NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Special Leave Petition (C) No……………….of 2016
(Diary No. 36526 of 2016)
NOIDA Toll Bridge Company Ltd. .... Petitioner(s)
Versus
Federation of NOIDA Residents Welfare
Association & Ors ….Respondent(s)
O R D E R
L. NAGESWARA RAO, J.
I.A. No…………………of 2016 which is an application for exemption from
filing certified copy of judgment dated 26.10.2016 passed by the High Court
of Judicature at Allahabad in Public Interest Litigation (PIL) No. 60214 of
2012 is allowed.
Issue notice. Respondent Nos. 1, 2, and 9 are represented by Mr. Sanjay
Hegde, learned Senior Advocate, Mr. Ranjit Saxena, Advocate and Mr. K. K.
Venugopal, learned Senior Advocate respectively. Notice shall now go to the
remaining Respondents only.
Federation of NOIDA Residents Welfare Association & Ors., Respondent No.1
herein, filed PIL No.60214 of 2012 in the High Court of Judicature at
Allahabad for a declaration that collection of toll fee should be stopped
on the DND Flyover between New Delhi and NOIDA.
A Concession Agreement (hereinafter referred to as “the Agreement”) was
entered into between the Petitioner, NOIDA (Respondent No.2) and IL & FS
Ltd. (Respondent No.9) on 12.11.1997 for development of infrastructure
facility of a bridge and an access road. The Project was conceived on
Build-Operate-Transfer (BOT) basis. The 9th Respondent IL & FS had to
arrange the investment for the Project which could be recovered by levy of
toll from the users of the road and the Project.
As the main dispute in the PIL filed in the High Court revolves around the
recovery of the Project Cost by the proponent, it is essential to refer to
some important provisions of the Agreement. Section 2.3 refers to the
concession period which is as follows:
“Section 2.3 Concession Period
(a) The Concession Period shall commence on the Effective Date and shall
extend until the earlier of:
A period of 30 years from the Effective Date; or
(ii) The date on which the concessionaire shall recover the Total Cost of
Project and the Returns as determined by the Independent Engineer and
Independent Auditor in accordance with Section 14 thereon through (a) the
demand, collection, retention and Appropriation of Fee, (b) the receipt,
retention and appropriation of Development Income, or (c) any other method
as determined by the Parties.
(b) Upon the termination of the Concession Period, the Concessionaire
shall transfer the Project Assets to NOIDA in accordance with the terms of
Article 19.”
It is relevant to refer to the definition of ‘Effective Date’ which means
the earlier of (a) the date of issuance of Certificate of Compliance or (b)
the date of issuance of Certificate of Commencement. Article 19 provides
that NOIDA will continue the operations of the DND project either directly
or by its nominated agency from the ‘Transfer Date’ which is the day
immediately following the last day of the concession period, including any
extension thereto or earlier termination thereon in accordance with the
terms of the Agreement.
Fixation and calculation of the fee is dealt with in Section 13. As per
Section 14.1, the Total Cost of the Project shall be the aggregate of (i)
Project Cost, (ii) Major Maintenance Expenses & (iii) Shortfalls in the
recovery of returns in a specific financial year as per the formula in
Section 14.2 (a).
Section 14.2 contemplates that recovery of the Total Cost of the Project
and Returns therefrom shall be as illustrated in Annexure F. The
calculation of the Returns shall be made at annual intervals from the
effective date in the following manner:
“Start with: Gross revenue from fee collections, income from
advertising and Development income.
Less: O & M expenses
Less: Taxes (excluding any customs and import duties).”
“Returns” is defined in the Agreement as the returns on the Total Cost of
Project recoverable by the Concessionaire from the effective date at the
rate of 20 per cent per annum as per Section 14.2 of the Agreement.
Respondent No. 1 contended in the writ petition that the Total Cost of the
DND Flyover Project was approximately Rs. 408.17 Crores and the cumulative
toll income from the years 2001 to 2014 was Rs. 803.524 Crores. As on
31.03.2014 the cumulative net profit was Rs. 165.08 Crores. Respondent No.
1 further contended that the Total Cost of the Project as per the report of
the Company’s Auditor was Rs. 2,339.69 crores as on 31.03.2012 which
increased to Rs. 2,955.1 crores as on 31.03.2013 and Rs. 3,448.95 crores as
on 31.03.2014. It was further urged that the projected figure of the Total
Cost of the Project as on 31.03.2016 was Rs. 5,000 crores. It was contended
by Respondent No. 1 that as per the calculation of the Auditor of the
Petitioner herein, the Total Cost of the Project can never be recovered and
the Project will never be free from levy of toll.
