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2009 Supreme(Del) 411
IN THE HIGH COURT OF DELHI
Honble Judge: Rajiv Sahai Endlaw, J.
National Highways Authority of India – Appellants
Vs.
Mr. K.K. Sarin and Ors. – Respondent
Arb. A. No. 410/2008
Decided On: 09.04.2009
For Appellant/Petitioner/Plaintiff: Parag Tripathi, A.S.G. and Sandeep Sethi, Sr. Adv. and Krishan Kumar, Padma Priya, V. Rao and Sumit Gahlawat, Advs.
For Respondents/Defendant:Valmiki Mehta, Sr. Adv., Kiran Suri, Purvesh Buttan and Aparna Bhat, Advs. for respondent No. 4
The main legal point established in the judgment is the importance of the agreement between the parties in the fee dispute and the procedure for challenging the arbitrator's mandate under Section 14 of the Arbitration and Conciliation Act, 1996.
Headnote:
Arbitration and Conciliation Act, 1996 - Termination of Arbitral Tribunal - Section 14 - Fee Dispute - Section 31(8) - Supplementary Agreement - Bias Allegation - [ARBITRATION] - [Arbitration and Conciliation Act, 1996, Section 31(8), Section 14] - The court discussed the fee dispute between the parties, emphasizing the importance of the agreement between the parties and the fee schedule. The court also addressed the bias allegation and the procedure for challenging the arbitrator's mandate under Section 14 of the Act.
Fact of the Case:
The petitioner filed a petition under Section 14 of the Arbitration and Conciliation Act, 1996, seeking to terminate the mandate of the arbitral tribunal and appoint a sole arbitrator. The petition was based on two grounds: the arbitral tribunal's failure to abide by the fee agreement and bias against the petitioner.
Finding of the Court:
The court found that the petitioner had agreed to the fee schedule and dismissed the challenge on the fee dispute. The court refrained from returning any findings on the bias allegation, stating that the petitioner should first approach the arbitral tribunal with the plea of bias.
Issues: The issues involved the fee dispute between the parties and the bias allegation against the arbitral tribunal.
Ratio Decidendi: The court held that the petitioner had agreed to the fee schedule, and the challenge on the fee dispute failed. The court refrained from returning any findings on the bias allegation, stating that the petitioner should first approach the arbitral tribunal with the plea of bias.
Final Decision: The petition was dismissed, and the petitioner was burdened with costs of Rs 5,00,000.
Rajiv Sahai Endlaw, J.
1. The petition is filed under Section 14 of the Arbitration and Conciliation Act, 1996 for the relief of terminating the mandate of the arbitral tribunal comprising of the nominees of the petitioner and respondent No. 4 and the presiding arbitrator appointed by the said two nominees and for appointment of a sole arbitrator by this Court. The members of the arbitral tribunal are impleaded as the respondents 1 to 3 and though served with the notice, did not appear. The respondent No. 4 contested the petition.
2. The petition has been preferred on two grounds. Firstly, that the arbitral tribunal has failed to abide by the agreement between the petitioner and the respondent No. 4 of the fee to be paid to the arbitral tribunal and ordered the parties to pay fee much in excess thereto and Secondly on the ground of bias of the arbitral tribunal against the petitioner, originating from the petitioner objecting to the payment of fee at rates higher than agreed upon with the respondent No. 4; other instances of bias from certain interim orders made by the tribunal have also been pleaded.
3. The petition contained a prayer for interim relief and, on a prima facie view of the matter, vide ex parte order dated 21st November, 2008 further proceedings before the arbitral tribunal were stayed.
4. After completion of pleadings and during the course of hearing it was disclosed that certain relevant documents had remained unnoticed in the reply of the respondent No. 4 and which were filed alongwith supplementary affidavit and response thereto of the petitioner elicited.
5. I will take up the aspect of fee of the arbitrator first. At the time of granting the ex parte order, it was felt that the arbitrators, being creatures of an agreement between the parties, would be bound by the agreement between the parties as to the fee also and if the fee, as per the said agreement, is not acceptable to the arbitrators, the only option for the arbitrators is to recuse themselves and the arbitrators cannot order the parties to pay fee in excess of that provided in the agreement. Section 31(8) of the Act is also subject to the agreement between the parties.
6. However, during the arguments, the documents, which are not disputed, have been filed and which lead me to believe that notwithstanding the agreement between the petitioner and the respondent No. 4 as to the fee, the petitioner and the respondent No. 4 had, for the purposes of the arbitration subject matter of this petition, agreed to the fee schedule ordered by the Tribunal.
7. It is not disputed that the petitioner and the respondent No. 4 are, since prior to the commencement of the arbitration subject matter of the present petition, engaged in another arbitration also, which hereafter is referred to as Arbitration-I. The arbitral tribunal in the other arbitration is also the same as in the arbitration subject matter of this petition, which hereafter is referred to as Arbitration-II.
8. The respondent No. 4 vide its letter dated 5th June, 2006 to all the three arbitrators informed that certain more disputes (than subject matter of Arbitration-I) had arisen and with respect whereto the respondent No. 4 had issued notice of intention to commence arbitration and had requested to refer the additional disputes to the existing arbitral tribunal and further that the petitioner had also decided to refer the said additional disputes before the existing arbitral tribunal - and requesting the arbitral tribunal that additional disputes may be adjudicated upon "on the existing terms and conditions". It is the contention of the respondent No. 4 that the "existing terms and conditions" qua the fee in Arbitration-I were the same as the fee demanded by the tribunal in the Arbitration-II. It is further urged that the petitioner having agreed to pay fee to the Tribunal at a rate higher than that provided in the agreement between the petitioner and the respondent No. 4, what was understood
