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1999 Supreme(Ker) 94

Judges : A.R.LAKSHMANAN,K.NARAYANA KURUP
Kesariya Tea Co.Ltd. - Appellant
Versus
State Bank of India - Respondent
Case No : W.A.Nos.2715, 2722 etc. of 1998
Decided On : 02/24/1999
Advocates Appeared :
K. Rajagopalan & C.J. Xavier For Appellant T.P. Kelu Nambiar, S.K. Bramanandan, George Thomas, K.C. John, P.P. Malhotra, Roy Chacko, M.C. Sen & C.G.S.C. (K. Ramakumar) For Respondents

Important Points

The judgment established the principle that when a contract provides for a mode of settlement of disputes, the parties should follow that remedy, and the extraordinary jurisdiction of the High Court under Art.226 should not be invoked.

Subject

Civil Law - Contract Law

Act Referred

CONSTITUTION OF INDIA : Art.226

Headnote

Writ Petition - Contractual Dispute - Art.226 of the Constitution of India - Clause 13 of the Arbitration Agreement

Fact of the Case:

The appellants filed Original Petitions against the rejection of their claim to repatriate the amount retained from the export of pepper to former U.S.S.R. The dispute arose from the retention of 3% of the export value by the Russian importer, and the appellants sought payment of this amount.

Finding of the Court:

The Court found that the Writ Petitions were not maintainable under Art.226 of the Constitution of India as they raised disputes relating to terms of a private contract. The Court directed both parties to resort to the remedy of arbitration or to file a suit, in accordance with Clause 13 of the Arbitration Agreement.

Issues: The main issue was the maintainability of the Writ Petitions under Art.226 of the Constitution of India, and whether the dispute should be resolved through arbitration as per the contract.

Ratio Decidendi: The Court held that when a contract provides for a mode of settlement of disputes, the parties should follow and adopt that remedy, and the extraordinary jurisdiction of the High Court under Art.226 should not be invoked. The Court emphasized the existence of an effective alternative remedy provided in the contract itself as a ground for declining to exercise its extraordinary jurisdiction.

Final Decision: The Writ Petitions were deemed not maintainable, and the appellants were directed to resort to the remedy of arbitration or to file a suit, in accordance with Clause 13 of the Arbitration Agreement.

Judgment :-

AR. Lakshmanan, J.

By consent of all parties all the Writ Appeals are taken up for final hearing. We have heard Mr. K. Rajagopalan for appellants in all the appeals, Mr. T.P. Kelu Nambiar, Sr. Advocate for Reserve Bank of India., Mr. K. Ramakumar, Senior Central Government Standing Counsel for Union of India, Mr. P.P. Malhotra, Sr. Advocate for the Bank of Foreign Economic Affairs of the U.S.S.R. and respective counsel for respondent No.1 Bank in all the appeals.

2. The unsuccessful petitioners are the appellants in the respective appeals. Original Petitions were filed against the order of rejection of the claim made by the appellants to repatriate the amount shown in the petition, being the amount retained from the date of export of pepper by the appellants to former U.S.S.R. remaining to be paid. The total amount of dues by the Union of India/ third respondent to former U.S.S.R. before its disintegration amounted to several crores of rupees. The prayer now made is for ordering payment of the amount of 3% retained from the export value of the goods made to Sujuzplodoimport, Moscow, the purchaser from the appellant. According to the appellants they have effected exports of pepper during February and September 1988 to the said importer in former U.S.S.R. and as per the terms of the contract 3% of the value of goods was retained for the possible losses of the goods enroute. It is also submitted that the discount was a conditional one made as a precautionary measure to protect the interests of the buyers against possible shortages till the goods reach its destination. Contesting respondents in each Original Petition is in the authorised dealer in foreign exchange. The State Bank of India and other banks have been impleaded as the first respondent in the respective Original Petitions. According to the Banks no amount is due to the appellants from the foreign buyer and that no repatriable amount is outstanding out of the exports made by the appellants and since the appellants were completely paid in terms of the bills drawn by it nothing remains to be realised by the foreign buyer and that the appellants cannot make any claim in the circular in question.

3. The second respondent viz., Reserve Bank of India have filed its counter through the General Manager, Exchange Control Department of the Reserve Bank of India, Kochi. According to the Reserve Bank of India the Rural relationship between the appellants and M/s. Sujuzplodoimport, Moscow is purely contractual and for breach of any conditions in the said contract and for enforcing the rights thereunder or for getting redressal against recovery of amounts pertaining to such contract, the remedy of the appellants is to file a suit in the ordinary civil court and it is not open to the appellants to invoke the extraordinary jurisdiction vested in this Court under Art.226 of the Constitution of India. A detailed counter affidavit has been filed adverting to all the submissions made in the Original Petition and also denying its liability. The third respondent, viz., Union of India have not filed any counter. Additional fourth respondent was impleaded as per earlier orders. They filed a separate affidavit denying their liability. By way of preliminary submission respondent No. 4 submitted that the appellants/ petitioners have no right to get any amount as is claimed and if the appellants have any dispute with the contracting party, it is a contractual dispute for which a writ petition is not an appropriate remedy. It is submitted that the appellants have chosen to file the Writ Petition for some un drawn Balance/retention money. It is also alleged that the appellants had received 97% of the money and 3% was kept as retention money by the Russian importer who has not been made a party in the present petition. Fourth respondent has also stated in the counter affidavit that the dispute if any is a contractual dispute between the appellants and M/s. Sujuzplodoimport, Moscow and the sa







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