Rites LTD. Through Its Cmd vs. B. L. Kashyap And Sons LTD. And Ors

Facts

A contractual dispute between B.L. Kashyap & Sons Ltd. (Claimant) and EMAAR MGF Land Ltd. (Respondent) led to the appointment of an Arbitral Tribunal. RITES Ltd. was appointed as a Local Commissioner to assess work done and unexecuted work. Initially, RITES Ltd. fixed its fees at Rs. 80 Lakhs plus 18% GST, with parties paying 50% upfront. Subsequently, RITES Ltd. sought an enhancement of fees to Rs. 4 Crores plus GST. The Respondent paid Rs. 1.3 Crores plus GST. RITES Ltd. filed an application for further extension and payment of enhanced fees, which was allowed by the Court, subject to the Arbitrator examining the tenability of the enhanced fees. The Arbitrator passed a final order on 11.09.2021, rejecting RITES Ltd.'s claim for additional fees. The learned Single Judge upheld the Arbitrator's order. RITES Ltd. filed the present appeal against the Single Judge's order.

Held

The Court held that the findings of the Arbitral Tribunal, as affirmed by the learned Single Judge, did not warrant interference. The Arbitrator was justified in rejecting RITES Ltd.'s claim for additional fees. The Arbitrator found that RITES Ltd. failed to specify the 'norms' it relied upon for its fee calculation and did not provide supporting documents. The agreements presented by RITES Ltd. were found to be dissimilar in nature, with RITES Ltd. acting as a consultant rather than a Local Commissioner for measurement. The Tribunal also noted discrepancies in staff costs and the lack of evidence for travel and incidental charges. The Court found no reason to interfere with the Arbitrator's rejection of the claim and the direction for refund of excess payment received by RITES Ltd. The appeal was accordingly dismissed.

Key Issues

1. Whether the Arbitral Tribunal and the learned Single Judge were justified in rejecting RITES Ltd.'s claim for additional fees as a Local Commissioner, considering the nature of the work and the evidence presented? The Appellant (RITES Ltd.) argued that its fees were based on norms where it normally charges approximately 1% of the contract value for such works, and the Rs. 4 Crores claimed was less than 1% of the contract value. They also relied on three previous agreements to show similar rates were charged for comparable works. Furthermore, they contended that since the Respondent had paid its share of the enhanced bill without prior objection, the parties were estopped from raising objections. The Respondents (Claimant and Respondent) argued that RITES Ltd. failed to provide proper details of its alleged costs, making the bill highly inflated and unsubstantiated. They contended that the loading on the bill was excessive and arbitrary. They also argued that the agreements relied upon by RITES Ltd. were different in nature, where RITES Ltd. acted as a consultant with a broader scope of work, unlike its role as a Local Commissioner for measurement.