Oil and Natural Gas Corporation Ltd. vs Interocean Shipping (India) Pvt. Ltd.

A.A. Sayed, J.—The above three Arbitration Petitions, filed under Section 34 of the Arbitration & Conciliation Act, 1996, emanate from the same arbitration proceedings in respect of disputes under the Contract dated 22 March 1995 executed between the Petitioner and the Respondent. Arbitration Petition No. 459 of 2009 has been filed challenging the ''Award'' dated 12 March 2009, Arbitration Petition No. 1029 of 2009 has been filed challenging the ''Supplemental Final Award'' dated 24 February 2010 and Arbitration Petition No. 86 of 2012 has been filed challenging the ''further Award'' dated 21 September 2011.

After a bidding process, the parties entered into the aforementioned Contract dated 22 March 1995 (hereinafter referred to as "the Contract") in respect of Offshore Supply Vessel (OSV) named Samudrika-2 (Sam-2). The vessel Sam-2 is owned by the Petitioner (ONGC). Under the Contract, the Respondent''s duties and obligations included, inter alia, manning, operating, victualling, repair and maintenance and provisioning of the vessel Sam-2 with a view to provide round-the-clock logistics support services to the Petitioner''s offshore operations. The Contract was for two & half years i.e. from 15 March 1994 to 14 September 1996, which was later extended upto 11 November 1996. The Contract provides for payment of lump sum amount per day for the Respondent''s obligation and duties under the Contract. The Contract also provides for deductions to be made from the amounts payable to the Respondent, inter alia, on account of deficiency in equipment not rectified (clause 4.0), on account of non-compensable downtime (clause 12.0.b), for fuel, oil and freshwater during non-compensable downtime (clause 10.0-vi), for liquidated damages (clause 14), etc. The Contract contained an arbitration clause. According to the Petitioner, since the Respondent always billed for 100% of the amount without taking into account the deductions stipulated in the Contract, the Petitioner made certain deductions from the bills.

The Respondent disputed the deductions made by the Petitioner and claimed the said amounts in the arbitration proceedings. According to the Petitioner, it was the Respondent''s duty and obligation to repair the vessel at its own costs. According to the Respondent, however, the expenses for repairs of the vessel was required to be borne by the Petitioner. The Respondent invoked arbitration by notice dated 23 March 1999. The Respondent, who was the Claimant in the arbitration proceedings, filed its Statement of Claim before the Arbitral Tribunal, consisting of three Arbitrators. The Petitioner, who was the Respondent in the arbitration proceedings, filed its Written Statement. Rejoinder and sur-rejoinder were also filed. The parties led oral evidence. The parties also filed written submissions before the Arbitral Tribunal. After hearing the parties, the Arbitral Tribunal passed the impugned Award dated 12 March 2009, partly allowing the claim of the Respondent. The operative part of the impugned Award dated 12 March 2009 reads as follows:

"12. In conclusion our findings on the claims raised by the Claimant are as under:

(a) Limitation: We reject the Respondent''s preliminary objection, and find that the claims made in these proceedings are not barred by limitation.

(b) The Repairs Claim: We have already held in paragraph B. 20 that the entire expenses of Rs. 80,67,589.00 incurred by the Claimant must be taken to be relatable to schedule and necessary repairs incurred by the Claimant and the Claimant must therefore be held to be entitled to be reimbursed the entire amount of Rs. 80,67,589.00.

(c) The Accident Claim: ... ...

(d) The claim for Reimbursement for withheld amounts of monthly stipend: We hold that the following deductions were wrongly made from the Claimant''s monthly stipend, and are liable to be reimbursed:

(i) unexplained deductions of Rs. 4,870/- and Rs. 919/-;

(ii) deduction of Rs. 2,86,641/- in respect of the period for which Sam-2 was not in operation during Hand-Over Take-Over operations;

(iii) deductions of Rs. 68,794/-, Rs. 68,795/- and Rs. 61,484/- on account of liquidated damaged.

(iv) deductions in respect of fuel and water used during period of downtime relatable to the time when Sam-2 was not in operation during Hand-Over Take-Over operations. Since the Respondent has not provided details regarding the amounts of fuel and water used during the above mentioned period, the burden of which was on the Respondent the entire deduction of Rs. 3,99,028/- made in respect of fuel and water must be disallowed and the said amount be reimbursed to the Claimant.

We find that other deductions have been made in terms of the contract, and the Claimant is not entitled to recover such amounts.

(e) Claim for interest: We award 9% simple interest per annum from the date of the reference to arbitration till the date of payment on all amounts due to the Claimant under this award.

..."

The Petitioner challenged the Award dated 12 March 2009 in this Court by filing Arbitration Petition No. 459 of 2009. The Arbitral Tribunal while dealing with the Accident Claim, in para C-18(ii) of the Award dated 12 March 2009 left the quantum of reimbursement by the Petitioner to the Respondent ''Blank'', as the Respondent was required to submit a detailed Statement in respect of costs of activities ancillary to the repairs necessitated by the two accidents involving "M.V. Satyam" and "M.V. Rajendra Prasad" respectively. Pursuant thereto, by two letters both dated 4 May 2009, the Respondent''s Advocate provided certain clarifications/Statements to the Arbitral Tribunal, whereupon the Arbitral Tribunal passed the 2nd Award dated 24 February 2010, which is titled as "Supplemental Final Award", directing the Petitioner to pay the Respondent a sum of Rs. 18,25,596/- arrived at after deducting Rs. 1,75,000/-, alongwith interest. The Petitioner challenged the Supplemental Final Award dated 24 February 2010 by filing Arbitration Petition No. 1029 of 2010, essentially on the ground that the Arbitral Tribunal had become functus officio and had no power to make the Supplemental Final Award.

In the aforementioned Arbitration Petition No. 459 of 2009 as also in Arbitration Petition No. 1029 of 2010, the Respondent filed two separate Chamber Summons relying upon Section 34(4) of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as "the 1996 Act") seeking to defer the hearing of the Arbitration Petitions in order to give the Arbitral Tribunal an opportunity to resume the arbitral proceedings or to take other action as in the opinion of the Arbitral Tribunal would eliminate the grounds for setting aside the Award dated 12 March 2009 and the Supplemental Final Award dated 24 February 2010. It appears that the said two Chamber Summons were taken out in view of the objection on behalf of the Petitioner that the Arbitral Tribunal had become functus officio and did not have the power to make the Supplemental Final Award dated 24 February 2010. The Petitioner filed its Affidavits-in-Reply to the said two Chamber Summons. This Court passed an order dated 22 July 2011 allowing the Chamber Summons and adjourned the hearing of the Arbitration Petitions.

Pursuant to the aforesaid order dated 22 July 2011 passed by this Court, upon resumption of the Arbitration proceeding, the Arbitral Tribunal, by order dated 1 August 2011 directed the parties to file their respective written arguments on whether any particular portion of the Award needs rectification by the Arbitral Tribunal and in what manner. The Petitioner''s Advocate addressed letters dated 18 August 2011 and 2 September 2011 to the Arbitral Tribunal. The Respondents'' Advocate addressed letter dated 19 August 2011 to the Arbitral Tribunal. In the letter dated 19 August 2011, the Respondent gave up their claim of interest pendente lite which was granted by the Award dated 12 March 2009 and conceded to the position that their claim for interest pendente lite would be barred in view of the judgment of the Supreme Court in Sayeed Ahmed and Co. Vs. State of U.P. and Others, . In the last line of the letter dated 19 August 2011, however, it was stated that if the Arbitral Tribunal makes no Award on interest, then automatic interest provisions of section 37(1)(b) of the Act will apply. (This provision deals with Appeal and it appears to have been wrongly mentioned.)

The Arbitral Tribunal, thereafter, on 21 September 2011 passed a 3rd Award styling the same as "Order" (hereinafter referred to as ''further Award''). By this further Award, the Arbitral Tribunal made certain rectifications in the Award dated 12 March 2009 including corrections of some inadvertent errors. The Arbitral Tribunal also, inter alia, substituted the figure of Rs. 36,18,323/- by Rs. 80,67,589/- in paragraph B. 20 of the Award dated 12 March 2009. The Arbitral Tribunal recorded that in the Award dated 12 March 2009 the direction to pay 9% interest from the date of reference shall stand deleted in view of the judgment of the Supreme Court in Sayyad Ahmed & Co. vs. State of U.P., (supra). The Arbitral Tribunal however held "the Claimant shall be entitled to interest from the date of the Award until payment as the law permits" [which effectively meant interest at the rate of 18% per annum by virtue of section 31(7)(b) of the 1996 Act].

It is in this background that the aforesaid three Arbitration Petitions are filed impugning the three Awards as mentioned in paragraph 1 hereinabove. Inasmuch as the impugned Awards arise from the same Contract dated 22 March 1995 and same arbitral proceedings, this common order is being passed, which would dispose of the three Arbitration Petitions.

The controversy in the present proceedings primarily relates to the first Award dated 12 March 2009, in which the Arbitral Tribunal framed the following issues:

Preliminary Issue

(a) Whether and to what extent the claims are barred by limitation?

