M/S. SUMITOMO HEAVY INDUSTRIES LIMITEDversusOIL & NATURAL GAS COMPANY

                         [2010] 9 S.C.R. 176


A         M/S. SUMITOMO HEAVY INDUSTRIES LIMITED
                                v.
                OIL & NATURAL GAS COMPANY
                 (Civil Appeal No. 3185 of 2002)
                           JULY 28, 2010
B
         [R.V. RAvEENDRAN AND H.L. GOKHALE, JJ.]

          Arbitration: International commercial contract - Works
    contract between respondent and contractor - Respondent
C   agreed to compensate contractor for all necessary and
    reasonable extra cost caused by a change in law affecting the
    contractor economically - Contractor entered into a sub-
    contract with a sub-contractor for a part of a contract - Under
    the existing law, the income arising out of the work done was
D   not subject to income tax in India - Change in law after closing
    of bid - Under the amended law, the work done under the
    tender and the income arising therefrom became subject to
    Income Tax Act, 1961 under s.4488 with retrospective effect
    - Tax liability imposed on sub-contractor - He paid and
E   received reimbursement from contractor - Contractor claimed
    it from respondent company - Respondent rejected the claim
    - Reference to arbitration - Umpire passed award holding the
    respondent liable to indemnify contractor for sum paid to sub-
    contractor on account of assessment of income tax due to
F   change in law - High Court set aside the award - Held:
    Respondent was liable to indemnify contractor for sum paid
    to sub-contractor - Sub-contractor played pivotal role in the
    execution of entire contract - Contractor reimbursed the tax
    amount to sub-contractor in view of commitment made - The
G   reimbursement was not voluntary act and arose out of change
    in law - There was nexus between payment to sub-contractor
    and the responsibility of the respondent - View taken by
    umpire on the construction of arbitration clause was plausible
    one and High Court erred in interfering with same - Income

H                                176
  SUMITOMO HEAVY INDUSTRIES LIMITED v. OIL & 177
           NATURAL GAS COMPANY
Tax Act, 1961 - s. 4488 - Territorial Waters, Continental Shelf,   A
Exclusive Economic Zone and other Maritime Zones Act,
1976 - Clauses 6(6), 7(7) - Contract.

     Deeds and documents: International commercial contract
- Interpretation of
                                                                   B
    Words and phrases: 'perverse finding' - Meaning of

      The respondent invited tenders for installation of a
platform complex. The closing date for the bid was
11.10.1982. The work was to be done beyond the fiscal              c
limit of Indian Income Tax laws as it then existed, and
therefore, the income arising therefrom under the existing
law was not subject to income tax in India. The appellant
was a successful bidder. An agreement was entered into
between the appellant and the respondent. Clause 17.3              D
of the agreement provided that the respondent company
would compensate the contractor for all necessary and,
reasonable extra cost caused by any change in law,
affecting the contractor economically. The appellant
entered into a sub-contract with Mii for execution of a            E
part of a work under the contract. The work was
completed in 1984. Meanwhile, a notification dated
31.3.1983 was issued by Government of India under
clauses 6(6) and 7(7) of the Territorial Waters, Continental
shE;!lf, Exclusive Economic Zone and other Maritine Zones
Act, 1976, extending Income Tax Act, 1961 to the
                                                                   F
continental shelf of India and the exclusive Economic
Zone with effect from 1.4.1983. Under the amended law,
the work done under the tender and the income arising
therefrom, became subject to the Income Tax Act, 1961.
By Finance Act, 1987, Clause 4488 was introduced in the            G
Income Tax Act, 1961 with retrospective effect from
1.4.1983. In 1988, Mii was served notices for re-opening
and revising the assessments already made for the AY
1984-85 and 1985-86. The authorities rejected the
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    178      SUPREME COURT REPORTS           [20101 9 S.C.R.


A objections of Mii and imposed tax on Mii. Mii paid that
  amount and claimed it from the appellant. The appellant
  re-imbursed the same and claimed it from the respondent
  under Clause 17.3. The respondent rejected the claim.
  The appellant served on the respondent a notice of
B arbitration and filed their statement of claim. Both the
  parties appointed their respective arbitrators. The two
  arbitrators differed in their determination, and the matter
  was referred to an umpire, who gave his award. He
  declared that in the event of appellant becoming liable to
c pay further sums to Mii, due to any assessment of income
  tax on Mii or under the sub-contract pursuant to Section
  44BB of Income Tax Act, the respondent would have to
  compensate the appellant against such payment of tax.
  A single judge of the High Court set aside the award
0 passed by the umpire which decision was confirmed by
  a Division Bench. The decision of High Court was
  challenged in the instant appeal.

          Allowing the appeal, the Court

E      HELD: 1.1. The instant case was dealing with an
  International Commercial Contract under which the
  appellant reimbursed the tax liability of their sub-
  contractor (Mii) which arose out of change in the law after
  the date of bid closing. This was stated to have affected
F the position of the appellant economically for which the
  appellant sought equivalent compensation from the
  respondent as per its construction of clause 17.3. [Para
  31] [199-B-E]

       1.2. Mii became liable to pay the tax amount to the
G government of India only because of the retrospective
  change in the Indian Income Tax Law, brought in
  subsequent to the date of bid closing. The liability of the
  appellant to reimburse that amount to Mii arose in view
  of the commitment made by the appellant in their sub-
H
 SUMITOMO HEAVY INDUSTRIES LIMITED v. OIL &                179
          NATURAL GAS COMPANY
contract to Mii. It cannot be ignored that if there was no        A
change in law, this situation would not have arisen at all.
It was therefore not possible to treat this payment as
voluntary, that is, in the absence of any liability. [Para 32]
[199-G-H; 200-A-B]
                                                                  B
     1.3. The relevant material and evidence placed before
the arbitrator clearly showed that Mii was the principal
sub-contractor and throughout was in picture in the
contract between the appellant and the respondent. In
fact, it was because of the expertise of Mii that it was
given a pivotal role in the execution of the entire contract.     C
The appellant had entered into a back to back contract
with Mii to the knowledge of the respondent. The
performance of obligation under the sub-contract by Mii,
formed part and parcel of appellant's obligations under
the Head-contract. The respondent had taken up the                D
responsibility for the income tax liabilities of the appellant.
The appellant had taken up the responsibility for the tax
liabilities of Mil and the respondent cannot be said to be
ignorant of it. In any case, clause 17.3 has to be given a
meaningful interpretation. It is confined only to the             E
necessary and reasonable extra cost, caused by change
in law occurring after the date of bid closing. The claim
of appellant was restricted only to that extent. The
contract was otherwise completely executed, payments
were made and the discharge certificate was issued long           F
back. Mil had already filed its returns for the two relevant
assessment years 1984-85 and 1985-86. In 1988, its
assessment was reopened in view of the change in law,
for which appellant had made the payment and had
sought reimbursement from the respondent. In the                  G
circumstances, the submission of absence of nexus
between payment to Mii and the responsibility of the
respondent cannot be accepted. [Para 33] [200-C-H]

     Union of India v. Mis D.N Revri & Co. (1976) 4 SCC 147;
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    180    SUPREME COURT REPORTS                [2010] 9 S.C.R

A Central Bank of India Ltd., Amritsar v. Hartford Fire Insurance
  Co. Ltd. AIR 1965 SC 1288; Polymat India (P) ltd. v. National
  Insurance Co. Ltd. (2005) 9 SCC 174 - referred to.

