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2017 DIGILAW 1898 (MAD)

Shriram City Union Finance Limited v. Samarath Engineering Works (Firm), Represented by its Partner

2017-07-06

ANITA SUMANTH

body2017
JUDGMENT : 1. This Original Application filed in terms of section 9 of the Arbitration and Conciliation Act 1996 (in short ‘Act’) prays for the appointment of a Receiver to administer the property of the respondents morefully described in the schedule to the Judges Summons pending disposal of proceedings for arbitration and enforcement of award. 2. Along with the application, the applicant remitted court fee of a sum of Rs.200/- in terms of Rule 1 of Appendix II to the High Court Fee Rules being of the view that the application was incapable of valuation. Order II of the High Court Fee Rules prescribes a levy of fee in accordance with the provisions of the Tamil Nadu Court Fees and Suits Valuation Act, 1955 and Rules framed thereunder and as per the scale of fee set out in Appendix II to the High Court Fee Rules. According to the applicant, the applicable provision would be the following: APPENDIX II COURT FEES Serial Number Description of document or proceeding Amount (1) (2) (3) Fees to be levied by the Registrar of the High Court 1. Special Case under the Arbitration Act, 1940 or any other enactment Rs.200.00 3. The Registry notes that the application seeking appointment of Receiver refers to an agreement for a loan of an amount of Rs.62,00,000/- and that the claim before the Arbitrator was for an amount of Rs.82,80,653/-. The application was thus, according to the Registry, capable of valuation and 3% of the subject matter was liable to be paid subject to a maximum of one lakh in terms of Schedule II Article 11(m) of the Tamil Nadu Court Fees and Suits Valuation Act reading as under: Schedule II Article 11(m) of Tamil Nadu Court Fees and Suits Valuation Act (m) Application under the Arbitration and Conciliation Act 1996 Three per cent of the value of the subject matter, subject to a maximum of Rupees One Lakh 4. The application was returned for remittance of deficit fee as aforesaid and has come to be listed for a determination of its ‘maintainability’ before me. 5. Heard Mr. R. Umashankar, learned counsel appearing for the applicant as well as other learned counsels present at the time of hearing on the issue of maintainability. 6. This application, filed in terms of section 9 of the Act seeks certain interim measures of protection, pending proceedings for arbitration. 5. Heard Mr. R. Umashankar, learned counsel appearing for the applicant as well as other learned counsels present at the time of hearing on the issue of maintainability. 6. This application, filed in terms of section 9 of the Act seeks certain interim measures of protection, pending proceedings for arbitration. Learned counsel would contend that the application is in the nature of an interlocutory application akin to one in terms of section 94, Order XXXVIII (Rules 5 and 6), Order XXXIX (Rules 1 and 2) and Order XL of the Civil Procedure Code 1908. The proper court fee is a sum of Rs.20 in terms of the High Court Fee Rules read with the provisions of the Tamil Nadu Court Fees and Suit Valuations Act and at the highest, a sum of Rs.200 in view of Rule 1 of Appendix II thereof, extracted above. The call for remittance of 3% of the value of the loan availed/claim before the arbitrator, subject to a ceiling of Rs.1,00,000/- would in effect, equate the application for interim relief with a suit for the purpose of valuation which is erroneous in law. 7. Section 9 of the Arbitration and Conciliation Act 1996 reads thus: Interim measures etc by Court – (1) A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36 apply to Court – (i) For the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or (ii) For an interim measure of protection respect of any of the following matters, namely- (a) The preservation, interim custody or sale of any goods which are the subject matter of the arbitration agreement; (b) Securing the amount in dispute in the arbitration; (c) The detention, preservation or inspection of any property or thing which is the subject matter of the dispute in arbitration, or as to which any question may arise therein and authorizing for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party or authorizing any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence. (d) Interim injunction or the appointment of a receiver; (e) Such other interim measure of protection as may appear to the Court to be just and convenient. and the Court shall have the same power for making orders as it has for the purpose of and in relation to any proceedings before it. 8. Proceedings under section 9 of the Act relate wholly to the grant of interim measures for the preservation of the subject matter of arbitration. A committee constituted under Justice Sampath of the Madras High Court to rationalize the structure of Court fee suggested, in paragraphs 42, 43 and 44 of its recommendations, various measures relating to the levy of fees for petitions filed in terms of sections 34 and 38 of the Arbitration and Conciliation Act 1996 as follows: ‘Petitions under Sections 34 and 48 of the Arbitration and Conciliation Act, 1996 42. Petitions under Section 34 of the Arbitration and Conciliation Act, 1996 are challenges to the domestic award. Although the scope of the challenge is limited after the Arbitration and Conciliation (Amendment) Act 2015, elaborate arguments are addressed and voluminous documents presented both during admission and during the final hearing in an effort to bring the matter within the ambit of challenge prescribed in the statute. 