Case Note & Summary
The appeal under Section 37 of the Arbitration and Conciliation Act, 1996, arose from an order dated 6 May 2016 passed by a learned Single Judge of the Bombay High Court, dismissing the Appellant's petition under Section 34 of the Act challenging an arbitral award. The Appellant, Fugro Survey (India) Pvt. Ltd., was the original claimant, and the Respondent, Oil and Natural Gas Corporation Ltd., was the original respondent before the Arbitral Tribunal. The dispute pertained to a contract awarded to the Appellant by the Respondent for "Current, Wind and Wave Observations at 6 locations on the East Coast in India." The contract was a lump sum/fixed price contract, awarded by a notice of award dated 29 October 2003, and a formal contract was signed on 23 December 2013. The Appellant relied on a pre-contractual meeting held on 12 December 2003, called the "Basin Group Meeting," where a detailed schedule was allegedly prepared. The Appellant claimed that this meeting altered the scope of work, entitling it to additional payment. The Arbitral Tribunal rejected the claim, and the Single Judge upheld the award. The Division Bench, in appeal, held that the terms of the formal contract, being a lump sum contract, could not be varied by pre-contractual discussions. The Court found no error in the Single Judge's order and dismissed the appeal.
Headnote
A) Arbitration - Appeal under Section 37 - Dismissal of Section 34 Petition - The appeal under Section 37 of the Arbitration and Conciliation Act, 1996, challenged the order of the Single Judge dismissing the Appellant's petition under Section 34 of the Act against the arbitral award. The Court held that the Single Judge's order was correct and the appeal was dismissed. (Paras 1-3)
B) Contract Law - Lump Sum Contract - Pre-contractual Negotiations - The dispute arose from a lump sum/fixed price contract for wind and wave observations. The Appellant claimed additional payment based on a pre-contractual meeting (Basin Group Meeting) which allegedly altered the schedule. The Court held that the terms of the formal contract, being a lump sum contract, could not be varied by pre-contractual discussions, and the arbitral award rejecting the claim was not liable to be interfered with under Section 34. (Paras 2-3)
Issue of Consideration
Whether the learned Single Judge erred in dismissing the Appellant's petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the arbitral award which rejected the Appellant's claim for additional payment based on a pre-contractual meeting, given that the contract was a lump sum/fixed price contract.
Final Decision
The appeal is dismissed. The order of the learned Single Judge dated 6 May 2016 dismissing the Appellant's petition under Section 34 of the Arbitration and Conciliation Act, 1996, is upheld.
Law Points
- Section 37 of the Arbitration and Conciliation Act
- 1996
- Section 34 of the Arbitration and Conciliation Act
- Lump sum contract
- Pre-contractual negotiations
- Interpretation of contract terms
Case Details
2016 LawText (BOM) (07) 58
APPEAL NO. 409 OF 2016 IN ARBITRATION PETITION NO. 1363 OF 2010
Anoop V. Mohta, G.S. Kulkarni
Mr. Rajiv K. Pandey i/b. PRS Legal, for the Appellant; Mr. Pradeep Sanchedi, Senior Counsel with Mr. Subhash Bhalwal i/b. Vyas Bhalwal, for the Respondent
Fugro Survey (India) Pvt. Ltd.
Oil And Natural Gas Corporation Ltd.
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Nature of Litigation
Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against an order dismissing a petition under Section 34 of the Act challenging an arbitral award.
Remedy Sought
The Appellant sought to set aside the order of the learned Single Judge dismissing its Section 34 petition and to set aside the arbitral award.
Filing Reason
The Appellant was aggrieved by the dismissal of its petition under Section 34 of the Arbitration and Conciliation Act, 1996, which challenged the arbitral award rejecting its claim for additional payment based on a pre-contractual meeting.
Previous Decisions
The learned Single Judge dismissed the Appellant's petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the arbitral award.
Issues
Whether the learned Single Judge erred in dismissing the Appellant's petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the arbitral award which rejected the Appellant's claim for additional payment based on a pre-contractual meeting, given that the contract was a lump sum/fixed price contract.
Submissions/Arguments
The Appellant argued that the Basin Group Meeting held on 12 December 2003 altered the schedule and scope of work, entitling it to additional payment.
The Respondent contended that the contract was a lump sum/fixed price contract and the terms of the formal contract could not be varied by pre-contractual discussions.
Ratio Decidendi
In a lump sum/fixed price contract, the terms of the formal contract cannot be varied by pre-contractual discussions or meetings. The arbitral award rejecting a claim based on such pre-contractual negotiations is not liable to be interfered with under Section 34 of the Arbitration and Conciliation Act, 1996.
Judgment Excerpts
This appeal under Section 37 of the Arbitration and Conciliation Act,1996 (for short 'the Act'), arises from the order dated 6 May 2016 passed by the learned Single Judge whereby the Appellant's/Claimant's petition under Section 34 of the Arbitration Act challenging the award of the Arbitral Tribunal, has been dismissed.
The dispute between the parties arose in respect of a contract awarded to the Appellant by the Respondent for which tenders were invited namely the contract of 'Current Wind and Wave Observations at 6 locations on the East Coast in India namely KGKD 8, KGKD 9, KGKD 10, KGKD 11, GDSW and GDNW'.
There is no dispute that the contract which was awarded was a lump sum/fixed price contract.
Procedural History
The Appellant filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the arbitral award. The learned Single Judge dismissed the petition on 6 May 2016. The Appellant then filed the present appeal under Section 37 of the Act before the Division Bench.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 37, Section 34
