Gujarat Urja Vikash Nigam Ltd vs Essar Power Ltd on 13 March, 2008

    CASE NO.:

Appeal (civil) 1940 of 2008

PETITIONER:

Gujarat Urja Vikash Nigam Ltd

RESPONDENT:

Essar Power Ltd

DATE OF JUDGMENT: 13/03/2008

BENCH:

H.K. Sema & Markandey Katju

JUDGMENT:

J U D G M E N T

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 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.

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 this Act."



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 1989)."

 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, the Atomic 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 consumers;

(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 considered,

necessary;

(k) discharge such other functions as may be

assigned to it under this Act."

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
states :

 "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 1996)."

15. Shri K.K. Venugopal also relied on Section 2(3) of the 1996 Act which states
:

 "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 arbitration."



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 power.

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 Umpire/third Arbitrator.

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 arbitrator.

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 `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.

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 suitable.

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."

             (emphasis supplied)

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 implication.

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 disregarded altogether."

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 prevail".

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
omitted.

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
Section 175.

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
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, 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.