# State of U.P. & Ors v. Gvk Emri (Up) Pvt. Ltd. & Anr

- **Citation:** (2021) 8 ILRA 382
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2021-08-05
- **Case number:** Misc. Single No. 16858 of 2021
- **Bench:** Mrs. Sangeeta Chandra
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/state-of-u-p-ors-v-gvk-emri-up-pvt-ltd-anr-47208
- **Pages:** 13

## Headnote

Arbitral Tribunal order challenged-as far
as relates to the determination of fee
and administrative expenses payable to
each arbitrators-Section 11(14) and the
Fourth
schedule
of
Arbitration
&
Conciliation Act, 1996 are applicable to
even Arbitral Tribunal appointed by the
parties
in
terms
of
their
contract/agreement. Impugned orders
set aside.

Held, under 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 of the
Arbitral
Tribunal".
Had
the
Legislature
intended that the Fee as mentioned in the
Fourth Schedule was to be given to each of
the
members
of
the
Arbitral
Tribunal
individually, in case it was a multi member
body, then it would have clarified the same
by appending another note to the Fourth
Schedule by saying that in the event the
Tribunal is a multi member body each of its
its members would be getting the Fee as
mentioned in the Schedule. (para 38)

W.P. allowed. (E-7)

List of Cases cited:

## Text

_Characters 0–39,981 of 44,334. This is a partial read: ask again with offset=39981 for what follows._

382 INDIAN LAW REPORTS ALLAHABAD SERIES

30. Such an order being passed in
ignorance of law and in excess of
jurisdiction is also liable to be quashed, and
hence quashed.

31. The matter is remitted to the
Deputy
Registrar
to
give
proper
opportunity of hearing to all concerned by
issuing notice in the newspapers, if need
be, and asking for objections if any and
then
to
pass
appropriate
orders
in
accordance with law within a period of
three months from the date a copy of this
order is produced before him.

32. The writ petition stands allowed.

33. Shri Ved Prakash Nag who
appears for the State- respondents is
directed to inform of the orders passed
today to the Deputy Registrar as it has been
submitted by the learned counsel for the
parties that election as per the orders
impugned that have been quashed today is
due to be held tomorrow.
----------
(2021)08ILR A382
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 05.08.2021

BEFORE

THE HON'BLE MRS. SANGEETA CHANDRA, J.

Misc. Single No. 16858 of 2021

State of U.P. & Ors. ...Petitioners
Versus
Gvk Emri (Up) Pvt. Ltd. & Anr.
 ...Respondents

Counsel for the Petitioners:
Sudeep Kumar, C.S.C., Mohit Jauhari

Counsel for the Respondents:
-----
Arbitral Tribunal order challenged-as far
as relates to the determination of fee
and administrative expenses payable to
each arbitrators-Section 11(14) and the
Fourth
schedule
of
Arbitration
&
Conciliation Act, 1996 are applicable to
even Arbitral Tribunal appointed by the
parties
in
terms
of
their
contract/agreement. Impugned orders
set aside.

Held, under 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 of the
Arbitral
Tribunal".
Had
the
Legislature
intended that the Fee as mentioned in the
Fourth Schedule was to be given to each of
the
members
of
the
Arbitral
Tribunal
individually, in case it was a multi member
body, then it would have clarified the same
by appending another note to the Fourth
Schedule by saying that in the event the
Tribunal is a multi member body each of its
its members would be getting the Fee as
mentioned in the Schedule. (para 38)

W.P. allowed. (E-7)

List of Cases cited:

1.
Delhi
State
Industrial
Infrastructure
Development Corporation Limited Vs Bawana
Infra & Development Private Ltd. , 2018 SCC
Online Delhi, 9241

2. U.O.I. Vs Singh Builders Syndicate reported
2009 (4) SCC 523

3.n State of Bihar & ors. Vs Bihar State
Sugarcane Corporation Ltd. & ors. decided on
05.03.2020 in C.W.J.C. Nos.14355 of 2019 and
23934
of
2018,
reported
in
MANU/BH/0720/2020,

4. Punjab State Power Corporation Ltd. Vs
U.O.I. & ors. Civil Writ Petition No.3962 of 2017
decided on 21.07.2017

5. Bengal Immunity Co. Ltd. Vs St. of Bihar [AIR
1955 SC 661
8 All. State of U.P. & Ors. Vs. Gvk Emri (Up) Pvt. Ltd. & Anr.
383
6. Parayankandiyal Eravath Kanapravan Kalliani
Amma Vs K. Devi [(1996) 4 SCC 76 : AIR 1996
SC 1963]

7. Bengal Immunity Co. Ltd. Vs St. of Bihar [AIR
1955 SC 661]

8. Goodyear India Ltd. Vs St. of Har. [(1990) 2
SCC 71 : 1990 SCC (Tax) 223 : AIR 1990 SC
781]

9. District Mining Officer Vs Tata Iron & Steel
Co. [(2001) 7 SCC 358

(Delivered by Hon'ble Mrs. Sangeeta
Chandra, J.)

