JUDGMENT:

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