LLOYDS STEEL INDUSTRIES LTD Vs. OIL INDIA LTD

JUDGEMENT

(1.) This appeal is against the order dated 23/12/1994 passed by the learned Additional District Judge No. 1 Jodhpur in Civil Misc. Case No. 17/93 by which the learned Additional District Judge No. 1, Jodhpur dismissed the application under Section 20 of the Arbitration Act, 1940 filed by the appellant against the respondent.

(2.) Brief facts of the case are that the appellant and respondent No. 1 both are Companies incorporated under the Companies Act, 1956. The respondent carries on its business of extracting natural oil/gas and allied products. The respondent desired to award a contract for charter-hire of an on-shore drilling Rig in the region of Rajasthan. The appellant was one of the parties who gave the bid for the said contract. It is alleged by the appellant in his application under Section 20 of the Arbitration Act that before letter of intent was issued by the respondent, certain meetings took place, at which the representatives of the appellant were present and discussions were made for finalising the terms and conditions which were to be incorporated in the contract. The respondent, by telegram dated 30/5/ 1990. awarded the contract to the appellant for the charter hire of one 1400-155 HP on shore drilling Rig to be deployed in the Rajasthan. By said letter of intent, the appellant was required to furnish a performance guarantee by way of a bank guarantee of Rs. 98.30 lacs which was done by the appellant.

(3.) The appellant in para No. 10 of the application under Section 20 of the Arbitration Act demonstrated the reasons in support of the appellant's contention that the contract between the parties was dependent upon the regulations of the Government of India and was also dependent upon the approval from the various Ministries and Departments of the Union of India which were, according to the appellant, were not within the control of the appellant. The appellant tried its best to complete the work at his end and, in pursuance of that, issued advertisement for purchase of a requisite Rig on 28-4-1990 but no response was received by the appellant upto 12-6-1990, i.e., for 45 days. The appellant also submitted application to the Ministry of Industries to obtain capital goods clearance for the import of a second hand drilling Rig and an application was also made to the ICICI for financial assistance by way of foreign currency loan for importing the Rig and another application was made on 13-9-1990 to the SCIC1 for foreign currency loan. This way, the appellant tried to justify that there was no fault of the appellant at any point of time and since the appellant duly complied with all the terms and conditions on its part entitling it to extension of time and/or suspension of its obligation under the contract by reason of the subsistence of the Force Majeure conditions and the applicability of the Force Majeure clause in the said contract. It is further submitted by the appellant that the appellant submitted notice as required under clause 37.4 of the contract stating reasons for beginning of Force Majeure conditions.