'In India, Every State Action Must Be Fair, Failing Which It Will Fall Foul Of Article 14' : Supreme Court Sets Aside Direction To Shift NH Toll Plaza

The Supreme Court set aside a Patna High Court judgment which directed the National Highway Authority of India to shift the toll plaza on Patna-Bakhtiyarpur four-lane road (NH-30) from Karmalichak near Deedarganj.

"Undoubtedly, in India, every state action must be fair, failing which, it will fall foul of the mandate of Article 14. It is, at this juncture, we may also notice that the duty to give reasons, would arise even in the case of administrative action, where legal rights are at stake and the administrative action adversely affects legal rights", a bench comprising Justices KM Joseph and S Ravindra Bhat observed in the judgment.

The Patna High Court, while allowing the writ petitions challenging the setting up of Toll Plaza, had held that the toll plaza location was violation of Rule 8 of National Highways Fee (Determination of Rates and Collection) Rules, 2008 which provides that a toll plaza must be constructed beyond 10 kilometres of a municipal or town area and, in no condition, should be within five-kilometre limits.

Rule 8

Rule 8(1) provides that the Executing Authority or the Concessionaire shall establish toll plaza beyond a distance of 10 kilometres from a municipal or local town area limits. First Proviso states that the executing authority may, for reasons to be recorded in writing, locate or allow the concessionaire to locate a [fee plaza] within a distance of ten kilometres of such municipal or local town area limits, but in no case within five kilometres of such municipal or local town area limits:

Second Proviso reads as follows: Where a section of the national highway, permanent bridge, by-pass or tunnel, as the case may be, is constructed within the municipal or town area limits or within five kilometres from such limits, primarily for use of the residents of such municipal or town area, the [fee plaza] may be established within the municipal or town area limits or within a distance of five kilometres from such limits.

In appeal, the Apex Court noted that High Court has read the second proviso in continuation with the first proviso and thereby concluding that, even the requirement of the first proviso, viz., the recording of reasons in writing, would also become necessary to invoke the power under second proviso.

"We would think that such an interpretation would fly in the face of the clear words used in the second proviso, and would, what is more, amount to rewriting the Rule. The real safeguard, which is present in the second proviso, is the nature of the objective and inflexible requirements, which are declared therein.", the court said.

According to the court, the second proviso should be construed as :

i. Upon construction being made of a section of the national highway within municipal or town area limits and upon the construction being primarily for the use of the residents of the municipal or town area then the toll plaza can be located within the municipal or town area limits.

ii. Similarly, if the construction of section of the national highway is made within 5 km from the municipal or town area limits and the construction is primarily for the use of the residents of such municipal or town area the toll plaza may be set up within a distance of 5 km from such limits.

The court noticed that, unlike the main Rule and the first proviso, the second proviso does not indicate as to, in whom, the power to locate the toll plaza under the second proviso, stands vested with.  Also that, unlike the first proviso, the second proviso does not contemplate that the reasons for exercising the discretionary power, is to be recorded in writing.

The power to take decision under the second proviso, is lodged with the Executing Authority.

The court thus proceeded to consider the question about who can take a decision under the second proviso in the absence of any express reference to the power to take a decision. It said:

76. The said power must be found vested with the Executive Authority. We say this for the reason that, some person must, indeed, take the decision that the situation warrants locating the toll plaza, in exercise of the power under the second proviso. We certainly cannot lodge that power with a Concessionaire. The Rule-maker has conferred the power on the Concessionaire, expressly when it declared in Rule 8, that the Concessionaire may, apart from the Executing Authority, locate the toll plaza beyond 10 kilometres from the municipal or town area limits. The power under the first proviso, is conferred only upon the Executing Authority. Having regard to the nature of the power, viz., to locate the toll plaza, in complete contradiction with the mandate of the Rule, within the municipal area, inter alia, we hold that, the power to take decision under the second proviso, is lodged with the Executing Authority.

Duty of the Executing Authority

The court also explained the duty of the Executing Authority in this regard:

77. However, a decision must be taken. It must be taken by the Competent Authority. The Authority, we have found is the Executing Authority. It must apply its mind and be convinced that a section of the national highway, inter alia, is constructed within the municipal or town area limits. This is a pure question of fact. Secondly, it must conclude that the said construction is 'primarily' or 'mainly' for the 'use' of the residents of the municipal limits. This is again a factual matter. We may also find that the second proviso does not compel the Authority to locate the plaza within the municipal or town area limits. It is a matter of discretion to be exercised, no doubt, taking into consideration the maximization of toll collection also and avoiding of leakage of toll, bearing in mind the fact that the Concessionaire is permitted to collect the toll only for the period of the Concessionaire Agreement under Rule 16. To show application of mind, there must be material. Even in the absence of reasons, recorded as such, there must be proper pleadings with materials, unless facts are not in dispute.

