MADGAVKAR SALVAGE Vs. NORSEA GLOBAL OFFSHORE PTE LTD

JUDGEMENT

(1.) This arbitration petition challenges an award passed by a tribunal of three arbitrators in a reference arising out of a salvage contract. The Petitioner, who was the salvor, had raised claims against the Respondent-shipowner on account of damages for breach of contract. The Respondent had raised counter-claims against the Petitioner. Both the claims and the counter-claims were rejected by the arbitral tribunal. The Petitioner-salvor has come in challenge from rejection of its claims.

(2.) The Petitioner had raised claims against the Respondentshipowner on account of idling charges. It was the Petitioner's case that though security for the salvage operations to be carried out by the Petitioner was to be provided to the salvors within ten days of signing of the contract, i.e. by 17 September 2009, the Respondent did not do so until 9 December 2009. It was submitted that the Petitioner nevertheless commenced salvage operations on 7 November 2009 against a sum of Rs.40 lakhs paid to it on an adhoc basis and as an interim measure by the Respondent. It was submitted that the Petitioner did not want to carry out any substantial work or incur substantial costs before the Respondent submitted the payment guarantee and hence mobilised only some salvage personnel and basic equipment in tune with the amount paid at that point of time, i.e. between 7 November 2009 and 9 December 2009. The Petitioner claimed to have accordingly mobilised personnel and basic equipment, and carried out minimum work so as to prevent the dredger from drifting further aground and for her safety. It was the case of the Petitioner that the payment guarantee was furnished by the Respondent finally on 9 December 2009. It was submitted that on account of nonfurnishing of the payment guarantee in time, the Petitioner was entitled to claim idling charges as it had kept its vessel on stand-bye but could not mobilise it and the vessel kept idling all this while. Secondly, it was claimed that there was some interference or sabotage by the previous contractor of the Respondent. It was the Petitioner's case that the contractor had come to the site on 17 November 2009 and removed the wire ropes connecting the dredger and the ground anchors (which had been put out in preparation to pull the dredger towards deeper water) and consequently the dredger drifted further aground and this practically negated the work that had been carried out by the Petitioner until then. Thirdly, it was claimed that there was stoppage of work by Gujarat Maritime Board due to want of permission to carry out salvage work. According to the Petitioner, as per oral understanding between the parties, besides paying the port, customs and government charges, the Respondent was also responsible for obtaining requisite permissions from the authorities, including Gujarat Maritime Board, and stoppage of work on account of want of the latter's permission was to the account of the Respondent and idling charges resulting thereby were payable by the Respondent. It was, on the other hand, the Respondent's case that the Petitioner, in the first place, had accepted performance of the promise of payment guarantee on the part of the Respondent on 7 December 2009 without putting the Respondent to the notice of any claim for damages or otherwise; and this disentitled the Petitioner from claiming any damages for late performance. Secondly, it was submitted that by reason of the pre-receipt issued by the Petitioner on 11 January 2010 as well as the subsequent receipt to the underwriters of the salvaged vessel, the Petitioner was estopped from raising any further claims under the salvage contract. It was submitted that these receipts amounted to discharge of the Petitioner's claims, if any, under the contract of salvage. On individual claims of idling charges made by the Petitioner, the Respondent submitted answers on merits. In the light of the pleadings of the parties and material placed on record by them, the learned arbitrators, whilst holding that the Petitioner was not estopped from raising its claims by reason of the receipts referred to above, held the Petitioner to be dis-entitled to any idling charges on account of nonfurnishing of payment guarantee before 9 December 2009. The arbitrators, in particular, held that though, according to the Petitioner, furnishing of a security within the agreed time was an essential term of the contract and the Respondent's failure to do so had rendered the contract voidable at the Petitioner's option, and the Petitioner, accordingly, had terminated the contract, yet on 7 December 2009, the Petitioner informed the Respondent that it had, after due deliberations, decided to accept late tender of security and to recommence the salvage operations in full swing. There was no notice given or intention expressed at that time to claim any damages for idling charges or otherwise due to the Respondent's failure to furnish salvage security within the stipulated period of time. The arbitrators held that consequently, in accordance with Section 55 of the Contract Act, the Petitioner was not legally entitled to claim any compensation due to the late tender of security by the Respondent.

(3.) Apropos of the Petitioner's claim for damages for the alleged interference or sabotage by the previous contractor, the arbitrators held that it was common knowledge that wire rope for ground tackle was not usually carried on board dredgers or other sea-going vessels and the Petitioner, as an experienced salvor, would be, or ought to have been, aware of the usual equipment on board such vessels. The arbitrators held that the vessel particulars provided by the Respondent did not include any wire rope that could be used as ground tackle and there was no statutory provision relied on to support the contention that wire ropes were required to be carried on board dredgers. The arbitrators also held that there was no evidence to support any active concealment by the Respondent in this behalf. The arbitrators, on the basis of the testimony of the witnesses before them, held that the earlier contractor had informed the Petitioner a day or two before 17 November 2009 that the wire rope actually belonged to them and they would remove it. The arbitrators held that having been forewarned, the Petitioner ought to have taken steps to lay out its own wire ropes and that there was no legitimate claim in this behalf. The arbitrators found that the Petitioner did not use its equipment in accordance with the agreed methodology or the usual contemporary industry practice; that the previous contractor's action in taking away the wire ropes and pumps could not be said to amount to any interference or sabotage. This is a matter of fact and the arbitrators have rendered a finding of fact in this behalf inter alia after considering the industry practice.