Rajendra Mimani vs. Power Transmission Corporation Of Uttarakhand

Facts

The petitioner, Rajendra Mimani, was awarded two contracts by the Power Transmission Corporation of Uttarakhand Ltd. (PTCUL) for supply of materials and for erection, testing, and commissioning of equipment. Disputes arose, leading the petitioner to invoke the arbitration clause. An arbitrator was appointed, and arbitration proceedings are ongoing. The Arbitrator had passed an interim order directing PTCUL not to take coercive steps against the petitioner. Despite this, PTCUL, through respondent no. 2, unilaterally terminated the contract on January 19, 2023, forfeited a performance bank guarantee of Rs. 2,66,06,677, and issued notices regarding blacklisting and deposition of Labour Cess. The petitioner filed a writ petition seeking to quash these termination and forfeiture actions and to direct the return of the forfeited bank guarantee and retention amounts.

Held

The High Court held that the writ petition should not be entertained at the admission stage. The Court noted that a dispute arose from a contract which contained an arbitration clause. The petitioner had invoked this clause, an arbitrator had been appointed, and arbitration proceedings were underway. Crucially, the Arbitrator had already taken note of the dispute and passed an interim order. Given that the dispute was already seized by the Arbitrator, who had the power to address all grievances and pass appropriate orders, the High Court found no reason to intervene through a writ petition. Therefore, the writ petition was dismissed in limine. The ratio decidendi is that a writ petition is not the appropriate remedy when a statutory mechanism like arbitration is already in motion and capable of resolving the dispute.

Key Issues

1. Whether the High Court should entertain a writ petition when arbitration proceedings are pending and an Arbitrator has been appointed, particularly when the Arbitrator has already passed an interim order. (Question of law) Petitioner's arguments: The petitioner contended that the actions of the respondent authorities were malafide and arbitrary. Specifically, the contract was terminated unilaterally without issuing any show cause notice. The petitioner sought to quash the impugned letters and direct the return of the forfeited performance bank guarantee and retention amount. Respondent's arguments: The respondents argued that since the parties are already before the Arbitrator, who was appointed by the High Court, the petitioner should take all his grievances before the Arbitrator. The respondents relied on the fact that an arbitration clause existed, arbitration was invoked, an arbitrator was appointed, and interim orders were passed by the Arbitrator.