(ORAL)

1. Heard Shri Sudeep Seth, learned
Senior Counsel assisted by Shri Sudeep
Kumar and Shri Mohit Jauhari, for the
petitioners and Shri Gaurav Mehrotra
alongwith Mr. Tushar Mittal appearing for
the respondents.

2. The petitioners have challenged
two orders of the Arbitral Tribunal dated
23.06.2021 filed as Annexures-1 and 2 to
the writ petition, in so far as they relate to
the
determination
of
Fee
and
Administrative expenses payable to each of
the
Arbitrators
in
the
arbitration
proceedings between GVK EMRI (U.P.)
Private Limited and State of U.P. and its
assigns and they pray that a direction be
issued determining the Fee and expenses of
the Arbitrators which are appropriate in the
matter.

3. It has been submitted by the learned
counsel for the petitioners that as per the
Agreement dated 21.12.2011 between the
petitioners and the respondents, on a dispute
arising between the parties. They can invoke
the arbitration clause under Article 18 (2) of
the contract. From the Amended statement of
Claim filed by the claimants on 24.09.2020 a
sum of Rs.197,40,15,637/- (One hundred and
Ninety Seven Crores thirty four lacs fifteen
thousand and six hundred and thirty seven)
had been prayed whereas the petitioners who
are the respondents in the Arbitration
proceedings filed a counter claim on
16.01.2021
wherein
a
sum
of
Rs.230,45,74,000/- (Two Hundred and Thirty
crores Forty Five Lacs and Seventy Four
Thousand) was prayed as a counter claim
against the claimant. It was agreed between
the parties that one Arbitrator shall be
appointed by each of the parties and a third
Arbitrator shall be appointed by the two
Arbitrators on their own, consequently, the
Arbitral Tribunal consisted of three Hon'ble
retired Judges of this Court. In the
preliminary hearing held for the purpose of
determination of fee and administrative
expenses, the Fee has been determined by the
Arbitral Tribunal @ 0.125% of the Total Sum
in Dispute with claim and the counter claim
taken separately and additionally a fee @
10% of the said amount has been determined
towards
Secretarial
and
Administrative
expenses in connection with the Arbitration
proceedings (to be shared equally by the
parties). As per the orders passed by the
Tribunal which are impugned in this petition,
the parties have been directed to pay
Rs.56,34,735/- (Fifty Six Lacs Thirty Four
Thousand Seven Hundred and Thirty Five)
which includes the amount of Rs.51,22,487/-
(Fifty One Lacs Twenty Two Thousand Four
Hundred and Eighty Seven) towards fee of
the Arbitration individually and Rs.5,12,248/-
(Five Lacs Twelve Thousand Two Hundred
and Forty Eight) towards Secretarial and
Administrative expenses to each of such
Arbitrators.

4. Learned Senior Counsel Shri
Sudeep Seth appearing for the petitioners
has pointed out that the order passed by the
384 INDIAN LAW REPORTS ALLAHABAD SERIES
Tribunal for determining its Fee dated
23.06.2021 is clearly based on erroneous
premises. He has read out Annexure No.1
detailing the determination of fee, and
pointed out that the Arbitral Tribunal has
referred to Sub Section (14) of Section 11
of the Arbitration and Conciliation Act,
1996 (hereinafter referred to as Act) as
amended from time to time, and thereafter
observed that Sub Section (14) of Section
11 refers to determination of fee of the
Tribunal, in case Rules have been framed
in this regard by the High Court. The High
Court having not framed any Rules under
Sub Section (14) of Section 11 of the Act,
therefore, it was open for the Tribunal to
ignore the Fourth Schedule altogether.

5. Learned counsel for the petitioners
has read out from the Act itself Section 11
thereof, which is a part of Chapter-III
which relates to composition of Arbitral
Tribunal and has referred to Section 11 (2)
thereafter which says that subject to Sub
Section (6) the parties are free to adopt any
Procedure for appointing the Arbitrator or
the Arbitrators. Sub Section (6) relates to
Arbitral Tribunal being appointed either by
the Supreme Court or by the High Court in
case of failure of the parties to appoint one.

6. Learned counsel for the petitioners
has pointed out that it is clear from the
language of the Act itself that it applies to
all kinds of Arbitral Tribunals and the
Procedure adopted for their appointment as
a whole, either by agreement between the
parties or on the failure of such agreement
between the parties. In all such cases, Sub
Section (14) of Section 11 would apply.
Learned counsel for the petitioners has read
out Sub Section 14 of Section 11 which is
applicable today (as amended Sub Section
14 is yet to be notified). It is quoted
hereinbelow:-

"(14)
For
the
purpose
of
determination of the fees of the arbitral
tribunal and the manner of its payment to
the arbitral tribunal, the High Court may
frame such rules as may be necessary, after
taking into consideration the rates specified
in the Fourth Schedule.

