THE RATIO — one judgment, decoded twice: once for anyone, once for the profession.

Headnote

A ₹911 crore arbitral award, largely undone. The National Highways Authority of India challenged an award that had calculated a highway concessionaire’s termination payment using its actual project cost — even though the underlying contract capped that cost at ₹650 crore. The Delhi High Court has now sided with NHAI: allowing a routine notification letter to silently override an express contractual ceiling is not interpreting the contract, it is rewriting it, and that crosses from an arbitrator’s ordinary latitude into the narrow ground on which an Indian court may actually set an award aside.

Factual Background

In 2010, NHAI awarded a concession to Kurukshetra Expressway Private Limited — a special purpose vehicle promoted by JMC Projects (India) Ltd and SREI Infrastructure Finance Limited — to four-lane a stretch of NH-71 between Rohtak and Bawal in Haryana. The concession was to run 28 years; toll collection began in 2013, and the project was certified complete in 2018. By 2014 the concessionaire was already seeking, and NHAI was already granting, deferment of the annual premium it owed, citing financial stress.

Matters came to a head in October 2021, when the concessionaire terminated the Concession Agreement, citing an “Indirect Political Force Majeure Event,” and claimed a termination payment of roughly ₹1,347 crore. A third round of arbitration between the parties followed. In August 2024, the tribunal awarded the concessionaire ₹911 crore on this claim, together with interest, while rejecting two of its other heads of claim and partly allowing some of NHAI’s counter-claims.

NHAI challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 — India’s narrow, statutory route to setting aside an award, as distinct from an ordinary appeal. Before that challenge could even be heard on its merits, the concessionaire applied to have it thrown out altogether, arguing NHAI had filed too late and had withheld documents from the roughly 4,500-page arbitral record.

The Question for Determination

Two questions arose, one procedural and one substantive.

Procedurally: had NHAI filed within time, and had it suppressed material documents? The concessionaire pointed to a string of re-filings between November and December 2024 to argue the petition was, in substance, late, and to NHAI’s initial filing of only a fraction of the arbitral record to argue deliberate concealment.

Substantively, and this is where the real weight of the case sits: the Concession Agreement defined “Total Project Cost” as the lowest of three figures, one of which was a flat ₹650 crore. The termination payment formula was built on components of that defined term. Separately, the contract required the concessionaire to send NHAI a “disaggregation letter” notifying the actual project cost and splitting it between debt and equity, providing that “only the amounts so conveyed shall form the basis of computing” the termination payment. The concessionaire’s disaggregation letter put its actual cost at over ₹1,045 crore — well above the ₹650 crore ceiling — and the tribunal accepted that higher figure. NHAI’s position was that the letter was never meant to do more than divide an already-capped number between debt and equity; it was not a mechanism for resetting the cap itself.

The Court’s Reasoning

On the threshold applications, the Court found NHAI’s petition timely: it was first filed on 13 November 2024, comfortably inside the three-month window under Section 34(3), and later re-filings made only to cure registry defects do not reopen that clock, a position drawn from the Supreme Court’s ruling in Northern Railway v Pioneer Publicity Corporation. Measured even against the outer 120-day limit that Section 34(3) allows on sufficient cause, the petition was in time. On suppression, the Court found it telling that NHAI’s own petition had asked the Court to summon the complete arbitral record — an odd thing to request if the intention was to conceal something within it.

On the substance, the Court accepted NHAI’s reading of the contract. Its central analytical move was to distinguish between interpreting a contract, which is squarely the arbitrator’s task however debatable the outcome, and rewriting one, which is not. Treating the disaggregation letter as capable of displacing the ₹650 crore ceiling did not merely favour one reasonable reading over another, in the Court’s assessment — it drained an express contractual cap of effect in precisely the scenario, termination, for which the parties had built in a specific (if narrow) adjustment mechanism of their own. That, the Court held, tips into “patent illegality” under Section 34(2A), the ground the Supreme Court recognised in Ssangyong Engineering for awards resting on a construction that no fair-minded, reasonable person could reach. Claim No. 2 (interest on the termination payment) fell with it, being entirely dependent on the figure in Claim No. 1. Every other claim and counter-claim — running across several further heads — the Court left undisturbed, treating each as a plausible reading of the contract or the evidence, squarely within the tribunal’s remit.

