Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4611 OF 2014

(Arising out of SLP (Civil) No. 19379/2013)

M/S. SOMA ISOLUX NH ONE TOLLWAY

PRIVATE LIMITED .

Appellant

Versus

HARISH KUMAR PURI & ORS.

..Respondents

J U D G M E N T

GYAN SUDHA MISRA, J.

1. Leave granted.

2. This appeal by special leave has been filed

assailing the order dated 27.5.2013 passed by the High

Court of Punjab and Haryana at Chandigarh in C.M.No.

3301/2013 arising out of CWP No. 13848/1998 whereby

certain adverse directions to be related hereinafter were

Page 2 issued having grave implication on the contractual rights

of the appellant- M/s. Soma Isolux NH One Tollway Pvt.

Ltd. (hereinafter referred to as ‘the Concessionaire

company’) as it was saddled with a fine of Rs.60 crores

and Rs.7 crores to be paid by the appellant-

Concessionaire Company and its Director respectively

which were to be deposited with the Registrar General of

the High Court within one month of the date of the order.

The respondent No.6 National Highways Authority of India

(shortly referred to as ‘the NHAI’) was further directed to

proceed in the matter forthwith and take possession of

the Highway project and ensure that collection of toll is

deposited in a separate account and the work of repairs

of the highway commenced within a week and the work of

construction of highway commenced and completed

within a month thereafter. The High Court further issued

direction that the entire matter relating to the contract,

the completion of the work of the highway, collection

from tolls without existence of six-lanes be enquired into

and a report in that regard be placed before the High

2

Page 3 Court within three months. It was also made clear that

the enquiry shall not be construed to be an excuse to

delay the construction of the highway. It was further

observed that the Chairman, NHAI shall be personally

responsible for ensuring that the work of six-laning of the

highway between Panipat and Jullunder is completed

within six months failing which the Chairman, NHAI would

be held personally liable to pay fine similar to the terms

imposed on the Concessionaire Company –respondent

No.7. The appellant-Concessionaire Company has,

therefore, come up to this Court challenging the

impugned order passed by the High Court.

3. The substantial questions of law of general and

public importance that emerge for consideration in this

appeal inter alia may be crystallised as follows:

iWhether the directions issued by the High Court

which have far reaching consequences against the

petitioner/appellant and which directions by a judicial fiat,

has the effect of nullifying the terms of the Concession

Agreement dated 09.05.2008 defeating the rights and

3

Page 4 obligations arising therefrom in a Public Interest Litigation

while exercising jurisdiction under Article 226 of the

Constitution of India is an act of judicial overreach under

the garb of public interest?

iiWhether the terms and conditions of a concluded

contract can be nullified by the High Court by issuing

sweeping directions in an ongoing Public Interest

Litigation Petition which renders the terms and conditions

of the Concession Agreement between the contracting

parties redundant at the instance and initiative of the

Court itself when such directions has not even been

sought by any of the parties to the Public Interest

Petition?

iiiWhether a Bench of the High Court which is seized of

a particular dispute would be justified in not taking note

of the final judgment and order passed earlier by a co-

ordinate Bench settling the said controversy in view of

which no direction could be issued by the High Court

nullifying the contractual rights of the affected party?

4

Page 5 4. In order to appreciate and adjudicate the

controversy involved and to put the matter in proper

perspective certain factual background may be related

which disclose that this appeal by way of special leave

petition has its genesis in a writ petition bearing CWP No.

13848/1998 which came to be filed in the High Court of

Punjab and Haryana at Chandigarh as a public interest

litigation on 25.7.1998 by the respondent No.1 herein

Harish Kumar Puri whose son had died in a road accident

on 14.5.1996 at Pipli Chowk, Kurukshetra due to the

criminal negligence alleged on the part of the traffic

police posted on the said chowk. In the PIL, the

respondent No.1 Mr. Puri prayed for issuance of a writ in

the nature of mandamus directing for enforcement of

traffic rules and to maintain the signal system, rumble

strips on crossing, first aid units, control over speeding on

G.T. Road National Highway No.1 and a further writ or

direction holding the State functionaries liable for the

criminal negligence on the part of its employees and

saddle it with monetary liability.

5

Page 6 5. Interestingly, this writ petition which was filed as

a PIL with the laudable object of improving management

of traffic on the highway in the interest of the commuters

and the public at large over the years metamorphosed

into a long drawn litigation alleging breach of contractual

obligations between the appellant-concessionaire

company and the respondent No.7 NHAI wherein the

respondent Union of India as also the respondent/PIL

petitioner in the High Court have jumped into the fray

giving rise to several rounds of litigation. In the process it

affected the very purpose and object for which the writ

petition had been filed as also the construction of the

Highway for which a concession agreement had been

executed between the appellant-concessionaire company

and the respondent No.6 NHAI by way of a competitive

bidding process during pendency of the PIL as a step

towards resolving the issue of management of traffic.

6. While tracing out the background of the matter,

bereft of not so essential factual details, it may be

sufficient to state that the Division Bench of the High

6

Page 7 Court issued notice of motion on 1.9.1998 in the writ

petition (PIL) which came up before the High Court for

consideration from time to time spanning over several

years and finally on 11.4.2002, an order was passed by

the High Court on 11.4.2002 for impleading the Secretary

to the Government of India, Ministry of Road Transport

and Highways, New Delhi when the issue camp up

regarding non-opening of the railway bridge near Dera

Bassi for the general public. Several years thereafter,

notice was also issued to the National Highways Authority

of India (NHAI) to appear before the High Court through

its authorized representative as on 9.5.2008 a Concession

Agreement had been executed between NHAI and the

appellant-company since the appellant succeeded in a

competitive bidding process by which it was granted

exclusive rights, license and authority to construct,

operate and maintain its project namely, six-laning of a

part of NH 1 from KM 96.00 to KM 387.100

(approximately 291.10 KM) from Panipat to Jullundur for a

period of 15 years. While awarding the contract, the

7

Page 8 credentials and track record of the appellant was taken

note of which indicated that the appellant M/s Soma

Isolux NH One Tollway Pvt. Ltd. is a joint venture

company with Isolux Corsan Group which is a

multinational company having vast experience of

Infrastructure Development in various part of the world

including Europe, South America, North America and Asia

and has successfully developed Highway Projects in

various countries including Spain, Mexico, Brazil, India

etc. Isolux Corsan Group is the leading European

Investor in infrastructure in India and M/s Soma Enterprise

Ltd. is a renowned Development Construction firm and

has several National Highway Projects in the past 13

years and have completed projects ahead of schedule. It

has also undertaken and completed projects in other

infrastructure sectors like Irrigation Hydro Power and

Railways.

7. The Concession Agreement envisaged reciprocal

obligations from various parties including NHAI, the State

of Haryana and the State of Punjab. Under Clause 4.1.2

8

Page 9 (a) NHAI is/was required to provide right of way and the

appellant-company is/was entitled to demand and collect

appropriate fee commonly known as toll fee from vehicles

and persons liable to pay toll fee for using the national

highway. The Concession Agreement was drafted as per

the model approved by the Planning Commission of India

and the draft concession was in fact circulated with the

RFP (Tender Document) and, therefore, neither the

appellant-company nor the NHAI could have changed the

contents of the agreement pursuant to the award of

contract.

8. In so far as the financing and investment to the

Highway Project is concerned the agreement envisaged

that the appellant-company and the NHAI would be on the

basis of Build, Operate, Trade (BOT) mode which

enumerated that the project being in BOT mode, all

investment in the project will have to be made by the

appellant-company by the income generated from toll

collection and no amount was to be invested/received

from the NHAI. On the contrary, the appellant-company

9

Page 10 as per the Agreement, offered to pay to the

respondent/NHAI premium equal to 20.14 per cent of the

total collection of toll for the first year and this premium

was to be increased by one per cent every subsequent

year. Based on a detailed analysis of the Concession

Agreement, the NHAI thus is not only not funding any part

of the project development cost, it is receiving a

significant portion of the revenue collected as premium

by way of collection of toll. However all the amount

collected by way of toll were to be deposited in the

ESCROW account as a result of which any amount from

this account cannot be withdrawn by the appellant

without signature from the other contracting party i.e.

NHAI. It may further be noted that the agreement

between the appellant and respondent/NHAI

acknowledges and confirms the role of lending

institutions, mainly nationalised banks as a major

significant holder in project implementation. All the

financial agreement dealing in the administration

occurred between lending institutions and the appellant

1

Page 11 and the financial model for the project had been

submitted regarding revenue and approval prior to the

commencement of the project. Agreement entered into

between the appellant/company and the NHAI also

envisages continuous support and co-operation from the

respective State Governments of Punjab and Haryana and

the Concession Agreement as per Article 47.3 requires

the execution of Tripartite State Support Agreement

between NHAI, Concessionaire and respective State

Governments for which support agreements were signed

by the State of Punjab on 11.9.2009 and the State of

Haryana on 16.9.2009. As per the agreement six laning

was to be retrofitted on the existing four-lane as per

standards and specifications which temporarily was to put

the travelling public to some inconvenience. On

8.9.2008, the Division Bench of the High Court which was

seized of the matter passed an order impleading M/s.

Himalayan Expressway Limited as respondent No.7 herein

and on 11.9.2009 the State Support Agreement

mentioned hereinbefore was executed between the

1

Page 12 Governor of the State of Punjab, NHAI and the appellant-

company regarding the obligations of the Government of

Punjab and its continued support for grant of certain

rights and authorities for mobilization of resources by the

appellant-company. The agreement visualizes continuous

support and co-operation of the Government of Punjab.

9. In the meantime, the writ petition/Public Interest

Litigation which was pending in the High Court during

pendency of which the Concession Agreement was

executed, continued to be taken up by the High Court and

various directions came to be passed from time to time

by the High Court in course of hearing of the PIL.

