The Allahabad High Court has quashed the National Highways Authority of India’s (NHAI) decision terminating Tata Projects Limited’s EPC contract for the widening and strengthening of NH-709A between Garhmukteshwar and Meerut, holding that the action was arbitrary and ignored NHAI’s own failure to provide hindrance-free land in accordance with the EPC Agreement.
The contract, awarded to Tata Projects in 2021, envisaged completion of the 50.254-km highway project by October 2023. NHAI terminated the contract in January 2025 citing slow progress and non-performance. Tata Projects challenged the action, contending that the delay was attributable to NHAI’s failure to hand over 90% of the project land with the requisite ‘Right of Way’ and to remove encumbrances, including land disputes, religious structures and utilities, despite repeated requests and recommendations by the Authority’s Engineer.
A Division Bench of Justice Ajit Kumar and Justice Swarupama Chaturvedi observed that NHAI’s own records and the Authority Engineer’s reports acknowledged that substantial portions of the project site continued to suffer from land acquisition issues and other hindrances, making the contractual ‘Right of Way’ unavailable. The Court held that the State, being an instrumentality under Article 12 of the Constitution, cannot blame the contractor for delays after failing to perform its own contractual obligations.
The Court also found that the termination order reflected complete non-application of mind, as it ignored the contractor’s detailed reply and the Authority Engineer’s reports documenting NHAI’s own lapses.
Accordingly, the High Court quashed NHAI’s order dated January 14, 2025 terminating Tata Projects’ contract, the consequential forfeiture of the contractor’s bank guarantees, and the fresh tender issued on February 3, 2025.
Observing that completion of the highway project is in the larger public interest and taking note of the petitioner’s undertaking to complete the remaining work within 14 months, the Court directed the parties to conduct a fresh joint site inspection within one month and reschedule the project timeline in accordance with the EPC Agreement, keeping in view the Authority Engineer’s report dated July 10, 2024. The writ petition was accordingly allowed without any order as to costs.
