Tata Projects Limited vs Union Of India And 2 Others

A.F.R.
Reserved on 15.05.2026
Delivered on 08.07.2026
HIGH COURT OF JUDICATURE AT ALLAHABAD
WRIT - C No. - 4559 of 2025
Tata Projects Limited
…..Petitioner(s)
Versus
Union of India and 2 others
…..Respondent(s)
Counsel for Petitioner(s) : Varad Nath
Counsel for Respondent(s) : Aushim Luthra, A.S.G.I., Pragya
Pandey, Pranjal Mehrotra
Court No. – 1
HON'BLE AJIT KUMAR, J.
HON'BLE SWARUPAMA CHATURVEDI, J.
For convenience, this judgment is structured as per the following index
for proper consideration of facts, controversy involved, law points that
arise for consideration in this petition.
Index
1. Facts …………………………………………………..……………...2
2. Record of Proceedings ……………………………………………….3
3. Arguments advanced on behalf of the Petitioner ……..……………...6
4. Supportive documents placed on behalf of the Petitioner………..….10
5. Arguments advanced on behalf of the NHAI…………………..……11
6. Supportive documents placed on behalf of NHAI ...………………..12
7. Rejoinder argument advanced on behalf of the Petitioner ...………..12
8. Discussion & Analysis ……………………………...…………...….13
9. Findings ……………………………………………………………..37
10. Authorities cited on behalf of the Petitioner ……………………....46
11. Authorities cited on behalf of NHAI …………………...………….52
12. Discussion and application of authorities to the present case……..53
13. Order ……………………………………………………..………..60

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WRIC No. - 4559 of 2025
1. FACTS
1. Briefly stated facts of the case are that respondent- National
Highway Authority (hereinafter referred to as ‘Authority’) issued a
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Request For Proposals (hereinafter referred to as ‘RFP’) on 11
December, 2018 for widening and strengthening for improvement and
up-gradation of NH-709A, Garhmukteshwar (Chainage-83+200 of
NH-24) to Meerut (Chainage 9+860 of NH-235) including connector to
NH-119 Package XII in the State of Uttar Pradesh. The contract of the
Highway was for a stretch of 50.254 Km at the cost of Rs.940.68 Crores.
2. The petitioner upon being successfully selected as a bidder, was
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issued with a Letter of Acceptance (for short ‘LOA’) on 12 March, 2021
for the development of the above section of NH-709A.
3. With the issuance of letter of acceptance and signing of EPC
agreement between the authority and the contractor with declaration of
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the appointed day as 10 October, 2021 prescribing the dead line for
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completion of project as 10 October, 2023, the petitioner submitted
nd
work programme by way of Narrative Statement on 2 December, 2021
as per Article 10(iii)-b. This narrative statement of programme had
project overview, objective of the document qua methodology and
assumption made by which the works programme have been developed,
eight points scope of work, scheduling of methodology with key dates of
projects with reference to Milestone-1, Milestone-2 and Milestone-3
totaling 730 days from the appointed day. It also referred to the land
handover as per Article 3 & 8, utility shifting, submissions of approval
of drawing, execution of work.
4. The MSE International link, the Authority’s Engineer forwarded
the above narrative statement of programme to the authority namely the
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Project Director, National Highways vide letter dated 20 December,
2021.

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5. Under the contract while the NHAI was to provide absolute
possession of the entire stretch of the highway area free from
encumbrances/ hindrances to facilitate the work, which according to the
respondent No.- 2, was provided to the petitioner as per the
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acknowledgment by the petitioner himself under his letter dated 26
August, 2021. Petitioner repeatedly raised a plea of not providing
hindrance free 5 kms contiguous stretch at a time to carry out the work
which delayed the project work getting completed within the time
schedule. Ultimately, a curative notice was issued to the petitioner on
th th
11 October, 2024 to which petitioner submitted a detailed reply on 19
November, 2024 raising the issue of not providing free stretch of land as
per the agreement within 150 days which resulted in delay in completion
of project. Petitioner thereafter also repeatedly made applications vide
different replies but according to him, all remained unaddressed and
ultimately a show cause notice was issued to him to which he also
submitted a reply. However, contract was terminated mid-term vide
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order dated 25 November, 2024 by the respondent No.- 2 citing various
provisions contained under various clauses of the agreement for low
maintenance and also not completing the project within time. It is this
order terminating the contract which is impugned in this petition and so
also the consequential actions by the concerned respondent.
2. Record of Proceedings
6. In order to put the record straight we reproduce the record of
proceedings in following manner:
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(i). This petition after adjournment being granted on 18 February, 2025
while came up for admission as a fresh, a preliminary objection was
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raised as to the maintainability of this petition, however, on 6 March,
2025 an adjournment was granted and then the petition was entertained
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on merits and interim relief was also granted. The order dated 18
March, 2025 is reproduced hereunder:
“Heard Sri Shashi Nandan and Sri Amit Saxena, learned Senior counsels
assisted by Sri Varad Nath, for the petitioner and Sri Makrand Adkar and
Ms. Pragya Pandey, learned counsel for the respondents.

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The petitioner was awarded a contract on 26.8.2021 for construction of a
patch of national highway. The work itself was to be completed by
10.10.2023. By the impugned action the contract has been cancelled on the
ground that though the period for completion of work has expired yet,
physical completion of work is to the extent of 51.05%, whereas financial
progress is only to the extent of 48.37%. Various documents and reports
have been relied upon to contend that in fact the land on which road was to
be constructed was not made available to the petitioner on account of
various protests and disputes raised by the tenure holders and there was
thus no failure on part of the petitioner to comply with the contract. It is
also submitted that the respondents themselves have acknowledged such
facts and have extended the term of contract thrice.
Learned Senior counsel for the petitioner then argues that 91% of the land
for road construction has been made available only by December, 2024
and, therefore, the respondents having failed to provide the land cannot
allege any failure on part of the petitioner in complying with the contract.
It is also submitted that a fresh tender is now floated, wherein 15 months
time is allowed for completion of work and the cost of project is assessed
at Rs.873.31 crores which would result in additional financial losses to the
State of several hundred crores. The petitioner further contends that they
undertake to complete the work by December, 2025 itself.
On behalf of the petitioner, it is submitted that the overwhelming public
interest requires this Court to intervene in the matter as not only the
project would be completed in a shorter time but there would be
substantial saving for the NHAI if the petitioner is allowed to complete the
contract.
The petition is opposed by Sri Makrand Adkar, learned counsel for the
respondents primarily on the ground that there is an arbitration clause
and, therefore the remedy of the petitioner would be to approach the
arbitrator once the contract is cancelled. It is also submitted that the
authorities themselves have adopted a generous approach towards the
petitioner and various extensions have been granted as there has been
substantial failure on part of the petitioner in concluding the contract, as
such the authorities are left with no option but to terminate the contract
and issue fresh bids.
Learned counsel for the respondents also submits that the allegation that
there was a failure on part of NHAI in offering land for road construction
is factually incorrect.
We have heard learned counsel for the parties and have perused the
materials on record.
Ordinarily this Court would not entertain a writ where there exits an
arbitration clause and the allegation in the writ pertains to violation of
various clauses of contract. However, in the facts of the present case, we
are proceeding to examine the cause primarily for two reasons. The issue
as to whether land for the project was made available earlier or is made
available only in December, 2024, as is alleged in the petition, can be
examined if a reply is received from the respondents on this aspect. Firstly,
we find that by issuing re-tender the road will now be completed within 15

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months which would expire some time in June, 2026, whereas the
petitioner undertakes to complete the work by December, 2025. Secondly,
there is a substantial enhancement of cost. In such circumstances, we are
of the prima facie view that the core issue of contest between the parties
can be examined for the limited purposes, by this Court, so as to ascertain
as to whether predominant public interest warrants exercise of writ
jurisdiction by this Court in the facts of the present case, or not?
Learned counsel for the respondents fairly submits that the NHAI shall file
an affidavit, within a week, specifying the dates when the possession of the
land was given to the petitioner. A fair stand is also taken that till such
affidavit is filed the respondents shall not award any fresh contract . In
view of the fair stand taken by the respondents, we adjourn the matter to
25.3.2025. An advance copy of the affidavit proposed to be filed by NHAI
will be served upon the counsel for the petitioner by 25.3.2025.
Post as fresh once again on 25.3.2025.”
(emphasis added)
(ii). Thus, the Court granted interim relief to the effect that no fresh
contract shall be awarded in favour of a third party until such affidavit as
required was filed. Thereafter certain dates were fixed in the matter and
interim order was made to continue and the Court was compelled to
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make strict observations on 26 November, 2025 that if the order dated
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18 March, 2025 was not complied with by the next date, the Court shall
be at liberty to exercise its extraordinary power under Article 215 of the
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Constitution. The order dated 26 November, 2025 is reproduced
hereunder:
“1. Heard Sri Varad Nath, learned counsel for the petitioner and Sri
Rakesh Pandey, learned Senior Advocate assisted by Sri Pranjal Mehrotra,
for respondents no. 2 and 3.
2. At the very outset, learned counsel for the petitioner has drawn the
attention of this Court to the last paragraph of the order dated 18.03.2025,
where there was a specific direction to the NHAI which is unequivocal,
unambiguous and incapable of multiple interpretations. The said direction
was to file an affidavit within a week of the said order specifying the dates
when the possession of the land was given to the petitioner. The said order
admittedly has not been complied with till date. The Court takes note of
this conduct on the part of the respondents as contumacious. An order that
is passed by the Court which is absolutely categorically clear, had to be
complied with.
3. This was subsequently reiterated in the order by this Court on
16.09.2025 in paragraph '1' where it is stated that the affidavit which was
required to be filed by the respondent specifying the dates when the
possession of the land was handed over to the petitioner and the work was

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to be executed, has not been disclosed by the NHAI in any of the affidavit
filed by it so far.
4. Learned counsel for the respondent NHAI submits that they have filed
another affidavit, however, the disclosure required by this Court was not
there in the said affidavit.
5. This Court takes serious note of the conduct of the respondent no. 2.
However, by way of a last opportunity, ten days' time is granted to the
respondents to comply with the order dated 18.03.2025 on or before the
next date of hearing, failing which this Court shall be at liberty to exercise
its jurisdiction under Article 215 of the Constitution and proceed to initiate
contempt proceedings against the Chief General Manager of the National
Highway Authority of India on the next date of hearing.
6. The advance copy be supplied to learned counsel for the petitioner and
thereafter, three days' time is granted to petitioner to file any response, if
any, to it.
7. Put up this matter on 09.12.2025 in daily cause list.”
(emphasis added)
(iii). It is after the above order was passed that a supplementary affidavit
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came to be filed bringing on record the ‘Handover Memorandum’ on 30
November, 2025. Thereafter the matter was heard on certain dates and
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finally it was reserved on 9 February, 2026. Seeking certain
clarification as to whether the document brought on record was really a
‘Handover Memorandum’ within the meaning of Article 8.2 of EPC
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Agreement, the matter was listed for further hearing on 24 April, 2026.
Learned Senior Advocate for NHAI sought time to bring the entire
document and with further averments clarifying its stand regarding
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Handover Memorandum and 11 May, 2026 was fixed. The document
namely Handover Memorandum came to be filed stating clearly that it
was document acknowledging handing over possession of more than
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90% of land initially. On 15 May, 2026 the matter was finally heard and
judgment was reserved.
3. Arguments Advanced on behalf of of Petitioner
7. Assailing the order terminating the contract following arguments
have been advanced by learned Senior Advocate :

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(I). First party to the contract was under an obligation to procure the site
and provide the same as an unencumbered land with a ‘Right of Way’ to
the contractor as per the schedule ‘A’ of the bid document in terms of its
Article 8.1 and 8.2 and liability of the contractor for the termination of
contract mid-term would only be in the event of default as per the Article
23 of the agreement.
(II). With the appointment of Authority’s Engineer as an interface
between the first party and the second party to agreement, duties were
assigned under Article 18.2 to the Authority’s Engineer regarding
assessment of performance of work under the contract and to take an
appropriate action with the approval of the authorities before
determining time extension, additional cost, if any to be paid,
termination payment, if any, issuance of completion certificate and any
other allied matter that was not specified and which may have created
financial liability on either party. It was argued that delegation of power
under the agreement by the first party to its engineer was to not only to
ensure that second party carried out the work under the contract as per
terms and conditions laid therein but also to impress upon the authority
to facilitate delivery of possession of hindrance free land. So there was
to be a coordinated effort between the Authority’s Engineer and the
contractor to get the task accomplished as per the agreement. However,
Authority Engineer’s crucial reports submitted time to time for extension
of time, were not paid any heed.
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(III). Despite letter written to the Authority’s Engineer on 7 July, 2022
citing reasons for delays due to obstructions/ impediments, the details of
which were given in the letter and request being made for extension of
248 days and further, despite the fact that Authority’s own Engineer had
recommended for 130 days extension earlier, the respondent authorities
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provided only 42 days extension vide their letter dated 8 August, 2022
and that too without providing hindrance free stretch of land to carry out
work. Inasmuch as, the highway authority always failed to discharge its

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duty to provide 5 kms long stretch free land at a time to facilitate the
smooth and hurdle-free working.
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(IV). The respondents’ own admission in their letter dated 16 October,
2023 written to the Sub-Divisional Magistrate that plot No. 303 in
village Sisoli, Plot No.- 220 in village Bhagwanpur Chattawan and plot
No.- 281 in village Mau Khas were not provided, the project got
delayed.
(V). The acquisition notice under the National Highways Act, 1956
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published on 5 February, 2024 for a stretch of 12.13 km land on
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Gardmukteshwar to Meerut section published on 5 February, 2024 is an
admission of the respondents highway authority, the first party to
contract, to the effect that 12 kms land was still not available for which
they were proceeding for acquisition. The documents sufficiently
demonstrated that possession of the entire stretch or at least 90% of total
land was still not available to the National Highway to be handed over to
the petitioner so as to carry out the work and thus, petitioner could not
have been saddled with the liability of delay in work in the absence of
available land free from encumbrances and hindrances in terms of
Article 9.2 of the agreement.
(VI). The manner and method in which impugned order has been passed
showed lack of application of mind by the authority as none of the facts
pleaded in reply nor, the relevant material available with the respondent,
was taken into account.
(VII). Although the petitioner had submitted a detailed reply to the show
cause notice and also letter of Authority’s Engineer raising issues qua
availability of land with the respondents and yet the respondents failed to
consider any of such letters nor, even referred to reply submitted by the
petitioner while arriving at a conclusion that the contractor, namely
second party to the contract was chiefly responsible for the delay in
completion project for having carried out the work at a very slow pace.
Thus, this finding arrived at under the order impugned, according to the

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learned counsel for the petitioner, was perverse. Thus lack of application
of mind by the authorities, has vitiated the order impugned and as such it
was rendered unsustainable.
(VIII). The National Highway Authority was very much State within the
meaning of Article 12 of the Constitution and, therefore, any act even in
the realm of contract, if was a result of arbitrary exercise of power, as the
case in hand was, it stood hit by Article 14 of the Constitution and hence
deserved to be interfered with by even a writ Court.
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8. Relying upon the Authority’s Engineer’s letter dated 26
September, 2022 Mr. Saxena drew the attention of the Court towards the
last remark column, according to which 15.926 kms of stretch out of
total 50.25 kms. i.e. 32% was hindered and work front was not available
due to standing trees, land acquisition issues, building, religious
structures, government structures. Further, the contractor was unable to
carry out the construction work upto 3.2 km at a stretch in length since
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15 July, 2022 due to Dotai villagers’ agitation and Jama Masjid Eidgah
Samiti’ stand, who were demanding 4 times compensation qua their land
required for shifting the Dotai Mosque Eidgaah and demand for another
pass 2.392 kms. He submitted that this document had been filed as
Annexure-14 to the petition and referred to in paragraph 39 of the writ
petition which had not been specifically denied vide paragraph 28 of the
counter affidavit.
9. Sri Saxena emphasized further that despite twice order being
th th
passed by this Court on 18 March, 2025 and 9 December, 2025, no
document had been filed giving date-wise chart of handing over the
available vacant land to the petitioner with 5 km contiguous stretch in
terms of the agreement, and it also reflected fair admission of the
pleadings raised in the writ petition with supported documents brought
on record and hence petitioner could not have been blamed for delays in
completion of task under the project per agreement.