On Merits

(b) Whether and to what extent the Claimant is entitled to reimbursement of expenses incurred in carrying out scheduled repairs? (Claim Rs. 80,67,589/-)

(c) Whether and to what extent the Claimant is entitled to reimbursement of expenses incurred in respect of accident repairs? (Claim Rs. 23,97,423/-)

(d) Whether and to what extent the Claimant is entitled to recover the amount of withheld portions of its monthly stipend? (Claim Rs. 26,10,323/-)

(e) Whether the Claimant is entitled to interest? If so, at what rate and from which date? (Claim @ 18% pa from 1 July 1999)

(emphasis supplied)

I have heard learned Counsel for the Petitioner and learned Counsel for the Respondent. I have also perused the judgments cited by the Counsel, which in my view are not of much assistance (except for certain general principles to which there can be no dispute) as the issues involved in the present case are by and large contract-specific.

During the course of hearing, learned Counsel for the Respondent, on instructions, made a statement before the Court that the Respondent is giving up the claim for reimbursement of expenses incurred in respect of accident repairs of Rs. 18,25,596/- awarded by the Supplemental Final Award dated 24 February 2010. In these circumstances, it being a common ground before the Court that the challenge in the Arbitration Petition No. 1029 of 2010 (wherein the issue of the Arbitral Tribunal being functus officio is raised) to the Supplement Final Award does not survive for consideration, the Arbitration Petition No. 1029 of 2010 shall stand disposed of as not pressed.

In the present proceedings as it now stands, the claims under the following heads are required to be considered:

(I) Limitation;

(II) Reimbursement for Repairs;

(III) Reimbursement for withheld amount of monthly stipend;

(IV) Claim for interest;

(I) Limitation

It is the case of the Petitioner that since the notice of Arbitration was dated 23 March 1999 and was served on that day itself, the arbitration proceeding is deemed to have commenced on 23 March 1999 and since all the claims are due and payable prior to 1996, i.e. three years prior to the date of notice, the Arbitration would be barred by limitation. It is contended that the Respondent was required to submit its invoices on monthly basis before the 7th of each succeeding month and successive causes of action arose in respect of each of the invoices that were raised, and consequently all invoices remaining unpaid as on 23 March 1996 would be barred by limitation.

On the other hand, the case of the Respondent is that the Respondent used to maintain a running account in respect of the amounts due under the Contract and used to make deductions at the end of the Contract for fuel oil, water and liquidated damages in respect of the earlier period, and therefore the limitation would begin to run only from the end of the Contract in November 1996. It is also contended that the Contract provided for a mutual dispute resolution process prior to the referral of disputes to Arbitration and accordingly efforts to resolve the claims continued until the end of 1998 and it was only after the dispute resolution process failed, the cause of action can be said to have arisen.

The Arbitral Tribunal has rejected the contention of the Petitioner that the claim was barred by limitation. The Arbitral Tribunal noted Clause 22.0 of the Contract which, inter alia, provided that if the dispute could not be mutually resolved by the parties, the same shall be referred to Arbitration. The Arbitral Tribunal held as follows:

"Clearly, therefore, the cause of action for referring disputes under the Contract to arbitration would arise only after it is determined that they cannot be mutually resolved by the parties. Since this conclusion was reached by the parties only after 20-03-1996, we find no merit in the plea that the disputes forming the subject matter of the present arbitration are barred by limitation."

Thus, the Arbitral Tribunal arrived at a finding after interpreting clause 22.0 of the Contract, that since the conclusion that the dispute could not be mutually resolved by the parties was reached only after 20-03-1996, the cause of action would arise only thereafter. It is not in dispute before the Court that the Petitioner had set up a separate authority and the parties hereto had approached this authority so as to mutually resolve their disputes.

Having considered the rival contentions, I do not find any fault in the Arbitral Tribunal rejecting the contention of the Petitioner that the claim was barred by limitation. In any event, this view of the Arbitral Tribunal is certainly a possible view and not liable to be disturbed by this Court in its limited jurisdiction under section 34 of the 1996 Act.

In the circumstance, no interference is warranted in the overruling of the preliminary objection of the Petitioner by the Arbitral Tribunal that the claim of the Respondent would be barred by limitation.

(II) Reimbursement for Repairs

The crux of the dispute between the parties is under this head.

The vessel Sam-2 was required to undergo repairs and the vessel was required to dry-dock on two occasions for such repairs and the Respondent made necessary payment of costs incurred in carrying out such repairs. The Respondent sought reimbursement of these repairs from the Petitioner, which was refused on the ground that the liability for carrying out the repairs was that of the Respondent.

According to the Petitioner the repairs under this head to the vessel Sam-2 were required to be borne by the Respondent alone and the learned Arbitral Tribunal has incorrectly held that the Respondent was entitled to reimbursement of a sum of Rs. 80,67,589/-. The case of the Respondent, on the other hand, is that the repairs under this head was the liability of the Petitioner and therefore the Award rightly grants reimbursement of the aforesaid amount of Rs. 80,67,589/- to the Respondent.

It would be necessary to extract some of the clauses of the Contract between the parties to appreciate the controversy. Clauses 2.4, 2.6, 3.0, 5.0, 7.0, 7.2(iv), (v), (vi), (viii) & (x), 8.0, 8.2, 8.4.2, 9.0, 10.0(ii), (v) & (vi), 12.0(a) & (b), 14, 16.0(e), 19.6, 20.0(A), (B) & (C), are relevant and read as follows:

"2.4 It is agreed that dry docking of vessel will be performed by the due date i.e. on April 94. However, in case of the dry docking is not done due to exigencies of Owner, or any other reasons within the Contract period, the Owner reserves the right to dry dock the vessel subsequently at the cost of the Operator. In such cases an amount of Rs. 15.00 Lakhs as costs of the dry dock shall be recovered from the Operator. In addition to recovery of the above amount as cost of dry docking an amount equal to O & M charges of 14 days shall also be recovered from the Contractor.

2.6 REIMBURSEMENT

In the event of the Owner NOT being able to provide goods and/or services as specified in this Agreement such as fuel oil, water, pilotage, wharfage for whatever reason, the Operator shall procure/obtain such goods and/or services and the cost thereof shall be reimbursed by the Owner at actual + 5% service charges against production of challans or receipts or invoices, provided owner has approved such action in advance.

3.0 DELIVERY/RE-DELIVERY OF VESSEL:

The vessel shall be delivered to the Operator at any port in India as may be designated by the Owner. At the time of delivery, the vessel shall be in good, shipshape condition alongwith spares, tools and tackles and other equipment supplied by the shipyard, and in every respect sea worthy with all standard (MMD and class) certificate valid and up-to-date and in good running order and condition. The Operator shall take charge of the vessel as custodian in trust on behalf of the Owner. However, at the time of delivery if any repair and survey are considered necessary to be carried out to bring the vessel fully operational and shipshape condition, these shall be carried out by new Operator at the cost of outgoing Operator as decided by Owner. List of such pending repair work and survey shall be prepared jointly by the outgoing and new Operator and to be submitted to Owner. In case of any dispute between the two Operators decision of Owner shall be binding on both. Such repair work and Survey shall be carried out by the new Operator under supervision of (DGM), Nhava or his authorized representative and if the vessel becomes in-operative for some period for carrying out these jobs, such period of inoperation shall not be counted as downtime within the scope of clause 12(a) and (b) nor will cost, for such period be recovered from the incoming Operator. An Inventory of the vessel''s entire equipment, outfit, appliances, spares and stores shall be prepared by an independent surveyor jointly appointed by the Operator and Owner at the time of delivery and by the parties at the time of re-delivery. The cost of such survey at delivery will be borne by the Operator and on re-delivery by the Owner. The Operator shall re-deliver the vessel with all equipment, tools, tackles, spares store and other accessories to the Owner on termination of this Agreement in the same good order and shipshape condition in which it was delivered to him, normal wear and tear accepted. The Operator shall pay for the cost of replacement/repair of all such equipments, tools, tackles, spares/stores and other accessories which are lost/damaged as against the inventory handed over on delivery to the Operator. The Operator shall pay any/all charges of repair and survey which are required to be carried out to bring the vessel fully operational and in same shipshape condition as at the time of delivery, normal wear and tear accepted.

5.0 BASE PORT:

The vessel is required to operate any where in offshore India at any depth, and undertake voyages as required to proceed to such area of operation as directed by the Corporation. Besides the port of Bombay, the vessel may be stationed at any other Indian Port for any period within the currency of the Agreement. The Operator shall be responsible for manning, operation, maintenance and repairs of the vessel from such port(s) without any extra cost to the owner.

7.0 OPERATOR''S DUTIES/OBLIGATIONS:

The Operator''s duties and obligations are detailed in Clause 5.1 and shall include, inter alia, manning, operation, victualling, repair and maintenance and provisioning of the vessel, with a view to provide round-the-clock logistics support services to the Owner''s offshore operations. The Operator shall keep the vessel in good running order and condition, and in substantially the same condition in which it was received from the Owner. The complete inventory of the vessel''s entire equipment, outfit, fixture, appliances and of all stores and spares, are to be maintained at all time during the Agreement and any extension thereof.

