The Apex Court found that in exercising its jurisdiction under Article 226, the High Court has an obligation not to enter into a dispute that can be resolved by the nature of the arbitration. Only matters relating to a fundamental issue of public interest should be dealt with under Article 226.
The bank made this observation in the case of Rapid MetroRail Gurgaon Limited v Haryana Mass Rapid Transport Corporation, where the complainant had appealed against the order of Punjab and Haryana HC.
In the present case, the respondent had submitted written petitions to contest the notice of termination issued by the complainant. Although there was an arbitration clause, the HC maintained the written petition submitted by the respondent.
The bank justified this by saying that the HC may have been addressing the fundamental public interest issue, which was the plight of the commuters who used to prefer a high-speed subway for mass transportation to Gurgaon.
The bank also noted that if HC did not interfere, the consequences could have been disastrous. The bank also stated that there are remedies under the 1996 Arbitration and Conciliation Act. Preliminary instructions can be obtained either from a competent court (Section 9) or from the arbitral tribunal itself (Section 17).
However, the Apex court gave instructions and held the written petitions submitted by respondents.