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10. It was further argued that any fresh opportunity to a new
contractor would not only enhance the project cost further but also
further delay in completing the formality. Further, it was argued that
considering the fact that 50% of the physical work was carried out under
the project by the petitioner, overwhelming public interest would be to
get the project completed by the present petitioner subject to the
escalation of price for the project having remained stalled over a period
of more than one year.
11. Mr. Saxena lastly argued that given an opportunity, petitioner
would be completing the projects in terms of the agreement in the next
14 months’ time and this fact had been pleaded in paragraph 19.9 of the
rejoinder affidavit.
4. Supportive Documents placed on behalf of petitioner
12. In support of his above submissions, learned Senior Advocate has
taken the Court to the various documents in the nature of letter written
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by the Authority’s Engineer to the respondent No.2 dated 20 December,
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2021 and letter of the petitioner to respondent No.- 2 dated 7 July, 2022
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then again letter written by the petitioner to respondent No.- 2 dated 17
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August, 2022 in reply to the letter of respondent No.- 2 dated 8 August,
2022, another letter written by the petitioner to the respondent No. 2 on
th th
30 August, 2022. Then again petitioner’s letter dated 29 September,
2022, which was accompanied by the Authority’s Engineer report/letter
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dated 26 September, 2022. Again letter of the petitioner dated 21
th
December, 2022 to the respondent No. 2 in reply to the letter dated 9
st
November, 2022, then again letter dated 21 December, 2022
rd th
subsequently letters written on 3 January, 2023 and 6 January, 2023
and the delay analysis report prepared by the petitioner and sent vide
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letter dated 17 March, 2023, letter dated 10 July, 2023 then letter of
st th
Authority’s Engineer dated 1 August, 2023, letter dated 12 August,
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2023 and 30 September, 2023 to the respondent No.- 2, Authority’s
st th
Engineer report to the respondent No.- 2 dated 21 November, 2023, 10
th
July, 2024, letter of the petitioner dated 17 September, 2024 to the

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th
respondent No. 2 and then authority’s engineer’s letter dated 25 August,
th
2023 and 16 August, 2024. All these correspondences took places
between the petitioner and the authority engineer, his report and
respondent’s authority prior to the issuance of cure period notice dated
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11 October, 2024.
5. Arguments advanced on behalf of NHAI
13. Meeting the above submissions, Sri Rakesh Pande, learned Senior
Advocate appearing for NHAI has raised following points:
(I). In terms of the agreement reached between the parties more than
90% of the land was made available to carry out the project and this was
acknowledged by the petitioner himself under the letter of their
st st
authorized signatory dated 21 September, 2021. Thus, as on 21
September, 2021 90% of the land was made available and only 10% of
the land was made to available.
(II). The contract very specifically provided vide Article 9.2 that
hindered land with building structures on land, trees and any other
immovable property on or attached to the site shall be referred to in the
‘Handover Memorandum’ will be subject to Article 8.2(iii). According to
him, vacant land and encumbered land are two different things. The
unencumbered land means a land regarding which there is no claim of
title or possession and it is free from encumbrances. The building
structure and the trees attached to the site were to be ultimately removed
by the contractor as per Article 9.2 read with 9.3, 9.4 and 9.5 of the
agreement to ensure that the land remains vacant for execution of work.
Thus, according to Mr. Pande, the existence of utilities, structures, poles
and trees would not amount to such hindrances which may have delayed
the project and it was for the second party of contract to have removed
them with the assistance of the authority.

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14. According to Mr. Pande, status of land in possession was 94.76%
and, therefore, it would be wrong to suggest even that possession was
not made available.
6. Supportive documents placed on behalf of NHAI
15. In support of his above submissions Mr. Pande, learned Senior
Advocate has placed reliance upon the documents namely Handover
Memorandum filed as Annexure - 2 to the supplementary counter
affidavit. According to him as per documents brought on record and
contract petitioner had been allotted hindrance free land and sufficient
time to complete the work with further extension of time which he had
prayed for and, therefore, the contract was rightly terminated mid-term
upon failure of petitioner to carry out necessary maintenance and also
failure in completing the project within time. Fresh tender bids have
been entertained and tender has been finalized and it would have been
awarded but for the interim protection granted to the petitioner by this
Court. He also placed before the Court arbitration clause of the
agreement vide Article 26, which the petitioner, according to him, ought
to have invoked as he raised pleas regarding delays at the end of the
respondent authority NHAI which the NHAI seriously disputed. He
argued that material brought on record by way of annexure could be
better appreciated and examined to arrive at conclusion by the arbitrator
instead of this Court exercising power under Article 226 of the
Constitution.
16. In support of his submission regarding arbitration Mr. Pandey, has
placed reliance upon the judgment of Supreme Court in the case of
Union of India and others v. Puna Hinda (2021) 10 SCC 690 .
7. Rejoinder argument advanced on behalf of the Petitioner
17. Meeting the above submissions in rejoinder, Mr. Saxena, learned
Senior Advocate has again relied upon the documents filed along with
counter affidavit which, according to him, demonstrate that the land was
not made available as per ‘Handover Memorandum’ and the subsequent

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acquisition notification itself showed that entire land was not available
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till 2024. He has placed reliance upon the letter of NHAI dated 15
March, 2024 which was sufficiently indicative of a fact that amount of
compensation was being processed for the purposes of payment to the
th
land owners in the matter of acquisition of land and the letter dated 12
July, 2024 showed that in between Garhmukteshwar and Meerut of
NHA-709A, it was for non payment of compensation that project could
not be carried through and farmers/ land owners protested against
possession. These documents have been brought on record as Annexure -
4 to the rejoinder affidavit filed in reply to the supplementary counter
affidavit.
18. Mr. Saxena had also placed reliance upon the document of
respondent that showed that possession of entire land was not handed
over till as late as 2023-2024 as against the claim set up through the
acknowledgment letter of petitioner.
19. Meeting the submission on the point of alternative remedy by way
of arbitration, invoking the relevant clause of the agreement and scope of
interference by High Court in matters of contract, Sri Saxena has placed
reliance firstly upon the authority of Supreme Court in the case of ABL
International Ltd and others v. Export Credit Guarantee
Corporation of India Ltd and others (2024) 3 SCC 553 and MP
Power Management Company Ltd v. M/s Sky Power Southeast
Solar India Pvt Ltd. and others (2023) 2 SCC 703 and A.P. Electrical
Equipment Corporation v. Tehsildar and others (2025) SCC Online
SC 447 .
8. Discussion & Analysis
20. Having heard learned counsel for the respective parties and having
perused the records, We find there to be a serious dispute in this case as
to the real and effective transfer of unencumbered and hindrance free
land to the petitioner as per the agreement at the very beginning and
thereafter as well, with free ‘Right of Way’ and hindrances free land at a

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stretch of 5 kms in contiguous parts of the total length, which made it
impossible for contractor to complete the project within the time line
prescribed under the agreement; and further that the respondent authority
of NHAI instead of giving objective construction to the replies filed by
the petitioner and ignoring reports of the Authority’s own Engineer, it
proceeded to rescind the contract mid term. Thus following two points
arise for consideration of this Court to test the correctness of the order
impugned:-
(I). Whether the terms conditions given under the agreement in handing
over the possession of land site after its due procurement in terms of
Article 8.1 and 8.2 of the agreement and the documents brought on
record by the authority do effective factum of delivery of possession of
such land site without there being any dispute whatsoever.
(II). Whether disputed questions of facts arise in this case for which the
petitioner should be relegated to the remedy of arbitration invoking
Article 26 of the agreement or there is a fair admission of the
respondents reflected from the documents brought on record as to issue
and it is all question of law regarding exercise of power to terminate the
contract mid-term for being arbitrary and unlawful and paramount public
interest involved in the matter to hear and decide the petition on merits.
21. In order to find answer to the above points it is necessary for us to
first go through the basic terms and conditions prescribed for under the
agreement called Engineering, Procurement and Construction Agreement
(for short ‘EPC’).
22. The basic features like making available the land, free ‘Right of
Way’ to carry out the work, terms and conditions, notice etc., force
majeure and termination of contract mid-term as provided under the EPC
Agreement are summarised as under:
(i). The work was to be completed within two years of the appointed day.

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(ii). The authority was under obligation vide Article 3 to provide at least
not less than 90% of the procured land to carry out the project, free from
encumbrance within 30 days of the agreement, approval of the railways
for general arrangement drawings so as to construct road over- bridges/
under-bridges at level crossings on the project highway, within 60 days
of the appointed date.
(iii). Delay in the right of way by the authority (NHAI) or approval of
general arrangement drawing (for short ‘GAD’) by the railways would
entitle the contract to damages, environment, clearance certificate, prior
to the date of issuance of LOA. Article 3 deals with obligations of
Authority. Relevant Article 3.1(i), (ii) & (iii) are reproduced hereunder:
“3.1 Obligations of the Authority
(i) The Authority shall, at its own cost and expense, undertake, comply with
and perform all its obligations set out in this Agreement or arising hereunder.
(ii) The Authority shall be responsible for the correctness of the Scope of the
Project, Project Facilities, Specifications and Standards and the criteria for
testing of the completed Works.
(iii) The Authority shall, upon submission of the Performance Security as per
the RFP by the Contractor, shall provide to the Contractor:
(a) No less than 90% (ninety per cent) of the required Right of Way of the
Construction Zone of total length of the Project Highway within a period of
30 (thirty) days from the date of this Agreement, which shall be in
contiguous stretches of length not less than 5 (five) kilometre.
(b) approval of the general arrangement drawings (the "GAD") from
railway authorities to enable the Contractor to construct road over-
bridges/under-bridges at level crossings on the Project Highway in
accordance with the Specifications and Standards, and subject to the terms
and conditions specified in such approval, within a period of 60 (sixty) days
from the Appointed Date, and reimbursement of all the costs and expenses
paid by the Contractor to the railway authorities for and in respect of the
road over-bridges/under bridges; and
(c) all environmental clearances as required under Clause 3.3 for the project
Highway are not required.”
(emphasis added)
(iv). Vide Article 4 certain obligations were cast upon the contractor for
carrying out the work under the contract as per the EPC Agreement

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carrying out survey etc. and management and then obligations relating to
the shop contracts and other agreements regarding employment of
foreign nationals and contract personnel, coordination of work with the
authority and clearances of site.
(v). Article 5.2 provided vide its clause (g) & (h) that authority shall be
giving guarantees as to good and valid right to the site and grant of
‘Right of Way’ in respect thereof, to the contractor and shall have to
ensure that it has procured right of way and environment clearances qua
90% of the total length of highway project. This clause (g) & (h) are
reproduced hereunder:
“(g). It has good and valid right to the Site and has the power and authority to
grant the Right of Way in respect thereof to the Contractor; and
(h). It has procured Right of Way and environment clearances such that the
Contractor can commence construction forthwith on 90% (ninety per cent) of
the total length of the Project Highway.”
(vi). ‘Site’ has been defined vide Article 8.1 and ‘Right of Way’ has been
defined vide clause 8.2 of Article 8 and relevant sub-clauses (i), (ii) &
(iii) of the said article, relevant for the purposes of the case. Article 8.1
& clauses (i), (ii) & (iii) of Article 8.2 are reproduced hereunder:
“ 8.1 The Site
The site of the Project Highway (the "Site") shall comprise the site described
in Schedule-A in respect of which the Right of Way shall be provided by the
Authority to the Contractor. The Authority shall be responsible for:
(a) acquiring and providing Right of Way on the Site in accordance with the
alignment finalized by the Authority, free from all encroachments and
encumbrances, and free access thereto for the execution of this Agreement;
and
(b) obtaining licences and permits for environment clearance for the Project
Highway.
“ 8.2 Procurement of the Site
(i). The Authority Representative, the Contractor and Authority's Engineer
shall, within 10 (ten) days of the date of this Agreement, inspect the Site and
prepare a detailed memorandum containing an inventory of the Site including
the vacant and unencumbered land, buildings, structures, road works, trees
and any other Immovable property on or attached to the Site (hereinafter

