Full Judgment Text
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PETITIONER:
PUNJAB STATE ELECTRICITY BOARD,MAHILPUR
Vs.
RESPONDENT:
M/S GURU NANAK COLD STORAGE &ICE FACTORY, MAHILPUR & ANR.
DATE OF JUDGMENT: 12/07/1996
BENCH:
RAMASWAMY, K.
BENCH:
RAMASWAMY, K.
G.B. PATTANAIK (J)
CITATION:
JT 1996 (6) 678 1996 SCALE (5)487
ACT:
HEADNOTE:
JUDGMENT:
O R D E R
Leave granted.
This case has a chequered history, the entire narration
of which is not material to the controversy at hand. Suffice
it to state that pursuant to the default committed by the
respondent in payment of the dues, the appellant-Board had
disconnected the supply of electrical energy on 20.8.1982.
For the recovery of the arrears, the appellant had laid the
suit. Ultimately, the suit ended in the order passed by this
Court in C.A. No.2767 of 1987 on February 15, 1989 upholding
the decree for recovery of the arrears for the disconnection
of the supply of electrical energy; the respondent had a
notice issued on August 1, 1985 claiming damages in a sum of
Rs.68,25,734/- which, we are informed, subsequently
increased to over Rs.93,00,694.00. Therein, the respondent
called upon the appellant to refer the dispute to an
arbitration under Section 52 of the Indian Electricity Act,
1910 (for short, the ‘Electricity Act’) or under Section
76(2) of the Electricity (Supply) Act, 1948 (for short,
‘Supply Act’). Calling that notice in question, the
appellant filed suit No.291 of 1985 on the file of the Sub-
Judge, I class for declaration and also for permanent
injunction restraining the appointment of an arbitrator to
adjudicate the dispute raised in the notice. The civil suit
was dismissed on March 31, 1989 which was confirmed in
appeal. The High Court in the impugned judgment and order
dated December 14, 1992 in Second Appeal No.1993 of 1990
dismissed the appeal finding thus:
"A perusal of Section 32 shows that
no suit is competent on any ground
whatsoever "for a decision upon the
existence, effect or validity of an
arbitration agreement......."
Furthermore, a perusal of
provisions of section 33 shows that
any party wanting to challenge the
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existence of an arbitration
agreement can do so only through an
application under the said
provisions of the Arbitration Act.
It appears that no civil suit is
competent in respect of matters
which can be decided through
arbitration and any party
challenging the existence of an
arbitration agreement can only do
so through the summary procedure
contemplated under section 33 of
the Act. The remedy of a regular
civil suit, thus, appears to have
been excluded."
Thus this appeal by special leave.
Shri P.P.Rao, learned senior counsel for the appellant,
contended that the view taken by the High Court and courts
below is clearly unsustainable in law. His primary
contention is that the disconnection of supply of electrical
energy and the alleged consequential damages claimed by the
respondent are not matters arbitrable under the provisions
either of Electricity Act or Supply Act. Therefore, the
invocation of the provisions in either of the Acts for
reference is clearly without authority of law. He has taken
us through the relevant provisions under the Acts which we
would refer during the course of the judgment. Shri M.S.
Gujral, learned senior counsel for the respondent contended
that illegal disconnection of supply of electricity energy
to the appellant and resultant damages is a dispute arising
under Section 19 of the Electricity Act since due to illegal
disconnection, the respondent had suffered damages. As a
consequence, the respondent is entitled to compensation for
such illegal act done by the appellant. Therefore, it is
dispute arbitrable under the provisions of the Electricity
Act and also the Supply Act. He also contended that though
there is no agreement entered into between the appellant and
the respondent for arbitration as defined under Section 2(a)
of the Arbitration Act, 1940, by operation of Section 46 of
the Arbitration Act read with Section 33 thereof, it would
clearly give power to the civil court to decide whether the
matter would be arbitrable under the provisions of the Acts.
The High Court accordingly recorded a finding that the civil
suit is not maintainable but the arbitrator to decide the
arbitrability of the dispute as regards the damages caused
to the respondent due to illegal disconnection under Section
52 of the Electricity Act or Section 76(2) of the Supply
Act.
In view of the rival contentions, the question that
arises is: whether the view of the High Court is correct in
law? It is seen that learned sub-ordinate Judge had recorded
a finding that the dispute is not arbitrable under the
provisions of either the Electricity Act or Supply Act.
Consequently, the notice issued by the respondent for
arbitration of the dispute is illegal. However, on wrong
premise of the arbitrability of the dispute be the-
arbitrator under Section 33 suit was dismissed. As noted,
the High Court recorded that dispute would be decided only
in the arbitration by operation of Section 33 or 32 and that
the civil court has no jurisdiction to go into the matter.