         2.1. The umpire entertained appellant's claim only
    after giving a meaningful interpretation to clause 17.3
8
    after considering all the material on record as well as the
    context. He looked into the evidence including that of the
    respondent's officer as to how Mil had participated in the
    bid clarification meetings. He considered the submission
    of the appellant as to how the sub-contract was also tax
C   protected, which was their main plea. The court can
    interfere, if there is an error apparent on the face of the
    award or where the umpire had exceeded his jurisdiction
    or travelled beyond the reference. In the instant case, the
    award did not suffer from any of the defects so as to call
D   for interference. In the circumstances, the approach
    adopted by the umpire being a plausible one,
    interpretation was not open to interference. Perhaps, it
    can be said to be a situation where two views were
    possible, out of which the umpire had legitimately taken
E   one. [Paras 34, 35) (201-A-H; 202-A]

        Steel Authority of India Limited v. Gupta Brothers Steel
    Tubes Limited (2009) 10 SCC 63; Triveni Rubber & Plastics
    v. CCE AIR 1994 SC 1341 - relied on.
F      2.2. A perverse finding is a finding which is not only
  against the weight of evidence but altogether against the
  evidence. In the instant case, the findings and award of
  the umpire were rendered after considering the material
  on record and giving due weightage to all the terms of
G the contract. Calling the same to be perverse was highly
  unfair to the umpire. The umpire considered the fact
  situation and placed a construction on the clauses of the
  agreement which according to him was the correct one.
  One may at the most say that one would have preferred
H
 SUMITOMO HEAVY INDUSTRIES LIMITED v. OIL &              181
          NATURAL GAS COMPANY
another construction of clause 17.3 but that would not          A
make the award in any way perverse. Nor can one
substitute one's own view in such a situation, in place of
the one taken by the umpire, which would amount to
sitting in appeal. The umpire was legitimately entitled to
take the view which he holds to be the correct one after        B
considering the material before him and after interpreting
the provisions of the agreement. If he does so, the
decision of the umpire has to be accepted as final and
binding. [Para 36] [202-C-H; 203-A-B]

    Arulve/u and Another v. State Represented by the Public
                                                                c
Prosecutor and Another (2009) 10 SCC 206; Kwality
Manufacturing Corporation v. Central Warehousing
Corporation (2009) 5 SCC 142·- relied on.

     3. It is an obligation of the parties to a contract that   D
they must perform their respective promises, and if a
party does not so perform, the arbitrator or the umpire
has to give the necessary direction, if sought. In that
process, they have to give a meaningful interpretation to
all the relevant clauses of the contract to make them           E
effective and not redundant. The intention of the parties
in providing a clause like clause 17.3 could not be
ignored. It had to be given a due weightage. This was
what the umpire had done and had given the direction
to the respondent to compensate the appellant for the           F
amount of the necessary and reasonable extra cost
caused by change in law. The award of the umpire was
a well reasoned award and one within his jurisdiction,
and which gave a meaningful interpretation to all the
clauses of the contract including clause 17.3. In the           G
circumstances, the High Court clearly erred in interfering
with the award rendered by the umpire. [Para 37] [203-8-
E]
   4. It was canvassed by the appellant in the High
Court and before the Supreme Court also that the award          H
    182      SUPREME COURT REPORTS            [2010] 9 S.C.R.


A rendered by the umpire was one on a question of law,
  and on that ground also the High Court was not expected
  to interfere with the award. The Supreme Court was not
  required to go into that issue since it was otherwise
  holding that the award was not only a plausible one but
B a well reasoned one and in the circumstances the
  interference by the High Court was not called for. [Paras
  38 and 39] [203-F; 204-E-F]

        Mis Kapoor Nilokheri Co-op Diary Farm Society Ltd. v.
    Union of India and Others (1973) 1 SCC 708; Mis Tarapore
c   & Co. v. Cochin Shipyard Ltd. AIR 1984 SC 1072; Rajasthan
    State Mines & Minerals Ltd. v. Eastern Engineering
    Enterprises & Anr JT 1999 (7) SC 379 7 - referred to.

                        case Law Reference:
D
          (1976) 4 sec 147      referred to         Para 28

          AIR 1965 SC 1288      referred to         Para 30

          (2005) 9 sec 114      referred to         Para 30
E         (2009) 1o sec 63      referred to         Para 35

          AIR 1994 SC 1341      relied on           Para 36

          (2009) 1o sec 20s     referred to         Para 36

F         (2009) s sec 142      relied on           Para 36
          (1973) 1 sec 108      referred to         Para 38
          AIR 1984 SC 1072      referred to         Para 38
          JT 1999 (7) SC 379    referred to         Para 38
G
        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    3185 of 2002.

        From the Judgment & Order dated 19.12.2001 of the High
    Court of Bombay in Appeal No. 126 of 2000 in Arbitration
H
 SUMITOMO HEAVY INDUSTRIES LIMITED v. OIL &                 183
          NATURAL GAS COMPANY
Petition No. 104 of 1998 in Award No. 11 of 1998.                   A

    Dusyant Dave, Shyam Divan, Pratap Venugopal, Hitesh
Modi, Vikram Mehta, S. Trehan, Kush Chaturvedi, Vikas Mehta,
Deepti (for K.J. John & Co.) for the Appellant.

    Vivek Tankha, ASG, Gaurav Agrawal, Barsha Misra, P.S.           B
Sudheer, Sumit Attri, Noami Chandra, Suman Jyoti Khaitan for
the Respondent.

