W.P.(C) 4817/2026 Page 1 of 18

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* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment reserved on: 17.04.2026

Judgment pronounced on: 20.04.2026

Judgment uploaded on: 20.04.2026

+ W.P.(C) 4817/2026, CM APPL. 23578/2026, CM APPL.

23579/2026, CM APPL. 23580/2026 and CM APPL.

24716/2026

MD. KARIMUNNISA .....Petitioner

Through: Mr. Sanjoy Ghose, Sr. Adv.

with Mr. Kaustubh Anshuraj,

Mr. Parmod Kalirana, Mr.

Manish Choudhary, Mr. Amaya

Vaid, Advs.

versus

NATIONAL HIGHWAYS AUTHORITY OF INDIA

THROUGH ITS CHAIRMAN & ANR. .....Respondents

Through: Mr. N. Venkataraman, ASG

with Mr. Namit Saxena, Adv.

CORAM:

HON'BLE MR. JUSTICE ANIL KSHETARPAL

HON'BLE MR. JUSTICE AMIT MAHAJAN

J U D G M E N T

ANIL KSHETARPAL , J. :

1. Through the present Writ Petition under Article 226 of the

Constitution of India, the Petitioner assails the order dated 08.04.2026

[hereinafter referred to as the „Impugned Order‟], along with the show

cause notice dated 02.04.2026 [hereinafter referred to as the

„Impugned Show Cause Notice‟], whereby the Contract dated

26.05.2025 [hereinafter referred to as „Contract‟] executed between

W.P.(C) 4817/2026 Page 2 of 18

the Petitioner and the NHAI for collection of user fee at Pawangaon

Fee Plaza has been terminated prior to expiry of the contractual

period. The Petitioner has also challenged the fresh tender dated

02.04.2026 issued for engagement of a new user fee collecting agency

for three months for the said Fee Plaza.

2. The Petitioner contends that the termination of the Contract is

arbitrary, premeditated and contrary to the contractual stipulations,

particularly Clause 35(6) of the Contract [hereinafter referred to as

„Clause 35(6)‟], inasmuch as no circumstances warranting invocation

of the said clause existed. It is further urged that the impugned action

has been taken despite the contract remaining valid till 17.06.2026 and

without any breach attributable to the Petitioner.

3. In the aforesaid backdrop, the principal issues that arise for

consideration before this Court are:

i. Whether the Respondent Authority was justified in

terminating the Contract in exercise of its enabling powers under

Clauses 35(2) [hereinafter referred to as „Clause 35(2)‟] and

35(6); and

ii. Whether any interference is warranted in exercise of writ

jurisdiction with a contractual decision taken in the interest of

public exchequer by a public authority in matters relating to the

termination of a tender contract.

W.P.(C) 4817/2026 Page 3 of 18

FACTUAL MATRIX:

4. In order to appreciate the controversy involved in the present

case, the relevant facts, in brief, are required to be noticed.

5. The Petitioner had earlier operated as a User Fee Collection

Agency at the Pawangaon Fee Plaza situated at Km. 57+935 on NH-

353J in the State of Maharashtra for a period of two months during

April and May 2025. The Respondent No.1, namely the National

Highways Authority of India [hereinafter referred to as „NHAI‟],

invited bids through e-tender for engagement of a User Fee Collection

Agency at the said Pawangaon Fee Plaza, for a period of one year.

6. Pursuant to the competitive bidding process, in which multiple

bidders participated, the Petitioner was declared the successful bidder

with a daily remittance of Rs.2,62,430/- (Rs.2,58,737/- as per the

stand of the Respondents) for a period of one year and a Letter of

Award dated 13.05.2025 came to be issued in its favour. It is stated

that the Petitioner‟s quoted remittance was substantially higher than

the reserve price as well as the bid submitted by the second highest

bidder.

