Court's Jurisdiction Under Article 226 Not Always Ousted in the Presence of an Arbitration Clause

The Jammu and Kashmir and Ladakh High Court in M/S Amira Engineers Vs Telecommunications Consultants India & Ors. has held that writs under Article 226 are maintainable for asserting contractual rights against the State or its instrumentalities and the presence of the 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.

The Court referred to ABL International Ltd. And another vs. Export Credit Guarantee Corporation of India Ltd. and others, wherein it has been held regarding the maintainability of such an arbitration petition by the top court, it says:

“(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.

The Court also referred to Unitech Limited and others v. Telangana State Industrial Infrastructure Corporation (TSIIC) and others, wherein it has been 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.

Therefore in the instant case, the Court observed that “Applying the aforesaid principles to the facts of the instant case, 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 learned counsel for the respondents that any disputed questions of fact are involved in the instant case, at least to the aforesaid extent.”