M/s. Sewak Enterprises v. The Union of India & Ors.

provided in the contract, the High Court would refuse to exercise its discretion under Article 226 of Constitution of India. He further relied upon the judgment in the case of M.P. Power Management Company Limited, Jabalpur vs. Sky Power Southeast Solar India Private limited and Others reported in (2023) 2 SCC 703 and submits that the existence of a provision for arbitration, which is a forum intended to quicken the 5 pace of dispute resolution is viewed as a bar to entertain a writ petition.

#11. Heard the learned counsel for the respective parties perused the materials on record.

#12. This Court finds that the LOI has been issued to the petitioner on October 10, 2025. As per the terms and conditions in case the bidder fails to submit the required documents with change of name etc. within four months from the issuance of LOI, suitable penal action shall be taken including the forfeiture of EMD and caution money. In the present case the LOI was issued on October 10, 2025, the four months completed on February 9, 2026. The document produced by the petitioner in the supplementary affidavit shows that the transferred of the ownership of the particular vehicle has been transferred on February 9, 2026 itself and on February 10, 2026 the petitioner has informed the authorities by way of email dated February 10, 2026 and subsequently, the PESO license was also transferred in the name of the petitioner and the same was also informed to the authorities on February 11, 2026. The authorities without considering the document submits by the petitioner by way of email dated February 10, 2026 and February 11, 2026 wherein the petitioner has disclosed the transfer of ownership and transferred of the PESO license had issued a show-cause notice dated February 26, 2026. In the show-cause notice it is not the case of the authorities that the petitioner has submitted the document by transferring the ownership and the 6 PESO license after the period of four months. It is the specific case in the show-cause notice that the petitioner has not transferred the ownership and the PESO license within four months but that is contrary to the document produced before this Court by way of supplementary affidavit.

#13. In the case of Unitech Limited and others vs. Telengana State Industrial Infrastructure Corporation (TSHC) and others reported in (2021) 16 SCC 35 wherein the Hon’ble Supreme Court held that: “39.6. In determining as to whether jurisdiction should be exercised in a contractual dispute, the Court must, undoubtedly eschew, disputed questions of fact which would depend upon an evidentiary determination requiring a trial. But equally, it is well settled that the jurisdiction under Article 226 cannot be ousted only on the basis that the dispute pertains to the contractual arena. This is for the simple reason that the State and its instrumentalities are not exempt from the duty to act fairly merely because in their business dealings they have entered into the realm of contract. Similarly, the presence of an arbitration clause thus (sic not) oust the jurisdiction under Article 226 in all cases though, it still needs to be decided from case to case as to whether recourse to a public law remedy can justifiably be invoked.” In the case of M.P. Power Management Company Limited, Jabalpur (supra) the Hon’ble Supreme Court held that: 7 “82.12. In a case the State is a party to the contract and a breach of a contract is alleged against the State, a civil action in the appropriate forum is, undoubtedly, maintainable. But this is not the end of the matter. Having regard to the position of the State and its duty to act fairly and to eschew arbitrariness in all its actions, resort to the constitutional remedy on the cause of action, that the action is arbitrary, is permissible (see in this regard Shrilekha Vidyarthi v. State of U.P.30). However, it must be made clear that every case involving breach of contract by the State, cannot be dressed up and disguised as a case of arbitrary State action. While the concept of an arbitrary action or inaction cannot be cribbed or confined to any immutable mantra, and must be laid bare, with reference to the facts of each case, it cannot be a mere allegation of breach of contract that would suffice. What must be involved in the case must be action/inaction, which must be palpably unreasonable or absolutely irrational and bereft of any principle. An action, which is completely mala fide, can hardly be described as a fair action and may, depending on the facts, amount to arbitrary action. The question must be posed and answered by the Court and all we intend to lay down is that there is a discretion available to the Court to grant relief in appropriate cases.”

#14. Considering the same, this Court finds that the authorities without considering the document submitted by the petitioner on February 10, 2026 and February 11, 2026 wherein the petitioner has disclosed the transfer of ownership and the particular vehicle on February 9, 2026 and the PESO license on February 11, 2026. 8

#15. This Court finds that the authorities have issued the show-cause notice on the pretext that the ownership and the PESO license have not been transferred within four months in terms of the condition of the contract. The show-cause notice was issued on February 26, 2026 wherein the fact remains the petitioner has submitted the document on February 10, 2026 and February 11,

#2026. Considering the above, this Court finds that the authorities without considering the document submitted by the petitioner on February 10, 2026 and February 11, 2026 wherein the petitioner has submitted the transfer of ownership of the vehicle as well as the PESO license, thus the issuance of the show-cause notice is without any application of the mind.

#16. Consequently, the authorities have also issued the impugned order by terminating the contract without considering the said documents.

#17. In view of the above, this Court finds that the authorities while issuing the show-cause notice and the impugned order of termination have not considered the documents submitted by the petitioner wherein it is clear that the petitioner has already challenged the ownership and PESO license of the vehicle. Thus the show-cause notice and the termination notice are set aside and quashed.

#18. WPA 6745 of 2026 is disposed of.

#19. Urgent Xerox certified copy of this order, if applied for, be given to the parties upon compliance of all necessary formalities. (Krishna Rao, J.)