Surya Power Engineering And Construction, Through Proprietor Amb Singh, S/o Shri Jabar Singh v. State of Rajasthan, Through Secretary, Public Works Department, Govt. Of Rajasthan, Secretariat
2025-11-24
NUPUR BHATI
body2025
DigiLaw.ai
ORDER : NUPUR BHATI, J. 1. This writ petition has been filed by the petitioner under Article 226 of the Constitution of India, seeking following reliefs:- “(i) The impugned order dated 04.06.2025 (Annex.22) may kindly be declared arbitrary, unjust and same may kindly be quashed and set aside. (ii) The respondent authorities may kindly be directed to deposit the amount of performance security in the account of the petitioner firm with interest. (iii) The respondent authorities may kindly be directed to provide the relaxation in the weekly remittance fees as per the request made by the petitioner as the petitioner firm sustained losses. (iv) The respondent authorities may kindly be directed to provide the relaxation as per the clause 26 of the contract. (v) The respondent authorities may kindly be directed not to impose any penalty on due amount and not to blacklist the petitioner firm for further contract in respondent department. (vi) The respondent authorities may kindly be restrained from debarring the petitioner firm from the participating in bid process of any procurement and blacklisting the petitioner firm. (vii) Any other appropriate writ, order or direction which this Hon'ble Court deems just and proper may kindly be passed in favour of the petitioner.” 2. It is inter alia indicated in the petition that the petitioner is a registered firm with the Government of India under GST registration (Annex.1), for which the GST department has issued a registration certificate as per Rule 10(1) of the GST Rules. The respondent State Highway Authority issued NIT dated 06.06.2024 (Annex.2) for collection of user fee at the Toll Plaza located at Khood-Dataram to Renwal km “00.00 to 51+040”, prescribing the bidding process, the projected toll collection of Rs. 6.22 crore for one year, the contract period of one year, and the applicable fee for various categories of vehicles. 2.1. Clause 2.21 of the NIT provided that user fees shall be collected by the successful bidder and the agreed amount, as referred to in para (h) of the preamble and clause 5 of the contract, shall be remitted to the authority on a weekly basis, latest by Tuesday of every week, by way of demand draft, and the petitioner-firm participated in the bid process.
The technical bid was opened on 20.06.2024 and the financial bid on 12.07.2024, whereafter the petitioner was found to be the highest bidder and, taking into consideration its bid amount of Rs. 7,11,75,000/- as annual remittance, respondent–Member WC&O, Rajasthan State Highway Authority, issued the letter of acceptance dated 29.07.2024 (Annex.3), prescribing the weekly remittance as Rs. 13,65,000/-. 2.2. In pursuance of the said letter of acceptance, an agreement dated 02.09.2024 (Annex.4) was executed between the State Highway Authority and the petitioner-firm, containing, inter alia, clauses relating to termination, pre-mature termination, and termination due to force majeure; clause 36 provided for termination of contract by the authority, whereas clause 36(5) provided for pre-mature termination of the contract at the request of the contractor. 2.3. Under clause 36(5), the contractor was entitled, within 30 days of taking over the toll plaza, to seek pre-mature termination if it felt it had erred in assessing realizable user fee, subject to continuing collection and remittance till handing over to a new agency and to appropriation of 25% of performance security by the authority as mutually agreed genuine pre-estimated compensation and damages, while the balance performance security was to be released within 30 days of handing over, and the authority was required to complete the bidding process and hand over the toll plaza to a new agency within 60 days of receipt of such request. In the present matter, despite this stipulation, the respondents did not decide the petitioner’s request. Under the agreement, toll collection was to commence from 04.09.2024, but due to incomplete system installation, toll collection could not start on that date; instead, the petitioner successfully commenced toll collection on 06.09.2024, and M/s G.S. India Pvt. Ltd. issued a handing over certificate on 06.09.2024, whereafter the petitioner firm sent the communication and certificate of handing and taking over of the toll plaza to the Project Director vide letter dated 09.09.2024 (Annex.5). The petitioner-firm began work on 06.09.2024; however, most of the traffic was diverted via Danta Gaushala through Sulyas, resulting in substantial losses and an inability to collect sufficient revenue for the weekly remittance, leading the petitioner to issue a notice dated 20.09.2024 (Annex.6) to the Member (WC&O), seeking pre-mature termination of the toll plaza contract under clause 36(5) and requesting initiation of the requisite procedure. 2.4.
