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PETITIONER: PUNJAB STATE ELECTRICITY BOARD,MAHILPUR

       Vs.

RESPONDENT: M/S GURU NANAK COLD STORAGE &ICE FACTORY, MAHILPUR & ANR.

DATE OF JUDGMENT:       12/07/1996

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. G.B. PATTANAIK (J)

CITATION:  JT 1996 (6)   678        1996 SCALE  (5)487

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      Leave granted.      This case has a chequered history, the entire narration of which is not material to the controversy at hand. Suffice it to  state that  pursuant to  the default committed by the respondent in  payment of  the dues, the appellant-Board had disconnected the  supply of  electrical energy on 20.8.1982. For the  recovery of the arrears, the appellant had laid the suit. Ultimately, the suit ended in the order passed by this Court in C.A. No.2767 of 1987 on February 15, 1989 upholding the decree for recovery of the arrears for the disconnection of the  supply of  electrical energy;  the respondent  had a notice issued on August 1, 1985 claiming damages in a sum of Rs.68,25,734/-  which,   we   are   informed,   subsequently increased to  over Rs.93,00,694.00.  Therein, the respondent called upon  the  appellant  to  refer  the  dispute  to  an arbitration under  Section 52 of the Indian Electricity Act, 1910 (for  short, the  ‘Electricity Act’)  or under  Section 76(2) of  the Electricity  (Supply) Act,  1948  (for  short, ‘Supply  Act’).   Calling  that   notice  in  question,  the appellant filed  suit No.291 of 1985 on the file of the Sub- Judge, I  class  for  declaration  and  also  for  permanent injunction restraining  the appointment  of an arbitrator to adjudicate the  dispute raised in the notice. The civil suit was dismissed  on March  31, 1989  which  was  confirmed  in appeal. The  High Court  in the  impugned judgment and order dated December  14, 1992  in Second  Appeal No.1993  of 1990 dismissed the appeal finding thus:      "A perusal of Section 32 shows that      no suit  is competent on any ground      whatsoever "for a decision upon the      existence, effect or validity of an      arbitration       agreement......."      Furthermore,    a     perusal    of      provisions of section 33 shows that      any party  wanting to challenge the

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    existence  of   an      arbitration      agreement can do so only through an      application    under    the    said      provisions of  the Arbitration Act.      It appears  that no  civil suit  is      competent  in  respect  of  matters      which  can   be   decided   through      arbitration    and     any    party      challenging  the  existence  of  an      arbitration agreement  can only  do      so through  the  summary  procedure      contemplated under  section  33  of      the Act.  The remedy  of a  regular      civil suit,  thus, appears  to have      been excluded."      Thus this appeal by  special leave.      Shri P.P.Rao, learned senior counsel for the appellant, contended that  the view  taken by the High Court and courts below  is   clearly  unsustainable   in  law.   His  primary contention is that the disconnection of supply of electrical energy and  the alleged consequential damages claimed by the respondent are  not matters  arbitrable under the provisions either of  Electricity Act  or Supply  Act.  Therefore,  the invocation of  the provisions  in either  of  the  Acts  for reference is  clearly without authority of law. He has taken us through  the relevant  provisions under the Acts which we would refer  during the  course of  the judgment.  Shri M.S. Gujral, learned  senior counsel for the respondent contended that illegal  disconnection of  supply of electricity energy to the  appellant and resultant damages is a dispute arising under Section 19 of the Electricity Act since due to illegal disconnection, the  respondent had  suffered damages.  As  a consequence, the  respondent is entitled to compensation for such illegal  act done  by the  appellant. Therefore,  it is dispute arbitrable  under the  provisions of the Electricity Act and  also the  Supply Act. He also contended that though there is no agreement entered into between the appellant and the respondent for arbitration as defined under Section 2(a) of the  Arbitration Act, 1940, by operation of Section 46 of the Arbitration  Act read  with Section 33 thereof, it would clearly give  power to the civil court to decide whether the matter would be arbitrable under the provisions of the Acts. The High Court accordingly recorded a finding that the civil suit is  not maintainable  but the  arbitrator to decide the arbitrability of  the dispute  as regards the damages caused to the respondent due to illegal disconnection under Section 52 of  the Electricity  Act or  Section 76(2)  of the Supply Act.      In view  of the  rival contentions,  the question  that arises is:  whether the view of the High Court is correct in law? It is seen that learned sub-ordinate Judge had recorded a finding  that the  dispute is  not  arbitrable  under  the provisions of  either the  Electricity Act  or  Supply  Act. Consequently,  the  notice  issued  by  the  respondent  for arbitration of  the dispute  is illegal.  However, on  wrong premise  of   the  arbitrability  of  the  dispute  be  the- arbitrator under  Section 33  suit was  dismissed. As noted, the High  Court recorded  that dispute would be decided only in the arbitration by operation of Section 33 or 32 and that the civil court has no jurisdiction to go into the matter.      The Electricity Act deals with grant of licences to the licensee for supply of electrical energy to the consumer and election of  the electrical  lines etc.  Part II  deals with supply of energy. Section 7-A(1) deals with determination of purchase price.  Section 8  provides  consequences  for  non

