Court Under Section 29A Of The A&C Act Would Not Consider Issue Regarding Fees Of Arbitral Tribunal: Delhi High Court

The bench of Justice Sachin Datta reaffirmed that the only ground for removal of the arbitrator under Section 29A is that the arbitrator failed to proceed expeditiously in the adjudication process and the same cannot be extended to removal of the arbitrator on the ground of any issue with the arbitrator qua the fees fixed by him.

Facts

The arbitrator entered reference on 23.09.2021 pursuant to an order by the Court upon an application filed under Section 8 of the A&C Act. In an arbitral meeting held on 25.09.2021, the arbitrator passed certain directions to the parties to submit their initial deposit towards fees along with secretarial and administrative expenses.

The arbitrator, vide a consent order dated 16.02.2022, directed the parties to pay to the tribunal a sum of Rs. 75,000/- as arbitrators fees per session. However, the respondent failed to comply with such directions and instead filed an application under Section 14 of the Act for the removal of the arbitrator on the ground that the fees was not fixed in terms of the 4^th Schedule and the judgment of the Supreme Court in ONGC v. Afcons Gunanusa JV. However, the said petition was withdrawn.

Thereafter, the Respondent filed an application before the arbitrator requesting it to fix its fees in terms of the 4^th Schedule which was dismissed by the tribunal vide order dated 24.01.2023. Afterwards, Respondent filed a miscellaneous petition before the High Court inter alia praying for directions to tribunal to fix its fees in terms of the 4^th schedule. The tribunal dismissed the petition by observing that the tribunal had fixed its fees with the consent of the parties and a party cannot later resile from its earlier understanding and seek modification of fees. The Court also observed that the Supreme Court judgment in ONGC also reserve the right to the tribunal to fix the fees with the consent of the parties and 4^th schedule would not apply in such cases.

Finally, the petitioner filed the application under Section 29A of the Act requesting the Court to extend the mandate of the tribunal by six months.

Contention of the Parties

The petitioner contended that the arbitral proceedings are at their fag end, and even final arguments have been concluded, therefore, it would be appropriate to extend the mandate of the tribunal by six months to enable the learned arbitrator to make the arbitral award.

The respondent sought the removal of the arbitrator and appointment of a substitute arbitrator on the ground that the arbitrator wrongly fixed the fees and the same is against the mandate of the act.

Analysis by the Court

The Court held the Court exercising power under Section 29A of the A&C Act, which provides for extension of time to conclude arbitral proceedings, is only concerned with the issue as to whether the arbitrator has acted with expedition in the matter and would not consider any issue regarding the conduct of the arbitration or the fees of the arbitral tribunal as they are not relevant for the purpose of the said Section.

The Court referred to its earlier judgments in Orissa Concrete & Allied Industries Ltd. Vs. Union of India^[1] and NCC Ltd. Vs. Union of India^[2] and reaffirmed that the only ground for removal of the arbitrator under Section 29A is that the arbitrator failed to proceed expeditiously in the adjudication process and the same cannot be extended to removal of the arbitrator on the ground of any issue with the arbitrator qua the fees fixed by him.

Accordingly, the Court rejected the objection raised by the Respondent and allowed the petition and extended the mandate of the tribunal by six months.

Case Details: Anay Kumar Gupta v. Jagmeet Singh Bhatia

Citation: 2023 LiveLaw (Del) 596

Counsel for the Petitioner: Mr. Shailen Bhatia, Mr. Amit Jain, Mr. Arnav Chatterjee and Mr. Raghav Bhalla, Advs.

Counsel for the Respondent: Mr. Manish Kaushik, Mr. Ajit Singh Johar, Mr. Plarsh Vashishth, Ms. Snigdha Sharma and Mr. Mishal Johri, Advs.

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[1] OMP (MISC) (COMM) 10/2018 order dated 05.03.2018.