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Oil and Natural Gas corporation Limited Vs. Enterpose GTM Four Les Travaux, Petroliers Maritimes and Volker Stevins Baggermaatschappy N.V. (Consortium) - Court Judgment

LegalCrystal Citation
CourtMumbai High Court
Decided On
Case NumberArbitration Petition No. 584 of 2008
Judge
AppellantOil and Natural Gas corporation Limited
RespondentEnterpose GTM Four Les Travaux, Petroliers Maritimes and Volker Stevins Baggermaatschappy N.V. (Consortium)
Excerpt:
bombay high court (original side) rules, 1980 - rule 787(5) - arbitration act, 1940 - section 30 and section 33 – tender for construction of pipeline - contract between parties - breaches of contract – encashment of bank guarantee – appointment of umpire – direction to recover liquidated damages challenged -petitioner/respondents, invited tenders for construction oil pipe line and bid of respondents/claimants was accepted by respondents - parties entered into a contract and respondents sought to encash bank guarantee in view of alleged breaches of contract by claimants - claimants filed suit, and obtained injunction restraining respondents from encashing bank guarantee – on appeal by respondents, court directed banks of claimants to pay amount claimed by.....oral judgment: 1. by this petition filed under section 30 and 33 of the arbitration act, 1940 the petitioner seeks that the arbitral award dated 10th december, 2007 rendered by the learned umpire be set aside. the petitioners herein were the original respondents in the arbitration proceedings and the respondents herein were the original claimants. for the sake of convenience, the parties herein are referred to as the parties described in the arbitration proceedings. some of the relevant facts for the purpose of deciding this petition are as under:- 2. sometimes in the month of december 1987 the respondents invited tenders for construction of 26' submarine oil pipe line and 24' submarine oil trunk pipeline between uran shore refinery and the hra platform. the claimants submitted their bid.....
Judgment:

Oral Judgment:

1. By this petition filed under section 30 and 33 of the Arbitration Act, 1940 the petitioner seeks that the arbitral award dated 10th December, 2007 rendered by the learned umpire be set aside. The petitioners herein were the original respondents in the arbitration proceedings and the respondents herein were the original claimants. For the sake of convenience, the parties herein are referred to as the parties described in the arbitration proceedings. Some of the relevant facts for the purpose of deciding this petition are as under:-

2. Sometimes in the month of December 1987 the respondents invited tenders for construction of 26' submarine oil pipe line and 24' submarine oil trunk pipeline between Uran Shore Refinery and the HRA Platform. The claimants submitted their bid in response to the said invitation. On 6th November, 1989 the bid of the claimants came to be accepted by the respondents. Parties entered into a contract on 6th November, 1989 on the terms and conditions recorded therein. The claimants submitted a bank guarantee as per clause 17.1 of the contract. The stipulated date of completion of the work as per clause 8.5 of the contract was 15th May, 1990. On 7th July, 1990, 1st August, 1990 and 8th August, 1990 the partial work was completed and the project was handed over to the respondents by the claimants.

3. On 23rd November, 1990 the claimants requested the respondents to issue work completion certificate. On 30th November, 1990 the respondents issued partial work completion certificate to the claimants subject to their fulfilling and completing the pending work.

4. On 31st March, 1995 the respondents sought to encash the bank guarantee in view of the alleged breaches of the contract by the claimants. The claimants filed a suit in the court of Civil Judge, Senior Division at Panvel and obtained an injunction restraining the respondents from encashing the bank guarantee. By an order dated 23rd February, 1998 in the Civil Revision Application (445 of 1996) this court directed the banks of the claimants to pay the amount claimed by the respondents under the said bank guarantee and held that in the event of the arbitrator holding that the respondents were not entitled to invoke the said bank guarantee, the respondents shall refund the amount so received to the claimants along-with interest at the rate of 15% per annum from the date of such payment till the date of refund.

5. Dispute arose between the parties. Under the arbitration agreement recorded in clause 16.2, each party appointed an arbitrator. The two arbitrators appointed the umpire under the said arbitration agreement. It was provided in the agreement that the arbitration proceedings shall be held in accordance with the provisions of the Indian Arbitration Act, 1940 and the rules made there-under. The agreement provided that the arbitrators/umpire shall give reasoned award.

6. On 29th May, 1999 the learned arbitrator informed the parties that they were unable to agree on the award and advised the parties to appoint an umpire as per terms of the contract. The entire matter was thus referred to the learned umpire. Both parties led oral and documentary evidence. The learned umpire reserved the award in the year 2004. On 10th December, 2007 after expiry of more than three years, the learned umpire made an award. By the said award the learned umpire directed the respondents to pay USD 996846, Euros 766860 and Rs.169143/- with interest only on USD 780245, Euros 766860 and Rs.169143/- at the rate of 10% per annum from 23rd February 1998 till the date of the award and interest on the entire amount awarded at the rate of 10% per annum from the date of award till payment or realization whichever is earlier.

7. The learned umpire allowed some of the claims made by the claimants and held that the respondents are entitled to recover out of the awarded sum on account of liquidated damages the sum of USD 759723. The learned umpire directed the respondents to pay the net amount after adjusting the claim of liquidated damages awarded by the learned umpire. Being aggrieved by the part of the said award allowing some of the claims by the learned umpire, the respondents have impugned that part of the award. The claimants have not impugned the rejection of the claims in the impugned award and also the award allowing part of the counter claim of the respondents.

8. Before the learned arbitrators and umpire it was case of the respondents that on account of the delay on the part of the claimants in completing the work within the stipulated completion date, the respondents suffered various losses on account of expenses incurred towards hiring oil tankers during the delayed period, loss on account of deferred revenue due to loss in production of oil, loss due to flaring of gas, loss of production etc. and the respondents accordingly exercised its right to levy liquidated damages and had levied damages in the sum of USD 780245.50, French Franc 3314211.14, Dutch Guilders 580796.46 and Indian rupees 169243.01.

9. I will now deal with the submissions made by the learned counsel appearing for parties claim-wise which are allowed by the learned umpire in the later part of this judgment.

Claim in Paragraph 9(I)(b) :

10. The claimants claimed USD 150000 as the cost of repair of pipes alleged to have been damaged by the drilling rig Ed-Holt and for an extension of time of completion by 12.670 days. It was case of the claimants that the said rig Ed-Holt belonged to another contractor of the respondents i.e. Jingal Drilling and Industries Limited. It was case of the claimants that after the installation of 24 inches pipe line, they were proceeding with the installation of 26 inch pipe line and giving a routine diving survey towards HRA Platform to prepare the as built documentation for the completion of the 26 inch pipeline, the surveyor of the claimants discovered that the legs of a drilling rig Ed-Holt appeared to have damaged the 24 inch pipeline. The claimants therefore had to cut out the damaged pipeline and re-lay the pipeline towards the platform. The claimants on these grounds claimed the cost and time extension.

11. The respondents denied in their reply that the damage to the pipes was caused by the rig Ed-Holt. The learned umpire in paragraph 187 of the impugned award has held that on a review of the evidence before him, he was inclined to reject the claim of the claimants for want of evidence and accordingly rejected the claim of the claimants for cost of repairs. The learned umpire thereafter considered the claim for extension of time which was claimed for 12.670 days. The learned umpire held that where a delay was caused on account of factors for which the claimants herein were not responsible and could not be held responsible, a reasonable extension of time for completion will have to be granted. The learned umpire held that there was no reliable evidence as to how the accident occurred and also the fact that the claimants could not have caused the damage to the pipeline as well as the fact that almost all the vessels moving about in the vicinity, either belong to the respondents or under the control of the respondents, the learned umpire out of extension of 12.670 days claimed by the claimants granted an extension of 6 days for the completion of the contract.

12. In paragraph 191 of the impugned award, the learned umpire held that in paragraph 9(2) (a) of the statement of claim the claimants had made claim for extension of time on account of mooring interference to meet the needs of the work-front as envisaged in the master project. It is held that on account of such mooring interference, the work slipped into the monsoon season and D.P.Vessel Stela-I had to be mobilised to avoid anchor interference. However there are no particulars regarding the delay which was allegedly caused nor is there any evidence to support the said claim which has been denied by the respondents. The learned umpire therefore rejected the said claim. In the said paragraph the learned umpire also observed that there were number of averments in the statement of claim which were completely vague and regarding which no particulars had been given or in respect of which no evidence was there on record. Those claims have been ignored in the award.

13. Mr. Kamdar, learned senior counsel for the respondents submits that though the learned umpire has rejected the claim for cost of repairs for USD 1,50,000 for want of evidence has granted extension of 6 days on the basis that the delay was caused on account of the factors which were beyond the control of the claimants and that the vessels moving in or about the vicinity either belonged to the respondents or were under its control. It is submitted that under clause 5.9 of the contract the work was under the care of the claimants and they were supposed to repair and make good the same if there was any damage caused to the work. Under clause 41.8 of the contract, it was the responsibility of the claimants to rectify damage and effect caused to the pipes without any cost and/or time effect. It is submitted that the claim awarded by the learned umpire is contrary to clause 5.9 and 41.8 of the contract. Though the respondents had argued this issue before the learned umpire, in the impugned award the learned umpire has not considered it. It is submitted that the award on this claim is based on conjectures and surmises and not based on evidence.

14. Learned senior counsel then submits that the witness examined by the claimants in his cross examination at page 866 (Volume III) though admitted that he had no personal knowledge as to how the damage was caused to the rig Ed Holt, the learned umpire has allowed this claim for extension of time. It is submitted that though the witness of the claimants in his cross examination at page 826 of Volume III admitted that the insurance company had paid them compensation in respect of the pipe line and also compensated that for the time effect, the learned umpire granted claim for extension of time. There was thus double compensation awarded to the claimants. Learned senior counsel submits that once the learned umpire rejected the claim for cost of repairs, he could not have granted claim for extension of time, cause for both the claims being identical. In any event the claimants had failed to prove the extension period before the learned umpire. There was no provision in the contract for grant of extension except on account of monsoon.

15. Mr. Advani, learned counsel appearing on behalf of the claimants on the other hand would submit that the learned umpire has followed a passage from the well known treaties from the 11th Edition of Hudson on “Building and Engineering contracts” while considering the claim for extension of time. It is submitted that the learned umpire having come to the conclusion that the delay was caused on account of factors for which the claimants were not responsible and could not be held responsible, a reasonable extension of time for completion will have to be granted, the learned umpire was justified in granting extension of six days for the completion of the contract as against the claim of 12.670 days claimed by the claimants. It is submitted that this court cannot go into the reasonableness of the reasons rendered by the learned umpire. The learned umpire has exercised his discretion and has rightly granted six days extension on rough and ready basis.

16. Learned counsel submits that the extension of time was required on account of mooring interference to meet the needs of the work front as envisaged in the master project. The work slipped into the monsoon season and the D.P. Vessel Stena–I had to be mobilized to avoid anchor interference. It is submitted that this court cannot re-appreciate the evidence considered by the learned umpire in this proceedings under section 30 of the Arbitration Act, 1940. Learned counsel submits that the claim for extension awarded by the learned umpire is not contrary to clause 5.9 or 41.8 of the contract as canvassed by the respondents. Learned counsel submits that even if the claim for cost of repairs is rejected by the learned umpire, claim for extension of time was an independent claim and has been rightly considered by the learned umpire.

