The Single Bench of the Delhi High Court in the case of National Highway Authority of India vs M/S Tantia Raxaul Tollways Pvt Ltd consisting of Justice V. Kameswar Rao reiterated that the arbitrator can charge the arbitration fee only as has been agreed by the parties.
Facts
This petition was filed by the petitioner National Highways Authority of India (‘NHAI’) u/s 14 and 15(2) of the Arbitration and Conciliation Act, 1996 (‘the Act’) seeking the termination of the mandate of the Arbitral Tribunal (‘Tribunal’) and appointment of a substitute Tribunal.
A Concession Agreement (‘CA’) was signed between both the parties for two-laning with paved shoulder of a Section of NH - 28A, under which Clause 44.3.1 talked about Arbitration. When certain disputes arose between the parties, it was mutually agreed to refer the disputes to arbitration as per the Rules of Arbitration of the International Centre for Alternative Dispute Resolution, New Delhi (‘ICADR Rules’). In terms of the Clause reproduced above, a three-member Tribunal was appointed which stated that it would fix its own fees as per National Highway Authority of India v. Gayatri Jhansi Roadways Ltd.
Procedural History
The petitioner filed an application for modification of the order with respect to fees and venue, which was dismissed. Sometime at the end of 2020, the then Presiding Arbitrator passed away and a substitute Presiding Arbitrator was appointed. The Tribunal then directed the parties to deposit ₹5 lakh each and administrative expenses with the Presiding Arbitrator within two weeks. The parties were also directed to deposit ₹2 lakh and administrative expenses with the other two arbitrators. The Tribunal would sit only at 4.30 PM and rise early without carrying out its functions with due dispatch, thus delaying the proceedings on various occassions. However, on November 24, 2021, it proceeded to direct to pay ₹1,50,000/- per sitting per arbitrator, in complete disregard to the terms between the parties, the ICADR Rules and the Fourth Schedule of the Act.
Contentions Made
Petitioner: It was contended that the Tribunal was de jure and de facto unable to perform its functions, as the fee being charged by the Tribunal was in complete disregard of the agreement between the parties which provided for Arbitration as per the ICADR Rules. It also contended that this direction of the Tribunal to pay ₹1,50,000/- per sitting per arbitrator was over and above the lump sum fee already fixed by the Tribunal. Reliance was placed on Gayatri Jhansi Roadways Ltd. (supra), which held that the fee is governed by the agreement between the parties, to demonstrate that the Tribunal could not fix its own fees disregarding the Agreement. Reliance was placed on NTPC v. Amar India, Delhi State Industrial Infrastructure Development Corporation v. Bawana Infra Development (P) Ltd., Jivanlal Jotiram Patel v. National Highways Authority of India, and K/S Norjarl A/S v. Hyundai Heavy Industries Co. Ltd. It was also contended that a party cannot be forced to pay higher fee than the one stated in the arbitration agreement, while relying on Union of India v. Singh Builders Syndicate. It was submitted that even under the Fourth Schedule of the Act, which is pari materia to the Fee Schedule of ICADR, the maximum fee payable is ₹ 30,00,000/-.
Respondent: It was contended that although the Tribunal revised its fee and fixed it at ₹1,50,000/- per sitting, however, the cap/ceiling is still ₹ 49,87,500/-, as enshrined in both the arbitral agreement as well the earlier order of the Tribunal setting the fee, and once the said ceiling is reached no more fee is payable to the Tribunal. It also contended that the order dated November 24, 2021 merely talked about the frequency of the payment of the fee and that neither parties have paid the full amount of ₹49,87,500/- to the Tribunal. It was submitted that proper construction of Fourth Schedule of the Act is that each arbitrator can claim an amount of up to ₹49,87,500/- from each party as held in Rail Vikas Nigam Ltd.
Observations of the Court
The Bench observed that the short question for consideration was whether the mandate of the Arbitral Tribunal needed to be terminated on the grounds that; “(i) the fee being charged by the members of the Tribunal is in disregard to the agreement between the parties; and (ii) the Tribunal has failed to proceed with due dispatch.”
It found the submission, that the Tribunal despite fixing the fee of ₹49,87,500/- on September 20, 2018 by taking into account both the claims and counter claims, could not have re-fixed the fee beyond the said figure, quite appealing as it is settled law that the arbitrator can charge the fee only as has been agreed by the parties. Reliance was placed on Oil and Natural Gas Corporation Ltd (supra) and connected matters where it was held that the Arbitral Tribunal cannot deviate from the terms of reference, the same being a tripartite agreement between the parties and Tribunal, and any amendments, revisions, additions may only be made with the consent of the parties.
It was further observed that the Tribunal did not clarify, that, the amount of ₹1.5 lakh shall only be paid till the cap of ₹49,87,500/- is reached. So, its intent was to go beyond the figure of ₹49,87,500/-. But, the respondent had relied on the order dated November 25, 2021 when the learned counsel for the petitioner raised an objection to the Tribunal ordering fee to be paid at ₹1.5 lakh per sitting to be shared equally by the parties. He stated, there were judgments which he shall produce the next day, i.e., November 25, 2021. He in fact, submitted the judgments to the Tribunal and in the order of November 25, 2021, the Tribunal inter-alia stated as under:
“We have gone through those judgment and it only needs to be clarified by us that the fee payable to the members of the Tribunal will be as per law in this regard.”
In view of the above, it was observed that:
“The Tribunal has not clarified what it meant by the words “as per law”. It can be inferred that the intent of the order dated November 25, 2021 was to say that the Tribunal cannot exceed the figure as permissible in law. The law that existed was that the Tribunal could not have charged the fee beyond ₹49,87,500/-. So, the benefit of the expression “as per law” would accrue in favour of the Tribunal for the reason that the order dated November 24, 2021 had not attained finality as the counsel for the respondent had objected to the Tribunal fixing the fee @ ₹1.5 lakh per hearing and wanted to show certain judgment(s) and on consideration of the judgment(s), on November 25, 2021, the Tribunal clarified that the fee payable will be as per law. As such, this Court is not inclined to agree with the submission of Mr. Tripathi that the Tribunal has fixed the fee beyond ₹49,87,500/- and as such, the mandate of the Tribunal need to be terminated.”
Looking at the list of dates, except the brief cross examination conducted by the Tribunal on certain dates, the proceedings have been adjourned for reasons not attributable to the Tribunal, it opined that the delay in protracting the proceedings was not on the Tribunal.
Judgment
The Bench opined that the prayers made by the petitioner could not be granted and dismissed the petition accordingly. Before parting, it left for the Members of the Tribunal to consider, whether they would like to continue as Members of the Tribunal in the arbitration proceedings, given the nature of issues raised on the aspect of fee/conduct of proceedings, to which objections were raised by the petitioner, resulting in the filing of the present petition seeking termination of the mandate of the Tribunal.
Case: National Highway Authority of India vs M/S Tantia Raxaul Tollways Pvt Ltd
Citation: O.M.P. (T) (COMM.) 45/2022, I.As. 6265/2022 & 13050/2022
Bench: Justice V. Kameswar Rao
Decided on: 9th September 2022
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