7.2 OPERATIONS:

(iv) The Operator shall, at its cost, expense and risk, dry-dock, clean and paint the vessel''s hull and other areas and carry out overhaul and necessary repairs at reasonable intervals whereas the vessel will be dry-docked as per mutually agreed programme between the Owner and the Operator. It is hereby understood and agreed that any cleaning, painting, operation and gas freezing operation of the enclosed spaces of the vessel on each occasion referred to above shall be on Operator''s account. Similarly, all expenses on towing, pilotage, fuel, water and other expenses connected therewith, incurred or to be incurred from the time and date the vessel is released for dry docking and during the operation, to be designated by the Owner, shall be entirely borne by the Operator. It is also hereby understood and agreed that before the vessel is intended to proceed for dry-docking, fuel oil, tube oil and fresh/drill water remaining on-board the vessel shall be measured by the Surveyor appointed by the Owner at Operator''s cost at the last point of operation and such fuel, tube oil and fresh/drill water shall be re-measured in the manner prescribed above when the vessel reports at the first point of operation after dry-docking. Any difference between these shall be paid for by the Operator to the Owner at the established rate. It is hereby agreed that the fee as referred in clause 2.1 for the period from the time when the vessel was released at the last point of operation before dry-docking till the time the vessel reaches the first point of operation as designated by the Owner after the dry-docking, is not payable to the Operator.

(v) The Operator shall be responsible for all operations, including, but not limited to, full maintenance and upkeep of the vessel and its equipment (including onboard spares and stores) and for carrying out repairs, dry-docking, survey of hull, machinery, electrical/electronic equipment and facilities on the vessel, regular cleaning of ship''s linen and furnishings as required by the Owner/classification surveyors and to maintain the vessel in good shape, cleaned and painted and in efficient running condition during the currency of this Agreement.

(viii) In the performance of its obligations under this Agreement the Operator shall be deemed to be an independent Contractor and neither of their employees nor the Master nor crew of the vessel shall be deemed to be servants, agents or employees of the Owner, under any circumstances.

(x) The Operator shall attend to all port and customs formalities obtain port clearances and other services, if and as required. The Operator shal pay port and light dues at all port(s) other than Bombay and Madras. Such payments shall be reimbursed to the Operator at actuals plus 5% service charges on submission of relevant invoices/bills.

8.0 MAINTENANCE OF THE VESSEL:

The upkeep of the vessel shall be the prime and exclusive responsibility of the Operator. The Operator shall ensure that the vessel is always safe, seaworthy and in shipshape condition to the entire satisfaction of the Owner, the classification society and the statutory surveyors.

8.2 SPARES

In case of requirement Operator may consume spares from the vessel''s stock or from the Owner''s stock. The Owner shall recover the book value of such spares plus 15% as overhead charges from the Operator.

8.4.2 All expenses incurred including but not limited to inspection survey, drydocking, pilotage, warfage, port and light charges etc. in respect of repairs arising out of damages caused by an accident, other than total loss, shall be borne exclusively by the Operator. No liability on this account shall accrue to the Owner under any circumstances. However, any reimbursement as received by the Owner from the underwriters on above account shall be for the benefit of the Operator, except in the case of total loss.

9.0 SUPPLY OBLIGATION

The Operator shall at his own cost fully store and provision the vessel. His liability shall extend to all stores including but not limited to saloon stores, galley stores, Bosun stores, stationery, freon gas, engine room stores, all equipment and machinery fitted in vessel, tools, supplies and all other stores required to run the machinery, mooring lines, shackles, towing gears, bulk hoses for water, oil & cement and any other items required for vessel operation. However, renewal of main low-wire will be to the account of the Owner subject to admissibility.

10.0 LIABILITY OF OWNER:

The Owner shall:

(ii) assist the Operator at his costs without any commitment, in obtaining clearances from Govt. agencies to import spares and such other assistance permissible under law of the land.

(v) pay all charges connected with pilotage, berth hire charges, port and light dues at Bombay, Madras. At other ports charges will be paid by the Owner or reimbursed to the Operator at actuals plus 5% service charges on submission of relevant invoices/bills. However, charges connected with pilotage, berth hire charges port and light dues during downtime (other than compensable downtime) and drydocking will be borne by the Operator.

(vi) supply fuel tube oil and fresh water onboard. The cost of fuel oil and fresh water consumed during non-compensable downtime will be to the Operator''s account.

12.0 DOWN TIME

(a) The Operator shall be allowed compensable down time for three (3) days in a quarter for maintenance/repair/survey/breakdown/inoperative for any other reason. The compensable downtime will be cumulative upto maximum six (6) days at any time. The Operator will be paid normal daily rate or pro-rata thereof during such compensable downtime.

(b) For any downtime allowed to the Operator over and above downtime as provided in clause 12(a) above, the Operator will not be paid the daily charges. Such downtime will further be subject to provisions contained in clause 14 of the Agreement.

LIQUIDATED DAMAGES:

If the vessel is in-operative and is not made available to the Owner for use beyond 30 days (including compensable down time) during one operating year the Operator shall pay the Owner by way of ascertained and agreed Liquidated Damages and not by way of penalty, a sum equivalent to 10% of prorated daily rate as per clause 2.1 for every day or part thereof for non-availability beyond 30 days in addition to non-payment of prorated daily rate beyond the compensable down time during one operating year.

16.0 PERFORMANCE GUARANTEE:

16(e) The Operator shall have the use of all outfit, equipment and appliances now on-board the vessel without extra-cost provided the same or their substantial equivalent shall be returned to the Owner on re-delivery in the same good order and conditions as and when received, ordinary wear and tear excepted.

19.0 TERMINATION:

19.6 In the event of termination of this Contract as per any of the clause at 19.1 to 19.5 above, recovery for dry docking as per clause 2.4 will apply. The prorated dry docking cost will be calculated on the notional dry docking cost of Rs. 15 lakhs for the dry dock plus O & M charges for 14 days.

The dry-docking cost shall be pro-rated as follows:-

(1) In the event Contract is terminated before carrying out statutory dry docking.

(2) In the event the Contract is terminated after completion of the statutory drydocking, drydocking cost is neither reimbursible from the Operator nor payable to the Operator by the Owner.

20.0 INVOICING & BILLING:

(A) The Operator shall at the end of each month (or part of the month whichever applicable) submit an invoice in quadruplicate for the lumpsum monthly fee covering the period of proceeding month before 7th of every month to the office of the Oil & Natural Gas Corporation, Bombay Regional Business Centre, 12th floor, Express Tower, Nariman Point, Bombay-400021.

(B) The Operator shall also submit alongwith the above bill(s)/invoices towards any charges made for an on behalf of the Owner, alongwith supporting documents/vouchers/receipts.

(C) Such invoice(s)/Bill(s) duly supported by all relevant documents will be paid, after due verification and certification within 30 days of receipt of invoice (s)/bill(s) for all undisputed amount(s). However, no interest will be payable on any disputed or delayed payment.

(emphasis supplied throughout)

Having reproduced the material clauses of the Contract, it would now be apposite to consider how the Arbitral Tribunal has dealt with the claim under this head viz. Reimbursement for Repairs. The Arbitral Tribunal has in the impugned Award dated 12 March 2009 stated as follows:

"B. Reimbursement for scheduled repairs.

B.1 During the term of the contract, Sam-2 was required to undergo scheduled and necessary maintenance resulting from regular wear and tear of the OSV and its accessories. These repairs were necessitated by normal wear and tear. Sam-2 was as a result dry-docked on two occasions for such repairs, and on each occasion, the Claimant made the necessary payment of the costs incurred in carrying out such repairs. The Claimant sought reimbursement of these amounts from the Respondent, but such reimbursement was refused by the Respondent on the ground that the contractual responsibility for incurring the necessary expenses for carrying out these repairs was that of the Claimant.

B.2 The Respondent urged in support of this contention that under the contract, it was the Claimant''s duty and obligation to repair the vessel at its own cost. The Respondent drew our attention to clauses 3.0, 5.0, 7.0, 7.2(iv) and (v), 8.0 and 8.2 of the Contract which provide as follows:

"3.0 ... The Operator shall pay for the cost of replacement/repair of all such equipments, tools, tackles, spares/stores and other accessories which are lost/damaged as against the inventory handed over on delivery to the Operator. The Operator shall pay any/all charges of repair and survey which are required to be carried out to bring the vessel fully operational and in same shipshape condition as at the time of delivery, normal wear and tear excepted." [sic.]

"5.0 ... The Operator shall be responsible for manning, operation, maintenance and repairs of the vessel from such port(s) without any extra cost to the Owner."

"7.0 The Operator''s duties and obligations are detailed in Clause 5.1 and shall include, inter-alia, manning, operation, victualling, repair and maintenance and provisioning of the vessel, with a view to provide round-the clock logistics support services to the Owner''s offshore operations ..."

''7.2(iv) The Operator shall, at its cost, expense and risk, dry-dock, clean and paint the vessel''s hull and other areas and carry out overhaul and necessary repairs at reasonable intervals ..."

"7.2(v) The Operator shall be responsible for all operations, including, but not limited to ... carrying out repairs ..."

"8.0 The upkeep of the vessel shall be the prime and exclusive responsibility of the Operator ..."

"8.2 In case of requirement Operator may consume spares from the vessel''s stock or from the Owner''s stock. The Owner shall recover the book value of such spares plus 15% as overhead charges from the Operator."

[Emphasis Supplied throughout]

B.3 The Claimant submits that all repair work which was necessary was carried out at reasonable cost. Further submits the Claimant the repair work was done with the knowledge and approval of the Respondent, and the mere fact that formal approval may not have been taken in all cases cannot detract from the Respondent''s liability to make-reimbursement for the same. The Claimant further submits that the Respondent had itself agreed to make payment for certain categories of repairs in August, 2001.