2.4. As the respondent No.5 neither initiated proceedings for issuance of a fresh NIT nor for handing over the toll plaza to another firm, the petitioner sent a reminder dated 21.10.2024 (Annex.7) and again a communication dated 18.11.2024 (Annex.8), reiterating the request for pre-mature termination of the contract. Even after lapse of two months from the initial request, the respondent authority neither initiated the process for handing over the toll plaza to a new agency nor appointed any new agency; consequently, the petitioner sent another reminder dated 22.11.2024 (Annex.9), specifically pointing out expiry of the contractual time-limit for pre-mature termination at Kharondi Toll Plaza and requesting appointment of a new agency, while highlighting serious operational difficulties and financial losses due to irregular traffic and declining collections, and seeking necessary directions to provide financial relief and ensure stability in operation of the toll plaza. Despite expiry of the two-month period contemplated for pre-mature termination, no new agency was deployed for toll fee collection, and the petitioner-firm continued to incur an estimated daily loss of Rs.75,000/-, whereupon it further informed the respondents that total collection from 13.09.2024 to 26.11.2024 was Rs.1,02,71,030/-, which was significantly lower than expected, and by communication dated 29.11.2024, the petitioner requested appointment of a new agency or, in the alternative, permission to continue operations with a daily installment of Rs.1,15,000/- until further arrangements. The petitioner again communicated with the respondents on 18.12.2024 and 05.01.2025, and communications regarding pre-mature termination dated 29.11.2024, 18.12.2024 and 05.01.2025 are annexed collectively as Annex.10. 2.5. The respondent General Manager (Technical) then issued communication dated 21.01.2025 (Annex.11), alleging non- deposit of weekly remittances by the petitioner-firm and disclosing outstanding dues of Rs.1,32,03,530/-. The petitioner submitted a detailed reply dated 22.01.2025 (Annex.12), explaining the factual background and losses due to traffic diversion. Thereafter, the respondent General Manager (Technical) issued communication dated 28.03.2025 (Annex.13) regarding revised toll rates with effect from 01.04.2025, and again issued communications dated 26.03.2025 and 28.04.2025 (Annex.14 collectively), directing the petitioner to deposit the outstanding installment amount of Rs. 3,22,94,752/- with interest, failing which recovery proceedings would be initiated. By communication dated 28.04.2025 (Annex.15), the respondent General Manager (Technical) revised the weekly remittance with effect from 01.04.2025 to Rs. 13,82,609/-. The petitioner submitted a reply dated 01.05.2025 (Annex.16), enclosing details of its earlier letters seeking pre- mature termination, drawing attention to daily financial losses and requesting appropriate compensation for such loss. 2.6.
