Writ Jurisdiction Can Be Exercised Despite Arbitration Remedy In Exceptional Cases: Calcutta High Court
The Calcutta High Court has held that where a contract contains an arbitration clause, parties have an alternative remedy of invoking arbitration, particularly when the dispute involves questions of fact that cannot be adjudicated in writ jurisdiction under Article 226 of the Constitution.
Justice Ajay Kumar Gupta, relying on the judgment of Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and others reiterated that writ jurisdiction may still be exercised in exceptional circumstances including violation of fundamental rights or principles of natural justice,or where proceedings are wholly without jurisdiction.
"When there is an arbitration clause, the parties have an alternative remedy to approach for arbitration for their disputes whatsoever. This court is conscious that despite the availability of the alternative remedy. With reference to the decision of Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and others, it is clearly established that the High Court may still exercise its writ jurisdiction on discretionary power when it is found (i) where the writ petitioner seeks enforcement of any of the fundamental rights; (ii) where there is violation of the principles of natural justice; (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act and rule is challenged."
The ruling came in a writ petition filed by Chakvrigu Cooperative Labour Contact & Construction Society Limited and its Secretary, seeking release of ₹17 lakh allegedly withheld for construction work at Khochabari Hat under the Rashtriya Krishi Vikas Yojana Scheme 2011-12.
The work order dated January 31, 2012 involved a tender amount of ₹32,66,865 under an agreement dated May 14, 2012. The authority extended the completion period till August 16, 2016 but the electrical work was completed on February 15, 2018.
The authorities imposed compensation at 0.0182% per day and ultimately paid ₹6,78,345 as the final balance, which the petitioners accepted. The matter had also been placed before the 116th Board meeting on May 31, 2019.
The petitioners contended that the work was completed within the extended period and therefore no compensation was payable, while the State argued that the delay warranted compensation.
The Court noted that the parties disputed whether the work had been completed within the extended period.
Such a disputed question of fact, it held could not be adjudicated in writ jurisdiction.
The Court further noted that Clause 10 of the agreement specifically provided for arbitration of disputes arising from the contract.
Holding that the instant case also involved a disputed question of fact, the Court accordingly dismissed the writ petition and vacated interim order, if any.
It clarified that dismissal of the writ petition would not prevent the petitioners from invoking the arbitration clause and any arbitrator appointed would decide the matter independently without being influenced by observations in the judgment.
For Petitioner: Advocate Debapriya Mitra
For State: Advocates Rashmi Bothra, Ashima Roychoudhury