ONGC V. Afcons By SC Will Not Affect Fee Already Fixed By Arbitration Tribunal : Delhi High Court

The High Court of Delhi was considering a situation wherein the fees was fixed in terms of the earlier law. The petitioner challenged the fees so fixed as violative of the Supreme Court order.

The bench of Justice Neena Bansal Krishna held that the maximum amount that an arbitrator could charge was Rs. 49, 87, 500/- in terms of the judgment of the Delhi High Court in Rail Vikas Nigam Ltd. v. Simplex Infrastructure Ltd^[1] before the Supreme Court reduced this amount to Rs. 30 Lakhs in its judgement in ONGC, however, the Supreme Court had not stayed the judgement in Rail Vikas, therefore, it was the prevailing law before the judgment in ONGC was delivered.

The Court refused to stay the operation of an award that had directed the petitioner to pay the fees of arbitral tribunal in terms of the judgment in Rail Vikas.

Facts

Pursuant to a dispute between the parties, an arbitral tribunal consisting of three members was constituted. In the first meeting, it was mutually decided that the fees of the tribunal would be as paid as per IV Schedule. In the procedural meeting, considering the value of amount in dispute, the tribunal fixed the individual fees at Rs. 49, 87,500/- in terms of the judgement in Rail Vikas. However, the petitioner (NHAI) did not consent to the fees as determined. It contended that since an SLP in pending against the judgment in Rail Vikas, the amount of Rs. 49,87,500/- cannot be held to be the ceiling amount but it would only be an amount of Rs. 30 Lakhs.

The tribunal vide an order dated 23.11.2020 rejected the objection of the petitioner and held that the judgment in Rail Vikas still holds the position as it has not been stayed by the Court. Accordingly, directed the parties to pay the fees as fixed earlier.

The petitioner paid an amount of Rs. 20 lakhs and the remaining amount remains unpaid. The respondent paid the remaining amount and the tribunal awarded this amount as costs to it. Aggrieved with the direction of the tribunal, the petitioner filed an application under Section 36 of the Act for the stay on the award to the extent it directed the balance fee to be recovered as costs.

Submissions

The petitioner prayed for the stay on the award on the following grounds:

• The fee was fixed by the tribunal on a wrong interpretation of the IV Schedule.
• The Supreme Court in ONGC has fixed the ceiling amount at Rs. 30 Lakhs and overruled the decision on which the tribunal had placed reliance.

Analysis by the Court

The Court held that the tribunal had fixed the fee in accordance with the judgment in Rail Vikas. It held the judgment was the position of law not just on the date on which the fee was fixed but also when the award was delivered. It held that merely because an SLP is filed against a judgment, the same does not neutralize its effect unless its operation is stayed.

The Court held that the fixation of fee cannot be faulted as it was determined in accordance with the prevailing law. It held that judgment in Rail Vikas was the prevailing law before it was overruled by the Supreme Court in ONGC, thus, fees fixed in accordance with it cannot be held to be either against the public policy or the substantive law as existed on the said date.

Accordingly, the refused to stay the operation of an award but granted liberty to the petitioner to agitate its challenge to the fee of the tribunal under Section 34 of the Act.

Case Title: NHAI v. IJM GAYATRI JV, OMP (COMM.) 235 of 2021

Citation: 2023 LiveLaw (Del) 115

Counsel for the Petitioner: Mr. Sudhir Nandrajog, Sr. Advocate with Mr. Krishan Kumar & Mr. Nitin Pal

Counsel for the Respondent: Mr. Angad Mehta, Advocate

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