JUDGMENT

CM No.14819/2021

1. This appeal was disposed of by a judgment dated 23rd January, 2018 passed by the Division Bench - with the consent of the parties. It was agreed that claims No.1 and 2 of the respondent, and counterclaims No.2, 5, 7-10 and 15 of the appellant be adjudicated afresh, and that a sole Arbitrator may be appointed instead of a three-member Arbitral Tribunal, in order to save time and costs. The relevant extracts from the aforesaid judgment are set out below:

"10. Parties agree that they would rely upon pleadings urged earlier and some additional plea which may be necessary on account of change in circumstances and legal objections may be required to be taken. Accordingly, the present appeal is dismissed.

11. Justice Manmohan Sarin, Former Chief Justice of the J&K High Court, Mobile No. 9818000210 is appointed as the Sole Arbitrator, who would decide the claims and counter claims arising out of the Agreement dated 17.11.2004 between the parties. He shall fix his fee us per the 4th Schedule of the Act of 1996. The legal objections of both parties are kept open.

12. Accordingly the present appeal is disposed of." (Emphasis Supplied)

2. Pursuant to the above judgment, the Arbitral Tribunal entered reference on 28th February, 2018. In the Procedural Order dated 29th April, 2019, it was noted the total amount of claim was Rs.33,53,27,205/- (inclusive of interest @ 18% per annum from 01st October, 2006 to 28th February, 2018), and the total amount of counter claim, including interest, was Rs. 11,43,40,050/-.

3. Vide Procedural Order dated 21st August, 2020, the Arbitral Tribunal fixed the arbitral fees as Rs.40,44,795/- in terms of ratio of the judgment of this Court in Rail Vikas Nigam Vs. Simplex Infrastructure Ltd., MANU/DE/1367/2020, and both the parties consented to the fixation of the aforesaid arbitral fees. At the hearing before the Arbitral Tribunal on 26th November, 2020, the counsels were requested to address the Arbitral Tribunal on the issue whether counter claim(s) is/are to be included in the expression "sum in dispute" appearing in the 4th Schedule of the Arbitration and Conciliation Act, 1996 (hereinafter ,, Act"), or the amount thereof is to be separately considered in terms of proviso to Section 38(1) of the Act.

4. After hearing both parties, the Arbitral Tribunal passed the order dated 27th January, 2021 holding that the applicable arbitral fee, in the present case has to be assessed separately for the claim, and counter claim. While arriving at this conclusion, the Arbitral Tribunal noted the following:

(i) Initially it was agreed between the parties that they do not need to file fresh pleadings or lead evidence, but as the arbitration progressed need for further evidence arose and parties filed fresh documents and directions for production of records were given by the Arbitral Tribunal.

(ii) Proviso to Section 38(1) of the Act carves out a specific exception providing for Arbitral Tribunal to fix a separate fee for claims and counter claims.

(iii) Counter claim would mostly be founded upon an independent cause of action, and can continue even if the main suit fails, or is withdrawn.

(iv) Separate court fee is required to be paid on the amount of counter claim.

(v) Adjudication of claims and counter claims mostly require additional or separate evidence and arguments.

(vi) Claims in a particular case may cross the ceiling provided under the 4th Schedule to the Act and if counter claims are filed thereafter, and they are taken together with a claim, the Arbitral Tribunal would have to decide the counter claims as well as the claims without any additional fee and this could not be the intention of the Statute.

(vii) Dictum of combining claims and counter claims for the purposes of determining fee under the 4th Schedule could result in inequitable situations contrary to the express language of Section 38(1) of the Act.

(viii) The aforesaid contentions were neither raised, nor considered by this Court in Delhi