n India, Every State Action Must Be Fair, Failing Which It Will Fall Foul Of Article 14’: SC Sets Aside Direction To Shift NH Toll Plaza


In an interesting turn of events, we saw just recently on September 23, 2021, the Apex Court in a well-articulated, well-analysed, well-substantiated, well-justified and well-concluded judgment titled National Highways Authority of India & Others vs Madhukar Kumar & Others vs Madhukar Kumar & Others in Civil Appeal No(s). 11141 of 2018 in exercise of its civil appellate jurisdiction set aside a Patna High Court judgment which directed the National Highway Authority of India to shift the toll plaza on Patna-Bakhtiyarpur four-lane road (NH-30) from Karmalichak near Deedarganj. Quite remarkably, the Bench of Apex Court comprising of Justice KM Joseph and Justice S Ravindra Bhat observed forthrightly that, “Undoubtedly, in India, every state action must be fair, failing which, it will fall foul of the mandate of Article 14. It is, at this juncture, we may also notice that the duty to give reasons, would arise even in the case of administrative action, where legal rights are at stake and the administrative action adversely affects legal rights.” Very rightly so!

To start with, this learned, laudable, landmark and latest judgment authored by Justice KM Joseph for a Bench of Apex Court comprising of himself and Justice S Ravindra Bhat sets the ball rolling by first and foremost putting forth in para 1 that, “Respondent Nos. 1 to 17 in this appeal (hereinafter referred to as, ‘the writ petitioners’), filed Writ Petition No. 5643 of 2012. The relief sought in this Writ Petition was to restrain the construction of a toll plaza at 194 km of NH30 in the four-laning of Patna-Bakhtiyarpur section of NH30, in violation of Rule 8 of the National Highways Fee (Determination of Rates and Collection) Rules, 2008 (hereinafter referred to as, ‘the Rules’, for short). The said Writ Petition was heard along with Writ Petition No. 4526 of 2013, filed by one Shri Ritesh Ranjan Singh @ Bittu Singh. By Judgment dated 22.07.2014, the Writ Petitions were allowed in the following manner by the learned Single Judge:

“32. Thus, on the basis of aforesaid discussions, these writ petitions are allowed and respondents no. 6 and 11 are directed to shift the proposed construction of Toll Plaza at 194 km milestone of Patna-Bakhtiyarpur Section of N.H. 30 from its present location to any other place on new alignment which separates from old N.H. 30 so that the violation of Rule 8 of Rules 2008 could be avoided and the persons who do not have intend to use toll road could be exempted from paying toll tax. The respondent no. 6 should take the decision of shifting the above stated Toll Plaza to any other place as discussed above within six weeks from today and till then respondents shall not collect the toll tax from those persons who do have intend to go through the old N.H. 30 without using the new alignment of toll road. The parties shall bear their own cost.””

Needless to say, the Bench then observes in para 2 that, “The appellants before us, who are NHAI, its Chairman and the General Manager, filed LPA No. 388 of 2015 against Writ Petition No. 5643 of 2012. The said Appeal came to be heard along with LPA No. 236 of 2015, filed by the concessionaire, arising from Judgment in Writ Petition No. 5643 of 2012 and LPA No. 332 of 2015 filed again by the concessionaire against Writ Petition No. 4526 of 2013, and by the impugned Judgment, the Division Bench confirmed the Judgment of the learned Single Judge.”