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referred to as the "Handover Memorandum"). Subject to the provisions of
Clause 8.2 (ii), the Handover Memorandum shall have appended thereto an
appendix (the "Appendix") specifying in reasonable detail those parts of the
Site to which vacant access and Right of Way has not been given to the
Contractor along with details of hindrances in the Construction Zone. For
sake of clarity the Handover Memorandum shall clearly specify the parts of
Site where work can be executed. Signing of the Handover Memorandum, in
three counterparts (each of which shall constitute an original), by the
authorized representatives of the Authority, Contractor and Authority's
Engineer shall be deemed to constitute a valid evidence of giving the Right of
Way to the Contractor for discharging its obligations under and in accordance
with the provisions of this Agreement and for no other purpose whatsoever.
(ii). Whenever the Authority is ready to hand over any part or parts of the Site
included in the Appendix, it shall inform the Contractor, by notice, of the
proposed date and time such of hand over. The Authority Representative and
the Contractor shall, on the date so notified, inspect the specified parts of the
Site, and prepare a memorandum containing an inventory of the vacant and
unencumbered land, buildings, structures, road works, trees and any other
immovable property on or attached to the Site so handed over. The signing of
the memorandum, in three (3) counterparts (each of which shall constitute an
original), by the authorized representatives of the Parties shall be deemed to
constitute a valid evidence of giving the relevant Right of Way to the
Contractor.
If the contractor fails to join for site inspection or disputes the parts of the site
available for work, the Authority's Engineer shall decide the parts of the site
where work can be executed and notify to both the parties within 3 days of the
proposed date of inspection. The parties agree that such notification of the
Authority's Engineer as mentioned hereinabove shall be final and binding on
the parties.
(iii). The Authority shall provide the Right of Way to the Contractor in respect
of all land included in the Appendix by the date specified in Schedule-A for
those parts of the Site referred to therein, and in the event of delay for any
reason other than Force Majeure or breach of this Agreement by the
Contractor, it shall pay to the Contractor, Damages in a sum calculated in
accordance with Clause 8.3. The Contractor agrees that it shall not be entitled
to claim any other damages on account of any such delay by the Authority.”
(emphasis added)
(vii). Vide clauses 9.1 & 9.2 of Article 9 Utilities and Trees have come to
be defined. Clause 9.1, 9.2, 9.3 & 9.4 of Article 9 being relevant are
reproduced hereunder:
“9.1 Existing utilities and roads
Notwithstanding anything to the contrary contained herein, it shall be the
responsibility of the Contractor to ensure that the respective entities owning
the existing roads, right of way, level crossings, structures, or utilities on,

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under or above the Site are enabled by it to keep them in continuous
satisfactory use, if necessary, by providing suitable temporary diversions with
the authority of the controlling body of that road, right of way or utility.
9.2 Shifting of obstructing utilities
The Contractor shall, in accordance with Applicable Laws and with assistance
of the Authority, undertake the work of shifting of any utility (including
electric lines, water pipes, gas pipelines and telephone cables) to an
appropriate location or alignment, if such utility or obstruction adversely
affects the execution of Works or Maintenance of the Project Highway in
accordance with this Agreement. The cost of such shifting, as per estimates
prepared by the entity owning the utility and approved by the Authority, shall
be reimbursed by the Authority to the Contractor. The scope of work of such
shifting of Utilities shall be as indicated in Schedule-B-1. In the event of any
delay of such shifting on the part of the contractor, no extension of time for
completion of the project and no claims, in any manner, shall be admissible on
this account against the Authority.
The work of shifting of Utilities can be taken up by the Contractor any time
after signing of the Agreement.
9.3 New utilities
(i) The Contractor shall allow, subject to the permission from the Authority
and such conditions as the Authority may specify, access to, and use of the Site
for laying telephone lines, water pipes, electricity lines/ cables or other public
utilities. Where such access or use causes any financial loss to the Contractor,
it may require the user of the Site to pay compensation or damages as per
Applicable Laws. For the avoidance of doubt, it is agreed that use of the Site
under this Clause 9.3 shall not in any manner relieve the Contractor of its
obligation to construct and maintain the Project Highway in accordance with
this Agreement and any damage caused by such use shall be restored forthwith
at the cost of the Authority.
(ii) The Authority may, by notice, require the Contractor to connect any
adjoining road to the Project Highway, and the connecting portion thereof
falling within the Site shall be constructed by the Contractor at the Authority’s
cost in accordance with Article 10.
(iii). The Authority may by notice require the Contractor to connect, through a
payed road any adjoining service station, hotel, motel or any other public
facility or amenity to the Project Highway, whereupon the connecting portion
thereof that falls within the Site shall be constructed by the Contractor on
payment of the cost. The cost to be paid by the Authority to the Contractor
shall be determined by the Authority's Engineer. For the avoidance of doubt,
in the event such road is to be constructed for the benefit of any entity, the
Authority may require such entity to make an advance deposit with the
Contractor or the Authority, as the case may be, of an amount equal to the
estimated cost as determined by the Authority's Engineer and such advance
shall be adjusted against the cost of construction as determined by the
Authority's Engineer hereunder.

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(iv). In the event construction of any Works is affected by a new utility or
works undertaken in accordance with this Clause 9.3, the Contractor shall be
entitled to a reasonable Time Extension as determined by the Authority's
Engineer.
9.4 Felling of trees
The Authority shall assist the Contractor in obtaining the Applicable Permits
for felling of trees in non-forest area to be identified by the Authority for this
purpose if, and only if, such trees cause a Material Adverse Effect on the
construction or maintenance of the Project Highway. The Contractor shall fell
these trees as per the Permits obtained. The cost of such felling shall be borne
by the Authority and in the event of any delay in felling thereof for reasons
beyond the control of the Contractor; it shall be excused for failure to perform
any of its obligations hereunder if such failure is a direct consequence of delay
in the felling of trees. The Parties hereto agree that the felled trees shall be
deemed to be owned by the Authority and shall be disposed in such manner
and subject to such conditions as the Authority may in its sole discretion deem
appropriate. For the avoidance of doubt, the Parties agree that if any felling
of trees hereunder is in a forest area, the Applicable Permit thereof shall be
procured by the Authority within the time specified in the Agreement.”
(emphasis added)
(viii). Article 10 provides for design and construction of the project
highway. Sub-clause (iv) of clause 10.3 and clause 10.5 are reproduced
hereunder:
“ 10.3 Construction of the Project Highway
(iv). In the event that the Contractor fails to achieve the Project Completion
within a period of 90 (ninety) days from the Schedule Completion Date set
forth in Schedule-J. unless such failure has occurred due to Force Majeure or
for reasons solely attributable to the Authority, the contractor shall be deemed
to be ineligible for bidding any future projects of the Authority, both as the
sole party or as one of the parties of Joint Venture/ Consortium during the
period from Scheduled Completion Date to issuance of Completion
Certificate. This restriction is applicable if the contract value of the delayed
project is not less than Rs. 300 Crore.
10.5 Extension of time for completion
(i) Without prejudice to any other provision of this Agreemeht for and in
respect of extension of time, the Contractor shall be entitled to extension of
time in the Project Completion Schedule (the "Time Extension") to the extent
that completion of any Project Milestone is or will be delayed by any of the
following, namely:
(a) delay in providing the Right of Way of Construction Zone, environmental
clearances or approval of railway authorities, specified in Clause 3.1 (iv);

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(b) Change of Scope (unless an adjustment to the Scheduled Completion Date
has been agreed under Article 13);
(c) occurrence of a Force Majeure Event;
(d) any delay, impediment or prevention caused by or attributable to the
Authority, the Authority's personnel or the Authority's other contractors on the
Site; and
(e) any other cause or delay which entitles the Contractor to Time Extension
in accordance with the provisions of this Agreement.
(ii) The Contractor shall, no later than 15 (fifteen) business days from the
occurrence of an event or circumstance specified in Clause 10.5 (i), inform the
Authority's Engineer by notice in writing, with a copy to the Authority, stating
in reasonable detail with supporting particulars, the event or circumstances
giving rise to the claim for Time Extension in accordance with the provisions
of this Agreement. Provided that the period of 15 (fifteen) business days shall
be calculated from the date on which the Contractor became aware, or should
have become aware, of the occurrence of such an event or circumstance.
Provided further that notwithstanding anything to the contrary contained in
this Agreement, Time Extension shall be due and applicable only for the Works
which are affected by the aforesaid events or circumstances and shall not in
any manner affect the Project Completion Schedule for and in respect of the
Works which are not affected hereunder.
(iii) On the failure of the Contractor to issue to the Authority’s Engineer a
notice in accordance with the provisions of Clause 10.5 (ii) within the time
specified therein, the Contractor shall not be entitled to any time Extension
and shall forfeit its right for any such claims in future. For the avoidable of
doubt, in the event of failure of the Contractor to issue notice as specified in
this clause 10.5 (iii), the Authority shall be discharged from all liability in
connection with the claim.
(iv) The Authority's Engineer shall, on receipt of the claim in accordance with
the provisions of Clause 10.5 (ii), examine the claim expeditiously within the
time frame specified herein. In the event the Authority's Engineer requires any
clarifications to examine the claim, the Authority's Engineer shall seek the
same within 15 (fifteen) days from the date of receiving the claim. The
Contractor shall, on receipt of the communication of the Authority's Engineer
requesting for clarification, furnish the same to the Authority's Engineer
within 10 (ten) days thereof. The Authority's Engineer shall, within a period of
30 (thirty) days from the date of receipt of such clarifications, forward in
writing to the Contractor its determination of Time Extension.
Provided that when determining each extension of time under this Clause
10.5, the Authority's Engineer shall review previous determinations and may
increase, but shall not decrease, the total Time Extension.
(v) If the event or circumstance giving rise to the notice has a continuing
effect:
(a) a fully detailed claim shall be considered as interim;

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(b) the Contractor shall, no later than 10 (ten) days after the close of each
month, send further interim claims specifying the accumulated delay, the
extension of time claimed, and such further particulars as the Authority's
Engineer may reasonably require; and
(c) the Contractor shall send a final claim within 30 (thirty) days after the
effect of the event or the circumstance ceases.
Upon receipt of the claim hereunder, the Authority's Engineer shall examine
the same in accordance with the provisions of Clause 10.5 (iv) within a period
of 30 (thirty) days of the receipt thereof.”
(emphasis added)
(ix). Vide Article 11 quality assurance by the contractor, monitoring and
supervision by the Authority’s Engineer has been provided for. Article
11.8 and 11.14 are relevant and are reproduced hereunder:
“ 11.8 Inspection
(i) The Authority’s Engineer and its authorised representative shall at all
reasonable times:
(a) have full access to all parts of the Site and to all places from which natural
Materials are being obtained for use in the Works; and
(b) during production, manufacture and construction at the Site and at the
place of production, be entitled to examine, inspect, measure and test the
Materials and workmanship, and to check the progress of manufacture of
Materials.
(ii) The Contractor shall give the Authority's Engineer and its authorised
agents access, facilities and safety equipment for carrying out their
obligations under this Agreement.
(iii) The Authority's Engineer shall submit a monthly inspection report (the
"Inspection Report") to the Authority and the Contractor bringing out the
results of inspections and the remedial action taken by the Contractor in
respect of Defects or deficiencies. For the avoidance of doubt, such inspection
or submission of Inspection Report by the Authority's Engineer shall not
relieve or absolve the Contractor of its obligations and liabilities under this
Agreement in any manner whatsoever.”
11.14 Delays during construction
Without prejudice to the provisions of Clause 10.3 (ii), in the event the
Contractor does not achieve any of the Project Milestones or the Authority's
Engineer shall have reasonably determined that the rate of progress of Works
is such that Completion of the Project Highway is not likely to be achieved by
the end of the Scheduled Completion Date, it shall notify the same to the
Contractor, and the Contractor shall, within 15 (fifteen) days of such notice,
by a communication inform the Authority's Engineer in reasonable detail

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about the steps it proposes to take to expedite progress and the period within
which it shall achieve the Project Completion Date.”
(emphasis added)
(x). Vide Article 18 of EPC Agreement provides for appointment and
Authority’s Engineer in accordance with the terms of reference set forth
in Annexure 1 of Schedule – N. For the purposes of exercise of authority
by the Authority’s Engineer force majeure and termination is provided in
Article 21 of Part V of EPC. Article 18.2 relevant here in this case is
reproduced hereunder:
“ 18.2 Duties and authority of the Authority’s Engineer
(i) The Authority's Engineer shall perform the duties and exercise the
authority in accordance with the provisions of this Agreement and
substantially in accordance with the terms of reference ("Terms of Reference"
or "TOR") set forth in Annexure-I of Schedule N, but subject to obtaining prior
written approval of the Authority before determining:
(a) any Time Extension;
(b) any additional cost to be paid by the Authority to the Contractor;
(a) the Termination Payment;
d) issuance of Completion Certificate; or
(e) any other matter which is not specified in (a), (b), (c) or (d) above and
which creates financial liability on either Party.”
(xi). Vide Article 23, 60 days cure period notice was prescribed for. Vide
clauses (ii) & (iii) of Article 23, 15 days notice of termination was
prescribed for. Vide Article 23.3 termination for Authority’s convenience
is prescribed for. Clause (i), (ii) & (iii) of Article 23.1 and Article 23.2
and Article 23.3 are reproduced hereunder:
“ 23.1 Termination for Contractor Default
(i) Save as otherwise provided in this Agreement, in the event that any of the
defaults specified below shall have occurred, and the Contractor fails to
cure the default within the Cure Period set forth below, or where no Cure
Period is specified, then within a Cure Period of 60 (sixty) days, the
Contractor shall be deemed to be in default of this Agreement (the
"Contractor Default"), unless the default has occurred solely as a result of
any breach of this Agreement by the Authority or due to Force Majeure. The
defaults referred to herein shall include:

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(a) the Contractor fails to provide, extend or replenish, as the case may be, the
Performance Security in accordance with this Agreement;
(b) after the replenishment or furnishing of fresh Performance Security in
accordance with Clause 7.3, the Contractor fails to cure, within a Cure Period
of 30 (thirty) days, the Contractor Default for which the whole or part of the
Performance Security was appropriated;
(c) the Contractor does not achieve the latest outstanding Project Milestone
due in accordance with the provisions of Schedule-J, subject to any Time
Extension, and continues to be in default for 45 (forty five) days;
(d) the Contractor abandons or manifests intention to abandon the
construction or Maintenance of the Project Highway without the prior written
consent of the Authority;
(e) the Contractor fails to proceed with the Works in accordance with the
provisions of Clause 10.1 or stops Works and/or the Maintenance for 30
(thirty) days without reflecting the same in the current programme and such
stoppage has not been authorised by the Authority's Engineer;
(f) the Project Completion Date does not occur within the period specified in
Schedule-J for the Scheduled Completion Date, or any extension thereof;
(g) the Contractor fails to rectify any Defect, the non-rectification of which
shall have a Material Adverse Effect on the Project, within the time specified
in this Agreement or as directed by the Authority's Engineer;
(h) the Contractor subcontracts the Works or any part thereof in violation of
this Agreement or assigns any part of the Works or the Maintenance without
the prior approval of the Authority;
(i) the Contractor creates any Encumbrance in breach of this Agreement;
(j) an execution levied on any of the assets of the Contractor has caused a
Material Adverse Effect;
(k) the Contractor is adjudged bankrupt or insolvent, or if a trustee or
receiver is appointed for the Contractor or for the whole or material part of
its assets that has a material bearing on the Project;
(l) the Contractor has been, or is in the process of being liquidated, dissolved,
wound-up, amalgamated or reconstituted in a manner that would cause, in the
reasonable opinion of the Authority, a Material Adverse Effect;
(m) a resolution for winding up or insolvency of the Contractor is passed, or
any petition for winding up or insolvency of the Contractor is admitted by a
court of competent jurisdiction and a provisional liquidator or receiver or
interim resolution professional, as the case may be, is appointed and such
order has not been set aside within 90 (ninety) days of the date thereof or the
Contractor is ordered to be wound up by court except for the purpose of
amalgamation or reconstruction; provided that, as part of such amalgamation
or reconstruction, the entire property, assets and undertaking of the
Contractor are transferred to the amalgamated or reconstructed entity and