7. Thereafter, the Contract was executed between the parties for

collection of user fee at the said Fee Plaza for the period commencing

from 17.06.2025 (08:00 hours) till 17.06.2026 (08:00 hours). The

Petitioner furnished performance security and commenced toll

collection operations in terms of the Contract.

W.P.(C) 4817/2026 Page 4 of 18

8. The Contract, inter alia, contained Clause 35 governing

termination of the contract. While Clause 35(2) enabled termination

upon issuance of seven days‟ notice without assigning reasons, Clause

35(6) provided for termination in case of “windfall gain” at new fee

plazas where the moving average of ETC and cash collections for the

preceding fifteen days exceeded forty percent of the existing

remittance being paid by the toll agency.

9. On 02.04.2026, the Respondents issued a show cause notice

cum seven days‟ termination notice invoking Clauses 35(2) and 35(6)

of the Contract, stating their intention to terminate the contract. The

notice alleged the occurrence of windfall gain and simultaneously

afforded an opportunity of personal hearing to the Petitioner. On the

same date, the Respondents also issued a fresh tender for engagement

of a new user fee-collecting agency for three months for the very same

Fee Plaza.

10. Subsequently, by order dated 08.04.2026, the Contract stood

terminated prior to expiry of its contractual tenure. Aggrieved thereby,

the Petitioner instituted the present Writ Petition under Article 226 of

the Constitution of India challenging the Impugned Show Cause

Notice, the Impugned Order and the fresh tender issued for

appointment of a new agency.

11. The principal contention of the Petitioner is that the invocation

of Clause 35(6) was wholly misconceived and impermissible,

inasmuch as the said provision relating to “windfall gain” is expressly

applicable only to new user fee plazas, whereas the Pawangaon Fee

W.P.(C) 4817/2026 Page 5 of 18

Plaza is an already operational and existing fee plaza. Further, the

premature termination of a subsisting contract, allegedly without

existence of any breach or default on its part, is arbitrary, pre-

determined, and violative of Article 14 of the Constitution of India.

12. During the course of hearing, the Respondents placed on record

a tabulated compilation reflecting a substantial and consistent increase

in toll collection at the Pawangaon Fee Plaza over successive months.

The said compilation, produced to demonstrate the financial trajectory

of collections vis-à-vis the contractual remittance, is extracted below

for ready reference:

Month ETC

Collectio

n

Annual

pass

Compensa

tion

amount

ETC

Collection

including

Compensation

Present

remittance

per day

Compari

son

Apr-25 2,31,734 0 2,31,734 2,58,737 10.44

May-25 3,38,228 0 3,38,228 2,58,737 30.72

June-25 4,50,264 0 4,50,264 2,58,737 74.02

Jul-25 4,81,012 0 4,81,012 2,58,737 85.91

Aug-25 5,19,804 2,716 5,22,521 2,58,737 101.95

Sep-25 6,41,192 5,150 6,46,341 2,58,737 149.81

Oct-25 6,21,503 8,682 6,30,185 2,58,737 143.56

Nov-25 7,79,651 12,915 7,92,566 2,58,737 206.32

Dec-25 8,72,630 17,590 8,90,220 2,58,737 244.06

Jan-26 8,64,490 18,933 8,83,422 2,58,737 241.44

Feb-26 9,37,590 20,970 9,58,560 2,58,737 270.48

Mar-26 8,92,866 19,780 9,12,646 2,58,737 252.73

13. A perusal of the aforesaid data indicates that the toll collection

substantially exceeded the 40% benchmark contemplated under

Clause 35(6) as early as June 2025 and thereafter demonstrated a

steady upward trajectory. According to the Respondents, continuation

W.P.(C) 4817/2026 Page 6 of 18

of the existing contractual arrangement despite such escalation in

collections resulted in a significant revenue imbalance, causing an

estimated loss of approximately Rs.7,50,000/- per day to the public

exchequer.

