M3nergy SDN. BHD. v. Hindustan Petroleum Corporation Ltd.

14. In the judgement dated January 10, 2019, in the earlier round, the Learned Single Judge took the view that the jurisdictional fact to examine if an arbitration agreement is in existence must be reviewed by the Section 34 Court independently through a prism not necessarily the same as the one used to examine arbitral findings on merits. The Learned Single Judge indicated that the question of challenge to a finding in favour of the Arbitral Tribunal having jurisdiction stands on a footing different from the parameters of Section 34 of the Act. The following extracts are noteworthy: - “In such challenge, it is for the court to scrutinize the objections to the tribunal’s jurisdiction. In that scrutiny, the jurisdictional facts, on the basis of which the tribunal claims to act, are examined by the court for their existence.” “The yardstick applied by the challenge court to the other assessments of the arbitral tribunal, namely, on matters of merit, whether on questions of fact or of law, is not apposite for considering this jurisdictional challenge.” “By coming to an erroneous finding on jurisdictional facts, whether or not its view on such matters be a possible view, it cannot confer upon itself the jurisdiction which it did not possess. In other words, the question of jurisdiction, in the ultimate analysis, is only for the court to decide, though, as part of the principle of party autonomy, the question is, and ought to be, decided in the first instance always by the arbitral forum.”

15. With this metric stated, the Court ruled on the purported existence of an arbitration agreement. In a nutshell, the view taken was that the arbitration agreement formed part of the JEA, but the JEA itself had not been concluded as an agreement. There had been moving parts and the parties were negotiating further, even after the JEA was initialled. Therefore, it was held, the arbitration agreement contained in it cannot be said to have been agreed upon. The Learned Arbitral Tribunal’s ruling on how the JEA is in existence was not squarely examined and dealt with. However, the Learned Single Judge independently came to the view that the JEA not being in existence, the arbitration agreement contained in it is not in existence.

16. In other words, the standard applied had been that the plausible view that the JEA had come into existence, could not be visited on the existence of the arbitration agreement. That the parties were wrangling over the percentage threshold of affirmative voting; that there had been no closure on Article 7.[3] of the JEA when it was initialled; and that the arbitration clause was meant to be recast too, all weighed with the Learned Single Judge, to hold that the Learned Arbitral Tribunal had no jurisdiction at all.

17. A Learned Division Bench of this Court, exercising jurisdiction under Section 37 of the Act, found fault with the Section 34 Court re-appreciating evidence to form its own view on execution of the JEA and substituting the findings of the Learned Arbitral Tribunal. In its judgement dated October 16, 2019, the Section 37 Court held that the contours of Section 34 were as much applicable to the judicial review of a decision taken under Section 16. The following extracts from the Section 37 Court’s judgement are noteworthy:- “The Learned Single Judge has not dealt with the reasoning of the arbitral tribunal on account of the view taken by the learned Single Judge that law enjoined upon him to independently appraise the evidence and not deal with the manner in which the arbitral tribunal has dealt with the evidence.” “….the Court is bound to examine, both carefully and with interest, the reasoning and conclusion of an arbitral tribunal.”

18. The principle of law stated by the Learned Single Judge in his review of the question of jurisdiction and this being the sole issue before the Section 37 Court, the Learned Division Bench set aside the Learned Single Judge’s judgement and restored the Section 34 proceedings to the roster of the Section 34 Court for consideration in accordance with the declared principles governing the Section 34 jurisdiction.

19. With this perspective, it is vital to examine how the Learned Arbitral Tribunal has considered the existence of the arbitration agreement between the parties. Existence of Arbitration Agreement and the JEA:

20. Having examined the record and upon a review of the Impugned Award, I have no doubt in my mind that the arbitration agreement was in existence. To my mind, this is a rather straightforward point notwithstanding the volume of documents and submissions sought to be pressed into service.

21. Indeed, after the MOU was executed, ONGC awarded the Project to the Consortium on the strength of the Consortium having been formed in terms of the MOU. Matters progressed with ONGC even further, and the Service Contract was executed. Privity of contract to Service Contract involved the very same parties as the parties to the MOU, with ONGC now being the counter-party to all of them as one Consortium. In other words, when the parties spoke to ONGC, they spoke in one voice. That unified voice represents the agreement between them on the matters covered by the Service Contract. If such matters were at a deviation from the provision of the same matters in the MOU, it would stand to reason that the parties had agreed to move on from the earlier position under the MOU.

22. I will analyse separately if the Service Contract superseded the MOU, but at this point, suffice it to say that the parties were well invested in the Project and were taking multiple steps in furtherance of the award of the Project. One of the requirements stipulated by the ONGC was that the parties must execute and deliver a JEA and the parties made significant progress towards executing the JEA as well.

23. I must state that in the formation of commercial contracts, it can be quite the norm for commercial parties, depending primarily on the commercial and corporate culture of each party on how to negotiate for the best bargain, on how much to pursue a desired objective. Commercial parties push for and extract the best package of give and take to arrive at a concluded bargain. A bid to reopen negotiations to agree afresh on elements of concluded contracts depending on a change of heart, can also be quite the norm, and can form part of the way of life for parties engaged in long-term contracts such as infrastructure contracts and hydrocarbon exploration and exploitation.

24. This case appears no different. The parties negotiated hard and came to an agreed position in the 2007 JEA. Thereafter, M[3] continued to hold out on some facets (such as the Executing Contractor, a point that had been closed out and agreed). The other parties too reacted to push their respective counter-proposal on bargains already concluded (such as the affirmative voting threshold already agreed at 71% in the 2007 JEA). Each party also expressed openness to move from its earlier positions, in a bid to commercially accommodate the competing pulls and pushes from the counterparties. However, the key issue in the matter at hand is to consider, upon distilling the noise generated by such negotiations, whether there had been a concluded bargain among the parties in the 2007 JEA or whether there had been no bargain at all, with the actual JEA having remained elusive.

25. In my opinion, it is apparent that there was a concluded bargain in the 2007 JEA. A couple of open issues that could reasonably not be regarded as essential elements of the bargain too got closed after the 2007 JEA. Attempts to open up closed topics were indeed made all around. However, I have no doubt that there had been a concluded bargain in the form of the 2007 JEA. Attempts to re-open the agreed position led to retaliation in the form of expressing openness to re-open but also imposing revisions to terms to effect such a re-opening. In any event, it is clear to me that there always had been a clear and unequivocal intent of the parties to refer their disputes to arbitration.

26. Before analysing the contract formation in more detail, it would be useful to notice some elements of the MOU the parties agreed upon. The MOU contemplated executing the JEA, which was defined as a framework of agreement governing the execution of the Project by the ‘IPMT’, which was meant to comprise personnel deputed by the parties by mutual consent, for implementation of any specified work. The scope of the MOU was to define principles for the JEA to implement the Service Contract, if awarded by ONGC.

