Stating that “citizenry cannot be deprived of a well-constructed highway to ensure smooth and free movement,” the Delhi High Court has permitted the National Highways Authority of India (NHAI) to proceed with its intent to terminate the contract of a Pune contractor working on the Delhi-Mumbai Expressway.
RSIIL was first awarded all these three stretches in 2021. Two of these were scrapped in March 2023 due to delays, only to be re-awarded to the same company in November 2023 after it bid the lowest. At the end of almost four years now, less than 20% per cent of the 87 km has been completed.
While restraining NHAI from encashing insurance surety bonds and bank guarantees submitted by RSIIL for the project — amounting to approximately Rs 100 crore — the court permitted the authority to proceed with its intent to terminate notice issued to RSIIL on December 23, 2025.
The division bench of Justices Dinesh Mehta and Vinod Kumar further gave NHAI the nod to issue a fresh notice inviting tender (NIT) if it deems it urgent.
NHAI and RSIIL are already engaged in arbitration proceedings.
RSIIL had issued a notice of intention on December 18 to terminate the contract, prior to NHAI’s notice, alleging that the latter failed to make contiguous land available for construction of road. However, NHAI, acting on its notice, holds the power to blacklist the firm, which may mean barring them from participating in future NITs.
What the division bench said
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The division bench’s January 13 order also overturns a single judge’s order from earlier this month, where it had restrained NHAI from acting on notices against RSIIL.
In a petition by RSIIL seeking an immediate stay on NHAI’s notice expressing intent to terminate the contract, Justice Madhu Jain, on January 2, had restrained NHAI from acting on the notice.
The firm, before the court, had expressed its apprehension that if not stayed, NHAI may unlawfully encash the insurance surety bonds deposited by them and terminate the agreement to hide its own defaults. NHAI appealed against this.
The division bench recorded, “… the court cannot take unto itself the authority or power of granting unwarranted indulgence to a contractor. It should best be left to the authorities. In the facts of the present case, when the contractor itself wanted the contract to be terminated, one cannot conclude at this stage as to whether the contractor really wanted to work or it simply wants to wriggle out of the contractual obligations or escape the consequences entailing the termination of contract… Ultimately, it is within the domain of and discretion of the awarder of the contract to continue with the contract or to terminate.”
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Solicitor General Tushar Mehta, appearing for NHAI, had termed such an injunction against NHAI as “against national interest as the ambitious infrastructure project would not be completed within the scheduled timeline”.
SG Mehta had also proposed before the division bench that till the arbitration proceedings are pending, NHAI shall not encash the bank guarantees and surety.
The contractor, accepting that they had indeed issued a notice of termination on December 18, argued that NHAI’s notice was “a counterblast” to the contractor’s notice and was illegal and arbitrary.
It was also argued that “it was only because of the fault of NHAI, by failing to complete land acquisition proceedings and hand over possession for the land package, that the project could not be completed or could not see the desired progress”.
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The division bench found this plea by the contractor “unsustainable” and termed it a “lame excuse” after recording that the acquisition and possession proceedings had been completed.
“When the NHAI itself has written letters to the contractor on 23.08.2025 and 14.10.2025 that it should mobilise labour and machinery on or near the spot so that possession of land (if not taken) can be taken with the aid of the police and handed over to the contractor, it does not behove the contractor to take a lame excuse that the land has not been made available,” the court recorded.
Holding that “there is enough material to show NHAI had valid and legit reasons” to issue the notice of intent to terminate, the bench ruled that the notice “cannot be said to be without authority or even arbitrary…”
The division bench also observed that the single judge should not have granted the injunction in RSIIL’s favour “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-km 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.”
