# NOIDA Toll Bridge Company Ltd v. Federation of NOIDA Residents Welfare Association and Others

- **Citation:** 2024 INSC 1027
- **Court:** Supreme Court of India
- **Decided:** 2024-12-20
- **Case number:** Civil Appeal No. 14826 of 2024
- **Bench:** Surya Kant, Ujjal Bhuyan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/noida-toll-bridge-company-ltd-v-federation-of-noida-residents-welfare-37423
- **Pages:** 46

## Headnote

The issue concerned a challenge to collection and levying of
toll, as legitimised by provisions enumerated in Agreement
dated 12.11.1997 (Concession Agreement), executed between
Appellant-NOIDA Toll Bridge Company Limited (NTBCL), the
New Okhla Industrial Development Authority (NOIDA) and the
Infrastructure Leasing and Financial Services Limited (IL&FS);
The Concession Agreement conferred upon NTBCL the rights
necessary for implementation of the Delhi NOIDA Bridge Project
or the Delhi-NOIDA Direct Flyway (DND Flyway/Project) and,
in connection thereto, the collection and levying of toll; In a
writ petition purportedly filed in public interest by Respondent
No.1-Association established to espouse the cause of NOIDA
residents before the public authorities, the High Court vide the
impugned judgment directed NTBCL to cease the imposition of
user fees or toll upon commuters using the DND Flyway.
In the instant appeal filed by NTBCL, inter alia the following issues
arose for consideration, namely, (i) Whether the Writ Petition
purportedly filed in public interest was maintainable before the High
Court; (ii) Whether the non-floating of tenders was justified in the
instant case; (iii) Whether the power to levy fees could be delegated
to the Appellant and if so, whether it was a case of excessive
delegation; and (iv) Whether Art.14 of the Concession Agreement
read with the formula used therein was opposed to public policy.
Headnotes†
Constitution of India - Art.226 - Writ Petition filed seeking
direction to discontinue toll charged to users of DND Flyway -
Maintainability of - High Court rightly entertained the writ
* Author
1998
[2024] 12 S.C.R.
Supreme Court Reports
petition filed by Respondent No. 1, which had the requisite
locus standi - The writ petition filed in public interest was
maintainable - PIL:
Held: While public interest litigation serves as an effective tool
for addressing the grievances of the public, it must be carefully
scrutinised to prevent misuse or abuse by those with ulterior
motives - Courts must look beyond the surface to assess whether
the litigation has been genuinely initiated in the interest of the
public or as a result of mischief - The essence of PIL lies in its
aim to remedy genuine public wrongs or injuries rather than being
driven by personal vendetta or malice - On facts, Respondent
No. 1 is a Society duly registered under the Societies Registration
Act, 1860, with the primary objective of promoting the welfare
of NOIDA residents - The society acts as a bridge between the
residents and public authorities, catering to the former's needs
for essential civic amenities - Given this object, it is clear that
Respondent No. 1 approached the High Court in good faith, with a
view to safeguard the interests of NOIDA residents, who had been
subjected to the levy of toll at the DND Flyway under the guise of
user fees by NTBCL-Appellant - Consequently, there is no merit
in NTBCL's contention that Respondent No. 1 lacked locus standi
in approaching the High Court. [Paras 12, 14, 15]
Constitution of India - Art.226 - Toll charged to users of
DND Flyway - Respondent No. 1 filed Writ Petition in High
Court seeking direction to discontinue the toll - On facts,
continuing cause of action - No delay or laches in filing the
writ petition - Doctrine of Delay and Laches:
Held: The contention regarding delay and laches in filing the writ
petition is wholly misconceived and misdirected for the reason that,
writ proceedings u/Art.32 or 226 are not guided by the provisions
of the Limitation Act, 1963, but instead, by the Doctrine of Delay
and Laches - It is ubiquitous that the doctrine of delay and laches
cannot be applied stricto senso to writ petitions invoking public
interest jurisdiction unless the court is satisfied that the party has
not approached it with clean hands - While delay is a material
factor there is no fixed period of limitation for invoking jurisdiction
u/Art.226 and each case should be considered on its own

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[2024] 12 S.C.R. 1997 : 2024 INSC 1027
NOIDA Toll Bridge Company Ltd.
v.
Federation of NOIDA Residents Welfare
Association and Others
(Civil Appeal No. 14826 of 2024)
20 December 2024
[Surya Kant* and Ujjal Bhuyan, JJ.]
Issue for Consideration
The issue concerned a challenge to collection and levying of
toll, as legitimised by provisions enumerated in Agreement
dated 12.11.1997 (Concession Agreement), executed between
Appellant-NOIDA Toll Bridge Company Limited (NTBCL), the
New Okhla Industrial Development Authority (NOIDA) and the
Infrastructure Leasing and Financial Services Limited (IL&FS);
The Concession Agreement conferred upon NTBCL the rights
necessary for implementation of the Delhi NOIDA Bridge Project
or the Delhi-NOIDA Direct Flyway (DND Flyway/Project) and,
in connection thereto, the collection and levying of toll; In a
writ petition purportedly filed in public interest by Respondent
No.1-Association established to espouse the cause of NOIDA
residents before the public authorities, the High Court vide the
impugned judgment directed NTBCL to cease the imposition of
user fees or toll upon commuters using the DND Flyway.
