NATIONAL HIGHWAYS AUTHORITY OF INDIA vs. SAYEDABAD TEA CO. LTD. AND ORS

Case Type: Civil Appeal

Date of Judgment: 27-08-2019

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Full Judgment Text

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION    CIVIL APPEAL NO(s). 6958­6959 OF 2009 NATIONAL HIGHWAYS AUTHORITY OF INDIA    ….APPELLANT(S) VERSUS SAYEDABAD TEA COMPANY LTD.  AND ORS.     ….RESPONDENT(S) WITH    CIVIL APPEAL NO(s). 6965­6966 OF 2009 J U D G M E N T Rastogi, J. 1. The moot question which arises before us is whether the application under Section 11 of the Arbitration and Conciliation Act,   1996(hereinafter   being   referred   to   as   “Act   1996”)   is maintainable in view of Section 3G(5) of the National Highways Act,  1956   (hereinafter   being   referred   to  as   “Act  1956”)  which Signature Not Verified provides   for   appointment   of   an   Arbitrator   by   the   Central Digitally signed by SATISH KUMAR YADAV Date: 2019.08.27 17:34:29 IST Reason: Government. 1 2. 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 nd Section   3(D)   of   the   Act   1956   vide   notification   dated   22 November,   2005   under   L.A.P.   Case   No.   4/2004­05   for   the purpose of construction of the highways. 3. The   Act,   1956   is   a   comprehensive   code   in   itself   and   a special legislation enacted by the Parliament for acquisition and for determining compensation and its disbursement where there are   several   claimants   over   the   amount   deposited   towards compensation   determined   by   the   competent   authority   in accordance with the mechanism provided under Section 3G of the Act, 1956.   If the amount so determined by the competent authority under sub­section(1) or sub­section (2) of Section 3G is not acceptable to either of the parties, the amount shall, on an application   by   either   of   the   parties,   be   determined   by   the Arbitrator   to   be   appointed   by   the   Central   Government   under 2 Section   3G(5)   of   the   Act.     While   determining   the   amount   of compensation  under   sub­section(1)  or   sub­section(5),   it is   the duty   of   the   Arbitrator   to   take   into   consideration   the   relevant pointers envisaged under sub­section(7) of Section 3G of the Act, 1956.   Where  the  amount determined  by  the  Arbitrator  is in excess of   the   amount   determined   by   the   competent  authority under Section 3G of the Act, 1956, the Arbitrator may, at its discretion, award interest at nine per cent per annum on the excess amount under sub­section (5) of Section 3H from the date of taking  possession  under  Section  3D  till  the   date  of   actual deposit. 4. The extract of the sections of the Act 1956 relevant for the purpose are as under:­ “3G.   Determination   of   amount   payable   as compensation .— (1)   ……… (2)    ……… (3)    ……… (4)    ……… (5)  If the amount determined by the competent authority under   sub­section   (1)   or   sub­section   (2)   is   not acceptable to either of the parties, the amount shall, on   an   application   by   either   of   the   parties,   be 3 determined by the arbitrator to be appointed by the Central Government. (6)  Subject to the provisions of this Act, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to every arbitration under this Act.  (7)   The   competent   authority   or   the   arbitrator   while determining the amount under sub­section (1) or sub­ section   (5),   as   the   case   may   be,   shall   take   into consideration—  (a) the market value of the land on the date of publication of the notification under section 3A;  (b) the   damage,   if   any,   sustained   by   the person interested at the time of taking possession of the land, by reason of the severing of such land from other land;  (c) the   damage,   if   any,   sustained   by   the person interested at the time of taking possession of the land, by reason of the acquisition   injuriously   affecting   his other   immovable   property   in   any manner, or his earnings;  (d) if, in consequences of the acquisition of the   land,   the   person   interested   is compelled   to   change   his   residence   or place   of   business,   the   reasonable expenses,   if   any,   incidental   to   such change. 3H. Deposit and payment of amount .— (1)……. (2) ……. (3)……. (4)……. (5) Where the amount determined under section 3G by the arbitrator is in excess of the amount determined by the   competent   authority,   the   arbitrator   may   award interest at nine per cent, per annum on such excess 4 amount   from   the   date   of   taking   possession   under section 3D till the date of the actual deposit thereof. (6)…… … … 12…………” 5. 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 th terms   of   Section   3G(5)   to   the   Central   Government   on   8 December, 2006.  As alleged, since the Central Government has not responded to his request for appointment of an Arbitrator in th terms of letter dated 8   December, 2006 within a period of 30 th days from   receipt  of   the   request,   application  was   filed   on  7 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. 