Summary
The Supreme Court refused to terminate an arbitral tribunal’s mandate because it had unilaterally increased fees, later reverting to the agreed rate. The increase was impermissible without consent, but did not itself create Seventh Schedule ineligibility. Alleged impartiality concerns outside that statutory category had to follow the Section 13 challenge procedure, with recourse after the award under Section 34. The tribunal was directed to resume proceedings.
Issues
- Whether the unilateral fee increase automatically rendered the arbitrators legally ineligible.
- Whether the applicant could bypass Section 13 and seek immediate termination under Section 14.
Provisions considered
- Sections 12(1)–(5); Fifth and Seventh Schedules, Arbitration and Conciliation Act, 1996The Court distinguished disclosure and justifiable-doubt challenges from statutory ineligibility under Section 12(5) and the Seventh Schedule. (¶¶ 17, 21–32, 38–39)
- Sections 13 and 14, Arbitration and Conciliation Act, 1996The fee-based apprehension had to follow the tribunal challenge route; it did not justify direct termination as a Seventh Schedule legal disability. (¶¶ 24–32, 39–40)
Held
- Impartiality is assessed objectively in the relevant circumstances, rather than solely through an arbitrator’s assurance or a party’s suspicion. The statutory mechanism nevertheless governs how the challenge is pursued. (¶ 18–32)
- Section 12(3) challenges ordinarily go first to the tribunal through Section 13, with subsequent award challenge under Section 34 if unsuccessful. Seventh Schedule ineligibility permits direct recourse to court under Section 14, subject to the statutory express written waiver. (¶ 28–32)
- Arbitrator fees are contractual. Revising an agreed fee requires agreement of the parties and tribunal; a unilateral increase cannot be imposed over a party’s objection. (¶ 33–34)
- Breach of the fee-fixation rule did not per se render the appointment void or terminate the mandate. The applicant could not transform this non-enumerated apprehension into automatic Section 12(5) ineligibility and skip the prescribed route. (¶¶ 34, 38–39)
- The High Court’s refusal of termination was upheld and the arbitrators were directed to resume and decide the disputes according to law. (¶ 40)
Result
Application dismissed and appeal disposed of; High Court order upheld. Arbitrators directed to resume proceedings and decide the case in accordance with law.