Kalpataru Projects International Ltd: High Court Partially Sets Aside Arbitration Award

• 'Termination Payment' and interest award set aside.
• Company plans to file an appeal.

Reader Takeaway: A legal setback impacting potential recovery from a terminated project, with an appeal pending.

What just happened

The High Court, in an order dated July 28, 2026, has partially set aside an arbitration award that was in favor of Kurukshetra Expressway Private Limited (KEPL), a subsidiary of Kalpataru Projects International Ltd (KPIL). The award was against the National Highways Authority of India (NHAI) concerning the Rohtak-Bawal Section of NH-71.

Specifically, the court upheld awards for other claims but nullified the 'Termination Payment' and the interest on that payment.

Why this matters

This decision is significant as it impacts the financial recovery expected from the terminated Rohtak-Bawal road project. The 'Termination Payment' was a crucial part of the arbitration award. The ultimate resolution of this claim will directly affect KPIL's potential asset recovery.

The backstory

The Rohtak-Bawal road project was terminated in 2021 by KEPL. This termination followed persistent disruptions and blockades due to farmer agitations, which were classified as a Force Majeure event under the concession agreement. Post-termination, the project's account was classified as a Non-Performing Asset (NPA).

Management Stance

KPIL's management stated that KEPL, based on legal advice, believes it has a strong case. The company is pursuing legal recourse and intends to file an appeal against the High Court's order.

What changes now

The company will now focus on its appeal process to challenge the High Court's decision regarding the 'Termination Payment' and associated interest. Until the appeal is resolved, the recovery of these specific amounts remains uncertain.

Risks to watch

The key risk is the outcome of the appeal. An unfavorable ruling could mean a significant reduction in the expected financial recovery from the terminated project.

Peer comparison

While specific peer project terminations and their arbitration outcomes are not detailed here, such legal disputes are common in infrastructure projects facing unforeseen disruptions. The ability to recover dues following termination is a critical factor for infrastructure companies.

Context metrics (time-bound)

The project was terminated in 2021. The arbitration award was received prior to the High Court's order on July 28, 2026, which partially set aside the award.

What to track next

Investors should closely monitor the progress and outcome of KEPL's appeal against the High Court's order. The final resolution of the 'Termination Payment' claim is critical.