Jharkhand High Court
The State Highways Authority Of ... vs Rcm Infrastructure Limited on 6 May, 2024
Author: Shree Chandrashekhar
Bench: Navneet Kumar, Shree Chandrashekhar
IN THE HIGH COURT OF JHARKHAND AT RANCHI
(Civil Miscellaneous Jurisdiction)
C.M.P. No. 23 of 2022
The State Highways Authority of Jharkhand through its through its Member
Technical namely Mr. Abinash Kumar Dipak having its principal office at
Deen Dayal Nagar, Booty Road (Near office of Executive Engineer, N.H.
Ranchi Division), Ranchi-834008 Jharkhand, P.O.-Ranchi University, P.S.
Lalpur, District-Ranchi
.. ... ... Petitioner/Applicant
Versus
RCM Infrastructure Limited, Banjara Hills, Hyderabad, through the
Managing Director, RCM Infrastructure Limited, 8-2-622/5/A2, Indira
Chambers, 2nd Floor, Avenue-4, Road No. 10, Banjara Hills, Hyderabad-
500034, P.O. & P.S. Banjara Hills, District-Hyderabad.
... ... ... Respondent/Respondent
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CORAM: HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE NAVNEET KUMAR
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For the Petitioner: Mr. Sharad Kaushal, Advocate For the Opposite Party: Mr. D. Sheshadri Naidu, Sr. Advocate [Through V.C.] Mr. Parth Jalan, Advocate Mr. Bajrang Kumar, Advocate
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6th May 2024 Per, Shree Chandrashekhar, A.C.J. The order dated 28th February 2020 passed by the learned A.J.C.-XIII-cum-P.O. Commercial Court, Ranchi in Commercial Case No. 09/2019 is under challenge in this Civil Miscellaneous Petition.
2. This is unfortunate that even on 16th date of hearing of this Civil Miscellaneous Petition a prayer for adjournment is made on behalf of the State Highways Authority of Jharkhand (in short, SHAJ).
3. A detailed order was passed by this Court on 22nd August 2022 running across 10 pages and referring to the issue raised in the present petition. Notwithstanding that, adjournments after adjournments were taken for over a year and half.
4. The order under challenge was passed by the Presiding Officer of the Commercial Court at Ranchi in Commercial Case No. 09/2019.
5. In the order dated 28th February 2020, the Presiding Officer of the Commercial Court referred to the provisions under Section 32 of the Arbitration and Conciliation Act 1996 (in short "the AC Act") which provides that mandate of the Arbitrator terminates on termination of the arbitral proceedings except the cases referred under section 33 and sub- section (4) of section 34 of the Act. The Presiding Officer also noted that during pendency of Commercial Case No. 09/2019 an Award was made on 10th June 2019 by the Arbitral Tribunal. We are informed that the application under section 14(1) of the AC Act was filed around 18th April 2019 and, at that time, the Arbitral Tribunal was seized with the reference.
6. The order dated 28th February, 2020 which is under challenge is extracted as hereunder:
" ..... Both the sides have been heard at length.
It has been vehemently argued on behalf of the applicant that the Arbitrators ascertained their fees arbitrarily and exorbitantly and they charged their fees separately for the claim and counter claim which is not in consonance with Schedule IV of the Act which prescribes for model fee.
On the other hand the learned Counsel for the Claimant submitted that the Arbitrators are entitled to ascertain separate fees for claim and counter claim. The learned counsel further submitted that the applicant earlier filed W.P.(C) no 6368 of 2018 raising same and similar grievances and the Hon'ble court vide its order dated 14/03/2019 referred the matter to the administrative side for considering the question. In this backdrop it has been submitted that the applicant cannot raise the issue of ascertainment of fees at this stage particularly in the backdrop that the award has been published and therefore the mandate of the arbitrator cannot be terminated at this stage.
Here in the backdrop of the pleadings and submissions made by the rival side it would be in fitness of things to reproduce Sec. 32 of the Arbitration and Conciliation Act which reads- 32. Termination of proceedings (1) The arbitral proceedings shall be terminated by the final arbitral award or by and order of the arbitral tribunal under sub-section(2). (2)...
(3) Subject to section 33 and sub-section (4) of section 34, the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings.
In the present case it has been pointed out that the arbitral award has already been published on 10/06/2019 meaning thereby the mandate of the Arbitrators has already terminated in view of Sec. 32 of the Arbitration and Conciliation Act.
The learned Counsel for the petitioner has not brought any notice to this Court with regard to any statutory provision or any judicial pronouncements which prescribes for termination of the mandate of the 2 C.M.P. No.23 of 2022 Arbitrators after publication of the Award. Even otherwise if the mandate of the Arbitrator is terminated at this stage then it would amount to indirectly setting aside of the award for which there is specific provision as contained in Sec 34 of the Arbitration and Conciliation Act.
