Burgeoning Infrastructure & The People Beneath The Project: Law, Land, And Loss

Every time a new highway is announced, or a metro line gets the green signal, there's a wave of excitement faster commutes, reduced congestion, economic growth. The government holds press conferences. Banners go up. And then, somewhere down the line, years pass, cases pile up, and the infrastructure springs beneath the graveyard of taxed money.

We have been following infrastructure disputes in India for a while now, and the pattern is almost painfully predictable. A project is announced. Land acquisition begins. Someone challenges it in court. The contractor claims delays. The government disputes costs. And suddenly, a project that was supposed to take three years is eating into its tenth.

Let us walk you through what actually happens not the official version, but the legal and contractual reality on the ground.

The Land Acquisition Problem It Never Fully Goes Away

The Land Acquisition, Rehabilitation and Resettlement Act, 2013¹ was supposed to fix things. It replaced the colonial-era 1894 Act² and promised fair compensation, consent from affected communities, and a humane rehabilitation process. On paper, it looked like progress.

In practice? It created new layers of litigation.

Take the case of the Delhi-Meerut Expressway³. Parts of it were in court for years, with farmers and residents arguing that compensation was calculated on outdated circle rates rather than actual market value. The law says compensation should be four times the market rate in rural areas and twice in urban ones but when the government's own records show one rate and the property market reflects another entirely, you're opening a door to legal challenge that almost nobody can close quickly.

And courts don't rush these things. Nor should they these are people's homes and livelihoods. But the contractor sitting on-site with equipment and workers on payroll? They're bleeding money every single day.

The Contract: Where the Real Fight Begins

Here's something that doesn't get nearly enough attention: most infrastructure disputes don't begin as civil protests or activist petitions. They begin inside the contract itself.

EPC (Engineering, Procurement, and Construction) contracts the standard vehicle for large infrastructure projects are notoriously complex documents. They run into hundreds of pages, and buried inside them are clauses that can be read in wildly different ways depending on which side's lawyer is doing the reading.

The three most contested areas, in our experience of reading through arbitration awards and court judgments, are:

Scope of Work Disputes. The government or project authority will argue that certain additional work was always within the original scope. The contractor will argue it wasn't, and will present a variation order claim. These can run into hundreds of crores. Neither side is usually entirely wrong the contract was just ambiguously drafted to begin with.

Force Majeure Clauses. Every project contract has one. Most of them are useless in a real crisis. During the early COVID-19 lockdowns, dozens of infrastructure contractors filed force majeure claims to excuse delays. Many were denied on the grounds that the clause required the event to be both unforeseeable and unavoidable and some adjudicators argued that construction work, being "essential services," should have continued. The courts are still sorting through that one.

Termination and Encashment of Bank Guarantees. When a project goes bad really bad authorities sometimes encash the contractor's bank guarantee, which is essentially calling in a financial security deposit. Contractors then rush to court for an injunction. Courts are generally reluctant to interfere unless there's clear fraud, so contractors often lose that immediate battle, but the dispute then shifts into arbitration over whether the encashment was justified. It drags on for years.

Arbitration: The Process That's Supposed to Speed Things Up (But Often Doesn't)

Most infrastructure contracts in India now have arbitration clauses as the first port of call for disputes. The idea was sound get experienced technical and legal arbitrators, avoid the backlog of civil courts, get a binding award faster.

It hasn't quite worked out that way.

Arbitration in major infrastructure disputes can take two to three years by itself. Awards, when they come, are frequently challenged in the High Courts under Section 34 of the Arbitration and Conciliation Act, 1996.⁴ And because the Govt. authorities remains to be the primary litigants challenging every finding of the arbitrator under the head of "public policy" and "patent illegality", the finality that arbitration promises are often illusory.

There have been genuine improvements. The 2015 and 2019 amendments to the Act⁵ tried to narrow the grounds for challenging awards. The Supreme Court has repeatedly directed Courts to stop treating Section 34 applications as a second round of full appeals⁶ and the change is quite evident but for the routine Section 34 petitions are still filed by the dissatisfied parties. What you often end up with is this: the project finishes (or is abandoned halfway), the parties spend another four to six years in arbitration and then in courts challenging the award, and by the time there's any finality, the costs have multiplied, the contractors have either gone bankrupt or restructured, the Govt. having spent the tax payers money on litigation and the people who were displaced at the beginning have largely been forgotten.

The State's Double Role and Why It's a Problem

One thing that strikes us every time we look at these disputes is the structural awkwardness of the government's position. It is simultaneously the project authority (framing the contract and overseeing execution), the acquiring authority (taking land from its own citizens), the regulator (issuing environmental and other clearances), and at least sometimes the financial guarantor (backstopping the project through viability gap funding or state guarantees).

That's a lot of hats to wear at once. And the conflicts of interest are obvious.

