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  NON-REPORTABLE  

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Special Leave Petition (C) No……………….of 2016 (Diary No. 36526 of 2016)

NOIDA Toll Bridge Company Ltd.   .... Petitioner(s) Versus

Federation of NOIDA Residents Welfare  Association & Ors       ….Respondent(s)

O R D E R  

L. NAGESWARA RAO, J.

I.A. No…………………of 2016 which is an application

for exemption from filing certified copy of judgment dated

26.10.2016  passed  by  the  High  Court  of  Judicature  at

Allahabad in Public  Interest  Litigation (PIL)  No.  60214 of

2012 is allowed.   

2. Issue  notice.   Respondent  Nos.  1,  2,  and  9  are

represented by Mr. Sanjay Hegde, learned Senior Advocate,

Mr.  Ranjit  Saxena,  Advocate  and  Mr.  K.  K.  Venugopal,

learned Senior Advocate respectively. Notice shall now go to

the remaining Respondents only.  

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3. Federation of NOIDA Residents Welfare Association &

Ors., Respondent No.1 herein, filed PIL No.60214 of 2012 in

the High Court of Judicature at Allahabad for a declaration

that  collection  of  toll  fee  should  be  stopped on the  DND

Flyover between New Delhi and NOIDA. 4. A  Concession  Agreement  (hereinafter  referred  to  as

“the Agreement”)  was entered into between the Petitioner,

NOIDA (Respondent  No.2)  and IL  & FS Ltd.  (Respondent

No.9)  on  12.11.1997  for  development  of  infrastructure

facility of  a bridge and an access road.   The Project was

conceived on Build-Operate-Transfer (BOT) basis.   The 9th

Respondent IL & FS had to arrange the investment for the

Project which could be recovered by levy of  toll  from the

users of the road and the Project.  5. As the main dispute in the PIL filed in the High Court

revolves  around  the  recovery  of  the  Project  Cost  by  the

proponent,  it  is  essential  to  refer  to  some  important

provisions  of  the  Agreement.  Section  2.3  refers  to  the

concession period which is as follows: “Section 2.3 Concession Period (a)  The  Concession  Period  shall  commence  on  the Effective Date and shall extend until the earlier of:   

(i) A period of 30 years from the Effective Date; or

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(ii) The  date  on  which  the  concessionaire  shall recover the Total Cost of Project and the Returns as  determined  by  the  Independent  Engineer and  Independent  Auditor  in  accordance  with Section  14  thereon  through  (a)  the  demand, collection,  retention  and  Appropriation  of  Fee, (b)  the  receipt,  retention  and  appropriation  of Development Income, or (c) any other method as determined by the Parties.         

(b) Upon the termination of the Concession Period, the  Concessionaire  shall  transfer  the  Project Assets to NOIDA in accordance with the terms of Article 19.”

6. It is relevant to refer to the definition of ‘Effective Date’

which  means  the  earlier  of  (a)  the  date  of  issuance  of

Certificate  of  Compliance  or  (b)  the  date  of  issuance  of

Certificate  of  Commencement.  Article  19  provides  that

NOIDA  will  continue  the  operations  of  the  DND  project

either directly or by its nominated agency from the ‘Transfer

Date’ which is the day immediately following the last day of

the concession period,  including any extension thereto or

earlier termination thereon in accordance with the terms of

the Agreement.   7. Fixation  and  calculation  of  the  fee  is  dealt  with  in

Section  13.   As  per  Section  14.1,  the  Total  Cost  of  the

Project shall be the aggregate of (i) Project Cost, (ii) Major

Maintenance Expenses & (iii)  Shortfalls in the recovery of

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returns in a specific  financial  year as per the formula in

Section 14.2 (a). 8. Section 14.2 contemplates that recovery of  the Total

Cost  of  the  Project  and  Returns  therefrom  shall  be  as

illustrated in Annexure F.  The calculation of the Returns

shall be made at annual intervals from the effective date in

the following manner: “Start  with:   Gross  revenue  from  fee  collections,

income from  advertising  and Development income.

Less:        O & M expenses  Less:   Taxes  (excluding  any  customs  and

import duties).”

9. “Returns” is defined in the Agreement as the returns

on  the  Total  Cost  of  Project  recoverable  by  the

Concessionaire from the effective date at the rate of 20 per

cent per annum as per Section 14.2 of the Agreement. 10. Respondent No.  1 contended in the writ petition that

the Total Cost of the DND Flyover Project was approximately

Rs. 408.17 Crores and the cumulative toll income from the

years  2001  to  2014  was  Rs.  803.524  Crores.  As  on

31.03.2014  the  cumulative  net  profit  was  Rs.  165.08

Crores. Respondent No. 1 further contended that the Total

Cost  of  the  Project  as  per  the  report  of  the  Company’s

Auditor was Rs. 2,339.69 crores as on 31.03.2012 which 4

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increased to Rs. 2,955.1 crores as on 31.03.2013 and Rs.