The Electricity Act deals with grant of licences to the
licensee for supply of electrical energy to the consumer and
election of the electrical lines etc. Part II deals with
supply of energy. Section 7-A(1) deals with determination of
purchase price. Section 8 provides consequences for non
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purchase of undertaking and revocation of licence with
consent of licensee. Section 9 prohibits licensee from
purchasing, or associating himself with, other licensed
undertakings or transfer his undertaking. Section 10 deals
with general power of Government to vary terms of purchase.
Sections 12 to 18 deal with various types of works and
Section 12 empowers licensee to open and break up streets,
railways and tramways. Section 13 speaks of notice to the
owners undertaking new work. Sub-section (3) thereof
provides that "[N]otwithstanding anything in this section,
the licensee may, in case of emergency due to the breakdown
of an underground electric supply-line, after giving notice
in writing to the repairing authority or the owner, as the
case may be, of his intention to do so, place an overhead
line without complying with the provisions of sub-section
(1)". Section 14 provides for alteration of pipes or wires.
Section 15 gives power of laying of electric supply-lines or
other work near sewers, pipes or other electric supply-lines
or works. Section 16 gives power to the licensee to exercise
any of the powers under the Act to open or break-up soil or
pavement of any street railway or tramway, or any sewer,
drain or tunnel. Section 18 empowers to lay overhead lines.
While exercising those or any of those powers and performing
undertaken works, Section 19 envisages that the licensee may
in exercise of any of the above powers, cause as little
damage, detriment or inconvenience as may be, and shall make
full compensation for any damage, detriment or inconvenience
caused by the licensee or by any one employed by the
licensee. Sub section (2) in that behalf provides that save
in the case provided for in Section 12, sub-section (3),
where any difference or dispute arises as to the amount or
the application of such compensation, the matter shall be
determined by arbitration. Similarly, Sections 21(4), 22,
14(3), 15(5), 16-(3), 22- A(2) and 32 provide determination
of the disputes by arbitration. If any of the disputes arise
under the aforesaid provisions, obviously Section 52 of the
Electricity Act provides for forum for arbitration which
reads as under:
"52. Arbitration.-- Where any
matter is, by or under this Act,
directed to be determined by
arbitration, the matter shall,
unless it is otherwise expressly
provided in the licence of a
licensee, be determined by such
person or persons as the State
Government may nominate in that
behalf on the application of either
party; but in all other respects
the arbitration shall be subject to
the provisions of the Arbitration
Act, 1940 (10 of 1940):
Provided that where the
Government or a State Electricity
Board is a party to a dispute, the
dispute shall be referred to two
arbitrators, one to be appointed by
each party to the dispute."
A reading thereof would thereby clearly indicate that
where any matter is by or under the Act directed to be
determined by arbitration, the matter shall, unless it is
otherwise expressly provided in the licence of a licensee,
be determined by such person or persons as the State
Government may nominate in this behalf on application by
either party; and in all other respects, in furtherance of
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the arbitration it shall be subject to the provisions of the
Arbitration Act. It would, therefore, be clear that with a
view to attract the provisions of the Electricity Act, the
dispute shall be one of the disputes directed by or under
the Act arbitrable by the arbitration under the provisions
of the Act. As seen, the Act extracted hereinbefore where a
dispute shall be arbitrable in an arbitration which attracts
the provisions of Section 52 of the Electricity Act.
Similarly, the Supply Act envisages that if arbitration of
any question or matter is required under Sections 19(4),
44(3), 55(3) and 78-A(2) to be referred to arbitration under
Section 76(2) of the Supply Act, such question or matter
becomes arbitrable
It is, therefore therefore, to be seen whether the
dispute raised in this case is arbitrable under any of the
provisions of either the two Acts. As stated earlier, the
specific contention of Shri Gujral is that it is a dispute
arising under Section 19(1) of the Electricity Act for
damages caused to the consumer-respondent and that,
therefore it is arbitrable under Section 52 of the
Electricity Act or Section 76(2) the Supply Act. We are
unable to agree with the learned counsel.
It is seen that the right to claim damages obviously is
not to the consumer to whom, though under the Electricity
Act the licensee, on an application made in this behalf, is
under an obligation to supply the electrical energy. The
damages which ensued for disconnection is not a dispute
arising under Section 19(1) of the Electricity Act. The
scheme of Part II of the Electricity Act would be viewed in
its operational perspective. It would indicate that if any
damage is caused obviously to the owner of the property or
the person affected in execution of the works undertaken as
envisaged in Part II, the damages so ensued, unless agreed
between licensee and the person affected, the dispute arisen
under section 19(1) would be arbitrable, by operation of
sub-section (2) of Section 19 of the Electricity Act.
