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2020 Supreme(Del) 1534

IN THE HIGH COURT OF DELHI
C. Hari Shankar, J.
Entertainment City Ltd. - Appellants
Vs.
ASPEK Media Private Ltd. - Respondent
O.M.P. (T) (COMM.) 24/2020 and I.A. 4099-101/2020
Decided On : 03-06-2020

Advocates Appeared:
For the Appellant : Pradeep Aggarwal, Arjun Aggarwal and Pawas Agarwal, Advs.
For the Respondents: Gaurav Mitra, Muhammad Ali Khan, Omar Hoda, Aishwarya Mohapatra and Shriya Raychaudhari, Advs.

Headnote:

Arbitration - Appointment of Sole Arbitrator - Arbitration & Conciliation Act, 1996 - Section 14, Section 12(4) - 4th Schedule - The court discussed the provisions of Section 11(14) and Section 14(1)(a) of the Act, and the applicability of the Fourth Schedule to the determination of fees of the arbitral tribunal. The court held that the fees charged by the learned Sole Arbitrator did not infract Section 11(14) of the Act and that the petitioner's challenge under Section 12(4) was misconceived. The court also rejected the plea of financial stringency as a ground for termination of the mandate of the learned Sole Arbitrator.

Fact of the Case:

The petitioner and respondent had arbitral disputes, and both parties filed petitions before the Court for the appointment of an arbitrator. The learned Sole Arbitrator was appointed, and the petitioner challenged the fees charged by the arbitrator under Section 14, read with Section 12(4) of the Act.

Finding of the Court:

The court found that the challenge under Section 12(4) was misconceived as the fees charged did not infract Section 11(14) of the Act. The court also rejected the plea of financial stringency as a ground for termination of the mandate of the learned Sole Arbitrator.

Issues: The main issue was whether the fees chargeable by the learned Sole Arbitrator were subject to the statutory limits stipulated in the 4th Schedule to the Act.

Ratio Decidendi: The court held that the challenge under Section 12(4) was misconceived as the fees charged did not infract Section 11(14) of the Act. The court also rejected the plea of financial stringency as a ground for termination of the mandate of the learned Sole Arbitrator.

Final Decision: The petition was dismissed, and the plea for termination of the mandate of the learned Sole Arbitrator was rejected.

JUDGMENT :

C. Hari Shankar, J.

1. This matter has been taken up for hearing via videoconferencing.

2. Consequent to arbitral disputes arising between the petitioner and the respondent, O.M.P. (I) (COMM.) 467/2018 and O.M.P. (I) (COMM.) 479/2018 were preferred, by the petitioner, and the respondent, respectively, before this Court, for appointment of an arbitrator to arbitrate on the disputes.

3. Vide order, dated 21st December, 2018, a learned retired Judge of this Court was appointed as Sole Arbitrator. The said order did not fix any fees, as payable to the learned Sole Arbitrator. Admittedly, the contract/agreement, dated 14th August, 2014, between the petitioner and the respondent, too, contained an arbitral clause, but does not fix any fees as payable to the Arbitrator.

4. Consequent on appointment of the learned Sole Arbitrator, a claim, for Rs. 71,76,11,202/-, with 18 % compound interest, was filed by the respondent, and a counter-claim of Rs. 64,34,20,140/- was filed by the petitioner.

5. The learned Sole Arbitrator, consequently, entered on the reference and proceeded to hear the parties.

6. The grievance of the petitioner, on the basis whereof the prayer for terminating the mandate of the learned Sole Arbitrator is being urged in these proceedings, essentially relates to the fees being charged by the learned Sole Arbitrator.

7. The main contention of the petitioner, in this petition, preferred under Section 14, read with Section 12(4) of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as "the Act"), is that the fees, which the learned Sole Arbitrator has required the parties to pay, is in violation of the provisions of the Act. Inasmuch as the exact quantum of fees charged, by the learned Sole Arbitrator, is not relevant for adjudication of the dispute before me, I deem it appropriate, in the interests of privacy, not to make reference thereto.

8. The precise issue, arising for consideration, is whether the fees chargeable by the learned Sole Arbitrator, in the present case, were subject to the statutory limits, stipulated in the 4th Schedule to the Act.

9. Suffice it to state that, consequent upon the directions issued by the learned Sole Arbitrator on 9th December, 2019, an application was preferred, by the petitioner, before the learned Sole Arbitrator, on 7th January, 2020, pleading that the fees demanded by her infracted Section 11(14) of the Act, read with the Fourth Schedule thereto. The petitioner also pleaded financial stringency.

10. Vide order dated 28th February, 2020 (impugned herein), the learned Sole Arbitrator rejected the aforesaid objection of the petitioner, regarding the fees charged by her. The specific finding of the learned Sole Arbitrator, on this point, as contained in the said order, may be reproduced as under:

    "The Respondent on the last date had moved an application seeking fixation of fee for the undersigned. The undersigned has been appointed by the Hon'ble High Court on a petition under Section 9 of the Arbitration and Conciliation Act, 1996 on 21.12.2018. The undersigned had been directed to give for disclosure under Section 12 of the said Act which is on record. The undersigned is not bound by the 4th Schedule; it can be considered as a guiding factor. In the instant case, there is a claim and counterclaim. The provision of Section 38(1) and (2) of the said Act noted in the fee shall be charged separately for the claim of the plaint. The fee will be charged according. The parties will calculate the amount. The judgment of the Hon'ble High Court reported as [2018 (4) ARBLR 168 (Delhi)] is relied upon. It inter alia reads as under:

"15. Proviso to Section 38(1) of the Act can only apply when there Arbitral Tribunal is not to fix its fee in terms of the 4th Schedule to the Act. It would not have any bearing on the interpretation to be put to the 4th Schedule. It is noted that as regards the even under the Amended Act, the Arbitral Tribunal is free to fix its schedule of fee in an ad

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