Court Prevents Encashment of Rs. 100 Crore Insurance Bonds Amid Contractual Dispute
In a significant development, the Delhi High Court has temporarily restrained the National Highway Authority of India (NHAI) from terminating its contract with Roadway Solutions India Infra Limited. The court's decision comes in light of a petition filed by Roadway Solutions seeking interim relief against the NHAI's Notice of Intent to Terminate the contract and the encashment of insurance surety bonds worth approximately Rs. 100 crores.
Presiding over the matter, Justice Madhu Jain addressed the complex contractual dispute between the two parties, which centered on the interpretation of terms such as "Financial Progress" and "Expenditure/Progress" within multiple Settlement Agreements. These terms were crucial for determining the execution and achievement of project milestones in a public utility service project.
The petitioner argued that the NHAI failed to provide 90% of the contiguous land required for project execution, leading to delays and disputes over financial progress. Despite multiple Settlement Agreements aimed at resolving these issues, the NHAI issued a Notice of Intent to Terminate the contract, prompting Roadway Solutions to seek judicial intervention.
The court recognized the potential severe financial implications for the petitioner, should the insurance surety bonds be encashed before a final adjudication. In light of the prima facie case and balance of convenience favoring the petitioner, the court granted interim relief, restraining the NHAI from acting on the termination notice until the next hearing scheduled for February 9, 2026.
The court also directed the NHAI to file a reply to the petition within a week, with a rejoinder from the petitioner to follow within three weeks. This decision underscores the judiciary's role in safeguarding contractual rights and preventing irreversible financial harm amid pending adjudication.
Bottom Line:
Interpretation of contractual terms such as "Financial Progress" and "Expenditure/Progress" along with disputes arising from alleged non-compliance with Settlement Agreements in public utility service project.
Statutory provision(s): Arbitration and Conciliation Act, 1996