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purchase of  undertaking  and  revocation  of  licence  with consent of  licensee.  Section  9  prohibits  licensee  from purchasing, or  associating  himself  with,  other  licensed undertakings or  transfer his  undertaking. Section 10 deals with general power of Government to vary terms of purchase.      Sections 12  to 18 deal with various types of works and Section 12  empowers licensee  to open and break up streets, railways and  tramways. Section  13 speaks  of notice to the owners  undertaking   new  work.   Sub-section  (3)  thereof provides that  "[N]otwithstanding anything  in this section, the licensee  may, in case of emergency due to the breakdown of an  underground electric supply-line, after giving notice in writing  to the  repairing authority or the owner, as the case may  be, of  his intention  to do so, place an overhead line without  complying with  the provisions  of sub-section (1)". Section  14 provides for alteration of pipes or wires. Section 15 gives power of laying of electric supply-lines or other work near sewers, pipes or other electric supply-lines or works. Section 16 gives power to the licensee to exercise any of  the powers under the Act to open or break-up soil or pavement of  any street  railway or  tramway, or  any sewer, drain or  tunnel. Section 18 empowers to lay overhead lines. While exercising those or any of those powers and performing undertaken works, Section 19 envisages that the licensee may in exercise  of any  of the  above powers,  cause as  little damage, detriment or inconvenience as may be, and shall make full compensation for any damage, detriment or inconvenience caused by  the licensee  or  by  any  one  employed  by  the licensee. Sub  section (2) in that behalf provides that save in the  case provided  for in  Section 12,  sub-section (3), where any  difference or  dispute arises as to the amount or the application  of such  compensation, the  matter shall be determined by  arbitration. Similarly,  Sections 21(4),  22, 14(3), 15(5),  16-(3), 22- A(2) and 32 provide determination of the disputes by arbitration. If any of the disputes arise under the  aforesaid provisions, obviously Section 52 of the Electricity Act  provides for  forum for  arbitration  which reads as under:      "52.   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  State      Government  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      Act, 1940 (10 of 1940):           Provided   that    where   the      Government or  a State  Electricity      Board is  a party to a dispute, the      dispute shall  be referred  to  two      arbitrators, one to be appointed by      each party to the dispute."      A reading  thereof would  thereby clearly indicate that where any  matter is  by or  under the  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  State Government may  nominate in  this behalf  on application  by either party;  and in  all other respects, in furtherance of

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the arbitration it shall be subject to the provisions of the Arbitration Act.  It would,  therefore, be clear that with a view to  attract the  provisions of the Electricity Act, the dispute shall  be one  of the  disputes directed by or under the Act  arbitrable by  the arbitration under the provisions of the  Act. As seen, the Act extracted hereinbefore where a dispute shall be arbitrable in an arbitration which attracts the  provisions  of  Section  52  of  the  Electricity  Act. Similarly, the  Supply Act  envisages that if arbitration of any question  or matter  is required  under Sections  19(4), 44(3), 55(3) and 78-A(2) to be referred to arbitration under Section 76(2)  of the  Supply Act,  such question  or matter becomes arbitrable      It is,  therefore therefore,  to be  seen  whether  the dispute raised  in this  case is arbitrable under any of the provisions of  either the  two Acts.  As stated earlier, the specific contention  of Shri  Gujral is that it is a dispute arising under  Section 19(1)  of  the  Electricity  Act  for damages  caused   to  the   consumer-respondent  and   that, therefore  it   is  arbitrable   under  Section  52  of  the Electricity Act  or Section  76(2) the  Supply Act.  We  are unable to agree with the learned counsel.      It is seen that the right to claim damages obviously is not to  the consumer  to whom,  though under the Electricity Act the  licensee, on an application made in this behalf, is under an  obligation to  supply the  electrical energy.  The damages which  ensued for  disconnection is  not  a  dispute arising under  Section 19(1)  of the  Electricity  Act.  The scheme of  Part II of the Electricity Act would be viewed in its operational  perspective. It  would indicate that if any damage is  caused obviously  to the owner of the property or the person affected in execution of the works undertaken as envisaged in  Part II,  the damages so ensued, unless agreed between licensee and the person affected, the dispute arisen under section  19(1) would  be arbitrable,  by operation  of sub-section (2) of Section 19 of the Electricity Act.      The question  then is:  whether the matter will be only referable to arbitration as provided under Section 33 of the Electricity Act?  The contention  of Shri  Gujral is that by operation  of  Section  46  read  with  Section  33  of  the Arbitration Act,  the dispute  would  be  arbitrable  by  an arbitrator and  the civil court is devoid of jurisdiction to decide the matter. We find no force in the contention. It is true that  Section 46  expressly envisages  that despite the absence of an express arbitration agreement as defined under Section 2(a)  of the  Arbitration Act,  if it  is a  dispute statutorily arbitrable,  Section 46  stands attracted except to the  extent of  the provisions  excluded  therein,  i.e., Sections 6(1), 7, 12, 36 and 37 Section 46 reads as under:      "46.   Application    of   Act   to      statutory    arbitrations.--    The      provisions of  this Act except sub-      section  (1)   of  Section   6  and      Sections 7,  12, 36,  and 37, shall      apply to  every  arbitration  under      any other  enactment for  the  time      being   in   force,   as   if   the      arbitration  were  pursuant  to  an      arbitration agreement  and if  that      other enactment were an arbitration      agreement, except in so far as this      Act is  inconsistent with the other      enactment or  with any  rules  made      thereunder."      Sections 6(1),  7, 12,  36 and  37 have  been expressly

