RAVVA OIL Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner has filed this application under Section 9 of the Arbitration and conciliation Act, 1996 with a prayer that this Court should restrain respondent i. e. Union of India from recovering any amounts payable by the petitioner through Hindustan Petroleum Corporation Limited (HPCL) and Bongaigaon Refinery petrochemicals Ltd. (BRPL) pursuant to judgment of the Malaysian Court dated 12 th January, 2009.

(2.) UNION of India had entered into a Production Sharing Contract (PSC) dated 28th October, 1994 with Oil and Natural Gas Corporation Ltd. , Videocon Petroleum limited (Videocon), Command Petroleum India Pty Limited and RAAVA Oil Singapore pte. Limited. The agreement provided a specific procedure of calculation of post Tax Rate of Return (PTRR ). This contract specifically provided as to what can be included in the accounts for the purpose of PTRR calculations. However, the respondents did not follow the contractual provisions and started including, for the purpose of PTRR calculation, the sums paid by the companies in accordance with the Article 3. 3 of Production Sharing Contract (PSC ). A dispute was raised by the Union of India on this method of calculation of PTRR by petitioner and other two companies viz. Videocon and Command Petroleum India pty. Ltd. and the dispute was referred to an Arbitral Tribunal. The Arbitral tribunal, by a majority, upheld the method of calculating PTRR as adopted by the petitioner and other two companies. Against the decision of Arbitral tribunal, an appeal was preferred by Union of India before the Malaysian Court at Kuala Lumpur and the Malaysian Court after considering the terms of the contract came to the conclusion that it was wrong for the Majority Arbitrators to have ignored the plain meanings of the words in the relevant provisions and include "commercial sense" in the contract, since the words were clear. The malaysian Court therefore set aside the part of the award observing as under: on balance, and since I have found a manifest error of law on the face of the relevant portion of the Partial Award, an order that that portion of the Partial award reading:

(3.) AFTER this award was set aside by the Malaysian Court, the petitioner preferred an appeal against the order of the Malaysian Court. The Appellate court at Malaysia did not grant stay against the order of the Malaysian Court. The Union of India thereafter calculated the amounts recoverable from petitioner and other companies which were short-paid to Union of India adopting a wrong method of PTRR calculation. Since the petroleum supply was being made by the petitioner to HPCL and BRPL, Union of India issued letters dated 5th february, 2009 and 20th March, 2009 asking HPCL/brpl to divert the amounts payable to the petitioner to Union of India so that the amounts recoverable by union of India from the petitioner and other companies were recovered and adjusted. After these letters, the petitioner has filed this petition under section 9 of the Arbitration and Conciliation Act, 1996 seeking an interim injunction against recovery of these amounts.