In a recent landmark ruling, the Supreme Court addressed the appointment of Arbitrator dispute in the case involving Gujarat Urja Vikash Nigam Ltd. and Essar Power Limited. The judgment delves into the conflicting provisions of the Acts involved and clarifies the legal position regarding the appointment of Arbitrators. Let’s explore the implications of this ruling and its significance in resolving disputes between parties in the legal landscape.
Issue
- The main issue to be considered is the maintainability of the application under Section 11 of the Arbitration and Conciliation Act, 1996.
- The question arises due to Section 3G(5) of the National Highways Act, 1956 which allows for the appointment of an Arbitrator by the Central Government.
- The conflict lies between the two Acts regarding the appointment of an Arbitrator in this particular case.
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Arguments
- The appellant failed to make an appointment of the Arbitrator within 30 days of a letter dated 8 December 2006.
- The High Court of Calcutta was competent to appoint an Arbitrator as per Section 3G(5) of the Act 1956.
- The right of appointment of an Arbitrator by the Central Government was forfeited as per the law.
- The appointment of an Arbitrator by the High Court of Calcutta under Section 11(6) of the Act 1996 was deemed legally unsustainable.
- The Orders passed by the High Court on 6 July 2007 and 27 August 2007 were deemed to be quashed and set aside.
- Mr. Prashant Bhushan, learned counsel for the respondents, supported the order passed by the High Court of Calcutta.
- He pointed out that sub-section (6) of Section 3G clearly states that the provisions of the Arbitration Act of 1996 shall apply to every arbitration under the Act of 1956.
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Analysis
- The Act, 1956 is a special legislation for acquisition and compensation determination.
- Appointment of an Arbitrator is governed by Section 3G(5) of the Act, 1956.
- Arbitrator duty includes considering relevant pointers under Section 3G(7).
- Interest at 9% can be awarded by Arbitrator if the amount is in excess of the competent authority’s determination.
- The Act, 1956 prevails over the Arbitration and Conciliation Act, 1996 for dispute resolution.
- Failure of the Central Government to appoint an Arbitrator promptly can lead to invoking of writ jurisdiction or civil court.
- The Act, 1956 is a comprehensive code for acquisition and dispute settlement, excluding the application of the Land Acquisition Act, 1894.
- Provisions of the Act, 1956 override those of the Act, 1996 for appointment of Arbitrators.
- High Court intervention in Arbitrator appointment under Section 11(6) of the Act, 1996 was deemed not maintainable.
- The legislature intended to centralize the power of appointing Arbitrators under the Act, 1956 only, overruling any other statutes.
- The question arose whether an application under Section 11(6) of the 1996 Act is maintainable in light of the statutory provisions of the Electricity Act, 2003.
- In the case of Gujarat Urja Vikash Nigam Ltd. Vs. Essar Power Limited, the Court observed that Section 86(1)(f) of the Electricity Act, 2003 is a special provision that will override the general provision in Section 11 of the Arbitration and Conciliation Act, 1996 for disputes between licensees and generating companies.
- Special laws are held to override general laws, making Section 11 of the Arbitration and Conciliation Act, 1996 inapplicable to disputes between licensees and generating companies. Only Section 86(1)(f) of the Electricity Act, 2003 applies in such cases.
- Litigation has consumed a significant amount of time.
- Arbitrator appointed by Central Government must adjudicate within six months of respondent-applicant’s presence.
- Rights of a party are not forfeited to appoint an Arbitrator after invoking Section 11(6) of the Act 1996.
- Arbitrator appointed in 2007 could not proceed due to subsequent appointments and recusals.
- No need for respondent-applicant to file another application, Central Government to appoint an arbitrator within 30 days.
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Decision
- The appeals have succeeded and are allowed.
- The orders passed by the High Court on 6 July, 2007 and 27 August, 2007 have been set aside.
- The appellants have the authority to appoint the Arbitrator based on the terms indicated.
- No costs are to be charged in this case.
Case Title: NATIONAL HIGHWAYS AUTHORITY OF INDIA Vs. SAYEDABAD TEA CO. LTD. AND ORS
Case Number: C.A. No.-006958-006959 / 2009
