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Informist, Monday, Aug. 31, 2026

 

NEW DELHI – The Supreme Court Monday stayed an Allahabad High Court order that allowed resumption of work under National Highways Authority of India's INR 10.92 billion contract with Tata Projects Ltd. for the upgradation of Garhmukteshwar-Meerut National Highway, including a connector, in Uttar Pradesh under the engineering, procurement and construction mode. "In the peculiar facts of this case, and keeping in mind, the overall public interest, and the nature of the project, it will be in fitness of things, if the parties can once again sit together, and try to work out the issues insofar as the aforesaid is concerned, that is, the reasons assigned in the termination notice," said a bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran.

 

National Highways Authority of India said the high court completely erred and interfering with the termination of its contract with Tata Projects and then directed a fresh joint inspection of the project site, reconsideration of contractual entitlements and revision of the construction schedule, thereby virtually reviving a determinable commercial contract and compelling its continued performance. Even if the contractual termination were open to judicial review, such mandatory directions travel far beyond the permissible limits of judicial review under Article 226 of the Constitution and effectively substitute the contractual dispute resolution mechanism agreed between the parties, said the authority.

 

The high court's verdict raises questions having far-reaching consequences for public infrastructure contracts, the authority said. The high court's judgment, if allowed to stand, would substantially dilute the settled principles governing judicial review of government contracts by permitting courts to re-appreciate contractual evidence, reinterpret contractual clauses, modify contractual obligations and interfere with valid contractual termination by conclusively determining disputed contractual issues and restructuring future performance of the contract in exercise of writ jurisdiction, it said.

 

In 2021, the highways authority issued Tata Projects a letter of acceptance and awarded the contract to execute the project. Under the contract, the highways authority was to provide absolute possession of the entire stretch of the highway, free of encumbrances, to facilitate execution of the work. However, Tata Projects said that it was not provided a contiguous, hindrance-free 5-kilometre stretch at a time to carry out the work, which delayed the project within the stipulated time.  

 

The highways authority terminated the contract with Tata Projects in 2024, citing poor maintenance and failure to complete the project on time. Challenging the highway authority's order, Tata Projects moved the high court. Since the construction of the highway and its maintenance project is basically meant to serve public interest and since Tata Projects has assured to complete the entire work under the contract within 14 months, the parties should conduct a joint site inspection afresh and arrive at an agreement to conclude the project within the re-scheduled timeline, the high court said. The highways authority moved the apex court challenging the high court's order.  End

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

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