Case Details Chennai Metro Rail Limited Administrative Building vs M/s Transtonnelstroy Afcons (Jv) & Anr.

Court

Supreme Court of India

Date

19 October 2023

Case No.

Miscellaneous Application No.184 of 2023

Result

Disposed

Bench

S. Ravindra Bhat, Aravind Kumar

Citation

[2023] 14 S.C.R. 995 : 2023 INSC 932

Issue for consideration

Whether revision of fee by an arbitral tribunal would terminate the mandate of the tribunal on the ground of ineligibility as per s. 12 of the Arbitration and Conciliation Act, 1996. Arbitration and Conciliation Act, 1996 – ss. 12, 13 and 14 – Grounds and procedure of challenge – Failure or impossibility of the arbitrator or tribunal to act – Arbitration proceedings between the parties – Tribunal revised the hearing fee for each arbitrator fixed at Rs 1,00,000/- per session to Rs 2,00,000/- per session of three hours – Respondent paid the revised fee for five hearings – Application u/s. 14 by the appellant challenging the mandate of the tribunal that the payment of the disputed increased amount by one party, caused prejudice to the appellant and not be treated in an impartial manner by the tribunal, resulting in the tribunal to become de jure unable to perform its functions as required – Dismissal of the application by the High Court – Correctness:

Headnote

Held: Fixation of fee, is contractual, and wherever there is no prior arrangement or court order, the tribunal has to fix it at the threshold – Fee increase can be resorted to only with the agreement of parties; in the event of disagreement by one party, the tribunal has to continue with the previous arrangement, or decline to act as arbitrator – By insisting that the increase of fee should prevail does not amount to a per se ineligibility, reaching to the level of voiding the tribunal’s appointment, and terminating its mandate – Plea of the applicant that the concept of de jure ineligibility because of existence of justifiable doubts about impartiality or independence of the tribunal on unenumerated grounds or other than those outlined as statutory ineligibility conditions in terms of s.12(5), cannot be sustained – Grounds other than those mentioned in the said schedule, occasioning an application in terms of s.12(3) cannot be conceived – In case, applicants plea is upheld, the consequences could well be an explosion in the court docket and other unforeseen results – Skipping the statutory route carefully devised by Parliament can cast yet more spells of uncertainty upon the arbitration process – De jure condition is not the key which unlocks the doors that bar challenges, mid-stream, and should “not to unlock the gates which shuts the court out” from what could potentially become causes of arbitrator challenge, during the course of arbitration proceedings, other than what the Act specifically provides for – Direction to the arbitrators to resume the proceedings and decide the case in accordance with law. [Paras 33, 34, 39 and 40]

Arbitration and Conciliation Act, 1996 – s. 12 – Grounds for challenge of an arbitrator – Determination of ineligibility of an arbitrator – Elucidated. [Paras 21-24, 28-31]

Arbitration and Conciliation Act, 1996 – Expression ‘bias’ – Meaning of:

Held: The Act has deliberately avoided an expression ‘bias’, instead the term used is justifiable doubts about the impartiality of an arbitrator, is an expression with many facets-subject matter bias; pecuniary bias and personal bias – Predisposition to decide for or against one party, without proper regard to the true merits of the dispute is bias – There must be reasonable apprehension of that predisposition. [Para 18] LIST OF CITATIONS AND OTHER REFERENCES

JUDGMENT / ORDER OF THE SUPREME COURT JUDGMENT S. RAVINDRA BHAT, J. 1. Chennai Metro Rail Limited, the applicant (hereinafter referred to as “Chennai Metro”), a joint venture between the Central Government and the Government of Tamil Nadu, had, pursuant to a public tender, awarded the contract to the respondent (hereafter referred to as “Afcons”) have called for a project the total value of Rs. 1566 crores. The contract was signed on 31.01.2011. Eventually, on 15.04.2021, Afcons sought a reference of several heads of disputes to arbitration after certain interlocutory proceedings. Eventuall

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