Case Note & Summary
The case involves a dispute between the National Highways Authority of India (NHAI) and Sayedabad Tea Company Ltd. regarding the acquisition of land for highway construction under the National Highways Act, 1956. The land measuring 5.08 acres was acquired by NHAI under Section 3D of the Act. The respondent, dissatisfied with the compensation determined by the competent authority under Section 3G(1), applied to the Central Government on 8 December 2006 for appointment of an arbitrator under Section 3G(5). Alleging that the Central Government did not respond within 30 days, the respondent filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 before the Calcutta High Court on 7 March 2007. The Central Government appointed an arbitrator in April 2007. The High Court held that the Central Government's right to appoint an arbitrator stood forfeited and appointed a sole arbitrator under Section 11(6). NHAI's review application was dismissed. The Supreme Court considered whether an application under Section 11 of the 1996 Act is maintainable given the exclusive appointment mechanism under Section 3G(5) of the 1956 Act. The Court held that the 1956 Act is a special enactment providing an inbuilt mechanism for appointment of an arbitrator by the Central Government, and Section 11 of the 1996 Act has no application. The High Court's orders were set aside, and the arbitrator appointed by the Central Government was deemed valid. The Court clarified that if the Central Government fails to appoint an arbitrator within a reasonable time, the remedy is by way of a writ petition under Article 226 or a suit, not an application under Section 11(6).
Headnote
A) Arbitration Law - Appointment of Arbitrator - Special Law vs General Law - Section 3G(5) of National Highways Act, 1956 and Section 11 of Arbitration and Conciliation Act, 1996 - The National Highways Act, 1956 being a special enactment provides an inbuilt mechanism for appointment of an arbitrator by the Central Government under Section 3G(5). Section 11 of the 1996 Act has no application. If the Central Government fails to appoint an arbitrator within a reasonable time, the remedy is by way of a writ petition under Article 226 of the Constitution or a suit, not an application under Section 11(6) of the 1996 Act. (Paras 1, 15) B) Arbitration Law - Forfeiture of Right to Appoint Arbitrator - Section 3G(5) of National Highways Act, 1956 - The right of the Central Government to appoint an arbitrator under Section 3G(5) is not forfeited merely because an application under Section 11(6) of the 1996 Act is filed. The High Court erred in holding that the right stands forfeited. (Paras 6, 15) C) Arbitration Law - Applicability of Arbitration Act, 1996 - Section 3G(6) of National Highways Act, 1956 - Sub-section (6) of Section 3G provides that subject to the provisions of the 1956 Act, the provisions of the 1996 Act shall apply to every arbitration under the 1956 Act. However, this does not override the specific appointment mechanism under Section 3G(5). The 1996 Act applies only to the conduct of arbitration, not to the appointment of the arbitrator. (Paras 3, 12, 15)
Issue of Consideration
Whether an application under Section 11 of the Arbitration and Conciliation Act, 1996 is maintainable for appointment of an arbitrator in view of Section 3G(5) of the National Highways Act, 1956 which provides for appointment of an arbitrator by the Central Government.
Final Decision
The Supreme Court allowed the appeals, set aside the High Court orders dated 6 July 2007 and 27 August 2007, and held that the arbitrator appointed by the Central Government under Section 3G(5) of the National Highways Act, 1956 is valid. The application under Section 11(6) of the Arbitration and Conciliation Act, 1996 was not maintainable.
Law Points
- Special law prevails over general law
- Exclusive appointment mechanism under Section 3G(5) of National Highways Act
- 1956
- Section 11 of Arbitration and Conciliation Act
- 1996 not applicable
- Remedy by writ petition under Article 226 or suit if Central Government fails to appoint arbitrator within reasonable time
