The Calcutta High Court has dismissed Bharat Petroleum Corporation Limited’s (BPCL) plea to set aside an arbitral award directing it to compensate Haldia Petrochemicals Ltd (HPL), in a Naphtha supply dispute that also hinged on customs duty implications arising from differential pricing.
Justice Shampa Sarkar, delivering the verdict on BPCL’s application under Section 34 of the Arbitration and Conciliation Act, held that the tribunal had taken a plausible view on interpreting contract clauses and assessing evidence. “The award does not suffer from perversity or conflict with public policy or the fundamental policy of Indian law,” the court stated.
The case stemmed from a 2017 agreement between BPCL and HPL for the monthly supply of 20,000 MT of Naphtha. A dispute arose over pricing when HPL contested BPCL’s final invoice, which was based on August 2017 average quotes. HPL argued that the Naphtha had mostly been loaded in July 2017 and should have been priced accordingly.
An arbitral tribunal comprising three retired judges dismissed both the main claims — BPCL’s demand of ₹10.69 crore for alleged underpayment and HPL’s ₹15.17 crore counterclaim. However, it upheld certain components of HPL’s counterclaim.
BPCL challenged the award on grounds of misinterpretation of contract terms, failure to consider vital evidence, and alleged excess of jurisdiction by the tribunal.
The court observed that the tribunal had conducted a meticulous analysis of contract clauses such as those relating to price (Clause 5), title transfer (Clause 8), and shipping logistics (Clause 6). It found that the tribunal had adopted a logical interpretation of the expression “parcel loaded in a month” by splitting the consignment into quantities loaded in July and August.
On the issue of risk purchase, the court upheld the tribunal’s finding that BPCL failed to supply cargo within the agreed laycan period and that the rejection of inferior quality cargo by HPL was justified.
The court rejected BPCL’s contention that the tribunal rewrote the contract or ignored vital documents. “Merely because another interpretation is possible does not render the tribunal’s reasoning perverse,” the court noted.
Case Details
Case Title: BHARAT PETROLEUM CORPORATION LIMITED VS HALDIA PETROCHEMICALS LTD.
Case No.: AP- 338 of 2022
Date: 19.06.2025
Counsel For Appellant: Tilak Kr. Bose, Sr. Adv.
Counsel For Respondent: Sabyasachi Chaudhury, Sr. Adv.
