The Delhi High Court has refused to restrain the National Highways Authority of India (NHAI) from proceeding with the proposed termination of an Engineering, Procurement and Construction (EPC) contract for the six-laning of the Kagal-Satara section of NH-48, holding that interim orders should not impede completion of public infrastructure projects and that disputes over contractual defaults are best left to arbitration.
Justice Om Prakash Shukla dismissed a petition filed by Roadway Solutions India Infra Limited under Section 9 of the Arbitration and Conciliation Act, 1996 seeking to restrain NHAI from acting upon its Notice of Intention to Terminate dated July 16, 2026. The Court clarified that its observations were only prima facie and that all disputes would remain open for adjudication before the arbitral tribunal.
The dispute arose out of an EPC contract executed on October 17, 2022 for construction of the six-laning project. The contractor contended that delays were attributable to NHAI’s failure to provide continuous right of way and necessary approvals, while NHAI alleged persistent defaults by the contractor, including slow progress, inadequate deployment of resources and safety violations.
The petitioner argued that the Cure Period Notice issued by NHAI on January 2, 2026 was premature because the revised Milestone-III date under a Settlement Agreement had not yet expired. It further contended that the settlement prevented NHAI from taking coercive action before the revised completion date and relied upon the Supreme Court’s recent decision in Manjunath to argue that the contract was not “determinable” under Section 14(d) of the Specific Relief Act.
Accepting one aspect of the contractor’s submissions, the Court held that the contract was not determinable in nature merely because it contained a termination clause. Relying on the Supreme Court’s decision in K. S. Manjunath v. Moorasavirappa, 2025 INSC 1298, Justice Shukla observed that contracts terminable only upon specified defaults after notice and an opportunity to cure cannot be treated as inherently determinable within the meaning of Section 14(d) of the Specific Relief Act.
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However, the Court found that this conclusion alone did not entitle the petitioner to interim protection. Examining the Cure Period Notice, it observed that NHAI had invoked several independent defaults relating to failure to proceed with the works, inadequate deployment of manpower, failure to rectify defects and non-compliance with contractual obligations, rather than merely alleging failure to achieve Milestone-III. Consequently, the Court held that the petitioner had failed to establish that the notice was prima facie premature.
The Court also rejected the argument that the Settlement Agreement barred NHAI from invoking contractual defaults until the revised completion date. It held that the agreement merely extended the completion schedule and waived damages up to a specified date but did not grant immunity from independent contractual breaches or prevent NHAI from invoking Clause 23 where such defaults existed.
Significantly, Justice Shukla emphasised that Sections 20A and 41(ha) of the Specific Relief Act restrict courts from granting injunctions that would impede or delay infrastructure projects. The Court observed that while the contractor’s alleged loss was essentially commercial and compensable in damages, restraining NHAI from proceeding with termination could delay completion of an important national highway project and adversely affect public interest.
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Relying on earlier Division Bench decisions involving NHAI as well as the Supreme Court’s judgment in N.G. Projects Ltd. v. Vinod Kumar Jain, (2022) 6 SCC 127, the Court reiterated that even where a contractor may have a prima facie case, interim orders should ordinarily not stall public infrastructure works, as any wrongful termination can ultimately be compensated through an arbitral award.
Holding that the petitioner had failed to establish a prima facie case, balance of convenience or irreparable injury warranting interim protection, the Court dismissed the petition and declined to restrain NHAI from proceeding further pursuant to the Notice of Intention to Terminate.
