National Highway Authority Of India vs Gayatri Jhansi Raodways Limited

CIVIL APPEAL NO. 5384 OF 2019 (Arising out of SLP (C) No. 22099 of 2018) Leave granted.

The brief facts of the present appeal are as follows: A contract dated 07.02.2006 was entered into between 

As disputes arose between the parties, arbitration was invoked by the appellant long after the contract was entered into, i.e., on 23.05.2017. The respondent wrote a letter dated 14.07.2017 appointing Shri Sudesh Dhiman as its nominee arbitrator in which it reminded the arbitrator that the fee applicable is to be considered as per the policy circular of the NHAI dated 01.06.2017. This circular substituted amounts payable to the arbitrator as per the circular of 2004, whereby the arbitrators would now get for any claim under Rs.100 crores, Rs.25,000 per day together with enhanced other charges or a lumpsum fee of Rs.5 lakhs per case which includes counter claims, in place of the original fee structure.

(c) The Tribunal considered the matter and decided that the fees of the AT shall be regulated as per provisions of the Fourth Schedule of the Arbitration and Conciliation (Amendment) Act, 2015.” The respondent, against this order, moved an application dated 13.10.2017 before the Tribunal in which it sought to remind the Tribunal that the arbitral fees has been fixed by the agreement and that, therefore, they may be fixed in terms of the policy of 2017 and not as per the Fourth Schedule of the Arbitration and Conciliation Act, 1996. The matter came up before the Tribunal yet again on 30.01.2018. The Tribunal then passed the following order:

The arbitrators merely followed the law laid down by the Delhi High Court and cannot, on that count, be said to have done anything wrong so that their mandate may be terminated as if they have now become de jure unable to 7 Civil Appeal No. 5383 of 2019 etc. perform their functions. The learned Single Judge, in allowing the Section 14 application, therefore, was in error and we set aside the judgment of the learned Single Judge on this count.

However, the learned Single Judge’s conclusion that the change in language of section 31(8) read with Section 31A which deals only with the costs generally and not with arbitrator’s fees is correct in law. It is true that the arbitrator’s fees may be a component of costs to be paid but it is a far cry thereafter to state that section 31(8) and 31A would directly govern contracts in which a fee structure has already been laid down. To this extent, the learned Single Judge is correct. We may also state that the declaration of law by the learned Single Judge in Gayatri Jhansi Roadways Limited is not a correct view of the law.

With these observations, this appeal is allowed, the impugned judgment is set aside and the arbitrators are directed to proceed with the arbitration as expeditiously as possible.

We extend the time, with the consent of the parties, to a period of one year from today in which the arbitrators must deliver the Arbitral Award in the present case. CIVIL APPEAL NO. 5383 OF 2019 (Arising out of SLP (C)No. 3211 of 2018 Regard being had to the judgment just pronounced in 8 Civil Appeal No. 5383 of 2019 etc. the aforementioned Civil Appeal No. 5384 of 2019, we set aside the impugned judgment dated 11.09.2017 in the present case. However, the setting aside of this judgment will not, in any way, come in the way of the final Award between the parties which has been upheld finally by this Court.

The appeal stands disposed of accordingly.

[ SURYA KANT ] New Delhi;

July 10, 2019.