Delhi High Court: No Merit In Terminating the Mandate of 3-Member Arbitral Tribunal

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The said petition (Ram Vikas Nigam Ltd. versus Simplex Infrastructures Ltd.) sought termination of the mandate of the Tribunal. It disregarded the ceiling provided in Section IV of the Act while fixing its fee. There was the appointment of a three-member Arbitral Tribunal for adjudicating disputes between the parties.

Brief facts of the Case

The petitioner is a PSU engaged in the business of railway construction projects. The petitioner and the respondent got into a contract to carry out a project and it’s completion was on 27.06.2013. But for various reasons, the project could not be completed. Five years later, the project was completed but the respondent claimed that the petitioner’s failed to complete the contract. They sought cost escalation for the 54-month delay. After unanswered claims, the respondent invoked arbitration. But, the petitioner failed to appoint its nominee arbitrator. The Court appointed an arbitrator and directed the parties to pay the outstanding due of arbitrators’ fees. Aggrieved by the fees, the petitioner filed an application stating that the fee fixed exceeds the statutory ceiling limit prescribed in Schedule IV of the Act. 

Arguments before the Court

The learned counsel for the plaintiff sought termination of the mandate of the three-member Arbitral Tribunal. They submitted that the fee fixed by the Tribunal exceeds the prescribed limit of Rs. 30 lakhs. Also, they contend that the Tribunal has erroneously concluded the claims and the outstanding due to be paid by the parties. The manner in which the Tribunal interpreted Schedule IV and the petitioner’s objections on fee fixation is contrary to the legislative intent of the provision.

While the counsel appearing for the respondent contends that the petitioner’s claim is arbitrary. It arises out of a deliberate misinterpretation of Schedule IV appended to the Act. They contend that the petition is an attempt made to defeat the rights of the respondent owing to the time-lapse in the date of order. Also, they submit that the present petition further delays the adjudication of the dispute between the parties. They prayed for dismissal of the petition with costs. 

Court’s Ruling

The Delhi High Court is of the view that the fee column bears two components of the basic fee and variable fee. The Court finds merit in the respondent’s contention that if the legislature had intended to place a ceiling limit, it would have mentioned the same. In the present case, the plain text of Schedule IV is enough to shed light on the meaning and implication of Entry no. 6 as it expressly mentions the ceiling limit. Also, the purpose of Schedule IV is clear and consonant and not in conflict with the recommendations of the 246th Law Commission Report. The petitioner did not make out a case for termination of the mandate of the learned Tribunal. Thus, the Court dismissed the petition.


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