Report Of Expert Board Constituted By Consent Cannot Be Executed As Arbitral Award: Delhi High Court

The Delhi High Court has held that an expert board constituted through consent orders to determine service charges cannot be treated as an arbitral tribunal merely because the parties agreed to its constitution.

It ruled that the Board's report, which contained recommendations, could not be treated as an arbitral award, decree or any other executable instrument.

Justice Harish Vaidyanathan Shankar dismissed an execution petition filed by the South Delhi Municipal Corporation (SDMC), which sought to recover about ₹15.74 crore from Delhi Gurgaon Super Connectivity Limited (DGSCL) on the basis of the Board's report.

The court held, "The Board was neither constituted as an adjudicatory forum nor vested with the authority to judicially determine disputes between the parties. Its role was confined to examining technical and financial aspects relating to service charges and furnishing its opinion in the form of a report. The Board, therefore, cannot be equated with an arbitral tribunal, nor can its report be treated as a binding adjudicatory determination capable of execution in the absence of any express agreement or legal provision conferring such status upon it."

The dispute arose out of integrated toll collection at the Rajokari Border on the Delhi-Gurgaon Expressway.

Delhi Gurgaon Super Connectivity Limited operated the toll plaza under a concession agreement executed with the National Highways Authority of India on April 18, 2002. It collected an integrated toll, including SDMC's toll component, and deducted service charges for providing the collection service.

The parties had agreed that DGSCL would deduct service charges at the rate of 11%. After they failed to reach a consensus on the applicable rate beyond May 16, 2011, DGSCL invoked the arbitration clause and approached the High Court for interim protection.

With the consent of both sides, the court constituted a three-member expert board through orders passed between April 2012 and March 2013 to determine the appropriate service charges.

The board submitted its report on March 3, 2014. It recommended that the service charges for the period between May 16, 2011 and May 16, 2014, be fixed at 7%.

According to SDMC, DGSCL nevertheless continued deducting service charges at 11%, resulting in excess deductions of about ₹15.74 crore. It therefore sought to recover that amount by executing the board's report.

SDMC contended that because the Board had been constituted under consent orders of the High Court, its determination was binding and capable of execution.

DGSCL opposed the petition, arguing that the Board had been constituted only to undertake an expert determination of service charges and was never intended to function as an arbitral tribunal. It also pointed out that SDMC had separately filed a civil suit seeking recovery of the same amount, indicating that it had not originally treated the report as an executable instrument.

Accepting DGSCL's objections, the court held that the consent orders merely created a mechanism for expert determination. They neither empowered the Board to adjudicate disputes nor provided that its recommendations would be final, binding or executable.

The court observed, "There is nothing in the language of the Orders, either express or implied, from which it can be inferred that the parties agreed that the Board's determination would, by itself, create enforceable rights and obligations or attain the status of a decree, award, or other executable instrument. Consequently, the mere fact that the parties consented to the constitution of the Board cannot, without more, lead to the conclusion that every recommendation or determination contained in the Board's report became binding and executable as a matter of law."

The court further observed that the Board lacked the essential attributes of arbitration. No pleadings were exchanged, no evidence was recorded, no witnesses were examined and no oral hearings were conducted. Instead, it gathered information, analysed technical and financial data, and made recommendations on the appropriate rate of service charges.

The court held, "The parties merely agreed to the constitution of an expert body for the purpose of technical determination of service charges and not for the adjudication of disputes through a process having the attributes of arbitration."

The court also noted that the report was framed under the heading "Conclusions and Recommendations" and expressly stated that the Board "recommends" fixing the service charges at 7%.

It held that neither the consent orders nor any subsequent order of the court conferred binding or executable status on the report.

Holding that the report was neither a decree, an arbitral award, nor any other executable, the court dismissed the execution petition as not maintainable. It also disposed of the pending applications without costs.

For the South Delhi Municipal Corporation (SDMC): Advocates Rakesh Mittal, Yamini Mittal and Ajay Harshana.

For Delhi Gurgaon Super Connectivity Limited (DGSCL): Senior Advocate Dayan Krishnan with Advocates Deepak Khurana, Vineet Tayal and Anurag Vats.