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2024 SCC OnLine Del 6795 : AIR 2025 (NOC 77) 34
In the High Court of Delhi at New Delhi
(BEFORE MANMOHAN, A.C.J. AND TUSHAR RAO GEDELA, J.)
C.S. Construction Company Pvt. Ltd. and Another …
Appellants;
Versus
Excelling Geo and Engineering Consultant Pvt. Ltd.
and Others … Respondents.
LPA 968/2024, CM Appl. 57001/2024, CM Appl. 57002/2024 & CM
Appl. 57003/2024§
Decided on September 27, 2024
Advocates who appeared in this case :
Mr. Sudhir Nandrajog, Senior Advocate alongwith Mr. Chaitanya
Mahajan, Ms. Payal Kakra, Mr. Ehraaz Zafar, Ms. Padamja Sharma, Ms.
Astha Agrawal and Mr. Devang Sharma, Advocates.
Mr. Rakesh Kumar and Mr. Ankit Kumar, Advocate for R-1.
The Judgment of the Court was delivered by
MANMOHAN, A.C.J. (Oral):— Present appeal has been filed
th
challenging the order dated 25 August, 2024 passed by the learned
Single Judge in W.P. (C) 10027/2024 titled “CS Construction Company
Pvt. Ltd. v. Excelling Geo & Engineering Consultant”, whereby the
learned Single Judge held that no exceptional circumstances or
perversity has been demonstrated to warrant the exercise of the
extraordinary jurisdiction of the Court under Article 226 or 227 of the
Constitution of India and dismissed the underlying writ petition with
costs.
2. Mr. Sudhir Nandrajog, learned senior counsel appearing for the
appellants submits that the appellants have invoked the writ
jurisdiction for issuance of appropriate direction for quashing the orders
dated 27th March, 2024, 24th May, 2024, 5th July, 2024 and 9th July,
2024, passed in the ongoing arbitration proceedings by respondent no.
nd
2/sole arbitrator as well as an order dated 22 March, 2024 passed by
respondent no. 3/coordinator, Delhi International Arbitration Centre (for
short ‘DIAC’).
3. Learned senior counsel for the appellants, at the outset, states on
instructions, that the appellants are restricting their appeal only qua
nd
the order dated 22 March, 2024 of the respondent no. 3/coordinator,
DIAC. He states that the controversy has arisen in respect of the fee
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payable to the respondent no. 2/sole arbitrator regarding the counter
claim filed by it. He states that vide order dated 12th March, 2024, the
respondent no. 2/sole arbitrator had directed the parties to deposit
their individual share in respect of the claim as also the counter claim.
He states that in the meantime, the respondent no. 1/claimant moved
st
an application dated 21 March, 2024 to the DIAC expressing its
inability to pay its share of the deposit with respect to the counter
claim. He states that the respondent no. 3/coordinator, DIAC, vide
order dated 22nd March, 2024 directed reassessment in accordance with
the proviso to sub-section (1) of section 38 of the Arbitration &
Conciliation Act, 1996 (for short ‘Arbitration Act’).
4. He states that the respondent no. 3/coordinator, DIAC, without
having any jurisdiction and contrary to the authority vested in him,
passed the order dated 22nd March, 2024 thereby directing separation
of assessment of fee in respect of the claim and the counter claim. He
states that the respondent no. 3/coordinator, DIAC, has misdirected
himself of the exercise of the power by relying on Rule 3 (ii) of the
DIAC (Administrative Costs & Arbitrator's fee) Rules, 2018 (for short
‘DIAC Rules, 2018’). He states that this order is not only without
jurisdiction but also contrary to the order passed by the respondent no.
th
2/sole arbitrator on 12 March, 2024. He states that the respondent no.
3/coordinator, DIAC is not an appellate authority sitting in an appeal
over the respondent no. 2/sole arbitrator, particularly, in respect of the
fee determined by the respondent no. 2/sole arbitrator.
