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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 11465  OF 2014 [Arising out of S.L.P.(C)No.8101 of 2011]

M/s. Ram Barai Singh & Co.        …..Appellant

Versus

State of Bihar & Ors.          …..Respondents

J U D G M E N T

SHIVA KIRTI SINGH, J.

1. Heard the parties.  Leave granted.  

2. This  appeal  is  directed  against  final  judgment  and  order  

dated 12.01.2011 passed by the Division Bench of  Patna High  

Court in L.P.A. No.762 of 2009 whereby the Letters Patent Appeal  

preferred by the respondents herein was allowed and order of the  

learned Single Judge dated 18.02.2009 in Writ  Petition bearing  

C.W.J.C. No.10173 of 2008 was set aside on the sole ground that  

there  was  an arbitration clause in  an agreement  between the  

parties and since such alternative remedy was not availed by the  

appellant, the writ petition itself was not maintainable.   

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3. Learned counsel for the appellant has assailed the aforesaid  

order of the Division Bench on facts as well as on law.  On law, it  

was contended that the writ petition could not have been held  

not maintainable, more so when no such objection was taken by  

the other side. On facts,  it  was submitted that the agreement  

noticed by the Division Bench no doubt contained an arbitration  

clause entitling either of the parties to invoke arbitration by the  

concerned Superintending Engineer in case of any dispute arising  

out of the agreement but the Division Bench failed to notice that  

the agreement itself was no longer in existence because the work  

was completed long back and payments including payment on  

account of labour escalation costs amounting to Rs.9.53 lacs was  

paid  in  February  1992.   Thus,  according  to  the appellant,  the  

agreement dated 06.02.1989 had worked itself  out and it  was  

much later that a dispute arose when the respondent authorities  

withheld the security amount of the appellant of Rs.30 lacs for a  

long period.  On persistent demand, Rs.20 lacs out of the security  

amount, was returned after 10 years in December 2002 and that  

too without any interest.  At that stage appellant came to know  

that  Engineer-in-Chief  vide  an  order  dated  09.06.2001  had  

ordered for making a recovery of Rs.9.53 lacs from the appellant  

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which had been paid long back on account of labour escalation  

cost.

4. The  appellant  preferred  a  writ  petition  bearing  

C.W.J.C.No.3686 of 2005 to claim the interest on undue delay in  

refunding  the  security  deposit  and  against  the  direction  for  

recovery of labour escalation cost.  The respondents did not raise  

plea of arbitration clause and that writ petition was disposed of  

on  20.09.2006  allowing  12%  interest  on  account  of  delay  in  

payment of security amount.  The issue of labour escalation cost  

was remanded back to the concerned Engineer-in-Chief who was  

directed to pass a reasoned order after hearing the appellant or  

his  representative,  within  a  fixed  period.   The  appellant  was  

granted liberty to seek his remedy if he was aggrieved by the  

order that may be passed by the Engineer-in-Chief.   

5. The respondents preferred a Letters Patent Appeal bearing  

No.877  of  2006 in  which  also  they  did  not  raise  the  issue  of  

alternative remedy by way of arbitration clause.  The LPA was  

disposed of on 11.12.2007 with the following direction :

“…. …. Since the matter is going on remand, the State  has  to  apply  its  mind  afresh  to  the  facts  and  circumstances  of  the  case  and,  therefore,  the  direction, as quoted above would be juxtaposition to  the  order  of  remand.   The  question  of  payment  of  interest  by  either  side,  however,  will  abide  by  the  

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ultimate determination of the question by the State of  Bihar.   

It goes without saying that the matter would be  examined  and  re-determined  by  the  State  expeditiously.”

6. The Engineer-in-Chief passed a fresh order on 21.05.2008  

against  the  appellant  over-ruling  the  various  grounds  and  

objections raised by the appellant in his representation relating to  

merits  of  the matter  as  well  as jurisdiction of  the Engineer-in-

Chief who, according to appellant, had no role in the issue which  

was to be finalized at the stage of Executive Engineer and the  

Superintending Engineer.  The appellant challenged the order of  

Engineer-in-Chief through writ petition bearing C.W.J.C. No.10173  

of  2008  which  was  allowed  by  the  learned  Single  Judge  on  

18.02.2009  by  a  reasoned  order.   There  is  no  dispute  that  

respondents  filed  a  counter  affidavit  but  did  not  raise  any  

objection of alternative remedy by way of an arbitration clause in  

the agreement dated 06.02.1989.   

7. The learned Single Judge allowed the writ petition preferred  

by the appellant by setting aside the order of the Engineer-in-

Chief dated 21.05.2008.  The Court found that the Engineer-in-

Chief had raised demand of interest in the year 2008 along with  

refund of labour escalation cost only to offset the State’s liability  

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to  pay  interest  on  refund  of  security  deposit  after  a  delay  of  

about 10 years.  Thus the action of the respondents was held to  

be for  ulterior  reasons  and objection to  labour  escalation cost  

after a long gap from its actual payment was held to be arbitrary  

and unreasonable.

