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

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

since these amounts were not kept in view by the High Court, it still needed to recover an aggregate sum of Rupees 454.71 crores from user fees and other income, which was the computation of losses it had suffered as on 31.03.2014.

82Copy pinpoint82. NTBCL further contended that it generated a revenue of Rupees 743.34 lakhs (out of Rupees 2028.88 lakhs) from the display of advertisement hoardings on the NOIDA side of the Project in 2019- 2020, which increased to Rupees 399.81 lakhs in 2020-2021. Out of this advertising revenue, Rupees 339.87 lakhs were paid towards license fees in 2019-2020, and Rupees 84.97 lakhs in 2020-2021. After the collection of tolls was discontinued, NTBCL became solely reliant on the revenue generated from advertisement hoardings.

83Copy pinpoint83. We find that no independent evaluation of these competing claims is required to be undertaken by us as the issues raised by NTBCL have been effectively answered by the independent arbiter, namely the CAG, through its Report submitted to this Court concluding that: (i) The total expenses incurred by NTBCL are Rupees 1,136.26 crores. (ii) The total income generated by NTBCL is Rupees 1,103 crores. (iii) The Total Project Cost has been recovered to a large extent and only around Rupees 15 crores remained to be recovered as of 31.03. 2016. (iv) Other future recurring costs which would be incurred over the life span of the DND Flyway are the O&M costs. These are to be calculated as per the norms adopted in the Feasibility Study of the DND Flyway based on which the expenditure for the year 2015-16 can be reasonably estimated to be around Rupees 19 crores.

84Copy pinpoint84. The sum of Rupees 1,136 crores, i.e. the total expenses incurred by NTBCL are based on the statutory accounts from 2001 to March 2016. This sum includes all the unrecovered project costs added before the date of commissioning of the Project and the inflated and unnecessary expenditures undertaken by NTBCL such as, travelling expenses, legal fees, extraordinary salaries and bonuses to employees, etc. as specified in paragraph 62 of this judgement.

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85Copy pinpoint85. 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.23 In Mandsaur Transport Assn. v. State of M.P., when dealing with the aspect of the collection of toll to recover the costs of construction of a bridge, this Court held that there was no reason for the collection of the toll to continue if the State Government had recovered the costs of construction and maintenance several times over.24 This reasoning was reiterated in MSK Projects (I) (JV) Ltd. v. State of Rajasthan.25

86Copy pinpoint86. The CAG Report further states that the annual toll income of NTBCL during 2001-2016 was Rupees 892.51 crores. NTBCL has been making profits for the last 11 years; has no accumulated losses as of 31.03.2016; has paid dividends of Rupees 243.07 crores till 31.03.2016 to its shareholders; and repaid all its debt with interest. NTBCL had thus, by 31.03.2016, recovered the project costs, the maintenance costs, and a significant profit on its initial investment. There is no rhyme or reason for the collection of user fees/tolls to continue.

87Copy pinpoint87. An exhaustive reading of the CAG Report highlights the extent to which the public has been defrauded. 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. This could not have been done but for the collusion of the then officers of the two State Governments and of NOIDA, who closed their eyes while the contractual obligations were incurred. Had Respondent No. 1 not been vigilant of their rights, the public funds would have continued to be misappropriated for private profiteering. Furthermore, the role played by IL&FS in this entire scheme is highly questionable. We say nothing except that the facts speak for themselves. Res ipsa loquiter.

88Copy pinpoint88. That being said, 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.

23 Institute of Law, Chandigarh v. Neeraj Sharma, (2015) 1 SCC 720. 24 Mandsaur Transport Assn. v. State of M.P., (2001) 9 SCC 328. 25 MSK Projects (I) (JV) Ltd. v. State of Rajasthan, (2011) 10 SCC 573.

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

G.6 Recovery of dues arising out of display of outdoor advertisements

89Copy pinpoint89. The question pertaining to outdoor advertisements does not constitute the subject matter of the present appeal, where the matter assailed by the Respondent Welfare Association before the High Court was restricted to the imposition and levy of user fees or toll by NTBCL and concomitantly, the validity of certain provisions of the Concession Agreement. Regardless, Respondent No. 2, NOIDA, has alleged that NTBCL owes substantial dues to them, accrued through outdoor advertising, for which the license had been granted by NOIDA.

90Copy pinpoint90. All that we thus observe, is that NOIDA shall be at liberty to initiate recovery proceedings as per the dispute resolution mechanism outlined in the Delhi Land Lease and NOIDA Land Lease Agreements. Such a process shall be subject to the defence and objections that may be available to NTBCL before the appropriate forum. Consequently, this issue does not fall within the scope of the instant appeal and therefore we have not expressed any opinion on its merits.

H. Conclusion and directions

91Copy pinpoint91. In light of the above analysis, it is held that there is no infirmity in the impugned judgement and we find no reason to interfere with it. The instant appeal is consequently dismissed. Nonetheless, we consider it essential to summarize our conclusions on the issues raised: i. The High Court rightly entertained the writ petition filed by Respondent No. 1, who had the requisite locus standi. The said writ petition filed in public interest was maintainable; ii. There were no delay or laches in approaching the High Court; iii. The contract awarded to NTBCL through the Concession Agreement by State authorities and NOIDA was unfair, unjust and inconsistent with Constitutional norms; iv. NOIDA exceeded its authority by delegating the power to levy fees or impose tolls to NTBCL, rendering such delegation invalid. v. Article 14 of the Concession Agreement, read with the formula in Annexure F, contravenes public policy and is, therefore, liable to be severed from the Agreement.

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vi. NTBCL has recovered the project costs and substantial profits, eliminating any justification for the continued imposition or collection of user fees or tolls. vii. The issue pertaining to outdoor licensing fees between NOIDA and NTBCL does not fall within the purview of the present challenge.

92Copy pinpoint92. As regard to SLP(C) No. 8060/2019, concerning the challenge to the arbitration proceedings between NOIDA and NTBCL, it is clarified that the said matter shall be heard and decided separately on its own merit.

93Copy pinpoint93. Ordered accordingly. Pending applications if any, to be disposed of.

Result of the case: Appeal dismissed.

† Headnotes prepared by: Bibhuti Bhushan Bose