In our view, a constitutional remedy by way of writ petition is always available to an aggrieved party and an arbitration clause in an agreement between the parties cannot ipso facto render a writ petition "not maintainable" as wrongly held by the Division Bench. Availability of alternative remedy is definitely a permissible ground for refusal by a writ court to exercise its jurisdiction in appropriate cases. But once the Respondents had not objected to entertainment of the writ petition on ground of availability of alternative remedy, the final judgment rendered on merits cannot be faulted and set aside only on noticing by the Division Bench that an alternative remedy by way of arbitration clause could have been resorted to.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 11465 OF 2014
[Arising out of S.L.P.(C)No.8101 of 2011]
M/s. Ram Barai Singh & Co.
Versus
State of Bihar & Ors.
SHIVA KIRTI SINGH, J.
Dated;December 17, 2014.
1. Heard the parties. Leave granted.
2. This appeal is directed against final judgment and order
dated 12.01.2011 passed by the Division Bench of Patna High
Court in L.P.A. No.762 of 2009 whereby the Letters Patent Appeal
preferred by the respondents herein was allowed and order of the
learned Single Judge dated 18.02.2009 in Writ Petition bearing
C.W.J.C. No.10173 of 2008 was set aside on the sole ground that
there was an arbitration clause in an agreement between the
parties and since such alternative remedy was not availed by the
appellant, the writ petition itself was not maintainable.
3.
Learned counsel for the appellant has assailed the aforesaid
order of the Division Bench on facts as well as on law. On law, it
was contended that the writ petition could not have been held
not maintainable, more so when no such objection was taken by
the other side. On facts, it was submitted that the agreement
noticed by the Division Bench no doubt contained an arbitration
clause entitling either of the parties to invoke arbitration by the
concerned Superintending Engineer in case of any dispute arising
out of the agreement but the Division Bench failed to notice that
the agreement itself was no longer in existence because the work
was completed long back and payments including payment on
account of labour escalation costs amounting to Rs.9.53 lacs was
paid in February 1992.
Thus, according to the appellant, the
agreement dated 06.02.1989 had worked itself out and it was
much later that a dispute arose when the respondent authorities
withheld the security amount of the appellant of Rs.30 lacs for a
long period. On persistent demand, Rs.20 lacs out of the security
amount, was returned after 10 years in December 2002 and that
too without any interest. At that stage appellant came to know
that Engineer-in-Chief vide an order dated 09.06.2001 had
ordered for making a recovery of Rs.9.53 lacs from the appellant
which had been paid long back on account of labour escalation
cost.
4.
The
appellant
preferred
a
writ
petition
bearing
C.W.J.C.No.3686 of 2005 to claim the interest on undue delay in
refunding the security deposit and against the direction for
recovery of labour escalation cost. The respondents did not raise
plea of arbitration clause and that writ petition was disposed of
on 20.09.2006 allowing 12% interest on account of delay in
payment of security amount. The issue of labour escalation cost
was remanded back to the concerned Engineer-in-Chief who was
directed to pass a reasoned order after hearing the appellant or
his representative, within a fixed period.
The appellant was
granted liberty to seek his remedy if he was aggrieved by the
order that may be passed by the Engineer-in-Chief.
5.
The respondents preferred a Letters Patent Appeal bearing
No.877 of 2006 in which also they did not raise the issue of
alternative remedy by way of arbitration clause.
The LPA was
disposed of on 11.12.2007 with the following direction :
“.... .... Since the matter is going on remand, the State
has to apply its mind afresh to the facts and
circumstances of the case and, therefore, the
direction, as quoted above would be juxtaposition to
the order of remand. The question of payment of
interest by either side, however, will abide by the
ultimate determination of the question by the State of
Bihar.
It goes without saying that the matter would be
examined
and
re-determined
by
the
State
expeditiously.”
6.
The Engineer-in-Chief passed a fresh order on 21.05.2008
against the appellant over-ruling the various grounds and
objections raised by the appellant in his representation relating to
merits of the matter as well as jurisdiction of the Engineer-in-
Chief who, according to appellant, had no role in the issue which
was to be finalized at the stage of Executive Engineer and the
Superintending Engineer. The appellant challenged the order of
Engineer-in-Chief through writ petition bearing C.W.J.C. No.10173
of 2008 which was allowed by the learned Single Judge on
18.02.2009 by a reasoned order.