Most significantly, what forms the cornerstone of this brief, brilliant and balanced judgment is then summed up in para 60 wherein it is postulated that, “We would hold that as noticed by the Bench of three Judges in M/s. Mahabir Jute Mills Ltd., Gorakhpore (supra), there is no general duty, when an administrative decision is taken, to give reasons. A Statute may, however, explicitly provide that the Executive Authority must provide reasons and it must be recorded in writing. A case in point is the first proviso to Rule 8 of the Rules itself. The desirability of a general duty, in the case of administrative action to support decisions with reason, is open to question. One of the most important reason is, the burden it would put on the administration. It is apposite, at this juncture, to notice that administrative decisions are made in a wide spectrum of situations and contexts. The executive power of the Union and States are provided in Articles 73 and 162 of the Constitution of India, respectively. Undoubtedly, in India, every state action must be fair, failing which, it will fall foul of the mandate of Article 14. It is, at this juncture, we may also notice that the duty to give reasons, would arise even in the case of administrative action, where legal rights are at stake and the administrative action adversely affects legal rights. There may be something in the nature or the context, under which, the administrative action is taken, which may necessitate the authority being forthcoming with rational reasons. There are other decisions, which essentially belong more to the realm of executive policy-making, which ordinarily may not require the furnishing of reasons. The advantages, undoubtedly, of introducing a reasons driven regime, are as follows.”

As a corollary, the Bench then observes in para 61 that, “Persons, who may have a right or an interest, would know, what are the reasons which impelled the Administrator to take a particular decision. Judicial review, in India, which encompasses the wide contours of public interest litigation as well, would receive immeasurable assistance, if the reasons for particular decisions, are articulated to the extent possible. The giving of reasons also has a disciplining effect on the Administrator. This is for the reason that the reasons would capture the thought process, which culminated in the decision and it would help the Administrator steer clear of the vices of illegality, irrationality and also disproportionality. Reasons could help establish application of mind. Conversely, the absence of reasons may unerringly point to non-application of mind. The duty to act fairly, may require reasons to be recorded but the said duty, though there is a general duty on all state players to act fairly, may have its underpinnings, ultimately in legal rights.”

Interestingly enough, the Bench then envisages in para 62 that, “It is one thing to say that there should be reasons, which persuaded the Administrator to take a particular decision and a different thing to find that the reasons must be incorporated in a decision. The question, relating to duty to communicate such a decision, would arise to be considered in different situations, having regard to the impact, which it, in law, produces. In fact, the second proviso to Rule 17 of the Rules, provides not only for there being reasons, but the reasons for refusal to permit barricades, must be communicated. If the law provides for a duty to record reasons in writing, undoubtedly, it must be followed and it would amount to the violation of the Statute, if it were not followed. Even if, there is no duty to record reasons or support an order with reasons, there cannot be any doubt that, for every decision, there would be and there must be, a reason. The Constitution does not contemplate any Public Authority, exercising power with caprice or without any rationale. But here again, in the absence of the duty to record reasons, the court is not to be clothed with power to strike down administrative action for the mere reason that no reasons are to be found recorded. In certain situations, the reason for a particular decision, may be gleaned from the pleadings of the Authority, when the matter is tested in a court. From the materials, including the file noting’s, which are made available, the court may conclude that there were reasons and the action was not illegal or arbitrary. From admitted facts, the court may conclude that there was sufficient justification, and the mere absence of reasons, would not be sufficient to invalidate the action of the Public Authority. Thus, reasons may, in certain situations, have to be recorded in the order. In other contexts, it would suffice that the reasons are to be found in the files. The court may, when there is no duty to record reasons, support an administrative decision, with reference to the pleadings aided by materials.”

It is worth noting that the Bench then enunciates in para 82 that, “We have referred to the pleadings. We have also noticed the relevant parts of the DPR. In the Writ Petition, petitioners themselves have pleaded that the road in question is a national highway, and what is more, that it has been constructed merely for the use of the residents of the Patna Municipality Area. In our view, this pleading is fatal to the case of the petitioner that there is violation of the second proviso. As already found by us, the only requirement to locate the toll plaza within the municipal limits, is that a section of the national highway, inter alia, is constructed within the municipal limits and the construction must be primarily for the residents living in the said municipal limits. There is hardly any dispute that the national highway, which means the project road, commences from 181.300 kms from the Patna side and it goes to the east and till 196 kms, it is located within the municipal limits. After 196 kms, it branches of towards the south, which is the new bypass consisting of nearly 36 kms. The total stretch consists of a little over 50 kms. For nearly 14 kms, the road project road passes through the municipal limits.”

