Writ jurisdiction is unavailable for contractual disputes involving disputed facts and an agreed arbitration remedy.

Respondent No. 2, the Rail Land Development Authority (RLDA), invited a tender on 12 February 2018 for development of a Multi-Functional Complex at Hazipur Railway Station. The petitioners’ bid was accepted, and a 45-year lease was awarded through a Letter of Acceptance dated 22 May 2018, followed by execution of a Lease Agreement on 15 January 2019.

The petitioners paid ₹6,11,00,000 towards lease premium, ₹13,86,027 as interest, and furnished a performance bank guarantee of ₹30,55,000.

Although possession was contractually required to be delivered within thirty days, the original site was not handed over when the petitioners visited it on 15 February 2019.

RLDA offered alternate sites in July and November 2019, which the petitioners declined; the original site was offered in December 2019, but the petitioners refused it on the ground that the project had become commercially unviable.

At the petitioners’ request, the Lease Agreement was terminated on 31 August 2020. RLDA refunded 75% of the lease premium—₹4,58,25,000—and the petitioners separately received GST refunds totalling ₹82,48,500, but the remaining amounts were not refunded.

In an earlier writ petition, the Court directed RLDA to decide the petitioners’ representation after granting a hearing. RLDA thereafter passed a Speaking Order dated 13 June 2022 rejecting the claim for further refund, leading to the present writ petition.

Whether the writ petition under Article 226 of the Constitution was maintainable where the dispute involved contractual interpretation and disputed questions of fact.

Whether the petitioners were entitled to terminate the Lease Agreement and claim a refund of the entire amount on account of delay in handing over the original site.

Whether the contractual disputes were required to be pursued through the arbitration mechanism contained in the Lease Agreement, including in light of Section 8 of the Arbitration and Conciliation Act, 1996 and Article 23 of the General Conditions of the Lease Agreement.

The Court applied the principle that writ jurisdiction under Article 226 is ordinarily not exercised for resolution of contractual disputes involving disputed questions of fact, particularly where the contract provides an alternate dispute-resolution mechanism.

Section 8 of the Arbitration and Conciliation Act, 1996 and Article 23 of the General Conditions of the Lease Agreement were relied upon in relation to the contractual arbitration remedy.

Under Article 21.3(a) of the GCLA, failure by RLDA to provide the petitioner the right of way to the site for more than twelve months constituted an RLDA Event of Default, giving rise to a right of termination.

Article 14.2.3 of the GCLA separately permitted the petitioner to claim damages for failure or delay in handing over the right of way, but did not confer an automatic right of termination.

Clause 13 of the Special Conditions of the Lease Agreement prescribed a termination payment equivalent to 75% of the lease premium where termination occurred before commencement of commercial operations.

The Court also relied on Rajkumari Mundra v. Union of India, W.P.(C) 6434/2021, decided on 13 July 2021, which held that contractual and commercial disputes involving disputed facts should ordinarily be pursued through the remedies provided under the relevant contract rather than through writ proceedings.

The Court held that the petitioners’ claim depended on disputed factual and contractual questions, including the effect of the delay in handing over the site, the legal consequences of the alternate-site offers, and the interpretation of the termination and refund provisions.

On the contractual merits, the Court noted that the original site was offered on 2 December 2019, within twelve months of execution of the Lease Agreement on 15 January 2019. Consequently, the twelve-month threshold under Article 21.3(a) had not been crossed and no RLDA Event of Default, as defined in that provision, had arisen.

Although Article 14.2.3 could support a claim for damages arising from delay, it did not itself authorise termination of the Lease Agreement.

Since the petitioners had requested termination before commencement of commercial operations and had not proceeded under Articles 21.3 and 14.2.3, RLDA’s invocation of Clause 13 and refund of 75% of the lease premium was found to be contractually supportable.

In any event, the Court declined to adjudicate these matters in writ jurisdiction because they required determination in arbitration under the Lease Agreement. The petitioners’ concern that RLDA might treat the dispute as an “Excepted Matter” was rejected because RLDA’s counter-affidavit acknowledged that the disputes were arbitrable.

The Court did not grant any additional refund or interfere with RLDA’s Speaking Order dated 13 June 2022.

It directed that the time spent by the petitioners in pursuing the present and earlier writ petitions be excluded for computing limitation in the arbitration proceedings.

The pending application was consequently disposed of.