10. The High Court thereafter vide order dated

2.1.2012 on an oral request impleaded the appellant-

company as a party respondent and issued notice to it on

2.1.2012 to ascertain the progress of the Highway

Project. The appellant-company responded to the notice

and sought time to file its reply. Thereafter, on

28.1.2012, an affidavit was filed by the Project Chairman,

NHAI, Ambala before the High Court in the pending PIL

1

Page 13 informing the status of Panipat – Jullundur Section of NH 1

stretch from KM 96.000 to KM 387.100 wherein it was

stated that the Concessionaire-appellant company could

not achieve the milestone –II on the specified date due to

delay in various clearance, tree cutting, utility shifting

etc. and further stated that the scheduled six laning date

has been extended to 15.6.2012. In the meantime and in

response to the notice, the appellant also had filed

affidavit on 12.3.2012 giving details of the progress of the

construction on the highway as also the difficulties and

impediments encountered in the construction.

11. The High Court however refused to consider

even remotely the reasons for the delay in the progress of

the Highway Construction, much less scrutinized it and

further failed to examine or even visualise as to why the

appellant/concessionaire company, which within a period

of three years had constructed 71 % of the highway

project had suddenly slowed down for the rest 29% of the

project. In the process it further refused to consider

whether there were bonafide reasons for the delay on the

1

Page 14 part of the appellant/concessionaire company or the

delay was on account of the impediments created by the

NHAI violating the terms and conditions of the Agreement

as also ignored even the reasoned judicial orders passed

earlier by a co-ordinate Bench of the Punjab and Haryana

High Court itself which had permitted the appellant to

shift the toll plaza in view of the terms and conditions in

the Agreement which were conveniently ignored by the

NHAI contrary to the opinion of its own Independent

Engineer whose opinion in terms of the Agreement was

binding on the NHAI and the same has been upheld by

the High Court by several judgments and orders settling

the controversy. It further failed to take note of the fact

that the High Court itself had stayed the show cause

notice issued by the NHAI to the appellant/company for

terminating the contract and had it not been

stayed/ordered to be kept in abeyance, the cause as to

whether the delay was on the part of the

appellant/company or on account of unreasonable stand

of the NHAI which was contrary to the terms and

1

Page 15 conditions of the Concessionaire Agreement would have

come to the fore. However, the High Court never

addressed itself on these aspects but was pleased to pass

an order on 13.3.2012 inter alia directing the functional

head of the appellant-company as also the Director-

Officer-Incharge of the Project to remain present in Court

on the adjourned date of hearing. The presence of the

Chief General Manager of the NHAI along with the Project

Director was also ordered as it was directed that the

representative of the Concessionaire company as well as

the NHAI will come prepared to respond to all questions

as may be raised by the Court with regard to the

completion of the project within a particular time frame

and shall also come ready to execute the necessary

undertakings before the Court for completion of the

project with the time schedule.

12. The matter was thereafter listed before the High

Court on 22.3.2012 wherein it was submitted that the

Haryana Section of the Six Lane Highway was expected to

be complete by December 2012 and the Punjab Section

1

Page 16 was expected to be complete by March 2013. The High

Court however failed to scrutinise the cause of delay and

refused to take into consideration the terms of the

Concession Agreement under which the respondent No.6

NHAI was under the contractual obligation to grant

approval to shifting of Toll Plazas, straightaway perhaps

on an overall impression observed that there has been

inordinate delay in conducting the project and hence

directed the appellant-company to submit an undertaking

before the Court for completion of the project as per the

schedule mentioned by the appellant No.2 before the

High Court in the form of an affidavit.

13. In compliance to the same, a detailed affidavit

further was filed by the appellant No.2 on behalf of the

appellant-company wherein it was submitted inter alia

that there were certain bottlenecks existing between the

appellant/company and the respondent NHAI in regard to

contractual violations which were adversely affecting the

efforts of the appellant/Concessionaire company in

achieving the project completion. However, it was added

1

Page 17 that the Concessionaire-company shall be making all out

efforts to complete the project highway within 12 months

from the date of clearance of all obstructions that

currently existed between the appellant and the NHAI.

The High Court, however, directed the appellant to file a

clarificatory affidavit by 2 o’clock on the same date which

was submitted in the Court.

14. However, in order to check the authenticity of

the difficulties expressed by the appellant, the High Court

thought it appropriate to get it verified by directing the

parties to hold a joint meeting of the

appellant/Concessionaire company and the

respondent/NHAI and any other authority that may be

involved and steps be taken to remove the obstructions

and difficulties in completing the construction of the

highway if that were found to be actually existing. It was

also directed that a report in this regard including such

steps as may be taken for completing the project be

submitted before the High Court.

1

Page 18 15. In pursuance to the order passed by the High

Court, a meeting was held on 12.4.2012 under the

Chairmanship of Secretary to the Government of Punjab,

Department of Public Works (B & R) between the

appellant-company represented by the appellant No.2

and other officers of the appellant-company and various

officials including that of the NHAI. Another meeting also

took place on 14.4.2012 between the officers of the State

of Haryana, the officers of the appellant-company and

various officials including that of the NHAI. An affidavit

was, thereafter, filed by the Director of appellant-

company on behalf of the appellant-company to complete

the project obviously anticipating that the

respondent/NHAI will remove the impediments which was

coming in the way of completing the project which was

also the contractual obligation of the respondent NHAI.

16. The Division Bench of the High Court however,

did not feel convinced and satisfied, hence passed an

order on 19.4.2012 wherein it observed that the

appellant-company is not serious about the undertaking

1

Page 19 given to the Court and that it entertained serious doubts

with regard to sincerity of the appellant-company to

complete the work within the time frame undertaken. The

High Court, therefore, directed that in the event of work

not completed on schedule which was December 2012

and March 2013 which were the dates furnished by the

appellant-company to complete the project before the

Court, it would be liable to pay a sum of Rs. 50 crores by

way of penalty and its Director Shri Patri Ramachandra

Rao who was responsible for running the day-to-day

affairs of the company would be personally liable to the

extent of Rs. 5 crores. The High Court further observed

that the Concession Agreement appears to be one sided

in its application i.e. in favour of the Concessionaire and

contrary to public interest ignoring the fact that the terms

and conditions of the agreement were in consonance with

the guidelines of the Planning Commission which had

been approved by the Government of India. The High

Court thereafter directed that the matter be listed after

two months for further monitoring.

1

Page 20 17. The appellant in the meantime preferred a

Special Leave petition (Civil) No. CC 8974/2012 before

this Court on 3.5.2012 which was later dismissed as

subsequent development had taken place in the High

Court itself. Thereafter, the Division Bench of the High

Court on 6.7.2012 modified the order dated 19.4.2012

and increased the penalty to be paid by the appellant-

company to Rs. 60 crores and the personal liability of the

Director of the appellant No.1 company to Rs. 7 crores in

case the project was not completed within the time

granted by the Court on 19.4.2012.

18. On 3.8.2012 when the matter was further listed

before the High Court, the counsel for the appellant-

company informed the Court that the NHAI had issued a

show cause notice to the appellant as to why the contract

be not terminated. The High Court, however, passed an

order that the operation of the show cause notice issued

by the NHAI be kept in abeyance till further orders. In the

said order, the High Court also directed the Ministry of

Defence, Government of India to pass an appropriate

2

Page 21 order regarding the land needed for widening of NH 1

falling within the area of Jullundur Cantt. in the State of

Punjab and granted 15 days time to the authorities

concerned to do the needful. The High Court vide Order

dated 24.8.2012 also directed the Ministry of Defence,

Government of India to hand over the land for widening of

the National Highway forming part of the Concession

Agreement against which the Ministry of Defence

approached this Court by filing a Special Leave Petition

bearing No. 26544-26545/2012 which however were

dismissed vide Order dated 5.9.2012 granting further six

weeks time to the authorities concerned to comply with

the orders and directions issued by the High Court. The

Ministry of Defence, Government of India, thereafter

handed over the land for the project to the appellant in

October 2012 after dismissal of the special leave petitions

before the Supreme Court on 5.9.2012. According to the

appellant’s plea the work at the said defence land could

not commence due to utility shifting, boundary wall

shifting in 4 kms. of length.

2

Page 22 19. In order to explain and highlight the

impediments faced by the appellant-company seeking

extension of time to fufill its undertaking, the

appellant/company filed an application bearing C.M. No.

14936/2012 in the pending writ petition in the High Court

of Punjab and Haryana at Chandigarh which is pending

disposal. It was stated therein that the

appellant/concessionaire company was making every

effort to complete the six laning works at the earliest

provided there was complete co-operation by all

concerned and work was not hampered for any reason

beyond the control of the concessionaire as the

agreement itself envisaged continuous support and co-

operation from the respective State Governments of

Punjab and Haryana and the Concession Agreement as

per Article 47.3.

20. The appellant in its application came up with a

case that the highway in question commenced on

11.5.2009 which was the appointed date and the

appellant has been diligently proceeding with the work

2

Page 23 upon declaration of the appointed date by the

respondent. However, the project work were adversely

affected on account of several impediments, delays,

which according to the appellant are solely attributable to

the respondent NHAI. The appellant company submitted

that it has been carrying on its obligation under the

existing Concession Agreement towards construction of

the aforesaid six lane highway earnestly in a professional

manner and to the best of its ability and in spite of the

impediments and difficulties, obstructions and

hindrances, the appellant-Concessionaire till date has

completed 71.06 per cent of the work in the project

highway as on May 2013. However, due to certain

circumstances beyond the control of the appellant-

company, the project was getting delayed. The appellant

while explaining the delay, stated that in spite of

extremely adverse site conditions since commencement

of the project, it has managed to complete substantial

portions of the project highway because of its well

preparedness and adequate mobilization of resources. It

2

Page 24 has been submitted on behalf of the appellant that the

appellant-Concessionaire is fully geared up for the

completion of the project provided the two main

impediments/obstacles namely the stringent conditions of

mining in the States of Punjab and Haryana and the

shifting of Toll Plaza which was hampering the only

source of revenue for the Concessionaire were resolved

which were the main reasons for non-completion of the

project highway. Thus, it had been submitted that the

flow of work in the project highway had been

hindered/slowed down due to various reasons beyond the

control of the appellant-company which was primarily

attributable to the NHAI.