B.4 With reference to the terms of the contract, the Claimant submits that the dominant purpose of the contract was to provide for the manning of Sam-2, and the contract did not contemplate the manning contractor to be also responsible for normal deterioration of the vessel, or for any major repairs. In support of this submission, the Claimant relies upon the level of remuneration, the Operator''s business and expertise as set out in the preamble, and the specific requirement of qualified personnel set out in clauses 7.2(ii) and (iii) of the contract, which require personnel competent to supervise repairs of the OSV. The Claimant submits that it was acting as a trustee of the Respondent and therefore, all expenses incurred on behalf of the Respondent were liable to be reimbursed. The Claimant also relies on clause 3.0 of the contract which states that the Operator (Claimant) shall take charge of the vessel as custodian in trust on behalf of the Owner (Respondent). The Claimant also relies upon the said clause to assert that under the contract, the Operator was required to ensure that the OSV remained in the same condition in which it was delivered, normal wear and tear excepted. It therefore submits that the Respondent exclusively bears the risk and responsibility of normal wear and tear. The stipulations regarding the Operator being a custodian in trust, and not being liable for ordinary wear and tear are also reiterated in clause 16.0 of the contract.

B.5 The Respondent counters these submissions of the Claimant by pointing out that the exception for normal wear and tear is made only in those clauses of the contract that deal with the time of delivery and redelivery of the OSV. The Respondent submits that all claims under this head made by the Claimant relate to repairs carried out during the term of the contract and not at redelivery. It further states that there are in fact clauses in the contract (clause 2.6 and clause 10.0) that deal with reimbursement, and reimbursement for repairs carried out during the term of the contract has not been mentioned. The Respondent therefore submits that no amount is payable by the Respondent by way of reimbursement in respect of expenses incurred on repairs.

B.6 We have given our anxious consideration to these rival contentions of the parties. By way of a preliminary, observation we may state that the contract is in a standard form of contract prepared by the Respondent and most of the individual terms of the Contract were not the result of negotiations between the parties. The Respondent was at the relevant time a virtual monopoly purchaser of services offered by contractors such as the Claimant in addition, being a Government entity, the Respondent held a superior bargaining position vis-a-vis the Claimant. Moreover, the contract was signed one year after the commencement of operations under the contract, and consequently fair and reasonable opportunity to negotiate the terms of the contract was not available to the Claimant. The Claimant has advanced an argument to the effect that'' the contract is not valid and unfair. But this argument is unacceptable. The Claimant having accepted the benefits under the contract, cannot now be permitted to repudiate the liabilities under it. Nevertheless, it is to our mind clear that having regard to the aforesaid facts and circumstances it is a fit case in which the rule of contra proferentum should be applied. Since the contract was a standard form of contract prepared by the Respondent which the Claimant had no choice but to sign since it was presented for signature almost 18 months after the work had started any ambiguity in its terms or conflict in its provisions must be resolved in favour of the Claimant.

B.7 We find no merit in the Claimant''s contention that the Respondent has admitted liability for normal wear and tear by agreeing to reimburse the expenses incurred by the Claimant under certain specified heads of repair. It may be noted that this concession was made by the Respondent as a special case and without prejudice to its legal contentions and it cannot therefore be regarded as all admission of liability on the part of the Respondent.

B.8 Next we may examine the clauses of the contract referred to by the parties. For the sake of convenience, we may first examine the clause cited by the Claimant. The Claimant submits that the dominant purpose of the contract was to provide for the manning of Sam-2. There is no serious dispute that the monthly remuneration specified in clause 2.1 of the contract was arrived at on the basis that it would correspond closely with the amount required to be paid to personnel for manning an OSV. Moreover, the Operator''s business and expertise set out in the preamble also demonstrate that the Operator is primarily required to be competent to operate the OSV and not to repair it. The personnel nominated by the Operator are required under clause 7.2(ii) and (iii) of the contract to be competent to supervise repairs of the OSV. Thus, it is obvious that the dominant purpose of the contract was manning and operating the OSV. However, other clauses of the contract (for example clause 7.0, examined in greater detail supra) do envisage certain repairs being carried out by the Operator. Such clauses must be read in light of the dominant purpose of the contract and so read they would seem to require the Operator to carry out only such repairs as are incidental to the operation of the OSV and as may reasonably be expected to be carried out by an operator.

B.9 It also appears to be fairly clear from the terms of the contract that the Claimant/Operator was given custody of Sam-2 as custodian in trust on behalf of the Owner/Respondent. Clauses 3.0 and 16.0 of the contract limit the responsibility of the Operator in that they exempt the Operator from liability for the effects of normal wear and tear. The Respondent claims that these clauses deal only with the delivery and redelivery of the vessel and therefore the exceptions apply only at those stages. However, such a reading would be meaningless and absurd as wear and tear occurs throughout the course of the contract. If, during the course of the contract, the vessel or any equipment thereof becomes completely useless due to normal wear and tear and requires repairs, then as per the Respondent''s reading of terms of the Contract the Claimant could avoid the burden of the cost of repair just by not repairing the vessel or its equipment, thereby endangering the lives of its personnel and the property of the Owner, while also committing default in observance of legal safety norms. Moreover, this contention is based only on the heading of clause 3.0 overlooking fact that the sentence containing the exception for normal wear and tear does not refer to delivery or redelivery of the vessel. Clause 1.5 of the contract specifically prohibits reference to headings in interpreting the terms of the contract and therefore we are not inclined to agree with the Respondent''s submission on this score. In our opinion, the contract excludes the liability of the Operator for any normal wear and tear of the vessel or its equipment whether or not the same is repaired during the course of the contract. The exception for normal wear and tear is not limited to the time of delivery or redelivery of the vessel.

B.10 We now turn to consider the clauses of the contract relied upon by the Respondent. It would be clear on a plain reading of clause 3.0, of the Contract that under the Contract the Operator is required to pay for the cost of replacement/repairs of certain equipments as well as the charges for repair and survey required to bring the vessel to a fully operational and shipshape condition at the time of delivery. The liability to pay for the cost of replacement/repairs, refers only to the stage of making of payment in the first instance. It does not exclude the possibility that the Operator/Claimant would be entitled to subsequent reimbursement.

B.11 Clause 5.0 of the contract, relied upon by the Respondent places the responsibility for manning, operation, maintenance and repairs of the vessel from the base port(s) upon the Operator, without any extra cost to the Owner. It appears to us that under this clause, the responsibility for repairs of the vessel from the base port is placed upon the Claimant, and for discharging this responsibility, the Claimant is not entitled to claim any extra compensation from the Owner. However, the responsibility for repairs and bearing the actual cost of carrying out of the repairs are two different things. It cannot reasonably be said that the Claimant, which is described in the preamble to the contract as being in the business of operation of OSVs, was expected to itself carry out the repairs at its own cost since it was not qualified to do so and it was not its own OSV. The responsibility for repairs would therefore refer to the responsibility for ensuring carrying out of the repairs. The Claimant would not be entitled under clause 5.0 of the contract to claim any additional compensation for overseeing these repairs. In other words, unlike the situation contemplated by clauses 2.6 and 10.0(v) of the contract, the Claimant would not be entitled to claim any service charge for the service of overseeing the repairs which may be required to be carried out to the Vessel. However, it would not be precluded from passing on the costs actually incurred by it to the Owner of the OSV to which repairs are made.

B.12 Clause 7.0 of the contract, relied upon by the Respondent states that the Operator''s duties and obligations shall include repair and maintenance and provisioning of the vessel, with a view to providing round the clock logistic support services to the Owner''s offshore operations. The words ''repair and maintenance'' must be interpreted ejusdem generis with the other responsibilities referred to in the said clause. The acts of manning, operation, victualling and provisioning of the vessel are all primarily related to the operations of the OSV while not drydocked. Moreover, each of the duties and obligations mentioned in clause 7.0 is qualified by the phrase "with a view to provide round the clock logistics support services to the Owner''s offshore operations". This also makes it clear that the duties and obligations mentioned in clause 7.0 relate to the period of time during which the OSV is in operation offshore and is in a position to provide logistics support to the Owner''s offshore operations. Thus, the words "repair and maintenance" must he read as referring only to such running repairs as may reasonably be undertaken by the Claimant while Sam-2 has been deployed, so as to keep it in a functioning condition. It cannot refer to major repairs or repairs that require drydocking.

