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Oil and Natural Gas Corporation Ltd. v. Western Geco International Ltd.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 3415 of 2007)Decided 4 Sept 2014
Civil Appeal No. 3415 of 2007
Justice T.S. Thakur · Justice C. Nagappan · Justice Adarsh Kumar Goel

Background

ONGC contracted for modernisation of a seismic survey vessel, including equipment requiring an American export licence. Licence difficulties delayed return of the vessel, and ONGC deducted contractual delay charges. Arbitrators ordered repayment of part of those deductions after attributing several months of delay to ONGC; it challenged the award.

Decision Breakdown

The Supreme Court partly allowed ONGC's appeal and reduced the amount payable under the award. The contractor was responsible for 42 days taken to submit the licence application and another fourteen days taken to communicate its rejection, so deductions for those 56 days stood. Under the law applied in this 2014 decision, public-policy review included a reasoned judicial approach, fair procedure and protection against irrational findings causing injustice. The challenge to the award's rejection of Indian-tax deductions failed because the contracted work was performed in Singapore.

Lesson Learnt

Keep records identifying who caused each period of contractual delay. In this case, treating separate periods as one block produced an unjustified award, while delay arising from the customer's own instructions remained the customer's responsibility.

Official source (sci.gov.in)View Judgment (PDF)

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