Presence Of An Arbitration Clause Does Not Always Oust Court's Jurisdiction Under Article 226: J&K&L High Court

The observation came from Justice Sanjay Dhar while hearing a plea seeking a direction upon the respondent to release an amount of Rs.12,49,517/ along with CDR of Rs.20,000/ in respect of the work/contract executed by him for laying telephone cables in Sanatnagar Srinagar in the year 1998. Petitioners further prayed for a direction upon the respondents to pay an amount of Rs.28,07,975/ to the petitioner for the work executed and completed by him for laying telephone cables at Kulgam in the year 2003 has also been sought. The petitioner has also claimed interest @ 24% per annum.

The petitioners further contended that the amounts incurred by them in executing the works allotted to them in the year 1998 and 2003 are admitted the by respondents but in spite of this, they are illegally withholding the admitted dues merely on the pretext that the completed works have been damaged by R&B Department of the State Government.

Contesting the plea the respondent counsel argued that there is an arbitration clause in the agreement between respondent No.1 and the petitioner and, as such, the petitioner should have availed the remedy of arbitration and that he could not file the instant petition.

Adjudicating upon the matter in controversy the bench observed that writs under Article 226 are maintainable for asserting contractual rights against the State or its instrumentalities as defined under Article 12 of the Indian Constitution. In order to buttress the said proposition the bench placed reliance on the Supreme Court judgement in ABL International Ltd. And another vs. Export Credit Guarantee Corporation of India Ltd. and others, (2004) wherein the Apex Court Court laid down the following principles as to maintainability of a writ petition as,

"(a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable.

(b) Merely because some disputed questions of fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule.

(c) A writ petition involving a consequential relief of monetary claim is also maintainable."

While dealing with the contention of the respondents that there exists an arbitration clause in the agreement between respondent No.1 and the petitioner and, as such, the petitioner should have availed the remedy of arbitration and that he could not file the

instant petition, the bench placed firm reliance on Supreme court judgement in Unitech Limited and others vs. Telengana State Industrial Infrastructure Corporation (TSIIC) and others, 2021 wherein SC held that the presence of an arbitration clause does not oust the jurisdiction under Article 226 in all cases though it still needs to be decided from case to case as to whether recourse to a public law remedy can justifiably be invoked.

Deciding the matter the bench accordingly observed that it can safely be stated that in the case at hand, the respondents have not only withheld the amount of Rs.10.6 lacs, which according to them is the cost of material retained by petitioner with him but they have also withheld the admitted claim of the petitioner over and above the aforesaid amount which cannot be justified in any manner. Even from the record that has been produced by respondent No.3, this Court could not find any document that would support the contention of counsel for the respondents that any disputed questions of fact are involved in the instant case, at least to the aforesaid extent, Justice Dhar recorded.

For the foregoing reasons, the bench allowed the writ petition partly allowed and directed the respondents to release the amount that was due to the petitioners with an interest of 9% till it is realized.

Case Title : M/S Amira Engineers Vs Telecommunications Consultants India & Ors.

Citation : 2022 LiveLaw (JKL) 148

Click Here To Read/Download Judgment