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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  4611 OF  2014 (Arising out of SLP (Civil) No. 19379/2013)

M/S. SOMA ISOLUX NH ONE TOLLWAY  PRIVATE LIMITED                .  Appellant

Versus

HARISH KUMAR  PURI & ORS.            ..Respondents

J U D G M E N T

GYAN SUDHA MISRA, J.

1. Leave granted.  

2. This  appeal  by  special  leave  has  been  filed  

assailing the order dated 27.5.2013  passed by the High  

Court  of  Punjab and Haryana at  Chandigarh in  C.M.No.  

3301/2013 arising out of CWP No. 13848/1998 whereby  

certain adverse directions to be related hereinafter were

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issued having grave implication on the contractual rights  

of the appellant- M/s. Soma Isolux NH One Tollway Pvt.  

Ltd.  (hereinafter  referred  to  as  ‘the  Concessionaire  

company’) as it was saddled with a fine of Rs.60 crores  

and  Rs.7  crores  to  be  paid  by  the  appellant-

Concessionaire  Company  and  its  Director  respectively  

which were to be deposited with the Registrar General of  

the High Court within one month of the date of the order.  

The respondent No.6 National Highways Authority of India  

(shortly referred to as ‘the NHAI’) was further directed to  

proceed in the matter forthwith and take possession of  

the Highway project and ensure that collection of toll is  

deposited in a separate account and the work of repairs  

of the highway commenced within a week and the work of  

construction  of  highway  commenced  and  completed  

within a month thereafter.  The High Court further issued  

direction that the entire matter relating to the contract,  

the  completion  of  the  work  of  the  highway,  collection  

from tolls without existence of six-lanes be enquired into  

and a report  in  that  regard be placed before the High  

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Court within three months.  It was also made clear that  

the enquiry shall  not  be construed to be an excuse to  

delay  the  construction  of  the  highway.   It  was  further  

observed  that  the  Chairman,  NHAI  shall  be  personally  

responsible for ensuring that the work of six-laning of the  

highway  between  Panipat  and  Jullunder  is  completed  

within six months failing which the Chairman, NHAI would  

be held personally liable to pay fine similar to the terms  

imposed  on  the  Concessionaire  Company  –respondent  

No.7.   The  appellant-Concessionaire   Company  has,  

therefore,  come  up  to  this  Court  challenging  the  

impugned order passed by the High Court.

3. The substantial questions of law of general and  

public importance that emerge for consideration in this  

appeal inter alia may be crystallised as follows:

i Whether  the  directions  issued  by  the  High  Court  

which  have  far  reaching  consequences  against  the  

petitioner/appellant and which directions by a judicial fiat,  

has the effect of nullifying the terms of the Concession  

Agreement  dated  09.05.2008  defeating  the  rights  and  

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obligations arising therefrom in a Public Interest Litigation  

while  exercising  jurisdiction  under  Article  226  of  the  

Constitution of India is an act of judicial overreach under  

the garb of public interest?

ii Whether  the  terms  and  conditions  of  a  concluded  

contract  can  be  nullified  by  the  High  Court  by  issuing  

sweeping  directions  in  an  ongoing  Public  Interest  

Litigation Petition which renders the terms and conditions  

of  the  Concession  Agreement  between  the  contracting  

parties  redundant  at  the  instance  and  initiative  of  the  

Court  itself  when  such  directions  has  not  even  been  

sought  by  any  of  the  parties  to  the  Public  Interest  

Petition?

iii Whether a Bench of the High Court which is seized of  

a particular dispute would be justified in not taking note  

of the final judgment and order passed earlier by a co-

ordinate Bench settling the said controversy in view of  

which  no  direction  could  be  issued  by  the  High  Court  

nullifying the contractual rights of the affected party?

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4. In  order  to  appreciate  and  adjudicate  the  

controversy  involved  and  to  put  the  matter  in  proper  

perspective  certain  factual  background  may  be  related  

which disclose that this appeal by way of special  leave  

petition has its genesis in a writ petition bearing CWP No.  

13848/1998 which came to be filed in the High Court of  

Punjab and Haryana at  Chandigarh as a public  interest  

litigation  on  25.7.1998  by  the  respondent  No.1  herein  

Harish Kumar Puri whose son had died in a road accident  

on  14.5.1996  at  Pipli  Chowk,  Kurukshetra  due  to  the  

criminal  negligence  alleged  on  the  part  of  the  traffic  

police  posted  on  the  said  chowk.   In  the  PIL,  the  

respondent No.1 Mr. Puri prayed for issuance of a writ in  

the  nature  of  mandamus  directing  for  enforcement  of  

traffic  rules and to maintain the signal  system, rumble  

strips on crossing, first aid units, control over speeding on  

G.T.  Road National  Highway No.1 and a further  writ  or  

direction  holding  the  State  functionaries  liable  for  the  

criminal  negligence  on  the  part  of  its  employees  and  

saddle it with monetary liability.

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5. Interestingly, this writ petition which was filed as  

a PIL with the laudable object of improving management  

of traffic on the highway in the interest of the commuters  

and the public at large over the years metamorphosed  

into a long drawn litigation alleging breach of contractual  

obligations  between  the  appellant-concessionaire  

company  and  the  respondent  No.7  NHAI  wherein  the  

respondent  Union  of  India  as  also  the  respondent/PIL  

petitioner  in  the High Court  have jumped into  the fray  

giving rise to several rounds of litigation.  In the process it  

affected the very purpose and object for which the writ  

petition  had been filed  as  also  the  construction  of  the  

Highway  for  which  a  concession  agreement  had  been  

executed between the appellant-concessionaire company  

and the respondent No.6 NHAI by way of a competitive  

bidding  process  during  pendency  of  the  PIL  as  a  step  

towards resolving the issue of management of traffic.

6. While tracing out the background of the matter,  

bereft  of  not  so  essential  factual  details,  it  may  be  

sufficient  to  state  that  the  Division  Bench  of  the  High  

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Court  issued  notice  of  motion  on  1.9.1998  in  the  writ  

petition (PIL) which came up before the High  Court for  

consideration  from time to  time spanning  over  several  

years and finally on 11.4.2002, an order was passed by  

the High Court on 11.4.2002 for impleading the Secretary  

to the Government of India,  Ministry of Road Transport  

and  Highways,  New  Delhi  when  the  issue  camp  up  

regarding non-opening of  the  railway  bridge near  Dera  

Bassi  for  the  general  public.   Several  years  thereafter,  

notice was also issued to the National Highways Authority  

of India (NHAI) to appear before the High Court through  

its authorized representative as on 9.5.2008 a Concession  

Agreement  had  been  executed  between  NHAI  and  the  

appellant-company  since  the  appellant  succeeded  in  a  

competitive  bidding  process  by  which  it  was  granted  

exclusive  rights,  license  and  authority  to  construct,  

operate and maintain its project namely, six-laning of a  

part  of  NH  1  from  KM  96.00  to  KM  387.100  

(approximately 291.10 KM) from Panipat to Jullundur for a  

period  of  15  years.   While  awarding  the  contract,  the  

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credentials and track record of the appellant was taken  

note  of  which  indicated  that  the  appellant  M/s  Soma  

Isolux  NH  One  Tollway  Pvt.  Ltd.  is  a  joint  venture  

company  with  Isolux  Corsan  Group  which  is  a  

multinational  company  having  vast  experience  of  

Infrastructure Development in various part of the world  

including Europe, South America, North America and Asia  

and  has  successfully  developed  Highway  Projects  in  

various  countries  including  Spain,  Mexico,  Brazil,  India  

etc.    Isolux  Corsan  Group  is  the  leading  European  

Investor in infrastructure in India and M/s Soma Enterprise  

Ltd.  is  a  renowned Development  Construction firm and  

has  several  National  Highway  Projects  in  the  past  13  

years and have completed projects ahead of schedule.  It  

has  also  undertaken  and  completed  projects  in  other  

infrastructure  sectors  like  Irrigation  Hydro  Power  and  

Railways.

7. The Concession Agreement envisaged reciprocal  

obligations from various parties including NHAI, the State  

of Haryana and the State of Punjab.  Under Clause 4.1.2  

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(a) NHAI is/was required to provide right of way and the  

appellant-company is/was entitled to demand and collect  

appropriate fee commonly known as toll fee from vehicles  

and persons liable to pay toll fee for using the national  

highway.  The Concession Agreement was drafted as per  

the model approved by the Planning Commission of India  

and the draft concession was in fact circulated with the  

RFP  (Tender  Document)  and,  therefore,  neither  the  

appellant-company nor the NHAI could have changed the  

contents  of  the  agreement  pursuant  to  the  award  of  

contract.

8. In so far as the financing and investment to the  

Highway Project is concerned the agreement envisaged  

that the appellant-company and the NHAI would be on the  

basis  of  Build,  Operate,  Trade  (BOT)  mode  which  

enumerated  that  the  project  being  in  BOT  mode,  all  

investment in the project will  have to be made by the  

appellant-company  by  the  income  generated  from  toll  

collection  and  no  amount  was  to  be  invested/received  

from the NHAI.  On the contrary, the appellant-company  

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as  per  the  Agreement,  offered  to  pay  to  the  

respondent/NHAI premium equal to 20.14 per cent of the  

total collection of toll for the first year and this premium  

was to be increased by one per cent every subsequent  

year.   Based  on  a  detailed  analysis  of  the  Concession  

Agreement, the NHAI thus is not only not funding any part  

of  the  project  development  cost,  it  is  receiving  a  

significant portion of the revenue collected as premium  

by  way  of  collection  of  toll.  However  all  the  amount  

collected  by  way  of  toll  were  to  be  deposited  in  the  

ESCROW account as a result of which any amount from  

this  account  cannot  be  withdrawn  by  the  appellant  

without  signature  from the  other  contracting  party  i.e.  

NHAI.   It  may  further  be  noted  that  the  agreement  

between  the  appellant  and  respondent/NHAI  

acknowledges  and  confirms  the  role  of  lending  

institutions,  mainly  nationalised  banks  as  a  major  

significant  holder  in  project  implementation.   All  the  

financial  agreement  dealing  in  the  administration  

occurred between lending institutions and the appellant  

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and  the  financial  model  for  the  project  had  been  

submitted regarding revenue and approval  prior  to  the  

commencement of the project.  Agreement entered into  

between  the  appellant/company  and  the  NHAI  also  

envisages continuous support and co-operation from the  

respective State Governments of Punjab and Haryana and  

the  Concession  Agreement  as  per  Article  47.3 requires  

the  execution  of  Tripartite  State  Support  Agreement  

between  NHAI,  Concessionaire  and  respective  State  

Governments for which support agreements were signed  

by  the  State  of  Punjab  on  11.9.2009 and the  State  of  

Haryana on 16.9.2009.  As per the agreement six laning  

was  to  be  retrofitted  on  the  existing  four-lane  as  per  

standards and specifications which temporarily was to put  

the  travelling  public  to  some  inconvenience.   On  

8.9.2008, the Division Bench of the High Court which was  

seized  of  the  matter  passed  an  order  impleading  M/s.  

Himalayan Expressway Limited as respondent No.7 herein  

and  on  11.9.2009  the  State  Support  Agreement  

mentioned  hereinbefore  was  executed  between  the  

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Governor of the State of Punjab, NHAI and the appellant-

company regarding the obligations of the Government of  

Punjab  and  its  continued  support  for  grant  of  certain  

rights and authorities for mobilization of resources by the  

appellant-company.  The agreement visualizes continuous  

support and co-operation of the Government of Punjab.

9. In the meantime, the writ petition/Public Interest  

Litigation  which  was  pending  in  the  High  Court  during  

pendency  of  which  the  Concession  Agreement  was  

executed, continued to be taken up by the High Court and  

various directions came to be passed from time to time  

by the High Court in course of hearing of the PIL.