17. In rejoinder Mr. Kamdar, learned senior counsel submits that though the learned umpire has rendered finding in the impugned award that there was no evidence produced by the claimants has still allowed several claims made by the claimants. It is submitted that though in paragraph 22 of the impugned award, it is observed by the learned umpire that the statement of claim was devoid of several material particulars which one would normally expect in a statement of claim, the basis of the claim and the material has not been disclosed in the statement of claim, finding the learned umpire has awarded several claims which are contrary to the findings rendered by the learned umpire and shows non-application of mind on the part of the learned umpire.

18. It is submitted by the learned senior counsel that though the claimants have relied upon the daily progress report during the course of arguments in this proceedings including the stand by rates, the claimants had neither referred to and/or relied upon on these reports and/or stand by rates in the statement of claim. It is submitted that even the learned umpire has not referred to these stand by rates in the impugned award. Learned senior counsel submits that even otherwise the stand by rates relied upon by the claimants across the bar does not apply to the claims made in the arbitration proceedings. It is submitted that even otherwise from the perusal of the award it is clear that the learned umpire has not granted rates even as per stand by rates.

19. Mr. Kamdar, learned senior counsel submits that in the impugned award the learned umpire has rendered a finding that there was no cogent evidence in respect of most of the claims. The claimants have not challenged such finding of fact. The learned umpire had recorded the statement of the claimants made through their learned counsel that the claimants were not proving the contents of daily status report and the claimants thus could not rely upon such disputed and unproved documents.

20. Learned senior counsel submits that in any event this court cannot consider the evidence which was not relied upon by the claimants and/or not proved before the learned umpire for the first time in this proceedings filed under section 30 of the Indian Arbitration Act, 1940 while the claimants defending such award. It is submitted that though the learned umpire was under an obligation to give reasons, in respect of most of the claims which are allowed by the learned umpire, no reasons are rendered. Claims are allowed contrary to the terms of the contract and based on conjectures and surmises. This court cannot re-write the award and supply the additional reasons in the award in this proceedings under section 30 of the Indian Arbitration Act, 1940.

21. Mr. Advani, learned counsel for the claimants and Mr. Kamdar, learned senior counsel for the respondents placed reliance on various judgments of the Supreme Court and this court in support of various submissions. Some of such relevant judgments I have been dealt with in this judgment.

22. A perusal of record indicates that in so far as claim for cost of repair of pipes claimed at USD 150000 made by the claimants is concerned, the learned umpire in para-187 of the impugned award has rejected the claim for want of evidence. However, he has held that where a delay was caused on account of factors for which the claimants was not responsible and could not be held responsible, a reasonable extension of time for completion will have to be granted. The learned umpire also held that there was no reliable evidence as to how the accident occurred and also the fact that the claimants could not have caused the damage to the pipeline as well as the fact that almost all the vessels moving about in the vicinity either belong to the respondents or under the control of the respondents. In-spite of rendering such findings, the learned umpire allowed the claim for an extension of six days as against the claim of extension of 12.670 days.

23. Under clause 41.8(b) of the contract it is provided that during the laying of the pipelines if any damage occurs to the pipelines, then the contractor shall replace the damaged pipeline segment without any time and cost effect to the company. A perusal of the record indicates that the respondents had raised this issue before the learned umpire which has not been considered by him. Though, the witness examined by the claimants in his cross examination has admitted that he had no personal knowledge as to how the damage was caused to the rig Ed-Holt, the learned umpire has allowed the claim for extension of time.

24. A perusal of the cross examination of the witness at page 26 of Volume III examined by the claimants clearly indicates that the witness had admitted that the insurance company had paid the claimants compensation in respect of the pipeline and also compensated for the time effect. In my view the learned umpire once having rejected the claim for cost of repairs of pipes could not have allowed the claim for extension of time since cause for both the claims was identical. In my view the learned umpire has allowed the claim for extension contrary to clause 41.8 of the contract which prohibits any cost and time effect for replacing the damaged pipeline segment. In my view this part of the award is contrary to the terms of the contract. The learned umpire has exceeded his jurisdiction by allowing a prohibited claim.

25. A perusal of the award on this issue also clearly indicates that though there was no evidence led by the claimants as to how any additional number of days were required to carry out the work of repairs, the learned umpire has without any basis and evidence has allowed claim for extension of six days as against the claim of 12.670 days based on conjectures and surmises.

26. In case of Sikkim Subba Associates vs. State of Sikkim (2001) 5 SCC 629 it is held by the Supreme Court that an arbitrator is not a conciliator and his duty is to decide the disputes submitted to him according to the legal rights of the parties and not according to what he may consider to be fair and reasonable. An arbitrator was held not entitled to ignore the law or misapply it and he cannot also act arbitrarily, irrationally, capriciously or independently of the contract. Paragraph 14 of the said judgment of the Supreme Court read thus :-

“14. It is also, by now well settled that an Arbitrator is not a conciliator and his duty is to decide the disputes submitted to him according to the legal rights of the parties and not according to what he may consider it to be fair and reasonable. Arbitrator was held not entitled to ignore the law or misapply it and cannot also act arbitrarily, irrationally, capriciously or independently of the contract (See : Rajasthan State Mines and Minerals Ltd. vs Eastern Engineering Enterprises and Anr.) If there are two equally possible or plausible views or interpretations, it was considered to be legitimate for the Arbitrator to accept on or the other of the available interpretations. It would be difficult for the Courts to either exhaustively define the Word 'misconduct' or likewise enumerate the line of cases in which alone interference either could not be made. Courts of Law have a duty and obligation in order to maintain purity of standards and preserve full faith and credit as well as to inspire confidence in alternate dispute redressal method of arbitration, when on the face of the Award it is shown to be based upon a proposition of law which is unsound of findings recorded which are absurd or so unreasonable and irrational that no reasonable or right thinking person or authority could have reasonably come to such a conclusion on the basis of the materials on record or the governing position of law to interfere. So far as the case before us is concerned, the reference to the Arbitrator is found to be a general reference to adjudicate upon the disputes relating to the alleged termination of the agreement of the State and not a specific reference on any particular question and consequently, if it is shown or substantiated to be erroneous on the fact of it, the award must be set aside.”

27. This court in case of Siddhivinayak Realities Pvt. Ltd. vs. V. Hotels Ltd. And others delivered of 10th May 2014 in Arbitration Petition No. 667 of 2011 has held that there is no proposition that the court should be slow to interference with the arbitration award even if the conclusions are perverse and even when the entire basis of the arbitration award is wrong. It is held that it is open to the court to consider whether the award is against specific terms of the contact and if so interfere with it on the ground that it is patently illegal. Paragraph 133 of the said judgment reads thus :-

“133. In my view, there is no proposition that the court should be slow to interfere with the arbitration award even if the conclusions are perverse and even when the very basis of the arbitration award is wrong. It is open to the court to consider whether the award is against specific terms of the contract and if so interfere with it on the ground that it is patently illegal and it is opposed to the public policy of India. If award is contrary to the terms of the contract, it would be open to the court under section 34(2) (b) (II) of the Arbitration and Conciliation Act to interfere with such award. The award which is on the face of it patently in violation of the statutory provisions cannot be said to be in public interest. It has been held by the Supreme Court in case of ONGC Ltd. vs. Saw Pipes Ltd. (2003) 5 SCC 705 that in certain cases the court can set aside the award if it is contrary to the fundamental policy of Indian law, or the interest of India, or justice or morality or is patently illegal or is so unfair and unreasonable that it shocks the conscience of the court. Supreme Court has also held that normally the court are slow in interfering with the findings and interpretation given by the arbitrator. However, if any perverse award is passed, then the courts are not powerless to interfere with such perverse award.”

28. In case of Edifice Developers and Engineers Ltd. vs. Essar Projects (India) Ltd., Division Bench of this court in the judgment delivered on 3rd January 2013 in Appeal No.11 of 2012 has held that if an award is based on pure conjectures and in the absence of any evidence whatsoever, award can be set aside. The learned arbitrator in that case had awarded a claim which he considered to be reasonable without there being any evidence on record. The learned single judge was pleased to set aside that award. The Division Bench of this court dismissed the appeal filed by the contractor. Paragraph 12 of the said judgment of the Division Bench in case of Edifice Developers and Engineers Ltd. (supra) read thus :-

“12. The Arbitrator, as noted earlier, also awarded claims in respect of loss of profit, for under utilized plant and equipment and for reimbursement of infrastructure expenses. In respect of loss of profits, the Arbitrator merely held that a measure of 10% on the value of the remaining part of the works contract cannot be said to be unreasonable. The Arbitrator observed that a percentage representing 10% of the rate of profit is invariably accepted in the construction industry. Evidently save and except for an priori assumption, no evidence whatsoever was led before the Arbitrator in that regard. In P.R. Shah, Shares and Stock Brokers Private Limited v. B.H.H. Securities Private Limited4 the Supreme Court has held that while an Arbitral Tribunal cannot make use of its personal knowledge of the facts of the dispute, which is not a part of the record, the Tribunal can certainly use its expert or technical knowledge or the general knowledge about the particular trade in deciding a matter. That is why in many arbitrations, persons with technical knowledge are appointed since they may be well-versed with the practices and customs in the respective fields. The Arbitrator in the present case was not an arbitrator drawn from the trade. No basis whatsoever has been indicated in the award for accepting 10% as a measure representing loss of profits. No material was produced before the Arbitrator on the nature of the practice in the trade. During the course of the hearing no basis has been indicated to the Court from the record to suggest that any practice of that nature in the construction industry was brought to the notice of the Arbitral Tribunal. In the circumstances, the arbitral award to the extent that it allows the claim for loss of profits is based on pure conjecture and in the absence of any evidence whatsoever was correctly set aside. Similarly, in regard to the claim for underutilized plant and equipment and for reimbursement of expenses of infrastructure, it is evident that the Arbitrator has merely awarded a sum which he considered to be reasonable. No evidence whatsoever was led before the Arbitral Tribunal.”

29. In my view the learned umpire in this case has not only allowed the claim contrary to the terms of the contract but has decided the claim on the basis of conjectures and surmises and contrary to the evidence on record. In my view the learned umpire could not have awarded extension of time based on equity and what he felt reasonable when there was no evidence on record produced by the claimants. In my view the learned umpire has to decide in accordance with law, as per the terms of the contract and based on the evidence on record. The learned umpire has in my view exceeded his jurisdiction and has committed misconduct of the proceedings.

30. In my view there is no substance in the submission of Mr. Advani learned counsel for the claimants that the learned umpire having exercised his discretion and having allowed extension of time for six days on rough and ready basis, this court cannot interfere with such an award under section 30 of the Indian Arbitration Act, 1940. This court is not going into the reasonableness of the reasons given by the learned umpire or is not re-appreciating the evidence considered by the learned umpire. In my view this part of the award is not set aside on re-appreciating the evidence or by going into the reasonableness of the reasons rendered by the learned umpire. The award is based on no evidence led by the claimants and is in ignorance and de hors the provisions of contract and shows non-application of mind on the part of the learned umpire and is accordingly set aside.

Claim in paragraph 11(1) read with paragraph 9(f):

31. The claimants claimed a cost compensation at USD 1413677.80 and time extension of 7.583 days on the ground that the work slipped into the monsoon season for the reasons attributed to the respondents which resulted in additional expenses required to be incurred by the claimants for carrying on the work in the monsoon conditions and the obstructions caused by HHI Anchor Pattern. It was case of the claimants that under clause 8.5 of the contract, the completion date of work which was stipulated as 15th May, 1990, the claimants were entitled to a grace period of 30 days which would expire on 15th June, 1990 which was well into the monsoon season. Under clause 1.1.26,” Monsoon Season” means the portion of the year between 16th May to 17th September of every year. It was the case of the claimants that in this contract since the stipulated date of completion was 16th May 1990, even a single day's delay would push the work into the monsoon season during which period the monsoon storms and high seas was of such frequency and intensity at offshore location that construction work could not be scheduled with any assurance.

