NHAI’s Battle for Compensation: Deciphering Delhi High Court’s Recent Decision   

Case Title: National Highways Authority of India v. D S Toll Roads Pvt. Ltd. 

Date of Decision: 19/09/2023 

Case Number: O.M.P. (COMM.) 546/2016 & I.A.15029/2016 

Coram: Hon’ble Mr. Justice Manoj Kumar Ohri 


Factual Background  


In this case, the petitioner, the National Highways Authority of India (NHAI), filed a petition under Section 34 of the Arbitration & Conciliation Act, 1996, challenging an arbitral award dated 07.07.2016. The arbitral award was made in response to disputes arising from a Concession Agreement between NHAI and the respondent, D S Toll Roads Pvt. Ltd., regarding the construction and operation of a highway in Tamil Nadu. The petitioner contested certain claims made by the respondent and sought a review of the award. 


Legal Issue 


The key legal issue in this case was the interpretation of the Concession Agreement and the applicability of specific clauses regarding compensation for delays and additional costs. 


Observation and Analysis 


The Court examined the relevant clauses of the Concession Agreement, particularly sub-clauses 13.5.1, 13.5.2, and 31.2, to determine the appropriate compensation for the delays. The Court emphasized that a comprehensive reading of the clauses, including their provisos, was essential. It concluded that compensation should be calculated in accordance with sub-clause 31.2 because the provisional completion certificate and the COD (Commercial Operation Date) were adversely affected and delayed. The Court noted the limited scope of interference under Section 34 of the Arbitration & Conciliation Act, emphasizing that the Court could only intervene if the arbitral award was patently illegal or perverse.  


Decision of the Court  


The Court found that the arbitral tribunal’s decision was reasonable and legally sound. It upheld the applicability of sub-clause 31.2 of the Concession Agreement and dismissed the petitioner’s objection under Section 34. Consequently, the petition was dismissed, and no costs were awarded. 


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Written by – Ananya Chaudhary 

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