Full Judgment Text
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CASE NO.:
Appeal (civil) 6123 of 2001
Special Leave Petition (civil) 3716 of 2001
Appeal (civil) 6124 of 2001
Special Leave Petition (civil) 13473 of 2001
PETITIONER:
STATE OF WEST BENGAL ... V.
Vs.
RESPONDENT:
DATE OF JUDGMENT: 2001
@
03/09/2001
BENCH:
Doraiswamy Raju, S.R.Babu
JUDGMENT:
Raju, J.
Special leave granted.
These appeals have been filed by the National Highways
Authority of India, who was not a party to the proceedings in the High
Court, but with the permission granted by this Court and the State of
West Bengal against the judgment dated 20.11.2000 in FMAT
No.3607 of 1999, whereunder a Division Bench of the Calcutta High
Court has not only stayed the action initiated by the Superintending
Engineer to re-bid the right to collect the toll in question but also
ordered the continuance of the Receiver in respect of the possession
of the expressway and collection of toll charges, meeting the
expenses and deposit with the State, etc., and a further direction to
the State Government to take a decision in terms of Clause 15 of the
Memorandum No.15/1(3)/PR/N/DEW/IE-12/94(V) dt.11.3.1998.
The disputes between the parties relate to the right of collection
of toll charges from the vehicles using part of Durgapur Expressway
between 22 km. to the end point Palsit - a stretch of 48 km. of road
on National Highway No.2, known as Durgapur Expressway. That
the said stretch forms part of a National Highway which vest with the
Central Government and the Central Government, in exercise of its
powers under Section 5 of the National Highways Act, 1956
[hereinafter referred to as "The Highways Act"], issued a Notification
to the extent that the functions in relation to the execution of works
pertaining to this National Highway shall be exercisable also by the
State Government of West Bengal, subject to the condition that the
State Government concerned shall, in the exercise of such functions,
be bound to comply with the rules for the time being in force made
under the Act is indisputable. The Parliament has enacted The
National Highways Authority of India Act, 1988 [hereinafter referred to
as "The Highways Authority Act"] in order to get over the difficulties
experienced from time to time in maintaining effectively the National
Highways through the "Agency System" pursuant to a delegation
Notification under Section 5 of the Highways Act in favour of the State
Governments concerned. Among other things, the Central
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Government also framed rules called, The National Highways (Fees
for the use of National Highway Section and Permanent Bridge-
Public Funded Project) Rules, 1997 [hereinafter referred to as "The
Fee Collection Rules"]. These Rules provide for fixation of rates of
fee by the Central Government, the display of rates for fees,
procedure for collection - either departmentally or through
Franchisee, the manner of its remittance from time to time, and
submission of returns, etc.
Rules 6 to 8 of the Fee Collection Rules provide for collection of
fees departmentally, mode of collection and the manner of its
remittance. Rule 9 provides for the collection of fees through
Franchisee to whom the Franchise to collect has been awarded
through auction for specific periods as the Central Government may
issue, as per terms and conditions of the agreement executed for
such purposes and remittance of the auction money collected from
the Franchisee by the Executing Agency to the Pay and Accounts
Officer (National Highways), Ministry of Surface Transport, New
Delhi. Rule 5 mandates that all fees levied under the rules shall be
collected by the Executing Agency concerned departmentally or
through Private Contractors "on the basis of competitive bidding on
behalf of the Central Government". Executing Agency has been
defined to mean, the National Highways Authority of India in the case
of those National Highways or part thereof entrusted to NHAI and
State Government or Union Territory, to which such functions are
delegated under Section 5 of the Highways Act. So far as the part of
the Highway in question, though there had been earlier Notification
under Section 5, as noticed supra, subsequently, the Central
Government has issued a Notification dated 4.2.1999, in exercise of
its powers under Section 11 of the Highways Authority Act, entrusting
the stretch of the Highway under consideration to the National
Highways Authority of India and indisputably the NHAI became, as a
consequence thereof, the Executing Agency in respect of the stretch
of the National Highway in the place of the State of West Bengal.