32. The learned umpire in paragraph 131 of the impugned award has observed that if the respondents request the contractor to carry on work during the monsoon season, the respondents must bear the extra cost including cost on account of delays due to adverse weather provided that the delay which caused the slippage into the monsoon season is occasioned by the respondents. For delays and slippage attributed to the respondents, appropriate time must be added to the schedule completion date. It is observed that the respondents had option to ask the claimants to de-moblize during the monsoon season and cost of such de-moblization and re-mobilization would be to the account of the respondents. The learned umpire held that both the parties realized that there were bound to be delays in the work during the monsoon on account of adverse weather, the respondents however did not ask the claimants to demobilize at the start of monsoon season and re-mobilize after the monsoon season perhaps as in that case, it would have to pay for de-mobilization and re-mobilization. The claimants at the same time also did not ask the respondents for permission to de-mobilize at the commencement of the monsoon and re-mobilize at its conclusion as in that case it would have to bear the cost of de-moblization and remobilization.

33. The learned umpire held that taking that into account the fact that broadly speaking the liability for delay on account of adverse weather condition was on the claimants, it would be appropriate only to award a part of the amount claimed by the claimants.

34. In paragraph 132 of the impugned award, the learned umpire has observed that it was claimed by the claimants that due to onset of monsoon it was compelled to retain DLB 801 for HRA modification work instead of continuing to use a smaller but more weather sensitive work boat such as Big Orange which had earlier carried on structural modification work at HRA. It was case of the respondents that the changes made by the claimants were for its own convenience or for reason for its own. The learned umpire in the said paragraph has recorded a finding that there was no cogent evidence one way or the other in regard to that dispute. However the respondents had not factually denied that barge DLB 801 which was employed for the work was prevented from mooring in the correct manner on account of interference by an HHI Barge which would have necessarily led to some delay as crossing anchor lines would be hazardous in adverse weather conditions. The learned umpire held that taking into consideration these factors, the claimants were entitled to the cost compensation of USD 4,00,000 and an extension of four days.

35. Mr. Kamdar, learned senior counsel for the respondents submits that though the learned umpire came to the conclusion that broadly speaking the liability for delays on account of adverse weather condition was on the claimants, contrary to such finding the learned umpire has awarded substantial part of claim. It is submitted that though the respondents had factually denied that barge DLB 801ed from mooring in the correct manner on account of interference by HHI barge, the learned umpire did not consider the pleading of the respondents and allowed claim of USD 4,00,000 and extension of four days. It is submitted that the claim awarded is contrary to clause 40 of the contract. The learned umpire did not render any reasons and disclose any basis for awarding claim of USD 4,00,000 and extension of time of four days in the impugned award. The entire claim is awarded on the basis of conjectures and surmises.

36. Mr. Kamdar, learned senior counsel submits that as per time schedule provided in the contract, the work was to be completed between 2nd February, 1990 and 30th April, 1990, however due to the negligence of the claimants the work slipped into the monsoon season and the problem occurred between 20th May, 1990 and 29th May, 1990. Learned senior counsel placed reliance on clause 8.5.1 of the contract and would submit that the delay including one due to rough weather condition occasioned during the grace period was on account of the claimants. It is submitted that the claimants did not cross examine the witness of the respondents on this issue and the said evidence has gone unchallenged. It is submitted that under clause 40 of the contract, the claimants were required to mutually discuss and minimize the interface problem which the claimant failed to do so. The learned umpire however did not consider this issue.

37. It is submitted that the amount awarded by the learned umpire and the extension granted is based on no evidence. Though the learned umpire has held that there was no cogent evidence produced by the claimants in paragraph 132 of the impugned award, the learned arbitrator still proceeded with grant of claim to the tune of USD 4,00,000 and extension of four days. Learned senior counsel placed reliance on clause 13.1 of the contract and would submit that the contract price was a firm price and the contractor was bound to keep his price firmed and without acceleration on any ground whatsoever until completion of entire work under the contract. It is stated that unless it is specified, the cost of all works as specified in the contract/bid package shall be deemed to be included in that firmed lump sum price of that contract. It is submitted that the claim awarded by the learned umpire is thus contrary to clause 13.1 of the contract also. Learned senior counsel submits that though the respondents in their written statement and in particular paragraph 43 had denied this claim as well as the breaches on the part of the respondents, the learned umpire has recorded a finding that the respondents had not factually denied that barged DLB 801 was prevented from mooring in the correct manner on account of interference by an HHI barge.

38. Mr. Advani, learned counsel for the respondents on the other hand submits that part of the work slipped in the monsoon period due to the delay attributed on the part of the respondents. The claimants though continued work in the monsoon period, the respondents neither asked the claimants to work in monsoon period nor stopped the claimants from working in the monsoon period. It is submitted that the learned umpire has rendered a finding of fact that both parties realised that there were bound to be delays in the work in the monsoon on account of weather and therefore the respondents did not ask the claimants to demobilize at the start of monsoon and re-mobilized after the monsoon season was over. It is submitted that this court cannot re-appreciate this findings of fact.

39. Mr. Advani, learned counsel placed reliance on various daily status reports which are at pages 611 to 620 of the compilation which were alleged to have been signed by both the parties in support of the submission that the learned umpire has awarded the monetary claim based on the daily status reports signed by both the parties and this court cannot re-appreciate the evidence considered by the learned umpire.

40. Learned counsel placed reliance on the letter dated 24th May, 1990 from the respondents to the claimants and the reply of the claimants thereto and would submit that the delay due to monsoon was an admitted position by the respondents. Mr. Advani, learned counsel placed reliance on Appendix A-3 and the rates provided therein for various items under the head 'Mobilization' and “Demobilization'. Learned counsel submits that since the vessel of the claimants was lying idle for which the respondents were responsible, claimants had rightly claimed the stand by rate provided in the contract itself for such idle period. It is submitted that the learned umpire has granted four days extension and has awarded stand by rates on the basis of rates provided under the caption 'mobilization and demobilization' which is forming part of the contract. It is submitted that the learned umpire has interpreted the terms of the contract and has awarded reasonable rate and no interference is thus warranted with the impugned award on this claim. It is submitted that this is not a case of there being no evidence on record. Some evidence was produced by the claimants which has been considered and appreciated by the learned umpire which cannot be re-appreciated by this court.

41. In rejoinder Mr. Kamdar, learned senior counsel invited my attention to the statement of the claimants made through their learned counsel recorded on page 864 of Volume III forming part of the cross examination of the witness examined by the claimants. It is recorded by the learned umpire that 'Mr. Advani further states that he does not intend to prove the correctness of the daily status report or the correctness through this witness'. It is submitted that the claimants have thus not proved the contents of these documents. The learned umpire in any event has not dealt with in the impugned award these reports while allowing the monetary claim. This court thus cannot consider the evidence for the first time and that also unproved documents in these proceedings. It is submitted that in any event the said rates mentioned in Appendix A-3 are not applicable to the claims made by the claimants and thus no reliance thereon could be placed by the claimants. No such reliance was placed also in the statement of claim on such appendix in support of their claim.

42. A perusal of the award indicates that it is observed by the learned umpire that neither the respondents requested the claimants to carry out any work during the monsoon season nor the claimants asked the respondents for the permission to de-mobilize at the commencement of the monsoon and re-mobilise at its conclusion. The learned umpire however held that taking that into account the fact that broadly speaking the liability for delay on account of adverse weather condition was on the claimants, it would be appropriate only to award a part of the amount claimed by the claimants. Though the learned umpire observed that there was no cogent evidence one way or the other in regard to the dispute, the respondents had not factually denied that barge DLB 801 which was employed for the work was prevented from mooring in the correct manner on account of interference by an HHI barge which would have necessarily let to some delay as crossing anchor lines would be hazardous in adverse weather condition. The learned umpire allowed the cost compensation of USD 400000 and an extension of four days.

43. A perusal of the pleadings clearly indicates that the respondents had denied that the barge DLB 801 was prevented from mooring in the correct manner on account of interference by HHI barge, however, the learned umpire has rendered an erroneous finding that the respondents had not factually denied that barge DLB 801 which was employed for the work was prevented from mooring in the correct manner on account of interference by HHI barge which could have laid to some delay.

44. A perusal of the paragraph-132 of the impugned award indicates that the learned arbitrator has rendered a finding that there was no cogent evidence produced by the claimants. In-spite of such findings, the learned umpire has allowed the claim of USD 400000 by way of cost compensation and an extension of four days. In my view even though the provisions of Evidence Act are not applicable to the arbitration proceedings, principles of Evidence Act apply to the arbitration proceedings. The party alleging breach of contract on the part of the other party and claims a compensation on that ground has not only to prove the breach committed by the other but has also to prove the loss and damages suffered by such party alleging breach. This court in case of Pradyuman Kumar Sharma vs. Jai Sagar M. Sancheti 2013 (4) All MR 286 has held that though arbitrator is not bound by the provisions of Code of Civil Procedure or Evidence Act, principles of Evidence Act and the Code of Civil Procedure are applicable even to the arbitration proceedings. Para 33 of the said judgment reads thus :-

“33. In my view, there is no substance in the contention of Mr. Anturkar, the learned counsel appearing for the petitioner that learned arbitrator ought to have taken into consideration Mr. Mishra's report, or that the same was alleged to be on record by virtue of Order 26 Rule 10 of the Code of Civil Procedure and was part and parcel of record and proceedings. It is not in dispute that the learned arbitrator did not appoint Mr. Mathur or Mr. Mishra as Commissioner to examine the disputed signature. Perusal of Order 26 Rule 10 of the Code of Civil Procedure indicates that Court is empowered to appoint Commissioner for carrying out local investigation. The scheme of Order 26 Rule 10 of Code of Civil Procedure indicates that such Commissioner appointed by the Court or carrying out investigation, collects the evidence on behalf of the Court and the report of such Commissioner has to be read as evidence in such proceedings as per the provisions of Code of Civil Procedure. In my view, provisions of Order 26 Rule 10 of Code of Civil Procedure or principles thereof, cannot be extended to the alleged report relied upon by the petitioner, the same being a disputed document not having been proved by the petitioner by examining proper witness in that behalf in spite of an opportunity being available to the petitioner to examine Mr. Mishra at the relevant and appropriate time. Petitioner himself did not enter the witness box. He was the best witness to depose that his signature was alleged to have been forged by the respondents. In my view, though arbitrator is not bound by the provisions of Code of Civil Procedure or Evidence Act, principles of Evidence Act and Code of Civil Procedure are applicable even to arbitration proceedings. A document which is disputed by a party and if not proved, cannot be considered even by the arbitrator to be on record or as a piece of evidence. Taking into consideration an unproved document by an arbitrator, on the contrary would be in violation of principles of natural justice. In my view, arbitrator was not bound to refer the alleged document to an expert witness suo moto.”

45. This court in case of Konkan Railway Corporation Limited vs. Oriental Construction 2013(3) Bom. C.R. 140 has held that a party alleging breach of contract on the part of other has not only to prove the breach committed by other but has also to prove the loss and damages suffered by such party alleging breach committed by the other. An arbitrator cannot apply thumb rule and allow a claim mechanically without any evidence on record. Paragraph 20 of the said judgment in case of Konkan Railway Corporation Limited (supra) reads thus :-

“20. The impugned award indicates that though no evidence was led by the contractor in support of its claim for compensation, the arbitral tribunal has without apportioning the delay and without any evidence on record, has applied thumb rule by allowing the claim at the rate of 60% mechanically and without application of mind. In my view, a party alleging breach of contract on the part of other, has not only to prove the breach committed by the other but has also to prove the loss or damages suffered by such party alleging breach. In my view the entire award is based on no evidence and thus deserves to be set aside.”