B.13 Clause 7.2(iv) requires that "the Operator shall, at its cost, expense and risk, dry-dock, clean and paint the vessel''s hull and other areas and carry out overhaul and necessary repairs at reasonable intervals, whereas the vessel will be dry-docked as per mutually agreed programme between the Owner and the Operator. It is recorded in Clause 7.2(iv) that it is understood and agreed that any cleaning, painting operation and gas freeing operation of the enclosed spaces of the vessel on each occasion referred to above shall be on Operator''s account. Similarly, all expenses on towing, pilotage, fuel, water and other connected expenses incurred or to be incurred from the time and date the vessel is released for dry docking and during the operation, to be designated by the Owner, shall be entirely borne by the Operator". The Claimant has raised several contentions as to the proper interpretation of this clause of the contract. It has submitted firstly that the location of the said sub clause in the contract is ''strange''. The heading of clause 7 indicates that the said clause relates to ''Operator''s Duties and Obligations'', and not to Liabilities," The Claimant submits that since clause 7 does not deal with financial liabilities save in a limited manner, this clause would be strange place to find a revolutionary provision transmitting the Respondent entire risk in the vessel to the Operator. The Claimant further submits that the term ''at its cost, expense and risk'' appearing in clause 72(iv) is mere jargon and was actually intended to convey the same meaning which is conveyed by the alternate expression ''at no further cost or liability to the Owner''. In the alternative, the Claimant submits that this phrase used in the clause qualifies only the words "drydock, clean and paint the vessel''s hull and other areas," and it does not qualify the words ''and carry out overall and necessary repairs'', since these words are instead qualified by the term ''at reasonable intervals'' and are used in contradistinction to the phrase ''whereas the vessel will be drydocked as per mutually agreed programme. It further states that the very same clause makes it clear that any cleaning, painting operation and gas freeing operation of the enclosed spaces of the vessel shall on each occasion, be on the Operator''s account but obviously any other operations would not be on the Operator''s account. The Claimant also submits that to read clause 7.2(iv) in any other manner would give rise to conflicts inter se between the different terms of the contract.

B.14 These arguments are Innovative, but largely unconvincing. The argument regarding the location of the sub-clause in the contract is predicated upon the use of the heading of the clause in the interpretation of the contract. However such reference to the heading is expressly prohibited in clause 1.5 of the contract. Moreover, we must give effect to the words of the contract and cannot reject any words merely because of their allegedly inappropriate location in the contract. We are also not inclined to rewrite the contract by replacing the words ''at its cost, expense and risk'' with the words ''at no further cost or liability to the Owner''. We do not believe that such redrafting of the contract is permissible in law. Clause 7.2(iv) in addition to the liability already placed upon the Operator in the opening words of the said sub-clause, clearly provides that cleaning, painting operations and gas freeing operations of even enclosed spaces of the vessel shall be on the Operator''s account.

B.15 Hence, to our mind, the critical issue to be decided in respect of this clause is the appropriate interpretation of the opening words of Clause ''7.2(iv) which read''s "the Operator shall, at its cost, expense and risk, dry-dock, clean and paint the vessel''s hull and other areas and carry out overhaul and necessary repairs at reasonable intervals, whereas the vessel will be dry-docked as per mutually agreed programme between the Owner and the Operator".

B.16 We have already found that the dominant purpose of the contract was to provide for manning and operation of Sam-2. Any clause requiring the Operator to repair the equipments should be read as subsidiary to this dominant purpose and should therefore be read to relate only to running repairs incidental and ancillary to the operation of the OSV. The above quoted words of clause 7.2(iv) would prima facie seem to require the Operator to bear the cost or necessary and scheduled repairs to Sam-2. Nevertheless, in view of the application of the contra proferentum rule of interpretation of contracts and our finding with regard to the dominant purpose of the contract, we are inclined to hold that the term ''at its cost, expense and risk'' qualifies only ''the drydocking, cleaning and painting of the vessel''s hull and other areas. We also hold that the Operator''s responsibility with regard to overhaul and necessary repairs 1s to ensure that they are carried out at reasonable intervals even if these intervals are not as per a mutually agreed program between the Owner and the Operator. However, the drydocking of the vessel must be strictly as per the mutually agreed programme between the Owner and the Operator. Such an interpretation is supported by the fact that the term ''at reasonable intervals'' cannot possibly be said to qualify all the activities mentioned in the earlier part of article 7.2(iv) but refers only to the part dealing with overhaul and necessary repairs. Moreover drydocking cannot be merely at reasonable interval but must explicitly be as per the mutually agreed programme. It is thus clear that the terms ''at its cost, expense and risk'' and ''at reasonable intervals do not, and were never intended to qualify the same activities that the Operator is required to carry out. Moreover, a reference to the entire sub-clause (iv) of Clause 7.2 shows that the Operator is required to bear all expenses ancillary to the repair of the Vessel, including cleaning, painting, gas freeing, towing, pilotage, fuel and water, as well as the surveyor''s expense. The clause does not, apart from the portions specifically referred here and interpreted contain any words that might suggest that the Operator is required to bear the cost, expense and risk of even necessary and scheduled repairs. We are, Therefore, of the opinion that the liability for expenses incurred in overhauling and carrying out necessary repairs to the vessel rests with the Owner, and that if the Operator has incurred such expenses, it is not disentitled by this clause from seeking reimbursement.

B.17 We now turn to consider clause 7.2(v) which states that the Operator shall be responsible for all operations including carrying out of repairs. It is clear that the responsibility for ensuring that repairs are carried out is not the same as the liability to bear all expenses connected with such repairs. Similarly, where clause 8.0 places the prime and exclusive responsibility for the upkeep of the vessel on the Operator, this does not require the Operator to bear the expenses for repairs on its own account.

B.18 Clause 8.2 of the contract cited by the Respondent refers only to spares. The book value of spares required for use due to the damage to equipment and appliances on board the vessel arising out of ordinary wear and tear would not be recoverable from the Operator, whether with or without any service charge. Only such spares that are required for use to replace equipment damaged otherwise than in course of ordinary wear and tear would fall within the coverage of Clause 8.2.

B.19 Such a reading of the clauses of the contract suggests that there is no clause in the contract excluding the liability of the Respondent for necessary and scheduled repairs. However, certain ancillary expenses such as those relating to drydocking charges (not including charges for repairs), cleaning and painting the vessel''s hull and other areas, gas freeing operations for enclosed spaces, towing, pilotage, fuel, water and similar ancillary, activities are contractually required to be borne by the Operator. In view of our finding that the Operator/Claimant was in custody of Sam-2 as a custodian in trust for the Owner/Respondent, we hold that all other expenses relating to the repair, not explicitly assigned under the contract as interpreted hereinabove are the liability of the Respondent and the Claimant is entitled to succeed in its claim to this extent,

B.20 Now it is obvious that the total expenses incurred by the Claimant for scheduled and necessary repairs including expenses such as those relating dry docking charges other than charges tor repairs, cleaning and painting the Vessel''s hull and other areas, gas freezing operations for enclosed spaces, towing, piloted fuel, water and other similar ancillary activity amounted to Rs. 36,18,323.00. These expenses amounting to Rs. 36,18,323.00 were incurred and paid by the Claimant. We have already shown that under Contract the cost of scheduled and necessary repairs to the Vessel was to be borne by the Respondent. This constituted major part of the total expenditure of Rs. 36,18,323.00. The expenditure in respect of the other items being comparatively insignificant it is not possible to believe that in a Contract where a Vessel was given to the Claimant only for the purpose of manning any sizeable part of the expenditure relating to charges for dry docking, cleaning and painting the Vessel''s hull and other areas should have been intended to be borne by the Claimant unless they were of a minor insubstantial character. The entire expenses of Rs. 80,67,589.00 incurred by the Claimant must therefore be taken to be relatable to scheduled and necessary repairs. It may be pointed out that in any event the burden of showing what part of these expenses related to items like dry docking, cleaning and painting the Vessel''s hull and other areas, gas freezing operations was on the Respondent and there will be no evidence at that point, the entire amount of Rs. 80,66,589.00 must be held to represent expenses for scheduled and necessary repairs incurred by the Claimant and since under the Contract as interpreted by us above, the liability to bear these expenses was on the Respondent, the Claimant is entitled to be reimbursed the entire amount of Rs. 80,67,589/-."

Both the learned Counsel have taken me through the clauses of the Contract and the relevant portions of the impugned Award dated 12 March 2009. What is required to be considered by the Court is whether upon examining the terms of the Contract, the Arbitral Tribunal had rightly granted the relief of reimbursement of repairs of an amount of Rs. 80,67,589/- by the Petitioner to the Respondent.

Learned Counsel for the Petitioner submitted that the Arbitral Tribunal had gone beyond the terms of the Contract in allowing the claim of the Respondent under this head and ignored the express of the clauses of the Contract. He submitted that the Arbitral Tribunal has thus exceeded its jurisdiction. Learned Counsel for the Petitioner has relied upon the following judgments in support of his contention:

i) Mallikarjun Vs. Gulbarga University, ;

ii) Ladli Construction Company (P) Ltd. Vs. Punjab Police Housing Corporation Ltd. and Others, ;

iii) McDermott International Inc. Vs. Burn Standard Co. Ltd. and Others, ;

iv) ONGC Ltd. Vs. Garware Shipping Corpn. Ltd., ;

v) Delhi Development Authority Vs. R.S. Sharma and Co., New Delhi, ;

vi) Geojit Financial Services Limited vs. Kritika Nagpal, Appeal No. 35 of 2013 (Bombay) (DB);

vii) Harinarayan G. Bajaj Vs. Rajesh Meghani, ;

viii) V. Narayanaswami Vs. Sri Mohan Prasad Singh Deo Zamindar of Bodogode Estate, Ganjam District, ;

ix) Muhammad Noohu Muhammad Abdulkadir Vs. Kathiradima Pillai Abdulrahiman Pillai and Others, ;

x) Assistant Excise Commissioner and Others Vs. Issac Peter and Others, .

