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TMI Blog2007 (11) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... hort 'OSVs') inter-alia, for supplying material from its onshore bases to its offshore installations. After initially meeting its requirements by chartering foreign OSVs, the appellant decided to develop a fleet of Indian Flag vessels. Various Indian companies including the respondent and the Shipping Corporation of India (in short 'SCI') acquired OSVs, with a view to chartering them to the appellant. The respondent acquired five vessels-(named Garware I to Garware V) which were handed over to the appellant in the months of November and December, 1983 and January and March, 1984. The dispute pertains to the cost of repairs and maintenance of the respondent's OSVs for the eleventh to the sixteenth year of their operation. Even though there is no dispute regarding the first two terms of five years each, reference to the manner in which the rates for the same were arrived at is necessary. A working group under the Director General of Shipping was constituted by the Ministry of Petroleum to determine the floor day rate in respect of the vessels keeping two objects in mind, i.e. (a) long term availability of the OSVs for the appellant and (b) economic viability to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commended by Dr. Saxena Committee of 1995-77. 8. Disputes and differences arose between the appellant and inter-alia the respondent and others regarding the method to the adopted for calculating rates payable with reference to the eleventh to the sixteenth years. The respondent, therefore, filed Writ Petition No. 2788 of 2001 for various reliefs. 9. By an order dated 7.12.2001 a Division Bench of the High Court recorded that the Writ Petition involved certain contractual disputes and that both the parties had agreed to refer the disputes raised in the Writ Petition to the sole arbitration of Mr. Justice M.L. Pendse (a former Judge of the Bombay High Court and the former Chief Justice of the Karnataka High Court). The order which is a short one, reads as follows: This writ petition involves certain contractual disputes relating to repairs and maintenance expenses etc. contract between the parties contain an arbitration clause. Both the parties agree to refer the disputes raised in the writ petition to sole arbitration of Justice M.L. Pendse (Retd.). Parties further agree that in case Justice Pendse is not in a position to take up the arbitration, Justice D.R. Rege (Retd.) shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. According to the Division Bench, the learned arbitrator has considered and construed the reports while arriving at his conclusions. The entire dispute in the Writ Petition and before the learned arbitrator centered around this issue. The basis of the calculation adopted by the learned arbitrator was, not only logical but just and fair. The provisions of the said reports are not such that they required no interpretation and were merely to be applied without anything more. They called for a proper interpretation and construction before being applied to the facts of the case. The learned arbitrator did so. 13. The learned Single Judge held that undoubtedly there was no reference so far as the period of 13 to 16 years are concerned to the learned Arbitrator. But the prayers and the writ petitions clearly indicated that even for that period an issue was raised. 14. The Division Bench was of the view that even if the mode of calculation as applied by the arbitrator is not very appropriate in its effect that could not be a ground for exercise of power under Section 34. 15. It noted that the reference in fact did not include the 12th to the 16th year to inspect that the arbitrator th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t effectiveness by ensuring lower capital because of lower interest rate and lower rate equality ratio. 21. The recommendations of the HLWG are as follows: 1. Determination of year from which R&M expenses are to be actualized a. 1st to 5th year as per payments already made. Settled cases not to be reopened. b. 6th to: 10th year as per norms fixed by the Dr. Saxena Committee of 1995-97. c. 11th and 12th years to be actualized on the basis of SCI's OSVs as recommended by the Dr. Saxena Committee of 1995-97. 5. Ceiling rates for "A" type Vessels only pertaining to the period beyond 12 years of operation a. From 1st to 5th year ceiling rates as already paid by ONGC. b. From 6th to 10th year floor rates to be paid by ONGC. c. For the 11th and 12th years ceiling rates to be paid by ONGC 6. Compensation in lieu of CRF a. The Operating Expenses (including Crew Salary & Wages covering agreements between INSA and MUI/ NUSI) as determined on the last day of the 12th year of operation for each vessel, (as per recommendations of the Dr. Saxena Committee and further modified by this Working Group) to be fixed and made applicable for the next four year i.e. from the 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 BHP. 26. Though there was some controversy as to whether the year referred to is the financial year as reimbursement was on year to year basis after receipt of the auditor's statement from SCI the norms obviously relate to financial year. 27. A few factual aspects need to be noted. So far as Essar is concerned, the year is same as SCI. In case of Bann, there was one time settlement and it is only JESCO which challenged the report. SCI's first year of operation was 1984-85. The figures for that year provide some material for rationalization. It is to be noted that stress is on re-imbursement. Thus the measure is fixed and, therefore, year of operation is immaterial. It needs no reiteration that claim was for 11th and 12th years and the award also covered from 12th to 16th year. It is also to be noted that the HLWG referred to certain anomalies. But they related to the previous years. The "Bench Mark" is the figure of SCI of particular year. So when entry to business was made is irrelevant. 28. There is no proposition that the courts could be slow to interfere with the arbitrator's Award, even if the conclusions are perverse, and even when the very basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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