43. The Committee recommends levy of ad valorem court fees on the subject matter of the challenge at the same rate as a suit (vide paragraph 24 above). Since awards in many arbitrations run to hundreds of crores of rupees, it is recommended that the maximum court fees payable under this head shall not exceed Rs.1,00,000/-. 44. Section 48 deals with the enforcement of international awards. Similar court fee is recommended for petitions under Section 48 as well.’ 9. The recommendation of the Committee at paragraph 43 is for the levy of ad valorem court fee on the ‘subject matter of challenge’ at the same rate as for a suit, with a ceiling of an amount of Rs. 1 lakh. In any event, the recommendations are restricted to the application of sections 34 and 48 alone and a petition for interim relief in terms of section 9 has consciously been kept outside the purview of the recommendation. 10. 1 lakh. In any event, the recommendations are restricted to the application of sections 34 and 48 alone and a petition for interim relief in terms of section 9 has consciously been kept outside the purview of the recommendation. 10. While this is so, the amendment to the Tamil Nadu Stamp Act, consequent upon the recommendations of the Justice Sampath Committee levies a fee of three per cent of the value of the ‘subject matter of the challenge’, subject to a maximum of Rupees One lakh in respect of all applications under the Act without distinction between interim applications and challenges to awards. I am thus called upon to decide what the ‘subject matter’ of an application under section 9 of the Act is for the purpose of determining the applicable court fee payable thereupon. 11. An application under section 9 of the Act provides interim relief targeted at protecting, preserving or securing the amount or the subject matter in dispute either before, during or after proceedings for arbitration. The types of relief envisaged in terms of clauses (a) to (e) of section 9 of the Act, are interim measures of preservation, custody or sale, securing of the amount in dispute, detention or inspection of any property or thing, injunction or the appointment of a receiver etc. The provision is designed to provide measures for the interim protection of the rights of the parties, either prior to, pending or post proceedings for arbitration. These reliefs are purely interlocutory and, by virtue of their nature and purpose, incapable of valuation. 12. Section 9 is, in that sense, akin to section 94, Order XXXVIII, Order XXXIX and Order XL of the Civil Procedure Code, all of which deal with interlocutory orders and temporary reliefs sought by a party, pending suit. While the court fee for an application for interlocutory relief in any other situation would be an amount of Rs.20/-, the court fee for an application in terms of the Arbitration Act 1940 or any other enactment as stipulated in Rule 1 of Appendix 2 to the High Court Fee Rules 1956, would be Rs.200/-. 13. The present application, filed for appointment of Receiver, seeks interim protection of the asset pending arbitration, in terms of section 9 of the Act. The ‘subject matter’ of the application is confined to interim relief and is, in itself, subject to the result of the arbitration. 13. The present application, filed for appointment of Receiver, seeks interim protection of the asset pending arbitration, in terms of section 9 of the Act. The ‘subject matter’ of the application is confined to interim relief and is, in itself, subject to the result of the arbitration. In this view of the matter, the relief sought for is merely temporary and not capable of valuation. The relief sought cannot be equated to the value of the loan availed or the claim before the Arbitrator and reference to the same in the application is merely incidental. For the above reasons, the court fee paid of an amount of Rs.200/- is held to be in order. The application is directed to be numbered and posted for hearing in the regular course, if otherwise found to be in order. 14. It is brought to my notice that similar/identical applications have been filed by other counsel where the Registry has raised similar objections. Registry is directed to number and list the same before Court if otherwise in order. It is also represented that in some cases, parties have, on account of urgency, remitted the court fee as computed by the Registry under protest. In such cases, the learned counsel may approach the Registry for a refund of the court fee paid that shall be refunded forthwith.