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that the amalgamated or reconstructed entity has unconditionally assumed the
obligations of the Contractor under this Agreement; and provided that:
i. the amalgamated or reconstructed entity has the capability and experience
necessary for the performance of its obligations under this Agreement; and
ii. the amalgamated or reconstructed entity has the financial standing to
perform its obligations under this Agreement and has a credit worthiness at
least as good as that of the Contractor as at the Appointed Date;
(n) any representation or warranty of the Contractor herein contained which
is, as of the date hereof, found to be false or the Contractor is at any time
hereafter found to be in breach or non-compliance thereof;
(o) the Contractor submits to the Authority any statement, notice or other
document, in written or electronic form, which has a material effect on the
Authority's rights, obligations or interests and which is false in material
particulars;
(p) the Contractor has failed to fulfill any obligation, for which failure
Termination has been specified in this Agreement; or
(q) the Contractor commits a default in complying with any other provision of
this Agreement if such a default causes a Material Adverse Effect on the
Project or on the Authority.
(r) gives or offers to give (directly or indirectly) to any person any bribe, gift,
gratuity, commission or other thing of value, as an inducement or reward:
i. for doing or forbearing to do any action in relation to the Contract, or
ii. for showing or forbearing to show favour or disfavour to any person in
relation to the Contract,
or if any of the Contractor’s personnel, agents or subcontractors gives or
offers to give (directly or indirectly) to any person any such inducement or
reward as is described in this sub-paragraph (s). However, lawful inducements
and rewards to Contractor's Personnel shall not entitle termination.
(ii) Without prejudice to any other rights or remedies which the Authority
may have under this Agreement, upon occurrence of a Contractor Default,
the Authority shall be entitled to terminate this Agreement by issuing a
Termination Notice to the Contractor; provided that before issuing the
Termination Notice, the Authority shall a notice inform the Contractor of
and grant 15 (fifteen) days to the Contractor to make a representation, and
may after the expiry of such 15 (fifteen) days, whether or not it is in receipt
of such representation, issue the Termination Notice.
(iii) The following shall apply in respect of cure of any of the defaults and/ or
breaches of the Agreement:
(a) The Cure Period shall commence from the date of the notice by the
Authority to the Contractor asking the latter to cure the breach or default
specified in such notice;

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(b) The Cure Period provided in the Agreement shall not relieve the
Contractor from liability for Damages caused by its breach or default;
(c) The Cure Period shall not in any way be extended by any period of
suspension under the Agreement;
(d) If the cure of any breach by the Contractor requires any reasonable action
by the Contractor that must be approved by the Authority hereunder the
applicable Cure Period (and any liability of the Contractor for damages
incurred) shall be extended by the period taken by the Authority to accord its
required approval.
(iv) After termination of this Agreement for Contractor Default, the Authority
may complete the Works and/or arrange for any other entities to do so. The
Authority and these entities may then use any Materials, Plant and equipment,
Contractor's documents and other design documents made by or on behalf of
the Contractor.
23.2 Termination for Authority Default
(i) In the event that any of the defaults specified below shall have occurred,
and the Authority fails to cure such default within a Cure Period of 90 (ninety)
days or such longer period as has been expressly provided in this Agreement,
the Authority shall be deemed to be in default of this Agreement (the
"Authority Default") unless the default has occurred as a result of any breach
of this Agreement by the Contractor or due to Force Majeure. The defaults
referred to herein shall include:
(a) the Authority commits a material default in complying with any of the
provisions of this Agreement and such default has a Material Adverse Effect
on the Contractor;
(b) the Authority has failed to make payment of any amount due and payable
to the Contractor within the period specified in this Agreement;
(c) the Authority has failed to provide, within a period of 180 (one hundred
and eighty) days from the Appointed Date, the environmental clearances
required for construction of the Project Highway;
(d) the Authority becomes bankrupt or insolvent, goes into liquidation, has a
receiving or administration order made against him, compounds with its
creditors, or carries on business under a receiver, trustee or manager for the
benefit of its creditors, or if any act is done or event occurs which (under
Applicable Laws) has a similar effect;
(e) the Authority repudiates this Agreement or otherwise takes any action that
amounts to or manifests an irrevocable intention not to be bound by this
Agreement;
(f) the Authority's Engineer fails to issue the relevant Interim Payment
Certificate within 60 (sixty) days after receiving a statement and supporting
documents; or

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(g) the whole work is suspended by Authority beyond 120 (one hundred
twenty) days for any reason which is not attributed to the Contractor.
(ii) Without prejudice to any other right or remedy which the Contractor may
have under this Agreement, upon occurrence of an Authority Default, the
Contractor shall be entitled to terminate this Agreement by issuing a
Termination Notice to the Authority; provided that before issuing the
Termination Notice, the Contractor shall by a notice inform the Authority of
its intention to issue the Termination Notice and grant 15 (fifteen) days to the
Authority to make a representation, and may after the expiry of such 15
(fifteen) days, whether or not it is in receipt of such representation, issue the
Termination Notice.
If on the consideration of the Authority's representation or otherwise, the
contractor does not issue the Termination Notice on such 15th (fifteenth) day
and prefers to continue with the project, it is deemed that the cause of action
of the Termination Notice has been condoned by the Contractor and he would
be deemed to have waived any claim and forfeited any right to any other
remedy on that count or in relation to such action or omission.
23.3 Termination for Authority's convenience
Notwithstanding anything stated hereinabove, the Authority may terminate
this Agreement for convenience. The termination shall take effect 30 (thirty)
days from the date of notice provided to the Contractor.”
(emphasis added)
(xii). Article 25 provided Liability and Indemnity and Article 26
provided for resolution of dispute between the parties including
arbitration vide Article 26.3.
23. From a bare reading of the aforesaid Articles of EPC Agreement
following undisputed conditions regarding availability of land under the
agreement vis-a-vis the obligations and duties emerge out:
(i). The project highway site shall be procured by the authority.
(ii). The possession of the project highway site will be made available to
the contractor free from all encroachments, encumbrances with further
free access.
(iii). It will be authority’s duty to design the site in terms of alignment of
national highway road.

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(iv). The authority shall provide ‘Right of Way’ on the site in accordance
with the alignment. The right of way as defined, a site in accordance
with alignment finalised by the authority free from all encroachments
and encumbrances. Clause 3 provides for right of way to the contractor
in respect of all land included the appendix by the dates specified in
schedule – A for those parts of site referred therein and in the event delay
occurs then force majeure clause of the agreement can be enforced.
(v). It will be authority’s duty to obtain environment clearance and
licences for the project highway.
(vi). The authority’s representative, the contractor and Authority’s
Engineer shall inspect the site within 10 days of the agreement.
(vii). Soon after the above inspection a memorandum would be prepared
containing inventory of the site qua vacant land and encumbered land,
buildings structure, road works, trees and any other immovable property
on or attached to the site. This would be a Handover Memorandum.
(viii). The Handover Memorandum shall contain Appendix regarding
details of those parts of the site which are vacant having access as the
land where ‘Right of Way’ has not been given to the contractor with
further details of hindrances in the construction zone.
(ix). The site of project will be prepared as per schedule – A of the
agreement.
(x). The authority is to provide right of way to the contractor in respect
of all the land included in the appendix by the date specified in
Schedule- A and in the event of breach of this, contractor would be
entitled to damages etc.
(xi). Upon a careful reading of aforesaid clauses, we find that soon after
the agreement is reached within 10 days, the Authority Engineer shall
inspect the site the and prepare a detailed memorandum containing an
entry of site vacant and unencumbered land, buildings, structures, trees

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and other removal properties and the documents hand over memorandum
would carry with the appendix specifying the vacant access, specifying
the site with detail of access and where right of way and access has not
been provided along with other details of hindrances in the construction
zone. The hand over memorandum shall also provide clearly the part of
site where work can be executed and the hand over memorandum shall
have the counter parts and each shall construe as original by the
authorised representatives of the authority, contractor and Authority
Engineer.
(xii). The agreement defines ‘Right of Way’ as under:
“Right of Way” means and refers to the total land required and acquired for
the project, both in its width and length, together with all way leaves,
easements, unrestricted access and other rights of way, howsoever described,
necessary for constructions and maintenance of the Project Highway in
accordance with this Agreement.”
(xiii). 90% of the total length of project shall be handed over to the
contractor prior to the appointed day.
(xiv). Conditions specified in the clauses contained in Article 8.2 shall
not be waived by either of the parties.
(xv). Existing rights of way, easements, privileges, liberties and
appurtenances to the site shall not be deemed to be encumbrances.
(xvi). The contractor would have to shoulder the responsibility to shift
obstructing utilities like electric lines, water pipes, gas pipelines,
telephone cables to appropriate location if these utilities create
obstructions in the work or maintenance of project highway in
accordance with law and the cost incurred in such reallocation will be
borne by the authority. Such work and shifting of utilities has been
indicated in Schedule – B-1 of the agreement.
(xvii). The contractor shall allow use of site for laying down new public
telephone utilities like lines, electric lines, water pipelines, cables and

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other new public utilities subject to permission from the authority for
which the damages may be claimed.
(xviii). The authority shall be assisting the contractor in obtaining
applicable permits for cutting of trees in non forest area to be identified
by the authority for the purposes if such trees cause a material adverse
effect on construction and maintenance of the project. Dismantling of
structures would be done by the contractor to get the land free from
hindrances in respect of which the compensation has already been paid
by the authority to the land owners and the land was handed over to the
contractor.
24. Thus, from the above, we find that agreement very
comprehensively prescribed terms and conditions to ensure good time
bound execution of work with a right to reserve with contractor to
enforce obligations of the Authority to ensure carrying out of the project
as per the agreement. It also provides for the authority to adopt measures
in the event of default by contractor in carrying out the work as per the
agreement within the time schedule and upon failure of contractor to
complete the project denying core period to terminate contract.
25. Now, it is in the above background of conditions laid under the
agreement that we proceed to examine the documents brought on record
to reach out to the conclusion as answer to the points framed above by
us.
26. As the pleadings raised in the writ petition demonstrate so also the
documents brought on record, the reasons for delays in completion of
project, which according to the petitioner, was attributable to hindrances
th
and land issues. Petitioner had applied for the first time on 7 July, 2022
for extension of time taking recourse to the Article 10.5. The total time
demanded by petitioner 248 days so as to enable him to complete the
th
project by 15 June, 2022. However, the Authority’s Engineer vide letter
th
dated 27 July, 2022 recommended an extension of time only 39 days
and resultantly the respondent No.- 2 namely the NHAI Project Director

30
WRIC No. - 4559 of 2025
accorded extension of only 42 days for Milestone-1 and denied any other
th
extension for Milestone 2 & 3. Relevant para (iv) of letter dated 8
February, 2022 is reproduced hereunder:
“iv. As per clause 9.2 Article 9.2 of CA the shifting of obstructing Utilities
(including electric lines, water pipes, Gs pipeline etc) & dismantling of
structures is the obligation of contractor. Further, in respect of tree cutting of
protect & non-protected forest, permission was obtained within 150 days (i.e
upto 09.03.2022) from the Appointed Date and tree cutting by respective DLM
was in progress. Further, length of 20.340 Km was considered to be hindered
after 150 days as stated in the contractor’s letter/ respective MPR. Thus,
length considered handed over to the contractor shall be 29.914 Km (50.254
Km – 20.340 Km). It is pertinent to mention that contractor/ AE has submitted
the proposal based on land available within 150 days & delays upto
15.06.2022. Since, the project milestone-1 (21.06.2022) date has been passed,
hence, effected delay days is worked out for 104 days (10.03.2022 to
21.06.2022) as (50.254-29.914)/ 50.254 x 104 days = 42.09 days or say 42
days.”
27. Petitioner raised objection to the criteria adopted by the
Authority’s Engineer in evaluating time extension request. The petitioner
continued to reiterate but the maximum period remained granted 42 days
th
vide letter of the Authority dated 9 November, 2022. While the
correspondence went on between the petitioner the Authority’s Engineer
and the Authority, a development took place in the form of letter of
st
Authority’s Engineer dated 21 November, 2023 acknowledging the
presence of hindrances/ encumbrances of the project land which,
according to the petitioner caused the delay in project and hence it
recommended for further extension of time for 196 days. Authority’s
st
Engineer’s recommendation as contained in its letter dated 21
November, 2023 is reproduced hereunder:
“ 9. AE’s Recommendations of Interim EOT:
Considering the aforesaid data points made available, the AE Representative
is delighted to recommend the following to the Authority for grant of interim
EOT to the EPC Contractor in terms of Clause 10.5 of the Contract
Agreement:-
a) Since hindrances/ encumbrances are continuing on affected project stretch
as per Annexure-I even on date, this recommendation of EOT is interim only.
b) Considering EPC Contractor’s letter, No TPL/GM/NHAI/FY22-23/
709A/843, dated 17.03.2023, there is an estimated delay of 196 days up to the
scheduled date of completion of 09.10.2023 for which EPC Contractor is not

31
WRIC No. - 4559 of 2025
liable. EPC Contractor is therefore recommended an interim EOT of 196 days
(Interim EOT-2) to be granted by the Competent.”
28. While the matter lingered on, the Authority’s Engineer prepared a
th
comprehensive report vide letter dated 10 July, 2024 addressed to the
Project Director, NHAI, recording reasons for delay in carrying out the
th
project and proposed 5 January, 2025 as revised schedule complete
date. This letter of the Authority’s Engineer acquires significance and
relevance year because it was based upon the survey conducted on the
spot and the reasons assigned for the delay in project. The relevant
extract thereof is reproduced hereunder:
“10. AE’s Recommendations of Interim EOT-3:
Considering the aforesaid data points made available, the AE Representative
is delighted to recommend the following to the Authority for grant of interim
EOT to the EPC Contractor in terms of Clause 10.5 of the Contract
Agreement: -
a) Since hindrances/encumbrances are continuing on affected project stretch
as per Annexure-I and Annexure-11 even on date, this recommendation of EOT
is interim only.
b) Considering the EOT-1 of 42 days and EOT-2 of 196 days to the EPC
Contractor, this interim recommendation is for an additional of 247 Days to
be reckoned from Revised Scheduled Completion Date of 22/4/2024 as per
EOT-2 recommendations. Considering EOT-3, the revised Scheduled
Completion Date stands at 5th January 2025 for 100% completion of the
Project Highways in all respects inclusive of the Change of Scope work
items under consideration for approval by the Competent Authority.
c) The Revised Milestones/Scheduled Completion Date pursuant to Clause 6
of Schedule J of the Contract Agreement considering the current interim
recommendation EOT-3 stand modified as follows: -
Sr.
No.
Milestone Revised Project Milestone as
per Project Length handed
over to the EPC Contractor
on AD+90 days,
Revised
Date
Status
1. MS-I 10% x68.615% x Rs 954.90
Cr
Completed
on 02-
Aug-22
Achieved
= Rs. 65.54 Cr.
2. MS-II 35% x 68.615% x 954.9 23-Dec-22 Achieved