27. Clause 5 of the MOU provided for ‘Performance of Work’ and contained the devolution of responsibility and roles to be played by the parties. Under Clause 5.2, PPCL was to coordinate activities for preparation and submission of the bid. PPCL was to engage with ONGC and provide the well log interpretation and analysis. PPCL was to carry out economic assessment of the Project from the perspective of the Consortium. Under Clause 5.4, M[3] was to provide various services, one of which was to prepare the IDP. Clause 6 provided for the role of the “Executing Contractor” and identified PPCL and M[3] jointly as such. Clause 10 also identified both PPCL and M[3] as the Executing Contractor.

28. Clause 8.[2] of the MOU specifically provided that if ONGC were to request the parties to revise the commercial terms, the parties will endeavour to agree unanimously on the proposed revision within the timeframe allowed in the circumstances. In the case of differences between the parties, the most competitive commercial terms were to be offered by the parties within the available timeframe. Clause 8.[3] provided for PPCL being the lead negotiator on behalf of the Consortium in the acquisition of development rights in the Project from ONGC. The parties agreed that none of them would withdraw after the proposal is made to ONGC, and even if the parties agree upon withdrawal, the withdrawing party would not be relieved of its obligations incurred until the date of the withdrawal.

29. Under Clause 10, the parties agreed that they would execute the Project in terms of the Service Contract to be signed with ONGC and the JEA to be executed among the parties in accordance with the principles set out in the MOU. The tenure of the MOU was two years unless terminated earlier. In Clause 14, the parties agreed that the MOU would terminate if the parties decide to supersede the MOU with any other agreement between the parties.

30. The MOU contained an arbitration clause – “any dispute relating to” the MOU would be subjected to arbitration as a means of resolving the dispute. It provided for a three-member arbitral tribunal.

31. ONGC awarded the Project to the Consortium by a letter dated March 31, 2006 addressed to PPCL as “leader of consortium consisting of” the parties. ONGC referred to the terms of the development programme submitted by the parties and called for the IDP along with estimated capital expenditure and operational expenditure for the first three years. ONGC called upon the parties to depute authorised persons to execute the Service Contract. This contract was executed on September 9, 2006.

32. The Service Contract defined “Contractor” to mean all companies where the award of the Service Contract is to more than one company. Clause 7.[3] of the Service Contract is unequivocal in its terms – the functions of the “Contractor” are to be carried out by the Executing Contractor “on behalf of all constituents of the Contractor” without this requirement “relieving the constituent(s) of Contractor from any of its obligations or liability under the Contract”. Clause 7 generally provided for the “Petroleum Operations” (defined to mean exploration, development production or any combination thereof in a wide and all-encompassing manner relating to the Project) t0 be carried out by the Executing Contractor.

33. The JEA was to be executed within 15 days of the Service Contract, consistent with the terms of the Service Contract. It necessarily had to provide for the role and responsibilities of the Executing Contractor. A decision-making forum, namely the “Executing Committee” was mandated by the Service Contract to be set out in the JEA – a committee comprising an agreed number of representatives of each Consortium member. The functions of the Executing Committee consistent with discharge of obligations under the Service Contract were to be set out in the JEA, which was also meant to record that the Consortium members would be jointly and severally responsible for discharging the obligations under the Service Contract. The duly executed JEA was to be filed with ONGC within 30 days or such longer date as permitted by ONGC. Accounting procedures for purposes of recognition of income and offering income to tax were annexed to the Service Contract.

34. Various other operational provisions including requirements of statutory and regulatory compliances are set out in the Service Contract and it is not really necessary to allude to them for purposes of this judgement. The Service Contract too had an arbitration agreement, but for resolving disputes and differences between the Consortium and ONGC.

35. Through the MOU and the Service Contract, the parties having signed on and contracted the entire package of rights and obligations obtaining under these instruments, it was now for them to comply with the Service Contract by signing the JEA and delivering it to ONGC. This singular act was subject matter of a breakdown in the relationship between the parties, and ONGC issued the Termination Notice. The parties had hit a wall in making their inter se relationship work, and this led to arbitration.

36. The core question raised in this Petition is whether the parties had an arbitration agreement.

37. As stated above, de hors the question of whether 2007 JEA is a concluded contract, the parties already had an arbitration agreement to resolve all disputes and differences “relating to the MOU”.

38. The MOU contemplated PPCL as well as M[3] being joint executing contractors, but clearly ONGC required a sole point of coordination with responsibility. The MOU had provided that if ONGC desired anything to change in the commercial terms between the parties, the parties would need change it within the circumstances. The parties indeed executed the Service Contract, which clearly recorded that there shall be a sole Executing Contractor. The Service Contract contained inter se obligations between the Consortium and ONGC but when each member of the Consortium who had executed the MOU also executed the Service Contract, it is completely reasonable and plausible to note that when they executed a subsequent contract on the same subject, they had moved on from the inter se positions contracted in the MOU. In any case, it is well declared law that when commercial transactions end up having to be spread across multiple contracts, there has to be a harmonious construction across instruments in a manner that reconciles any perceived conflict among them.

39. In Chattanatha Karayalar[6], the Supreme Court declared as follows: -

3. ………. “The principle is well established that if the transaction is contained in more than one document between the same parties they must be read and interpreted together and they have the same legal effect for all purposes as if they are one document. In Manks v. Whiteley 1912-1 Ch. 735 at p. 754, Moulton, L.J. Stated: “Where several deeds form part of one transaction and are contemporaneously executed they have the same effect for all purposes such as are relevant to this case as if they were one deed. Each is executed on the faith of all the others being executed also and is intended to speak only as part of the one transaction, and if one is seeking to make equities apply to the parties they must be equities arising out of the transaction as a whole.”

40. Seen in this light and from the perspective of the sequence of events, the movement from M[3] and PPCL being joint Executing Contractors to the need to have a sole Executing Contractor is writ large in the record by this stage of executing the Service Contract. M[3] too had evidently agreed to the need to have a sole Executing Contractor. The MOU obligated the parties to readjust the MOU to factor in what ONGC desired. Therefore, by the time the Service Contract was executed by all the parties including M[3] with commitments being made to ONGC, in the light of Clause 7.[3] of the MOU having contemplated that the parties would adjust commercial terms to suit ONGC’s requirements, the sole Executing Contractor provided for in the Service Contract and the other evidence to show M[3] agreed to PPCL being the sole Executing Contractor with the check and balance being the decision-making matrix agreed to by the parties, giving M[3] the veto power, it is a completely plausible finding that the issue of who should have been the sole Executing Contractor was no longer in doubt. Executing Committee Meeting of April 2007:

41. The next facet of the relationship between the parties is to examine what transpired in the negotiation and conclusion of the JEA. The parties engaged with one another, brought to bear the commercial pulls and pressures of negotiation, and after multiple drafts of the JEA, the parties met between April 16, 2007 and April 18, 2007 with a view to put the final JEA to bed. Whether they had concluded the JEA in that round is the question that has arisen for consideration because of M[3] contending that the JEA had never been finalised at all.

