COMMUTERS USING the Delhi Noida Direct (DND) Flyway will no longer have to pay toll to use the bridge, the Allahabad High Court said on Wednesday.
A bench of Justice Arun Tandon and Justice Sunita Agrawal also held that the concession agreement between the government and the concessionaire company IL&FS was “unfair”, but added that it would not go into the legality as the concessionaire had “performed its part and the contract has worked for about 15 years”. The Noida Toll Bridge Company Limited (NTBCL) said they would approach the Supreme Court on Thursday.
The bench, which was hearing a PIL filed by the Federation Of Noida Resident Welfare Association, said NTBCL had “recovered all reasonable returns” from the bridge, and was no longer entitled to charge toll. “The concessionaire, according to their own financial statements, has recovered Rs 810.18 crore (approximately) from toll income till 31.3.2014 and after deduction of O&M expenses and corporate income tax, the surplus was Rs 578.80 crores… They have further realised user toll two and half years thereafter, which comes up to around Rs 300 crore…” the bench held.
The company had argued that it had not been able to recover the total cost of project and returns, which includes a provision that the company will recover 20 per cent of total project cost per year from user fee. The court, however, observed that since the amount of operation and maintenance costs were “ever increasing”, the method of calculation of the total project cost was “arbitrary and opposed to public policy”.
The court struck down the relevant section of the agreement by which the company was calculating its costs and amount recoverable from user fee. “Thus from the report of company’s auditor and the admission of company’s executive, the total cost of project has reached a point of no return… This element of perpetuity in the public contract, where the state assets have been put in the hands of a private entity, is bothering us,” observed the court. Further, the bench held that the agreement specified that the concessionaire would have the right to levy toll till its costs were recovered, but did not necessarily have control of the flyway for 30 years.
The court also observed that the agreement between the UP government and NTBCL was a “glaring example of misuse of power by a public authority” as the Noida authority had “first entered into the agreement and then framed regulations to bring the clauses of agreement in line with the legislation to give it a statutory backing”. The observation was made after the court concluded that at the time the contract was signed in November 1997, the Noida authority did not have the power to authorise the developer to collect fee, as rules authorising such tolls were passed in 1998.
The bench also issued scathing comments on the award of tender to IL&FS and observed that the “entire DND project” seemed to be “the brainchild” of the then secretary in the Ministry of Urban Development R K Bhargava, who became chairman of the Steering Committee. The court also observed that the agreements indicated that NTBCL was “set up” without any justification and that the project has not brought any profit to Noida or UP.
Pooja Agarwal, company secretary, NTBCL, in a statement to BSE, said, “The judgment has held the two provisions relating to levy and collection of fee to be inoperative and has directed the company to stop collecting user fee. In compliance, the firm has stopped collection of toll. But an appeal will be filed in the Supreme Court.”