Gujarat Urja Vikash Nigam
Ltd Vs. Essar Power Ltd  Insc 446 (13 March 2008)
H.K. Sema & Markandey
Civil Appeal No 1940 of
2008 [Arising Out Of S.L.P(C) No.2700 of 2007] With Civil Appeal No. 1941 of
2008 [Arising out of S.L.P(C) No.675 of 2007] Markandey Katju, J.
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, retired Chief Justice
of India, as the sole arbitrator for deciding certain disputes between the parties.
3. Heard learned counsel for the parties and perused the record.
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
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
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, the provisions of this Act shall have effect notwithstanding
anything inconsistent therewith contained in any other law for the time being
in force or in any instrument having effect by virtue of any law other than
10. He has also invited our attention to Section 173 of the Act of 2003
which states :
"173. Inconsistency in laws Nothing contained in this Act or any rule
or regulation made thereunder or any instrument having effect by virtue of this
Act, rule or regulation shall have effect in so far as it is inconsistent with
any other provisions of the Consumer Protection Act, 1986 (68 of 1986) or the
Atomic Energy Act, 1962 (33 of 1962) or the Railways Act, 1989 (24 of
11. Mr. K.K. Venugopal submitted that a joint reading of these provisions
indicates that ordinarily the Act of 2003 will prevail over all other laws or
instruments, but the said Act will have to give way only to the Consumer Protection Act,
Energy Act, or the Railways Act.
In other words, except for the aforementioned three Acts, the Act of 2003 will
prevail over all other laws and instruments.
12. Mr. K.K. Venugopal then invited our attention to Section 86(1) of the
Act of 2003 which states :
"86. Functions of State Commission (1)
The State Commission shall discharge the following function, namely
(a) determine the tariff for
generation, supply, transmission and wheeling of electricity, wholesale, bulk or
retail, as the case may be, within the State:
Provided that where open access has been permitted to a category of
consumers under section 42, the State Commission shall determine only the
wheeling charges and surcharge thereon, if any, for the said category of
(b) regulate electricity purchase and procurement process of distribution
licensees including the price at which electricity shall be procured from the
generating companies or licensees or from other sources through agreements for
purchase of power for distribution and supply within the State;
(c) facilitate intra-State transmission and wheeling of electricity;
(d) issue licences to persons seeking to act as transmission licensees,
distribution licensees and electricity traders with respect to their operations
within the State;
(e) promote cogeneration and generation of electricity from renewable
sources of energy by providing suitable measures for connectivity 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
(k) discharge such other functions as may be assigned to it under this
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 companies to an arbitrator since such power of adjudication or
reference to an arbitrator has been specifically given to the State Commission.
14. Shri K.K. Venugopal also relied on Section 158 of the Act of 2003 which
"158. Arbitration Where any matter is, by or under this Act, directed
to be determined by arbitration, the matter shall, unless it is otherwise
expressly provided in the licence of a licensee, be determined by such person
or persons as the Appropriate Commission may nominate in that behalf on the
application of either party; but in all other respects the arbitration shall be
subject to the provisions of the Arbitration and Conciliation Act, 1996 (26 of
15. Shri K.K. Venugopal also relied on Section 2(3) of the 1996 Act which
"2(3) This part shall not affect any other law for the time being in
force by virtue of which certain disputes may not be submitted to
16. Shri Venugopal submitted that Section 11 of the 1996 Act has no
application because the Act of 2003 has provided for arbitration of disputes
between licensees and generating companies by the Commission or its nominated
arbitrator. Since the Electricity Act is a special law dealing with
arbitrations of disputes between licensees and the generating companies, he
submitted that the general provision in Section 11 of the Arbitration and
Conciliation Act, 1996 will not apply for appointing an arbitrator for such
disputes in view of the maxim Generalia specialibus non derogant (vide G.P.
Singh's `Principles of Statutory Interpretation', 9th Edition, 2004 page 133).
