Roadway Solutions India Infra Limited vs National Highways Authority Of India
- Court
- Delhi High Court
$~40
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P.(I) (COMM.) 299/2026, I.A. 19560/2026, I.A.
19561/2026, I.A. 19562/2026
ROADWAY SOLUTIONS INDIA INFRA LIMITED
.....Petitioner
Through: Mr. Dayan Krishnan and Mr.
Ravi Prakash, Sr, Adv. with Mr.
Sandeep Sharma, Mr. Varun
Kalra, Mr. Krishan Kumar and
Mr. Akash Malik, Advs.
versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA
.....Respondent
Through: Mr. Abhay Gupta, Ms. Simran
Goel and Ms. Ipshita Dutta,
Advs.
CORAM:
HON'BLE MR. JUSTICE OM PRAKASH SHUKLA
ORDER(ORAL)
% 30.07.2026
Introduction
1. The present petition has been filed under Section 9 of the
Arbitration and Conciliation Act, 1996, seeking interim relief
pertaining to disputes arising out of the Engineering, Procurement and
Construction Contract dated 17.10.2022 executed between the parties
herein for the construction of six-laning of the Kagal Satara section of
1
NH-48, Package-I. The immediate grievance of the Petitioner arises
from the Notice of Intention to Terminate dated 16.07.2026 issued by
the Respondent.
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Facts
2. Briefly stated, the parties entered into a Contract dated
17.10.2022 for execution and completion of the aforementioned
highway project. Upon fulfilment of the stipulated conditions
precedent, the Respondent declared 13.01.2023 as the Appointed
Date, the original Scheduled Completion Date, fell on 12.01.2025. In
terms of Clause 7 of the Contract, the Petitioner also allegedly
furnished Performance Security Bank Guarantees and Additional
Performance Security Bank Guarantees aggregating to Rs.
61,51,20,004/-.
3. During execution of the project, disputes arose between the
parties regarding delay and progress of project. According to the
Petitioner, the delay was attributable to the Respondent on account of
failure to provide Right of Way in terms of Clause 8.1 of the Contract,
non-availability of continuous work fronts and delay in obtaining
necessary approvals. The Respondent, on the other hand, alleged that
the delay was due to Petitioner’s failure to deploy adequate resources,
maintain the highway stretch and comply with contractual and safety
obligations despite repeated communications and meetings.
4. The Petitioner sought extension of time under Clause 10.5(ii) of
the Contract. Upon assessment, the Respondent’s Engineer
recommended extension of 474 days. Consequently, the parties
1
“EPC” hereafter
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entered into a Settlement Agreement dated 25.04.2025, whereby the
Scheduled Completion Date was revised to 30.04.2026 and Milestone-
III was shifted to 11.01.2026.
5. Despite the Settlement Agreement, disputes continued
regarding completion and progress of the project. On 02.01.2026, the
Respondent issued a Cure Period Notice alleging various defaults and
the Petitioner was called upon to cure the alleged defaults within a
period of 60 days. The Petitioner, in its reply to the said notice,
disputed the allegations and contended that the Cure Period Notice
was premature. It was asserted that the Respondent had failed to
account for its own continuing defaults and that the Petitioner’s
request for further extension of time remained pending consideration.
6. After expiry of the cure period and unsuccessful attempts at
resolution, the Respondent issued a Notice of Intention to Terminate
dated 16.07.2026 under Clause 23.1(ii) of the Contract. Aggrieved
thereby, the Petitioner approached this Court under Section 9 of the
Arbitration and Conciliation Act, 1996 seeking restraint against
further action pursuant to the said notice.
Submission of the parties
Petitioner’s submissions
7. Mr. Dayan Krishnan, learned Senior Counsel appearing for the
petitioner submits that the Cure Period Notice dated 02.01.2026 was
premature since Milestone-III was due only on 11.01.2026 and, under
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Clause 10.3(ii), a further grace period of 30 days was available after
expiry of the milestone date. It was contended that any action founded
upon non-achievement of Milestone-III could not have been initiated
before expiry of such period, including the Notice of Intention to
Terminate dated 16.07.2026.
8. Mr. Krishnan further submitted that Clause 3.1(viii) of the
Settlement Agreement dated 25.04.2025 reflected an understanding
that no coercive action arising from delay would be taken until expiry
of the revised Scheduled Completion Date. According to the
Petitioner, the Respondent could not have proceeded against it without
first deciding its entitlement to further extension of time on account of
alleged hindrances attributable to the Respondent. Thus, the Notice of
Intention to Termination is premature and contrary to the contractual
mechanism governing extension of time and termination.