Tenders seem to have been called for in sealed covers, initially
for the grant of franchise for collection of toll charges in respect of the
portion of the Highway under dispute. Since, the highest bid offered
in a sum of Rs.1,51,000/- per day was not acceptable to the
authorities concerned for a second time bids were called for and
though the highest bid in a sum of Rs.1,99,909/- per day, was
accepted, there has been violation of the terms and conditions of the
grant, resulting in termination of the same and forfeiture of earnest
money. Once again sealed tenders were called for and the 1st
respondent, whose bid was for Rs.2,20,701/- per day, was accepted
and entrusted with the collection of toll charges in question. A written
contract was entered into on 13.11.97 for the purpose for a period of
one year commencing from 13.12.97 between the 1st respondent and
the State of West Bengal, which at that point of time happened to be
the Executing Agency. It is interesting to note that Clause 1 of the
terms and conditions of the agreement stipulated that the Agency for
toll collection shall be for one year and in no case extension of the
period would be allowed. However, the additional clauses agreed
(Addl. Clause 1) provided that the Agency for toll collection, which is
for one year, "may be extended/fresh agreement may be made
subject to fulfillment" of clauses 8 and 9 of the terms and conditions
of the bid. It also contained a clause for termination for non-payment
of advance bid money (Clause 5) and the power to terminate the
agreement (Clause 9) without showing any cause and call for a fresh
bid, by giving forty five days’ notice with similar option to the
collecting agent also to put an end by giving similar notice, if he is
unwilling to continue or unable to offer revised bid due to revision of
rates, if any - and in such eventualities, to handover vacant and
peaceful possession of site, structures and toll gates etc., forthwith on
receipt of the notice of termination.
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Formal inauguration of toll collection was said to have been
made on 12.12.97 and from 13.12.97, the 1st respondent-contractor
commenced regular collections. Though, he was obliged to deposit
seven days bid money in advance, he committed defaults from
inception and started making several pleas to avoid compliance.
Regular and repeated defaults in the deposit of advance bid money
as well as actual bid money are attributed to him, driving the
authorities to issue show-cause notices for taking appropriate action.
Instead of dealing with the officials, the 1st respondent seems to have
approached the Minister-in-Charge, for installment deposits and on
the same date (5.1.98) approached the Minister with offer to pay
Rs.2,90,000/- per day when another stretch of 17 kms of the
Durgapur Expressway upto Dankuni is open for traffic and handed
over to him and for extension of the contract period to 40 years after
the expiry of original period of one year, in addition to making several
other claims in utter disregard and against the terms of the very
written contract. On 15.1.98, the Secretary PW and PW (Roads),
Govt. of West Bengal, appears to have directed the concerned
Engineer not to take penal action against the contractor till his
representations to the Minister are decided. As on 15.1.98, the
arrears of tolls due from him are stated to be Rs.22,07,010/-.
Surprisingly, on 11.3.98 the Joint Secretary PW and PW (Roads)
seems to have issued a Memorandum to the Chief Engineer,
Durgapur Expressway, directing him to allow the contractor to deposit
at the rate of Rs.1.10 lakh per day (an amount far less than the bid
which was not initially accepted as being low) for six months with
effect from 16.12.97 subject to the condition that he would pay at the
original contracted rate after six months and dues will be paid in 10
equal installments. The very Joint Secretary issued another
Memorandum dated 11.3.98, permitting him to deposit bid money
with effect from 16.12.97 and further ordering that the Toll Collector
will be liable to continue to deposit bid money at the rate of
Rs.2,90,000/- per day, if Dankuni and 17 kms of Durgapur
Expressway is opened during currency of the present contract period,
provided the toll charges are increased proportionately. After
referring to the payment schedule permitted under the other Memo
dated 11.3.98, several other concessions like dispensing with the
requirement of deposit of bid money in advance and modifications of
the earlier agreed terms seem to have been also indiscriminately
made, of which strong reliance has been placed for the 1st
respondent on para 15, which read as follows:
"15. Subject to satisfactory performance of the
toll collector during the contract period of one
year, to be decided by PW (Roads)
Department, the Toll Collector will continue to
collect toll charges on Durgapur Expressway
for 30 (thirty) years to start with, beyond the
initial contract period of one year, on a lease
basis, (since the agency has been referred to
as leassee in condition 22 of the Annexure A)
subject to renewal of the lease at the end of
every three years to the satisfaction of PW
(Roads) Department."
