9911796707
TMI Blog2017 (10) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Umpire. The award was ultimately only on the said issue. In passing, the Umpire did refer to Clause 13.2.7, which was the only bone of contention left between the parties, but stated that since Clause 17.3 of the contract was not attracted, and since consequently the Claimants were not liable to indemnify the sub-contractor, Clause 13.2.7, would squarely come into play. From this it can be seen, that there was no independent reasoning or conclusion with regard to the applicability of Clause 13.2.7. This being the case, and the matter being a fairly old one, we are of the view that the award of the Umpire has to be set aside on the ground that his ultimate decision was on a matter not referred to him, but indeed on a matter which had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tively. Immediately after the submission and acceptance of these tenders, on 31 st March, 1983, a Notification was issued by the Government of India extending the Income Tax Act, 1961 to the Continental Shelf and Exclusive Economic Zone of India with effect from 1 st April, 1983, in respect of income derived by every person inter alia from prospecting for, or extraction or production of mineral oil in the Continental Shelf or Exclusive Economic Zone of India. Fomal contracts were entered into between the Oil and Natural Gas Corporation Ltd.[ ONGC ] and the appellant on 16 th December, 1983. For the purpose of this appeal, two clauses are material and are set out below: 13.2.8 The company shall not be responsible/obligated for ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing to the contrary contained in various sections of the Income Tax Act, liable to pay income tax on a sum equal to 10% of the aggregate of the amounts specified in sub-section (2), which were then deemed to be profits and gains of such business chargeable to tax under the head 'profits and gains of business' or profession. To complete the narration of facts, the work under the two contracts was done during the period 1984-85 to 1987-88. As a result of work done in this period, the Income Tax Department taxed the sub-contractor M/s McDermott International Incorporated after reopening its assessments to tax under Section 148 of the Act. As a result, the sub-contractor became liable to pay various amounts by way of tax, both u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case, yet Clause 13.2.8 interdicted the payment of any amounts on account of the sub-contractor's liablity. On the other hand, Justice D.M. Rege, learned Arbitrator, by his separate award dated April, 1999 agreed with Shri Chandrashekhar on all points except one, namely, the effect of Clause 13.2.8 on Clause 17.3. According to him, Clause 13.2.8 would not come in the way of ONGC having to pay amounts paid by the sub-contractor by way of tax because of a change in law. The learned Arbitrator held: Firtly, the said Cl.13.2.8 is a part of Cl.13 dealing with Contract price payment/Discharge Certificate and was not connected with the subject covered by Cl.17.3 of the Contract on which the Claimants' claim is based. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be attracted, as there was no change in law under which such tax had to be paid. The tax had to be paid in any case under the provisions of Sections 5 and 9 of the Income Tax Act and accordingly, the claim of the appellant was rejected. However, before concluding the award the learned Umpire held: 35. Before concluding the discussion on the aforesaid point, it would be useful to refer to clause 13.2.7 of the main Contract between the Claimants and the Respondents, it reads thus: 13.2.7. the Company shall not be responsible/obligated for making any payments or any other related obligations under this Contract to the Contractor's sub-contractors/vendors.The contractor shall be fully liable and responsible for meeting all suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to him, but indeed on a matter which had been concluded in favour of the appellant. This being the case, it would be necessary to remit the matter to the Umpire. Inasmuch as the Former Chief Justice Y.V. Chandrachud is no longer alive, with the consent of the parties, we appoint Justice Aftab Alam to be the Umpire in this case to decide the narrow issue as to whether Clause 13.2.8 would apply so as to interdict the application of Clause 17.3 which has been held by both learned Arbitrators to apply to the parties. We request the learned Arbitrator to take up the matter as early as possible and deliver his award within a period of three months from the date on which he receives the papers from the parties. By consent, it is recorded tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