In the instant appeal filed by NTBCL, inter alia the following issues
arose for consideration, namely, (i) Whether the Writ Petition
purportedly filed in public interest was maintainable before the High
Court; (ii) Whether the non-floating of tenders was justified in the
instant case; (iii) Whether the power to levy fees could be delegated
to the Appellant and if so, whether it was a case of excessive
delegation; and (iv) Whether Art.14 of the Concession Agreement
read with the formula used therein was opposed to public policy.
Headnotes†
Constitution of India - Art.226 - Writ Petition filed seeking
direction to discontinue toll charged to users of DND Flyway -
Maintainability of - High Court rightly entertained the writ
* Author
1998
[2024] 12 S.C.R.
Supreme Court Reports
petition filed by Respondent No. 1, which had the requisite
locus standi - The writ petition filed in public interest was
maintainable - PIL:
Held: While public interest litigation serves as an effective tool
for addressing the grievances of the public, it must be carefully
scrutinised to prevent misuse or abuse by those with ulterior
motives - Courts must look beyond the surface to assess whether
the litigation has been genuinely initiated in the interest of the
public or as a result of mischief - The essence of PIL lies in its
aim to remedy genuine public wrongs or injuries rather than being
driven by personal vendetta or malice - On facts, Respondent
No. 1 is a Society duly registered under the Societies Registration
Act, 1860, with the primary objective of promoting the welfare
of NOIDA residents - The society acts as a bridge between the
residents and public authorities, catering to the former's needs
for essential civic amenities - Given this object, it is clear that
Respondent No. 1 approached the High Court in good faith, with a
view to safeguard the interests of NOIDA residents, who had been
subjected to the levy of toll at the DND Flyway under the guise of
user fees by NTBCL-Appellant - Consequently, there is no merit
in NTBCL's contention that Respondent No. 1 lacked locus standi
in approaching the High Court. [Paras 12, 14, 15]
Constitution of India - Art.226 - Toll charged to users of
DND Flyway - Respondent No. 1 filed Writ Petition in High
Court seeking direction to discontinue the toll - On facts,
continuing cause of action - No delay or laches in filing the
writ petition - Doctrine of Delay and Laches:
Held: The contention regarding delay and laches in filing the writ
petition is wholly misconceived and misdirected for the reason that,
writ proceedings u/Art.32 or 226 are not guided by the provisions
of the Limitation Act, 1963, but instead, by the Doctrine of Delay
and Laches - It is ubiquitous that the doctrine of delay and laches
cannot be applied stricto senso to writ petitions invoking public
interest jurisdiction unless the court is satisfied that the party has
not approached it with clean hands - While delay is a material
factor there is no fixed period of limitation for invoking jurisdiction
u/Art.226 and each case should be considered on its own facts
and circumstances, thus allowing for a more liberal approach
when applying this doctrine - The doctrine is not a rigid rule but
is rather a practice that is founded on exercise of sound judicial
discretion - Also, cause of action in the circumstances of the case
[2024] 12 S.C.R.
1999
Noida Toll Bridge Company Ltd. v.
Federation of Noida Residents Welfare Association and Others
could have arisen and perhaps actually arose only after expiry of a
reasonable period, within which cost of the Project was expected
to be recovered - Further, levying of user fees or tolls by NTBCL
constituted a continuing cause of action, which was challenged
by the Association of affected commuters - Plea of delay and
laches cannot be raised in a case of continuing cause of action.
[Paras 17, 18, 20]
Constitution of India - Art.226 - Toll charged to users of DND
Flyway - Contract involving a State instrumentality - Scope
of judicial intervention:
Held:1. Judicial review, being a dynamic process as opposed to
static, has experienced a significant shift in terms of the degree
of judicial interference in contractual disputes, especially when
one of the parties involved is the State or its instrumentalities -
This is because when contractual power is exercised for public
purposes, the State and its instrumentalities bear the responsibility
to act fairly, without arbitrariness or caprice - In such situations,
where State action is challenged as arbitrary or capricious, courts
are justified in intervening through judicial review to determine
whether the State has adhered to the principles embodied in
Art.14 of the Constitution of India, which mandates fairness
and non-arbitrariness in State actions - Considering that the
Concession Agreement involves not only entities like IL&FS and
NTBCL but also a Public Authority such as NOIDA, it is evident
that the Concession Agreement, though commercial in nature,
is subject to judicial scrutiny - This is particularly true given
the public interest concerns raised by Respondent No. 1, while
challenging the fairness and legality of the toll collection and
overall execution of the Agreement - The involvement of a public
authority necessitates cognizance to ensure that the Agreement
upholds constitutional principles - In such scenarios, it becomes
the solemn duty of the judiciary, entrusted under the Constitution
as an independent arbiter, to intervene and protect the interests
of the public at large. [Paras 26, 27]
2. Second, it is crucial to recognise that when a contract involves a
State instrumentality like NOIDA, significantly impacting the public,
the metes and bounds of judicial review ought to be expanded -
The State is duty-bound to act equitably and in accordance with the
Public Trust Doctrine, ensuring that no action harms the broader
public interest. [Para 28]
2000
[2024] 12 S.C.R.
