The Appellate Division of the Supreme Court has held that where a contract provides for arbitration, mediation or another alternative mechanism to resolve disputes arising after its execution, a party cannot bypass that mechanism and directly file a writ petition with the High Court.
The observation came in a judgment published on the Supreme Court website on Sunday.
The Appellate Division made the observation while dismissing a civil appeal challenging an earlier judgment concerning the execution of a contract through negotiation or settlement.
The court said that where a contract provides an effective alternative remedy for resolving a dispute, there is no scope for directly invoking the High Court's writ jurisdiction under Article 102 of the Constitution.
The judgment was delivered in the case of M/s AMS Faraz Construction vs State.
The full 37-page judgment, delivered on February 22 by a five-member bench headed by Chief Justice Zubayer Rahman Chowdhury, was published on August 25.
The judgment said that even when a statutory authority is a party to a contract involving the sale of government assets, a party that has violated the terms of the contract cannot seek redress by filing a writ petition. Where the contract contains an effective arbitration clause or provides another alternative mechanism for dispute resolution, the party must pursue that remedy before seeking relief under Article 102.
Background
According to the case documents, Chisty Textile Mills was established in 1966 on about 16 acres of land in Daulatpur of Adarsha Sadar upazila in Comilla. The mill was nationalized in 1972.
Production at the factory was later suspended and its workers were dismissed under a golden handshake scheme. Bangladesh Textile Mills Corporation (BTMC) subsequently resumed operations, but the mill was eventually closed amid continued losses. On November 9, 2003, the government decided to liquidate it.
After a liquidator was appointed to sell the state-owned mill, Md Faruk Islam Bhuiyan, proprietor of AMS Faraz Construction Ltd of Ganganagar in Kasba upazila, Brahmanbaria, expressed interest in purchasing it.
The Ministry of Textiles and Jute subsequently valued the mill at Tk35 crore and signed an agreement with Faraz Construction on January 1, 2014. Under the agreement, the company was required to pay Tk15 crore as a down payment and the remaining Tk20 crore in five equal instalments.
The government handed over the mill and its land to Faraz Construction on January 9, 2014.
However, allegations later surfaced that the factory had been sold without a tender or open auction and at a price significantly below its actual value.
Several national dailies reported on February 11, 2014, alleging irregularities in the liquidation process and claiming that property worth Tk350 crore had been sold for Tk35 crore.
The government subsequently issued an order directing Faruk Islam Bhuiyan to refrain from carrying out activities related to the mill and stopped accepting the outstanding instalments. Faraz Construction had already defaulted on the second instalment.
Faraz Construction later sought withdrawal of the order, but the government rejected its request. Following instructions from the Prime Minister's Office, BTMC issued an order on April 17, 2014, suspending all activities at the mill until further instructions.
Faraz Construction subsequently sought withdrawal of the suspension order. After receiving a response, the company served a legal notice and later filed a writ petition with the High Court in 2014 after receiving no further response.
The High Court issued a rule and, after hearing both sides, disposed of it on June 15, 2015, with several directions.
The High Court directed the authorities to allow Faraz Construction to resume operations at Chisty Textile Mills and to accept the remaining instalments. It also directed the execution and registration of the necessary sale deed in favour of Faraz Construction in accordance with the law and the terms of the January 1, 2014 agreement with BTMC.
The government subsequently appealed against the High Court judgment. On July 3, 2018, the Appellate Division set aside the High Court judgment and order.
Faraz Construction filed a civil review petition against the Appellate Division judgment in 2019. The petition was accepted for hearing on March 6, 2025. On February 22, 2026, the five-member Appellate Division bench dismissed the review petition.
Appellate Division's observations
In its judgment, the Appellate Division said the liquidator had no authority under the agreement to sell the mill through any process other than a tender or open auction.
Therefore, once the agreement was executed, the mill could not be transferred without following the procedure prescribed in the agreement. The court also observed that the process followed for transferring the mill did not comply with the law.
The court said the appellants themselves had violated important terms and conditions of the agreement and therefore could not seek legal remedy through a writ petition based on the alleged agreement.
The judgment further said that when parties to a contract choose arbitration as the forum for resolving disputes arising from the agreement, a party cannot bypass that mechanism and seek direct enforcement of the contract under Article 102 of the Constitution.
“In this context, this division is of the opinion that where a dispute arises out of an obligation to comply with a contract and the contract itself provides for settlement of the dispute through arbitration or any other forum, the aggrieved party should pursue the remedy prescribed in the contract without invoking the exceptional jurisdiction of the High Court Division under Article 102 of the Constitution,” the judgment said.
The court also noted that Faraz Construction had failed to comply with the payment schedule under the contract and had not pursued the arbitration mechanism provided in the agreement.
Finding no manifest error in the judgment under review, the Appellate Division dismissed the civil appeal.