Case: Gujarat Urja Vikash Nigam Ltd Vs. Essar Power Ltd

4. The appellant-company is engaged in the business of generation of electrical energy. The appellant-company has its generation station at Hazira, Surat. On 30th May, 1996 the appellant-company entered into a power purchase agreement (hereinafter in short "the aforesaid agreement") with the Gujarat Electricity Board. Under the aforesaid agreement the parties agreed, inter alia, that out of the total generating capacity of 515MW electricity the appellant-company would allocate 300MW electricity to the Board and 215MW electricity to the Essar Group of Companies. Under Clause 11 of the agreement the parties agreed that in the event any dispute arose the same may be resolved by the parties by mutual agreement as envisaged by Clause 11(1) of the aforesaid agreement. In the event of failure to resolve the dispute by amicable settlement, the parties agreed that such dispute be submitted to arbitration vide Clause 11(2).5. In the meantime, under the Gujarat Electricity Industry (Reorganization and Regulation) Act, 2003 published in the Gujarat Government Gazette on 12th May, 2003 the assets and liabilities of the Board were transferred to the appellant Nigam.6. It appears that certain disputes had arisen between the parties mainly in connection with the allocation of power to the Essar Group of Companies. It is not in dispute that the respondent-company did not utilize its total generating capacity to generate 515MW electricity. It also did not supply 300MW electricity to the Board as agreed. According to the Board, in the event of the respondent-company generating less than its total generating capacity of 515MW electricity under the aforesaid agreement, the respondent-company was required to maintain a ratio of 300MW:215MW in allocation of electrical energy to the Board and the Essar Group of Companies respectively. The respondent-company, allegedly, did not maintain the said ratio, and supplied more electricity to the Essar Group than in accordance with the ratio of 300MW:215MW.7. The respondent-company and the Board tried to settle the above dispute amicably. The State Government also intervened in the matter but to no avail. After protracted correspondence, on 14th November, 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.

Reasoning:
25. In our opinion, the submission of Mr. K.K. Venugopal has to be accepted.26. It may be noted that Section 86(1)(f) of the Act of 2003 is a special provision for adjudication of disputes between the licensee and the generating companies. Such disputes can be adjudicated upon either by the State Commission or the person or persons to whom it is referred for arbitration. In our opinion the word ‘and in Section 86(1)(f) between the words generating companies and ‘to refer any dispute for arbitration means ‘or. It is well settled that sometimes ‘and can mean ‘or and sometimes ‘or can mean ‘and (vide G.P. Singhs ‘Principle of Statutory Interpretation 9th Edition, 2004 page 404.)27. In our opinion in Section 86(1)(f) of the Electricity Act, 2003 the word ‘and between the words ‘generating companies and the words ‘refer any dispute means ‘or, otherwise it will lead to an anomalous situation because obviously the State Commission cannot both decide a dispute itself and also refer it to some Arbitrator. Hence the word ‘and in Section 86(1)(f) means ‘or.28. Section 86(1)(f) is a special provision and hence will override the general provision in Section 11 of the Arbitration and Conciliation 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 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.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.In our opinion to resolve this conflict the Mimansa principles of Interpretation would of great utility.In our opinion the principle laid down in Section 174 of the Electricity Act, 2003 is the principal or primary whereas the principle laid down in Section 175 is the accessory or subordinate to the principal. Hence Section 174 will prevail over Section 175 in matters where there is any conflict (but no further).57. In our opinion Section 174 and Section 175 of the Electricity Act, 2003 can be read harmoniously by utilizing the Samanjasya, Badha and Gunapradhana principles of Mimansa. This can be done by holding that when there is any express or implied conflict between the provisions of the Electricity Act, 2003 and any other Act then the provisions of the Electricity Act, 2003 will prevail, but when there is no conflict, express or implied, both the Acts are to be read together.58. In the present case we have already noted that there an implied conflict between Section 86(1)(f) of the Electricity Act, 2003 and Section 11 of the Arbitration and Conciliation Act, 1996 since under Section 86(1)(f) the dispute between licensees and generating companies is to be decided by the State Commission or the arbitrator nominated by it, whereas under Section 11 of the Arbitrary and Conciliation Act, 1996, the Court can refer such disputes to an arbitrator 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 in accordance with the Arbitration and Conciliation Act,