Learned Counsel for the Respondent on the other hand submitted that there was ambiguity in terms of the Contract and the Arbitral Tribunal had merely interpreted the terms of the Contract and it is not open for this Court in its jurisdiction under section 34 of the 1996 Act to interfere in matters of interpretation by the Arbitral Tribunal of the terms of the Contract. Learned Counsel for the Respondent in support of his submissions has relied upon the following judgments:

i) Darmilla Fashions Pvt. Ltd. vs. Prasad A. Jog, Appeal No. 954 of 2005, Order dated 26 October 2005 of this Court;

ii) Delhi Development Authority Vs. Durga Chand Kaushish, ;

iii) D.C.M. Ltd., etc. Vs. Municipal Corporation of Delhi and another etc., ;

iv) Haji Abdul Rahman Allarakhia & Anr. vs. The Bombay and Persia Steam Navigation Company, Bombay Series Vol. XVI, 561;

v) State Bank of India and Another Vs. Mula Sahakari Sakhar Karkhana Ltd., ;

vi) Central Bank of India Ltd. Vs. Hartford Fire Insurance Co. Ltd., ;

vii) Radha Sundar Dutta Vs. Mohd. Jahadur Rahim and Others, ;

viii) Parry''s (Calcutta) Employee''s Union Vs. Parry and Co. Ltd. and Others, ;

ix) Pure Helium India Pvt. Ltd. Vs. Oil and Natural Gas Commission, .

The issue before this Court essentially boils down to whether the Arbitral Tribunal had merely interpreted the terms of the Contract or whether the Arbitral Tribunal had gone beyond the terms and scope of the Contract. Having heard the learned Counsel for the parties and having carefully perused the terms of the Contract, in all humility, I am unable to subscribe to the view of the Arbitral Tribunal and I have no hesitation in holding that the Arbitral Tribunal had gone beyond the terms and scope of the Contract which amounts to rewriting the Contract and it cannot be said that the Arbitral Tribunal had merely interpreted the terms of the Contract. At the cost of repetition and to lay emphasis, I may reproduce clause 7.2(iv) and clause 7.2(v), which in my view, clearly provide that the liability of ''repairs'' is that of the Respondent. The said clauses 7.2(iv) and 7.2(v) read as under:

"7.2 OPERATIONS:

(iv) The Operator shall, at its cost, expense and risk, dry-dock, clean and paint the vessel''s hull and other areas and carry out overhaul and necessary repairs at reasonable intervals whereas the vessel will be dry-docked as per mutually agreed programme between the Owner and the Operator. It is hereby understood and agreed that any cleaning, painting, operation and gas freezing operation of the enclosed spaces of the vessel on each occasion referred to above shall be on Operator''s account. Similarly, all expenses on towing, pilotage, fuel, water and other expenses connected therewith, incurred or to be incurred from the time and date the vessel is released for dry docking and during the operation, to be designated by the Owner, shall be entirely borne by the Operator. It is also hereby understood and agreed that before the vessel is intended to proceed for dry-docking...

(v) The Operator shall be responsible for all operations, including, but not limited to, full maintenance and upkeep of the vessel and its equipment (including on-board spares and stores) and for carrying out repairs, dry-docking, survey of hull, machinery, electrical/electronic equipment and facilities on the vessel, regular cleaning of ship''s linen and furnishings as required by the Owner/classification surveyors and to maintain the vessel in good shape, cleaned and painted and in efficient running conditions during the currency of this Agreement."

(emphasis supplied)

From a plain reading of the aforesaid clauses as also the other clauses reproduced in paragraph 22 hereinabove and more particularly the underlined portions thereof, it would be evident that the Contract expressly provides that it is the Respondent''s obligation to repair the vessel at its own costs. Reference may be made to clause 8.2 of the Contract which provides that if the Respondent consumed any spares form the vessel''s stock or the Petitioner''s stock then the Petitioner was entitled to recover the cost of such spares (consumed by the Respondent) plus 15% overhead charges from the Respondent. Therefore, it is clear that the Respondent was required to pay even for the spares used from the vessel stock or Petitioner''s stock. Considering the aforesaid clause 8.2, it would indubitably follow that if the Respondent purchases the spares from the market it would be at the Respondent''s own cost.

Clause 3.0 also clearly imposes the liability on the Respondent for any survey or repairs that are required to be carried out at the time of delivery/re-delivery of the vessel, to bring the vessel fully operational and shipshape condition which repairs are to be carried out by the new Operator at the cost of the outgoing Operator (the Respondent) as decided by the Petitioner. I am unable to agree to the view of the Arbitral Tribunal that the liability of the Respondent for repairs would confine only to the time of delivery/re-delivery. There appears to be substance in the submission of the learned Counsel for the Petitioner that since most of the invoices pertaining to repairs were submitted after expiry of the extended period of the Contract, it cannot be ruled out that the claim for repairs have been made by way of afterthought and after certain specified repairs were allowed by way of concession and as a special case without prejudice to the contentions of the Petitioner. There is no clause in the Contract which states that the liability of repairs is that of the Petitioner or of reimbursement by the Petitioner of the repairs carried out by the Respondent.

It is pertinent to note that the Arbitral Tribunal in the Award, in paragraph B-16 specifically holds - "The above quoted words of clause 7.2(iv) would prima facie seem to require the Operator to bear the cost of necessary and scheduled repairs to Sam-2". Despite this finding, the Arbitral Tribunal has applied the rule of ''contra proferentum'' to interpret the Contract on the ground that the Petitioner, being a Government entity, held a superior bargaining position vis-a-vis the Respondent and the Contract was a standard form of Contract prepared by the Petitioner, which the Respondent had no choice but to sign since it was presented for signature almost 18 months after the work had started and any ambiguity in its terms or conflict in its provisions must be resolved in favour of the Respondent. In my view, there was no warrant at all for the Arbitral Tribunal to invoke the rule of contra proferentum for interpretation of Contracts, which in effect resulted in alteration of the express terms of the Contract in the present case. First and foremost, there was no such plea to invoke the rule of contra proferentum raised by the Respondent in the Statement of Claim/pleadings before the Arbitral Tribunal. As indicated earlier, the terms of the Contract and the Contract read as a whole would clearly show that the repair to the vessel was the liability of the Respondent and there was no ambiguity as regards liability of the repairs. Apart from that, it is required to be noted that the Respondent had invited tenders by publication of notice and the Respondent, like other interested parties, participated in the bid. Moreover, the Respondent had earlier too dealt with the Petitioner and they had entered into similar Contracts and the Respondent was well aware of the nature of Contract (even if were a standard form of Contract as stated by the Arbitral Tribunal) which they would be required to enter into. Despite this, the Respondent had participated in the bid and had entered into the Contract with open eyes. In these circumstances, it cannot be said that the Respondent had no choice than to sign the Contract and I do not see how the rule of contra proferendum could have been invoked to put the Respondent in an beneficial or advantageous position as regards the terms of the Contract in the facts and circumstances of the present case.

In the Statement of Claim filed by the Respondent before the Arbitral Tribunal in para 2, it has been stated by the Respondent as follows:

"2. The Claimant has for the past almost 25 years been rendering services to the Respondent in connection with their offshore operations. The Claimant had entered into six Contracts/agreements all dated 22 March 1995 with the Respondent. In terms thereof, the Claimant was to provide to the Respondent''s manning, running, victualing operations and maintenance services of the Operator for six Offshore Supply Vessels (hereinafter referred to as ''the OSVs''). The dates of the said agreements ...........

The terms and conditions of the six Agreements dated 22 March 1995 are identical.

The present Statement of Claim is in respect of Agreement dated 22 March 1995 for Samudrika-2 (hereinafter referred to as a ''SAM-2'')."

In the Written Statement filed by the Petitioner, it has been inter alia averred in paragraph 9 as follows:

"...The Claimant has been operating the vessels under a similar Contract even for the earlier period of 1991-1994. At that time also the repairs were carried out by the Claimant at its own cost. The Claimant did not claim the cost of repairs from the Respondent. A copy of one sample Contract for the earlier period is annexed hereto as Exhibit "R3". There are several other operators including M/s. Pearl Ships Ltd., M/s. South India Ltd., M/s. Seaspan Shipping, M/s. Indus Marine (Pvt.) Ltd., M/s. Orient Ship Management and M/s. Aarnav Shipping Co. Pvt. Ltd. who are operating about 26 vessels under similar Contracts. In all these cases the cost of repairs is borne by the operators, as has been done by the Claimant itself in the past. However all of a sudden the Claimant is now dishonestly claiming the cost of repairs from the Respondent. A sample copy of one such Contract with a third party is annexed as Exhibit "R4" hereto."

