IN THE HIGH COURT OF JUDICATURE AT PATNA
MOHIT KUMAR SHAH, J.
The State of Bihar through The Principal Secretary, Sugarcane Cane Industry Department & Ors. - Petitioners
Versus
The Bihar State Sugarcane Corporation Ltd. & Ors. - Respondents
Civil Writ Jurisdiction Case No.14355 of 2019 with Civil Writ Jurisdiction Case No.23934 of 2018
Decided On : 05-03-2020
Arbitration and Conciliation Act, 1996 – Sections 11(14) and 38 read with Fourth Schedule – Fixation of fees of Arbitral Tribunal – Intention of Legislature was/is to provide a upper cap to fee of arbitrator in order to make arbitral process costs effective – In case, legislature intended to permit arbitrator(s) of arbitral tribunal to fix a fee exceeding ceiling amount by charging a base amount and a percentage of claim amount, which would be subject to ceiling separately, it would have provided so in Fourth Schedule – Ceiling of Rs. 30,00,000/- has to be applied to summation of base amount and percentage of claim added together, however, in cases, where arbitral tribunal consists of a sole arbitrator, he would be entitled to an additional amount of 25% of maximum amount which, in any case, cannot be more than a sum of Rs. 7,50,000/-(25% of Rs. 30,00,000/-) – Ceiling of Rs. 30,00,000/- in Fourth Schedule to Arbitration and Conciliation Act, 1996 is not only on variable amount of fees to be calculated at the rate of 0.5% of claim amount, leaving aside the fee amount of Rs. 19,87,500/-, but also on both base amount and percentage of claim amount added together – Sum in dispute, as referred to in Schedule Fourth to Arbitration and Conciliation Act, 1996 shall include both claim and counter claim amounts – Fourth Schedule to Arbitration and Conciliation Act, 1996, is not mandatory in determining fee structure where fee structure has been agreed to in agreement between parties – Since no rules have been framed by Patna High Court, providing for fee schedule for domestic arbitration, Fourth Schedule to Arbitration and Conciliation Act, 1996 shall govern field regarding determination of fee of arbitral tribunal – Fee fixed by arbitrators is illegal, exorbitant, arbitrary, disproportionate and contrary to provisions contained in Fourth Schedule to Arbitration and Conciliation Act, 1996 – Impugned orders quashed, however, with liberty to arbitrators to fix their fees afresh, strictly as per mandate of Fourth Schedule to Arbitration and Conciliation Act, 1996. (Paras 12 and 14)
JUDGMENT :
Heard Sri P.K. Sahi, Senior Advocate, assisted by Sri Girijish Kumar and Sri Vikas Kumar, Advocates, appearing for the petitioners in CWJC No. 23934 of 2018, Sri Prashant Pratap (GP-2), appearing for the State, Sri Rajesh Kumar Verma, Assistant Solicitor General, appearing for the Union of India and Sri Gyan Shankar, appearing for the Bihar State Sugar Corporation Ltd., apart from other Ld. Counsels, appearing in CWJC No. 14355 of 2019, whose appearance has been noted above.
2. The petitioner of the first case i.e. CWJC No. 14355 of 2019 is the State of Bihar, which has challenged the order dated 26.03.2019 (Annexure3) and the order dated 08.05.2019 (Annexure-4) passed by the learned sole Arbitrator in Arbitration Case No. 34 of 2018. By the impugned orders, the learned Arbitrator has fixed his fee to the tune of Rs. 31,83,125/- for consideration and adjudication of the counter claim of the State of Bihar and has also dismissed the review petition filed by the State of Bihar. The petitioners of the first case has also prayed for directing the learned Arbitrator to charge and accept the consolidated fee of Rs. 30,00,000/-, both for the claim and counter claim to be shared equally by both the parties.
3. As far as the second case i.e. CWJC No. 23934 of 2018 is concerned, the petitioners therein i.e. the Bihar State Electronics Development Corporation Ltd. & Anr. has challenged the order dated 16.09.2018 (Annexure-2) whereby and whereunder the learned Arbitrator has interpreted that the legislature has laid down a ceiling of Rs. 30,00,000/-, as per the 6th slab of the Fourth Schedule of the Arbitration and Conciliation (Amendment) Act, 2015, only on the variable amount of fees to be calculated at the rate of 0.5% of the claim amount, hence, the same does not include the fixed amount of Rs. 19,87,500/-, thus has directed the petitioners to make payment of a further sum of Rs. 10,00,000/-by way of fee to the Arbitral Tribunal. The petitioners of the second case have also prayed for quashing of the order dated 03.11.2018 (Annexure-4 to the writ petition) whereby and whereunder the review application filed before the learned Arbitral Tribunal has been dismissed with a cost of Rs. 25,000/-.
4. The learned Senior Counsel for the petitioners of the second case has submitted that the learned sole Arbitrator, by the impugned order dated 16.09.2018, passed in the ongoing arbitral proceedings in-between Srei Infrastructure Finance Limited, Kolkata and The State of Bihar, BELTRON & others, has relied upon the 4th Schedule to the Arbitration and Conciliation Act, 1996, particularly 6th slab, to mean that the cap of Rs.30 lacs is exclusive of the sum of Rs. 19,87,500/- and puts ceiling only on the variable amount of fees to be calculated @ 0.5% of the claim amount over and above Rs. 20 crore.
5. It is contended by the learned Senior Counsel appearing for the petitioners that if the cap of Rs. 30 lacs is not adhered to, the arbitral fees would amount to around Rs. 62 lacs an odd however, if the cap mentioned in the 4th Schedule to the Arbitration and Conciliation Act, 1996 is applied, the maximum amount of arbitral fees would be a sum of Rs. 30 lacs plus an additional sum of 25% since the arbitral tribunal consists of a sole arbitrator. Thus, in the present case, the arbitral fees would total up to a sum of Rs. 37.50 lacs approximately, out of which 50% has to be paid by the claimant and 50% by the respondents/petitioners herein.
6. The learned Senior Counsel for the petitioners has submitted that the petitioners have got no other alternative and efficacious remedy under the Arbitration and Conciliation Act, 1996, as amended up-to-date, for the purpose of assailing the impugned order passed by the learned sole Arbitrator, save and except by way of filing the present writ petition under Article 226 of the Constitution of India.
7. The le
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