National Highways Authority Of India Vs Sayedabad Tea Company Ltd And Ors: Power To Select Arbitrator Lies With The Central Government Under The National Highway Act

DATE OF JUDGEMENT
27 August 2019

CORUM
Hon’ble Justice N. V. Ramana
Hon’ble Justice Mohan M. Shantanagoudar
Hon’ble Justice Ajay Rastogi

PARTIES
National Highways Authority of India(Appellants)
Sayedabad Tea Company Ltd. and Ors.(Respondents)

SUMMARY

The appellant (NHAI) purchased the land inhabited by the respondent under Section 3(D) of the National Highway Act, 1956, in order to construct a highway. According to Section 3G (1) of the National Highways Act, the responsible body decided on the compensation for the acquired land. The respondent was dissatisfied with the compensation that had been determined.According to the Supreme Court, the right to select an Arbitrator is vested in the Central Government under Section 3G (5) of the 1956 Act and Section 11 of the 1996 Acthas no bearing on the matter. The Court also ratified the Central Government-appointed Arbitrator and directed him to adjudicate and deliver an arbitral award as soon as possible. The Supreme Court overturned the High Court's previous decisions.

IMPORTANT PROVISIONS

• Section 3D of the National Highways Act, 1956: Section 3D gives the Central Government the powers to acquire land for declaring national highways if no objections have been raised.
• Section 3G (5) of the National Highways Act, 1956: In the event that any party objects to the compensation determined, Section 3G (5) of the Act allows for the appointment of an Arbitrator to re-determine the amount.
• Section 11 of the Arbitration and Conciliation Act, 1996: Section 11 of the Arbitration and Conciliation Act 1996 lays out the steps for appointing an Arbitrator and directs the aggrieved party to file a complaint with the Chief Justice if the act needed under the procedure is not performed.

OVERVIEW

• The appellant had acquired 5.08 acres of land, which is the ‘Sayedabad Tea Estate’, by exercising the powers under Section 3(D) of the 1956 Act by a notification for constructing highways.
• On December 8, 2006, the applicant, unsatisfied with the compensation award made by the competent body under Section 3G (1) of the Act, 1956, filed an application with the Central Government for the appointment of an Arbitrator under Section 3G (5).After the Central Government failed to respond to this request for the appointment of an Arbitrator within 30 days of receipt, the respondent requested the Chief Justice of the Calcutta High Court to appoint an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act 1996. In the meanwhile, the Central Government appointed an Arbitrator under Section 3G (5) of the 1956 Act.
• The Central Government's deed of appointing the Arbitrator in April came to the notice of the Calcutta High Court after the respondent approached the Court to take necessary steps, and the Court held that the Central Government appointed the Arbitrator only after an application was filed with the Court under Section 11 (6) of the 1996 Act, and that such appointments were made only during the pendency of the proceeding. It also stated that the right of the Central Government to appoint an Arbitrator has been forfeited as a result of the Court application.
• The appellant, on the other hand, filed a review petition, claiming that because the National Highways Act of 1956 is a special enactment with provisions for appointing an Arbitrator, the application under the Arbitration and Conciliation Act of 1996 could not be used. Regardless, the Court denied the petition for review. The appellant therefore, decided to go to the Supreme Court after the Calcutta High Court dismissed his review petition.
• In the Supreme Court, the appellant contended that the Court concluded in the matter of General Manager (Project), National Highways and Infrastructure Development Corporation Ltd. v. Prakash Chand Pradhan that the Arbitrator can only be appointed through Section 3G of the 1956 Act. Furthermore, the Arbitration Act has no bearing on the selection of an Arbitrator.
• He further submitted that invoking Section 11 of the 1996 Arbitration and Conciliation Act to appoint an Arbitrator is an attempt to nullify the Central Government's power to appoint an Arbitrator under the 1956 Act.
• The counsel for the respondent cited Section 3G(6) of the Act, claiming that the Arbitration and Conciliation Act applies to all arbitrations and will be applied to arbitrations conducted under the 1956 Act. As a result, the respondent can invoke the Arbitration Act's assistance. Furthermore, the Central Government's right to choose an Arbitrator was relinquished because the government exceeded the 30-day deadline and filed an application under Section 11(6) of the Arbitration Act.
• Despite the desire of the dealer, the corporation failed to discharge its responsibility of appointing the Arbitrator in the case of Deep Trading Company v. Indian Oil Corporation and Others. As a result, the company filed a motion with the court under Section 11(6) to appoint an Arbitrator. The right of the corporation to nominate an Arbitrator has been surrendered, according to the court, and only the Chief Justice has the obligation to fulfil his duty in the area of Arbitrator appointment.
• He contended that the appellant has forfeited its right to appoint an Arbitrator under the Act of 1956 after filing an application under the Act of 1996 before the High Court of Calcutta, and there was no legal impediment before the High Court of Calcutta in appointing an Arbitrator invoking Section 11(6) of the 1996 Act in the circumstances.

