Writ Appeal Not Entertainable When Arbitration Offers Adequate Remedy: Kerala High Court

The Kerala High Court on 6 April, declined to entertain a writ appeal arising from termination of a contractual agreement, holding that when efficacious alternative remedies exist under arbitration, the writ court ordinarily refrains from exercising its discretionary jurisdiction.

A Division Bench of Chief Justice Soumen Sen and Justice Syam Kumar V.M observed:

“…having regard to the fact that there are efficacious alternative remedies available where such issues can be more conveniently dealt with and decided, the writ court in appropriate situations decline to exercise this discretionary remedy.”

The appellant, a contractor, was awarded an Engineering Procurement and Construction (EPC) contract for construction of international and domestic cruise terminals and allied facilities at Mormugao Port.

The Cochin Port Authority issued a show cause notice alleging delay, slow progress, suspension of work, and inferior workmanship, warning of contract termination if the response was unsatisfactory. The appellant responded, citing, inter alia, absence of CRZ approval and pending arbitration proceedings concerning variations in scope and payments.

Despite the reply, Cochin Port terminated the contract on grounds including non-compliance with the supplementary agreement, stoppage of work, failure to meet timelines, and breach of contractual terms.

The appellant had initially filed an application under Section 9 of the Arbitration and Conciliation Act before the Commercial Court, Ernakulam, which was later withdrawn. Subsequently, he challenged the termination by invoking writ jurisdiction. Dissatisfied with the High Court's initial response, he preferred a writ appeal.

Before the Division Bench, Cochin Port contended that the writ petition was not maintainable due to the arbitration clause in the contract. The Court, however, preferred the term “entertainability” over “maintainability.” Emphasising that powers under Article 226 are discretionary and not statutorily restricted, it held:

“However, the fact remains that if the parties have agreed to a specific forum to which the dispute is required to be referred, this Court would be extremely reluctant to entertain a writ petition on the issue, in view of the existence of such an alternative remedy.”

The Court noted that the relief sought in the writ petition could be obtained either through Section 9 proceedings before the Commercial Court or under Section 17 by the Arbitrator. It clarified:

“It is only in cases where there is an absence of an efficacious remedy available to the writ petitioner that, notwithstanding existence of such alternative remedy, the court may grant an interim relief.”

The Bench further observed that even if the termination letter cited grounds not mentioned in the show cause notice, such issues could have been addressed before the Commercial Court, and the Arbitrator could grant damages if the termination was found wrongful. The Court held:

“The existence of the scope of work under the amended contract as urged by the appellant in this proceeding are required to be adjudicated before the appropriate forum and it cannot be convenient to decide in a writ proceeding. Moreover, as reiterated earlier, when the parties themselves had agreed before a forum for resolution of dispute and the agreement subsists, the writ court would not ordinarily invoke the writ jurisdiction.”

In view of the summer recess, the judges directed that no coercive steps shall be taken for six weeks and that joint measurements should be carried out, without prejudice to the rights of the parties. They also clarified that the disposal of the writ appeal would not prevent the appellant from seeking relief under the Arbitration and Conciliation Act.

Accordingly, the High Court disposed of the writ appeal.

For Appellant: Advocates Ranjith Varghese, Rahul Varghese, Ralitzine Mendez and Akhila Sunil Nedungadi