14. By order dated 16.04.2026, after hearing learned counsel for the

parties, this Court granted opportunity to the Petitioner to respond to

the compilation produced by the Respondents and directed the

Respondents to explain the delay in invoking Clause 35(6) of the

Contract, however, no satisfactory explanation has been furnished.

CONTENTIONS OF THE PARTIES:

15. Heard learned Counsel for the parties at length and perused the

record placed before the Court.

16. Learned Senior Counsel representing the Petitioner has made

the following submissions:

i. The termination of the Contract is arbitrary, pre-

determined and contrary to the contractual stipulations, inasmuch

as Clause 35(6) could not have been invoked since the

Pawangaon Fee Plaza is not a new user fee plaza and no

“windfall gain” situation existed.

ii. The contract was admittedly valid till 17.06.2026 and no

breach, deficiency, or contractual default has been attributed to

the Petitioner. Therefore, exercise of termination powers under

Clause 35(2) is mala fide and violative of Article 14 of the

Constitution of India.

W.P.(C) 4817/2026 Page 7 of 18

iii. The Impugned Show Cause Notice and the consequential

Impugned Order are non-speaking and were issued in a

mechanical manner, particularly as a fresh tender was floated on

the very same date, demonstrating a pre-decided intention to

terminate the contract.

iv. The reply dated 04.04.2026 submitted by the Petitioner

was neither considered nor dealt with prior to termination of the

Contract.

v. The policy circular dated 26.03.2025 governing

“overstay” situations has been wrongly applied during the

subsistence of the contractual period, thereby causing serious

financial prejudice.

17. Per contra, learned ASG appearing on behalf of the

Respondents has made the following submissions:

i. The Contract expressly confers upon the NHAI the power

to terminate the contract by issuance of notice under Clause

35(2), and such contractual power cannot be curtailed merely

because the contract period had not expired.

ii. Invocation of Clause 35(6), read with the applicable

policy circulars, is stated to be a policy and administrative

decision taken in public interest to safeguard public revenue and

ensure efficient toll operations.

iii. Judicial review in contractual matters is limited to

examining the decision-making process and does not extend to

W.P.(C) 4817/2026 Page 8 of 18

re-appreciation of commercial or policy decisions taken by a

public authority.

18. No other submissions were urged by learned Counsel

representing the parties.

ANALYSIS AND FINDINGS:

19. This Court has considered the submissions advanced by learned

Counsel for the parties and perused the material placed on record.

20. At the outset, it is necessary to delineate the scope of judicial

review exercisable in contractual and tender matters under Article 226

of the Constitution of India. It is now well-settled that when the State

or its instrumentalities act within the domain of commercial contracts,

the Court does not sit as an appellate authority over contractual

decisions. Interference is warranted only where the decision-making

process is shown to be arbitrary, mala fide, irrational, or in violation

of statutory or constitutional mandates.

21. The Supreme Court, in Tata Cellular v. Union of India

1

,

authoritatively held that judicial review in contractual matters is

confined to examining the decision-making process and not the merits

of the decision itself. The Court cannot substitute its own view for that

of the competent authority merely because another view is possible.

22. Similar principles have consistently been reiterated in Jagdish

Mandal v. State of Orissa

2

, wherein it was held that interference in

1

(1994) 6 SCC 651

2

(2007) 14 SCC 517

W.P.(C) 4817/2026 Page 9 of 18

tender matters is permissible only when the action is so arbitrary or

unreasonable that no responsible authority acting reasonably could

have arrived at such a decision, or when public interest is

demonstrably affected.

23. Recently, the Supreme Court in N.G. Projects Ltd. v. Vinod

Kumar Jain

3

cautioned that courts must exercise restraint in

contractual disputes involving State entities, as excessive judicial

intervention delays public projects and adversely impacts the public

exchequer.

24. Having delineated the settled contours governing judicial

review in contractual and tender matters, this Court now proceeds to

examine the controversy arising in the present case.

