Madras High Court
Paramount Group Pvt. Ltd vs M/S.Land Marvel Homes on 24 October, 2025
Author: N.Anand Venkatesh
Bench: N.Anand Venkatesh
Appln.No.5192 of 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 24.10.2025
CORAM:
THE HONOURABLE MR.JUSTICE N.ANAND VENKATESH
Application No.5192 of 2025
in
A.No.1152 of 2024
in
O.P.No.636 of 2012
Paramount Group Pvt. Ltd.,
Represented by its Director C.D.Vivekanandan
24, Ponniamman Koil Street
Saligramam
Chennai-600 093.
... Applicant
Vs.
1. M/s.Land Marvel Homes
Reg. Partnership Firm
Rep. by its Managing Partner, Mr.M.Veerashekar
Having its office at No.63
LB Road, Adyar, Chennai-600 020.
2. M.Veerashekar
No.38, Dr.M.G.Ramachandran Road
Kalashethra Colony
Besant Nagar, Chennai-600 020.
3. Palaniappan
No.38, Dr.M.G.Ramachandran Road
Kalashethra Colony
Besant Nagar, Chennai-600 020.
1/8
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Appln.No.5192 of 2025
4. M.Arivazhagan
No.38, Dr.M.G.Ramachandran Road
Kalashethra Colony
Besant Nagar, Chennai-600 020.
5. M.Vinayagaraj
No.38, Dr.M.G.Ramachandran Road
Kalashethra Colony
Besant Nagar, Chennai-600 020. ... Respondents
Prayer: Arbitration Application filed under Order XIV Rule 8 of O.S. Rules
read with Section 15 of the Arbitration and Conciliation Act, 1996, praying
to pass an order substituting the Arbitrator appointed by order dated
29.02.2024 passed in A.No.1152 of 2024 in Arb.O.P.No.636 of 2012 with
another learned Arbitrator.
For Applicant : Mr.A.K.Sriram
Senior Counsel
For Respondents : Mr.K.V.Babu
for Mrs.Inthu Karunakaran
ORDER
This application has been filed under Section 15 of the Arbitration
and Conciliation Act, 1996 (Act No.26 of 1996) ["A and C Act" for the
sake of brevity] seeking for substitution of the Arbitrator appointed by this
Court by an order dated 29.02.2024 in A.No.1152 of 2024 in O.P.No.636 of
2012.
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2. Heard Mr.A.K.Sriram, learned Senior Counsel appearing on behalf
of the applicant and Mr.K.V.Babu, learned counsel appearing on behalf of
the respondents.
3. It is not necessary for this Court to go into various facts that were
put forth before this Court on either side and it will suffice to find a solution
in this case, which revolves around the fee that is payable to the sole
Arbitrator under the Fourth Schedule to A and C Act.
4. It is brought to the notice of this Court, that the applicant has
already paid Rs.17.5 Lakhs and the respondents have already paid Rs.25
Lakhs to the sole Arbitrator. The case is at the stage of cross-examination
of C.W.1. Therefore, even if the Arbitrator is substituted, the parties must
once again shell out money in line with the Fourth Schedule to A and C Act
which will only increase the cost of the proceedings.
5. When the above was pointed out by this Court, the learned counsel
appearing on either side submitted that the fee can be fixed by this Court in
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line with the Fourth Schedule. If the same is done, whatever balance
amount that has to be paid by both sides can be paid after deducting the
amount that has already been paid to the sole Arbitrator and proceedings can
continue from the stage of cross-examination of C.W.1. In the light of the
above submission made, this Court will now proceed further to deal with the
fee that is actually payable to the sole Arbitrator.
6. As per the Fourth Schedule, if the sum in dispute is above Rs.20
Crores, the fee payable will be Rs.19,87,500/- + 0.5% of the claim amount
over and above Rs.20 Crores with a ceiling of Rs.30 Lakhs. Hon'ble Apex
Court had an occasion to deal with this issue in Oil and Natural Gas
Corporation Limited Vs. Afcons Gunanusa JV reported in (2024) 4 SCC
481. The relevant portions are extracted hereunder:
"187. We answer the issues raised in this batch of cases
in the following terms:
187.1. Arbitrators do not have the power to unilaterally
issue binding and 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 31-A of the Arbitration Act and also demand a deposit
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(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);
187.2. Since this judgment holds that the fees of the
arbitrators must be 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 (see
paras 125 to 129);
187.3. The term “sum in dispute” in the Fourth Schedule
to the Arbitration Act refers to the sum in dispute in a claim and
counterclaim separately, and not cumulatively. Consequently,
arbitrators shall be entitled to charge a separate fee for the
claim and the counterclaim 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;
187.4. The ceiling of Rs 30,00,000 in the entry at Sl. No.
6 of the Fourth Schedule is applicable to the sum of the base
amount (of Rs 19,87,500) and the variable amount over and
above it. Consequently, the highest fee payable shall be Rs
30,00,000; and
187.5. 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% over and above this amount in
accordance with the Note to the Fourth Schedule."
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7. In view of the above, whatever is the total amount of the claim, the
maximum cap has been fixed at Rs.30 Lakhs. It is also relevant to take note
of the note appended to the Fourth Schedule which says that in the event the
Arbitral Tribunal is a sole Arbitrator, he shall be entitled to an additional
amount of 25% on the fee payable as per the Fourth Schedule to A and C
Act. This position has also been reiterated in the above judgment in
paragraph No.187.5. If the above is taken into consideration and 25% is
added, the total fee on the claim and counter claim will come to Rs.75 Lakhs
(Rs.37.5 Lakhs for the claim and Rs.37.5 Lakhs for the counter claim). This
will be the maximum fee that can be charged by the sole Arbitrator in line
with the Fourth Schedule to A and C Act and the judgment of Hon'ble Apex
Court in Natural Gas Corporation case referred supra.
8. It is submitted that the applicant has already paid a sum of Rs.17.5
Lakhs and the respondents have paid a sum of Rs.25 Lakhs to the sole
Arbitrator. The total fee payable on the side of the applicant is Rs.37.5
Lakhs and the total fee payable on the side of the respondent is Rs.37.5
Lakhs. The amount that has already been paid shall be given due credit and
the balance amount shall be paid to the sole Arbitrator by both sides.
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9. The above direction sufficiently takes care of the grievance
expressed on the side of the applicant. This direction will also enable the
sole Arbitrator to effectively proceed further with the case which is at the
stage of cross-examination of C.W.1.
10. The sole Arbitrator was appointed by this Court, by an order dated
29.02.2024 in A.No.1152 of 2024 in O.P.No.636 of 2012 and more than one
year and eight months has lapsed. Therefore, in order to ensure that the
proceedings are completed within the mandate, the mandate of the sole
Arbitrator is extended by six months from the date of this order for
completion of proceedings and for passing final award.
This Application is disposed of in the above terms.
24.10.2025
mk
Index: Yes/No
Speaking Order/Non-Speaking Order
Neutral Citation Case : Yes/No
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N.ANAND VENKATESH, J.
mk
24.10.2025
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