9. The learned senior counsel for petitioner placed reliance on the
judgment of this court in Mahajan Imaging Pvt Ltd v. Pushpawati
2
Singhania Research Institute & Anr. to contend that when a
termination procedure is contemplated in the contract, it must be
adhered to strictly. It was argued that the present Contract was not
determinable in nature since termination was permissible only upon
occurrence of specified defaults and compliance with the prescribed
cure mechanism. The Petitioner accordingly sought restraint against
further action pursuant to the Notice of Intention to Terminate dated
16.07.2026.
2
2026: DHC:1735
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Respondent’s submissions
10. Mr. Abhay Gupta, learned counsel for the respondent,
submitted that reliance on Mahajan Imaging (supra) is misplaced
since, unlike the facts therein, the Respondent had followed the
contractual mechanism by issuing a Cure Period Notice and granting
sufficient opportunity to cure the alleged defaults before issuing the
Notice of Intention to Terminate.
11. It was submitted that the Petitioner had incorrectly proceeded
on the assumption that the Cure Period Notice was issued only in
relation to Milestone-III. The notice specifically invoked Contractor
Defaults under Clauses 23.1(i)(d), (e), (g) and (q), relating to
continuing breaches, including failure to maintain progress,
inadequate deployment of resources and safety violations. The
question whether such defaults were established was a matter for
adjudication by the Arbitral Tribunal.
12. Learned counsel for the Respondent relies upon the judgment in
National Highways Authority of India v. Panipat Jalandhar Nh-I
3
Tollway Pvt. Ltd and more particularly, on the Division bench
judgment in National Highways Authority of India v. Roadway
Solutions India Infra Limited, to contend that courts should
ordinarily not stop termination of highway infrastructure contracts. It
is submitted that disputes as to responsibility for delay are arbitrable
3
2021 SCC OnLine Del 2632
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and, even if termination is ultimately found to be wrongful, the
remedy ordinarily lies in compensation.
13. It is further submitted that the contractual framework adopted
by NHAI has repeatedly been examined by this Court and such
contracts have been held to be determinable. It was further contended
that Sections 20A and 41(ha) of the Specific Relief Act, 1963, restricts
grant of injunctions which may impede or delay completion of
infrastructure projects.
14. Mr. Gupta further submits, restraining termination would
prevent respondent from appointing another contractor and proceeding
with completion of the highway project, It was also submitted that the
Petitioner has failed to establish a prima facie case, the balance of
convenience lies in favour of completion of the public infrastructure
project, and the alleged injury is compensable in damages.
Rejoinder by petitioner
15. Mr. Dayan Krishnan in rejoinder submits that the Respondent’s
attempt to distinguish the Cure Period Notice from Milestone-III
default is artificial, since the substance of the notice relates to failure
to achieve progress and completion milestones. It is contended that the
Cure Period Notice was, in essence, premised upon alleged delay in
achieving Milestone-III and therefore could not have been issued
before expiry of the milestone date.
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16. He further submits that the judgment relied upon by the learned
counsel for the respondent on determinability of contracts must now
be read in the light of the subsequent judgment in Manjunath ( supra).
According to him, a contract which permits termination only upon
occurrence of specified defaults and after compliance with a
prescribed termination procedure cannot be regarded as determinable
within the meaning of Section 14(d) of the Specific Relief Act.
17. Lastly, it is submitted that Sections 20A and 41(ha) of the
Specific Relief Act do not operate as an absolute bar against interim
protection, particularly where the Petitioner is ready and willing to
continue execution of the project without delay. It is argued that no
prejudice would be caused to the Respondent since no alternative
contractor has yet been appointed and continuation of the existing
contractor would avoid delay associated with fresh procurement.
Analysis
18. I have heard learned counsel for the parties and perused the
material placed on record. At the outset, it is clarified that the relief
pressed before this Court is confined to the prayer seeking restraint
against the Respondent from proceeding further pursuant to the Notice
of Intention to Terminate dated 16.07.2026. The learned Senior
Counsel for the Petitioner has fairly submitted that the remaining
prayers are consequential to the said principal relief.
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19. Before addressing the issues in the present controversy, it is
relevant to first delineate the scope of interference under Section 9 of
the Arbitration and Conciliation Act, 1996.
