The central legal point established in the judgment is the interpretation of Section 14(1)(a) of the Act 1996, which governs the termination of an arbitrator's mandate when they become de jure unable to perform their function effectively.

1. The Original Petition is filed to appoint a fresh Arbitrator terminating the present Arbitrator terminating the present Arbitrator and fix the Arbitrator’s remuneration as not more than Rs.6 lakhs in all payable by the petitioner and respondent.

2. The Madras Fertilizers Limited (MFL) a public sector undertaking has filed the above Petition under Section 14 r/w 11(6) of the Act 1996.

.3. The brief facts leading to the above Petition are as under:

.The petitioner entered into an agreement for the supply of Co2, a by-product of the petitioner Company with the first respondent. The first respondent agreed to pay the required price. Dispute arose regarding payment and the first respondent declined to pay the amount as per the reading recorded by the flow meter. The petitioner filed C.S. No.299 of 2003 for the recovery of the amounts due and the first respondent declined to pay the amount as per the reading recorded by the flow meter. The petitioner filed C.S.No.299 of 2003 for the recovery of the amounts due and the first respondent filed a Petition under Section 11 of the Act 1996 in O.P. No.338 of 2003. This Court by Order dated 1.04.2006 appointed the second respondent, a retired Chief Justice of the Himachal Pradesh High Court as the sole Arbitrator.

.4. The first respondent as claimant filed a Claim Petition before the second respondent and the petitioner filed a reply statement and made a counter claim. The first respondent herein has filed a reply to the counter statement. Draft issues were also filed.

5. On 8. 2005, the second respondent suggested that a total fee of Rs.15 lakhs be fixed as remuneration besides a reading fee and writing fee of Rs.1 lakh and the expenses for the conduct of the arbitration have to be borne by the parties. The petitioner paid a sum of Rs.50,000/- towards their share of the reading and writing fee.

6. The petitioner was informed by the Counsel and the officers of the petitioner about the decision of the Arbitrator fixing his fee at Rs.15 lakhs. As the petitioner is a sick Company incurring loss, the petitioner already finding it difficult to honour the commitment to its employees and third parties. Therefore, the fee fixed by the Arbitrator at Rs.15 lakhs is beyond the reach of the petitioner. Hence, the petitioner sent a letter to the second respondent on 9. 2005 informing that their share of Rs.7.5 lakhs towards fee is beyond the financial realities of the petitioner and requesting the second respondent to accept a sum of Rs.3 lakhs as their share of Arbitration fees. The second respondent could not accept the request and the petitioner was informed that the first respondent tendered their share of fees payable to the second respondent.

7. As the fees fixed by the Arbitrator is beyond the capability of the petitioner, the nonpayment resulted in the temporary cessation of the arbitration proceedings. In such circumstance, the second respondent cannot be expected to proceed with arbitration and according to the petitioner, the second respondent has become de jure unable to perform his function and hence they have filed the above Petition for the aforesaid prayer.

8. The first respondent entered appearance through their Counsel and filed a counter statement.

9. In their counter statement, the first respondent submitted that the above petition is not at all maintainable as neither the ingredients of Section 14 nor the provisions of Section 11(6) of Act 1996 are present in the above matter.

10. It is stated by the first respondent that the second respondent fixed the fees at Rs.15 lakhs after having a discussion with the first respondent and the petitioner represented by the petitioner’s Counsel and officers. Having accepted and consented to the fixation of fee at Rs.15 lakhs, it is not open to the petitioner, now to unilaterally fixed their share at Rs.3 lakhs only. Further, the first respondent questioned the claim of the petitioner that they are running at loss and they