Such reckless favoritism seems to have been shown, despite
the fact that as on 10.3.98, the arrears of toll due from 1st respondent
was stated to be Rs.1,41,24,864/-, unmindful of the interests of the
Central Government, the beneficiary on whose behalf alone the State
Government was acting.
The Superintending Engineer concerned seems to have invited
on 21.10.98 sealed bids for the selection of fresh franchise for
collection of toll for the period commencing from 13.12.98 (for the
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period subsequent to the one year duration of the contract with the 1st
respondent).
The 1st respondent appears to have filed on 6.11.98 T.S. No.
273 of 1998, before the Court of Civil Judge, Senior Division,
Burdwan, against the Authorities of the State Government not only
challenging the notice inviting tenders but also for a declaration that
there is a subsisting valid contract by and between the plaintiff and
defendant for 30 years with effect from 16.12.98 by virtue of the
Memorandum dated 11.3.98; for a mandatory injunction to direct the
Authorities to hand over 17 kms stretch of Calcutta-Durgapur
Expressway from Dankuni to Singur as and when ready; and for
permanent injunction restraining the defendant from taking any steps
pursuant to the notice dated 21.10.98 inviting tenders. Relief in the
nature of ad-interim, prohibitory order of injunction also seems to
have been sought. Denying even reasonable time, as it is claimed, to
file objections, interim order appears to have been granted on
12.11.98, permitting, at the same time, the 1st respondent to carry on
toll collection in terms of the agreement dated 19.11.97, as modified
by the Govt. Memos dated 11.3.98 and further directing the
Authorities to hand over the 17 km stretch of the Highway from
Dankuni to Singur, on its completion, for collection of toll on the road
from Palsit to Dankuni. These orders were to be in force till the
disposal of the injunction petition and the same was adjourned to
4.1.99 for hearing with permission to file objections, if any, in the
meantime.
By this time, the Central Government, which came to know of
this litigation, seems to have on 15.2.99 issued instructions to the
State Government to challenge the injunction order passed by the
Court, expeditiously. On 1.7.99, a request seems to have been also
made to the State Government to initiate action to transfer toll
collection arrangement as well the stretch of the National Highway in
question to the NHAI in view of the Notification dated 4.2.99
entrusting the Highway in question to NHAI. On the willingness
expressed by the State on 16.8.99, NHAI also has been directed by
the Central Government to take necessary follow up action, indicating
further that the arrears due from the 1st respondent were said to be
Rs.4,19,75,250/- for 13.12.97 to 12.12.98; and Rs.35,31,210/- for
13.12.98 to 18.1.99. The State of West Bengal appears to have filed
Miscellaneous Appeal FMAT No.2360 of 1999 before the Calcutta
High Court, challenging the order dated 12.11.98. A separate suit for
recovery of the outstanding arrears from the 1st respondent for the
period upto 31.5.99 appears to have been also filed. By a
Memorandum dated 24.8.99, the very Joint Secretary, PW (Roads)
Department, with reference to the issues raised by the Chief
Engineer, Durgapur Expressway, clarified the real position regarding
the nature of action culminating in the issue of memo dated 11.3.98
by stating as hereunder:
"His memo nos. 314-R/DEW dated
21.10.1998 and 317-R/DEW dated
21.10.1998 may be referred to. His
Suggestion contained there regarding memo
under reference has been carefully examined.
M.R. Mondal who having been selected the
toll collector Durgapur Expressway between
Palsit end and intersection with B.T.C. Road
at Singur through process of agreement
submitted certain representations in his letter
No. MRM/RD/97-98/36 dated 05.01.1998 in
terms of certain long term and short-term
concessions and benefit in the operation of toll
collection. After careful consideration the
Govt. in its memo no. 15/PR/N/DEW/IE-12/94
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(V) dated 11.03.1998 placed certain proposals
on the issue for further discussion subject to
approval by the competent authority, Ministry
of Surface Transport, Govt. of India. But M.R.