32
WRIC No. - 4559 of 2025
= Rs.229.32 Cr.
3. Revised MS-
III
70% x 1043.07 Cr.
16-
Sep-2024
Yet to be
achieved.
= Rs. 730.149 Cr.
4. Revised
Scheduled
Completion
Date
100% of effective Project
Completion Cost subject to a
maximum of Rs. 1043.07 Cr
including amounting to
Rs.88.15 Cr. Change of
Scope work items
considering for approval by
the Competent Authority.
05-Jan-2025 Yet to be
achieved.
The EPC Contractor has to submit his resource based Revised work program
with enhanced resources to achieve above mentioned milestones. In this
context it is highly recommended that EPC Contractor executes the works at
site in 03 parallel sections concurrently with additional mobilization of
necessary and augmented as mentioned below:
i. Grade Separated Interchanges at km 0+000, km 38+120, km 12+134;
ii. Change of Scope Work items including all additional underpasses, service
roads etc under approval by the Authority
iii. Rest of the Highways/Structures/balance CD works etc including balance
scope as per Schedule B of the Contract Agreement
d) While EPC Contractor has achieved a financial progress of 36% i.e.
Rs.343.76 Cr upto IPC-22, and works amounting to Rs. 297.56 Cr are
continued to be delayed due to ongoing hindrances/encumbrances for which
EPC Contractor is not liable, the EPC Contractor may be allowed escalation
as per the rate prevailing on the original date of completion of 09.10.2023
on balance works amounting upto Rs.297.56 Cr. value of works.
e) Since there is impending delay in completion of value of works amounting
to Rs.313.58 till IPC 22 due to slow progress by the EPC Contractor until
interim EOT-2, necessary damages may be charged to EPC Contractor
pursuant to Clause 10.3 read with Clause 10.6 of the Contract Agreement.
f) The EPC Contractor has not made any financial claim so for pursuant to
Clauses 3.1, 8.3, 9.5 and any other applicable claim condition in terms of
Schedule O of the EPC Contract dated 26-08-2021 and the Authority also has
not abrogated applicable delay damages to the EPC Contractor in terms of
Clause 10.3 of the Contract Agreement with the understanding that either
party shall consider and agree exclusively vide a settlement agreement for not
making any claim or charging applicable damages in acceptance of this
recommendation of EOT-3 unconditionally.

33
WRIC No. - 4559 of 2025
g) The aforesaid recommendations of the EOT are based on the assumption
that since there has been persistent slow progress by EPC Contractor, the
EPC Contractor shall be accepting these recommendations unconditionally
and shall not make any financial claims in future for the EOT and the
Authority also will not charge any LDs to the EPC Contractor for his slow
progress/non-performance up to the revised scheduled completion date of
05.01.2025.
h) Any further extension of time/escalation will be recommended by the
Authority Engineer/Authority as per performance of EPC Contractor
measured against the Revised work program submitted vide his email dated
09.07.2024 to achieve the revised financial Milestones as outlined in point
(c) above. ”
(emphasis added)
29. The annexure appended to the report/ letter also acquires
significance because it refers to the length in meters which were not
th
hindrance free even on 10 July, 2024 and the total land comes out to be
as per main carriage way 7.998 km. out of total project length of 50.254
km. The letter also recorded that Handover Memorandum showed
encumbrance/ hindrance free project site admeasuring 47.620 km. out of
total project length 50.254 km. with necessary access and right of way
handed over to the contractor but as per the joint site visit by Authority’s
Engineer team, the contractor and the authority dated March, 2023 a
total of 15.66 km. of the project length was encumbered with various
hindrances. Thus making effective available land only to the tune of
34.594 km.
30. From the perusal of the annexure to the report/ letter it is worth
noticing that hindrances that accounted for 7.998 km. as recorded above,
were basically for buildings, temples, mosque, boundary wall and land
issues, besides the other land full of hindrances in terms of trees,
electricity polls etc. so it had come in black and white in the report of
th
Authority’s Engineer dated 10 July, 2024 that till that date land issues
were there, the permanent structures were there and hence the land,
possession of which was required to be given as per the Article 8.1(a),
8.2(i), 8.2(ii) and 8.2 (iii) was not there.

34
WRIC No. - 4559 of 2025
31. It is worth noticing here that as per the EPC the work was to
completed by July, 2022 whereas even 90% land site were not available
th th
as per the agreement as on 10 July, 2024. On 17 September, 2024 the
petitioner submitted a revised schedule for completion of the project
appending therewith the details but the NHAI proceeded to issue a cure
th
period notice on 11 October, 2024 in terms of Article 23.1(i) of the
agreement.
th
32. The petitioner submitted a detailed reply to the notice on 19
November, 2024 citing that the handover of land at site of project was
still not complete and land issues were there but the authority brushed
aside the reply and directed the petitioner to complete the project in
terms of the extended period earlier granted and to achieve the finish line
at the earliest. Further time extension request and rescheduling the time
th
line was rejected vide letter dated 11 December, 2024.
th
33. The contractor in his reply dated 16 December, 2024 cited the
status of the site of land and hindrances still to be existing and prayed for
support in the matter for the practical problem that had arisen and in the
light of the earlier response of the petitioner some sympathetic
consideration should be accorded, however, still the contractor assured to
complete the project on agreed if extended time lines, was allowed.
th
34. The Authority’s Engineer wrote to the petitioner on 17
December, 2024 that financial performance be submitted and also
additional steps, if any, taken for the completion of project. While this
th
letter was issued by the Authority’s Engineer on 17 December, 2024, on
rd
23 December, 2024 the petitioner was issued with a show cause notice
citing slow progress and failure to complete the project and not
maintenance of project highway.
35. The petitioner again submitted reply citing the photographic
evidence collected in the matter to demonstrate that maintenance
activities were duly carried out and that petitioner has been prudently
performing its obligation under the agreement to complete the project at

35
WRIC No. - 4559 of 2025
the earliest. However, the project progress got impacted for the reasons
not attributable to the contractor beyond his control. Petitioner again
prayed for extension of time but his request went in vein as the authority
nd
finally terminated the contract on 22 January, 2025 the order impugned
in this petition.
36. From the above discussion, it clearly comes to be established that
Authority’s Engineer reported to the authority itself that Handover
Memorandum though referred to handing over more than 90% of the
land but as a matter of fact possession of this much of land was never
handed over.
37. Here it is apt to refer to the Handover Memorandum which has
been basically relied upon by the NHAI and we find this Handover
st
Memorandum dated 21 September, 2021 to be referring to delivery of
possession of total length of 47.620 km out of 50.254 km. amounting to
94.76% but the appendix to the same is not as per the Article 8.2. The
appendix shows hindrances in the form of electric polls, a little water
pipeline, a few hand pumps but does not refer to any land issues or
building structure or temple etc. that have come to be referred to in the
th th
Authority’s Engineer’s report dated 10 July, 2024. This report dated 10
July, 2024 has come to be referred to in paragraph 49 of the writ petition
but to our utter surprise, in reply thereto vide paragraph 28 of the counter
affidavit the same has remained undenied.
38. The paragraph refers to some letter/ communication of the
th
petitioner dated 7 June, 2024 to allege that the petitioner deliberately
avoided to file the same but no such letter has been annexed in support
of the averments so made by respondent NHAI. Thus, the Authority’s
Engineer’s report has remained undenied.
39. We can understand that utilities like electricity polls, trees, hand
pumps, pipelines etc. are removable easily and for that contractor had the
liability but the land issues cannot be taken to be within the control of
the contractor. Further, appendix-2 schedule – A as per Article 8.3(i), was

36
WRIC No. - 4559 of 2025
to also bear the date of providing ‘Right of Way’ in respect of hindrances
after its removal but the Handover Memorandum was so sketchy and
evasive that it did not contain any such details.
40. We further notice that in the order impugned exhaustive reply
submitted by the petitioner to show cause notice was not accorded due
consideration and it is one of those cases where the authority instead of
carrying out its own obligations, it kept on tightening the screw upon the
contractor to finish the work within the extended time line. The
agreement itself provides that procurement of the land is the prime duty
of the authority and so long as the land issues continue to remain there as
a hindrance, then no contractor can even dare to demolish the
constructions without settling the land issues. There is one document
filed along with the writ petition at page 948 along with the annexure- 24
that shows that compensation to the members of the Committee of Jama
nd
Masjid and Eidgah was paid on 2 December, 2024. This document has
come to be referred to in paragraph 49 of the writ petition and we have
already held above how evasive the reply was there in counter affidavit.
Still further, the land state can take the plea that compensation payment
issue may not cause difficulty in possession but in a democratic country
like ours if payment remains withheld, the farmers and land owners keep
agitating and no private person can forcefully take possession
challenging to a land and order situation caused on the spot by such
agitation.
41. Thus, respondents having not discharged their obligations and
having failed to perform duties of their part under the agreement, they
were certainly not justified in asking petitioner to complete the project
within the extended short timeline inasmuch as, they having failed to
honour the report of their own Engineer, were absolutely unjustified in
issuing show cause notice even. The contract agreement itself provides
for appointment of Authority’s Engineer vide Article 18.1 & 18.2(i) lays
down the duties as per the terms of reference. There is nothing in the

37
WRIC No. - 4559 of 2025
counter affidavit to demonstrate that Authority’s Engineer submitted any
collusive report in favour of the petitioner to help him out.
9. Findings
42. From the discussions that we have held above referring to the
various correspondences between petitioner-contractor, the Authority’s
Engineer and the response letters of the National Highway Authority of
India, Project Director, Meerut, following undisputed fact positions
emerge out:
st
(i). On 21 September, 2021 Handover Memorandum was signed by the
contractor, National Highways Authority and Authority’s Engineer, all
jointly describing therein that 47.620 kms (94.76%) length of land out of
total 50.254 kms. with right of way available to 45 meters and 54 meters
as per schedule- B of the contract agreement. The appendix to the
document showed that total land area required was 305.5 hectares with
right of way 120 hectares, whereas area under 3D notification of
National Highways Act, 1956 was 85.51 hectares and compensation
awarded under Section 3G was 184.5 hectares. It also contained a detail
regarding area under possession against 3G notification of National
Highways Act, 1956 was 173.39 hectares. So, total possession were
shown as 293.39 hectares and the pending length possession was shown
as 2.364 kms only but the chain-wise pending possession was at different
level like 13.200 kms. to 14.600 kms., 25.600 kms. to 26.500 kms.,
5.200 kms. to 5.400 kms. and 12.000 kms. to 12.134 kms., in a total
stretch of 50.254 kms.
st
(ii). The appendix-2 to Handover Memorandum dated 21 September,
2021 did show only few utilities but did not show the time line by which
the utilities were expected to be removed by the contractor with the
cooperation to be rendered by the authority.
(iii). The petitioner acknowledged Handover Memorandum as was given
to him. This got further acknowledged with subsequent documents

38
WRIC No. - 4559 of 2025
nd
signed on 22 September, 2021 by the contractor in a letter written to the
Project Director.
th
(iv). Soon after the project work started, Tata wrote a letter on 7 July,
2022 to the Authority’s Engineer complaining of non-fulfilment of
reciprocal promises by the authority and citing six reasons demanded
extension of time of 248 days, which are as follows:
(a). Delay in providing encumbrance free row pursuant to Article 8.2 &
3.1 (iii) of the agreement;
(b). Delay due to tree cuttings as per Article 9.2 contract agreement;
(c). Delay due to shifting of chartered and unchartered utilities;
(d). Inordinate delay in designs and drawing approvals;
(e). Delay due to extended monsoon/ adverse weather condition and
Force Majeure; and
(f). Delay due to spread of Covid -19/ omicrons/ Force Mejiure.
(v). The above letter carried annexure that referred to various
constructions like mosque, houses, boundaries wall, buildings, mazars,
commercial buildings, besides other utilities like electricity polls, bore-
wells etc. covering 23.210 kms. Then land payment issues and private
possessions covering 25.720 kms. The letter also details the area of land
involved in handing over in different villages and also main carriage way
affected by various constructions like mosque etc. and further the Garh
area of 1.360 kms affected by Eidgah and temple and also referred to an
area of total 12.3332 hectares of land in different villages that requires
re-gazette notification in Meerut and Hapur districts.
(vi). The National Highways Authority in its letter addressed to the
th
Regional Office, Gomti Nagar, Lucknow dated 8 August, 2022
admitted vide its (iv) as under:

39
WRIC No. - 4559 of 2025
“(iv). As per clause 9.2. Article -9 of CA, the shifting of obstructing Utilities
(including electric lines, water pipes, Gas pipeline etc) & dismantling of
structures is the obligation of contractor. Further, in respect of tree cutting of
protect & non-protected forest, permission was obtained within 150 days (i.e.
upto 09.03.2022) from the Appointed date and tree cutting by respective DLM
was in progress. Further, length of 20.340 Km was considered to be hindered
after 150 days as stated in the contractor’s letter/ respective MPR. Thus,
length considered handed over to the contractor shall be 29.914 Km (50.254
km – 20.340 km). It is pertinent to mention that contractor/ AE has
submitted the proposal based on land available within 150 days & delays
upto 15.06.2022 . Since, the project milestone-1 (21.06.2022) date has been
passed, hence, effected delay days is worked out for 104 days (10.03.2022 to
21.06.2022) as (50.254-29.914)/50.254 x 104 days = 42.09 days or say 42
days.”
(emphasis added)
(vii). Thus NHAI fairly admitted that only 29.914 kms was in fact
handed over to the contractor and yet it only allowed 42 days extension
of time.
th
(viii). The petitioner on 17 August, 2022 wrote for further extension of
th
time and NHAI reiterated 42 days of extension vide letter dated 30
August, 2022.
(ix). Despite repeated letters written by the petitioner to the authority
th
including one letter dated 29 September, 2022 citing reasons and the
th
Authority’s Engineer also wrote to the authority on 26 September, 2022
submitting report regarding hindrances found on existing constructions
and other hindrance of total length of 31.852 kms. in two laining and
th
15.925 kms. in four laining, the NHAI vide letter dated 9 November,
nd
2022 only extended time for shifting Milestone-1 for 42 days upto 2
August, 2022 keeping scheduled date of completion of other milestones
unchanged.
st
(x). Petitioner wrote to the authority on 21 December, 2022 for
necessary extension of time as per Article 10.5 of the contract. The
rd
Authority’s Engineer vide letter dated 3 January, 2023 intimated the
authority that EOT request was under preparation and yet the authority
wrote to the Authority’s Engineer that request for extension of time
further was not found suited to reconsider at that stage.

