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

t Petition immediately after the Concession Agreement and other Supporting Agreements were entered into, would have been highly premature and ill-advised, without giving a reasonable time to the project proponent to recover the actual cost of the project.

19Copy pinpoint19. In this vein, the High Court rightly observed that the plea of delay lacks substance, as the commuters, including Respondent No. 1, were justified in trusting that NOIDA would protect their interests. However, in 2012, after learning that they were being misled and subjected to an illegal toll based on an audit report from NTBCL’s Auditor and Chartered Accountant—indicating that as of 31.05.2012, Rupees 2340 crores were still to be recovered from the public, and the recovery period had extended from 30 years to 100 years—they were prompted to immediately approach the High Court.

20Copy pinpoint20. Furthermore, it must be acknowledged that the levying of user fees or tolls by NTBCL constituted a continuing cause of action, which was challenged by the Association of affected commuters. An established exception to the defence of delay is the presence of a continuous injury stemming from an ongoing wrong.8 The plea of delay and laches cannot be raised in a case of a continuing cause of action.

21Copy pinpoint21. In our considered view, the challenge laid by Respondent No. 1 before the High Court, regarding the levying of toll or user fees, being rooted in public interest and involving en masse potential violations of Fundamental Rights of citizenry, warrants thorough examination. Given that NTBCL’s actions represented a continuing cause of action, we concur with the High Court in rejecting the hyper technical objection of delay and laches.

8 Union of India and another v. Tarsem Singh, (2008) 8 SCC 648.

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

G.1.3. Scope of judicial intervention

22Copy pinpoint22. In the context of maintainability, NTBCL has also contended that the High Court should not have intervened in a commercial contract such as the Concession Agreement and rendered its provisions invalid, as it amounts to judicial interference into a Governmental Policy.

23Copy pinpoint23. While considering these submissions, the High Court conducted a detailed analysis and has addressed them based on two principal rationales: (i) the judicial review of administrative action, and (ii) the public interest factor. These rationales were employed to determine whether the Court had the jurisdiction to adjudicate on the validity of the Concession Agreement and the levying of toll upon commuters using the DND Flyway.

24Copy pinpoint24. Having said that, we also deem it necessary to embark on an independent analysis and assess whether the conclusion of the High Court having employed such rationale would hold sway. First, regarding the judicial review of administrative action, NTBCL has contended that courts cannot interfere in contractual obligations or policy decisions.

25Copy pinpoint25. It is indeed true that the Concession Agreement and the MoU involved the NOIDA authorities as a party, and the decision to grant development and construction rights to NTBCL was somewhat a policy decision by the Government, considering the financial and technical constraints present at the time. The crucial question, however, is whether such commercial contracts, which may stem from a Government Policy decision or where one of the parties is the State or its instrumentalities, are entirely insulated from judicial review.

26Copy pinpoint26. This issue is no longer res integra and there is no absolute bar on the maintainability of writ petitions, even in matters concerning contracts or monetary claims. In such cases, the discretion lies with the Court as held in Joshi Technologies International Inc. v. Union of India,9 which summarised the legal position on judicial review of contracts entered into by public authorities with private parties. Judicial review, being a dynamic process as opposed to static, has experienced a significant shift in terms of the degree of

9 Joshi Technologies International Inc. v. Union of India, (2015) 7 SCC 728.

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judicial interference in contractual disputes, especially when one of the parties involved is the State or its instrumentalities.10

27Copy pinpoint27. 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.11 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 Article 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.

28Copy pinpoint28. Second, it is crucial to recognise that when a contract involving a State instrumentality like NOIDA, significantly impacting the public, the metes and bounds of judicial review ought to be expanded. The guiding principle is that every State action must prioritise public interest. If a governmental action disproportionately favours a private entity at the expense of public welfare, it is liable to be struck down as invalid.12 As rightly acknowledged by the High Court also, 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.13

29Copy pinpoint29. In light of the above, 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

10 Subodh Kumar Singh Rathour v. Chief Executive Officer, 2024 SCC Online SC 1682. 11 Silippi Constructions Contractors v. Union of India, (2020) 16 SCC 489. 12 Kasturi Lal Lakshmi Reddy. v. State of Jammu and Kashmir, 1980 (4) SCC 1. 13 Centre for Public Interest Litigation v. Union of India, 2012 (3) SCC 1.

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

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. The contention of NTBCL seeking dismissal of Respondent No. 1’s petition at the threshold was thus rightly rejected by the High Court.

G.2 The validity of awarding the contract to NTBCL

30Copy pinpoint30. One of the primary contentions raised by Respondent No. 1 before the High Court was that the contract for the development and construction of a significant project like the DND Flyway had been awarded to NTBCL without NOIDA having followed any formal tender procedure, such as advertising or issuing a notice inviting competitive tenders. In response, NTBCL argued that, at the time, it would not have been feasible to float tenders due to a shortage of private companies capable of undertaking such large-scale infrastructure projects. NTBCL further contended that the mere absence of a competitive tendering process was not, in itself, sufficient grounds to invalidate the agreement.

31Copy pinpoint31. In this context, it is evident that 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.

32Copy pinpoint32. Considering the onus placed upon the State, it requires no further elaboration that 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 publ