Delhi HC Dismisses Toll Contractor’s Challenge To NHAI’s ₹1.6-Crore Security Forfeiture Without Ruling On Disputed Audit Merits

The Petitioner had a contract with the Respondent to collect user fees at Diengpasoh Fee Plaza for one year from June 11, 2022, against an annual remittance of ₹19,19,89,635 and performance security of ₹1,60,00,000

Following a forensic audit, the Respondent imposed a ₹1,00,000 penalty concerning alleged under-reporting of cash transactions and later issued a show-cause notice proposing forfeiture of the performance security under Clause 18(a).

By letter dated September 10, 2026, the Respondent approved the forfeiture. The Petitioner challenged that decision, including the Respondent’s asserted right to recover the amount from securities relating to other contracts, arguing that Clause 18(a)’s threshold of three incidents of penalty had not been met.

The Respondent disputed the Petitioner’s position and relied on audit findings of alleged excess collection and other discrepancies.

A contractual dispute does not, merely by arising from a contract, exclude the High Court’s jurisdiction under Article 226; however, that jurisdiction does not require the Court to adjudicate every contractual dispute in writ proceedings.

The nature of the controversy and the availability of an appropriate alternative remedy are relevant considerations, and a dispute requiring detailed fact-finding and appreciation of evidence may be unsuitable for determination in the Court’s extraordinary writ jurisdiction.

The Court found that the dispute involved more than interpreting Clause 18(a): the parties contested the factual basis for forfeiture, including the audit’s methodology and findings, the individual transactions, the alleged excess collections, and whether refunds had been made.

Resolving those matters would require examination of transactional records and evidence, which the Court considered inappropriate in writ proceedings, particularly because the controversy could be examined in appropriate proceedings. The Court therefore did not determine whether the contractual forfeiture threshold had been met or whether recovery from other securities was permissible.

The Court expressed no opinion on the merits and left all issues open for consideration by the appropriate forum.

The previously fixed date of December 2, 2026, was cancelled.