OIL INDIA LIMITED Vs. ESSAR OIL LIMITED

JUDGEMENT

(1.) OIL issued a Notice Inviting Tender on July 19, 1993 to drill and set up four Offshore Oil/Gas Wells, three at Saurashtra Offshore and one at Orissa Offshore. The work had to be executed on turnkey basis i.e. drillship, associated equipment, personnel and services were to be provided by the bidder, called as operator under the NIT. In response, ESSAR submitted its bid on December 06, 1993. There was an exchange of correspondence between the parties. Offer being accepted, OIL issued a letter of intent on February 20, 1995, which was followed by a formal agreement executed by the parties on May 08, 1995. As per the agreement the operations had to be completed within one year. Rates were fixed for payment. The three wells Offshore Saurashtra coast at locations L -2, L -3 and L -4 had to be completed first, followed by drilling at the location at L -1; Offshore Orissa. Depth to which the wells had to be drilled was specified. Number of days required for drilling and testing was recorded. Pertaining to location L -1, drilling days stipulated were 135. Testing days stipulated were 28. Meaning thereby, total days to complete the well and tested was 163 days. Inter -location movement time was 1 day from L -2 to L -3 and L -3 to L -4. From L -4 to L -1 inter -location movement time was 15 days. There was a delay in completing the works at location L -2, L -3 and L -4 and at the said three locations the work was completed on July 16, 1996. Vide letter dated August 29, 1995, OIL extended the time for completion of the works till March 31, 1997.

(2.) The dispute between the parties concerns what happened after August 29, 1995.

(3.) We propose to note the correspondence between the parties post July 16, 1996 when the work at location L -4 was completed till OIL terminated the agreement on October 12, 1996 while noting the submissions of the learned Senior Counsels for the parties with reference to the finding returned by the majority arbitrators against OIL, and at this stage simply note that there being an arbitration clause in the agreement between the parties, an Arbitral Tribunal was set up comprising : Justice R.S.Pathak (Former Chief Justice of India), Justice Rajinder Sachhar (Retired Chief Justice), Justice J.K.Mehra (Retd.), Justice R.S.Pathak was the Presiding Arbitrator. In view of the pleadings of the parties the Arbitral Tribunal settled the following seven issues for adjudication: -