40
WRIC No. - 4559 of 2025
th
(xi). Petitioner kept on writing to the Authority’s Engineer on 17
March, 2023 citing the delay issues involving agitation by the farmers
for almost 9-10 days and delay in approval of designs etc. by the
authority and numbers of change of scope as per Article 13.5 pending
consideration by the authority. Nothing progressed and the
correspondence continued amongst the petitioner, Authority’s Engineer
th
and NHAI until 10 July, 2024.
th
(xii). On 10 July, 2024 the Authority’s Engineer made
recommendations for 248 days of extension of time citing reasons of
land not being hindrance free that has been discussed above.
th
(xiii). On 17 September, 2024 petitioner submitted a revised schedule
st
for completion of the project till 31 July, 2025 but instead of
considering the above letter the authority issued a cure period notice
th
under Article 23.1(i) on 11 October, 2024 asking the petitioner to
complete the maintenance work within 60 days from the receipt of the
notice. The Authority cited in its letter only non conformance in respect
of certain areas in openings of national highway project.
th
(xiv). On 19 November, 2024 petitioner submitted a detailed reply
citing such constructions and buildings with other areas involving land
payment issues which could not be easily removed but the authority
th
wrote a letter on 11 December, 2024 to expedite the prescribed work
th
and complete the subject project at the earliest. Petitioner on 16
December, 2024 reiterated is stand.
th
(xv). On 17 December, 2024 the Authority’s Engineer submitted report
regarding delays in project attributing low pace of work and wrote to the
petitioner that he should get the work completed as per the re-scheduled
th
date proposed by him under letter dated 17 September, 2024 and to
expedite the work by submitting additional steps that are proposed.
rd
(xvi). On 23 December, 2024 the authority issued a termination notice
to the petitioner on the ground of slow progress and failure to complete

41
WRIC No. - 4559 of 2025
rd
the project and non performance of project authority. On 3 January,
2025 petitioner gave proper reply on both counts: firstly, the reply letter
clearly stated that firstly the actual handing over of 90% land was made
st
only on 31 December, 2024 whereas it was to be handed over on
th th
appointed date that was 10 October, 2021 and 150 days i.e. 9 March,
2022 but 100% possession of land was yet not handed over and
complaint that delay was still continued on the site. He explained his
slow progress and failure to complete the project for the reasons
attributable to the authority and that the Authority’s Engineer was fully
aware since the inception of the project that contractor had encountered
various hindrances/ impediments which were well on record and were
finally informed to the authority and Authority’s Engineer but no action
was taken. Regarding maintenance as complained of in show cause
notice petitioner replied that he did not commit any default under Article
23.1 (I) (d), (e), (f) and (q) of the agreement and since the authority/
Authority’s Engineer failed to fulfil its obligation under the contract in
timely handing over land site with ‘Right of Way’ for construction,
timely approvals of designed, timely removal of trees and hindrances
and timely approval of change of scope that project work got delayed.
This reply was supported by various documents and photographs and
th
details of hindrances within the right of way. The authority on 14
January, 2025 terminated the contract of the petitioner.
43. The above fact positions clearly demonstrate that the only issue
between the petitioner and the authority was that, though actual physical
possession of land was claimed in the Handover Memorandum as per
Article 8 but was not there available on the spot and not only the
hindrances were in the form of utilities like electricity lines, bore-wells
etc. but there were constructed buildings like mosque, mazar, temple and
other boundary walls of the private constructions involving land issues,
which led to the repeated correspondence between the petitioner and
authorities with no headway except granting extension of time of 42
days and with certain change of scope of work. All these were very
meagre efforts taken by the Authority in comparison to what was in fact

42
WRIC No. - 4559 of 2025
communicated to the authority by the authority’s own engineer vide
th th
letter dated 10 July, 2024. The letter dated 10 July, 2024 is undisputed
document which clearly disclosed that a very large area of land was still
affected by the hindrances and right of way as defined under the
agreement was not available to the petitioner on the main highway land
area at every stretch of 5 kms in continuation. Further the ‘Handover
Memorandum’ though of course, referred to handing over possession of
47.62 kms. out of 50.254 kms. amounting to 94.76% with right of way
th
available. A letter dated 8 August, 2022 vide its clause (iv) quoted
above, the actual handing over possession of the land was 29.914 kms.
This completely renders the handover memorandum only a paper work
as no such handing over possession of 90% land ever took place until
st
31 October, 2024 as has come to be referred to by the petitioner to the
authority in its reply to the termination notice. Thus, the argument
advanced by learned counsel for the petitioner holds merit that petitioner
was not handed over possession of the land as referred to in the
Handover Memorandum holds merit and the authority is liable to be held
guilty of non performance of contract by the authority itself as admitted
fact position emerges, inasmuch as the authority was guilty in not
helping out the petitioner in removing the hindrances paying the land
dues in time, gaining actual physical possession of the certain part of
land within time inasmush as the possession issues were at different
interval of total stretch of 50.254 kms making it difficult for the
petitioner to expedite the work and perform its obligations as per the
Narrative of Statement given initially after the agreement.
44. Yet another argument advanced by Mr. Saxena, learned Senior
Advocate appearing for the petitioner that the respondents the first party
to the contract unilaterally avoided to comply with the Article 8.2 not
informing the contractor about the proposed date and time it shall hand
over the hindrance free possession and the appendix attached to the
Handover Memorandum did not disclose all this details inasmuch as it
referred to only an electric poll and hand pump and not the constructed
building area like mosque, temple and Eidgah etc. Thus it rendered the

43
WRIC No. - 4559 of 2025
Handover Memorandum as a misleading document with
misrepresentation of facts also holds merit. If appendix-2 of the
Handover Memorandum filed as Annexure-1 to the supplementary
th
counter affidavit dated 29 April, 2026 is compared with the document,
th
the letter of the authority itself dated 8 August, 2022 particularly clause
(iv) of it as reproduced above, and the Authority’s Engineer’s own letter
th
dated 10 July, 2024 and the appendix contained therewith, it would
fully demonstrate that the appendix annexed to the Handover
Memorandum was an eye wash and misleading in itself inasmuch as the
promises made under Article 8 stood not complied with by the first party
to the contract.
45. All this could have been a disputed question of fact, had there
th
been no letter of Authority’s own as referred to herein above dated 9
th
August, 2022 and the authority’s engineer’s own letter dated 10 July,
2024. This is an admitted fact position which cannot be doubted by
anyone. This appears to be the reason why despite initial order passed by
th
this Court on 18 March, 2025 regarding fair submission and stand of
the authority that “NHAI shall file an affidavit, within a week specifying
the dates when possession of land was given to the petitioner and yet no
th
such affidavit was filed until 30 November, 2025 and that too only after
the Court took a serious note of the conduct of the National Highway
th
Authority in its order dated 26 November, 2025 granting 10 days’ and
no more time. This document was again filed when the Court directed
the matter to be listed for further hearing requiring the respondent to
clear the stand as to whether this document was infact Handover
th
Memorandum as per Article 8. The next supplementary was filed on 29
April, 2026 on behalf of NHAI declaring it to be Handover
Memorandum.
46. Thus, it is clear that except the document that has been brought
twice on record, there is nothing more to demonstrate any Handover
Memorandum was executed as per Article 8 putting the authority under
obligations vide its Article 8.2(i) & 8.2(ii).

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47. This is the document upon which the entire counter affidavit of the
State respondents rests. It was argued by Mr. Rakesh Pande, learned
Senior Advocate that once the petitioner acknowledged handing over
st
possession of 94% land on 21 September, 2021, it could not have
turned around to say that as per Article 8 handing over possession of
90% of the land did not take place and because of the land issues etc.
and utilities, that project got delayed and the impugned order was bad.
48. Interestingly, in the entire counter affidavit there is nothing even
th
suggestive of that letter of the authority dated 8 August, 2022 much
st
after 21 September, 2021 was a mistake or that what was stated was
th
wrong. The Authority’s Engineer’s own letter dated 10 July, 2024 has
also not been disputed.
49. In the circumstances, therefore, in our considered view, the above
argument advanced by Mr. Pande, learned Senior Advocate, does not
hold any merit and deserves to be rejected.
50. What further is very interesting and is quite apparent on face of it
that there has been no application of mind by the authority while passing
the order impugned as both the notice of proposed termination of
rd th
contract dated 23 December, 2024 and the order impugned dated 14
January, 2025 are verbatim same. Paragraph 2 of the order impugned is
the same word by word as paragraph 2 of the notice except reference to
th
the dates letter of the Authority’s Engineer dated 17 December, 2024
th rd
and 4 January, 2025 and reply letter of the petitioner dated 3 January,
2025. We have already discussed above that the Authority’s Engineer
th
letter dated 17 October, 2024 was absolutely contrary to what he had
th
submitted on 10 July, 2024 requesting for extension of time of 248 days
citing reasons for the same. However, what is very surprising is that
detailed reply submitted by the petitioner referring to the various
progress related reports, photographs, hindrances and the issues like land
issues etc. that we have already discussed above in the fact position,
nothing was considered as if authority was sitting with a pre-determined
mind to terminate the contract of the petitioner mid-term, whatever be

45
WRIC No. - 4559 of 2025
his reply. This shows that there is absolutely non-application of mind by
the authority.
51. The National Highway Authority is state within the meaning of of
Article 12 of the Constitution and enters contract with private body for
construction of national highway, a project of public interest and
importance and hence it was expected to behave reasonably in the matter
of such contract. The parties to the contract are no doubt bound by the
terms and conditions of the contract but burden upon the state authority
lies heavily in performing its part of the contract, more especially, when
the work to be executed, becomes a concern of larger public interest.
Constructing the national highway involves expenditure out of the state
exchequer where the public money lies. Tax-payer contribution is there
which is spent on development activities by the State and the National
Highway Authority is acting as a State to carry out such execution of
work. Stand as defence qua impugned action has been taken by the
National Highway Authority in throughout blaming the contractor-
petitioner in not performing its part of the contract in maintaining the
national highway and accomplishing the task assigned under the
agreement within the prescribed period but did not introspect at least
once to realise as to what it did in preparing document full of
misrepresentation in the name of ‘Handover Memorandum’ which, of
th
course, it did acknowledge and realise subsequently vide letter dated 8
August, 2022. This amounts to an unfair practice on part of the State.
The act of a party which is State under Article 12 in this case is found to
be arbitrary one against affect work of public importance and so this
Court will not shirk away from its responsibility in arresting any
miscarriage of justice in larger public interest. Delay in construction of
national highway as a project, if caused due to reasons for the negligence
and carelessness and arbitrariness on the part of the State as one of the
parties of the contract, the Court is certainly justified lift the corporate
veil to understand the exact reasons for such actions impugned in this
petition.

46
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10. Authorities cited on behalf of the petitioner
52. Mr. Amit Saxena, learned Senior Advocate appearing for the
petitioner has placed reliance upon the authority in the case of ABL
International Ltd and others v. Export Credit Guarantee
Corporation of India Ltd and others (2004) 3 SCC 553 and MP
Power Management Company Ltd v. M/s Sky Power Southeast
Solar India Pvt Ltd. and others (2023) 2 SCC 703 and A.P. Electrical
Equipment Corporation v. Tehsildar and others (2025) SCC Online
SC 447 .
53. Citing the authority in the case of ABL International Ltd ( supra ),
learned Senior Advocate has placed reliance upon paragraphs 23, 24 and
27 of the judgment that are quoted below:
“ 23. It is clear from the above observations of this Court, once the State or an
instrumentality of the State is a party of the contract, it has an obligation in
law to act fairly, justly and reasonably which is the requirement of Article 14
of the Constitution of India. Therefore, if by the impugned repudiation of the
claim of the appellants the first respondent as an instrumentality of the State
has acted in contravention of the abovesaid requirement of Article 14, then we
have no hesitation in holding that a writ court can issue suitable directions to
set right the arbitrary actions of the first respondent. In this context, we may
note that though the first respondent is a company registered under the
Companies Act, it is wholly owned by the Government of India. The total
subscribed share capital of this Company is 2,50,000 shares out of which
2,49,998 shares are held by the President of India while one share each is held
by the Joint Secretary, Ministry of Commerce and Industry and Officer on
Special Duty, Ministry of Commerce and Industry respectively. The objects
enumerated in the memorandum of association of the first respondent at para
10 read:
“To undertake such functions as may be entrusted to it by the Government
from time to time, including grant of credits and guarantees in foreign
currency for the purpose of facilitating the import of raw materials and semi-
finished goods for manufacture or processing goods for export.”
Para 11 of the said object reads thus:
“To act as agent of the Government, or with the sanction of the Government
on its own account, to give the guarantees, undertake such responsibilities and
discharge such functions as are considered by the Government as necessary in
national interest.”
24. It is clear from the above two objects of the Company that apart from the
fact that the Company is wholly a Government-owned company, it discharges

