Appointment of arbitrator: section 11 or the National Highways Act? (Supreme Court)

    Updates by Shivam Tiwari,Aimen Reshi

National Highways Authority of India v. Sayedabad Tea Company Ltd. [2019 SCC OnLine SC 1102]
V. Ramana, Mohan M. Shantanagoundar and Ajay Rastogi, JJ., decided on 27 August 2019

 

Under the NHA, when land is acquired, the competent authority determines compensation. If that determination is not accepted, the matter goes to an arbitrator and the Arbitration and Conciliation Act, 1996(“ACA”) applies subject to the provisions of the NHA. One of the sections in NHA—section 3G (5)—prescribes that the arbitrator is to be“appointed by the Central Government”.

What if the Central Government is delaying the appointment? Would an application under section 11 of the ACA be maintainable?

The court answered, no[1]:-

  1. The NHA is a special enactment and has an inbuilt mechanism for appointment of arbitrator by the Central Government. ACA is a general law and application of Section 11 is impliedly excluded. The expression “subject to” indicates that legislature wanted to give overriding effect to the NHA.
  2. The NHA does not set a limitation period for exercise of this power, but there is no unguided discretion and arbitrator must be appointed within reasonable time. If not done, the remedy is to file a writ petition under Article 226 of the Constitution of India or a suit.
  3. The submission—relying on Deep Trading Company v. Indian Oil Corporation and others, (2013) 4 SCC 35—that the Central Government forfeited its right to appoint is without substance and Deep does not apply because:-   
    1. There is no statutory limitation under the NHA
    2. The controversy in that case was not of appointment under a special enactment, but whether a party, by not exercising it in time, forfeited the contractual right to appoint.

[1] Accepting and reiterating the ‘legal position’ stated in General Manager (Project), National Highways and Infrastructure Development Corporation Ltd. v. Prakash Chandra Pradhan and others, 2018 SCC Online SC 3245 (R.F. Nariman & A.M. Sapre, JJ.). The court also referred separately to Gujarat Urja Vikash Nigam Ltd. v. Essar Power Limited, (2008) 4 SCC 755 (H.K. Sema & Markandey Katju, JJ., which related to Section 86 (1) of the Electricity Act, 2003 under which the State Electricity Commission could refer a dispute to arbitration. Gujarat Urja held that this was a special provision overriding Section 11 of the ACA. The decision in Prakash Chandra Pradhan is very brief, just over a page, and based entirely on Gujarat Urja.

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Categories: Appointment of arbitrator |  Limitation period for appointing arbitrator |  Right under special law for appointing arbitrator |  Waiver of right to appoint arbitrator  

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