9911796707
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Issues Involved:
1. Misconduct by the arbitrator in interpreting contract clauses. 2. Error in awarding Claim No. 9 regarding the difference in exchange rate. 3. Jurisdiction and scope of court intervention in arbitration awards. Detailed Analysis: 1. Misconduct by the Arbitrator in Interpreting Contract Clauses: The petitioner contended that the arbitrator misconducted by misinterpreting and misconstruing various clauses of the contract related to the construction of two offshore well platforms at South Bassein field in the Arabian Sea. The petitioner argued that the arbitrator failed to appreciate the oral evidence and misinterpreted documents on record, leading to an erroneous and illegal award. The umpire, however, partly granted Claims Nos. 1 to 7 and 9 to 11 of the respondent while Claims Nos. 8 and 12 were not pressed, and Claim No. 13 regarding interest was not granted. The umpire allowed interest at 12% per annum on the claims allowed from specified dates until payment, and rejected the counterclaims made by the petitioner. 2. Error in Awarding Claim No. 9 Regarding the Difference in Exchange Rate: The petitioner argued that the umpire committed an error apparent on the face of the record by accepting the respondent's claim for the difference in exchange rate. The respondent claimed an amount of US $432,500.35, which was deducted by the petitioner to meet the respondent's surtax liability under the Companies (Profits) Surtax Act, 1964. The petitioner deposited Rs. 88,16,484 with the income-tax authorities based on notices under section 226(3) of the Income-tax Act, 1961. The umpire accepted the alternative claim of the respondent for the difference in exchange rate, holding that the contract price was to be paid in US dollars and the liability did not change to rupees. The umpire awarded the respondent US $100,733.89 with interest from May 21, 1990. However, the court found that the award suffered from a manifest error apparent ex-facie as the petitioner was treated as a representative assessee under section 162 of the Income-tax Act. The court held that the petitioner was not liable for the fluctuation in the value of foreign currency between the date of deduction and the date of payment, as the liability related to the period of assessment. The court found the umpire's findings inconsistent and self-contradictory, leading to a serious error of law in awarding the alternative claim. 3. Jurisdiction and Scope of Court Intervention in Arbitration Awards: The respondent argued that the court's jurisdiction is limited when deciding objections against an arbitration award and cannot sit in appeal to examine the correctness of the award on merits. The court acknowledged that an award may be set aside on the ground of an error on the face of the award if it contains a legal proposition that is erroneous. The court referred to several precedents, including Champsey Bhara and Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd., AIR 1923 PC 66, and Sudarsan Trading Co. v. Government of Kerala, AIR 1989 SC 890, which recognized the limited scope of court intervention but allowed setting aside awards based on patent errors or erroneous application of legal principles. Conclusion: The court allowed the petition partly, setting aside the umpire's award regarding Claim No. 9 and the associated interest. The rest of the award was confirmed, and a decree was passed in terms of the award except for Claim No. 9, with future interest at 12% per annum from the date of the decree until payment.
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