Delhi High Court Upholds Arbitral Award That Found Commission Was Not Automatic Under Representative Agreement

The Delhi High Court on Tuesday upheld an arbitral award in a commission dispute between a consultancy firm and an oil and gas pipeline services company. The court affirmed the arbitrator's view that a representative appointed under a commercial agreement does not automatically become entitled to commission every time the company secures a project from the same customer.

A Division Bench of Justice Anil Kshetrapal and Justice Amit Mahajan dismissed an appeal and affirmed an earlier decision refusing to set aside the award.

The dispute arose between consultancy firm Synergy Consultants and pipeline services company T.D. Williamson India Pvt. Ltd.

Synergy had been appointed as a commission representative under an agreement dated July 1, 2012 to help promote the company's services and develop business in India, including with Oil and Natural Gas Corporation. TD Williamson India is a subsidiary of TD Williamson Inc., based in Tulsa, Oklahoma.

The consultancy later claimed that it had promoted the company's services before ONGC and sought commission of about 3.06 crore rupees. The claim related to two ONGC projects, the Uran project and the Hazira 42 HTPCS hot-tapping project.

The dispute went to arbitration. In an award dated May 11, 2019, the tribunal partly allowed the claim. It granted commission of about 66.22 lakh rupees for the Uran project but rejected the claim relating to the Hazira project after finding that Synergy had failed to establish its involvement in securing that contract. The tribunal also declined to grant pre reference interest.

Synergy challenged the award in the Delhi High Court but the challenge failed in April 2024. The firm then filed the present appeal.

Before the Division Bench, Synergy argued that the commission granted for the Uran project should also apply to the Hazira project. According to the consultancy, both projects involved the same customer and similar services. It said its promotional and brand building efforts before ONGC had helped TD Williamson secure the work.

TD Williamson argued that Synergy had not shown any actual role in obtaining the Hazira contract.

The High Court first noted that the scope of interference in appeals relating to arbitral awards is limited. Courts do not re examine the evidence simply because another view may be possible.

The bench said the arbitrator had examined the agreement, the documents on record and the email correspondence relied on by the consultancy. After doing so, the tribunal concluded that Synergy had failed to establish a link between its efforts and the award of the Hazira project.

The court rejected the argument that a commission granted for one ONGC project should automatically extend to another.

“The Arbitrator recorded that mere existence of a representative arrangement or general brand building efforts would not ipso facto entitle the Appellant to commission on every project awarded by ONGC."

Affirming the view, the court observed the agreement reasonably allowed an interpretation under which commission depended on the services actually rendered in relation to a particular project.

"A commercial arrangement of this nature, whereby a representative is appointed to promote products and assist in securing projects, reasonably admits of an interpretation that commission is linked to the services rendered and the extent of participation in the concerned transaction. The view adopted by the Arbitrator, that the representative would be entitled to commission commensurate with the work performed or assistance actually rendered, is a possible and commercially sensible interpretation of the agreement."

The record also showed that the arbitrator had not taken a blanket view. Commission was granted for the Uran project but denied for the Hazira project after examining the evidence relating to each project separately.

The court also rejected Synergy's challenge to the refusal of pre-reference interest, noting that the award of such interest lies within the discretion of the arbitral tribunal.

Finding no perversity or legal error in the arbitral award or in the earlier High Court decision upholding it, the Division Bench dismissed the appeal.

For Appellant (Synergy Consultants): Advocates Sandeep Bisht, Sahil Nindawat, Prarabdh Tiwari.

For Respondent (T.D. Williamson India Pvt. Ltd.): Advocates Fereshte D. Sethna, Mohit Tiwari, Devansh Jain.