Critical Assessment

A ruling of this kind sits on a genuinely difficult line, and it is worth naming rather than passing over. Section 34 review is deliberately narrow because arbitration’s value depends on finality: if a court can freely revisit a tribunal’s contractual interpretation whenever it would have read a clause differently, arbitration becomes a prelude to litigation rather than an alternative to it. Patent illegality is meant to be the exception for the rare award that does not so much interpret a contract as disregard it. That exception has a long and contested history in Indian arbitration practice of being stretched toward something closer to ordinary appellate review, particularly in disputes where a public authority is the one paying out — and this judgment devotes the bulk of its reasoning, running across some forty paragraphs, to precisely the kind of clause-by-clause contractual construction a first-instance contract dispute would involve, before concluding that the tribunal’s reading was not merely wrong but impermissible. Whether that line has been drawn correctly here, or redrawn a step further into “we would have read the clause differently” territory than Section 34(2A) contemplates, is exactly the question a Division Bench hearing an appeal under Section 37 — which, given the sums at stake, seems likely — will have to confront directly.

There is also a commercial dimension worth sitting with rather than passing over. That the concessionaire’s actual capital cost exceeded ₹650 crore was never in dispute; the fight was only ever about whether that higher figure could be paid out on termination. The practical effect of this judgment is that, on an early termination triggered by circumstances the concessionaire did not itself bring about, it absorbs the entire gap between the contractual ceiling and its real spend. That may well be precisely the risk allocation the parties struck — the Court’s tracing of the ₹650 crore figure back to the original bid documents is not a weak argument — but it is worth registering as a substantial, real-world distributive consequence, and not merely a question of contractual construction decided in the abstract.

Implications

If you’re not a lawyer: few people will personally encounter a ₹900 crore arbitration, but the underlying lesson travels well beyond highways. Where a contract caps one party’s liability and separately requires that party to notify a figure to the other side, courts will be reluctant to treat the notification requirement as a quiet way of overriding the cap — the two provisions have to be read together, not as the second silently repealing the first. Anyone drafting a contract with both a liability ceiling and a separate reporting or notification clause would do well to state explicitly, at the drafting stage, whether that notification is meant only to record a number or is meant to reset one.

For the profession: this is a carefully reasoned application of the interpretation-versus-rewriting line from PSA SICAL Terminals and the “no fair-minded or reasonable person” standard from Associate Builders and Ssangyong Engineering, worth keeping on hand in any Section 34 matter involving a definitional cap said to have been read out of a contract by a separate mechanism. Two procedural points are independently useful regardless of how the merits eventually settle on appeal: first, the confirmation, via Northern Railway v Pioneer Publicity Corporation, that curing registry defects and re-filing does not reopen the Section 34(3) limitation clock once the original filing was timely — a recurring skirmish in high-value petitions with voluminous records; second, the observation that a petition’s own prayer for summoning the complete arbitral record cuts against an inference of deliberate suppression, useful wherever an opposing party tries to make capital out of an initial partial filing. A Section 37 appeal seems likely given the sum set aside and the closeness of the interpretive question, and would be the first real appellate test of how far this particular application of patent illegality is allowed to reach.

Case Details

  • Citation: O.M.P. (COMM) 542/2024
  • Court: Delhi High Court — Sachin Datta J
  • Decided: 28 July 2026
  • Governing provisions: Arbitration and Conciliation Act, 1996, ss 34, 34(2A), 34(3), 37
  • Counsel: Mr A.K. Nijhawan and Mr Abdul Vahiel for NHAI; Mr Sandeep Sethi and Mr Dayan Krishnan, Senior Advocates, with others, for the respondent
  • Precedents applied: Associate Builders v Delhi Development Authority (2015) 3 SCC 49 · Ssangyong Engineering & Construction Co Ltd v NHAI (2019) 15 SCC 131 · PSA SICAL Terminals Pvt Ltd v Board of Trustees of V.O. Chidambranar Port Trust, 2021 SCC OnLine SC 508 · Northern Railway v Pioneer Publicity Corporation Pvt Ltd (2017) 11 SCC 234 · Simplex Infrastructure Ltd v Union of India (2019) 2 SCC 455
  • Key paragraphs: [14]–[21] (threshold application dismissed: limitation and suppression) · [41]–[45] (the review standard: interpretation versus rewriting) · [51]–[88] (Claim No. 1 set aside for patent illegality) · [91]–[96] (remaining claims upheld; disposition)