46. In so far as submission of Mr. Advani, learned counsel for the claimants that since the respondents did not raise any objection about the work carried out by the claimants in monsoon period without permission or the respondents did not raise any objection when the claimants were carrying on work in monsoon, the learned umpire was justified in allowing part of the claim is concerned, in my view there is no substance in this submission of the learned counsel. A perusal of the record indicates that the learned umpire has rendered a finding that taking into account the fact that broadly speaking the liability from delay on account of adverse weather condition was on the claimants and in-spite of such findings, the learned umpire allowed substantial part of the claim. The conclusion drawn by the learned umpire in my view is contrary to the findings rendered and shows non-application of mind on the part of the learned umpire.

47. In my view the learned umpire has not interpreted any terms of the contract as canvassed by the learned counsel for the claimants but has decided contrary to the terms of the contract and has allowed the claim without any evidence.

48. In so far as the submission of Mr. Advani the learned counsel for the claimants that the monetary claim allowed by the learned Umpire is based on the daily status report signed by both parties and this court cannot re-appreciate the evidence is concerned, a perusal of the statement recorded by the learned Umpire which is forming part of the evidence clearly indicates that the claimants did not want to prove the contents of such daily status reports. In the statement of claim the claimants had not even relied upon such daily status reports. Even the learned Umpire while allowing the substantial claim did not refer to any such daily status reports. The witness examined by the claimants in the cross examination did not prove such documents for want of personal knowledge.

49. In my view, the claimants not having proved the contents of such documents and as a matter of record having made a statement before the learned Umpire that the claimants did not propose to prove the contents of such records, cannot seek reliance on such documents which are not proved. Be that as it may, neither any reliance was placed on such documents in the statement of claim by the claimants nor by the learned umpire in the impugned award. This court cannot allow a party to rely upon the document which was not proved before the learned Umpire admittedly though oral evidence was led by the claimants, for the first time in this proceedings. This court in case of Pradyuman Kumar Sharma supra) has held that a document which is disputed by a party and if not proved cannot be considered to be on record or as a piece of evidence by an arbitrator. If an arbitrator considers an unproved document, it would be in violation of principles of natural justice.

50. A perusal of the status reports sheets relied upon by Mr. Advani, learned counsel for the claimants even otherwise does not indicate that the parties have agreed to the contents of the entries and/or data mentioned therein. I am thus not inclined to accept the submissions of Mr. Advani learned counsel for the claimants that the award is based on the daily report sheets signed by both the parties and thus this court cannot re-appreciate the evidence alleged to have been considered by the learned Umpire.,

51. In my view, submission of Mr. Kamdar, learned senior counsel for the respondents that even otherwise the rates provided in appendix A-III under the head “mobilization and demobilization” relied upon by Mr. Advani learned counsel for the claimants, would not apply to the claims made which is in question is correct. The award being contrary to the terms of the contract and is based on no evidence is accordingly set aside.

Claim in Paragraph 11(t) :

52. The learned Umpire had dealt with this claim in paragraphs 152 to 154 of the impugned award. It was the case of the claimants that due to spillage of oil, gas leaks and fire, their vessel Big Orange was prevented access to site and as a result thereof, the claimants claimed a sum of USD 23,750.888 as standby costs of Big Orange. It is observed by the learned umpire that respondents did not deny the factual basis of the claim nor the quantum of cost. It is noted by the learned umpire that independently he had also reviewed the justification of the claimant's claim at C-2 Volume 2 page 521 although he did not place any reliance on the said document. The learned Umpire held that the Daily Status Reports for Big Orange for 9th, 13th, 15th, and 16th April, 1991, (C-2 Volume 2, Pages 522 to 526) clearly evidence the standby. The learned Umpire awarded the claim of USD 23,750.888 rounded off to USD 23751 as claimed by the claimants.

53. Mr. Kamdar learned senior counsel for the respondents submits that the claim for standby charges of Big Orange was made by the claimants alleging that the same vessel was prevented from accessing the site due to spillage of oil and gas leak. It is submitted that the finding of the learned Umpire that the respondents have not denied the factual basis of the claim or quantum of cost is contrary to the pleadings and the evidence led by the respondents in which the respondents had categorically denied their liability to pay the said amount or any other amount under the said claim. Reliance is placed on paragraph 51 of the written statement and para 53 at page 958 of the oral evidence led by the respondents. It is submitted that the impugned award shows an error apparent on the face of the record. The learned Umpire has ignored the material piece of pleadings and evidence and has decided contrary to the same. It is submitted that the learned Umpire has committed patent error in relying on the Daily Progress Report though the claimants through their counsel had made a statement that the claimants did not intend to prove the correctness of those reports. It is submitted that the witness examined by the claimants admitted in the cross examination at page 864, 865 that he had no personal knowledge of the daily progress reports. Learned senior counsel submits that the said daily progress reports were not proved by the claimants through any other witness. It is submitted that the entire claim is allowed by the learned Umpire only based on such daily progress report which were unproved documents. The award is based on no evidence led by the claimants. Award is contrary to the evidence led by the respondent.

54. Mr. Advani learned counsel appearing for the claimants on the other hand would submit that the claimants had only claimed standby rates as there was no access to site. Learned counsel placed reliance on the daily progress reports and in particular at pages 522 to 524 in support of his submission that the daily progress report clearly evidenced the standby of the vessel. It is submitted that the standby rate is provided in the contract which was claimed by the claimants. It is submitted that the learned Umpire has relied upon the daily progress reports which were signed by both the parties and thus this court cannot re-appreciate the evidence considered by the learned Umpire. It is submitted that strict provisions of the evidence Act are not applicable to arbitration proceedings.

55. Mr Advani learned counsel for the claimants placed reliance on clause 8.2.1 and 8.2.2 of the contract and submits that the respondents were under an obligation to provide access to the claimants to site in accordance with the the terms of the said clauses and since the respondents have failed to provide access and as a result thereof there was a delay resulting in expenses of the claimants, the claimants are entitled to extension of time for completion of the works and reasonable compensation within the appropriate schedule of rates applicable and otherwise as were mutually agreed. It is submitted by the learned counsel that the claimants had claimed only the stand by rates at US $ 89.600 and day rate at US $ 91.00. It is submitted that the claimants had explained the calculation of delay at page 52 of Vol. C-II. Learned counsel placed reliance on pages 522 to 524 of the Volume C-II in support of his submission that daily status reports were signed by both the parties which clearly showed the evidence of the stand by as claimed by the claimants. It is submitted that the learned umpire had relied upon the daily status report signed by both the parties and thus this court cannot re-appreciate the evidence relied upon by the learned umpire. It is submitted that strict provisions of the Evidence Act are not applicable to the arbitration proceedings.

56. A perusal of the award indicates that the learned Umpire allowed this claim by recording an observation that the respondents had not denied the factual basis of the claim or the quantum of cost. The learned Umpire noted that independently he had also reviewed the justification of the claim at volume II (C-2) page 521 although he did not place reliance on the said document. The learned Umpire held that the daily status reports for Big Orange clearly evidenced the standby and accordingly allowed claim of US dollars 23750.888 rounded of to USD 23751.

57. A perusal of paragraph 51 of the written statement however, indicates that the respondents have denied their alleged liability in respect of the said claim made by the claimants. In para 2 of the written statement it is further submitted by the respondents that except the amounts admitted in the written statement i.e. USD 6330702.22, sum of DFL 1766167, sum of FRF 2105604.17 and a sum of Rs.5308190.6, claimants were not entitled to any other claim as the same were not maintainable under various contract clauses and there was no liability whatsoever on the part of the respondents to any such sum or sums so claimed. In my view the finding of the learned Umpire and the basis of allowing the claim based on the alleged admission on the part of the respondents discloses a patent error apparent on the face of the award being contrary to and in ignorance of the written statement filed by the respondents.

58. In so far as the amount of claim allowed by the learned Umpire is concerned, the only documents relied upon by the learned Umpire are the daily status reports which were on pages 522 to 526 of volume II of C-2 in respect of the claim for standby charges. Though the learned Umpire himself had recorded the statement of Mr. Advani, learned counsel for the claimant that the claimants did not propose to prove the contents of any of the daily status reports has contrary to such statement proceeded to rely upon such unproved and disputed documents. The learned Umpire also ignored the material part of the cross examination of the witness examined by the claimants and in particular at page 864 and 865 that he had no personal knowledge of the daily progress reports. In my view the entire award is based on the unproved documents and which were not part of the evidence. The learned Umpire could not rely upon unproved and disputed documents. The award is in violation of principles of natural justice. Neither such daily progress report was even proposed to be proved nor the witness examined by the claimants had admittedly any personal knowledge of such daily progress reports. The learned Umpire has thus committed misconduct of the proceedings and also legal misconduct.

59. In so far as submission of Mr. Advani learned counsel for the claimants that the claimants had claimed only the standby rates at USD 89.600 and day rate at USD 91 is concerned, a perusal of the statement of claim does not indicate any such claim on the basis of standby rates alleged to have been provided in the contract as sought to be canvassed by the learned counsel across the bar. The learned Umpire in para 22 of the impugned award has held that the statement of claim was devoid of several material particulars which one would normally expect in a statement of claim and further observed that the material on the basis of which the claims were made has not been disclosed in the statement of claim and during the hearing at several times summaries/synopsis prepared and submitted by the claimants from some of the documents on record had to be resorted to, to understand the claims. It is observed that the learned counsel for the claimants had argued those claims based on the summaries contained in volume I and II of the claim which summaries were however, admittedly not been proved and they could not be exhibited or relied upon except to understand the claim.

60. It is observed by the learned Umpire that there was no evidence as to how those summaries were prepared or showing that they were correct and therefore, he had not taken into account such claims as were not reflected in the statement of claim and merely based on statements of figures contained in the summaries. It is thus clear beyond reasonable doubt that the learned Umpire has allowed this claim not based on pleadings and evidence but based on the unproved documents and has allowed the claim in violation of principles of natural justice and contrary to his own findings rendered in paragraph 22 of the award. A perusal of the appendix III which is relied upon by Mr. Advani learned counsel for the claimants in support of this claim purporting to be the standby rates or day rates are even otherwise not applicable to this claim made by the claimants. The award allowing this claim is accordingly set aside.

Claim in paragraph 11(d) read with para 9(1)(a) of the statement of claim :

61. The claimants had made this claim in the sum of DFL 490,800 and a time extension of 9 days for completion of the project on account of the alleged standby of the dredging vessel “Hardinxveld” on the ground that the Bombay Port Trusty had not provided a pilot which was a necessary precondition for the mobilization of the vessel. It was the case of the claimants that Bombay Port Trust did not provide cooperation in view of its dispute with the respondents and therefore, there was a failure on the part of the respondents to provide access to the site. The claimants claimed that due to the delay in dredging, the mobilization of DLB 801 Lay Barge was delayed from 28th November, 1989 to 7th December, 1989. There was 13 days delay according to the claimants which delayed the commencement of pipeline/laying operations for 9 days from 4th December, to 13th December, 1989.