6. 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 5 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 th the Chief Justice for naming an Arbitrator vide its Order dated 6 July, 2007. th 7. Immediately after passing of the order dated 6  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 6 Procedure and the review application was dismissed vide Order dated August 27, 2007. 8. It may be relevant to note that the sole Arbitrator (Justice P.N. Sinha) who was appointed by the High Court of Calcutta th pursuant to Order dated 6  July, 2007 under Section 11 of the Act, 1996 before initiation of the proceedings, sent the letter of th his recusal dated 25  January, 2008 (Annexure P­12). 9. It is informed to this Court that the Arbitrator who was appointed by the Central Government under Section 3G(5) of the Act,   1956   in   April,   2007   could   not   have   proceeded   after   the intervention   was   made   by   the   High   Court   of   Calcutta   in appointing the sole Arbitrator under Section 11(6) of the Act, 1996.  That for all practical purposes, the dispute raised by the respondent­applicant   aggrieved   by   the   compensation   awarded under sub­sections(1) or (2) of Section 3G of the Act, 1956 has so far   not   been   adjudicated   because   of   the   competence   of   the authority in appointing the Arbitrator remain pending decision as to whether it would be under the Act, 1956 or Act, 1996 as 7 invoked by the High Court of Calcutta under the order impugned before us. 10. 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 respondent­applicant   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.   8 11. In   support   of   his   submission,   learned   counsel   for   the appellant   has   placed   reliance   on   the   recent   judgment   of   two Judges’   Bench   of   this   Court   in   General   Manager   (Project), National   Highways   and   Infrastructure   Development . passed Corporation Ltd. Vs. Prakash Chand Pradhan & Ors th in Civil Appeal No. 5250 of 2018 decided on 16  May, 2018 and taking assistance thereof submits that the order passed by the High Court of Calcutta in the appointment of an Arbitrator under Section 11(6) of Act 1996 is not legally sustainable and both the th th Orders passed by the High Court, i.e. 6   July, 2007 and 27 August, 2007 deserves to be quashed and set aside. 12. 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 9 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 th Justice/his Designate under Section 11(6) of the Act, 1996 i.e. 7 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.  13. Learned counsel further submits that the appellant under the Act, 1956 has forfeited its right to appoint an Arbitrator after presentation of the application under the Act, 1996 before the High Court of Calcutta and in the given circumstances, there was no   legal   impediment   before   the   High   Court   of   Calcutta   in appointment of an Arbitrator invoking Section 11(6) of Act 1996 and   in   support   of   his   submission   placed   reliance   on   the judgment of this Court in  Deep Trading Company  Vs.  Indian 1   Oil Corporation and Others   . 1 2013(4) SCC 35 10 14. We  have  heard learned counsel for the parties and  with their assistance perused the material available on record. 15. 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 (supra), while dealing with Development Corporation Ltd. case 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   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. 11 16. We are in full agreement with the legal position stated by a two Judge Bench of this Court in   General Manager (Project), National   Highways   and   Infrastructure   Development (supra) but like to add further that the Corporation Ltd. case Act, 1956 has been enacted under Entry 23 of the Union List of the   Seventh   Schedule   of   the   Constitution   with   the   exclusive power to legislate with respect to highways, which are declared to be national highways by or under law by the Parliament.  It is a comprehensive code and 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. 17.   In compliance of the mandate of Sections 3A to 3F of the Act, 1956,  after  the   land   is   acquired,  there   shall be  paid   an amount of compensation which shall be determined by an order of   the   competent   authority   under   sub­sections   (1)   or   (2)   of 12 Section 3G of the Act, 1956 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, on an application   being   filed   by   either   of   the   parties,   has   to   be determined   by   the   Arbitrator   to   be   appointed   by   the   Central Government in terms of sub­section (5) of Section 3G of the Act, 1956.  