42. Mr. Gupta’s table comprising key dates in the negotiation of the JEA with a view to indicate that there had never arisen consensus ad idem among the parties, comprises 24 dates, the first of which is the date of negotiations held between April 16,2007 and April 18, 2007.

43. Prior to this meeting, there had been some back and forth about a few facets of the JEA. M[3] had deleted the provisions in the draft JEA that provided for a Management Committee. M[3] had insisted about the Executing Contractor being joint between PPCL and M[3]. The Management Committee was contemplated to be a higher forum with a role in policy decisions and comprising higher placed officials. It was expected to resolve outstanding issues on which the Executing Committee could not build consensus, by escalating them to the Management Committee. PPCL wrote to M[3] on March 28, 2007 explaining why M[3] should not delete the Management Committee and how PPCL alone would be the Executing Contractor after the Service Contract was executed.

44. M[3] replied on the same date i.e. on March 28, 2007 confirming that “M[3] can accept that PPCL is nominated as the Executing Contractor providing that the project is jointly executed via an IPMT formed by members from all partners and that project is managed to be approved schedule and budget”. M[3] also welcomed the role for the Management Committee. M[3] proposed that the decisionmaking process should entail a 71% affirmative vote i.e. partners holding at least 71% vote would need to support a decision, which would indicate that unanimity was vital – HPCL along with PPCL holding 70%, they could not override M3’s objections.

45. A plain reading of this letter would also indicate that M[3] was keen to get moving with the JEA. M[3] highlighted that the earlier draft had been circulated on January 7, 2007, and it was discussed on February 7 and 8, 2007, with a draft turned around on February 12,

2007. PPCL had commented on that draft only on March 28, 2007. M[3] complained that quality was being overrun by urgency created by lack of proper planning.

46. It is in this background, that the Executing Committee met on an updated draft of the JEA in the sessions held between April 16, 2007 and April 18, 2007. Before that, all parties had met in Mumbai on April 10, 2007. At the end of the sessions held in April 16-18, 2007, the parties initialled the JEA. Agenda Item (d) for this meeting of the Executing Committee was titled “JEA Initialing”.

47. At this meeting, each party nominated members to the Executing Committee and to the Management Committee. After a couple of operational points, the parties recorded that the JEA was discussed and the “final draft as agreed to among the members was initialed & taken on record.” What was not closed was Article 7.[3] of the JEA relating to charging of costs of the Executing Committee meetings to the account of the Consortium. The members decided to escalate the matter to the Management Committee for a decision. The Executing Contractor (obviously PPCL) advised that meanwhile “members may have the initialed document approved at the appropriate level within their organisation so as to formally execute the JEA ASAP upon decision of the Management Committee on Article 7.3”.

48. The minutes also recorded that the parties agreed on the “Review & Approval Matrix” and “Level of Authorization” and incorporated it in the JEA. The Management Committee, the Executing Committee, Chairman of Executing Committee, Project Manager and Project Commercial Manager of the IPMT being authorised parties based on the prescribed decision-making areas were also agreed on.

49. This meeting has been a significant milestone in the mind of the Learned Arbitral Tribunal. The agreeing to the draft leaving the formal execution to later is held by the Learned Arbitral Tribunal as an agreement having been reached on the JEA. Now only the formal affixation of signatures was left and M[3] withholding that signature has become the subject matter of the dispute.

50. The execution draft of the JEA initialled by the parties at the end of this meeting is on record. I have examined the same. It is writ large that the Executing Contractor nominated by the parties is PPCL and the JEA was approved consistent with the Service Contract. Article 4 records so in explicit terms. Article 6 provided for the Management Committee and all decisions were contemplated to be taken unanimously. The affirmative vote of at least two parties holding participating interest of at least 71% was agreed to in Article 6.5. This was a significant protection to M[3] to veto any decision since it held a participating interest of 30% and without its consent, a decision could not be steamrolled by HPCL and PPCL. This would not confer positive control in the hands of M[3] – it could not have had its own view imposed on HPCL and PPCL, but it gave M[3] strong influence over the Consortium – the others could never ride roughshod over M[3] with a proposal that M[3] was unhappy about. It is against this backdrop that M3’s agreement to have PPCL as the sole Executing Contractor cannot be wished away.

51. Article 7 dealt with the Executing Committee and its powers. Indeed the parties initialled their agreement to this draft and even meticulously inserted a handwritten note about Clause 7.3, stating that it has two variants for consideration by the Management Committee, which would approve one of the variants. This handwritten note too was initialled by all parties. Every single page of this 91-page agreement was initialled by all parties, leaving Clause 7.[3] to the Management Committee. The Arbitration Clause at Article 20 provided for a threemember arbitral tribunal akin to the arbitration clause in the MOU, with the only real difference being that the place of arbitration was agreed as Mumbai instead of Delhi (as per the MOU). Management Committee Meeting of April 23, 2007:

52. The Management Committee met on April 23, 2007. Multiple decisions were taken and recorded in the unanimously confirmed minutes, which again would inexorably show that the parties moved forward with the Project. The Management Committee’s chair was meant to rotate among the partners with HPCL nominee being the Chair for the first year, M3’s nominee as Chair in the second year and PPCL being the Chair for the year after. Nominations to the Executing Committee and Management Committee were also recorded by the parties. In paragraph 6, it was recorded that the Management Committee decided that each partner would bear its own costs for the Executing Committee’s meetings and not charge it to the Consortium’s account. This this, the only open clause i.e. Clause 7.[3] of the JEA too came to a close.

53. The Review and Approval Matrix was also confirmed by the Management Committee. It was agreed that these would “automatically get adopted upon signing of the JEA by the MC members.” At this meeting the issue of the Front-End Engineering Design (“FEED”) sub-contract came up. The parties authorised PPCL to published an invitation of expressions of interest for the same.

54. The finance professionals of the three partners met at Kuala Lumpur between December 4, 2007 and December 6, 2007 (M[3] is based in Malaysia). Various decisions on accounting treatment and approval matrix were taken. In a separate meeting at the same time, cash calls were discussed and formats for making of cash calls were agreed.

55. However, the actual appendage of signatures on the initialled JEA remained pending with M[3] postponing the affixation of signatures. Management Committee Meeting of April 18, 2008:

56. A bare perusal of the Record Notes of the Management Committee meeting held on April 18, 2008 and the minutes of that meeting would indicate that HPCL set the context in the deliberations by agreeing that the JEA not having been finalised until then was a matter of concern, exposing the Service Contract with ONGC to jeopardy. M3’s lead representative Mr. Madzri Ab Rahman could not attend until that date owing to flash floods in Kuala Lumpur but he had been briefed by M3’s CEO, the other representative, about the previous days’ deliberations. He indicated his readiness to stay over an extra day, if required. M[3] requested that the agenda items prior to the JEA finalisation be skipped so that the parties could get to clearing the JEA straight away.