By communication dated 28.04.2025 (Annex.15), the respondent General Manager (Technical) revised the weekly remittance with effect from 01.04.2025 to Rs. 13,82,609/-. The petitioner submitted a reply dated 01.05.2025 (Annex.16), enclosing details of its earlier letters seeking pre- mature termination, drawing attention to daily financial losses and requesting appropriate compensation for such loss. 2.6. The respondent General Manager (Technical) again issued notice dated 02.05.2025 (Annex.17) for deposit of the outstanding weekly remittance, failing which recovery proceedings under clause 19(1) of the contract would be initiated. The petitioner- firm, by communications dated 02.05.2025 and 21.05.2025 (Annex.18 collectively), once again informed the authorities about earlier communications for pre-mature termination under clause 36(5) and reiterated that it was continuously suffering huge losses. The respondent General Manager (Technical) and General Manager (Finance) then issued communications dated 27.05.2025 (Annex.19) and 28.05.2025 (Annex.20), respectively, directing the petitioner to deposit the outstanding weekly remittance within three days along with interest, failing which proceedings under clause 19(1) would be initiated. The petitioner replied to the notice on 29.05.2025 (Annex.21), seeking clarification on the installment procedure post pre-mature termination period and requesting consideration of financial losses. 2.7. Being aggrieved by the notices dated 21.01.2025 (Annex.11), 26.03.2025 (Annex.12), 28.04.2025 (Annex.14), 02.05.2025 (Annex.17), 27.05.2025 (Annex.19) and 28.05.2025 (Annex.20), the petitioner preferred S.B. Civil Writ Petition No.11836/2025 before this Court, which was listed on 13.06.2025 but could not be reached, and thereafter listed on 19.06.2025, when notices were issued to the respondents. 2.8. Meanwhile, the respondents passed order dated 04.06.2025 (Annex.22) directing withdrawal of the petitioner’s FDRs, deposited as performance security, for recovery of dues; the bank did not promptly inform the petitioner, who came to know of the deduction only on 18.06.2025, contacted the bank, and ultimately obtained a copy of the order dated 04.06.2025 along with undated communication. The respondent authorities also continued to issue fresh NITs for successive bidders; NIT dated 08.07.2025 carried a tender value of Rs. 5,80,00,000/- per annum, in which one firm, Umesh Kumar, participated, the technical bid was opened on 17.07.2025, and the financial bid on 18.07.2025, where the quoted rate was 23.85% below, i.e., Rs. 4,41,65,999/-, and the NIT dated 08.07.2025, tender summary report dated 18.07.2025 and summary of opening of financial bid are collectively annexed as Annex.23. 2.9. After sending the pre-termination notice dated 20.09.2024, the respondents issued NIT No. 29/2024-25 on 13.10.2024, inviting contractors to bid for toll collection from Khood to Renwal.
4,41,65,999/-, and the NIT dated 08.07.2025, tender summary report dated 18.07.2025 and summary of opening of financial bid are collectively annexed as Annex.23. 2.9. After sending the pre-termination notice dated 20.09.2024, the respondents issued NIT No. 29/2024-25 on 13.10.2024, inviting contractors to bid for toll collection from Khood to Renwal. Subsequently, NIT No. 46/2024-25 was issued on 08.01.2025 and published in newspapers, with only one firm participating, but the bid was not finalized. NIT No. 20/2025-26 was issued on 07.07.2025, again with one contractor participating, and the bid remained unresolved. Another NIT was issued on 18.07.2025 (Annex.25), where three contractors participated, but bids did not comply with government guidelines. The petitioner sent multiple pre-termination letters, with the last receipt acknowledged by respondents on 01.12.2024 (Annex.26). The petitioner, being aggrieved by the order dated 04.06.2025 (Annex.22), has preferred the present writ petition. 3. At the very outset, learned counsel for the respondents raised a preliminary objection stating that the writ petition is not maintainable due to the specific arbitration clauses 27 and 28(a) in the Agreement, which require disputes to be referred to arbitration. He further submitted that according to Clause 44 of the Contract/Agreement, even if the petitioner chooses to invoke writ jurisdiction under Article 226 of the Constitution, the jurisdiction lies with the Jaipur Bench. Another objection was raised that the petitioner knowingly violated mandatory conditions of the agreement i.e. Clause 8 & 4 and therefore cannot invoke the extraordinary writ jurisdiction under Article 226. 4. Counsel further submits that the petitioner was served multiple notices demanding payment of contractual liabilities amounting to Rs.5,12,28,356/-, but continued to violate the Agreement's terms. He submits that the petitioner was obliged to comply with the conditions stipulated in the agreement even after requesting premature termination, as Clause 36(5) clearly requires the petitioner to continue toll collection and remittance until handing over the toll plaza to the new agency. 5. Furthermore, the petitioner willingly signed the contract accepting all conditions, including Clause 4 on collection rates and Clause 17(c)(ii) on performance security, which grants the respondents discretion to forfeit security if contractual obligations are breached. It was averred that the total contractual liability is Rs.7,15,73,295/-, while the petitioner has deposited only Rs.1,85,45,000/- till date, leaving an outstanding amount of Rs.5,30,28,295/-, which the petitioner does not dispute. Thus the petition is not maintainable and deserves to be dismissed. 6.