When a contractor files a claim against a public authority and that claim is being adjudicated by an arbitrator who was once a government engineer himself possessing limited judicial experience, there are questions about impartiality that don't always get asked loudly enough. The Supreme Court has issued several judgments on the independence of arbitrators in government contracts, particularly addressing the practice of allowing the government itself to nominate the sole arbitrator⁷. Progress is being made. But not fast enough.

When Communities Fight Back and Actually Win

We don't want this piece to sound entirely bleak. There have been genuine victories for affected communities.

In several cases involving tribal land in central India particularly around power transmission and mining-linked infrastructure, Courts have upheld the requirement for Free, Prior and Informed Consent under the Forest Rights Act⁸ and the Panchayats (Extension to Scheduled Areas) Act, or PESA⁹. Projects have been stayed, and in at least a few instances, fundamentally redesigned.

The Narmada Bachao Andolan case before the Supreme Court¹⁰, whatever one thinks of its eventual outcome, set an important principle: that rehabilitation must precede submergence. It is a principle that gets violated regularly in practice, but it exists in the law and lawyers continue to invoke it.

These wins matter not just for the specific communities involved. They create legal precedents that future projects must navigate. They add accountability, however imperfect, to a process that would otherwise be entirely opaque.

What Actually Needs to Change

We'll be direct here, because we think the problem deserves directness.

First, land acquisition timelines need to be separated from construction timelines. Right now, contracts are signed and work is theoretically supposed to begin while acquisition is still legally contested. That's a recipe for cost overruns. Acquisition should be substantially complete and legally settled before major construction contracts are awarded.

Second, government entities need to accept that they are parties to contracts, not just administrators of them. That means when an arbitral tribunal makes an award against a public authority, it should be honoured, not reflexively challenged. The culture of delay in government litigation is partly responsible for the fact that arbitration has failed to deliver speed.

Third, the social impact assessment process again, technically required under the 2013 Act needs actual teeth. Right now, these assessments are often conducted by agencies appointed by the same authority that wants the project cleared. The independence isn't real.

And finally, the public authorities, need to trust arbitration more. Section 34 was never meant to be a full appeal and shall be treated like that.

A Final Thought

Infrastructure disputes are messy partly because infrastructure itself is messy. You're dealing with land, money, politics, engineering, environmental concerns, and people's lives all at the same time, all at scale. The law is one of the few tools that genuinely mediates between these competing interests, and for all its slowness, it matters.

The projects that get done well on time, without ruinous cost escalation, with affected communities at least partially compensated are almost always the ones where the legal groundwork was done honestly upfront. Not perfectly. Just honestly.

That sounds obvious. It shouldn't need saying.

And yet, here we are.

Footnotes

1. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (Act No. 30 of 2013), Ministry of Law and Justice, Government of India.

2. The Land Acquisition Act, 1894 (Act No. 1 of 1894), repealed by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

3. See Pawan Kumar & Ors. v. National Highways Authority of India, writ petitions filed before the Allahabad High Court concerning compensation disputes along the Delhi-Meerut Expressway corridor (2017–2021); see also NHAI v. Prakash Kumar, SLP (C) No. 9940/2019 (Supreme Court).

4. Section 34, Arbitration and Conciliation Act, 1996 (Act No. 26 of 1996). An application to set aside an arbitral award must be made within three months and may be granted only on the limited grounds specified under sub-sections (2) and (2A).

5. The Arbitration and Conciliation (Amendment) Act, 2015 (Act No. 3 of 2016); The Arbitration and Conciliation (Amendment) Act, 2019 (Act No. 33 of 2019). The 2015 amendment inserted Section 34(2A) to introduce 'patent illegality' as a domestic-award-specific ground; the 2019 amendment established the Arbitration Council of India and tightened timelines.

6. Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49; Ssangyong Engineering & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131; ONGC v. Saw Pipes Ltd., (2003) 5 SCC 705. The Supreme Court has consistently held that courts exercising jurisdiction under Section 34 cannot reassess the merits of an arbitral award.

7. TRF Limited v. Energo Engineering Projects Ltd., (2017) 8 SCC 377; Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd., (2020) 20 SCC 760. The Supreme Court held that a person who has an interest in the outcome of a dispute cannot appoint a sole arbitrator, even if authorised to do so under the contract.

8. The Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 (Act No. 2 of 2007). Section 3 enumerates the forest rights of forest-dwelling Scheduled Tribes and other traditional forest dwellers.

9. The Provisions of the Panchayats (Extension to Scheduled Areas) Act, 1996 (Act No. 40 of 1996). PESA extends the provisions of Part IX of the Constitution to Scheduled Areas and mandates gram sabha consent for acquisition of land in such areas.

10. Narmada Bachao Andolan v. Union of India & Ors., (2000) 10 SCC 664. The Supreme Court (3:2 majority) permitted the height of the Sardar Sarovar Dam to be raised but mandated that resettlement and rehabilitation of displaced persons must be completed before submergence.