Existence of an arbitration clause is not bar for Writ Petition : Supreme Court (Read Order)

arbitration clause is not bar for writ petition

Law Point : Existence of an arbitration clause is not bar for Writ Petition.

Case Title : Uttar Pradesh Power Transmission Corporation Ltd. and Ors. Vs. CG Power and Industrial Solutions Limited and Ors.

Brief of Case : Present Petition under Article 136 of the Constitution of India, 1950 filed by the Petitioner (UPPTCL), is against a final Judgment passed by the High Court allowing the writ petition filed by Respondent No.1. High Court quashed the letters dated 2nd September 2016 and 29th December 2018 issued by the Executive Engineer, directing the Respondent No.1 to remit Labour Cess amounting to Rs.2,60,68,814, computed at 1% of the contract value, under Sections 3 sub-section (1) and (2) of the Building and Other Construction Workers’ Welfare Cess Act, 1996, (“Cess Act”), read with Rules 3 and Rule 4 (1), (2) (3) and (4) of the Building and Other Construction Workers Welfare Cess Rules, 1998, (“Cess Rules”) and also Section 2 (1)(d), (g) and (i) of the Building and Other Construction Workers (Regulation of Employment and Condition of Service) Act, 1996, (“BOCW Act”).

In present Case, there is apparently no dispute, difference or controversy between UPPTCL and the Respondent No.1 as to the true construction, meaning or intent of any part of the conditions of contract or to the manner of execution or the quality or description or payment for the same.

Nor is there any dispute as to the true meaning, intent, interpretation, construction or effect of the clauses of contract, specifications or drawings or any of them. UPPTCL has changed its stand only after the CAG report. Cess in respect of the First Contract has been deducted only in view of the audit objection raised by the Office of Comptroller and Auditor General (CAG).

Even though there is an arbitration clause, the Petitioner herein has not opposed the writ petition on the ground of existence of an arbitration clause. There is no whisper of any arbitration agreement in the Counter Affidavit filed by UPPTCL to the writ petition in the High Court. In any case, the existence of an arbitration clause does not debar the Court from entertaining a writ petition.

It is well settled that, availability of an alternative remedy does not prohibit the High Court from entertaining a writ petition in an appropriate case. The High Court may entertain a writ petition, notwithstanding the availability of an alternative remedy, particularly.

(1)     where the writ petition seeks enforcement of a fundamental right;

(ii)    where there is failure of principles of natural justice or

(iii)  where the impugned orders or proceedings are wholly without jurisdiction or

(iv)   the vires of an Act is under challenge.

It is now well settled by a plethora of decisions of this Court that relief under Article 226 of the Constitution may be granted in a case arising out of contract. However, the writ jurisdiction under Article 226, being discretionary, the High Courts usually refrain from entertaining a writ petition which involves adjudication of disputed questions of fact which may require analysis of evidence of witnesses. Monetary relief can also be granted in a writ petition.

In present case, the action of UPPTCL in forcibly extracting building cess from the Respondent No.1 in respect of the first contract, solely on the basis of the CAG report, is in excess of power conferred on UPPTCL by law or in terms of the contract. UPPTCL has no power and authority and or jurisdiction to realize labour cess under the Cess Act in respect of the first contract by withholding dues in respect of other contracts and/or invoking a performance guarantee. There is no legal infirmity in the finding of the High Court that, UPPTCL acted in excess of power by its acts impugned, when there was admittedly no assessment or levy of cess under the Cess Act.

Even otherwise, the Cess Act and/or statutory rules framed thereunder prescribe the mode and manner of recovery of outstanding cess under the Cess Act. It is well settled that, when statute requires a thing to be done in a particular manner, it is to be done in that manner alone. UPPTCL could not have taken recourse to the methods adopted by it. The impugned communications have rightly been set aside. The judgment and order of the High Court impugned does not call for inference under Article 136 of the Constitution. Petition dismissed.

Read Order.PDF

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