Substantive Monetary Relief Under Section 17 Not Warranted Where Disputed Claims Require Trial: Delhi High Court Sets Aside Interim Payment Order in EPC Contract Dispute

1. Case Snapshot

Case Name: India International Convention And Exhibition Centre Limited vs Larsen And Toubro Limited

Citation: ARB. A. (COMM.) 35/2026

High Court: High Court of Delhi

Bench: Hon'ble Mr. Justice Harish Vaidyanathan Shankar

Date of Judgment: 1st July, 2026

Area of Law: Arbitration Law, Contract Law, Interim Relief, EPC Contracts, Commercial Disputes

2. Judgment in Brief

The Delhi High Court allowed an appeal under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996, setting aside an order of the Majority Arbitral Tribunal that had directed the Appellant (IICC) to release approximately Rs. 227 crores to the Respondent (L&T) as an interim measure under Section 17 of the Act. The dispute arose from an EPC contract where stage payments were certified by an independent Engineer but subject to reconciliation of contract price due to alleged negative variations. The Majority Tribunal had found a prima facie case for SP-69 and SP-70 while holding that SP-68 required trial. The High Court held that the Tribunal's reasoning was internally inconsistent, as it directed payment of sums certified under SP-69 and SP-70 while acknowledging that the foundational dispute regarding negative variations required adjudication upon evidence. The Court also found that the balance of convenience and irreparable injury tests were not satisfied, as the project was substantially completed and 80% of the contract price had already been paid. The appeal was allowed, and the Tribunal's order was set aside.

3. Relevant Facts

The Contract

• The Appellant (IICC) is a Special Purpose Vehicle under the Government of India for development of the India International Convention and Expo Centre Project at Dwarka, New Delhi.

• The Respondent (L&T) was awarded the EPC contract for detailed design, construction, testing and commissioning of Phase-I works on a lump-sum basis vide Contract dated 30.01.2018.

• The contract envisaged stage-wise payments to be released upon certification by an independent Engineer (AECOM India Pvt. Ltd.) through Interim Payment Certificates (IPCs).

The Dispute

• Disputes arose regarding change in scope, delay, withholding of payments, GST claims, and force majeure costs.

• A principal dispute concerned alleged "negative variations"—works the Appellant claimed formed part of the original scope but remained unexecuted.

• The Respondent disputed this and contended such works were beyond the agreed scope.

Engineer's Certifications

• The Engineer issued SP-68 on 26.10.2024 certifying Rs. 142.91 crores but recommended "NIL" payment due to reconciliation of contract price on account of negative variations.

• The Engineer revised SP-68 on 15.01.2025 to a negative value of Rs. 621.57 crores.

• The Engineer issued SP-69 on 15.01.2025 certifying Rs. 51.42 crores, subject to reconciliation.

• The Engine

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