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Browse Law School Education ADR: Arbitration Important Arbitration Cases

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Here, i’ll discuss the case of National Highways Authority of India v. Sayedabad Tea Company Ltd. and Ors., (2019) SCC OnLine SC 1102—which is 2019 case.

BRIEF FACTS:

Now the brief facts of this case are that the land comprised in “Sayedabad Tea Estate” was acquired by the appellant in exercise of its powers under Section 3(D) of the National Highways Act of 1956, for the purpose of construction of highways. The Act of 1956 is a comprehensive code in itself and a special legislation enacted by the Parliament for acquisition and for determining compensation and disbursement of amounts. If the amount so determined by the competent authority under is not acceptable to either of the parties, the amount, on an application by either of the parties, is determined by the arbitrator to be appointed by the Central Government under Section 3G(5) of the Act. 

The respondent, not being satisfied with the award of compensation, filed an application for the appointment of an arbitrator in terms of Section 3G(5) to the Central Government. Since the Central Government did not respond to the request, an application was filed to the Chief Justice for appointing an arbitrator invoking Section 11(6) before the High Court of Calcutta. The Central Government then appointed an arbitrator as per Section 3G(5) of 1956 NHAI Act after the appointment of sole arbitrator under Section 11(6) of Arbitration and Conciliation Act, 1996.

Taking note of the fact that the arbitrator had been appointed by the Central Government under Section 3G(5) of the Act, 1956 after the respondent had moved an application to the Chief Justice/his Designate, invoking its power under Section 11(6) of the 1996 Act. The Court 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 1996 Act and appointment of arbitrator during the pendency of proceedings, cannot be said to be a valid appointment. 

Hence, this appeal was filed.

ISSUE: 

Now let’s take up the issue in this case. Whether an application under Section 11 of the Arbitration and Conciliation Act, 1996, for appointment of an arbitrator in relation to disputes with National Highway Authority of India (NHAI) is maintainable in view of Section 3G(5) of the National Highway Act, 1956, which provides for such appointed by the Central Government?

HELD: 

The Supreme Court in this case, held that the Act is a comprehensive code and a special enactment which provides an inbuilt mechanism not only in initiating acquisition until culmination of the proceedings in determining the compensation and its adjudication by the Arbitrator to be appointed by the Central Government and if still remain dissatisfied, by the Court of law.

The Court further held that the expression “subject to” clearly indicates that the legislation intended to give overriding effect to the provisions of the NHAI Act, 1956 where it relates to disputes pertaining to determination of amount of compensation, but the appointment is to be made by the Central Government. Therefore the SC held that Section 11 has no applicability in the present case. 

While dealing with the scope of Section 3G of the Act 1956, the Court relied on the two Bench judgement in the case of General Manager (Project), National Highways and Infrastructure Development Corporation Ltd. v. Prakash Chand Pradhan & Ors., passed in Civil Appeal No. 5250 of 2018 decided on 16 May, 2018, wherein it was held that “ The Act 1956 being a special enactment and Section 3G in particular provides an inbuilt mechanism for appointment of an arbitrator by the Central Government. Hence Section 11 of the Act, 1996 i.e. the Arbitration & Conciliation Act has no application and the power is exclusively vested with the Central Government under Section 3G(5) of NHAI Act, 1956 for appointment of the arbitrator and if the Central Government does not appoint an arbitrator within a reasonable time period, it is open for the party to avail the remedy either by filing a writ petition under Article 226 of the Constitution of India or a suit for the purpose but the remedy of Section 11 of Act 1996 is not available for appointment of an arbitrator.”

RATIO:

The ratio that can be derived from here is that—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 from it.

In view of the power being vested exclusively with the Central Government for the appointment of an Arbitrator under Section 3G(5) of the NHAI Act, being a special enactment, the application filed under Section 11(6) of the Arbitration & Conciliation Act, 1996 for the appointment of an Arbitrator is not maintainable and provisions of the Act, 1996 therefore cannot be invoked for the purpose.

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