10. The  High  Court  thereafter  vide  order  dated  

2.1.2012  on  an  oral  request  impleaded  the  appellant-

company as a party respondent and issued notice to it on  

2.1.2012  to  ascertain  the  progress  of  the  Highway  

Project.  The appellant-company responded to the notice  

and  sought  time  to  file  its  reply.   Thereafter,  on  

28.1.2012, an affidavit was filed by the Project Chairman,  

NHAI, Ambala before the High Court in the pending PIL  

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informing the status of Panipat – Jullundur Section of NH 1  

stretch from KM 96.000 to KM 387.100 wherein  it  was  

stated that the Concessionaire-appellant company could  

not achieve the milestone –II on the specified date due to  

delay  in  various  clearance,  tree  cutting,  utility  shifting  

etc. and further stated that the scheduled six laning date  

has been extended to 15.6.2012.  In the meantime and in  

response  to  the  notice,  the  appellant  also  had  filed  

affidavit on 12.3.2012 giving details of the progress of the  

construction on the highway as also the difficulties and  

impediments encountered in the construction.

11. The  High  Court  however  refused  to  consider  

even remotely the reasons for the delay in the progress of  

the Highway Construction,  much less scrutinized it  and  

further failed to examine or even visualise as to why the  

appellant/concessionaire company, which within a period  

of  three  years  had  constructed  71  %  of  the  highway  

project had suddenly slowed down for the rest 29% of the  

project.   In  the  process  it  further  refused  to  consider  

whether there were bonafide reasons for the delay on the  

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part  of  the  appellant/concessionaire  company  or  the  

delay was on account of the impediments created by the  

NHAI violating the terms and conditions of the Agreement  

as also ignored even the reasoned judicial orders passed  

earlier by a co-ordinate Bench of the Punjab and Haryana  

High  Court  itself  which  had  permitted  the  appellant  to  

shift the toll plaza in view of the terms and conditions in  

the Agreement which were conveniently ignored by the  

NHAI  contrary  to  the  opinion  of  its  own  Independent  

Engineer whose opinion in terms of the Agreement was  

binding on the NHAI and the same has been upheld by  

the High Court by several judgments and orders settling  

the controversy.  It further failed to take note of the fact  

that  the  High  Court  itself  had  stayed  the  show  cause  

notice issued by the NHAI to the appellant/company for  

terminating  the  contract  and  had  it  not  been  

stayed/ordered to be kept in abeyance, the cause as to  

whether  the  delay  was  on  the  part  of  the  

appellant/company or on account of unreasonable stand  

of  the  NHAI  which  was  contrary  to  the  terms  and  

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conditions of the Concessionaire Agreement would have  

come  to  the  fore.   However,  the  High  Court  never  

addressed itself on these aspects but was pleased to pass  

an order on 13.3.2012  inter alia  directing the functional  

head  of  the  appellant-company  as  also  the  Director-

Officer-Incharge of the Project to remain present in Court  

on the adjourned date of hearing.  The presence of the  

Chief General Manager of the NHAI along with the Project  

Director  was  also  ordered  as  it  was  directed  that  the  

representative of the Concessionaire company as well as  

the NHAI will come prepared to respond to all questions  

as  may  be  raised  by  the  Court  with  regard  to  the  

completion of the project within a particular time frame  

and  shall  also  come  ready  to  execute  the  necessary  

undertakings  before  the  Court  for  completion  of  the  

project with the time schedule.

12. The matter was thereafter listed before the High  

Court  on  22.3.2012  wherein  it  was  submitted  that  the  

Haryana Section of the Six Lane Highway was expected to  

be complete by December 2012 and the Punjab Section  

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was expected to be complete by March 2013.  The High  

Court however failed to scrutinise the cause of delay and  

refused  to  take  into  consideration  the  terms  of  the  

Concession Agreement under which the respondent No.6  

NHAI  was  under  the  contractual  obligation  to  grant  

approval to shifting of Toll Plazas, straightaway perhaps  

on an overall  impression observed that there has been  

inordinate  delay  in  conducting  the  project  and  hence  

directed the appellant-company to submit an undertaking  

before the Court for completion of the project as per the  

schedule  mentioned  by  the  appellant  No.2  before  the  

High Court in the form of an affidavit.

13. In compliance to the same, a detailed affidavit  

further was filed by the appellant No.2 on behalf of the  

appellant-company  wherein  it  was  submitted  inter  alia  

that there were certain bottlenecks existing between the  

appellant/company and the respondent NHAI in regard to  

contractual violations which were adversely affecting the  

efforts  of  the  appellant/Concessionaire  company  in  

achieving the project completion.  However, it was added  

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that the Concessionaire-company shall be making all out  

efforts to complete the project highway within 12 months  

from  the  date  of  clearance  of  all  obstructions  that  

currently  existed  between  the  appellant  and the  NHAI.  

The High Court, however, directed the appellant to file a  

clarificatory affidavit by 2 o’clock on the same date which  

was submitted in the Court.

14. However,  in order to check the authenticity of  

the difficulties expressed by the appellant, the High Court  

thought it appropriate to get it verified by directing the  

parties  to  hold  a  joint  meeting  of  the  

appellant/Concessionaire  company  and  the  

respondent/NHAI  and  any  other  authority  that  may  be  

involved and steps be taken to remove the obstructions  

and  difficulties  in  completing  the  construction  of  the  

highway if that were found to be actually existing.  It was  

also directed that a report in this regard including such  

steps  as  may  be  taken  for  completing  the  project  be  

submitted before the High  Court.

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15. In pursuance to the order  passed by the High  

Court,  a  meeting  was  held  on  12.4.2012  under  the  

Chairmanship of Secretary to the Government of Punjab,  

Department  of  Public  Works  (B  &  R)  between  the  

appellant-company  represented  by  the  appellant  No.2  

and other officers of the appellant-company and various  

officials including that of the NHAI.  Another meeting also  

took place on 14.4.2012 between the officers of the State  

of  Haryana,  the  officers  of  the  appellant-company  and  

various officials including that of the NHAI.  An affidavit  

was,  thereafter,  filed  by  the  Director  of  appellant-

company on behalf of the appellant-company to complete  

the  project  obviously  anticipating  that  the  

respondent/NHAI will remove the impediments which was  

coming in the way of completing the project which was  

also the contractual obligation of the respondent NHAI.   

16. The Division Bench of the High Court however,  

did  not  feel  convinced  and  satisfied,  hence  passed  an  

order  on  19.4.2012  wherein  it  observed  that  the  

appellant-company is not serious about the undertaking  

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given to the Court and that it entertained serious doubts  

with  regard  to   sincerity  of  the  appellant-company  to  

complete the work within the time frame undertaken. The  

High Court, therefore, directed that in the event of work  

not  completed  on schedule which was December  2012  

and March 2013 which were the dates furnished by the  

appellant-company  to  complete  the  project  before  the  

Court, it would be liable to pay a sum of Rs. 50 crores by  

way of penalty and its Director Shri Patri  Ramachandra  

Rao  who  was  responsible  for  running  the  day-to-day  

affairs of the company would be personally liable to the  

extent of Rs. 5 crores. The High Court further observed  

that the Concession Agreement appears to be one sided  

in its application i.e. in favour of the Concessionaire and  

contrary to public interest ignoring the fact that the terms  

and conditions of the agreement were in consonance with  

the  guidelines  of  the  Planning  Commission  which  had  

been  approved  by  the  Government  of  India.  The  High  

Court thereafter directed that the matter be listed after  

two months for further monitoring.  

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17. The  appellant  in  the  meantime  preferred  a  

Special  Leave  petition  (Civil)  No.  CC  8974/2012  before  

this  Court  on  3.5.2012  which  was  later  dismissed  as  

subsequent  development  had  taken  place  in  the  High  

Court  itself.  Thereafter,  the Division Bench of  the  High  

Court  on  6.7.2012 modified  the  order  dated  19.4.2012  

and increased the penalty to be paid by the appellant-

company to Rs. 60 crores and the personal liability of the  

Director of the appellant No.1 company to Rs. 7 crores in  

case  the  project  was  not  completed  within  the  time  

granted by the Court on 19.4.2012.  

18. On 3.8.2012 when the matter was further listed  

before  the  High  Court,  the  counsel  for  the  appellant-

company informed the Court that the NHAI had issued a  

show cause notice to the appellant as to why the contract  

be not terminated.  The High Court, however, passed an  

order that the operation of the show cause notice issued  

by the NHAI be kept in abeyance till further orders.  In the  

said order,  the High Court also directed the Ministry of  

Defence,  Government  of  India  to  pass  an  appropriate  

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order  regarding the land needed for  widening of  NH 1  

falling within the area of Jullundur Cantt. in the  State of  

Punjab  and  granted  15  days  time  to  the  authorities  

concerned to do the needful. The High Court vide Order  

dated 24.8.2012 also  directed  the  Ministry  of  Defence,  

Government of India to hand over the land for widening of  

the  National  Highway  forming  part  of  the  Concession  

Agreement  against  which  the  Ministry  of  Defence  

approached this Court by filing a Special Leave Petition  

bearing  No.  26544-26545/2012  which  however  were  

dismissed vide Order dated 5.9.2012 granting further six  

weeks time to the authorities concerned to comply with  

the orders and directions issued by the High Court. The  

Ministry  of  Defence,  Government  of  India,  thereafter  

handed over the land for the project to the appellant in  

October 2012 after dismissal of the special leave petitions  

before the Supreme Court on 5.9.2012.  According to the  

appellant’s plea the work at the said defence land could  

not  commence  due  to  utility  shifting,  boundary  wall  

shifting in 4 kms. of length.  

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19. In  order  to  explain  and  highlight  the  

impediments  faced  by  the  appellant-company  seeking  

extension  of  time  to  fufill  its  undertaking,  the  

appellant/company filed an application bearing C.M. No.  

14936/2012 in the pending writ petition in the High Court  

of Punjab and Haryana at Chandigarh which is pending  

disposal.   It  was  stated  therein  that  the  

appellant/concessionaire  company  was  making  every  

effort  to  complete  the  six  laning  works  at  the  earliest  

provided  there  was  complete  co-operation  by  all  

concerned and work was not  hampered for  any reason  

beyond  the  control  of  the  concessionaire  as  the  

agreement  itself  envisaged continuous support  and co-

operation  from  the  respective  State  Governments  of  

Punjab and Haryana and the Concession Agreement  as  

per Article 47.3.  

20. The appellant in its application came up with a  

case  that  the  highway  in  question  commenced  on  

11.5.2009  which  was  the  appointed  date  and  the  

appellant  has been diligently  proceeding with the work  

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upon  declaration  of  the  appointed  date  by  the  

respondent.   However,  the project work were adversely  

affected  on  account  of  several  impediments,  delays,  

which according to the appellant are solely attributable to  

the respondent NHAI.  The appellant company submitted  

that  it  has  been  carrying  on  its  obligation  under  the  

existing  Concession  Agreement  towards  construction  of  

the aforesaid six lane highway earnestly in a professional  

manner and to the best of its ability and in spite of the  

impediments  and  difficulties,  obstructions  and  

hindrances,  the  appellant-Concessionaire  till  date  has  

completed  71.06  per  cent  of  the  work  in  the  project  

highway  as  on  May  2013.   However,  due  to  certain  

circumstances  beyond  the  control  of  the  appellant-

company, the project was getting delayed.  The appellant  

while  explaining  the  delay,  stated  that  in  spite  of  

extremely adverse site conditions since commencement  

of  the project,  it  has managed to  complete substantial  

portions  of  the  project  highway  because  of  its  well  

preparedness and adequate mobilization of resources. It  

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has been submitted on behalf of the appellant that the  

appellant-Concessionaire  is  fully  geared  up  for  the  

completion  of  the  project  provided  the  two  main  

impediments/obstacles namely the stringent conditions of  

mining  in  the  States  of  Punjab  and  Haryana  and  the  

shifting  of  Toll  Plaza  which  was  hampering  the  only  

source of revenue for the Concessionaire were resolved  

which were the main reasons for non-completion of the  

project highway. Thus, it  had been submitted  that the  

flow  of  work  in  the  project  highway  had  been  

hindered/slowed down due to various reasons beyond the  

control  of  the  appellant-company  which  was  primarily  

attributable to the NHAI.  