21. Since the High Court by its impugned judgment

and order has permitted the NHAI to take away the

project from the appellant due to slow progress of the

National Highway Project and has also imposed heavy

fine on the company for violating its undertaking in

completing the project, the appellant has sought to

explain the reasons in detail for the alleged slowing down

2

Page 25 of the project. It has been stated that one of the major

constraints that the appellant faced and which vitally

affected the normal flow of work of the project in question

was and is the non-availability of an essential raw

material, namely, stone aggregate in the States of Punjab

and Haryana due to the stringent conditions of mining of

the said material in Haryana with effect from 1.3.2010

and in Punjab with effect from January 2011. However, in

course of arguments the plea regarding non-availability of

supply of raw material, namely, stone aggregate was not

seriously pressed as it was submitted that the appellant

would try to sort it out and avail the material from the

adjoining states.

22. What has seriously been contested and is the

core contentious issue between the appellant and the

respondent-NHAI, which is hindering the completion work

of the project highway is non-relocation of the Toll Plazas

by the NHAI at two locations at KM 110 and KM 211 at

Karnal and Ambala for which the appellant-

Concessionaire had approached the appropriate authority

2

Page 26 ever since March 2010 which is hampering the only

source of revenue for the appellant-Concessionaire

Company. It has been explained that as per the policy of

NHAI (referred to hereinbefore) approved by the Planning

Commission and as per the Concession Agreement

entered into between the parties, tolling is allowed during

the construction of the project from four laning to six

laning. Article 3 of the Concession Agreement which

grants the Concessionaire by virtue of Article 3.1.2. (d)

entitled the Concessionaire to demand, collect

appropriate fee from vehicles and persons liable for

payment of fee for using the project highway or any part

thereof or refuse entry of any vehicle if the fee due/toll

fee is not paid. Internal accruals from the tolls during

construction are part of the financing package agreed

with the lenders and critical to enable financing for the

project as already recorded hereinbefore.

23. On the question of relocation of toll plaza, it has

been submitted that the Concession Agreement allows

the appellant company to choose the location of Toll

2

Page 27 Plazas in consultation with the Independent Engineer and

the authority as per the explicit provisions in this regard

agreed between the parties in the Concession Agreement.

In this context, attention of this Court has been invited to

clause 2.1 of Schedule ‘C’ and Article 48 of the

Concession Agreement which reads as follows:-

Clause 2.1 of Schedule ‘C’

“Toll Plaza means the structure and barriers

erected on the project Highway for the purpose of

regulating the entry and exist of vehicles in

accordance with the provisions of this Agreement

and shall include all land, buildings, equipment

and other facilities required in accordance with or

incidental to the provisions of this Agreement;

situated at locations to be decided by the

Concessionaire as per Schedule D in consultation

with NHAI and IE”. The tentative locations of the

Toll Plazas are given in Appendix-I.”

Article 48 defines Toll Plaza as

“the structure and barriers erected of the

project highway for the purpose of regulating the

entry and exit of vehicles in accordance with the

provisions of this Agreement and shall include all

land, buildings, equipment and other facilities

required in accordance with or incidental to the

provisions of this Agreement; provided that such

toll plazas shall not be erected within a distance of

20 km and 10 km from the notified urban of

Karnal, Ambala, Ludhiyana, Jalandhar cities and

2

Page 28 Gharonda, Nilokhere, Kurushetra, Shahabad,

Rajpura, Sirhind Mandi Govindgarh, Khanna,

Doraha, Sahniwal, Pillore, Goraya, Phagwara towns

respectively as notified on the date of this

Agreement and shall be situated at locations to be

decided by the Concessionaire in consultation with

the Independent Engineer.”

24. Placing heavy reliance on the aforesaid clause of

the Concession Agreement, learned Senior Counsel Dr.

Abhishek M. Singhvi has submitted on behalf of the

appellant-Concessionaire that it has the exclusive right in

accordance with the provisions of the Concession

Agreement to choose the location of Toll Plazas in

consultation with the Independent Engineer and NHAI. It

was, therefore, submitted that the existing Toll Plazas at

KM 146 and KM 212 were proposed to be shifted to KM

110 and KM 182 with the 3

rd

Toll Plaza at KM 328 retained

at the existing location in view of the contractual rights of

the appellant to fix the Toll Plaza location and

recommendations of Independent Engineer for relocation

of the existing Toll Plaza at KM 146 and KM 212 to KM 110

and KM 211 respectively vide letter dated 9.11.2010

issued by the Ministry of Road Transport and Highways to

2

Page 29 the Regional Officer (Punjab and Haryana), National

Highways Authority of India, the appellant started the

construction of Toll Plazas and subsequently the Haryana

Government on 4.7.2011 put forward the requirement to

shift the Toll Plaza from the approved location at KM 182

to KM 211 in consultation with the respondent. It has

further been stated that based on the discussion between

the Haryana Government and the respondent on the

issue, the respondent sought consent of the appellant

regarding proposal of the Haryana Government for

shifting of Toll Plaza to KM 211 in lieu of the Toll Plaza at

KM 182 for which the in principal approval was granted

earlier.

25. In order to honour the proposal of Haryana

Government and keeping in view the national interest and

public utility of the project, the appellant agreed to follow

the proposal of Haryana Government to relocate the Toll

Plaza at KM 211 instead of KM 182. The appellant

reserved its rights regarding the shifting of Toll Plaza as

per the provisions of the Concession Agreement while

2

Page 30 communicating its willingness to follow the proposal of

Haryana Government as suggested by the respondent.

Subsequently, the respondent NHAI gave approval for

relocation of Toll from KM 213 to KM 211.550 to 212.250

on the basis of recommendation of the Independent

Engineer, consent of appellant and the Government of

Haryana vide its letter dated 11.10.2011.

26. The aforesaid order of shifting of Toll Plaza gave

rise to further litigation as a fresh spate of public interest

litigations were filed in November 2011 in the High Court

of Punjab and Haryana against the relocations of Toll

Plazas since a writ petition bearing CWP No. 21332/2011

(Gram Panchayat Dangdehri & Ors. vs. Union of India &

Ors.) was filed against the relocation of Toll Plaza KM 110

but the same was dismissed by the High Court of Punjab

and Haryana vide order dated 25.1.2012 wherein it was

held as follows:

“Moreover, shifting of Toll Plaza from the

present location to the proposed location seems to

be bona fide in view of the fact that at the present

location flyover has to be constructed to ease the

traffic flow within stipulated time as per the

agreement. Development and construction of

3

Page 31 National Highway should not be stopped for the

simple reason that some of the residents shall face

inconvenience or shall be burdened with toll fee.”

The High Court further held:

“the NHAI and Concessionaire while choosing

the site for installation of Toll tax have to consider

viability, availability of space/location including

financial aspect …………….Therefore, action /

decision to shift Toll Plaza within 1.5 KM from

Ambala Muncipal Limit does not seem to be

unjustified, arbitrary or in violation of Rules

2008………………… shifting of Toll Plaza is

necessitated to facilitate construction of flyover at

the present site.”

27. Another writ petition being CWP No. 23971/2011

(Vishal Nagrath & Ors. Vs. Union of India & Ors.) had also

been filed challenging the relocation of Toll Plaza at 211

KM – 212 KM but the same was dismissed by the High

Court of Punjab and Haryana vide order dated 1.5.2012

wherein another Bench of the High Court had also not

found any infirmity in the decision of the respondents

(appellant herein and NHAI) to relocate the Toll Plaza and

they were held to be well within their right to evaluate the

location of the Toll Plaza considering the fact that they

were being located with reference to the entire project of

3

Page 32 291 KM and the requirement was to have only three Toll

Plazas which had to be so located that they did not result

in a situation of peristalsis movement of the traffic or

even create bottlenecks. The Court went on to hold that

such decisions were to be left to the wisdom of the

agencies involved in the execution of the project and

merely because another location may be perceived to be

the better one, cannot be a ground to warrant judicial

interference.

28. The PIL petitioners challenged this order of the

single Judge by filing a Letters Patent Appeal bearing LPA

No. 170/2012 but this was also dismissed by the High

Court of Punjab and Haryana vide order dated 6.12.2012.

While dismissing the appeal, the learned Judges of the

Division Bench had clearly held which is extracted

hereinunder:

“The argument that the shifting of the toll

plaza is actuated with arbitrariness or mala fide

is also to be rejected. Learned Single Judge, in

this behalf has remarked, and rightly so, that the

shifting of toll plaza to the present location seems

to be bonafide in view of the fact that at the

present location fly over has to be constructed

to ease the traffic flow within stipulated time as

3

Page 33 per the agreement and development and

construction of National Highway should not be

stopped for the simple reason that some of the

residents shall face inconvenience or shall be

burdened with toll fee.

Before we close, we would also like to point

out the submission of learned senior counsel for

the National Highway Authority of India as well as

the Concessionaire to the effect that in so far as

the local residents are concerned, they would

have to pay the toll at much lesser rate, which is

projected at Rs. 150/- per month per vehicle.

Normally, the choosing of location of Toll

Plaza is to be left to the parties concerned. When

in the present case, two States as well as

government undertaking like the National

Highway Authority of India are involved in the

decision making process and they have

considered financial aspects, the Courts are ill

equipped to go into the rationale of such

decisions. After it is found that the decision is

bonafide; it does not suffer from any oblique

motive; and it is not in violation of any statutory

provisions, no further judicial scrutiny on the

merits of such a decision is admissible in law.

We, therefore, do not find any merit in this

appeal which is accordingly dismissed.”

The judgment and order passed in the LPA was thereafter

never challenged either by the PIL petitioner or the

respondent NHAI or the respondent-Harish Kumar Puri

and this judgment and order passed in the LPA thus

attained finality.

3

Page 34 29. However, despite the orders passed by the High

Court of Punjab and Haryana and approval granted by the

respondent NHAI, the appellant has been prevented from

commencing tolling at located Toll Plaza at 211 KM and

110 KM due to which it is contended that the appellant is

gravely affected and is losing substantial fund due to non-

commencing of tolling at the located Toll Plazas that

could have been utilized for the construction of the

project. It has been urged that the NHAI has all along

been consistently stating that the Toll Plaza relocation is

as per the Concession Agreement. Based on this

assurance, the lenders have continued disbursement to

the project. Thus, the respondent by granting of approval

and re-affirming the appellant Concessionaire right to

relocate the Plazas, has induced the appellant and

lenders to invest in construction of the project but the

NHAI has now reversed its decision after 2 ½ years in

spite of giving the in principal approval.

