NEW DELHI: The Supreme Court on Tuesday was miffed over the submission of ONGC that arbitrators have been charging "exorbitant and arbitrary" fee and PSUs are in quandary and apprehend that the adjudicators may not be happy if not paid the demanded remuneration, and said that the way some government firms are functioning is not appreciable.
"Should we say that an arbitrator has to work without any remuneration? (It is) better we close the arbitration system," a bench comprising Chief Justice N V Ramana and Justices A S Bopanna and Hima Kohli said, when Attorney General K K Venugopal, appearing for PSU Oil and Natural Gas Corporation (ONGC), raised the issue of exorbitant fees being charged from the parties including the government firms.
It has been held by the apex court that the arbitrators should be bound by the fees, agreed upon by the parties in their agreement, and the bench should lay down uniform guidelines.
"The other side, the contractors are happy to comply. They have huge amounts. As far as we are concerned, we are answerable to the CAG. If we don't agree, the arbitrator will not be happy. So we are in a quandary," Venugopal said.
"Attorney General, with due respect to you, the way the PSUs are working is not appreciable. Simply because the arbitrator cannot defend themselves in these proceedings, you cannot attribute bias. At the point of appointment, you need to say that you do not agree with the fees...," the bench said.
The bench was irked over the submission on probability of bias and said an impression has been created by the PSU that arbitrators, if not paid the demanded fees, might be "biased".
The bench said if there was any objection to the fees then it should be expressed at the time of the appointment itself.
"We wrote to each arbitrator. They accepted the 4th schedule (provisions governing the fees of arbitrators). But later they changed their minds," Venugopal said.
"It goes to Rs 85 lakh and more for each arbitration. Having accepted the 4th schedule, and asked us to deposit Rs 25 lakh, then they suddenly say Rs 1.5 lakh per sitting would be charged. Then they demand separate reading fee, conference fee. We only seek uniformity. The court will have to bring in uniformity," he said.
The PSUs are answerable to the Comptroller and Auditor General of India (CAG) for the money spent on arbitration and the private parties do not face these kinds of hurdles, he added.
The bench said that it would hear all the pleas together related to the issue of charging of fees by the arbitrators under relevant provisions of the arbitration rules under the Arbitration and Conciliation Act.
The bench then issued notice on the plea and fixed it for hearing on March 23 along with other similar issue on the fees of arbitrators in relation to the statutory scheme.