17. Shri K.K. Venugopal submitted that in view of Section 86(1)(f) of the
Act of 2003 it is only the State Commission or its nominee which can adjudicate
upon disputes between licensees and generating companies. Hence he submitted that the impugned judgment of the High Court referring
the dispute to an arbitrator was illegal, since the High Court has no such
18. On the other hand Shri F.S. Nariman, learned senior counsel for the
respondent, has invited our attention to the agreement between the parties
dated 30.5.1996. The relevant part of the agreement is Article 11 which states:
"ARTICLE 11 ARBITRATION 11.1 RESOLUTION OF DISPUTES :
Except as otherwise provided in this Agreement, any disagreement dispute
controversy or claim (the "Dispute") 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 11.1 then such Dispute shall be settled exclusively
and finally by Arbitration. It is specifically understood and agreed that any
Dispute that cannot be resolved between the Parties, including any matter
relating to the interpretation of this Agreement, shall be submitted to
Arbitration irrespective of the magnitude thereof and the amount in dispute or
whether such Dispute would otherwise be considered justifiable or ripe for
resolution by any Court. This Agreement and the rights and obligations of the
Parties hereunder shall remain in full force and effect pending the award in
such Arbitration proceedings. The award shall determine whether and when
Termination of this Agreement, if relevant, shall become effective.
The Arbitration shall be in accordance with the Indian Arbitration and
Conciliation Ordinance, 1996 or such modifications or re-enactment thereof.
11.3 NUMBER OF ARBITRATORS The arbitral tribunal shall consist either (a) of
sole Arbitrator mutually agreed upon or (b) of three (3) (Arbitrators One each
to be chosen by each Party and third person to be selected by two Arbitrators
so chosen before commencement of arbitration proceedings to act as an
11.4 PLACE OF ARBITRATION The arbitration shall be conducted at Baroda.
11.5 FINALITY AND ENFORCEMENT OF AWARD The arbitral tribunal shall give
reasoned decision or award which shall be final and binding upon the Parties.
The Parties hereto agree that the arbitral award may be enforced against the
Parties to the arbitration proceeding or their assets wherever they may be
found and that a judgment upon the arbitral award may be entered in any Court
which shall have jurisdiction over the matter."
19. Shri F.S. Nariman invited our attention to Section 175 of the Act of
2003 which states :
"175. Provisions of this Act to be in addition to and not in derogation
of other laws The provisions of this Act are in addition to and not in
derogation of any other law for the time being in force."
20. In view of the above provision, Shri Nariman submitted that the Act of
2003 does not prohibit the application of the provisions of the Act of 1996
including Section 11 thereof. Hence he submitted that a reference can be made
by the Court under Section 11(5) and (6) of the said Act of disputes between
licensees and generating companies. Accordingly he submitted, the 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 the High Court
the respondent Essar Power Limited sent a notice dated 14.11.2005 invoking the
arbitration clause and nominating Mr. Justice A.M. Ahmadi as the sole
Arbitrator in terms of Article 11 of the agreement, and called upon the Nigam
to concur to the said nomination or suggest its own nominee within thirty days.
Instead of concurring to the nominee suggested by the company or suggesting its
own nominee, the Nigam vide its letter dated 5.12.2005 denied that the dispute
can be resolved by appointing an Arbitrator under Section 11 of the Act of
1996. The Nigam contended that only the State Commission can adjudicate the
dispute under Section 86(1)(f) of the Act of 2003, or refer the matter to an
24. The main question before us is whether the application under Section 11
of the Act of 1996 is maintainable in view of the statutory specific provisions
contained in the Electricity Act of 2003 providing for adjudication of disputes
between the licensee and the generating companies.
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.
Singh's `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
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.
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 no violation of Article 14 at all.
It is in the discretion of the State Commission whether the dispute should be
decided itself or it should be referred to an arbitrator. Some leeway has to be
given to the legislature in such matters and there has to be judicial restraint
in the matter of judicial review of constitutionality of a statute vide
Government of Andhra Pradesh & Ors. vs. Smt. P. Laxmi Devi JT 2008(2) 8 SC
639. There are various reasons why the State Commission may not decide the dispute
itself and may refer it for arbitration by an arbitrator appointed by it. For
example, the State Commission may be overburdened and may not have the time to
decide certain disputes itself, and hence such cases can be referred to an
arbitrator. Alternatively, the dispute may involve some highly technical point
which even the State Commission may not have the expertise to decide, and such
dispute in such a situation can be referred to an expert arbitrator. There may
be various other considerations for which the State Commission may refer the
dispute to an arbitrator instead of deciding it itself. Hence there is no
violation of Article 14 of the Constitution of India.
