Delhi High Court Holds NITI Aayog Payments Cannot Alter Award Rules, Directs NHPC To Pay HCC ₹16.39 Cr.

The Delhi High Court on 28 July held that interim payments released under NITI Aayog's relief scheme for construction contractors during the pendency of challenges to arbitral awards cannot alter the legal method of adjusting payments once the award attains finality.

Justice Subramonium Prasad directed National Hydro Electric Power Corporation Ltd. (NHPC) to pay Rs. 16.39 crore to Hindustan Construction Co. Ltd. (HCC) after adjusting the amounts already paid under the scheme, holding that such payments could not be treated as an agreement between the parties to depart from the law governing adjustment of award amounts. He observed:

“Once the Award has attained finality then the amount under the Award has to be paid in accordance with the law laid down by the Apex Court in Leela Hotels Ltd. (supra) in execution proceedings after adjusting the amounts already received under the OMs. It cannot be said that any correspondence made regarding OMs issued by NITI Aayog would result in any agreement to the contrary as alleged by the Judgment Debtor.”

The dispute arose from a contract dated 10 May 2006 between NHPC and HCC for civil works relating to the Teesta Low Dam Hydroelectric Project, Stage IV. The works included construction of diversion arrangements, dams, spillway, powerhouse, intake structure, tail-race channel, switchyard and other associated infrastructure.

After disputes arose, an arbitral tribunal on 31 December 2015 awarded HCC Rs. 53.73 crore, including Rs. 43.95 crore towards claims and Rs. 9.78 crore as interest, along with future interest at 18% annually from the date of the award until payment.

The Delhi High Court upheld the award on 2 April 2024. During the pendency of proceedings challenging the award, HCC received payments under two NITI Aayog Office Memorandums dated 5 September 2016.

The Office Memorandums were introduced to provide temporary relief to construction companies whose arbitral awards against government bodies and public sector undertakings remained pending before courts. They permitted release of 75% of the awarded amount against a bank guarantee, subject to the final outcome of the challenge proceedings.

NHPC released Rs. 47.55 crore to HCC on 18 August 2017 and Rs. 37.10 crore on 29 June 2024 under the scheme. A dispute later arose over whether these payments had extinguished NHPC's liability and whether the amounts had to be adjusted first towards interest or towards the principal amount.

HCC moved the High Court under Section 151 of the Code of Civil Procedure (which allows courts to exercise inherent powers to secure the ends of justice), seeking payment of the balance amount under the award. It argued that the payments had to be adjusted first towards accrued interest and thereafter towards the principal amount, relying on the Supreme Court's ruling in Leela Hotels Ltd. v. Housing and Urban Development Corporation Ltd.

NHPC contended that HCC's letters dated 9 December 2016 and 8 February 2017, along with earlier calculations, showed that the parties had agreed to adjust a larger portion of the interim payments towards the principal amount. It argued that HCC had accepted the payments without protest and could not reopen the calculation years later.

The Court rejected NHPC's contention, holding that the correspondence between the parties only related to implementation of the NITI Aayog Office Memorandums while the award was under challenge. It held that the correspondence neither formed part of execution proceedings nor created an agreement changing the manner of adjustment prescribed by law.

Further, the Bench noted that HCC had accepted the interim payments without prejudice to its right to claim the balance amount under the award. It observed that after the award attained finality, the Office Memorandums “pale into insignificance” as they were intended only to provide temporary financial assistance to contractors while protecting government interests through bank guarantees.

Accordingly, the High Court allowed HCC's application and directed NHPC to pay Rs. 16,39,87,708, calculated as due on 2 July 2026, within six weeks from the date of uploading of the judgment.

Appearances for petitioner (Hindustan Construction Co. Ltd.): Advocates Dayan Krishnan, Senior Advocate, Rishi Agrawala, Shruti Arora, Rajat Sinha, Tarini Khurana, Shreedhar Kale.

Appearances for respondent (National Hydro Electric Power Corporation Ltd.): Advocates Shikha Tandon, Shubham Mittal, Piyush Sharma, Anuj Kumar Sharma.