Facts: The petitioner, a partnership firm, was awarded a contract by the Central Railway for bridge construction and drain works. Despite two supplemental agreements increasing the contract value and multiple extensions of the completion timeline, the respondent railway authorities issued a 'part termination' notice followed by a final termination notice on 02.12.2025. The respondents cited consistently unsatisfactory progress and failure to achieve milestones as the reasons for termination. The petitioner challenged these actions, alleging they were arbitrary, violated principles of natural justice because the managing partner was abroad, and involved unauthorized offloading of work to third parties. The petitioner further claimed that approximately Rs.7.5 crores for executed work remained unpaid.
Procedural Posture: The petitioner approached the High Court of Judicature at Bombay, Bench at Aurangabad, by filing a Writ Petition under Article 226 of the Constitution of India, seeking to quash the termination and receive a direction to complete the balance work and release outstanding payments.
Issue: Whether a writ petition under Article 226 is maintainable for disputes arising out of a commercial contract containing an arbitration clause, especially when the dispute involves contested questions of fact and alleged violations of natural justice?
Holding: No, the writ petition is not maintainable. The court dismissed the petition, relegating the parties to the contractually agreed arbitration mechanism.
Reasoning: The Court reasoned that while the existence of an alternative remedy like arbitration is not an absolute bar to writ jurisdiction, it is a rule of discretion. In this case, the dispute is squarely in the realm of private law and involves "overwhelmingly disputes involving contested questions of fact" such as work progress measurements and site conditions, which require evidence and expert opinion. The Court found the natural justice plea factually unsustainable as the respondents had issued multiple show-cause notices and held meetings where the petitioner was present. Furthermore, no public law element or infringement of fundamental rights was demonstrated. The Court distinguished the "Tantia Construction" precedent, noting that the present case did not involve an arbitrary exercise of statutory power beyond the four corners of the agreement, but rather a standard contractual termination for non-performance.