57. The 2007 JEA that had been initialled was tabled and discussed. Each issue that each party desired to negotiate was discussed. A careful perusal would show that the parties reached agreement on almost all open issues – these included HPCL’s nominee being the permanent chairman of the Management Committee (instead of rotation). HPCL had sought to change the voting percentage threshold applicable as of then (at 71%) to be reduced to 60% (which would make HPCL’s vote bind all the parties). PPCL, a joint venture of HPCL had no objection. M[3] had objections, and this issue could not be changed and closed. M[3] indicated that it would revert by April 23,

2008.

58. HPCL proposed changes to nominating a Project Manager. M[3] indicated that this is linked to the issue of who is the Executing Contractor. The two issues were discussed collectively. M[3] recognised the view that HPCL desired to have a more active role in the Project than envisaged in the run up to the MOU. The parties agreed to discuss this on the following day and circulate a “finalised matrix” by April 21,

59. Specifically, the arbitration clause was discussed. HPCL indicated that Article 20.[2] would need some modification to bring it in line with the Act. All partners recorded their agreement to this. The parties had already agreed in the MOU that any dispute relating to the MOU would be resolved by arbitration. The 2007 JEA, agreed and initialled also had an arbitration agreement. The re-opening discussions on the 2007 JEA also got confirmed by all parties as of April 18, 2008. Therefore, to my mind, there was no doubt about the parties having agreed to resolve their disputes by arbitration. It is trite law that the arbitration agreement in any agreement always has its own independent existence. There is no manner of doubt that even if there were disputes about existence of other contracted provisions, the parties clearly had recorded their intent to refer disputes to arbitration right from the time they executed the MOU. Every facet of the JEA is but a matter relating to the MOU. This continued even when they worked on the 2007 JEA.

60. Moreover, when ONGC took its eventual decision to issue the Termination Notice dated September 4, 2008 to terminate the Service Contract, after giving the Consortium a long rope to get its act together to submit the executed JEA. At this stage, the Consortium did not invoke the arbitration clause in the Service Contract to dispute ONGC’s termination. The parties did not even dispute with each other about the Termination Notice by ONGC being unwarranted.

61. On the other provisions of the 2007 JEA on which the parties held discussions, each of HPCL and M[3] had sought some changes – the other party either agreed to the change requested, or the proposing party even agreed that the request for change be dropped. Therefore, it is clear from the record that the Executing Contractor issue was still being held out by M[3] even at this later stage after having consented to PPCL being the sole Executing Contractor.

62. The parties agreed that after deliberations on the responsibility matrix scheduled for the next day, with M3’s responses expected by April 23, 2008 with the final changes, the parties would execute on April 25, 2008 and submit the JEA to ONGC by April 30,

2008. Management Committee Meeting of May 31, 2008:

63. Despite the Management Committee meeting of April 18, 2008, appending the signatures on the JEA remained elusive although the parties had confirmed that the initialled 2007 JEA was the final agreed draft. Proposals to move provisions around were tabled but the key question is whether these were essential elements of contract without which it could not be stated that an agreement had come into being.

64. On May 21, 2008, the parties met and representatives of ONGC met with the Consortium representatives. ONGC candidly asked if they should part ways or progress further. All the Consortium members resolved to move forward. It was agreed that the JEA would be signed by May 31, 2008, failing which it would be presumed that the Consortium is not interested. Management Committee Meeting of August 1, 2008:

65. The first agenda item for this meeting held on August 1, 2008 was titled “Sign the JEA and submit to ONGC before they take steps of Termination”. It was squarely agreed by all parties at this meeting and recorded in the minutes that “the JEA initialled in April 2007 will be the final document to be executed and submitted to ONGC.” M[3] agreed to sign the document on August 5, 2008 “after discussions with their management”. Concluded JEA in Existence:

66. Having examined each of the aforesaid events and the material on record, I am of the view that the interpretation by the Learned Arbitral Tribunal is at the least, an impeccably plausible view. It is correct that the JEA was not formally signed, as contended by M[3]. The contention itself contains the answer inasmuch as what was missing was only the formality of appending the signature, which was evidently being withheld by M[3], even while otherwise acting in accordance with the agreed and initialled 2007 JEA. Indeed the parties jostled for space attempting to reopen and renegotiate the 2007 JEA but that would not mean the 2007 JEA did not reflect an agreement among the parties. The only open issues in the 2007 JEA was the treatment of costs of holding the Executing Committee meetings. That issue too stood resolved with the Management Committee deciding on April 23, 2007 that these expenses need not be charged to the Consortium’s account. Therefore, the only open issue of the 2007 JEA i.e. Article 7.[3] also stood resolved.

67. In any case, to my mind, the costs of conducting Executing Committee meetings cannot be considered to be an essential feature without which the JEA could have never been agreed upon. This was evidently adjectival to the larger bargain even in the minds of the parties, which is why they escalated it to the Management Committee and the Management Committee also resolved this issue immediately thereafter. Thereafter, the parties were conducting themselves in accordance with the bargain struck in the 2007 JEA, of course, adopting stances of renegotiation and countering attempt at renegotiation by the other parties.

68. As stated by me earlier, even in concluded contracts, depending on the perceived operational bargaining power, parties to a contract can hope to extract a renegotiated bargain and hope to get some movement from the existing positions, but that would not pose an existential threat undermining an agreed contract. Mr. Gupta’s submissions about “signing” not having taken place are not convincing when the matter is seen in this light. Indeed, M[3] was withholding its formal signature and that is a plausible view that the Learned Arbitral Tribunal has legitimately taken. I have carefully examined each of the 24 events listed in the table of dates relied upon by Mr. Gupta to indicate that negotiations were still underway and that there had been no contract. As stated elsewhere, to my mind these are only attempts at re-opening and preventing the re-opening of a bargain that the parties had already struck.

69. The references to PPCL too having asked for a change in voting percentage thresholds do not carry M3’s case any farther inasmuch as these are contra bargains and commercial threats thrown at M[3], which was attempting to re-open a matter closed by M[3] itself explicitly – the role of the Executing Contractor. In fact, on August 17, 2007, M[3] has expressed indignation by indicating that PPCL’s proposal to change the affirmative vote threshold would reopen an agreed position. Indeed, agreement had been reached among the parties, and that agreement is found in the 2007 JEA.

70. The issue of Executing Contractor was clearly a closed and agreed issue that M[3] kept indicating was open. In fact, the veto power that M[3] had obtained in the 2007 JEA would indicate clearly that M3’s interests were well bargained for and contracted. Therefore, the Learned Arbitral Tribunal’s view that it was merely attempting to reopen the issue of Executing Contractor is reasonable and plausible. I would have taken the same view. In fact, the Service Contract makes it abundantly clear that ONGC needed to have single point of contact in its engagement with the Consortium. PPCL led the bid. PPCL coordinated all the activity with ONGC. The award letter is addressed to PPCL. To ensure PPCL does not act without consensus of the other parties, the approval matrix with a 71% vote requirement gave M[3] a strong influence or even a shade of negative control over the policy decisions of the Consortium. What the Executing Committee could not build consensus on, would get escalated to the Management Committee, and at the Management Committee, the 2007 JEA entailed a 71% positive vote requirement. Everything stood resolved.

