GREAT OFFSHORE LIMITED Vs. CHENNAI PORT TRUST

JUDGEMENT

(1.) This Original Side Appeal is filed by the appellant aggrieved by the order dated 02.09.2006 passed by the learned single Judge, dismissing the O.P. No. 47 of 2003 filed by the appellant.

(2.) The first respondent port is an artificial port, the Western side is land and other three sides are artificial walls and small opening in the Eastern wall for the passage of ships. In view of that, the ships cannot straight away enter the harbour to berth or unberth for loading or unloading of cargoes. The ships will be anchored some miles away in the sea. Two tugs will go from the harbour berth for loading and unloading. After loading and unloading, again two tugs will tow and move the ships from the harbour berth and leave the ship in the Sea.

(3.) According to the appellant, they are the owner of the harbour tug named 'Rishabh'. In the year 1994, the first respondent floated a tender for taking on charter one harbour Tug to assist the ships maneuvoring within the port. On 14.09.1994, the appellant submitted their tender offer to the first respondent. The appellant emerged as the highest bidder and they were awarded the contract and as per the contract, the tug named 'Rishabh' belonged to the appellant entered into the service of the port from 10.11.1994. On 14.11.1994, the appellant also issued a performance guarantee in favour of the first respondent for a sum of Rs.16,42,500/-. The contract itself was executed on 09.01.1995 between the appellant and the first respondent and the contract comes to an end on 9th November 1995. On 18.08.1995, since the contract comes to an end on 9th November 1995, the appellant requested the first respondent for extending the contract beyond 9th November 1995. Pursuant to this, the first respondent, by letter dated 03.11.1995, extended the contract for a further period of six months. Thereafter, the appellant sent letters to the first respondent on 14.11.1995, 21.12.1995 and 02.02.1996 complaining about the fouling of propellors and thereby they are unable to operate the tug. Later on, by letter dated 08.04.1996, the appellant demanded reimbursement of the down time payment. On 09.04.1996, the appellant sent a letter to the first respondent to extend the contract for further period. Subsequently, on 01.05.1996, the appellant also extended the bank guarantee, pursuant to the letter of the first respondent dated 23.04.1996. On 06.05.1996, the first respondent sent a letter to the appellant stating that the request made for extension of bank guarantee is a routine request and they have no intention to extend the contract. Ultimately, by the letter dated 10.05.1996, the tug was de-hired by the first respondent with effect from 9th May 1996. This was opposed by the appellant on the ground that they have exercised their option for extension of contract by extending the bank guarantee and therefore, it is not open for the first respondent to cancel the contract. Though the bank guarantee was returned by the first respondent, as per the clauses contained in the agreement, the appellant approached the arbitral Tribunal on the ground that (a) the first respondent is not justified in cancelling the contract and sought for extension of the contract from 09.05.1996 for a further period of six months, or, in the alternative, demanded compensation of Rs.1,25,41,976/- for wrongful repudiation of charter agreement by the first respondent (b) for payment of Rs.18,72,875/- being the hire charges wrongfully deducted or as indemnity for propeller fouling of the tug due to the uncleanliness of the port waters which the first respondent is bound to keep clean (c) for payment of Rs.1,27,00,000/- for expenses incurred/to be incurred for carrying out repairs to the tug and (d) for payment of interest on the amounts to be awarded.