O.M.P.(MISC.)(COMM.)/50/2017 of IDBI BANK LIMITED Vs HARYANA STATE INDUSTRIAL & INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED & ANR.

* IN THE HIGH COURT OF DELHI AT NEW DELHI+ O.M.P.(MISC.)(COMM.) 50/2017 IDBI BANK LIMITED ..... Decree Holder Through Mr.Ashu Punchhi, Mr.Raunak Dhillon and Mr.George Varghese, Advs.

versus

HARYANA STATE INDUSTRIAL & INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED & ANR.

..... Judgement Debtors Through Mr.Sandeep Sethi, Sr. Adv. with Mr.Ashish Dholakia, Mr.Saket Sikri, Mr.Kishore Kumar and Mr.Vikalp Mudgal, Advs.

CORAM:HON'BLE MR. JUSTICE NAVIN CHAWLA

O R R% 13.12.2017

I.A. No.14870/2017

This is an application seeking modification of the order dated 28.11.2017 passed by this Court in OMP(MISC) (COMM) 50/2017 by which this Court, while extending the period for making of the Award, had directed that for the extended period of time, Arbitral Tribunal shall be paid Rs.1 lac per arbitrator per sitting (wrongly recorded as Rs.1 lac per arbitration sitting).

At the outset, learned senior counsel appearing on behalf of the respondent No.2 submits that the present application, being in nature of review, is not maintainable as the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) does not give any power of review to this Court. He relies upon the judgments of Supreme Court in State of

Arunachal Pradesh v. M/s Damini Construction, 2007(3) SCALE 576; and Surendra Mohan Arora v. HDFC Bank Ltd & Ors. (2014) 15 SCC 294 and of this Court in NTPC Limited v. Marathon Electric Motors India Ltd. 194 (2012) DLT 404 (DB). Without going into the objection so raised, I would deal with the ground on which the present application has been filed.

Learned counsel for the petitioner submits that the Arbitral Tribunal in the proceedings held on 02.12.2017 have observed that they would not be inclined to continue as Arbitrators on this reduced fee. He further submits that this Court, having come to the conclusion that the Arbitral Tribunal has acted with expedition as far as the conduct of the arbitral proceedings is concerned, did not have the power to order of reduction of fee of the Arbitral Tribunal. He submits that in terms of Proviso to Sub-Section (4) of Section 29A of the Act, the Court is empowered to reduce the fee of the Arbitrators only where the Court finds that the proceedings had been delayed for the reasons attributable to the Arbitral Tribunal. As the Court had concluded that that this is not the case, the Court could not have reduced the fee exercising its power under the said Proviso.

I am unable to agree with the above submission. The mandate of the Arbitrators had terminated with the expiry of the extended period for making an award under Sub-Section (2) of Section 29A of the Act. With this termination, the agreement between the parties to pay particular fee to the Arbitral Tribunal had also ended. While exercising the jurisdiction under Sub-Section (5) of Section 29A of the Act and while granting extension of period for making of an award, Court may impose such terms and conditions as may be deemed just and proper. Equally, this Court is empowered under Sub-Section (6) of Section 29A of the Act to substitute one or all the

Arbitrators and such substituted Arbitrator(s) would/can be empowered to take the arbitral proceedings from the stage already reached.

In this case, the respondent No.1 being Public Sector Undertaking had raised grievance regarding fee charged by the Arbitral Tribunal. The prayer was, therefore, that either any alternative Arbitral Tribunal be appointed or the time be extended with the condition that there is reduction in the fee. It was under this situation that this Court exercised its powers under Sub-Section (5) of Section 29A of the Act and instead of substituting the Arbitral Tribunal, deemed it fit and proper to order reduction in the fee of the Arbitral Tribunal, especially taking into account the fact that an amount of Rs.1.66 crores had already been paid by the parties as arbitral fee; almost 38 hearing had been conducted by the Arbitral Tribunal; and in another arbitration, same Arbitral Tribunal was being paid fee of Rs.1 lac per Arbitrator per sitting.

