Court emphasizes arbitration as alternative dispute resolution; refuses writ intervention in factual disputes concerning work completion timelines and compensation.
In a significant ruling delivered on September 16, 2026, the Calcutta High Court, presided over by Justice Ajay Kumar Gupta, dismissed a writ petition filed by Chakvrigu Cooperative Labour Contact & Construction Society Limited against the State of West Bengal and others. The petitioners sought the release of a pending payment of Rs. 17,00,000/- allegedly withheld unlawfully by the respondents following a construction contract dispute.
The case arose from a contract awarded under the R.K.V.Y. Scheme 2011-2012 for the construction of a pucca stall with a two-storied foundation at Khochabari Hat, Coochbehar Sadar Regulated Market Committee. While the petitioners claimed completion of the work within the extended timeline and demanded the pending payment along with interest, the respondents contended that the work was completed beyond the stipulated period and imposed compensation deductions as per contract terms.
The Court observed that the contract contained a specific arbitration clause (Clause 10), mandating that all disputes relating to the contract, including questions of fact such as quality, specifications, and execution timelines, be referred to arbitration by the Chief Executive Officer of the West Bengal State Marketing Board or an appointed arbitrator. This clause provided the parties an alternative remedy to resolve their disputes.
Citing the Supreme Court precedent in Whirlpool Corporation v. Registrar of Trade Marks, Mumbai (1998) 8 SCC 1, Justice Gupta reiterated that High Courts should exercise writ jurisdiction cautiously, especially where an alternative remedy like arbitration exists. The writ jurisdiction should be invoked only under exceptional circumstances such as violation of fundamental rights, breach of natural justice, or when the authority acts without jurisdiction.
Given the disputed factual questions regarding the completion of work and compensation imposition, which are unsuitable for adjudication under writ jurisdiction, the Court declined to interfere. It allowed the earlier dismissal of the writ petition to be recalled and restored the case to its original file and number but ultimately dismissed the writ petition on merits.
Importantly, the Court clarified that its dismissal does not preclude the petitioners from initiating arbitration proceedings as per the contract. The arbitration process is expected to be conducted independently and concluded without influence from the Court's observations.
This judgment underscores the judiciary's respect for arbitration as a preferred alternative dispute resolution mechanism in contractual disputes and delineates the limited scope of writ jurisdiction in matters involving intricate factual disputes.
Bottom Line:
Arbitration clause in agreements provides an alternative remedy for dispute resolution, and writ jurisdiction may not be exercised where disputed questions of fact are involved unless certain exceptions apply.
Statutory provision(s):
West Bengal Cooperative Society Act, Arbitration clause under contract agreement, Supreme Court precedent in (1998) 8 SCC 1 (Whirlpool Corporation v. Registrar of Trade Marks, Mumbai)
