SC: Application under Section 11 of Arbitration not maintainable in view of Section 3G(5) of the National Highways Act, 1956 [READ JUDGMENT]

National Highways Authority of India v. Sayedabad Tea Estate (Judgment dated 27 August 2019 in Civil Appeal No. 6958-5959 of 2009)

Background:

Land comprising “Sayedabad Tea Estate” situated at Mouza Purba Madati, J.L. No. 108, Police Station Phansidewa, Dist. Darjeeling measuring 5.08 acres was acquired by the National Highways Authority of India in exercise of its powers under Section 3(D) of the Act 1956 vide notification dated 22nd November, 2005 under L.A.P. Case No. 4/2004-05 for the purpose of construction of the highways. Pursuance to the acquisition of land by NHAI, a n award was passed determining compensation of land acquisition. Feeling aggrieved by such award the Respondent filed an application for appointment of an Arbitrator in terms of Section 3G(5) to the Central Government. Since the Central Government did not responded to his request for appointment of an Arbitrator within a period of 30 days from receipt of the request, application was filed to the Chief Justice/his designate for appointment of an Arbitrator invoking Section 11(6) of the Act, 1996. However the Arbitrator was appointed by the Central Government sometime in April 2007. 

The High Court of Calcutta held that right of appointment of the Arbitrator by the Central Government stands forfeited as it failed to appoint the Arbitrator until filing of the application under Section 11(6) of the Act, 1996 before the High Court of Calcutta and appointment of Arbitrator during the pendency of proceedings, cannot be said to be a valid appointment and hence referred the matter to be placed before the Chief Justice for naming an Arbitrator vide its Order dated 6th July, 2007. The NHAI challenged the order of High Court before the Supreme Court

Issue:

Whether the application under Section 11 of the Arbitration and Conciliation Act, 1996(hereinafter being referred to as “Act 1996”) is maintainable in view of Section 3G(5) of the National Highways Act, 1956 (hereinafter being referred to as “Act 1956”) which provides for appointment of an Arbitrator by the Central Government.

Contention of NHAI:

The Act 1956 being a special enactment is a code in itself provide not only the procedure of acquisition but also the mode of determining compensation by the competent authority and any person, if aggrieved by the compensation determined under sub-sections(1) or (2) of Section 3G of Act 1956 can certainly move an application for appointment of an Arbitrator to which a Central Government is under obligation to appoint under Section 3G(5) of the Act 1956.

Contention of Respondent:

  1. Sub-section(6) of Section 3G clearly postulates that subject to the provisions of the Act 1956, the provisions of Act 1996 shall apply to every arbitration under the Act, 1956.
  2. The respondent was justified in taking recourse to sub-section(6) of Section 3G of Act, 1956 for appointment of an Arbitrator under Section 11(6) of Act, 1996.
  3. Appellant under the Act, 1956 has forfeited its right to appoint an Arbitrator after presentation of the application under the Act, 1996 before the High Court of Calcutta 

The Supreme Court Held :

The legislature intended the Act, 1956 to act as a complete code in itself for the purpose of acquisition until culmination including disbursement and for settlement of disputes and this conclusion is further strengthened in view of Section 3J of the Act which eliminates the application of the Land Acquisition Act, 1894, to an acquisition under the Act, 1956.

It is settled principles of law that when the special law sets out a self-contained code, the application of general law would impliedly be excluded. 

In the instant case, the scheme of Act, 1956 being a special law enacted for the purpose and for appointment of an arbitrator by the Central Government under Section 3G(5) of Act, 1956 and sub-section (6) of Section 3G itself clarifies that subject to the provisions of the Act 1956, the provisions of Act 1996 shall apply to every arbitration obviously to the extent where the Act 1956 is silent, the Arbitrator may take recourse in adjudicating the dispute invoking the provisions of Act, 1996 for the limited purpose. But so far as the appointment of an Arbitrator is concerned, the power being exclusively vested with the Central Government as envisaged under sub-section (5) of Section 3G of Act 1956, Section 11 of the Act 1996 has no application.

We  are also  of  the   considered opinion that in  view   of  the power being  vested exclusively  with  the   Central  Government to appoint an  Arbitrator under Section 3G(5) of the  Act  1956, being a  special enactment, the  application filed   under Section 11(6) of the Act     1996 for   appointment   of an Arbitrator   was   not maintainable  and provisions  of   the Act,  1996  could  not    be invoked for the  purpose.”

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