Furthermore, the Bench then observes in para 83 that, “The DPR would show that the construction of the project road and other roads, will bring about greater circulation of traffic in the area. In other words, it means that, the project road which begins from 181.300 kms, which was a two-lane road was widened to a fourlane road and the project road ends at 231 kms, where NH30 meets NH31. The Project Report also makes it clear that from km 180 to km 190 of the bypass section, there is a very congested stretch. From km 190 to km 195, it is further stated that there is agricultural land on both sides. Didardanj is located even further to the east, and still further is, Fatua town. Construction of the bypass in that area, was found to be impracticable and it is accordingly that from 196 kms, the new alignment towards the south, was carried out. The Project Report further reveals that the project road is only 50 kilometres long. Only one toll plaza could be provided. In this regard, Rule 8(2) contemplates the distance of 60 kilometres between two toll plazas. The Project Report further reveals that the NHAI Officials were available at the site along with the persons who prepared the DPR, and it is thereafter that this location was quite clearly accepted by the NHAI, as when it entered into the agreement with the Concessionaire, the agreement itself provides for the site of the toll plaza being km 194. It may be true that there may not be any decision which specifically incorporates the view of the NHAI regarding the site. What has apparently happened is, in keeping with the newly introduced Rule (Rule 8 of the 2008 Rules), the NHAI has proceeded to accept the recommendation of the Expert Body to locate the toll plaza at km 194.”

Frankly speaking, the Bench then observes in para 84 that, “We are not unmindful of the fact that counter affidavit of the appellants betrays a certain degree of ambiguity. This is for the reason that, what is pleaded in both the counter affidavits, was that, even if the toll plaza is located within the municipal limits, the second proviso to Rule 8 comes to the rescue of the appellant. This is sought to be exploited by the Writ Petitioners to point out that even appellants were not clearly aware, whether the toll plaza was being located within the municipal limits or not. Writ Petitioners also harp upon the clarity being infused by the counter affidavit filed by the Municipal Council of Patna that the toll plaza was located within the municipal area. We also agree that the matter becomes a little worse, when we read the pleadings of the Concessionaire. In the first counter affidavit, it was contended that the proposed toll plaza at km 194 is much beyond 5 kilometres stipulated in the first proviso. There is also pleading, which indicates that understanding of the Concessionaire was that the construction was for the overall population of the area. However, we must also not ignore that the upgradation was stated to be also aimed at benefitting the local population for the speedy movement from Patna to Bhaktiyarpur and vice-versa. In the second supplementary counter affidavit, it is contended that the four-laning was initiated to reduce the pressure of the local traffic as well and that it is primarily for the benefit of the local residents.”

Be it noted, the Bench then points out in para 85 that, “We are, indeed, troubled by the manner in which the case was approached by the Concessionaire, in particular. However, the appellants definitely set up the case under Rule 8 in both the counter affidavits filed by it. The statement that the second proviso applies, even if the construction is made within the municipal limits, is emphasised by the Writ Petitioners, to show the non-application of minds. We must, in this regard, bear in mind the nature of the lis, as also the rights of the Writ Petitioners. The High Court did not find any Fundamental Rights with the writ petitioners in the matters. The only issue is relating to violation of Rule 8. We have already found that upon the satisfaction of the objective criteria laid down in the second proviso, construction of the toll plaza, as provided therein, is permissible. Apart from the statement of the Writ Petitioners themselves, that the road is a national highway and it is merely for the use of the local residents, the undeniable fact is that, in place of the two-lane road, after a huge investment, it was upgraded to a four-lane road and nearly 14 kilometres of the project road, indisputably, passed through the municipal limits and the most important beneficiary of the said construction, can clearly be stated to be the residents in the municipal area. The project road, did enure chiefly to the residents of the Patna Municipality. The road from 180 to 190 kms was found to be a very congested stretch. The construction of the widened road, undoubtedly, helped mainly the residents of the municipal area. There are other features, apart from widening, including the graded separators. No doubt, it may be true that many persons may be using the said stretch, who may not be residents of the Patna Municipality, would also benefit from the construction, but that cannot detract from requirement of the second proviso being fulfilled, viz., that the construction was primarily for the benefit of the residents of the municipal area. The second proviso does not require that the construction must be solely for the benefit of the residents of the municipal area.”

