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PSUs not Behaving Good, Not Appreciable: SC

In News
March 08, 2022

The Supreme Court on Tuesday told the Attorney General (AG) K. K. Venugopal that the way public sector undertakings (PSUs) are behaving is not good, while hearing a matter connected with arbitrator’s fee dispute between Oil and Natural Gas Corporation (ONGC) and Afcons.

A bench headed by Chief Justice N.V. Ramana and comprising Justices A.S. Bopanna and Hima Kohli told the AG: “Better, we close arbitration in the country”.

Pointing to the exorbitant fee of arbitrators, which comprises mostly retired judges, of Rs 2.5 lakh per session and conducting three sessions in a day, the AG, who was representing the ONGC, told the bench, “You may have to”.

The Chief Justice queried the AG, “So, we should ask the arbitrators to work without remuneration? Okay we will ask them”.

The AG replied that there should be some uniformity in the fee of arbitrators and added that during the arbitration, the arbitrators passed an order of Rs 1.5 lakh for each sitting and their two sittings in a day amounted to Rs 3 lakh.

Venugopal said 54 sittings are already over and emphasised that the fee should not be fixed unilaterally, as it amounts to misconduct.

The Chief Justice queried the AG, if they do not not agree with the fee, then arbitrators are biased?

The AG said, “There needs to be uniformity in this…public sector (companies) are also answerable.” Venugopal added that the arbitrators’ remuneration under the Fourth Schedule was agreed upon, however, they later differed on conference fees, reading fees, etc.

Senior advocate Abhishek Manu Singhvi, representing Afcons, pointed at the cap on fee in the Fourth Schedule. He queried, “If it is 30 sittings, do you want arbitrators who are retired Supreme Court judges to appear for Rs 30,000 per sitting?”

Singhvi submitted before the bench that it should ask ONGC to say how much they are paying their lawyers.

The AG replied that the interpretation of the Fourth Schedule is pending before a two-judge bench of the top court. The Chief Justice said he would constitute a bench to resolve this issue. The bench issued notice in the matter, and scheduled it for further hearing on March 23.

Concluding the hearing, the Chief Justice told the AG, “The way PSUs are behaving is not good and not appreciable…” The bench added that at the time of appointing arbitrators, the government should say ‘sorry, we don’t agree with the fees.’

On December 1, last year, the top court warned ONGC of contempt, for declining to pay fees to the arbitrators, retired judges, who have been arbitrating its dispute with Schlumberger Asia Services Ltd.

The top court said the public sector undertakings have so much money that they keep filing frivolous proceedings. The bench noted: “Then you have an issue in paying the arbitrators.”

The Chief Justice said: “What do you think of yourselves? We will issue contempt notice”.