TMI Blog2008 (3) TMI 654X X X X Extracts X X X X X X X X Extracts X X X X ..... urse be governed by Arbitration and Conciliation Act, 1996, unless there is a conflicting provision in the Act of 2003. Since the High Court has appointed an arbitrator for deciding the dispute between the licensee and the generating company, in our opinion, the judgment of the High Court has to be set aside. Only the State Commission or the arbitrator (or arbitrators) appointed by it could resolve such a dispute. We, therefore, set aside the impugned judgment of the High Court but leave it open to the State Commission or the Arbitrator (or Arbitrators) nominated by it to adjudicate/arbitrate the dispute. between the parties expeditiously. Appeal allowed. The impugned judgment set aside. - C.A. 1940 OF 2008 - - - Dated:- 13-3-2008 - HOTOI KHETOHO SEMA AND MARKANDEY KATJU, JJ. JUDGMENT 1. Leave granted. 2. This appeal by special leave has been filed against the judgment of the learned Single Judge of the Gujarat High Court dated 15.6.2006 which was passed on a petition under Section 11(5) and (6) of The Arbitration and Conciliation Act, 1996 (hereinafter in short the 1996 Act ). By that judgment the High Court has appointed Hon'ble Mr. Justice A.M. Ahmadi, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, 2005 the respondent-company called upon the appellant-Nigam to refer the disputes arising from the aforesaid agreement to the arbitrator Mr. Justice A.M. Ahmadi, retired Chief Justice of India. On the other hand, the Nigam approached the Gujarat Electricity Regulatory Commission, Ahmedabad (hereinafter in short the Commission ) by Application No.873 of 2005 made under Section 86(1)(f) of the Electricity Act, 2003 (hereinafter in short the Act of 2003 ). 8. Since the Nigam did not send its approval for appointment of Mr. Justice A.M. Ahmadi as arbitrator, the respondent-company approached the Gujarat High Court by filing an application under Section 11(5) and (6) of the 1996 Act, and by the impugned judgment dated 15.6.2006 the learned Single Judge, Gujarat High Court, has appointed Mr. Justice A.M. Ahmadi, retired Chief Justice of India, as the sole arbitrator for resolving the disputes. Aggrieved, this appeal by special leave has been filed by the Nigam before us. 9. Mr. K.K. Venugopal, learned senior counsel for the appellant, has relied on Section 174 of the Act of 2003 which states : 174. Act to have overriding effect Save as otherwise provided in section 173 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee; (f) adjudicate upon the disputes between the licensees and generating companies and to refer any dispute for arbitration; (g) levy fee for the purposes of this Act; (h) specify State Grid Code consistent with the Grid Code specified under clause (h) of sub-section (1) of section 79; (i) specify or enforce standards with respect to quality, continuity and reliability of service by licensees; (j) fix the trading margin in the intra- State trading of electricity, if considered, necessary; (k) discharge such other functions as may be assigned to it under this Act. 13. Learned counsel for the appellant submitted that Section 86(1)(f) of the Act of 2003 clearly indicates that the disputes between the licensees and generating companies can only be adjudicated upon by the State Commission, either itself or by an arbitrator to whom the Commission refers the dispute. Hence he submitted that the High Court cannot refer disputes between licensees and generating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the Board and the Company in connection with or arising out of this Agreement, the Parties shall attempt to settle such Dispute in the first instance within thirty days by discussion between the Com[any and the Board in the following manner : (a) Each Party shall designate in writing to the other Party a representative who shall be authorized to resolve any dispute arising under this Agreement in an equitable manner. (b) If the designated representatives are unable to resolve the dispute under this Agreement within 15 days, such dispute shall be referred by such representatives to a senior officer designated by the Company and a senior officer designated by the Board respectively, who shall attempt to resolve the Dispute within a further period of 15 days. (c) The Parties hereto agree to use their best efforts to attempt to resolve all Disputes arising hereunder promptly equitably and in good faith and further agree to, provide each other with reasonable access during normal business hours to any records, information and data pertaining to any such Dispute. 11.2 ARBITRATION In the event that any Dispute is not resolved between the Parties pursuant to Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he High Court order was valid. 