30. It has been submitted by Dr. Singhvi that the

above change in stand of the respondent on the Toll Plaza

3

Page 35 relocation and disallowing the appellant-Concessionaire’s

rights under the Concession Agreement has a material

adverse affect on the concession as the entire investment

on the project was based on its right to enforce the

provision for shifting the Toll Plazas i.e. fixing the Toll

Plaza location to have optimum toll collection as

envisaged in its financial model. As a result, the lenders

have stated that they cannot continue disbursing to the

project without the appellant being allowed to collect toll

from the new locations.

31. It appears that the appellant although had

succeeded in the High Court of Punjab and Haryana on

the dispute regarding shifting of Toll Plaza, the appellant

approached the High Court of Delhi in view of Clause 47.1

of the Concession Agreement under Section 9 of the

Arbitration and Conciliation Act, 1996 by filing OMP No.

321/2013 which is pending disposal before the Delhi High

Court wherein the appellant inter alia has raised several

issues before the High Court of Delhi including the issues

of mining as well as the relocation of the Toll Plaza. It was

3

Page 36 informed that OMP No. 321/2013 is still pending

consideration before the High Court of Delhi but the fact

remains that the issue/dispute regarding shifting of Toll

Plaza had already been set at rest by the High Court of

Punjab and Haryana as already related hereinbefore.

32. However, the High Court in its impugned order

manifestly appears to have ignored or failed to take

notice of the orders by which the High Court vide CWP No.

21332/2011 and CW No. 23971 of 2011 and LPA No.

170/2012 had permitted vide order dated 6.12.2012 to

shift the Toll Paza and completion of the highway project

entrusted to the appellant vide Concessionaire

Agreement which had been approved by the NHAI itself

vide letter dated 30.6.2010.

33. However, the NHAI which had approved the

shifting of Toll Plazas all through suddenly took a U turn

after 2 ½ years when a new Chairman of the NHAI took

over the charge on 18.3.2013 and started questioning the

decision of the NHAI for the first time which had been

approved by an independent Engineer Louis Berger

3

Page 37 permitting shifting of Toll Plazas earlier by the NHAI

stating that it was an error and a malafide decision of

some of the officers of the NHAI oblivious of the fact that

the same had already been upheld by the High Court

after contest when the PIL filed against the shifting of toll

plaza had been rejected by the High Court upto the

Division Bench against which no appeal was preferred

either by the NHAI or any other party. In fact, at the

initial stage, the counsel representing the NHAI had

submitted that shifting of Toll Plazas is contrary to the

Concession Agreement but the same could not withstand

the express clause in the Concession Agreement which

permitted such shifting with the approval of the NHAI and

Independent engineer who under the agreement was

competent to approve or disapprove the shifting.

Confronted with the glaring contradiction, the then

counsel representing the NHAI went on to advance other

arguments which were never raised before the High Court

at any point of time earlier.

3

Page 38 34. Contesting the plea of the appellant and

supporting the directions issued by the High Court in its

impugned order, Ms. Indu Malhotra, learned senior

counsel appearing for the respondent NHAI at a much

later stage submitted that the appellant was required to

complete the project of six laning of National Highway

No.1 by November 2011 under the Concession

Agreement. But even though two years have already

elapsed since the period stipulated in the Concession

Agreement got over, the progress of the National

Highway project has been negligible since January 2012.

It is alleged that the appellant, in fact, is not carrying out

any work whatsoever since November 2012. It was

submitted that several opportunities had been granted to

the appellant to complete the project within the period

stipulated and several extensions were also granted up to

31.3.2013. Despite this, appellant has failed to complete

the project. It was elaborated that the appellant has

practically suspended work on the National Highway ever

since November 2012 even though toll is being collected

3

Page 39 from the commuting public since 11.5.2009 which is the

appointed date. The NHAI in support of its bona fide has

urged that it is primarily concerned with completion of the

project highway in the interest of safety and security of

the public at large, but the appellant having put the

project on hold by not doing any progress in completing

the construction of the highway, the respondent-NHAI

should be allowed to substitute the Concessionaire as per

the provisions of the Concession Agreement. It has been

further urged that the appellant has been flouting the

undertaking given to the Punjab and Haryana High Court

and thus the impugned order passed by the High Court

should not be interfered with.

35. On the most contentious issue regarding

shifting, relocation of the Toll Plaza, it has been submitted

that there is no provision in the Concession Agreement

for shifting/relocation of the Toll Plazas from the pre-

determined locations set out in the bid documents.

Similarly, it has also been submitted that Clause 48.1 of

the Concession Agreement put forth by the appellant that

3

Page 40 it has an unfettered right to decide locations of Toll Plaza

at any three places over a stretch of 291 KM of National

Highway No.1 in complete disregard to the locations

mentioned in Appendix I of Schedule ‘C’ to the

Concession Agreement is wholly untenable, misconceived

and is contrary to the provisions and the overall scheme

of the Concession Agreement. Such interpretation, if

accepted, would not only alter the basic structure of the

Concession Agreement but also would subvert the bid

process. It was further added that changing the bid

parameters subsequent to the award of the project, is not

only against the public policy, but also unjust to the other

unsuccessful bidders and would amount to unjust

enrichment of the concessionaire at the cost of local

public which is not liable to pay such user fee as per the

original scheme of the Concession Agreement.

36. It was still further contended on behalf of the

respondent-NHAI that the appellant also made an attempt

to read Clause 48.1 of the Concession Agreement in

isolation and in complete disregard to its schedules and

4

Page 41 annexures, but the provisions of the contract are to be

read as a whole and not in isolation. Hence if the

definitions of Toll Plaza in Clause 48.1 of the Concession

Agreement and Clause 2.1 of Schedule ‘C’ are to be read

together, it broadly covers three aspects. Firstly, the Toll

Plazas shall not be erected at a distance of 20 KMs and 10

KMs from the notified urban limits of the respective towns

as stated therein. Secondly, the Toll Plazas should be

situated at locations to be decided by the Concessionaire

in consultation with NHAI and Independent Engineer and

thirdly the tentative locations of the Toll Plazas which are

given in Appendix I. Elaborating on this aspect, it was

urged that the locations of Toll Plazas were clarified to

bidders and the ambiguity, if any, in the locations of the

Toll Plaza as per the word “Tentative” mentioned in

Appendix I of Schedule ‘C’ stood frozen permanently

beyond all doubts in view of the reply given to the pre-bid

query. It is an admitted position that the schedules and

annexures to the Concession Agreement forms on

integral part of the Concession Agreement and would be

4

Page 42 in full force and effect as expressly set out in the body of

the Concession Agreement. Relying on this provision, it

was submitted that the limited discretion of the appellant

to decide the locations in view of the words “Locations to

be decided by the Concessionaire” in Clause 48.1, Clause

2.1 of Schedule ‘C’ and mentioning of word “Tentative” in

Appendix I of the Schedule ‘C’ was only to overcome any

unforeseen site constraints at the time of actual

construction of Toll Plaza. The discretion available was

only to marginally modify the location of the Toll Plazas

with the approval of Independent Engineer and NHAI. The

said discretion cannot be appended so as to apply to a

situation where the appellant is permitted to shift the

location of a Toll Plaza from the pre-determined locations

as per Appendix I of Schedule ‘C’ of the Concession

Agreement and further clarified in the reply to the pre-bid

meeting, to another point that too at a distance of 36 KMs

so that the appellant can mop up extra revenue. Adding

further, it was contended that in view of Clause 48.1 of

the Concession Agreement, Toll Plaza should not be

4

Page 43 relocated within 20 KMs and 10 KMs from the notified

urban limits of the respective cities mentioned therein.

Admittedly, the proposed location of Toll Plaza at KM 110

falls within a distance of 10 KMs of Municipal Limits of

Gharonda and within 20 KMs of Municipal Limits of Karnal

as well as of Panipat. In view thereof the relocation of

Toll Plaza at KM 110 as set up by the appellant, if

permitted, would be in complete violation of the

definition of ‘Toll Plaza’ given in Clause 48.1 and the

same should not be permitted as that would amount to

changing the terms agreed into between the parties.

37. Extensive arguments were further advanced on

the point of shifting the location of Toll Plaza and it was

contended that locations of Toll Plaza were determined

even prior to invitation of the tender and approved by the

Cabinet Committee on Economic Affairs. The locations of

the Toll Plaza were identified as early as at the time of

preparation of the feasibility report of the project and on

submission of the feasibility report to the Ministry of Road

Transport and Highways took transfer of the project from

4

Page 44 the Public Private Partnership Appraisal Committee and

subsequent thereto the project was approved by the

Cabinet Committee on Economic Affairs. It is only then

the bids for the project were invited with the pre-

determined locations of Toll Plazas specifically mentioned

in the bid documents. Thus, locations of Toll Plaza were

approved by the Government of India keeping in view the

various factors involved including the total project costs

of the project. In view thereof, the locations of the Toll

Plaza were final right from inception and are part of

statutory approval. In view of this, it was submitted that

shifting of the Toll Plaza would completely change the

bidding parameter and the total project costs, on the

basis of which bids were invited from various bidders. In

support of this, counsel relied upon a decision of this

Court in Monarch Infrastructure (P) Ltd. Vs.

Commissioner, Ulhasnagar Municipal Corporation,

reported in (2000) 5 SCC 287 and submitted that this

Court ( Supreme Court ) upheld the view that if a term of

the tender is delayed after the players have entered into

4

Page 45 arena, it is like change the rules of the game after it had

begun, which would be patently unfair to the other

candidates participating in the tender process.

