Disputes over risk-and-cost termination and consequential payments are appropriately resolved through arbitration.

The Petitioner, a micro and small enterprise, was awarded a contract by Numaligarh Refinery Limited under a work order dated 15 December 2022.

NRL terminated the contract on 27 November 2024 at the Petitioner’s risk and cost.

Subsequently, NRL placed the Petitioner in its Holiday List for one year by communication dated 2 January 2025 and made the processing/release of RA Bill No. 2 contingent upon adjustment of alleged recoverable risk-and-cost dues by communication dated 30 May 2025.

The Petitioner challenged these actions and sought release of admitted dues amounting to Rs.20,65,231.90, along with other withheld payments.

Before filing the writ petition, the Petitioner appealed against its placement in the Holiday List and also submitted a representation seeking reconsideration of the termination.

During the proceedings, the Managing Director of NRL, by order dated 24 October 2025, revoked the Holiday List order and directed deletion of the Petitioner’s name from NRL’s website and internal records; however, the representation against termination remained undecided.

1. Whether the challenge to the Petitioner’s placement in the Holiday List survived after NRL revoked the relevant order during the pendency of the writ petition.

2. Whether the High Court should adjudicate the validity of the contractual termination at the Petitioner’s risk and cost and the consequential withholding or adjustment of payments, where the dispute involved contested questions of fact and was covered by an arbitration clause.

3. Whether the Petitioner should be granted liberty to invoke the arbitration clause contained in Clause 8.7.2 of the General Conditions of Contract.

The Court applied the principle that disputed contractual claims involving contested questions of fact, particularly where determination requires the leading of evidence, are ordinarily unsuitable for adjudication in writ proceedings.

It further applied the contractual dispute-resolution mechanism contained in Clause 8.7.2 of the General Conditions of Contract, holding that disputes concerning termination at risk and cost and consequential payment adjustments could be resolved through arbitration.

The Court also applied the principle that a challenge to an order which has been withdrawn or revoked no longer survives for adjudication.

The Court held that the challenge to the Holiday List order had become academic because NRL’s Managing Director had revoked the order dated 2 January 2025 and directed removal of the Petitioner from the relevant records.

As to the termination and withholding of payments, NRL alleged that the Petitioner had completed less than 50% of the work and caused substantial losses, whereas the Petitioner attributed its non-performance to NRL’s failure to fulfil its own contractual obligations.

Since resolution of these competing factual claims would require evidence, the Court declined to determine them in writ jurisdiction.

In view of the arbitration clause in Clause 8.7.2, the Court considered arbitration to be the appropriate forum for resolving the termination dispute and consequential monetary claims.

The challenge to the Holiday List order was held not to survive because that order had already been revoked on 24 October 2025.

The Court declined to adjudicate the validity of the risk-and-cost termination or the consequential withholding and adjustment of payments, and granted the Petitioner liberty to initiate appropriate arbitration proceedings under Clause 8.7.2 of the General Conditions of Contract.

The Court clarified that its non-adjudication of those disputes would neither preclude nor prejudice the Petitioner in the arbitration proceedings.