21. It appears that the respondent Essar Power limited was obliged under its agreement with the Gujarat Electricity Board to supply power to the Board and the Essar Steel Limited in the ratio of 300MW:215MW. The grievance of the Board (now the Nigam) was that the Essar Power Limited has diverted energy which was to be supplied to the Board to the Essar Steel Limited. Hence the Board vide its letter dated 29.10.2003 raised a demand of Rs.537 crores upon Essar Power Limited for diverting the said energy. On the other hand, Essar Power Limited disputed the said claim by its reply dated 1.11.2003 and stated that the Board had not honoured its commitment under the agreement regarding payment to it. The Board, thereafter, raised further claims against Essar Power Limited. 22. The appellant company then approached the Gujarat Electricity Regulatory Commission under Section 86(1)(f) of the Electricity Act, 2003 whereas Essar Power Limited filed a petition in the Gujarat High Court under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996 in which the impugned order was passed. 23. It may be mentioned that before filing the petition in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is well settled that the special law overrides the general law. Hence, in our opinion, Section 11 of the Arbitration and Conciliation Act, 1996 has no application to the question who can adjudicate/arbitrate disputes between licensees and generating companies, and only Section 86(1)(f) shall apply in such a situation. 29. This is also evident from Section 158 of the Electricity Act, 2003 which has been quoted above. We may clarify that the agreement dated 30.5.1996 is not a part of the licence of the licensee. An agreement is something prior to the issuance of a licence. Hence any provision for arbitration in the agreement cannot be deemed to be a provision for arbitration in the licence. Hence also it is the State Commission which alone has power to arbitrate/adjudicate the dispute either itself or by appointing an arbitrator. 30. Shri Jayant Bhushan, learned counsel for one of the parties in the connected case submitted that Section 86(1)(f) is violative of Article 14 of the Constitution of India because it does not specify when the State Commission shall itself decide a dispute and when it will refer the matter to arbitration by some arbitrator. In our opinion there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of disputes between the licensees and generating companies there is a special law namely 86(1)(f) of the Electricity Act, 2003. Hence the general law in Section 11 of the Arbitration and Conciliation Act, 1996 will not apply to such disputes. 34. It is well settled that where a statute provides for a thing to be done in a particular manner, then it has to be done in that manner, and in no other manner, vide Chandra Kishore Jha vs. Mahavir Prasad, AIR 1999 SC 3558 (para 12), Dhananjaya Reddy vs. State of Karnataka, AIR 2001 SC 1512 (para 22), etc. Section 86(1)(f) provides a special manner of making references to an arbitrator in disputes between a licensee and a generating company. Hence by implication all other methods are barred. 35. At first glance there is an apparent inconsistency between Section 175 and Section 174 of the Electricity Act, 2003. While Section 174 says that the said Act will prevail over other laws, Section 175 says that the said Act is in addition and not in derogation of any other law (which would include Section 11 of the Arbitration and Conciliation Act, 1996.) 36. In our opinion to resolve this conflict the Mimansa principles of Interpretation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they subsequently began to be used in law, grammar, logic, philosophy, etc. i.e. they became of universal application. The books on Mimansa are all in Sanskrit, but there is a good book in English by Prof. Kishori Lal Sarkar called `The Mimansa Rules of Interpretation' published in the Tagore Law Lecture Series, which may be seen by anyone who wishes to go deeper into the subject. 41. In the Mimansa system there are three ways of dealing with conflicts which have been fully discussed by Shabar Swami in his commentary on Sutra 14, Chapter III, Book III of Jaimini. (1) Where two texts which are apparently conflicting are capable of being reconciled, then by the Principle of Harmonious Construction (which is called the Samanjasya Principle in Mimansa) they should be reconciled. The Samanjasya Principle has been laid down by Jaimini in Chapter II, Sutra 9 which states : The inconsistencies asserted are not actually found. The conflicts consist in difference of application. The real intention is not affected by application. Therefore, there is consistency. 