    The Judgment of the Court was delivered by

     GOKHALE, J. 1. This appeal is directed against the
                                                                    c
judgment and order dated 19th December 2001 rendered by
a Division Bench of the Bombay High Court in Appeal No. 126
of 2000 confirming the decision of a single Judge of that Court
dated 29th November, 1999, in Arbitration Petition No. 104 of       D
1998 whereby the High Court has set aside the Award dated
27th June, 1995 made by the umpire in an Arbitration claim of
the appellant against the respondent. The question involved in
this appeal is as to whether as held by the Division Bench, the
umpire had failed to apply his mind to the material on record
and the clauses of the contract between the parties thereby         E
rendering a perverse award, or whether his decision was a
possible one and the High Court had erred in interfering therein.

     2. The appellant had entered into a contract with the first
respondent for installing and commissioning of Well-cum-            F
Production Platform Deck and connected system including
submarine pipelines on a turn-key basis at its Bombay High
(South) Offshore Site for extraction of oil. The appellant had
appointed Mis.Mc Dermott International Inc (in short 'Mil') as
the Sub-Contractor in execution of this work by a back to back      G
contract to the full knowledge of the respondent. The appellant
had sought from the respondent the reimbursement of the
Income-tax amount which Mil was required to pay to the Union
of India under newly added Clause 44BB of the Income Tax Act
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    184     SUPREME COURT REPORTS                  [2010] 9 S.C.R.


A   1961 (concerning the profits and gains in connection with the
    business of exploration of minerals) and which amount was paid
    by the appellant to Mii. The respondent had declined to
    reimburse the tax amount.

B      3. The appellant, therefore, invoked the Arbitration clause
  in the agreement between the appellant and the respondent.
  The appellant contended that their liability had arisen due to
  change of law and that under clause 17.3 of the General
  Conditions of Contract forming part of the contract between the
C parties, the respondent was required to reimburse this amount
  since it was in the nature of necessary and reasonable extra
  cost arising out of change of law. (In the General Conditions of
  contract its clauses are referred to as sections.) As against this,
  the submission of the respondent was that they were
  responsible only for the appellant's tax liability under clause 23
D of the General Conditions, and if at all, it was the responsibility
  of the appellant under clause 13.2.7 thereof to take care of the
  obligations of the Sub-Contractor.

       4. The two arbitrators appointed by the appellant and the
E respondent differed while deciding this claim of the appellant
  for reimbursement. This led to Sir Micheal Kerr entering the
  reference as the Umpire who has accepted appellant's claim,
  by award dated 27.6.1995. By the said award, the umpire
  directed the respondent to pay the appellant the sum of
F Japanese Yen 129,764,463/- with interest at 4.5% per annum
  from 15.5.1991 to date of award. He declared that in the event
  of appellant becoming liable to pay further sums to Mii
  thereafter, due to any assessment of income tax on Mii under
  the present sub-contract pursuant to Section 44 BB of Income
G Tax Act, then Respondent shall indemnify the appellant against
  any such payment on demand. He awarded costs also. The
  respondent sought setting aside of the award of the umpire by
  invoking the jurisdiction of a learned single Judge of Bombay
  High Court under Clause - 30 of the Arbitration Act, 1940. The
  learned single Judge took the view that the said reimbursement
H
     SUMITOMO HEAVY INDUSTRIES LIMITED v. OIL &                   185
      NATURAL GAS COMPANY [H.L. GOKHALE, J.]
    by appellant to Mii was a voluntary act on the part of the           A
    appellant and the terms of the contract did not require the
    respondent to reimburse the said income-tax amount to the
    appellant. The learned single Judge held that the construction
    placed by the umpire on clause 17.3 of the agreement was
    'clearly an impossible one', and therefore, the Court would be       B
    justified in interfering with the findings and the award. The
    learned single Judge, therefore, allowed the Arbitration Petition
    and set aside the Award.

          5. Being aggrieved by this judgment and order, the             C
    appellant preferred an appeal, which came to be dismissed by
    the Division Bench of the Bombay High Court by its above
    referred to judgment and order dated 19th December, 2001.
    The Division Bench held that the only possible view of all the
    clauses of the contract was that the respondent could not be
    held to be liable to the appellant for the income-tax liability of   D
    the sub-contractor and that the umpire exceeded his jurisdiction
    in allowing appellant's claim under Clause 17 .3 of the General
    Conditions. The Division Bench, therefore, dismissed the
    appeal by its judgment and order dated 19th December, 2001.
    Being aggrieved by this judgment and order the present appeal        E
    has been filed by Special Leave. It may be mentioned at this
    stage that it was submitted on behalf of the respondent before
    the single judge that the revised assessment of the sub-
    contractor was not referable to Clause 44 BB of Income Tax
-   Act, and that the conclusion of the umpire be interfered on that     F
    ground also. The submission did not find favour with the
    learned single judge. The respondent challenged that finding
    by filing a cross-appeal and submitted that, if the cross-appeal
    was not maintainable, the respondent be permitted to challenge
    that finding while defending the judgment. The Division Bench        G
    overruled this challenge of the respondent to that finding.

    The short facts leading to this appeal are as follows:

         6. On 22nd July, 1982 the respondent invited tenders for
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    186     SUPREME COURT REPORTS                  [2010] 9 S.C.R.


A installation and commissioning on turn-key basis of a Platform
  Complex on its Bombay High (South) Offshore Site. The closing
  date for the bid was 11.10.1982. On the date of closing of the
  bid, the fiscal limit of Indian Income-tax Laws was 12 Nautical
  Miles in the territorial waters of India. The work to be done under
B the above mentioned tender was about 100 miles off the coast,
  and hence, the income arising therefrom was not subject to
  income-tax in India. The appellant had submitted its tender offer
  on 11th October 1982, which was accepted by the respondent
  and an agreement between the two came to be signed on 7th
c September, 1983 for executing the above work for the contract
  price of J.Y.10,823,237,000/-. Clause - 13.1 of the General
  Conditions of Contract which provides for this contract price laid
  down that "the contract price is the firm price without escalation
  subject to the provisions of the contract". The contract clearly
D stipulated that the remuneration provided to the appellant under
  the contract would be tax protected and would be net of all
  taxes.

       7. Consequent upon signing of the contract the appellant
  entered into a sub-contract with Mii on 28th December, 1983
E for execution of a part of a work under the above mentioned
  contract. The work was ultimately completed as per the contract
  and the respondent certified that the appellant had successfully
  completed the contract and a Certificate of Completion and
  Acceptance was issued on 11th April, 1984. A Discharge
F Certificate was also issued by the respondent on 18th May,
  1984.

