NHAI v. Sayedabad Tea Company Ltd. and Ors

Judgement Name- NHAI v. Sayedabad Tea Company Ltd. and Ors

Citation: 2019 SCC OnLine SC 1102

Coram: N.V. Ramana, Mohan M. Shantanagoudar, Ajay Rastogi

Date: 27th August, 2019

Overview and Ratio: Supreme Court held that the Highways Act, being a special law, has overriding effect on general law of Arbitration and dismissed Section 11 application for appointment of arbitrator

Facts-

  • Sayedabad Tea Estate was acquired by the appellant, National Highways Authority of India for the purpose of construction of highways. The appellant awarded the respondent with compensation under the National Highways Act, 1956 (NH Act). Dissatisfied by the compensation determined by the competent authority under sub-section (1) of Section 3G of the Act, 1956 filed an application for appointment of an arbitrator as per Section 3G(5) to the Central Government.
  • Central government did not respond to the wish of the respondent within the requisite period of 30 days from receipt of the request. Following which the respondent filed an application to the Chief Justice/ his designate for appointment of an arbitrator invoking section 11(1) of the Act, 1966. Following which, the central government appointed an arbitrator a few months after.
  • Meanwhile the Calcutta High Court (HC) also appointed the sole arbitrator under Section 11 of the 1996 Act. He sent the letter of his recusal to the HC before initiation of the proceedings. This stopped the arbitrator appointed by the central government to proceed, once the intervention by the High Court of Calcutta was made,
  • The HC of Calcutta passed an order, in favor of the respondent taking note of the fact that the Arbitrator has 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 of India, invoking his power under Section 11(6), held that right of appointment of the Arbitrator by 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.

Issue –

  • Does the provision of appointment of Arbitrators in the Highways Act override the one present in the 1996 Act?

Rules-

Section 11 Arbitration and Conciliation Act, 1996

National Highways Act, 1956, Section 3G and H

Analysis-

  • The Supreme Court observed that the usage of the term ‘subject to’ in Section 3G(5) of the NH Act clearly indicates that the provisions of the NH Act will have an overriding effect vis-à-vis the Arbitration Act in relation to land compensation matters arising under the NH Act.
  • The Supreme Court used the National Highways and Infrastructure Development Corporation Ltd. Vs. Prakash Chand Pradhan & Ors. to say that the NH Act, 1956 has been enacted under Entry 23 of the Union List of the 7th Schedule of the Constitution, that makes gives central government the ambit to govern matters related to the national highways. It is 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. Further, the court assumed that the legislature intended the Act of 1956 to be a complete code in itself, which eliminates the application of the Land Acquisition Act, 1894 as it contains the culmination of disbursement and settlement of disputes that is further strengthened under Section 3J of the Act.
  • The Supreme Court noted that Section 3G(6) of the 1956 Act clearly stipulated that the provisions of the 1996 Act would apply subject to the provisions of the 1956 Act by the usage of the expression, “subject to”, which clearly indicates that the legislature intended to give an overriding effect to the provisions of the 1956 Act, wherein it relates to the disputes pertaining to determination of the amount of compensation of the Act. The conclusion from reading the act is that the legislature in its wisdom intended to abrogate the power for appointment of an arbitrator under the provisions of the Act, 1996.
  • It is also a well settled principle of law that when the special law sets out a self-contained code, the application of general law would impliedly be excluded.
  • The court held that right of appointment of an arbitrator by the central government does not get forfeited within 30 days since there is no statutory limitation provided under sub-section(5) of Section 3G of the 1956 Act. This does not give an unguided discretion to the authority and in the absence of any statutory limitation, it must be within the reasonable time and if in fact the central government fails to discharge its statutory duty by failing to appoint an arbitrator on request of the party aggrieved. It will then be open to the party to invoke either the writ jurisdiction of the High Court under Article 226 of the constitution of India or the Civil Court.

Conclusion-

  • As Section 3G(5) of the NH Act is a special enactment  that gives the central government exclusive power to appoint an arbitrator; the application filed under Section 11(6) of the Arbitration Act for appointment of an arbitrator is not maintainable and the provisions of the same can therefore not be invoked.
  • The Supreme Court ordered the central government to appoint an arbitrator and quashed all orders passed by the High Court of Calcutta.
  • The court ordered the Arbitrator so appointed by the Central Government to adjudicate and decided the dispute within a reasonable time.

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