8. The  aforesaid  order  of  the  learned  Single  Judge  dated  

18.02.2009 was set  aside by the Division Bench  by the order  

under appeal on the ground already noticed earlier.

9. We find ourselves in agreement with case of the appellant  

that  the  Division  Bench  failed  to  notice  the  relevant  facts  

including the history of earlier litigation.  It also failed to notice  

that the agreement itself had worked out long back and in the  

earlier  round  of  litigation  as  well  as  in  the  present  round  the  

respondents never raised any objection on the basis of arbitration  

clause.

10. The Division Bench noticed the judgment of this Court in the  

case  of  State  of  U.P.  &  Ors. v.  Bridge & Roof  Company  

(India)  Ltd. (1996)  6  SCC 22  as  well  as  in  the  case  of  ABL  

International  Ltd.  &  Anr.   v.  Export  Credit  Guarantee  

Corporation of India Ltd. & Ors.  (2004) 3 SCC 553 for coming  

to  the  conclusion  that  where  the  contract  itself  provides  an  

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effective alternative remedy by way of reference to arbitration, it  

is good ground for declining to exercise extraordinary jurisdiction  

under Article 226 of the Constitution of India and that the Court  

will  not  permit  recourse to  other remedy without invoking the  

remedy by way of arbitration, “unless, of course, both the parties  

to the dispute agree on another mode of dispute resolution.”

11. In our considered view, the aforesaid two decisions did not  

warrant  setting  aside of  the judgment  of  learned Single Judge  

without  going  into  merits  and  dismissing  the  writ  petition  at  

appellate stage on ground of alternative remedy when no such  

objection was taken by the respondents either before the writ  

court or even in the Memorandum of Letters Patent Appeal.

12. In our view, a constitutional remedy by way of writ petition  

is  always  available  to  an  aggrieved  party  and  an  arbitration  

clause in an agreement between the parties cannot  ipso facto  

render a writ petition “not maintainable” as wrongly held by the  

Division Bench.  Availability of alternative remedy is definitely a  

permissible  ground  for  refusal  by  a  writ  court  to  exercise  its  

jurisdiction in appropriate cases.  But once the respondents had  

not objected to entertainment of the writ petition on ground of  

availability of alternative remedy, the final judgment rendered on  

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merits cannot be faulted and set aside only on noticing by the  

Division Bench that an alternative remedy by way of arbitration  

clause could have been resorted to.

13. In our view, learned counsel for the appellant has made out  

a case for setting aside the order under appeal both on the facts  

noticed above which show that there was no existing agreement  

because the work had been completed and payment had already  

been made long back and also on the question of law raised in  

this appeal that a constitutional remedy through a writ petition  

cannot  be  held  to  be  not  available  and  not  maintainable  on  

account  of  an  alternative  remedy.   It  is  for  the  writ  court  to  

consider whether in an appropriate case, writ petitioner should be  

relegated  to  avail  alternative  remedy  or  not.   But  once  writ  

petition is heard at length and decided against one or the other  

party on merits, such a decision/order cannot be held to be bad in  

law only on the ground that writ petition was not maintainable  

due to availability of alternative remedy.

14. Having considered the matter on merits as reflected by the  

order of the learned Single Judge, we find sufficient merit in this  

appeal and hence it is allowed.  The order under appeal is set  

aside and the judgment and order of the learned Single Judge is  

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restored  along  with  a  cost  of  Rs.25,000/-  (Rupees  twenty  five  

thousand) to be paid by the respondents to the appellant within  

two months.

     …………………………………….J.       [M.Y. EQBAL]

      ……………………………………..J.                  [SHIVA KIRTI SINGH]

New Delhi. December 17, 2014.

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ITEM NO.1A             COURT NO.10               SECTION XVI

              S U P R E M E  C O U R T  O F  I N D I A                        RECORD OF PROCEEDINGS

Civil Appeal No. 11465 of 2014 in Petition(s) for Special  Leave to Appeal (C)  No(s).  8101/2011

M/S RAM BARAI SINGH & CO.                      Appellant(s)

                               VERSUS

STATE OF BIHAR & ORS.                          Respondent(s)

Date : 17/12/2014 This appeal was called on for judgment  today.

For Petitioner(s)                      Mr. Gaurav Agrawal,Adv.                       For Respondent(s)                      Mr. Gopal Singh,Adv.                       

Hon'ble  Mr.  Justice  Shiva  Kirti  Singh  

pronounced  the  judgment  of  the  Bench  comprising  of  

Hon'ble Mr. Justice M.Y. Eqbal and His Lordship.

Leave granted.

The appeal is allowed in terms of the signed  

judgment.

(Sukhbir Paul Kaur)              (Indu Pokhriyal)    Court Master                Court Master

(Signed reportable judgment is placed on the file)

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