31. We may now deal with the submission of Mr. Fali S. Nariman that in view
of Section 175 of the Electricity Act, 2003, Section 11 of the Arbitration and
Conciliation Act, 1996 is also available for arbitrating disputes between
licensees and generating companies.
32. Section 175 of the Electricity Act, 2003 states that the provisions of
the Act are in addition to and not in derogation of any other law. This would
apparently imply that the Arbitration and Conciliation
Act, 1996 will also apply to disputes such as the one with which we are
concerned. However, in our opinion Section 175 has to be read along with
Section 174 and not in isolation.
33. Section 174 provides that the Electricity Act, 2003 will prevail over
anything inconsistent in any other law. In our opinion the inconsistency may be
express or implied. Since Section 86(1)(f) is a special provision for
adjudicating disputes between licensees and generating companies, in our
opinion by implication Section 11 of the Arbitration and
Conciliation Act, 1996 will not
apply to such disputes i.e. disputes between licensees and generating
companies. This is because of the principle that the special law overrides the
general law. For adjudication 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 would of great utility.
37. It is deeply regrettable that in our Courts of law, lawyers quote
Maxwell and Craies but nobody refers to the Mimansa Principles of
Interpretation. Today many of our educated people are largely unaware about the
great intellectual achievements of our ancestors and the intellectual treasury
they have bequeathed us. The Mimansa Principles of Interpretation is part of
that intellectual treasury but it is distressing to note that apart from a
reference to these principles in the judgment of Sir John Edge, the then Chief
Justice of Allahabad High Court in Beni Prasad vs. Hardai Devi, (1892) ILR 14
All 67 (FB), and some judgments by one of us (M. Katju, J.) there has been
almost no utilization of these principles even in our own country.
38. It may be mentioned that the Mimansa Rules of Interpretation were our
traditional principles of interpretation laid down by Jaimini, whose Sutras
were explained by Shabar, Kumarila Bhatta, Prabhakar, etc. These Mimansa
Principles were regularly used by our great jurists like Vijnaneshwara (author
of Mitakshara), Jimutvahana (author of Dayabhaga), Nanda Pandit, etc. whenever
they found any conflict between the various Smritis or any ambiguity,
incongruity, or casus omissus therein. There is no reason why we cannot use
these principles on appropriate occasions.
However, it is a matter of deep regret that these principles have rarely
been used in our law Courts. It is nowhere mentioned in our Constitution or any
other law that only Maxwell's Principles of Interpretation can be used by the
Court. We can use any system of interpretation which helps us resolve a
difficulty. In certain situations Maxwell's principles would be more
appropriate, while in other situations the Mimansa principles may be more
39. The Mimansa principles of interpretation were created for resolving the
practical difficulties in performing the yagyas. The rules for performing the
various yagyas were given in books called the Brahmanas (all inSanskrit) e.g.
Shatapath Brahmana, Aitareya Brahmana, Taitareya Brahmana, etc.
There were many ambiguities, obscurities, conflicts etc. in the Brahmana
texts, and hence the Mimansa Principles of Interpretation were created for
resolving these difficulties.
40. Although the Mimansa principles were created for religious purpose, they
were so rational and logical that 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 conflicting texts of Manu and Yajnavalkya. The
first stated "a son born after a division shall alone take the paternal
wealth". The second text stated "sons, with whom the father has made
a partition, should give a share to the son born after the distribution".
Jimutvahana, utilizing the Samanjasya principle of Mimansa, reconciled these
two texts by holding that the former applies to the case of property which is
the self-acquired property of the father, and the latter applies to the
property descended from the grand-father.
43. One of the illustrations of the Samanjasya principle is the maxim of
lost horses and burnt chariot (Nashtashvadaghda Ratha Nyaya). This is based on
the story of two men traveling in their respective chariots and one of them
losing his horses and the other having his chariot burnt through the outbreak
of fire in the village in which they were putting up for the night.
The horses that were left were harnessed to the remaining chariot and the
two men pursued their journey together. Its teaching is union for mutual
advantage, which has been quoted in the 16th Vartika to Panini, and is explained
by Patanjali. It is referred to in Kumarila Bhatta's Tantra Vartika.
