EPC Contract With Termination Clause Not Inherently Determinable Contract U/S 14(d) Specific Relief Act: Delhi High Court

The Court was hearing a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996, by Roadway Solutions India Infra Limited, seeking interim relief in disputes arising out of an Engineering, Procurement and Construction Contract with the National Highways Authority of India for six-laning of the Kagal-Satara section of NH-48, Package-I. The immediate grievance arose from NHAI’s Notice of Intention to Terminate dated July 16, 2026.

A Bench of Justice Om Prakash Shukla observed: “… the mere inclusion of Clause 23, which provides for termination upon specified events of default and incorporates a cure and representation mechanism does not, render the EPC Contract inherently determinable within the meaning of Section 14(d) of the Specific Relief Act, 1963. Termination is permissible only upon occurrence of defined causes and after compliance with the prescribed cure and representation process. The decision in Manjunath(supra) therefore squarely applies to the contract between the parties.”

Senior Advocates Dayan Krishnan and Ravi Prakash appeared for the petitioner. Advocate Abhay Gupta appeared for NHAI.

Background

The parties entered into the EPC Contract on October 17, 2022. After fulfilment of conditions precedent, NHAI declared January 13, 2023 as the appointed date, with the original scheduled completion date falling on January 12, 2025. The petitioner furnished performance security and additional performance security bank guarantees aggregating to ₹61.51 crore.

During execution, disputes arose on delay and progress. The petitioner attributed delay to NHAI, citing failure to provide right of way under Clause 8.1, non-availability of continuous work fronts and delay in approvals. NHAI alleged that the delay was due to the petitioner’s failure to deploy adequate resources, maintain the highway stretch and comply with contractual and safety obligations.

The petitioner sought extension of time under Clause 10.5(ii). NHAI’s engineer recommended an extension of 474 days, after which the parties executed a Settlement Agreement dated April 25, 2025, revising the scheduled completion date to April 30, 2026 and shifting Milestone-III to January 11, 2026.

However, disputes continued. NHAI issued a Cure Period Notice on January 2, 2026 alleging defaults and calling upon the petitioner to cure them within 60 days. The petitioner disputed the notice as premature. After expiry of the cure period, NHAI issued the Notice of Intention to Terminate under Clause 23.1(ii), leading to the Section 9 petition.

Court’s Observations

The Court first noted that Section 9 jurisdiction is protective and is meant to preserve the subject matter of arbitration so that arbitral proceedings do not become meaningless. Relying on Arcelor Mittal Nippon Steel (India) Ltd. v. Essar Bulk Terminal Ltd. (2022), it said the Court must examine prima facie case, balance of convenience and irreparable injury.

The Court observed: “Thus, keeping in mind the scope of interference in Section 9 jurisdiction, the principal issue which falls for consideration before this court is whether the petitioner has been able to make out a prima facie case warranting restraint against the Respondent, pending arbitration, from acting upon the Notice of Intention to Terminate dated 16.07.2026, in light of the contractual termination mechanism and the provisions of the Specific Relief Act, 1963.”

The Court examined Clause 23 of the EPC Contract, which provided for termination on contractor default. It noted that termination could follow only after specified defaults occurred, notice was given and the applicable cure period was granted.

The Court stated: “A plain reading of Clause 23 shows that termination is not an unconditional contractual right exercisable at the discretion of the Respondent in this contractual relationship. Clause 23 provides that where any of the specified defaults occurs i.e. 23.1 (a) to (r), the Contractor must be notified of the alleged default and should be granted the applicable cure period. Only upon failure to cure the default can further action, including issuance of a Notice of Intention to Terminate, be undertaken.”

Relying on the Supreme Court’s decision in Manjunath, the Court distinguished between contracts terminable at will and contracts terminable only upon specified defaults.

It noted: “In Manjunath(supra) the Supreme Court, while considering the nature of determinability under Section 14(d), observed that contracts inherently revocable or terminable without cause would fall within the category of determinable contracts. However, contracts which can be terminated only upon breach, after issuance of notice and grant of opportunity to cure, do not become determinable merely because they contain a termination clause.”

Accordingly, the Court held that the contract was not determinable in nature. However, it clarified that this finding only removed the statutory objection based on determinability and did not automatically entitle the petitioner to interim relief.

