It has been observed from the current projections that the Highway construction industry shall be registering a tremendous growth of 133% by 2025 which is considered to be higher than any country in the world.1 Even though the National Highways are growing at a tremendous pace, but the question arises if the landowners are presented with a just and fair platform to raise their grievance with respect to the compensation.2
The National Highway Act, 1956 ((hereinafter 'NH act') is a complete code in itself as far as the acquisition of land, disbursement of compensation and settlement of disputes are concerned. According to the NH act, after the land is acquired under the NH Act, the compensation is paid to the landowners as decided by the competent authority authorised by the Central Government.3
In a situation where the landowners are not satisfied with the amount given to them, then they are vested with the right to invoke arbitration can be under Section 3G(5) of the NH act (although, the right is applicable to both the parties) but the power of appointment of the arbitrator rests with the Central Government without any say of the landowners.4 Keeping in mind the central legislation of the Arbitration & Conciliation Act, 1996 which as a blanket rule applies to all disputes arising out of an agreement, the issue arises pertaining to the resolution of the land disputes under the application of Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter 'A&C Act') if the same is maintainable under Section 3G (5) of the NH act, 1956 which provides for the appointment of an arbitrator by the Central Government.
This article shall be addressing the existing ambiguity created by the Supreme Court with respect to the appointment of the arbitrator pertaining to the provisions mentioned under the NH Act and A&C Act. It shall be further resolving the dispute between Lex Specialis and Lex Generalis by discussing the apt suggestions addressing the practical implications involved in the judgement of National Highway Authority of India v. Sayedabad Tea Company and Co.
CASE ANALYSIS OF THE NHAI V. SAYEDABAD TEA COMPANY5
I. Brief Facts of the Case
NHAI acquired a tea estate in 2007 under Section 3(D) of the NH Act. Sayedabad Tea company, dissatisfied with the compensation given to them, filed an application for the appointment of the arbitrator under Section 3G (5) of the NH Act. As the Central Government failed to respond within 30 days not abiding with the prescribed timeframe, the tea company moved an application under A&C Act. During the pendency of the Section 11 application before the Hon'ble Calcutta High court, the Central Government appointed an arbitrator.
II. Decision of the High Court and Supreme Court
The Hon'ble High Court dismissed the Review Petition filed by NHAI mentioning that the Central Government forfeited its right to appoint an arbitrator until the filing of the application under Section 11(6) of A&C Act, 1996. It was further reiterated by the High Court of Calcutta that the appointment of the arbitrator during the pendency of the proceedings shall not be considered to be a valid appointment, therefore, the Hon'ble High Court referred the matter to Chief Justice for the appointment of the Arbitrator.
Entertaining the appeal by the NHAI, the Hon'ble Supreme Court by deliberating on the issue held that NH act being a special enactment vests exclusive powers with the Central Government for the appointment of the arbitrator which is why Section 11 of the A&C Act, 1996 shall not be applicable.
Similarly, it was observed in the case of Deep Trading Company Vs. Indian Oil Corporation and Others,6 that, 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.
It was further observed in the case of General Manager (Project), National Highways and Infrastructure Development Corporation Ltd. Vs. Prakash Chand Pradhan & Ors.,7 that NH Act, 1956 being a special enactment, an inbuilt mechanism has been provided under Section 3G for the appointment of the arbitrator, thus, there shall not be any application of Section 11 of the A&C Act with respect to the appointment of the arbitrator. In case when the Central Government does not appoint an arbitrator within a reasonable time, the autonomy has been vested on the party to avail the remedy either by filing a Writ Petition under Art. 226 of the Constitution of India or file a suit for the purpose but the remedy pertaining to the Section 11 of the Act shall remain restricted.8
The Hon'ble Supreme Court relied on the ratio put forth in Gujarat Urja Vikash Nigam Ltd v Essar Power Limited,9 wherein statutory provisions of the Electricity Act, 2003 adjudicating the dispute between the licensees and the generating companies were held to be a special enactment and ACA 1996, Section 11 was not made available to the parties.
The principle of Lex Specialis, wherein it is stated that 'if two laws govern the same factual situation, a law governing a specific subject matter overrides a law governing only general matters. Therefore, concurring with the Latin phrase lex specialis derogat legi generali special laws shall be prevailing over the general laws. As Arbitration Act is concerned to be a general law in India, thus, a special act like NH Act, 1956 as in the instant case would be overriding the general act i.e. A&C Act. So, the court's decision very well abides by the principle of the Lex Specialis, but it fails to address certain concerns as discussed below which makes it a criticised judgement.
PRACTICAL IMPLICATIONS OF THE DECISION
I. Arbitration act has been declared to be a special act
This ruling has once again brought forth the discussion wherein special enactments have overridden the provisions of general law.10 It is clear that the view of the three-judge bench of the Hon'ble Supreme Court of India in NHAI v. Sayedabad Tea Co. Ltd.(supra) is inconsistent with the ratio laid down in other Hon'ble Supreme Court judgments. It is because the Court in that case, while premising its entire judgment on the assumption that A&C Act is a "general law", did not refer to the judgment by another three-judge bench of the Hon'ble Supreme Court in Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department11 wherein the A&C act was declared to be a special legislation while dealing with the question of the applicability of the Limitation act, 1963 overriding the effect of the Act of 1963.
