M/s Ram Barai Singh and Company v. State of Bihar and Others
Background
A contractor challenged Bihar's belated recovery of previously paid labour-escalation costs and delay in returning its security deposit. The Single Judge granted relief after an earlier round of writ litigation and remand to the Engineer-in-Chief. The appellate High Court set that decision aside solely because the old contract contained an arbitration clause, although the State had never raised that objection.
Decision Breakdown
The Court held that an arbitration clause did not automatically make the constitutional writ remedy unavailable. An alternative remedy could justify declining jurisdiction in an appropriate case, but could not alone invalidate a merits decision after the State had not objected throughout the proceedings. The Court also considered the completed work, long-past payments and earlier litigation relevant. Finding merit in the Single Judge's treatment of the belated recovery as arbitrary, it restored that judgment. It directed Bihar to pay ₹25,000 in costs within two months.
Lesson Learnt
The existence of contractual arbitration does not automatically defeat a writ challenge to arbitrary State action. Whether the court should entertain the challenge depends on the circumstances, and an unraised alternative-remedy objection cannot by itself undo a case already decided on its merits.