Writ refund claims may proceed on public law grounds; State retention of licence fee without forfeiture clause was unsustainable.

Writ jurisdiction under Article 226 was held maintainable where refund of a licence fee arose from State action with a public law flavour and the monetary claim was consequential, with no oral evidence required. In the absence of any express forfeiture clause, the State could not retain the licence fee or refuse refund, particularly when similarly placed bidders had been allowed to withdraw and no loss or injury was shown. Interest on the refunded amount was declined because entitlement depended on a fuller examination of the parties' conduct. The refusal to refund was quashed and the principal amount ordered to be recovered.

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Issues: (i) Whether a writ petition under Article 226 was maintainable for refund of the licence fee arising out of a contractual arrangement with the State. (ii) Whether the respondents could retain the Rs. 18 crores licence fee and refuse refund in the absence of any forfeiture clause, especially when similarly placed bidders were allowed to withdraw. (iii) Whether interest on the refunded amount was payable.

Issue (i): Whether a writ petition under Article 226 was maintainable for refund of the licence fee arising out of a contractual arrangement with the State.

Analysis: The dispute arose from a State action having public law flavour, and the claim for refund was consequential to the challenge against the refusal to return the amount. The existence of some contractual elements did not by itself oust writ jurisdiction. The settled position is that a writ petition may be entertained where State action is challenged as arbitrary or discriminatory, and where monetary relief is only consequential. The absence of disputed facts requiring oral evidence also weighed in favour of exercising writ jurisdiction.

Conclusion: The writ petition was maintainable.

Issue (ii): Whether the respondents could retain the Rs. 18 crores licence fee and refuse refund in the absence of any forfeiture clause, especially when similarly placed bidders were allowed to withdraw.

Analysis: The tender documents and advertisements contained no clause authorising forfeiture of the one-time licence fee. The respondents themselves maintained that the amount was not earnest money or security deposit, but consideration for permission to set up the facility. In such a situation, and in the absence of any pleaded or demonstrated harm to the respondents, retention of the amount was unjustified. The Court also found that EBPL and DRL had been allowed to exit the process in comparable or even less favourable circumstances, while the petitioner was denied similar treatment. The impugned refusal therefore failed the requirement of even-handed and non-arbitrary State action.

Conclusion: The respondents were bound to refund the licence fee and the refusal to do so was unsustainable.

Issue (iii): Whether interest on the refunded amount was payable.

Analysis: The entitlement to interest depended on a fuller examination of the alleged breach and the respective conduct of the parties. That aspect was not finally determined on the record before the Court.

Conclusion: Interest was declined.

Final Conclusion: The impugned refusal to refund the licence fee was quashed, and the petitioner was held entitled to recovery of the principal amount, while interest was denied.

Ratio Decidendi: In the absence of an express forfeiture clause, the State cannot retain a contractual payment received for a permission or licence when the contract is not carried through, especially where the State has acted inconsistently with Article 14 and no loss or injury is shown to justify retention.

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