It was averred that the total contractual liability is Rs.7,15,73,295/-, while the petitioner has deposited only Rs.1,85,45,000/- till date, leaving an outstanding amount of Rs.5,30,28,295/-, which the petitioner does not dispute. Thus the petition is not maintainable and deserves to be dismissed. 6. In support of his contentions, learned counsel for the respondents has placed reliance on the judgment of the Hon’ble Apex Court in the case of Joshi Technologies International Inc. v. Union of India & Ors.: (2015) 7 SCC 728 , wherein the Hon’ble Supreme Court emphasized the arbitration as the primary dispute resolution mechanism, limiting judicial interference except in exceptional cases. 7. Learned counsel for the petitioner submits that the petitioner served a notice dated 20.09.2024 (Annex.6) and thereafter many notices on the respondents regarding premature termination of the contract under Clause 36(5) of the Agreement. The petitioner contends that the contract became unworkable due to traffic diversion caused by an alternate existing road, however, the respondents, without any valid justification, refused to terminate the contract, compelling the petitioner to continue performance, resulting in the passing of the impugned order dated 04.06.2025 (Annex.22). He further submits that the respondents are duty- bound under Clause 36(5) to appoint a new agency within 60 days, but instead compelled the petitioner to perform till the contract expired. 8. Learned counsel further argues that arbitration is not available as a remedy because the petitioner submitted a notice under Clause 36(5) seeking premature termination, and this clause is specifically designated as non-arbitrable as per Clause 27 of the Agreement. 9. He also submits that Clause 26 of the Agreement pertains to ‘Force Majeure’, and the petitioner’s circumstances fall under Clause 26(b)(viii), covering events analogous to Force Majeure that excuse performance, including suspension of obligations such as remittance if the event continues for over seven days. 10. Lastly, counsel for the petitioner asserts that the respondents failed to comply with the procedure under Clause 26(c), which requires the affected party to notify the other within seven days of the Force Majeure event with details and supporting documents, and the recipient must raise any disputes within 30 days. This procedural lapse undermines the respondents' position. Therefore, the petition is maintainable and deserves to be allowed. 11. In support of his contentions, learned counsel for the petitioner has placed reliance on judgments of Hon’ble Supreme Court rendered in the case of Maharashtra Chess Association Vs.
