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
| 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) |
(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 Dispute | Model Fees |
| (1) | (2) | (3) |
| 1. | Upto Rs.5,00,000 | Rs.45,000 |
| 2. | Above Rs.5,00,000 and upto Rs.20,00,000 | Rs.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.1,00,00,000 | Rs.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.10,00,00,000 | Rs.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.20,00,00,000 | Rs.12,37,500 plus .75 percent of the claim amount over and above Rs.1,00,00,000 |
| 6. | Above Rs.20,00,00,000 | Rs.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
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.
Section 2 (d) of the Act the Arbitral Tribunal is defined either as a sole arbitrator or a Panel of arbitrators and the language used in Sub Section (14) of Section 11 is for "determination of Fees o....
The main legal point established in the judgment is the importance of party autonomy in determining arbitral fees, as well as the interpretation and application of the 2020 Circular in the context of....
Arbitration fees under ICA Rules must be calculated separately for claims and counter-claims, as clarified by the court's interpretation of the rules, reaffirming the Arbitral Tribunal's authority.
The principle of party autonomy is crucial in arbitration proceedings, and the Arbitral Tribunal cannot impose its will and wishes without reason or cause.
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