The court ruled that disputes arising under a contract with an arbitration clause are not maintainable in writ petitions, emphasizing the arbitration process must be followed for resolution.

ORDER :

1. Heard Sri. H. Giridhar, learned counsel for the petitioner and Sri Vaibhav Ravi Malimath, learned counsel for the respondent.

2. The instant writ petition is filed challenging the termination notice dated 10.08.2023, Annexure-E, issued by the respondent.

3. The brief facts of the case are that the respondent invited tender No. TK-RDG-72 for providing skilled manpower for various services, including Professional Housekeeping, Waste Disposal, Sewerage Works, Security, Rest Houses, Offices, Field Work, Gardening, and other Engineering works, as well as providing Laundry Services in Rest Houses at South Railway Construction Offices in Bengaluru. The petitioner participated in the tender process and was declared the successful bidder. Consequently, the respondent entered into an agreement for the work with the petitioner, who successfully performed the contract. While the bills were submitted and pending clearance, the Central Bureau of Investigation (CBI) registered a case against the Assistant Executive Engineer of the respondent concerning the alleged demand and acceptance of an undue advantage. In light of the CBI's investigation, the respondent withheld the Earnest Money Deposit (EMD) and Security Deposit (SD) amounts. The petitioner made representations requesting the release of the said amounts, along with the final bill. However, instead of considering the petitioner's representation and refunding the EMD and SD, the respondent issued a final termination notice on 10.08.2023. The total amount withheld by the respondent towards the EMD and SD is Rs. 1,01,80,070/-. Aggrieved by the termination notice, the petitioner has preferred the present writ petition.

4. Sri. H. Giridhar, learned counsel for the petitioner, submits that the petitioner participated in the tender process and emerged as the successful bidder. The petitioner has completed the works as per the terms of the tender contract, and the completion of the works has been certified by the competent authorities. The case registered by the Central Bureau of Investigation (CBI) against the officials of the respondent is unrelated to the work performed by the petitioner. The amount retained, consisting of the Earnest Money Deposit (EMD) and Security Deposit (SD), is required to be released upon completion of the work. The withholding of these deposit amounts is illegal and contrary to the terms and conditions of the contract. In the alternative, learned counsel submits that the withholding of the amounts should only be to the extent of any loss or damage sustained by the Railways due to a decision influenced by illegal gratification. However, the respondent has failed to quantify any such loss or damage under the contract, and the reasons provided for withholding the amounts are vague. With the above submissions, learned counsel prays that the termination notice be quashed and that the respondent be directed to release the EMD and SD amounts.

5. Per contra, Sri Vaibhav Ravi Malimath, learned counsel appearing for the respondent, submits that the contract in question was awarded and the final bills were settled with the petitioner due to illegal gratification by the officials of the respondent. The Central Bureau of Investigation (CBI) has conducted an inquiry and gathered evidence regarding the illegal gratification allegedly offered by the petitioner in relation to the work in question. Learned counsel further submits that, as per the contract agreement, the re