The Petitioner contested the Writ Petition on several grounds including the
maintainability. The Petitioner herein relied upon the Agreement and the
reports of the Independent Auditor appointed in accordance with the
Agreement to contend that the Total Cost of the Project has not been
recovered.
The High Court framed six questions for consideration and concluded as
follows:
“This Public Interest Litigation is legally maintainable.
In the facts of the case, interference with the Concessionaire agreement is
warranted in exercise of powers of judicial review under Article 226 of the
Constitution of India.
Selection of Concessionaire in the facts of the case is violative of
Article 14 of the Constitution of India and is found to be unfair and
unjust. We, however, do not deem it fit to nullify the entire concession
agreement.
Right to levy and collect User fee from the commuters as conferred upon the
Concessionaire under the Concession Agreement suffers from excessive
delegation and is contrary to the provisions of the U.P. Industrial Area
Development Act, 1976. Article 13 (Clause) of the Concession Agreement is
held to be bad and inoperative in the eyes of law.
The method of calculation of the Total Project Cost and appropriation of
the User fee collection under Article 14 (Clause) of the Concession
Agreement is held to be arbitrary and opposed to Public Policy. Article 14
(Clause) of the Concession Agreement is severed, therefrom.
The proposed Amendments do not affect the reliefs which have been prayed
for in the petition.”
On the basis of the above conclusions, the High Court directed the
Petitioner not to impose any user fee/toll from the commuters for using the
DND flyover.
Dr. Abhishek Manu Singhvi, learned Senior Advocate for the Petitioner
submitted that the reports of the Independent Auditor appointed in
accordance with the Agreement were not properly considered by the High
Court. He handed over two charts which, according to him, were prepared in
accordance with the terms of the Agreement. Relying on the charts, he
submitted that the Total Cost of the Project has not been recovered. He
urged that the Petitioner has created a world-class facility of a bridge
over the river Yamuna and a 8 lane highway of 9.5 kilometres. Dr. Singhvi
submitted that the veracity of the Petitioner’s claims that the Total Cost
of the Project has not been recovered can be verified by taking the
assistance of the Comptroller and Auditor General of India. Finally he
submitted that the Petitioner would suffer irreparable loss if the judgment
of the High Court is not stayed.
Prima facie, we are of the opinion that the various issues that arise in
this SLP warrant a detailed scrutiny. Conflicting claims have been made
regarding the recovery of the Total Cost of the Project by the
Concessionaire. To resolve the dispute, it is appropriate that an
independent agency is requested to examine the relevant records of the DND
flyway. The said agency should examine the reports of the independent
auditors appointed by the Petitioner and submit a report regarding the
correctness of the Petitioner’s claim that the Total Cost of the Project
has not been recovered. We accept the suggestion of the Petitioner and
request the Comptroller and Auditor General of India (CAG) to assist us in
this matter. The Petitioner is directed to place the entire record
pertaining to the recovery of the Total Project Cost of the DND flyover
project as per the Agreement before the CAG. The CAG is requested to
verify the claim of the Petitioner that the Total Cost of the Project has
not been recovered and submit a report within four weeks. The CAG shall be
at liberty to call for and examine all such records having a bearing on the
financial aspects, as it requires to facilitate its decision. This will
include matters and information pertaining to all the benefits which have
flowed to the Petitioner under the entirety of the agreement, including the
utilisation, if any. The Petitioner shall co-operate in all respects with
the CAG and provide all documents, information and details as sought.
We do not agree with the submission that the Petitioner would suffer
irreparable loss if the judgment of the High Court is not stayed. It will
be impossible to provide restitution to the lakhs of commuters from whom
the fee would be collected to repay them in the event of dismissal of the
SLP. On the other hand, if the Petitioner succeeds, it can be compensated
suitably by extension of time. The balance of convenience is also against
the Petitioner. Therefore, we are not inclined to grant the interim relief
as prayed for.
A copy of this order shall be provided to the CAG expeditiously.
Three weeks time granted to the respondents for filing their Counters and
one week thereafter to the petitioners for filing a Rejoinder, if any.
List the matter after four weeks.
...…...........................CJI
[T. S. THAKUR]
........................................J
[Dr. D. Y. CHANDRACHUD]
……................................J
[L. NAGESWARA RAO]
New Delhi,
November 11, 2016