20. The jurisdiction under Section 9 is protective in nature and is
intended to preserve the subject matter of arbitration and ensure that
the arbitral proceedings do not become meaningless. The supreme
court in the judgment of ArcelorMittal Nippon Steel (India) Ltd. v.
4
Essar Bulk Terminal Ltd. , has explained that interim relief is granted
in aid of final relief and that the Court must examine the existence of
prima facie case, balance of convenience and irreparable injury while
considering an application under Section 9. The relevant paragraphs
are reproduced:
“88. Applications for interim relief are inherently applications
which are required to be disposed of urgently. Interim relief is
granted in aid of final relief. The object is to ensure protection of
the property being the subject-matter of arbitration and/or
otherwise ensure that the arbitration proceedings do not become
infructuous and the arbitral award does not become an award on
paper, of no real value.
89. The principles for grant of interim relief are (i) good prima
facie case, (ii) balance of convenience in favour of grant of interim
relief and (iii) irreparable injury or loss to the applicant for
interim relief. Unless applications for interim measures are
decided expeditiously, irreparable injury or prejudice may be
caused to the party seeking interim relief.
90. It could, therefore, never have been the legislative intent that
even after an application under Section 9 is finally heard, relief
would have to be declined and the parties be remitted to their
remedy under Section 17”.
4
(2022) 1 SCC 712
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21. Thus, keeping in mind the scope of interference in Section 9
jurisdiction, the principal issue which falls for consideration before
this court is whether the petitioner has been able to make out a prima
facie case warranting restraint against the Respondent, pending
arbitration, from acting upon the Notice of Intention to Terminate
dated 16.07.2026, in light of the contractual termination mechanism
and the provisions of the Specific Relief Act, 1963.
22. The learned senior counsel for the Petitioner contends that the
Contract is not determinable in nature since Clause 23 permits
termination only upon occurrence of specified defaults and after
compliance with the prescribed cure mechanism. The Respondent,
however, submits that the existence of a termination clause, even with
procedural safeguards, does not alter the determinable nature of the
Contract.
23. In order to address these contrasting assertions, it is relevant to
address the concerned provisions of Specific Relief Act, 1983.
Accordingly, Section 14(d) of the Specific Relief Act, 1963 stipulates
that contract determinable in nature cannot be specifically enforced,
while Section 41(e) provides that an injunction cannot be granted to
prevent breach of a contract that cannot be specifically enforced.
24. Therefore, it is clear that in view of the statuary bar, the nature
of the Contract requires examination before considering the grant of
interim relief.
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25. For this purpose, it is logical to explore the terminating
procedure under the subject contract as same would aid this court in
identifying whether the contract is determinable or not.
26. In this regard, the relevant clause for termination on account of
Contractor’s Default is clause 23, the same is reproduce for perusal:
23.1 Termination for Contractor Default Contract Agreement (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:
(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-},
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
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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-I 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 that the amalgamated or
reconstructed entity has unconditionally assumed the obligations
of the Contractor under this Agreement; and provided that:
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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 fulfil 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 by a notice inform the
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Contractor of its intention to issue such Termination Notice
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;
(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.
27. A plain reading of Clause 23 shows that termination is not an
unconditional contractual right exercisable at the discretion of the
Respondent in this contractual relationship. Clause 23 provides that
where any of the specified defaults occurs i.e. 23.1 (a) to (r), the
Contractor must be notified of the alleged default and should be
granted the applicable cure period. Only upon failure to cure the
default can further action, including issuance of a Notice of Intention
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to Terminate, be undertaken. Upon termination, NHAI may complete
the balance works itself or through another agency.
28. As per petitioner, since this clause envisage a detailed
termination procedure, the present Contract cannot be regarded as
determinable, while the respondent maintains a stance that similar
highway contracts have been regarded as determinable by various
authorities and submits that contractual termination rights, even when
coupled with procedural safeguards, do not take the contract outside
the scope of Section 14(d) of the Specific Relief Act.
29. This court finds that although, respondent has been able to
highlight judgments where contracts with similar framework have
been regarded as determinable, however, on the common question of
what constitutes a contract in its nature “determinable” under Section
14(d), the Supreme Court’s interpretation in Manjunath (supra) binds
all the judgment relied upon by the respondent wherein the court has
clarified distinction between contracts which are terminable at will
and contracts which can be terminated only upon occurrence of
specified events of default.