38. Learned counsel also submitted that the

proposal seeking relocation of Toll Plazas was three times

rejected by the Independent Engineer before its

conditional recommendation leading up to the grant of

conditional in principal approval. Giving out the details in

this regard, it was pointed out that a proposal seeking

relocation of the existing Toll Plazas was received by the

Independent Engineer from the appellant vide letter

dated 11.3.2010. The proposal of the appellant was

rejected by the Independent Engineer vide its letter dated

18.3.2013, 2.4.2010 and 29.5.2010 as the Independent

Engineer found the said proposal to be contrary to the

provisions of the Concession Agreement. The

Independent Engineer was of considered opinion that the

relocation of Toll Plaza would amount to change in the

scope of work. The Independent Engineer had rejected

the proposal of the Concessionaire on the basis that these

4

Page 46 proposed locations contradicted the provisions of

definition of Toll Plaza and Concession Agreement.

Therefore, the Independent Engineer observed that he

could not decide against the provision of Concession

Agreement.

39. Learned counsel representing the NHAI although

related the past history in great detail regarding denial of

permission to shift the Toll Plazas, it could finally notice

that the Independent Engineer vide his letter dated

30.6.2010 expressed that it is not in disagreement with

the shifting of Karnal Toll Plaza although it noted that the

same would amount to change in scope in view of the

provisions of the Concession Agreement. But, thereafter

the Independent Engineer vide its letter dated 10.07.2010

finally “opined that the shifting of location of the Toll

Plaza may be allowed subject to approval of the

competent authority keeping in view the various clauses

of the Concession Agreement and the Gazette Notification

issued by the Government of India.” Counsel for the NHAI

however has still harped upon the previous background

4

Page 47 wherein the Independent Engineer had initially expressed

some reservations for shifting the Toll Plaza ignoring that

after all opinion and counter opinion on the question of

shifting of Toll Plaza, the Independent Engineer finally

gave approval for shifting of the Toll Plaza vide letter

dated 30.6.2010.

40. However, the same could not be made effective

as approval of the Independent Engineer to shift the Toll

Plaza gave rise to at least two public interest litigations

referred to hereinbefore challenging the shifting of Toll

Plaza whereby the High Court approved of the single

Bench order permitting shifting of Toll Plaza as the

Division Bench had dismissed the LPA upholding the order

of the single Bench allowing shifting the Toll Plaza in view

of the clause in the Concession Agreement and the

opinion of the Independent Engineer and the NHAI.

Neither the NHAI nor the PIL petitioners challenged the

judgment and order of the High Court permitting to shift

the Toll Plaza. One would have inferred that as a matter

of judicial propriety ingrained in the principle of

4

Page 48 constructive res judicata and above all rule of law, the

controversy regarding shifting of Toll Plaza attained

finality in view of final adjudication of the dispute

regarding shifting of Toll Plaza by the High Court of

Punjab and Haryana but it is rather strange and beyond

comprehension in view of the principle of constructive res

judicata that the dispute regarding shifting of Toll Plaza

was still allowed to survive as the appellant filed another

writ petition in the High Court of Delhi seeking a writ of

mandamus or any other appropriate direction permitting

it to shift the Toll Plaza which writ petition finally was

dismissed and rightly so as in any case the same could

not have been held maintainable. It is equally interesting

to note that in spite of all this exercise undertaken

regarding the dispute pertaining to shifting of Toll Plaza,

an application was filed under Section 9 of the Arbitration

and Conciliation Act 1996 for appointment of an Arbitrator

to resolve several disputes including shifting of Toll Plaza

missing out that the dispute relating to shifting of Toll

Plaza had already been dealt with on the judicial side by

4

Page 49 the High Court of Punjab and Haryana when two writ

petitions and one LPA against shifting was rejected by the

Division Bench of the High Court and yet the NHAI and

the appellant/company has been litigating and contesting

the plea regarding shifting of Toll Plaza.

41. In fact, we have noticed that it is only in the year

2013 i.e. 18.3.2013 when a new incumbent took over the

charge as Chairman of the NHAI that a letter dated

18.3.2013 was issued wherein the proposal of the

appellant for relocation of Toll Plaza was finally rejected

stating therein that the in principle approval dated

9.11.2010 by NHAI was only conditional in nature and at

the most were only recommendatory vide its letter dated

9.11.2010 ignoring that the Independent Engineer, earlier

had approved of the proposal for shifting the Toll Plaza.

In spite of these, the application is still surviving urging

that the matter regarding shifting of Toll Plaza be decided

in the arbitration proceedings and the NHAI should not be

allowed to interfere with the decision of the I.E. and

approved by the NHAI which earlier had endorsed the

4

Page 50 shifting. In fact, the NHAI seems to be completely

oblivious of the fact that when the Division Bench of the

Punjab and Haryana High Court had already settled the

dispute by a speaking judgment and order in CWP

No.21332/2011, CWP No.23971/2011 and LPA

No.170/2012 permitting the shifting, what legal authority

was left with the Chairman, NHAI to issue a letter

questioning the shifting. It is rather strange that an

authority in contemptuous disregard to a speaking

judgment and order of the High Court had the audacity to

defy the order which had permitted relocation of toll plaza

and it is equally strange that the High Court also vide the

impugned order, appears to have ignored the fact that

the controversy regarding shifting of Toll Plaza although

had been set at rest by a judicial verdict of the High

Court, the NHAI still insisted that it cannot permit the

shifting when its I.E. (Independent Engineer) had earlier

approved of the same and accepted by NHAI in view of

the specific clause in the agreement to that effect.

5

Page 51 42. In fact, the main contest although is between

the contracting parties/signatories to the Concession

Agreement which are the NHAI and the appellant

company and the agreement had been signed and

executed incorporating the terms and conditions in the

agreement which had approval of the Planning

Commission and the Ministry of Economic Affairs, the

respondent No.5 Union of India appeared which was given

a notice by this Court merely to facilitate and resolve the

controversy between the contracting parties and

admittedly is not a contracting party itself as it is not a

signatory to the Concession Agreement. However, it has

come up in support of the respondent No.6 NHAI which is

represented by the Additional Solicitor General Mr. Paras

Kuhad. However, the learned ASG Mr. Kuhad on behalf of

the Union of India advanced arguments limited to the

issue of permissibility of change of location of the Toll

Plaza within the scheme of applicable statutory provisions

as also the question as to the statutory status of the

Central Government in relation to contract for

5

Page 52 development of national highways. Inter alia it was

submitted that Section 4 read with Section 8 A(1) of the

National Highways Act 1956 makes it clear that national

highways vest in the Union and by virtue of Section 8 (A)

(1), the power to enter into an agreement for

development is also vested with the Central Government.

However, there is no quarrel about this position and

hence is not really required to be gone into or dealt with

in extenso as this position is not disputed by any of the

parties nor we have any doubt that the National Highways

Authority is clearly an authority under the National

Highways Act 1956 and it is the power of the Central

Government to vest or entrust its authority in the National

Highway Authority. We therefore entirely agree with the

learned ASG to the extent that it is the Central

Government which may from time to time by notification

in the official gazette vest in or entrust to the authority

such national highway or any stretch thereof as may be

specified in such notification. This is clearly the provision

also under Section 11 and Section 15 (2) and (3) of the

5

Page 53 National Highway Authorities Act 1988 and Section 15 (2)

of the said Act clearly lays down that subject to the

provisions of sub-section (1), “the form and manner in

which any contract shall be made under this Act shall be

such as may be provided by Regulations.” Sub-section

(3) of Section 11 of the Act 1988 further clearly lays down

that no contract which is not in accordance with the

provisions of this Act and the regulations shall be binding

on the authority. Rule 3(2) of the Rules of 1997 framed

for collection of toll fees under the National Highways

Authority of India Act 1988 further lays down that no

contract which is not in accordance with the provisions of

this Act and the regulations shall be binding on the

authority and the rates of fees and the period of

collection shall be decided and shall be specified by

notification in all official gazette by the Central

Government having regard to the expenses involved in

building, maintenance, management and operation of the

whole or part of such section, interest on the capital

5

Page 54 invested, reasonable return, the volume of traffic and

period of such agreement.

43. Although, the learned ASG has cited several

authorities to establish the provisions incorporated under

the National Highways Authority Act, we do not find any

difficulty in accepting the position even without the ratio

of the authorities relied upon, that in case of statutory

contracts, the terms of the statute prevail over the terms

of the contract. Therefore, determination of the terms

and conditions of the contract will no doubt follow the

deliberations, discussions and views expressed by the

Central Government while drafting the contractual

agreement and the National Highways Authority being an

agency of the Central Government in terms of the Act

itself which has to incorporate the terms and conditions

which is finally included in the draft agreement of the

NHAI. But once the contract is signed by the contracting

parties obviously the contract having assumed the legal

authority of a concluded contract would govern the terms

and conditions of the contract between the parties who

5

Page 55 have signed and thereafter would be binding on the

contracting parties. But to contend that even though the

contract stands concluded after the same has been

singed by the contracting parties, the opinion of the

Central Government on its administrative side will prevail

over the terms and conditions of the contract in absence

of any statutory violation, would be difficult to accept and

it is not even the case in the instant matter that the terms

and conditions in the Concessional Agreement is contrary

to some statute or a central legislation so as to strike

down the clause in the agreement.

44. Therefore, we are of the view that the

Concession Agreement having been signed by the

appellant – joint venture company and respondent No.6 –

NHAI, the role of the Union of India to express its view

over and above the terms and conditions of the contract

in absence of any statutory violation will not be allowed to

prevail as after execution of the contract, it can only issue

the notification in this regard. We, therefore, do not wish

to go further in regard to the correctness or otherwise of

5

Page 56 the contentions urged on behalf of respondent No.6 –

Union of India as its status under the prevailing facts and

situation at the most can be treated as that of a facilitator

and nothing more than that. The position no doubt would

have been otherwise if the Concession Agreement

suffered from the vice of some statutory violation. Since

it is the appellant – joint venture company and

respondent No.6 – NHAI which alone are the parties

between whom the Concession Agreement has been

signed and the agreement is not even remotely alleged to

be in violation of some statute or central Act, the role or

the authority of the U.O.I. to intervene or contest cannot

be allowed as the U.O.I. at the most is a proforma

respondent in this appeal under the prevailing facts and

circumstances.