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excluded from  the operation  of statutory  arbitration. The rest of  the provisions  per force  would get attracted. But the provisions  of the  appropriate statute  or rules should necessarily  be   consistent  with  the  provisions  of  the Arbitration Act.  In  that  event,  despite  absence  of  an arbitration agreement, rest of the provisions of Arbitration Act would  apply (as  if there  was an arbitration agreement between parties)  and the  dispute becomes  arbitrable under the  Arbitration   Act,  as  if  there  was  an  arbitration agreement   between   the   parties.   If   there   is   any inconsistency, then the provisions of the Arbitration Act do not get  attracted. Section  33 expressly gives power to the civil court  to decide  the existence  or  validity  of  the arbitration agreement or the award as such. If this question was to arise, necessarily the civil court would be devoid of jurisdiction to decide the dispute on merits but only in the forum of  arbitration. The  existence and  validity  of  the arbitration agreement  should be decided by the civil court. Arbitrator  cannot   clothe  himself  with  jurisdiction  to conclusively decide it by himself as a jurisdictional issue. It is  for the  court to  decide it.  The dispute  on merits should be resolved by the arbitrator and the legality of the award would  be subject  to  decision  by  the  court  under Section 33.      The question  is: whether  the dispute as to damages is arbitrable? As stated earlier, Section 52 of the Electricity Act or  76(2) of  Supply Act  read  with  Section  19(1)  of Electricity Act  has no  application to dispute. So, Section 52 of  the Electricity  Act  does  not  get  attracted;  and equally Section  76(2) of  the Supply  Act. Therefore, it is not arbitrable  under the  statute. In  view of  the express admission made  by the respondent that there As no agreement of arbitration as defined in Section 2(a) of the Arbitration Act, Section  33, therefore  does not get attracted. Section 46 does  not apply as the scheme under both the Acts in this behalf is  inconsistent. The  arbitrator cannot  decide that question.      Shri Gujral laid emphasis on the ratio of this Court in Punjab S.E.B.  vs. Bassi  Cold storage  [(1994) Supp.  2 SCC 124] contending  that the  dispute whether  it is arbitrable itself  would   be  decided  by  the  arbitrator  and  that, therefore, the  appellant having raised that question, it is not open  to the Board to contend that it is not arbitrable. We find  no force  in the  contention.  In  that  case,  the question was  whether the  dispute was  arbitrable  or  not. Though the  question was  given up  in the  trial court, the learned counsel  appearing for  the party  had conceded that the question  did arise. On that basis, notice was issued by the High  Court and  it was held that it was not arbitrable. But in this case, the question is: whether the notice issued by the  respondent invoking the provisions of Section 52 and Section 76(2)  of the  Electricity Act  and  he  Supply  Act respectively  would  get  attracted?  In  The  Mysore  State Electricity Board vs. Bangalore Woollen, Cotton and silk and Silk Mills  Ltd. & Ors. [(1963) Supp. 2 SCR 127], this Court had considered  whether the  dispute as  regards revision of rates of  tariff was  arbitrable under the provisions of the Acts. On  an elaborate  consideration, it  was held that the dispute as  regards revision  of rates  of  tariff  was  not arbitrable. Similarly,  a suit for damages for disconnection was filed  and the question arose whether it was arbitrable. In Mysore  Manufacturers &  Traders vs.  State of  Karnataka [AIR 1982  Karnataka 54],  the learned  single Judge  of the High Court had held that the dispute was not arbitrable and, therefore, the reference of the dispute under the provisions

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of the  Arbitration Act  was not  available. This  Court  in Bassi’s case  (supra) had  held that  the  dispute  for  the arbitration for  the damages caused due to disconnection was not arbitrable  under either  of the two Acts. In that view, the High  Court and  courts below  were clearly  in error in holding that  the matter  was to  be referred to arbitration and arbitrator had to decide the dispute as to arbitrability or on merits.      The  appeal   is  accordingly   allowed,  but   in  the circumstances without costs. The decrees of all courts stand set aside and suit stands decreed as prayed for. No costs.