71. Yet, M[3] kept leveraging the perceived strength in withholding affixing its signature on the document, to somehow get a bargain better than what had been agreed to. This brinkmanship, eventually led to ONGC terminating the Service Contract. The consequences for breach of an agreed contract would then follow and that is what the Learned Arbitral Tribunal has done.

72. In any case, as stated earlier, the arbitration agreement among the parties was not at all an open issue. The parties had agreed to Article 20 of the 2007 JEA and that is an arbitration agreement, with an independent existence. It is an arbitration agreement that was also a successor to the arbitration agreement in the MOU. It is merely a further iteration of the undeniable intent to arbitrate already expressed in the MOU. I see no merit in the contention that there was no arbitration agreement. Summary of Conclusions – Existence of JEA:

73. To summarize, on the existence of the arbitration agreement and the JEA, I emphatically find that the Learned Arbitral Tribunal’s view is not just a plausible view, it is an accurate view. It is completely reasonable to hold that: a) The parties including M[3] always intended to arbitrate about the disputes and differences between them. They expressed this first under the MOU. There is no element of M3’s autonomy to arbitrate having been undermined; b) The parties moved on to winning the Project on the strength of the MOU and engaged in finalising the JEA. The differences between the parties stood resolved by consent accorded by the parties to the 2007 JEA, which too had an arbitration clause and indeed, in the 2007 JEA there was no difference of opinion at all left over the arbitration agreement. The only area left open was Article 7.3, which was escalated to the Management Committee meeting scheduled for a week later, on April 23, 2007, and that too was resolved at that meeting; c) It is noteworthy that the Management Committee as a forum was itself a feature of the 2007 JEA. The MOU had contemplated only the Executing Committee. M[3] had initially deleted the provision for the Management Committee from the draft JEA but saw PPCL’s point and was convinced to agree upon it. This forum forms an integral essential feature of the agreed and initialled 2007 JEA and indeed M[3] even nominated its representatives to the Management Committee, and it is this forum that held multiple meetings to resolve issues among the parties. The forum was a creature that came into existence only because of the agreement contained in the 2007 JEA; d) Despite agreeing and finalising a full bargain on all substantive issues by April 18, 2007 (and at the latest by April 23, 2007), leaving only formal execution for later, M[3] withheld the formal affixation of signatures. In this phase, each party did attempt to leverage and bargain further, but to my mind they were only attempting to get at each other’s attempts to re-negotiate the agreement already reached in the 2007 JEA. M[3] itself rebuffed PPCL’s attempt to dilute the affirmative vote threshold from 71% by replying in writing on August 17, 2007 that M[3] would not renegotiate the understanding already reached in the “already agreed and initialled JEA”; e) Each of the contents of Paragraph 48 of the Impugned Award is a perfectly logical and reasoned conclusion. The Section 34 Court cannot re-appreciate evidence and search for an alternate and competing view that is canvassed by M[3] as also being plausible; f) The standard for review by the Section 34 Court has already been set by the Learned Division Bench acting as the Section 37 Court. That is the standard I have applied. My detailed examination and articulation of the record as above, is not with a view to re-appreciate the evidence but is only an examination to see if the Learned Arbitral Tribunal’s reading of the record presents any perversity or patent illegality; g) It is not at all correct to say that the Learned Arbitral Tribunal has ignored any material evidence or taken into account any irrelevant evidence. The reading of the post- April 2007 events would explain that those are evidently attempts to re-negotiate a concluded contract that was even being acted upon by the parties including M[3]. They were attempts to counter an attempt or to even accommodate the request to re-negotiate, in the wider interest of moving forward commercially. Such efforts to resist or accommodate a re-negotiation of a concluded contract cannot inexorably undermine a binding contract that had already come into existence with the 2007 JEA; h) M[3] signing the 2008 JEA, its own version of a JEA that was acceptable to it, could have been a bold and aggressive attempt to arm-twist HPCL into agreeing to a new JEA. However, that attempt evidently failed. It would not follow that the 2007 JEA did not exist. Therefore, the copious comparison of the terms between the 2007 JEA and the 2008 JEA are of no avail to take M3’s case any higher; i) The Learned Arbitral Tribunal’s reading of the judgement of the Supreme Court in Trimax[7] perfectly answers the issue of essentiality. The application of Pagnan[8] in Trimax and the discussion on it by the Learned Arbitral Tribunal in the discussion that is responsive to the query framed at Paragraph 30(a) of the Impugned Award is impeccable and cannot be faulted at all; j) The reasons I have already set out above are responsive to my endorsement of the conclusions of the Trimax International FZE LTd. Vs. Vedanta Aluminium Ltd. – (2010) 3 SCC 1 @ 30 Pagnan SPA v. Feed Products Ltd. – (1987) 2 Lloyd’s Rep 601 Learned Arbitral Tribunal in response to query it posed in Paragraph 30(b) of the Impugned Award; k) The issue raised by M[3] that privity to the MOU was different from the privity to the Service Contract, also does not further M3’s case. The subject matter of the MOU was to bag the Service Contract. The terms on which the parties executed the MOU indeed underwent a transformation when they negotiated and agreed the Service Contract. The MOU entailed both M[3] and PPCL being Executing Contractors while the Service Contract refers only to one Executing Contractor. Towards this end, the MOU itself contains the provision that if ONGC were to require changes the parties would work towards such changes. When the parties executed the Service Contract, it stands to reason that they consciously engaged and arrived at the reference to a sole Executing Contractor in the Service Contract. That coupled with M3’s own contemporaneous acceptance of PPCL as the Executing Contractor and indeed the reference to the presentations by the Executing Contractor in the minutes of the Management Committee leaves no doubt that this was a closed issue and re-opening it was a red herring from M[3]; l) Therefore, in my opinion, nothing perverse can be found in the reasoning by the Learned Arbitral Tribunal that the MOU was superseded by the Service Contract. On the facet of the Executing Contractor, clearly the parties moved on to a moulded bargain under the Service Contract and this facet was truly superseded. M[3] bargained and received the safety feature of a pre-agreed budget and the Review and Approval Matrix and the affirmative voting threshold of 71% participating interest; m) That apart, as a matter of evidence, the Learned Arbitral Tribunal has rightly come to a plausible view that M[3] has confirmed in writing that this issue was accepted by M[3] and put to rest; n) It is apparent to me that M3’s conduct is not of one who is of the belief that there has been no contract at all. M[3] has been well aware that the JEA is an essential requirement under the Service Contract and its actions are not at all in conflict with furthering the essential bargain under the 2007 JEA. The disputes and open areas being pressed into service are distractions holding to distract the line of reasoning and consideration to an impression as if the parties did not have consensus ad idem; and o) The Learned Arbitral Tribunal found that under Indian contract law, a contract need not even be in writing. It was ONGC’s requirement that an executed JEA be delivered to it. The parties indeed had a contract that was in writing and even initialled, but to deliver to ONGC, it needed a formal signature, and that was systematically withheld by M[3] despite having an agreement evidenced by initialling it and minuting the draft as an agreed position. The aforesaid reasoning is a sound one and does not call for any interference as a matter of Indian law. There is nothing illegal in the aforesaid proposition much less patently illegal. Therefore, M3’s efforts to put too fine a point about the meaning of the term “execution” does not lend itself to acceptance for interference under Section 34 of the Act. The case law relating to development agreements governing redevelopment of buildings of housing societies cited by Mr. Gupta on the facet of concluded contracts are totally distinguishable. A development agreement by law is required to be registered to be enforceable, and consent to a development agreement involving a housing society involving multiple constituents, they stand on a very different footing.

