Perpetual Toll Collection Arbitrary; No Entity Can't Be Allowed Unjust Enrichment At Public Cost : Supreme Court In DND Flyway Case

Rejecting the plea for imposition of tolls on commuters of Delhi Noida Direct (DND) flyway, the Supreme Court recently observed that no entity can be allowed to profit unjustly at the cost of public suffering.

"The golden principle thus is that Government procedures or policies pioneered in public interest must genuinely serve the public and not merely enrich private entities...It seems to us that 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...The contract awarded to NTBCL through the Concession Agreement by State authorities and NOIDA was unfair, unjust and inconsistent with Constitutional norms", said a bench of Justices Surya Kant and Ujjal Bhuyan.

Dismissing Noida Toll Bridge Company Ltd.'s appeal against an Allahabad High Court judgment of 2016, which struck down the concessionaire agreement in its favor, the Court said:

"The general public has been forced to part with hundreds of crores by IL&FS and NTBCL, under the guise of providing necessary public infrastructure...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, we find no error in the High Court's judgment and its directions in restraining the imposition and collection of user fees/tolls."

Further, it concurred with the High Court's finding that Article 14 of the Concession Agreement was perpetual in nature and 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."

Emphasizing on the importance of authorities' fairness in public infrastructure projects, the Court added:

"When a state undertakes a project involving an overwhelming public element, comprising of public funds and public assets, its actions must remain free of arbitrariness and remain grounded in a just, transparent and a well-defined policy. In this case, the government seems to have made no efforts to issue tender, invitations or seek competitive bids from other interested private companies."

On a perusal of the material, it further concluded that the method used to calculate the Total Project Cost was fundamentally a mechanism for unjust enrichment by a select few. It was opined that there was impropriety not only on the part of IL&FS, NTBCL, but also the concerned officers of Noida, State of UP, and NCT of Delhi. As such, the Court remarked that the misuse of power and breach of public trust "profoundly shocked" its conscience.

"The manner in which some senior bureaucrats manipulated the siphoning of project funds for their personal gains clearly make out a fit case for investigation under the Prevention of Corruption Act, 1988, although the ship might have sailed for such action at this stage."

Case Title : Noida Toll Bridge Company v. Federation of Noida RWA, SLP(C) No. 33403/2016

Citation : 2024 LiveLaw (SC) 1027

Click here to read the judgment