JAGSON INTERNATIONAL LTD Vs. FRONTIER DRILLING

JUDGEMENT

(1.) This order shall dispose of the plaintiff's application under Order XXXIX Rules 1 and 2 read with Section 151 Code of Civil Procedure numbered as IA No.3743/2003, the defendant's application IA No.5819/2003, under Order XXXIX Rule 4 read with Section 151 Code of Civil Procedure and IA No.5639/2003, under Section 45 of the Arbitration and Conciliation Act, filed by defendant for referring the matter to arbitration.

(2.) The facts relevant for the disposal of the aforesaid three applications, briefly stated are that the plaintiff a limited Company has filed a suit for declaration, injunction and recovery praying that Arbitration Agreement contained in Clause 24 of the Charter Agreement dated 15th September, 2000 between plaintiff and defendant be declared illegal, null and void, non est, inoperative and incapable of being performed. It is also prayed that an injunction be issued restraining the defendant from taking any steps pursuant to the aforesaid arbitration clause. A declaration declaring the invocation of the Bank Guarantee illegal and void is also sought along with injunction directing the defendant to return the benefit of the Bank Guarantee wrongfully encashed.

(3.) The plaintiff's case is that the plaintiff and defendant entered into a Charter Agreement dated 15th September, 2000, to which addenda dated 6th November, 2000 and 13th June, 2002 were also added. In terms of this Charter Agreement, the defendant was to provide a rig named Frontier Duchess to the plaintiff, which was required for drillship by the plaintiff in Indian waters. According to the plaintiff, this rig was required for the purposes of oil exploration. It was specifically agreed in Clause (6) of the Charter Agreement that the repairs of the latent and inherent defects in the rig would be the liability of the owner and during period of repairs no charter hire would be paid by the plaintiff. It is pleaded that latent and inherent defects could not be detected without survey of the rig and could be seen only upon the working of the rig. The plaintiff as such took this rig on hire on the assurances of the defendant that it would give uninterrupted and trouble-free service but later it was found that Sub-Sea Camera, Top Drive and Compensator Piston Assembly of the rig were having latent defects. When these defects were pointed out, the defendant procured a rented Sub-Sea Camera from Singapore. However, rent was not paid by the defendant and as such it was taken back by the owners. The O.N.G.C. with whom the plaintiff was having oil exploration contract wrote a letter dated 11th December, 2002, to the plaintiff clearly saying that Sub-Sea Camera was not available on the drillship. On account of defective Top Drive also, there were repeated breakdowns and as such substantial loss was caused to the plaintiff.