Explanation: For the removal of
doubts, it is hereby clarified that this subsection shall not apply to international
commercial arbitration and in arbitration
(other
than
international
commercial
arbitration) in case where parties have
agreed for determination of fees as per the
rules of an arbitral institution".

7. It has been submitted by the
learned counsel for the petitioners that the
Explanation to Sub Section (14) would not
apply in the case of the petitioners as it is
not international commercial arbitration
and it is also not a case where the parties
have agreed amongst themselves about the
fee of the Arbitration Tribunal. Therefore,
the exclusionary Clause as given in the
Explanation would not come in the way for
the application of Sub Section (14) of
Section 11 of the Act to the Arbitration
proceedings between the parties.

8. Learned counsel for the petitioners
has read out the observations made by the
learned Tribunal that the cases cited by the
learned counsel for the State respondents
are not applicable to the facts of the case
and then pointed out the judgments that
were cited by the petitioners in their
arguments.

9. The first such judgment is of Single
Judge decision of the High Court of Delhi in
Delhi
State
Industrial
Infrastructure
Development Corporation Limited Vs.
Bawana Infra and Development Private
Limited (hereinafter referred to as Bawana
8 All. State of U.P. & Ors. Vs. Gvk Emri (Up) Pvt. Ltd. & Anr.
385
Infra judgment), the said judgment is reported
in 2018 SCC Online Delhi, 9241. The writ
petition was filed before the Delhi High
Court primarily seeking an interpretation of
the Fourth Schedule that was introduced by
way of Amendment Act, 2015. The question
was "whether the term, "Total Sum in
Dispute" would mean the amount of claim
and also counter claim taken separately rather
than cumulatively." The Delhi High Court
considered Law Commissions 246th Report
wherein the mischief sought to be removed
by way of introduction of the Fourth
Schedule in the Act was dealt with. One of
the main complaints against the Arbitration in
India was the high cost associated with the
same including Fee of the Arbitration
Tribunal
fixed
unilaterally
and
disproportionately, by several Arbitrators.
The Commission believed that if Arbitration
was really to become a cost effective solution
for dispute resolution in the domestic context,
there should be devised some mechanism to
rationalize the Fee structure for arbitration. It
referred to a judgment rendered by the
Supreme Court in Union of India Vs. Singh
Builders Syndicate reported 2009 (4) SCC
523, where it was observed that:-

"The cost of arbitration can be
high if the Arbitral Tribunal consists of
retired Judges and there is no doubt or
prevalent opinion that the cost of arbitration
becomes very high in many cases where
retired Judges are Arbitrator. The large
number of sitting and charging of very high
Fees per sitting with several additions,
without any ceiling, have many time resulted
in cost of arbitration approaching or even
exceeding the amount involved in the dispute
or the amount of the Award."

10. Several observations made in
Paragraph nos.10, 11 and 12 of the said
judgment rendered by the Supreme Court
in Union of India Vs. Singh Builders
Syndicate (Supra) were considered by the
Delhi
High
Court
as
also
Law
Commission's Report. The mechanism
derived for the purpose of rationalizing of
Fee structure for arbitration after much
deliberation
by
the
Legislature
was
thereafter
introduced
in
the
Fourth
Schedule relating to Section 11 of the Act.
It was observed that the Fee Structure as set
up in the Fourth Schedule was based on the
Fee by the Delhi High Court International
Arbitration
Center
(D.I.A.C.)
which
specifically provided that "Sum in Dispute"
shall include the counter claim made by the
party.
Therefore
the
intent
of
the
Legislature and the objective sought to be
achieved clearly pointed out to the
conclusion that "Sum in Dispute" would be
a cumulative value of the claim and the
counter claim and not each of them treated
separately. The Delhi High Court observed
in Paragraph-14 that even in the general
parlance "Sum in Dispute" shall include
both claim and counter claim amounts. If
the Legislature intended to have the
Arbitral Tribunal exceed the ceiling limit
by charging separate Fee for the claim and
counter claim amounts it would be
provided so in the Fourth Schedule.

11.

Learned
Counsel
for
the
petitioners has also pointed out the
judgment rendered by a Single Judge of the
Patna High Court in State of Bihar and
others
Vs.
Bihar
State
Sugarcane
Corporation Limited and Others decided
on 05.03.2020 in C.W.J.C. Nos.14355 of
2019 and 23934 of 2018, reported in
MANU/BH/0720/2020,
where,
while
referring to the Fourth Schedule relatable to
Sub Section (14) of Section 11 a reference
was made to the judgment rendered in
Bawana Infra (Supra). The Patna High
Court came to the conclusion that the high
386 INDIAN LAW REPORTS ALLAHABAD SERIES
costs are seriously hampering the growth of
Arbitration as an effective alternate dispute
resolution process. It referred to the
judgment rendered in Union of India Vs.
Singh Builders Syndicate Limited (Supra)
also and then observed in Paragraph-12 of
the report as follows:-