74. Therefore, on the core contention presented in this Petition under Section 34, namely, that there is no arbitration agreement in existence, and which contention is based on the premise that the 2007 JEA was not a binding contract, I find nothing wrong with the findings of the Learned Arbitral Tribunal in terms of Section 34(2)(a)(ii) of the Act.

75. It would not be out of place to draw reference to the views of the Supreme Court in Kollipara Sriramulu[9] extracted below:

3. We proceed to consider the next question raised in these appeals, namely, whether the oral agreement was ineffective because the parties contemplated the execution of a formal document or because the mode of payment of the purchase money was not actually agreed upon. It was submitted on behalf of the appellant that there was no contract because the sale was conditional upon a regular agreement being executed and no such agreement was executed. We do not accept this argument as correct. It is well established that a mere reference to a future formal contract will not prevent a binding bargain between the parties. The fact that the parties refer to the preparation of an agreement by which the terms agreed upon are to be put in a more formal shape does not prevent the existence of a binding contract. There are, however, cases where the reference to a future Kollipara Sriramulu v. T. Aswatha Narayana – 1968 SCC OnLine SC 87 contract is made in such terms as to show that the parties did not intend to be bound until a formal contract is signed. The question depends upon the intention of the parties and the special circumstances of each particular case. As observed by the Lord Chancellor (Lord Cranworth) in Ridgway v. Wharton [6 HLC 238, 63], the fact of a subsequent agreement being prepared may be evidence that the previous negotiations did not amount to a concluded agreement, but the mere fact that persons wish to have a formal agreement drawn up does not establish the proposition that they cannot be bound by a previous agreement. In Von Hatzfeldt- Wildenburg v. Alexander [(1912) 1 CH 284, 288] it was stated by Parker, J. as follows: “It appears to be well settled by the authorities that if the documents or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of the further contact is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognize a contract to enter into a contract. In the latter case there is a binding contract and the reference to the more formal document may be ignored.”

4. In other words, there may be a case where the signing of a further formal agreement is made a condition or term of the bargain, and if the formal agreement is not approved and signed there is no concluded contract. In Rossiter v. Miller [3 AC 1124] Lord Cairns said: “If you find not an unqualified acceptance subject to the condition that an agreement is to be prepared and agreed upon between the parties, and until that condition is fulfilled no contract is to arise then you cannot find a concluded contract.” In Currimbhoy and Company Ltd. v. Creet [60 IA 297] the Judicial Committee expressed the view that the principle of the English law which is summarised in the judgment of Parker, J. In Von Hatzfeldt- Wildenburg v. Alexander [(1912) 1 CH 284, 288] was applicable in India. The question in the present appeals is whether the execution of a formal agreement was intended to be a condition of the bargain dated July 6, 1952 or whether it was a mere expression of the desire of the parties for a formal agreement which can be ignored. The evidence adduced on behalf of Respondent 1 does not show that the drawing up of a written agreement was a pre-requisite to the coming into effect of the oral agreement. It is therefore not possible to accept the contention of the appellant that the oral agreement was ineffective in law because there is no execution of any formal written document. As regards the other point, it is true that there is no specific agreement with regard to the mode of payment but this does not necessarily make the agreement ineffective. The mere omission to settle the mode of payment does not affect the completeness of the contract because the vital terms of the contract like the price and area of the land and the time for completion of the sale were all fixed. We accordingly hold that Mr Gokhale is unable to make good his argument on this aspect of the case.

76. Applying this to the facts of the case, it is not even a case of an oral contract. There is a written instrument in place in the 2007 JEA, that reduced to writing the agreement among the parties, and initialled by the designated representatives on April 18, 2007 to confirm that it was an agreed draft. The only provision (Article 7.[3] of the 2007 JEA) was also closed out in a week thereafter. The accounting treatment was subject matter of the Service Contract and in any case loose ends were further tied up by December 2007. Nothing really was left in the parties’ understanding of what they had agreed on. Even the issue of PPCL being the sole Executing Contractor was resolved with M[3] agreeing in writing to it, with the safeguard of its affirmative voting threshold. When PPCL sought to revisit the affirmative voting threshold as a reaction to M3’s conduct, it was M[3] that resisted it stating that the agreed position could not be revisited. For the aforesaid reasons, I do find that 2007 JEA was indeed in existence.

77. That apart, the arbitration agreement was indeed in existence and was truly valid. M3’s exercise of its autonomy to arbitrate disputes with the Consortium partners has been manifestly exercised right from the execution of the MOU and reiterated under the 2007 JEA that was agreed and initialled with formal appending of signatures being withheld.

78. The Impugned Award cannot be set aside under Section 34(2)(a)(ii) either, as canvassed by Mr. Gupta on behalf of M[3]. I am not inclined to endorse the standard of de novo review for the Section 34 Court canvassed by Mr. Gupta under Section 34(2)(a)(ii), primarily because the standard to be applied has been explicitly set in terms of the remand order of the Learned Division Bench. Yet, looking at the material on record, for the reasons that I have independently expressed, my views align with the views expressed by the Learned Arbitral Tribunal. M[3] has failed to prove that the arbitration agreement is not in existence or is not valid under the law to which the parties have subjected it.

