M/S. M.B. PATEL & CO.versusOIL & NATURAL GAS COMMISSION

                                 [2008] 8 S.C.R. 35

    -lo:
                              MIS. M.B. PATEL & CO.                          A
                                         v
                       OIL & NATURAL GAS COMMISSION
                          (Civil appeal No.7340 of 2002)

                                   MAY 8, 2008
                                                                             B
                  [H.K. SEMA AND MARKANDEY KAT JU, JJ]

                Arbitrtion:

                 Award by arbitrator - Set aside by High Court - HELD:
           Arbitrator has not considered, inter alia, clause 14 of arbitra-  c
           tion agreement - Interest has a/so been awarded in violation
           of clause 18 of the agreement - High Court was right in its
           reasonings for setting aside the award - Arbitrat9r may now
           proceed with arbitration and would consider the matter in the
           light of the reasonings given in the judgment of the High Court D
i
               CIVIL APPELLATE JURISDICTION : Civil Appeal NO.
           7340 of 2002

                From the Judgment and Order dated 11.7.2000 of the High
           Court of Gujrat at Ahemadabad in First Appeal from NO. 418/       E
           1986

               Ramesh Singh, Ankur Saigal, Gaurav Singh and Bina
           Gupta for the Appellant.
't'
                B. Dutta, ASG, K.R. Sasiprabhu and R. Chandrachud for        F
           the Respondent.
                The following Order of the Court was delivered
                 This appeal is filed against the judgment and order dated
           11.07 .2000 of the High Court of Gujarat at Ahmedabad in First    G
           Appeal No.418 of 1986 whereby the High Court set aside the
    -(     award dated 03.05.1985 passed by the Arbitrator. The High
           Court set aside the aforesaid award on the following reason-
           ings:
                                         35                                  H
    36       SUPREME COURT REPORTS                   [2008] 8 S.C.R.


A        (a) that an arbitrator or umpire has misconducted himself      "'
         in the proceedings;
         (b) that there appears to be an error on the face of the
         record inasmuch as the Umpire has overlooked clauses
         14 & 18 of the Arbitration Agreement;
B
         (c) that the Umpire has traveled beyond the scope of the
         contract between the parties on certain items and claims and

         (d) that he has rendered lump sum award making it totally
         unintelligible.
c
         On the aforesaid premises the award was s3t aside.
         In the present case the contractor claimed Rs.30,425/- for
  abandonment of contract. This was the first claim. The second
  claim was for Rs.30,213/-for illegal deductions made by ONGC.
D The third claim was for Rs.2,00,000/- for not supplying the ma-
  terial in time by the ONGC. The fourtl-i claim was loss occa-
  sioned by the contractor for keeping his establishment alive and
  on this head the claim was for Rs.3,50,000/-. The fifth claim
  was loss of profit at the rate of 20 percent amounting
E Rs.1,80,000/-. Last claim was interest at the rate of 18% p.a.
         As already pointed out that the Arbitrator awarded
    Rs.5,98,438/- as lump sum, we agree with the reasoning of the
    High Court that the award is unintelligible.

F        Clause 14 of the Arbitration Agreement reads as under :
         "DELAY IN CONSTRUCTION                 (COMMISSION'S
         DEFAULTS);
         The Commission will make every reasonable affect to
G        furnish the materials under the contract and the right of
         user including the permits required to be furnished by the
         Commission under the contract in due time so as not to
         delay the construction related work of reconditioning. In
         case of any hold up to site work of the CONTRACTOR on
         account of non-availability of any one of these terms, no
H
                   M/S. M.B. PATEL & CO. v.                     37
               OIL & NATURAL GAS COMMISSION

       compensation by way of claims is admissible but only           A
       corresponding extension of time limit would be granted."

      Under the aforesaid clause no claim for compensation is
admissible even that foul of the Commission. Clause 18 of the
Arbitration Agreement reads :
                                                                      B
       "INTEREST ON AMOUNTS

       No interest will be payable on the security deposit or any
       other amount payable to the CONTRACTOR under the
       contract."
                                                                      c
      The Arbitrator has awarded the interest at the rate of 12%
on the amount with effect from 09.02.1984 to 03.05.1985 (pen-
dente lite). He has also awarded interest from the date at the
rate of 12% on the amount as shown in 1 & 3 above till the date
of decree or actual date of payment, whichever is earlier.
                                                                      D
      In view of the aforesaid premi!'es, the Arbitrator has not at
all considered clause 14 of the Arbitration Agreement. The in-
terest has been awarded in violation of clause 14 of the Agree-
ment. Apart from others these two legal aspects have not been
considered by the Arbitrator. We are, therefore, in full agree-       E
ment with the reasoning given by the High Court. The Arbitrator
may now proceed with the arbitration but in the light of the judg-
ment of the High Court. We direct the Arbitrator to consider the
matter afresh in the light of the reasoning of the High Court.

       Subject to the aforesaid, the appeal is dismissed.             F

R.P.                                         Appeal dismissed.