Mondal did not respond to the said memo and
no amended agreement has also executed.
Thus, memo no. 15/PR/N/DEW/IE-12/94 (V)
dated 11.03.1998 of P.W. (Roads) Deptt. has
no application in the matter of collection of toll
charges from Durgapur Expressway by M.R.
Mondal. This is without any prejudice to legal
cases pending before different courts of law in
the matter of collection of toll charges.
Concerned parties are informed accordingly"
On 3.9.99, FMAT No. 2360 of 1999 came to be disposed of
with a direction to the Trial Court to dispose of the injunction
application, at an early date. By an Order dated 5.10.99, the Trial
Judge vacated the interim injunction and dismissed the injunction
petition both on merits and also for the reason that the interim orders
were obtained by misleading the Court. On 11.10.99, the Authorities
of the State took over possession of the Highway in question and it is
stated that as on 10.10.99 the arrears due from the 1st respondent is
said to be Rs.8,39,08,440/-. Yet, at the intervention of the Minister-in-
Charge, the 1st respondent managed to get directions in his favour
and sought for restoration of the collection work to him. The matter
was pursued before the High Court in FMAT No.3607/99 and by an
order dated 27.10.99, Shri Tarun Kumar Banerjee, Advocate, Ex-
Chief Judge of City Civil Court, Calcutta, was appointed as Receiver
to supervise the collection of toll charges, until further orders. Prior to
this on 11.10.99, an order for maintaining the status quo also appears
to have been made. The Special Leave Petition file by the State
against the order dated 27.10.99 in SLP (C) No.17123/99 came to be
dismissed on 17.12.99 on the following terms:
"Both the parties agree that the receiver after
collecting the amount of toll shall pay the
entire amount to the State. In that view of the
matter, no orders are sought by the learned
counsel for the petitioner. The Special Leave
Petitions are disposed of accordingly.
If there is any objection regarding the
expenses incurred by the receiver or any
other amount spent by him, it shall be open to
the petitioner to approach the High Court."
The grievance of the State Government seems to be that the
Receiver is not able to cope up with the work and there had been
default in not only filing the returns properly but also in the remittance
of the amounts. The public exchequer continued to be the loser and
with the Court Receiver on the job, the State was unable to properly
assess the quantum of collection and the ultimate loss of revenue to
the public exchequer. The Department appears to have taken a
census on the Durgapur Expressway from 8 a.m. on 12.6.2000 to
8 a.m. on 15.6.2000 and it was found that at Azapur near Palsit,
average toll collection should have been Rs.4.95,575/- per day.
Similar census at Dankuni also, the other point of the Highway in
question, revealed that the collection should have been Rs.4,49,565/-
per day. The deposits made by the Receiver seem to have been,
apart from the same being irregular and not systematic, were only in
the range of Rs.70,000/- to Rs.2,25,000/- per day.
The Division Bench of the Calcutta High Court, as indicated
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above, disposed of the appeal on 20.11.2000, by giving certain
directions, both learned Judges rendering separate but concurring
opinions. Hence, the above appeals.
Heard the learned Senior Counsel for the appellants as well as
the respondents. On an overall consideration of the indisputable
facts on record and the submissions made on either side, we are
unable to persuade ourselves to appreciate or approve the manner of
approach adopted, the method of consideration undertaken and
statements on some abstract principles of law, unmindful of the stage
of the proceedings and the serious as well as irretrievable public
detriment that is bound to result from the conclusions arrived at and
directions issued on a perfunctory understanding of the rights of
parties, the statutory provisions of the Act, Rules and Regulations
governing the issue.
The observations of the learned Judges of the Division Bench
on the question of existence of ‘prima facie case’ to justify or warrant
the grant of the prohibitory as well as mandatory directions of the
nature issued in the case, in our view, suffer from serious self-
contradictions, apart from impermissibility of several assumptions
made in this regard on the basis of perfunctory and inchoate
materials which could not provide any basis in law for such claims.