79. On this facet of the matter i.e. the alleged non-existence of the arbitration agreement, for the very same reasons, even Section 34(2) (b)(ii) of the Act would not be attracted. As stated above, the doctrine of essentiality is well articulated in Pagnan and applied in Indian law. Mr. Gupta would firmly contend that Pagnan itself would indicate that what is “essential” is for the contracting parties to decide and not for the Court to impose. He would contend that it is not for the Learned Arbitral Tribunal or this Court to decide if Article 7.[3] was not essential. Therefore, I believe it is important to extract the following principle from the summary set out in Pagnan: (6) It is sometimes said that the parties must agree on the essential terms and that it is only matters of detail which can be left over. This may be misleading, since the word “essential” in that context is ambiguous. If by “essential” one means a term without which the contract cannot be enforced then the statement is true: the law cannot enforce an incomplete contract. If by “essential” one means a term which the parties have agreed to be essential for the formation of a binding contract, then the statement is tautologous. If by “essential” one means only a term which the court regards as important as opposed to a term which the court regards as less important or a matter of detail, the statement is untrue. It is for the parties to decide whether they wish to be bound and, if so, by what terms, whether important or unimportant. It is the parties who are, in the memorable phrase coined by the judge, “the masters of their contractual fate”. Of course the more important the term is the less likely it is that the parties will have left it for future decision. But there is no legal obstacle which stands in the way of the parties agreeing to be bound now while deferring important matters to be agreed later. It happens every day when parties enter into so-called “heads of agreement”. Mr Rokison submits that that is a special case, but I do not think it is.

80. Indeed, it is not just for the Court to decide if some element is inessential. What is clear in the facts of the case is that the parties not only deferred their final view on Article 7.3, they also agreed on the variants and only escalated the selection of the variant by the Management Committee. The Management Committee, in concept, was inherently also a creature of the 2007 JEA. More importantly, the Management Committee indeed picked one of the variants and closed it out. Therefore, what is writ large is that the parties themselves felt Article 7.[3] as being inessential, agreeing to leave it as a loose end only to be tied by the Management Committee under the escalation mechanism, which was also part of the very agreement they had arrived at. They worked on that very framework and closed this open issue. Therefore, the reading of the aforesaid extract from Pagnan in the manner sought to be canvassed on M3’s behalf, does not appeal to me.

81. All that transpired thereafter has been a manifestation of M3’s bold attempts to reopen the agreement, based on its own perception of its relative strength, which has not found favour with the Learned Arbitral Tribunal, in its perfectly plausible and reasoned Impugned Award.

82. For completeness, I must also state that the Learned Arbitral Tribunal is assailed for not having considered certain documents – in particular documents prior to April 16, 2007, and a few others subsequently. I am afraid this too does not turn the needle in M3’s favour inasmuch as (as held in Associate Builders) the Learned Arbitral Tribunal, as the master of the evidence is the best judge of the quality and quantity of evidence necessary to draw plausible conclusions. There is nothing in the documents listed in the table presented on behalf of M[3] as not having been considered by the Learned Arbitral Tribunal, that would change the analysis set out in this judgement.

83. Likewise, I have also examined the Compilation of Factual Documents, some of which have admittedly not been part of the record, and I find that the same analysis as above would apply to them too. I find that most of these documents relied upon by Mr. Gupta to indicate that the JEA is not yet “finalised” are assertions by M[3] and that too well after April 2007 (December 2007 onwards), by which time, evidently with the benefit of hindsight, it is apparent that there has been a change in approach by M[3]. Contemporaneous with events as they transpired in 2007, M[3] itself rebuffed PPCL in August 2007 that there had been an agreed position on the affirmative vote threshold, which ought not to be reopened. Liability Indicated in the Impugned Award:

84. This brings me to the other facet of the Impugned Award, namely, whether the Learned Arbitral Tribunal’s view that it is M[3] that was responsible for the issuance of the Termination Notice, and whether M[3] was liable for damages said to have been suffered by the HPCL and PPCL, necessitating compensation.

85. Having considered the arbitration agreement to be existent, it is necessary to examine M3’s challenge to this portion of the Impugned Award. Essentially, the Impugned Award notices that ONGC terminated the Service Contract because: (i) the parties did not deliver an executed JEA within the deadline extended from time to time and eventually by the final extended deadline of May 31, 2008; (ii) the parties were not able to resolve their inter se contractual issues, in particular on the FEED sub-contract; and (iii) the parties did not deliver the IDP as required under the Service Contract.

86. The Learned Arbitral Tribunal has found M[3] responsible for each of the foregoing grounds in the Termination Notice. The first ground has been dealt with in detail above. This segment of the judgement deals with the Learned Arbitral Tribunal’s handling of the other grounds in ONGC’s Termination Notice.

87. On these counts, Mr. Gupta would submit that the scope of review under Section 34 of the Act ought to be considered through the prism of the position obtaining prior to the amendments to the Act effected in 2015. The grounds on which he would contend the Impugned Award fails in relation to fastening the responsibility and liability on M[3] are said to be breach of natural justice with regard to the FEED sub-contract; perversity by ignoring vital evidence; and patent illegality in ignoring contractual provisions. Non-Submission of IDP:

88. On the non-provision of the IDP, M[3] would refer to provisions in the Service Contract and the MOU to indicate that under the MOU the oil and gas estimation was to be made by HPCL and PPCL while M[3] was responsible for preparing the IDP. M[3] claimed that the submission of the IDP was delayed because HPCL and PPCL failed to provide the oil and gas estimates necessary for preparing the IDP. FEED Sub-Contract:

89. According to Mr. Gupta, HPCL and PPCL had conceded that they had no contractual claim against M[3] on the FEED sub-contract since it did not form subject matter of the Service Contract. Therefore, it is stated that M[3] never had occasion to address the Learned Arbitral Tribunal on this issue and yet there are findings recorded against M[3]. Essentially, what the Learned Arbitral Tribunal has found is that PPCL indeed had the right to appoint Trident, an Australian third party, as the FEED sub-contractor and M[3] did not have any right to challenge such appointment.

90. Mr. Gupta would contend that there is an evident violation of natural justice since the FEED sub-contract was not part of the claim by HPCL and PPCL and M[3] had no occasion to address the Learned Arbitral Tribunal on this issue. That apart, M[3] would hark back to the MOU, which placed the responsibility for well design and well engineering on M[3] and this fell within the scope of M3’s rights, indicating that PPCL had no right to grant a sub-contract on this subject. Summary of Conclusions – Liability and Responsibility:

91. Having considered the submission of M[3] in this regard, it is evident that the Learned Arbitral Tribunal examined the evidence on record including the minutes of meeting of the Management Committee held on January 10, 2008 at which the sixth version of the IDP was signed for submission to ONGC. However, it was M[3] that was unhappy with the estimation of oil and gas, and at the meeting of the Management Committee meeting held on May 21, 2008, M[3] had agreed to take appropriate action of estimating the oil and gas reserves within four weeks i.e. by June 21, 2008. This was not done and M[3], which simply sought more time from ONGC on June 21, 2008, which was rejected by ONGC on June 26, 2008.

92. Six versions of the IDP prepared based on oil and gas estimations made by HPCL and PPCL were not acceptable to M[3]. Thereafter, M[3] took on itself undertaking this task, and it was agreed that if M[3] failed to do so, the estimations made by HPCL and PPCL would be the basis for the IDP. When M[3] did not perform, it was also agreed that whatever was already in place would be submitted.

93. The abiding theme in M3’s submissions is that the estimations made by HPCL and PPCL were “not acceptable” to M[3]. ONGC was also examining the conduct of the parties as the party that had granted the Service Contract to the Consortium. ONGC had, in parallel, been witness to M[3] holding up signatures on the agreed JEA.