       8. The Government of India, Ministry of Finance,
  Department of Revenue issued a notification on 31st March,
G 1983 under Clauses 6(6) and 7(7) of the Territorial Waters,
  Continental Shelf, Exclusive Economic Zone and other Maritime
  Zones Act, 1976, extending Income Tax Act, 1961 to the
  Continental Shelf of India and the Exclusive Economic Zone with
  effect from 1.4.1983. Hence, under the amended law, the work
  done under the above mentioned tender and the income arising
H
 SUMITOMO HEAVY INDUSTRIES LIMITED v. OIL &                  187
  NATURAL GAS COMPANY [H.L. GOKHALE, J.]
therefrom, became subject to the Income Tax Act, 1961. By            A
Finance Act, 1987 Clause 44BB was introduced in the Income
Tax Act, 1961 with retrospective effect from 1.4.1983. This
clause is a special provision for computing profits and gains
in connection with the business of exploration etc. of minerals.
It is obvious that all these changes in law took place after the     B
closing date of the bid i.e. after 11th October, 1982.

      9. In July, 1987 the Foreign Tax Division of the Department
of Revenue, Ministry of Finance issued a circular in respect of
turn-key projects of foreign contractors engaged in the business     C
of exploration of oil and natural gas in India. This circular
contained guidelines for computing the tax liability under the
above referred to Clause 44BB of the Income Tax Act, 1961
and instructions were given to all Commissioners of Income Tax
to assess the tax liability accordingly. In the year 1988 the
above referred to Mii was served with income-tax notices to re-      D
open and revise the assessments already made for the
assessment years 1984-85 and 85-86. Mii was informed that
it was required to pay the tax on the income from the
respondent for the work executed by them at Bombay High
(South) Offshore Site. Mii pointed out that it had already filed     E
tax returns for these two years stating that it had incurred loss,
and it was no more liable to pay income-tax. The authorities
rejected the objections of Mii and a tax liability was imposed
to the tune of US$1,12,447.84 (Rupees 1,85,23,780/-). Mii paid
that amount and claimed it from the appellant. The appellant         F
reimbursed the same, and claimed it from the respondent under
clause 17.3 of the General Conditions of Contract, which
provided for situations arising out of change of law. The
respondent did not accept this claim. As pointed out earlier,
respondent contended that they were responsible for the tax          G
liability of the appellant alone under clause 23 of the General
Conditions of Contract, and under clause 13.2.7 thereof it was
the responsibility of the appellant to meet all the obligations of
the Sub-Contractor.
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    188        SUPREME COURT REPORTS                  [2010] 9 S.C.R.


A       10. On 6th March, 1991 the appellant served on the
  respondent a notice of arbitration under clause 17 .2 of the
  agreement between the parties and filed their statement of
  claim on 13th October, 1992. Both the parties appointed their
  respective arbitrators as per the agreement. The two arbitrators
B differed in their determination, vide 'Reasons for conclusions'
  dated 4.7.1994 and 18.7.1994. Hence, the matter was referred
  to Sir Micheal Kerr as Umpire, who gave his award as
  aforesaid.

C The Relevant Terms of the Agreement entered into
    between the Parties.

        11. To understand the scope of the controversy it will be
    necessary to refer to the relevant clauses of the agreement
    dated 7.9.1983 between the parties.
D
       12. Clause B of the agreement specifically states that the
  following documents including the annexures listed thereunder
  shall be deemed to form, and will be read and construed as
  integral parts of the contract, and in case of any discrepancy,
E conflict or dispute, they shall be referred to in the order of priority
  as stated hereunder:

          Order of Priority:

          1.    Agreement
F
          2.    Annex. 'A' General Conditions of the Contract

          3.    Annex.'B' Scope of Work (as briefly outlined)

          4.    Annex. 'C' Contract Price Schedule
G
          5.    Annex. 'D' Project Schedule

          6.    Annex. 'E' Minutes of Meeting

          7.    Annex. 'F' Contract Specifications & Drawings
H
 SUMITOMO HEAVY INDUSTRIES LIMITED v. OIL &                 189
  NATURAL GAS COMPANY [H.L GOKHALE, J.]

     13. In the present matter we are concerned with the A
provisions of the General Conditions of Contract and the claim
of the appellant for reimbursement of the amounts paid by the
appellant to its sub-contractor. Clause 3.1 deals with
Assignment and clause 3:2 deals with Conditions of·
Subcontracting. Clauses 3.1 and 3.2(i) read as follows:        B

       "3.0 - ASSIGNMENT AND SUBCONTRACTING:

                       3.1 - Assignment:
          The Contractor shall not, except with the previous        C
    consent in writing of the Company, transfer or assign their
    obligations or interests in the Contract or any part thereof
    in any manner whatsoever."

             3.2 - Conditions for Subcontracting:                   D

           Concerning the works and facilities covered by the
    Contract having to be executed and commissioned on
    turnkey basis by the Contractor, the following conditions
    shall apply as regards subcontracting of any portion of the     E
    work entrusted to the Contractor.

           (i) In case of plant, equipment and allied requirement
    to be procured, installed and commissioned on the
    platform structure for the purpose of receiving, processing,
                                                                    F
    pumping, compressing, etc., and also any other facilities
    to be provided thereon, the Contractor shall, subject to the
    limitations imposed on him with regard to the makes/
    manufacturer of certain plant and equipment specifically
    stipulated to be procured against this Contract, be free to
    sublet the work to the manufacturers/authorized agents of       G
    the respective plant and equipment for procurement of the
    necessary supplies. In respect of those stipulated items
    referred to above, the Contractor shall not arrange
    alternative makes other than those agreed already for
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    190       SUPREME COURT REPORTS                 [2010] 9 S.C.R.


A         procurement without the prior written consent of the
          Company."

         14. Clause 5.10.5 lays down that the Contractor shall
    protect, indemnify and hold the Company (ONGC) harmless
    against all losses and claims, including such claims arising out
8
    of the negligence of the Contractor or its subcontractors, and
    the particulars of this indemnity are specified in this clause.

        15. Clause 5.11.3. lays down that the Contractor shall
  observe and comply with and shall ensure that all his
C subcontractors also observe and comply with the laws,
  regulations or requirements of any states which are liiioral
  states with respect to any sea areas comprised at site, and of
  any international authority or international convention or other
  rule of international law or custom applicable thereto. This is
D subject to the exception in clause 5.11.2 which provides as
  follows:

                'The Contractor shall conform in all respects, and
          shall ensure that all his subcontractors also conform in all
          respects with the provisions of any statute, ordinance or
E
          laws as aforesaid except where such laws, statutes or
          ordinances conflict with any laws, statutes or ordinances
          of United States of America and Japan, Contractor
          confirms that there is presently no law or regulation which
          should preclude its parformance of the works under the
F         Contract."