18. After  analysing   the  scheme,  it can  be  assumed   that  the legislature intended the Act, 1956 to act as a complete code in itself for the purpose of acquisition until culmination including disbursement and for settlement of disputes and this conclusion is further strengthened in view of Section 3J of the Act which eliminates the application of the Land Acquisition Act, 1894, to an acquisition under the Act, 1956. 19. 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 13 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. 20. The plea of the respondents that they have rightly taken recourse in the facts and circumstances of Section 11 of the Act, 1996 cannot be accepted for the reason that Section 3G(6) of the Act, 1956 clearly stipulates that the provisions of the Act, 1996 will apply subject to the provisions of the Act, 1956.  The usage of the expression “subject to” clearly indicates that the legislature intended to give overriding effect to the provisions of the Act, 1956 where it relates to the disputes pertaining to determination of the amount of compensation under the Act.   The irresistible conclusion   is   that   the   legislature   in   its   wisdom   intended   to 14 abrogate the power for appointment of an Arbitrator under the provisions of the Act, 1996. 21. In our considered view, the High Court of Calcutta was not holding its competence to appoint an Arbitrator invoking Section 11 of Act, 1996. 22.   This very question earlier arose before this Court whether the   application   under   Section   11(6)   of   the   Act   1996   is maintainable in view of statutory provisions of Electricity Act, 2003   adjudicating   the   dispute   between   the   licencees   and   the generating companies of the special enactment and Section 86(1) of the Electricity Act, 2003 in particular, this Court in  Gujarat 2 in para 28 Urja Vikash Nigam Ltd. Vs. Essar Power Limited     observed as under:­
28. Section 86(1)(f)is a special provision and hence will
override the general provision in Section 11 of the
Arbitration andConciliation Act, 1996 for arbitration of
disputes between the licensee and generating
companies. It is well settled that the special law
overrides the general law. Hence, in our
opinion,Section 11of the Arbitration and Conciliation
Act, 1996 has no application to the question who can
adjudicate/arbitrate disputes between licensees and
2 2008(4) SCC 755 15
generating companies, and only Section 86(1)(f)shall
apply in such a situation.
23. 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. 24. The submission of learned counsel for the respondents that as the appellant failed to make an appointment of the Arbitrator th pursuant to a letter dated 8  December, 2006 in terms of Section 3G(5) of the Act, 1956 within a period of 30 days, the High Court of   Calcutta   alone   was   holding   its   competence   to   appoint   an Arbitrator   and   application   was   submitted   by   the   respondent­ th applicant   on  7   March,   2007   the   right  of   appointment  of   an Arbitrator by the Central Government stands forfeited and has relied on the Judgment of this Court in  Deep Trading Company (supra) is of without substance for the reason that there is case no statutory limitation provided under sub­section (5) of Section 16 3G   of   Act   1956   for   the   Central   Government   to   appoint   an Arbitrator but that may 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 the Central Government fails in discharge of its statutory duty in appointing an Arbitrator on a request being made by either of the party aggrieved, it will 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 for the purpose.  But as long as the power is exclusively vested   with   the   Central   Government   for   appointment   of   an Arbitrator under Section 3G(5) of the Act 1956, the provision of Section 11 of Act 1996 has no application.   The judgment in Deep Trading Company case (supra) on which learned counsel has placed reliance is of no assistance for the reason firstly that controversy there was not in reference to the appointment of an Arbitrator under the special enactment as in the instant case under Act 1956 and secondly, if one party fails to exercise its power of appointment in terms of Clause 29 of the agreement in vogue, the provisions of Act 1996 would apply and the question for   consideration   was   whether   the   rights   of   the   party   stand forfeited  to   appoint   an   Arbitrator   after   the   party   has   invoked 17 Section 11(6) of the Act 1996 which, as already observed by us, is not the question for consideration in the instant case. 25. 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. 18 26. The   appeals   accordingly   succeed   and   are   allowed.     The th th orders passed by the High Court dated 6   July, 2007 and 27 August,   2007   are   hereby   set   aside.     The   Arbitrator   may   be appointed by the appellants in terms indicated above.  No costs. 27. Pending application(s), if any, stand disposed of. …………….…………………………J. (N.V. RAMANA) ……..……..………………………….J. (MOHAN M. SHANTANAGOUDAR) ……………………………………….J. (AJAY RASTOGI) NEW DELHI AUGUST 27, 2019 19