M/S ESSAR OIL LTD. versus HINDUSTAN SHIPYARD LTD. & ORS.

M/S ESSAR OIL LTD. versus HINDUSTAN SHIPYARD LTD. & ORS.

ONGC is not liable to pay the appellant, as there is no privity of contract or arbitration agreement between ONGC and Essar Oil Ltd.; Hindustan Shipyard Ltd., which gave the sub-contract, is liable to make payment, regardless of the fact that ONGC made direct payments for convenience. The majority arbitral award is upheld, and the High Court's contrary view is set aside.

Parties
Appellant: M/S Essar Oil Ltd.; Respondent: Hindustan Shipyard Ltd.; Third Party (not Before Tribunal or Court): Oil and Natural Gas Commission (ONGC); Formal Parties: Respondents Nos. 2, 3, and 4 (Arbitrators)
Jurisdiction
India
Judgment Date
02 July 2015
Procedural Posture
Civil Appeal / Supreme Court Final Judgment
Outcome
Appeals allowed; majority arbitral award confirmed; High Court judgment set aside.
Legal Topics
Arbitration Award Enforcement, Privity of Contract, Sub Contract Liability, Direct Payment Arrangements
Arbitration Law Contract Law Arbitration Award Enforcement Privity of Contract Sub Contract Liability Direct Payment Arrangements

Case Brief

Summary, issues, holding and outcome

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Parties

M/S Essar Oil Ltd.

Appellant

Hindustan Shipyard Ltd.

Respondent

Oil and Natural Gas Commission (ONGC)

Third Party (not Before Tribunal or Court)

Respondents Nos. 2, 3, and 4 (Arbitrators)

Formal Parties

Procedural Posture

Civil Appeal / Supreme Court Final Judgment

Legal Issues

  1. 1 Who is liable to make payment to a sub-contractor where the main contract was with ONGC and sub-contract given by Hindustan Shipyard Ltd.?
  2. 2 Whether ONGC can be held liable to pay the appellant Essar Oil Ltd., in absence of privity of contract or arbitration agreement?
  3. 3 Effect of direct payments from ONGC to appellant on contractual liability

Ratio Decidendi

ONGC is not liable to pay the appellant, as there is no privity of contract or arbitration agreement between ONGC and Essar Oil Ltd.; Hindustan Shipyard Ltd., which gave the sub-contract, is liable to make payment, regardless of the fact that ONGC made direct payments for convenience. The majority arbitral award is upheld, and the High Court's contrary view is set aside.

Court Disposition

Appeals allowed; majority arbitral award confirmed; High Court judgment set aside.

Orders

  • Respondent, Hindustan Shipyard Ltd., shall make payment to the appellant, Essar Oil Ltd.
  • ONGC is not liable to pay the appellant.