Back
2021 Supreme(Online)(Sikk) 644
HIGH COURT OF SIKKIM
Biswanath Somadder, CJ, Bhaskar Raj Pradhan, J
Linkwell Telesystems Pvt. Ltd. – Appellant
Versus
State Of Sikkim – Respondent
WA No. 03/2021
For the Appellants/Petitioners: Sajal Sharma
For the Respondents: Sudesh Joshi, Yadev Sharma, Sujan Sunwar, Sangay Gyurmay Bhutia
The High Court should not exercise discretionary writ jurisdiction in contractual disputes when an efficacious alternative legal remedy, such as arbitration, is available to the parties, unless exceptional circumstances demonstrate a failure of justice or patent illegality.
Headnote:(A) Constitution of India - Article 226 - Arbitration and Conciliation - Writ jurisdiction in contractual matters - Existence of an arbitration clause does not divest the High Court of jurisdiction, but is a relevant factor in determining the existence of an efficacious alternative remedy - High Court should not entertain writ petitions in contractual disputes as a matter of course when a statutory forum is available for redressal - Judicial interference in such matters is permissible only in exceptional cases or where there is clear bad faith - (Paras 4, 5, 6)
(B) Intra-Court Mandamus - Scope and ambit - Appellate interference is restricted to cases involving palpable infirmity or perversity in the lower court’s reasoning - An order supported by cogent and justifiable reasons should not be disturbed solely because an alternative view is possible - (Paras 5, 6)
Facts of the case:
The appellant challenged the termination of a service agreement and the subsequent floating of a new tender for the same work. The appellant had already initiated proceedings under the relevant arbitration law to resolve the dispute. The lower court dismissed the writ petition, observing that the petitioner had an efficacious alternative remedy under the arbitration mechanism and failed to demonstrate exceptional circumstances warranting exercise of extraordinary writ jurisdiction.
Findings of Court:
The court found that the lower court did not commit any palpable infirmity or perversity in declining to exercise its discretionary writ jurisdiction, noting that the appellant had already moved the arbitration forum as stipulated in the contract.
Issues: Whether the High Court is obligated to exercise writ jurisdiction under the Constitution in a commercial dispute despite the existence of a binding arbitration clause and whether the termination of a service contract requires judicial interference via writ relief.
Ratio Decidendi: When a contract contains a clear arbitration clause and a party has already invoked the said mechanism for dispute resolution, the High Court’s discretionary power to grant writ relief in contractual matters should not be exercised, as the arbitration framework constitutes an efficacious alternative remedy.
Result: Appeal dismissed.
| Table of Content |
|---|
| 1. writ jurisdiction is not a substitute for efficacious arbitration remedies. (Para 1 , 2 , 3 , 4) |
| 2. limited appellate interference in discretionary writ court determinations. (Para 5 , 6 , 7) |
| 3. final dismissal of the appeal on merits. (Para 8) |
HON’BLE MR. JUSTICE BISWANATH SOMADDER, CHIEF JUSTICE HON’BLE MR. JUSTICE BHASKAR RAJ PRADHAN, JUDGE …
JUDGMENT: (per the Hon’ble, the Chief Justice)
Let a photocopy of the receipt issued by the bank indicating payment of costs of Rs.5,000/- in terms of our order dated 03rd December, 2021, be taken on record.
2. This appeal, preferred by the writ petitioner, arises in respect of a judgment and order dated 09th June, 2021, passed by a learned Single Judge in W.P.(C) No.23 of 2021 (M/s Linkwell Telesystems Pvt. Ltd. vs. The State of Sikkim & Ors.). By the impugned judgment and order, the learned Single Judge was pleased to dismiss the writ petition for reasons stated therein.
3. Briefly stated, the facts of the case, culled out from the impugned judgment and order, are as follows: -
“3.(i) Briefly, the case of the petitioner is that vide Agreement dated 04.05.2017, the Petitioner was awarded the Contract for the purpose of supply and maintenance of POS Devices, POS application, its installation, maintenance, integration with the TPDS Software and Automation of Fair Price Shops of the 1421 Fair Price Shops in Sikkim.
(ii) As per Clause 2 of the said Agreement, the Petitioner was to adhere to the Request for Proposal (RFP) Guidelines and the Service Level Agreement also formed a part of the Agreement.
(iii) Clauses 2 and 8 of the Agreement were to be read together to determine the rights and liabilities of the parties.
(iv) Clause 7.9 of the RFP contained the Arbitration Agreement as defined under Section 7 of the Arbitration and Conciliation Act, 1996. The relevant portion of Clause of 7.9 of the RFP inter alia reads as under; “7.9. Resolution of Disputes.
FCS&CA Department and the successful bidders shall make every effort to resolve amicably by direct informal negotiation, any disagreement or dispute, arising between them under or in connection with the contract.
Any dispute or difference whatsoever arising between the parties to this Contract out of or relating to the meaning, scope, operation or effect of this Contract or the validity of the breach thereof, which cannot be resolved, shall be referred to a sole Arbitrator to be appointed by mutual consent of both the parties herein. If the parties cannot agree on the appointment of the Arbitrator within a period of one month from the notification by one party to the other of existene of such dispute, then the Arbitrator shall be nominated by the Secretary, Law Department, Government of Sikkim (“Law secretary”). The provisions of the Arbitration and Conciliation Act, 1996 will be applicable and the award made thereunder shall be final and binding upon the parties hereto, subject to legal remedies available under the law. Such differences shall be deemed to be a submission to arbitration under the Indian Arbitration and Conciliation Act, 1996, or of any modifications, rules or re-enactments thereof. The arbitration proceedings will be held at Gangtok, Sikkim, India.”
(v) The work was to be taken up by the Petitioner in a phased manner as per the terms and conditions specified in Order No.1804/FCS&CA, dated 29.03.2017. The Petitioner commenced the works accordingly.
(vi) By a Letter, dated 25.05.2020 (Annexure-12), addressed to the State-Respondent No.2 by the Petitioner, the Petitioner raised a Bill of Rs.3,65,01,842.00 (Rupees three crores, sixty five lakhs, one thousand, eight hundred and forty two) only, and requested the State- Respondent No.2 to release the pending payment within seven days to enable them to run the project, besides informing them that the Petitioner may not be able to manage operations beyond 01.06.2020 unless the payments were made over to them for the Bills raised.
(vii) From the month of June, 2020, the Peti