Supreme Court Reports
3. It is evident that the High Court was justified in entertaining the
petition filed by Respondent No. 1 in public interest - The continued
levy of toll and the Concession Agreement were directly impacting
the rights and interests of commuters - NTBCL's attempts to
classify the Concession Agreement as a purely private contractual
matter, sequestered from such scrutiny, thus holds no ground - The
Project, having been developed for public benefit, cannot escape
judicial oversight, particularly when the allegations pertain to the
public's rights and interests, which are being infringed upon by
the levying of user fees - Contention of NTBCL seeking dismissal
of Respondent No. 1's petition at the threshold was thus rightly
rejected by the High Court. [Para 29]
Contract - Award of contract for development and construction
of DND Flyway project to NTBCL - Challenged, for not following
any formal tender procedure - Contract awarded to NTBCL
through the Concession Agreement by State authorities and
NOIDA was unfair, unjust and inconsistent with Constitutional
norms:
Held:1. NTBCL entered into an agreement with NOIDA to
undertake a project that involved an overwhelming public element,
comprising of public funds and public assets - When such a project
is undertaken by the State in partnership with a private entity,
the element of public interest necessitates strict adherence to
Constitutional obligations - The State is obligated to ensure that
its actions remain free from any arbitrariness or capriciousness,
particularly when public welfare is at stake. [Para 31]
2. Every action or decision of the State or its instrumentalities in
conferring any form of largesse or benefit must be grounded in a
just, transparent, and well-defined policy - Such a policy should
be made known to the public through appropriate publication and
implemented through non-discriminatory means, free from bias or
favouritism - Even when the Government awards a contract or
grants similar benefits, such bestowal must meet the standards of
reasonableness and public interest - Should either of these criteria
remain unmet, the conferment would be deemed unconstitutional -
The golden principle is that Government procedures or policies
pioneered in public interest must genuinely serve the public and
not merely enrich private entities. [Paras 32, 35]
3. In the case in hand, the Government made no efforts to issue
tenders, invitations, or seek competitive bids from other interested
[2024] 12 S.C.R.
2001
Noida Toll Bridge Company Ltd. v.
Federation of Noida Residents Welfare Association and Others
entrepreneurs - As the High Court rightly observed, the selection
of NTBCL appears to have been strategically aligned, given that
the Concession Agreement entrusted the Steering Committee with
selecting a private company promoted by IL&FS to implement the
DND Flyway project - Further, this private company-NTBCLwas incorporated only after the MoU had been executed and
thus could not be considered as having extensive experience in
developing such large-scale infrastructural projects - The contention
that there were no suitable companies capable of undertaking
such infrastructural development during that period lacks any
substantiation or material on record to support such sweeping
claims - The selection of NTBCL without following proper procedure
and without giving any opportunity to bid, to other competitors,
was nothing but an opaque device resorted to, in contravention of
Art.14 of the Constitution of India. [Paras 36, 38, 39, 40]
Delegated Legislation - Scope of - Toll charged to users of DND
Flyway - Concession Agreement, executed between NTBCL,
NOIDA and IL&FS sub-delegated the power to levy and collect
user fees to NTBCL - Delegation of power to levy user fees
and its validity - NOIDA exceeded its authority by delegating
the power to levy fees or impose tolls to NTBCL, rendering
such delegation invalid - NOIDA (Levy of Infrastructure Fee)
Regulations, 1998 - Uttar Pradesh Industrial Area Development
Act, 1976 - s.6A r/w s.19:
Held:1. A plain reading of Section 6A of Uttar Pradesh Industrial
Area Development Act, 1976 makes it unequivocally clear that the
'Authority' is empowered to delegate the power to collect taxes or
fees levied by it - However, under no circumstances does Section
6A authorize the delegation of the power to levy taxes or fees -
Similarly, s.19(2)(e) of the 1976 Act enables NOIDA to frame
Regulations governing the levy of taxes or fees - This provision,
however, cannot be interpreted as empowering NOIDA to delegate
the power of levying taxes or fees through an agreement under
s.6A of the Act. [Para 46]
2. An authority vested with the power to frame subordinate legislation
must act within the bounds of that power and refrain from exceeding
its limits - The power to delegate must be expressly discernible in
the Principal Act itself and in the absence of such provisions, no
circular method can be countenanced to extract such power. [Para 47]
3. In complete contradiction and violation of the scheme of the
Statute, NOIDA in purported exercise of its power to formulate
2002
[2024] 12 S.C.R.