       16. Clause - 13 provides for Contract Price and PaymenU
  Discharge Certificate. Clause 13.1 lays down the Contract
  Price, which is mentioned earlier. Clause 13.2 lays down the
G Payment Procedure and sub-clause 13.2.7 provides as follows:

          "13.2. 7 - The Company shall not be responsible/obliged
          for making any payments or any other related obligations
          under this Contract to the Contractor's Subcontractor/
          Vendors. The Contractor shall be fully liable and
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 SUMITOMO HEAVY INDUSTRIES LIMITED v. OIL &                      191
  NATURAL GAS COMPANY [H.L. GOKHALE, J.]
     responsible for meeting all such obligations and all                A
     payments to be made to its SubcontractorsNendors and
     any other third party engaged by the Contractor in any way
     connected with the discharge of the Contractor's obligation
     under the Contract and in any manner whatsoever.
                                                                         B
     17. Next relevant clause 17 relates to Laws/Arbitration.
Clause - 17 .1 is on applicable laws, which lays down that "all
questions, disputes or differences arising under, out of or in
connection with this Contract shall be subject to the laws of
India." Clause 17.2 provides for arbitration in the event of any         C
dispute and for appointment of one Arbitrator each by the
parties, that the arbitration will be held at London, and further
that the decision of the arbitrators and in the event of their failing
to arrive at an agreed decision, the decision of the umpire shall
be final and binding on the parties.
                                                                         D
    18. Clause 17.3 makes the provision in the event of a
Change in Law. This clause reads as follows:

           "Should there be, after the date of bid closing a
     change in any legal provision of the Republic of India or           E
     any political sub-division thereof or should there be a
     change in the interpretation of said legal provision by the
     Supreme Court of India and/or enforcement of any such
     legal provision by the Republic of India or any political
     subdivision thereof which affects economically the position
     of the Contractor; then the Company shall compensate
                                                                         F
     Contractor for all necessary and reasonable extra cost
     caused by such a change."

    19. The last clause relevant for our purpose is clause - 23
which is on Duties and Taxes, and in that Clause the respondent          G
has taken care of the Customs Duties and Income-tax which
would be payable by the appellant. It reads as follows:

            "23.0 - DUTIES AND TAXES:

            Indian Customs Duties, if any, levied upon fabricated        H
    192      SUPREME COURT REPORTS                  [2010] 9 S.C.R.


A         structures, sub-assemblies and equipment and all
          components which are to be incorporated in the Works
          under the Contract shall be borne by the Company. The
          Company shall bear all Indian income taxes levied or
          imposed on the Contractor under the Contract, on account
B         of its or their offshore personnel while working at offshore
          or on account of payments received by Contractor from the
          Company for Work done under the Contract.
          Notwithstanding the foregoing, the Company shall have no
          obligation whatsoever in respect of the Contractor's
c         onshore employees whether they may be expatriate or
          nationals."

    Question arising for consideration

0      20. As stated above, the submission of the appellant was
  that the tax liability of Mii arose out of change of law and the
  appellant had to reimburse that amount to Mii. This affected the
  position of the appellant economically. The reimbursement of
  the tax liability of Mii by the appellant was merely the necessary
E and reasonable extra cost arising due to the change of law.
  There is no dispute that this liability of Mii arose out of the
  change of law after the date of bid closing. This being the
  position, according to the appellant the respondent was liable
  to compensate the appellant to that extent.

F      21. As against this submission of the appellant, the
  submission of the respondent was that under clause 23 of the
  General Conditions of Contract, referred to above, the
  respondent was liable to bear all Indian taxes levied or imposed
  on the appellant under the contract on account of the payment
G received by the appellant from the respondent for work done
  under the contract or on account of its off-shore personnel while
  working at off-shore. This Clause states that the respondent had
  no obligation whatsoever in respect of appellant's on-shore
  employees whether they were expatriate or nationals.
H Accordingly to the respondent they had not taken over the
 SUMITOMO HEAVY INDUSTRIES LIMITED v. OIL &                   193
  NATURAL GAS COMPANY [H.L. GOKHALE, J.]

liability to pay any taxes which may be due to be paid by the         A
sub-contractors of the appellant which, according to them was
also clear from Clause 13.2. 7 of the General Conditions of
Contract which laid down the Payment Procedure and which
stated that the respondent shall not be responsible or obliged
for making any payment in any other related obligations under         B
the contract to the appellant's sub-contractors.

       22. As stated earlier, the umpire has taken the view that
the tax liability of Mii reimbursed by the appellant was the
necessary and reasonable extra cost arising out of change of          C
law and that the respondent was required to compensate the
appellant to that extent in view of the provision contained in
Clause 17 .3 of the General Conditions of Contract. The
question for decision is whether the umpire exceeded his
jurisdiction in making the award or whether there is an error         D
apparent on the face of the award. This necessitates
consideration of the question whether the view taken by the
umpire on the construction of clause 17.3 was a possible one
and in which case whether it was open to the High Court to
ir.tei fere with the Award. Alternatively, the question is whether
the view taken by the umpire was an impossible one and in             E
which case whether there was no error in the High Court
interfering with the Award rendered by the umpire.

The approach of the Umpire
                                                                      F
     23. To find an answer to the question we have to see as
to what was the approach adopted by the umpire. To decide
as to whether the respondent was liable under the above
referred clause 17 .3, the umpire framed three questions. They
are reflected in Para 6.2 of the award which reads as follows:-
                                                                      G
            "6. 2 ONGC liability on the true construction of Clause
     17 .3 effectively depends on the answers to three questions
     in the circumstances of this case, of which the first can be
     divided into two parts. These are the following:
                                                                      H
    194          SUPREME COURT REPORTS                 [2010] 9 S.C.R.


A          (1)     Since 11 October 1982, the date of the bid closing,
                   has there been

                   (a)   any (relevant) change in any legal provision
                         of the Republic of India; or
B
                   (b)   any (relevant) change in the enforcement of
                         any such legal provision by the Republic of
                         India/

          (2) If the answer to (1) (a) or (b) be "yes", has this affected
c         economically the position of SHI?