"12. This Court further finds that a
conjoint reading of the provisions contained
in Section 11(14), Section 38 and Fourth
Schedule of the Arbitration and Conciliation
Act, 1996 along with the 246th Law
Commission Report, which has addressed the
issue of fees of arbitrators and has suggested
a model schedule of fees as a mechanism to
rationalize the fee structure, leading to
coming into being of the Arbitration and
Conciliation (Amendment) Act, 2015, which
has been passed with a view to make the
arbitral process cost effective and has thus
inserted Schedule Fourth to the Act,
providing therein a model fee schedule for
domestic arbitration, for the purposes of
determination of fees of the arbitral tribunal,
would
definitely
demonstrate
that
the
intention of the legislature was/is to provide a
upper cap to the fee of the arbitrator in order
to make the arbitral process cost effective. In
case, the legislature intended to permit the
arbitrator(s) of the arbitral tribunal to fix a
fee exceeding the ceiling amount by charging
a base amount and a percentage of the claim
amount, which would be subject to ceiling
separately, it would have provided so in the
"Fourth Schedule". Now coming back to the
phrase used in the "Fourth Schedule", with
regard to the "sum in dispute", it would be
appropriate to reproduce the model fees
prescribed for claim above Rs. 20,00,00,000/-
, herein below:-

"Rs. 19,87,500 plus 0.5 per cent
of the claim amount over and above Rs.
20,00,00,000
with
a
ceiling
of
Rs.
30,00,000".

It is apparent from a bare
reading of the phrase "with a ceiling of Rs.
30,00,000/-", that the same cannot be
considered as a modifying phrase at the
end, which would only refer to the ceiling
being applicable to "plus 0.5% of the claim
amount over and above Rs. 20,00,00,000".
Thus, it would be seen that the afore-said
provision is to be read conjunctively and
not in a disjointed manner inasmuch as
doing so would defeat the intention of the
legislature, resulting in exorbitant amount
of fees being fixed by the learned
arbitrators."

In Paragraph-14 of the said
judgment the Patna High Court has
observed as under:-

"Para-14. Having considered the
aforesaid aspect of the matter as also the
law laid down by the Hon'ble Courts, as
referred to hereinabove in the preceding
paragraphs, apart from taking into account
the 246th Law Commission Report and the
2015 amendment made in the Arbitration
and Conciliation Act, 1996, this Court is of
the
considered
view
that
a
sound
interpretation of the "Fourth Schedule",
especially keeping in mind the legislative
intent as also taking into cognizance the
plain and simple understanding of the
aforementioned provision in simple English
language used for the purposes of defining
the model fee, as far as sum in dispute
being
above
Rs.
20,00,00,000/-
is
concerned, can only have one meaning i.e.
- "the ceiling of Rs. 30,00,000/- has to
applied to the summation of the base
amount and the percentage of claim added
together, however, in cases, where the
arbitral
tribunal
consists
of
a
sole
arbitrator he would be entitled to an
additional amount of 25% of the maximum
amount which, in any case, cannot be more
than a sum of Rs. 7,50,000/- (25% of Rs.
30,00,000/-). It further held that the sum in
8 All. State of U.P. & Ors. Vs. Gvk Emri (Up) Pvt. Ltd. & Anr.
387
dispute, as referred to in Schedule Fourth
to the Arbitration and Conciliation Act,
1996 shall include both claim and counter
claim amounts, as has also been held by the
Hon'ble Delhi High Court in the case of
Bawana Infra Private Ltd. (supra). It is
needless to state that the "Fourth Schedule
to the Arbitration and Conciliation Act,
1996, is not mandatory determining the fee
structure where the fee structure has been
agreed to in the agreement between the
parties. Moreover, since no rules have been
framed by the Hon'ble Patna High Court,
providing for the fee schedule for domestic
arbitration,
the
aforesaid
"Fourth
Schedule,
to
the
Arbitration
and
Conciliation Act, 1996 shall govern the
field regarding determination of fee of the
arbitral tribunal."

12.

Learned
counsel
for
the
petitioners has also referred to a Division
Bench judgment of the Punjab and Haryana
High Court rendered in the case of Punjab
State Power Corporation Limited Vs.
Union of India and Others Civil Writ
Petition No.3962 of 2017 decided on
21.07.2017, wherein a similar dispute was
being considered and one of the issues that
was raised was regarding the interpretation
made by the Arbitral Tribunal about the
fees admissible to them. The Arbitral
Tribunal had held that a model fee
prescribed would be admissible to all its
members whereas the petitioners stated that
the Arbitral Tribunal would be entitled to a
composite fee in terms of the Fourth
Schedule and the members of the Tribunal
cannot be treated as separate individuals for
the applicability of the Schedule. Both the
petitioners and the Union of India (it was
the
respondent)
had
supported
this
contention. The Punjab and Haryana High
Court observed that the observation of the
Arbitral Tribunal was clearly erroneous. It
observed that the note appended to the
Fourth Schedule cannot be interpreted so as
to mean that each member of the Tribunal
shall be entitled to fee as admissible to the
sole Arbitrator. It meant only that "in the
eventuality of Arbitral Tribunal consisting
of a solitary member, it would entitle him to
an additional fee of 25% of the Model Fee,
but if it is a multi member body then they
would be entitled to composite fee as set up
in the Fourth Schedule."