All relevant materials also do not seem to have been adverted to in
their proper and legal perspective and the conclusions arrived at
appears to have arrived at throwing to winds the elementary and
basic principles of law pertaining to the creation of contractual
relationship between the parties. The judgment under challenge also
seems to be oblivious to the obvious facts emanating from records
that those materials relied upon for the plaintiff-contractor do not, in
law, constitute any or sufficient basis of evidence, which could
establish even if not rebutted by evidence adduced on the other side,
the plaintiff’s case for an extended term in law. The fact that
substantial mischief or injury is likely to be necessarily caused by the
grant of the order, under challenge, unlike in the case of refusal of the
relief, and that the grant would lead to irreparable loss and damage to
the interest of the State as well as public interest, seems to have
been completely lost sight of notwithstanding the serious violations of
the conditions and terms of the contract between parties.
The learned Judges of the Division Bench of the High Court
ought to have seen that there can be no legal impediment for the
Department to make preparations ahead of the period of expiry of the
one year contract given in favour of the plaintiff to facilitate the
entrustment of the task of collecting the toll in question for the period
subsequent thereto, to a newly selected contractor at competitive
rates. The Division Bench further overlooked the vital legal
proposition that the Memorandum dated 11.3.1998 of the Joint
Secretary cannot, per see, have the legal consequence of bringing
into existence an extended period of contract and that too for 30
years though said to be renewable periodically every three years. On
a proper consideration of the Memorandum dated 11.3.1998, which
was also stated to have been never communicated to the plaintiff,
and the subsequent Memorandum dated 24.8.1999 of the very Joint
Secretary, who issued the earlier Memo, that Memorandum dated
11.3.1998 contained only certain proposals and not any final orders
of extension or renewal of the contract as assumed in the judgment
under challenge. Paragraph 15 of the Memorandum dated
11.3.1998, which has been relied upon as the basis for claiming an
extended period of contact, itself has been misconstrued out of
context though by itself, it cannot have the effect of bringing into
existence such an extended term of contract to warrant or justify the
grant of the directions of the nature in the present case. Even
assuming for consideration without accepting that paragraph 15 of
the Memorandum dated 11.3.1998 had any effect, it can by no stretch
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of imagination be construed to bring into existence ipso facto an
extended period of contract beyond the one year period for which
alone the contract had been given to the plaintiff in this case. An
order passed but retained in file without being communicated to the
plaintiff can have no force or authority whatsoever and the same has
no valid existence in the eye of law or claim to have come into
operation and effect. No reliance can be placed on the same to even
assert a claim based on its contents. If its utility depended upon a
decision to be taken on the performance of the plaintiff by the
Competent Authority, neither the authority could be compelled to take
a decision nor any concrete rights could be said to have been
acquired by the plaintiff, to warrant the grant of the type of directions
given in this case. It is really surprising that the discretionary power
to grant injunction, be it of prohibitory or mandatory nature, has been
availed of to bring into existence and force upon the State a new
contract, which could never have been the intention of the State itself.
The relevant and vital facts apparent on record and the stark
realities of the case go to show that the plaintiff has been entrusted
with the contract for collecting the toll in question only for a period of
one year from 13.12.1997 and that as per the provisions of law
noticed supra, such collection by the Executing Agency
departmentally or through franchisee as in this case, is to be for and
on behalf of the Central Government and the amounts have to be
remitted to the Central Government, which only is the beneficiary of
such collection. When the statutory rules provided for collection
through franchisee and the selection of the contractor only through
public auction under the instructions for specific periods as the
Central Government may issue, at competitive rates and in this case
such grant was made on behalf of the Central Government for one
year initially, there can be no extension granted in law by the
Executing Agency without the prior instructions or approval of the
Central Government. It would be futile for anyone to claim or for
Courts to countenance any claim that without reference to the Central
Government on whose behalf the State Government was acting as
Executing Agency could under the pretext of a proposed extension
proceed to extend the same for 30 years with a provision for
periodical review of three years unmindful of the financial interest of
the Central Government and the ultimate loss that may result to the
public exchequer. The mere fact that if departmentally the collection
is made by the Executing Agency it can be in perpetuity in the sense
that as long as the Executing Agency is continuing to be the Agency,
a person like the plaintiff, who has been entrusted for the task only for
one year, cannot seek umbrage under clause (11) of the Rule. Unlike
contracts entered into in exercise of the executive power of the State
wherein terms can be stipulated and settled at the will and pleasure
of the State, a franchise or contract envisaged for the collection of toll
in question is limited and circumscribed by the provisions of the Fee
Collection Rules, 1997 and what could be only the subject-matter of
an auction, selection and grant on the basis of competitive rates of
the bid cannot be the subject of whim and fancy of any authority,
particularly when public interest and public exchequer of the Central
Government is and will be at stake. Thus, without the concurrence of
the Central Government, which also has to be necessarily
inconformity with the statutory rules governing the same, there cannot
be any extension granted in favour of the plaintiff and the High Court
could not have directed the doing of a thing not permissible in or
contrary to the statutory rules.
