Entertainment City Ltd. v. Aspek Media (P) Ltd., 2020 SCC OnLine Del 2648

ENTERTAINMENT CITY LTD V. ASPEK MEDIA PRIVATE LTD

Whether the fees charged by the Arbitrator are subject to the statutory limits stipulated in the fourth schedule of the Arbitration and Conciliation Act 1996?

Section 14 of the Arbitration and Conciliation Act 1996 deals with the resignation and termination of appointed arbitrators on the grounds of inability to perform duties de jure or de facto or any such reasons.

The arbitral disputes arising between the petitioner and the respondent for appointment of an arbitrator to arbitrate on the disputes. Vide order, dated 21th December, 2018, a learned retired Judge of this Court was appointed as Sole Arbitrator. The said order did not fix any fees, as payable to the learned Sole Arbitrator. The contract/agreement, dated 14th August, 2014, between the petitioner and the respondent, too, contained an arbitral clause, but does not fix any fees as payable to the Arbitrator.
A claim of Rs. 71,76,11, 202 with an 18% interest was filed by the Respondent, and a counter-claim of Rs. 64,34,20,140 was filed by the Petitioner. The Learned Sole Arbitrator heard the parties and issued an award, for which the Petitioners prayed for terminating the mandate of the Arbitrator, especially relating to the fees being charged by the Arbitrator under Section 14 of the Act.
The matter was appealed before the High Court of Delhi.

The High Court of Delhi held that Section 14 deals with situations where there is an impossibility to act, where, on the part of the Learned Sole Arbitrator, the mandate is terminated. The Court referred to Section 11(4) of the Act which empowers the Court to frame rules for the purpose of determining the fees of the arbitral authorities, taking into consideration the rates mentioned in the Fourth Schedule of the Act.
The Court further held that the rates fixed in the fourth schedule of the Act are not necessarily binding on the Arbitrator in the present matter, and the Petitioners did not insist on a fee at the time of appointment, and thus it is not up to the Petitioners to seek a termination of the mandate of the Arbitrator at this stage.