          (1) and (2) are of course interdependent, and the insertion
          of ("relevant" is designed to provide the necessary
          connection).
D
          (3) If the answer to (2) is also "yes" have SHI incurred any
          "necessary and reasonable extra cost caused by any
          changes" as referred to in (1) above?

          If the answer to (3) is also "yes" then ONGC are liable. If
E
          any of the answers are different, then ONGC are not liable."

       24. It is seen from the award that before answering these
  three questions the learned umpire went into the issue as to
  what approach should be adopted while examining the scope
F and application of clause 17.3. The respondent submitted that
  this clause was in the nature of an indemnity and that it must
  be construed strictly and narrowly. This view is also accepted
  by the Division Bench. The Division Bench ob:;erved as follows:

G               'The Umpire further erred in law by refusing to put a
          narrow interpretation on the indemnity clause 17.3. Clause
          17.3 being indemnity clause should not have been given
          wider interpretation. The indemnity clause should be
          construed strictly analogously to an exemption clause. The
H
  SUMITOMO HEAVY INDUSTRIES LIMITED v. OIL &                  195
   NATURAL GAS COMPANY [H.L. GOKHALE, J.]
     Umpire overlooked the commercial principle that every            A
     business venture carried its own risk.".
                                         I
     25. The umpire on the other hand observed in Para 6.3.3
as follows:
                                                                      B
            "It is self-evident that Clause 17.3 is couched in wide
     terms. This is commercially understable, since it was
     designed to cover a wide and potentially unfores~eable
     spectrum- the possible impact of possible changes in
     Indian law in the future. I can therefore see no reason for
     giving to it any particularly strict or narrow interpretation.   C
     From the point of view of its commercial purpose, the
     contrary approach would be more justifiable. However, in
     relation to the present facts, it seems to me that this
     question has no practical significance. The proper
     approach is to construe the Clause on the basis of the           D
     ordinary and natural meaning of the words used, in the
     usual way, and of course in its context, as already
     mentioned."

       26. The umpire has noted this context in Para 2.2.4 of the     E
  award. He noted that the bid made it clear that a large part of
  the contract works were to be fabricated, positioned and
  installed by Mii as the named and approved principal sub-
  contractor of the appellant for this purpose. In para 2.2.4 he
  referred to the evidence of the Project Manager of the              F
  respondent, the sub-contract between the appellant and Mii, and
  the fact of the terms of the proposed sub-contract having been
· set out in the bid document. The umpire recorded in Para 2.2.4
  as follows:
                                                                      G
            'The evidence of Mr. B.L. Goel, ONGC's Project
     Manager, was that Mii had participated in the Bid
     Clarification meetings between ONGC and SHI, and had
     been approved by ONGC as Subcontractors of SHI
     because ONGC were familiar with their work and relied
                                                                      H
    196      SUPREME COURT REPORTS                  [2010] 9 S.C.R.


A         on their expertise. In this connection SHI placed some
          reliance on the fact that under the heading of Mii's
          "Schedule of Hourly Rates", a number of the terms of the
          proposed Subcontract between SHI and Mii were out set
          in the Bid, including a provision which made it clear that,
B         in the same way as in the Head Contract between SHI and
          ONGC, the Subcontract was to be "tax protected", with the
          consequence that SHI would be liable for all Indian tax that
          might become payable by Mii. This provision, which
          referred to Mii as "Contractor" and SHI as "Customer" was
c         in the following terms:

               "Any foreign (i.e non-U.S.A.) taxes incurred by
          Contractor and Contractor's employees and which are
          imposed by or payable to any foreign governmental
          authority, whether by way of withholding, assessment or
D         otherwise, for work performed hereunder shall be borne
          by Customer. Any such taxes which are paid directly by
          Contractor, shall be reimbursed by Customer."

                As will be seen hereafter, what became Clause 23
E         in the Head Contract and thus subsequently also in the
          Subcontract, was in different terms, but the substance was
          the same."

       27. In this background, the umpire answered the three
F questions and held that there was a relevant change in view of
  the enactment of Clause 44 BB in the Income Tax Act with
  retrospective effect. The enactment of this clause caused Mii
  to become liable to pay the tax which they paid. Since the
  appellant had to pay this amount of tax to Mii, it did affect
G economically the position of the appellant. Then the umpire
  posed a question whether the payments made by appellant to
  Mii can properly be described as cost to the appellant. The
  umpire took the view that the word 'cost' is a very wide word
  and that obviously the payments were an 'extra cost'. He held
H that when the payment arises under a contractual obligation to
  SUMITOMO HEAVY INDUSTRIES LIMITED v. OIL & 197
   NATURAL GAS COMPANY [H.L. GOKHALE, J.]

pay or refund some other party's tax, then such a payment is           A
obviously a cost under the contract in question. The cost was
therefore 'necessary cost' and it was also 'reasonable' since
it was only the added tax amount. He accordingly held that the
appellant was legally obliged to make this payment to Mii in
view of the back to back contract between the appellant and            B
Mii and that the respondent was required to reimburse the
same to the appellant.

 Consideration of the rival submissions

     28. The Division Bench has found fault with the umpire in         C
not placing a narrow and strict interpretation on clause 17.3.
Mr. Dushyant Dave learned Senior Advocate appearing for the
appellant submitted that it would not be right to apply strict rules
of construction ordinarily applicable to conveyances and other
formal documents to a commercial contract like the present one         D
and referred to and relied upon the judgment of this Court in
Union of India vs. Mis D.N Revri & Co. reported in (1976) 4
SCC 147. As held in that judgment, he submitted that the
            a
meaning of contract, and particularly a commercial one, must
be gathered by adopting a common sense approach and not                E
by a narrow pedantic and legalistic interpretation. The present
case relates to an international commercial contract and. as
noted earlier the appellant and Mii had agreed to subject
themselves to the domestic laws of India as well as the
International law and conventions. On this background the              F
appellant wanted to safeguard itself in the event of change of
law in India to which the respondent had agreed. It was
submitted that any narrow interpretation of Clause 17 .3 to
exclude the reimbursement of the income tax liability of the sub-
contractor will defeat the purpose in providing this safeguard         G
under clause 17.3 and will make it otiose.

     29. On the other hand Mr. Vivek Tankha, learned Additional
Solicitor General appearing for the respondent pressed for the
acceptance of the approach of the Division Bench viz. that
                                                                       H
    198      SUPREME COURT REPORTS                  [2010] 9 S.C.R.


