Kalpataru Projects' JV loses Termination Payment claim in NHAI dispute
- Delhi High Court upholds partial setting aside of arbitral award against NHAI
- Termination Payment and interest claims by KEPL denied; other claims upheld
- KEPL plans to file appeal under Section 37 of Arbitration and Conciliation Act
- Kalpataru holds 49.57% equity stake in Kurukshetra Expressway Private Limited
*this image is generated using AI for illustrative purposes only.
Kalpataru Projects International reported that the Hon'ble Delhi High Court upheld its earlier order partially setting aside an arbitral award in favor of its joint venture, Kurukshetra Expressway Private Limited (KEPL), against the National Highways Authority of India (NHAI). The court's decision, dated September 28, 2026, specifically denies KEPL's claim for Termination Payment and associated interest, while upholding awards on other claims.
The dispute stems from a concession agreement executed in July 2010 for the four-laning of the Rohtak-Bawal section of NH-71 in Haryana. KEPL terminated this agreement in October 2021, citing force majeure due to farmer protests that halted toll collection. Following termination, KEPL initiated arbitration, securing awards against NHAI which included the disputed Termination Payment. NHAI challenged these awards under Section 34 of the Arbitration and Conciliation Act, 1996.
Legal Proceedings Timeline
The legal battle has seen multiple developments since the initial arbitration awards were received in August 2024. The table below outlines the key procedural milestones disclosed by the company:
| Date | Event | Status |
|---|---|---|
| August 16, 2024 | KEPL receives two arbitration awards in its favor against NHAI | Awards received |
| December 11, 2024 | NHAI serves advance copies of Section 34 application challenging awards | Challenge initiated |
| July 28, 2026 | Delhi High Court partially sets aside arbitral award (Termination Payment denied) | Partial setting aside |
| September 28, 2026 | Delhi High Court upholds the order dated July 28, 2026 | Order upheld |
Impact on Joint Venture
KEPL, in which Kalpataru holds a 49.57% equity stake, stated that it believes it has a strong case to challenge the current order. The company is taking appropriate legal steps, including filing an appeal under Section 37 of the Arbitration and Conciliation Act, 1996. The financial impact on Kalpataru Projects International remains uncertain until the awarded claims are crystallized and any further legal outcomes are determined.
The termination of the concession agreement previously led to KEPL's account being classified as a Non-Performing Asset (NPA) under RBI guidelines after it failed to pay interest to lenders in October 2021. This classification occurred because the company could not honor lender payments following the cessation of toll revenue due to the force majeure event.
What the Numbers Show
While specific monetary values of the arbitral award are not disclosed in the filing, the judicial distinction between claim types is significant. The court upheld awards on all claims except the Termination Payment and interest thereon. This suggests that the judiciary recognized certain liabilities of NHAI towards KEPL but rejected the compensation mechanism for the project's early termination. For investors, the concentration of the dispute around the Termination Payment highlights that the primary financial recovery expected from this litigation has been legally blocked at the appellate stage, shifting focus to the strength of KEPL's further appeal.
Historical Stock Returns for Kalpataru Projects International
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.76% | -5.14% | -1.53% | +27.14% | +9.97% | +245.03% |
How might the Delhi High Court's distinction between general liabilities and Termination Payments influence future arbitration outcomes for other infrastructure joint ventures facing similar force majeure claims?
What are the potential implications for Kalpataru Projects International's balance sheet if the Section 37 appeal results in a prolonged legal stalemate regarding the KEPL NPA classification?
Could this judicial precedent encourage NHAI to adopt stricter termination clauses or different risk-sharing mechanisms in upcoming concession agreements to mitigate similar litigation risks?
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