13.

Learned
counsel
for
the
petitioners has pointed out from the order
impugned filed as Annexure-1 that after
referring to arguments regarding the
judgments of different High Courts being
cited before it the Arbitral Tribunal
observed that they are inapplicable to the
facts of the case. It has not been stated as to
how the facts of the case before the Arbitral
Tribunal were different, in so far as the
issues
involved
were
regarding
the
applicability of Sub Section (14) of Section
11 and the Fourth Schedule for determining
the fee of the Arbitral Tribunal, and
whether such fee would be on the basis of
claim and counter claim being treated
separately or in a cumulative manner. It
also involved the question whether such fee
would be payable individually to each of
the members of the Arbitral Tribunal or it
would be a composite fee for all of them to
be divided amongst themselves later on.

14. It has been pointed out by the
learned Senior counsel that after observing
that the judgment in Bawana (supra) would
not apply the Arbitral Tribunal strangely
referred to one of the Paragraphs of the said
judgment to come to the conclusion that
Section 38 of the Act would apply in the
absence of Rules framed under Section 11
(14) of the Act being framed by the High
Court. The Tribunal thereafter observed
388 INDIAN LAW REPORTS ALLAHABAD SERIES
that it was of the view that the fee of the
Arbitrators in the case before it had to be
determined with reference to Section 31,
Section 31 (A) and Section 38 (1) of the
Act.

15. Learned counsel for the petitioners
has taken this Court through Chapter-VI of
the Act of which Section 31 and Section 31A are a part. It relates to the making of
Arbitral Award and termination of the
proceedings. Section 31 relates to Form and
Contents of Arbitral Award, and it also
relates to Interim Arbitral Award, and Final
Arbitral Award and the rate of interest etc.
Under Section 31 (A), the Regime for Costs
has been given (which Section was inserted
w.e.f. 23.10.2015) and it relates to a "cost" to
be awarded at the time of conclusion of
arbitration either to the claimant or to the
respondent of such arbitration proceedings. It
does not relate to the determination of fee of
Arbitral Tribunal. Such "Cost" in the
Explanation appended to Section 31 (A)
would be reasonable and would also take into
account the Fee and expenses of the
Arbitrators, the Court and the witnesses,
Legal Fee and Expenses, Administration Fee,
and other Expenses also. The intention of the
Legislature was clear that if the Courts or the
Arbitration Tribunal decides impose to
"Cost" the factors given under Section 31-A
would be considered for the determination of
the same. Learned counsel for the petitioners
has pointed out that the "Costs" are different
from "Fee" the phrase "determination of fee"
has been used only in Sub Section (14) of
Section 11, which relates to Chapter-III and
the mode and manner of appointment of
Arbitrators and does not relate at all to
"Costs" as has been wrongly presumed by the
Arbitral Tribunal.

16. Similarly, Section 38 in ChapterX of the Act relates to deposit that have to
be made by the parties to the arbitration
proceedings only in terms of the "Costs"
that
would
be
later
imposed
after
termination of arbitration proceedings. Sub
Section-1 of Section 38 clearly says that the
Arbitral Tribunal may fix the amount of the
deposit, or the supplementary deposit, as
the case may be as advance for the purpose
of "Costs" referred to in Sub Section (8) of
Section 31 which it expects will be incurred
in respect of claim submitted to it. The First
Proviso to Section 38 (1) says that where
apart from claim, the counter claim has
been submitted to the Arbitral Tribunal it
may fix separate amount of deposit for the
claim and counter claim.

17. It has been argued by the learned
counsel for the petitioners that the Proviso
is only with respect to the payment of
"Costs" to take into account the claim and
counter claim separately, not with respect
to determination of Fees, but Arbitral
Tribunal has erroneously assumed that
"Costs" would include the "fee" and
Section 38 relates to separate deposit for
claim and counter claim, therefore, the
"fees" should also be determined separately
for claim and counter claim.

18. It has been submitted that the
learned
Tribunal
has
assumed
that
provisions with regard to "Costs" are the
same as for "fees". This is apparent from
the Paragraph-17 of the order which says
that "keeping in view the Costs should
remain reasonable" this Tribunal decides
that the fee payable to each member of the
Arbitral Tribunal would be 0.125% of the
total sum in dispute that is the claim and
counter claim put together. In addition to
this, each of the Arbitrators was also be
paid 10% of the fee payable to him towards
Secretarial and Administrative expenses in
connection
with
the
arbitration
8 All. State of U.P. & Ors. Vs. Gvk Emri (Up) Pvt. Ltd. & Anr.
389
proceedings." The Fee as determined was
to be shared by the parties equally.

