Govt targets small disputes choking highways with new resolution panel

The pre-conciliation committee, set up by the ministry of road transport and highways (MoRTH), will attempt to resolve disputes valued under ₹5 crore between highway contractors and government authorities before they snowball into prolonged legal battles, according to two government officials aware of the development.

The development assumes significance given that these small-value disputes account for a fifth of the nearly ₹1 trillion legal claims in road and highway construction that the government has been party to over the past decade. Also, there are documented cases of sub- ₹1 crore road payment disputes where contractors had to wait for 6-7 years for resolution. Interest and legal costs increase the government’s liability far beyond the original claim by the time disputes are finally resolved.

“A reported example is a ₹27.5-lakh unpaid road bill in the Yadgir (a district in Karnataka) PWD (Public Works Department) project, where once interest and enforcement costs were added over several years of delay, ultimately resulting in a court-directed recovery of approximately ₹1.2 crore,” said Anuradha Mukherjee, partner (head, disputes, north India), Cyril Amarchand Mangaldas.

MoRTH's concern over mounting highway-related disputes, along with its push to control legal costs, highlights a broader challenge—the government’s prolonged battles in courts and arbitration that continue to drain the public exchequer. In the past 10 years, the government has faced adverse arbitration awards topping ₹30,000 crore, indicating an urgent need to dispose of pending matters.

The move to set up the committee comes in the backdrop of MoRTH's focus on reducing its legal expenses, through a three-tier resolution mechanism. Under this system, cases must first undergo mediation and conciliation before being escalated to MoRTH’s Dispute Resolution Board (DRB) in arbitration.

“The government feels that if small disputes are taken off from the arbitration and resolved separately, it would unburden the stretched arbitration system and allow for faster resolution of large-value disputes,” the first of the two government officials cited earlier said, both of whom spoke on the condition of anonymity.

The MoRTH had earlier in 2023 set up a pre-conciliation committee for all road building disputes between contractors and the National Highways Authority of India (NHAI).

In the roads and highways sector, as many as 574 national highway projects awarded over the past five years, with cumulative project costs estimated at around ₹3.60 trillion have overshot their original completion timelines, the road ministry informed the Rajya Sabha on 17 December. Of these, over 300 projects are facing delays of up to one year, while 253 projects have been delayed by 1-3 years. Another 21 projects are running more than three years behind schedule, excluding those under consideration for termination or foreclosure.

The ministry also said that 133 national highway projects, with a total cost of about ₹1 trillion, have been awarded, but construction is yet to begin.

“Several of these projects have the potential to result in disputes between the authority and the contractors,” said the second government official, adding that the new conciliation mechanism is aimed at preventing some of these projects from running into litigation and resolving the issue to facilitate project completion.

Queries emailed to the spokespersons of MoRTH and NHAI on 6 January remained unanswered till press time.

To be sure, these disputes arise because routine payment and scope disagreements on highway projects are left unresolved at the field level, forcing contractors to seek legal remedies that drag on for years.

“Small-value road disputes are low on quantum but high on friction. They consume disproportionate administrative time and legal cost, often ending up costing the exchequer more in interest and litigation expenses than the claim itself,” Mukherjee said.

MoRTH’s focus on clearing legal costs is a part of the government’s overall efforts to expedite dispute resolution and reduce costs. In June 2024, the finance ministry nudged all government entities, including state governments and their agencies, to not engage in arbitrations valued over ₹10 crore in public procurement cases, as arbitration was more expensive and time-consuming than other options such as mediation.

In a representation to MoRTH in December 2025, National Highway Builders Federation (NHBF), an industry lobby group, had suggested that the core issue lies in dispute generation, not merely in the forum of resolution.

“Disputes often arise due to: Deficient or ambiguous DPRs (detailed project reports), inconsistent contract administration, delayed approvals and decisions, arbitrary interpretations at field level. However, there is no effective accountability framework for Independent Engineers (IEs), Authority Engineers (AEs), or Authority officials whose actions or omissions give rise to disputes. Fixing responsibility and enforcing accountability would significantly reduce disputes at source,” NHBF has said in its communication dated 30 December 2025 to MoRTH.