Research › Search › Judgment

Rajasthan High Court · body

2021 DIGILAW 853 (RAJ)

Project Director, Government of Rajasthan v. Electrosteel Casting Ltd

2021-04-15

MANOJ KUMAR VYAS, SABINA

body2021
JUDGMENT : [Per : Manoj Kumar Vyas, J.] 1. By way of this special appeal challenge has been made to the judgment of learned Single Judge dated 24.02.2021 by which the writ petition filed by the appellants, was dismissed. 2. Brief facts of the case are that a coordinate Bench of this court vide its order dated 02.04.2018 appointed Mr. Justice Mahesh Chandra Sharma (Retd.) as the Sole Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 (hereafter referred as ‘the Act of 1996’). Subsequently Mr. Justice Dinesh Chandra Somani (Retd.) was appointed as Sole Arbitrator vide order dated 15.12.2018. The order dated 15.12.2018 was challenged by way of review petition by the appellants and the same was dismissed vide order dated 03.01.2019. The claimant-respondent had filed claim petition before the Sole Arbitrator seeking two sets of claim i.e. (i) for 1,05,45,760/- and (ii) for 1,77,00,000/- along with interest @ 18% p.a. till its realization. During the course of arbitral proceedings the Sole Arbitrator vide order dated 28.04.2019 determined his fees at Rs. 06,48,696/- as per Section 11(14) read with Schedule-IV of the Act of 1996. The Sole Arbitrator had also mentioned that the claimant had not quantified the amount of interest till submission of the statement of claim / commencement of the arbitral proceedings and the parties were directed to quantify the amount of interest as claimed in the statement of claim and the same was to be submitted on the next date of hearing. It was also mentioned that after quantification of amount of interest, fees of the arbitral Tribunal would be redetermined accordingly. Thereafter the claimant filed an application quantifying the interest and a sum of 11,17,00,000/- was claimed as interest till - the submission of the claim petition. On the basis of this, the Sole Arbitrator rescheduled the fees vide order dated 09.08.2019 and calculated the fees as per sub-section (14) of Section 11 of the Act of 1996 and Schedule-IV appended thereto at Rs. 19,21,366/-. The Sole Arbitrator, when found that the fees was not paid, passed the order dated 24.02.2020 directing the officer-in-charge to file a detailed affidavit, asking certain explanations as to what steps were being taken for payment of arbitral Tribunal’s fees. A review petition was filed against the order dated 24.02.2020, which was dismissed vide order dated 22.03.2020. 19,21,366/-. The Sole Arbitrator, when found that the fees was not paid, passed the order dated 24.02.2020 directing the officer-in-charge to file a detailed affidavit, asking certain explanations as to what steps were being taken for payment of arbitral Tribunal’s fees. A review petition was filed against the order dated 24.02.2020, which was dismissed vide order dated 22.03.2020. The arbitral proceedings were continued after dismissal of the review petition and the matter was fixed for final arguments. The final arguments were partly heard and 07.11.2020 was fixed as the next date for final arguments. At that stage, the appellants filed an application under Sections 13, 14 and 15 of the Act of 1996 before learned Commercial Court No. 1, Jaipur MetropolitanII. The court below came to the conclusion that the application filed by the petitioner-appellants had no merit and accordingly the application was rejected. Aggrieved by the order dated 31.10.2020 passed by learned court below, the appellants preferred the writ petition, which came to be dismissed by learned Single Judge vide order dated 24.02.2021. Hence this special appeal. 3. It has been submitted on behalf of learned counsel for the appellants that learned Single Judge has failed to appreciate the provisions of Sections 13, 14, 15, 38 and 39 of the Act of 1996. It was also submitted that the learned Single Judge has erred in dismissing the writ petition. 4. We have heard learned counsel for the appellants and perused the record available on the file carefully. 5. The relevant provisions of the Act of 1996 are reproduced as under :- “13. Challenge procedure.— (1) Subject to sub-section (4), the parties are free to agree on a procedure for challenging an arbitrator. (2) Failing any agreement referred to in sub-section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of section 12, send a written statement of the reasons for the challenge to the arbitral tribunal. (3) Unless the arbitrator challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge. (3) Unless the arbitrator challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge. (4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award. (5) Where an arbitral award is made under sub-section (4), the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with section 34. (6) Where an arbitral award is set aside on an application made under sub-section (5), the Court may decide as to whether the arbitrator who is challenged is entitled to any fees. 14. Failure or impossibility to act.—(1) 3 [The mandate of an arbitrator shall terminate and he shall be substituted by another arbitrator, if]— (a) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and (b) he withdraws from his office or the parties agree to the termination of his mandate. (2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub-section (1), a party may, unless otherwise agreed by the parties, apply to the Court to decide on the termination of the mandate. (3) If, under this section or sub-section (3) of section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of section 12. 15. Termination of mandate and substitution of arbitrator.—(1) In addition to the circumstances referred to in section 13 or section 14, the mandate of an arbitrator shall terminate— (a) where he withdraws from office for any reason; or (b) by or pursuant to agreement of the parties. (2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. (3) Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2), any hearings previously held may be repeated at the discretion of the arbitral tribunal. (2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. (3) Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2), any hearings previously held may be repeated at the discretion of the arbitral tribunal. (4) Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal. 38. Deposits.