Madhya Pradesh High Court Upholds Arbitration Fee In IMC Compensation Case, Bars IDA Officer From Remuneration

Madhya Pradesh's High Court has confirmed the application of the Arbitration and Conciliation Act, 1996 to settle a compensation dispute involving the Indore Municipal Corporation (IMC). However, the court ruled that an officer from the Indore Development Authority (IDA), serving on the arbitration panel, would not receive any remuneration.

A bench consisting of Justices Subodh Abhyankar and Alok Awasthi dismissed two appeals filed by IMC and others against identical orders passed by the lower court on October 10, 2023. The dispute stemmed from Section 387 of the Madhya Pradesh Municipal Corporation Act, 1956, which governs compensation claims following municipal demolition.

The District Court in Indore had initially appointed a two-member panel, comprising IDA assistant engineer Kapildev Bhalla and Rajendra Pradhan, to evaluate the claim, with retired district judge Gulab Sharma acting as the umpire. The claimant sought Rs 30.46 lakh in compensation, and the panel subsequently decided on their fees under the Arbitration and Conciliation Act, directing the claimant and IMC to share the costs equally.

The corporation contested the fee arrangement, contending that it was too high and that the claimant, invoking Section 387, should bear the entire expense. After the lower court rejected their challenge, the High Court intervened. The division bench determined that the Arbitration and Conciliation Act could be applicable to arbitration proceedings under other laws, provided there was no inconsistency.

The court also noted that concerns about excessive claims or fees could be addressed by the arbitral tribunal under Section 31A of the 1996 Act. In its decision, the court modified the arrangement to specify that the IDA officer would receive no fee, with any amount otherwise due to him being deposited in the IDA's account.