30. In Manjunath (supra) the Supreme Court, while considering the
nature of determinability under Section 14(d), observed that contracts
inherently revocable or terminable without cause would fall within the
category of determinable contracts. However, contracts which can be
terminated only upon breach, after issuance of notice and grant of
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opportunity to cure, do not become determinable merely because they
contain a termination clause. The relevant observations of the apex
court in this regard are reproduced below as the same calls for a read:
“64. In this backdrop, it would be useful to advert to the
classification set out in A. Murugan (supra), wherein the Madras
High Court categorised contracts into five broad classes
depending on their ease of determinability. Out of those, the first
two i.e., (i) contracts inherently revocable such as licences and
partnerships at will, and (ii) contracts terminable unilaterally on a
“without-cause” basis, were held to be determinable in nature.
The remaining classes, namely, (iii) contracts terminable for cause
without provision for cure, (iv) contracts terminable for cause with
notice and opportunity to cure, and (v) contracts without a
termination clause but terminable only for breach of a condition,
were all held not determinable in nature.
65. Further, as laid down in DLF Home (supra), the question
whether a contract is in its nature determinable lies in ascertaining
whether the party against whom specific performance is sought has
the right to terminate the contract even when the other party is
ready and willing to perform. This means if the contract cannot be
terminated so long as the other party stands willing to perform, it
is not determinable in its nature and would, in equity, be
specifically enforceable. The same reasoning was followed in
Affordable Infrastructure (supra), where it was held that a contract
terminable for breach cannot merely for that reason be regarded
as determinable, otherwise, no contract could ever be specifically
enforced.
(emphasis supplied)
31. Applying the principle laid down in Manjunath (supra), the
mere inclusion of Clause 23, which provides for termination upon
specified events of default and incorporates a cure and representation
mechanism does not, render the EPC Contract inherently determinable
within the meaning of Section 14(d) of the Specific Relief Act, 1963.
Termination is permissible only upon occurrence of defined causes
and after compliance with the prescribed cure and representation
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process. The decision in Manjunath (supra) therefore squarely applies
to the contract between the parties.
32. Consequently, this Court is of the view that the contract is not
determinable in nature.
33. Having said that, according to this Court, the stage is set now
for determination of any prima facie in favour of Petitioner as the non-
determinable nature only removes the statutory objection based on
determinability.
34. To decide whether any prima facie exists, this Court shall
consider Sections 20A and 41(ha) of Specific Relief Act,1963, and
whether the Respondent followed the contractual termination
mechanism.
35. The Petitioner’s principal contention is that the Cure Period
Notice dated 02.01.2026 was premature as Milestone-III was schedule
for 11.01.2026 under the Settlement Agreement dated 25.04.2025 and
the additional grace period under Clause 10.3(ii) had not expired.
According to the Petitioner, no breach or default under Clause
23.1(i)(c) could have arisen on 02.01.2026, as the milestone obligation
had not yet fallen due.
36. The respondent, however, disputes this contention and submits
that the Cure Period Notice was not issued under Clause 23.1(i)(c),
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relating to failure to achieve a project milestone, but was based upon
independent defaults under Clauses 23.1 (i) (d), (e), (g) & (q), i.e
including failure to proceed with the works, inadequate deployment of
resources, failure to rectify defects and non-compliance with
contractual obligations.
37. The Respondent’s case is that the Cure Period Notice dated
02.01.2026 was not issued for failure to achieve Milestone III under
Clause 23.1(i)(c), but for separate and already existing defaults
covered by Clauses 23.1(i)(d), (e), (g) and (q). Therefore, according to
learned counsel for respondent, the fact that Milestone III was due
only on 11.01.2026 does not make the Cure Period Notice premature,
because respondent was specifically not invoking the milestone
provision.
38. It is undisputed that the premise of the Notice of Intention to
Terminate rests upon the Cure Period Notice. Clause 23 of the
agreement dated 17.10.2022 requires respondent to first notify the
contractor of specified defaults and give the applicable cure period. If
the Cure Period Notice was itself invalid, the Petitioner’s case of pre-
mature cure notice strengthens.
39. At this juncture, it would be beneficial, to examine the
substance of the Cure Period Notice dated 02.01.2026, as the
subsequent Notice of Intention to Terminate must be founded on the
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same defaults identified in the Cure Period Notice. The relevant
portion of cure period notice is reproduced below for perusal:
“Issuance of Cure Period Notice:
37. Whereas despite the Authority's constant support and effort, the
EPC contractor has consistently been in breach of its various
obligations under the Contract Agreement and Settlement
Agreement, consequent upon which the NHAI as also the
Authority's Engineer had issued letters/notices calling upon the
EPC Contractor to remedy the said breaches. It is on record that
despite letters/notices having been issued expressly seeking curing
of the said defaults, the EPC Contractor has even failed to respond
to relevant points and also for taking any remedial action. EPC
contractor has delayed the project work inordinately causing
inconvenience to the commuters and bad name & lowering the
Image of Authority in the eyes of public due to delay in completion
of work.
