Madhya Pradesh High Court
Chief Executive Officer vs The Director on 5 March, 2025
Author: Vishal Dhagat
Bench: Vishal Dhagat
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IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE VISHAL DHAGAT
ON THE 5 th OF MARCH, 2025
WRIT PETITION No. 13757 of 2024
CHIEF EXECUTIVE OFFICER
Versus
THE DIRECTOR
Appearance:
Shri Manan Agrawal - Advocate for petitioner.
Shri Shobhitaditya - Advocate for respondent.
ORDER
Petitioner has filed this petition under Article 226 of Constitution of
India challenging order dated 05/04/2024 contained in Annexure P-3,
whereby objections to provisional assessment of arbitration fees and
miscellaneous expenses was rejected.
2. Claimant had entered into memorandum of understanding dated
07/07/2017 for imparting skill training to 2500 candidates for 36 months in
various sectors in State of Madhya Pradesh. Total project cost was
Rs.27,59,84,375/-. Company namely Surya Wires Pvt. Ltd. terminated
memorandum of understanding and made a demand for refund of
Rs.9,54,32,486/- and interest amounting to Rs.2,66,53,286/-. Petitioner
issued termination letter and demand notice and filed an application under
Section 11(6) of Arbitration and Conciliation Act, 1996 for appointment of
an Arbitrator. Application was allowed and retired Justice of High Court was
appointed as sole Arbitrator. Arbitration commenced at MPDIAC in
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Arbitration Case No.17/2023. Director calculated provisional assessment of
arbitration fee and miscellaneous expenses on claim amount of
Rs.19,58,94,972/-.
3. Petitioner who is non-applicant in arbitration case preferred
objection before Director. It is submitted that claimant made five prayers i.e.
(i) quashing of letter dated 27/09/2019 by which MOU was terminated; (ii)
quashing of letter dated 07/10/2021 by which demand of Rs.9,54,32,486/-
was made; (iii) Rs.50,00,000/- as damage for loss of opportunity; (iv) legal
cost and (v) interest at 12% per annum.
4. Respondent had filed reply and prayed for following reliefs:-
(i) claimed Rs.9,54,32,486/- alongwith interest of 10% per annum;
(ii) directed claimant to pay legal cost of Rs.30,000/-;
(iii) directed claimant to pay cost of present proceeding and
(iv) any other relief.
5. Counsel appearing for petitioner submitted that respondent has
wrongly calculated sum in dispute and also included non-monetary relief in
calculation of total sum in dispute. This resulted in incorrect calculation of
arbitration fees and miscellaneous expenses. It is submitted that effective
prayer which is made by claimant was damages for sum of Rs.50,00,000/-
and for quashing of letter dated 27/09/2019 and demand letter dated
07/10/2021. Non-applicant made a prayer for direction of payment of
Rs.9,54,32,486/- with 10% interest alongwith legal cost of Rs.30,000/-. It is
submitted that claims are mutually exclusive. Either claim i.e. quashing of
demand notice may be allowed or counter claim for making payment of
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Rs.9,54,32,486/- can be allowed in favour of non-applicants. Hence, total
sum in dispute was Rs.10,04,62,486/-. It is submitted that non-monetary and
technical relief of claim wherein they have asked for setting aside the
demand has also been taken into account for purpose of calculation of
arbitration fees. Said relief was non-monetary and technical in nature and
could not have been included in calculation of arbitration fees and
expenses. Counsel appearing for petitioner placed reliance on judgment
passed by Apex Court in case of Union of India Vs. Singh Builders
Syndicate, (2009) 4 SCC 523, wherein Apex Court held that exorbitantly
high fee charged by the arbitrator puts a blockage on the road of India trying
to become a pro-arbitration hub and breaks the flow of growth of arbitration
in the country. Reliance is also placed on judgment passed in case of
National Highways Authority of India Vs. Gayatri Jhansi Roadways
Limited, 2019 SCC OnLine SC 906, wherein it was held that when the claim
is non-monetary in nature, the relief sought for has to be quantified in terms
of the facts of the dispute and the fees of the arbitrator shall depend upon
such amount.
