"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well."

-Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Thursday, June 30, 2011

Clear and Unclear Injustice: Tantia Constructions

Sanjeev K Kapoor, a partner in Khaitan and Co. has written an article in moneycontrol.com critiquing the recent Supreme Court judgement in Union of India and Ors vs Tantia Construction Pvt Ltd. The article titled 'Arbitration: Existential Crisis?' traces the debate regarding interference by a writ court in contractual matters and argues that "[t]he test under the latest judgment to invoke writ jurisdiction is when injustice is clear from the facts of the case and exercise of such jurisdiction is mandated to curb injustice and uphold the rule of law. This is an onerous test which is required to be satisfied by a party invoking writ jurisdiction of the court as opposed to existing remedy of the arbitration." The reasoning cited by the Supreme court for interference in a contractual matter was injustice:
"[I]t is now well-established that an alternative remedy is not an absolute bar to the invocation of the writ jurisdiction of the High Court or the Supreme Court and that without exhausting such alternative remedy, a writ petition would not be maintainable. The various decisions cited by Mr. Chakraborty would clearly indicate that the constitutional powers vested in the High Court or the Supreme Court cannot be fettered by any alternative remedy available to the authorities. Injustice, whenever and wherever it takes place, has to be struck down as an anathema to the rule of law and the provisions of the Constitution. We endorse the view of the High 28 Court that notwithstanding the provisions relating to the Arbitration Clause contained in the agreement, the High Court was fully within its competence to entertain and dispose of the Writ Petition filed on behalf of the Respondent Company."
Contrary to what Sanjeev K Kapoor suggests, this blawgger feels that the test that the writ court would intervene where "injustice is clear from the facts of the case and exercise of such jurisdiction is mandated to curb injustice and uphold the rule of law" is neither an onerous test nor the correct one for the court's interference. Any breach of contract would result in injustice to the other party. This blawgger is not sure if the court has supplied us with parameters on how to distinguish between "clear" injustice and "unclear" injustice. Does the court mean that if the case of breach of contract is arguable, the dispute would be within the contractual domain and if the breach of contract is clear, it would be within the constitutional domain? If so, what is the basis or the utility for such a distinction? 

The problem with interference of writ courts in commercial matters is that there are no clear parameters laid down for interference. Amorphous tests like "clear injustice" bring no certainty. In case the Supreme Court lays down parameters for interference, it would be the duty of subsequent courts deciding on interference to state why interference is warranted under a particular parameter listed out by the prior Supreme Court decision.

In a future post, we will look into past decisions to see if there are such parameters.

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