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National Highways Authority of India Vs. Ms IJM Gayatri JV – Delhi High Court Read Post »
In this important judgment, Hon’ble High Court held that:
(i) The moratorium order passed by the NCLT u/s 14 of IBC order also does not prohibit payment of arbitrator’s fees which was liable to be paid by the applicant much prior to the passing of the moratorium order.
(ii) The payment to the Arbitrator, who was appointed by orders of this Court under Section 11 of the Arbitration and Conciliation Act, 1996 has to be treated on par with the liquidator’s costs. The Arbitrator appointed by this Court has to be treated on par with the liquidator, who is having the priority to recover his fees / expenses.
(iii) The fees payable to an Arbitrator appointed by this Court has to be necessarily treated as costs incurred for CIRP.
(iv) Arbitrator’s Fees/costs are paramount and they have to be treated as preferential payments even in case where CIRP proceedings are pending before the NCLT. The Arbitrator’s fees payable to the Arbitrator appointed by this Court stands on a higher pedestal and has to be treated as a priority payment.
(v) The applicant, who has agreed to pay the fees of the Arbitrator as seen from the Minutes recorded by the Arbitrator on several occasions, cannot now question the fixation of the fees by the Arbitrator.
(vi) Having exercised his statutory lien for non payment of his fees/costs as per the provisions of Section 39(1) of the Arbitration Act, the petitioner will not be in a position to challenge the Arbitral Award passed against them by the Arbitrator.
(vii) Unless and until the applicant pays the agreed balance Arbitrator’s fees, the lien exercised by the Arbitrator’s under Section 39(1) of the Arbitration and Conciliation Act, 1996 will not get extinguished.
Hon’ble High Court held that even under the Arbitration Act, there is no binding provision obligating the parties or the arbitrators to follow and abide by one fixed rule or procedure to decide the fees. Moreover, party autonomy plays a crucial role in deciding the procedure of an arbitration proceeding. Power, right and entitlement are given to the parties involved in a dispute when it comes to Alternate Dispute Resolution. Therefore, it is essential that where the parties decide a course of action or procedure in arbitration proceedings, which is also supported by the governing entity, the said course of action or procedure is to given due recognition and observation. The Arbitrators shall not pass and issue any directions qua the fees that may be made binding on the parties when the same are in complete violation of the agreement between the parties as well as the specific and explicit directions of the Railway Board and RCF in their communications/notifications.
Landmark judgment of Supreme Court.
