Judgment MCA-ARBN-278-2026 J..odt 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH AT NAGPUR MISC. CIVIL APPLICATION (ARBN) NO.278 OF 2026 APPLICANTS 1) Municipal Corporation of the City of Nagpur, constituted under the City of Nagpur Corporation Act, 1948 (presently Maharashtra Municipal Corporations Act, 1949) Having its Office at: Mahanagar Palika Marg, Civil Lines, Nagpur - 440001 2) Commissioner, Municipal Corporation of the City of Nagpur, Having its Office at: Mahanagar Palika Marg, Civil Lines, Nagpur - 440001 3) Nagpur Environmental Services Limited, CIN : U9300MH2009PLC19618, Having its Office at: Mahanagar Palika Marg, Civil Lines, Nagpur - 440001 ... VERSUS... NON-APPLICANT : Orange City Water Private Limited, office at 301 and 302, 3rd Floor, Wing-C, VIPL, IT Park, Plot No. 28, MIDC IT Park Area, Gayatri Nagar Road, Parsodi, Rana Pratap Nagar, Nagpur-440022 ---------------------------------------------------------------------------------------------- Mr. J.B. Kasat, Advocate for Applicants. Mr. S.V. Manohar, Senior Counsel i/b. Mr. N.G. Moharir, Advocate for Non-Applicant. ---------------------------------------------------------------------------------------------- CORAM : PRAFULLA S. KHUBALKAR, J . DATE : 08/05/2026 ORAL JUDGMENT : Pvf 2026:BHC-NAG:7281 Judgment MCA-ARBN-278-2026 J..odt 2 1. Heard learned counsel for the applicants as well as learned Senior Advocate for the non-applicant. 2. In view of the controversy involved, issue notice to the non-applicant. 3. Learned counsel Mr. Moharir, appears and waives service of notice on behalf of the non-applicant. 4. By this application under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 (for short “the Act”), the applicants have prayed for termination of the mandate of the Arbitral Tribunal and sought for substitution of the Arbitrator, by raising certain pleas which are stated in the memorandum of the application. The prayers for the main reliefs, as put forth in the instant application vide prayer clauses (A) and (B) are reproduced below :- “A. Terminate the mandate of Arbitral Tribunal constituted on 30/9/2025 in Misc. Civil Application (ARBN) No. 329/2025 at Annexure-A; B. Appoint substitute Arbitrator for resolving the dispute between the applicants and non-applicant by replacing the present Arbitrator Hon’ble Shri A.K. Sikri (Retired Supreme Pvf Judgment MCA-ARBN-278-2026 J..odt 3 Court Judge) and also by expressly stipulating the fee that the Arbitral Tribunal would be entitled to charge;” By way of interim relief, the applicants have also prayed to stay of the further proceedings before the Arbitral Tribunal. 5. In view of the urgency pointed out, the matter was taken up for consideration and the arguments of the applicants as well as the non-applicants are heard. 6. Advocate Mr. Kasat, learned counsel for the applicants vehemently submitted that a situation has arisen to terminate the mandate of the Arbitral Tribunal under Sections 14 and 15 of the Act. The primary grounds raised by the applicants are that firstly, the arbitral fees fixed by the Hon’ble Arbitral Tribunal is exorbitant for the applicants, as the fees is to be borne by a statutory local body, which has to perform other statutory duties as well; secondly the arbitral fees fixed by the Hon’ble Arbitral Tribunal is not as per Schedule of Fees of the Arbitral Tribunal, in accordance with the Bombay High Court (Fees Payable to Arbitrators) Rules, 2018 (for short “Rules of 2018”) and thirdly, the consent for fixing the fees as given by the counsel for the applicants as well as the Officers of the applicants was without Pvf Judgment MCA-ARBN-278-2026 J..odt 4 obtaining the financial sanction from the Commissioner/Administrator, Nagpur Municipal Corporation as well as Vice-Chairman and Managing Director, NESL. 7. On the basis of these contentions, the learned counsel for the applicants submitted that the arbitration fees being exorbitant and not as per the Schedule of Fees, for which the consent was given without prior sanction, have created a situation of the mandate of the Arbitrator becoming de jure unable to perform his functions and warranting termination of the mandate of the Arbitral Tribunal, which was constituted on 30.09.2025 in Misc. Civil Application (ARBN) No.329 of 2025. He submitted that by terminating the mandate of the Arbitral Tribunal, a new Arbitrator be appointed for resolving the dispute between the parties, by expressly stipulating the fees of the Arbiral Tribunal. He therefore submitted that in view of the grounds raised, the case falls within four corners of Section 14(1) of the Act. 8. In support of his submissions, he placed reliance on the judgment of Single Bench of the High Court of Madras in the matter of Madras Fertilizers Limited, Manali, Chennai-600068 Vs. 1. SICGIL India Limited, rep. by Mr. V.N. Vijayakumar, Company Secretary 2. Hon’ble Pvf Judgment MCA-ARBN-278-2026 J..odt 5 Mr. Justice V. Ratnam (Retd.), (Old No.40), No.16, Pelathope, Mylapore, Chennai-600004 (Arbitrator) reported in 2010(2) CTC 357 and the judgment of Coordinate Bench of this Court in the matter of Parekh Industries Limited Vs. Diamond India Limited reported in 2019 SCC OnLine Bom 851. 