21. Since the High Court by its impugned judgment  

and  order  has  permitted  the  NHAI  to  take  away  the  

project  from the appellant  due to slow progress of  the  

National  Highway  Project  and  has  also  imposed  heavy  

fine  on  the  company  for  violating  its  undertaking  in  

completing  the  project,  the  appellant  has  sought  to  

explain the reasons in detail for the alleged slowing down  

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of the project.  It has been stated that one of the major  

constraints  that  the  appellant  faced  and  which  vitally  

affected the normal flow of work of the project in question  

was  and  is  the  non-availability  of  an  essential  raw  

material, namely, stone aggregate in the States of Punjab  

and Haryana due to the stringent conditions of mining of  

the said material  in  Haryana with effect  from 1.3.2010  

and in Punjab with effect from January 2011. However, in  

course of arguments the plea regarding non-availability of  

supply of raw material, namely, stone aggregate was not  

seriously pressed as it was submitted that the appellant  

would try to sort it out and avail  the material from the  

adjoining states.  

22. What  has seriously  been contested and is  the  

core  contentious  issue  between  the  appellant  and  the  

respondent-NHAI, which is hindering the completion work  

of the project highway is non-relocation of the Toll Plazas  

by the NHAI at two locations at KM 110 and KM 211 at  

Karnal  and  Ambala  for  which  the  appellant-

Concessionaire had approached the appropriate authority  

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ever  since  March  2010  which  is  hampering  the  only  

source  of  revenue  for  the  appellant-Concessionaire  

Company. It has been explained that as per the policy of  

NHAI (referred to hereinbefore) approved by the Planning  

Commission  and  as  per  the  Concession  Agreement  

entered into between the parties, tolling is allowed during  

the  construction  of  the  project  from four  laning  to  six  

laning.  Article  3  of  the  Concession  Agreement  which  

grants the Concessionaire by virtue of Article 3.1.2. (d)  

entitled  the  Concessionaire  to  demand,  collect  

appropriate  fee  from  vehicles  and  persons  liable  for  

payment of fee for using the project highway or any part  

thereof or refuse entry of any vehicle if the fee due/toll  

fee  is  not  paid.  Internal  accruals  from the  tolls  during  

construction  are  part  of  the  financing  package  agreed  

with the lenders and critical to enable financing for the  

project as already recorded hereinbefore.  

23. On the question of relocation of toll plaza, it has  

been  submitted  that  the  Concession  Agreement  allows  

the  appellant  company  to  choose  the  location  of  Toll  

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Plazas in consultation with the Independent Engineer and  

the authority as per the explicit provisions in this regard  

agreed between the parties in the Concession Agreement.  

In this context, attention of this Court has been invited to  

clause  2.1  of  Schedule  ‘C’  and  Article  48  of  the  

Concession Agreement which reads as follows:-

Clause 2.1 of Schedule ‘C’

“Toll Plaza means the structure and barriers  erected on the project Highway for the purpose of  regulating  the  entry  and  exist  of  vehicles  in  accordance with the provisions of this Agreement  and  shall  include  all  land,  buildings,  equipment  and other facilities required in accordance with or  incidental  to  the  provisions  of  this  Agreement;  situated  at  locations  to  be  decided  by  the  Concessionaire as per Schedule D in consultation  with NHAI and IE”.  The tentative locations of the  Toll Plazas are given in Appendix-I.”

Article 48 defines Toll Plaza as

“the  structure  and  barriers  erected  of  the  project highway for the purpose of regulating the  entry and exit of vehicles in accordance with the  provisions of this Agreement and shall include all  land,  buildings,  equipment  and  other  facilities  required in  accordance with  or  incidental  to  the  provisions of this Agreement; provided that such  toll plazas shall not be erected within a distance of  20  km  and  10  km  from  the  notified  urban  of  Karnal,  Ambala,  Ludhiyana,  Jalandhar  cities  and  

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Gharonda,  Nilokhere,  Kurushetra,  Shahabad,  Rajpura,  Sirhind  Mandi  Govindgarh,  Khanna,  Doraha, Sahniwal, Pillore, Goraya, Phagwara towns  respectively  as  notified  on  the  date  of  this  Agreement and shall be situated at locations to be  decided by the Concessionaire in consultation with  the Independent Engineer.”   

24. Placing heavy reliance on the aforesaid clause of  

the  Concession  Agreement,  learned  Senior  Counsel  Dr.  

Abhishek  M.  Singhvi  has  submitted  on  behalf  of  the  

appellant-Concessionaire that it has the exclusive right in  

accordance  with  the  provisions  of  the  Concession  

Agreement  to  choose  the  location  of  Toll  Plazas  in  

consultation with the Independent Engineer and NHAI. It  

was, therefore, submitted that the existing Toll Plazas at  

KM 146 and KM 212 were proposed to be shifted to KM  

110 and KM 182 with the 3rd Toll Plaza at KM 328 retained  

at the existing location in view of the contractual rights of  

the  appellant  to  fix  the  Toll  Plaza  location  and  

recommendations of Independent Engineer for relocation  

of the existing Toll Plaza at KM 146 and KM 212 to KM 110  

and  KM  211  respectively  vide  letter  dated  9.11.2010  

issued by the Ministry of Road Transport and Highways to  

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the  Regional  Officer  (Punjab  and  Haryana),  National  

Highways  Authority  of  India,  the  appellant  started  the  

construction of Toll Plazas and subsequently the Haryana  

Government on 4.7.2011 put forward the requirement to  

shift the Toll Plaza from the approved location at KM 182  

to KM 211 in  consultation with the respondent.   It  has  

further been stated that based on the discussion between  

the  Haryana  Government  and  the  respondent  on  the  

issue,  the  respondent  sought  consent  of  the  appellant  

regarding  proposal  of  the  Haryana  Government  for  

shifting of Toll Plaza to KM 211 in lieu of the Toll Plaza at  

KM 182 for which the in principal approval was granted  

earlier.  

25. In  order  to  honour  the  proposal  of  Haryana  

Government and keeping in view the national interest and  

public utility of the project,  the appellant agreed to follow  

the proposal of Haryana Government to relocate the Toll  

Plaza  at  KM  211  instead  of  KM  182.  The  appellant  

reserved its rights regarding the shifting of Toll Plaza  as  

per  the  provisions  of  the  Concession  Agreement  while  

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communicating its  willingness  to  follow the  proposal  of  

Haryana  Government  as  suggested  by  the  respondent.  

Subsequently,  the  respondent  NHAI  gave  approval  for  

relocation of Toll from KM 213 to KM 211.550 to 212.250  

on  the  basis  of  recommendation  of  the  Independent  

Engineer,   consent of appellant and the Government of  

Haryana vide its letter dated 11.10.2011.  

26. The aforesaid order of shifting of Toll Plaza gave  

rise to further litigation as a fresh spate of public interest  

litigations were filed in November 2011 in the High Court  

of  Punjab  and  Haryana  against  the  relocations  of  Toll  

Plazas since a writ petition bearing CWP No. 21332/2011  

(Gram Panchayat Dangdehri & Ors. vs. Union of India &  

Ors.) was filed against the relocation of Toll Plaza KM 110  

but the same was dismissed by the High Court of Punjab  

and Haryana vide order dated 25.1.2012 wherein it was  

held as follows:

“Moreover,  shifting  of  Toll  Plaza  from  the  present location to the proposed location seems to  be bona fide in view of the fact that at the present  location flyover has to be constructed to ease the  traffic  flow  within  stipulated  time  as  per  the  agreement.  Development  and  construction  of  

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National  Highway should  not  be stopped for  the  simple reason that some of the residents shall face  inconvenience or shall be burdened with toll fee.”

The High Court further held:  

“the NHAI and Concessionaire while choosing  the site for installation of Toll tax have to consider  viability,  availability  of  space/location  including  financial  aspect  …………….Therefore,  action  /  decision  to  shift  Toll  Plaza  within  1.5  KM  from  Ambala  Muncipal  Limit  does  not  seem  to  be  unjustified,  arbitrary  or  in  violation  of  Rules  2008…………………  shifting  of  Toll  Plaza  is  necessitated to facilitate construction of flyover at  the present site.”

27. Another writ petition being CWP No. 23971/2011  

(Vishal Nagrath & Ors. Vs. Union of India & Ors.) had also  

been filed challenging the relocation of Toll Plaza at 211  

KM – 212 KM but the same was dismissed by the High  

Court of Punjab and Haryana vide order dated 1.5.2012  

wherein another  Bench of  the High Court  had also not  

found  any  infirmity  in  the  decision  of  the  respondents  

(appellant herein and NHAI) to relocate the Toll Plaza and  

they were held to be well within their right to evaluate the  

location of the Toll  Plaza considering the fact that they  

were being located with reference to the entire project of  

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291 KM and the requirement was to have only three Toll  

Plazas which had to be so located that they did not result  

in  a situation of peristalsis  movement of the traffic or  

even create bottlenecks.  The Court went on to hold that  

such  decisions  were  to  be  left  to  the  wisdom  of  the  

agencies  involved  in  the  execution  of  the  project  and  

merely because another location may be perceived to be  

the better  one,  cannot be a ground to warrant  judicial  

interference.  

28. The PIL petitioners challenged this order of the  

single Judge by filing a Letters Patent Appeal bearing LPA  

No.  170/2012 but  this  was  also  dismissed by the High  

Court of Punjab and Haryana vide order dated 6.12.2012.  

While dismissing the appeal,  the learned Judges of  the  

Division  Bench  had  clearly  held   which  is  extracted  

hereinunder:  

“The  argument   that the shifting  of the toll  plaza  is actuated  with arbitrariness  or mala fide  is also  to be rejected.  Learned   Single  Judge, in  this behalf  has remarked,  and rightly so,  that the  shifting  of toll plaza to the present location seems  to be bonafide  in view of the  fact  that at the  present  location fly over has to be  constructed  to ease the traffic flow within   stipulated time as  

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per  the   agreement   and  development   and  construction of National  Highway should  not be  stopped for  the simple reason that  some of  the  residents   shall  face   inconvenience or  shall  be  burdened with toll fee.

Before we close, we would also like to point  out the submission of learned senior counsel  for  the National Highway Authority of India as well as  the  Concessionaire  to the effect that in so far as  the  local  residents  are  concerned,  they  would  have to pay the toll at much lesser rate, which is  projected at Rs. 150/- per month per vehicle.

Normally,  the  choosing  of  location  of  Toll  Plaza is to be  left to the parties concerned.  When  in  the  present  case,  two  States  as  well  as  government   undertaking   like  the  National  Highway  Authority  of  India  are  involved  in  the  decision  making  process  and  they  have  considered   financial  aspects,  the  Courts  are  ill  equipped   to  go  into  the  rationale  of  such  decisions.  After it  is found  that the decision is  bonafide;  it  does  not  suffer  from  any  oblique  motive; and it is not  in violation of any statutory  provisions,  no  further  judicial  scrutiny  on  the  merits of such a  decision is admissible in law.

We, therefore, do not find any merit in this  appeal which is accordingly dismissed.”

 The judgment and order passed in the LPA was thereafter  

never  challenged  either  by  the  PIL  petitioner  or  the  

respondent  NHAI  or  the  respondent-Harish  Kumar  Puri  

and  this  judgment  and  order  passed  in  the  LPA  thus  

attained finality.  

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29. However, despite the orders passed by the High  

Court of Punjab and Haryana and approval granted by the  

respondent NHAI, the appellant has been prevented from  

commencing tolling at located Toll Plaza at 211 KM and  

110 KM due to which it is contended that the appellant is  

gravely affected and is losing substantial fund due to non-

commencing  of  tolling  at  the  located  Toll  Plazas  that  

could  have  been  utilized  for  the  construction  of  the  

project.  It  has  been urged that  the NHAI  has  all  along  

been consistently stating that the Toll Plaza relocation is  

as  per  the  Concession  Agreement.  Based  on  this  

assurance, the lenders have continued disbursement to  

the project. Thus, the respondent by granting of approval  

and  re-affirming  the  appellant  Concessionaire  right  to  

relocate  the  Plazas,  has  induced  the  appellant  and  

lenders to  invest  in  construction of  the project  but  the  

NHAI has now reversed its  decision after  2 ½ years in  

spite of giving the in principal approval.  

