NHAI EPC Contract Article 14: Allahabad HC Quashes Termination, Restores Tata Projects’ Highway Deal
In a significant ruling dated 8 July 2026, the Allahabad High Court quashed the National Highways Authority of India’s mid-term termination of Tata Projects Limited’s ₹940.68 crore EPC contract for the widening of NH-709A, holding that NHAI’s arbitrary action violated Article 14 of the Constitution.
A Division Bench of Justice Ajit Kumar and Justice Swarupama Chaturvedi allowed the writ petition filed by Tata Projects, finding that NHAI had punished the contractor for delays that were directly attributable to NHAI’s own failure to deliver encumbrance-free land, according to LiveLaw.
Background: How We Got Here
NHAI issued a request for proposals in December 2018 for the widening and upgrading of a 50.254 km stretch of NH-709A between Garhmukteshwar and Meerut, at a contracted value of ₹940.68 crore, according to LiveLaw.
Tata Projects Limited was selected and received a letter of acceptance in March 2021. The case was registered as Writ-C No. 4559 of 2025 before the High Court of Judicature at Allahabad, per LegalDeli and LiveLaw.
- The appointed day for commencement of work was fixed as 10 October 2021, with a completion deadline of 10 October 2023, as confirmed by LiveLaw.
- A Handover Memorandum dated 21 September 2021 recorded that only 47.620 km — or 94.76% — of the total project length had been handed over to the contractor.
- Despite Tata Projects repeatedly raising complaints that hindrance-free stretches were not being made available, NHAI terminated the contract on 14 January 2025 citing non-completion within time, then simultaneously forfeited bank guarantees and issued a fresh tender on 3 February 2025, according to LiveLaw.
The Ruling — Key Findings
The Division Bench quashed three consequential actions in one order: the termination dated 14 January 2025, the forfeiture of the bank guarantees, and the fresh tender issued on 3 February 2025, per LiveLaw.
The Court characterised NHAI’s conduct in the harshest terms available to it. As quoted directly in the judgment and reported by LegalDeli:
“This shows that there is absolutely non-application of mind by the authority. This amounts to an unfair practice on part of the State.”
The Bench further observed, per LiveLaw:
“The act of a party which is State under Article 12 in this case is found to be arbitrary one against affect work of public importance and so this Court will not shirk away from its responsibility in arresting any miscarriage of justice in larger public interest.”
The Court held that NHAI, being ‘State’ under Article 12 of the Constitution, cannot arbitrarily terminate a highway construction contract mid-term and fasten liability for delay on a contractor when that delay was caused by the Authority’s own failure to hand over encumbrance-free land with a clear right of way.
On the question of jurisdiction, the Bench held that arbitrary action by a State instrumentality can be challenged in writ jurisdiction under Article 226 notwithstanding an arbitration clause, where the controversy turns on the interpretation of documents and the Authority’s own record amounts to a fair admission, according to LiveLaw.
Crucially, the Court noted that no third-party rights had been created under the fresh tender and that physical possession of the project site remained with Tata Projects. It recorded the contractor’s undertaking to complete the remaining work within 14 months.
The parties were directed to conduct a fresh joint site inspection within one month and to reschedule and complete the project under the existing EPC agreement in the larger public interest, as reported by LiveLaw.
Reactions & What’s Next
Tata Projects was represented by Senior Advocate Amit Saxena, assisted by Varad Nath and Vineet Kumar. NHAI was represented by Senior Advocate Rakesh Pandey, assisted by Pranjal Mehrotra, according to LiveLaw.
The immediate next step mandated by the Court is a fresh joint site inspection to be conducted by the parties within one month of the judgment date of 8 July 2026, following which the project schedule will be redrawn under the existing EPC agreement for completion within 14 months.
The ruling carries significant implications for infrastructure contractors dealing with State authorities, reinforcing that writ courts will intervene where a public body’s own records demonstrate that delay was not attributable to the contractor.
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What did the Allahabad High Court rule in the Tata Projects vs NHAI case?
The Division Bench of Justice Ajit Kumar and Justice Swarupama Chaturvedi, in Writ-C No. 4559 of 2025, quashed NHAI’s termination order dated 14 January 2025, the forfeiture of bank guarantees, and the fresh tender dated 3 February 2025. The Court held that NHAI’s termination was arbitrary and violated Article 14, since delays were attributable to NHAI’s own failure to provide encumbrance-free land with a clear right of way, per LiveLaw.
What is the value and scope of the NH-709A highway project at the centre of the dispute?
The project involved the widening and upgrading of a 50.254 km stretch of NH-709A between Garhmukteshwar and Meerut, at a contracted cost of ₹940.68 crore. NHAI issued the request for proposals in December 2018, and Tata Projects received its letter of acceptance in March 2021, according to LiveLaw.
Can a contractor challenge an NHAI contract termination through a writ petition despite an arbitration clause?
Yes, according to this ruling. The Court held that arbitrary State action can be challenged under Article 226 notwithstanding an arbitration clause, where the controversy turns on the interpretation of documents and the Authority’s own record amounts to a fair admission of its default, as reported by LiveLaw.
Disclaimer
Disclaimer: This article is for general information only and does not constitute legal advice. Laws may change or vary by case — consult a qualified lawyer before acting. The Courtroom is not liable for any reliance on this content.