Supreme Court Reports
Regulations not only delegated the power to collect fee but also
authorised NTBCL to revise and levy such charges - Such a
delegation was totally in violation of the provisions of the 1976
Act - The responsibility to determine the amount and rate of fees
lies with NOIDA; by delegating this function to NTBCL via the
Concession Agreement and reinforcing it through the Regulations,
NOIDA exceeded its authority moored under the 1976 Act - The
Concession Agreement, in so far as it sub-delegates the power to
levy and collect fees to NTBCL, is unlawful, and the Regulations
justifying such sub-delegation undermine the objective of s.6A of the
1976 Principal Act - Moreover, these Regulations were introduced
by NOIDA in the aftermath of enacting the Concession Agreement,
serving merely as an afterthought, while having no authority to do
so - Thus, NOIDA did not have any competence to delegate the
power to levy fees and toll to NTBCL, and thereby overstepped
its statutory bounds. [Paras 48, 50, 52]
Contract - DND Flyway project - Terms opposed to public
policy - 'Total Cost of the Project' and its calculation
methodology - Dissonance between Art.14 of the Concession
Agreement read with the formula vis-à-vis public policy -
Doctrine of Severability - Invocation of:
Held: Contracts loaded with terms which are so unfair and
unreasonable, that they truly baffle this Court, are undoubtedly
opposed to public policy and must be adjudged void - The Court is
always cautious when determining if a particular contract or action
is opposed to public policy, but in doing so, it cannot shirk from
its duty and approve helplessly the interpretation of a Statute or a
document or of an action which is certain to subvert the societal
goals and endanger the public good - To do so, the Court may
invoke the Doctrine of Severability and sever the incurable parts
of the contract from the whole - The Court can do so only when
the rest of the contract can breathe and survive without the aid
of its void covenants - The Court must ask itself whether the
parties would have agreed to the valid terms of the agreement
if they knew that the invalid terms would be removed - In the
instant case, the High Court held that Art.14 of the Concession
Agreement was perpetual in nature and it entitled NTBCL to
recover user fees/ toll indefinitely - Such a clause, therefore, being
opposed to public policy was unjust and arbitrary and liable to be
severed from the Concession Agreement - There is no error in the
analysis undertaken by the High Court - It is evident that, despite
approval from various authorities, the formula used was far from
[2024] 12 S.C.R.
2003
Noida Toll Bridge Company Ltd. v.
Federation of Noida Residents Welfare Association and Others
reasonable - The compounding nature of the formula granted
NTBCL the right to collect user fees indefinitely; the absence of a
cap on O&M expenses allowed for potential inflation of costs by
including extraneous expenditures in the Total Project Cost; and the
fixed, unrealistic return rate of 20% ensured that the Total Project
Cost would escalate yearly without possibility of adjustment by the
parties involved - The method used to calculate the Total Project
Cost was fundamentally a mechanism for unjust enrichment by
a select few and, as such was rightly deemed to be inherently
arbitrary by the High Court - Accordingly, the formula outlined
in the Concession Agreement is unreasonable and contravenes
Art.14 of the Constitution - Given the extent of manipulation in the
instant case, Art.14 of the Concession Agreement, read with the
formula, is opposed to public policy and must be cut apart from
the Concession Agreement. [Paras 57, 58, 63, 65, 77, 78]
Contract - DND Flyway project - Recovery of Total Project
Cost and returns - No justification for continued imposition
or collection of user fees or tolls upon commuters using the
DND Flyway:
Held: No person or entity can be allowed to make an undue
and unjust profit from public property, at the cost of the public at
large - Since NTBCL has recovered the costs of the project and
substantial profits thereon by virtue of imposition of user fees/tolls
and given the existing position of law, there is no error in the High
Court's judgment and its directions in restraining the imposition
and collection of user fees/tolls. [Paras 85, 88]
Interpretation of Statutes - Taxing Statutes - Interpretation
thereof:
Held: Taxing statutes, being penal in nature, must be construed
strictly - The power to levy a tax or fee cannot be inferred by
implication but must be expressly conferred by Statute - Under
our Constitutional framework, no private entity can be granted the
authority to levy taxes or fees, for such powers are exclusively
vested in public authorities. [Para 49]
Case Law Cited
Joshi Technologies International Inc. v. Union of India [2015] 6
SCR 1042 : (2015) 7 SCC 728; City and Industrial Corporation
of Maharashtra Limited v. Shishir Realty [2021] 13 SCR 190:
2004
[2024] 12 S.C.R.
Supreme Court Reports
(2022) 16 SCC 527; Meerut Development Authority v. Association
of Management Studies [2009] 6 SCR 663 : (2009) 6 SCC 171;
Mandsaur Transport Assn. v. State of M.P. (2001) 9 SCC 328;
MSK Projects (I) (JV) Ltd. v. State of Rajasthan [2011] 9 SCR
402 : (2011) 10 SCC 573 - relied on.
Chennai Metropolitan Water Supply and Sewerage Board and
others v. T.T. Murali Babu [2014] 1 SCR 987 : (2014) 4 SCC
108; Ramana Dayaram Shetty v. International Airport Authority of
India [1979] 3 SCR 1014 : (1979) 3 SCC 489; Janata Dal v. H.S.