30. It  has been submitted by Dr.  Singhvi  that  the  

above change in stand of the respondent on the Toll Plaza  

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relocation and disallowing the appellant-Concessionaire’s  

rights  under  the  Concession  Agreement  has  a  material  

adverse affect on the concession as the entire investment  

on  the  project  was  based  on  its  right  to  enforce  the  

provision  for  shifting  the  Toll  Plazas  i.e.  fixing  the  Toll  

Plaza  location  to  have  optimum  toll  collection   as  

envisaged in its financial model.   As a result, the lenders  

have stated that they cannot continue disbursing to the  

project without the appellant being allowed to collect toll  

from the new locations.  

31. It  appears  that  the  appellant  although  had  

succeeded in the High Court of Punjab and Haryana on  

the dispute regarding shifting of Toll Plaza, the appellant  

approached the High Court of Delhi in view of Clause 47.1  

of  the  Concession  Agreement  under  Section  9  of  the  

Arbitration and Conciliation Act, 1996 by filing OMP No.  

321/2013 which is pending disposal before the Delhi High  

Court wherein the appellant inter alia has raised several  

issues before the High Court of Delhi including the issues  

of mining as well as the relocation of the Toll Plaza. It was  

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informed  that  OMP  No.  321/2013  is  still  pending  

consideration before the High Court of Delhi but the fact  

remains that the issue/dispute regarding shifting of Toll  

Plaza had already been set at rest by the High Court of  

Punjab and Haryana as already related hereinbefore.  

32. However, the High Court in its impugned order  

manifestly  appears  to  have  ignored  or  failed  to  take  

notice of the orders by which the High Court vide CWP No.  

21332/2011  and  CW  No.  23971  of  2011  and  LPA  No.  

170/2012 had permitted vide order  dated 6.12.2012 to  

shift the Toll Paza and completion of the highway project  

entrusted  to  the  appellant  vide  Concessionaire  

Agreement which had been approved by the NHAI itself  

vide letter dated 30.6.2010.

33. However,  the  NHAI  which  had  approved  the  

shifting of Toll Plazas all through suddenly took a U turn  

after 2 ½ years when a new Chairman of the NHAI took  

over the charge on 18.3.2013 and started questioning the  

decision of  the NHAI  for  the first  time which had been  

approved  by  an  independent  Engineer  Louis  Berger  

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permitting  shifting  of  Toll  Plazas  earlier  by  the  NHAI  

stating that it  was an error  and a malafide decision of  

some of the officers of the NHAI oblivious of the fact that  

the  same had  already  been  upheld  by  the  High  Court  

after contest when the PIL filed against the shifting of toll  

plaza  had  been  rejected  by  the  High  Court  upto  the  

Division  Bench  against  which  no  appeal  was  preferred  

either  by the NHAI or  any other  party.   In  fact,  at  the  

initial  stage,  the  counsel  representing  the  NHAI  had  

submitted that shifting of Toll  Plazas is  contrary to the  

Concession Agreement but the same could not withstand  

the express clause in the Concession Agreement which  

permitted such shifting with the approval of the NHAI and  

Independent  engineer  who  under  the  agreement  was  

competent  to  approve  or  disapprove  the  shifting.  

Confronted  with  the  glaring  contradiction,  the  then  

counsel representing the NHAI went on to advance other  

arguments which were never raised before the High Court  

at any point of time earlier.  

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34. Contesting  the  plea  of  the  appellant  and  

supporting the directions issued by the High Court in its  

impugned  order,  Ms.  Indu  Malhotra,  learned  senior  

counsel  appearing  for  the  respondent  NHAI  at  a  much  

later stage submitted that the appellant was required to  

complete the project  of  six  laning of  National  Highway  

No.1  by  November  2011  under  the  Concession  

Agreement.  But  even  though  two  years  have  already  

elapsed  since  the  period  stipulated  in  the  Concession  

Agreement  got  over,  the  progress  of  the  National  

Highway project has been negligible  since January 2012.  

It is alleged that the appellant, in fact, is not carrying out  

any  work  whatsoever  since  November  2012.   It  was  

submitted that several opportunities had been granted to  

the appellant to complete the project within the period  

stipulated and several extensions were also granted up to  

31.3.2013. Despite this, appellant has failed to complete  

the  project.  It  was  elaborated  that  the  appellant  has  

practically suspended work on the National Highway ever  

since November 2012 even though toll is being collected  

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from the commuting public since 11.5.2009 which is the  

appointed date.  The NHAI in support of its bona fide has  

urged that it is primarily concerned with completion of the  

project highway in the interest of safety and security of  

the  public  at  large,  but  the  appellant  having  put  the  

project on hold by not doing any progress in completing  

the  construction  of  the  highway,  the  respondent-NHAI  

should be allowed to substitute the Concessionaire as per  

the provisions of the Concession Agreement. It has been  

further  urged  that  the  appellant  has  been  flouting  the  

undertaking given to the Punjab and Haryana High Court  

and thus the impugned order passed by the High Court  

should  not  be  interfered  with.   

35. On  the  most  contentious  issue  regarding  

shifting, relocation of the Toll Plaza, it has been submitted  

that there is no provision in the Concession Agreement  

for  shifting/relocation  of  the  Toll  Plazas  from  the  pre-

determined  locations  set  out  in  the  bid  documents.  

Similarly, it has also been submitted that Clause 48.1 of  

the Concession Agreement put forth by the appellant that  

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it has an unfettered right to decide locations of Toll Plaza  

at any three places over a stretch of 291 KM of National  

Highway  No.1  in  complete  disregard  to  the  locations  

mentioned  in  Appendix  I  of  Schedule  ‘C’  to  the  

Concession Agreement is wholly untenable, misconceived  

and is contrary to the provisions and the overall scheme  

of  the  Concession  Agreement.   Such  interpretation,  if  

accepted, would not only alter the basic structure of the  

Concession  Agreement  but  also  would  subvert  the  bid  

process.  It  was  further  added  that  changing  the  bid  

parameters subsequent to the award of the project, is not  

only against the public policy, but also unjust to the other  

unsuccessful  bidders  and  would  amount  to  unjust  

enrichment  of  the  concessionaire  at  the  cost  of  local  

public which is not liable to pay such user fee as per the  

original scheme of the Concession Agreement.  

36. It  was still  further  contended on behalf  of  the  

respondent-NHAI that the appellant also made an attempt  

to  read  Clause  48.1  of  the  Concession  Agreement  in  

isolation and in complete disregard to its schedules and  

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annexures, but the provisions of the contract are to be  

read  as  a  whole  and  not  in  isolation.  Hence  if  the  

definitions of Toll Plaza in Clause 48.1 of the Concession  

Agreement and Clause 2.1 of Schedule ‘C’ are to be read  

together, it broadly covers three aspects. Firstly, the Toll  

Plazas shall not be erected at a distance of 20 KMs and 10  

KMs from the notified urban limits of the respective towns  

as  stated  therein.  Secondly,  the  Toll  Plazas  should  be  

situated at locations to be decided by the Concessionaire  

in consultation with NHAI and Independent Engineer and  

thirdly the tentative locations of the Toll Plazas which are  

given in Appendix I.   Elaborating on this aspect, it was  

urged that the locations of Toll  Plazas were clarified to  

bidders and the ambiguity, if any, in the locations of the  

Toll  Plaza  as  per  the  word  “Tentative”  mentioned  in  

Appendix  I  of  Schedule  ‘C’  stood  frozen  permanently  

beyond all doubts in view of the reply given to the pre-bid  

query. It is an admitted position that the schedules and  

annexures  to  the  Concession  Agreement  forms  on  

integral part of the Concession Agreement and would be  

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in full force and effect as expressly set out in the body of  

the Concession Agreement.  Relying on this provision, it  

was submitted that the limited discretion of the appellant  

to decide the locations in view of the words “Locations to  

be decided by the Concessionaire” in Clause 48.1, Clause  

2.1 of Schedule ‘C’ and mentioning of word “Tentative” in  

Appendix I of the Schedule ‘C’ was only to overcome any  

unforeseen  site  constraints  at  the  time  of  actual  

construction  of  Toll  Plaza.  The  discretion  available  was  

only  to marginally modify the location of the Toll Plazas  

with the approval of Independent Engineer and NHAI.  The  

said discretion cannot be appended so as to apply to a  

situation  where  the  appellant  is  permitted  to  shift  the  

location of a Toll Plaza from the pre-determined locations  

as  per  Appendix  I  of  Schedule  ‘C’  of  the  Concession  

Agreement and further clarified in the reply to the pre-bid  

meeting, to another point that too at a distance of 36 KMs  

so that the appellant can mop up extra revenue.  Adding  

further, it was contended that in view of Clause 48.1 of  

the  Concession  Agreement,  Toll  Plaza  should  not  be  

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relocated within  20 KMs and 10 KMs from the notified  

urban limits  of  the respective cities mentioned therein.  

Admittedly, the proposed location of Toll Plaza at KM 110  

falls  within a distance of 10 KMs of Municipal  Limits of  

Gharonda and within 20 KMs of Municipal Limits of Karnal  

as well as of Panipat.  In view thereof the relocation of  

Toll  Plaza  at  KM  110  as  set  up  by  the  appellant,  if  

permitted,  would  be  in  complete   violation  of  the  

definition  of  ‘Toll  Plaza’  given  in  Clause  48.1  and  the  

same should not be permitted as that would amount to  

changing the terms agreed into between the parties.  

37. Extensive arguments were further advanced on  

the point of shifting the location of Toll Plaza and it was  

contended that locations of Toll  Plaza were determined  

even prior to invitation of the tender and approved by the  

Cabinet Committee on Economic Affairs. The locations of  

the Toll Plaza were identified as early as at the time of  

preparation of the feasibility report of the project and on  

submission of the feasibility report to the Ministry of Road  

Transport and Highways took transfer of the project from  

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the Public  Private Partnership Appraisal  Committee and  

subsequent  thereto  the  project  was  approved  by  the  

Cabinet Committee on Economic Affairs.  It is only then  

the  bids  for  the  project  were  invited  with  the  pre-

determined locations of Toll Plazas specifically mentioned  

in the bid documents.  Thus, locations of Toll Plaza were  

approved by the Government of India keeping in view the  

various factors involved including the total project costs  

of the project.  In view thereof, the locations of the Toll  

Plaza  were  final  right  from  inception  and  are  part  of  

statutory approval.  In view of this, it was submitted that  

shifting  of  the  Toll  Plaza  would  completely  change  the  

bidding parameter  and the total   project  costs,  on the  

basis of which bids were invited from various bidders. In  

support  of  this,  counsel  relied  upon  a  decision  of  this  

Court  in  Monarch  Infrastructure  (P)  Ltd.  Vs.  

Commissioner,  Ulhasnagar  Municipal  Corporation,  

reported  in  (2000)  5  SCC 287  and  submitted  that  this  

Court (  Supreme Court ) upheld the view that if a term of  

the tender is delayed after the players have entered into  

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arena, it is like change the rules of the game after it had  

begun,  which  would  be  patently  unfair  to  the  other  

candidates participating in the tender process.  

