The recent legal case delved deep into jurisdictional matters surrounding the appointment of arbitrators, highlighting the complex interplay between different statutory provisions. The court’s meticulous analysis of jurisdictional challenges provides crucial insights into the application of relevant laws in such scenarios.
Facts
- The respondent filed a review petition after the High Court declined to entertain the petition due to an arbitration agreement in the PPA.
- The review petition was also dismissed by the High Court.
- The respondent then filed an application under Section 11(6) of the Arbitration and Conciliation Act 1996 to appoint an arbitrator.
- The respondent issued notices to the Board for arbitration under Clause 12.3 of the PPA when there was no response.
- The appointment of arbitrators faced obstacles due to non-payment of fees, leading to the filing of AC No 1 of 2015 for arbitrator appointment.
- The appellant opposed the application citing the jurisdiction of the State Electricity Commission under Section 86(1)(f) of the Electricity Act 2003.
- The Single Judge of the High Court granted the application under Section 11(6) of the 1996 Act for arbitrator appointment.
- The High Court recorded that the parties agreed to nominate arbitrators and proceed as per Clause 12.3(a) of the PPA.
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Analysis
- The power purchase agreement was entered into on 30 May 1996.
- The notice for referring the dispute to arbitration was sent on 14 November 2005.
- The High Court had the jurisdiction to exercise under Section 11(6) of the 1996 Act, as held by a Single Judge.
- The appellant raised an appeal against the High Court’s decision.
- The respondent argued that the Gujarat Urja Vikas Nigam Limited case did not apply due to the timing of events before the enforcement of the 2003 Act.
- The respondent contended that the objection based on Section 86(1)(f) of the 2003 Act was not raised at earlier stages and therefore cannot be raised now.
- The arbitration proceedings commenced on 30 May 2011 as per the notice invoking Clause 12.3 of the PPA.
- Arguments about jurisdiction were raised based on Section 86(1)(f) of the 2003 Act.
- The Commercial Court and subsequent appeal discussed the jurisdictional issues.
- Inherent lack of jurisdiction can be raised at any stage, as held by Justice Rohinton F Nariman.
- Similar issues were addressed in the Hindustan Zinc Limited case.
- The judgment in Gujarat Urja Vikas Nigam Limited established the authority of Section 86(1)(f) of the 2003 Act over general provisions of the 1996 Act.
- The position has been approved by two three-Judge benches of this Court in Hindustan Zinc Limited v Ajmer Vidyut Vitran Nigam Limited and NHAI v Sayedabad Tea Company Limited.
- Section 86(1)(f) of the 2003 Act is provided.
- Section 174 of the 2003 Act gives overriding effect to the Act, overriding any inconsistent provisions in other laws or instruments.
- The order of the High Court appointing an arbitrator under Section 11(6) of the 1996 Act is unsustainable.
- A decree passed by a court without subject matter jurisdiction is considered a nullity.
- The invalidity of such a decree can be raised whenever it is sought to be enforced or relied upon.
- A defect of jurisdiction cannot be cured by the consent of the parties.
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Decision
- The court has not expressed any opinion on the merits or objections raised by the appellant.
- The appellant’s objections will be considered by the appropriate forum when urged.
- The appeal has been allowed, and the impugned judgment and order of the High Court dated 30 November 2016 in AC No 1 of 2015 have been set aside.
- No costs have been ordered.
- Any pending applications have been disposed of.
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Case Title: CHIEF GENERAL MANAGER (IPC) M.P. POWER Vs. NARMADA EQUIPMENTS PVT LTD (2021 INSC 204)
Case Number: C.A. No.-001051-001051 / 2021
