The main legal point established in the judgment is that the cancellation of a lease must be based on valid grounds supported by the lease terms and applicable laws. The court also emphasized the need to consider public interest in reaching a decision.

RAJIV SAHAI ENDLAW, J.

1. The petition impugns the letter dated 02.06.2009 of the respondent DDA to the petitioner cancelling the allotment (earlier made in favour of the petitioner) of land ad-measuring 9950 sq. mtrs. at Sector-6, Pappan Kalan, Dwarka, Delhi, for the reason of violation by the petitioner of the terms and conditions of allotment.

2. Notice of the petition was issued and vide order dated 06.07.2009 which has continued to be in force, the operation of the letter / order dated 02.06.2009 stayed. Pleadings have been completed. On further application, being CM No.5738/2010 of the petitioner, vide order dated 25.05.2010 directions were issued to the respondent DDA to, without prejudice to its rights and contentions and subject to payment of composition charges, issue a No Objection Certificate (NOC) to construction over the plot and grant permission to the petitioner to mortgage the said plot/land subject to order of the Court being brought to the knowledge of the mortgagee bank. The counsels have been heard.

3. The land aforesaid was allotted by the President of India acting through the respondent DDA to the petitioner vide Perpetual Lease Deed dated 11.06.1996. The cancellation thereof has been effected on two grounds i.e. (i) for the reason of the petitioner being required to construct the building as per the sanctioned plan on the allotted land within two years of being put into physical possession thereof and having not constructed the building even after 13 years from the date of taking over physical possession of the land; and, (ii) the land having been allotted on concessional rates and having been sold in a clandestine manner to earn profit; it is the case of the respondent DDA that all the original members of the petitioner Society at the time of allotment of the land have been replaced by new set of members.

4. The petitioner ofcourse controverts both the aforesaid grounds of cancellation and hence this writ petition.

5. The Perpetual Lease of land between the parties, in Clause VI thereof provides for reference of any question, dispute or difference arising under the lease or in connection therewith to the sole arbitration of the Lieutenant Governor or any other person appointed by him. It is one of the arguments of the counsel for the respondent DDA that the present petition is not maintainable for the reason of availability of the remedy of arbitration. The senior counsel for the petitioner has in rejoinder contended that if it was the case of the respondent DDA that any arbitrable dispute had arisen between the parties, it was for the respondent DDA to have referred the same to arbitration; however, the respondent DDA instead chose to issue a show cause notice and notwithstanding the reply thereto of the petitioner controverting that the petitioner was in violation of any of the terms of the Lease Deed chose to, without referring the dispute to arbitration, cancel the lease and cannot now be heard to oust the petitioner from the remedy of writ against the said action of the respondent DDA.

6. I am satisfied with the aforesaid response of the petitioner to the objection aforesaid of the respondent DDA. The respondent DDA, from the reply of the petitioner to the show cause notice, was aware of the disputes which had arisen. The respondent DDA however instead of referring the same to arbitration in terms of the arbitration Clause in the Lease Deed chose to exercise its right as the lessor of the land. In the circumstances, the respondent DDA cannot be heard to now rely on the arbitration clause. Even otherwise it has been held by this Court in Chandana Kedia Vs. UOI 2010 II AD (Del) 757 that writ jurisdiction is not ousted by the mere existence of arbitration clause in the contract.

7. It is also the contention of the counsel for the respondent DDA that the writ remedy is not maintainable for the reason of dispute between the parties being contractual and entailing disputed quest