At, High Court of Karnataka
By, THE HONOURABLE DR. JUSTICE VINEET KOTHARI
For the Petitioner: G. Shivadass, Advocate. For the Respondents: R1, S.S. Naganand, Sr. Counsel, N.N. Harish, R2, B. Pramod, Advocates.
(Prayer: This writ petition is filed under Articles 226 and 227 of the Constitution of India praying to direct the R-1 to release the sum of Rs.16,30,75,929/- being the sum wrongly deducted from the payments due to the petitioner along with interest @ 12% p.a. from the date of deduction of the said amount till the date of refund.)
Mr. Shivadass G, Advocate for Petitioner Mr. S.S. Naganand, Sr. Counsel for Mr. N.N. Harish, Advocate for R-1, Mr. B. Pramod, Advocate for R-2.
1.The prayer made in the present petition filed by M/s. Rites Limited is quoted below for the ready reference:
"a. Issue a writ in the nature of mandamus directing the Respondent No.1 to release the sum of Rs.16,30,75,929/- being the sum wrongly deducted from the payments due to the petitioner along with interest @ 12% p.a. from the date of deduction of the said amount till the date of refund.
b. Pass any such other order/s as this Hon'ble Court deems fit and proper in the facts and circumstances of the case in the interests of justice and equity."
2. The petitioner provided Technical Consultancy services to the Bangalore Metro Rail Corporation Ltd. ('BMRCL' for short).
3. The tenor and burden of this writ petition is essentially to seek the refund of service tax paid by the petitioner Company on the Consultancy services provided by it to the BMRCL.
4. The learned counsel for the respondent BMRCL Mr. S.S. Naganand, Senior Counsel drawing the attention of the Court towards the decision of the Hon'ble Supreme Court in the case of STATE OF U.P. AND OTHERS VS BRIDGE & ROOF COMPANY (INDIA) LTD. [(1996) 6 SCC 22, Paragraph No.16] submitted that the question raised before this Court is an issue triable by way of Arbitration as per the Arbitration clause in the Agreement between the petitioner and the respondent BMRCL, Vide clause 8 of the agreement produced before this Court as Annexure-D (page 189 of the paper book), which is quoted below for ready reference and therefore the present petition is not maintainable.
"8.0 SETTLEMENT OF DISPUTES
8.1 Amicable Settlement
The Parties shall use their best efforts to settle amicably all disputes arising out of or in connection with this Contract or the interpretation thereof.
8.2 Dispute Settlement
Any dispute between the Parties as to matters arising pursuant to this Contract which cannot be settled amicably within sixty (60) days after receipt by one Party of the other Party's request for such amicable settlement may be submitted by either Party for settlement in accordance with the provisions specified in the SCC.
5. The Hon'ble Supreme Court in paragraph No.16 of the aforesaid decision held as under:
"16. Firstly, the contract between the parties is a contract in the realm of private law. It is not a statutory contract. It is governed by the provisions of the contract Act or, maybe, also by certain provisions of the sale of Goods Act. Any dispute relating to interpretation of the terms and conditions of such a contract cannot be agitated, and could not have been agitated, in a writ petition. That is a matter either for arbitration as provided by the contract of for civil court, as the case may be. Whether any amount is due to the respondent from the appellant-Government under the contract and, if so, how much and the further question whether retention or refusal to pay any amount by the Government is justified, or not, are all matters which cannot be agitated in or adjudicated upon in a writ petition. The prayer in the writ petition, viz., to restrain the Government from deducting a particular amount from the writ petitioner's bill(s) was not a prayer which could be granted by the High Court under Article 226. Indeed, the High Court has not granted the said prayer."
6. Having heard the learned counsel for the parties on the aforesaid preliminary objection, this Court is satisfied that the issue raised in the present petition and the relief sought is directed against Respondent No.1 BMRCL only and there is no issue raised about the leviability or otherwise of the service tax with the respondent Tax Department in the present case and therefore the issue raised in the present petition is essentially within the four corners of the contract between the petitioner Rites Limited and respondent No.1 BMRCL. The said issue can certainly
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be decided by the arbitration procedure, as agreed to between these two parties under the contract in question. 7. In view of the effective alternative remedy available to the petitioner, this Court is not inclined to invoke its extraordinary jurisdiction in the matter and therefore relegates the parties to resolve the dispute by resorting to arbitration under the Arbitration and Conciliation Act, 1996. 8. With these observations, the petition is disposed of. No costs.