This procedural lapse undermines the respondents' position. Therefore, the petition is maintainable and deserves to be allowed. 11. In support of his contentions, learned counsel for the petitioner has placed reliance on judgments of Hon’ble Supreme Court rendered in the case of Maharashtra Chess Association Vs. Union of India : (2019) 10 SCC 1 , UNITEC Ltd. Vs. Telangana State Industrial Infra. Corp. : (2021) 16 SCC 35 and Union of India Vs. Tantia Construction Pvt. Ltd.: (2011) 5 SCC 697 . 12. I have considered the submissions made by learned counsel for the parties and have perused the material available on record. 13. Before dwelling on the merits of the case, this Court first addresses the preliminary objection regarding the maintainability of the present writ petition concerning Clauses 26, 27, and 28(a) of the Agreement. To evaluate this, the prayers in the writ petition must also be considered, wherein, the petitioner challenges the order dated 04.06.2025 (Annex.22), by which the respondents forfeited the performance security. Additionally, the petitioner seeks a direction for the respondents to deposit the performance security amount into the petitioner-firm’s account and requests relaxation in the weekly remittance fees as per Clause 26 of the Agreement. The respondents have forfeited the petitioner’s performance security invoking Clause 17(ii) of the Contract Agreement, which is reproduced hereunder: “17. PERFORMANCE SECURITY: (a). xxx xxx xxx (b). xxx xxx xxx (c) (i). xxx xxx xxx (c) (ii). The Contractor undertakes that, in case of any default on its part to perform and observe any of the covenants, conditions or provisions contained in this Contract, it shall be lawful for the Authority in its absolute discretion to forfeit the whole or any part of the said Performance Security, without prejudice to any other remedy that the Authority may have against the Contractor under this Contract or under general law for such breach.” 14. The petitioner willingly entered into the contractual agreement with the respondents, being fully aware of and accepting all terms and conditions, including the provision granting the respondent-authority discretion to forfeit the whole or any part of the performance security in the event of any default by the contractor in performing or complying with any covenants, conditions, or provisions of the contract. The petitioner has not disputed his failure to deposit the contractual liability amount, thereby clearly violating the contractual terms and conditions.
The petitioner has not disputed his failure to deposit the contractual liability amount, thereby clearly violating the contractual terms and conditions. Such forfeiture of performance security is supported by well- established contract law principles, wherein performance guarantees can be lawfully forfeited upon breach or non- compliance by the contractor, provided the terms are clear and the forfeiture is not punitive but serves as compensation for default. 15. Here in the present case, the petitioner has not alleged any violation of fundamental rights, breach of natural justice principles, or lack of jurisdiction in issuing the impugned order (Annex.22). Moreover, the writ petition does not include any prayer for enforcement of Clause 36(5) of the contract conditions by the respondents. Consequently, the petitioner’s contention that the remedy of arbitration is not available in light of Clause 36(5) being a non-arbitrable as per Clause 27 is unsustainable. Forfeiture of performance security under the contract, when the petitioner has breached mandatory contractual obligations, is lawful and does not infringe fundamental rights, provided the forfeiture is reasonable and not excessive. This aligns with Supreme Court precedents emphasizing that contractual forfeiture clauses must be fair and proportionate to the breach and cannot be challenged as a violation of constitutional rights absent such factors. 16. This Court also takes into consideration the fact that Clause 27 pertains to dispute resolution, and being apposite, the same is reproduced hereunder: “27. DISPUTE RESOLUTION Any disputes or differences of whatsoever nature between the parties arising out of in connection to this Agreement, in particular, the matters covered under Clauses 3, 7, 8, 10, 14, 18, and 19 shall be referred to the Authority/Project Implementation Unit for the redressal. The decision of the Authority/Project Implementation Unit shall be final towards Bid Security.” 17. As per Clause 27, in case of any dispute or differences of whatsoever nature between the parties in respect to this Agreement, the matters covered under Clauses 3, 7, 8, 10, 14, 18, and 19 shall be referred to the Authority/Project Implementation Unit for the redressal. 18. In the Agreement, Clause 28 pertains to Arbitration, in which sub-Clause (a) specifically provides that All disputes and/or differences except those which are mentioned in the matters non- arbitral under Clause 27 above arising between the parties out of this Contract shall be settled by Arbitration. For ready reference, Clause 28 is reproduced hereunder: “28.
