Contractual Background and Dispute
On October 17, 2022, Roadway Solutions India Infra and the National Highways Authority of India (NHAI) entered into a contract for a highway project with an original completion date set for January 12, 2025. Disputes soon arose, with both parties blaming each other for delays. The petitioner, Roadway Solutions, cited NHAI’s failure to provide the right of way, lack of continuous work fronts, and delayed approvals under Clause 8.1. Conversely, NHAI attributed delays to the petitioner’s inadequate resource deployment and non-compliance with safety obligations.
Following these disagreements, the petitioner requested an extension of time under Clause 10.5(ii). Subsequently, NHAI’s engineer recommended a 474-day extension. This led to a settlement on April 25, 2025, which revised the project’s completion date to April 30, 2026, and Milestone-III to January 11, 2026.
Escalation and Legal Proceedings
Despite the settlement, disputes persisted. On January 2, 2026, NHAI served a cure period notice, alleging defaults and granting 60 days for rectification. Roadway Solutions disputed these allegations, claiming the notice was premature and that NHAI’s ongoing defaults had been overlooked.
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After unsuccessful negotiations, NHAI issued a notice of intention to terminate the contract on July 16, 2026, under Clause 23.1(ii). In response, the petitioner sought relief from the Court under Section 9 of the Arbitration and Conciliation Act, 1996, seeking to prevent further action based on the termination notice.
Judicial Analysis
The Court focused on whether the contract was determinable and if interim relief was warranted. It reiterated that Section 9 aims to protect arbitration proceedings by preserving the subject matter and preventing them from becoming futile. Interim relief necessitates a prima facie case, a balance of convenience, and the potential for irreparable harm.
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According to Section 14(d) of the Specific Relief Act, 1963, a contract determinable by nature cannot be specifically enforced. Section 41(e) prohibits injunctions to prevent breaches of such contracts. The Court scrutinized Clause 23 and concluded that termination was not an unconditional right of NHAI. Instead, it required specific contractor defaults, followed by notice and a cure period, aligning with the Supreme Court’s decision in K.S. Manjunath v. Moorasavirappa. Thus, the contract was not inherently determinable under Section 14(d).
Decision on Interim Relief
Clearing the Section 14(d) hurdle alone did not justify interim relief. Applying the Section 9 triad and referencing Arcelor Mittal Nippon Steel (India) Ltd. v. Essar Bulk Terminal Ltd., the Court ruled against the petitioner. The Court found the cure period notice valid, as it allowed 60 days for the petitioner to rectify defaults, and the termination notice followed its expiration. The merits of alleged defaults were left to be decided by the Arbitral Tribunal.
The Court also considered the public infrastructure implications under Sections 20A and 41(ha) of the Specific Relief Act, which discourage injunctions that hinder infrastructure projects. Given the highway’s significance, the Court balanced public interest against contractual rights. Drawing from NHAI v. Roadway Solutions India Infra Limited and NG Projects Ltd. v. Vinod Kumar Jain, it concluded that interim orders should not impede public infrastructure projects.
Ultimately, the petitioner failed to establish a prima facie case for restraining NHAI’s actions, and the balance of convenience favored the respondent. Consequently, the request for interim relief was denied, and the petition dismissed, with considerations limited to Section 9 proceedings, leaving arbitration rights intact.
Author’s Perspective
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This judgment represents a significant contractor-friendly stance for standard-form EPC and infrastructure contracts, marking a shift from the broader Delhi High Court position seen in Turnaround Logistics v. Jet Airways and Ksheeraabd Construction v. NHIDCL. It narrows the interpretation of Section 14(d) to contracts terminable at will, adhering closely to the legislative language.
About the Author
Faranaaz Karbhari is a Counsel at HSA Advocates.
Disclaimer: The opinions in this article are those of the author and do not necessarily reflect the views of Bar & Bench.
