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Chief General Manager (IPC) M.P. Power Trading Co Ltd & Anr. v. Narmada Equipments Pvt Ltd

Civil Appeal · 2021 INSC 204Decided 23 Mar 2021
Civil Appeal No. 1051 of 2021
Dr. Justice D.Y. Chandrachud · Justice M.R. Shah · Justice Sanjiv Khanna

Background

A power-purchase agreement between a government power board and a private company for a mini hydro-electric project was terminated in 2001. Years of correspondence and failed arbitrator appointments followed, and the respondent eventually applied to the Madhya Pradesh High Court under Section 11(6) of the Arbitration Act for appointment of an arbitrator. The appellant objected that only the State Electricity Commission, not a court under the general Arbitration Act, had jurisdiction to appoint an arbitrator in a dispute between a licensee and a generating company, under Section 86(1)(f) of the Electricity Act, 2003. The High Court rejected this objection and appointed an arbitrator.

Decision Breakdown

The Supreme Court, following its earlier decision in Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd., held that Section 86(1)(f) of the Electricity Act, 2003 is a special provision that overrides the general arbitrator-appointment power under Section 11 of the Arbitration Act, 1996, for disputes between licensees and generating companies. It rejected the argument that the appellant could not raise this jurisdictional objection at a later stage merely because it had not done so earlier or had earlier consented to arbitrator appointment, holding that a plea of inherent lack of jurisdiction can be raised at any stage and cannot be cured by the parties' consent. The High Court's order appointing an arbitrator was set aside, though the respondent was left free to pursue whatever legal remedies remained available.

Lesson Learnt

When a special law gives a specific authority exclusive power to decide certain disputes, that power cannot be overridden by a general law, and an objection to the wrong forum's jurisdiction can be raised at any point in the proceedings, even if the parties had earlier gone along with it, because parties cannot create jurisdiction by agreement where none exists in law.

Official source (sci.gov.in)View Judgment (PDF)

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