ISSUES

• Whether the Section 11 of Arbitration and Conciliation Act, 1996 would be applicable in view of rights bestowed on the Central Government under Section 3G (5) of the National Highways Act, 1956 to appoint an Arbitrator?
• Whether the procedure to appoint an Arbitrator under the National Highways Act would override the procedure given under the Arbitration and Conciliation Act?

ANALYSIS OF THE JUDGEMENT

• The 1956 Act is a comprehensive code in and of itself, as well as a special legislation enacted by the Parliament for acquisition, determination, and disbursement of compensation when there are multiple claimants over the amount deposited towards compensation determined by the competent authority in accordance with the mechanism set forth in Section 3G of the 1956 Act. If the amount determined by the competent authority under Section 3G (1) or (2) is not acceptable to any of the parties, the amount shall be determined by the Arbitrator appointed by the Central Government under Section 3G (5) of the Act, on an application by either of the parties.
• The Arbitrator must consider the relevant pointers envisioned under sub­section (7) of Section 3G of the 1956 Act while assessing the amount of compensation under sub­section (1) or sub­section (5). If the amount determined by the Arbitrator exceeds the amount determined by the competent authority under Section 3G of the 1956 Act, the Arbitrator may, at its discretion, award interest at 9% per annum on the excess amount from the date of taking possession under Section 3D until the date of actual deposit under Section 3H.
• Issues had emerged between the licensee and the power generating business in Gujarat Urja Vikash Nigam Ltd. v. Essar Power. Since the Electricity Act is a special legislation, the provisions of special law will trump the ordinary law in that circumstance. In light of the Electricity Act’s legislative requirements, the application under Section 11 of the Arbitration Act is not maintainable.
• The Court explained the meaning of the phrase ‘subject’ to in Section 3G (6) of the National Highways Act, 1956 before issuing the judgement. It implies that the said Act has the potential to overturn the Act of 1956. However, if the 1956 Act contains explicit and active provisions, the Arbitration Act cannot be used. As a result, the Arbitration Act's provisions can only be used when the Highway Act is silent. As a result, Section 11 cannot be upheld in this case. The Supreme Court reaffirmed the well-established legal principle that when special laws are created with a specific code, the applicability of the general law code is barred.
• After the land is acquired, in accordance with Sections 3A to 3F of the 1956 Act, an amount of compensation shall be paid, which shall be determined by an order of the competent authority under sub­sections (1) or (2) of Section 3G of the 1956 Act, and any person who is aggrieved by the amount so determined by the competent authority or what being determined is not acceptable to either of the parties has to be determined by the Arbitrator.
• After examining the scheme, it is reasonable to conclude that the legislature intended the Act, 1956 to serve as a complete code in and of itself for the purposes of acquisition, including disbursement and dispute resolution. This conclusion is bolstered by Section 3J of the Act, which eliminates the application of the Land Acquisition Act, 1894, to an acquisition made under the Act, 1956. It is a well­ established legal concept that when special law establishes a self­ contained code, general law is impliedly excluded.
• The 1956 Act, as a special law enacted for the purpose of appointing an Arbitrator by the Central Government under Section 3G(5) of the 1956 Act, and sub­section (6) of Section 3G itself, clarifies that, subject to the provisions of the 1956 Act, the provisions of the 1996 Act shall apply to every Arbitration. Section 11 of the 1996 Act has no application because the right to select an Arbitrator is entirely vested in the Central Government as provided for in sub-section (5) of Section 3G of the 1956 Act.
• The Arbitrator who was appointed by the Central Government following the filing of an application under Section 11 of the Act 1996 in April 2007 could not proceed after the Arbitrator was appointed pursuant to the Order impugned in the instant proceedings, who later recused himself, and almost 12 years have passed, there is no need for the applicant to file any application. The Central Government may appoint an arbitrator to hear and decide the dispute within a reasonable time, but no later than six months after the applicant records its presence in the proceedings. The appeal was allowed and the Court allowed appointment of an arbitrator by the appellants.

CONCLUSION

The National Highways Act is a piece of legislation that gives the Government the sole authority to designate highways as national highways, acquire lands, and determine compensation amounts. If any of the parties are dissatisfied with the compensation sum determined, an arbitrator might be appointed to resolve the dispute.The main goal of arbitration is to settle conflicts amicably between parties by appointing an Arbitrator with their mutual consent. In case of dispute, the Court has the power to interpret the provisions and clarify the powers of the authorities involved. It is thus important to ensure that the appointment of an Arbitrator should be done very carefully as decisions of national importance should not be taken lightly.

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