Chowdhary [1991] 3 SCR 752 : (1992) 4 SCC 305; City Industrial
Development Corporation v. Platinum Entertainment [2014] 10
SCR 704 : (2015) 1 SCC 558; Balco Employees' Union v. Union
of India and Ors. [2001] Supp. 5 SCR 511 : (2002) 2 SCC 333;
Dattaraj Nathuji Thaware v. State of Maharashtra [2004] Supp.
6 SCR 900 : (2005) 1 SCC 590; Villianur Iyarkkai Padukappu
Maiyam v. Union of India [2009] 9 SCR 225 : (2009) 7 SCC 561;
R&M Trust v. Koramangala Residents Vigilance Group [2005]
1 SCR 582 : (2005) 3 SCC 91; State of Madhya Pradesh and
Another v. Bhailal Bhai and Others [1964] 6 SCR 261 : AIR 1964
SC 1006; Union of India and Another v. Tarsem Singh [2008] 12
SCR 104 : (2008) 8 SCC 648; Subodh Kumar Singh Rathour v.
Chief Executive Officer [2024] 7 SCR 532 : 2024 SCC Online SC
1682; Silippi Constructions Contractors v. Union of India (2020)
16 SCC 489; Kasturi Lal Lakshmi Reddy. v. State of Jammu and
Kashmir [1980] 3 SCR 1338 : (1980) 4 SCC 1; Centre for Public
Interest Litigation v. Union of India [2012] 3 SCR 147 : (2012)
3 SCC 1; Pathan Mohammed Suleman Rehmatkhan v. State of
Gujarat [2013] 12 SCR 446 : (2014) 4 SCC 156; Tata Cellular v.
Union of India [1994] Supp. 2 SCR 122 : (1994) 6 SCC 651;
Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly
[1986] 2 SCR 278 : (1986) 3 SCC 156; Rattan Chand Hira
Chand v. Askar Nawaz Jung [1991] 1 SCR 327 : (1991) 3 SCC
67; Beed District Central Coop. Bank Ltd. v. State of Maharashtra
[2006] Supp. 6 SCR 895 : (2006) 8 SCC 514; Institute of Law,
Chandigarh v. Neeraj Sharma [2014] 11 SCR 1096 : (2015) 1
SCC 720 - referred to.
List of Acts
Constitution of India; Uttar Pradesh Industrial Area Development
Act, 1976; NOIDA (Levy of Infrastructure Fee) Regulations, 1998.
[2024] 12 S.C.R.
2005
Noida Toll Bridge Company Ltd. v.
Federation of Noida Residents Welfare Association and Others
List of Keywords
Locus standi; Maintainability; Project; Construction; NOIDA;
Contract; Doctrine of Severability; Public policy; Public interest
litigation; Taxing statute; Interpretation; DND Flyway project;
Delegated Legislation; State instrumentality; Maintainability of writ
petition; Constitutional norms; Judicial intervention.
Case Arising From
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 14826 of 2024
From the Judgment and Order dated 26.10.2016 of the High Court
of Judicature at Allahabad in PIL No. 60214 of 2012
Appearances for Parties
Ravindra Raizada, Sr. Adv./A.A.G., Dr. Abhishek Manu Singhvi,
Gopal Jain, Parthiv K. Goswami, Ravindra Kumar Sr. Advs.,
Raunak Dhillon, Ms. Madhavi Khanna, Nihaad Dewan (for M/s.
Cyril Amarchand Mangaldas), Ms. Diksha Rai, Mrs. Atiga Singh,
Arijit Dey, Ms. Apurva Sachdev, Binay Kumar Das, Ms. Priyanka
Das, Ms. Neha Das, Shivam Saxena, Raj Bahadur Yadav, Adarsh
Upadhyay, Aman Pathak, Mrs. Pooja Kabra, Ms. Pallavi Kumari,
Shashank Puchauri, Pradeep Misra, Daleep Dhyani, Suraj Singh,
Manoj Kumar Sharma, Rakesh Chaterjee, M/s. Ap & J Chambers,
Advs. for the appearing parties.
K.R. Chitra, Adv. for the Intervenor.
Respondent-in-person.
Judgment / Order of the Supreme Court
Judgment
Surya Kant, J.
Leave granted.
2.
The NOIDA Toll Bridge Company Limited (NTBCL), has preferred the
instant appeal questioning the judgement dated 26.10.2016 passed
by the High Court of Judicature at Allahabad (High Court). The issue
before the High Court concerned a challenge to the collection and
levying of toll, as legitimised by the provisions enumerated in the
2006
[2024] 12 S.C.R.
Supreme Court Reports
Agreement dated 12.11.1997 (Concession Agreement), executed
between NTBCL, the New Okhla Industrial Development Authority
(NOIDA) and the Infrastructure Leasing and Financial Services Limited
(IL&FS). The Concession Agreement conferred upon NTBCL the
rights necessary for the implementation of the Delhi NOIDA Bridge
Project or the WDelhi-NOIDA Direct Flyway (DND Flyway/Project)
and, in connection thereto, the collection and levying of toll.
3.
The High Court has vide the impugned judgement held Articles 13
and 14 of the Concession Agreement to be bad in law and directed
NTBCL to cease the imposition of user fees or toll upon commuters
using the DND Flyway.