9. By inviting the position of law as laid down by the Hon’ble Madras High Court, in Madras Fertilizers’s case (supra), learned counsel for the applicants submitted that while dealing with an identical controversy about exorbitant fees of the Arbitral Tribunal, it has been held that due to the controversy with regard to the fixation of fees, the Arbitration Proceedings could not proceed and the Court observed that the Arbitrator had become de jure unable to perform his functions effectively and directed termination of the mandate as per Section 14(1) (a) of the Act. He therefore, submitted that this is a valid ground for termination of the mandate. By relying on the judgment in the matter of Parekh Industries’ case (supra), he submitted that the Coordinate Bench of this Court has directed substitution of the Arbitrator by relying upon the judgment of the Madras Fertilizers’s case (supra). He thus, submitted that in view of the grounds raised in the instant application, Pvf Judgment MCA-ARBN-278-2026 J..odt 6 the mandate of the Arbitrator is required to be terminated for substituting the Arbitral Tribunal. 10. Per contra, opposing the application, learned Senior Advocate Mr. Manohar, instructed by Advocate Mr. Moharir, vehemently submitted that the application deserves to be rejected, as the applicants have failed to make out any case warranting the termination of the mandate of the Arbitrator either under Section 14(1) of the Act, or otherwise. He submitted that the applicants have failed to demonstrate that the Arbitrator has become de jure or de-facto unable to perform his functions and since, the Arbitration Fees was fixed by consent of the parties, the applicants are prohibited from raising any objection at this stage. He further submitted that the consent for fees at preliminary hearing by all the parties is a binding tripartite agreement and since, the fees was fixed with consent of the parties, the applicants are not entitled to invoke Schedule-IV read with Rules of 2018. 11. He thus submitted that since, the parties had consciously agreed upon the fee structure and the same had been acted upon and recorded by the Arbitral Tribunal, it is not permissible for the applicants to unilaterally resile from the agreed position and seek substitution of Pvf Judgment MCA-ARBN-278-2026 J..odt 7 the Arbitral Tribunal. He also submitted that the contentions about the fees being exorbitant or absence of approval from the Commissioner/ Administrator of Nagpur Municipal Corporation or Vice-Chairman / Managing Director of NESL is unsustainable, since, the representative/ counsels of the applicants did not raise any objections at the relevant time. He thus, submitted that the instant application seeking termination of the mandate of the Arbitral Tribunal is an attempt to somehow delay the Arbitration Proceedings and therefore, the application deserves to be rejected. 12. In support of his submissions, he placed reliance on the judgment of Three Judges Bench of the Hon’ble Supreme Court in the matter of Oil and Natural Gas Corporation Limited Vs. AFCONS GUNANUSA JV. Reported in (2024) 4 Supreme Court Cases 481. By pointing out the legal position as laid down in this case, dealing with the issue about fixation of the fees by the Arbitral Tribunal, he submitted that although the Arbitration Fees could be fixed by resorting to Schedule-IV, the same could be in a given case, changed by mutual consensus. He therefore submitted that in the instant case, the fees having been fixed by mutual consent of all the parties, the insistence of the applicants, at this stage, to re-decide the fees in accordance with Pvf Judgment MCA-ARBN-278-2026 J..odt 8 Rules of 2018 is absolutely unsustainable. He also invited attention to Procedural Order No.02 dated 24.12.2025 and the directions based on Section 38 of the Act. 13. In the wake of these submissions, the rival contentions fall for my consideration. 14. It has to be noted that the applicants have sought for termination of the mandate of Arbitral Tribunal, by raising three issues about the Arbitral Fees: (i) being exorbitant; (ii) not as per the Schedule of Fees, as per the Rules of 2018 and (iii) the fees being fixed without obtaining the financial sanction from the higher officials. 