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Oil & Natural Gas Corporation Ltd. Petitioner(s) v. Discovery Enteprises Pvt. Ltd. And Another (s).
Factual and Procedural Background
In Special Leave Petition (Civil) No. 35292 of 2012 and connected Transferred Cases, Oil and Natural Gas Corporation Ltd. (ONGC) challenges an arbitral award dated 9-10-2013 in favour of M/s Jindal Drilling. By an interim order dated 6-1-2020, a three-Judge Bench of the Supreme Court stayed the execution of the award and directed ONGC to deposit the award money in court, with the amount to be invested in an interest-bearing account. Subsequently, Jindal Drilling filed four interim applications seeking permission to withdraw the deposited sum along with accrued interest.
Legal Issues Presented
- Whether Jindal Drilling should be permitted to withdraw the amount deposited by ONGC, together with accrued interest, during the pendency of the SLP and Transferred Cases.
- What conditions, if any, should be imposed to safeguard ONGC’s interests pending final adjudication.
Arguments of the Parties
Applicant (Jindal Drilling)
- Sought permission to withdraw the deposited amount with accrued interest.
Respondent (ONGC)
- Raised no objection to the withdrawal provided Jindal Drilling furnishes an unconditional bank guarantee.
- Specified three nationalised banks acceptable for issuing the guarantee: State Bank of India, Bank of India, and Bank of Baroda.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Court noted the concurrence of both parties on the core issue. ONGC’s agreement to withdrawal, conditioned upon the furnishing of an unconditional bank guarantee from one of three specified nationalised banks, provided adequate security for the amount in dispute. Given this consensus and the protective mechanism of a bank guarantee, the Court found it appropriate to allow withdrawal while ensuring that ONGC’s interests remain protected until the final disposal of the SLP and Transferred Cases.
Holding and Implications
ORDER: Jindal Drilling is permitted to withdraw the entire amount deposited by ONGC, along with accrued interest, upon furnishing an unconditional bank guarantee from State Bank of India, Bank of India, or Bank of Baroda. The Registry must verify the guarantee, which shall remain in force for the duration of the proceedings, and the withdrawn amount will abide by the final outcome. The matters are listed for further hearing on 18 August 2020.
Implications: The decision grants immediate financial relief to Jindal Drilling while safeguarding ONGC through a bank guarantee. The order is interlocutory and does not set a substantive precedent; the ultimate rights of the parties remain subject to final adjudication.
1. On 6-1-2020 SLP (C) No. 35292 of 2012, the following order was passed by a three-Judge Bench of this Court presided over by the learned Chief Justice of India:
“Shri Tushar Mehta, learned Solicitor General appearing on behalf of the petitioner(s) states that the petitioner will deposit amount awarded to the respondent Jindal Drilling in this Court. The amount shall be dealt with according to the decision in the present matters. The amount when deposited shall be invested in an interest bearing account of a national Bank in appropriate scheme offering higher rate of interest as per the guidelines formulated in this regard, initially for a period of six months.
Until further orders, execution of Arbitral Award dated 9-10-2013 passed by the Arbitral Tribunal and subject matter of the Transferred Cases Nos. 49/2016, 50/2016, 47/2016 and 48 of 2016 shall remain stayed.”
2. Four interim applications [IA No. 56409/2020 in T.C.(C) No. 49/2016, IA No. 56401/2020 in T.C.(C) No. 50/2016, IA No. 56339/2020 in T.C.(C) No. 47/2016 and IA No. 56392/2020 in T.C.(C) No. 48/2016] have been instituted by M/s Jindal Drilling for withdrawal of the amount deposited by the ONGC, with accrued interest, in pursuance of the interim directions of the Court.
3. On the previous occasion, Mr. Tushar Mehta, learned Solicitor General, had sought a short adjournment to respond to the suggestion of Mr. Shyam Divan, learned senior counsel appearing on behalf of the applicant, that the applicant may be permitted to withdraw the amount so deposited, with accrued interest, subject to furnishing an unconditional bank guarantee of a bank to be nominated by the ONGC.
4. Responding to the suggestion of Mr. Shyam Divan, learned senior counsel, the learned Solicitor General has stated that the ONGC has no objection to the amount which has been deposited being withdrawn, subject to the applicant furnishing an unconditional bank guarantee of one of the following nationalized banks to cover the entire amount withdrawn till the final disposal of the Special Leave Petition and Transferred Cases. The banks which have been nominated by the ONGC are:
(i) State Bank of India;
(ii) Bank of India; and
(iii) Bank of Baroda.
5. In view of the statement which has been made on behalf of the ONGC, we permit the applicant to withdraw the amount which has been deposited, with accrued interest, in pursuance of the interim directions dated 6-1-2020 SLP (C) No. 35292 of 2012, subject to the applicant furnishing an unconditional bank guarantee of any of the following banks, namely:
(i) State Bank of India;
(ii) Bank of India; and
(iii) Bank of Baroda.
6. The Registry shall duly verify the form of the bank guarantee before releasing the amount. The bank guarantee shall be kept alive during the pendency of the Special Leave Petition and the Transferred Cases and the amount which is withdrawn shall abide by the final orders.
7. List the Special Leave Petition and the Transferred Cases on 18 August 2020.
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