A.
Facts
4.
Having laid out the observations of the High Court in brevi, it is
essential at this juncture to delve into the facts of the instant case:
4.1. The controversy at hand concerns the toll levied on the users
of the DND Flyway. The inception of this dispute can be
traced to the 1980s when the State of Uttar Pradesh (State
of UP) sought to construct a bridge connecting South Delhi
and NOIDA, to improve connectivity between the two regions.
However, the State of UP recognised that significant financial
expenditure would be involved in this ambitious endeavour,
which it could not undertake independently.
4.2. NOIDA and the Delhi Administration entered into a Memorandum
of Understanding (MoU) with IL&FS on 07.04.1992, intending
to construct the DND Flyway. IL&FS at that point in time, was
a Company promoted by Public Financial Institutions to enable
non-governmental investment in infrastructure development. In
pursuance of the MoU, a Committee comprising representatives
of the Government of India, the Government of NCT of Delhi,
the State of UP and IL&FS was constituted on 08.06.1993
to take important decisions relating to the Project and its
implementation (Steering Committee).
4.3. Thereafter, the Steering Committee on 08.04.1996 approved
the incorporation of NTBCL by IL&FS in accordance with the
Companies Act, 1956, which was contemplated to operate
as a Special Purpose Vehicle for developing the DND Flyway
on a Build, Operate, Own and Transfer (BOOT) basis. It was
[2024] 12 S.C.R.
2007
Noida Toll Bridge Company Ltd. v.
Federation of Noida Residents Welfare Association and Others
thereby intended that NTBCL would recover its investment in
developing the DND Flyway infrastructural facility by imposing
user fees on the commuters availing such services.
4.4. In pursuance thereto, the State of UP accorded approval for
the implementation of the DND Flyway and constituted an
Empowered Committee, tasked with negotiating the Concession
Agreement with IL&FS. The draft Concession Agreement was
approved by the State Cabinet and reviewed by multilateral
agencies financing the project, including the World Bank and
the Asian Development Bank. This initiative was recognised
as one of the pioneering projects in India developed under the
Public Private Partnership model (PPP).
4.5. The Concession Agreement was executed on 12.11.1997,
designating NOIDA and IL&FS as the 'Sponsors' and NTBCL
as the 'Concessionaire'. The aforesaid Concession Agreement
expressly provided for the construction of the DND Flyway, from
the Okhla Barrage in NOIDA to a location close to Maharani
Bagh in Delhi. The project encompassed the development,
establishment, financing, design, construction operation and
maintenance of the DND Flyway, including the development,
financing, design and construction of a flyover at Ashram
Chowk.
4.6. In terms of Section 2.7 of the Concession Agreement, the
State and the Government of NCT of Delhi entered into a
State Support Agreement on 14.01.1998, which facilitated: (i)
the execution of the Delhi Lands Lease Deed on 23.10.1998
between NTBCL and NOIDA; and (ii) the execution of the
Ashram Flyover Site Lease Deed on 30.08.1999 between the
Government of NCT of Delhi and NTBCL, for the construction
of the Ashram Flyover.
4.7. The Project was thereafter initiated and completed, with the
DND Flyway being opened for public use on 06.02.2001
(Commissioning Date). It consisted of: (i) the main bridge;
(ii) three minor bridges; (iii) a 32-lane approach road with a
300-metre-wide toll plaza in NOIDA; (iv) an 11-lane toll plaza
at Mayur Vihar; and (v) a flyover at Ashram Chowk.
4.8. Respondent No. 1 is an Association established to espouse
the cause of NOIDA residents before the Public Authorities,
2008
[2024] 12 S.C.R.
Supreme Court Reports
particularly concerning civic issues. Nearly 15 years after
the execution of the Concession Agreement, Respondent
No. 1 approached the High Court (through a Writ Petition)
purportedly in public interest seeking a direction to discontinue
toll charged to the users of the DND Flyway. The Writ Petitioner
contended that NTBCL had already recovered the project costs,
thereby eliminating the need to continue imposing user fees.
Respondent No. 1 thereafter on 08.09.2014, amended the Writ
Petition, seeking additional relief to annul both the MoU and
the Concession Agreement.
4.9. The High Court, vide the impugned judgment dated 26.10.2016,
while considering the constitutional validity of the Concession
Agreement, has primarily held that: (i) Article 13 of the
Concession Agreement, which governed the determination,
collection, and appropriation of user fees by NTBCL, was invalid
in law; (ii) Article 14 thereof, which outlined the calculation of
the Total Project Cost, Returns, and their recovery by NTBCL,
was to be severed from the Concession Agreement; and (iii)
NTBCL was prohibited from continuing to impose or collect user
fees. The High Court further held that the selection process of
NTBCL for the Project violated Article 14 of the Constitution.