38. Whereas the "unprofessional and non-serious attitude" of the
EPC Contractor towards the subject Project is not at all
acceptable to Authority & Whereas despite the clear and
unequivocal terms of the Contract Agreement, the EPC Contractor
has failed to perform its obligations under the Contract Agreement
including failure to expedite the progress of the work so as to
complete the Project within Schedule/Revised Date, default in
maintaining the Project stretch, abandonment of the Project site,
non provisions of adequate road safety measures etc. thereby
causing irreparable loss to the Authority. Whereas the EPC
Contractor has consistently failed, despite the Authority's extension
of all possible efforts to support the EPC Contractor to improve
their cash flow. The Authority had always facilitated the EPC
Contractor by providing necessary support. However, the EPC
Contractor neither improved the progress of work nor submitted
any satisfactory and acceptable justification for slow progress of
work, non-maintenance of Project stretch and non-provision of
road safety measures.
39. In view of above facts and substances, it is apparent that there
has been a consistent failure on the part of the EPC Contractor in
compliance with the obligations of the Contract Agreement read
with the Settlement Agreement & the EPC Contractor has
breached on various fronts under the Contract Agreement,
resulting into Contractor's defaults under Article 23.1.
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40. Whereas EPC Contractor has not deployed skilled and
adequate technical manpower and sufficient resources for
execution of work as set forth in the Contract Agreement at Site,
improper planning and lack of manpower/equipment, slow
progress of work, non-adoption of safety measures and neglect on
the part of EPC Contractor in maintaining the project stretch in
traffic worthy condition has invited public wrath, complaints from
various organizations, bad news in News Media and News Paper
about NHAI & slow progress of work, endangering safety of the
Public/ Road users had left no other option to the Authority but to
notify that EPC Contractor Mis Roadway Solutions India Infra
Limited is in default & in breach of the Contract Agreement under
Clause 4.1 (i),(ii),(iii),(vii)(c)(g), (viii) & (f),(ix),(xi),(xii), CL 4.4,
Cl.4.10(i),Cl.9.1 & Cl.9.2, Cl.10.2, Cl.10.3(ii) & (iv) Cl.10.4(i),
Cl.16.1 which have resulted into the Contractor Defaults under
Clause 23.1 (i)(d),(e),(g) & (q).
41. Accordingly, the EPC Contractor is hereby called upon for
curing the aforesaid defaults and breaches by not later than a
period of 60 (Sixty) days of the receipt of this notice, failing which
the Authority shall be entitled to take appropriate actions,
including but not limited to issuance of "Intention to Issue the
Termination notice" under clause 23.1 (ii), penal action as per
clause 10.3(ii). 42. This "Cure Period Notice" under Contract
Agreement Cl.23.1 (i)&(iii) is issued without prejudice to
Authority's any other rights to claim damages for EPC
Contractor's failure to comply with the unambiguous obligations
cast upon it under the Contract Agreement read with the Settlement
Agreement and/or realize any dues, losses and damages
whatsoever or to exercise any other remedy, which may be
available now or in future under the Contract Agreement or under
the applicable laws or otherwise, as the case may be.
40. Upon perusal of the cure notice, this Court cannot accept the
contention of the learned senior counsel for the Petitioner that the
Cure Period Notice dated 02.01.2026 was necessarily premature
merely because Milestone-III was due only on 11.01.2026 and had not
expired on 02.01.2026.
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41. The validity of the notice must be examined with reference to
the defaults expressly invoked therein and not solely on the basis of
the milestone provision. The chronology also assumes significance.
The Cure Period Notice granted 60 days for curing the alleged
defaults. The Notice of Intention to Terminate was issued only on
16.07.2026, after expiry of the said period. Prima facie , therefore, the
Petitioner has not been able to show that the Respondent curtailed the
cure period prescribed under Clause 23.