18. In the Agreement, Clause 28 pertains to Arbitration, in which sub-Clause (a) specifically provides that All disputes and/or differences except those which are mentioned in the matters non- arbitral under Clause 27 above arising between the parties out of this Contract shall be settled by Arbitration. For ready reference, Clause 28 is reproduced hereunder: “28. ARBITRATION: (a) All disputes and/or differences except those which are mentioned in the matters non-arbitral under Clause 27 above arising between the parties out of this Contract shall be settled by Arbitration under and in accordance with the provisions of the Arbitration and Conciliation Act, 1996. The Secretary in-chargeof PWD Rajasthan or his nominee shall be the sole Arbitrator. The award made and published in pursuance of such Arbitration proceedings shall be final and binding on both the parties. (b) The proceedings of the Arbitration shall be held in English language and shall be held at such place as may be decided by the Secretary in-chargeof PWD Rajasthan or his nominee. The award of the Arbitration shall be final and binding on both the parties to the Contract. (c) Pending resolution of any dispute pursuant to Arbitration, under all circumstances the Contractor shall continue to remit the agreed installments of money to the Authority as prescribed in this Contract including when the dispute is about the amount to be remitted. (d) The Contract Agreement shall be governed by and construed in accordance with the law of India and the Court at Jaipur shall have the exclusive jurisdiction over all disputes arising under, pursuant to, and/ or in connection with the contract Agreement.” 19. The impugned order dated 04.06.2025 (Annex.22) was passed invoking Clause 17(ii) of the Agreement, which is distinct and not encompassed within Clause 27. Therefore, disputes arising under Clause 17(ii) are required to be adjudicated by an arbitrator as provided under Clause 28(a), meaning thereby that while Clause 27 outlines the scope of arbitrable disputes in the contract, Clause 17(ii) governs specific defaults, and any related disputes must be resolved through arbitration, consistent with the procedural requirements stipulated in Clause 28(a). Hence, the matter falls unequivocally within the purview of arbitration, affirming the mandatory nature of arbitration in relation to disputes under Clause 17(ii). 20.
Hence, the matter falls unequivocally within the purview of arbitration, affirming the mandatory nature of arbitration in relation to disputes under Clause 17(ii). 20. This Court is conscious of the fact that writ petitions are generally not maintainable in purely contractual disputes where parties have agreed to an arbitration clause, as the appropriate remedy lies in invoking the arbitral mechanism under the Arbitration and Conciliation Act, 1996. However, exceptions recognized by the Hon’ble Apex Court permit writ jurisdiction in cases involving violation of fundamental rights, lack of jurisdiction, or breach of principles of natural justice. Only in such exceptional situations can writ petitions be entertained despite the existence of an arbitration agreement. 21. The Hon’ble Apex Court in the case of Union of India & Ors. Vs. Tantia Construction Private Limited : (2011) 5 SCC 697 , (reliance placed on by learned counsel for the petitioner) has already laid down that the presence of an arbitration clause does not bar the High Court from exercising writ jurisdiction under Article 226 of the Constitution. It was further held that constitutional powers of judicial review cannot be restricted by the mere existence of alternate remedies such as arbitration. The High Court is empowered to entertain a writ petition in exceptional circumstances where alternative remedies are inadequate, ineffective, or where fundamental rights or principles of justice demand immediate intervention and even if arbitration is available, writ jurisdiction can be invoked to prevent injustice, address grave illegality, or ensure compliance with statutory duties. It was further held that this judgment affirms that contractual clauses cannot oust the constitutional writ jurisdiction of the High Court, especially in matters involving public interest or fundamental rights. Paragraphs No.33 and 34 of the said judgment, being apposite, are reproduced hereunder: “33. Apart from the above, even on the question of maintainability of the writ petition on account of the arbitration clause included in the agreement between the parties, it is now well established that an alternative remedy is not an absolute bar to the invocation of the writ jurisdiction of the High Court or the Supreme Court and that without exhausting such alternative remedy, a writ petition would not be maintainable. The various decisions cited by Mr Chakraborty would clearly indicate that the constitutional powers vested in the High Court or the Supreme Court cannot be fettered by any alternative remedy available to the authorities.
