2015 (5) TMI 1142 - HC - Indian Laws

Court enforces arbitration agreement in contractual dispute, limits Article 226 jurisdiction

Uttaranchal Paper Converters & Publishers Thru. Prop. Versus The State Of U.P. Thru. Secy. Basic Education & 10 Ors.

Uttaranchal Paper Converters & Publishers Thru. Prop. Versus The State Of U.P. Thru. Secy. Basic Education & 10 Ors. - TMI Issues:Petitioner seeking refund of deducted amount from contract, existence of arbitration agreement, jurisdiction of court under Article 226 in contractual matters.Analysis:The judgment deals with a petition seeking a refund of an amount deducted from a contract, where the petitioner claimed that 5% of the contract value was wrongfully withheld by the third respondent. The court noted the presence of an arbitration agreement in the contract, emphasizing that granting the relief sought would essentially amount to a money decree. The judges held that since there is an arbitration agreement between the parties, the petitioner must invoke the terms of the agreement to resolve the dispute.In a similar case, the court referred to a previous judgment where a Division Bench had declined to entertain a similar petition under Article 226 of the Constitution. The court in the previous case highlighted that contractual matters involving issues such as work satisfaction, compliance with agreement terms, and payment disputes should be addressed by the competent authority or through arbitration if there is an agreement between the parties. The court stressed that the jurisdiction under Article 226 should not be exercised in such cases, as the remedy for the contractor lies in filing a civil suit or invoking the arbitration agreement.The judges in the present case, following the precedent set by the Division Bench, declined to entertain the petition and directed the petitioner to utilize the arbitration agreement to resolve the dispute. They emphasized that while there is no absolute bar on entertaining petitions in contractual matters, in cases like the present one, where various factual issues need determination, the court's jurisdiction under Article 226 is not suitable. The court concluded by dismissing the petition and ordered no costs to be awarded.In summary, the judgment underscores the importance of arbitration agreements in contractual disputes and highlights the limited scope of the court's jurisdiction under Article 226 in such matters. It directs parties to resort to arbitration for resolution and emphasizes that the court is not inclined to grant money decrees in contractual disputes, reiterating the need to adhere to the terms of the agreement for dispute resolution.