The Hon’ble High Court of Manipur vide order dated 20.08.2020 dismissed an appeal against the decision of a Single Judge Bench of the Court declining to assume jurisdiction over a contractual dispute arising out of the India-Myanmar-Thailand Trilateral Road Project.

The said judgement was passed in respect of a complex commercial dispute arising in the matter of the construction of 69 bridges on the approach road to the India-Myanmar-Thailand Trilateral Road. The Union of India and the project management consultants terminated the contract citing defaults on the contractor’s side.

The contractor contended that the Centre, without taking note of the work done, had arbitrarily exercised power to victimise the contractor for no fault of his, and that the mandatory provision in the contract relating to termination, requiring notice to be served informing the contractor of the intention to issue termination notice by granting 15 days’ time to make a representation, was not complied with.

The Single Judge of the Manipur High Court, noting that as per the ouster clause in the agreement, Courts at Delhi shall have exclusive jurisdiction over the matters arising out of or relating to the Agreement, had dismissed the writ petition on the plea that there was no cause of action within the jurisdiction of this Court.

Thereafter, an intra-court appeal was filed, which could not be heard on account of the Pandemic Situation, until the Attorney General raised the issue in the Supreme Court and the Apex court directed that the matter be decided expediently.

Clearing a key impediment to the High Court’s adjudication of a contractual dispute prior to recording findings, the Bench of Chief Justice Ramalingam Sudhakar and Justice Lanusungkam Jamir held as follows, “This Court would not have ventured into the interpretation of Article of the agreement but we were forced to rule on the above as Appellant invoked the plea of Fundamental Rights and arbitrariness vehemently on the basis of Article 23.1.2 of the Agreement. The respondents also denied such allegations with equal proportion…We are conscious of the fact that writ Courts normally does not enter into the arena of interpretation of the terms of contract.”

Citing pronouncements of the Supreme Court, the Bench reiterated the proposition that contracts, even those involving the government, could be resolved only in civil courts or through arbitration. As the jurisdiction of the High Court had been invoked by alleging violation of fundamental rights and arbitrariness, the Bench was compelled to pronounce a judgment, it was stated.

The bench was of the view that the number of notices, review meetings, clarifications given by the Respondents made it amply clear that they had cautioned the Appellant time and again to take steps to complete the project. The bench opined that since the authority has proceeded in the terms of the articles of the agreement, the Appellant’s plea for interference by invoking Article 226 “appears to be misplaced”.

‘Party relying on one part of the Agreement (Termination Clause) is also equally bound by the other parts (Ouster Clause)’

Noting that the Appellant had primarily pitched the writ petition on the interpretation of Article 23.1.2 of the Agreement (‘Termination for Contractor Default’), the bench took the view that the party cannot resile from the other parts of the agreement, particularly the article relating to ouster of jurisdiction of the courts in case of dispute and article relating to arbitration”, the bench further pointed out.

The Appellant submitted that the Courts in Delhi were closed for vacation when the plea was moved, and also because some parts of the project were to be carried out in Manipur. The Appellant also argued that since the grievance of arbitrariness was raised, the High Court could adjudicate, in light of the Supreme Court’s ruling in Maharashtra Chess Association v. Union of India.

This argument was rejected, however, since the judgment relied upon allowed the High Court to decline jurisdiction applying the forum non conveniens doctrine if the facts so required.

Finding that the Appellant appeared to have ‘forum shopped’, the Court critically pointed out that even during vacations, the courts were open.

Before parting with the judgment, the Court reprimanded the Appellant for approaching it with ‘unclean hands’, by suppressing key documents that evidenced communications between the parties such as notices and replies.

On these, among other grounds, the appeal was dismissed.