15. Pertinent to note that Section 14 of the Act provides that the mandate of the Arbitrator shall terminate and he shall be substituted by another Arbitrator, if he becomes de jure or de-facto unable to perform his functions, or for other reasons fails to act without undue delay. The applicants have tried to fit their case in the Sub-Section 1 of Section 14 of the Act, by contending that the Arbitrator had become dejure unable to perform his functions. Pvf Judgment MCA-ARBN-278-2026 J..odt 9 16. Thus, the issue is whether in view of the grounds raised by the applicants, the Arbitrator can be said to have become de jure unable to perform his functions. It is crucial to note that the Arbitration Fees was fixed by consent of the applicants’ counsel alongwith their representative namely viz. Executive Director, NESL; Assistant Law Officer of Nagpur Municipal Corporation and Executive Engineer of Nagpur Municipal Corporation, as can be seen from the Procedural Order No.01 dated 29.12.2025. Clause 17 of the Procedural Order No.01 specifically states that with the consent of parties and their counsels, the Arbitration Fees is fixed, which shall be shared by both the parties equally. As such, it is clear that none of the parties had raised any objection to the fixation of the Arbitral Fees, nor the applicants herein sought for any time to obtain sanction from the Commissioner/Administrator of Nagpur Municipal Corporation of Vice-Chairman / Managing Director of NESL. Since, the quantum of fees was fixed by consent and in the presence of counsels/ representatives of the parties, the same cannot be termed as exorbitant by any of the parties, at a later stage. Further, in view of the fact that the parties have decided the fees by consent, the insistence of the applicants to invoke the Schedule of Fees as per the Rules of 2018 is absolutely unjustified. Pvf Judgment MCA-ARBN-278-2026 J..odt 10 17. For all the aforesaid reasons, it is clear that the grounds raised by the applicants for seeking termination of the mandate of the Arbitral Tribunal are not sufficient to establish that the Arbitral Tribunal has become de jure unable to perform his functions. Although, learned counsel for the applicants have relied upon the judgment of Madras Fertilizers’s case (supra), it is important to note that in the instant matter, the Arbitration Fees was fixed by consent of the senior officials of the applicants, namely Assistant Law Officer and Executive Engineer of Nagpur Municipal Corporation as well as Executive Director of NESL alongwith their counsels. The Madras High Court has observed that the Arbitrator become de jure unable to perform his functions, as the applicants therein, being a public sector undertaking, found the fees to be exorbitant. However, it has to be noted that the Arbitration Fees was fixed only at the instance of the counsels and the Court found that the party had expressed its inability to afford the fees and therefore, by considering the totality of the facts and circumstances, the Court has inferred that the Arbitrator became de jure unable to perform his functions. However, in the instant case, there is nothing on record to show that counsel for the applicants or the senior officials who were Pvf Judgment MCA-ARBN-278-2026 J..odt 11 present had sought for any time or opportunity to obtain sanction from the higher officials before fixation of the Arbitral Fees. 18. Thus, the judgment in the matter of Madras Fertilizers’s case (supra) is not of assistance of the petitioner. Although, the Coordinate Bench of this Court has referred to the judgment of Madras Fertilizers’s case (supra), while deciding the Parekh Industries’ case (supra), it has to be noted that the provisions of Sections 14 and 15 of the Act, are invoked by observing that in view of the totality of circumstances, the applicants in that case had lost confidence in the Arbitral Tribunal and therefore, the substitution of Arbitrator was ordered. However, in the instant case, the applicants have not at all put forth any contentions about loosing confidence in the Arbitrator and as such, the judgment relied upon by the applicants are not of any assistance to them. 19. After giving anxious consideration to all the grounds raised by the applicants and the submissions advanced by both the parties, I am of the firm opinion that the applicants have failed to make out any case under Section 14(1) of the Act, to demonstrate that the Arbitral Tribunal has become de jure unable to perform his functions, Pvf Judgment MCA-ARBN-278-2026 J..odt 12 warranting termination of the mandate of the Arbitral Tribunal. In view of the contentions canvassed alleging attempt of delay, it is desirable that the parties to the dispute act diligently and participate in the Arbitration Proceedings without seeking any unnecessary adjournments, so as to enable the Arbitrator to decide the arbitration proceedings expeditiously. 20. In view of above mentioned factual and legal aspects, I am of the firm opinion that the applicants have failed to make out any case for termination of the mandate of the Arbitrator or for substitution of the Arbitrator. Therefore, the application deserves to be rejected. Accordingly, the miscellaneous civil application is rejected. No order as to costs. ( PRAFULLA S. KHUBALKAR, J . ) 𝒫𝓇𝒾𝓋𝑒𝓁 Pvf