C.R.No.7001 of 2010 #1# IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH C.R.No.7001 of 2010 Date of decision: 08.3.2011 Kotak Mahindra Bank Ltd ….Petitioner Vs. P.C Singal and another ….Respondents CORAM: HON’BLE MR. JUSTICE JASWANT SINGH Present: Mr. A.S. Virk, Advocate for the petitioner. Mr. Vivek Suri, Advocate for respondent No.1. Mr. Atul Sharma, Advocate for respondent No.2. Jaswant Singh, J Petitioner has preferred the instant petition under Article 227 of the Constitution praying for setting aside the impugned order dated 22.9.2010 (P.1) passed by the learned Sole Arbitrator-respondent No.1 whereby he has ordered the arbitration fee of Rs.1,08,000/- (One Lac and eight thousand) to be paid equally by both the parties. Facts of the case are that respondent No.1-Narinder Pal Singh filed a petition dated 15.4.2009 (P.3) under Section 11 of the Indian Arbitration and Conciliation Act, 1996 (hereinafter to be referred as “1996 Act”) before this Court and upon notice, present petitioner appeared through his counsel and raised no objection for the appointment of an independent Arbitrator. After considering the matter, Hon'ble the then Chief Justice vide order dated 29.4.2010 (P.4) appointed Sh. P.C Singal, District Judge (Retd) (respondent No.1 herein) as an Arbitrator specifically mentioning that the C.R.No.7001 of 2010 #2# Arbitrator shall fix his own fee. Parties through their counsel were directed to appear before the Arbitrator on 6.9.2010 or any other agreed date but not later than a fortnight from 6.9.2010 and it was made clear that after completion of pleadings by the parties within the stipulated period mentioned in the order, the Arbitrator shall dispose of the reference not later than six months from the first date of appearance of the parties. Consequently, respondent No.2 filed his claim petition dated 27.5.2010 (P.5) claiming total amount of Rs.64,37,940.39/- in response thereto, present petitioner filed reply resisting the claim of respondent No.2 besides claiming an amount of Rs.1,35,623/- as a counter claim dated 31.8.2010 (P.6). Thereafter, on 22.9.2010, both the parties supplemented their pleadings and the case was adjourned for 27.10.2010 for admission and denial of documents. Simultaneously on that very day i.e 22.9.2010 (P.1), keeping in view the amount of claim, counter claim, volume of work involved and the rules of Indian Council of Arbitration, the learned Arbitrator-respondent No.1 fixed his fee as Rs.1,08,000/- to be paid equally by both the parties. It was made clear that the fee shall include the reading of the case file as well as the preparation of award, which was ordered to be paid on the next date of hearing i.e 27.10.2010. Feeling aggrieved against the fixation of the fee of Rs.1,08,000/-, present petition has been filed. After hearing learned counsel for the parties and perusing the paper book, this Court does not find any merit in the revision petition and the same deserves dismissal. Learned counsel for the petitioner argues that the fee of Rs.1,08,000/- is highly exorbitant as the total claim before this Court in the petition under Section 11 of the 1996 Act was Rs.7,62,000/- (Seven lacs and C.R.No.7001 of 2010 #3# sixty two thousand). It is further argued that the matter is referred to the Arbitrator not only with a view for its early disposal but also for the reason that the cost of Arbitration is low than the ordinary remedy of courts. The notice of the petition was issued to both the respondents including the sole Arbitrator, who has filed his detailed affidavit and submitted inter alia as under: “1. That the deponent was appointed as an arbitrator by this Hon'ble Court as per the orders dated 29.4.2010 and the deponent fixed his own fees as per the orders of this Hon'ble Court, as I am the member of Indian Council of Arbitration which regulates the fees with regards to the Arbitrator and the said fees has been incorporated in the rules of Arbitration and as per the Rules the Arbitrators fees for the amount from Rs.25 Lacs to Rs.1 Crore is Rs.60,000+Rs.1200/- per lac or part thereof subject to a sealing of Rs.1.50 Lacs. 2. The deponent had fixed his fees as the claimant (now respondent No.2) has filed a claim of Rs.64,37,940.39/- Ps and the petitioner has filed a counter claim of Rs.1,35,623/-. Thus, the deponent has accordingly fixed his fees as per rules to the tune of Rs.1,08,000/- to be paid by the both the parties.” Learned counsel for respondent No.2 supported the order passed by the learned Arbitrator-respondent No.1 and submitted that respondent No.2 has no objection for payment of his share of fee as fixed by the learned Arbitrator-respondent No.1. A perusal of the affidavit filed by respondent No.1-Sole Arbitrator as well as the claim statement dated 27.5.2010 (P.5) clearly reveal that a claim of Rs.64,37,940.39/- Ps was filed by the claimant- respondent No.2 against the present petitioner and in the counter claim, the petitioner has also filed a claim of Rs.1,35,623/-. Thus, as per the rules of Indian Council of Arbitration, the present subject matter falls within the slab C.R.No.7001 of 2010 #4# of Rs.25,00,000/- (Twenty five lacs) to Rs.1,00,00,000/- (One crore) and for this amount, Rs.60,000/- (Sixty thousand) plus Rs.1200/- per