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the functions of the Government and acts as an agent of the Government even
when it gives guarantees and it has a responsibility to discharge such
functions in the national interest. In this background it will be futile to contend
that the actions of the first respondent impugned in the writ petition do not
have a touch of public function or discharge of a public duty. Therefore, this
argument of the first respondent must also fail.
27. From the above discussion of ours, the following legal principles emerge
as to the maintainability of a writ petition:
(a) In an appropriate case, a writ petition as against a State or an
instrumentality of a State arising out of a contractual obligation is
maintainable.
(b) Merely because some disputed questions of fact arise for consideration,
same cannot be a ground to refuse to entertain a writ petition in all cases as a
matter of rule.
(c) A writ petition involving a consequential relief of monetary claim is also
maintainable.”
54. In the case of A. P. Electrical Equipment Corporation ( supra )
paragraphs 47, 48, 49, 51 & 52 of the judgment that are quoted below:
“ 47. One stock argument available with the State in this type of cases is that
the question whether the actual physical possession of the disputed land had
been taken over or not is a seriously disputed question of fact, which the High
Court should not adjudicate or determine in exercise of its writ jurisdiction.
As a principle of law, there need not be any debate on such a proposition, but
by merely submitting that it is a seriously disputed question of fact, the same,
by itself, will not become a question of fact. To put it in other words, having
regard to the materials on record, which falsifies the case of the State
Government, then such materials should not be overlooked or ignored by the
Court on the principle that the issue with regard to taking over of the actual
physical possession would be a disputed question of fact.
48. Normally, the disputed questions of fact are not investigated or
adjudicated by a writ court while exercising powers under Article 226 of the
Constitution of India. But the mere existence of the disputed question of fact,
by itself, does not take away the jurisdiction of this writ court in granting
appropriate relief to the petitioner. In a case where the Court is satisfied, like
the one on hand, that the facts are disputed by the State merely to create a
ground for the rejection of the writ petition on the ground of disputed
questions of fact, it is the duty of the writ court to reject such contention and to
investigate the disputed facts and record its finding if the particular facts of
the case, like the one at hand, was required in the interest of justice.
49. There is nothing in Article 226 of the Constitution to indicate that the High
Court in the proceedings, like the one on hand, is debarred from holding such
an inquiry. The proposition that a petition under Article 226 must be rejected
simply on the ground that it cannot be decided without determining the
disputed question of fact is not warranted by any provisions of law nor by any
decision of this Court. A rigid application of such proposition or to treat such

48
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proposition as an inflexible rule of law or of discretion will necessarily make
the provisions of Article 226 wholly illusory and ineffective more particularly
Section 10(5) and 10(6) of the Act, 1976 respectively. Obviously, the High
Court must avoid such consequences.
51. This Court in the case of Gunwant Kaur v. Bhatinda Municipality, (1969)
3 SCC 769 : AIR 1970 SC 802 observed as follows:—
“The High Court observed that they will not determine disputed
question of fact in a writ petition. But what facts were in dispute and what
were admitted could only be determined after an affidavit in reply was filed
by the State. The High Court, however, proceeded to dismiss the petition in
limine. The High Court is not deprived of its jurisdiction to entertain a
petition under Art. 226 merely because in considering the petitioner's right
to relief questions of fact may fall to be determined. In a petition under Art.
226 the High Court has jurisdiction to try issues both of fact and law.
Exercise of jurisdiction is, it is true, discretionary, but the discretion must
be exercised on sound judicial principles. When the petition raises
questions of fact of a complex nature, which may for their determination
require oral evidence to be taken, and on that account the High Court is of
the view that the dispute may not appropriately be tried in a writ petition,
the High Court may decline to try a petition. Rejection of a petition in
limine will normally be justified, where the High Court is of the view that
the petition is frivolous or because of the nature of the claim made, dispute
sought to be agitated., or that the petition against the party against whom
relief is claimed is not maintainable or that the dispute raised thereby is
such that it would be inappropriate to try it in the writ jurisdiction, or for
analogous reasons.”
(emphasis supplied)
52. In one of the recent pronouncements of this Court in State of U.P. v. Ehsan,
2023 INSC 906, this Court observed that:—
“28. We are conscious of the law that existence of an alternative
remedy is not an absolute bar on exercise of writ jurisdiction. More so,
when a writ petition has been entertained, parties have exchanged their
pleadings/affidavits and the matter has remained pending for long. In such
a situation there must be a sincere effort to decide the matter on merits and
not relegate the writ petitioner to the alternative remedy, unless there are
compelling reasons for doing so. One such compelling reason may arise
where there is a serious dispute between the parties on a question of fact
and materials/evidence(s) available on record are insufficient/inconclusive
to enable the Court to come to a definite conclusion.
29. Bearing the aforesaid legal principles in mind, we would have to
consider whether, in the facts of the case, the High Court ought to have
dismissed the third writ petition of the first respondent and relegate him to
a suit as there existed a serious dispute between the parties regarding
taking of possession. More so, when the High Court, in the earlier round of
litigation, refrained from taking up the said issue even though it had arisen
between the parties.

49
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30. No doubt, in a writ proceeding between the State and a landholder,
the Court can, on the basis of materials/evidence(s) placed on record,
determine whether possession has been taken or not and while doing so, it
may draw adverse inference against the State where the statutory mode of
taking possession has not been followed [See State of UP v. Hari Ram
(supra)]. However, where possession is stated to have been taken long ago
and there is undue delay on the part of landholder in approaching the writ
court, infraction of the prescribed procedure for taking possession would
not be a determining factor, inasmuch as, it could be taken that the person
for whose benefit the procedure existed had waived his right thereunder
[See State of Assam v. Bhaskar Jyoti Sarma, (supra)]. In such an event, the
factum of actual possession would have to be determined on the basis of
materials/evidence(s) available on record and not merely by finding fault
in the procedure adopted for taking possession from the land holder. And if
the writ court finds it difficult to determine such question, either for
insufficient/inconclusive materials/evidence(s) on record or because oral
evidence would also be required to form a definite opinion, it may relegate
the writ petitioner to a suit, if the suit is otherwise maintainable.”
(emphasis supplied)
55. In the case of M.P. Power Management Corporation Ltd. ( supra ),
learned counsel for the petitioner has relied upon paragraphs 53, 54, 74,
75, 82.9, 82.10 & 82.11 that are quoted below:
“ 53. In Radhakrishna Agarwal v. State of Bihar [Radhakrishna Agarwal v.
State of Bihar, (1977) 3 SCC 457] writ petitions were filed against orders of
the State Government revising the rate of royalty under a lease. The
contention was both against the revision of rate of royalty during the period of
the lease and the cancellation of the lease on various grounds. Though an
attempt was sought to draw support from the judgment of this Court in
Erusian Equipment & Chemicals Ltd. v. State of W.B. [Erusian Equipment &
Chemicals Ltd. v. State of W.B., (1975) 1 SCC 70] , the Court took the view
that the said case involved discrimination at the threshold or at the time of
deciding as to whether the Government should enter into the contract. The
Court took the view that the only question which normally arises in such cases
is as to whether the action complained of was in conformity with the
agreement.
54. We may notice the earlier opinions of this Court which came to be dealt
with in the following statement : (Radhakrishna Agarwal case [Radhakrishna
Agarwal v. State of Bihar, (1977) 3 SCC 457] , SCC p. 465, para 19)
“19. We do not think that any of these cases could assist the appellants or are
at all relevant. None of these cases lays down that, when the State or its
officers purport to operate within the contractual field and the only grievance
of the citizen could be that the contract between the parties is broken by the
action complained of, the appropriate remedy is by way of a petition under
Article 226 of the Constitution and not an ordinary suit. There is a formidable
array of authority against any such proposition. In Lekhraj Sathramdas

50
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Lalvani v. Custodian [Lekhraj Sathramdas Lalvani v. Custodian, AIR 1966 SC
334] this Court said : (AIR p. 337, para 5)
‘5. … In our opinion any duty or obligation falling upon a public servant out
of a contract entered into by him as such public servant cannot be enforced by
the machinery of a writ under Article 226 of the Constitution.’
In Banchhanidhi Rath v. State of Orissa [Banchhanidhi Rath v. State of
Orissa, (1972) 4 SCC 781] , this Court declared : (SCC p. 783, para 8)
‘8. … If a right is claimed in terms of a contract such a right cannot be
enforced in a writ petition.’
In Har Shankar v. Excise & Taxation Commr. [Har Shankar v. Excise &
Taxation Commr., (1975) 1 SCC 737] , a Constitution Bench of this Court
observed : (SCC p. 747, para 21)
‘21. … The appellants have displayed ingenuity in their search for
invalidating circumstances but a writ petition is not an appropriate remedy for
impeaching contractual obligations.’ ”
74. We may notice that as to what constitutes arbitrariness fell for
consideration by this Court in a case which involved cancellation of the
examination held as part of a recruitment process, in East Coast Railway v.
Mahadev Appa Rao [East Coast Railway v. Mahadev Appa Rao, (2010) 7 SCC
678 : (2010) 2 SCC (L&S) 483] . We notice the following passages which are
apposite for this case : (SCC pp. 685-87, paras 19-20 & 23)
“19. Black's Law Dictionary describes the term “arbitrary” in the following
words:
‘arbitrary. adj.—1. Depending on individual discretion; specif., determined by
a Judge rather than by fixed rules, procedures, or law. 2. (Of a judicial
decision) founded on prejudice or preference rather than on reason or fact.
This type of decision is often termed arbitrary and capricious.’
20. To the same effect is the meaning given to the expression “arbitrary” by
Corpus Juris Secundum which explains the term in the following words:
‘Arbitrary.—Based alone upon one's will, and not upon any course of
reasoning and exercise of judgment; bound by no law; capricious; exercised
according to one's own will or caprice and therefore conveying a notion of a
tendency to abuse possession of power; fixed or done capriciously or at
pleasure, without adequate determining principle, non-rational, or not done
or acting according to reason or judgment; not based upon actuality but
beyond a reasonable extent; not founded in the nature of things; not governed
by any fixed rules or standard; also, in a somewhat different sense, absolute in
power, despotic, or tyrannical; harsh and unforbearing. When applied to acts,
“arbitrary” has been held to connote a disregard of evidence or of the proper
weight thereof; to express an idea opposed to administrative, executive,
judicial, or legislative discretion; and to imply at least an element of bad faith,
and has been compared with “willful”.
*

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23. Arbitrariness in the making of an order by an authority can manifest itself
in different forms. Non-application of mind by the authority making the order
is only one of them. Every order passed by a public authority must disclose
due and proper application of mind by the person making the order. This may
be evident from the order itself or the record contemporaneously maintained.
Application of mind is best demonstrated by disclosure of mind by the
authority making the order. And disclosure is best done by recording the
reasons that led the authority to pass the order in question. Absence of reasons
either in the order passed by the authority or in the record contemporaneously
maintained is clearly suggestive of the order being arbitrary hence legally
unsustainable.”
75. We would, therefore, sum up as to when an act is to be treated as
arbitrary. The Court must carefully attend to the facts and the
circumstances of the case. It should find out whether the impugned decision
is based on any principle. If not, it may unerringly point to arbitrariness. If
the act betrays caprice or the mere exhibition of the whim of the authority it
would sufficiently bear the insignia of arbitrariness. In this regard
supporting an order with a rationale which in the circumstances is found to
be reasonable will go a long way to repel a challenge to State action. No
doubt the reasons need not in every case be part of the order as such. If
there is absence of good faith and the action is actuated with an oblique
motive, it could be characterised as being arbitrary. A total non-application
of mind without due regard to the rights of the parties and public interest
may be a clear indicator of arbitrary action. A wholly unreasonable decision
which is little different from a perverse decision under the Wednesbury
doctrine would qualify as an arbitrary decision under Article 14. Ordinarily
visiting a party with the consequences of its breach under a contract may
not be an arbitrary decision.
82.9. The need to deal with disputed questions of fact, cannot be made a
smokescreen to guillotine a genuine claim raised in a writ petition, when
actually the resolution of a disputed question of fact is unnecessary to grant
relief to a writ applicant.
82.10. The reach of Article 14 enables a writ court to deal with arbitrary State
action even after a contract is entered into by the State. A wide variety of
circumstances can generate causes of action for invoking Article 14. The
Court's approach in dealing with the same, would be guided by, undoubtedly,
the overwhelming need to obviate arbitrary State action, in cases where the
writ remedy provides an effective and fair means of preventing miscarriage of
justice arising from palpably unreasonable action by the State.
82.11. Termination of contract can again arise in a wide variety of situations.
If for instance, a contract is terminated, by a person, who is demonstrated,
without any need for any argument, to be the person, who is completely
unauthorised to cancel the contract, there may not be any necessity to drive
the party to the unnecessary ordeal of a prolix and avoidable round of
litigation. The intervention by the High Court, in such a case, where there is
no dispute to be resolved, would also be conducive in public interest, apart
from ensuring the fundamental right of the petitioner under Article 14 of the
Constitution of India. When it comes to a challenge to the termination of a
contract by the State, which is a non-statutory body, which is acting in
purported exercise of the powers/rights under such a contract, it would be

52
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over simplifying a complex issue to lay down any inflexible rule in favour of
the Court turning away the petitioner to alternate fora. Ordinarily, the cases
of termination of contract by the State, acting within its contractual domain,
may not lend itself for appropriate redress by the writ court. This is,
undoubtedly, so if the Court is duty-bound to arrive at findings, which involve
untying knots, which are presented by disputed questions of facts.
Undoubtedly, in view of ABL [ABL International Ltd. v. Export Credit
Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] , if resolving the dispute,
in a case of repudiation of a contract, involves only appreciating the true
scope of documentary material in the light of pleadings, the Court may still
grant relief to an applicant. We must enter a caveat. The Courts are today
reeling under the weight of a docket explosion, which is truly alarming. If a
case involves a large body of documents and the Court is called upon to enter
upon findings of facts and involves merely the construction of the document, it
may not be an unsound discretion to relegate the party to the alternate remedy.
This is not to deprive the Court of its constitutional power as laid down in
ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd.,
(2004) 3 SCC 553] . It all depends upon the facts of each case as to whether,
having regard to the scope of the dispute to be resolved, whether the Court
will still entertain the petition.”
(emphasis added)
11. Authorities cited on behalf of NHAI
56. Mr. Rakesh Pande, learned Senior Advocate appearing for the
respondents has placed reliance upon the judgment of Supreme Court in
the case of Union of India and others v. Puna Hinda (2021) 10 SCC
690 , and had placed before us paragraph 24 of the judgment that runs as
under:
“24. Therefore, the dispute could not be raised by way of a writ petition on the
disputed questions of fact. Though, the jurisdiction of the High Court is wide
but in respect of pure contractual matters in the field of private law, having no
statutory flavour, are better adjudicated upon by the forum agreed to by the
parties. The dispute as to whether the amount is payable or not and/or how
much amount is payable are disputed questions of facts. There is no admission
on the part of the appellants to infer that the amount stands crystallised.
Therefore, in the absence of any acceptance of joint survey report by the
competent authority, no right would accrue to the writ petitioner only because
measurements cannot be undertaken after passage of time. Maybe, the
resurvey cannot take place but the measurement books of the work executed
from time to time would form a reasonable basis for assessing the amount due
and payable to the writ petitioner, but such process could be undertaken only
by the agreed forum i.e. arbitration and not by the writ court as it does not
have the expertise in respect of measurements or construction of roads.”
57. Considering the above authority cited from the point of view of
the respondent, in the first instance, it deals with the preliminary