38. Learned  counsel  also  submitted  that  the  

proposal seeking relocation of Toll Plazas was three times  

rejected  by  the  Independent  Engineer  before  its  

conditional  recommendation leading up to the grant of  

conditional in principal approval.  Giving out the details in  

this regard,  it  was pointed out that a proposal  seeking  

relocation of the existing Toll Plazas was received by the  

Independent  Engineer  from  the  appellant  vide  letter  

dated  11.3.2010.   The  proposal  of  the  appellant  was  

rejected by the Independent Engineer vide its letter dated  

18.3.2013,  2.4.2010 and 29.5.2010 as the Independent  

Engineer found the said proposal to be contrary to the  

provisions  of  the  Concession  Agreement.   The  

Independent Engineer was of considered opinion that the  

relocation of Toll  Plaza would amount to change in the  

scope of work.  The Independent  Engineer had rejected  

the proposal of the Concessionaire on the basis that these  

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proposed  locations  contradicted  the  provisions  of  

definition  of  Toll  Plaza  and  Concession  Agreement.  

Therefore,  the  Independent  Engineer  observed  that  he  

could  not  decide  against  the  provision  of  Concession  

Agreement.  

39. Learned counsel representing the NHAI although  

related the past history in great detail regarding denial of  

permission to shift the Toll Plazas, it could finally notice  

that  the  Independent  Engineer  vide  his  letter  dated  

30.6.2010 expressed that it is not in disagreement with  

the shifting of Karnal Toll Plaza although it noted that the  

same would amount to change in scope in view of the  

provisions of the Concession Agreement. But, thereafter  

the Independent Engineer vide its letter dated 10.07.2010  

finally  “opined  that  the  shifting  of  location  of  the  Toll  

Plaza  may  be  allowed  subject  to  approval  of  the  

competent authority keeping in view the various clauses  

of the Concession Agreement and the Gazette Notification  

issued by the Government of India.”  Counsel for the NHAI  

however has still  harped upon the previous background  

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wherein the Independent Engineer had initially expressed  

some reservations for shifting the Toll Plaza ignoring that  

after all opinion and counter opinion on the question of  

shifting  of  Toll  Plaza,  the  Independent  Engineer  finally  

gave  approval  for  shifting  of  the  Toll  Plaza  vide  letter  

dated 30.6.2010.

40. However, the same could not be made effective  

as approval of the Independent Engineer to shift the Toll  

Plaza gave rise to at least two public interest litigations  

referred to hereinbefore challenging the shifting of  Toll  

Plaza  whereby  the  High  Court  approved  of  the  single  

Bench  order  permitting  shifting  of  Toll  Plaza  as  the  

Division Bench had dismissed the LPA upholding the order  

of the single Bench allowing shifting the Toll Plaza in view  

of  the  clause  in  the  Concession  Agreement  and  the  

opinion  of  the  Independent  Engineer  and  the  NHAI.  

Neither the NHAI nor the PIL petitioners challenged the  

judgment and order of the High Court permitting to shift  

the Toll Plaza.  One would have inferred that as a matter  

of  judicial  propriety  ingrained  in  the  principle  of  

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constructive res judicata and above all  rule of law, the  

controversy  regarding  shifting  of  Toll  Plaza  attained  

finality  in  view  of  final  adjudication  of  the  dispute  

regarding  shifting  of  Toll  Plaza  by  the  High  Court  of  

Punjab and Haryana but it is rather strange and beyond  

comprehension in view of the principle of constructive res  

judicata that the dispute regarding shifting of Toll Plaza  

was still allowed to survive as the appellant filed another  

writ petition in the High Court of Delhi seeking a writ of  

mandamus or any other appropriate direction permitting  

it  to  shift  the Toll  Plaza  which writ  petition finally  was  

dismissed and rightly so as in any case the same could  

not have been held maintainable.  It is equally interesting  

to  note  that  in  spite  of  all  this  exercise  undertaken  

regarding the dispute pertaining to shifting of Toll Plaza,  

an application was filed under Section 9 of the Arbitration  

and Conciliation Act 1996 for appointment of an Arbitrator  

to resolve several disputes including shifting of Toll Plaza  

missing out  that  the dispute relating to  shifting of  Toll  

Plaza had already been dealt with on the judicial side by  

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the  High  Court  of  Punjab  and  Haryana  when  two  writ  

petitions and one LPA against shifting was rejected by the  

Division Bench of the High Court and yet the NHAI and  

the appellant/company has been litigating and contesting  

the plea regarding shifting of Toll Plaza.

41. In fact, we have noticed that it is only in the year  

2013 i.e. 18.3.2013 when a new incumbent took over the  

charge  as  Chairman  of  the  NHAI  that  a  letter  dated  

18.3.2013  was  issued  wherein  the  proposal  of  the  

appellant for relocation of Toll Plaza was finally rejected  

stating  therein  that  the  in  principle  approval  dated  

9.11.2010 by NHAI was only conditional in nature and at  

the most were only recommendatory vide its letter dated  

9.11.2010 ignoring that the Independent Engineer, earlier  

had approved of the proposal for shifting the Toll Plaza.  

In spite of these, the application is still surviving urging  

that the matter regarding shifting of Toll Plaza be decided  

in the arbitration proceedings and the NHAI should not be  

allowed  to  interfere  with  the  decision  of  the  I.E.  and  

approved  by  the  NHAI  which  earlier  had  endorsed  the  

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shifting.   In  fact,  the  NHAI  seems  to  be  completely  

oblivious of the fact that when the Division Bench of the  

Punjab and Haryana High Court had already settled the  

dispute  by  a  speaking  judgment  and  order  in  CWP  

No.21332/2011,  CWP  No.23971/2011  and  LPA  

No.170/2012  permitting the shifting, what legal authority  

was  left  with  the  Chairman,  NHAI  to  issue  a  letter  

questioning  the  shifting.   It  is  rather  strange  that  an  

authority  in  contemptuous  disregard  to  a  speaking  

judgment and order of the High Court had the audacity to  

defy the order which had permitted relocation of toll plaza  

and it is equally strange that the High Court also vide the  

impugned order,  appears to have ignored the fact that  

the controversy regarding shifting of Toll Plaza although  

had  been  set  at  rest  by  a  judicial  verdict  of  the  High  

Court,  the  NHAI  still  insisted  that  it  cannot  permit  the  

shifting when its I.E. (Independent Engineer) had earlier  

approved of the same and accepted by NHAI in view of  

the specific clause in the agreement to that effect.   

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42. In  fact,  the  main contest  although is  between  

the  contracting  parties/signatories  to  the  Concession  

Agreement  which  are  the  NHAI  and  the  appellant  

company  and  the  agreement  had  been  signed  and  

executed incorporating the terms and conditions in the  

agreement  which  had  approval  of  the  Planning  

Commission  and  the  Ministry  of  Economic  Affairs,  the  

respondent No.5 Union of India appeared which was given  

a notice by this Court merely to facilitate and resolve the  

controversy  between  the  contracting  parties  and  

admittedly is not a contracting party itself as it is not a  

signatory to the Concession Agreement.  However, it has  

come up in support of the respondent No.6 NHAI which is  

represented by the Additional Solicitor General Mr. Paras  

Kuhad.  However, the learned ASG Mr. Kuhad on behalf of  

the  Union  of  India  advanced  arguments  limited  to  the  

issue of  permissibility  of  change of  location of  the Toll  

Plaza within the scheme of applicable statutory provisions  

as  also  the  question  as  to  the  statutory  status  of  the  

Central  Government  in  relation  to  contract  for  

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development  of  national  highways.   Inter  alia  it  was  

submitted that Section 4 read with Section 8 A(1) of the  

National Highways Act 1956 makes it clear that national  

highways vest in the Union and by virtue of Section 8 (A)  

(1),  the  power  to  enter  into  an  agreement  for  

development is also vested with the Central Government.  

However,  there  is  no  quarrel  about  this  position  and  

hence is not really required to be gone into or dealt with  

in extenso as this position is not disputed by any of the  

parties nor we have any doubt that the National Highways  

Authority  is  clearly  an  authority  under  the  National  

Highways  Act  1956  and  it  is  the  power  of  the  Central  

Government to vest or entrust its authority in the National  

Highway Authority.  We therefore entirely agree with the  

learned  ASG  to  the  extent  that  it  is  the  Central  

Government which may from time to time by notification  

in the official gazette vest in or entrust to the authority  

such national highway or any stretch thereof as may be  

specified in such notification.  This is clearly the provision  

also under Section 11 and Section 15 (2) and (3) of the  

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National Highway Authorities Act 1988 and Section 15 (2)  

of  the  said  Act  clearly  lays  down  that  subject  to  the  

provisions  of  sub-section (1),  “the  form and manner  in  

which any contract shall be made under this Act shall be  

such as may be provided by Regulations.”  Sub-section  

(3) of Section 11 of the Act 1988 further clearly lays down  

that  no  contract  which  is  not  in  accordance  with  the  

provisions of this Act and the regulations shall be binding  

on the authority.  Rule 3(2) of the Rules of 1997 framed  

for  collection  of  toll  fees  under  the  National  Highways  

Authority  of  India  Act  1988  further  lays  down  that  no  

contract which is not in accordance with the provisions of  

this  Act  and  the  regulations  shall  be  binding  on  the  

authority  and  the  rates  of  fees  and  the  period  of  

collection  shall  be  decided  and  shall  be  specified  by  

notification  in  all  official  gazette  by  the  Central  

Government having regard to the expenses involved in  

building, maintenance, management and operation of the  

whole  or  part  of  such  section,  interest  on  the  capital  

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invested,  reasonable  return,  the  volume  of  traffic  and  

period of such agreement.

43. Although,  the  learned  ASG  has  cited  several  

authorities to establish the provisions incorporated under  

the National Highways Authority Act, we do not find any  

difficulty in accepting the position even without the ratio  

of the authorities relied upon,  that in case of statutory  

contracts, the terms of the statute prevail over the terms  

of  the contract.   Therefore,  determination of  the terms  

and conditions  of  the contract  will  no  doubt  follow the  

deliberations,  discussions  and  views  expressed  by  the  

Central  Government  while  drafting  the  contractual  

agreement and the National Highways Authority being an  

agency of  the Central  Government  in  terms of  the Act  

itself which  has to incorporate the terms and conditions  

which is finally included  in the draft agreement of the  

NHAI.  But once the contract is signed by the contracting  

parties obviously the contract having assumed the legal  

authority of a concluded contract would govern the terms  

and conditions of the contract between the parties who  

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have  signed  and  thereafter  would  be  binding  on  the  

contracting parties.  But to contend that even though the  

contract  stands  concluded  after  the  same  has  been  

singed  by  the  contracting  parties,  the  opinion  of  the  

Central Government on its administrative side will prevail  

over the terms and conditions of the contract in absence  

of any statutory violation, would be difficult to accept and  

it is not even the case in the instant matter that the terms  

and conditions in the Concessional Agreement is contrary  

to  some statute or  a  central  legislation so  as to  strike  

down the clause in the agreement.   

44. Therefore,  we  are  of  the  view  that  the  

Concession  Agreement  having  been  signed  by  the  

appellant – joint venture company and respondent No.6 –  

NHAI, the role of the Union of India to express its view  

over and above the terms and conditions of the contract  

in absence of any statutory violation will not be allowed to  

prevail as after execution of the contract, it can only issue  

the notification in this regard.  We, therefore, do not wish  

to go further in regard to the correctness or otherwise of  

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the  contentions  urged  on  behalf  of  respondent  No.6  –  

Union of India as its status under the prevailing facts and  

situation at the most can be treated as that of a facilitator  

and nothing more than that.  The position no doubt would  

have  been  otherwise  if  the  Concession  Agreement  

suffered from the vice of some statutory violation.  Since  

it  is  the  appellant  –  joint  venture  company  and  

respondent  No.6  –  NHAI  which  alone  are  the  parties  

between  whom  the  Concession  Agreement  has  been  

signed and the agreement is not even remotely alleged to  

be in violation of some statute or central Act, the role or  

the authority of the U.O.I. to intervene or contest cannot  

be  allowed  as  the  U.O.I.  at  the  most  is  a  proforma  

respondent in this appeal under the prevailing facts and  

circumstances.