42. The learned senior counsel for the petitioner has also relied on
Settlement Agreement dated 25.04.2025 to contend that the parties
had agreed not to take coercive action arising from delay until expiry
of the revised completion date. In view thereof, it would be beneficial
to go through the settlement agreement dated 25.04.2025, the relevant
clauses of the settlement agreement are reproduced below for perusal:
“3. TERMS OF SETTLEMENT AND OBLIGATIONS OF
AUTHORITY AND CONTRACTOR.
3.1. The parties agreed to the followings:
(i) Authority shall grant extension of time for completion of project
by 474 days from 11.01.2025 to 30.04.2026 and shifting the
Project Milestones as under:
(ii) Contractor agreed to complete the entire project including
COS works (i.e CoS 1&2) by 30.04.2026. Three parties viz
Contractor, AE and Authority to expedite and ensure that CoS
order is issued within 30 days of this agreement. However,
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Contractor would proceed with CoS works without awaiting CoS
order.
(iii) CoS 3 related to Shifting of Water Supply Pipeline and
Electrical utility is under consideration of Authority. The
Contractor agreed to complete the CoS-3 work within the revised
Scheduled Completion date i.e 30.04.2026, if CoS -3 order is
issued within 90 days of signing of this Settlement Agreement.
(iv) The Contractor also agreed to complete the work in hindered
length of 6.947Km within the extended scheduled date of
completion subject to removal of hindrances by the Authority by
15.06.2025.
(v) The Contractor undertakes to submit the methodology for
overlay on existing rigid pavement as per clause 5.3.1, within 15
days of this agreement and further undertake to start the overlay
on existing rigid pavement within 30 days from this agreement.
(vi) Authority agreed to release the Proportionate Performance
Security Bank Guarantee & Additional Performance Security Bank
Guarantee within 20 days of this agreement in view of descoped
works amounting to 161.080 Cr.
(vii) No bonus shall be payable in this Contract.
(viii) Both parties agreed not to impose any damages till
30.04.2026 and waive off damages already imposed on each other
i.e Rs 96.37 Cr claimed by Authority and Rs. 6.75 Cr Claimed by
Contractor.
(ix) NHAI agreed for price escalation till 30.04.2026 as per the
provisions of Contract Agreement since AE/PO/RO have intimated
that the delay is concurrent delay.
(x) In reciprocation of above considerations, contractor agreed not
to claim any prolongation cost such as idling of plant, machinery,
overheads, loss of profit or any other claims under any clause of
Contract Agreement, of entire EOT period from scheduled date of
Completion Date i.e. 11.01.2025 to actual date of completion of
project. Contractor also agreed not to impose any damages for
delay in fulfilment of conditions precedent by NHAI including
delay in handing over of encumbrance free land.
3.2 Each party hereby confirms that it does not have any residual,
pending or any other claims, demands, disputes or differences
against each other in respect of Contract Agreement and all
claims, demands, disputes etc. of the Contractor including that
arising out of in relation to the Contract Agreement against the
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other party namely Authority stands settled without any further
recourse whatsoever as on date.
3.3 The terms and conditions of the Contract Agreement dated
17.10.2022 are modified to the above extent only. It is clarified that
all other terms and conditions of the Contract Agreement dated
17.10.2022, save and except the terms and conditions expressed
and agreed upon between the parties in this Settlement Agreement,
shall remain unaltered/unchanged and remain binding on the
parties. This Settlement Agreement is an integral part of the
Contract Agreement dated 17.10.2022. In case of conflict between
the provision of this Settlement Agreement and related provision of
Contract Agreement, the provision of the Settlement Agreement
will prevail.”
43. Upon a perusal of the Settlement Agreement also, it can be
curled out that it only extended the overall completion period to
30.04.2026 and shifted the date for Milestone-III to 11.01.2026. There
is, however, no specific stipulation granting immunity from all
contractual defaults or preventing invocation of Clause 23 on account
of independent breaches. Therefore, the Settlement Agreement, prima
facie , cannot be interpreted as preventing the Respondent from
invoking Contractor Defaults under Clauses 23.1(i)(d), (e), (g) and (q),
if such defaults had independently arisen.
44. This court is not required, at this stage, to determine the
correctness of such allegation. The Arbitral Tribunal would be the
appropriate forum to determine the alleged faults. The interim
proceedings under section 9 cannot be converted into a forum for
determining such disputes questions. The grant of relief under Section
9 is discretionary and must satisfy the settled principle governing
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injunctions, including prima facie case, balance of convenience and
irreparable injury.
