Madhya Pradesh High Court
Northern Coal Field Ltd. vs Gsco Infrastructure Pvt. Ltd. on 14 December, 2022
Author: Sushrut Arvind Dharmadhikari
1
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI
ON THE 14 th OF DECEMBER, 2022
ARBITRATION CASE No. 55 of 2021
BETWEEN:-
1. NORTHERN COAL FIELD LTD. THR CHAIRMAN
CUM MANAGING DIRECTOR HQ DISTT.
SINGRAULI (MADHYA PRADESH)
2. GENERAL MANAGER, NCL BINA PROJECT, POST
B I N A DISTT. SONEBHADRA, U.P. (UTTAR
PRADESH)
3. CHIEF GENERAL MANAGER CMC (CONTRACT
MANAGEMENT CELL) NCL HEADQUARTERS
DISTT. SINGRAULI (MADHYA PRADESH)
.....PETITIONER
(BY SHRI GREESHM JAIN - ADVOCATE)
AND
GSCO INFRASTRUCTURE PVT. LTD. THROUGH ITS
MANAGING DIRECTOR SHRI GURMEET SINGH S/O
SHRI BAKHTAWAR SINGH AGED 67 YEARS R/O H.NO.
517 SECTOR 33A, CHANDIGARH PUNJAB (PUNJAB)
.....RESPONDENTS
(BY SHRI DEEPAK KUMAR RAGHUWANSHI - ADVOCATE)
This petition coming on for admission this day, th e court passed the
following:
ORDER
I n this petition under Section 11(6) of the Arbitration and Conciliation
Act, 1996, the petitioners has prayed for following reliefs:-
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(i) Direct the arbitrator to fix the fee of arbitration
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BURMAN
tribunal based on 4th scheduled of A&C Act, 1996 of ran
Date: 2022.12.14 19:10:08 IST
amount of Rs.37,50,000/- in total for the complete case which
includes claim and counter claim.
(ii) Issue any other appropriate direction or grant
any other relief deems fit in the facts and circumstances of
the instant case, in the interest of justice.
The brief facts of the case are that learned Arbitrator on 29.02.2020 has
fixed arbitration fees based on schedule 4 of the Arbitration and Conciliation
Act, 1996 (hereinafter referred to as 'the Act') for an amount of Rs. 62,30,000/-
equally divided in two parts. The respondent filed an application for fixing fee
as per 4th schedule of the Act of 1996 on 14.05.2020, which was rejected by
the learned Arbitrator on 31.05.2020. Thereafter, respondent filed the
Arbitration Case No.29/2020 u/s 11(6) read with Section 14 and 15 of the Act
of 1996 before this Court. However, the respondent subsequently had
withdrawn the application. Thereafter, the learned Arbitrator by Order dated
12.07.2021 has reconsidered the fee structure and directed for payment of
Rs.50,00,000/- as total fee payable by both the parties equally. The grievance of
the petitioner is that the learned counsel for the Arbitrator ought to have fixed
Rs. 37,50,000/- instead of Rs.50,00,000/-.
Learned counsel appearing for the respondent submitted that the fee of
the Arbitrator cannot be settled under Section 11(6) of the Act of 1996. The
Apex Court in case of Oil And Natural Gas Corporation Limited vs Afcons
Gunanusa Jv AIR 2022 SC 4413 in para 158 has held as under:
"158. We answer the issues raised in this batch of cases in the
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following terms:
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(i) Arbitrators do not have the power to unilaterally issue binding
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BURMAN
Date: 2022.12.14 19:10:08 IST
a n d enforceable orders determining their own fees. A unilateral
determination of fees violates the principles of party autonomy and the
doctrine of the prohibition of in rem suam decisions, i.e., the arbitrators
cannot be a judge of their own private claim against the parties regarding
their remuneration. However, the arbitral tribunal has the discretion to
apportion the costs (including arbitrators' fee and expenses) between the
parties in terms of Section 31(8) and Section 31A of the Arbitration Act
and also demand a deposit (advance on costs) in accordance with
Section 38 of the Arbitration Act. If while fixing costs or deposits, the
arbitral tribunal makes any finding relating to arbitrators'€˜ fees
(in the absence of an agreement between the parties and arbitrators), it
cannot be enforced in favour of the arbitrators. The arbitral tribunal can
only exercise a lien over the delivery of arbitral award if the payment to
it remains outstanding under Section 39(1). The party can approach the
court to review the fees demanded by the arbitrators if it believes the
fees are unreasonable under Section 39(2);
(ii) Since this judgment holds that the fees of the arbitrators must
b e fixed at the inception to avoid unnecessary litigation and conflicts
between the parties and the arbitrators at a later stage, this Court has
issued certain directives to govern proceedings in ad hoc arbitrations in
Section C.2.4;
(iii) The term "sum in dispute"€ÂÂ- in the Fourth Schedule
of the Arbitration Act refers to the sum in dispute in a claim and counter-
claim separately, and not cumulatively. Consequently, arbitrators shall be
entitled to charge a separate fee for the claim and the counter-claim in an
ad hoc arbitration proceeding, and the fee ceiling contained in the Fourth
Schedule will separately apply to both, when the fee structure of the
Fourth schedule has been made applicable to the ad hoc arbitration;
(iv) The ceiling of Rs 30,00,000 in the entry at Serial No 6 of
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the Fourth Schedule is applicable to the sum of the base amount (of Rs
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BURMAN
19,87,500) and the variable amount over and above it. Consequently,
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the highest fee payable shall be Rs 30,00,000; and
(v) This ceiling is applicable to each individual arbitrator, and not
the arbitral tribunal as a whole, where it consists of three or more
arbitrators. Of course, a sole arbitrator shall be paid 25 per cent over
and above this amount in accordance with the Note to the Fourth
Schedule."
I n view of the Afcons Gunanusa JV (supra), the fee of the Arbitrator
cannot be decided in exercise of powers under Section 11(6) of the Act of
1996.
Accordingly, this petition is hereby dismissed.
(S. A. DHARMADHIKARI)
JUDGE
vinay*
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SAN
Digitally signed by VINAY KUMAR
BURMAN
Date: 2022.12.14 19:10:08 IST
