Legal Bar on Injunctions Against Infrastructure Project Terminations: Delhi High Court

In a significant ruling emphasizing the priority of national infrastructure development, the Delhi High Court has held that courts cannot restrain authorities from terminating contracts for major infrastructure projects through interim injunctions. The bench, comprising Justice Dinesh Mehta and Justice Vinod Kumar, observed that sections of the Specific Relief Act, 1963 , create a clear embargo on judicial interference that would cause delays in the progress of essential projects.

The Conflict: A Stalled Expressway

The dispute arose between the National Highways Authority of India (NHAI) and Roadway Solutions India Infra Limited, a contractor engaged for Package No. VIII of the ambitious Delhi-Mumbai National Expressway. Following performance disputes, NHAI issued a notice to terminate the contract in December 2025. While a Single Judge had initially granted an interim stay against this termination, NHAI challenged the order at the Division Bench level.

NHAI argued that the project, a vital link between major metropolitan hubs, was facing significant delays. They contended that "out of the entire road of 794 kilometres, most of the road has been constructed," yet the incomplete stretches (Packages 8, 9, and 10) were forcing travelers to take unnecessary detours.

Arguments from the Frontlines

Counsel for the respondent-contractor argued that the NHAI’s termination notice was retaliatory—a "counterblast" to the contractor’s own notice of termination issued earlier due to land availability issues. They maintained that the contractor had invested approximately Rs. 237 crores and argued that an injunction was necessary for the preservation of the subject matter until the arbitration proceedings were resolved.

Conversely, the Solicitor General, appearing for the NHAI, highlighted that the contractor had failed to achieve the project milestones revised under subsequent settlement agreements. He pointed to inspection reports indicating that essential earthworks and structural tasks remained significantly behind schedule, labeling the contractor's performance as an attempt to "wriggle out of contractual obligations."

Key Observations

The High Court’s ruling was anchored in the legislative intent behind the 2018 amendments to the Specific Relief Act. The Court emphasized that infrastructure development holds a special status in law:

• "When it comes to development of infrastructure projects, Clause (ha) of Section 41 ... creates a clear embargo or fetters on the powers of the court to grant injunction."
• "No injunction shall be granted by a court in a suit under this Act involving a contract relating to an infrastructure project ... where granting injunction would cause impediment or delay in the progress or completion of such infrastructure project."
• "The balance of convenience entirely lies in the favour of the nation and citizen of India and in turn NHAI and not in favour of the contractor."

The Court’s Ruling: A Balanced Approach

The Division Bench set aside the interim injunction passed by the Single Judge, allowing NHAI to proceed with the termination and potential re-tendering of the contract. However, in a move to balance the equities, the Court imposed specific safeguards:

1. NHAI is restrained from encashing the contractor’s bank guarantees and insurance surety bonds until the underlying Section 9 application is finally decided.
2. NHAI is barred from passing any final recovery orders against the contractor until the same proceeding concludes.

The Court clarified that its findings are prima-facie and should not color the final adjudication of the arbitration proceedings. By allowing the project work to proceed while protecting the contractor's fiscal security, the Court has reinforced a model that keeps national infrastructure in motion, leaving the complex determination of fault to the eventual arbitration process.