So far as contention of the petitioner that the Arbitrators have ascertained their fees exorbitantly and is not in consonance with Schedule IV of the Act, I find that the Hon'ble Court in WPC No. 6368 of 2019 has heard the matter and has been pleased to refer the matter to the Administrative side of the Hon'ble Court for framing of rules in terms of Section 11 (14) of the Arbitration and Conciliation Act 1996 vide order dated 14/03/2019 therefore the said plea cannot be taken by the petitioner in separate proceedings.
In the light of the discussions made above, I find that the petition filed by the petitioner for termination of the mandate of the Arbitrators has become infructuous on account publication of the award and accordingly the present case is dismissed as infructuous. O/c is directed to consign the record in the record room as per Rules."
7. The scheme of the AC Act is that except the situations provided under section 17 of the AC Act the Courts shall not step in and the remedy of the aggrieved party shall lie either before the Arbitral Tribunal or in a petition filed under section 34 of the AC Act. We may usefully refer to section 5 of the AC Act which reads as under:
5. Extent of judicial intervention.--Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.
8. As regards the application under section 14 (1) of the AC Act, this needs to be recorded that the mandate of an Arbitrator shall terminate if
(a) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; or (b) he withdraws from his office or the parties agree to the termination of his mandate. Sub section (2) provides that 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.
9. The dispute raised on so called exorbitant fee fixed by the Arbitral Tribunal prima facie does not appear to fall under section 14. Still, the SHAJ takes out a proceeding before this Court in W.P.(C) No. 6368 of 2018. In that proceeding, the statement of the learned Advocate General was recorded that SHAJ shall seek a remedy before the appropriate forum;
3 C.M.P. No.23 of 2022apparently before the Arbitral Tribunal. This has not been brought on record or at least not recorded in the order dated 28 th February 2020 that the SHAJ filed an application before the Arbitral Tribunal seeking permission to laid evidence to corroborate and demonstrate the plea of exorbitant fee taken in the application under section 14(1) of the AC Act. What is contended before this Court is that the respondent filed an application vide C.M.P. No. 217 of 2019 for modification in the order dated 14th March 2019 inasmuch as it was also aggrieved by the fixing of exorbitant fee.
10. The order dated 14th March 2019 passed in W.P.(C) No. 6368 of 2018 is reproduced as under:
"2. The immediate cause which appears to have had prompted institution of the present writ petition is an order passed by a learned Arbitral Tribunal comprising of three learned Arbitrators fixing Rs.60 Lacs as fees of each of them computing separately the amount claimed and forming basis of counter claim. The writ petitioner is apprehensive of a direction coming under Section 38(1) of the Arbitration and Conciliation Act, 1996 (the 1996 Act) for deposit of such fees and it is for this reason the vires of the aforesaid provision has been challenged.
3. The main grievance of the writ petitioner as well as the respondent no. 1, being the competing parties before the Arbitral Tribunal, is that the fees fixed thus fixed exceed the table of fees specified in Fourth Schedule to the 1996 Act. The Arbitral Tribunal was appointed by an order of a learned Single Judge of this Court in exercise of power under Section 11(6) of the 1996 Act. Admitted position is that this Court is yet to frame Rules under Section 11(14) of the 1996 Act. So far as the appointment of the Arbitral Tribunal is concerned, however, the learned Single Judge had indicated in the order passed on 11th May, 2018 the fees to be fixed in the following passage:-
"I, therefore, appoint Hon'ble Mr. Justice Narendra Nath Tiwari (Retd.), Former Judge of this Court, at present residing at 673/F, Jatin Chandra Road, Burdwan Compound, Lalpur, Ranchi having mobile nos. 9431115603 and 7781003511 as the 2nd arbitrator to adjudicate the dispute between the parties. Both the arbitrators would now proceed to appoint the presiding arbitrator in terms of Arbitration Clause-26.3 of the E.P.C. Agreement dated 22nd May 2015. The Arbitral Tribunal on its constitution would proceed to adjudicate the dispute between the parties thereafter. The learned arbitrators would be free to lay down their fee and other expenses for conduct of the arbitral proceeding however keeping into mind the ceiling as prescribed under Schedule-IV of the Act of 1996 (as amended). The Arbitral Tribunal would endeavor to conclude the proceeding expeditiously also keeping into mind the mandate of the legislature as contained in Section 29-A of the Act of 1996."
4. Mr. Ajit Kumar, learned Advocate General appearing for the writ petitioner, submits that there is no provision under the 1996 Act by which such order of the Tribunal fixing excessive fees can be challenged and hence the instant writ petition has been filed.
5. As regards the provision of Section 38(1) of the 1996 Act, the same provides for fixing the amount of deposit or supplementary deposit, as the case may be, as an advance for the costs referred to in sub-section 4 C.M.P. No.23 of 2022 (8) of Section 31 thereof, which it expects will be incurred in respect of the claim submitted to it. Sub-section (2) of Section 38 of the 1996 Act lays down the provision for payment for such deposit. We do not find any reason to question the constitutional validity of the aforesaid provisions.