The various decisions cited by Mr Chakraborty would clearly indicate that the constitutional powers vested in the High Court or the Supreme Court cannot be fettered by any alternative remedy available to the authorities. Injustice, whenever and wherever it takes place, has to be struck down as an anathema to the rule of law and the provisions of the Constitution. 34. We endorse the view of the High Court that notwithstanding the provisions relating to the arbitration clause contained in the agreement, the High Court was fully within its competence to entertain and dispose of the writ petition filed on behalf of the respondent Company. We, therefore, see no reason to interfere with the views expressed by the High Court on the maintainability of the writ petition and also on its merits.” 22. The reliance placed by learned counsel for the petitioner on the judgments of Maharashtra Chess Association v. Union of India and UNITEC Ltd. v. Telangana State Industrial Infra. Corp. (supra) are not applicable to the present case. These judgments concern specific legal principles and factual matrices that do not arise here, and therefore cannot be relied upon to support the petitioner’s contentions in this matter. 23. Further, the Hon’ble Apex Court in the case of Uttar Pradesh Power Transmission Corporation Limited & Anr. v. CG Power and Industrial Solutions Limited & Anr.: (2021) 6 SCC 15 , held that the availability of an alternative remedy does not preclude the High Court from entertaining a writ petition. The Apex Court observed that the High Court may exercise writ jurisdiction notwithstanding the existence of an alternative remedy, particularly where the writ petition seeks enforcement of fundamental rights, alleges failure of principles of natural justice, challenges orders or proceedings that are wholly without jurisdiction, or questions the vires of an Act. Paragraphs 67 and 68 of the said judgment, being relevant, are reproduced hereunder: “67. It is well settled that availability of an alternative remedy does not prohibit the High Court from entertaining a writ petition in an appropriate case. The High Court may entertain a writ petition, notwithstanding the availability of an alternative remedy, particularly: (i) where the writ petition seeks enforcement of a fundamental right; (ii) where there is failure of principles of natural justice or (iii) where the impugned orders or proceedings are wholly without jurisdiction or (iv) the vires of an Act is under challenge.
The High Court may entertain a writ petition, notwithstanding the availability of an alternative remedy, particularly: (i) where the writ petition seeks enforcement of a fundamental right; (ii) where there is failure of principles of natural justice or (iii) where the impugned orders or proceedings are wholly without jurisdiction or (iv) the vires of an Act is under challenge. Reference may be made to Whirlpool Corpn. v. Registrar of Trade Marks and Pimpri Chinchwad Municipal Corpn. v. Gayatri Construction Co., cited on behalf of Respondent 1. 68. In Harbanslal Sahnia v. Indian Oil Corpn. Ltd., this Court allowed the appeal from an order of the High Court dismissing a writ petition and set aside the impugned judgment of the High Court as also the impugned order of the Indian Oil Corporation terminating the dealership of the appellants notwithstanding the fact that the dealership agreement contained an arbitration clause.” 24. Further, in the case of Joshi Technologies International Inc. Vs. Union of India & Ors.: (2015) 7 SCC 728 , (the reliance placed upon by learned counsel for the respondents) has specifically held that the Hon’ble Supreme Court observed that disputes arising out of contractual agreements containing arbitration clauses must be referred to the arbitral forum as the primary and appropriate mechanism for resolution and it was further observed that judicial intervention through writ jurisdiction should be limited and that matters are rightly directed to arbitration if the contract provides for it. Paragraph No.70, being apposite, is reproduced hereunder: “70. Further, the legal position which emerges from various judgments of this Court dealing with different situations/aspects relating to contracts entered into by the State/public authority with private parties, can be summarised as under: 70.1. At the stage of entering into a contract, the State acts purely in its executive capacity and is bound by the obligations of fairness. 70.2. State in its executive capacity, even in the contractual field, is under obligation to act fairly and cannot practise some discriminations. 70.3. Even in cases where question is of choice or consideration of competing claims before entering into the field of contract, facts have to be investigated and found before the question of a violation of Article 14 of the Constitution could arise.