There is no dispute that
respondents filed a counter affidavit but did not raise any
objection of alternative remedy by way of an arbitration clause in
the agreement dated 06.02.1989.
7.
The learned Single Judge allowed the writ petition preferred
by the appellant by setting aside the order of the Engineer-in-
Chief dated 21.05.2008. The Court found that the Engineer-in-
Chief had raised demand of interest in the year 2008 along with
refund of labour escalation cost only to offset the State’s liability
to pay interest on refund of security deposit after a delay of
about 10 years. Thus the action of the respondents was held to
be for ulterior reasons and objection to labour escalation cost
after a long gap from its actual payment was held to be arbitrary
and unreasonable.
8.
The aforesaid order of the learned Single Judge dated
18.02.2009 was set aside by the Division Bench by the order
under appeal on the ground already noticed earlier.
9.
We find ourselves in agreement with case of the appellant
that the Division Bench failed to notice the relevant facts
including the history of earlier litigation. It also failed to notice
that the agreement itself had worked out long back and in the
earlier round of litigation as well as in the present round the
respondents never raised any objection on the basis of arbitration
clause.
10.
The Division Bench noticed the judgment of this Court in the
case of State of U.P. & Ors. v. Bridge & Roof Company
(India) Ltd. (1996) 6 SCC 22 as well as in the case of ABL
International Ltd. & Anr.
v. Export Credit Guarantee
Corporation of India Ltd. & Ors. (2004) 3 SCC 553 for coming
to the conclusion that where the contract itself provides an
effective alternative remedy by way of reference to arbitration, it
is good ground for declining to exercise extraordinary jurisdiction
under Article 226 of the Constitution of India and that the Court
will not permit recourse to other remedy without invoking the
remedy by way of arbitration, “unless, of course, both the parties
to the dispute agree on another mode of dispute resolution.”
11.
In our considered view, the aforesaid two decisions did not
warrant setting aside of the judgment of learned Single Judge
without going into merits and dismissing the writ petition at
appellate stage on ground of alternative remedy when no such
objection was taken by the respondents either before the writ
court or even in the Memorandum of Letters Patent Appeal.
12.
In our view, a constitutional remedy by way of writ petition
is always available to an aggrieved party and an arbitration
clause in an agreement between the parties cannot ipso facto
render a writ petition “not maintainable” as wrongly held by the
Division Bench. Availability of alternative remedy is definitely a
permissible ground for refusal by a writ court to exercise its
jurisdiction in appropriate cases. But once the respondents had
not objected to entertainment of the writ petition on ground of
availability of alternative remedy, the final judgment rendered on
merits cannot be faulted and set aside only on noticing by the
Division Bench that an alternative remedy by way of arbitration
clause could have been resorted to.
13.
In our view, learned counsel for the appellant has made out
a case for setting aside the order under appeal both on the facts
noticed above which show that there was no existing agreement
because the work had been completed and payment had already
been made long back and also on the question of law raised in
this appeal that a constitutional remedy through a writ petition
cannot be held to be not available and not maintainable on
account of an alternative remedy.
It is for the writ court to
consider whether in an appropriate case, writ petitioner should be
relegated to avail alternative remedy or not.
But once writ
petition is heard at length and decided against one or the other
party on merits, such a decision/order cannot be held to be bad in
law only on the ground that writ petition was not maintainable
due to availability of alternative remedy.
14.
Having considered the matter on merits as reflected by the
order of the learned Single Judge, we find sufficient merit in this
appeal and hence it is allowed.
The order under appeal is set
aside and the judgment and order of the learned Single Judge is
restored along with a cost of Rs.25,000/- (Rupees twenty five
thousand) to be paid by the respondents to the appellant within
two months.
...........................................J.
[M.Y. EQBAL]
............................................J.
[SHIVA KIRTI SINGH]
New Delhi.
December 17, 2014.
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