The Delhi High Court ruled that NITI Aayog Award Payments made during pending challenges to arbitral awards cannot alter the legal method for adjusting payments after an award becomes final. The Court directed NHPC to pay Hindustan Construction Co. Ltd. (HCC) ₹16.39 crore. It held that interim relief under the NITI Aayog scheme does not override settled principles governing execution of arbitral awards.
Background of the Dispute
NHPC awarded HCC a contract on May 10, 2006, for civil works at the Teesta Low Dam Hydroelectric Project (Stage IV). The project included dams, diversion works, a powerhouse, a spillway, intake structures, a tail race channel, and related infrastructure.
After disputes arose, an arbitral tribunal awarded HCC ₹43.95 crore on December 31, 2015. It also granted ₹9.78 crore as interest, along with future interest at 18% per annum until payment. The Delhi High Court upheld the arbitral award on April 2, 2024.
NITI Aayog Relief Scheme
During the challenge proceedings, HCC received payments under the NITI Aayog Office Memorandums dated September 5, 2016.
The scheme allowed government departments and public sector undertakings to release 75% of the awarded amount against a bank guarantee while court proceedings remained pending. Under this framework, NHPC paid HCC ₹47.55 crore in August 2017 and another ₹37.10 crore in June 2024.
A dispute later arose over how these payments should be adjusted after the award attained finality.
Parties’ Arguments
HCC approached the High Court under Section 151 of the Code of Civil Procedure and sought payment of the remaining amount due under the award.
The company argued that the interim payments should first reduce accrued interest and only then the principal amount. It relied on the Supreme Court’s judgment in Leela Hotels Ltd. v. Housing and Urban Development Corporation Ltd.
NHPC disagreed. It argued that letters exchanged between the parties showed they had agreed to adjust a larger portion of the payments toward the principal. NHPC also contended that HCC accepted the payments without protest and therefore could not reopen the calculation later.
High Court Rejects NHPC’s Stand
Justice Subramonium Prasad rejected NHPC’s arguments. The Court held that the correspondence related only to implementing the NITI Aayog scheme while the award remained under challenge. It did not amount to an agreement changing the legal method of adjustment.
The Bench observed that once the arbitral award became final, execution law governed the adjustment of all payments. The Court also noted that HCC accepted the interim payments without giving up its right to claim the remaining amount.
According to the Bench, the NITI Aayog Office Memorandums only provided temporary financial assistance. They could not replace the legal principles governing execution of arbitral awards after finality.
Court’s Directions
The High Court allowed HCC’s application and directed NHPC to pay ₹16.39 crore, calculated as due on July 2, 2026. It ordered the payment within six weeks from the date of uploading the judgment.
Why the Judgment Matters
The ruling clarifies that NITI Aayog Award Payments serve only as interim financial relief during pending litigation. They cannot change the legal framework for adjusting arbitral awards after they become final.
The judgment will guide public sector undertakings and contractors involved in similar disputes. It also reinforces that interim executive schemes cannot override settled principles of execution law unless the parties enter into a clear and independent agreement.
