Abdul Vahid Son Of Shri Abdul Mazid vs. Union Of INDIA

Held

The Court held that the petitioner was not entitled to a refund of the security amount. The primary reason was the petitioner's failure to comply with Clause 13 of the license agreement, which mandated three months' prior written notice for termination. The Court found no evidence of such notice being submitted. Consequently, the security deposit was liable to be forfeited as per Clause 10(i) of the agreement, which allows for forfeiture in case of default in payment of charges. The Court also noted the presence of Clause 26, an arbitration clause, which provided an alternative dispute resolution mechanism. While dismissing the writ petition on merits, the Court, in the interest of justice, granted the petitioner liberty to pursue his claim through arbitration proceedings as provided under Clause 26 of the license agreement. The issue of interest on the security amount was not expressly decided as the refund itself was denied.

Facts

The petitioner, Abdul Vahid, entered into a license agreement with the respondent railways for a cycle stand at Kota Junction, commencing work on August 1, 2016. He deposited Rs. 41,51,804/- as security. The petitioner sought to terminate the agreement effective September 2017, citing significant losses due to the imposition of GST. He applied for the refund of his security deposit with interest. The respondents contended that the writ petition was not maintainable due to an arbitration clause in the agreement and that the petitioner was obligated to pay taxes as per the tender notice. The petitioner argued for the refund based on Clause 13 of the license agreement, which allowed termination after 12 months with three months' prior notice.

Key Issues

1. Whether the petitioner is entitled to a refund of the security amount deposited, along with interest, despite not providing the mandatory three months' prior written notice for termination as stipulated in Clause 13 of the license agreement. 2. Whether the writ petition is maintainable in light of the arbitration clause (Clause 26) present in the license agreement, which provides a mechanism for dispute resolution. Petitioner's arguments: The petitioner contended that he was entitled to a refund of his security deposit based on Clause 13 of the license agreement, which allowed for termination after 12 months. He argued that the imposition of GST caused him significant losses, justifying the termination and refund. He relied on Clause 13 of the license agreement. Respondents' arguments: The respondents argued that the writ petition was not maintainable due to the existence of an arbitration clause (Clause 26) in the agreement. They also asserted that the petitioner was obligated to pay taxes as per the tender notice and that the security deposit could be forfeited under Clause 10(i) in case of default in payment of charges. They relied on Clause 10(i) and Clause 26 of the license agreement.