Supreme Court of India
|Name of the case||NHAI v Sayedabad Tea Company Ltd. and Ors.|
|Citation||2019 SCC Online SC 1102|
|Year of the case||2019|
|Appellant||National Highways Authority (NHAI)|
|Respondent||Sayedabad Tea Company Ltd. and Ors.|
|Bench||N.V. Ramana, Mohan M. Shantanagoudar, Ajay Rastogi.|
|Important sections/ Articles||Section 11 of the Arbitration and Conciliation Act, 1996.Section 3G (5) and Section 3D of of the National Highways Act, 1956.|
|Relevant statutes||The Arbitration and Conciliation Act, 1996.The National Highways Act, 1956|
The case of NHAI v Sayedabad Tea Company Ltd. and Ors was heard by the Supreme Court recently in the year 2019. In this case, the prime question that arose while deciding was; whether Section 11 of the Arbitration and Conciliation Act should be followed in the event of appointing an arbitrator or Section 3G of the National Highways Act of 1956 can override the 1996 Act in appointing the arbitrator.
The Arbitration and Conciliation Act was enacted in 1996. Its primary objective is to resolve the disputes arising between the parties by appointing an Arbitrator with the mutual consent of the parties. The procedures for the appointment of an arbitrator are given in Section 11 of the Act.
The National Highways Act is special legislation, which was enacted with the exclusive power to declare highways as national highways, acquisition of lands, and determination of the compensation amount for the same. The procedure that should be followed for the appointment of an arbitrator is given in Section 3G of the Act. If any of the parties are unsatisfied with the determined compensation amount, then it can be resolved by appointing an arbitrator.
Background of the Case
To construct a highway, under Section 3(D) of the National Highway Act, 1956, the appellant (NHAI) acquired the land occupied by the Respondent (Sayedabad tea estate company). The compensation for the acquired land was decided by the competent authority, as mentioned in Section 3G (1) of the Highways Act. But the respondent was not satisfied with the determined compensation.
Facts of the Case
Since the respondent was dissatisfied with the compensation that was offered by the appellant, he filed an application under Section 3G (5) of the 1956 Act for the appointment of an arbitrator for re-determination of the compensation amount. But the central government failed to appoint an arbitrator within 30 days from the request made dated 8th December 2006, which is a mandate under Section 11(5) of the 1996 Act. On the basis of Section 11(6) of the Arbitration and Conciliation Act 1996, the respondent requested the Chief Justice of Calcutta High Court to Appoint an Arbitrator on 7th March 2007. But in the meantime, an arbitrator was appointed by the central government under Section 3G (5) of the 1956 Act. The Calcutta High Court took a note of the Central Government deed of appointing the arbitrator in the month of April after the respondent approached the court to take necessary measures and the Court held that the Central government-appointed the Arbitrator only after the application was moved to the Court under Section 11 (6) of the 1996 Act, during the pendency of the proceeding such appointment of the arbitrator cannot be considered as a valid appointment. Further, it stated that the central government’s right to appoint an arbitrator stands forfeited with the application filed before the court.
However, the Appellant filed a review petition claiming that, as The National Highways Act, 1956 is a Special enactment and also has provisions for appointing an arbitrator; the application under the Arbitration and Conciliation Act, 1996 cannot be applied. Regardless, the Court dismissed the review application. With the review petition dismissed by the Calcutta High Court, the Appellant decided to approach the Supreme Court.
Whether or not Section 11 (6) of the Arbitration and Conciliation Act of 1996 stands forfeited when the central Government exercised its right which is bestowed by Section 3G (5) of the 1956 Act to appoint an Arbitrator?
Whether or not the procedures for the appointment of arbitrator given in the National Highways Act 1956 overrides the course of actions given in the existing Act of 1996?
Section 11 of the Arbitration and Conciliation Act 1996 provides the procedures for the appointment of the arbitrator and further, directs the aggrieved party to approach the Chief Justice in case of any failure in performing the act as required under the procedure given.
Section 3D of the National Highways Act of 1956 empowers the central government to acquire land for declaration of national highways if only if no objection has arisen. Further, Section 3G empowers the competent authority to determine the amount payable as compensation for the acquired land. Section 3G (5) of the Act also allows the appointment of an arbitrator for re-determination of the amount, in case either of the parties has any objection with the determined compensation.
