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National Highways Authority of India – Petitioner  Versus  K.K. Sarin Ors. – Respondents

 A. Arbitration and Conciliation Act, 1996, Section 14 – Fees of Arbitrators – Arbitrators to be bound by agreement between parties as to the fees – If fees is not acceptable to arbitrators , they can recuse themselves and are free not to accept office as an arbitrator but they cannot demand higher fee in supersession of said agreement – In the instant case, party once having agreed to fee schedule as directed by arbitral tribunal cannot make a grievance in respect thereto at the end of arbitration proceedings.

[Paras 21 and 22]

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DELHI HIGH COURT, 2009(157) D.L.T. 555 : 2009(4) A.D.(Delhi) 284

28.01. 2009

Delhi Development Authority– Appellant  Versus  Sunder Lal Khatri and Sons – Respondents

Arbitration Law – Arbitrator – Computation and award of amount – Failure of Arbitrator to give reasons – Legal misconduct – Obligation of arbitrator to give reasons – Where the Arbitrator , contractually or statutorily, is obliged to give reasons, it cannot be said he may give reasons in his award for awarding or rejecting some of the claims or counter claims and give no reasons for the rest of claims – Merely because parties may have contractually agreed to resolve their disputes through arbitration , it does not mean they are not entitled to be informed of reasons on basis of which their Arbitrator makes this award or that they should suffer clueless being condemned by the Arbitrator , particularly where the parties have expressly made it obligatory for the Arbitrator to give a reasoned award – Arbitrator loosely and generally referred to documents without specifying any particular document with reference to any amount – Failure to give reasons for computation of awarded amount constitutes legal misconduct of the Arbitrator – Impugned award partly set aside – Award of pendente lite interest @ 16% p.a. held justified considering the ongoing rates of interest during the period contract was performed and award was made – However, grant of interest @ 18% p.a. from the date of award held to be excessive because the rates of interest have substantially declined over the years – Rate of interest reduced to 12% p.a. from 18% p.a.

SUPREME COURT, A.I.R. 2009 SC 1585 : 2009(5) S.C.C. 678

20.3. 2009

MP. Housing Board – Appellant   Versus  Progressive Writers & Publishers – Respondents

A. Contract Act, 1872, Section 55 – Arbitration Act, 1940, Section 30 – Award – Setting aside of – Misconduct of arbitrator – Three construction agreements between society and Housing Board – Dispute referred to arbitr ator – In third agreement depositor/Society agreed to pay the amount of cost, loan, interest etc up to 31-10-1989 failing which there would be its deemed cancellation – Board’s own action in not furnishing accounts even at the stage of arbitration resulted in non-payment by the society – Finding by the arbitrator that the Board could not wriggle out of the agreement for its own wrong and that the time was not the essence of agreement and subsisted even after 31-10-1980 cannot be said to be perverse giving rise to any misconduct on his part.

[Paras 20 and 21]

B. Arbitration Act, 1940, Section 23 – Powers of arbitrator – Framing of issues – Additional issue can also be framed by the arbitrator on his own for the purpose of decision of the reference made to him under Section 23 of the 1940 Act.

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DELHI HIGH COURT, 2009(159) D.L.T. 314

9.4. 2009

National Highways Authority of India – Petitioner  Versus  K.K. Sarin Ors. – Respondents

A. Arbitration and Conciliation Act, 1996, Section 14 – Fees of Arbitrators – Arbitrators to be bound by agreement between parties as to the fees – If fees is not acceptable to arbitrators , they can recuse themselves and are free not to accept office as an arbitrator but they cannot demand higher fee in supersession of said agreement – In the instant case, party once having agreed to fee schedule as directed by arbitral tribunal cannot make a grievance in respect thereto at the end of arbitration proceedings.