42. The Samanjasya axiom is illustrated in the Dayabhag. Jimutvahana found that there were two apparently conflict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. An approved Achara bars an unapproved Achara. An unobjectionable Achara bars an objectionable Achara. A Smriti of the character of a Vidhi bars one of the character of an Arthavada. A Smriti of a doubtful character is barred by one free from doubts. That which serves a purpose immediately bars that which is of a remote service. That which is multifarious in meaning is barred by that which has a single meaning. The application of a general text is barred by a special text. A rule of procedure is barred by a mandatory rule. A manifest sense bars a sense by context. A primary sense bars a secondary sense. That which has a single indication is preferable to what has many indications. An indication of an inherent nature bars one which is not so. That which indicates an action is to be preferred to what merely indicates a capacity. If you can fill up an ellipse by an expression which occurs in a passage, you cannot go beyond it. (emphasis supplied) 44. The principle of Badha is discussed by Jaimini in the tenth chapter of his work. Badha primarily means barring a thing owing to inconsistency. Jaimini uses the principle of Badha mainly with reference to cases where Angas or sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Aghara and the Ajyabhaga homas need not be made in the Pasu Yagya. Therefore, these homas need not be made in the Pasu Yagya, though in the absence of the prohibitory text they would have to be made on account of the rule which lays down that all Yagyas must partake of the character of Darsha and paurnamasi. 48. One of the Mimansa principles is the Gunapradhan Axiom, and since we are utilizing it in this judgment (apart from the badha and samanjasya principles) we may describe it in some detail. 49. `Guna' means subordinate or accessory, while `Pradhan' means principal. The Gunapradhan Axiom states : If a word or sentence purporting to express a subordinate idea clashes with the principal idea, the former must be adjusted to the latter or must be disregarded altogether. This principle is also expressed by the popular maxim known as matsya nyaya i.e. `the bigger fish eats the smaller fish'. According to Jaimini, acts are of two kind, principal and subordinate (see Jaimini 2 : 1 : 6). In Sutra 3 : 3 : 9 Jaimini states : Kumarila Bhatta, in his Tantravartika (See Ganganath Jha's English Translation Vol.3, page 1141) explains this Sutra as fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 175 in isolation, we have to read it along with Section 174, and reading them together, we have to adjust Section 175 (the guna or subordinate) to make it in accordance with Section 174 (the pradhan or principal). For doing so we will have to add the following words at the end of Section 175 except where there is a conflict, express or implied, between a provision in this Act and any other law, in which case the former will prevail . 51. No doubt ordinarily the literal rule of interpretation should be followed, and hence the Court should neither add nor delete words in a statute. However, in exceptional cases this can be done where not doing so would deprive certain existing words in a statute of all meaning, or some part of the statute may become absurd. 52. In the chapter on `Exceptional Construction' in his book on `Interpretation of Statutes' Maxwell writes : Where the language of a statute, in its ordinary meaning and grammatical construction leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbitrator appointed by it. Hence on harmonious construction of the provisions of the Electricity Act, 2003 and the Arbitration and Conciliation Act, 1996 we are of the opinion that whenever there is a dispute between a licensee and the generating companies only the State Commission or Central Commission (as the case may be) or arbitrator (or arbitrators) nominated by it can resolve such a dispute, whereas all other disputes (unless there is some other provision in the Electricity Act, 2003) would be decided in accordance with Section 11 of the Arbitration and Conciliation Act, 1996. This is also evident from Section 158 of the Electricity Act, 2003. However, except for Section 11 all other provisions of the Arbitration and Conciliation Act, 1996 will apply to arbitrations under Section 86(1)(f) of the Electricity Act, 2003 (unless there is a conflicting provision in the Electricity Act, 2003, in which case such provision will prevail.) 59. In the present case, it is true that there is a provision for arbitration in the agreement between the parties dtd. 30.5.1996. Had the Electricity Act, 2003 not been enacted, there could be no doubt that the arbitration would have to be done i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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