45. However, the respondent No.1 Harish Kumar

Puri who had initially filed the public interest litigation in

the High Court of Punjab and Haryana merely for ensuring

safety and security of the commuters on the national

highway has also entered appearance in the matter and

5

Page 57 has advanced submissions through the senior counsel

Shri P.S. Patwalia and has practically supported the stand

of the NHAI respondent No.6 as also the impugned order

passed by the High Court which is under challenge in this

appeal. Learned Senior Counsel Mr. Patwalia

representing respondent No.1-PIL petitioner, inter-alia

submitted that the excuse of non-shifting of Toll Plaza by

the appellant/company is merely a ploy to justify its acts

of delay in continuing with the project as it has been

giving excuses one after another for the delay and every

time comes up with a new lame excuse. According to his

averment, the plea of leakage raised by the appellant in

order to shift the Toll Point/Toll Plaza is merely a ruse for

not completing the project. It has been submitted that no

new access/cross roads joining the highway have been

built and the so-called leakage/diversions as alleged by

the appellant are the straight highways and the major

roads are in existence for the last many many years.

Respondent No.1- Mr. Puri has also stated that huge sums

are being transferred from the Esrow accounts which

5

Page 58 should have been spent on the project. It had been

added that the concessionaire while submitting financial

model to the financial institution showed the project cost

as Rs.4517 crores against the actual project cost of

Rs.2747 crores which has been done to secure higher

borrowing which shows that the action of the appellant is

not in public interest. It was also contended that the

dispute regarding shifting of Toll Plaza was not an issue

raised before the High Court. Hence, the appellant

should not be permitted to raise this question before this

Court as the shifting is not at all in public interest since

the appellant by doing so merely wants to enrich itself at

the cost of general public. It has further been contended

that in the event of shifting only a very short stretch of

road will be covered after which the commuters will have

to cross through the Toll Plaza and the commuters of

Haryana will have to pay a huge toll for the entire

Haryana portion which at present is more than Rs.100/-

per vehicle at the Karnala Toll Plaza. If the Toll Plaza is

shifted close to the Panipat area, people traveling for

5

Page 59 extremely short distance and turning of the highway to go

to other States like Himachal Pradesh, Uttarakhand and

Uttar Pradesh via Yamuna Nagar will end up paying toll

for the entire Haryana portion which will not be used by

them. Similarly, if the Shambhu Barrier is shifted to the

proposed location at Neelokheri, people who will travel for

a negligible distance of Punjab highway and turn off the

highway to go to Banaur and further to Himachal Pradesh

and Jammu and Kashmir will end up paying Toll for the

Punjab portion which they will never use. Thus, shifting of

the Plazas will not be in public interest as toll can only be

charged if the commuters are utilizing the facilities of the

highway. It cannot be made as a compulsory extract fee

so that even if a person who is using a very small portion

of the highway should pay for the entire stretch of the

Highway. It was finally submitted that the completion of

the 70 per cent of the highway as claimed by the

appellant is also factually incorrect as the highway

consists of few phases for six laning as dotted with

incomplete projects, half built flyovers abundant service

5

Page 60 lanes. According to respondent No.1 highway traveling is

a nightmare for the traveling public faced with heavy

traffic and ill maintained narrow diversions. Respondent

No.1, therefore, has supported the impugned directions of

the High Court by which the NHAI has been permitted to

take over the project from the appellant and ensure its

completion under its supervision. The respondent No.1

has also given figures of fatal accidents and injuries on

NH No.1 falling in the district of Kurukshetra by which it

sought to establish that the commuters are suffering

heaving losses of lives, properties due to negligence and

failure on the part of the appellant-company despite

paying heavy but illegal toll at various toll barriers on this

road from Panipat to Jullundur. Thus, in sum and

substance respondent No.1 has sought to justify the order

passed by the High Court and submitted that the penal

consequences ought to be allowed to follow and should

not be interfered with because of negligence and apathy

on the part of the concessionaire/appellant herein.

6

Page 61 46. Besides the above, an application for

intervention also was filed by one Chander Prakash

Kathuria who also has come up in support of the NHAI and

has supported the direction of the High Court by which

the High Court directed respondent No.6 NHAI to

forthwith proceed in the matter and take possession of

the highway and ensure that the work for the repair of the

highway commenced within a week and the work for its

completion commenced within a month thereafter. But,

his intervention application having not been allowed,

arguments could not be advanced. In any view, he also

has merely supported the stand of the respondent No.1

and the other contesting respondents NHAI.

47. In any case, the High Court vide its impugned

judgment and order has divested the appellant of its

contractual authority to continue with the project as the

Concession Agreement practically has been annulled and

rescinded since the NHAI has been clearly directed to

take over the project from the appellant and ensure that

the project is completed which clearly implies that the

6

Page 62 construction of the Highway for the rest of the area which

is merely 29% of the project will have to be constructed

by executing another contract in favour of some other

construction company as it was informed to us that the

NHAI itself does not execute the construction and will

have to entrust the same to a new player/contractor. In

fact, the erstwhile counsel Mr. Sethi who represented the

NHAI earlier and was later replaced by Ms. Malhotra had

submitted before this Court that a new contractor has

already been appointed who is ready to take over the

highway project for construction of the balance area of

29% where the construction has to be done. Thus, the

Contractual Agreement has been nullified by the High

Court although it was observed by the High Court itself

that it is not entering into or touching upon the terms and

conditions of the contract. The High Court has further

imposed heavy penalty/fine of Rs.60 crores and Rs.7

crores respectively on the appellant-company and its

director holding them exclusively responsible for delay

and non-completion of construction of the highway

6

Page 63 between Panipat and Jullundur without entering into the

cause of delay of the project as also without considering

whether denial of permission by the NHAI to shift the toll

plaza was in violation of the terms of the Agreement and

whether the same is not in contemptuous disregard to the

order of the High Court passed earlier by a co-ordinate

Bench of the High Court referred to earlier.

48. Learned senior counsel Dr. Abhishek Manu

Singhvi, therefore, has made detailed submissions by way

of rejoinder to the arguments advanced by the contesting

respondent No.6 NHAI which clearly is the main

contesting respondent. Dr. Singhvi while countering the

arguments advanced by the NHAI and the respondent

No.1 Mr. Harish Kumar Puri has focused on the plea that

the High Court while passing the impugned order has

clearly ignored the contractual rights and obligations

contained in the Concession Agreement dated 9.5.2008

but ventured into the arena without taking into account

the contractual rights of the parties, thereupon nullifying

the terms of the Concession Agreement. Learned counsel

6

Page 64 elaborated that the controversy adjudicated by the High

Court vide the impugned order has emerged out of a

public interest litigation filed in the year 1998 and the

Concession Agreement dated 9.5.2008 was executed at a

much later stage after ten years in 2008 between the

appellant company and the respondent No.6 NHAI

granting exclusive right, license and authority to

construct, operate and maintain the highway on a Build,

Operate and Transfer basis (BOT for short) for a period of

15 years. The rights and obligations between the parties

have been determined by incorporating the terms and

conditions which are contained in the Concession

Agreement executed between the appellant and the NHAI

but the High Court has completely ignored the

contractual provisions and has passed directions which

has practically nullified the terms of the contract.

49. Having analyzed the arguments advanced by

the counsel for the contesting parties in the light of the

terms and conditions of the Concession Agreement as

also the contents of the impugned judgment and order of

6

Page 65 the High Court, it is difficult to overlook that the Hon’ble

Judges of the High Court although have recorded that

they did not intend to traverse the contractual obligations

and liabilities of parties and confine their considerations

as far as the orders passed by the High Court is

concerned so as to see whether public interest require

that the said order be extended or vacated, it has indeed

done the same when it directed the NHAI to forthwith

take possession of the Highway Project which in effect

has nullified the contract and has gone much further by

directing the NHAI to ensure completion of the project

which in effect mean that the NHAI would have to invite

fresh tender for construction of the balance 29% area of

the Highway Project as admittedly NHAI itself cannot

undertake the construction. This clearly is nothing short

of cancellation of the Concession Agreement and it is a

misnomer when it observed that it was not traversing the

contractual obligation ignoring its devastating effect on

the contracting party who had completed 71% of the

project and had at least the right to explain whether the

6

Page 66 delay in concluding the project could entirely be

attributed to the appellant or at least some of it could be

fastened on the NHAI which had gone to the extent of not

only backing out of its earlier opinion but also

conveniently shut its eyes that it was violating the order

of the High Court which had earlier upheld the right of the

appellant to shift the toll plaza.

50. Thus, the High Court was not justified in

recording that the delay has been caused merely at the

instance of the appellant so as to pass a blanket order for

transferring the execution of the project to NHAI contrary

to the agreement wherein it was permissible for the

appellant to shift the Toll Plazas and the same was also

approved by the High Court as referred to hereinbefore

time and again. The High Court further seems to have

missed the track, perhaps in its enthusiasm, that the

matter with which it was seized was limited to the

question as to whether the order by which the show

cause notice issued by the NHAI to the appellant

concessionaire-company was ordered to be kept in

6

Page 67 abeyance was fit to be vacated or not as the High Court

was essentially adjudicating the question whether the

NHAI could at all issue a show cause notice to the

appellant-company to terminate the contract and while

the High Court did not enter into the question whether

the said order was fit to be continued or was fit to be

vacated, went into the question whether the appellant-

company was fit to continue with the project which had

been handed over to the appellant by the NHAI by virtue

of a valid agreement executed between the parties

primarily on the ground of delay without really entering

into the cause of delay and considering the plea at whose

instance the contractual obligations had been violated.

51. In fact, even at this stage before this Court, the

respondent NHAI has merely contended that the Toll

Point/Toll Plaza should not be allowed to be shifted from

the point determined earlier and has been asserting that

the Toll Plaza should not be shifted from 146 KM to 110

KM. In fact, the respondent No.6 NHAI neither before the

High Court nor before this Court even remotely had

6

Page 68 contended that the contract should be nullified although

it has contended that shifting of Toll Plaza should not be

permitted as the same according to their averment is

contrary to the terms and conditions of the agreement.