62. The respondents denied this claim and also the reasons for any delay alleged to be attributed to the respondents. The learned Umpire observed that the respondents did not specifically deny the factum of dispute between the respondents and the Bombay Port Trust though it denied that the non-giving of permits was due to such disputes. It is observed by the learned Umpire that although the respondents admitted that it made a payment to the extent of DFL 3,26,700/- and admitted that here was delay of 12,275 days because the pilots were not provided by the Bombay Port Trust, the respondents claimed that the said payment was for some other work done by “Hardinxveld” for carrying out some checks on survey position system during that period. It is observed that it was contention of the respondents that the delay was during the grace period and thus the claimants could not claim any extension on that ground. It is observed by the learned Umpire that the respondents however specifically admitted that the claimant was entitled to costs to the extent of DFL 3,26,700/- and had paid the said amount.

63. The learned Umpire in paragraph 99 of the award has held that it was for the claimants to prove that the denial of pilots by Bombay port trust was on account of dispute with the respondents. It is held that the only evidence produced by the claimants was certain newspaper reports which was clearly insufficient and unreliable and therefore, he would have disallowed the claimant's claim but for the specific admissions made by the respondents. Learned Umpire held that as the respondents admitted that there was delay of 12.375 days on account of denial of pilots by the Bombay Port Trust, he was inclined to grant reasonable extension on that account. A monetary claim on the ground of non-furnishing of pilots be dismissed but that would not affect the payment of DLF 3,26,700/- which had been paid for the work done by “Hardinxveld”. Learned Umpire then opined that although a particular delay taken by itself may not affect the critical part, it cannot be ignored on that ground that if all such delays were taken together, they would affect the critical part. The learned Umpire held that once the respondents had admitted liability for a net delay of 12.375 days, the onus of proving that such delay should not translate in extension of project schedule delay was on the respondents.

64. The learned Umpire placed reliance on article 8.2.2 of the contract and held that it was for the respondents to provide access and if delay was caused on account of their failure to provide access, the clause did not mention any requirement that such delay should have affected the critical part. Learned Umpire gave a finding that on the evidence before him, he would hold that the respondent had failed to discharge such onus. The learned umpire placed reliance on the treatise of “Hudson on Building and Engineering Contracts”. The learned Umpire held that on the basis of the admission of 12.375 days delay on the part of the respondents, he considered it just and proper to allow an extension of 9 days to the claimants in the completion of project schedule as claimed by the claimants.

65. Mr. Kamdar, learned senior counsel for the respondents submits that the finding of the learned Umpire that the respondents have admitted the delay of 12.375 days because the pilot was not provided by the Bombay Port Trust and that the claimant shall be entitled to extension of time is contrary to contract, pleadings and the evidence. It is submitted that the witness examined by the claimants had admitted in the cross examination that it was responsibility of the claimants to obtain pilot and the respondents had categorically denied their liability to pay the said amount. It is submitted that such delay could not be attributed to the respondents. The respondents have denied that the permit was not given to the claimants because of any dispute with the Bombay Port Trust and the respondents. It was the case of the respondents that the claimants were entitled to DFL 3,26,700/- as the vessel had carried out some checks on survey positioning system on 1st and 2nd October, 1989 for the total period of 0.625 days. The witness of the claimant had admitted these facts in paragraph 6 and 7 of the cross examination at page 789 and 790. Learned senior counsel submits that the said activity was not on the critical part of the schedule and the work was completed prior to the commencement of the next activity and thus claimants were not entitled to any cost and time effect.

66. Learned senior counsel submits that witness of the claimants had admitted in the cross examination that he had no personal knowledge as to what transpired between their agents and the Bombay Port Trust and therefore, claimants had failed to prove that the pilot was not provided by the Bombay Port Trust due to any alleged disputes between the respondents and the Bombay Port Trust. It is submitted that in any event under clause 5.2.2 and 5.2.3 it was the responsibility of the claimants to obtain pilots from Bombay Port Trust. The claimants had in fact made an application on 30th September, 1989 to the Bombay Port Trust. It is submitted that the Bombay Port Trust did not provide the pilot as the claimants had not applied for the same on time.

67. Learned senior counsel invited my attention to the grounds raised in paragraph (b) and (c) of the petition disputing the alleged admission on the part of the respondents in the pleadings or otherwise. It is submitted that the entire claim is awarded based on alleged admission on the part of the respondents which is contrary to the evidence and pleadings on record. It is submitted that as per provisions of contract, any delays on account to work pursuant to delays in entry to/exit from the port was on account of the claimants. Reliance is placed on clause 5.12.6 of the contract in support of this submission.

68. Mr. Advani, learned counsel for the claimants submits that the respondents had admitted delay of 12.375 days delay. The learned umpire has rendered a finding of fact and as against the admitted delay of 12.375 days, the learned umpire has allowed extension of 9 days. This court cannot re-appreciate the evidence and interfere with the findings rendered by the learned umpire.

69. It is submitted by the learned counsel that the respondents have already accepted the delay of 12.375 days. The learned counsel placed reliance on letters dated 16/11/1990 from the claimants to the respondents, dated 02/01/1990 from the claimants to the respondent and letter dated 2/3/1992 from the respondents to claimants in support of the submission that the respondent had admitted the delay of 12.375 days.

70. A perusal of the award on this claim indicates that the learned Umpire has allowed the claim for extension of time for nine days as claimed by the claimants on account of alleged delay on the part of the respondents for completion of the project as the Bombay Port Trust had not provided a pilots which was a necessary precondition for the mobilization of the vessel. The learned Umpire has held that it was for the claimants to prove that the denial of pilots by the Bombay Port Trust was on account of dispute with the respondents. It is also observed that the only evidence produced by the claimants was certain newspaper reports which was insufficient and unreliable and he would have disallowed the claimant's claim but for the specific admissions made by the respondents, that there was delay of 12.375 days on account of denial of pilots by the Bombay Port Trust, he was inclined to grant reasonable extension on that account. The learned Umpire relied on article 8.2.2 of the contract and held that it was for the respondents to provide access and if any delay was caused on account of their failure to provide access, the clause did not mention any requirement that such delay should have affected the critical part and he would have held that the respondent had failed to discharge such onus. The learned Umpire held that he considered it just and proper to allow the extension of nine days to the claimants in the completion of project schedule as claimed by the claimants.

71. The learned umpire while allowing claim for extension of time for nine days also considered the fact that the respondents had already paid the claimants to the extent of DFL 326700. A perusal of the record indicates that under clause 5.2.2 and 5.2.3 it was the responsibility of the claimants to obtain pilots from the Bombay Port Trust. The claimants had made an application on 30/09/1989 to the Bombay Port Trust. The Bombay Trust however did not provide the pilots as the claimants had not applied for the same on time. The witness examined by the claimants also admitted in cross examination that it was the responsibility of the claimants to obtain pilot and the respondents had categorically denied their liability to pay any such amount. The witness examined by the claimants in his cross examination had further deposed that he had no personal knowledge as to what transpired between their agents and the Bombay Port Trust.

72. A perusal of the written statement does not indicate any such alleged admission on the part of the respondents of the delay of 12.325 days on the ground of the pilots not having been provided by the Bombay Port Trust or on any other ground. In my view the entire basis of the award allowing claim for extension of 9 days on the basis of alleged admission of delay on the part of the respondents is contrary to the pleadings and evidence and shows an error apparent on the face of the award. The learned umpire has ignored the admissions of the witness examined by the claimants during the course of cross examination which was a crucial and material evidence. In my view the conclusion drawn by the learned umpire is contrary to his own observations/finding that the claimants had failed to prove that the denial of pilots by the Bombay Port Trust was on account of the dispute between the respondents and the Bombay Port Trust. The learned umpire had already rejected the newspaper reports produced by the claimants as insufficient and unreliable. In my view even otherwise the award granting extension of nine days is based on no evidence and is thus set aside.

73. In so far as submission of Mr Advani learned counsel for the claimants that the learned umpire has granted extension of nine days as against alleged admission of delay of 12.375 days is concerned, in my view this argument has no merits. There is no admission on the part of the respondents of any such delay as erroneously observed by the learned umpire.

Claim in Paragraph 11(x) :

74. The learned umpire had dealt with this claims in paragraphs 165 to 170 of the award. The claimants had claimed a sum of USD 64,906 due to alleged stand by of resources and assistance given to the respondents to clean Uran site after oil/water leak alleged to have been caused by the respondents personnel opening valves and discharging oil and water on site. It was the case of the claimants that due to negligence on the part of the personnel of the respondents an oil spillage flooded the work site at Uran due to which all the works were stopped for three days which resulted in delay in the completion of Uran modification works and finally the project. It was the case of the claimants that they had acted in normal manner and if the respondents wanted extra steps to be taken by way of blinding arrangements or otherwise, they ought to have instructed the claimants under clause 5.8.2 and similarly the respondents could have invoked clause 42.4 sub clauses III and IV and clause 42.5.1.

75. The learned umpire has observed that in its reply, the respondents did not deny that the oil spillage occurred due to the negligence on the part of the personnel of the respondents and also did not deny the factum or quantum of the claim. It is observed that the only defence of the respondents was that the claimants failed to provide blinding arrangements. In paragraphs 169 of the impugned award the learned umpire has held that apart from the admission of the respondents he had reviewed the justification of the claimants of claim at C-2, Volume 2 pages 450–453. It is observed that the day work sheet dated 19th June 1990 to 22nd June 1990 at pages 456 to 459 showed the number of personnel and equipments on stand by due to oil spillage and thus he was not satisfied that the claimants in any manner contributed to the problems and awarded the entire claim to the claimants.

76. Mr. Kamdar, learned senior counsel invited my attention to paragraph 55 of the written statement to demonstrate that the respondents had not admitted any alleged negligence but had blamed the claimants. It is submitted that the oil spillage occurred due to the failure of the claimants to provide appropriate blinding arrangements and the respondents were not liable to pay any amount to the claimants. Though the witness Mr. Jacques Menochet examined by the claimants at pages 864 and 865 of volume III admitted that he had no personal knowledge of the daily progress report and no other witness proved the said report, the learned umpire relied upon such daily progress which were disputed documents. Learned senior counsel relied upon the statement of the claimants made through their learned counsel that he did not intend to prove the said daily status reports. There was no oral evidence to prove the disputed documents. My attention is invited to evidence recorded on pages 450 to 459 by the learned senior counsel in support of his submission that the award is contrary to the oral evidence on record and is based on the unproved documents.

77. Learned senior counsel submits that in the statement of claim the claimants did not give any breakup or proof in support of this claim and the claim was totally vague and without proof. Learned senior counsel placed reliance on the scope of work provided in Appendix B which included safety requirement to be provided by the claimants. It is submitted that though the witness examined by the respondents had deposed that it was obligation on the part of the claimants to provide safety/blinding arrangements, there was no cross examination on this deposition of the respondents and it remained un-controverted. It is submitted that the award is also contrary to the terms of the contract.

78. Mr. Advani, learned counsel for the claimants on the other hand placed reliance on clause 5.8.2 of the contract and would submit that there is no reference to the flanges and blinds in the said provision required to be provided by the claimants. It is submitted that the items which are required to be provided by the claimants free for taking safety procedure did not include flanges and blinds. It is submitted that the learned umpire had interpreted the terms of the contract which is possible interpretation and no interference with such possible interpretation is permissible under section 30 of the Arbitration Act. Learned counsel placed reliance on letter dated 20th June 1990 of the respondents to the claimants admitting the oil spillage and directing the claimants to provide flanges and blinds. It is submitted that the learned umpire had rightly rendered a finding of fact that it was not the responsibility of the claimants to provide flanges and blinds and such finding of fact does not require any interference. The claimants had made claim for the stand by of the equipments at the rates provided in the contract.

