High Court In Exercise Of Writ Jurisdiction Cannot Enter Into Arena Of Interpretation Of Contractual Term: Karnataka HC

The Karnataka High Court said that the High Court in exercise of its writ jurisdiction cannot enter into an arena of interpretation of contractual term.

The Court was deciding a batch of two appeals against the judgment of the Single Judge by which the writ petition was partly allowed.

A Division Bench of Chief Justice N.V. Anjaria and Justice Krishna S. Dixit enunciated, “The scope of judicial review in contractual matters is extremely limited and it is in rare category of cases that the writ of mandamus could be issued. The facts of the present case is not a case where learned Single Judge would have issued writ of mandamus directing the respondents to release the payment straightaway without the trial of the issues. The High Court in exercise of writ jurisdiction would not enter into the arena of interpretation of contractual term, its enforcement and the questions regarding breach or otherwise thereof since they are questions to be subjected to evidence.”

Advocate H. Mohan Kumar appeared for the appellants while Senior Advocate Jayakumar S. Patil and Additional Advocate General Ruben Jacob appeared for the respondents.

Factual Background -

The company named M/s. BBP Studio Virtual Bharath Private Limited was a renowned film production house and Invest Karnataka Forum (IKF) was a non-profit company established under the Companies Act, 2013. It was the case of BBP that the Karnataka Government held Global Investors Meet titled “Invest Karnataka 2022” at Bengaluru in November 2022 which aimed at attracting investments from around the world. In June 2022, Marketing Communication and Advertising Limited (MCAL) issued an invitation for Expression of Interest for appointment of business associates for the said event by issuing tender. The empanelment of business associates was called in four categories based on valuation of the work ranging from Rs. 25 lakhs to over Rs. 1 crore. In July 2022 MCAL addressed a letter to BBP notifying its prequalification and successful acceptance of the application. It was, therefore, called upon to furnish the security deposit amount as required.

Thereafter, IKF issued a letter to MCAL with an intention to showcase the uniqueness of Karnataka through a three dimensional (3D) film titled “Invest Karnataka 2022: Global Investors Meet”. Hence, MCAL issued a proposal to IKF quoting a sum of Rs. 4,08,87,000/- for creation of 3D film. In August 2022, the proposal was communicated and it stood accepted by its competent authority. Pursuantly, MCAL issued work order to BBP to execute the work in view of the orders issued by IKF. The work order was issued with a stipulation to complete the work within a budget of Rs. 3,98,40,000/-. As per BBP, upon receipt of such work order, it started the work of 3D film creation and in compliance of the work order, it had spent huge amount of money in addition to the advance payment. It completed the work expeditiously as time was the essence. When it was ready to deliver its work in October 2022, it was surprised to receive an email from MCAL, whereby the work order was cancelled and withdrawn without assigning any reason. As no response was received, it led to the dispute.

The High Court in view of the facts and circumstances of the case observed, “The present controversy is not one which could be decided on the basis of documents and affidavits. There are rival factual disputes and the factual stance taken by the parties which necessarily require the leading of evidence.”

The Court said that the order passed by the Single Judge could hardly be treated good in law as the Judge manifestly erred in setting aside the communication whereby the work order was cancelled.

“The second direction which learned Single Judge proceeded to issue a mandamus was to direct the respondent–State to release the balance amount due to the petitioner. This part of the direction was evidently erroneous inasmuch as with any quantification and adjudication release of the payment was not warranted. A writ of mandamus could not have been issued. The petitioner was required to establish its case on evidence”, it added.

The Court noted that in the third direction, the Single Judge placed BBP at liberty to seek arbitration for any other dispute and when the agreement contained arbitration clause, it is trite that the court would not entertain the writ petition and would require the parties to avail the arbitral remedy.

Accordingly, the High Court allowed both the appeals and set aside the judgment of the Single Judge.

Cause Title- Invest Karnataka Forum & Anr. v. M/s. BBP Studio Virtual Bharath Pvt. Ltd.

Appearance:

Appellants: Advocate Mohan Kumar

Respondents: Senior Advocate Jayakumar S. Patil, AAG Ruben Jacob, AGA Niloufer Akbar, and Advocate S. Swaroop.

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