Section 34 Applications Challenging Arbitral Awards Subject To ₹120 Court Fee, Higher Fees Under Entry No. 1(10) Not Applicable: Calcutta High Court
The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that the principal application under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award, falls under Entry No. 2(c) of Schedule II of the Court Fees Act. This entry is the residuary provision that prescribes a court fee of Rs. 120 for original applications before the...
The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that the principal application under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award, falls under Entry No. 2(c) of Schedule II of the Court Fees Act. This entry is the residuary provision that prescribes a court fee of Rs. 120 for original applications before the High Court, where no other specific provision in Schedule II applies.
The bench clarified that Entry No. 1(10) of the Court Fees Act, which prescribes higher fees for applications seeking a direction for filing an award, an order for filing an agreement, or for enforcing foreign awards, does not extend to principal applications under Section 34.
Brief Facts:
The matter pertained to an objection raised by SREI Equipment Finance Limited (Respondent) regarding the application filed under Section 34 of the Arbitration and Conciliation Act, 1996 by Sajarul Rahaman (Petitioner). The Respondent contended that the application was barred by limitation due to the insufficient court fees paid at the time of filing. According to the Respondent, the court fee payable for such an application is governed by Serial no. 1(10) of Schedule II of the West Bengal Court Fees Act, 1970 which mandates a fee of Rs. 5,000 for the case.
The Respondent argued that under Section 34(3) of the Arbitration Act, the limitation period for filing an application is three months from the date the applicant receives the arbitral award, with an additional thirty days provided under the proviso, during which the court may accept an application if it is satisfied that the applicant was prevented from filing within the initial three months due to sufficient cause. The petitioner received the arbitral award on December 31, 2022, and the initial three-month period expired on March 31, 2023. The additional thirty days expired on April 30, 2023. The application under Section 34 was filed on April 27, 2023, with a court fee of Rs. 130/-, instead of the required Rs. 5,000/-, which has not been paid to date, even beyond the April 30, 2023 deadline. As a result, the Respondent contended that the application should be dismissed as time-barred.
In support of its argument, the Respondent referred to Section 4 of the Court Fees Act, which states that no document chargeable with fees under the Act shall be filed, exhibited, or recorded in any court unless the fee prescribed by the Act has been paid. The Respondent argued that Section 4(2), which allows a court to accept a plaint or memorandum of appeal with insufficient fees provided the deficit is paid within a time fixed by the court, is not applicable to applications under Section 34, as such applications do not involve a plaint or memorandum. Consequently, the relaxation provided under Section 4(2) of the Court Fees Act is not applicable the petition.
On the other hand, the Petitioner argued that the application under Section 34 was filed within the prescribed time limit with the court fee of Rs. 130/-, as assessed by the Stamp Reporter of the court. The Petitioner contended that there was no error on their part in paying the court fees and relied on the legal maxim Actus Curiae Neminem Gravabit (an act of the court shall prejudice no one) to argue that he should not be penalized for following the court's assessment.
Observations by the High Court:
The High Court examined the provisions of the Court Fees Act to determine the appropriate court fees for an application under Section 34 of the Arbitration Act challenging an arbitral award. The High Court noted that four entries in Schedule II of the Court Fees Act were important.
Firstly, Entry No. 2(c) of Schedule II states a court fee of Rs. 120/- for an original petition filed before the High Court that is not otherwise provided for. This entry acts as a residuary clause applicable only when no other specific provision governs the relevant application.
The High Court then considered Entry No. 14, which prescribes court fees for memoranda of appeal under Sections 37 and 50 of the Arbitration Act. However, it noted that an application under Section 34 is not a memorandum of appeal under either of these sections.
Next, the High Court examined Entry No. 17(iv) of Schedule II, which specifies court fees for a plaint or memorandum of appeal to set aside an award other than an arbitral award as defined in Clause (c) of sub-section (1) of Section 2 of the Arbitration Act. The High Court held that challenges to arbitral awards are specifically excluded from the scope of this entry.
The final and most debated provision was Entry No. 1(10). This entry outlines the court fees for applications under Section 12 or Section 34 of the Arbitration Act, including applications for a direction for filing an award or for an order for filing an agreement as well as applications for enforcing foreign awards. The High Court noted that while the phrases "Application under Section 12 or Section 34" and "application for enforcing foreign awards" are each prefixed by the word "application," the phrases "for a direction for filing an award" and "for an order for filing an agreement" are not. The absence of the word "application" before these phrases led the High Court to held conclude that the legislature did not intend to treat these phrases as independent categories but as qualifiers for applications under Sections 12 and 34.
The Respondent argued that the comma separating different parts of the sentence in Entry No. 1(10) indicated distinct and independent ideas. However, the High Court clarified that a comma merely introduces a pause in a sentence and does not necessarily signify independent ideas. Instead, it could also indicate a single general idea divided into sub-parts. Thus, the High Court held that the legislature intended to include only those applications under Section 12 or Section 34 that sought a direction for filing an award or an order for filing an agreement, rather than the principal applications under Section 34.
Given this interpretation, the High Court held that Entry No. 1(10) does not apply to a principal application under Section 34 of the Arbitration Act that challenges an arbitral award. Consequently, by the process of elimination, the High Court held that Entry No. 2(c) of Schedule II, the residuary provision, was the only relevant entry for determining the court fees for such an application. Under this entry, the court fee is set at Rs. 120/- for original applications before the High Court.
The High Court also considered judgments from the Madras High Court related to the Tamil Nadu Court Fees Act, which allows for the curing of defects in court fees paid inadvertently or by mistake. However, the High Court clarified that the bar regarding deficit court fees arises not from the Arbitration Act but from the Court Fees Act, a special statute governing court fees in West Bengal. Sections 42 and 46 of the West Bengal Court Fees Act provide mechanisms for curing defects in court fees and enlarging the time for paying the required fees.
The High Court noted that the Petitioner paid the court fees as assessed by the Stamp Reporter. Even if there was a deficit in the court fees paid, the High Court found that Section 42 of the Court Fees Act would allow the defect to be cured, and Section 46 would enable the court to condone any delay. The High Court held that the bar under Section 4 of the Court Fees Act is not absolute, and the court has the discretion to accept the application upon directing the deficit court fees to be paid later.
Therefore, the High Court held that the application under Section 34 of the Arbitration Act was maintainable, and the court fees paid by the Petitioner were sufficient under the West Bengal Court Fees Act, 1970. The High Court also condoned the delay in filing the application, as the Petitioners provided sufficient justification for filing the applications beyond three months but within thirty days from the receipt of the award.
Case Title: Sajarul Rahaman And Anr vs Srei Equipment Finance Limited And Anr and Connected Matters
Case Number: AP-COM/304/2024 and connected matters
Advocate for the Petitioner:Mr. Enakshida, Adv., Mr. Himadri Roy, Adv., Mr. Sk Aptabuddin, Adv.
Advocate for the Respondent:Mr. Swatarup BSinghae, Adv., Mr. Sariful Haque, Adv., Mr. Saubhik Chowdhury, Adv., Ms. Prarthana Singha Roy, Adv. For the respondent in in AP-COM/304/2024 & AP-COM/305/2024 : Mr. Swatarup Banerjee, Adv., Mr. Sariful Haque, Adv., Mr. Rajib Mullick, Adv., Ms. Sonia Mukherjee, Adv. For the respondent in AP-COM/314/2024 & AP-COM/319/2024 : Mr. Swatarup Banerjee, Adv., Mr. Sariful Haque, Adv., Mr. Avishek Guha, Adv., Ms. Enakshi Saha, Adv.
Date of Judgment: 27.08.2024