45. However,  the  respondent  No.1  Harish  Kumar  

Puri who had initially filed the public interest litigation in  

the High Court of Punjab and Haryana merely for ensuring  

safety  and  security  of  the  commuters  on  the  national  

highway has also entered appearance in the matter and  

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has  advanced  submissions  through  the  senior  counsel  

Shri P.S. Patwalia and has practically supported the stand  

of the NHAI respondent No.6 as also the impugned order  

passed by the High Court which is under challenge in this  

appeal.   Learned  Senior  Counsel  Mr.  Patwalia  

representing  respondent  No.1-PIL  petitioner,  inter-alia  

submitted that the excuse of non-shifting of Toll Plaza by  

the appellant/company is merely a ploy to justify its acts  

of  delay  in  continuing  with  the  project  as  it  has  been  

giving excuses one after another for the delay and every  

time comes up with a new lame excuse.  According to his  

averment, the plea of leakage raised by the appellant in  

order to shift the Toll Point/Toll Plaza is merely a ruse for  

not completing the project.  It has been submitted that no  

new access/cross roads joining the highway have been  

built  and the so-called leakage/diversions as alleged by  

the  appellant  are the  straight  highways and the major  

roads  are  in  existence  for  the  last  many  many  years.  

Respondent No.1- Mr. Puri has also stated that huge sums  

are  being  transferred  from  the  Esrow  accounts  which  

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should  have  been  spent  on  the  project.   It  had  been  

added that the concessionaire while submitting financial  

model to the financial institution showed the project cost  

as  Rs.4517  crores  against  the  actual  project  cost  of  

Rs.2747  crores  which  has  been  done  to  secure  higher  

borrowing which shows that the action of the appellant is  

not  in  public  interest.   It  was  also  contended that  the  

dispute regarding shifting of Toll Plaza was not an issue  

raised  before  the  High   Court.   Hence,  the  appellant  

should not be permitted to raise this question before this  

Court as the shifting is not at all in public interest since  

the appellant by doing so merely wants to enrich itself at  

the cost of general public.  It has further been contended  

that in the event of shifting only a very short stretch of  

road will be covered after which the commuters will have  

to  cross  through  the  Toll  Plaza  and  the  commuters  of  

Haryana  will  have  to  pay  a  huge  toll  for  the  entire  

Haryana portion which at present is more than Rs.100/-  

per vehicle at the Karnala Toll Plaza.  If the Toll Plaza is  

shifted  close to the Panipat  area,  people  traveling for  

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extremely short distance and turning of the highway to go  

to other States like Himachal Pradesh, Uttarakhand and  

Uttar Pradesh via Yamuna Nagar will end up paying toll  

for the entire Haryana portion which will not be used by  

them.  Similarly, if the Shambhu Barrier is shifted to the  

proposed location at Neelokheri, people who will travel for  

a negligible distance of Punjab highway and turn off the  

highway to go to Banaur and further to Himachal Pradesh  

and Jammu and Kashmir will end up paying Toll for the  

Punjab portion which they will never use.  Thus, shifting of  

the Plazas will not be in public interest as toll can only be  

charged if the commuters are utilizing the facilities of the  

highway.  It cannot be made as a compulsory extract fee  

so that even if a person who is using a very small portion  

of the highway should pay for the entire stretch of the  

Highway.  It was finally submitted that the completion of  

the  70  per  cent  of  the  highway  as  claimed  by  the  

appellant  is  also  factually  incorrect  as  the  highway  

consists  of  few  phases  for  six  laning  as  dotted  with  

incomplete projects, half built flyovers abundant service  

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lanes.  According to respondent No.1 highway traveling is  

a  nightmare  for  the  traveling  public  faced  with  heavy  

traffic and ill maintained narrow diversions.  Respondent  

No.1, therefore, has supported the impugned directions of  

the High Court by which the NHAI has been permitted to  

take over the project from the appellant and ensure its  

completion under its supervision.  The respondent No.1  

has also given figures of fatal accidents and injuries on  

NH No.1 falling in the district of Kurukshetra by which it  

sought  to  establish  that  the  commuters  are  suffering  

heaving losses of lives, properties due to negligence and  

failure  on  the  part  of  the  appellant-company  despite  

paying heavy but illegal toll at various toll barriers on this  

road  from  Panipat  to  Jullundur.   Thus,  in  sum  and  

substance respondent No.1 has sought to justify the order  

passed by the High Court and submitted that the penal  

consequences ought to be allowed to follow and should  

not be interfered with because of negligence and apathy  

on the part of the concessionaire/appellant herein.

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46. Besides  the  above,  an  application  for  

intervention  also  was  filed  by  one  Chander  Prakash  

Kathuria who also has come up in support of the NHAI and  

has supported the direction of the High Court by which  

the  High  Court  directed  respondent  No.6  NHAI  to  

forthwith proceed in the matter and take possession of  

the highway and ensure that the work for the repair of the  

highway commenced within a week and the work for its  

completion commenced within a month thereafter.  But,  

his  intervention  application  having  not  been  allowed,  

arguments could not be advanced.  In any view, he also  

has merely supported the stand of the respondent No.1  

and the other contesting respondents NHAI.

47. In any case, the High Court vide its impugned  

judgment  and  order  has  divested  the  appellant  of  its  

contractual authority to continue with the project as the  

Concession Agreement practically has been annulled and  

rescinded  since  the  NHAI  has  been  clearly  directed  to  

take over the project from the appellant and ensure that  

the project  is  completed which clearly  implies  that  the  

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construction of the Highway for the rest of the area which  

is merely 29% of the project will have to be constructed  

by executing another  contract  in  favour  of  some other  

construction company as it was informed to us that the  

NHAI  itself  does  not  execute  the  construction  and  will  

have to entrust the same to a new player/contractor.  In  

fact, the erstwhile counsel Mr. Sethi who represented the  

NHAI earlier and was later replaced by Ms. Malhotra had  

submitted  before  this  Court  that  a  new contractor  has  

already been appointed who is  ready to  take over  the  

highway project for construction of the balance area of  

29% where the construction has to be done.  Thus, the  

Contractual  Agreement  has  been  nullified  by  the  High  

Court although it was observed by the High Court itself  

that it is not entering into or touching upon the terms and  

conditions of  the contract.   The High Court has further  

imposed  heavy  penalty/fine  of  Rs.60  crores  and  Rs.7  

crores  respectively  on  the  appellant-company  and  its  

director  holding  them exclusively  responsible  for  delay  

and  non-completion  of  construction  of  the  highway  

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between Panipat and Jullundur without entering into the  

cause of delay of the project as also without considering  

whether denial of permission by the NHAI to shift the toll  

plaza was in violation of the terms of the Agreement and  

whether the same is not in contemptuous disregard to the  

order of the High Court passed earlier by a co-ordinate  

Bench of the High Court referred to earlier.

48. Learned  senior  counsel  Dr.  Abhishek  Manu  

Singhvi, therefore, has made detailed submissions by way  

of rejoinder to the arguments advanced by the contesting  

respondent  No.6  NHAI  which  clearly  is  the  main  

contesting respondent.  Dr. Singhvi while countering the  

arguments  advanced  by  the  NHAI  and  the  respondent  

No.1 Mr. Harish Kumar Puri has focused on the plea that  

the  High  Court  while  passing  the  impugned  order  has  

clearly  ignored  the  contractual  rights  and  obligations  

contained in the Concession Agreement dated 9.5.2008  

but ventured into the arena without taking into account  

the contractual rights of the parties, thereupon nullifying  

the terms of the Concession Agreement.  Learned counsel  

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elaborated that the controversy adjudicated by the High  

Court  vide  the  impugned  order  has  emerged  out  of  a  

public  interest  litigation filed in  the year  1998 and the  

Concession Agreement dated 9.5.2008 was executed at a  

much later  stage after  ten years  in  2008 between the  

appellant  company  and  the  respondent  No.6  NHAI  

granting  exclusive  right,  license  and  authority  to  

construct, operate and maintain the highway on a Build,  

Operate and Transfer basis (BOT for short) for a period of  

15 years.  The rights and obligations between the parties  

have been determined  by  incorporating  the  terms  and  

conditions  which  are  contained  in  the  Concession  

Agreement executed between the appellant and the NHAI  

but  the  High  Court  has  completely  ignored  the  

contractual  provisions  and has  passed directions  which  

has practically nullified the terms of the contract.

49. Having  analyzed  the  arguments  advanced  by  

the counsel for the contesting parties in the light of the  

terms  and  conditions  of  the  Concession  Agreement  as  

also the contents of the impugned judgment and order of  

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the High Court, it is difficult to overlook that the Hon’ble  

Judges  of  the  High  Court  although  have  recorded  that  

they did not intend to traverse the contractual obligations  

and liabilities of parties and confine their considerations  

as  far  as  the  orders  passed  by  the  High  Court  is  

concerned so as to  see whether  public  interest require  

that the said order be extended or vacated, it has indeed  

done the  same when it  directed  the  NHAI  to  forthwith  

take possession of  the Highway Project  which in  effect  

has nullified the contract and has gone much further by  

directing  the  NHAI  to  ensure completion of  the  project  

which in effect mean that the NHAI would have to invite  

fresh tender for construction of the balance 29% area of  

the  Highway  Project  as  admittedly  NHAI  itself  cannot  

undertake the construction.  This clearly is nothing short  

of cancellation of the Concession Agreement and it is  a  

misnomer when it observed that it was not traversing the  

contractual  obligation ignoring its  devastating effect  on  

the  contracting  party  who  had  completed  71%  of  the  

project and had at least the right to explain whether the  

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delay  in  concluding  the  project  could  entirely  be  

attributed to the appellant or at least some of it could be  

fastened on the NHAI which had gone to the extent of not  

only  backing  out  of  its  earlier  opinion  but  also  

conveniently shut its eyes that it was violating the order  

of the High Court which had earlier upheld the right of the  

appellant to shift the toll plaza.

50. Thus,  the  High  Court  was  not  justified  in  

recording that the delay has been caused merely at the  

instance of the appellant so as to pass a blanket order for  

transferring the execution of the project to NHAI contrary  

to  the  agreement  wherein  it  was  permissible  for  the  

appellant to shift the Toll Plazas and the same was also  

approved by the High Court as referred to hereinbefore  

time and again.  The High Court further seems to have  

missed  the  track,  perhaps  in  its  enthusiasm,  that  the  

matter  with  which  it  was  seized  was  limited  to  the  

question  as  to  whether  the  order  by  which  the  show  

cause  notice  issued  by  the  NHAI  to  the  appellant  

concessionaire-company  was  ordered  to  be  kept  in  

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abeyance was fit to be vacated or not as the High Court  

was  essentially  adjudicating  the  question  whether  the  

NHAI  could  at  all  issue  a  show  cause  notice  to  the  

appellant-company to terminate the contract  and while  

the High Court did not enter into the question whether  

the said order was fit  to be continued or was fit  to be  

vacated,  went into the question whether the appellant-

company was fit to continue with the project which had  

been handed over to the appellant by the NHAI by virtue  

of  a  valid  agreement  executed  between  the  parties  

primarily on the ground of delay without really entering  

into the cause of delay and considering the plea at whose  

instance the contractual obligations had been violated.   

51. In fact, even at this stage before this Court, the  

respondent  NHAI  has  merely  contended  that  the  Toll  

Point/Toll Plaza should not be allowed to be shifted from  

the point determined earlier and has been asserting that  

the Toll Plaza should not be shifted from 146 KM to 110  

KM.  In fact, the respondent No.6 NHAI neither before the  

High  Court  nor  before  this  Court  even  remotely  had  

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contended that the contract should be nullified although  

it has contended that shifting of Toll Plaza should not be  

permitted  as  the  same  according  to  their  averment  is  

contrary to the terms and conditions of the agreement.

