Calcutta High Court: Arbitrator Can Fix Own Remuneration Without A&C Act Compliance If Decision Is Made In Consultation With Parties Involved
The Calcutta High Court dismissed an Application filed under Article 227 of the Constitution, contesting decisions by a Sole Arbitrator regarding non-payment of fees.
Justice Bibhas Ranjan De, Calcutta High Court
The Calcutta High Court clarified that an arbitrator can fix his own remuneration without complying with the Fourth Schedule of the Arbitration and Conciliation Act, 1996 (the Act), provided that such a decision is made in consultation with the parties involved.
The Court dismissed an Application filed under Article 227 of the Constitution, contesting decisions by a Sole Arbitrator regarding non-payment of fees. The Court held that a party cannot file a Revision Application under Article 227 of the Constitution solely based on dissatisfaction with an Arbitrator’s Order regarding quantum of remuneration as it does not fall within the scope of Section 37 (2) of the Act.
A Single Bench of Justice Bibhas Ranjan De held, “Based on the legal precedents connected with this issue, it would be safe to conclude that an arbitrator can indeed fix his own remuneration, and this can be done in a manner that may not comply with the Fourth Schedule of the Act of 1996, provided that such a decision is made in consultation with the parties involved. The contractual agreement regarding fees takes precedence over the statutory provisions of the Fourth Schedule, allowing for flexibility in remuneration as long as it aligns with the parties agreement.”
Advocate Partha Pratim Roy appeared for the Petitioner, while Senior Advocate Rajeeva Sharma represented the Respondent.
Brief Facts
P & P Business Private Limited (Petitioner) had filed the application under Article 227 of the Constitution, contesting decisions by a Sole Arbitrator regarding non-payment of fees. The underlying issue involved a lease agreement where Respondent, who held the tender for the sand block, granted Petitioner a lease to mine the sand block in exchange for monetary consideration.
Court’s Reasoning
The High Court held, “The arbitrator has ample jurisdiction to decide on matters relating to his remuneration including the authority to rule on any objection raised by the parties regarding his fees. This very provision is already codified in Section 16(3) of the Act of 1996. But, in the factual matrix of the case at hand, I am unable to gather any cogent information that the petitioner actually made any substantial attempt per se to showcase his objection to the arbitrator.”
While dealing with the issue of maintainability of Applications filed under Article 227 of the Constitution in arbitration matters, the Bench clarified, “We also need to keep in mind that the Hon’ble Apex Court has time and again emphasized that power under Article 227 should be exercised sparingly, particularly in arbitration matters where minimal judicial intervention is the guiding principle. If there is no lack of jurisdiction or patent illegality the High Courts should refrain from intervening in arbitration matters.”
The Court explained that “the appropriate recourse available to the petitioner would have been to challenge the final arbitral award passed by the arbitrator including the issue of remuneration of the arbitrator through the mechanism enshrined in Section 34 of the Act of 1996 before the Principal Civil Court of Original Jurisdiction, as defined in Section 2(1)(e) of the Act. Therefore, just like other issues involved in this application yet again the issue of maintainability is decided against the petitioner.”
“Based on the legal principle discussed hereinabove the only available answer to this issue is that a party cannot file a revision application under Article 227 solely based on dissatisfaction with an arbitrator’s order regarding quantum of remuneration as it does not fall within the scope of Section 37 (2) of the Act of 1996,” the Bench stated.
Consequently, the Court ordered, “Conglomeration of discussion of all the issues pertaining to the lease at hand boils down to the sole available conclusion that the revision application being no. C.O. 140 of 2023 is liable to be dismissed…With the aforesaid observation the instant revision application stands disposed of.”
Accordingly, the High Court dismissed the Application.
Cause Title: P & P Business Private Limited v. Marco Francesco Shoes (India) Private Limited (C.O.140 of 2023)
Appearance:
Petitioner: Advocates Partha Pratim Roy, Srijib Chakraborty and Sunny Nandy
Respondent: Advocates Sayak Ranjan Ganguly, Srijani Ghosh and Indrani Majumdar