Synopsis

NHAI challenged an arbitral award that had allowed several claims of the contractor (Progressive Constructions Ltd.) arising from a terminated road construction contract. The High Court partially allowed the appeal, setting aside Claims No. 6, 7, 8 and 9, while upholding Claims No. 1 and 11. The court held that: (i) the contractor, having accepted Engineer's recommendations granting extensions of time without prolongation costs, was estopped from later claiming overheads under Hudson formula; (ii) the award of Claim No. 9 (confiscated machinery) was perverse as it was based on no evidence; (iii) Claim No. 1 (unpaid work) was justified based on NHAI's own documents; (iv) Claim No. 11 (loss of profit) was justified as termination was held illegal; (v) the scope of interference under Section 37 is extremely circumscribed.

1. Heading of the judgment

High court of delhi at new delhi

Fao(os)(comm) no. 206 of 2023

National highways authority of india (appellant) vs. Progressive constructions limited (respondent)

Coram: hon’ble mr. justice v. kameswar rao and hon’ble mr. justice vinod kumar

Core Law: Arbitration and Conciliation Act, 1996 – Sections 34, 37 – Scope of judicial review – Patent illegality – Public policy – Termination of contract – Hudson formula for overheads – Acquiescence and waiver – EOT recommendations – Valuation of confiscated machinery – Loss of profit.

Court: High Court of Delhi at New Delhi
Coram: Hon’ble Mr. Justice V. Kameswar Rao and Hon’ble Mr. Justice Vinod Kumar (Division Bench)
Date of Judgment: June 18, 2026 (Reserved on December 12, 2025)
Case No.: FAO(OS)(COMM) No. 206 of 2023
Citation: 2026:DHC:5137-DB

2. Legal framework

Major laws and provisions involved:

• Arbitration and Conciliation Act, 1996 – Sections 34 (challenge to arbitral award), 37(1)(c) (appeal against order under Section 34), 16(6), 21 (commencement of arbitration), 23(3) (amendment of pleadings)

• Indian Contract Act, 1872 – Sections 72 (waiver), 115 (estoppel)

• National Highways Authority of India Act, 1988

Subject matter of the judgment:

Whether the Division Bench under Section 37 of the Arbitration Act can interfere with an arbitral award that was upheld by a Single Judge under Section 34, particularly regarding claims for overheads based on Hudson formula, valuation of confiscated machinery, and loss of profit; and whether the contractor's failure to challenge EOT recommendations rejecting prolongation costs amounts to acquiescence/waiver.

Key legal principles applied:

• Scope of interference under Section 37 is narrower than Section 34: The appellate court's jurisdiction under Section 37 is all the more circumscribed. If the Single Judge has upheld the award under Section 34, the Division Bench cannot undertake an independent asses

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