The Allahabad High Court has dismissed a writ petition challenging the cancellation of a 10-year fisheries lease agreement and the forfeiture of a security deposit, ruling that pure contractual disputes involving complex and disputed questions of fact cannot be adjudicated under Article 226 of the Constitution of India. A division bench comprising Justice Sudhanshu Chauhan and Justice Neeraj Tiwari held that the petitioner must instead invoke the arbitration mechanism provided within the lease agreement. However, to prevent undue hardship, the Court extended interim protection to the petitioner for six weeks to enable the initiation of arbitration proceedings.
Background
The controversy arose after the U.P. Fisheries Development Corporation Limited (the Corporation) invited e-tender applications for the auction of fishing rights in the Sharda Sagar Reservoir, Pilibhit, covering an advertised area of 6,880 hectares for a 10-year tenure ending on June 30, 2033. The petitioner, Netra Pal Singh, emerged as the successful bidder, depositing a 25% bid amount of ₹55,45,221, a security deposit of ₹67,70,825 in fixed deposit receipts, a stamp duty of ₹27,88,830, and a contract fee of ₹13,54,430. A formal lease agreement was subsequently concluded on August 29, 2023.
Shortly after operations began, the petitioner’s employees were detained and fishing boats seized by forest authorities, who claimed that a portion of the reservoir fell within the core area of the Pilibhit Tiger Reserve where fishing is strictly prohibited. Right to Information (RTI) disclosures later revealed that 683.88 hectares belonged to the tiger reserve’s core area. Furthermore, the petitioner discovered that agricultural activities were being conducted across 1,000 hectares of dry land within the reservoir area, and another portion fell under the jurisdiction of the State of Uttarakhand, rendering it inaccessible. National Register of Large Dams records also indicated the reservoir’s total area was only 5,765 hectares, far short of the 6,880 hectares advertised.
Due to these restrictions, the petitioner defaulted on contractual installments. Consequently, on September 28, 2024, the Chief General Manager of the Corporation cancelled the agreement, forfeited the security deposit, initiated blacklisting proceedings, and demanded an outstanding recovery of ₹1,82,67,040. A subsequent directive on October 7, 2024, instructed the petitioner’s bank to release the bank guarantees to the Corporation. Aggrieved by these actions, the petitioner approached the High Court.
Arguments of the Parties
The petitioner’s counsel argued that the Corporation committed a fundamental breach of contract by failing to provide the physical area advertised in the tender. They contended that the shortfalls were verified by official RTI replies and dam registries, making the subsequent payment delays a direct consequence of the Corporation’s own default. They further submitted that since pleadings had already been exchanged and the petition had been pending, relegating the parties to alternative remedies would cause unjust hardship.
Conversely, the respondents raised a preliminary objection regarding the maintainability of the writ petition, asserting that the agreement contained an arbitration clause for dispute resolution. They argued that the matter involved deeply disputed questions of fact that could not be verified under writ jurisdiction. Additionally, they maintained that the contract was executed on an “as-is-where-is basis” and that tender conditions explicitly required bidders to conduct independent spot inspections before participating.
Court’s Analysis
The Court observed that while the petitioner’s claims regarding the area shortfall appeared prima facie credible due to evasive replies from the respondents, the petitioner had still retained access to over 5,081 hectares and successfully conducted fishing operations for approximately thirteen months. The Court highlighted that crucial details, such as the actual income earned by the petitioner during this period and the precise financial adjustments required for the unavailable areas, were missing from the record.
The Court emphasized that evaluating the validity of the lease termination, the exact outstanding amounts, and the mutual allegations of breach required comprehensive evidence. Citing the Supreme Court’s landmark ruling in Joshi Technologies International Inc. vs Union of India (2015), the Court noted that:
“Whenever a particular mode of settlement of dispute is provided in the contract, the High Court would refuse to exercise its discretion under Article 226 of the Constitution and relegate the party to the said mode of settlement, particularly when settlement of disputes is to be resorted to through the means of arbitration.”
The bench also distinguished the present matter from Harbanslal Saharia vs Indian Oil Corporation Ltd. (2003), clarifying that writ jurisdiction in contractual matters is typically reserved for instances involving violations of natural justice or fundamental rights, neither of which were substantiated here since multiple show-cause notices had been served to the petitioner.
Addressing the argument on long pendency, the Court relied on State of UP vs Ehsan (2023), noting that even if pleadings are exchanged, a writ court must relegate parties to alternative forums if the evidence available on record is insufficient or inconclusive to arrive at a definite conclusion. The Court remarked:
“Though, the jurisdiction of the High Court is wide but in respect of pure contractual matters in the field of private law, having no statutory flavour, are better adjudicated upon by the forum agreed to by the parties.”
Decision
The High Court dismissed the writ petition, holding it non-maintainable due to the availability of an efficacious alternative remedy through arbitration, which is better suited to adjudicate complex factual disputes.
However, taking into account that the operation of the cancellation and recovery orders had been stayed by the Court since December 12, 2024, the bench ordered that the interim protection remain active for a strict period of six weeks. This allows the petitioner to seek appropriate remedies under the Arbitration and Conciliation Act, 1996, after which the stay will automatically stand vacated. The Court made it clear that it expressed no binding opinion on the merits or breaches of the contract. No order was made as to costs.
Case Title: Netra Pal Singh Versus State Of Up And 2 Others
Case No.: WRIT-C No. 35283 of 2024
Bench: Justice Neeraj Tiwari, Justice Sudhanshu Chauhan
Date: July 6, 2026