(emphasis supplied)

The Arbitral Tribunal has completely glossed over the assertions/admissions in the aforementioned pleadings, which in my view, go to the root of the matter, as it clearly brings out that despite the alleged onerous terms of the Contract, the Respondent had clearly accepted the terms of the Contract on previous occasions also and both the parties proceeded on the basis and were well aware of what the terms of the Contract would provide and which Contract was eventually entered into between the parties belatedly and without the Respondent raising any objection. Moreover, the Respondent, having operated the very vessel viz. SAM-2 under an earlier Contract was aware of the condition of the vessel and had bid for the same with open eyes. It is well settled that in reading and construing a Contract the attending circumstances and intention of the parties are also required to be considered, assuming there was any ambiguity in the Contract. The fact the Contract was entered into after about a year of the allotment of the Contract would only suggest that the parties were in no rush to enter into the Contract and they were aware that the proposed Contract would be on the same lines and on identical terms as the previous Contract, which was a mere formality. Even otherwise, there was no objection raised by the Respondent to the terms of the present Contract before execution thereof. Moreover, it does appear, as pointed out by the learned Counsel for the Petitioner that the other Operators who were operating about 24 vessels of the Petitioner on similar contracts were also carrying out repairs of the vessels at their own cost. Significantly, as averred in paragraph 10 of the Statement of Claim, the Respondent has entered into a fresh Contract with the Petitioner for a further period of two and half years commencing from 12 November 1996.

It is interesting to note that the Arbitral Tribunal rejected the contention of the Respondent that the Petitioner had admitted its liability for normal wear and tear by agreeing to the reimbursement of the expenses incurred by the Respondent under certain specified heads of repair viz. 1) Propeller blades 2) Anchor chain 3) Steel hull renewal 4) Life Raft, and 5) Rescue boats. The Arbitral Tribunal noted that the concession was made by the Petitioner as a special case and without prejudice to its legal contentions and held that it therefore, cannot be regarded as an admission of liability on part of the Petitioner. In my view, the fact that certain expenses incurred by the Respondent under specified heads of repairs were reimbursed by the Petitioner as and by way of concession and as a special case, itself suggests that the repairs were otherwise the liability of the Respondent and it was only by way of concession that the expenditure on certain specified repairs were reimbursed by the Petitioner. Pertinently, in paragraph 9(b) of their Rejoinder, the Respondent has averred thus-

"...The Claimants state that apart from these five items, the Respondent had also at that time agreed to compensate the operators in respect of the expenditure incurred on repairs/over hauling of the engine and repairs/replacement of radar. The Claimants state that these items constitute more than 99% of the OSV and covers everything on the OSVs as far as essential repairs and maintenance are concerned..."

Clause 2.6 of the Contract provides for ''reimbursement'' of costs of fuel, oil, water, pilotage and wharfage by the Petitioner to the Respondent on actuals plus 5% services charges as approved by the Petitioner in advance. Certain reimbursements are also provided for in clause 7.2(x) as also clause 10.0(x) of the Contract. In my opinion, if the liability of any repairs was that of the Petitioner, the Contract would have expressly provided for the reimbursement of repairs and would have stipulated the procedure for the same, including advance approval etc.

Though the Arbitral Tribunal has rejected the argument advanced on behalf of the Respondent that the Contract is not valid and that it was unfair, prima facie it does appear that the fact that the terms of the Contract were onerous has weighed with the Arbitral Tribunal. The Supreme Court in Assistant Excise Commissioner vs. Issac Peter, (supra) has held that in a Contract entered into by the State with a private party pursuant to a public auction of floating tenders or negotiation, the State is not obliged to guarantee profit to the contractor and the contractual obligations cannot be resiled from merely on the ground of onerous nature of terms and there is no room for invoking fairness and reasonableness. In the present case, the Contract is not merely a Contract for manning the vessel Sam-2 of the Petitioner. There were several liabilities imposed on the Respondent under the Contract, including expenses towards dry-docking as also other liabilities including liquidated damages in certain circumstances, which the Respondent was well aware of even prior to the bidding for the Contract as indicated earlier.

In my view the expression `normal wear and tear'' is interpreted completely out of context and beyond the scope of the Contract by the Arbitral Tribunal to take repairs under the umbrella of `normal wear and tear''. Ordinarily, the expression ''normal wear and tear'' is used in the context of general deterioration of the vessel on account of its age and use and are not relatable to repairs as such. Wear and tear is damage that naturally and inevitably occurs as a result of normal use and aging. It is a form of depreciation which is assumed to occur even when something is used with care and proper maintenance. The term ''normal wear and tear excepted'' appears only in clauses 30 and 16.0(e) of the Contract and I am disposed to agree with the submissions of the learned Counsel for the Petitioner that in the facts and circumstances of the present case and reading the Contract as a whole the said term is to be read in conjunction with the words ''same shipshape condition as at the time of delivery''.

Even if it were taken that the dominant purpose of the contract was manning, as held by the Arbitral Tribunal, the express terms of the Contract cannot be overlooked. Pertinently, the Arbitral Tribunal has observed in paragraph B8 - "However, other clauses of the contract (for example clause 7.0, examined in greater detail supra) do envisage certain repairs being carried out by the Operator". Indeed, the Respondent was given custody of Sam-2 as custodian in trust on behalf of the Petitioners, however that could not absolve the Respondent of their liability of repairs. As a matter of fact clause 7.2(viii) of the Contract stipulates that in the performance of its obligations under the Contract, the Respondent shall be deemed to be an independent Contractor. I am unable to agree with the Arbitral Tribunal that the liability to pay for the cost of replacement/repairs refers only to the stage of making payment in the first instance as contemplated in clause 3.0. The Arbitral Tribunal, in my view, fell in error in making a distinction in the ''responsibility'' for repairs and ''bearing the actual cost'' of repairs considering the terms of the Contract and the Contract read as a whole. Even assuming that the terms of the Contract were onerous, the Respondent knew very well what it was going for. The fact that it was sought to be argued before the Arbitral Tribunal that the Contract was invalid and the fact that it was contended in the Written Submission before the Arbitral Tribunal that the terms of the Contract were unconscionable (though this is not their case in the Statement of Claim), prima facie suggests that the Respondent do accept the position that the terms in the Contract as regards repairs are concerned, were adverse to the Respondent. In any event, if the Respondent was required to carry out repairs which were outside the Contract, surely, the Respondent would have insisted on a prior written commitment on part of the Petitioner to reimburse the same or would have reassessed their position so far as continuance of the Contract was concerned. It may be pertinent to note that for the subsequent Contracts, a specific clause was added in the Contracts that expenditure on certain major items including (i) major repairs overhauling replacement for main engine and aux engine, (ii) repair/replacement of gyro compass and radars, (iii) steel renewal, (iv) replacement of anchor chain and propeller blades, and (v) replacement of rescue boat and life rafts were to be reimbursed to the Respondent after prior approval in writing from the Petitioners.

In Delhi Development Authority vs. R.S. Sharma (supra), Supreme Court has held in para 21 as follows:

From the above decisions, the following principles emerge:

(a) An Award, which is

(i) contrary to substantive provisions of law; or

(ii) the provisions of the Arbitration and Conciliation Act, 1996; or

(iii) against the terms of the respective contract; or

(iv) patently illegal, or

(v) prejudicial to the rights of the parties, is open to interference by the Court under Section 34(2) of the Act.

(b) Award could be set aside if it is contrary to:

(a) fundamental policy of Indian Law; or

(b) the interest of India; or

(c) justice or morality;

(c) The Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court.

(d) It is open to the Court to consider whether the Award is against the specific terms of contract and if so, interfere with it on the ground that it is patently illegal and opposed to the public policy of India.

(emphasis supplied)

For the aforesaid reasons, the findings of the Arbitral Tribunal under this head viz. Reimbursement for Repairs cannot be sustained and are set aside and the claim of Respondent under this head shall accordingly stand rejected.

(III) Reimbursement for withheld amount of monthly stipend;

So far as the claim under this head is concerned, the Arbitral Tribunal has set out a table in paragraph D. 3 of the Award dated 12 March 2009 and concluded as under:

"D.15 We therefore, hold that the following deductions from the monthly dues of the Claimant are disallowed and must be reimbursed to the Claimant, namely:

(a) The deductions mentioned at serial Nos. 1, 2 and 3 of the table.

(b) The deductions on account of liquidated damages mentioned at serial Nos. 5, 7 and 8 of the table.

(c) The deductions mentioned at serial No. 10 of the table, save and except such part thereof as is relatable to the fuel and water used during periods of downtime at serial No. 1 of the table.

Since the Respondent has failed to prove the amount of fuel and water used during periods of downtime other than that alleged to be downtime in serial No. 1 of the table, the entire deduction referred to in serial No. 10 of the table will be disallowed and the entire amount of such deduction would be liable to be refunded to the Claimant.

D.16 All remaining deductions mentioned in the above quoted table are admittedly supported by the downtime statement produced by the Respondent, and we find that these deductions are mandated by the contract. The Claimant''s prayer for compensation in respect of such deductions is accordingly rejected."

The Arbitral Tribunal in the operative part of the Award dated 12 March 2009 held as under:

"(d) The claim for Reimbursement for withheld amounts of monthly stipend: We hold that the following deductions were wrongly made from the Claimant''s monthly stipend, and are liable to be reimbursed:

(v) unexplained deductions of Rs. 4,870/- and Rs. 919/-;

(vi) deduction of Rs. 2,86,641/- in respect of the period for which Sam-2 was not in operation during Hand-Over Take-Over operations;

(vii) deductions of Rs. 68,794/-, Rs. 68,795/- and Rs. 61,484/- on account of liquidated damaged.

(viii) deductions in respect of fuel and water used during period of downtime relatable to the time when Sam-2 was not in operation during Hand-Over Take-Over operations. Since the Respondent has not provided details regarding the amounts of fuel and water used during the above mentioned period, the burden of which was on the Respondent the entire deduction of Rs. 3,99,028/- made in respect of fuel and water must be disallowed and the said amount be reimbursed to the Claimant.