5. Learned senior counsel for the appellants refers to order dated
th
27 March, 2023, passed by the respondent no. 2/sole arbitrator,
directing the respondent no. 1/claimant deposit the whole of the fee
with respect to its claim and simultaneously, further directed the
appellants deposit the whole of the fee with respect to its counter claim
nd
as per the assessment order dated 22 March, 2024 passed by the
respondent no. 3/coordinator, DIAC.
6. Learned senior counsel for the appellants refers to section 37 of
the Arbitration Act to state that only those orders, specified in the said
section alone, are open to challenge and none others. He states that
evidently, the order passed by the arbitrator fixing the fee in respect of
the counter claim also does not fall within the ambit of section 37 nor
can the respondent no. 3/coordinator, DIAC arrogate to himself any
such power not vested in law. He contends that the exercise of
jurisdiction not available with the respondent no. 3/coordinator, DIAC
th
would render the order dated 12 March, 2024 non est in law.
Predicated on the above, he states that the impugned order dated 22nd
March, 2024 of the respondent no. 3/coordinator, DIAC be quashed and
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set-aside.
7. Learned senior counsel for the appellants forcefully submits that if
such order is permitted to stand, it would lead to an incongruous and
anomalous situation. According to him, any order passed by the
arbitrator fixing the fee and the schedule could be interdicted by any
party seeking to delay the proceedings on such procedural matters. He
states that this ought not to be encouraged and be nipped in the bud.
On this basis too, he states that the order is palpably illegal and
overreaching of the jurisdiction of respondent no. 3/coordinator, DIAC
and ought to be set-aside.
8. This Court has heard Mr. Sudhir Nandrajog, learned senior counsel
for the appellants and Mr. Mr. Rakesh Kumar, learned counsel for the
respondent no. 1/claimant and perused the record.
9. This Court notices that the issue raised before this Court pertains
to deposit of the sole arbitrator's fee to the extent of 50% on the
counter claim filed by the appellants and the refusal to deposit the
same by the respondent no. 1/claimant on the grounds of inability to
arrange for such fee. Though the learned senior counsel for the
nd
appellants argues that the impugned order dated 22 March, 2024 of
the respondent no. 3/coordinator, DIAC amounts to overreaching the
jurisdiction vested upon the respondent no. 3/coordinator, DIAC, yet
we find that the respondent no. 3/coordinator, DIAC has premised his
reasoning on the basis of Rule 3 (ii) of the DIAC Rules, 2018. This
Court finds that the respondent no. 3/coordinator, DIAC, while
examining the application filed by the respondent no. 1/claimant
describing its inability to pay the 50% of the fee of the counter claim,
had not interdicted or sat in appeal over that of the order dated 12th
March, 2024 of the respondent no. 2/sole arbitrator. The respondent no.
3/coordinator, DIAC has noted the order passed by the respondent no.
2/sole arbitrator and without making any observations or comments,
has exercised the power vested on him under Rule 3 (supra). The
respondent no. 3/coordinator, DIAC appears to have been driven by the
inability of the respondent no. 1/claimant to arrange for the 50% fee in
respect of the counter claim filed by the appellants and has applied his
mind in accordance with the rules with cogent reasons. It is apposite to
extract the relevant paragraphs of the impugned order hereunder:
“9. I have also gone through the application placed before the
undersigned as well as the order dated 22nd March, 2024 of the
Hon'ble Arbitrator. It transpires that in Para No. 12 of the application
so filed, the Claimant has in no unclear terms, expressed that he is
unable to arrange the balance amount of Rs. 10,95,042/-, so found
to be deficient. The relevant para of the application is reproduced as
under:
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“12. It is submitted that the claimant is unable to arrange the
amount of their part in respect of Counterclaim i.e. Rs. 10,95,042/
-. The claimant undertakes that to deposit entire amount of
administrative cost & arbitrator fee only in respect of claim as per
whatever payment schedule will be given by the DIAC. The
Respondent/Counter Claimant may be directed to deposit the
entire amount of administrative cost & arbitrator fee in respect of
their counter claim.”
10. The Claimant, on the basis of the above, has sought separate
assessment of claim and counter claim undertaking to pay the entire
balance amount as may be found due on the basis of assessment of
the claim separately.