45. Even though this Court has prima facie found that the Contract
is not rendered determinable merely because it contains a termination
mechanism, the same does not conclude the issue. The grant of interim
relief under Section 9 of the Arbitration and Conciliation Act, 1996
remains subject to the settled principles governing injunctions,
including the statutory restrictions contained in the Specific Relief
Act, 1963.
46. The Respondent has relied upon Section 20A and 41(ha) of the
Specific Relief Act to contend that no injunction ought to be granted
where such injunction would impede or delay completion of an
infrastructure project. The present Contract admittedly relates to
construction of a highway project, which falls within the category of
infrastructure projects contemplated under the Specific Relief Act.
Therefore, while considering interim relief, the Court is required to
balance the contractual rights asserted by the Petitioner against the
large public interest involved in ensuring timely completion of the
infrastructure project.
47. Even otherwise, the Division bench of this Court in National
Highways Authority of India v. Roadway Solutions India Infra
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5
Limited, considered a similar issue arising from termination of a
highway project contract. It held that Sections 20A and 41(ha) of the
Specific Relief Act place clear fetters on granting injunctions that
would delay infrastructure projects, even where a contractor may have
a prima facie case. The Court further held that if termination is
ultimately found to be wrongful, the contractor can be compensated
through an arbitral award, whereas delay in completion of a highway
project causes larger public loss. The principle laid down is equally
applicable in the present case. The relevant portion of the judgment is
reproduced below:
“30. The report of Lea Associates South Asia Private Limited dated
16.12.2025 (which was given after SA-3), clearly shows that the
contractor was in hibernation even after four months of execution
of SA-3. When it comes to development of infrastructure projects,
Clause (ha) of Section 41 inserted vide Amendment Act No.18 of
2018, in Specific Relief Act, 1963 (hereinafter referred to as the
Act of 1963), creates a clear embargo or fetters on the powers of
the court to grant injunction. It will not be out of place to
reproduce clause (ha) of section 41 which reads thus:
“41. Injunction when refused. – An injunction cannot
be granted (ha) if it would impede or delay the progress
or completion of any infrastructure project or interfere
with the continued provision of relevant facility related
thereto or services being the subject matter of such
project”
31. Furthermore, Section 20A of the Specific Relief Act, 1963
provides that an injunction cannot be granted, if the same would
cause delay in the progress of infrastructural development. The
schedule appended with the Act of 1963 clearly classifies the
construction of roads and bridges as infrastructure under the
category of “transport”. It would be apt to reproduce Section
20(A) of the Act of 1963, which reads as under:
5
FAO(OS)(COMM) 4/2026
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20A. Special provisions for contract relating to
infrastructure project.”(1) No injunction shall be
granted by a court in a suit under this Act involving a
contract relating to an infrastructure project specified
in the Schedule, where granting injunction would cause
impediment or delay in the progress or completion of
such infrastructure project....”
32. We are not much convinced with the contention of Mr. Jain
that awarding of fresh contract will take at least three months time
and in such time the respondent, who has spent approximately
Rs.237 crores and mobilized its resources would show the requisite
progress and that it would be in the best interest of the project that
the respondent be allowed to complete the work.
33. Such contention of the respondent at the first blush, appears to
be attractive, but if the principles governing contracts in this
regard are examined, it turns out to be a settled position of law that
the terms of commercial contract are to be strictly adhered to. In
case it is found that the contract was wrongly terminated, the
contractor can be compensated by way of award to be passed by
the Arbitrator or by the competent Civil Court, as the case may be.
But while hearing application under Section 9 of the Act of 1996,
by an interim order, the termination of the contract should
normally not be stayed. Because, ultimately, it is within the domain
of and discretion of the awarder of the contract to continue with the
contract or to terminate.
34. Regardless of rival contentions even if for the sake of argument,
it is presumed that the contractor-respondent has some prima-facie
case, then also, according to us, the injunction as granted
(restraining NHAI from proceedings in furtherance of the notice of
termination), should not have been granted, as the same would
result in delay in the project and it will be a national loss inasmuch
as citizens undertaking their journey are required to take a detour
for the stretch of 87 kilometres road, which is incomplete or going
at a snail’s pace due to the fault of either of the parties who is the
party at fault can be decided by the Arbitrator and not by the
Court.
35. So far as the contention of Mr. Jain that sub-section (1) of
section 9 particularly clause (ii)(c) of which requires the Court to
preserve any property or thing which is the subject matter of the
dispute in arbitration is concerned, we are of the considered
opinion that he has picked first two lines of clause (ii)(c) of sub-
section (1) of section 9 in order to suit the cause of the contractor.