We find that other deductions have been made in terms of the contract, and the Claimant is not entitled to recover such amounts.

The aforesaid findings by the Arbitral Tribunal are pure findings of facts after appreciating the evidence on record. It is not permissible for this Court in its jurisdiction under section 34 of the 1996 Act to re-appreciate these findings of facts. In any event, no arguments have been canvassed on behalf of the Petitioner to point out any perversity with regard to these findings. In the circumstances, the findings of the Arbitral Tribunal under this head are not liable to be interfered by this Court.

(IV) Claim for Interest;

In the Statement of Claim, the Respondent had sought interest at the rate of 18% p.a. per annum from 1 July 1999 till payment.

Dealing with the claim of interest, the Arbitral Tribunal in the body of the Award dated 12 March 2009, after referring to section 31(7)(a) and (b) of the 1996 Act, awarded simple interest at the rate of 9% p.a. on all amounts awarded and made it clear that although the quantification of some of these amounts may happen at a later stage, interest on such amounts will begin to run from the date on which the Award is delivered. In the operative part of the Award, the Arbitral Tribunal has awarded 9% simple interest per annum from the date of reference to arbitration till the date of payment on all amounts awarded.

As discussed in the earlier part of this judgment, in Arbitration Petition No. 459 of 2009 as also in Arbitration Petition No. 1029 of 2010, the Respondent had filed two separate Chamber Summons relying upon Section 34(4) of the 1996 Act seeking to defer the hearing of the Arbitration Petitions in order to give the Arbitral Tribunal an opportunity to resume the arbitral proceedings or to take other action as in the opinion of the Arbitral Tribunal would eliminate the grounds for setting aside the Award dated 12 March 2009 and the Supplemental Final Award dated 24 February 2010. It appears that the two Chamber Summons were taken out by the Respondent in view of the objection on behalf of the Petitioner that the Arbitral Tribunal had became functus officio and did not have the power to pass the Supplemental Final Award dated 24 February 2010. This Court passed an order dated 22 July 2011 allowing the Chamber Summons and adjourned the hearing of the Arbitration Petitions. Pursuant to the aforesaid order of this Court, upon resumption of the Arbitration proceeding, the Arbitral Tribunal, by its order dated 1 August 2011 directed the parties to file their respective written arguments on whether any particular portion of the award needs rectification by the Arbitral Tribunal and in what manner. The Arbitral Tribunal recorded the statement of the Counsel for the Respondent that the Respondent is not pressing for interest pendente lite. The Petitioner''s Advocate thereafter addressed letters dated 18 August 2011 & 2 September 2011 to the Arbitral Tribunal. The Respondent''s Advocate addressed letter dated 19 August 2011 to the Arbitral Tribunal giving up the claim of interest pendente lite in the Award dated 12 March 2009 and the Respondent conceded to the position that their claim for interest pendente lite may be barred and did not press for the same in view of the judgment of the Supreme Court in Sayyed Ahmed & Co vs. State of UP (supra) and added the following sentence in the last line of the said letter dated 19 August 2011 - "Should the learned Tribunal make no award on interest, then the automatic interest provisions of S. 37(1)(b) of the Act will apply". (This provision is wrongly mentioned as it deals with Appeal.)

The Arbitral Tribunal, thereafter, on 21 September 2011 passed the ''further Award'' wherein the Arbitral Tribunal recorded that the direction to pay 9% interest from the date of reference shall stand deleted and the Respondent shall be entitled to interest from the date of the Award until payment as "the law permits" [effectively granting interest @ 18% per annum from the date of the Award dated 12 March 2009, by virtue of the provisions of section 31(7)(b) of the 1996 Act]. The Arbitral Tribunal dealt with the claim of interest in the further Award dated 21 September 2011, in paras 12 and 13 in the following terms:

"12. The question of interest has been discussed in section E of the Award dated 12th March 2009. We do not believe it is necessary to repeat those arguments or to quote once more the provisions of the Agreement that deal with the payment of interest. In view of the clear findings of the Supreme Court in Sayeed Ahmed and Co. Vs. State of U.P. and Others, we modify both our reasoning and our decision in respect of interest payable. Paragraph E 4 will now be cancelled and replaced with the following:

We are not inclined to reject or ignore any provision of the Contract since an Arbitral Tribunal is a creature of the Contract. In addition, we must be guided by the clear judgment contained in Sayeed Ahmed and Co. Vs. State of U.P. and Others, in which the Supreme Court has made it abundantly clear that if the Contract specifically states that interest will not be payable by any party then the Arbitral Tribunal will not be entitled to go against such a provision and allow payment of interest pendente lite. In the light of the clear provisions contained in Clause 2.2 of the Contract, therefore, we hold that interest on delayed payment will not be attracted until the date of publishing the Award on the 12th of March 2009.

The first four lines of paragraph 12(e) of our award of 12th March 2009 viz, "We award 9% simple interest per annum from date of the reference to arbitration till the date of payment on all amounts due to the Claimants under this award" will now be deleted. They will be substituted by the following lines viz., "The Claimant shall be entitled to such interest accruing from the date of the Award until payment as the law permits".

Thus, so far as the ''period of interest'' is concerned, the Arbitral Tribunal by the further Award dated 21 September 2011 has changed the same by clarifying that the interest shall accrue from the date of Award (Award dated 12 March 2009) and not from the date of reference to arbitration. That change was necessary in view of the concession of the Counsel for the Respondent recorded by the Arbitral Tribunal on 1 August 2011 that the Respondent is giving up the claim of interest pendente lite as also in view of the letter dated 19 August 2011 of the Advocate of the Respondent referring to the judgment of the Supreme Court in Sayyed Ahmed & Co. vs. State of UP (supra). The Arbitral Tribunal was thus merely expected to clarify this position viz. that the interest of 9% was to run only from the date of the Award and not from the date of reference to arbitration. However, the Arbitral Tribunal has in addition changed the `rate of interest'' of 9% p.a. by stating that the interest would be ''as the law permits''. By observing so, as indicated earlier, the Arbitral Tribunal has effectively increased the rate of interest from 9% to 18% p.a., if the provisions of section 31(7)(b) are borne in mind. Section 31(7)(b) reads as follows:

"A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment."

In my view, it was impermissible for the Arbitral Tribunal to have changed the rate of interest, (whether inadvertently or otherwise) from 9% to 18% per annum for the following reasons:

"Firstly, even the Respondent has not specifically claimed that the rate of interest for the post award period should be increased from 9% to 18% per annum. [Section 37(i)(b) has been wrongly mentioned in the Respondent''s Advocates'' communication dated 19.08.2011 which provision deals with Appeal. Even otherwise, this was added in the said letter as an afterthought since on 1 August 2011 when the Counsel for the Respondent made the concession of giving up the claim for interest pendente lite, the same was without any condition or qualification.];

Secondly, the Respondent had not filed any Petition u/s. 34 challenging the rate of interest @ 9% p.a. granted by the Award dated 12 March 2009 for the post award period and claiming interest @ 18% per annum;

Thirdly, the Arbitral Tribunal has increased the rate of interest for the post award period from 9% to 18% per annum without any Application being made;

Fourthly, the Arbitral Tribunal has not followed the principles of natural justice before changing the rate of interest awarded for the post award period from 9% to 18% per annum as no notice or opportunity of hearing was given to the Petitioner in respect of the said change;

Fifthly, the said direction is beyond the authority and jurisdiction of the Arbitral Tribunal u/s. 34(4) under which the power of the Arbitral Tribunal is limited to ".... resume the arbitral proceedings or to take such other action as in the opinion of the arbitral tribunal will eliminate the grounds for setting aside the arbitral award." By the said direction i.e. by increasing the rate of interest for the post award period, the Arbitral Tribunal has not eliminated any ground for setting aside the Arbitral Award;

Sixthly, there is no discussion or reasons recorded by the Arbitral Tribunal in the further Award on what grounds the rate of interest was required to be increased from 9% p.a. to 18% p.a.

In light of the above, the direction of the Arbitral Tribunal in the further Award dated 21 September 2011 to the extent of granting interest "as the law permits" (which effectively means 18% p.a.) is set aside and the direction of payment of interest at the rate of 9% p.a. in the Award dated 12 March 2009 shall continue to operate. It is clarified that the interest shall be payable for the post Award period only, in view of the concession as recorded in the further Award dated 21 September 2011.

The upshot of the above discussion is as follows:

(1) The findings of the Arbitral Tribunal on Limitation are not disturbed;

(2) The findings of the Arbitral Tribunal on Repairs are set aside;

(3) Since the claim for Accident Repairs is given up by the Respondent, the challenge to the same does not survive for consideration;

(4) The findings of the Arbitral Tribunal on `Monthly Stipend'' are not interfered;

(5) Interest at the rate of 9% p.a. as granted by the Award dated 12 March 2009 on the amount payable by the Petitioner to the Respondent from the date of the Award till payment shall continue to operate and the direction to pay interest as the law permits (which effectively means 18% p.a.) as granted by further Award dated 21 September 2011, is set aside. Interest shall run from the date of the Award (Award dated 12 March 2009) till payment.

The Arbitration Petitions to stand disposed of accordingly.