(2) The second situation is a conflict where it is impossible to reconcile
the two conflicting texts despite all efforts. In this situation the Vikalpa
principle applies, which says that whichever law is more in consonance with
reason and justice should be preferred. However, conflict should not be readily
assumed and every effort should be made to reconcile conflicting texts. It is
only when all efforts of reconciliation fail that the Vikalpa principle is to
be resorted to.
(3) There is a third situation of a conflict and this is where there are two
conflicting irreconciliable texts but one overrides the other because of its
greater force. This is called a Badha in the Mimansa system (similar to the
doctrine of ultra vires). The great Mimansa scholar Sree Bhatta Sankara in his
book `Mimansa Valaprakasha' has given several illustrations of Badha as follows
"A Shruti of a doubtful character is barred by a Shruti which is free
from doubt. A Linga which is more cogent bars that which is less cogent.
Similarly a Shruti bars a Smriti. A Shruti bars Achara (custom) also. An
absolute Smriti without reference to any popular reason bars one that is based
upon a popular reason. 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."
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-ceremonies are to be introduced from the Prakriti Yagya (i.e. a
yagya whose rules for performance are given in detail in the Brahmanas) into a
Vikriti (i.e. a yagya whose rules of performance are not mentioned anywhere, or
are incompletely mentioned). In such a case, though the Angas or the
sub-ceremonies are to be borrowed from the Prakriti Yagya, those of the
sub-ceremonies which prove themselves to be inconsistent with or out of place
in the Vikriti Yagya, are to be omitted.
45. For example, in the Rajsuya Yagya, certain homas are prescribed, for the
proper performance of which one must borrow details from the Darshapaurnamasi
Yagya. In the Rajsuya Yagya, plain ground is directed to be selected as the
Vedi for the homas, while in the case of the Darshapaurnamasi, the Vedi should
be erected by digging the ground with spade etc. Such an act would be out of
place in constructing the Vedi for the homas in the Rajsuya Yagya. Here, there
is a Badha (bar) of the particular rule regarding the erection of the Vedi in
the Darshapaurnamasi Yagya, being extended to the Rajsuya Yagya. This is the
case of Badha by reason of express text.
46. There are other instances in which the inconsistency arises
incidentally. For example, in the Sadyaska there is no need of cutting the peg
with which the animal is to be tied. But, in the Agni-Somiya Yagya which is the
Prakriti of the Sadyaska Yagya, reciting of certain Mantras is prescribed in
connection with the cutting of the peg. This recital being out of place in the
former Yagya is barred in carrying the Atidesha process.
Numerous other illustrations can be given. For example, in the Satra Yagya
the selection of Rittik is out of place and so omitted, though this is done in
the Soma Yagya of which the Satra is the Vikriti. The Krishnala Nyaya (black
bean maxim) is another instance. In cases where Atidesha is to be made by implication,
it is altogether barred, if there is an express text against making the
47. When there is a negative ordinance prohibiting a thing, it is to prevail
notwithstanding that there is an Atidesha which by implication enjoins the
thing. For instance, there is a rule that all sacrifices partake of the
character of Darsha and Paurnamasi Yagyas. The result is that all the rules of
Darsha and Paurnamasi Yagyas are applicable to the Pasu Yagya also. But there
is a text which says that 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
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 :
xq.keq[;O;frdzes rnFkZRokr eq[;su osn la;ksx% Kumarila Bhatta, in his
Tantravartika (See Ganganath Jha's English Translation Vol.3, page 1141)
explains this Sutra as follows :
"When the Primary and the Accessory belong to two different Vedas, the
Vedic characteristic of the Accessory is determined by the Primary, as the
Accessory is subservient to the purpose of the primary."
It is necessary to explain this Sutra in some detail.
The peculiar quality of the Rigveda and Samaveda is that the mantras
belonging to them are read aloud, whereas the mantras in the Yajurveda are read
in a low voice. Now the difficulty arose about certain ceremonies, e.g.
Agnyadhana, which belong to the Yajurveda but in which verses of the Samveda
are to be recited. Are these Samaveda verses to be recited in a low voice or
loud voice? The answer, as given in the above Sutra, is that they are to be
recited in low voice, for although they are Samavedi verses, yet since they are
being recited in a Yajurveda ceremony their attribute must be altered to make
it in accordance with the Yajurveda. Commenting on Jaimini 3 : 3 : 9 Kumarila Bhatta says :
"The Siddhanta (principle) laid down by this Sutra is that in a case
where there is one qualification pertaining to the Accessory by itself and another
pertaining to it through the Primary, the former qualification is always to be
taken as set aside by the latter. This is because the proper fulfillment of the Primary is the business of the
Accessory also as the latter operates solely for the sake of the former.