The petitioner argued that the Cure Period Notice dated January 2, 2026 was premature because Milestone-III was due only on January 11, 2026 and the contractual grace period had not expired.

NHAI, however, submitted that the notice was not founded only on failure to achieve Milestone-III under Clause 23.1(i)(c), but on independent defaults under Clauses 23.1(i)(d), (e), (g) and (q), including failure to proceed with works, inadequate resources, failure to rectify defects and non-compliance with contractual obligations.

Accepting this prima facie, the Court observed: “Upon perusal of the cure notice, this Court cannot accept the contention of the learned senior counsel for the Petitioner that the Cure Period Notice dated 02.01.2026 was necessarily premature merely because Milestone-III was due only on 11.01.2026 and had not expired on 02.01.2026.”

The Court added: “The validity of the notice must be examined with reference to the defaults expressly invoked therein and not solely on the basis of the milestone provision. The chronology also assumes significance. The Cure Period Notice granted 60 days for curing the alleged defaults. The Notice of Intention to Terminate was issued only on 16.07.2026, after expiry of the said period. Prima facie, therefore, the Petitioner has not been able to show that the Respondent curtailed the cure period prescribed under Clause 23.”

The petitioner also relied on the Settlement Agreement to argue that the parties had agreed not to take coercive action arising from delay until expiry of the revised completion date.

The Court rejected this reading at the prima facie stage. It held that the Settlement Agreement extended the overall completion date and shifted Milestone-III, but did not grant immunity from all contractual defaults.

The Court stated: “Upon a perusal of the Settlement Agreement also, it can be curled out that it only extended the overall completion period to 30.04.2026 and shifted the date for Milestone-III to 11.01.2026. There is, however, no specific stipulation granting immunity from all contractual defaults or preventing invocation of Clause 23 on account of independent breaches. Therefore, the Settlement Agreement, prima facie, cannot be interpreted as preventing the Respondent from invoking Contractor Defaults under Clauses 23.1(i)(d), (e), (g) and (q), if such defaults had independently arisen.”

The Court made it clear that it was not determining whether the alleged defaults were correct. That issue, it said, belonged to the arbitral forum.

It observed: “This court is not required, at this stage, to determine the correctness of such allegation. The Arbitral Tribunal would be the appropriate forum to determine the alleged faults. The interim proceedings under section 9 can not be converted into a forum for determining such disputes questions.”

The Court then turned to Sections 20A and 41(ha) of the Specific Relief Act, 1963. Since the contract concerned a highway project, the Court held that contractual claims had to be balanced against the public interest in timely completion.

The Court observed: “The present Contract admittedly relates to construction of a highway project, which falls within the category of infrastructure projects contemplated under the Specific Relief Act. Therefore, while considering interim relief, the Court is required to balance the contractual rights asserted by the Petitioner against the large public interest involved in ensuring timely completion of the infrastructure project.”

Relying on National Highways Authority of India v. Roadway Solutions India Infra Limited and N.G. Projects Ltd. v. Vinod Kumar Jain (2022), the Court said public infrastructure projects should not ordinarily be stalled through interim orders.

It concluded that the petitioner’s injury was principally commercial and could be compensated in money, while restraining NHAI could delay completion of the highway project and affect public interest.

Conclusion

The High Court declined to restrain NHAI from proceeding pursuant to the Notice of Intention to Terminate dated July 16, 2026.

It held that the petitioner had not made out a prima facie case for interim relief, that the balance of convenience lay in favour of NHAI and the public at large, and that no irreparable injury was shown which could not be compensated monetarily.

The Section 9 petition and pending applications were dismissed. The Court clarified that its observations were only prima facie and limited to the Section 9 petition, leaving all rights and contentions open for determination by the Arbitral Tribunal.

Cause Title: Roadway Solutions India Infra Limited v. National Highways Authority of India (Neutral Citation: 2026:DHC:6435)

Appearances

Petitioner: Dayan Krishnan and Ravi Prakash, Senior Advocates, with Sandeep Sharma, Varun Kalra, Krishan Kumar and Akash Malik, Advocates.

Respondent: Abhay Gupta, Simran Goel and Ipshita Dutta, Advocates.

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