19. In Annexure-2 to the writ petition
which is also an order dated 23.06.2021
and challenged in this writ petition. The
Tribunal has observed as under:-

" By order passed separately the
Tribunal has today allowed claimant's
application dated 19.03.2021, seeking
amendment in statement of claim. The
claimants shall incorporate the allowed
amendment within a week of this order and
shall supply its copy to the respondents. An
amended copy of the Statement of Claim
shall be placed on record of the Tribunal
as mentioned in the said order.

The
respondents
have
been
allowed three weeks time from the date of
this order to file additional Statement of
Defence, if any.

By a separate detailed order this
Tribunal has also decided that the fee
payable to each of the member of this
Tribunal would be 0.125% of the total sum
in dispute i.e. claim and counter claim put
together. Each of the arbitrator shall
further be paid 10% of arbitration fee
towards secretarial and administrative
expenses. The fee so payable shall be borne
by parties in the ratio of 50% each.

At present the total value of the
claim of the claimant, including the
amendment presently allowed, is Rs.
197,34,15,637/- (Rupees One Hundred
Ninety Seven Crore Thirty Four Lac
Fifteen Thousand Six Hundred Thirty Seven
Only) and the value of the counter claim is
Rs. 230,45,74,000/- (Rupees Two Hundred
Thirty Crore Forty Five Lac Seventy Four
Thousand Only). The total sum in dispute is
Rs. 409,79,89,637/- (Rupees Four Hundred
Nine Crore Seventy Nine Lac Eighty Nine
Thousand Six Hundred Thirty Seven Only)
on which 0.125% plus 10% of the said sum
comes to Rs. 51,22,487/- + 5,12,248/- = Rs.
56,34,735/- (Rupees Fifty Six Lac Thirty
Four Thousand Seven Hundred Thirty Five
Only). shall be deposited by or before the
date of issues, third similar installment of
Rupees 14 Lac shall be paid by or before
the commencement of evidence and the last
installment of full remaining amount shall
be deposited by or before the time of final
argument.

Signed copies of the orders
passed separately today have been supplied
to the parties.

The matter shall now be taken up
on 18.07.2021 at 2pm for identifying issues
arising for determination of the case."

20. It is an order that says that the fee be
deposited in installments and the first
installment of an amount of Rs.14 lacs
(divided between the parties in equal shares)
be deposited with each of the Arbitrators
within a fortnight of the order. Similarly, the
second installment of Rs.14 lacs should be
deposited by or before the date of issues, and
the third similar installment should be paid
before the commencement of evidence and
the last installment of the remaining amount
be deposited by or before time of final
argument.

21. It has been argued that the learned
Tribunal has taken the cue from Section 38
of the Act in making such order for deposit
of Fee in advance. Fee is differently treated
from "Cost" it is only for the cost to be
determined at the termination of arbitration
proceedings which are likely to be incurred
by the parties, that a provision has been
made in the Act under Section 38, for it to
be deposited in advance.

22. In sum and substance, the
arguments raised by the learned Senior
390 INDIAN LAW REPORTS ALLAHABAD SERIES
counsel for the petitioners is that the
learned Tribunal has committed the error of
misreading different Sections of the Act
relating to different Chapters cumulatively
as applicable to Section 11 of the Act
which relates to appointment of Arbitral
Tribunal and determination of Fee thereof.

23. Shri Gaurav Mehrotra, who has
filed
his
Power
on
behalf
of
the
respondents today, has supported the
arguments made by the learned Senior
Counsel in so far as the the applicability of
the various judgments of different High
Courts are concerned, as according to him
such judgments are clearly applicable to the
facts of the case before the learned Tribunal
and the learned Tribunal has erroneously
ignored the observations made in them
saying that they do not apply to the case
before them.

24. It has been pointed out further by
Shri Gaurav Mehrotra that he had argued
before the Tribunal that the Fourth
Schedule relates to fee that is payable to
each of the members of the Arbitral
Tribunal individually on the basis of the
Note appended to the Fourth Schedule
which says that in the event the Arbitral
Tribunal is a sole Arbitrator, he would be
entitled to an additional amount of 25% of
the fee payable as per the Schedule itself. It
has been argued by Shri Gaurav Mehrotra
that he still believes that each of the
members of the Arbitral Tribunal shall be
entitled to separate fee as determined as per
the Fourth Schedule and it should not be
paid in a composite manner to the entire
Tribunal, as it would mean that when the
Arbitral Tribunal consists of more than one
member i.e., either two or five members,
then an amount of Rs.30 lacs would be
distributed amongst such three or five
members proportionately which would be
an unreasonably low amount whereas if the
Arbitral Tribunal consists of only one
member or sole Arbitrator, he would be
entitled to the entire Fees of Rs.30 lacs +
25% over and above, as additional amount.