52. There is yet another feature which catches

attention but has been missed by the High Court that

when the High Court itself had prevented the NHAI from

proceedings with a show cause notice given to the

appellant –concessionaire company and has gone to the

extent of passing an order for keeping the show cause

notice in abeyance and the NHAI itself has not contended

either before the High Court or before this Court for

terminating the contract except that it has been opposing

the shifting of Toll Plaza, whether the High Court on its

own could do the same without examining the contractual

obligations. Taking the worst case/situation and even

assuming that the stand of the respondent NHAI were to

be accepted, the appellant at the most could be

prevented from shifting the Toll Plaza from a pre-

determined point to another point in which case the

6

Page 69 appellant might have to continue with the project by not

allowing it to change the location of the Toll Plaza but the

same cannot entail the consequence of final termination

without adjudication at least by an arbitrator for which

there is a clear provision in the Agreement itself. In any

event, the question of termination of the Concession

Agreement without adjudication could not arise at all

when the High Court was merely considering the

application seeking vacation of the stay order to the show

cause notice issued by the NHAI. In case, it had rejected

the application, the show cause notice issued by the NHAI

to the appellant could have proceeded. But the High

Court seems to have taken a giant leap forward by

terminating the contract for all practical purposes without

expressly using the expression “termination” when it

directed the NHAI to take over the project from the

appellant – company and continue with the project and

complete it, nullifying the contract in its entirety.

53. The High Court seems to be completely

oblivious of the fact that it was dealing only with the

6

Page 70 limited question as to whether the NHAI was correct in

issuing show cause notice to the appellant which the High

Court itself by its own order allowed it to be kept in

abeyance for which the NHAI respondent No.6 had filed

an application for vacating this order. Thus, on the other

hand, it kept the order of show cause notice by the NHAI

in abeyance, but when the NHAI came up for vacating the

said order, the High Court straightway directed the NHAI

to take over the project itself from the appellant-company

without caring about its impact on the Agreement which

clearly resulted in its cancellation. The High Court ought

to have realised that if it could not traverse the terms of

the Agreement which the High Court itself has observed,

it surely could not have passed an order which

unequivocally had the effect of canceling the Agreement

and that too without any adjudication.

54. At this juncture, it is difficult to overlook that the

appellant admittedly has completed 71 per cent of the

291 KM stretch and now barely 29 per cent is yet to be

constructed which is enmeshed in litigation over the

7

Page 71 question as to whether the Toll Plaza should be permitted

to be shifted or not. This aspect as was contended by the

respondent No.1, had not been gone into by the High

Court clearly missing that this question had been raised in

the PIL before the High Court wherein the NHAI & Ors.

were a party wherein the appellant had been permitted to

shift the toll plaza. It needs to be highlighted even at the

cost of repetition that the dispute regarding shifting of

Toll Plaza was earlier raised before the High Court by two

separate writ petitions, the reference of which have been

given hereinbefore vide CWP No.21332/2011 and CWP

No.23971/2011 which were filed by two PIL petitioners

but the petitions were rejected. In one of the writ

petitions as noted earlier, an LPA was also filed in the

High Court but the same was dismissed and the dispute

regarding shifting obviously attained finality and could

not have been urged all over again before the High Court.

It is however difficult to appreciate that in spite of the

dispute having been settled regarding shifting of Toll

Plaza by the High Court of Punjab and Haryana which

7

Page 72 clearly attained finality, the respondent NHAI did not

permit the appellant – company to shift the Toll Plazas,

although it had failed to prefer any appeal against the

judgment and order passed by the High Court in CWP

No.21332/2011 and LPA No.170/2012 challenging such

permission.

55. It is no doubt true that the respondent-Union of

India has come up to the rescue of the respondent-NHAI

when it contended that if terms and conditions in the

contractual agreement is contrary to a statute, the Union

of India would be legally authorized to override the terms

and conditions of the contractual agreement. But as

already recorded hereinbefore, the facts of the instant

matter clearly establishes that it is not even the case of

the respondent that the terms and conditions

incorporated in the Concession Agreement was contrary

to any statute or central legislation so as to offer a plank

to the contesting respondent specially NHAI to urge that

the provision under the Concession Agreement had been

overriding a statutory provision of any central legislation

7

Page 73 in absence of any fact or situation establishing even

remotely that the agreement suffered the vice of violating

any central statute/legislation.

56. Thus, apart from the fact that the dispute

regarding the shifting of Toll Plaza had already been

adjudicated by the High Court earlier on two occasions,

the details of which have been given hereinbefore and

the Concession Agreement not being in violation of any

legislation of the centre, the dispute regarding shifting of

Toll Plaza obviously could not have been gone into by the

High Court all over again in the PIL. But while nullifying

the contract on the ground of delay, the dispute

regarding shifting of Toll Plaza which was clearly the only

contentious issue for not completing the project, could

not have been given a go bye or ignored in any manner

by the High Court while taking an undertaking from the

appellant and thereafter cancelling the Concession

Agreement itself when it admittedly did not traverse the

terms and conditions of the Agreement.

7

Page 74 57. Beside the above, it is more than well settled

that a question or an issue which has been raised earlier

before the High Court, adjudicated on which a final

judgment/order was delivered, cannot be allowed to be

raised for the second time as that would be clearly barred

by the principle of constructive res judicata which is too

well known a principle to be dealt with herein. Suffice it to

say that the well-acknowledged principle and equally well

settled legal position seems to have been ignored and

lost sight of not merely by the respondents but by the

appellant company also which filed a writ petition in the

High Court of Delhi raising the issue of shifting of Toll

Plaza which finally was dismissed since the High Court of

Punjab and Haryana had already dealt with it as also by

filing an application for referring the dispute to the

Arbitrator under the Arbitration and Conciliation Act, 1996

completely overlooking that at least this part was not

permissible to be referred for arbitration once on the

judicial side permission to shift the Toll Plaza was

permitted by the High Court of Punjab and Haryana vide

7

Page 75 its judgment and order passed in CWP No.21332/2011

and LPA No.170/2012 which had settled the issue

regarding shifting of Toll Plaza.

58. Besides the aforesaid legal protection which the

appellant enjoyed on account of the judgment and order

in its favour given by the High Court, the terms and

conditions in the Concession Agreement itself regarding

shifting of Toll Plaza was approved by the NHAI which

permitted that the Toll Plaza could be shifted provided the

Independent Engineer appointed by the NHAI approved of

the same. No doubt, initially the Independent Engineer

(I.E. for short) initially expressed certain reservations

regarding the relocation of the Toll Plazas vide letters

dated 18.3.2010, 2.4.2010 and 29.5.2010 but

subsequently the Independent Engineer, Project Director

and CGM NHAI in their recommendations recorded their

view that the location of two Toll Plazas is for different

facilities provided to the public and, therefore, there is no

reservation locating Toll Plaza at KM 110. In fact, it needs

to be highlighted that in terms of Article 48.1 of the

7

Page 76 Concession Agreement, liberty has been granted to the

appellant to decide the locations of Toll Plaza in

consultation with the I.E. and the same was finally

approved by the I.E. M/s. Louis Berger who conveyed his

approval to the change of location as proposed by the

appellant and hence the same cannot be allowed to be

re-agitated despite confirmation of the same by the High

Court vide its judgment and order passed in the writ

petitions and the LPA against which no appeal was

preferred either by the NHAI or the PIL petitioner or any

other concerned respondents.

59. Thus, the stand of the NHAI appears to be

clearly illegal and arbitrary and a clear case of an after

thought taken in the present proceedings before this

Court as the NHAI ad idem was in complete agreement

with the appellant as regard its right for relocation of Toll

Plazas. The same is recorded and clearly reflected in the

correspondence of various officers of NHAI, minutes of

meeting, stand of Independent Engineer including its

stand before the High Court of Punjab and Haryana and

7

Page 77 hence the NHAI cannot be permitted to resile from its

stand at this distant point of time as the affidavits were

filed as early as 2011 which finally upheld the location of

the Toll Plazas. The correspondence on record further

belies the stand now taken by the NHAI as various officers

of NHAI were of the same view that relocation of Toll

Plazas is permissible under the Agreement and the

change in stand happened in the meeting held for the

first time on 21.3.2013 when the present Chairman took

the stand that relocation is impermissible and the

decision not to permit relocation of Toll Plazas was taken

as late as on 3.5.2013 which is not merely highhanded

and illegal but contrary to the judgment and

order of the High Court which permitted relocation vide

its reasoned judgment and orders as already referred to

hereinbefore which were never challenged and hence

attained finality. Moreover, based on the in principle

approvals granted by NHAI and the stand of NHAI, the

lenders continued to disburse funds and the appellant

continued to invest in the project on the plea that the

7

Page 78 implementation of the decision to relocate the Toll Plazas

would be done after the decision of the High Court of

Punjab and Haryana upholding the relocation of Toll

Plazas. It is therefore too late in the day for the NHAI to

take such specious and untenable plea with a view to

wriggle out of its obligation which cannot be permitted by

this Court.

60. In fact, this Court was informed that the officers

of the NHAI which had approved of the shifting of Toll

Plazas are facing departmental action which has been

initiated against Rajeev Kumar Koundal, S.S. Geharwar

and S.I. Patel. But the stand of the NHAI appears to be

clearly an afterthought and an attempt to justify its

irrational/arbitrary/conflicting stand with regard to the

rights of the appellants for deciding the location of Toll

Plazas under the Concession Agreement and the

approvals granted by NHAI under the said agreement.

The alleged action initiated by the NHAI, therefore,

cannot justify its stand taken before this Court for the first

time nor can it permit to act contrary to the terms of

7

Page 79 Concession Agreement ignoring the orders passed by the

High Court on the judicial side in two PIL petitions which

were filed challenging the order for relocation of Toll

Plazas.

61. It is rather chaotic as also jurisdictional error

that in spite of several orders passed by three different

co-ordinate Benches of the High Court on the judicial side

permitting relocation of the Toll Plazas, the dispute did

not set at rest and the High Court while dealing with the

PIL has not even taken note of the fact that if it was

nullifying the Concession Agreement on the ground of

delay of the project without entering into the rights and

obligations of the Concessionaire-appellant and

Respondent No.6 NHAI ignoring that the NHAI could not

have been permitted to get away from the onus of

delaying the project when it failed to honour its

contractual obligation.

