Allahabad HC Quashes NHAI's Termination of Tata Projects' NH-709A Contract, Finds Handover Memorandum an Eye Wash
The Allahabad High Court set aside NHAI's mid-term termination of Tata Projects' Rs 940-crore highway contract, holding the authority's own documents proved it never handed over encumbrance-free land as promised under the EPC agreement.
A Division Bench of the Allahabad High Court comprising Justice Ajit Kumar and Justice Swarupama Chaturvedi, on 8 July 2026, allowed a writ petition filed by Tata Projects Limited and quashed the order dated 14 January 2025 by which the National Highways Authority of India (NHAI) terminated the company's Engineering, Procurement and Construction (EPC) contract for the widening and strengthening of NH-709A from Garhmukteshwar to Meerut in Uttar Pradesh. The court also quashed the subsequent forfeiture of bank guarantees and the fresh tender floated on 3 February 2025. The bench found that NHAI's own correspondence — including a letter dated 8 August 2022 and a comprehensive Authority's Engineer report dated 10 July 2024 — conclusively demonstrated that physical possession of the contracted land had never been handed over as represented in the Handover Memorandum, making the termination arbitrary and in breach of Article 14 of the Constitution.
The Rs 940-Crore Highway Contract and Its Collapse
NHAI issued a Request for Proposals on 11 December 2018 for the improvement of NH-709A covering a stretch of 50.254 km at a contract cost of Rs 940.68 crores. Tata Projects Limited received a Letter of Acceptance on 12 March 2021. The appointed day was declared as 10 October 2021, with a completion deadline of 10 October 2023.
Under Article 3.1(iii) of the EPC agreement, NHAI was obliged to provide no less than 90 per cent of the required Right of Way within 30 days of the agreement, in contiguous stretches of not less than 5 kilometres. A Handover Memorandum signed on 21 September 2021 recorded that 47.620 km out of 50.254 km — amounting to 94.76 per cent — had been handed over with Right of Way available.
Construction difficulties surfaced almost immediately. Tata Projects wrote to the Authority's Engineer on 7 July 2022 demanding an extension of 248 days, citing six categories of delay: encumbrance on land, tree-cutting delays, utility shifting, design approval delays, adverse weather, and Covid-19. The letter enumerated specific obstructions across 23.210 km — mosques, boundary walls, mazars, commercial buildings, bore-wells, and electricity poles — and identified 25.720 km affected by land payment disputes and private possession.
NHAI's own response, vide letter dated 8 August 2022, acknowledged that only 29.914 km out of 50.254 km had actually been handed over after accounting for 20.340 km of hindered land. Despite this admission, NHAI granted only 42 days of extension for Milestone-1 and refused to extend the timelines for Milestones 2 and 3.
The Handover Memorandum the Court Called an Eye Wash
The court's analysis of the Handover Memorandum dated 21 September 2021 formed the core of its reasoning. The bench found that the appendix to the memorandum listed only minor utilities — electric poles and hand pumps — and contained no reference to the land issues, building structures, religious constructions, or the chain-wise pending possessions that had been disrupting the project from its inception.
Article 8.2(i) of the EPC agreement required the Handover Memorandum to carry a detailed appendix specifying all parts of the site where vacant access and Right of Way had not been given, along with details of hindrances in the construction zone. The court found that the appendix as filed was so “sketchy and evasive” that it did not contain the dates by which utilities were expected to be removed, let alone any reference to the religious structures and land acquisition disputes that were making significant stretches impassable.
The Authority's Engineer's report of 21 November 2023 recommended an interim extension of 196 days, acknowledging that hindrances and encumbrances were continuing on the affected project stretch. A further comprehensive report dated 10 July 2024 documented that as of that date, a total of 15.66 km of the project length was encumbered, leaving only 34.594 km effectively available. The report additionally recorded that 7.998 km of the main carriageway remained hindered due to buildings, temples, mosques, boundary walls, and land disputes. The Authority's Engineer recommended a third interim extension of 247 days, proposing 5 January 2025 as the revised scheduled completion date.
The bench observed that NHAI's counter-affidavit failed to specifically deny the Authority's Engineer's report of 10 July 2024, even though it had been referred to in paragraph 49 of the writ petition. The court treated the report as an undisputed document. The bench equally noted that compensation to landowners of the Jama Masjid and Eidgah committee was paid only on 2 December 2024 — a document on record which the NHAI's reply addressed in a manner the court found evasive.
An acquisition notice under the National Highways Act, 1956 published on 5 February 2024 for a stretch of 12.13 km further reinforced the petitioner's position that land acquisition for a substantial portion of the project was still pending well into 2024.
NHAI's Termination and the Non-Application of Mind
Despite the Authority's Engineer recommending a 247-day extension as late as 10 July 2024, the sequence that followed pointed, in the bench's assessment, to a pre-determined outcome. On 17 September 2024 Tata Projects submitted a revised schedule proposing completion by 31 July 2025. NHAI responded by issuing a cure period notice on 11 October 2024 under Article 23.1(i) of the agreement, directing the contractor to complete maintenance work within 60 days.
