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IN THE HIGH COURT OF DELHI
C. Hari Shankar, J.
NTPC Limited - Appellant
Versus
Afcons R.N. Shetty and Co. Pvt. Ltd. JV - Respondent
O.M.P. (T) (COMM.) 37 of 2021 & I.A. 9377 of 2021
Decided On : 06-08-2021




The arbitration fees can be separately fixed for claims and counter-claims as per the provisions of the Arbitration and Conciliation Act, 1996, which is consistent with the statutory intent.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 31(8) and 38(1) - Fees payable to Arbitral Tribunal - Dispute arose regarding fixing separate fees for claims and counter claims - Parties agreed to adhere to the Fourth Schedule of the Act - Court confirmed that the Arbitral Tribunal can fix separate amounts for claims and counter-claims under the proviso to Section 38(1) - Fees determined to be reasonable according to the legislative scheme - Court upheld the Tribunal’s decision, dismissing the petition challenging the fee structure. (Paras 4, 10, 44, 56, 58)

Facts of the case:
Dispute between contracting parties over the fees payable to an Arbitral Tribunal for resolving their disputes through arbitration. The claims amounted to Rs. 37.54 Crores and counterclaims to Rs. 19.01 Crores. The Tribunal fixed separate fees based on Section 38(1) of the Act which allows separate fees for claims and counter-claims.

Findings of Court:
Tribunal sufficiently justified the separate determination of fees, stating it did not go beyond legislative mandates.

Issues: Main issue was whether same could be consolidated for the fee cap under the Fourth Schedule.

Ratio Decidendi: Court emphasized the interlinking of Sections 31(8) and 38(1), affirming the legislative intent that allows for separate fees for distinct claims and counter-claims.

Result: Petition dismissed.

Table of Content
1. context of the arbitration dispute. (Para 1 , 2)
2. fees structure under arbitration and conciliation act. (Para 3 , 4)
3. agreement on fee structure affirmed. (Para 5)
4. fee determination based on claims and counterclaims. (Para 6 , 11)
5. contentions regarding fee consolidation. (Para 9 , 18)
6. judicial interpretation of fees and laws. (Para 17 , 38)
7. court's conclusion on fee structure legitimacy. (Para 56 , 57)
8. final dismissal of the petition. (Para 58)

JUDGMENT (Oral)

(Video-Conferencing)

1. The petitioner and respondent are, unfortunately, in knots on the fees payable to the learned Arbitral Tribunal, in seisin of the dispute between them, and it has fallen to the sorry lot of this Court to untangle those knots.

2. The issue being restricted to the fees payable to the learned Arbitral Tribunal, no detailed allusion to the facts relating to the dispute between the parties is necessary. Suffice it to state that the arbitration agreement between the parties contemplates resolution of the disputes between them by a three-member arbitral tribunal and that, having appointed one learned arbitrator each, and the two learned arbitrators not being able to arrive at a consensus ad idem regarding the Presiding Arbitrator, the parties approached this Court which, by order dated 21st May, 2018, appointed a learned retired Chief Justice of the High Court of Jammu & Kashmir, who has also adorned the bench of this Court, as the Presiding Arbitrator. The Arbitral Tribunal thus stood constituted.

3. The first hearing of the learned Arbitral Tribunal took place on 12th July, 2018, on which occasion a detailed order came to be passed. Para 7 thereof dealt with the fees payable to the learned Arbitral Tribunal and reads thus:

    "7. During the course of hearing, Counsel for Respondent mentioned that the NTPC has a schedule of fee for Arbitration. It was clarified that the arbitral fee shall be in accordance with `The Fourth Schedule' of the Arbitration and Conciliation Act, 1996, and not by fee schedule of the Respondent."

4. There can be no dispute, therefore, that, by agreement between the parties, the fees payable to the learned Arbitral Tribunal was to be in accordance with the Fourth Schedule to the Arbitration and Conciliation Act, 1996 ("the 1996 Act"). For ease of reference, the Fourth Schedule to the 1996 Act may be reproduced as under:

"The Fourth Schedule

[See section 11(3A)]

Sl. No.Sum in DisputeModel Fees
(1)(2)(3)
1.Upto Rs.5,00,000Rs.45,000
2.Above Rs.5,00,000 and upto Rs.20,00,000Rs.45,000 plus 3.5 percent of the claim amount over and above Rs.5,00,000
3.Above Rs.20,00,000 and upto Rs.1,00,00,000Rs.97,500 plus 3 percent of the claim amount over and above Rs.20,00,000
4.Above Rs.1,00,00,000 and upto Rs.10,00,00,000Rs.3,37,500 plus 1 percent of the claim amount over and above Rs.1,00,00,000
5.Above Rs.10,00,00,000 and upto Rs.20,00,00,000Rs.12,37,500 plus .75 percent of the claim amount over and above Rs.1,00,00,000
6.Above Rs.20,00,00,000Rs.19,87,500 plus .5 percent of the claim amount over and above Rs.20,00,00,000 with a ceiling of Rs.30,00,000

    Note: In the event, the arbitral tribunal is a sole arbitrator, he shall be entitled to an additional amount of twenty-five per cent on the fee payable as per the table set out above."

5. Neither of the parties is aggrieved by the fixation of fees of the learned Arbitral Tribunal under the Fourth Schedule to the 1996 Act.

6. The grievance of the petitioner stems from a subsequent order, which came to be passed by the learned Arbitral Tribunal on 13th July, 2019 and is titled "Procedural Order no. 8", as it was passed on the eighth hearing of learned Arbitral Tribunal. The second paragraph of the said order, which essentially forms the nub of the controversy, read as under:

    "Considering the advance stage of the proceedings, we consider appropriate at this stage to fix the arbitral fee. The original claims of the Claimant as per the Statement of Claim were Rs.Thirty-Sev

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