25. The principal challenge mounted by the Petitioner essentially

relates to the validity of termination of the Contract, particularly the

invocation of Clause 35(6), contending that the Pawngaon Fee Plaza

was not a “New User Fee Plaza” and therefore the “windfall gain”

provision could not have been invoked.

26. Clause 35(6) envisages its invocation where the moving

average of electronic toll collection and cash collection for the

preceding fifteen days exceeds forty percent of the existing remittance

payable by the toll agency. In the present case, the material placed on

record indicates that toll collections crossed the said forty percent

threshold in the same month (June 2025) when the Petitioner took

over operations at the fee plaza under this contract.

3

(2022) 6 SCC 127

W.P.(C) 4817/2026 Page 10 of 18

27. Once the contract, viewed as a whole, provides adequate

safeguards to both contracting parties, it would not be appropriate to

strike down an individual clause as arbitrary. Considerable arguments

were advanced on the question whether the fee plaza constituted a

“new” fee plaza. However, once Clause 35(6) forms part of the

contractual framework accepted by the parties, the said controversy

loses much of its significance, particularly when it is the stand of the

Respondents that the fee plaza was less than one year old at the time

of award of contract and that the Petitioner itself had operated the

plaza for a limited period prior to execution of the Contract. In that

context, the Respondents have treated the plaza as a new fee plaza.

28. Clause 35(6) expressly contemplates termination upon

occurrence of specified financial contingencies relating to toll

collections. Once such a contractual power stand reserved in favour of

the NHAI, the contractor cannot claim an indefeasible right to

continue till expiry of the contractual tenure merely because the

Contract remained valid up to 17.06.2026. A commercial arrangement

governed by agreed contractual conditions necessarily remain subject

to termination in accordance with those very conditions, unless the

decision is established as arbitrary passed with mala fide intent or

biased.

29. Similarly, it has been consistently held that persons who enter

into contractual dealings with the State with open eyes must accept

both the advantages and the burdens flowing from such agreements. A

contractor participating in a competitive bidding process cannot

W.P.(C) 4817/2026 Page 11 of 18

subsequently challenge a mutually accepted termination mechanism

solely because its operation has resulted in commercial disadvantage.

30. The doctrine invalidating unfair contractual terms, as explained

in Central Inland Water Transport Corporation Ltd. v. Brojo Nath

Ganguly & Anr.

4

, applies primarily to situations involving gross

inequality of bargaining power, such as employer-employee

relationships. The present case, however, arises out of a commercial

tender between business entities operating in a competitive market

environment. The termination clause, forming part of the tender

conditions, cannot therefore be characterised as unconscionable or

oppressive.

31. It is pertinent to note that before declaring any particular clause

of a contract to be arbitrary, the Court is required to examine the

contract in its entirety. Testing a contractual stipulation on the

aforesaid basis becomes necessary, for a clause read in isolation may

lead to an incorrect conclusion. Selective reading of contractual terms

is fraught with inherent dangers and must therefore be avoided.

32. Clause 35(5) itself provides for premature termination of the

contract at the request of the contractor. Under sub-clause (a), the

contractor is at liberty to submit a written request to the NHAI seeking

premature termination within a period of thirty days of taking over the

fee plaza. Further, sub-clause (g) of Clause 35(5) contemplates

termination at the instance of the contractor in situations such as

farmer agitations or where the fee plaza is likely to remain closed for a

4

AIR 1986 SC 1571

W.P.(C) 4817/2026 Page 12 of 18

period exceeding thirty days. These provisions demonstrate that the

contractual framework incorporates safeguards operating in favour of

the contractor as well.

33. It is equally well settled that while State action in contractual

matters remains amenable to judicial review under Article 14 of the

Constitution of India, such review is confined to examining whether

the decision suffers from mala fides, arbitrariness, or colourable

exercise of power. Courts do not evaluate the commercial wisdom of

the Authority or substitute their own assessment for that of the

contracting agency managing public infrastructure.