Tata Projects replied on 19 November 2024, citing ongoing land handover issues. NHAI rejected the reply on 11 December 2024. A show cause notice was issued on 23 December 2024 citing slow progress and maintenance failures. On 3 January 2025, Tata Projects submitted a detailed reply stating that actual handing over of 90 per cent of the land had occurred only on 31 December 2024, whereas it was contractually due by 9 March 2022, and that 100 per cent possession had still not been transferred.
NHAI terminated the contract on 14 January 2025. The court, comparing the termination order with the show cause notice dated 23 December 2024, found the two documents were verbatim identical in their substantive paragraphs save for dates. Not a single point from Tata Projects' detailed reply had been discussed or addressed in the termination order.
The bench recorded that the Authority's Engineer, who had as recently as 10 July 2024 recommended 247 days of extension attributing delays to the authority's own failures, reversed course in a letter dated 17 December 2024 directing the petitioner to complete the work within the earlier extended timeline. The bench described this reversal as apparently occurring under pressure from the authority, noting it was contrary to what the Engineer had submitted barely five months before.
The court held that the termination order showed no application of mind, that it was “apparent on the face of record” that the authority had acted with a pre-determined intention, and that the conduct amounted to arbitrariness reviewable under Article 14 of the Constitution.
On Writ Jurisdiction Over Contract Disputes
NHAI had strenuously argued that the matter involved disputed questions of fact best resolved by an arbitrator under Article 26 of the EPC agreement, relying on the Supreme Court's judgment in Union of India v. Puna Hinda (2021) 10 SCC 690.
The Division Bench addressed this objection at length. It acknowledged the general principle that courts should discourage invocation of writ jurisdiction in purely commercial contractual disputes, particularly where disputed facts require adjudication. However, the bench distinguished the present case on the ground that the material before it did not involve genuinely contested facts. NHAI's own letter of 8 August 2022 and the Authority's Engineer's own report of 10 July 2024 together constituted a clear admission that the land had not been handed over as represented in the Handover Memorandum. In such circumstances, the court found, there was no complex factual dispute requiring arbitral expertise — the documentary record itself resolved the question.
The bench drew upon ABL International Ltd v. Export Credit Guarantee Corporation of India Ltd (2004) 3 SCC 553, MP Power Management Company Ltd v. Sky Power Southeast Solar India Pvt Ltd (2023) 2 SCC 703, and A.P. Electrical Equipment Corporation v. Tehsildar (2025) SCC Online SC 447. From these authorities the court extracted the principle that where resolution of a dispute involves appreciating the true scope of documentary material in the light of pleadings, a writ court may still grant relief, and that disputed questions of fact cannot be deployed as a smokescreen to foreclose a genuine claim under Article 226.
The bench also held that NHAI, as a State within the meaning of Article 12 of the Constitution, bore a heavy obligation to act fairly in performing its part of the contract, especially when the subject matter was a national highway project funded from public money. An act of the State that was arbitrary, even if arising in the contractual domain, remained subject to judicial review under Article 14.
Conduct During the Writ Proceedings
The court's account of proceedings in the writ petition itself formed a significant part of the judgment. An interim order dated 18 March 2025 directed NHAI to file an affidavit within a week specifying the dates when possession of land had been given to the petitioner, and stayed the award of any fresh contract to a third party pending that affidavit. NHAI did not file a compliant affidavit for months. On 26 November 2025, the court recorded NHAI's conduct as contumacious, warning it would invoke its jurisdiction under Article 215 of the Constitution and initiate contempt proceedings against the Chief General Manager of NHAI if compliance was not forthcoming within ten days.
Only after that warning did NHAI file a supplementary affidavit on 30 November 2025, bringing the Handover Memorandum on record. The matter was heard further and reserved on 9 February 2026. Subsequent clarifications were sought on whether the document was a Handover Memorandum as contemplated by Article 8.2 of the EPC agreement. A further supplementary affidavit filed by NHAI on 29 April 2026 confirmed it was the Handover Memorandum. Final hearing concluded on 15 May 2026 and judgment was reserved.
The bench observed that NHAI's sustained reluctance to produce the date-wise land handover chart — a document the court had described in terms that admitted of no ambiguity — was itself indicative of the authority's awareness that the Handover Memorandum did not withstand scrutiny.
What Follows the Quashing
The bench found that no third-party rights had been created during the pendency of the petition, NHAI having throughout maintained that no fresh contract had been awarded pursuant to the interim order. Tata Projects' machinery and materials remained on site, and the rejoinder affidavit stated that the balance works were valued at Rs 633 crores, of which Rs 157 crores had been executed but not billed, leaving Rs 476 crores of remaining work that the contractor undertook to complete within 14 months including two months of mobilisation.
The court directed the parties to conduct a fresh joint site inspection within one month of the judgment, and to proceed in accordance with the provisions of the EPC agreement — specifically Articles 13, 15, 16 and 17 — to arrive at a rescheduled timeline, taking into consideration the Authority's Engineer's report of 10 July 2024 alongside the findings of the fresh inspection.
Order
The Division Bench allowed the writ petition and quashed the contract termination order dated 14 January 2025, the forfeiture of bank guarantees, and the fresh tender floated on 3 February 2025. The parties were directed to undertake a joint site inspection within one month and to reschedule the project timeline under the applicable EPC provisions. No order as to costs was made.