Delhi High Court: Issues Relating to Conduct of Arbitration/Arbitral Fees are Not Relevant Under Section 29A of Arbitration & Conciliation Act

Delhi High Court: Issues Relating to Conduct of Arbitration/Arbitral Fees are Not Relevant Under Section 29A of Arbitration & Conciliation Act

The Delhi High Court has observed that it is a well settled law that the Court while considering an application under Section 29A of the Arbitration and Conciliation Act, 1996 (A&C Act) is only concerned with the issue as to whether the Arbitrator has acted with expedition in the matter.

The single judge Justice Sachin Datta stated that issues relating to the conduct of the Arbitration and/or arbitral fees are not relevant for the purpose of Section 29A of the A&C Act.

In the instant matter, the arbitrator had entered reference on 23 September, 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 September, 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 February, 2022, directed the parties to pay to the tribunal a sum of Rs. 75,000 as arbitrator’s 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 fourth Schedule and the judgment of the Supreme Court in ONGC vs. Afcons Gunanusa JV. Consequently, the said petition was withdrawn.

Subsequently, the Respondent filed an application before the arbitrator requesting it to fix its fees in terms of the fourth Schedule which was dismissed by the Tribunal vide order dated 24 January, 2023. Later, Respondent filed a miscellaneous petition before the High Court inter alia praying for directions to Tribunal to fix its fees in terms of the fourth 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 aforesaid petition was disposed of by this Court vide judgment/order dated 21 April, 2023. 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 fourth schedule would not apply in such cases.

Aggrieved by the same, the petitioner filed the application under Section 29A of the A&C Act requesting the Court to extend the mandate of the Tribunal by six months.

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 fee and the same was against the mandate of the A&C Act.

The Court at the outset remarked that the law is also well settled that the Court while considering an application under Section 29A of the A&C Act, is only concerned with the issue as to whether the Arbitrator has acted with expedition in the matter; issues relating to the conduct of the Arbitration and/or arbitral fees are not relevant for the purpose of Section 29A.

The Court referred to its earlier judgments in Orissa Concrete & Allied Industries Ltd. vs. Union of India and NCC Ltd. vs. Union of India and reiterated that the grievance of one of the parties with regard to the conduct of the arbitral proceedings, and a party’s substantive challenge with regard thereto, are beyond the scope of adjudication in proceedings under Section 29(A) of the A&C Act.

“It was reiterated that it is always open to the party aggrieved (with the manner of conduct of arbitral proceedings) to take appropriate remedies as available to it, however, such grievances cannot be ventilated in proceedings before the Court under Section 29 (A) of the Act,” added the Judge.

While noting that the arbitrator had acted with sufficient expedition and dispatch in the matter and the hearing before the learned arbitrator already stood concluded and only the arbitral award remains to be pronounced, the Court was of the deemed view that it would be appropriate to grant a suitable extension of time for completion of arbitral proceedings and making of the arbitral award.

Accordingly, the present petition was allowed, the time period for completion of arbitral proceedings and making of the arbitral award was extended by a period of six months, the Court ordered.