National Highways Authority of India v/s Sayedabad Tea Company Ltd. & Ors

“When the special law sets out a self­contained code, the application of general law would impliedly be excluded.”

Case name: Union of India v/s Pradeep Vinod Construction Company
Case number: CIVIL APPEAL NO(s). 6958­6959 OF 2009
Court: The Supreme Court of India
Bench: Justice N.V. Ramana, Justice Ajay Rastogi, Justice Mohan M. Shantanagoudar
Decided on: August 27, 2019
Relevant Act/Sections: Section 11 of the Arbitration and Conciliation Act, 1996 and Section 3G(5) of the National Highways Act, 1956.

• BRIEF FACTS AND PROCEDURAL HISTORY:
• The relevant seminal facts are that the subject land comprised in “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 appellant (National Highways Authority of India) in exercise of its powers under Section 3(D) of the Act 1956 vide notification dated 22^nd  November, 2005 under L.A.P. Case No. 4/2004­05 for the purpose of construction of the highways.
• In the instant case, the respondent­applicant being dissatisfied with the award of compensation determined by the competent authority under sub­section(1) of Section 3G of the Act, 1956 filed application for appointment of an Arbitrator in terms of Section 3G(5) to the Central Government on 8^th December, 2006. As alleged, since the Central Government has not responded to his request for appointment of an Arbitrator in terms of letter dated 8th December, 2006 within a period of 30 days from receipt of the request, application was filed on 7^th March, 2007 to the Chief Justice/his designate for appointment of an Arbitrator invoking Section 11(6) of the Act, 1996. It reveals that the Arbitrator was appointed by the Central Government sometime in April 2007.
• The High Court of Calcutta 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 respondent­applicant had moved an application to the Chief Justice/his Designate invoking its power under Section 11(6) of the Act, 1996 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 6^th July, 2007.
• Immediately after passing of the order dated 6^th July, 2007, the appellant moved an application for review and it was brought to the notice of the High Court that the Act, 1956 being a special enactment laying down a procedure for appointment of an Arbitrator where the power is being exclusively vested with the Central Government under Section 3G(5) of the Act, 1956, the application made under Section 11(6) of the Act, 1996 is not maintainable but this was not considered to be a valid reason for invoking review jurisdiction by the High Court as envisaged under Order 47 Rule 1 read with Section 114 of Code of Civil Procedure and the review application was dismissed vide Order dated August 27, 2007.
• ISSUE BEFORE THE COURT:
•  Whether the application under Section 11 of the Arbitration and Conciliation Act, 1996 is maintainable in view of Section 3G(5) of the National Highways Act, 1956 which provides for an arbitrator by the Central Government.
• RATIO OF THE COURT:
• Mr. Vikas Goel, learned counsel for the appellant submits that 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. But before the matter could be proceeded, the respondent­-applicant approached the High Court by filing an application under Section 11(6) of the Act 1996 which was not maintainable and this being the settled principles of law that the special law prevail over the general law, the provisions of Act 1996 could not have been invoked at least for the appointment of an Arbitrator in abrogating the power of the Central Government in appointing the Arbitrator as contemplated under Section 3G(5) of Act 1956 and this being an apparent error in law committed by the High Court needs to be interfered by this Court. He has placed reliance on the recent judgment of two Judges’ Bench of this Court in General Manager (Project), National Highways and Infrastructure Development Corporation Ltd. Vs. Prakash Chand Pradhan & Ors. passed in Civil Appeal No. 5250 of 2018 decided on 16^th May, 2018. 
• Per contra, Mr. Prashant Bhushan, learned counsel for the respondents, while supporting the order passed by the High Court of Calcutta impugned in the instant proceedings submits that sub­section(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. If the authority to whom application was filed for appointment of an Arbitrator under Section 3G(5) of Act, 1956 has failed to discharge its obligations within 30 days of presentation of the application which indisputedly was December, 2006 or until filing of the application for appointment of an Arbitrator to the Chief Justice/his Designate under Section 11(6) of the Act, 1996 i.e. 7^th March, 2007, the respondent was justified in taking recourse to sub­section(6) of Section 3G of Act, 1956 for appointment of an Arbitrator under Section 11(6) of Act, 1996 and has forfeited its right to appoint an Arbitrator after presentation of the application under the Act, 1996. Reliance was placed on Deep Trading Company Vs. Indian Oil Corporation and Others 2013(4) SCC 35.
• The Court observed that at the very outset, we may notice that the two Judge Bench of this Court in the recent judgment in General Manager (Project), National Highways and Infrastructure Development Corporation Ltd. case(supra), while dealing with the scope of sub­sections (5) and (6) of Section 3G of the Act 1956 with reference to Section 11 of the Act, 1996 has held that the Act of 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 has no application and the power is exclusively vested with the Central Government under Section 3G(5) of the Act, 1956 for appointment of an Arbitrator and if the Central Government does not appoint an Arbitrator within a reasonable time, 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.
• It is settled principles of law that when the special law sets out a self­contained 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 sub­section (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 sub­section (5) of Section 3G of Act 1956, Section 11 of the Act 1996 has no application. The irresistible conclusion is that the legislature in its wisdom intended to abrogate the power for appointment of an Arbitrator under the provisions of the Act, 1996. In our considered view, the High Court of Calcutta was not holding its competence to appoint an Arbitrator invoking Section 11 of Act, 1996. 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.

• DECISION HELD BY COURT:
• It is indeed true that the Arbitrator who was appointed by the Central Government subsequent to 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 too has later recused and almost 12 years have rolled by now, we deem it appropriate to observe that there is no need to file any application by the respondent­applicant and the Central Government shall consider and appoint an Arbitrator in terms of Section 3G(5) of the Act 1956 within a period of 30 days with prior intimation to the respondents. As the litigation has consumed a sufficient long time, we consider it appropriate to further observe that the Arbitrator so appointed by the Central Government may adjudicate and decide the dispute within a reasonable time but in no case later than six months after the respondent­applicant record its presence in the proceedings.
• The appeals accordingly succeed and are allowed. The orders passed by the High Court dated 6th July, 2007 and 27th August, 2007 are hereby set aside. The Arbitrator may be appointed by the appellants in terms indicated above. No costs.