A clause 17.3 must be construed as an indemnity clause and that
  it must be read strictly and narrowly. As far as this submission
  is concerned, one has to note that as per Section 124 of the
  Indian Contract Act, a Contract of Indemnity is one under which
  one party promises to save the other from loss caused to him
B by the conduct of the promisor or any other person. Thus in the
  present case, under clause 5.10.5 of the General Conditions
  of contract, the appellant has given the indemnity to the
  respondent against all losses that the respondent may suffer
  out of the negligence of appellant or their sub-contractor. Clause
c 17.3 thereof does not deal with any such losses. It makes a
  provision for compensation in the event of the appellant being
  subjected to extra cost arising on account of change of law. It
  cannot be compared with indemnity for loss due to conduct of
  the promisor or of a third party.

D       30. Mr. Tankha submitted that clauses in the contract have
  to be given a literal interpretation. He relied upon the judgments
  of this Court in Central Bank of India Ltd., Amritsar vs. Hartford
  Fire Insurance Co. Ltd. AIR 1965 SC 1288 and Polymat India
  (P) ltd. vs. National Insurance Co. Ltd. (2005) 9 SCC 174 in
E support. He contended that under the terms of the present
  contract respondent has taken up the income tax liability of the
  contractor alone, and clause 17.3 would not have the effect of
  passing on the burden of the income tax liability of the sub
  contractor as well on to the respondent. In this con11ection we
F must notice that both these judgments are concerning clauses
  in insurance policies. In the case of Central Bank of India
  (supra) the concerned clause in the insurance policy was "This
  Insurance may be terminated at any time at the request of the
  Insured." This Court held that the words "at any time" can only
G mean "at any time the party concerned likes". It was in this
  context that this Court held that the intention of the parties is to
  be looked for in the words used. In Polymat India (P) Ltd. (supra)
  the question for the consideration was whether as per the terms
  of the insurance policy the goods lying outside the shed were
H covered thereunder. The terms used in the policy were 'factory-
 SUMITOMO HEAVY INDUSTRIES LIMITED v. OIL &                   199
  NATURAL GAS COMPANY [H.L. GOKHALE, J.]
cum-godown-cum-office'. Obviously the goods lying outside the         A
factory and godown could not be held to be covered under the
policy. This Court held that the interpretation could not be given
de-hors the context.

     31. There is no difficulty in accepting that the clauses of
                                                                      8
an insurance policy have to be read as they are. In an insurance
policy the party which is insured makes a proportionate
advance payment to the Insurance Company and gets an
assurance to protect itself against the loss or the damage which
it might suffer in certain eventuality. Consequently the terms of
the insurance policy fixing the responsibility of the Insurance       C
Company are read strictly. Such is not the situation in the
present case. Here we are not concerned with a clause in an
insurance policy. We are dealing with an International
Commercial Contract under which the appellant has reimbursed
the tax liability of their sub-contractor which arose out of change   D
in the law after the date of bid closing. This is stated to have
affected the position of the appellant economically for which the
appellant is seeking equivalent compensation from the
respondent as per its construction of clause 17.3. When clause
17 .3 provides that the respondent company shall compensate           E
the contractor for all necessary and reasonable extra cost
caused by such a change in law, affecting the contractor
economically, could the claim for reimbursement made by the
appellant from the respondent be held as not covered under
this clause?                                                          F

     32. The respondents had contended in the High Court and
also before us that it was not necessary for the appellant to
reimburse this tax amount to Mii and that it was only a voluntary
payment on their part. It was also submitted that this payment        G
arose out of the contract between the appellant and Mii and not
because of change of law as such. Now, as can be seen from
the evidence as narrated above, Mii became liable to pay this
tax amount to the Union of India only because of the
retrospective change in the Income Tax Law, brought in
                                                                      H
    200      SUPREME COURT REPORTS                    [2010] 9 S.C.R.


A subsequent to the date of bid closing. The liability of the
  appellant to reimburse that amount to Mii arose in view of the
  commitment made by the appellant in their sub-contract to Mii.
  It cannot be ignored that if there was no change of law, this
  situation would not have arisen at all. It is therefore not possible
B to treat this payment as voluntary, that is, in the absence of any
  liability.

          33. It was canvassed on behalf of the respondent that there
    is no nexus between that payment to Mii and the responsibility
    cf ~he respondent. However, as can be seen from clause 3 of
c   the General condition quoted above, the sub-contracting was
    clearly contemplated by the parties and was provided for in their
    agreement. The relevant material and evidence placed before
    the arbitrator clearly shows that Mii was the principal sub-
    contractor and has all throughout been in picture in the contract
D   between the appellant and the respondent. In fact it is because
    of the expertise of Mii that it was given a pivotal role in the
    execution of the entire contract. The appellant had entered into
    a back to back contract with Mii to the knowledge of the
    respondent. The performance of their obligation under the sub-
E   contract by Mii, formed part and parcel of appellant's obligations
    under the Head-contract. The respondent had taken up the
    responsibility for the income tax liabilities of the appellant. So
    had the appellant taken up the responsibility for the tax liabilities
    of Mii and the respondent cannot be said to be ignorant there
F   of. In any case clause 17.3 will have to be given a meaningful
    interpretation. It is confined only to the necessary and
    reasonable extra cost, caused by change in law occurring after
    the date of bid closing. The claim of appellant was restricted
    only to that extent. It is necessary to note that the contract was
G   otherwise completely executed, payments were made and the
    discharge certificate was issued long back. Mii had already
    filed its returns for the two relevant assessment years 1984-85
    and 1985-86. In 1988 its assessment has been reopened in
    view of the change in law, for which appellant had made the
H   payment and had sought reimbursement from the respondent.
 SUMITOMO HEAVY INDUSTRIES LIMITED v. OIL &                    201
  NATURAL GAS cor.~PANY [H.L. GOKHALE, J.]
In the circumstances the submission of absence of nexus can            A
not be accepted.