lac or part thereof subject to a ceiling of Rs.1.5 lacs could be charged by the learned Arbitrator-respondent No.1. In this way, he has rightly fixed an amount of Rs.1,08,000/- to be paid by both the parties equally as the present petitioner is also claiming Rs.1,35,623/- as a counter claim. The plea of the petitioner that in the petition under Section 11 of the 1996 Act, the claimant- respondent No.2 valued his petition at Rs.7,62,000/- is not tenable as that petition was only for the purposes of referring the matter to the Arbitrator and not to restricting the claim of the parties to be raised in the arbitration proceedings. It is also pertinent to mention here that while disposing of the petition, Hon'ble the Chief Justice vide order dated 29.4.2010 has clearly mentioned that the parties shall exchange the statement of claims, which shall be supplied to the counsel for the respondent within four weeks and as such it was left open to file the claim statement while deciding the petition under Section 11 of the 1996 Act. So far as the arguments of the petitioner that Arbitration is not only the expeditious remedy but is lesser expensive, is not convincing at this stage. No doubt, the remedy of arbitration may be expeditious in comparison to the ordinary courts of law but in every situation, it cannot be accepted that it costs lesser than the ordinary remedy of courts because some times the cost of Arbitrator may go more than the amount of award involved where the Arbitrator(s) is/are appointed from the retired Judge(s). So as to the litigants being aware of the fees to be charged by the retired Judges while being appointed as Arbitrator, Hon'ble the Supreme Court in the reported case as Union of India v. M/s Singh C.R.No.7001 of 2010 #5# Builders Syndicate 2009(2) RCR (Civil) 636 has held in para 10 as under: “There is no doubt a prevalent opinion that the cost of arbitration becomes very high in many cases where retired Judge/s are Arbitrators. The large number of sittings and charging of very high fees per sitting, with several add-ons, without any ceiling, have many a time resulted in the cost of arbitration approaching or even exceeding the amount involved in the dispute or the amount of the award.” Hon'ble the Supreme Court further observed as under: “When an arbitrator is appointed by a court without indicating fees, either both parties or at least one party is at a disadvantage. Firstly, the parties feel constrained to agree to whatever fees is suggested by the Arbitrator, even if it is high or beyond their capacity. Secondly, if a high fee is claimed by the Arbitrator and one party agrees to pay such fee, the other party, who is unable to afford such fee or reluctant to pay such high fee, is put to an embarrassing position. He will not be in a position to express his reservation or objection to the high fee, owing to an apprehension that refusal by him to agree for the fee suggested by the arbitrator, may prejudice his case or create a bias in favour of the other party who readily agreed to pay the high fee. It is necessary to find an urgent solution for this problem to save arbitration from the arbitration cost. Institutional arbitration has provided a solution as the Arbitrators' fees is not fixed by the Arbitrators themselves on case to case basis, but is governed by a uniform rate prescribed by the institution under whose aegis the Arbitration is held. Another solution is for the court to fix the fees at the time of appointing the arbitrator, with the consent of parties, if necessary in consultation with the arbitrator concerned. Third is for the retired Judges offering to serve as Arbitrators, to indicate their fee structure to the Registry of the respective High Court so that the parties will have the choice of selecting an Arbitrator whose fees are in their 'range' having regard to the stakes involved. What is found to be objectionable is parties being forced to go to an arbitrator appointed by the court and then being forced to agree for a fee fixed by such Arbitrator.” C.R.No.7001 of 2010 #6# However, in the present case, it is too late for such a grievance being made by the petitioner as admittedly in the present case the learned Arbitrator is a retired District Judge and while passing the order dated 29.4.2010 (P.4), Hon'ble the Chief Justice had already made it clear that the Arbitrator shall fix his own fee and accordingly the learned Arbitrator has fixed his fee as per the Rules of Indian Council of Arbitration @ Rs.1,08,000/- to be paid by both the parties. Therefore, at this stage disputing the fee charged by the learned Arbitrator is too late particularly in view of the fact that the claimant had submitted a claim of Rs.64,37,940.39/- Ps and the present petitioner also filed a counter claim of Rs.1,35,623/-. Keeping in view the facts and circumstances discussed hereinabove, this Court is in fully agreement with the fees charged/fixed by respondent No.1-Sole Arbitrator @ Rs.1,08,000/- to be paid equally by both the parties. I find no illegality or perversity in the impugned order dated 22.9.2010 (P.1) passed by the learned Sole Arbitrator-respondent No.1 warranting interference under Article 227 of the Constitution. Dismissed. March 08, 2011 ( JASWANT SINGH ) manoj JUDGE