25. It has been argued also by Shri
Gaurav Mehrotra, that he supports the
arguments made by the learned Senior
Counsel with regard to the applicability of
Sub Section (14) of Section 11 for the
determination of Fee of the Arbitral
Tribunal as Section 11 is a part of the
Chapter-III
which
deals
with
the
appointment of Arbitrator. Shri Gaurav
Mehrotra has argued that "Sum in Dispute"
has been held by both Punjab and Haryana
High Court and Delhi High Court to mean
the
claim
and
counter
claim
taken
cumulatively and not separately, and the
learned
Tribunal
has
erroneously
interpreted the Section 38 relating to
"Costs" as applicable to Section 11 also.

26. He has pointed out from
Annexure-1 to the writ petition that the
basic premise for determination of Fee by
the orders impugned by the learned
Tribunal has been that for Fourth Schedule
referred to Sub Section (14) of Section 11
which comes into operation only when the
Arbitral Tribunal is constituted on an
application of a party to the High Court or
the Supreme Court, and that it does not
apply to the cases where the Tribunal come
into existence without intervention of the
Court under Section 11 of the Act. Such
premise has led to the super structure of the
entire order become vitiated. The counsel
for the respondents has also pointed out
Paragraphs 12, 13, and 14 of the order
impugned wherein reference has been made
to Section 31, 31-A and Section 38 and
says that all these sections relate to
determination of "Costs" after termination
8 All. State of U.P. & Ors. Vs. Gvk Emri (Up) Pvt. Ltd. & Anr.
391
of Arbitration proceedings and it has been
specifically stated in the Act that such
"Costs" would be part of the Arbitration
Award. He has referred to Sub Section (1)
of Section 31-A, the language of which
clearly specifies that the "Regime of the
Costs"
would
be
applicable
notwithstanding anything contained in the
Civil Procedure 1908, and the Arbitral
Tribunal shall have the discretion to
determine whether "Cost" is payable by one
party to another, the amount of such 'costs',
and when such 'costs' are to be paid. Such
costs as are referred under Section 38 are
relatable to an eventuality where the
arbitration proceedings are concluded in
favour of either of the claimant or the
respondent, to compensate them for the
trouble of having undergone the protracted
procedure of Arbitration to get their rights
determined.

27. Shri Gaurav Mehrotra, has
referred to the first Proviso under Section
38 (1) where the deposits are to be made by
the claimants and the respondents on their
claim and counter claim separately for such
costs as the Tribunal expects would be
incurred in respect of the claims submitted
to it. The Proviso appended to such section
refers to costs being determined separately
for claim and counter claim. It does not
relate to "fee" which has to be determined
on the cumulative amount of claim and
counter claim.

28. In this case, the claim of the
respondents was approximately Rs.198
crores and counter claim of the petitioners
was approximately Rs.230 crores, the
Tribunal has wrongly calculated the "Sum
in Dispute" amounting to more than Rs.409
crores. Because of this wrong assumption,
the entire Fee structure determined by the
learned Tribunal has become arbitrary.

29. This Court having heard both the
counsel for the petitioners as well as for the
respondents, finds that the counsel for both
the parties are in agreement with regard to
the basic premise on which the orders
impugned
have
been
passed
being
erroneous, vitiating the entire order with
the Vice of arbitrariness.

30. This Court has also carefully gone
through the judgments rendered by the
Delhi High Court, Patna High Court and
the Punjab and Haryana High Court.
Although such judgments
have only
persuasive value and cannot be said to be
binding precedings, this Court cannot
ignore the observations made therein on the
basis of 246th Report of the Law
Commission
which
related
to
the
Amendment Act of 2015. The mischief that
was to be sought to be avoided was that of
exorbitant costs of Arbitration, arbitrarily
fixed by the Arbitral Tribunal which
consisted of retired High Court and
Supreme Court Judges sometimes. The
arbitration proceedings were to be made an
attractive proposition for Alternate dispute
resolution. The observations made by the
Hon'ble Supreme Court in Union of India
Vs. Singh Builders Syndicate (Supra)
cannot be ignored by this Court.

31. In a Seven Judges Constitution
Bench judgment rendered in Bengal
Immunity Co. Ltd. v. State of Bihar
[AIR 1955 SC 661], the Supreme Court
observed in Paragraph-23 that it is a sound
rule of construction of statute firmly
established in England as far as back as
1584 when Heydon's case was decided that
for the sure and true interpretation of all
statutes in general (Be they penal or
beneficial, restrictive or enlarging of the
Common law), four things are to be
discerned and considered:-
392 INDIAN LAW REPORTS ALLAHABAD SERIES

(1) what was the Common law
before the making of the Act;

(2) what was the mischief and
defect for which the common law did not
provide;

(3) what remedy Parliament has
resolved and appointed to cure the disease
of the commonwealth; and

(4) the true reason of the remedy;

and then the office of all the
judges is always to make such construction
as shall:

(a) suppress the mischief and
advance the remedy; and

(b) suppress subtle inventions and
evasions for the continuance of the mischief
pro privato commodo (for private benefit);
and

(c) add force and life to the cure
and remedy according to the true intent of
the makers of the Act pro publico (for the
public good).?