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DELHI HIGH COURT, 2009(3) A.D.(Delhi) 404

02.02. 2009

Ethan Stein and Anr. – Petitioners   Versus  Balkrishna V. Doshi and Anr. – Respondents

Arbitration and Conciliation Act, 1996 – Sections 14 (2), 14(1)(a), 14(1)(b), 15(2), 15(1)(a), 11(6), 15(1)(a), 15(2) and 16 – Substitution of Arbitrator – Partnership of respondents and father of petitioners – Arbitration Agreement entered into – Arbitrate tribunal constituted without following the provisions of the Act which never held any formal meeting – Death of one arbitrator – Respondent failed to supply name of any substitute arbitrator despite request – Remaining arbitrators withdrew from the arbitration – Again, respondent failed to suggest substitute arbitrator despite request of the petitioner – Both the arbitrators gave consent – Court appointed third arbitrator – Later, one arbitrator recused himself claiming to have already resolved all disputes – Request by petitioner for substituting this arbitrator failed – Third arbitrator also withdrew during the pendency of the petition for substitution – Case for appointment/substitution of arbitrators made out – High Court cannot decide on the question of existence of disputes in such proceedings.

DELHI HIGH COURT, 2009(3) A.D.(Delhi) 282 : 2009(157) D.L.T. 712

11.02. 2009

Roshan Lal Gupta – Petitioner  Versus  Shri Parasram Holdings Pvt Ltd and Anr – Respondents

A. Arbitration and Conciliation Act, 1996, Sections 5, 8, 11, 16 and 34 – Arbitration Act, 1940, Sections 32, 33 and 34 – Arbitration award – Principle of natural justice – Petitioner took a chance of proceeding with the suit and not appearing before arbitrator – After the award had been made cannot be heard to make grievance of same – No denial of hearing and breach of principle of natural justice – Moreover arbitrator has in award dealt with all pleas.

[Para 40]

B. Arbitration and Conciliation Act, 1996, Sections 5, 8, 11, 16 and 34 – Arbitration Act, 1940, Sections 32, 33 and 34 – Arbitration award – Existence of – Challenged – Jurisdiction of arbitrator – Challenge to arbitr ator proceedings – Arbitral tribunal in its jurisdiction is entitled to decide the said challenge either a preliminary issue or together with entire matter.

2001(4) RAJ 106 (Ori)
Ratnakar Pradhan Vs Mahanadi Coalfields Ltd

There was a contract between the parties for execution of work, which envisaged that all disputes were to be settled by a sole arbitrator appointed by the CMD of the respondent. Once the dispute arose, in spite of notice by the petitioner, no arbitrator was appointed by the respondent, therefore the petitioner approached the court u/s 11. Thereafter the respondent appointed an arbitrator and contended that they wanted to explore the possibility of conciliation.

It was held that under the New Act, there can be conciliation even after the appointment of arbitrator and the respondent had no justification for the laxity in their actions. It is apparent that the respondent appointed the arbitrator only after it was brought to their notice that an application had been already filed in the Court. The respondent, having failed to exercise their power within a reasonable period, cannot thereafter insist that the arbitrator appointed by them must continue. Therefore the court has appointed an arbitrator.

2002(1) RAJ 381 (SC)
Narayan Prasad Lohia Vs Nikunj Kumar Lohia

This case probed into the question whether an arbitration agreement becomes invalid on the ground that it provided for appointment of only 2 arbitrators.

It was held that even if the parties provided for appointment of 2 arbitrators, the agreement does not become invalid. Under Section 11(3) the two arbitrators should then appoint a third arbitrator who shall act as presiding arbitrator. However, such an appointment should preferably be made in the beginning, even though the two arbitrators may also appoint a 3rd arbitrator at a later stage, ie. If and when they differ. This ensures that on a difference of opinion the arbitration proceedings are not frustrated. But if the 2 arbitrators agree and give a common award, there is no frustration of the proceedings. In such a case their common agreement would have prevailed, even if the 3rd arbitrator had differed.