Case Note & Summary
The petitioner, M/s Gammon India Ltd., filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an interim award dated 22 July 2013 passed by the arbitral tribunal. The tribunal had rejected the counter claim filed by the petitioner on the ground that the petitioner had not deposited the fees of the arbitral tribunal for hearing the counter claim. The facts reveal that the arbitral tribunal, in a meeting dated 23 April 2012, directed both parties to share the fees and expenses equally. However, since April 2013, the respondent, Trenchless Engineering Services (P) Ltd., had been paying the entire fees and expenses, including the petitioner's share, to avoid delays. The respondent, however, refused to pay the petitioner's share of fees for the days when the counter claim was heard. The tribunal, relying on Section 38 of the Act, rejected the counter claim. The High Court, after perusing the award and hearing both sides, found that the tribunal had not prescribed any separate fees for the counter claim. The court held that the tribunal could not reject the counter claim for non-payment of fees when the respondent had been paying the entire fees and no separate fee schedule was prescribed. The court set aside the impugned award and directed the tribunal to hear the counter claim on merits, without insisting on separate payment of fees by the petitioner for the counter claim. The court clarified that the respondent's obligation to pay fees would be subject to the final award.
Headnote
A) Arbitration - Counter Claim - Rejection for Non-Payment of Fees - Section 34, Arbitration and Conciliation Act, 1996 - The arbitral tribunal rejected the counter claim filed by the petitioner on the ground that the petitioner had not deposited the fees for hearing the counter claim, despite the respondent having paid the entire fees and expenses since April 2013. The High Court held that the tribunal could not reject the counter claim without prescribing a separate fee schedule for the counter claim, and that the rejection was contrary to the provisions of the Act. (Paras 1-6) B) Arbitration - Fees of Arbitral Tribunal - Section 38, Arbitration and Conciliation Act, 1996 - The court observed that Section 38 does not empower the arbitral tribunal to reject a counter claim for non-payment of fees when the respondent has been paying the entire fees. The tribunal's direction to deposit fees was for the entire arbitration, and no separate fees were prescribed for the counter claim. (Paras 5-6)
Issue of Consideration
Whether the arbitral tribunal was justified in rejecting the counter claim filed by the petitioner solely on the ground that the petitioner had not deposited the fees of the arbitral tribunal for hearing the counter claim, especially when the respondent had been paying the entire fees and expenses since April 2013 and no separate fees were prescribed for the counter claim.
Final Decision
The High Court allowed the petition, set aside the impugned interim award dated 22 July 2013, and directed the arbitral tribunal to hear the counter claim on merits without insisting on separate payment of fees by the petitioner for the counter claim. The respondent's obligation to pay fees would be subject to the final award.
Law Points
- Arbitral tribunal cannot reject counter claim for non-payment of fees unless separate fee schedule for counter claim is prescribed
- Section 38 of Arbitration and Conciliation Act
- 1996 does not empower tribunal to reject counter claim for non-payment of fees by claimant when respondent has been paying entire fees
