Article 226 jurisdiction is not exercisable to adjudicate contractual disputes involving complex contested questions of fact.

The Appellant (PCKL) is the nodal agency for power procurement in Karnataka.

In 1996, the State approved a barge-mounted power project originally for Euro AG, which was later transferred to Respondent No. 1 (HTPPL).

HTPPL deposited ₹1 crore as "Guarantee Money" in 1998.

Over two decades, the project underwent several Government-approved changes regarding capacity, fuel type, and location.

On 11.04.2016, the State withdrew the project approval, citing that the changes caused the project to lose its "bid route" character and violated the Electricity Act, 2003.

HTPPL initially sought arbitration before the Permanent Court of Arbitration (PCA), but the Karnataka Electricity Regulatory Commission (KERC) and subsequently the High Court and Supreme Court held that only KERC had jurisdiction under Section 86(1)(f) of the Electricity Act.

HTPPL then filed a Writ Petition seeking refund of the deposit with 12% interest.

The learned Single Judge allowed the petition, treating the retention as "unjust enrichment" and a "continuing wrong" under the Limitation Act.

PCKL appealed this order.

Whether a writ petition under Article 226 is maintainable for a refund claim involving disputed questions of contractual fact and performance.

Whether the claim for refund of Earnest Money Deposit (EMD) is barred by the law of limitation or if it constitutes a "continuing cause of action."

Whether HTPPL has an efficacious alternative remedy before the KERC under Section 86(1)(f) of the Electricity Act, 2003.

The Court applied Article 226 of the Constitution of India regarding the discretionary jurisdiction of High Courts in contractual matters.

It primary relied on Section 86(1)(f) of the Electricity Act, 2003, which mandates adjudication of disputes between generating companies and licensees by the State Commission.

Regarding time-bars, the Court applied Article 113 of the Schedule to the Limitation Act, 1963 (the residuary period of three years).

The Court also applied Section 14 of the Limitation Act, 1963, which allows for the exclusion of time spent bona fide in a forum lacking jurisdiction.

The Division Bench found that the dispute was fundamentally contractual, involving whether HTPPL performed its obligations or whether the State’s withdrawal was a breach.

Such "disputed questions of fact" are generally not entertained under Article 226.

The Court disagreed with the Single Judge’s view that the non-refund was a "continuing wrong"; rather, the right to sue accrued when the project was cancelled in 2016.

However, the Bench noted that HTPPL acted bona fide in pursuing arbitration until the Supreme Court finally settled the jurisdictional issue in 2025; thus, that period (2018–2025) is eligible for exclusion under Section 14 of the Limitation Act.

Crucially, the Court held that since the Supreme Court had already relegated the parties to the KERC/APTEL for all disputes, HTPPL possessed an efficacious alternative remedy which it had already begun to invoke.

It held that the writ petition was not the appropriate remedy for resolving complex factual and contractual disputes regarding the forfeiture or refund of security deposits.

The Court clarified that HTPPL is at liberty to file a fresh petition before the KERC as per the liberty already granted by that commission on 16.12.2025.

All rights and contentions regarding the merits of the refund and interest remain open for adjudication by the KERC.