62. The entire exercise of the High Court while

passing the overzealous directions giving a go by to the

rights and obligations under the Concession Agreement

7

Page 80 and the orders passed by the High Court while dealing

with limited issue in the PIL as to whether a show cause

notice by the NHAI was justified or not could not have

refused to scrutinize the reasons for the delay on the

ground that it was not entering into the terms and

conditions of the contractual agreement and yet went to

the extent of nullifying the agreement oblivious of its

consequence that the impugned direction of the High

Court clearly resulted in cancellation of the agreement

itself.

63. It is further difficult to overlook that over 71 per

cent of the Highway Project having been admittedly

completed by the appellant-Concessionaire, it would

delay the project without reason and is not sincere in its

attempt to complete it as delaying the project cannot

possibly benefit the appellant-Concessionaire since the

income would be generated by the appellant only when

the Toll Plaza is constructed and the revenue from toll at

present is being deposited in the ESCROW account. It

further cannot be overlooked that the NHAI is not funding

8

Page 81 the project in any manner as the agreement is in the

nature of BOT mode which means Build, Operate and

Trade (‘BOT’ for short) and the appellant cannot generate

profit without undertaking the construction further. It is,

therefore, pertinent to take note of the fact that the

project being in BOT mode, all investment in the project

has to be made by the appellant and no amount is

received from NHAI. It may further be noted that the

agreement between the appellant and respondent No. 6

NHAI acknowledges and confirms the role of lending

institutions, mainly nationalized banks as a major

significant holder in project implementation. All the

financing agreement dealing with the administration

occurred between lending institutions and the petitioner

as well as the financial model for the project has been

submitted that their revenue and approval prior to the

commencement of the project. The appellant-

Concessionaire therefore states that it is committed to

the completion of the project asserting that its endeavour

is to complete the six laning works at the earliest since it

8

Page 82 is not a gainer in any manner if the project is at a stand

still and the appellant also would gain only if the project is

started.

64. Consequent upon the aforesaid analysis of the

background of the matter and the sequence of events

arising out of a Public Interest Litigation which led to the

execution of a Concession Agreement creating

contractual relationship between the appellant

Concessionaire-company and the respondent No. 5 NHAI,

it is manifest that the High Court has issued over zealous

directions which has resulted into termination of the

concession agreement itself when it directed the

respondent No.5 NHAI to take over the project from the

appellant and ensure the balance construction of the

highway project by itself. Although, the High Court has

observed that it was not entering into the arena of the

contractual terms and conditions of the agreement, it

has clearly nullified and terminated the contract itself

when it directed the NHAI to take over the project from

the appellant-company overlooking the bonafide of the

8

Page 83 appellant-company which has already completed major

portion of the construction which is 71 per cent of the

total area of 291 KMs and only 29 per cent is to be

constructed further, when a dispute arose between the

appellant-company and the respondent NHAI in regard to

shifting of the Toll Plaza from KM 146 to KM 110 and KM

212 to KM 211 and the NHAI for the first time in 2013

reneged from its consent to permit shifting contrary to

the terms of the agreement. However, in course of oral

argument before this court, the respondent NHAI had

yielded and did not seriously dispute the shifting from

KM 212 to KM 211 and rightly so as the shifting is hardly

at a distance of 1KM from KM 212 to KM 211 at Shambhu

Toll Plaza which is negligible and the shifting has already

taken place as discussed hereinbefore. But, the

respondent No.5 NHAI has raised serious objections in

regard to shifting of the Toll Plaza from KMs 146 to KM

110 which appears to have been done for the first time in

the year 2013 when the new incumbent took over as

Chairman of the NHAI ignoring the fact that the

8

Page 84 Independent Engineer in terms of the agreement had

granted approval to the same way back on 30.6.2010. In

addition, the dispute regarding shifting of Toll Plaza had

already been settled by the High Court when it permitted

the appellant to shift the Toll Plaza to KMs 110

against which NHAI did not file any appeal challenging

the order of the High Court. Thus, in spite of the fact that

the dispute regarding shifting of toll plaza had attained

finality by virtue of a series of judicial verdict, the newly

appointed Chairman, NHAI for the first time in 2013

restrained the appellant-company from shifting the Toll

Plaza to KMs 110 and this clearly resulted into putting

the entire project to a standstill since the project was to

be financed by way of Build, Operate, Trade mode (BOT

mode) and affected financing of the project and the

matter got enmeshed into a series of litigations related

hereinbefore. But the High Court refused to go into this

dispute stating that it does not want to go into the terms

and conditions of the contract and directed for

undertaking from the appellant attributing the entire

8

Page 85 delay to the appellant-company for non performance and

finally terminated the contract when it directed the

respondent NHAI to take back the project from the

appellant. Assuming the High Court did it in public

interest to expedite the construction of the highway, it

is more than obvious that this direction of the High Court

cannot possibly and practically expedite the construction

as admittedly the NHAI itself do not undertake any

construction work of the highway which clearly implies

that it will have to issue a fresh tender for construction of

the balance area of the project which is bound to result

into greater delay of the project apart from the fact that

the dispute between the appellant-company and the

NHAI would still survive and finally a 3

rd

party being a new

player is bound to get entangled giving rise to further

legal complications in the whole process.

65. In addition to this it is difficult to overlook that

the High Court was merely seized with the limited issue

in the pending PIL as to whether the Show Cause Notice

issued by the NHAI to the appellant-company which was

8

Page 86 ordered to be kept in abeyance by order of the High

Court itself, was fit to be vacated on an application filed

by the respondent NHAI, but while doing so the High

Court took a leap much way ahead by cancelling the

agreement itself for non performance ignoring the main

issue as to whether the Show Cause Notice issued by

the NHAI was fit to be sustained or the order keeping it in

abeyance was fit to be vacated and straightway

concluded that the appellant-company had delayed the

project completely overlooking that the contractual

violation had been done by the NHAI when it declined to

permit shifting of the Toll Plaza from KMs 146 to KM 110

in spite of the reasoned orders of the High Court to that

effect against which no appeal was filed either by the

NHAI or the PIL petitioner or any other concerned party.

It is no doubt true that in a public interest litigation the

court at times may forego/overlook the technicalities

coming in the way of issuance of any direction which

may conflict or jeopardise the public interest. But the

same cannot be allowed to reach to the extent or affect

8

Page 87 the contractual agreement itself which reduces a valid

and a legal document into a worthless piece of paper or a

waste paper which clearly means that the relationship

between the parties although were to be governed and

supported by a valid legal document, the same would

finally turn out to be a document having no legal

significance in spite of its validity in the eye of law. If this

were to be permitted, it is bound to lead to a chaotic

situation affecting the very fabric of the rule of law which

cannot be allowed to prevail over a valid and legally

supported document conferring certain rights on the

person or entity possessing it.

66. As a consequence and fall out of the above

position, we deem it just and appropriate to set aside

the impugned directions of the High Court, and permit

the appellant to restore the construction of the balance

stretch/area of the highway project by further directing

the NHAI to permit the appellant to shift the Toll Plaza

from KM 146 to any point between KMs 110 and KMs 117

with concurrence of the NHAI. The exact point of

8

Page 88 construction of Toll Plaza between KMs 110 to KMs 117

shall thus be decided by the NHAI holding mutual

consultation with the appellant/concessionaire in the light

of the approval already granted by the Independent

Engineer in terms of the Agreement which also had been

approved by the High Court earlier. However, we take

note of the fact that the High Court although by its order

referred to hereinbefore permitted shifting of the Toll

Plaza in dispute to point KM 110, we have noticed that

the distance between KMs 96 where Toll Plaza of L & T is

existing and the proposed toll plaza at KMs 110 would be

at a distance of only 14 KMs which may not be in the

interest of the commuting public and, therefore, we

direct that the shifting although may not be permitted at

KMs 110, it may be allowed to be shifted at any point

between KMs 110 and KMs 117 in consultation and with

concurrence of the NHAI. In fact, we could have

directed the appellant to shift the Toll Plaza even beyond

117, KMs but we have been informed that beyond KM

117 the area is thickly populated and would not be

8

Page 89 practically possible to set up the Toll Plaza beyond KMs

117.

67. Therefore, and in order to facilitate and expedite

completion of the Highway Project, we direct the respondent

NHAI to permit shifting of Toll Plaza from 146 to anywhere

between KMs 110 and KMs 117 expeditiously but not later

than a period of two months from the date of this order

during which period the required legal formality of notifying

the area for construction of the Toll Plaza shall also be

complied with by the NHAI by getting it notified through the

Competent Authority and making the land available free from

all encumbrance. The appellant thereafter shall forthwith

restart the construction including setting up of Toll Plaza at

the agreed point and continue with construction of the

remaining area of the Highway Project and shall complete the

entire construction of the Highway on or before 31

st

of March

2015 failing which the appellant/concessionaire company shall

be liable for penal consequences to be determined by the

NHAI in terms of the Concession Agreement.

68. The appellant/concessionaire company is further

directed to report/update the progress/development of the

construction to the NHAI referred to in the Concession

8

Page 90 Agreement after every three months from the date of

compliance of the required statutory notification for shifting

of Toll Plaza at the instance of the NHAI and the Ministry of

Road Transport and Highways/any other competent authority.

However, we make it explicitly clear that no dispute shall be

allowed to be raised further by any of the parties before any

court which may impede or slow down the progress of

completion of the Highway Project as this measure most

certainly would not be in the interest of the Highway Project

and consequently not in public interest in any manner.

However, the main contesting parties i.e. the appellant-

Concessionaire Company and the NHAI would be at liberty to

seek such other or further direction from this Court in case

there is bona fide need to resort to such an eventuality in

regard to the Highway Project referred to in the Agreement.

The appeal accordingly is allowed but in the circumstances

leave the parties to bear the costs on their own.

…………………………… .J.

(Gyan Sudha Misra)

…………………………… .J.

(Pinaki Chandra Ghose )

New Delhi,

April 17, 2014

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