6. In view of aforesaid submissions, counsel appearing for petitioner
submitted that Director of MPDIAC has committed an error in dismissing
the objections of petitioner vide order dated 05/04/2024. Order dated
05/04/2024 be set aside and respondent be directed to calculate the fees and
cost of total sum in dispute i.e. Rs.10,04,62,486/-.
7. Counsel appearing for respondent submitted that petition is
misconceived and not tenable at this stage. Arbitration proceedings
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commenced on the date on which request of referring the dispute to
arbitrator is raised by respondent and after commencement of said arbitration
proceedings, no judicial intervention is permitted as per Section 5 of the Act
in respect of matter governed by Part-I. Matters relating to fees of Arbitral
Tribunal under Section 11(14) of the Act are duly covered under Part-1 of
the Act of 1996 and same cannot be questioned in the instant petition. It is
submitted that arbitration fees has correctly been calculated and valued and is
in conformity with Rule 32 of Madhya Pradesh Arbitration Centre (Domestic
and International) Rules, 2019. Fees has been calculated aggregate of the
claim and counter claim. It is submitted that as per Madhya Pradesh
Arbitration Centre (Domestic and International) Rules, 2019 Arbitrator's fee
is to be calculated in accordance with Rule 32 and note (2) of said Rule lays
down that in event of claim and counter claim Arbitrator's fee shall be
calculated on aggregate of claim and counter claim. No error has been
committed in dismissing objections and passing of order dated 05/04/2024.
8.Heard learned counsel for the parties.
9. Decision taken by Institution fixing the fees is amenable to writ
jurisdiction under Article 226 of Constitution of India. MPDIAC is a public
authority and therefore, Writ Petition is maintainable under Article 226 of
Constitution of India. Writ Court in usual course will not interfere in
determination of fees and cost by arbitration center unless fees are arbitrary,
unreasonable or violative of fundamental rights guaranteed by Constitution
of India. Excessive and unfair fees fixed by center is amenable to writ
jurisdiction if same is found to be arbitrary under Article 14 of Constitution
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of India.
10. Questions for consideration before this Court is :-
"Whether prayer made for quashing of demand letter dated
07/10/2021 is a non-monetary relief ?"
11. Vide letter dated 07/10/2021 demand of Rs.9,54,32,486/- is made
from Surya Wires. Quashing of said letter is having monetary consequences
and if claimant-applicant is successful, then he is not required to make
payment of demand of Rs.9,54,32,486/-, therefore, prayer of quashing of
letter of demand cannot be said to be a non-monetary and technical relief.
12. Question under consideration is whether claim made by applicant
and counter claim made by non-applicant is mutually exclusive and whether
fees is to be calculated on aggregate of claim and counter claim ?
13. As per Rule 32 fees is to be calculated on aggregate of claim and
counter claim. Prayer made by claimant and non-claimant is not same. Prayer
by claimant is for quashing of demand, whereas prayer made by non-
applicant is for positive direction for recovery of Rs.9,54,32,486/-. Amount
for which different relief is claimed by both the parties is same, but nature of
relief is different. Claimant wants quashing, whereas non-claimant wants
order for payment. Relief in claim is for setting aside / quashing and relief
claimed by non-applicant is in nature of mandatory injunction. Though
claims are mutually exclusive, but both parties are seeking different relief,
therefore, no error has been committed by Director of Madhya Pradesh
Arbitration Centre Domestic and International in directing parties to make
payment of aggregate of both the claims. Fees determined is not arbitrary,
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malafied, discriminatory and is not hit by Article 14 of Constitution of India.
14. In view of same, petition is dismissed.
(VISHAL DHAGAT)
JUDGE
as
