The Supreme Court has cautioned High Courts from invoking jurisdiction under Article 226 of Constitution in contractual matters with arbitration clause.
The division bench comprising of Justice SK Kaul and Justice MM Sundresh while adjudicating upon a Civil Appeal assailing High Court's order observed that the same isn't an appropriate remedy .
The case of the petitioner-Housing Board was that the High Court via its impugned order has asked it to refund ₹1,66,05,000/- and ₹21,66,470/- which the Board had forfeited while terminating the contract with respondent-V. Vandemataram Projects Private Limited.
The Court was clear on the point:
"We are of the view that the invocation of Article 226 of the Constitution of India for a contractual matter of this nature, where there was an existing arbitration clause was not the appropriate remedy nor could the High Court have examined this and granted the nature of relief which has been done by the impugned order dated 30.09.2021."
The Top Court wasn't convinced with the respondent's submission that the High Court order was akin to consent order. It was further disappointed in High Court for not making an endeavour to see that the parties sit together and negotiate a settlement.
On respondent's contention seeking restoration of the amount enchashed qua bank guarantee, the Court had this to say:
"We are not inclined to accept the plea of the learned counsel for the respondent in the present case but do believe that if the respondent had invoked or invokes the process under the Arbitration Act, that is an aspect which can been examined by the Arbitral Tribunal to be constituted in accordance with law."
It thus set aside the impugned order accordingly.
Read Order Here:
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