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2019 (7) TMI 1959 - HC - Indian LawsMaintainability of petition - availability of alternative remedy - Arbitrable dispute or not - clause 13A of conditions of contract - forfeiture of earnest money deposited - Article 226 of the Constitution of India - HELD THAT:- Clause 13A of conditions of contract provides settlement of disputes through arbitration under the provisions of the Act of 1996 as amended by the Act of 2015. Undoubtedly, the dispute is arbitrable and the petitioner has remedy of arbitration under the Act of 1996. It is well settled that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of availability of alternative remedy, this Court may still exercise its writ jurisdiction at least in three contingencies: (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged - the writ petition is entertained to the extent of examining and finding out as to whether forfeiture of earnest money to the tune of ₹ 50,00,000/- is legal and proper or it suffers from vice of arbitrariness leaving rest of dispute with regard to cancellation of contract, blacklisting and fresh tender for the said work and risk and cost to be raised by the petitioner by way of arbitration as provided in clause 13A of the conditions of contract, as such, the writ petition is entertained only to that extent indicated hereinabove leaving rest of the dispute to be adjudicated by way of arbitration, if any, to be invoked by the petitioner or avail any other remedy available to him under the law. Since the Letter of Intent has been cancelled and consequently, earnest money deposit has been forfeited and that being realm of contract, writ petition under Article 226 of the Constitution of India is not maintainable? - HELD THAT:- It is quite well settled law that where the State or State authorities which is State within the meaning of Article 12 of the Constitution of India behaves arbitrarily, even in the realm of contract, this Court can interfere under Article 226 of the Constitution of India. Admittedly, the respondent-SECL comes under “other authorities” within the meaning of Article 12 of the Constitution of India and therefore, it has an obligation to act fairly not arbitrarily even in contractual matter. It is the case of the petitioner that on 11.6.2018, 19.6.2018 and 20.6.2018 the petitioner demanded possession of subject land to commence the work as even in inspection carried out by the team of CMPDI, hindrance was caused by the villagers and inspection of work could not be completed. The respondents in para-8 of their return have also admitted that though the subject land on which work was to be executed was under their possession, but there was some obstruction by villagers agitation due to which there was little delay in handing over the site, but the fact remains that no document has been brought on record by the respondent-SECL that after vesting of land under Section 11 of the Act of 1957, possession of subject land was handed over to SECL before issuance of Letter of Intent and SECL, in turn, has placed the petitioner in possession to initiate the work awarded to him by Letter of Intent dated 2.5.2018. The petitioner/contractor had reasonable cause or valid reason in not commencing the execution of work within the stipulated time in terms of clause 6.1 of conditions of contract and therefore, forfeiture of earnest money deposit on account of non-execution work within the stipulated time and consequently, forfeiture of earnest money deposit to the extent of ₹ 50,00,000/- suffers from vice of arbitrariness and smacks total non-application of mind, which is violative of Article 14 of the Constitution of India and consequently, the impugned order to that extent deserves to be struck down. The impugned order dated 26.2.2019 (Annexure P/1) passed by respondent No.3 to the extent of forfeiture of earnest money deposit i.e. ₹ 50,00,000/- is set aside - The respondents are directed to make payment of the aforesaid amount to the petitioner within a period of four weeks from today. However, with regard to cancellation of subject work and other related disputes, parties are left to invoke clause 13 and clause 13A of conditions of contract relating to settlement of dispute by way of arbitration, if any. The writ petition is allowed.
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