79. A perusal of the award indicates that the amount as claimed by the claimant is awarded on the premise that the respondents did not deny that the oil spillage occurred due to the negligence on the part of the personnel of the respondents and also did not deny the factum or quantum of the claim. It is observed by the learned umpire that the only defence of the respondents was that the claimants failed to provide blinding arrangements. However the learned umpire also observed that apart from the admission of the respondents he had reviewed the justification of the claimants of claim at pages 540 to 553 of Vol.II (C-2). It is also observed by the learned umpire that the worksheet dated 19/06/1990 to 22/06/1990 showed the number of personnel and equipments on stand by due to oil spillage and thus he was not satisfied that the claimants in any manner contributed to the problems and allotted the entire claims to the claimants.

80. A perusal of written statement and in particular paragraph 55 does not indicate that the respondents had admitted to any alleged negligence on their part. On the contrary the respondents have blamed the claimants. A perusal of the statement of claim clearly indicates that the claimants did not give any break up or proof in support of this claim and the same was totally vague and without particulars. In my view, the scope of work recorded in appendix B makes it clear that the safely requirement was to be provided by the claimants and was within their scope of work. The witness examined by the respondents had deposed that it was obligation on the part of the claimants to provide such blinding arrangement. There was no cross examination of the witness of the respondent by the claimants on this deposition.

81. The learned umpire while allowing this claim has placed reliance on the daily status reports which admittedly were not proved by the claimants and were not part of the evidence. Reliance placed by the learned umpire on pages 450 to 453 of Vol.II is contrary to his own finding recorded in para 22 of the impugned award which shows non application of mind on the part of the learned umpire. The learned umpire has ignored the crucial part of the oral evidence and has relied upon the unproved and disputed documents. There is an error apparent on the face of the award and thus the entire award allowing this claim is contrary to the terms of the contract, and is in violation of principles of natural justice.

82. In so far as submission of Mr Advani learned counsel for the claimants that the claimants were not liable to supply flanges and blinds free of cost is concerned, this submission is contrary to the terms of the contract. Safety procedure was required to be followed by the claimants which was part of the scope of work and no extra was payable for the same. In so far as submission of the learned counsel that the learned umpire having interpreted the terms of the contract and his interpretation is possible interpretation and this Court shall not substitute the interpretation of learned umpire by interpreting it differently is concerned, in my view, while interpreting the terms of the contract the learned umpire could not have decided dehorse the terms of the contract which has been done by the learned umpire. The award thus requires interference by this Court. This part of the award is accordingly set aside.

83. I am not inclined to accept that the learned umpire has awarded the claim based on the stand by rates of the equipments alleged to have been provided in to contract. A perusal of the statement of claim does not indicate that the claimants had made any claims on the basis of stand by rates. Be that as it may, such stand by rates claimed by the claimants as alleged are not provided in the contract for such type of claim nor the same has been considered by the learned umpire as is apparent from the bare perusal of the award. There is thus no merit in the submission of the learned counsel on this issue.

Claim in paragraph 11(o) and (p) and Paragraph 9(2)(c) :

84. The learned umpire has dealt with these claims in paragraphs 140 and 141 of the impugned award. The head of the claim was comprising of three items.

(1) Time extension for completion of work on account of HHI

(2) Claim of USD 45433.60 for disruption caused by the respondents causing an oil spillage over platform which spread over operational areas

(3) Claimed USD 41313.30 on account of stand by charges caused by non issue of hot work permits due to gas leak during shut down.

85. The total time extension claimed by the claimants on account of the these three items was 0.902 days. The respondents have challenged only the claim awarded by the learned umpire in respect of the third item in the sun of USD 41313.40 on account of stand by charges caused by non issue of hot work permits due to gas leak during shut down.

86. The learned umpire has observed that the respondents has not denied the correctness of the allegation that the contractor of the respondents dumped water over the personnel of the claimants resulting in stoppage of work. It is observed that the respondents has not denied that the gas leak led to the non issue of hot work permits which was caused by the employees of the respondents. The respondents had merely claimed that the time extension of 0.167 days was granted in adjusting the liquidated damages. In para 141 of the impugned award the learned umpire granted the claim for USD 45433.60 on account of loss caused by the contractor of the respondents dumping water and USD 41313 on account of delay caused by gas leak. The learned umpire also granted extension of 0.167 days which delay according to the learned umpire was admitted by the respondents.

87. Mr Kamdar learned senior counsel for the respondents submits that the claimants were not granted hot work's permit due to genuine reasons. It is submitted that the cost impact on account of refusal or cancellation of hot work's permit is included in the contract price as per Appendix-3 of the contract. It is submitted that the claimants did not cross examine the witness examined by the respondents on this issue and the said evidence has gone unchallenged. It is submitted that the hot work's permit was to be issued by the respondents keeping in mind the production/processing program. It was the responsibility of the claimants to device methods and develop a detailed procedure to realize the objective and carry out the modification in orderly manner. It is submitted that it was the responsibility of the claimants to obtain such permit and to satisfy all the conditions laid down by the safety engineer. Learned senior counsel submits that the witness examined by the respondents had specifically stated that hot works's permit was not given or cancelled by the respondents in conformity with the contract and in particular clause 35 and 42.4 (iv) of the contract. It is submitted by the learned senior counsel that though such claim made by the claimant is prohibited under clause 35 and 42.4 (iv) of the contract and though the respondents had raised this issue before the learned umpire, in the impugned award the learned umpire did not consider the submissions of the respondents and allowed claims which are barred and/or prohibited under clause 35 and 42.4 (iv). The learned umpire has thus committed judicial misconduct and has exceeded his jurisdiction.

88. Mr Advani learned counsel for the claimants on the other hand submits that it was obligation on the part of the respondents to issue hot work's permission under the provisions of the contract. The production plan was already decided in advance. The claimants had already mobilized the resources. In view of the oil spillage and gas leak, the resources mobilized by the claimants were stand-by. Reliance is placed by the learned counsel on the daily status report at page Nos.584 to 586 of Vol. C-II in support of its claim of US $ 41313 awarded by the learned umpire. It is submitted that the restriction for issuance of hot works permit was during the production and not at any other time. The claimants were not allowed to carry out the work due to the gas leak. It is submitted that the learned umpire has rendered a finding of fact which cannot be interfered by this Court under Section 30 of Arbitration Act 1940.

89. The claimants had made this claim which was comprising of three items. The respondents have impugned only third item i.e. claim on account of stand by charges alleged to have been caused by non issue of hot work permits due to gas leak during shut down. In the impugned award the learned umpire has observed that the respondent had not denied that the gas leak led to the non issue of hot works permit which was caused by the employees of the respondents. A perusal of the record indicates that it was case of the respondents that the hot work permit was not granted to the claimants by the respondents due to genuine reasons and in any event the cost impact on account of refusal or cancellation of hot works permit was included in the contract price in appendix-III of the contract. Such hot work permit was to be issued keeping in mind production/processing program.

90. The witness examined by the respondents in evidence had deposed that such permit was not given or was cancelled by the respondents in conformity with the contract and in accordance with Clause 35 and 42.4(iv) of the contract. The learned umpire however did not consider the crucial part of the evidence and also any of the submissions made by the respondents and allowed this claim contrary to the terms of the contract. The learned umpire also did not give any reasons for allowing this claim made by the claimants.

91. In so far as submission of Mr Advani learned counsel for the claimants that the claimants had already mobilized the resources and in view of the oil spillage and gas leak the resources mobilized by the claimants were stand by as could be demonstrated from the daily status report is concerned, in my view even if the learned umpire is right in holding that the respondents were responsible for such oil spillage and gas leak, the onus was on the claimants to prove that the claimants suffered a loss and/or damages and the quantum arising thereof. The reliance placed by the claimants on daily status report across the bar or standby rates was neither pleaded in the statement of claim nor such daily status report were proved in evidence. Even the learned umpire has not allowed this claim on the basis of such daily status report. A claim is allowed thus on the basis of no evidence and is allowed on conjectures and surmises. The award in respect of this claim is accordingly set aside.

Claim in Paragraph 11(g) :

92. The claimants had made a claim for time extension of 1.299 days for completion of project and cost compensation of US $ 187046.30 and DFL 251820 due to alleged disruption of riser construction work due to platform flare eruption. The learned umpire dealt with this claim in paragraphs 113 to 115 of the impugned award. It is observed by the learned umpire that the respondents had granted an extension of 1.299 days and had claimed to have adjusted the cost in calculating the liquidated damages. In paragraph 78 of the impugned award, the learned umpire has dealt with the issue as to whether the respondents were entitled to claim that it compensated the claimants for some of its claim by adjusting the amounts claimed in the assessment of the liquidated damages or by granting extension of time in the computation of liquidated damages.

93. The learned umpire has held that there was no evidence as to how the liquidated damages had been calculated. It is observed that no person even calculated the liquidated damages or decided to levy such liquidated damages had given any evidence. It is also held that there was nothing to show as to how the various claims of the claimants who are alleged to have been taken into account in computation of the liquidated damages. The umpire on these grounds rejected the stand of the respondents that the claims of the claimants were adjusted. The learned umpire has recorded a finding that even on the evidence led, it is proved that the respondents did suffer substantial loss as a result of the delays and that it was not possible to quantify that loss with any precision. It is held that the respondents are therefore entitled to claim liquidated damages for the delay occasioned by the claimants and delays for which liquidated damages are liable to be levied under the contract. The learned umpire allowed the entire claim as claimed by the claimants.

94. Mr Kamdar learned senior counsel for the respondents submits that the learned umpire has allowed the entire claim merely by rejecting the theory of the respondents of adjustments of the claims made by the claimants in the impugned award. It is submitted that the entire claim is awarded without the claimants proving the extra cost alleged to have been incurred during the extension period.

95. Mr Advani learned counsel for the claimants on the other hand submits that the learned umpire has considered the evidence on record and has rendered a finding that though respondents had admitted to have considered the adjustment, respondents could not prove the adjustments alleged to have been made in the liquidated damages which finding of fact cannot be re-appreciated by this Court.

96. Claim 11(h) r/w 9-II(c)

The claimants had made a claim for extension of 0.028 days delay and cost compensation of US $3416 and DFL 5040 on account of disruption alleged to have been caused by the contractor of the respondents disposing rubbish off HRA.

97. Both the learned counsel appearing for parties have reiterated their submissions in respect of the claim awarded in respect of claim made in para 11(g).

98. Claim in para 11 (m)

The claimant had claimed a sum of US $122264 on account of 1.24 days stand-by of hook-up spread which occurred because of the alleged obstruction of the vessels of the respondents to the access of the claimants to the site.

99. Both the learned counsel have reiterated their submissions in respect to this claim which were made in respect of claim made in paragraph 11(g).

100. Claim in para 11(u) and 11(w) The claimants had claimed a sum of US $8112 and 1.949 days delay for supply of manpower to the respondents at Uran and a sum of US $45687.42 for fabrication of de-watering spools, leak tests and the work of assisting the respondents at Uran. The learned umpire has dealt with this claim in para 162 to 164 of the impugned award. It is observed by the learned umpire that the respondents have admitted the claim in respect of cost and time extension for the supply of manpower to the respondents at Uran. Since the learned umpire has rejected the defence of the respondents about the adjustment of the claim out of the liquidated damages, the learned umpire allowed the entire claim.

101. Mr Kamdar learned senior counsel for the respondents submits that this claim was totally vague and without particulars and proof. My attention is invited to paragraph (V) and (W) of the statement of claim in support of this submission. My attention is also invited to para 2 of the written statement in support of the submission that the claim was denied by the respondents. Learned senior counsel submits that it was pleaded by the respondents that the respondents had granted extension of time and had taken into account the cost compensation while calculating liquidated damages is not denied by the claimants. The learned umpire did not take into consideration the pleadings and evidence on record and awarded the entire claim.