In the case of General Manager (Project), National Highways and Infrastructure Development Corporation Ltd. vs. Prakash Chand Pradhan & Ors, the court held that the arbitrator can only be appointed via Section 3G of the National Highways Act 1956. And the Arbitration Act has no role to play in the appointment of an arbitrator. (Appellant’s contention)
In the case of Deep Trading Company v. Indian Oil Corporation and Others, the corporation failed to perform its duty of appointing the arbitrator, in spite of the demand made by the dealer. Hence the company moved the court under Section 11(6) for the appointment of the arbitrator. The court held that the right of the corporation to appoint an arbitrator stands forfeited and only the Chief Justice has the obligation to exercise his duty in the matter of appointment of the arbitrator. (Respondent’s contention)
In the case of Gujarat Urja Vikash Nigam Ltd. v. Essar Power, the dispute arose between the licensee and the power generating company. It was held in that case that since the Electricity Act is a special enactment, the provisions of special law will override the general law. Hence the application under Section 11 of the Arbitration Act is not maintainable in view of statutory provisions of the Electricity Act of 2003. (Judgment)
Contentions of the Appellant
The Appellant relied on the judgment of the case, General Manager (Project) National Highways and Infrastructure Development Corporation Ltd. v. Prakash Chand Pradhan & Ors. As mentioned, the said Act of 1956 is a special enactment dealing with the acquisition of land and compensation in regards to national highways. Indeed, the arbitrator is supposed to be appointed only through the provisions of this Highways Act.
Invoking the Arbitration and Conciliation Act of 1996 (Section 11) in the appointment of an arbitrator is an attempt to invalidate the Central Government’s power to appoint an arbitrator under the Act of 1956.
Contentions of the Respondent
The respondent, Tea company highlighted Section 3G(6) of the Act, contending that the Arbitration and Conciliation Act is applicable to all arbitrations and shall be applied to the arbitration carried out under the said Act of 1956. Hence, the respondent can claim the help of the arbitration Act. Further, the power of the central government to appoint an arbitrator was forfeited due to the Government exceeding the period of 30 days and also with the application moved under Section 11(6) of Arbitration Act.
Before delivering the Judgment the Court clarified the usage of the expression “Subject to” in Section 3G (6) of the National Highways Act 1956. It indicates that there is a possibility of the said legislation to override the Act of 1956. But if the 1956 Act has clear and active provisions then the recourse to Arbitration Act cannot be taken. Hence the provisions of the Arbitration Act can be applied only when the said Highway Act is silent. Therefore, in this case, Section 11 cannot be maintainable.
For substantiating the same, the court agreed with the case cited by the appellant and relied on the judgment in the case of Gujarat Urja Vikash Nigam Ltd. v. Essar Power. Further held that since it is a special enactment, the National Highways Act is vested with exclusive provisions to deal with the acquisition and determining compensation for settlement, on the view of this provision Section 11 of the 1966 Act is non-maintainable.
The Apex Court re-affirmed the settled principle of law as the special laws are enacted with the special code, the application of general law code will stand excluded.
Via Section 3G of the 1956 Act; it is comprehensible that the central government is empowered to appoint the Arbitrator. Therefore, Section 11 of the 1996 Act is not maintainable. The court also directed the parties to file a Writ Petition under Article 226 of the Indian Constitution or file a suit since the Central government failed to appoint the arbitrator within the framed time of 30 days.
In this case, the whole Contention was mainly on the basis of the Sections of 3G (5) and (6) of the National Highways Act 1956 and Section 11(6) of the Arbitration and Conciliation Act 1996.
The Apex Court clearly stated that the power for the appointment of an arbitrator is vested in the Central Government via Section 3G (5) and Section 11 of the 1996 Act has no role to play in it. Further, the court ratified the arbitrator appointed by the central government and ordered him to adjudicate and deliver arbitral award without any delay. The Supreme Court revoked the previous decisions of the High Court.
Frequently Asked Questions (FAQ)
- What are the predominant Sections discussed in this case?
- Between which provisions of the two mentioned Acts was a conflict found?
- On what basis did the HC of Calcutta decide the case prior to SC judgment?
- What are the cases cited by both the Appellant and the Respondent in support of their arguments?
- What is the settled principle of law that was mentioned by the Supreme Court of India?