Pudukottai Green Power PVT LTD. vs. Nhpc LTD.

Held

The High Court, while acknowledging that the writ petition was maintainable under Article 226 of the Constitution, particularly in cases involving State instrumentalities as per the Supreme Court's ruling in Unitech Limited, ultimately upheld the Single Judge's decision to relegate the appellant to arbitration. The Court reasoned that the appellant's contentions, which sought to shift the burden of GST payment to the first respondent despite the contractual clause, could potentially lead to a re-writing of the contract terms. The Court found that such a complex contractual interpretation and dispute resolution was best suited for an arbitrator. Therefore, although the Court may not have agreed with all the reasons or observations of the learned Single Judge, it found the eventual conclusion to dismiss the writ petition and direct the parties to arbitration to be sound and not deserving of interference. The Writ Appeal was dismissed.

Facts

The appellant, Pudukottai Green Power Private Ltd., entered into an agreement on May 26, 2017, with NHPC Limited. Clause 14 of this agreement stipulated that the first party (NHPC) would be responsible for all taxes, rates, cess, and levies, including penalties, in respect of the premises. The appellant paid GST amounting to Rs. 43,73,269/- for the period July 2017 to June 2021, which they contend was not contemplated by the parties at the time of the agreement, as GST was introduced later and lease transactions were not previously taxed. The appellant filed a writ petition seeking a direction for NHPC to refund this amount and pay future GST. The Writ Court dismissed the petition, relegating the appellant to arbitration. This Writ Appeal challenges that dismissal order.

Key Issues

1. Whether a writ petition under Article 226 of the Constitution of India is maintainable against a State instrumentality, notwithstanding the presence of an arbitration clause in the agreement, particularly when the matter involves a State or its instrumentality? Petitioner's Arguments: The appellant argued that the writ petition was maintainable because the matter involved a State instrumentality (NHPC). They relied on the Supreme Court's decision in Unitech Limited Vs. Telangana State Industrial Infrastructure Corporation (TSIIC) [2021 SCC Online SC 99], which held that writ petitions are maintainable in such cases despite an arbitration clause. Respondents' Arguments: The respondents did not explicitly argue against the maintainability of the writ petition. However, the Single Judge's order, which was upheld by the appellate court, was based on the discretion of the court to relegate parties to arbitration when an arbitration clause exists, especially when the contentions might lead to re-writing contract terms.