102. Mr Advani learned counsel for the claimants reiterated his submissions which were made in respect claims awarded by the learned umpire made in paragraph 11(g) of the impugned award.

103. A perusal of the impugned award indicates that the claim for time extension is allowed by the learned umpire on the ground that there was no evidence led by the respondents as to how the liquidated damages had been calculated. It is observed by the learned umpire that the respondent had not examined any person who had calculated liquidated damages or decided to levy such liquidated damages. It is observed that there is nothing to show on record as to how various claims of the claimants regarding compensation for the extension period as claimed are alleged to have been taken into account in computation of the liquidated damages. A perusal of the award indicates that the learned umpire has rendered a finding that it is proved that the respondents did suffer substantial loss as a result of the delays and that it was not possible to quantify that loss with any precision.

104. In paragraph 193 to 195 of the impugned award the learned umpire has dealt with the claim of the liquidated damages made by the respondents. In para 194 of the impugned award, it is held by the learned umpire that there is no evidence as to how the liquidated damages have been computed or even as to who calculated the same. The learned umpire therefore, accepted the actual/deemed completion dates given by the claimants which were taken from the table contained in the written arguments submitted by the respondents. It is held by the learned umpire that as far as part II work is concerned, the same was completed after the delay of 47 days from 15th June, 1990 and as far as part III work is concerned, it was completed after a delay of 54 days from 15th June, 1990. The learned umpire then considered various extensions of period granted by him in paragraph 195 of the impugned award and held that the aggregate period of extension shall be considered at 24 days and from this period of 23 days liquidated damages can be levied at the rate of USD 30585 plus USD 2084 totaling to USD 32669 per day which would come to USD 751387. The learned umpire came to the conclusion that the total amount payable on account of liquidated damages was at USD 759723. After giving credit of the amount recovered by the respondents by encashment of the performance guarantee, the learned umpire held that the claimants were entitled to recover from the respondents an amount of USD 986846, EURO 766860 and Rs.169143.

105. A perusal of the above referred paragraphs in which the learned umpire has considered the claims of liquidated damages made by the respondents, it clearly indicates that the learned umpire has not allowed the entire claim for liquidated damages as claimed but has after considering the completion date and deriving the total number of days which according to him was the delayed period and after adjusting the extension granted by him calculated the net amount.

106. Question that arises for consideration of this court is whether respondents have proved that while calculating their claim for liquidated damages, whether respondents have considered the claim of the claimants for extension of time and also the cost compensation as pleaded by the respondents in the written statement and whether the finding recorded by the learned umpire warrants any interference under section 30 of the Indian Arbitration Act, 1940.

107. A perusal of the written statement in so far as this claim is concerned, indicates that it was the case of the respondents that the claimants were given extension of time and were also given cost compensation by adjusting the same duration and therefore, no claim can be fastened on the respondents. It is pleaded that there was no absolute liability on the part of the respondents to pay the said sum as claimed by the claimants or to any other sum on that account.

108. The learned counsel appearing for parties invited my attention to the oral evidence led by the witness examined by the respondents on this issue. In reply to the question recorded at page 994 of the cross examination the witness examined by the respondents deposed that the respondents had considered the claim for time extension while calculating the liquidated damages to be levied against the claimants. When the witness was asked whether standby cost was in fact granted, the witness deposed that the time extension was allowed as per letter dated 2nd March, 1995 from the respondents to the claimants. When the witness was asked whether he was aware as to how much cost was granted or refused, the witness deposed that he was not aware as to how much of the cost was granted or refused. The witness has deposed that the claimants had requested only for the time extension and there was no request from the claimants regarding any standby cost. The respondents had considered the standby cost due to time extension while calculating Liquidated damages and as such the claimants had been fully compensated for the standby cost.

109. In my view the witness examined by the respondents was not aware of as to what claim for compensation was considered by the respondents while calculating the liquidated damages. The witness has deposed that the claimants had never made any claim for compensation. Be that as it may, the learned umpire has not granted the entire claim for liquidated damages made by the respondents. A perusal of the written statement indicates that the respondents have not disputed the quantum of the compensation claimed by the claimants but have vaguely denied the said claim on the ground that along with time extension the respondents had also considered the cost compensation while computing liquidated damages. The learned umpire has rendered a finding of fact after considering the oral evidence led by the parties which in my view is not a perverse finding and cannot be interfered with under section 30 of the Indian Arbitration Act, 1940. The view taken by the learned umpire is a possible view based on appreciation of evidence which cannot be gone into by this court under section 30 of the Act. This part of the award is accordingly upheld and needs no interference.

110. In my view similarly the claims awarded by the learned umpire in respect of the claim made in para 11(h) read with 9(h) read with 9(ii)(c), and claim made in para 11(m), 11(u) and 11(w) are also based on the same reasonings and are not interfered with by this court for the reasons recorded in respect of claim made in para 11(g) aforesaid.

111. Mr Kamdar learned senior counsel for the respondent invited my attention on the grounds raised by the respondents in the arbitration petition regarding plea of limitation and submits that the learned umpire has awarded time barred claims.

112. Mr Advani learned counsel for claimants invited my attention to the discussion on the issue of limitation in the impugned award in paragraphs 80 to 89 and submits that on the basis of the entire record, the learned umpire has rendered a finding that none of the claims are barred by law of limitation. This court cannot re-appreciate the finding of fact rendered by the learned umpire.

113. In so far as issue of limitation raised by the respondents is concerned, the learned umpire has dealt with this issue in paragraphs 80 to 88 of the impugned award. A perusal of the award indicates that the learned umpire has held that the respondents had issued certificate dated 9th December, 1993 certifying that the works were completed to their satisfaction. The learned umpire placed reliance on clause 13.3.1 of the contract which provides that a contract shall not be considered as completed until a discharge certificate was issued. Considering the evidence on record and on interpretation of clause 13.3.1 and 13.3.2 of the contract, the learned umpire rendered a finding that the second completion certificate viz 9th December, 1993 furnishes an appropriate starting point of limitation and that was sufficient to bring all the claims of the claimants within limitation. It is held that till 9th December, 1993, the contract was still operative and could not be considered as completed. The notice invoking arbitration agreement was issued by the claimants in the month of May, 1995. It is held by the learned umpire that the claims thus made by the claimants were within time and not barred by law of limitation.

114. In my view the finding of the learned umpire on the issue of limitation is based on the evidence led by the parties i.e. completion certificates and based on the interpretation of clause 13.3.1 and 13.3.2 of the contract which interpretation in my view is a possible interpretation. This court cannot substitute the possible interpretation of the terms of the contract by the learned umpire by taking a different interpretation. Similarly this court also cannot interfere with the finding of the learned arbitrator based on the partial completion certificate dated 30th November, 1990 and further certificate dated 9th December, 1993. In my view there is thus no merit in the submission of the respondents that the learned umpire has allowed any time barred claims.

115. In so far as claim for interest is concerned, a perusal of the award indicates that the learned umpire has dealt with this claim in paragraphs 200 to 203 of the impugned award. The learned umpire has awarded interest at the rate of 10% p.a. which in my view is a reasonable rate of interest. The learned umpire has referred to order passed by this court on 23rd February, 1998 while allowing the amendment applied by the claimants for claiming the recovery of excess amounts from the performance guarantee with interest at the rate of 10%. In my view there is no prohibition under the contract entered into between the parties from awarding claim for interest. The learned umpire has power to award interest for all the three periods i.e. pre-reference, pendente lite and future. The learned umpire was thus justified in awarding interest at the rate of 10%. No fault thus can be found with the impugned award awarding interest at the rate of 10%. The submission of the respondents on this part of the award is accordingly rejected. It is however, made clear that the rate of interest awarded by the learned umpire would be only on the claims awarded by the learned umpire and which are not set aside by this order.

116. Mr. Advani learned counsel appearing for the claimants placed reliance on various judgments in support of his submission that the learned umpire was not bound to record any detail reasons in the judgment rendered by him and that this court cannot go into the reasonableness of the reasons rendered by the learned umpire.

(1) Indian Oil Corporation Vs. Indian Carbon Ltd. 1988 (3) SCC 36

(para 8)

(2) Gujarat Water Supply and Sewerage Board Vs. Unique Erectors

(Gujarat) (P) Ltd. and anr. 1989 (1) SCC 532 (para 9)

(3) Delhi Development Authority Vs. M/s. Oppal Engg. Construction Company ILR (1982) I Delhi (para 8)

The relevant paragraphs read thus :

(1) Indian Oil corporation Vs. Indian Carbon Ltd. (para 8)

“8. In this case, however, we are in agreement with the High Court of Bombay that reasons were stated in the award. We have set out hereinbefore the three grounds, namely (1) The letter dated 18th October, 1982 is no bar to Indian Oil Corporation's claim for shifting charges and interest in respect of the period from 1st October, 1982 to 17th October, 1982. (2) The inference drawn from the contents of the letter and (3) Because of the said letter which has admittedly been acted upon by the Indian Oil Corporation Ltd., and which had not delivered any coke to the Indian Carbon Ltd. or made any offer to do so. For these reasons, the arbitrator held that the Indian Oil Corporation Ltd., is not entitled to interest claimed in respect of the period from 18th October, 1982 onwards nor to shifting charges from 18th October, 1982. These are the reasons for giving the award. No error of law was pointed out in those reasons. Indeed no proposition of law was stated in the aforesaid reasons, which could be objected to as an error of law. There was, however, no error of fact. It was a possible view to take. It could not be urged that it was an impossible view to take. The arbitrator has made his mind known on the basis of which he has acted that, in our opinion, is sufficient to meet the requirements even if it be reasons should be stated in the award. It is one thing to say that reasons should be stated and another thing to state that a detailed judgment to be given in support of an award. Even if it be held that it is obligatory to state the reasons, it is not obligatory to give a detailed judgment. This question was considered by the Court of Appeal in England in Bremer Hand elsgesells chat v. Westzucker . There Lord Donaldson speaking for the court at pages 132 and 133 of the report observed as follows:

It is of the greatest importance that trade arbitrators working under the 1979 Act should realize that their whole approach should now be different. At the end of the hearing they will be in a position to give a decision and the reasons for that decision. They should do so at the earliest possible moment. The parties will have made their submissions as to what actually happened and what is the result in terms of their respective rights and liabilities. All this will be fresh in the arbitrators' minds and there will be no need for further written submission by the parties. No particular form of award is required. Certainly no one wants a formal "Special Case". All that is necessary is that the arbitrators should set out what, on their view of the evidence, did or did not happen and should explain succinctly why, in the light of what happened, they have reached their decision and what that decision is. This is all that is meant by a "reasoned award".

For example, it may be convenient to begin by explaining briefly how the arbitration came about-"X sold to Y 200 tons of soybean meal on the terms of GAFTA Contract 100 at US. $Z per ton c.i.f. Bremen. X claimed damages for non-delivery and we were appointed arbitrators". The award could then briefly tell the factual story as the arbitrators saw it. Much would be common ground and would need no elaboration. But when the award comes to matters in controversy, it would be helpful if the arbitrators not only gave their view of what occurred, but also made it clear that they have considered any alternative version and have rejected it, e.g., "The shippers claimed that they shipped 100 tons at the end of June. We are not satisfied that this is so", or as the case may be. "We are satisfied that this was not the case". The arbitrators should end with their conclusion as to the resulting rights and liabilities of the parties. There is nothing about this which is remotely technical, difficult or time consuming.

