CHIEF GENERAL MANAGER (IPC) MP POWER TRADING CO LTD & ANR. versus NARMADA EQUIPMENTS PVT LTD

Citation: [2021] 4 S.C.R. 430 · Decided: 23-03-2021 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 4 S.C.R.
   [2021] 4 S.C.R. 430
430
CHIEF GENERAL MANAGER (IPC)
MP POWER TRADING CO LTD & ANR.
v.
NARMADA EQUIPMENTS PVT LTD
(Civil Appeal No. 1051 of 2021)
MARCH 23, 2021
[DR. DHANANJAYA Y CHANDRACHUD, M. R. SHAH
AND SANJIV KHANNA, JJ.]
Arbitration: Appointment of arbitrator – Madhya Pradesh
Electricity Board entered into a Power Purchase Agreement (PPA)
in 1999 with the respondent – PPA was terminated in 2001 – High
Court declined the writ petition filed by respondent in view of
arbitration clause contained in the PPA – In 2011, respondent issued
notice to the Board invoking arbitration as contained in the PPA –
As no reply was received, respondent filed application under s.11(6)
of AC Act seeking appointment of arbitrator – High Court allowed
the application declining the plea of appellant that in view of the
provisions of s.86(1)(f) of the Electricity Act, 2003, it was the State
Electricity Commission which was vested with the exclusive
jurisdiction to adjudicate upon disputes between licencees and
generating companies – On appeal, held: It is well settled that the
special law overrides the general law – s.86(1)(f) of 2003 Act is a
special provision and hence will override the general provision in
s.11 of the AC Act for arbitration of disputes between the licensee
and generating companies – Hence, s.11 of the AC Act has no
application to the question as to who can adjudicate/arbitrate
disputes between licensees and generating companies, and only
s.86(1)(f) shall apply in such a situation – Arbitration and
Conciliation Act, 1996 – s.11(6) – Electricity Act, 2003 – s.86(1)(f).
Jurisdiction: Jurisdiction cannot be assumed by consent of
parties – If there is inherent lack of jurisdiction, the plea can be
taken at any stage and also in collateral proceedings.
Allowing the appeal, the Court
HELD: 1. In the present case, the notice for the initiation
of arbitration under Clause 12.3 of the PPA was issued by the
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respondent on 30 May 2011. The commencement of the arbitral
proceedings by the invocation of the arbitration agreement would,
therefore, relate to 30 May 2011, when the notice invoking Clause
12.3 was issued. Hence, the fact that the PPA and the notice of
termination predate the 2003 Act would not constitute material
circumstances. Section 21 of the 1996 Act specifies that unless
otherwise agreed by the parties, the arbitral proceedings in
respect of a particular dispute would commence on the date on
which a request for that dispute to be referred to arbitration is
received by the respondent. Hence, there can be no manner of
doubt that 30 May 2011 would be the material date, since it is on
this date that the notice invoking Clause 12.3 was issued by the
respondent to the appellant. [Para 9][434-G-H; 435-A-C]
2. In Hindustan Zinc Limited v. Ajmer Vidyut Vitran Nigam
Limited and NHAI v. Sayedabad Tea Company Limited, it was held
that Section 86(1)(f) of the 2003 Act is a special provision which
overrides the general provisions contained in Section 11 of the
1996 Act. Section 86(1)(f) vests a statutory jurisdiction with the
State Electricity Commission to adjudicate upon disputes between
licensees and generating companies and to refer any dispute for
arbitration. The “and” between “generating companies” and “to
refer any dispute for arbitration” is to be read as an “or”, since
the State Electricity Commission cannot obviously resolve the
dispute itself and also refer it to arbitration. Section 174 of the
2003 Act provides overriding effect to the 2003 Act
notwithstanding anything inconsistent contained in any other law
for the time being in force or in any instrument having effect by
virtue of any law other than the 2003 Act itself. [Paras 10, 11 and
12][436-D-F; 437-A-B]
3. It was held in Hindustan Zinc Limited v. Ajmer Vidyut
Vitran Nigam Limited that if there is inherent lack of jurisdiction,
the plea can be taken at any stage and also in collateral
proceedings. A decree passed by a court without subject matter
jurisdiction is a nullity, and that its invalidity could be set up
whenever and wherever it is sought to be enforced or relied upon.
Such a defect of jurisdiction cannot be cured even by the consent
C. G. M. (IPC) MP POWER TRADING CO LTD  v. NARMADA
EQUIPMENTS PVT LTD
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SUPREME COURT REPORTS
[2021] 4 S.C.R.
of the parties. This dictum would apply to the present case.
The order of the High Court appointing an arbitrator u

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