11. In terms of the Rule 3(ii) of Delhi International Arbitration
Centre (Administrative Costs & Arbitrator's fees) Rules, 2018 as
reproduced hereinafter, the Centre can assess the claim and counter
claim separately in the event of failure of party to pay its share;
“3. Arbitrator's Fee
(ii) The fee shall be determined and assessed on the aggregate
amount of the Claim(s) and Counter Claim(s):
Provided that in the event of failure of party to arbitration to
pay its share as determined by the Centre, on the aggregation of
Claim(s) and Counter Claim(s), the Centre may assess the Claim
(s) and Counter Claim(s) separately and demand the same from
the parties concerned:
Provided further that for the purposes of valuation or
quantification of the Claims, the Centre shall be governed
by the laws of India, and the principles governing the
valuation of claims before the Courts of Civil Jurisdiction:
Provided also that in case of undervaluation or where the value
is not determinable in pecuniary terms, the Co-ordinator would be
entitled to assess and demand the revised fee on the basis of
assessment and to decide the objections, if any, relating to the
quantification or valuation.”
12. It may be relevant here to mention that the claimant's
application clearly records his inability to pay the balance and it shall
be undesirable or a futile process to keep pressing for a deficit
amount on the basis of assessment of aggregate amount of claim
and counter claim, even if, the claimant might be taken to have
wrongfully resiled from his earlier stand.
13. What factors in, significantly, is the fact that the Centre needs
to collect the complete fee on the claim and counter claim, rather
than going into the correctness of the stand of the parties. That
process would totally be beyond the jurisdiction of the Centre.
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14. Having regard to the specific averments made in the
application, the Centre can assume that the expression of inability to
pay, falls within the term of “failure” as mentioned in Proviso 3(ii) of
the aforesaid Rules.
15. Thus, what is necessitated now, is separate assessment of
claim and counter claim, without any further delay in order that the
parties can be asked for the respective shares on the basis of the
claim and counter claim.
16. Accordingly, the Deputy Counsel concerned is directed to
immediately reassess the claim and counter claim separately, as per
the schedule applicable and further to communicate the assessment
to learned counsel for the parties as well as to the Hon'ble Arbitrator
immediately, having regard to the fact that the next date is 27th
March, 2024.”
10. This Court also finds that the respondent no. 3/coordinator,
DIAC has appropriately assumed that the expression “inability to pay”,
falls within the terms of “failure” as mentioned in proviso to Rule 3 (ii)
of the DIAC Rules, 2018. Based thereon, a reassessment of fee in
respect of the claim and counter claim were directed to be worked out
separately. This Court also finds that while exercising such jurisdiction,
the respondent no. 3/coordinator, DIAC neither overreached the
th
jurisdiction vested in him nor sat in appeal over the order dated 12
March, 2024 passed by the respondent no. 2/sole arbitrator. All that
was done, was to direct reassessment of fee separately so as to ensure
that the claim and the counter claim can proceed in accordance with
law.
11. Besides, this Court also finds it intriguing that it is the
appellants/counter claimants who has challenged the order of the
respondent no. 3/coordinator, DIAC. If at all, anyone could be an
aggrieved person, it could be the respondent no. 2/sole arbitrator
alone. No such application, appeal or a writ petition has been preferred
by the respondent no. 2/sole arbitrator.
12. Moreover, in arbitral proceedings, if a party chooses not to
deposit its share of the arbitrator's fee, the other party while making
the deficit deposit, is kept safe and indemnified from any loss by the
arbitrator while passing award in the form of costs of arbitration. The
award, which is a deemed decree, would also take within its fold, apart
from the costs of arbitration, the fee, if any, payable by a party and not
paid. In other words, the 50% share of the arbitrator's fee not being
deposited by the respondent no. 1/claimant may be decreed in favour
of the appellants in the award itself. Thus, looked at it in any which
way, the appellants shall not be at loss nor would the appellants be
remediless.
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13. Thus, it is clear that the apprehension of the appellants is
unfounded. Resultantly, there is no merit in the present appeal and the
same is dismissed along with pending applications, without any order
as to costs.
———
§
2024:DHC:7521-DB
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