It is sometimes said that this involves arbitrators in delivering judgments and that this is something which requires legal skills. This is something of a half truth. Much of the art of giving a judgment lies in telling a story logically, coherently and accurately. This is something which requires skill, but it is not a legal skill and it is not necessarily advanced by legal training. It is certainly a judicial skill, but arbitrators for this purpose are Judges and will have no difficulty in acquiring it. Where a 1979 Act award differs from a judgment is in the fact that the arbitrators will not be expected to analyse the law and the authorities. It will be quite sufficient that they should explain how they reached their conclusion, e.g., "We regarded the conduct of the buyers, as we have described it, as constituting a repudiation of their obligations under the contract and the subsequent conduct of the sellers, also as described, as amounting to an acceptance of that repudiatory conduct putting an end to the contract". It can be left to others to argue that this is wrong in law and to a professional Judge, if leave to appeal is given, to analyse the authorities. This is not to say that where arbitrators are content to set out their reasoning on questions of law in the same way as Judges, this will be unwelcome to the Courts. Far from it. The point which I am seeking to make is that a reasoned award, in accordance with the 1979 Act, is wholly different from an award in the form of a special case. It is not technical, it is not difficult to draw and above all it is something which can and should be produced promptly and quickly at the conclusion of the hearing. That is the time when it is easiest to produce an award with all the issues in mind." See the observations in Russel on Arbitration, 20th Edn., page 291 Reasons for the Award and the decision referred to therein.”

(2) Gujarat Water Supply and Sewerage Board Vs. Unique Erectors (Gujarat) (P) Ltd. and anr. (para 9)

“9. The scope and extent of examination by the Court of the award made by an arbitrator has been laid down in various decisions. It has to be noted that there is a trend in modern times that reasons should be stated in the award though the question whether the reasons are necessary in ordinary arbitration awards between the parties is pending adjudication by the Constitution Bench of this Court. Even, however, if it be held that it is obligatory for the arbitrator to state reasons, it is not obligatory to give any detailed judgment. An award of an arbitrator should be read reasonably as a whole to find out the implication and the meaning thereof. Short intelligible indications of the grounds should be discernible to find out the mind of the arbitrator for his action even if it be enjoined that in all cases of award by any arbitrator reasons have to be stated. The reasons should not only be intelligible but should also deal either expressly or impliedly with the substantial points that have been raised. Liven in a case where the arbitrator has to state reasons, the sufficiency of the reasons depends upon the facts and the circumstances of the case. The Court, however does not sit in appeal over the award and review the reasons. The Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusion or if the award is based upon any legal proposition which is erroneous. See the observations of this Court in Indian Oil Corporation Ltd. v. Indian Carbon Ltd. MANU/SC/0194/1988: [1988]3SCR426 .

(3) Delhi Development Authority Vs. M/s. Uppal Engg. Construction

Company (para 8)

“(8) As already noted, we have dealt with this matter in the case of M/s. at Karma (supra). We have held that the arbitrator when called upon to give a reasoned award is still not required to write a detailed judgment as judges do. However, he is required to indicate the trend of his thought process but not his mental meanderings. The purpose of commercial arbitration, being speed, certainty and a cheaper remedy. Since the parties choose their own arbitrator they cannot, when the award is good on the face of it, object to the decision either, upon law or facts, unless such mistake appears, on the face of the award on a document appended to or incorporated with it. M/s. Allen Berry and Co. P. Ltd. v. Union of India, MANU/SC/0003/1971: [1971]3SCR282.”

117. Mr. Advani also placed reliance on judgment of Calcutta High Court in case of West Bengal Industrial Infra-strictire Development Corporation Vs. Star Engineering Company, AIR 1987 Calcutta 126 in support of his submission that the Evidence Act is not applicable to arbitration proceedings and in support of the proposition that the award cannot be challenged on the basis of inadequacy or inadmissibility or impropriety of evidence when both the parties are given an opportunity to adduce evidence. Paragraph 3 reads thus :

“3. But the Evidence Act is not applicable to arbitration proceeding. The arbitrator has to follow the principles of natural justice in conducting the arbitration proceeding. It is not for the Court to judge whether the evidence before the arbitrator was improper or inadmissible or inadequate. The arbitrator was the sole Judge of the law and of the facts. If he had taken the decision on the basis of whatever evidence was on record and had allowed the claim, his award cannot be challenged on the basis of inadequacy or inadmissibility or impropriety of evidence, particularly when both the parties had the full opportunity to argue their respective cases and adduce evidence. Total absence of evidence or arbitrator's failure to take into consideration a very material document on record or admission of the parties in arriving at the finding are however good grounds for challenging the proceeding for legal misconduct of the arbitrator.”

118. Mr. Advani learned counsel also placed reliance on the judgment of the Supreme court in case of Steel Authority of India Limited Vs. Gupta Brother Steel Tubes Limited, (2009)10 SCC 63 and in particular paragraphs 18, 28, 29, 36, and 37 in support of his submission that scope of section 30 of the Arbitration Act is very limited and that the respondents herein have not made out a case for interfering with the award based on the principles laid down by the Supreme Court in the said judgment on the scope of section 30 of the Arbitration Act. Paragraphs 18, 28, 29, 36 and 37 of the judgment of the Supreme Court in the case of Steel Authority of India Limited (supra) read thus :

“18. It is not necessary to multiply the references. Suffice it to say that the legal position that emerges from the decisions of this Court can be summarised thus:

(i) In a case where an arbitrator travels beyond the contract, the award would be without jurisdiction and would amount to legal misconduct and because of which the award would become amenable for being set aside by a Court.

(ii) An error relatable to interpretation of the contract by an arbitrator is an error within his jurisdiction and such error is not amenable to correction by Courts as such error is not an error on the face of the award.

(iii) If a specific question of law is submitted to the arbitrator and he answers it, the fact that the answer involves an erroneous decision in point of law does not make the award bad on its face.

(iv) An award contrary to substantive provision of law or against the terms of contract would be patently illegal.

(v) Where the parties have deliberately specified the amount of compensation in express terms, the party who has suffered by such breach can only claim the sum specified in the contract and not in excess thereof. In other words, no award of compensation in case of breach of contract, if named or specified in the contract, could be awarded in excess hereof.

(vi) If the conclusion of the arbitrator is based on a possible view of the matter, the court should not interfere with the award.

(vii) It is not permissible to a court to examine the correctness of the findings of the arbitrator, as if it were sitting in appeal over his findings.

28. The view of the arbitrator being possible view on construction of Clause 7.2, and having not been found absurd or perverse or unreasonable by any of the three Courts, namely , Sub-Judge, District Judge and the High Court, we are afraid, no case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution. Once the arbitrator has construed Clause 7.2 in a particular manner, and such construction is not absurd and appears to be plausible, it is not open to the courts to interfere with the award of the arbitrator.

29. Legal position is no more res integra that the arbitrator having been made the final arbiter of resolution of disputes between the parties, the award is not open to challenge on the ground that arbitrator has reached at a wrong conclusion. The courts do not interfere with the conclusion of the arbitrator even with regard to construction of a contract, if it is a possible view of the matter. The words "no award shall be set aside" in Section 30 mandate the courts not to set aside the award on the ground other than those specified in Section 30. In a case such as this, where the arbitrator has given elaborate reasons that compensation Clause 7.2 is not attracted for the breaches for which the compensation has been claimed by the respondent and such view of the arbitrator is a possible view, we are afraid in the circumstances award is not amenable to correction by the court.”

36. We are afraid none of the decisions cited by the learned senior Counsel for the appellant has any application to the facts of the present case. The courts below have concurrently 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. We have no justifiable reason to take a different view. As noticed above, only two grounds were urged before the High Court in assailing the award, one of which relating to time barred claim was ultimately not pressed before us and the only argument survived for consideration before us related to Clause 7.2 of the contract.

37. 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.”

119. Mr. Kamdar learned senior counsel appearing for the respondents placed reliance on the judgment of supreme court in case of Jajodia (Overseas) Pvt. Ltd. Versus Industrial Development Corporation of Orissa Limited, (1993) 2 SCC 106 and in particular paragraph 8 in support of his submission that an award can be considered as a speaking or reasoned award only when it discusses or sets out the reasons which led the arbitrator to make the award. It is submitted that setting out the conclusions upon the questions or issues that arise in the arbitration proceedings without discussing the reasons or coming to those conclusions does not make an award a reasoned or speaking award. Paragraph 8 of the said judgment of the Supreme Court reads thus :

“8. It is, we think, necessary, first, to clear some cobwebs. A speaking or reasoned award is one which discusses or sets out the reasons which led the arbitrator to make the award. Setting out the conclusions upon the questions or issues that arise in the arbitration proceedings without discussing the reasons for coming to these conclusions does not make an award a reasoned or speaking award. The arbitrator has in the award before us only answered the issues that were framed. He has not discussed or set out the reasons for the answers. The award is, therefore, not a speaking or reasoned award.”

120. Mr. Kamdar learned senior counsel submits that in so far as the other judgments relied upon by the learned counsel for the claimants is concerned, there is no dispute about the proposition of law laid down by the Supreme Court and by Delhi High Court. It is however, submitted that most of the claims awarded by the learned umpire are based on no evidence and are based on conjectures and surmises.

121. In so far as judgment of Supreme Court in case of Indian Oil Corporation (supra) and Gujarat Water Supply and Sewerage Board (supra) relied upon by Mr. Advani, learned counsel for the claimant is concerned, there cannot be any dispute about the proposition led down by the Supreme Court in those two judgments. Supreme Court in case of Jajodia (Overseas) Pvt. Ltd. (supra) has held that a speaking or reasoned award is one which discusses or sets out the reasons which led the arbitrator to make the award and setting out the conclusions upon the issues arisen in arbitration without discussing the reasons for coming to the conclusion does not make an award a reasoned or speaking award.

122. A perusal of the award clearly indicates that the learned umpire while allowing most of the claims has come to the conclusion without discussing the issues and has not rendered reasons for coming to such conclusions. Under the arbitration agreement the learned umpire was required to render reasons. In my view it is not a case of insufficiency of reasons in respect of most of the claims in the impugned award but it demonstrates no reasons for drawing any conclusion. Part of the award is contrary to the arbitration agreement and deserves to be set aside also on this ground.

123. In so far as judgment of the Calcutta High Court in case of West Bengal Industrial Infrastructure Development Corporation (supra) is concerned, the perusal of the award indicates that most of the claims are allowed without any evidence and is based on conjectures and surmises. The judgment of the Calcutta High Court relied upon by the claimants does not assist the claimants in any manner.

124. In so far as judgment of Supreme Court in case of Steel Authority of India Limited (supra) relied upon by Mr.Advani learned counsel for the claimants is concerned, there cannot be any dispute about the principles of law on the scope of section 30 culled out by the Supreme Court in the said judgment. In this judgment this court has not set aside any portion of the award by examining the correctness of the findings of the learned arbitrator. Since the learned umpire has travelled beyond the terms of the contract and decided contrary to substantial provisions of law, the award shows patent illegality in respect of most of the claims which are set aside on such grounds which are permissible grounds under section 30 of the Arbitration Act.

125. Resultantly I pass the following order:

(a) Arbitration petition is partly allowed.

(b) Impugned arbitral award dated 10th December 2007 is partly set aside as set out in the aforesaid judgment.

(c) There shall be decree in terms of the award under Rule 787(5) of the Bombay High Court (Original Side) Rules duly modified by this judgment.

(d) There shall be no order as to costs.

126. On oral application of Mr. Kamdar, learned senior counsel for the respondent, operation of this order is stayed for a period of four weeks from today.


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