Facts
The Petitioners challenged a debarment letter dated 25.08.2025 issued by the Respondent (NHAI), which barred them from participating in future projects due to alleged non-performance or faulty performance under a Concession Agreement dated 12.03.2022.
Source reference: p. 1-2The Petitioners sought interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, to stay the debarment.
Source reference: p. 1-2A Dispute Resolution Board (DRB) had previously recommended against the debarment.
Source reference: p. 3The Respondent raised a preliminary objection, arguing that debarment is an inherent administrative power and not an arbitrable dispute arising from the contract, and further argued that Petitioner No. 2 (the bidder/shareholder) had no privity of contract.
Source reference: p. 2Issues
1. Whether a dispute concerning the debarment of a contractor, resulting from alleged contractual non-performance, is an arbitrable dispute maintainable under Section 9 of the Act.
Source reference: p. 2-42. Whether Petitioner No. 2 (the parent bidder/shareholder) is a proper party to the proceedings despite not being the primary signatory to the Concession Agreement.
Source reference: p. 5-6Law Applied
The Court considered Section 9 of the Arbitration and Conciliation Act, 1996, regarding interim measures.
Source reference: p. 1It addressed the Respondent's reliance on *Patel Engg. Ltd. v. Union of India (2012) 11 SCC 257*, which establishes that the power to debar is an inherent authority of the State and need not be specifically mentioned in a contract.
Source reference: p. 2However, the Court balanced this with the scope of the Arbitration Clause (Clause 38.1), which covers any dispute "arising under or out of or in relation to" the Agreement.
Source reference: p. 4It also referenced the principle of "representations and warranties" under Clause 7.1 and the role of the "bidder" in the contract's recitals to determine the standing of Petitioner No. 2.
Source reference: p. 5Reasoning
The Court rejected the Respondent’s objection regarding non-arbitrability, noting that the debarment was explicitly triggered by alleged failures in performing the contract.
Source reference: p. 4Since the debarment was a "direct consequence" of contractual performance, it fell within the broad scope of the dispute resolution clause.
Source reference: p. 4The Court observed that the parties themselves had previously treated the issue as arbitrable by participating in proceedings before the Independent Engineer and the DRB without objecting to jurisdiction.
Source reference: p. 4-5Regarding the maintainability of the petition by Petitioner No. 2, the Court found that they were "intrinsically interconnected" with Petitioner No. 1, held shares in the concession, and were required to fulfill specific warranties under the Agreement.
Source reference: p. 5-6The Court declined to conduct a "mini-trial" on the technical evidence of construction safety, holding that such merits are for the Arbitral Tribunal to decide.
Source reference: p. 6Holding
The Court held that the petition was maintainable and that the debarment dispute was subject to the arbitration clause.
It granted interim relief by staying the operation of the impugned debarment letter dated 25.08.2025.
Source reference: p. 6The Respondent was restrained from treating the Petitioners as debarred entities or posting any such declaration on its website.
Source reference: p. 7The petition was disposed of with these directions, leaving the final adjudication of the merits to the Arbitral Tribunal.
Source reference: p. 7Original Court PDF
M/s Edapally to Kodungallur Highway Private Limited & Anr. v. National Highway Authority of India [O.M.P.(I) (COMM.) 379/2025]
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