Simply put, we cannot gloss over that the Bench then hastens to add in para 86 that, “There is another aspect, which we cannot ignore. The construction was completed in accordance with the agreement with the Concessionaire. The Judgment of the Division Bench came to be stayed by this Court and the toll has been collected from the toll plaza. Secondly, the High Court may not be justified in finding that the commercial expediency trumped the law. Commercial expediency is, undoubtedly, a relevant fact. The exact location of the toll plaza is also geared to garner maximum revenue. Concessionaire Agreement lasts for a particular period of time. It is the Concessionaire, who makes the construction, after making the entire investment. The contract contemplates “Design, Build, Finance, Operate and Transfer (the “DBFOT”) under Rule 16 of the Rules, upon the expiry of the agreement, the fee is to be collected by the Central Government or the Executing Authority. Therefore, in such circumstances, any leakage in the toll, would naturally be sought to be avoided. As long as the site of the toll plaza is otherwise supportable, with reference to the second proviso, then, the area of judicial review, in such matters, would be extremely narrow.”

Quite significantly, the Bench then makes it clear in para 94 that, “It is the case of the Writ Petitioners that the decision to locate site of toll plaza at 194 kilometre is arbitrary. Under Article 14 of the Constitution, no State action can pass muster, if it is found to be arbitrary. But, then, a different or even an incorrect decision, would not make an otherwise lawful decision vulnerable to judicial scrutiny. An arbitrary decision would be one which is bereft of any rationale or which is capriciously wrong, and not merely an erroneous view, in the perception of the Court. Any other view would tantamount to substituting its view for that of the Authority. Judged by the said standard, and also the nature of dispute, it cannot be held that toll plaza, having been located at a point where there was sufficient space and which would prevent the leakage of traffic, and also noticing that stretch itself consisted of a little over 50 kilometres, quite clearly, the case based on arbitrariness, is only to be repelled.”

Finally and far most significantly, the Bench then concludes by holding in para 97 that, “The upshot of the above discussion is that we find as follows:

(1) The construction of the toll plaza at 194 kilometre was not illegal or arbitrary;

(2) The direction by the High Court, to shift toll plaza, cannot be upheld and it is liable to be set aside;

(3) The appellants will look at the barricades (closing of service roads) in regard to the toll plaza and permit such barricades only as are permitted in Rule 17 of the Rules. Any unauthorised barricades will be removed without any delay and at any rate within 2 weeks from today.

(4) The First Appellant will issue suitable directions to all Executive Authorities to maintain distinct records containing the decision, invoking the second proviso to Rule 8 of the Rules. Such direction shall be issued within 3 weeks from today.

(5) We direct the appellants as also the Concessionaire to extend the fullest benefits of the concessions under Rule 9 of the Rules.

(6) Resultantly, we allow the Appeal and set aside the impugned Judgment and the direction to shift the toll plaza is set aside.

(7) There shall be no order as to costs.”

To conclude, the upshot of the above discussion of this notable judgment of the Apex Court is that it goes beyond doubt that in India every state action must be fair failing which it will fall foul of the mandate of Article 14 of the Constitution. The Apex Court also made it clear that the duty to give reasons would arise even in the case of administrative action where legal rights are at stake and the administrative action adversely affects legal rights! Thus the decision by the Apex Court to set aside the Patna High Court judgment stands well justified! No denying it!

Sanjeev Sirohi

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