      34. In the present matter the Division Bench has observed,
that the umpire exceeded his jurisdiction :·1 awarding Appellant's
claim under clause 17 .3 of the agreement and that he has failed       8
to apply his mind to the pleadings, documents and the evidence
as well as particular clause of the contract to decla12 that the
award was perverse. In fact as seen above, the umpire has
entertained appellant's claim only after giving a meaningful
interpretation to clause 17.3 after considering all the material       C
on record as well as the context. Respondent had contended
in their arbitration petition before the High Court that it was not
permissible to refer to the pre-contractual negotiations and the
documents arising therein. What the umpire has however done
is to look into the context with a view to understand the text. As
we have noted above the umpire has looked into the evidence            D
before him including that of the respondent's officer as to how
Mii had participated in the bid clarification meetings. He
considered the submission of the appellant as to how the sub-
contract was also tax protected, which was their main plea. It
is true that if there is an error apparent on the face of the award    E
or where the umpire had exceeded his jurisdiction or travelled
beyond the reference, the court can interfere. However in view
of what is noted above it is not possible to say that the award
suffers from any of the above defects so as to call for
 interefence.                                                          F

      35. The view canvassed on behalf of the respondent was
that clause 17 .3 ought to be read narrowly like an indemnity
clause or given a literal interpretation as in the case of an
insurance policy. The umpire on the other hand has observed            G
that this clause is couched in wide terms and it was
commercially understandable and sensible, since it was
designed to cover a wide and potentially unforseeable spectrum
viz. the likely impact of a possible change in Indian law in future.
 In the circumstances the approach adopted by the umpire being
                                                                       H
    202      SUPREME COURT REPORTS                   [20'10] 9 S.C.R.


A a plausible interpretation, is not open to interfere. The Division
  bench was clearly in error when it observed that the view of the
  umpire on clause 17.3 is by no stretch of imagination a
  plausible or a possible view. Perhaps, it can be said to be a
  situation where two views are possible, out of which the umpire
B has legitimately taken one. As recently reiterated by this Court
  in Steel Authority of India Limited versus Gupta Brothers Steel
  Tubes Limited reported in (2009) 10 SCC 63 if the conclusion
  of the arbitrator is based on a possible view of the matter, the
  court is not expected to interfere with the award. The High Court
c has erred in so interfering.

         36. Can the findings and the award in the present case
    be described as perverse? This Court has already laid down
    as to which finding would be called perverse. It is a finding which
    is not only against the weight of evidence but altogether against
D   the evidence. This court has held in Triveni Rubber & Plastics
    vs. CCE AIR 1994 SC 1341 that a perverse finding is one which
    is based on no evidence or one that no reasonable person
    would have arrived at. Unless it is found that some relevant
    evidence has not been considered or that certain inadmissible
E   material has been taken into consideration the finding cannot
    be said to be perverse. The legal position in this behalf has
    been recently reiterated in Arulvelu and Another vs. State
    Represented by the Public Prosecutor and Another (2009) 10
    sec   206. In the present case, the findings and award of the
F   umpire are rendered after considering the material on record
    and giving due weightage to all the terms of the contract. Calling
    the same to be perverse is highly unfair to the umpire. The
    umpire has considered the fact situation and placed a
    construction on the clauses of the agreement which according
G   to him was the correct one. One may at the highest say that
    one would have preferred another construction of clause 17.3
    but that cannot make the award in any way perverse. Nor can
    one substitute one's own view in such a situation, in place of
    the one taken by the umpire, which would amount to sitting in
H   appeal. As held by this Court in Kwality Manufacturing
 SUMITOMO HEAVY INDUSTRIES LIMITED v. OIL &                   203
  NATURAL GAS COMPANY [H.L. GOKHALE, J.]
Corporation versus Central Warehousing Corporation                    A
reported in (2009) 5 sec 142, the court while considering
challenge to arbitral award does not sit in appeal over the
findings and decision of the arbitrator, which is what the High
Court has practically done in this matter. The umpire is
legitimately entitled to take the view which he holds to be the       p
correct one after considering the material before him and after
interpreting the provisions of the agreement. If he does so, the
decision of the umpire has to be accepted as final and binding.

     37. It is an obligation of the parties to a contract that they
must perform their respective promises, and if a party does not       C
so perform, the arbitrator or the umpire has to give the
necessary direction if sought. In that process, they have to give
a meaningful interpretation to all the relevant clauses of the
contract to make them effective and not redundant. The intention
of the parties in providing a clause like clause 17.3 could not       D
be ignored. It had to be given a due weightage. This is what
the umpire has done and has given the direction to the
respondent to compensate the appellant for the amount of the
necessary and reasonable extra cost caused by change in law.
We have no hesitation in holding that the award of the umpire         E
is a well reasoned award and one within his jurisdiction, and
which gives a meaningful interpretation to all the clauses of the
contract including clause 17.3. In the circumstances in our view
the High Court has clearly erred in interfering with the award
rendered by the umpire.                                               F

       38. There is one more submission which has to be referred
to. It was canvassed on behalf of the appellant in the High Court
and before us also that the award rendered by the umpire was
one on a question of law and on that ground also the Court was        G
not expected to interfere with the award. Mr. Dave took us
through the notice of intention to appoint the arbitrator, the
request for arbitration, the summary of issues submitted by the
 appellant and the draft issues submitted by the respondent. He
 then contended that appellant's claim essentially depended on
                                                                      H
    204     SUPREME COURT REPORTS                  [2010] 9 S.C.R.


A the interpretation of the clauses of contract which plea was
  specifically raised through these draft issues and this stood on
  the same footing, as a reference of an issue of law for
  arbitration. Amongst others, the judgment in Mis Kapoor
  Nilokheri Co-op Diary Farm Society Ltd. vs. Union of India
B and Others in (1973) 1 sec 708 was relied upon in support
  of this proposition. As against that, Mr. Tankha submitted that
  in paragraph 23 of Mis Tarapore & Co. v. Cochin Shipyard
  Ltd. AIR 1984 SC 1072, the judgment in Kapoor Nilokheri has
  been read as one in the facts of that case. He further relied
c upon the judgment in Rajasthan State Mines & Minerals Ltd.
  vs. Eastern Engineering Enterprises & Anr JT 1999 (7) SC
  379 to submit that the award of the arbitrator on a question of
  law is immune from a challenge in a Court only when it is
  rendered on a specific question of law referred to him and that
  the same was not the situation in the present matter. The
0
  Division Bench has accepted this submission of the respondent
  and held that in the present case there was no specific question
  of law referred to the arbitrators or the umpire. It held that what
  was referred for arbitration was the determination of the claim
  of the appellant against the respondent, and that an incidental
E question involving interpretation cannot be said to be a specific
  question of law.

        39. However, we are not required to go into that issue since
  we are otherwise holding that the award was not only a
F plausible one but a well-reasoned award. In the circumstance
  the interference by the High Court was not called for. In that view
  of the matter we allow this appeal and set aside the judgment
  of the learned single Judge, as well as that of the Division
  Bench. The award made by the Umpire is upheld and there shall
G be a decree in terms of the award. The arbitration petition filed
  by the respondent for setting aside the award shall stand
  dismissed with cost.

    D.G.                                           Appeal allowed.