Annual Arbitration Review 2018

Paschimanchal Vidyut Vitran Nigam Limited v. M/S IL & FS Engineering & Construction Company Limited

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Judgment:  Paschimanchal Vidyut Vitran Nigam Limited v. M/S IL & FS Engineering & Construction Company Limited

 

Citation: 2018 SCC OnLine Del 10831

 

Court: High Court of Delhi

 

Coram: Rajiv Shakdher

 

Date: August 16, 2018

 

Overview: Case looks at whether Provisions of the Fourth Schedule of Act apply to domestic ad hoc arbitrations where parties haven’t approached the Court of constitution of an arbitral tribunal.

 

Issue: Whetherthe provisions of the Fourth Schedule of the Act pertaining to the fee to be paid to the arbitrators would apply to domestic ad hoc arbitrations where parties have not approached the court for the constitution of an arbitral tribunal?

 

Factual Background:

An order was issued to IL&FS Engineering & Construction Company Limited(“Respondent”) that Paschimanchal Vidyut Vitran Nigam Limited (“Appellant”) could not pay fee fixed by the tribunal. Tribunal scaled down the fees, but still the Appellant was aggrieved and hence approached the Delhi High Court. Delhi High Court issued a notice to the Respondent to examine as to whether under the Act any fetter can be put on fee fixed by the arbitral tribunal, especially when the arbitral tribunal has not been constituted with the intercession of the court.

 

 

Analysis:

The counsel for the Respondent argued that the fee prescribed in the Fourth Schedule would not be applicable to domestic ad hoc arbitrations while the counsel for the Appellant relying upon paras 10-12 of the 246thLaw Commission Report[1]argued the opposite.

 

After hearing both parties, the Court observed that the provision with regard to fees contained in Section 11(14) of the Act is only an enabling provision. The concerned High Court has been given the leeway to frame rules, if it chooses to do so. Section 11, broadly, applies to circumstances where a party approaches the Court for the appointment of an arbitrator or presiding arbitrator.

 

Since the parties did not approach the Court for the constitution of the arbitral tribunal, the Court would have no role to play in fixing the fees of the arbitral tribunal as no such power is vested in the Court. Further, provisions of sub-section (14) of Section 11 clearly indicate that the fee prescribed in the Fourth Schedule of the Act is only suggestive.

 

Conclusion:

As the parties did not approach the court for the constitution of the arbitral tribunal, the court would have no part in deciding fees or deciding that the tribunal was charging an excessive amount, therefore this petition was dismissed by the Delhi High Court

[1]http://lawcommissionofindia.nic.in/reports/Report246.pdf

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