Learned counsel for the petitioner submits that in the other arbitration this fee of Rs.1 lac per Arbitrator per sitting, was on the basis that it was bipartite Arbitration and as in the present case there are three parties, fee of Rs.1.50 lacs per Arbitrator per sitting was reasonable. I cannot agree with the said submission. I may only note that the Legislature, by making amendment in Arbitration and Conciliation Act, 1996, has recognised the repeated concern of the Supreme Court on the ever mounting cost of Arbitration. I may only refer to the judgments of Supreme Court in Union of India v. Singh Builders Syndicate, (2009) 4 SCC 523 and Sanjeev Kumar Jain v. Raghubir Saran Charitable Trust and Ors.(2012) 1 SCC 455. The fee as fixed by me is far above Schedule-IV of the Act.

Learned counsel for the petitioner submits that for this additional

burden of Rs.50,000/- per arbitration per sitting, the petitioner is ready and willing to pay the same without making any claim for the same against the respondents even at the stage of final award. He submits that Arbitrators were appointed by the order of the Supreme Court taking into account the fact that same Arbitral Tribunal is adjudicating the disputes between respondent Nos.1 and 2 and it was felt expedient that the same Arbitral Tribunal should be appointed for the disputes that have been raised by the petitioner herein. He further submits that Arbitral proceedings are at its final stage and therefore, any change in the Arbitral Tribunal at this stage would cause delay in the proceedings and may even prove out to be more expensive. He submits that grave prejudice would be caused to the petitioner in case mandate of Arbitral Tribunal is terminated at this stage for reasons of cost. He further submits that under Section 31A(4) of the Act, this Court has the power to even direct the petitioner to pay the proportionate cost of the other party.On the other hand, learned senior counsel for the respondent No.2 submits that the petitioner cannot take upon itself to pay the cost for the respondent No.2 as this may cause prejudice to the respondent No.2 in the conduct of the Arbitral proceedings. Relying upon the judgement of Supreme Court in Singh Builders Syndicate (supra), he submits that the respondent No.2 would be prejudiced in defence of its case and would have reasonable apprehension of bias due to its refusal to agree to pay the fee as demanded by the Arbitral Tribunal and if the petitioner is allowed to pay even his share of the fee. He further submits that Section 31A(4) of the Act has to be read along with Section 31(8) of the Act and would therefore, be applicable only at the stage of making of an award or while the Court is

exercising its jurisdiction under Section 34 of the Act. He further submits that Section 31A(5) of the Act, in fact, makes any agreement which has the effect of party paying the whole or part of the cost of the arbitration to be invalid. He submits that without the consent of the respondent No.2, even this Court cannot make an order directing only the petitioner to pay the enhanced portion of arbitral fee to the Tribunal by the petitioner alone.

Though, I appreciate the concern of the petitioner that the Arbitral Tribunal, having been constituted keeping in mind the fact that it was already dealing with another dispute inter-se between respondent No.1 and 2 on the similar project and being in advance stage of hearing, it does not persuade me to review my order. Any direction or even acceptance of the plea that only the petitioner would pay the differential fee between the one fixed vide order dated 28.11.2017 and the one fixed by Arbitral Tribunal earlier, can cause reasonable apprehension in the respondents. This cannot, therefore, be accepted to. Whether the Arbitral Tribunal would continue at the fee determined by me in my order dated 28.11.2017 or not, is for the Arbitral Tribunal to consider. The petitioner can always make request to the Arbitral Tribunal to continue on the revised fee taking into account the number of sittings that had already taken place and the stage of the proceedings. I can only hope that the Arbitral Tribunal would keep that in consideration while deciding whether or not to continue further.

In view of the above, I find no merit in the present application. The same is dismissed, however, with no order as to cost.

DECEMBER 13, 2017/vp

NAVIN CHAWLA, J