3,448.95 crores as on 31.03.2014. It was further urged that

the projected figure of the Total Cost of the Project as on

31.03.2016  was  Rs.  5,000  crores.  It  was  contended  by

Respondent No. 1 that as per the calculation of the Auditor

of the Petitioner herein, the Total Cost of  the Project can

never be recovered and the Project will never be free from

levy of toll.  11. The Petitioner contested the Writ  Petition on several

grounds including the maintainability. The Petitioner herein

relied  upon  the  Agreement  and  the  reports  of  the

Independent  Auditor  appointed  in  accordance  with  the

Agreement to contend that the Total Cost of the Project has

not been recovered.   12. The High Court framed six questions for consideration

and concluded as follows: a) “This  Public  Interest  Litigation  is  legally

maintainable. b) In  the  facts  of  the  case,  interference  with  the

Concessionaire  agreement  is  warranted  in exercise of powers of judicial review under Article 226 of the Constitution of India.

c) Selection of Concessionaire in the facts of the case is violative of Article 14 of the Constitution of India and  is  found  to  be  unfair  and  unjust.   We, however,  do  not  deem it  fit  to  nullify  the  entire concession agreement.   

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d) Right  to  levy  and  collect  User  fee  from  the commuters as conferred upon the Concessionaire under  the  Concession  Agreement  suffers  from excessive  delegation  and  is  contrary  to  the provisions of the U.P. Industrial Area Development Act, 1976.  Article 13 (Clause) of the Concession Agreement is held to be bad and inoperative in the eyes of law.

e) The method of calculation of the Total Project Cost and appropriation of the User fee collection under Article 14 (Clause) of the Concession Agreement is held to be arbitrary and opposed to Public Policy. Article 14 (Clause) of the Concession Agreement is severed, therefrom.  

f) The proposed Amendments do not affect the reliefs which have been prayed for in the petition.”   

On  the  basis  of  the  above  conclusions,  the  High  Court

directed the Petitioner not to impose any user fee/toll from

the commuters for using the DND flyover. 13. Dr. Abhishek Manu Singhvi, learned Senior Advocate

for  the  Petitioner  submitted  that  the  reports  of  the

Independent  Auditor  appointed  in  accordance  with  the

Agreement were not properly considered by the High Court.

He handed over two charts which, according to him, were

prepared in accordance with the terms of the Agreement.

Relying on the charts, he submitted that the Total Cost of

the  Project  has  not  been  recovered.  He  urged  that  the

Petitioner has created a world-class facility of a bridge over

the river Yamuna and a 8 lane highway of 9.5 kilometres. 6

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Dr. Singhvi submitted that the veracity of the Petitioner’s

claims  that  the  Total  Cost  of  the  Project  has  not  been

recovered can be verified by  taking  the  assistance  of  the

Comptroller  and  Auditor  General  of  India.  Finally  he

submitted that the Petitioner would suffer irreparable loss if

the judgment of the High Court is not stayed.   14. Prima  facie,  we  are  of  the  opinion  that  the  various

issues that arise in this SLP warrant a detailed scrutiny.

Conflicting claims have been made regarding the recovery of

the  Total  Cost  of  the  Project  by  the  Concessionaire.  To

resolve the dispute, it is appropriate that an independent

agency is requested to examine the relevant records of the

DND flyway. The said agency should examine the reports of

the independent auditors appointed by the Petitioner and

submit a report regarding the correctness of the Petitioner’s

claim  that  the  Total  Cost  of  the  Project  has  not  been

recovered. We accept the suggestion of the Petitioner and

request the Comptroller and Auditor General of India (CAG)

to assist us in this matter. The Petitioner is directed to place

the  entire  record  pertaining  to  the  recovery  of  the  Total

Project Cost of the DND flyover project as per the Agreement

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before the CAG.  The CAG is requested to verify the claim of

the Petitioner that the Total Cost of the Project has not been

recovered and submit a report within four weeks. The CAG

shall be at liberty to call for and examine all such records

having a bearing on the financial aspects, as it requires to

facilitate  its  decision.   This  will  include  matters  and

information pertaining to all the benefits which have flowed

to  the  Petitioner  under  the  entirety  of  the  agreement,

including  the  utilisation,  if  any.   The  Petitioner  shall

co-operate  in  all  respects  with  the  CAG  and  provide  all

documents, information and details as sought. 15. We  do  not  agree  with  the  submission  that  the

Petitioner would suffer irreparable loss if  the judgment of

the  High  Court  is  not  stayed.    It  will  be  impossible  to

provide restitution to the lakhs of commuters from whom

the fee  would be collected to  repay them in the event of

dismissal of the SLP. On the other hand, if the Petitioner

succeeds, it can be compensated suitably by extension of

time.   The  balance  of  convenience  is  also  against  the

Petitioner.  Therefore,  we  are  not  inclined  to  grant  the

interim relief as prayed for.   

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16. A  copy  of  this  order  shall  be  provided  to  the  CAG

expeditiously. 17. Three weeks time granted to the respondents for filing

their Counters and one week thereafter to the petitioners for

filing a Rejoinder, if any.  List the matter after four weeks.

 ...…...........................CJI                  [T. S. THAKUR]

      ........................................J [Dr. D. Y. CHANDRACHUD]

                 ……................................J                                         [L. NAGESWARA RAO]

New Delhi, November 11, 2016

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