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If the entire clause (c) is taken into consideration, it is clear that
the Court should preserve or ensure detention of the property or
thing being subject matter of the dispute, but only if the same is
necessary for the purpose of authorising any sample to be taken,
any preservation to be made or experiment to be tried which may
be necessary or expedient for the purpose of obtaining full
information or evidence.
36. It cannot be the contractor’s case that the contract be kept alive
for the purposes mentioned in Clause (ii)(c) of sub-section (1) of
Section 9. If that be so, he could perhaps pray that whatever little
work he has done be preserved, so that he can claim cost of the
work done by him.
37. In the instant case, if the contract is terminated, the rights of
either of the parties will not be adversely affected inasmuch as in
case the contractor approaches an Arbitrator and claims any
damage or cost of construction etc. the requisite evidence can be
led by way of documentary or oral evidence or by way of
photographs or videography etc. However, the expression
preservation of the property or thing which is subject matter of the
dispute in arbitration cannot be given an interpretation dehors the
complete provision or being oblivious to the fact situation and
against the interest of parties to the contract.
38. We feel that the balance of convenience entirely lies in the
favour of the nation and citizen of India and in turn NHAI and not
in favour of the contractor. Because the citizenry cannot be
deprived of a well constructed highway to ensure smooth and free
movement.
39. We have no hesitation in holding that in light of the discussion
made hereinabove, the appellant NHAI ought not to have been
restrained from proceeding in furtherance of notice of intent to
terminate contract dated 23.12.2025. We find the proposal given by
learned Solicitor General to be fair and just, that NHAI would not
encash the bank guarantee or surety until application under section
9 of the Act of 1996 is decided. Para 21 of the impugned order
dated 02.01.2026 passed by learned Single Judge is therefore set
aside. The appeal is allowed, however, with the following
directions.”
48. The Petitioner’s contention that continuation of the existing
contractor would avoid delay and no prejudice would be cause since
an alternative agency has not yet been appointed cannot, at this stage,
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outweigh the statutory mandate contained in Sections 20A and 41(ha)
of the Specific Relief Act. The court cannot presume that continuation
of the existing arrangement would necessarily serve public interest,
particularly when the Respondent asserts continuing defaults affecting
progress of the highway project.
49. Further, the Supreme Court in the case of N.G. Projects Ltd. v.
6
Vinod Kumar Jain , has also emphasized that public infrastructure
projects should not be stalled by interim order and that courts must
exercise restraint while interfering with public works. The relevant
paras of the judgment are reproduced:
“21. Since the construction of road is an infrastructure project and
keeping in view the intent of the legislature that infrastructure
projects should not be stayed, the High Court would have been
well advised to hold its hand to stay the construction of the
infrastructure project. Such provision should be kept in view even
by the Writ Court while exercising its juris- diction under Article
226 of the Constitution of India.
Xxxxx
26. A word of caution ought to be mentioned herein that any
contract of public service should not be interfered with lightly and
in any case, there should not be any interim order derailing the
entire process of the services meant for larger public good. The
grant of interim injunction by the learned Single Bench of the High
Court has helped no-one except a contractor who lost a contract
bid and has only caused loss to the State with no corresponding
gain to anyone.”
50. Thus, keeping in mind that the injury asserted by the Petitioner
is principally commercial and as the present contract relates to public
works particularly highway project, restraining the Respondent from
proceeding further or a restraining order against termination may
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delay completion of the highway project and adversely affect public
interest.
Conclusion
51. Henceforth, in view of the above discussion, this Court is
unable to make out a prima facie case in favor of petitioner.
52. Taking into consideration, Section 20A and Section 41(ha) of
the Specific Relief Act, the balance of convenience tilts in favour of
respondent and the public in large and this Court is unable to make out
any irreparable injury or loss that cannot be compensated in terms of
money.
53. This Court is unable to grant the restraint sought against the
Notice of Intention to Terminate dated 16.07.2026, accordingly, the
interim relief sought by the Petitioner is declined.
54. Accordingly, the present petition is dismissed, along with any
pending application.
55. Needless to state, the opinion and observation made herein are
only prima facie and limited to the adjudication of the present petition.
All rights and contentions of the parties, on all issues, are left open for
determination by the Arbitral Tribunal.
OM PRAKASH SHUKLA, J
JULY 30, 2026/ ss /pa
6
(2022) 6 SCC 127
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