless and Contract prohibited payment of interest. (M.L. Mahajan v. DDA , 2005 (2) Raj. 108/, 2005 (1) Avb LR 561 (Del).

(k) The Arbitral Tribunal it is award dated 28th June, 2000 awarded simple interest (not compound interest) at 15% per annum from 15th May, 1997 (completion of the Contract) till the date of award in respect of Claim No. 1 and Claim No. 2.

(l) Working Capital borrowing from Bank during the relevant period was bifurcated into Cash Credit (CC) and Working Capital Demand Loan (WCDL). The rate of interest being charged by State Bank of India (SBI) during the relevant period was above 15% (compounded quarterly). This will be evident from the letters from SBI to National Engineering Industries Ltd. (NEI), one of major shareholders of Birla Techneftegas Exploration Ltd. (BTEL). The said rate of interest, if simple interest, would work out to not less than 18% approx.

(m) From the foregoing, it will be clear that interest at 15% (simple, not compound) granted by the Tribunal was much less than what Companies were paying to the Bank on funds availed from Bank.

(n) In this connection copies of letters for the period covering 1997-99, as certified by SBI are enclosed.

(o) Reported as , 2010 (1) SCC 549 in the case of Madnani Construction Corporation Ltd. v. Union of India, Head note-C, Paragraph-24 and 39.

(p) Reported as , AIR 1992 SC 732, in the case of Secretary, Irrigation Department v. G.C. Roy, Head-note-A, Paragraph-45.

(q) Reported as , 2002 (1) SCC 659, in the case of State of Rajasthan and Anr. v. Navbharat Construction Company, Paragraph-7 and 8."

9. The unanimous award by the Arbitrators was a speaking award running into 54 pages. The award dealt with all questions that had been raised by ONGC. Thereafter the award was upheld by the Hon'ble District Court Order dated 5th May, 2001. The appeal pending before this Hon'ble Court has no merit and deserves to be dismissed with costs."

19. We have heard learned counsel for the parties at length and also perused the documents submitted before us and also perused the award impugned.

20. This Court while admitting the this appeal in the year 2001, passed the following order in Civil Application, which reads as under:

"Heard the learned counsel for the respective parties. On the facts and circumstances of the case, the prayer made in para 6(B) is specifically rejected. However, it is clarified that the amount which may be deposited by the applicant - appellant in the execution proceedings may be withdrawn by the opponent - respondent only on furnishing security to the satisfaction of the Executing Court. It is further directed by consent of parties that the deposit to be made in the execution proceedings may be made by 10th August, 2001. This application is accordingly disposed of with no order as to costs. Direct Service permitted."

21. The Court need to be mindful of the fact the Court is called upon to examine the matter in which, there are two decisions, one by learned Arbitrators and confirmed by learned District Judge and therefore, the Court need to be very slow in interfering with the findings, which have been recorded by Tribunal as well as the Court. The aspect of limitation has been in fact dealt in Award at page No. 3-6. The plea of limitation was in respect of invoices of different dates raising from 25.09.1996 to 24.10.1997. The Arbitrators' reasoning would be quite indicative of the fact that though arbitration was invoked and same is not required to be interfered with in any manner. The counsel appearing for the respondent appears to be just in submitting this, as ground of limitation was not raised in written statement before learned Arbitrators and Arbitrators have positively dealt with in para-3-6 of the award, which we find to be just and proper. It is stated that the contract came to an end in May, 1997 and invoices were submitted between September 1996 to March, 1997, which is within the validity of contract and therefore, it is rightly held that question of limitation is misconceived.

22. The Article 23 is in respect of subsequent enacted laws, which was argued to be not covering the increase in the fuel price. The fact remains to be noted that the said clause in our view, would cover the price increase also. As we are unable to accept the submission canvassed on behalf of appellant that notification issued under the Essential Commodities Act, cannot palate the characteristic of new enactment, which is otherwise would have been covered under the provisions, which would entitle the claimant to seek enhancement on that basis. In fact the definition of law as could be gathered from even the provision of General Clauses Act, also would indicate that the notification issued under Essential Commodities Act, being a statutory notification, would palate characteristic of law and therefore, the same can be said to be covered under the provisions of Article 23, which relates to subsequent enacted laws. We are therefore, unable to accept the submission canvassed on behalf of appellant for undoing the reasoning or conclusion of arbitrators or learned Judge on these aspects.

