Quick Summary: The Delhi High Court turned down the National Highways Authority of India (NHAI)'s request to be removed from ongoing arbitration talks with CFM Asset Reconstruction Pvt Ltd. The court decided that NHAI must stay involved in the arbitration.
NHAI, represented by Solicitor General Tushar Mehta, asked the court to review an order from the arbitration panel dated October 1, 2025, which refused to let NHAI leave the arbitration talks. The case is about a project on National Highway 8B, which was first given to Infrastructure Leasing and Financial Services Ltd. (ILFS) in 2005.
On December 21, 2021, NHAI sent a notice to end the agreement with the project partner, leading to legal fights. The National Company Law Appellate Tribunal (NCLAT) initially stopped NHAI from taking over the project but later changed this decision on March 16, 2022.
After the NCLAT's decision, both the project partner and main lenders asked the court for help in March 2022. The court told everyone to try to work things out, but that didn't work, leading to arbitration. During this time, the main lenders transferred their rights to CFM Asset Reconstruction Pvt Ltd on September 30, 2022.
CFM Asset Reconstruction made claims against NHAI for supposed rule-breaking. NHAI wanted to be replaced by the project partner in the arbitration, pointing to a Settlement Agreement approved by the National Company Law Tribunal (NCLT). But the arbitration panel said no, noting that CFM wasn't part of the Settlement Agreement and wasn't bound by it.
Justice Girish Kathpalia decided on November 26, 2025, that NHAI's request didn't have a strong basis. The court said that arbitration talks should not be stopped unless there's a clear mistake or unfairness. The judge pointed out that CFM's claims against NHAI were separate from the Settlement Agreement and needed NHAI to be part of the arbitration.
The court decided that NHAI must stay in the arbitration process because there were no valid reasons to replace it with the project partner.