Consequently if, in consideration of its own qualification it were to deprive
the Primary of its natural accomplishment then there would be a disruption of
that action (the Primary) for the sake of which it was meant to operate.
Though in such a case the proper fulfillment of the Primary with all its
accompaniments would mean the deprival of the Accessory of its own natural
accompaniment, yet, as the fact of the Accessory being equipped with all its
accompaniments is not so very necessary (as that of the primary), there would
be nothing incongruous in the said deprival". See Ganganath Jha's English
translation of the Tantravartika, Vol.3 page 1141.
50. In our opinion the gunapradhan axiom applies to this case. Section 174
is the pradhan whereas Section 175 is the guna (or subordinate). If we read
Section 175 in isolation then of course we would have to agree to Mr.Nariman's submission that Section 11 of the Arbitration and Conciliation Act, 1996
applies. But we cannot read Section 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
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 meaning of the words, and even the structure of the sentence. This
may be done by departing from the rules of grammar, by giving an unusual
meaning to particular words, by altering their collocation, by rejecting them
altogether, or by interpolating other words, under the influence, no doubt, of
an irresistible conviction that the legislature could not possibly have
intended what the words signify, and that the modifications thus made are mere
corrections of careless language and really give the true intention."
53. Thus, in S.S. Kalra vs. Union of India 1991(2) SCC 87, this Court has
observed that sometimes courts can supply words which have been accidentally
54. In G.P. Singh's `Principles of Statutory Interpretation' Ninth Edition,
2004 at pages 71-74 several decisions of this Court and foreign Courts have
been referred to where the Court has added words to a statute (though
cautioning that normally this should not be done).
55. Hence we have to add the aforementioned words at the end of Section 175
otherwise there will be an irreconciliable conflict between Section 174 and
56. 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
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, 1996.
However, since the Electricity Act, 2003 has come into force w.e.f. 10.6.2003, after this date all adjudication of disputes between licensees
and generating companies can only be done by the State Commission or the
arbitrator (or arbitrators) appointed by it. After 10.6.2003 there can be no
adjudication of dispute between licensees and generating companies by anyone
other than the State Commission or the arbitrator (or arbitrators) nominated by
it. We further clarify that all disputes, and not merely those pertaining to
matters referred to in clauses (a) to (e) and (g) to (k) in Section 86(1),
between the licensee and generating companies can only be resolved by the
Commission or an arbitrator appointed by it. This is because there is no
restriction in Section 86(1)(f) about the nature of the dispute.
60. We make it clear that it is only with regard to the authority which can
adjudicate or arbitrate disputes that the Electricity Act, 2003 will prevail
over Section 11 of the Arbitration and
Conciliation Act, 1996. However, as regards, the procedure to be followed
by the State Commission (or the arbitrator nominated by it) and other matters
related to arbitration (other than appointment of the arbitrator) the Arbitration and
Conciliation Act, 1996 will apply (except if there is a conflicting
provision in the Act of 2003). In other words, Section 86(1)(f) is only
restricted to the authority which is to adjudicate or arbitrate between
licensees and generating companies. Procedural and other matters relating to such proceedings will of course be
governed by Arbitration
and Conciliation Act, 1996, unless there is a conflicting provision in the
Act of 2003.
61. 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.
62. Case No.873 of 2005 filed by the appellant under Section 86(1)(f) of the
Electricity Act, 2003 before the Gujarat Electricity Regulatory Commission, is
still pending. Since the matter is pending from 2005, we direct the Gujarat
Electricity Regulatory Commission to dispose of the petition as expeditiously
as possible preferably within six months. C.A. No........../2008 [Arising out of S.L.P(C) No.675/2007]
63. This appeal is filed regarding the deduction of Rs.5 crores. The
appellant may file application under Section 94(2) of the Electricity Act, 2003
before the appropriate Commission, to pass such an interim order, as may
consider appropriate. This appeal is, accordingly, dismissed.
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