Article 226 of the Constitution of India empowers the high courts to issue any person or authority, including any government, directions, orders or writs "for the enforcement of any of the rights conferred by Part III and for any other purpose".1
Though "any other purpose" as provided for in Article 226 alludes that high courts have a wide discretion in the exercise of writ jurisdiction, judicial precedents hold otherwise. As has been held in Veerappa case2, writs under Article 226 are intended to enable the high court to issue them in grave cases where subordinate tribunals or bodies act wholly without or in excess of jurisdiction, or in violation of principle of natural justice, or refuse to exercise jurisdiction vested in them, or there is an error apparent on face of record and that such act, omission, error or excess has resulted in manifested injustice.
In relation to application of writ jurisdiction in private matters, the apex court has elucidated that writ petition is a remedy in public law and can be filed against Government or State or their instrumentalities and private individuals cannot be equated with State or its instrumentalities. However, private parties acting in collusion with State can be respondents in writ petitions.3 Therefore, as a principle, in case of property rights and in disputes between private individuals, writ court should not interfere unless there is any infraction of statute, or it can be shown that a private individual is acting in collusion with a statutory authority.4
Further, one may direct attention to the case where State instrumentalities act in contractual capacity. Judicial precedents hold that where there is a contract entered into between the State and the persons, such that this contract is non-statutory and creates a purely contractual relation where the rights are governed only by the terms of the contract, then no writ or order can be issued under Article 226 so as to compel the authorities to remedy breach of contract.5
Recently, judiciary has been of the opinion that even where there is an arbitration clause between a State instrumentality and a private party, such clause does not act as an absolute bar to the remedies under Article 226.6 Hence, where the State instrumentality violates the constitutional mandate to act fairly and reasonably under Article 14, relief under Article 226 can be sought. Therefore, recourse to jurisdiction under Article 226 is not excluded altogether in contractual matters.7
The above rationale was upheld in the recent case of Uttar Pradesh Power Transmission Corporation Ltd. v. CG Power and Industrial Solutions Ltd. & Anr8. In this case, the Respondent no. 1 & UPPTCL (Petitioner) entered into a Framework Agreement on 05.03.2010 for construction of 765/400 kV substation at Unnao. The agreement was further divided into 4 sub-agreements. First agreement was for supply-delivery of equipment. Second agreement was for handling-erecting-testing of equipment. First & second agreement were non civil in nature.
The Petitioner vide its letter dated 02.09.2016 informed the Respondent no. 1 that Rs. 2,60,68,814 was due on account of labour cess with respect to the First agreement (supply agreement). The Respondent objected the imposition of the labour cess on the note that the first agreement on which the labour cess is imposed is a "supply contract", and the respondent's company was not covered under the definition of contractor under the Cess Act. The Petitioner without considering the representation made by the respondent tried to recover the cess amount from pending bills of the Respondent. Pursuant to this action of the Petitioner, the Respondent no. 1 filed a writ petition under Article 226 of the Constitution before the High Court of Judicature at Allahabad (Lucknow Bench). High Court accepted the petition and by its order set aside the letter dated 02.09.2016 and 29.12.2018 issued by the Petitioner directing the Respondent no. 1 to discharge the due labour cess. The Petitioner challenged the impugned order of the High Court dated 24.02.2020 by way of the present petition under Article 136 of the Constitution. The Petitioner challenged the jurisdiction/ power of the High Court to adjudicate a contractual dispute where the contract contains an arbitration clause and when there is an alternative remedy available.
The Supreme Court rejected the plea of the Petitioner and upheld the decision of the High Court and decidedly held that the existence of arbitration clause does not debar the High Court from entertaining a writ petition under Article 226 of the Constitution.
Discussing the case of Dewan Chand Builders and Contractors9, the apex court noted that cess under the Building and others Construction Workers, Act, 1996 (BOCW Act) is leviable in respect of building and other construction works (and not in supply contract/ noncivil works). The court noted that the Petitioner demanded and partly realised cess on the supply contract on the basis of report of the CAG and it was impermissible for the Petitioner to issue the impugned communication to realise cess solely based on the CAG report.
Further, the Supreme Court recorded that relief under Article 226 of the Constitution can be granted in contractual disputes. However, given the discretionary nature of writ jurisdiction, it should not be exercised in matters involving adjudication of disputed questions of fact which may require detailed analysis of evidence. In relation to the power of the courts to issue prerogatives under Article 226, the apex court while relying on Whirlpool Corporation10 held that alternative remedy does not operate as a bar in the following contingencies:
- Where the writ petition seeks enforcement of any of the fundamental rights;
- Where there is violation of principles of natural justice;
- Where the impugned orders or proceedings are wholly without jurisdiction; and
- Where the order or the proceedings are wholly without jurisdiction or where the vires of an Act is challenged.
However, it must be noted that writ petition under Article 226 though maintainable despite the arbitration agreement does not render arbitration agreement and procedure infructuous. In fact, the Supreme Court has criticised the approach of High Courts allowing orders of the arbitral tribunal to be challenged under Article 226. It has been held that the intervention of a high court by entertaining writ petition under Article 226 against every order of the arbitral tribunal is impermissible since the object of minimizing judicial intervention during an arbitration procedure will certainly be defeated if the high courts are allowed to entertain every application under Article 226 against the orders of the arbitral tribunal.11
CONCLUSION
It is clear from the above that though the courts are restricted to entertain a contractual dispute under Article 226 of the Constitution, however they can, in very limited cases, entertain a dispute where the breach of contract on the part of the State violates fundamental rights of the other party. However, it needs to be decided on a case-to-case basis as to whether recourse to public law remedy is justified. But it has been held that though a writ petition under Article 226 of the Constitution is available to an aggrieved party, the ground for challenge in such petitions is limited as there is alternative remedy available within the Arbitration and Conciliation Act itself.12
Footnotes
1. INDIA CONST. art. 226.
2. Veerappa v. Raman & Raman Ltd. And Ors, [1952] 1 SCR 583, para 20.
3. Shalini Shyam Shetty and Ors. v. Rajendra Shankar Patil, [2010] 8 SCR 836, para 64.
4. Ibid. at para 65.
5. Radhakrishna Agarwal v. State of Bihar, [1977] 3 SCR 249; DFO v. Biswanath Tea Company Ltd., [1981] 3 SCR 662; Premji Bhai Parmar v. Delhi Development Authority, [1980] 2 SCR 704.
6. Unitech Ltd. V. Telangana State Industrial Infrastructure Corporation 2021 SCC OnLine SC 99.
7. Ibid.
8. AIR 2021 SC 2411.
9. Dewan Chand Builders and Contractors v. Union of India (UOI) and Ors.( 2012 ) 1 SCC 101
10. Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and Ors. (1998)8 SCC 1.
11. S.B.P. & Co. v. Patel Engineering Ltd. & Anr, (2005) 8 SCC 618.
12. State of Orissa and Ors. v. Gokulananda Jena, (2003) 6 SCC 456.
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