52. There  is  yet  another  feature  which  catches  

attention  but  has  been missed by  the  High  Court  that  

when the High Court itself had prevented the NHAI from  

proceedings  with  a  show  cause  notice  given  to  the  

appellant –concessionaire company and has gone to the  

extent of passing an order for keeping the show cause  

notice in abeyance and the NHAI itself has not contended  

either  before  the  High  Court  or  before  this  Court  for  

terminating the contract except that it has been opposing  

the shifting of Toll Plaza, whether the High  Court on its  

own could do the same without examining the contractual  

obligations.  Taking  the  worst  case/situation  and  even  

assuming that the stand of the respondent NHAI were to  

be  accepted,  the  appellant  at  the  most  could  be  

prevented  from  shifting  the  Toll  Plaza  from  a  pre-

determined  point  to  another  point  in  which  case  the  

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appellant might have to continue with the project by not  

allowing it to change the location of the Toll Plaza but the  

same cannot entail the consequence of final termination  

without adjudication at least  by an arbitrator  for  which  

there is a clear provision in the Agreement itself.  In any  

event,  the  question  of  termination  of  the  Concession  

Agreement  without  adjudication  could  not  arise  at  all  

when  the  High  Court  was  merely  considering  the  

application seeking vacation of the stay order to the show  

cause notice issued by the NHAI.  In case, it had rejected  

the application, the show cause notice issued by the NHAI  

to  the  appellant  could  have  proceeded.   But  the  High  

Court  seems  to  have  taken  a  giant  leap  forward  by  

terminating the contract for all practical purposes without  

expressly  using  the  expression  “termination”  when  it  

directed  the  NHAI  to  take  over  the  project  from  the  

appellant – company and continue with the project and  

complete it, nullifying the contract in its entirety.

53. The  High   Court  seems  to  be  completely  

oblivious  of  the  fact  that  it  was  dealing  only  with  the  

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limited question as to whether the NHAI was correct in  

issuing show cause notice to the appellant which the High  

Court  itself  by  its  own  order  allowed  it  to  be  kept  in  

abeyance for which the NHAI respondent No.6 had filed  

an application for vacating this order.  Thus, on the other  

hand, it kept the order of show cause notice by the NHAI  

in abeyance, but when the NHAI came up for vacating the  

said order, the High  Court straightway directed the NHAI  

to take over the project itself from the appellant-company  

without caring about its impact on the Agreement which  

clearly resulted in its cancellation.  The High Court ought  

to have realised that if it could not traverse the terms of  

the Agreement which the High Court itself has observed,  

it  surely  could  not  have  passed  an  order  which  

unequivocally had the effect of canceling the Agreement  

and that too without any adjudication.

54. At this juncture, it is difficult to overlook that the  

appellant  admittedly has completed 71 per cent of  the  

291 KM stretch and now barely 29 per cent is yet to be  

constructed  which  is  enmeshed  in  litigation  over  the  

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question as to whether the Toll Plaza should be permitted  

to be shifted or not.  This aspect as was contended by the  

respondent  No.1,  had not  been  gone  into  by  the  High  

Court clearly missing that this question had been raised in  

the PIL before the High Court wherein the NHAI & Ors.  

were a party wherein the appellant had been permitted to  

shift the toll plaza.  It needs to be highlighted even at the  

cost  of  repetition that  the dispute regarding shifting of  

Toll Plaza was earlier raised before the High Court by two  

separate writ petitions, the reference of which have been  

given  hereinbefore  vide  CWP  No.21332/2011  and  CWP  

No.23971/2011  which  were  filed  by  two PIL  petitioners  

but  the  petitions  were  rejected.   In  one  of  the  writ  

petitions as noted earlier,  an LPA was also filed in  the  

High Court but the same was dismissed and the dispute  

regarding  shifting  obviously  attained  finality  and  could  

not have been urged all over again before the High Court.  

It  is  however difficult to appreciate that in spite of the  

dispute  having  been  settled  regarding  shifting  of  Toll  

Plaza  by  the  High  Court  of  Punjab  and Haryana  which  

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clearly  attained  finality,  the  respondent  NHAI  did  not  

permit the appellant – company to shift the Toll Plazas,  

although it  had failed to prefer  any appeal  against the  

judgment  and order  passed by  the  High  Court  in  CWP  

No.21332/2011  and  LPA  No.170/2012  challenging  such  

permission.

55. It is no doubt true that the respondent-Union of  

India has come up to the rescue of the respondent-NHAI  

when  it  contended  that  if  terms  and  conditions  in  the  

contractual agreement is contrary to a statute, the Union  

of India would be legally authorized to override the terms  

and  conditions  of  the  contractual  agreement.  But  as  

already  recorded  hereinbefore,  the  facts  of  the  instant  

matter clearly establishes that it is not even the case of  

the  respondent  that  the  terms  and  conditions  

incorporated in the Concession Agreement was contrary  

to any statute or central legislation so as to offer a plank  

to the contesting respondent specially NHAI to urge that  

the provision under the Concession Agreement had been  

overriding a statutory provision of any central legislation  

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in  absence  of  any  fact  or  situation  establishing  even  

remotely that the agreement suffered the vice of violating  

any central statute/legislation.  

56. Thus,  apart  from  the  fact  that  the  dispute  

regarding  the  shifting  of  Toll  Plaza  had  already  been  

adjudicated by the High Court earlier on two occasions,  

the details  of  which have been given hereinbefore and  

the Concession Agreement not being in violation of any  

legislation of the centre, the dispute regarding shifting of  

Toll Plaza obviously could not have been gone into by the  

High Court all over again in the PIL.  But while nullifying  

the  contract  on  the  ground  of  delay,  the  dispute  

regarding shifting of Toll Plaza which was clearly the only  

contentious  issue for  not  completing the  project,  could  

not have been given a go bye or ignored in any manner  

by the High Court while taking an undertaking from the  

appellant  and  thereafter  cancelling  the  Concession  

Agreement itself when it admittedly did not traverse the  

terms and conditions of the Agreement.  

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57. Beside the above,  it  is  more than well  settled  

that a question or an issue which has been raised earlier  

before  the  High  Court,  adjudicated  on  which  a  final  

judgment/order was delivered,  cannot be allowed to be  

raised for the second time as that would be clearly barred  

by the principle of constructive  res judicata which is too  

well known a principle to be dealt with herein. Suffice it to  

say that the well-acknowledged principle and equally well  

settled legal  position seems to  have been ignored and  

lost sight of not merely by the respondents but by the  

appellant company also which filed a writ petition in the  

High Court  of  Delhi  raising the issue of  shifting of  Toll  

Plaza which finally was dismissed since the High Court of  

Punjab and Haryana had already dealt with it as also by  

filing  an  application  for  referring  the  dispute  to  the  

Arbitrator under the Arbitration and Conciliation Act, 1996  

completely  overlooking  that  at  least  this  part  was  not  

permissible  to  be  referred  for  arbitration  once  on  the  

judicial  side  permission  to  shift  the  Toll  Plaza  was  

permitted by the High Court of Punjab and Haryana vide  

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its  judgment  and  order  passed  in  CWP No.21332/2011  

and  LPA  No.170/2012  which  had  settled  the  issue  

regarding shifting of Toll Plaza.  

58. Besides the aforesaid legal protection which the  

appellant enjoyed on account of the judgment and order  

in  its  favour  given  by  the  High  Court,  the  terms  and  

conditions in the Concession Agreement itself regarding  

shifting of  Toll  Plaza  was  approved by  the  NHAI  which  

permitted that the Toll Plaza could be shifted provided the  

Independent Engineer appointed by the NHAI approved of  

the same.  No doubt,  initially  the Independent  Engineer  

(I.E.  for  short)  initially  expressed  certain  reservations  

regarding  the  relocation  of  the  Toll  Plazas  vide  letters  

dated  18.3.2010,  2.4.2010  and  29.5.2010  but  

subsequently the Independent Engineer, Project Director  

and CGM NHAI in their recommendations recorded their  

view that the location of two Toll  Plazas is for different  

facilities provided to the public and, therefore, there is no  

reservation locating Toll Plaza at KM 110. In fact, it needs  

to  be  highlighted  that  in  terms  of  Article  48.1  of  the  

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Concession Agreement,  liberty has been granted to the  

appellant  to  decide  the  locations  of  Toll  Plaza  in  

consultation  with  the  I.E.  and  the  same  was  finally  

approved by the I.E. M/s. Louis Berger who conveyed his  

approval  to  the change of  location as proposed by the  

appellant and hence the same cannot be allowed to be  

re-agitated despite confirmation of the same by the High  

Court  vide  its  judgment  and  order  passed  in  the  writ  

petitions  and  the  LPA  against  which  no  appeal  was  

preferred either by the NHAI or the PIL petitioner or any  

other concerned respondents.  

59. Thus,  the  stand  of  the  NHAI  appears  to  be  

clearly  illegal and arbitrary and a clear case of an after  

thought  taken  in  the  present  proceedings  before  this  

Court as the NHAI  ad idem was in complete agreement  

with the appellant as regard its right for relocation of Toll  

Plazas.  The same is recorded and clearly reflected in the  

correspondence  of  various  officers  of  NHAI,  minutes  of  

meeting,  stand  of  Independent  Engineer  including  its  

stand before the High Court of Punjab and Haryana and  

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hence the NHAI  cannot  be permitted  to  resile  from its  

stand at this distant point of time as the affidavits were  

filed as early as 2011  which finally upheld the  location of  

the Toll  Plazas.   The correspondence on record further  

belies the stand now taken by the NHAI as various officers  

of  NHAI  were  of  the  same view that  relocation  of  Toll  

Plazas  is  permissible  under  the  Agreement  and  the  

change in  stand happened in the meeting held for  the  

first time on 21.3.2013 when the present Chairman took  

the  stand  that  relocation  is  impermissible  and  the  

decision not to permit relocation of Toll Plazas was taken  

as late as on 3.5.2013 which is not merely highhanded  

and illegal but contrary to the                   judgment and   

order of the High Court which permitted relocation vide  

its reasoned judgment and orders as already referred to  

hereinbefore  which  were  never  challenged  and  hence  

attained  finality.   Moreover,  based  on  the  in  principle  

approvals  granted by NHAI  and the stand of  NHAI,  the  

lenders  continued  to  disburse  funds  and  the  appellant  

continued to invest  in the project on the plea that  the  

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implementation of the decision to relocate the Toll Plazas  

would  be  done after  the decision of  the  High Court  of  

Punjab  and  Haryana  upholding  the  relocation  of  Toll  

Plazas.  It is therefore too late in the day for the NHAI to  

take such  specious  and untenable  plea  with  a  view to  

wriggle out of its obligation which cannot be permitted by  

this Court.  

60. In fact, this Court was informed that the officers  

of  the NHAI which had approved of  the shifting of  Toll  

Plazas  are  facing  departmental  action  which  has  been  

initiated  against  Rajeev  Kumar  Koundal,  S.S.  Geharwar  

and S.I. Patel.  But the stand of the NHAI appears to be  

clearly  an  afterthought  and  an  attempt  to  justify  its  

irrational/arbitrary/conflicting  stand  with  regard  to  the  

rights of the appellants for deciding the location of Toll  

Plazas  under  the  Concession  Agreement  and  the  

approvals  granted  by  NHAI  under  the  said  agreement.  

The  alleged  action  initiated  by  the  NHAI,  therefore,  

cannot justify its stand taken before this Court for the first  

time nor  can it  permit  to  act  contrary  to  the terms of  

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Concession Agreement ignoring the orders passed by the  

High Court on the judicial side in two PIL petitions which  

were  filed  challenging  the  order  for  relocation  of  Toll  

Plazas.  

61. It  is  rather  chaotic  as  also  jurisdictional  error  

that in spite of several orders passed by three different  

co-ordinate Benches of the High Court on the judicial side  

permitting relocation of the Toll  Plazas, the dispute did  

not set at rest and the High Court while dealing with the  

PIL  has  not  even taken note  of  the  fact  that  if  it  was  

nullifying  the  Concession  Agreement  on  the  ground  of  

delay of the project without entering into the rights and  

obligations  of  the  Concessionaire-appellant  and  

Respondent No.6 NHAI ignoring that the NHAI could not  

have  been  permitted  to  get  away  from  the  onus  of  

delaying  the  project  when  it  failed  to  honour  its  

contractual obligation.  