The question then is: whether the matter will be only
referable to arbitration as provided under Section 33 of the
Electricity Act? The contention of Shri Gujral is that by
operation of Section 46 read with Section 33 of the
Arbitration Act, the dispute would be arbitrable by an
arbitrator and the civil court is devoid of jurisdiction to
decide the matter. We find no force in the contention. It is
true that Section 46 expressly envisages that despite the
absence of an express arbitration agreement as defined under
Section 2(a) of the Arbitration Act, if it is a dispute
statutorily arbitrable, Section 46 stands attracted except
to the extent of the provisions excluded therein, i.e.,
Sections 6(1), 7, 12, 36 and 37 Section 46 reads as under:
"46. Application of Act to
statutory arbitrations.-- The
provisions of this Act except sub-
section (1) of Section 6 and
Sections 7, 12, 36, and 37, shall
apply to every arbitration under
any other enactment for the time
being in force, as if the
arbitration were pursuant to an
arbitration agreement and if that
other enactment were an arbitration
agreement, except in so far as this
Act is inconsistent with the other
enactment or with any rules made
thereunder."
Sections 6(1), 7, 12, 36 and 37 have been expressly
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excluded from the operation of statutory arbitration. The
rest of the provisions per force would get attracted. But
the provisions of the appropriate statute or rules should
necessarily be consistent with the provisions of the
Arbitration Act. In that event, despite absence of an
arbitration agreement, rest of the provisions of Arbitration
Act would apply (as if there was an arbitration agreement
between parties) and the dispute becomes arbitrable under
the Arbitration Act, as if there was an arbitration
agreement between the parties. If there is any
inconsistency, then the provisions of the Arbitration Act do
not get attracted. Section 33 expressly gives power to the
civil court to decide the existence or validity of the
arbitration agreement or the award as such. If this question
was to arise, necessarily the civil court would be devoid of
jurisdiction to decide the dispute on merits but only in the
forum of arbitration. The existence and validity of the
arbitration agreement should be decided by the civil court.
Arbitrator cannot clothe himself with jurisdiction to
conclusively decide it by himself as a jurisdictional issue.
It is for the court to decide it. The dispute on merits
should be resolved by the arbitrator and the legality of the
award would be subject to decision by the court under
Section 33.
The question is: whether the dispute as to damages is
arbitrable? As stated earlier, Section 52 of the Electricity
Act or 76(2) of Supply Act read with Section 19(1) of
Electricity Act has no application to dispute. So, Section
52 of the Electricity Act does not get attracted; and
equally Section 76(2) of the Supply Act. Therefore, it is
not arbitrable under the statute. In view of the express
admission made by the respondent that there As no agreement
of arbitration as defined in Section 2(a) of the Arbitration
Act, Section 33, therefore does not get attracted. Section
46 does not apply as the scheme under both the Acts in this
behalf is inconsistent. The arbitrator cannot decide that
question.
Shri Gujral laid emphasis on the ratio of this Court in
Punjab S.E.B. vs. Bassi Cold storage [(1994) Supp. 2 SCC
124] contending that the dispute whether it is arbitrable
itself would be decided by the arbitrator and that,
therefore, the appellant having raised that question, it is
not open to the Board to contend that it is not arbitrable.
We find no force in the contention. In that case, the
question was whether the dispute was arbitrable or not.
Though the question was given up in the trial court, the
learned counsel appearing for the party had conceded that
the question did arise. On that basis, notice was issued by
the High Court and it was held that it was not arbitrable.
But in this case, the question is: whether the notice issued
by the respondent invoking the provisions of Section 52 and
Section 76(2) of the Electricity Act and he Supply Act
respectively would get attracted? In The Mysore State
Electricity Board vs. Bangalore Woollen, Cotton and silk and
Silk Mills Ltd. & Ors. [(1963) Supp. 2 SCR 127], this Court
had considered whether the dispute as regards revision of
rates of tariff was arbitrable under the provisions of the
Acts. On an elaborate consideration, it was held that the
dispute as regards revision of rates of tariff was not
arbitrable. Similarly, a suit for damages for disconnection
was filed and the question arose whether it was arbitrable.
In Mysore Manufacturers & Traders vs. State of Karnataka
[AIR 1982 Karnataka 54], the learned single Judge of the
High Court had held that the dispute was not arbitrable and,
therefore, the reference of the dispute under the provisions
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of the Arbitration Act was not available. This Court in
Bassi’s case (supra) had held that the dispute for the
arbitration for the damages caused due to disconnection was
not arbitrable under either of the two Acts. In that view,
the High Court and courts below were clearly in error in
holding that the matter was to be referred to arbitration
and arbitrator had to decide the dispute as to arbitrability
or on merits.
The appeal is accordingly allowed, but in the
circumstances without costs. The decrees of all courts stand
set aside and suit stands decreed as prayed for. No costs.