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SECTION II(6) OF THE ARBITRATION AND CONCILIATION ACT, 1996 AND THE DILEMMA REGARDING ITS STANDING.

Arushi Bhagotra, 1st year, National Law Institute University, Bhopal


Introduction:

With the evolution of time and legal systems, the numerical count of disputes also started increasing at a considerable rate. Resorting to the traditional system of litigation isn’t only costly, but also burdensome for a substantial amount of the common gentry. In such a scenario the evolution of alternate forms of dispute resolution not only provided a helping hand to the common man, but also lessened the burden on the traditional legal practices. Arbitration is better known as an alternative to litigation and is way less rigid than the latter. Arbitration are generally conducted in an ad hoc manner, especially in India. With the enactment of the Arbitration and Conciliation Act in 1996 the dispute resolution scenario in India witnessed a new dawn. But, as they say, ‘every coin has two sides’, the 1996 Act is also not without lacunae and in this piece a discussion would be done to unfold the ambiguity in the provisions of Section 11 of the Arbitration and Conciliation Act, 1996 (the 1996 Act).

Section 11 and the stand of its sub-clause (6):

Section 11 of the Arbitration and Conciliation Act, 1996 deals with the Appointment of Arbitrators and its provisions lay down the conditions for the appointment. Sub-clause (6) of the said section provides for appointing an arbitrator by the Chief Justice or his designate and the appointment has to be made on an application of one of the parties to the dispute.[1]


Even though the language of the sub-section seems too simple for application, the interpretation isn’t devoid of ambiguity. In a recent three-judge bench verdict of the apex court[2], the Hon’ble Supreme Court (SC), while comparing Section 11(6) of the 1996 Act with Section 3G(5) of the National Highways Act, 1956 (which provides for the appointment of an arbitrator by the Central Government), laid down that the Arbitration and Conciliation is a general law and hence, its provisions would be overridden by those of the National Highways Act, which, in turn is a special legislation. The Supreme Court relied on an earlier two-judge bench verdict[3] for reaching such a conclusion and imparting the 1996 legislation the status of a ‘general law’. Whereas, in a judgment pronounced by a three-judge bench of the SC in Consolidated Engineering Enterprises vs. Principal Secretary, Irrigation Department, 2018[4] (the Consolidated Engineering case) had held the 1996 Act to be a special legislation while dealing with the applicability of the Limitation Act, 1963 to Arbitration and Conciliation Act 1996, inter alia providing that the provisions of the 1996 Act would override those of the Limitation Act, 1963.


The SC in the National Highways Authority of India vs. Sayedabad Tea Company Ltd. and Ors., 2019, placed reliance on a two-judge bench decision in Gujarat Urja Vikash Nigam Ltd. vs. Essar Power Ltd., 2008, but not on the Consolidated Engineering case, hence, adopting a very vague and contrasting approach and further adding on to the uncertainty on how the 1996 legislation would be viewed (i.e., as a general or a special law).


According to another judgment of the Apex Court in Indian Oil Corporation vs. SPS Engineering[5] , Section 11(6) is observed to have a limited scope’ in itself also.

Hence, there is quite a lot of ambiguity in the scope of Section 11(6), not only when it is compared with other laws, but also when its own interpretation and application is concerned. Moreover, such ambiguity in the interpretation of the sub-clause (6) would only add to the existing vagueness in the provision itself. As far as this issue is concerned, a larger bench of the Supreme Court is required to settle the position of the 1996 Act so that the interpretation of its sections and their provisions could be simplified and its application could be more refined.

Conclusion:

Despite the effective framework of rules laid down by the Arbitration and Conciliation Act 1996, it has been well-observed that the legislation suffers from many drawbacks. Even though the 1996 legislation has been applicable in a lot many instances, still the biggest drawback of the legislation would be that the words ‘arbitration’ and ‘conciliation’ haven’t been defined anywhere in the act, which seems like an utterly callous fallacy.


Apart from the above, the main drawback which we’ve discussed in this piece is the ambiguity in the position of the act itself and the resulting vagueness in the interpretation of its sections.


Moreover, special laws overriding the applicability of general laws has serious repercussions where the executive government may invoke its legislative powers to impart a special statuses to circumvent the positions of the general laws and use it to their own advantage. Hence, imparting the 1996 legislation a ‘general law’ status would tarnish its interpretation and hamper its scope of applicability as far as such ‘special laws’ are concerned. Such a step would only add fuel to the fire. Also, throwing light on the current government’s take promoting arbitration in India, it is highly advisable that a larger bench of the Supreme Court finally engages itself in settling the position of the law and further imparting a clear status to the Arbitration and Conciliation Act, 1996.


Nevertheless, if this void isn’t filled in the near future, the increasing uncertainty and ambiguity would lead to a large number of chaotic situations for the developing arbitration framework in our nation.


Although the act has been subjected to various amendments in the recent era to improve the framework and working for a more refined governance of this form of dispute resolution, still a lot of attempts have to be made in order to achieve the desired results.










[1] 11. Appointment of Arbitrators :- (1)… (2)… (3)… (4)… (5)… (6) Where, under an appointment procedure agreed upon by the parties,— (a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request [the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court] to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. [2] National Highways Authority of India vs. Sayedabad Tea Company Ltd. And Ors. 2019 SCC Online SC 1102 [3] Gujarat Urja Vikash Nigam Ltd. Vs. Essar Power Ltd. 2008(4) SCC 755 [4] Civil Appeal No. 11866 of 2018 [5] AIR 2011 SC 987

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