NATIONAL HIGHWAYS AUTHORITY OF versus GAYATRI JHANSI ROADWAYS LIMITED

Citation: [2019] 9 S.C.R. 1001 · Decided: 10-07-2019 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Disposed off

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Judgment (excerpt)

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NATIONAL HIGHWAYS AUTHORITY OF INDIA
v.
GAYATRI JHANSI ROADWAYS LIMITED
(Civil Appeal No. 5383 of 2019)
 JULY 10, 2019
    [R.F. NARIMAN AND SURYA KANT, JJ.]
Arbitration:
Fee of Arbitrator – Whether to be governed by Fourth
Schedule of the Arbitration Act dehors the agreement between the
parties – Held: The fee schedule fixed by the agreement between
the parties would govern the fee of Arbitrator and not Fourth
Schedule to the Arbitration Act – Arbitration and Conciliation Act,
1996 [As amended by Arbitration and Conciliation (Amendment)
Act, 2015] – Fourth Schedule.
Arbitration and Conciliation Act, 1996:
s. 31(8) r/w. s. 31A  – Scope of – Held: Section 31(8) r/w
s.31A deals only with the costs generally and not with arbitrator’s
fee  – It is true that the arbitrator’s fees may be a component of
costs to be paid, but it is not correct to say that s. 31(8) and 31A
directly govern contracts in which fee structure has already been
laid down.
Disposing of the appeals, the Court
HELD: 1. In the facts of the present case, the fee schedule
was fixed by the agreement between the parties.  This fee
schedule, being based on an earlier circular of 2004, was now
liable to be amended from time to time in view of the long
passage of time that has ensued between the date of the
agreement and the date of the disputes that have arisen under
the agreement.  Therefore, the fee schedule that is contained in
the Circular dated 01.06.2017, substituting the earlier fee
schedule, will now operate and the arbitrators will be entitled to
charge their fees in accordance with this schedule and not in
accordance with the Fourth Schedule to the Arbitration Act.
[Para 12] [1007-A-C]
[2019]  9 S.C.R. 1001
1001
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SUPREME COURT REPORTS
[2019] 9 S.C.R.
2. The application that was filed before the High Court to
remove the arbitrators stating that their mandate must terminate,
is wholly disingenuous and would not lie for the simple reason
that an arbitrator does not become de jure unable to perform his
functions if, by an order passed by such arbitrator(s), all that they
have done is to state that, in point of fact, the agreement does
govern the arbitral fees to be charged, but that they were bound
to follow the judgment in National Highways Authority of India
vs. Gayatri Jhansi Roadways Limited case passed by the Delhi
High Court which clearly mandated that the Fourth Schedule and
not the agreement would govern. [Para 13] [1007-C-D]
3. However, the Single Judge’s conclusion that the change
in language of Section 31(8) read with Section 31A of Arbitration
and Conciliation Act, 1996 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 Sections 31(8) and 31A would
directly govern contracts in which a fee structure has already
been laid down.  To this extent, the  Single Judge is correct.  The
declaration of law by the Single Judge in Gayatri Jhansi Roadways
Limited case is not a correct view of the law.  [Para 15]
[1007-F-H]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5383
of 2019
From the Judgment and Order dated 11.09.2017 of the  High Court
of Delhi at New Delhi in ARB. A. No. 1 of 2017
 With
Civil Appeal No. 5384 of 2019.
P. S. Narsimha, Ms. Meenakshi Arora, Sr. Advs., Manish
K. Bishnoi, Archit Gupta,  Prashant Kumar, Ms. Awantika Manohar,
M/s. AP & J Chambers,  Bharat Singh,  Balendu Shekar, Ms. Sindoora
VNL, Rahul Tanwani, Santosh Kumar - I, Kaushik Laik, Angad Mehta,
P. S. Sudheer, Ms. Anne Mathew, Sayid Marzook Bafaki,  Advs. for the
appearing parties.
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The Judgment of the Court was delivered by
R. F. NARIMAN, J.
CIVIL APPEAL NO. 5384 OF 2019
(Arising out of SLP (C) No. 22099 of 2018)
1.  Leave granted.
2. The brief facts of the present appeal are as follows:
3. A contract dated 07.02.2006 was entered into between the
appellant and the respondent.  It is sufficient to state, for the purpose of
this case, that insofar as the dispute resolution is concerned, the arbitration
clause referred the parties to the arbitration of three learned arbitrators
- one to be appointed by each party and the third arbitrator to be appointed
by the two arbitrators so appointed.  The aforesaid contract contained
paragraph 5 which reads as follows:
“5. The parties are desirous that the remuneration and other
expenses payable to the Arbitrators as 

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