70.3. Even in cases where question is of choice or consideration of competing claims before entering into the field of contract, facts have to be investigated and found before the question of a violation of Article 14 of the Constitution could arise. If those facts are disputed and require assessment of evidence the correctness of which can only be tested satisfactorily by taking detailed evidence, involving examination and cross-examination of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article 226 of the Constitution. In such cases the Court can direct the aggrieved party to resort to alternate remedy of civil suit, etc. 70.4. Writ jurisdiction of the High Court under Article 226 of the Constitution was not intended to facilitate avoidance of obligation voluntarily incurred. 70.5. Writ petition was not maintainable to avoid contractual obligation. Occurrence of commercial difficulty, inconvenience or hardship in performance of the conditions agreed to in the contract can provide no justification in not complying with the terms of contract which the parties had accepted with open eyes. It cannot ever be that a licensee can work out the licence if he finds it profitable to do so: and he can challenge the conditions under which he agreed to take the licence, if he finds it commercially inexpedient to conduct his business. 70.6. Ordinarily, where a breach of contract is complained of, the party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specifically performed. Otherwise, the party may sue for damages. 70.7. Writ can be issued where there is executive action unsupported by law or even in respect of a corporation there is denial of equality before law or equal protection of law or if it can be shown that action of the public authorities was without giving any hearing and violation of principles of natural justice after holding that action could not have been taken without observing principles of natural justice. 70.8. If the contract between private party and the State/instrumentality and/or agency of the State is under the realm of a private law and there is no element of public law, the normal course for the aggrieved party, is to invoke the remedies provided under ordinary civil law rather than approaching the High Court under Article 226 of the Constitution of India and invoking its extraordinary jurisdiction. 70.9.
70.9. The distinction between public law and private law element in the contract with the State is getting blurred. However, it has not been totally obliterated and where the matter falls purely in private field of contract, this Court has maintained the position that writ petition is not maintainable. The dichotomy between public law and private law rights and remedies would depend on the factual matrix of each case and the distinction between the public law remedies and private law field, cannot be demarcated with precision. In fact, each case has to be examined, on its facts whether the contractual relations between the parties bear insignia of public element. Once on the facts of a particular case it is found that nature of the activity or controversy involves public law element, then the matter can be examined by the High Court in writ petitions under Article 226 of the Constitution of India to see whether action of the State and/or instrumentality or agency of the State is fair, just and equitable or that relevant factors are taken into consideration and irrelevant factors have not gone into the decision-making process or that the decision is not arbitrary. 70.10. Mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirements of due consideration of a legitimate expectation forms part of the principle of non-arbitrariness. 70.11. The scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes.” 25. In the present case, the petitioner has not demonstrated any violation of fundamental rights, having admitted failure to deposit the contractual liability amount, thereby breaching the mandatory conditions of the contract. Additionally, the petitioner has not disputed the service of various notices prior to the impugned order dated 04.06.2025 (Annex.22) regarding forfeiture of the performance security thus it is not a case of violation of principles of natural justice, nor has it shown that the impugned order was issued without jurisdiction. 26.
Additionally, the petitioner has not disputed the service of various notices prior to the impugned order dated 04.06.2025 (Annex.22) regarding forfeiture of the performance security thus it is not a case of violation of principles of natural justice, nor has it shown that the impugned order was issued without jurisdiction. 26. Thus, in view of the Hon’ble Supreme Court’s rulings in Union of India v. Tantia Construction and Uttar Pradesh Power Transmission Cor. Ltd. v. CG Power and Joshi Technologies International Inc. (supra), this writ petition regarding a dispute under a contract containing an arbitration clause is not maintainable, except under the narrow exceptions recognized by the Apex Court, none of which apply here. 27. In view of the above, the petitioner has failed to establish any violation of fundamental rights or jurisdictional errors, therefore, in view of binding Hon’ble Supreme Court rulings (quoted above), the present writ petition is not maintainable except under recognized narrow exceptions, which are absent here. Accordingly, the writ petition is dismissed. All pending application(s), if any, stand disposed of.