34. In the present case, the NHAI issued prior notice, considered

the Petitioner‟s reply, afforded a personal hearing, and thereafter

proceeded to terminate the Contract. The decision-making process

thus satisfies the requirements of procedural fairness. No material has

been placed before this Court to indicate mala fides, bias, or manifest

arbitrariness in exercise of the contractual power under Clause 35(2).

35. Once the Contract itself reserves an express right of termination

upon notice, continuation of the contract till the last date of tenure

cannot be claimed as a vested or enforceable right in writ jurisdiction.

36. Further, the Petitioner, in its reply, has itself asserted that it has

been associated with the NHAI since the year 2020 and has

successfully operated more than 80 Fee Plazas across the country

without adverse remarks. The said assertion, rather than advancing the

Petitioner‟s case, demonstrates that the Petitioner is an experienced

and commercially sophisticated contractor, well acquainted with the

W.P.(C) 4817/2026 Page 13 of 18

operational, financial, and contractual framework governing toll plaza

agreements. Consequently, the Petitioner cannot be permitted to

contend that the implications or consequences flowing from Clause

35(6) were unforeseen or inequitable, the contractual stipulations

having been accepted with full knowledge and understanding of their

commercial ramifications.

37. Additionally, the Petitioner is estopped from challenging the

validity of Clause 35(6) at this stage after having availed benefits

under the Contract for nearly nine months out of the total contractual

duration of twelve months. Having enjoyed the contractual

arrangement for approximately eighty percent of its tenure, it would

be inappropriate to permit a challenge to the very clause forming part

of the agreed tender conditions.

38. In substance, the relief sought by the Petitioner amounts to

enforcement of a commercial contract in the nature of specific

performance while simultaneously assailing the validity of Clause

35(6). Under the scheme of the Specific Relief Act, 1963, contracts

requiring continuous supervision or day-to-day monitoring by the

Court are ordinarily not specifically enforceable, particularly where

compensation or damages constitute an adequate remedy. The

appropriate remedy, if any, available to the Petitioner would therefore

lie in seeking damages or compensation in accordance with law.

39. Consequently, viewed either from the standpoint of valid

invocation of Clause 35(6) or independently under Clause 35(2), the

impugned termination cannot be said to be legally unsustainable. The

W.P.(C) 4817/2026 Page 14 of 18

challenge raised by the Petitioner, therefore, essentially seeks

enforcement of contractual expectations rather than correction of any

constitutional or public law infirmity.

40. The Petitioner has further alleged that the Impugned Show

Cause Notice and the consequential Impugned Order were issued in a

mechanical manner and that the simultaneous issuance of a fresh

tender demonstrates a pre-determined decision to terminate the

Contract. This contention does not merit acceptance.

41. As noted above, a perusal of the record indicates that the

Petitioner was issued a seven days‟ notice, submitted a detailed reply

dated 04.04.2026, and was afforded an opportunity of personal

hearing on 06.04.2026. The Impugned Order records consideration of

the submissions advanced and reflects the satisfaction of the

Competent Authority that the explanation offered by the Petitioner

was not tenable. The requirement of natural justice does not obligate

an administrative authority to render a judgment akin to a judicial

decree. It is sufficient if the order discloses application of mind to the

material placed before it, which requirement stands duly satisfied in

the present case.

42. The mere fact that a fresh tender process was initiated

contemporaneously with the termination decision cannot, by itself,

establish mala fides or pre-determination. In matters relating to toll

collection on national highways, continuity of operations is directly

connected with safeguarding public revenue. Administrative

W.P.(C) 4817/2026 Page 15 of 18

preparedness to avoid disruption in user fee collection constitutes

prudent governance rather than evidence of arbitrariness.