32. In Ameer Trading Corpn. Ltd.
v. Shapoorji Data Processing Ltd., (2004)
1 SCC 702 :The Division Bench of the
Supreme Court was considering the Order
XVIII Rule 4 of the CPC as amended in
2002. With regard to the mode of
"Examination-in-Chief" in every case and
whether any discretion has to be drawn
between the appealable and non-appealable
cases.
It
considering
whether
the
"Examination-in-Chief" on affidavit can be
said to be sufficiently good replacement for
oral tendering of evidence in Court and
whether such mode of taking of evidence
can cause prejudice to the other party, the
Court considered the provisions of Rule 4
and Rule 5 of Order XVIII and observed
that
both
are
required
to
be
read
harmoniously,
Keeping
in
mind
the
mischief sought to be reapprised by the
amendment. As the amendments were
made by the Parliament consciously and
keeping in mind the experience from the
past. The Supreme Court observed that
"Examination-in-Chief" of witnesses would
include the Evidence in Chief, crossexamination or re-examination. Rule 4 of
Order XVIII speaks of "Examination-inChief". The unamended rule provided for
the manner for which evidence is to be
taken. Such "Examination-in-Chief" of a
witness in every case shall be on affidavit.
The said provisions has been made to
curtail the time taken by the Court in
examining the Witness-in-Chief. The rule 4
of Order XVIII does not make any
distinction between appealable and nonappealable cases so far as mode of
recording evidence is concerned. Such a
difference is to be found only in Rules 5
and 13 of Order XVIII of the Code.

The Supreme Court observed that
whereas under the unamended rule, the
entire evidence was required to be adduced
in court, now the Examination-in-Chief of a
witness including the party to a suit is to be
tendered on affidavit. The expression ?in
every case? is significant. What thus
remains viz. cross-examination or reexamination in the appealable cases will
have to be considered in the manner laid
down in the rules, subject to the other subrules of Rule 4.

Rule 5 of Order 18 speaks of the
other formalities which are required to be
complied with. In the cases, however,
where an appeal is not allowed, the
procedures laid down in Rule 5 are not
required to be followed.

33. The Supreme Court observed in
Paragraphs 21, 22 and 23 of Ameer
Trading Corporation (Supra), thus:-

"21. In a situation of this nature,
the doctrine of suppression of mischief rule
as adumbrated in Heydon's case [(1584) 3
8 All. State of U.P. & Ors. Vs. Gvk Emri (Up) Pvt. Ltd. & Anr.
393
Co Rep 7a : 76 ER 637] shall apply. Such
an amendment was made by Parliament
consciously and, thus, full effect thereto
must be given.

22.
In
Halsbury's
Laws
of
England, Vol. 44(1), 4th Reissue, para
1474, pp. 906-07, it is stated:

?Parliament
intends
that
an
enactment shall remedy a particular
mischief and it is therefore presumed that
Parliament intends that the court, when
considering, in relation to the facts of the
instant case, which of the opposing
constructions of the enactment corresponds
to its legal meaning, should find a
construction which applies the remedy
provided by it in such a way as to suppress
that mischief. The doctrine originates in
Heydon's case [(1584) 3 Co Rep 7a : 76 ER
637] where the Barons of the Exchequer
resolved that for the sure and true
interpretation of all statutes in general (be
they penal or beneficial, restrictive or
enlarging of the common law), four things
are to be discerned and considered:

(1) what was the common law
before the making of the Act;

(2) what was the mischief and
defect for which the common law did not
provide;

(3) what remedy Parliament has
resolved and appointed to cure the disease
of the commonwealth; and

(4) the true reason of the remedy;

and then the office of all the
judges is always to make such construction
as shall:

(a) suppress the mischief and
advance the remedy; and

(b) suppress subtle inventions and
evasions for the continuance of the mischief
pro privato commodo (for private benefit);
and

(c) add force and life to the cure
and remedy according to the true intent of
the makers of the Act pro publico (for the
public good).?

23. Heydon's rule has been applied
by this Court in a large number of cases in
order to suppress the mischief which was
intended to be remedied as against the literal
rule which could have otherwise covered the
field. (See for example, Parayankandiyal
Eravath Kanapravan Kalliani Amma v. K.
Devi [(1996) 4 SCC 76 : AIR 1996 SC 1963]
; Bengal Immunity Co. Ltd. v. State of Bihar
[AIR 1955 SC 661] and Goodyear India Ltd.
v.