It is now an indisputable fact on record that the Central
Government has issued a statutory Notification dated 4.2.1999
published in the Government of India Gazette of even date, in
exercise of its powers under Section 11 of NHAI Act entrusting the
Highways including the stretches in question, to the National
Highways Authority of India and that with the said Notification, the
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status of the State Government as Executing Agency has come to an
end, though the plaintiff, first respondent herein, seeks to place
reliance upon Section 12(1)(a) of the National Highways Act. In our
view, the said provision will have no relevance or application to the
case on hand. The transitional provision in the form of transfer of
assets and liabilities of the Central Government to the authority,
would take in only subsisting rights already acquired or obligations
and liabilities incurred as on the date of publication of the Notification
and that too in accordance with law and not in derogation of law. So
far as the case on hand is concerned, the plaintiff could not
legitimately claim to have acquired any rights by virtue of the
Memorandum dated 11.3.1998 which has no force or sanctity in law
and the Central Government or the NHAI cannot be said to have
incurred any obligation or liability thereby, stepping into the shoes of
the State Government which acted as an Executing Agency for the
period commencing from 4.2.1999. We are unable to appreciate as
to how the Division Bench, in the teeth of concrete and clinching
material that from the inception of the contract the first respondent
plaintiff had been playing foul and has been devising methods and
ways to avoid his responsibilities and has been shown to be guilty of
serious lapses in depositing regularly the amounts due, could have
been given any protection by issuing directions of the nature under
challenge in these appeals. The obvious impracticalities involved in
the appointment of an Advocate-Receiver to supervise such a
stupendous task of the nature in question seems to have also been
overlooked and escaped the attention of the Court and no serious
thought seems to have been also bestowed upon the materials
brought to its notice even about the inability of the Advocate-Receiver
to effectively function to safeguard the financial interest of the public
exchequer.
For the reasons stated above, we are of the view that the
judgments under challenge have not only the effect of conferring an
undue, undeserved and unjustified benefits and rights on the plaintiff,
first respondent herein, but also have the consequence of doing
grave injustice to public interest and great loss to public Revenue.
We are also of the view that not only the order of the Division Bench
dated 20.11.2000 is liable to be set aside, but consequential direction
should be issued to retrieve the situation before any further
irreparable damage is caused to the public exchequer.
Consequently, we order :-
1. The order dated 20.11.2000 of the Division Bench is hereby
set aside and that of the learned Trial Judge is restored.
2. The Advocate-Receiver appointed by the High Court shall
stand discharged forthwith and he shall cease to function as such
from the day the authorities of the NHAI directly assume supervision
and control of the Highway and the collection of toll in question, under
intimation to the Receiver.
3. The authorities of the NHAI, who has jurisdiction and control
over the stretch of the Highways pursuant to the notification, are
hereby authorized and permitted to assume the right to collect and
regulate/control the collection of toll by serving a letter to that extent
on the Advocate-Receiver and on such service, the Advocate-
Receiver shall stand discharged for all purposes, except for rendering
accounts to the collections already made to the authorities of the
NHAI. If there is any dispute in this regard, it shall be worked out by
obtaining appropriate directions from the Calcutta High Court, which
appointed the Receiver.
Consequently, the appeals shall stand allowed on the above
terms. No costs.
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