94. If the Learned Arbitral Tribunal found that M[3] was neither willing to accept the estimates prepared by HPCL and PPCL nor was it willing to get its own estimates despite being given a chance to do so, it is a plausible view that the Learned Arbitral Tribunal is entitled to take on the basis of the material on record. It appears to me that M[3] was scuttling the Service Contract through these multiple means.

95. It is trite law that the Learned Arbitral Tribunal is the best judge of the quality and quantity of evidence and so long as its view is a plausible view, merely because another view can be canvassed, the Section 34 Court cannot accept a competing view presented as being plausible. In my considered opinion, after M[3] had taken on itself the task of estimating the oil and gas, with HPCL and PPCL having given M[3] the opportunity to make its own estimates, it is not possible for this Court to re-appreciate evidence prior to January 2008 and second-guess the findings of the Learned Arbitral Tribunal.

96. What is a plausible reading is that for reasons best known to M[3], it’s actions on multiple fronts, whether concerted or not, led to the scuttling of the Service Contract. Withholding the signature on the agreed 2007 JEA, which was confirmed as agreed again in April 2008, M[3] was also holding up the IDP, which to be fair to the other parties, went through six iterations with M[3] remaining displeased. The seventh version of IDP filed by HCPL and PPCL without waiting for M[3] was also rejected by ONGC for want of M3’s consent.

97. Therefore, the view of the Learned Arbitral Tribunal that M3’s actions had scuttled the Service Contract and therefore it was M[3] that was responsible for the termination by ONGC is a perfectly plausible view that cannot be disturbed lightly.

98. The FEED sub-contract falls in the same bucket. The Learned Arbitral Tribunal has come to a plausible view, not without any reference to evidence. Whether HPCL and PPCL made a claim in this regard and whether any damages are quantified in this regard would be seen when considering the next arbitral award on damages, but the Learned Arbitral Tribunal cannot be faulted in returning a plausible finding that after conceding to PPCL being the Executing Contractor, and that too in writing, for M[3] to still raise objections to the grant of the FEED sub-contract was not acceptable, and therefore had consequences.

99. The Impugned Award only returns a finding of who is responsible. The quantification would come later. If HPCL and PPCL are not pressing for damages on the FEED sub-contract that can be examined when considering the arbitral award granting damages in the matter. At this stage, in my opinion, no fault can be found with the Learned Arbitral Tribunal for its considered, reasonable and plausible opinion that it was M[3] that was scuttling the Service Contract. The objections to the grant of the FEED sub-contract was held to be untenable while frustrating the presentation of the IDP was held to be unreasonable. Since PPCL was agreed to be the sole Executing Contractor and the FEED sub-contract had been granted by PPCL, this too is something that Learned Arbitral Tribunal was entitled to plausibly find.

100. That the governance structure had a need for unanimity when any matter was escalated to the JEA is evident from the record. Whether the evidence shows that M[3] holding 30% participating interest was responsible for holding up the unanimity is a matter of finding on merits, which the Learned Arbitral Tribunal was entitled to find on the basis of the evidence. By examining the evidence, if the Learned Arbitral Tribunal concluded that the withholding of consent by M[3] was unreasonable, it is a matter of appreciation of evidence that the Learned Arbitral Tribunal is entitled to engage in, in order to return a plausible view.

101. Therefore, I am not persuaded that the findings of the Learned Arbitral Tribunal are perverse in any manner on the ground of leaving out any material evidence nor is it patently illegal or against public policy on the ground of taking into account any irrelevant evidence.

102. It cannot be ignored that Article 22.[5] of the 2007 JEA, which is held to be a binding contract, also enjoins the parties to act reasonably and do everything reasonably necessary to maintain the Service Contract in full force. The Learned Arbitral Tribunal has concluded that M[3] failed this standard. All the submissions of Mr. Gupta would be relevant only if one were to find that the JEA did not at all exist, which is M3’s foundational submission. That being rejected, the submissions made to get past M3’s unreasonable conduct in the teeth of Article 22.[5] of the 2007 JEA are not tenable. Final Conclusion:

103. I have already set out a summary of conclusions under each of the two main heads – (i) existence of the JEA and of the arbitration agreement contained therein, both independently and as an integral element of the JEA; and (ii) liability on M[3] for being responsible for what led to ONGC issuing the Termination Notice.

104. The parties have no quarrel with ONGC for wrongful termination. They appear to be well aware that the receipt of the Termination Notice was deserved and the Termination Notice was in the making for a while. The Service Contract too has an arbitration clause and no proceedings are said to have been initiated against ONGC, disputing the Termination Notice.

105. The real issue is the inter se disputes between the parties and of who is responsible for what came to pass. For the reasons articulated above under each of the two heads outlined in the earlier paragraph, I am not persuaded to make any intervention into the Impugned Award, which returns valid, plausible and reasonable findings rendered unanimously by the three-member Learned Arbitral Tribunal. There is no perversity at all in the Learned Arbitral Tribunal’s conclusions, which are not of a nature that no reasonable man could have arrived at.

106. Therefore, for the aforesaid reasons, the Petition fails and is hereby dismissed. Interim Applications, if any, would also stand finally disposed of, accordingly. Costs:

107. Considering that this is a commercial dispute, costs must follow the event. However, considering that the matter has languished for long for no fault of either party, I have restricted costs to a token sum of Rs. 14 lakhs, which shall be paid by M[3] to HPCL and PPCL in the proportion of 60:10 (the ratio of their participating interests in the Consortium – Rs. 12 lakhs to HPCL and Rs. 2 lakhs to PPCL) within a period of one week after the expiry of four weeks from the upload of this judgement on this Court’s website. An End-Note:

108. This judgement is regrettably long and has also taken regrettably long in its making. In the interest or brevity and to avoid prolix reproduction from the whole pile of case law sought to be presented into service, I have restricted references to them to the bare minimum, and not indulged in copious extraction from them, bearing in mind the standard of review applicable under Section 34 of the Act. To avoid further prolixity and lengthy extraction, I have not extracted from case law cited beyond what I felt is necessary to adjudicate what fell for review to dispose of this Petition finally.

109. It is also appropriate to record my gratitude to both Mr. Gupta and Mr. Seervai for having curtailed their verbal submissions within the reasonable time limits they committed to. There must be a special mention for Mr. Gupta’s ability to compile and present in writing, extremely well-referenced submissions, to enable the review of the voluminous material on record, necessary for adjudicating a Petition of this nature, without extremely time-consuming verbal submissions. Copious and lengthy written submissions had already formed part of the record before my predecessors, and Mr. Gupta has assisted me well by culling out well-referenced written submissions to aid my review of the record, and disposal of this Petition.

110. All actions required to be taken pursuant to this order shall be taken upon receipt of a downloaded copy as available on this Court’s website. [SOMASEKHAR SUNDARESAN, J.]