Termination for contractor default was restrained where substantial completion was admitted and extension remained under consideration.

The petitioner, M.S. Sahu Construction, entered into an Engineering Procurement Contract Agreement dated 7 December 2020 with the respondent, National Highways and Infrastructure Development Corporation Limited, for improvement and widening of an NH-208 road section in Tripura under the EPC mode.

The respondent issued a notice of intention to terminate dated 29 August 2026 under Clause 23.1(ii), alleging contractor default and delay in achieving milestones.

The petitioner contended that the work had reached 97.89% physical progress and 95.62% financial progress, while it claimed 100% completion.

It further relied on a recommendation for extension of time by 1,554 days—1,092 days without Liquidated Damages and 462 days with Liquidated Damages—with a revised completion date of 30 September 2026.

The petitioner also submitted a representation dated 10 September 2026 and stated that its application for extension of time had not been considered.

The petitioner approached the Delhi High Court under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim protection against termination.

Whether interim protection under Section 9 of the Arbitration and Conciliation Act, 1996 should be granted against the respondent’s notice of intention to terminate the EPC Contract Agreement for alleged contractor default, particularly when substantial physical and financial progress had been achieved?

Whether the respondent could rely, at the interim stage, on its power to terminate for convenience under Clause 23.3 when the impugned notice invoked Clause 23.1 concerning contractor default?

Whether the termination process was premature when the petitioner’s representation and request for extension of time remained pending?

The Court applied Section 9 of the Arbitration and Conciliation Act, 1996, which empowers the court to grant interim measures of protection before or during arbitral proceedings.

Under Clause 23.1 of the EPC Contract Agreement, termination was contemplated on account of contractor default, whereas Clause 23.3 separately authorised termination for convenience.

The Court also considered Section 14(b) of the Specific Relief Act, 1963, concerning contracts whose performance involves continuous supervision; however, it did not finally adjudicate that defence at the interim stage.

The governing interim principle was that short-term protective relief may be granted where the contractual action under challenge appears premature and the surrounding circumstances, including substantial performance and pending contractual representations, warrant preservation of the subject matter until the respondent’s case is heard.

The Court noted that the petitioner had achieved substantial physical and financial progress—97.89% and approximately 95.65%, respectively—even according to the respondent.

The petitioner was also not among the contractors identified as responsible for defective highway maintenance in the Tripura High Court proceedings relied upon by the petitioner.

Although the petitioner had allegedly delayed performance and missed milestones, the respondent itself had recommended an extension of 1,554 days, including a revised completion date of 30 September 2026.

These circumstances created a prima facie basis for examining whether termination for default was justified before the pending representation and extension request were considered.

The Court further held that the respondent’s reliance on Clause 23.3 was not presently relevant because the impugned action invoked Clause 23.1, relating to contractor default, rather than termination for convenience.

In view of the admitted progress and the need to hear the respondent fully, the Court considered it appropriate to grant a short injunction.

The respondent was directed to file its reply within ten days, with rejoinder, if any, to be filed within three days thereafter.

The matter was listed for consideration on 13 October 2026.

The Court did not finally determine the validity of the termination notice, the petitioner’s entitlement to extension of time, or the applicability of Section 14(b) of the Specific Relief Act.