The following observations have been made in the judgment.

The second proviso does not require that the construction must be solely for the benefit of the residents of the municipal area.

75.....Apart from the statement of the Writ Petitioners themselves, that the road is a national highway and it is merely for the use of the local residents, the undeniable fact is that, in place of the two-lane road, after a huge investment, it was upgraded to a four-lane road and nearly 14 kilometres of the project road, indisputably, passed through the municipal limits and the most important beneficiary of the said construction, can clearly be stated to be the residents in the municipal area. The project road, did enure chiefly to the residents of the Patna Municipality. The road from 180 to 190 kms was found to be a very congested stretch. The construction of the widened road, undoubtedly, helped mainly the residents of the municipal area. There are other features, apart from widening, including the graded separators. No doubt, it may be true that many persons may be using the said stretch, who may not be residents of the Patna Municipality, would also benefit from the construction, but that cannot detract from requirement of the second proviso being fulfilled, viz., that the construction was primarily for the benefit of the residents of the municipal area. The second proviso does not require that the construction must be solely for the benefit of the residents of the municipal area.

There is no general duty, when an administrative decision is taken, to give reasons.

There is no general duty, when an administrative decision is taken, to give reasons. A Statute may, however, explicitly provide that the Executive Authority must provide reasons and it must be recorded in writing. A case in point is the first proviso to Rule 8 of the Rules itself. The desirability of a general duty, in the case of administrative action to support decisions with reason, is open to question. One of the most important reason is, the burden it would put on the administration. It is apposite, at this juncture, to notice that administrative decisions are made in a wide spectrum of situations and contexts. The executive power of the Union and States are provided in Articles 73 and 162 of the Constitution of India, respectively. Undoubtedly, in India, every state action must be fair, failing which, it will fall foul of the mandate of Article 14. It is, at this juncture, we may also notice that the duty to give reasons, would arise even in the case of administrative action, where legal rights are at stake and the administrative action adversely affects legal rights. There may be something in the nature or the context, under which, the administrative action is taken, which may necessitate the authority being forthcoming with rational reasons. There are other decisions, which essentially belong more to the realm of executive policy-making, which ordinarily may not require the furnishing of reasons. The advantages, undoubtedly, of introducing a reasons driven regime, are as follows.

Reasons could help establish application of mind

61. Persons, who may have a right or an interest, would know, what are the reasons which impelled the Administrator to take a particular decision. Judicial review, in India, which encompasses the wide contours of public interest litigation as well, would receive immeasurable assistance, if the reasons for particular decisions, are articulated to the extent possible. The giving of reasons also has a disciplining effect on the Administrator. This is for the reason that the reasons would capture the thought process, which culminated in the decision and it would help the Administrator steer clear of the vices of illegality, irrationality and also disproportionality. Reasons could help establish application of mind. Conversely, the absence of reasons may unerringly point to non-application of mind. The duty to act fairly, may require reasons to be recorded but the said duty, though there is a general duty on all state players to act fairly, may have its underpinnings, ultimately in legal rights.

The court may, when there is no duty to record reasons, support an administrative decision, with reference to the pleadings aided by materials.

62. It is one thing to say that there should be reasons, which persuaded the Administrator to take a particular decision and a different thing to find that the reasons must be incorporated in a decision. The question, relating to duty to communicate such a decision, would arise to be considered in different situations, having regard to the impact, which it, in law, produces. In fact, the second proviso to Rule 17 of the Rules, provides not only for there being reasons, but the reasons for refusal to permit barricades, must be communicated. If the law provides for a duty to record reasons in writing, undoubtedly, it must be followed and it would amount to the violation of the Statute, if it were not followed. Even if, there is no duty to record reasons or support an order with reasons, there cannot be any doubt that, for every  decision, there would be and there must be, a reason. The Constitution does not contemplate any Public Authority, exercising power with caprice or without any rationale. But here again, in the absence of the duty to record reasons, the court is not to be clothed with power to strike down administrative action for the mere reason that no reasons are to be found recorded. In certain situations, the reason for a particular decision, may be gleaned from the pleadings of the Authority, when the matter is tested in a court. From the materials, including the file noting's, which are made available, the court may conclude that there were reasons and the action was not illegal or arbitrary. From admitted facts, the court may conclude that there was sufficient justification, and the mere absence of reasons, would not be sufficient to invalidate the action of the Public Authority. Thus, reasons may, in certain situations, have to be recorded in the order. In other contexts, it would suffice that the reasons are to be found in the files. The court may, when there is no duty to record reasons, support an administrative  decision, with reference to the pleadings aided by materials.

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