43. The Petitioner has also relied extensively upon alleged financial

losses suffered at other fee plazas, blockage of performance securities,

and the assertion that the Pawangaon Fee Plaza constituted its sole

revenue-generating asset. In contractual matters, hardship or adverse

commercial impact cannot override the express terms voluntarily

agreed between the parties or justify exercise of writ jurisdiction in the

absence of arbitrariness, mala fides, or violation of statutory or

constitutional obligations.

44. It is well settled that writ jurisdiction under Article 226 cannot

be invoked to renegotiate commercial bargains or to grant equitable

protection against contractual consequences voluntarily undertaken. A

contractor participating in a competitive tender assumes both

commercial risks and contractual obligations, and subsequent financial

inconvenience does not render lawful contractual termination

arbitrary.

45. The material on record further indicates that the NHAI acted

with the objective of protecting public revenue and ensuring efficient

management of toll operations. Initiation of a fresh tender process and

interim operational arrangements demonstrate continuity planning in

discharge of statutory and public duties. Judicial interference in such

administrative decisions, absent demonstrable illegality, would

amount to substituting administrative discretion with judicial

preference, which is impermissible in exercise of writ jurisdiction.

W.P.(C) 4817/2026 Page 16 of 18

46. Ultimately, the controversy raised by the Petitioner pertains to

the applicability and exercise of contractual termination clauses, the

financial consequences arising therefrom, and competing

interpretations of contractual terms. Invocation of Article 226 cannot

transform a commercial disagreement into a constitutional cause of

action.

47. Before parting with the matter, this Court considers it necessary

to record certain observations arising from the subsequent

developments placed on record during the course of hearing.

48. The material produced before this Court, including the later

administrative orders relied upon by the parties, indicates that the

circumstances giving rise to alleged “windfall gain” were not acted

upon with promptitude by the NHAI. Delay in timely assessment and

invocation of contractual safeguards, particularly in contracts

involving collection of public revenue, has the potential to result in

avoidable loss to the public exchequer.

49. Public authorities entrusted with management of national

highway toll operations discharge functions closely connected with

public finance. Contractual clauses such as Clause 35(6) are

incorporated precisely to enable timely corrective intervention where

revenue projections undergo substantial variation. Any institutional

delay in monitoring or enforcement undermines the very purpose of

such contractual mechanisms.

50. During the course of hearing on 17.04.2026, learned Additional

Solicitor General appearing for the NHAI fairly submitted that there

W.P.(C) 4817/2026 Page 17 of 18

had been a significant delay in invoking Clause 35(6) of the Contract,

which, according to the Respondents, resulted in a loss of

approximately Rs.7.5 lakhs per day to the NHAI and consequently to

the public exchequer. It was further submitted that a senior official has

already been issued a show cause notice in this regard. Learned

Additional Solicitor General also informed the Court that steps are

being undertaken to introduce an automated technological

mechanism/software-based monitoring system to enable real-time

tracking of toll collections and early identification of “windfall gain”

situations so as to avoid recurrence of such lapses.

51. This Court appreciates the said statement and expects the NHAI

to expeditiously implement robust monitoring mechanisms ensuring

transparency, timely decision-making, and protection of public

revenue. Keeping in view the aforesaid position, the NHAI is directed

to place on record the ultimate decision taken pursuant to the said

show cause notice. The disciplinary proceedings against the concerned

officials shall be concluded, as far as practicable, within a period of

six months, and the outcome thereof shall be placed before this Court,

notwithstanding disposal of the present Writ Petition. These

observations and directions are issued in the larger public interest and

shall not be construed as affecting the legality of the impugned

termination upheld herein.

W.P.(C) 4817/2026 Page 18 of 18

CONCLUSION:

52. In view of the foregoing discussion, this Court is satisfied that

the present Writ Petition is devoid of merit and is, accordingly,

dismissed. All the pending applications also stand closed.

ANIL KSHETARPAL , J.

AMIT MAHAJAN, J.

APRIL 20, 2026

sp/sh