4.10. The aggrieved NTBCL, has preferred the instant appeal. The
record reveals that this Court passed a self-speaking order on
11.11.2016, (i) outlining the facts of the case; (ii) identified that
the matter contained issues that required thorough scrutiny; and
(iii) also noted the conflicting claims regarding the Total Project
Cost recovered by NTBCL. Thereafter, this Court directed
the Comptroller and Auditor General of India (CAG) to verify
NTBCL's claims and submit a Report. The salient features of
the order dated 11.11.2016 may be highlighted at this stage:
"....3. Federation of NOIDA Residents Welfare
Association & Ors., Respondent No.1 herein, filed
PIL No.60214 of 2012 in the High Court of Judicature
at Allahabad for a declaration that collection of toll
fee should be stopped on the DND Flyover between
New Delhi and NOIDA.
4. A Concession Agreement (hereinafter referred to
as "the Agreement") was entered into between the
[2024] 12 S.C.R.
2009
Noida Toll Bridge Company Ltd. v.
Federation of Noida Residents Welfare Association and Others
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-OperateTransfer (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..."
"...14. Prima facie, we are of the opinion that the
various issues that arise in this SLP warrant a
detailed scrutiny. Conflicting claims have been made
regarding the recovery of the Total Cost of the Project
by the Concessionaire. To resolve the dispute, it is
appropriate that an independent agency is requested
to examine the relevant records of the DND flyway.
The said agency should examine the reports of the
independent auditors appointed by the Petitioner
and submit a report regarding the correctness of the
Petitioner's claim that the Total Cost of the Project
has not been recovered. We accept the suggestion
of the Petitioner and request the Comptroller and
Auditor General of India (CAG) to assist us in this
matter. The Petitioner is directed to place the entire
record pertaining to the recovery of the Total Project
Cost of the DND flyover project as per the Agreement
before the CAG. The CAG is requested to verify
the claim of the Petitioner that the Total Cost of the
Project has not been recovered and submit a report
within four weeks. The CAG shall be at liberty to call
for and examine all such records having a bearing
on the financial aspects, as it requires to facilitate its
decision. This will include matters and information
pertaining to all the benefits which have flowed to
the Petitioner under the entirety of the agreement,
including the utilisation, if any. The Petitioner shall
co-operate in all respects with the CAG and provide
all documents, information and details as sought.
15. We do not agree with the submission that the
Petitioner would suffer irreparable loss if the judgment
2010
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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..."
4.11. In compliance, the CAG conducted a detailed examination of
NTBCL's records, carrying out numerous surveys and tests to
arrive at its findings, which have been submitted to this Court
by way of a self-explanatory report, a detailed reference to
which shall be made in the later part of this judgement.
B.
Contentions on behalf of the Appellants
5.
Dr. Abhishek Manu Singhvi, Learned Senior Counsel appearing on
behalf of NTBCL, contended that the High Court has committed
multiple errors while rendering the impugned judgement. In this
regard, they made the following submissions:
(a) Owing to the considerable delay and laches in filing the
original petition, the High Court ought to have rejected it at
the threshold. The Writ Petition was filed twenty years after
execution of the MoU and fifteen years after execution of the
Concession Agreement, with no explanation provided to justify
such a significant delay.
(b) The Writ Petition allegedly filed in public interest could not
serve as a vehicle to interfere with a commercial contract like
the Concession Agreement or render it invalid. A PIL cannot be
utilised to annul or modify a Government Policy established and
implemented through the Concession Agreement. It is beyond
the scope of judicial review to invalidate a Government Policy
decision solely based on the belief that an alternative policy
might have been more appropriate. Consequently, the subject
PIL was beyond the purview of judicial powers exercisable
under Article 226 of the Constitution of India.
(c)
It was impossible during the relevant period to float tenders
in order to develop the necessary infrastructure, due to the
absence of non-governmental infrastructure developers from
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2011
Noida Toll Bridge Company Ltd. v.
Federation of Noida Residents Welfare Association and Others
whom competitive bids could have been solicited. IL&FS was
explicitly selected because it was a pioneer in the field, with 81%
of its ownership held by public sector institutions. That apart, it
is well-established in law that the non-floating of tenders alone
does not constitute a sufficient basis to deem the actions of a
public authority as arbitrary and illegal, nor does it invalidate
the consequential contract.
(d) The Concession Agreement resulted from extensive deliberations
and consultations among various Government entities over
several years and thus could not be termed as an arbitrary
decision. It received approval from the Steering Committee,
which comprised of representatives from all stakeholders,
and the Empowered Committee established by the State.
Additionally, the World Bank, which provided funding for the
Project through a line of credit to IL&FS, also endorsed the
Agreement. The Concession Agreement being an outcome of
consensual deliberations, the High Court ought not to have
construed it as violating Article 14 of the Constitution.
(e) Article 13 of the Concession Agreement does not lack legal
authority, as the rate of fees charged to users was determined
by the Fee Review Committee. This determination was made
by applying the formula specified in the Concession Agreement
and the base rate established by the Steering Committee. The
Fee Review Committee itself comprised of representatives
from both NOIDA and NTBCL, along with a third party, with
each representative duly qualified and possessing adequate
experience in the management, operation, and maintenance of
bridges. Additionally, the involvement of the Independent Auditor
and Engineer ensured a mechanism of checks and balances.
