Allahabad HC Dismisses Fisheries Lease Writ, Sends Contractor to Arbitration Over Sharda Sagar Reservoir Shortfall Dispute

A Division Bench found that disputed facts about reservoir area, Tiger Reserve restrictions, and actual income earned made the fisheries lease controversy unsuitable for Article 226 jurisdiction.

A Division Bench of the Allahabad High Court on 6 July 2026 dismissed a writ petition filed by a fisheries contractor challenging the cancellation of his ten-year lease over the Sharda Sagar Reservoir in Pilibhit, holding that the dispute was riddled with contested questions of fact that could only be resolved through arbitration. The bench, comprising Justice Neeraj Tiwari and Justice Sudhanshu Chauhan, found that the core arguments — whether the reservoir area actually available for fishing fell short of the 6,880 hectares put to auction, what income the petitioner earned during thirteen months of fishing, and what amount, if any, remained payable — were all matters requiring evidence and could not be decided in proceedings under Article 226 of the Constitution of India. The petition was dismissed with liberty to invoke the Arbitration and Conciliation Act, 1996, within six weeks, and the earlier interim stay of the impugned orders was preserved for that period.

The Fisheries Lease and What Went Wrong

The UP Fisheries Development Corporation Limited, Lucknow (“the Corporation”) had invited e-tender bids for auction of fishing rights over Sharda Sagar Reservoir, Class I, described as having a total area of 6,880 hectares in District Pilibhit, for a tenure of ten years ending 30 June 2033. Netra Pal Singh emerged as the successful bidder.

The financial commitments at the threshold were substantial. Within 24 hours of bid selection, the petitioner deposited Rs. 55,45,221/- on 14 July 2023 as 25% of the total amount. He then deposited a security amount of Rs. 67,70,825/- on 18 August 2023 by way of fixed deposit receipts, paid stamp duty of Rs. 27,88,830/- for execution of the agreement, and paid contract fees of Rs. 13,54,430/-. An agreement was executed on 29 August 2023, and an order dated 14 September 2023 formally granted the contract for the year 2023-24.

Problems surfaced almost immediately. When the petitioner's employees reached the reservoir to begin fishing, forest authorities detained them and seized the fishing boats on the ground that part of the reservoir lay within the core area of Pilibhit Tiger Reserve, where fishing was prohibited. An RTI response from the forest authorities at Pilibhit Tiger Reserve disclosed that 683.88 hectares of the Sharda Sagar Reservoir fell within the core area of the Tiger Reserve. There was also a prohibition on any activity within 200 to 500 metres from where the reservoir water entered the Tiger Reserve, which was likewise treated as core area.

The difficulties did not stop there. The petitioner pointed to approximately 1,000 hectares across six villages within the reservoir where there was no water and villagers were carrying out agricultural activities, making fishing impossible. Fishing was also barred in the portion of the reservoir that fell within the territory of the State of Uttarakhand.

The petitioner further relied on the National Register of Dams and charts maintained by the Irrigation and Water Resources Department to argue that the actual area of the Sharda Sagar Reservoir was only 5,765 hectares — not 6,880 hectares. On that arithmetic, the area effectively available to him fell short by 1,798.88 hectares. By letter dated 30 July 2024, the petitioner formally notified the Corporation of this shortfall.

The Corporation Cancels the Lease and Invokes the Bank Guarantee

Despite the petitioner's representations, payment defaults accumulated. The impugned order dated 28 September 2024, passed by respondent no. 2, the Chief General Manager of the Corporation, cancelled the fisheries lease agreement, forfeited the security deposit of Rs. 67,70,825/-, and directed the petitioner to deposit a further Rs. 1,82,67,040/- within 15 days. The order warned that failure to pay would trigger recovery proceedings as arrears of land revenue, and that the petitioner would be blacklisted.

A second letter dated 7 October 2024, issued by the Manager (Finance and Accounts) of the Corporation, directed the Branch Manager of Punjab and Sindh Bank to release the bank guarantee and FDR deposited by the petitioner in favour of the Corporation.

The petitioner argued that despite the shortfall in available fishing area, he had in fact deposited Rs. 1,05,15,000/- between the date of the agreement and 19 September 2024, over and above the amounts paid at the time of execution. He contended that it was the Corporation's own failure to provide the contracted area that caused his payment delays, amounting to a fundamental breach on the respondents' part.

