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NOIDA Toll Bridge Company Ltd. vs Federation of NOIDA Residents Welfare Association and Ors.

Not available · 2024 INSC 1027Decided 20 Dec 2024
Not available
Justice Surya Kant · Justice Ujjal Bhuyan

Background

In the 1990s, NOIDA and the Infrastructure Leasing & Financial Services Limited (IL&FS) set up NOIDA Toll Bridge Company Ltd. (NTBCL) as a special-purpose vehicle to build the Delhi-NOIDA Direct (DND) Flyway on a Build-Operate-Own-Transfer basis, recovering its investment by charging commuters toll under a 1997 Concession Agreement. Roughly 15 years after the flyway opened in 2001, a residents' welfare association filed a public interest writ petition alleging NTBCL had already recouped its costs many times over and continued collecting toll indefinitely under an unfair formula in the agreement. The Allahabad High Court struck down the relevant clauses (Articles 13 and 14) as bad in law and ordered toll collection to stop; NTBCL appealed to the Supreme Court.

Decision Breakdown

The Supreme Court dismissed NTBCL's appeal and upheld the High Court's judgment. Relying on an independent Comptroller and Auditor General (CAG) report showing NTBCL's total income (about Rs. 1,103 crore) nearly matched its total expenses (about Rs. 1,136 crore), with the company having paid dividends of over Rs. 243 crore and cleared all its debts by 2016, the Court held there was no justification left to keep collecting tolls. It found the Concession Agreement's fee-setting formula unfair and inconsistent with constitutional norms, that NOIDA had unlawfully delegated its statutory power to levy fees to a private company, and that continuing to charge tolls after costs and profits were fully recovered would let a private entity make undue and unjust profit from public infrastructure at the public's expense, invoking the principle "res ipsa loquitur" regarding the apparent collusion between the company and state authorities.

Lesson Learnt

Public infrastructure built through public-private partnerships must stop charging user fees once the private developer has recovered its costs plus a reasonable profit: continued toll collection beyond that point is an abuse of public trust, and ordinary citizens' associations can successfully challenge such arrangements even many years after they were signed.

Official source (sci.gov.in)View Judgment (PDF)

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