Arbitration clause does not bar jurisdiction of Writ Courts - Supreme Court reiterates its position

The Supreme Court of India, in Union of India v Tantia Construction Pvt. Ltd., held that the existence of an arbitration clause does not ipso facto bar the writ jurisdiction of the High Courts and the Supreme Court under Articles 226 and 32 of the Constitution respectively.

The case concerned a contract for the construction of a rail over-bridge. The respondent approached the High Court requesting the issuance of a writ to quash a decision of the Deputy Chief Engineer (Construction) of the Indian Railways. The impugned decision of the Deputy Chief Engineer, according to the company, had the effect of requiring the company to execute works of larger quantity than originally agreed upon. The writ was issued and the same was appealed against before the Supreme Court.

  

Section 5 of the Arbitration and Conciliation Act, 1996 states: "Extent of judicial intervention. Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part." Further, Section 8 (1) states: "A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration." Based on this, the Railways argued that the High Court was bound to not intervene in the dispute and dismiss the writ petition directing the parties to arbitration.

However, the Supreme Court observed that the availability of an alternative remedy is not an absolute bar to the jurisdiction of Writ courts. Therefore, it was held that the mere existence of an arbitration clause does not ipso facto preclude the availability of writ remedy.

The Supreme Court's decision is line with its earlier decisions in this regard which include Modern Steel Industries vs. State of U.P. and others [(2001) 10 SCC 491],  Whirlpool Corporation vs. Registrar of Trade Marks [(1998) 8 SCC 1]; National Sample Survey Organisation and Another vs. Champa Properties Limited and Another [(2009) 14 SCC 451] and Hindustan Petroleum Corporation Limited and Others vs. Super Highway Services and Another [(2010)3 SCC 321], all of which have been expressly relied upon.

Though the argument of the Railways centered around the above mentioned statutory provisions, the reasoning of the Court centered around an examination of the nature of the bar created to writ remedy by the availability of an alternative efficacious remedy. That is while Railways sought to impose a statutory limitation on the writ jurisdiction, the Courts reasoning centered around a non-statutory and somewhat judicially created limitation to writ jurisdiction of courts. This may be justified by referring to the case of L. Chandra Kumar vs Union Of India And Others [AIR 1997 SC 1125] wherein it was held that no statute could create an absolute bar on jurisdiction of Writ Courts under Articles 226 and 32 of the Constitution. Though this was not expressly stated, the Court appears to have assumed that if there was to be a limitation of writ jurisdiction by the existence of an arbitration clause, the same has to be on account of the arbitration clause qualifying to be an alternative efficacious remedy and not because of a statutory bar in this regard.