— (1) The arbitral tribunal may fix the amount of the deposit or supplementary deposit, as the case may be, as an advance for the costs referred to in sub-section (8) of section 31, which it expects will be incurred in respect of the claim submitted to it: Provided that where, apart from the claim, a counterclaim has been submitted to the arbitral tribunal, it may fix separate amount of deposit for the claim and counterclaim. (2) The deposit referred to in sub-section (1) shall be payable in equal shares by the parties: Provided that where one party fails to pay his share of the deposit, the other party may pay that share: Provided further that where the other party also does not pay the aforesaid share in respect of the claim or the counter-claim, the arbitral tribunal may suspend or terminate the arbitral proceedings in respect of such claim or counter-claim, as the case may be. (3) Upon termination of the arbitral proceedings, the arbitral tribunal shall render an accounting to the parties of the deposits received and shall return any unexpended balance to the party or parties, as the case may be. 39. Lien on arbitral award and deposits as to costs. — (1) Subject to the provisions of sub-section (2) and to any provision to the contrary in the arbitration agreement, the arbitral tribunal shall have a lien on the arbitral award for any unpaid costs of the arbitration. 39. Lien on arbitral award and deposits as to costs. — (1) Subject to the provisions of sub-section (2) and to any provision to the contrary in the arbitration agreement, the arbitral tribunal shall have a lien on the arbitral award for any unpaid costs of the arbitration. (2) If in any case an arbitral tribunal refuses to deliver its award except on payment of the costs demanded by it, the Court may, on an application in this behalf, order that the arbitral tribunal shall deliver the arbitral award to the applicant on payment into Court by the applicant of the costs demanded, and shall, after such inquiry, if any, as it thinks fit, further order that out of the money so paid into Court there shall be paid to the arbitral tribunal by way of costs such sum as the Court may consider reasonable and that the balance of the money, if any, shall be refunded to the applicant. (3) An application under sub-section (2) may be made by any party unless the fees demanded have been fixed by written agreement between him and the arbitral tribunal, and the arbitral tribunal shall be entitled to appear and be heard on any such application. (4) The Court may make such orders as it thinks fit respecting the costs of the arbitration where any question arises respecting such costs and the arbitral award contains no sufficient provision concerning them.” 5. A perusal of the record of this case reveals that the fees of the Sole Arbitrator had been fixed as per the powers conferred under sub-section (14) of Section 11 of the Act of 1996 read with Schedule-IV appended thereto. At the time of determination of fees it was also directed by the Sole Arbitrator that the parties should quantify the amount of interest as claimed in the statement of claim. The Sole Arbitrator had also mentioned that after quantification of the amount of interest, fees of the arbitral Tribunal would be redetermined accordingly. Thereafter the claimant quantified the interest and on the basis of application of the claimant, the Sole Arbitrator rescheduled the fees vide order dated 09.08.2019 and calculated the fees according to sub-section (14) of Section 11 of the Act of 1996 read with Schedule-IV appended thereto, at 19,21,366/-. Thereafter the claimant quantified the interest and on the basis of application of the claimant, the Sole Arbitrator rescheduled the fees vide order dated 09.08.2019 and calculated the fees according to sub-section (14) of Section 11 of the Act of 1996 read with Schedule-IV appended thereto, at 19,21,366/-. Thus, it is revealed that - initially the Sole Arbitrator had determined his fees at - 06,48,696/-, thereafter on the quantification of the amount of interest as claimed in the statement of claim, the fees was rescheduled and calculated at 19,21,366/-. Thus, the initial - determination and subsequent rescheduling of the fees, were made according to sub-section (14) of Section 11 of the Act of 1996 read with Schedule-IV appended thereto. Thus, the fees was strictly calculated as per the provisions of the Act of 1996. Hence, no fault or illegality can be found with the order of the Sole Arbitrator in determining and then rescheduling the fees. 6. Learned Single Judge had relied upon the judgment of Delhi High Court in the case of GS Developers & Contractors Pvt. Ltd. v. Alpha Corp Development Private Limited & Anr [O.M.P. (T) (Comm.) 54/2019 & IAs 8116-8117/2019) dated 29.05.2019, wherein it was held that if the Arbitrator fixes his fee then the application filed under Section 13 of the Act of 1996 raising an allegation of bias, cannot be entertained and the only remedy is to await the award and as such the application under Section 14 of the Act of 1996 was held to be not maintainable. Learned Single Judge has also held that the petitioner-appellants had participated in the arbitral proceedings before the Sole Arbitrator at several stages after initial order passed on 28.04.2019 permitting quantification of amount of interest and fees of arbitral Tribunal to be redetermined accordingly. Thus, the appellants participated continuously in the arbitral proceedings and it was at the stage of final arguments that the challenge was made before the concerned Commercial Court. Thus, it was rightly held by the learned Single Judge that in those circumstances the appellants were estopped from challenging the order of Sole Arbitrator of redetermination of arbitral Tribunal’s fees. Apart from this, it is also clear that the fees was determined as per the provisions of subsection (14) of Section 11 of the Act of 1996 read with Schedule-IV appended thereto. Apart from this, it is also clear that the fees was determined as per the provisions of subsection (14) of Section 11 of the Act of 1996 read with Schedule-IV appended thereto. Hence, no illegality can be attributed to the order by which the fees was rescheduled after quantification of the interest by the claimant. 7. In view of above discussion, we are of the considered opinion that the impugned order dated 24.02.2021 passed by learned Single Judge, is just and proper and no ground for interference is made out. 8. The special appeal, being devoid of any merit, is liable to be dismissed. 9. Dismissed.