6. At the time of hearing before us, learned Advocate General has also not pressed the point of unconstitutionality of the aforesaid provisions.
7. Once the present litigation gets divested of the constitutional question, the point which arises for us to address is as to whether the jurisdiction under Article 226 of the Constitution of India can be exercised against the order of an Arbitral Tribunal fixing its fees. But we are not called upon at the time of hearing to answer that question because the learned Advocate General has submitted before us that his client would seek remedy before the appropriate forum on the question of fixing of excessive fees and whether the same has caused prejudice to any of the parties or not.
8. The only point which is left to be addressed in view of this submission of the learned Advocate General is over framing of rules in terms of Section 11(14) of the 1996 Act.
9. This Court refers this matter to the administrative side of the High Court for considering this question.
10. Let the Registrar General of this Court place this order before the Standing Committee as also before the Rules Committee of this Court for this purpose.
11. This order disposes of the main writ petition."
11. This is also useful to see the order dated 11th April 2019 in C.M.P. No. 217 of 2019 filed by the claimant-company which is extracted as under:
"............This application has been brought mainly for deletion of part of the first sentence recorded in paragraph 3 of our order passed on 14th March, 2019. The first sentence of that paragraphs reads:-
"3. The main grievance of the writ petitioner as well as the respondent no. 1, being the competing parties before the Arbitral Tribunal, is that the fees fixed thus fixed exceed the table of fees specified in Fourth Schedule to the 1996 Act."
2. The applicant's case is that fixing of fees was not their grievance. The substantive plea of the applicant is pleaded in paragraph 7 of this application, which reads:-
"That in the present facts of the case, the petitioner is not aggrieved of the fee fixed by the Arbitration Tribunal as the Tribunal consciously determined its fee in terms of Schedule-IV. The submission as recorded by the Hon'ble Court at para -3 was never advanced by the present petitioner. Accordingly, the petitioner prays that the following may be deleted from para-3 of the order under modification which reads as follows:
"As well as the respondent no. 1 being the competing parties before the Arbitral Tribunal"."
3. This order was dictated in open Court in presence of learned counsel for the applicant. In course of hearing before us, it was specifically put to the learned counsel for the applicant by us as to whether they also had any grievance over fixing of fees and this was answered in the affirmative by the learned counsel representing the applicant at that point of time. It was in this context the first sentence of paragraph 3 of the order was recorded.
5 C.M.P. No.23 of 20224. The said paragraph 7 of this Application has been supported by an affidavit of one G. Jagedeeswara Rao, having his Office at 8-2-622/5/A/2, Indira Chambers 2nd Floor, Avenue - 4, Road No. 10, Banjara Hills, Hyderabad - 500034, Telangana. This affidavit however has been affirmed before an Advocate Oath Commissioner in Ranchi itself. The said paragraph 7 has been verified as true to the deponent's information and derived from relevant records of the case. We enquired from learned counsel appearing for the applicant as to whether the said deponent was present in Court at the time when the order was dictated and we were informed that he was not present in Court when the order was dictated. In such circumstances, in our view no reliance can be placed on the content of the said paragraph. Learned Advocate appearing for the applicant has indicated to us that he did not convey any such information to the deponent of the said affidavit. Source from which such information has been derived has not been disclosed in the affidavit portion of the application.
5. We had requested Mr. Pallav, who was earlier representing the said applicant to remain present in Court when this order was passed apart from Mr. Mishra, who is presently appearing for the applicant. None of them has submitted before us that part of paragraph 7 of the application in which it has been stated that the submission as recorded by this Court at paragraph 3 was never advanced on behalf of the applicant. What Mr. Mishra has submitted in course of hearing before us today is that he did not have specific instruction to make such submission before this Court. That could be an independent ground for making a prayer as made in this application, provided an application to that effect is brought and this Court is ultimately satisfied that such recordal is required to be deleted. On that count, we are not making any observation in this order. In the given context, we do not find any reason to entertain this application. The said submission, as we have already recorded, was dictated in open Court.
6. Hence, this application is dismissed."
12. Mr. D. Sheshadri Naidu, the learned Senior Counsel appearing for the claimaint-company submits that whether or not a party has become incapacitated on account of fixing of exorbitant fee is a question of fact that can be decided only after taking evidence. As noticed above, the remedy for the SHAJ lies in a petition under section 34 of the AC Act where the issue can be thrashed and a decision is rendered.
13. The present Civil Miscellaneous Petition lacks of merits is dismissed. Pending Interlocutory Applications stand disposed of.
(Shree Chandrashekhar, A.C.J.) (Navneet Kumar, J.) VK 6 C.M.P. No.23 of 2022