2026 (3) TMI 836 - HC - Indian Laws

Arbitrator appointment under a special statute excludes general appointment powers, so the specified central appointing scheme prevails.

Whether a petition under Section 11 of the Arbitration and Conciliation Act is maintainable where the SEZ Act vests appointment power in the Central ... Maintainability of section 11 application - seeking appointment of a suitable person as arbitrator to settle the dispute between the petitioner and the 3rd respondent - designation of courts under special statute - application of arbitration act to special regime - Whether the High Court could appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act in respect of a dispute falling under Section 42 of the SEZ Act. Application of Section 11 of the Arbitration and Conciliation Act - HELD THAT: - The High Court's jurisdiction under Section 11 of the Arbitration and Conciliation Act is limited to cases where the statutory conditions in Section 11 are satisfied - notably the existence of a valid arbitration agreement and circumstances showing lack of consensus between parties regarding appointment. Section 42 of the SEZ Act provides a special scheme: where courts under Section 23 are not designated, disputes of civil nature are to be referred to arbitration and the arbitrator is to be appointed by the Central Government under Section 42(2). Section 42(3) makes the Arbitration and Conciliation Act applicable to such arbitrations only once an arbitrator has been appointed and the dispute is referred for arbitration; its opening words 'save as otherwise provided under this Act' exclude application of the general appointment mechanism of the Arbitration Act to the special appointment regime under Section 42. In the present case no valid arbitration agreement was produced and no request was made to the counterparty for appointment of an arbitrator; consequently the conditions for invoking Section 11 are absent and the High Court cannot usurp the Central Government's appointment power under Section 42(2) of the SEZ Act. [Paras 8, 9, 10, 11, 12] The petition under Section 11 is not maintainable and is rejected; the High Court will not appoint an arbitrator in place of the Central Government under Section 42 of the SEZ Act. Final Conclusion: The arbitration petition was held misconceived and dismissed as not maintainable because the statutory appointment power under Section 42(2) of the SEZ Act rests with the Central Government and the prerequisites for invoking Section 11 of the Arbitration Act were not satisfied; the petitioner remains free to pursue appropriate remedies to compel consideration by the Central Government. Issues: (i) Whether a petition under Section 11 of the Arbitration and Conciliation Act, 1996 is maintainable to appoint an arbitrator where the Special Economic Zones Act, 2005 vests the power of appointment with the Central Government under Section 42(2) and no Court has been designated under Section 23.Analysis: The Special Economic Zones Act, 2005 provides a special mechanism for resolution of civil disputes arising in a Special Economic Zone: designation of courts under Section 23, and where such courts are not designated, referral to arbitration with the arbitrator to be appointed by the Central Government under Section 42(2). Section 42(3) makes the Arbitration and Conciliation Act, 1996 applicable to arbitrations under the SEZ Act 'save as otherwise provided under this Act', thereby preserving the specific appointment mechanism in Section 42(2). The power conferred by Section 11 of the Arbitration and Conciliation Act is confined to cases where the parties or the scheme of that Act leave the appointment unresolved; it presupposes the existence of a valid arbitration agreement and procedural prerequisites under the Arbitration Act. Where a special statute prescribes an exclusive appointment method and confers the appointment power on a specified authority, Section 11 does not supplant that statutory scheme and cannot be used to usurp the exclusive appointing authority provided by the special statute.Conclusion: The Section 11 petition is not maintainable and is rejected because the SEZ Act vests exclusive power of appointment in the Central Government under Section 42(2) and the prerequisites for invoking Section 11 (including a valid arbitration agreement and request as per the Arbitration and Conciliation Act) are absent.