IN THE HIGH COURT OF DELHI AT NEW DELHI
Chandra Dhari Singh, J.
M/s Ircon International Limited – Appellant
Versus
Union of India Railway Coach Factor – Respondent
O.M.P.(MISC.)(COMM.) 362 of 2019
Decided On : 24-02-2023
Arbitration Act - Dispute over Arbitral Award - Section 39(2) - GCC, 1999 - Railway Board's Communications/Notifications - The Arbitral Tribunal is liable to publish the Award - The fees of the Arbitrators shall be as per the rates fixed by the Railway Board from time to time and shall be borne equally by both the parties - The Arbitral Tribunal is directed to publish the Award forthwith.
Fact of the Case:
The petitioner and the respondent entered into an Agreement for 'Enhancement of Coach Production Capacity to 1400 coaches at Rail Coach Factory, Kapurthala'. Disputes arose regarding the Liquidated Damages (LD) and the fees of the Arbitrators. The petitioner invoked the Arbitration Clause of the Agreement and approached the Court seeking relief under Section 39(2) of the Arbitration Act as the Arbitral Tribunal had not published the Award.
Finding of the Court:
The Arbitral Tribunal is liable to publish the Award. The fees of the Arbitrators shall be as per the rates fixed by the Railway Board from time to time and shall be borne equally by both the parties. The Arbitral Tribunal is directed to publish the Award forthwith.
Issues: Dispute over the publication of the Arbitral Award and the fixation of the fees of the Arbitrators as per the Arbitration Act.
Ratio Decidendi: The Arbitral Tribunal is bound by the provisions of the GCC and the communications/notifications issued by the RCF and Railway Board regarding the fixation of the fees of the Arbitrators. The principle of party autonomy is crucial in arbitration proceedings, and the Arbitral Tribunal cannot impose its will and wishes without reason or cause.
Final Decision: The Arbitral Tribunal is directed to publish the Award forthwith. The fees of the Arbitrators shall be as per the rates fixed by the Railway Board from time to time and shall be borne equally by both the parties.
JUDGMENT
Chandra Dhari Singh, J.
1. By way of filing the instant petition, under Section 39 (2) of the Arbitration and Conciliation Act, 1996 (hereinafter "Arbitration Act"), the following reliefs have been sought on behalf of the petitioner:
"A) Pass an Order directing the Arbitral Tribunal to deliver and publish the Award in the arbitration matter of "IRCON International Limited Vs. Rail Coach Factory (RCF), Kapurthala" in respect of the disputes arising out of the Contract of Agreement no. RCF/Expansion Proj./556 dated 12.12.2006;
B) Pass any further order/s as deemed fit and proper in the facts and circumstances of the case."
FACTUAL MATRIX
2. The following course of events have led to the filing of the instant petition on behalf of the petitioner:
a. The petitioner and the respondent came together by signing and executing an Agreement on 12th December 2006 for 'Enhancement of Coach Production Capacity to 1400 coaches at Rail Coach Factory, Kapurthala' at an anticipated cost of Rs. 50,11,34,000/-. The Agreement was made subject to the terms and conditions of the General Conditions of Contract, 1999 (hereinafter "GCC").
b. According to the Contract, the date of completion was stipulated as 26th January 2008, however, the petitioner sought and was granted extensions on several occasions to complete the work. The work was finally completed on 30th March 2012.
c. During the course of the works to be carried out between the parties, several disputes arose amongst them.
d. In terms of the agreement, a Review Committee was constituted to look into the disputes. One of the primary disputes amongst the parties was regarding the Liquidated Damages (hereinafter "LD"). On this aspect, the Review Committee, after consideration of facts and circumstances before it, concluded that the delay in execution of work was not because of the petitioner, and also made recommendations that a competent authority may consider imposition of LD on the merit of the case, subject to the specific approval of Railway Board.
e. On 30th April 2015, the Rail Coach Factory (hereinafter "RCF") made a communication to the Railway Board stating therein that both the parties were at fault for the delay in the completion and therefore, recommending a token LD instead of the full amount. The respondent refused to implement the recommendations of the Review Committee and proceeded to deduct the amount of LD from the bill of the petitioner.
f. Aggrieved by the same, the petitioner vide letter dated 11th December 2015 invoked the Arbitration Clause of the Agreement between the parties, i.e. Clause 9.2, wherein it was decided that if any dispute arose between the parties, the General Manager, RCF was to appoint Arbitrators to decide the same in accordance with the GCC.
g. The General Manager, RCF, Kapurthala accordingly appointed an Arbitral Tribunal for adjudication of the disputes between the parties on payment basis vide appointment letter dated 8th July 2017.
h. It is the case of the petitioner that in terms of Clause 9.2 of the Agreement it was also decided under Clause 64(6) of the GCC, that the fees of the Arbitrators would be fixed by the Railway Board from time to time.
i. Thereafter, with the enactment of the Arbitration and Conciliation (Amendment) Act, 2015 the Railway Board modified Clause 64 of the GCC, whereby it was resolved that the fees under Clause 64(6) of the GCC, to be paid to Arbitrators as per the rates fixed by the Railway Board from time to time, shall be borne by the parties equally.
j. On 22nd September 2017, the Arbitral Tribunal passed its first order, whereby it fixed the fees of the Arbitrators constituting the Tribunal as per Schedule IV of the Arbitration Act.
k. The petitioner, vide its communication dated 25th October 2017 and 30th October 2017, raised its objection qua the fixation of the fees of the Arbitrators, thereby requesting the Railway Board to clarify the ambiguity in the two different provisions invoked for fixation of the fees. He re
The principle of party autonomy is crucial in arbitration proceedings, and the Arbitral Tribunal cannot impose its will and wishes without reason or cause.
The main legal point established in the judgment is the importance of party autonomy in determining arbitral fees, as well as the interpretation and application of the 2020 Circular in the context of....
Section 2 (d) of the Act the Arbitral Tribunal is defined either as a sole arbitrator or a Panel of arbitrators and the language used in Sub Section (14) of Section 11 is for "determination of Fees o....
The court emphasized the importance of honoring agreements on Arbitrator's fees and highlighted the need to prioritize payment of Arbitrator's fees, even in insolvency proceedings.
The main legal point established in the judgment is that the Arbitration Act, 1996 does not permit the Court to sit as an Appellate Court to find defects in the award. Additionally, the Arbitrator ha....
The arbitration fees can be separately fixed for claims and counter-claims as per the provisions of the Arbitration and Conciliation Act, 1996, which is consistent with the statutory intent.
Login now and unlock free premium legal research
Login to SupremeToday AI and access free legal analysis, AI highlights, and smart tools.
Login
now!
India’s Legal research and Law Firm App, Download now!
Copyright © 2023 Vikas Info Solution Pvt Ltd. All Rights Reserved.