Delhi High Court Sets Aside ₹126.77 Crore Arbitral Award Against NHAI Over Assam Highway Project Dispute

The Delhi High Court on Thursday set aside an arbitral award granting ₹126.77 crore to a highway contractor towards costs and confiscated assets in an Assam road-widening project. The Court held that the arbitral tribunal failed to consider extension-of-time decisions that had rejected those claims.

A Division Bench of Justice V. Kameswar Rao and Justice Vinod Kumar, however, upheld awards totalling ₹35.90 crore towards work executed under the contract and loss of profit.

The court allowed an appeal filed by the National Highways Authority of India (NHAI) against an award in favour of Progressive Constructions Limited, which was engaged to widen the Bijni–West Bengal Border section of NH-31C in Assam.

The dispute arose from a contract executed in September 2005. Progressive Constructions attributed delays to NHAI's failure to provide encumbrance-free land and other project impediments. NHAI, on the other hand, blamed the contractor's poor progress, inadequate mobilisation and prolonged non-performance. The contract was terminated in March 2016.

Following arbitration, the tribunal awarded the contractor ₹35.15 crore towards prolongation overheads, ₹6.81 crore towards increased rates during the extended contract period, ₹77.11 crore towards machinery idling and under-utilisation costs, ₹7.70 crore towards confiscated machinery, materials and other assets, ₹31.27 crore towards work executed under the contract and ₹4.63 crore towards loss of profit.

Before the Division Bench, NHAI argued that the Engineer's extension-of-time recommendations had consistently recorded concurrent delays attributable to the contractor and had rejected claims for prolongation and overhead costs. It contended that Progressive Constructions accepted those determinations and never challenged them.

Accepting the contention, the Court held that the tribunal could not have allowed the prolongation-related claims without first addressing the effect of those decisions. It noted that the contractor had not challenged the rejection of prolongation and overhead costs contained in the extension-of-time determinations.

Accordingly, the bench set aside the awards relating to prolongation overheads, increased rates during the extended contract period, machinery idling and under-utilisation costs, and confiscated machinery, materials and other assets.

The court, however, upheld the award of ₹31.27 crore towards work executed under the contract and ₹4.63 crore towards loss of profit. It found no ground to interfere with those portions of the award.

For Appellant (National Highways Authority of India): Advocates Ankur Mittal, Ankur Saboo.

For Respondent (Progressive Constructions Limited): Senior Advocate C. Mohan Rao, assisted by Advocate Lokesh Kumar Sharma.