62. The  entire  exercise  of  the  High  Court  while  

passing the overzealous directions giving a go by to the  

rights and obligations under the Concession Agreement  

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and the orders passed by the High Court while dealing  

with limited issue in the PIL as to whether a show cause  

notice by the NHAI was justified or not could not have  

refused  to  scrutinize  the  reasons  for  the  delay  on  the  

ground  that  it  was  not  entering  into  the  terms  and  

conditions of the contractual agreement and yet went to  

the  extent  of  nullifying  the  agreement  oblivious  of  its  

consequence  that  the  impugned  direction  of  the  High  

Court  clearly  resulted  in  cancellation of  the  agreement  

itself.   

63. It is further difficult to overlook that over 71 per  

cent  of  the  Highway  Project  having  been  admittedly  

completed  by  the  appellant-Concessionaire,  it  would  

delay the project without reason and is not sincere in its  

attempt  to  complete  it  as  delaying  the  project  cannot  

possibly  benefit  the  appellant-Concessionaire  since  the  

income would be generated by the appellant only when  

the Toll Plaza is constructed and the revenue from toll at  

present is  being deposited in the ESCROW account.   It  

further cannot be overlooked that the NHAI is not funding  

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the  project  in  any  manner  as  the  agreement  is  in  the  

nature  of  BOT  mode  which  means  Build,  Operate  and  

Trade (‘BOT’ for short) and the appellant cannot generate  

profit without undertaking the construction further.  It is,  

therefore,  pertinent  to  take  note  of  the  fact  that  the  

project being in BOT mode, all investment in the project  

has  to  be  made  by  the  appellant  and  no  amount  is  

received from NHAI.   It  may further  be noted that  the  

agreement between the appellant and respondent No. 6  

NHAI  acknowledges  and  confirms  the  role  of  lending  

institutions,  mainly  nationalized  banks  as  a  major  

significant  holder  in  project  implementation.   All  the  

financing  agreement  dealing  with  the  administration  

occurred between lending institutions and the petitioner  

as well as the financial  model for the project has been  

submitted that  their  revenue and approval  prior  to  the  

commencement  of  the  project.   The  appellant-

Concessionaire  therefore  states  that  it  is  committed  to  

the completion of the project asserting that its endeavour  

is to complete the six laning works at the earliest since it  

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is not a gainer in any manner if the project is at a stand  

still and the appellant also would gain only if the project is  

started.   

64. Consequent upon the aforesaid  analysis of the  

background of the matter and the  sequence of events  

arising out of a Public Interest Litigation which led to the  

execution   of  a  Concession  Agreement  creating  

contractual  relationship  between   the  appellant  

Concessionaire-company and the respondent No. 5 NHAI,  

it is  manifest that the High Court has issued over zealous  

directions  which has resulted  into termination  of the  

concession   agreement  itself  when  it  directed   the  

respondent No.5 NHAI  to take over the project from the  

appellant  and  ensure   the  balance  construction  of  the  

highway project by itself.   Although, the High Court has  

observed that it  was  not entering into  the arena of the  

contractual  terms  and conditions  of  the agreement,  it  

has clearly  nullified  and terminated the contract  itself  

when  it directed  the NHAI to take over the project from  

the appellant-company overlooking  the  bonafide  of  the  

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appellant-company  which  has  already  completed  major  

portion of the construction which is  71 per cent of the  

total  area   of  291 KMs and only  29 per  cent  is  to  be  

constructed further,  when a dispute arose between the  

appellant-company and the respondent NHAI in regard to  

shifting  of   the Toll Plaza from KM 146 to KM 110 and KM  

212 to KM 211 and the NHAI for the first time in 2013  

reneged from its consent to permit shifting contrary to  

the terms of the agreement.  However, in course of oral  

argument  before  this  court,  the  respondent  NHAI  had  

yielded  and did not seriously dispute the shifting  from  

KM 212  to KM 211 and rightly so as the shifting is hardly  

at a distance of 1KM from KM 212 to KM 211 at Shambhu  

Toll Plaza which is negligible and the shifting has already  

taken  place  as  discussed  hereinbefore.   But,  the  

respondent  No.5  NHAI  has  raised  serious  objections  in  

regard to shifting  of the Toll Plaza from KMs 146 to KM  

110 which appears  to have been done for the first time in  

the year 2013 when the new incumbent    took over as  

Chairman  of  the  NHAI  ignoring  the  fact  that  the  

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Independent  Engineer  in  terms  of  the  agreement  had  

granted approval to the same way back on 30.6.2010.  In  

addition, the dispute regarding  shifting of Toll Plaza had  

already been settled by the High Court when it permitted  

the            appellant  to shift the Toll Plaza to KMs 110  

against which NHAI did not  file any appeal challenging  

the order of the High Court. Thus, in spite of the fact that  

the dispute regarding shifting of toll  plaza had attained  

finality by virtue of a series of judicial verdict, the newly  

appointed  Chairman,  NHAI  for  the  first  time  in  2013  

restrained the appellant-company   from shifting  the Toll  

Plaza to KMs 110 and  this clearly  resulted into  putting  

the entire project to a standstill since the project was to  

be financed by way of Build, Operate, Trade mode (BOT  

mode)  and  affected  financing  of  the  project  and  the  

matter got enmeshed into a series of litigations related  

hereinbefore.  But the High Court refused to go into this  

dispute stating that it does not want to go into the terms  

and  conditions  of  the  contract  and  directed  for  

undertaking  from  the  appellant  attributing  the  entire  

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delay to the appellant-company for non performance and  

finally  terminated  the  contract  when  it  directed  the  

respondent  NHAI  to  take   back   the  project  from  the  

appellant.   Assuming  the  High  Court  did  it  in  public  

interest  to expedite  the construction of the  highway, it  

is more than obvious that this direction of the High Court  

cannot possibly and practically expedite the  construction  

as  admittedly  the  NHAI  itself  do  not   undertake  any  

construction work of  the highway which clearly  implies  

that it will have to issue a fresh tender for construction of  

the balance area of the project which is bound to result  

into  greater delay of the project apart from the  fact  that  

the  dispute   between  the  appellant-company  and  the  

NHAI would still survive and finally a 3rd party being a new  

player  is  bound to  get  entangled giving rise  to  further  

legal complications in the whole process.    

65. In addition to this it is difficult to overlook that  

the High Court  was merely seized with the limited issue  

in the pending PIL as to whether the  Show Cause Notice  

issued  by the NHAI  to the appellant-company which was  

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ordered to  be kept   in  abeyance by order  of  the High  

Court itself, was fit to be  vacated  on an application filed  

by the  respondent  NHAI,   but  while  doing  so  the  High  

Court  took a  leap much  way ahead by cancelling the  

agreement itself for non performance ignoring  the main  

issue as to whether   the Show Cause Notice issued  by  

the NHAI  was fit to be sustained or the order keeping it in  

abeyance  was  fit  to  be  vacated  and  straightway  

concluded that the appellant-company had  delayed the  

project  completely  overlooking  that  the  contractual  

violation had been done by the NHAI when it  declined to  

permit shifting of the Toll Plaza from KMs 146 to KM 110  

in spite of the reasoned orders of the High Court to that  

effect  against  which  no  appeal  was  filed  either  by  the  

NHAI or the PIL petitioner or any other concerned party.  

It is  no doubt true that  in a public  interest litigation  the  

court  at times  may forego/overlook the  technicalities  

coming in  the way of   issuance of  any direction which  

may conflict or jeopardise the public interest.   But  the  

same cannot be allowed to reach to the  extent or affect  

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the  contractual  agreement  itself  which  reduces  a  valid  

and a legal document into a worthless piece of paper or a  

waste  paper  which  clearly  means  that  the  relationship  

between the parties although were to be governed and  

supported by a valid legal  document,  the same  would  

finally  turn  out  to  be  a  document  having  no   legal  

significance in spite of its validity in the eye of law.  If this  

were to  be permitted,  it  is  bound to  lead to  a  chaotic  

situation affecting the very fabric of the rule of law which  

cannot  be  allowed  to   prevail  over  a  valid  and  legally  

supported  document  conferring  certain  rights  on  the  

person or entity possessing it.  

66. As  a  consequence  and  fall  out  of  the  above  

position, we deem it  just and appropriate  to set aside  

the impugned directions of the High Court, and   permit  

the appellant to restore the construction  of  the  balance  

stretch/area of  the highway project by further directing  

the NHAI to permit the appellant to shift  the Toll  Plaza  

from  KM 146 to any point between KMs 110 and KMs 117  

with  concurrence  of  the  NHAI.   The   exact   point  of  

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construction of Toll Plaza between KMs 110  to KMs 117  

shall  thus  be  decided  by  the  NHAI  holding  mutual  

consultation with the appellant/concessionaire in the light  

of  the  approval  already  granted  by  the  Independent  

Engineer in terms of the Agreement which also had been  

approved by the High Court earlier.   However,  we take  

note of the fact that  the High Court although by its order  

referred to hereinbefore  permitted shifting  of the Toll  

Plaza in dispute  to point KM 110, we have noticed that  

the distance  between KMs 96 where Toll Plaza of L & T is  

existing and the proposed toll plaza at KMs 110 would be  

at a distance of only 14 KMs which may not be in the  

interest  of  the   commuting  public  and,  therefore,   we  

direct that the shifting although may not be permitted at  

KMs 110, it may be allowed to be  shifted  at any point  

between KMs 110 and KMs 117 in consultation and with  

concurrence  of  the  NHAI.   In  fact,  we   could  have  

directed the appellant to shift the Toll Plaza even beyond  

117, KMs but we have been informed that  beyond KM  

117  the  area  is  thickly  populated   and  would  not  be  

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practically possible to  set up  the Toll Plaza  beyond KMs  

117.  

67.  Therefore,  and in order to facilitate and expedite  

completion of the Highway Project, we direct the respondent  

NHAI to permit  shifting of Toll  Plaza from 146 to anywhere  

between KMs 110 and KMs 117 expeditiously  but not later  

than  a  period  of   two  months  from the  date  of  this  order  

during which period the required legal formality  of notifying  

the  area  for  construction  of  the  Toll  Plaza  shall  also  be  

complied with by the NHAI by getting it notified through the  

Competent Authority and making the land available free from  

all  encumbrance.   The  appellant  thereafter  shall  forthwith  

restart the construction including setting up of Toll Plaza at  

the  agreed  point  and  continue  with  construction  of  the  

remaining area of the Highway Project and shall complete the  

entire construction  of the Highway on or before  31st of March  

2015 failing which the appellant/concessionaire company shall  

be  liable  for  penal  consequences  to  be  determined  by  the  

NHAI in terms of the Concession Agreement.  

68.  The  appellant/concessionaire  company  is  further  

directed  to  report/update  the  progress/development  of  the  

construction  to   the  NHAI  referred  to  in  the  Concession  

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Agreement   after  every  three  months  from  the  date  of  

compliance  of the required statutory  notification  for shifting  

of Toll Plaza  at the instance of  the NHAI and  the  Ministry of  

Road Transport and Highways/any other competent authority.  

However,  we make it explicitly clear that no dispute shall be  

allowed to be raised further by any of the parties  before any  

court  which  may  impede  or  slow  down  the  progress  of  

completion of  the Highway Project   as  this   measure most  

certainly would not be in the interest of the Highway Project  

and  consequently  not  in  public  interest  in  any  manner.  

However,  the  main  contesting  parties  i.e.  the  appellant-

Concessionaire Company and the NHAI would be at liberty to  

seek  such other or further direction from this Court in case  

there is   bona fide need to resort to such an eventuality in  

regard to the Highway Project referred to in the Agreement.  

The appeal  accordingly is allowed but in   the circumstances  

leave the parties  to  bear  the costs on their own.  

…………………………….J. (Gyan Sudha Misra)        

…………………………….J. (Pinaki Chandra Ghose )   

New Delhi, April 17, 2014  

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