Delhi High Court Upholds Nil Award In ₹4.37 Cr. NHAI Contract, Says Claims Of Extra Work Needs Proof

On 13 October, the Delhi High Court dismissed Abhoy Charan Bakshi's petition challenging a nil arbitral award in favour of the National Highways Authority of India (NHAI) over a Rs. 4.37 crore road maintenance contract for the Baharampore–Farakka section of National Highway 34 in West Bengal.

Justice Subramonium Prasad held that a contractor cannot claim payment for additional work without evidence establishing that the work was carried out, and found that the arbitral tribunal had no basis to quantify the alleged additional work without supporting evidence. The Bench observed:

“In absence of any material to showcase additional work done by the Petitioner, there was no mechanism available before the Tribunal to compute or even establish that the alleged extra work was done by the Petitioner.”

NHAI accepted Bakshi's bid for the short-term maintenance contract on 12 December 2005, and the parties executed an agreement worth Rs. 4.37 crore on 21 December 2005. The work, originally scheduled for completion on 27 April 2006, was completed on 31 July 2006 following revisions to the quantities of work.

Subsequently, Bakshi sought additional payments for road repairs allegedly necessitated by heavy rainfall. NHAI encashed a performance bank guarantee of Rs. 43.74 lakh and withheld a security deposit of Rs. 35.27 lakh.

Bakshi invoked arbitration, claiming payments for additional work and repeated repairs, release of the withheld securities, compensation for loss of goodwill and business losses, damages for contractual breach, and interest.

On 30 November 2022, a three-member arbitral tribunal delivered a split award. The majority rejected all claims without granting monetary relief, while the minority awarded Rs. 6.22 crore to Bakshi.

Before the High Court, Bakshi argued that the tribunal had ignored material evidence and wrongly rejected his claims for work allegedly performed beyond the contractual scope. NHAI maintained that the repairs formed part of Bakshi's maintenance obligations and that he had failed to rectify defects as required under the contract.

The Court found that the tribunal had adequately examined the evidence and reasonably concluded that repairs during the defect liability period fell within the contractual scope. It also noted that Bakshi had failed to substantiate the alleged additional work and that the newspaper clipping he relied on concerned rainfall at another location.

Regarding the withheld securities, it relied on joint inspection reports dated 16 January 2007 and 13 February 2007, which recorded defects that remained unrectified. Justice Prasad observed:

“The Joint Inspection Report certainly holds value as participation of both the parties is involved, as opposed to unilateral letters sent by the Petitioner to the Respondent.”

The Bench upheld the tribunal's interpretation permitting NHAI to retain the performance security because the defects remained unresolved. It also found that Bakshi had failed to comply with Clause 44.3, which governed early release of the security deposit against an unconditional bank guarantee.

Accordingly, the High Court dismissed Bakshi's petition and upheld the majority's nil arbitral award in favour of NHAI.

Appearances for petitioner (M/s Abhoy Charan Bakshi): Advocate Anantaprasad Mishra.

Appearances for respondents (National Highways Authority of India & Ors.): Advocates Abhay Gupta and Simran Goel.