II. Central government being a party interested in the outcome of arbitration under NH act cannot appoint arbitrators under NH Act
As far as the disputes under NH Act is concerned, NHAI becomes the necessary party. It has been observed that the court has recognised NHAI to be an implementing agency of the Central Government wherein this position has been created by the Parliament for managing the affairs of the National Highways.12 Therefore, it becomes an instrumentality of the Central Government.13 Thus, it can be said that the Central Government is an interested party in the outcome of the arbitration with the landowners. Considering the recent judgements, the appointment of the arbitrator cannot be carried out by the Central Government without keeping in mind Section 12 of the A&C Act. So, when the appointing authority is barred from appointing, the appointee is equally barred from acting as an arbitrator.14 But the real question arises, will there ever come a judgement curbing the unrestricted autonomy vested on the Central Government for the appointment of an arbitrator?
III. NH Act does not provide for any limitation period
It is prudent to mention that the NH Act does not provide with a statutory limitation period for the appointment of the arbitrator. In case when the time frame is not adhered to by the Lex Speciali legislation i.e., NH Act , 1956 for the appointment of the arbitrator then writ jurisdiction is the only salvation. This defeats the very purpose of speedy dispute resolution as mentioned under Arbitration proceedings.
A&C Act provides not only for 30 days' time period for the appointment of the arbitrator but also provides a mechanism for court appointed arbitrator when one of the parties fails to appoint an arbitrator according to the procedure agreed upon by the parties. As determined above, A&C Act is a special legislation that is designed to govern the arbitration proceedings in this country, its provisions shall be applicable for the appointment of the arbitrator under the NH Act when the Central Government fails to do so.
Therefore, the ruling of the Supreme Court in Sayedabad Tea Co. case (supra) is a wrong law for the following reasons:
- A&C Act is a special Act; thus, its applicability cannot be ousted by another law.
- Remedy provided here in the form of Writ Jurisdiction is not consistent with the principle of Writ Jurisdiction provided under the Constitution of India as the same can be used only for limited and special purpose, thus, it cannot be exercised just because the arbitrator-appointment framework under NH act is insufficient when A&C act already deals with the arbitrator appointment framework.
- Section 3G (6) of the NH Act subjects to A&C Act, but the applicability of the A&C Act comes into the picture wherever NH Act is silent. In the instant case NH Act is silent on two issues i.e., (i) Statutory time period within which the appointment is to be made; (ii) Remedies with the landowner if the appointment of the arbitrator is not made within the reasonable time. Despite this, there is no applicability of the A&C act.
- It has been envisaged under Section 11(6) of the A&C Act that the appointment of the arbitrator shall be made by the arbitral institution designated by the Hon'ble Supreme Court in case of ICA or by Hon'ble High Court in case of arbitrations other than ICA. The purpose of the 2019 amendment was to ensure a speedy appointment of the arbitrator for carrying out an expeditious dispute resolution process. But the concerned judgement has defeated the purpose of the Legislation by paving a way towards delaying the dispute resolution process for the Highway projects by stacking unhindered power with the Central Government in the appointment of an arbitrator.
As already discussed above, Judicial precedents suggest that an interested party can no longer unilaterally appoint an arbitrator. A way out has to be provided to resolve the issue wherein despite being an interested party, Central Government has been given unrestricted power to make an appointment. Taking into consideration the principle of Harmonious interpretation, the court must strive to harmoniously construe the provisions instead of striking down the faulty provision.
Therefore, it is suggested that an amendment can be made to Section 3G (5) of the NH Act wherein the Central government can provide a panel of arbitrators, wherein the landowners also get an opportunity to select an arbitrator from the panel of the arbitrators alongside the Central Government. This would create a balance in the unimpeded power vested in the hands of the Central Government. Furthermore, the judiciary can incorporate a limitation period for the specific legislations that have declared to be complete code in itself to adhere to the principle of speedy dispute resolution.
1. 'Indian growth story accelerated by Highway expansion' https://economictimes.indiatimes.com/industry/transportation/roadways/indian-growth-story-accelerated-by-highway-expansion/articleshow/93945121.cms
2. Appointing An Arbitrator Under the National Highways Act, 1956 In Light of The Recent Dictums of The Supreme Court in TRF Ltd. And Perkins Eastman? https://www.mondaq.com/india/arbitration-dispute-resolution/922582/appointing-an-arbitrator-under-the-national-highways-act-1956-in-light-of-the-recent-dictums-of-the-supreme-court-in-trf-ltd-and-perkins-eastman
3. Section 3(a) of the NH act.
4.Section 3G (5) of the NH act.
5.2019 SCC OnLine SC 1102.
6. 2013(4) SCC 35.
7. (2020) 15 SCC 533.
9. (2008) 4 SCC 755.
10. 'Is the Indian Arbitration and Conciliation Act 1996 special or general law?', https://www.mondaq.com/india/arbitration-dispute-resolution/847966/is-the-indian-arbitration-and-conciliation-act-1996-special-or-general-law-national-highways-authority-v-sayedabad-tea-company
11. Civil Appeal No 11866 of 2018.
12. GMR infrastructure Ltd. & Anr. v. National Highways Authority of India & Ors., 2008 SCC Online Del 1344,
13. Own Motion v. Union of India & others, 2017 SCC OnLine Jhar 3297, State of W.B. v. Mr. Mondal and Another, (2001) 8 SCC 443
14. TRF Limited v. Energo Engineering Projects Ltd. (2017) 8 SCC 377.
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