MANU/UP/1313/2021

Equivalent Citation: 2021(7)ADJ410

IN THE HIGH COURT OF ALLAHABAD (LUCKNOW BENCH)

Civil Misc. Writ Petition (M/S) No. 16858 of 2021
Decided On: 05.08.2021
Appellants: State of U.P. and Ors.
Vs.
Respondent: GVK EMRI (UP) Pvt. Ltd. and Ors.
Hon'ble Judges/Coram:
Sangeeta Chandra, J.
Counsels:
For Appellant/Petitioner/Plaintiff: Sudeep Kumar, C.S.C. and Mohit Jauhari
For Respondents/Defendant: Gaurav Mehrotra and Tushar Mittal
JUDGMENT
Sangeeta Chandra, J.
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
23.6.2021 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 24.9.2020 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 16.1.2021 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

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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 Laps 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 Tribunal for determining its Fee dated 23.6.2021 is
clearly based on erroneous premises. He has read out Annexure 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 sub-
section 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.

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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 v. Bawana
Infra and Development Private Limited (hereinafter referred to as Bawana Infra
judgment), the said judgment is reported in. 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 v. Singh Builders Syndicate, MANU/SC/0490/2009 : 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 v. 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 v. Bihar State
Sugarcane Corporation Limited and others decided on 5.3.2020 in C.W.J.C. Nos.
14355 of 2019 and 23934 of 2018, reported in MANU/BH/0720/2020, where, while

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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 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 v. 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 alongwith the 246th Law Commission
Report, which has addressed the is-. sue 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,

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 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 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."
1 2 . 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 v. Union of India and others Civil Writ Petition No. 3962 of
2017 decided on 21.7.2017, 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 An-nexure-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
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.

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15. Learned counsel for the petitioners has taken this Court through Chapter-VI of
the Act of which Section 31 and Section 31-A 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 Chapter-X 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 deter-mined 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 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 23.6.2021 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 19.3.2021, seeking amendment in statement of claim. The
claimants shall incorporate the allowed amendment within a week of this

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 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 18.7.2021 at 2 p.m. 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 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.

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2 3 . 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 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.
2 4 . 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 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.

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2 7 . 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 preceding,
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 v. 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, MANU/SC/0083/1955 : 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:
(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

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 (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).?
3 2 . In Ameer Trading Corpn. Ltd. v. Shapoorji Data Processing Ltd.,
MANU/SC/0943/2003 : (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, cross-
examination or re-examination. Rule 4 of Order XVIII speaks of "Examination-in-
Chief. 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 non-appealable 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 re-examination
in the appealable cases will have to be considered in the manner laid down in the
rules, subject to the other sub-rules 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.
3 3 . 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 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

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 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
[MANU/SC/0487/1996 : (1996) 4 SCC 76: AIR 1996 SC 1963]; Bengal
Immunity Co. Ltd. v. State of Bihar [MANU/SC/0083/1955 : AIR 1955 SC
661] and Goodyear India Ltd. v. State of Haryana [MANU/SC/0194/1989 :
(1990) 2 SCC 71 : 1990 SCC (Tax) 223 : AIR 1990 SC 781])."
3 4 . The Supreme Court after referring to several of its judgments relating to
amendment in Act carried out after experience was gathered from the past, referred
to judgment rendered in District Mining Officer v. Tata Iron & Steel Co.,
MANU/SC/0412/2001 : (2001) 7 SCC 358 and the observation made therein:
"The legislation is primarily directed to the problems before the legislature
based on information derived from past and present experience. It may also
be designed by use of general words to cover similar problems arising in
future. But, from the very nature of things, it is impossible to anticipate fully
the varied situations arising in future in which the application of the
legislation in hand may be called for and words chosen to communicate such
indefinite referents are bound to be in many cases, lacking in clarity and
precision and thus giving rise to controversial questions of construction. The
process of construction combines both literal and purposive approaches. In
other words, the legislative intention i.e. the true or legal meaning of an
enactment is derived by considering the meaning of the words used in the

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 enactment in the light of any discernible purpose or object which
comprehends the mischief and its remedy to which the enactment is
directed."
35. This Court is of the considered opinion that Sub-section (14) of Section 11 and
the Fourth Schedule relatable to it, are applicable to even Arbitral Tribunal appointed
by the parties themselves in terms of their contract/agreement.
36. This Court is also in agreement with the observations made by the various High
Courts quoted hereinabove, regarding the question of "Sum in Dispute" which has to
be taken cumulatively as the claim and counter claim and not calculated separately as
eventually only one of the parties to the arbitration proceedings would most likely
succeed. If the claimant succeeds it would be getting around 198 crores whereas if
the respondents succeed they would be getting an amount of Rs. 230 crores. As each
of the parties would be getting only the amount claimed by them at the termination
of the arbitration proceedings.
3 7 . This Court is also of the considered opinion that the Fourth Schedule is
applicable to even Arbitral Tribunals appointed under Section 11 (2) and the ceiling
limit of Rs. 30 lacs as Model Fee for all claims above Rs. 20 crores would be
applicable in the case of determination of Fee of Arbitral Tribunal and the orders
impugned have erroneously ignored the Fourth Schedule saying that it would only be
applicable to cases where the High Court has framed Rules or appointed Arbitrators.
38. With regard to the question whether Fee should be taken as a composite amount
or is to be paid separately and individually to each Arbitrator, this Court is of the
considered opinion that the arguments raised by Shri Sudeep Seth, learned Senior
Counsel appeal more to reason, because 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 members would be getting the Fee as
mentioned in the Schedule.
3 9 . For the reasons as mentioned hereinabove, this Court the orders impugned
deserve to be set aside. The orders impugned are set aside.
4 0 . The Arbitral Tribunal shall be free to determine its Fees and administrative
expenses taking into; consideration the observations made in this judgment and pass
a fresh orders.
41. The Writ petition stands allowed.
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