In Brief
Parties to a partnership dispute initiated arbitration over a Rs 13.65 crore claim and Rs 82.78 crore counter-claim. The sole arbitrator fixed fees under the Fourth Schedule, later revised to Rs 37.5 lakh due to the counter-claim. Both parties defaulted on payment; the arbitrator terminated proceedings in March 2022. The appellants challenged the termination, arguing the fee revision lacked consent, violating earlier Supreme Court precedent. The Supreme Court held that the Fourth Schedule fee is binding once determined; non-payment justified termination. However, finding exceptional circumstances—over three years of delay and substantial dispute amounts—the Court permitted appointment of a substitute arbitrator as a one-time opportunity, allowing fresh hearings de novo with amended claims if needed. The Court clarified that Section 32(2) is the exclusive source of termination power; remedies against wrongful termination lie in recall applications to the tribunal, then Section 14(2) court review. Total extinguishment of disputes due to inability to pay fees may be disproportionate in rare cases.
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