53
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objection as to the maintainability of this petition. The authority in case
of Puna Hinda ( supra ) has been relied upon to persuade us that in
matters of commercial transaction where disputed questions of fact may
arise relating to an issue for determination, this Court in exercise of its
power under Article 226 of the Constitution, may not interfere,
obviously for two reasons: (i). Parties in pure commercial transactions
emanating from an agreement reached between the parties are bound by
the principles of privity of contract and, therefore, the duties and
obligations are required to be addressed by the redressal forum that is
prescribed for and agreed upon by the parties; and (ii) there being no
public law elementen involved writ forum may not permitted to be
approved merely because a party to the contract is a state or a
government authority within the meaning of Article 12 of the
Constitution.
12. Discussion and application of authorities to the present case
58. It is true that in matters of commercial disputes emanating from
the contract/ agreement reached between the parties, the Court must
discourage invoking its extraordinary jurisdiction under Article 226 of
the Constitution, merely for the reasons that state or its officer purport to
operate within the contractual field (Radha Krishna Agrawal and others
Vs. State of Bihar and others [(1977) 3 SCC 457].
59. The law as ordinarily stood earlier to Radha Krishna Agrawal’s
case was that a duty or obligations falling upon the public servant out of
a contract, cannot be enforced by the machinery of a writ under Article
226 of the Constitution [Lekhraj Sathram Das Lalwani v. Custodian)
AIR 1966 SC 334] and so also the view taken in the case of Bachhandri
Rath Vs. State of Orissa (1972) 4 SCC 781, wherein it was held that a
right if claimed in terms of contract, such a right cannot be enforced in
writ petition, but this rigid legal principle came to be watered down for
the first time by the Supreme Court in the matter of Ramanna Dayaram
Shetty Vs. International Airport Authority of India (1979) 3 SCC 489,
wherein relying upon a judgment of Supreme Court of United States of

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America in the case of Bitarally Vs. Seaton (1959) SCC Online US SC
87, the Court held that procedure prescribed for, must be religiously
adhered to and the principles of Wednesbury law of reasonableness and
rule of law stand attracted to any issue of arbitrariness. Keeping this
principle in mind, Supreme Court in the case of Jagdish Mandal Vs.
State of Orissa and others (2007) 14 SCC 517 , enlarged the scope of
judicial review even in matters of commercial transactions where state or
its officer is a party. The Court held that if the decision suffers from the
vice of arbitrariness or caprice and does not pass the test of
reasonableness then such decision is judicially reviewable under Article
226 of the Constitution. The Court, however, hastened to add that the
judicial review will not be permitted to be invoked to protect the private
interest at the cost of public interest or to decide the contractual disputes.
Vide paragraph 22 the Court held thus:
“ 22. Judicial review of administrative action is intended to prevent
arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose
is to check whether choice or decision is made “lawfully” and not to check
whether choice or decision is “sound”. When the power of judicial review is
invoked in matters relating to tenders or award of contracts, certain special
features should be borne in mind. A contract is a commercial transaction.
Evaluating tenders and awarding contracts are essentially commercial
functions. Principles of equity and natural justice stay at a distance. If the
decision relating to award of contract is bona fide and is in public interest,
courts will not, in exercise of power of judicial review, interfere even if a
procedural aberration or error in assessment or prejudice to a tenderer, is
made out. The power of judicial review will not be permitted to be invoked to
protect private interest at the cost of public interest, or to decide contractual
disputes. The tenderer or contractor with a grievance can always seek
damages in a civil court. Attempts by unsuccessful tenderers with imaginary
grievances, wounded pride and business rivalry, to make mountains out of
molehills of some technical/procedural violation or some prejudice to self, and
persuade courts to interfere by exercising power of judicial review, should be
resisted. Such interferences, either interim or final, may hold up public works
for years, or delay relief and succour to thousands and millions and may
increase the project cost manifold. Therefore, a court before interfering in
tender or contractual matters in exercise of power of judicial review, should
pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority is mala fide
or intended to favour someone;
OR

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Whether the process adopted or decision made is so arbitrary and irrational
that the court can say: “the decision is such that no responsible authority
acting reasonably and in accordance with relevant law could have reached”;
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference under
Article 226. Cases involving blacklisting or imposition of penal consequences
on a tenderer/contractor or distribution of State largesse (allotment of
sites/shops, grant of licences, dealerships and franchises) stand on a different
footing as they may require a higher degree of fairness in action.”
60. The Court in the case of A. P. Electrical Equipment ( supra ) has,
therefore, asserted that mere existence of disputed question of fact by
itself, does not take away the jurisdiction of this Court in granting
appropriate relief to the petitioner. The Court observed that if the Court
is satisfied that facts were being disputed by the state merely to create a
ground for rejection of the writ petition raising the plea of disputed
question of facts, the Court can go into and investigate the disputed facts
vis-a-vis pleadings raised by the parties to record its own finding as to
the facts of the case. Thus, unless and until there is such a complex
factual issue involved in a case that needed proper adjudication for
appreciation of facts and pleadings which may be in the realm of a
common law remedy or otherwise referable to alternative dispute
resolution fora, if the sufficient material is otherwise available on record,
the Court would not shirk away from discharging its duty of judicial
review under Article 226 of the Constitution.
61. The Court rightly observed that in case of termination of contract
where variety of situations may arise and the state authority repudiates
the contracts mid-term in purported exercise of power under the contract,
if the only aspect is the interpretation of true scope of documentary
material in the light of pleadings raised, the Court may still grant relief
to the party approaching the Court (MP Power Management Company
(supra). It has been rightly observed that disputed question of fact cannot
be made a smokescreen to guillotine a gunuine claim raised in the writ
petition.

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62. In the matter of Silppi Constructions Contractors Vs. Union of
India and another (2020) 16 SCC 489 , the Court reiterated the
principles laid down in the case of Jagdish Mandal (supra), as to when
the power of judicial review should be invoked. The Court reiterated the
principle that wherever there is an arbitrariness in state action then the
Court being the guardian of fundamental rights, is the duty bound to
interfere with arbitrariness, irrationality and mala fide and bias but of
course, with a caution and self limitation this power to be exercised. The
Court, however, emphasised upon fair play and reasonableness approach
on the part of the state where it is a mere party to the contract. Vide
paragraphs 19 & 20 of the judgment the Court held thus:
“ 19. This Court being the guardian of fundamental rights is duty-bound to
interfere when there is arbitrariness, irrationality, mala fides and bias.
However, this Court in all the aforesaid decisions has cautioned time and
again that courts should exercise a lot of restraint while exercising their
powers of judicial review in contractual or commercial matters. This Court is
normally loathe to interfere in contractual matters unless a clear-cut case of
arbitrariness or mala fides or bias or irrationality is made out. One must
remember that today many public sector undertakings compete with the
private industry. The contracts entered into between private parties are not
subject to scrutiny under writ jurisdiction. No doubt, the bodies which are
State within the meaning of Article 12 of the Constitution are bound to act
fairly and are amenable to the writ jurisdiction of superior courts but this
discretionary power must be exercised with a great deal of restraint and
caution. The courts must realise their limitations and the havoc which
needless interference in commercial matters can cause. In contracts involving
technical issues the courts should be even more reluctant because most of us
in Judges' robes do not have the necessary expertise to adjudicate upon
technical issues beyond our domain. As laid down in the judgments cited
above the courts should not use a magnifying glass while scanning the tenders
and make every small mistake appear like a big blunder. In fact, the courts
must give “fair play in the joints” to the government and public sector
undertakings in matters of contract. Courts must also not interfere where such
interference will cause unnecessary loss to the public exchequer.
20. The essence of the law laid down in the judgments referred to above is the
exercise of restraint and caution; the need for overwhelming public interest to
justify judicial intervention in matters of contract involving the State
instrumentalities; the courts should give way to the opinion of the experts
unless the decision is totally arbitrary or unreasonable; the court does not sit
like a court of appeal over the appropriate authority; the court must realise
that the authority floating the tender is the best judge of its requirements and,
therefore, the court's interference should be minimal. The authority which
floats the contract or tender, and has authored the tender documents is the
best judge as to how the documents have to be interpreted. If two
interpretations are possible then the interpretation of the author must be

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accepted. The courts will only interfere to prevent arbitrariness, irrationality,
bias, mala fides or perversity. With this approach in mind we shall deal with
the present case.”
63. Now, applying the above judgments to the facts of the case as we
have discussed above, we find there to be no quarrel about the fact that
contract was to proceed and a task under the contract was to be executed
provided the state, National Highway Authority, party to the contract,
discharged its part of obligation in providing land as per Article 8 of the
agreement by executing a ‘Handover Memorandum’. This document of
‘Handover Memorandum’ shows apparent on the face of record that it
was simply an eye wash being not in terms of Article 8, inasmuch as
th
subsequent letter of NHAI dated 8 August, 2022 fully acknowledged
that the possession of land as was referred to under the Handover
Memorandum was not correct in a sense that only 29.914 kms out of
50.254 kms land was provided with ‘Right of Way’. Still further, the
th
letter of the Authority’s Engineer company dated 10 July, 2024
admitted, fairly too, that there was a lot of hindrances and land issues
involved for which right of way was not available within the meaning of
agreement. If the right of way was not available and there was a delay in
executing and completing the project, it was attributable to laxity and
casual approach on the part of the state in not performing its own
obligations.
64. The impugned action has been taken purely on the basis of alleged
poor maintenance and non-completion of project within time citing
without giving any example and statistic details that land, as was
promised under the agreement to be the part of the Memorandum of
association was physically ever handed over to the petitioner, the second
party to the contract to invoke the termination clause. When the first
party to the contract itself failed to discharge its duties and obligations,
then it cannot be said to be in a driver’s seat under an agreement to
navigate through the provisions that empower to it to terminate the
contract unilaterally.

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65. Thus, upon legal principles emanating from judgments discussed
above entire action and conduct of NHAI was really vitiated for
arbitrariness.
66. We have also noticed and discussed above in the earlier finding
part of this judgment that proper reply was submitted by the petitioner to
the show cause notice citing places, situations where the land was full of
hindrances, the delays in removal of those hindrances, non-cooperation
of the authority and delay in approving the design to execute the project
as per the Narrative of Statement submitted initially by the petitioner.
Not a single explanation offered by the petitioner was considered while
taking decision in the matter of notice of termination of contract. Merely
rd
date of reply dated 3 January, 2025 has been referred to but no part of
the reply has been discussed and the show cause termination notice as
rd
was issued to the petitioner on 23 December, 2024 was reproduced in
th
the order impugned dated 14 January, 2025. This act and conduct of the
NHAI officials in terminating the contract cannot be approved of and
such an order is certainly reviewable on the principle of law discussed
above evolved in various authorities of Supreme Court of India.
67. It is also worth mentioning here that the Authority’s Engineer
though had earlier submitted a report demanding for a time of 247 days
th
further to the petitioner in his recommendation letter dated 10 July,
2024 to the Project Director, National Highway Authority, PIE Meerut
but surprisingly, it appears, under the pressure of the authority it blamed
th
the petitioner for delay in project vide letter dated 17 December, 2024
directing him to accomplish the task within the extended time line earlier
given.
68. What is reasonableness in approach means looking to the facts of
a case and in the given scenario what a prudent man would think about
and what action would he take. In the present case a National Highway
Project with 50.254 kms was underway. Standing private constructions
with land issue where farmer’s are agitating and temple and mosque
structures are such which a private party could not have removed except

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with the help of State Authorities. Either the NHAI had given time
schedule along with ‘Handover Memorandum’ that it would get the
entire land procured with possession and that too with a ‘Right of Way’,
or should have subsequently done the job writing such letters at
subsequent stages meeting the objections if any. At least a prudent
person would have behaved this way. However, in the present case
NHAI Project Director and at his level only complained about
maintenance and slow pace of work and even ignored Authority’s
th
Engineer’s own letter dated 10 July, 2024 demanding extension of time
of 248 days while giving cure period notice and then termination notice.
This is an absolute arbitrariness, apparent on the face of record. Again
the arbitrariness was so much so that while terminating contract under
the order impugned petitioner’s reply was not referred to by discussing
the same. This is indicative of unerringly pointing to arbitrariness.
69. Thus, the points framed above are decided in favour of the
petitioner and the order impugned deserves to be quashed and writ
petition deserves to be allowed.
70. Now we come to the aspect as to whether any second party rights
have occurred during the pendency of this petition and if not, to save
time, the second party if in possession of land under construction of
Highway could be given further time in larger public interest.
71. We find that throughout the hearing of the case there has been no
change in the stand of NHAI that a third party right was not created
pursuant to the interim order passed by this Court and no contract was
awarded to a third party nor, any such statement has come up in any of
the affidavits filed on behalf of NHAI.
72. It is also not the case of NHAI that possession of the land was
taken from the petitioner. The petitioner’s construction company the
second party to the contract continued to remain there with all its articles
and construction machines and materials on the spot and it is in this

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background that an averment was made in paragraph 19.9 of the
rejoinder affidavit that runs as under:
“19.9. That with due respect, it is now stated that even as on the date of
filing the instant rejoinder affidavit, the value of the balance works is Rs.
633 Cr., out of which works amounting to Rs. 157 Cr. had already been
executed by TPL but not billed. The remaining value, thus is Rs. 476 Cr.
Hence, in case the balance works are awarded to TPL, the same will be
done at the cost of RS. 633 Cr. inclusive of what remains to be billed and
paid by NHAI within a period of 14 months [12 months + 2 months
mobilisation). For the convenience of this Hon'ble Court, a copy of the
chart depicting execution of balance works and the timelines is annexed
herewith and marked as ANNEXURE-RA 3.”
73. The status quo as was there on the date of filing of the petition
remained continued and the construction work though did not proceed
but remained under the control of second party to the contract.
13. Order
th
74. Accordingly, the order dated 14 January, 2025 terminating the
contract by the respondent No.- 2 and a subsequent action of forfeiting
rd
the bank guarantees and issuance of fresh tender dated 3 February, 2025
are hereby quashed.
75. As a consequence to the above and since the construction of the
highway and its maintenance project is to basically meant to serve public
interest and since petitioner in affidavit has assured to complete the
entire work under the contract within 14 months, we find it appropriate
for the parties to conduct a joint site inspection afresh, within a month
from today and taking recourse to the provisions as contained under the
EPC agreement and to arrive at an agreement to conclude the project
within the re-scheduled timeline taking into consideration the letter of
th
Engineer’s Authority in the light of the report dated 10 July, 2024 vis-a-
vis the interim report to be obtained after joint inspection as directed
above and applying the principles contained under Articles 13, 15, 16
and 17 of the EPC agreement.

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76. The endeavour of the parties to the agreement, must be to
complete the project as expeditiously as possible as per undertaking
advanced before us by the petitioner.
77. This writ petition thus stands allowed as above with no order as to
cost.
(Swarupama Chaturvedi,J.) (Ajit Kumar,J.)
July 8, 2026
Atmesh
Digitally signed by :-
ATMESH KESARI
High Court of Judicature at Allahabad