23. Learned advocate appearing for the respondent is justified in submitting that the submissions canvassed on behalf of the appellant regarding non-compliance of provisions of Evidence Act, is not proper and reference could be made to Section 19 and Section 4 of the Arbitration Act. Section 19 provides that arbitration Tribunal is not bound by the Code of Civil Procedure or Indian Evidence Act.

24. The submission on behalf of learned advocate for respondent appears to be quite reasonable and deserve to be accepted, which are based upon the acquiescence on behalf of appellant in continuing with proceedings and also touching upon the waiver aspect. The award of the Arbitrator is explicitly clear on this aspect.

25. It is also required to be noted that the quantum was never in question, as submitted by learned advocate for the respondent. As quantum was not subject matter and it was only its justification, the same was not required to be dealt with in any manner.

26. The plea of the appellant in respect of granting of interest is contrary to the contract, we are of the considered view that the provisions of Sections 73 and 74 of the Contract Act and section 31(7) of the Arbitration Act would clearly go to indicate that there cannot be any further scope of discussion so far as awarding of interest is concerned.

27. It is required to be set out the elaborate reasoning of learned Judge, as could be seen from the following:

"The learned Judge in para-11 and 12 held as under:

"Para-11 On the factual aspect, if the award in question in is given eye-bird view, then, it becomes clear that while deciding the point of claim of invoices, the Tribunals have found much weightage in favour of the opponent by considering the date of invoices. The Ld. Advocate appearing on behalf of the applicant, of course, wants this court to decide the point of limitation against the opponent by submitting that the date of invoices is not to be seen and according to him, the applicant argued this point at length before the arbitrators, but, no due weightage is given to the said argument. Here also, I would say that there is no merits in the said submission. On going through the arbitral award in question, this Court finds not only the proper appreciation of facts by the arbitrators, but, also proper application of Law. So, the question of successfully challenging the award U/s-34 of the Act by raising this point does not arise.

12) It appears from the various contention taken by the applicant in this Civil Mis. Application that the award in question is mainly challenged on the ground that the same is in conflict with the public policy of India. Ld. Advocates appearing on behalf of the respective parties have mainly concentrated their attention on the point of the applicant, in order to substantiate his long submission, placed much reliance upon the decision reported in , AIR 1964 A.P. 465 and the decision of the Hon. Apex Court of the Land reported in , AIR 1994 SC 860. Mr. Parikh, Ld. Advocate of the applicant also made reference about the dictionary meaning of Public Policy by citing the book of "THE LAW LEXICON". The Ld. Sr. Counsel of the opponent also emphasized upon the meaning of Public Policy and for that, he relied upon the Dictionary meaning of Public Policy given in the book "The Law Lexicon". So, this Court has to decide the point by considering the aforesaid rival submission. I have gone through the aforesaid citations and the dictionary meaning of Public Policy. According to the rule given in the case of KOLAPARTI VENKATAREDDI v. KOLAPARTI PEDA VENKATACHALAM reported in , AIR 1964 A.P. 465. "The term 'public policy' does not admit of any definition. It is a variable quantity, which must vary and does vary, with the habits, capacities and opportunities of the public. What is the policy of the public at one time may not be a sound public policy at another time. It is equivalent to the policy of the law. It is applicable to the spirit as well as the letter. Whatever tends to injustice of operation restraint of liberty, commerce and natural or legal right whatever tends to the obstruction of justice or to the violation of a statute and whatever is against the good morals. Agreement tending to injure the public service are always considered to be opposed to public policy. "while deciding the case of Renusagar Power Co. Ltd. v. General Electric Co. reported in , AIR 1994 S.C. 860 cited by the Ld. Advocate of the applicant while considering the meaning given in Section 7(1)(b)(ii) of Foreigns Awards (Recognition and Enforcement Act, rule is given to the effect that the enforcement of the arbitral award is not barred by Section - 7(1) (a)(ii) of the Foreign Awards Act on the ground that RENUSAGAR was unable to present its case before the arbitral tribunal. Now, as per the dictionary meaning of the book "THE LAW LEXICON" as cited by the Sr. Counsel of the opponent, Public Policy does not admit of definition and is not easily explained. Now, according to the meaning of WHARTON'S LAW LEXXICON, "Public policy means the principles under which the freedom of contract of private dealings is restricted by law for the good of the community. Public Policy is a very unruly horse and when onc