There was thus no factual foundation on the basis of which it
could be inferred that the authority to levy fees was exclusively
delegated to NTBCL.
(f)
NTBCL was empowered to collect user fees pursuant to
Regulation 5(2) of the NOIDA (Levy of Infrastructure Fee)
Regulations, 1998 (Regulations). These Regulations were
formulated by NOIDA, in exercise of its powers under Section
6A read with Section 19 of the Uttar Pradesh Industrial Area
Development Act, 1976 (1976 Act). The collection of user
fees commenced only in 2001, after the 1998 Regulations
2012
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had come into force. That being so, there is no legal or factual
foundation to hold that Section 6A of the 1976 Act was applied
retroactively. The Regulations were a condition precedent in
the Concession Agreement, as outlined in Section 3.1 (a) (iv),
which stipulated the formulation of such Regulations to authorise
NTBCL to collect fees. There is thus no lack of legal authority,
and Article 13 of the Concession Agreement does not suffer
from excessive delegation.
(g) Article 14 of the Concession Agreement does not contravene
public policy, and the High Court erred in applying the Doctrine
of Severability. The rationale behind the formulation of the Total
Project Cost took into account that NOIDA only contributed
Rupees 10 crores towards the project, and the Internal Rate
of Return (IRR) formula employed is a standard, accepted
methodology. Without the safeguard of such a formula, no
developer would be willing to undertake substantial investments,
particularly given the risk of premature and arbitrary termination
of the contract by NOIDA. Furthermore, the return of 20%
cannot be deemed arbitrary, as the project had to compete with
other infrastructure sectors to secure debt funding and equity
investment from the private sector. Article 14 of the Concession
Agreement, in the light of these mitigating circumstances,
therefore, is not opposed to public policy.
(h) NTBCL is currently facing losses and has not yet recovered the
Total Project Cost or returns. The CAG Report indicates that,
at a minimum, Rupees 30 crores remain recoverable by the
Appellant, as of date. Thus, the High Court erred in concluding
that NTBCL had fully recovered the Total Project Cost and has
made reasonable profits. Additionally, if the High Court's decision
were upheld, NTBCL would be compelled to continue bearing
maintenance costs until 2031 without any incoming revenue.
Following the cessation of toll collection, NTBCL has become
entirely dependent on the revenue generated from advertising
hoardings. However, the Court has failed to take notice that
NTBCL shares its revenue with NOIDA through license fees
for outdoor advertisements.
(i)
NOIDA's failure to provide regular fee hikes as per the terms
of the Concession Agreement has contributed to the escalation
of the Total Project Cost and as such, NOIDA cannot be
[2024] 12 S.C.R.
2013
Noida Toll Bridge Company Ltd. v.
Federation of Noida Residents Welfare Association and Others
permitted to benefit from the impugned judgment. As stipulated
in Clause 14.2 of the Concession Agreement, the aggregate of
gross revenue from fee collections, income from advertising,
and development income (minus Operation and Maintenance
expenses) should yield 20% of the Total Project Cost annually.
Consequently, the Appellant should be permitted to continue
collecting user fees.
(j)
The annulment of the Concession Agreement would deter future
investors and undermine the sentiment for investment in similar
projects. Instead, the residents in proximity to the project could
be offered concessional treatment, while frequent users could
benefit from discounted pricing.
C.
Contentions on behalf of Respondent No. 1
6.
Per contra, Mr. Parthiv Goswami, Learned Senior Counsel,
representing the Respondent Welfare Association, supported the
findings of the High Court and urged as follows:
(a) The Writ Petition was maintainable as it was filed promptly after
NTBCL's Chartered Accountant's report was made available to
the Respondents on 31.05.2012, revealing that users of the DND
Flyway were being subjected to an illegal tax. Given that the
cause of action is continuous, the issue of delay is irrelevant.
The irreversible injury suffered by commuters necessitated
examination on its merits, and therefore, no exceptions, including
delay and laches, can be allowed to be raised to question the
maintainability of the petition.
(b) The Writ Petition cannot be turned down at the outset merely
on the ground that users have two alternative routes available,
which do not require payment of user fees or tolls. The Project
in question constitutes public property, and the Concession
Agreement necessitates judicial scrutiny and potential
intervention.
(c)
The High Court correctly concluded that Article 13 of the
Concession Agreement suffered from excessive delegation and
was inconsistent with the provisions of the 1976 Act, thereby
determining that NTBCL could not levy any user fees. Until
the insertion of Section 6A of the 1976 Act on 14.08.1998,
NOIDA lacked the authority to empower a developer to collect
2014
[2024] 12 S.C.R.
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any tax or fee. Under Section 6A, the right to collect user fees
could have been granted to NTBCL through the formulation of
Regulations; however, the authority to levy such fees would
remain with NOIDA as per Section 19(2)(e) of the 1976 Act.
Furthermore, under the said parent Act, NOIDA had no authority
to authorise the imposition of fees to another entity. Section 6A
was introduced much after the execution of the Concession
Agreement and it is not retroactive in nature.
(d) The Concession Agreement is perpetual in nature and, therefore,
contrary to public policy.