Why the Bench Declined to Exercise Article 226 Jurisdiction

The bench, in a judgment delivered by Justice Sudhanshu Chauhan, identified at least four layered disputes of fact that made writ adjudication inappropriate.

On the area shortfall, the bench observed that the Corporation's counter-affidavit gave only an evasive reply to the petitioner's claim that 683.88 hectares fell in the Tiger Reserve core area and that the National Register of Dams recorded the reservoir at 5,765 hectares. The bench found, prima facie, that the petitioner's contention had force. However, it declined to act on that prima facie view because even accepting the shortfall of 1,798.88 hectares, the petitioner had 5,081.12 hectares available — and had in fact fished for approximately thirteen months before the termination.

The income earned during those thirteen months had not been placed on record. The bench held that any adjustment to installments, or any set-off arising from the reduced area, could not be computed without that income figure. Separately, the impugned order itself broke down the amounts allegedly due: Rs. 91,56,859/- in unpaid installments, Rs. 21,00,000/- towards fish seeds, and Rs. 7,42,420/- as penal interest for 2023-24, with the balance referable to 2024-25. The petitioner's claim to have paid Rs. 1,05,15,000/- created a further factual question about the net balance, if any, actually recoverable. Even the validity of the termination — whether it was made in accordance with the agreement or amounted to a wrongful cancellation — was itself a contested fact.

The bench applied the principles summarised by the Supreme Court in Joshi Technologies International Inc. v. Union of India, (2015) 7 SCC 728, which identified circumstances where a High Court would “normally” decline to exercise Article 226 discretion: where the matter is in the realm of pure contract without public law character; where a dispute-resolution mode, particularly arbitration, is contractually agreed; where seriously disputed questions of fact require oral evidence; and where the claim is essentially a money claim arising from contractual obligations. The bench found that all four of these circumstances were present.

The bench also relied on Union of India v. Puna Hinda, (2021) 10 SCC 690, where the Supreme Court held that disputes over amounts payable under a contract, in the absence of admission, must be adjudicated by the agreed forum — in that case, arbitration.

The petitioner sought to resist relegation to arbitration by relying on Harbanslal Shania v. Indian Oil Corporation Ltd., AIR 2003 SC 2120, which holds that availability of an alternative remedy is a rule of discretion and not compulsion, and that writ jurisdiction may be exercised where natural justice has been violated or fundamental rights are at stake. The bench distinguished that case: the dealership termination there had been done without hearing the party and for a non-existent cause, with no disputed facts. In the present case, multiple notices had been issued to the petitioner before termination, and the petitioner had not demonstrated any violation of his fundamental rights. The bench held that the benefit of Harbanslal Shania was therefore not available.

The petitioner also argued that since the writ petition had been pending for some time, pleadings had been exchanged, and relegating him to arbitration now would cause undue hardship. The bench addressed this directly by reference to State of UP v. Ehsan, 2023 LiveLaw (SC) 887, which acknowledges that where a writ petition has been entertained and affidavits exchanged, the court should make a sincere effort to decide on merits rather than relegate the petitioner — unless there are compelling reasons. The bench held that the serious and multi-layered disputed questions of fact, and the insufficient evidence on record to reach a definite conclusion, constituted exactly such a compelling reason. The petition was accordingly not maintainable.

Protection Granted During the Transition to Arbitration

The bench was conscious that it had, by an earlier order dated 12 December 2024, stayed both the termination order of 28 September 2024 and the bank guarantee invocation letter of 7 October 2024. It declined to abruptly lift that protection and instead held that the petitioner should have interim cover while he moves to invoke arbitration.

The bench was careful to clarify that its observations in the judgment about which party may have breached the agreement were made solely for the purpose of deciding whether the writ petition should be entertained. Those observations, it stated expressly, would have no binding effect in any subsequent arbitration proceedings.

Order

The writ petition was dismissed. The petitioner was granted liberty to invoke the remedy under the Arbitration and Conciliation Act, 1996, within six weeks from 6 July 2026. The stay on the order dated 28 September 2024 and the letter dated 7 October 2024 was continued for that six-week period. At the end of six weeks, the interim protection would automatically stand vacated. No order as to costs was made.