Delhi High Court Stays NHAI Debarment of Independent Engineer: Administrative Circulars Cannot Override Contractual Safeguards

The High Court of Delhi has granted interim relief to infrastructure engineering joint venture URS Scott Wilson India Pvt. Ltd. & Lion Engineering Consultants Pvt. Ltd., staying a 1-year debarment order issued by the National Highways Authority of India (NHAI).

In URS Scott Wilson India Pvt. Ltd. v. NHAI & Anr. (2026:DHC:7175), Dr. Justice Swarana Kanta Sharma held that NHAI cannot bypass mandatory, graded contractual disciplinary procedures—such as issuing formal warnings—by unilaterally invoking administrative policy circulars.

Background of the Dispute

NHAI had engaged the petitioner as the Independent Engineer (IE) for a 6-laning Hybrid Annuity Mode (HAM) highway project under the Bharatmala Pariyojana Phase-I. Following extensive project delays caused by omissions in the Detailed Project Report (DPR) and disruptions from Cyclone Michaung, extensive Change of Scope (CoS) proposals were processed across more than 20 internal iterations.

On July 20, 2026, NHAI issued an order declaring the joint venture a “non-performer” and debarring it from all future NHAI bids for one year under NHAI Policy Circular No. 16.12/2022, citing delays in submitting and recommending CoS proposals. The petitioner approached the Delhi High Court seeking an interim stay on the debarment.

Key Findings of the Court

• Contractual Warning Mechanism Cannot Be Ignored: Clause 13 of the Terms of Reference (TOR) governing the contract contemplated a graded mechanism requiring multiple warnings before imposing debarment. NHAI failed to issue any warning or default notice during the entire two-year execution window.
• Administrative Circulars Do Not Supercede Contract Terms: NHAI’s contention that its Policy Circular operated as an independent administrative power outside the contract was rejected at the prima facie stage. A public authority remains bound by the agreed terms of the underlying contract.
• No Waiver of Due Process: The Court held that an engineer’s failure to explicitly raise the non-applicability of the circular during initial Show Cause Notice (SCN) replies does not absolve the authority from adhering to mandatory contractual obligations.
• Recognition of Force Majeure and Design Deficiencies: The Court took note of documented project delays arising from natural disasters (Cyclone Michaung) and deficiencies in the initial project DPR.

Summary Table

Access the Complete Judgment

The official order passed by the High Court of Delhi is accessible below:

📥 Download Delhi High Court Judgment (PDF) — W.P.(C) 10430/2026