Writ Petition Not Maintainable under Article 226 If Effective Alternative Remedy Exists: Chhattisgarh HC

The High Court of Chhattisgarh at Bilaspur has dismissed a writ petition filed by M/s Kunal BSBK Joint Venture Pvt. Ltd. seeking reimbursement of Goods and Services Tax (GST) from the Chhattisgarh Housing Board (CGHB), holding that the dispute arose purely from contractual obligations and could not be adjudicated under Article 226 of the Constitution where an effective alternative remedy exists.

The judgment was delivered by a Division Bench comprising Chief Justice Ramesh Sinha and Justice Bibhu Datta Guru.

Background

The petitioner, M/s Kunal BSBK Joint Venture Pvt. Ltd., a special purpose vehicle (SPV) jointly formed by BSBK Pvt. Ltd. and Kunal Structure India Pvt. Ltd., was awarded a contract in 2015 for construction of LIG and EWS houses at Naya Raipur under the Pradhan Mantri and Mukhya Mantri Awas Yojana schemes. An agreement was executed on 5 February 2016.

The petitioner alleged that under the terms of the contract, GST was not applicable at the time of bidding. However, following the implementation of GST from 1 July 2017, the tax regime changed, and the previously exempted service became taxable. The petitioner contended that as per Clause 2.14.F of the agreement, CGHB had agreed to reimburse service tax, and by implication, the same should apply to GST.

Despite multiple representations, the petitioner claimed that CGHB failed to reimburse GST amounting to ₹9.18 crore along with interest, forcing the petitioner to pay the tax from its own resources, leading to severe financial hardship.

Petitioner’s Submissions

Mr. Abhishek Rastogi, appearing for the petitioner, argued that:

• The contract price was exclusive of GST since the bid was made prior to 1 July 2017.
  
• The contract clauses (specifically 2.14.F) indicated that if service tax becomes applicable, it would be reimbursed.
  
• After the GST regime came into effect, the petitioner started paying GST and passed on the input tax credit (ITC) to the CGHB.
  
• Despite admitting to reimbursement through internal communications, CGHB failed to release the dues.
  
• The petitioner had approached the Court after exhausting all other channels and after being compelled by the financial burden caused by delayed reimbursements.
  
• The issue involved a question of law and public law elements, especially in light of previous decisions in similar cases (e.g., BSBK Pvt. Ltd. v. State of Chhattisgarh, WPC No. 3339 of 2023), and thus was maintainable under Article 226.
  

Respondent’s Arguments

Mr. Amrito Das, counsel for CGHB, raised preliminary objections:

• The petition was not maintainable as it sought recovery of money under a private contract, not involving any public law element.
  
• The agreement contained an arbitration clause (Clause 1.21), which provided for resolution of disputes arising out of the contract.
  
• The petitioner had full knowledge of tax clauses at the time of bidding. Clause 2.14A and Clause 11.2 made it clear that any change in tax regime or structure would not entitle the contractor to additional payment.
  
• The GST paid by the petitioner cannot be equated with service tax, and any claim based on ITC availed by the respondent was baseless and irrelevant to the petitioner’s entitlement.
  
• The petition was the third round of litigation and had not been filed in a proper manner.
  

Court’s Analysis

The Court noted that:

• Clause 2.14A of the contract stated that quoted rates were deemed to include all taxes, duties, and levies. Clause 11.2 reaffirmed that any variation in taxes during the execution would not entitle the contractor to additional payment.
  
• While Clause 2.14F mentioned that “service tax, if applicable, will be reimbursed,” it did not cover GST specifically, and no amendment was made to the agreement post-GST implementation.
  
• The core dispute pertained to interpretation of contract terms and financial obligations arising from them, which fall within the realm of private law and contractual relationship.
  

The Court also referred to the well-settled principle that judicial review under Article 226 is not meant for resolving contractual disputes unless there is a clear public law element involved. It emphasized:

“One of the self-imposed restrictions on exercise of power under Article 226 of the Constitution of India that has evolved through judicial precedents is that the Courts should normally not entertain a writ petition, where an effective and efficacious alternative remedy is available.”

Findings and Decision

Rejecting the petitioner’s argument that the matter involved a public law element, the Court held:

• The dispute was entirely contractual and private in nature.
  
• Arbitration was an available and effective remedy as per the agreement.
  
• The petition involved several disputed questions of fact not amenable to writ jurisdiction.
  
• The earlier orders cited by the petitioner (BSBK judgments) were factually distinguishable.
  

Accordingly, the writ petition was dismissed as being devoid of merit. The Court stated:

“The petitioner has the remedy to approach the competent jurisdictional civil court for realisation of any amount which arises out of the contractual obligations. The petitioner has not pursued diligently the alternative remedy that is available to it.”

Conclusion

The Chhattisgarh High Court reaffirmed the principle that contractual disputes, even if involving statutory changes like GST, must be resolved through the agreed dispute resolution mechanism unless a clear public law element is involved. The ruling reiterates judicial restraint in exercising writ jurisdiction in purely commercial disputes, especially when arbitration is available.