2007 (11) TMI 670 - SC - Indian Laws

Summary

Issues Involved:
1. Correctness of the Arbitrator's Award.
2. Basis for computing rates for repairs and maintenance for the eleventh to the sixteenth year of operation.
3. Scope of reference to arbitration and whether the Arbitrator exceeded his mandate.

Summary:

1. Correctness of the Arbitrator's Award:
The appeal challenges the judgment of the Bombay High Court, which upheld the Arbitrator's award. The Arbitrator concluded that the computation of repairs and maintenance expenses should consider the years of operation rather than calendar years. This decision was contested by the appellant, who argued that the Arbitrator's conclusion was irrational and beyond the reference made.

2. Basis for Computing Rates for Repairs and Maintenance:
The dispute centered on the cost of repairs and maintenance of the respondent's Offshore Vessels (OSVs) for the eleventh to the sixteenth year of their operation. The Arbitrator held that the 12th year of operation of SCI's OSVs should be equated with the 12th year of operation of the respondent's OSVs. The High Court supported this view, stating that the Arbitrator's interpretation was logical, just, and fair.

3. Scope of Reference to Arbitration:
The appellant argued that the Arbitrator's award was beyond the reference made, as the reference did not include the 12th to the 16th year. The High Court, however, noted that the prayers in the writ petition indicated that the issue for that period was raised. The Division Bench held that even if the mode of calculation by the Arbitrator was inappropriate, it could not be a ground for exercising power u/s 34 of the Arbitration and Conciliation Act, 1996.

Conclusion:
The Supreme Court found that the Arbitrator's award was beyond the reference made and that the basis of the Arbitrator's award was wrong. The appeal was allowed, setting aside the norms prescribed by the Arbitrator as upheld by the learned Single Judge and the Division Bench, with no order as to costs.