Can High Court entertain a writ petition, notwithstanding the existence of Arbitration Clause in the contract?

Uttar Pradesh Power Transmission Corporation Ltd. Vs CG Power And Industrial Solutions Limited [SLP(C) 8630 OF 2020]

The Allahabad High Court allowed a writ petition filed by CG Power and Industrial Solutions Limited challenging the directions issued by Executive Engineer, Unnao UPPTCL it to remit Labour Cess amounting to Rs.2,60,68,814/-, under Sections 3 sub-section (1) and (2) of the Building and Other Construction Workers’ Welfare Cess Act, 1996, read with Rules 3 and Rule 4 (1), (2) (3) and (4) of the Building and Other Construction Workers Welfare Cess Rules, 1998, 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.

The court also noted the existence of the arbitration clause in the contract executed between the parties. However it was of the view that:

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;
  2. Where there is failure of principles of natural justice or
  3.  Where the impugned orders or proceedings are wholly without jurisdiction or
  4. The vires of an Act is under challenge.

The court relied upon Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and Ors. reported in AIR 1999 SC 22, Pimpri Chinchwad Municipal Corporation and Ors. V. Gayatri Construction Company and Ors, reported in (2008) 8 SCC and Harbanslal Sahnia and Ors. v. Indian Oil Corporation Ltd reported in (2003) 2 SCC 107.

The bench reiterated that relief under Article 226 of the Constitution of India may be granted in a case arising out of contract, however, it dismissed the appeal stating that 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.

Related articles

Two Sides of Related Party Transactions- A Big jigsaw puzzle?

#Related Party Transaction or Jigsaw Puzzle Game for Corporate usually played around in compliance with statutory requirement but skeptically remains a big Corporate Governance issue. The RPT transactions are always discouraged by financial institutions...

Abrogation of Article 370 and the new domicile law: Story of Jammu And Kashmir

Introduction The New Domicile Law has enraged the people of Kashmir valley, fuelling their mind with insecurity and anxiety regarding their future. After the abrogation of article370 and 35A the centre passed J&K Reorganization bill...

Online Proficiency Self-Assessment Test for Independent Directors – The Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019

Introduction “Heterogeneous Board of Directors with independent thinking enforce governance, and diversity strengthens creativity.” – Pearl Zhu The dramatic changes in the recent past in the regulatory environment in India on Corporate Governance with the enactment of...

BOOKS ON LANDMARK JUDGMENTS

10 Judgements That Changed India By Zia Mody This book presents a compilation of 10 essays on some of the most influential judgments’ that were passed by the Supreme Court of India and proved to be...

The Case That Shook India: The Verdict That Led To The Emergency

On 12 June 1975, for the first time in independent India’s history, the election of a prime minister was set aside by a high court judgment. The watershed case, Indira Gandhi v. Raj Narain, acted...