Facts of the Case

The petitioner, M/s Jaypee Projects Limited, was awarded a contract by the Public Works Department (Roads & Buildings), Government of Tripura, for the construction of the Composite Tripura Legislative Assembly Building and the New Secretariat Complex at Agartala. Upon successful completion of the project, the work was duly certified and handed over to the Government authorities without any dispute regarding the quality or execution of the work.

Subsequently, the petitioner claimed payment of outstanding dues amounting to Rs. 27,46,96,122.55, including escalation charges, GST reimbursement, VAT reimbursement and other pending contractual payments together with interest at 18% per annum. Despite repeated representations and reminder letters, the alleged outstanding amounts remained unpaid.

Aggrieved by the prolonged non-payment, the petitioner invoked the writ jurisdiction of the High Court under Article 226 of the Constitution of India, alleging violation of Articles 14, 19(1)(g), 21 and 300A and seeking directions for immediate release of the dues with interest.

 

Issues Involved

  1. Whether a writ petition under Article 226 of the Constitution of India is maintainable for recovery of disputed contractual dues.
  2. Whether the High Court should entertain a writ petition when disputed questions of fact require adjudication.
  3. Whether the existence of an arbitration clause and alternative dispute resolution mechanism bars exercise of writ jurisdiction in contractual disputes.
  4. Whether alleged non-payment of contractual dues constitutes violation of constitutional rights under Articles 14, 19(1)(g), 21 and 300A.

 

Petitioner’s Arguments

The petitioner contended that:

  • The entire contractual work had been completed to the satisfaction of the respondents, and completion certificates had already been issued.
  • Under the contractual clauses governing escalation, taxes and reimbursement, the petitioner was legally entitled to receive the pending escalation amount, GST reimbursement and other contractual payments.
  • The respondents had substantially admitted their liability and merely postponed payment on the ground of non-availability of Government funds.
  • Indefinite withholding of legitimate contractual dues was arbitrary and violative of Articles 14, 19(1)(g), 21 and 300A of the Constitution.
  • Although the agreement contained an arbitration clause, the respondents' admitted liability made the writ petition maintainable for enforcement of undisputed contractual obligations.
  • The Court should direct immediate payment along with interest at 18% from the date the amounts became due.

 

Respondent’s Arguments

The respondents submitted that:

  • The writ petition involved several disputed questions of fact regarding the quantum and admissibility of the claims.
  • The escalation claim was not maintainable under Clause 47 of the contract because the stipulated completion period attracted the contractual restriction on escalation.
  • GST reimbursement was also subject to contractual conditions and determination of delay attributable to the contractor.
  • Certain payments had already been released, while the remaining amounts were dependent upon availability of funds, approval of time extension and finalization of deviations.
  • The agreement itself provided an effective alternative dispute resolution mechanism through arbitration, which the petitioner had already invoked by seeking appointment of an arbitrator.
  • Since disputed contractual rights were involved, the writ petition was not maintainable under Article 226.

 

Court Order / Findings

The High Court dismissed the writ petition and held that:

  • The dispute involved complex and disputed questions of fact relating to contractual payments, escalation, GST reimbursement and computation of dues.
  • The petitioner itself had raised varying claims at different stages, making factual adjudication necessary.
  • Such disputed contractual issues cannot ordinarily be decided in writ jurisdiction under Article 226.
  • Where an effective alternative remedy, including arbitration, exists under the contract, the High Court should ordinarily decline to exercise its extraordinary writ jurisdiction.
  • The Court relied upon the Supreme Court judgment in Bhaven Construction v. Executive Engineer, Sardar Sarovar Narmada Nigam Ltd. & Another, (2022) 1 SCC 75, reiterating that writ jurisdiction should be exercised only in exceptional circumstances where statutory remedies are ineffective.
  • Since arbitration proceedings had already been sought by the petitioner and contractual remedies remained available, the writ petition was held to be not maintainable and was accordingly dismissed.

 

Important Clarification

The judgment reiterates that:

  • Recovery of disputed contractual dues generally cannot be pursued through a writ petition under Article 226.
  • Courts ordinarily refuse to adjudicate disputed questions of fact involving contractual rights in writ jurisdiction.
  • Existence of an arbitration clause or contractual dispute resolution mechanism is a significant factor against entertaining a writ petition.
  • Mere allegation of non-payment by a Government authority does not automatically justify invocation of constitutional writ jurisdiction where disputed facts exist.
  • Constitutional remedies are exceptional and do not replace agreed contractual dispute resolution mechanisms.

 

Sections / Constitutional Provisions / Contractual Clauses Involved

  • Article 226 – Constitution of India
  • Article 14 – Constitution of India
  • Article 19(1)(g) – Constitution of India
  • Article 21 – Constitution of India
  • Article 300A – Constitution of India
  • Clause 24 – Alternative Dispute Resolution
  • Clause 25 – Arbitration Procedure
  • Clause 26 – Contractual Dispute Resolution
  • Clause 31.1 – Final Completion Certificate
  • Clause 34 – Defect Liability Period
  • Clause 37.2 – Taxes, GST and Reimbursement
  • Clause 47 – Price Escalation

 

Link to download the order -

https://www.mytaxexpert.co.in/uploads/1782969989_89compressed.pdf 

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