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e you get astride of it you never know where it will carry you. The Courts have again and again said that where a contract does not fit into one or other of these pigeon-holes but lies outside this charmed circle, the courts should use extreme reserve in holding a contract to be void as against public policy and should only do so when the contract is incontestably and on any view inimical to the public interest. According to the said Dictionary meaning, Community common sense and common conscience, extended and applied throughout the state to matters of public morals, health, safety, welfare, and the like; it is that general and well settled public opinion relating to man's plain, palpable duty to this fellowmen, having due regard to all circumstances of each particular relation and situation." It is thus clear from the aforesaid Dictionary meaning of the word "Public Policy" that the case of the applicant does not fall within the purview of Public Policy and the award in question can not be said to be in conflict with Public Policy of India. Moreover, if the case on hand is considered on the another angle. Meaning thereby, if the award in question affect the community as well as interest of considerable section of it, then also, this Court can certainly say that the same goes against the applicant in as much as that the said award does not carry interest of the whole community as well as the interests of a considerable section of it. Of course, the Court can apply a variable notion of policy as a principle of judicial legislature or interpretation in view of the correct needs of the community, but, the public policy does not remain static. It varies from generation to generation and even in the same generation, it is variable and depend upon the welfare of the community, therefore, the Judges should discover what public policy should be at any given moment. Thus, it is clear from the aforesaid dictionary meaning of the book "THE LAW LEXICON" that the case of the present applicant can not be said to fall under the aforesaid dictionary meaning of the word Public Policy and therefore, the applicant can not successfully urge to set aside the award in question." 28. Therefore in light of decisions of the Apex Court and the discussion hereinabove, the scope of interference with the findings of Arbitrators and confirmed by the District Judge, on the basis of principles, we are not inclined to interfere with the findings, as settled in view of decision in case of Bharat Coking Coal Ltd. v. Annapurna Construction reported in , 2003 (8) SCC 154. 29.The award so far as interest is concerned, reads as follows: "With regard to contention (a) above, it is contended by the respondent that increase in HSD is not by operation of law but on account of the administrative orders and, therefore, the claim is not maintainable under Article 23.1 which deals only with variation in operating costs on account of change in or enactment of law in India or interpretation of existing law in India after the date of opening of price bid. To examine this contention it is essential to refer to the provisions of Essential Commodities Act, 1955. Section 2 of this Act in sub-section (a) defines "Essential Commodity". In sub clause (viii) of clause (a) of section 2, petroleum and petroleum products have also been included as "Essential Commodities Act, Central Government has power to regulate and control the prices at which an essential commodity may be bought or sold. Therefore, increase in prices of HSD being a petroleum product is pursuant to the exercise of powers given to the Central Government under Section 3 of the Essential Commodities Act and is therefore, on account of a change in law." The Tribunal has relied on the decisions of the Privy Counsel and Apex Court and also relied upon the affidavit of appellant filed before the Tribunal before the Award passed. 30. The awarding of interest cannot be said to be in any manner, warranting any interference, however, the factum of interest, in our view may be considered, which in our view is on higher side looking to prevalent practice at the relevant time. The quantum of interest, if reduced to 9% from 15%, the same would meet with ends of justice. As a result thereof, we modified the same and factum of interest is ordered to be reduced from 15% to 9%. The rest of the award is not interfered in any manner. 31. As a result thereof, the Appeal is disposed of accordingly with no order as to costs.