Supreme Court of India

M/S. SOMA ISOLUX NH ONE TOLLWAY PRIVATE LIMITEDversusHARISH KUMAR PURI & ORS.

Citation: 2014 INSC 292
Decided: 17 April 2014
Disposal: Appeal(s) allowed
Bench: GYAN SUDHA MISRA

Holding

The Supreme Court set aside the High Court's directions, held that the earlier judgment permitting toll‑plaza relocation is final and barred re‑litigation, and restored the appellant’s right to shift the toll plazas and complete the highway project.

Summary

The appellant, M/s. Soma Isolux NH One Tollway Pvt. Ltd., entered into a BOT concession agreement with the National Highways Authority of India (NHAI) to construct, operate and maintain a six‑laning of NH‑1. The High Court, while entertaining a public‑interest writ, cancelled the concession agreement, imposed heavy fines and ordered NHAI to take over the project, despite earlier judgments that had permitted the relocation of toll plazas under the agreement. The Supreme Court examined whether the High Court had exceeded its jurisdiction, whether the issue of toll‑plaza relocation was barred by constructive res judicata, and whether statutory provisions could override the contract terms. It held that the earlier High Court decisions on toll‑plaza relocation were final, that the contract could not be unilaterally nullified, and that the appellant was entitled to shift the toll plazas and complete the remaining work. Consequently, the Supreme Court set aside the impugned order, restored the concessionaire’s rights, and directed NHAI to allow the toll‑plaza shift within a specified range and to monitor project completion.

Issues considered

Whether the High Court's order cancelling the concession agreement and imposing fines amounted to judicial overreach in a public‑interest writ petition.
Whether the dispute over shifting the toll plaza, already decided by the High Court, is barred by the principle of constructive res judicata.
Whether statutory provisions under the National Highways Act and the NHAI Act can override the terms of a duly executed concession agreement.
Whether NHAI could terminate the concession agreement without adjudication under the contract’s dispute‑resolution mechanism.
Whether the appellant is entitled to relocate the toll plazas as per the concession agreement, the Independent Engineer’s approval, and prior High Court orders.

Legislation cited

Arbitration and Conciliation Act, 1996s. 9
National Highways Act, 1956s. 11, s. 15(2), s. 15(3), s. 4, s. 8(A)(1)
National Highways Authority of India Act, 1988s. 11, s. 15(2), s. 3

Subjects

public interest litigationcontract lawconstructive res judicataBOT projecttoll plaza relocationNHAIconcession agreementarbitrationtermination of contracthigh court overreach

Judgment

[2014] 14 S.C.R. 617

M/S. SOMA ISOLUX NH ONE TOLLWAY A
PRIVATE LIMITED
v.
HARISH KUMAR PURI & ORS.
(Civil Appeal No. 4611 of 2014) ..
APRIL 17, 2014
\[GYAN SUDHA MISRA AND
PINAKI CHANDRA GHOSE, JJ.]
Constitution of India : C
Art. 226 - Writ petition in public interest - National
. Highway (NH1) project - Contract between appellant-
company and NHAI to construct certain portion of Highway
on built, operate, trade (BOT) mode- Investment to be made
by appellant by income generated from toll collection - In D
other writ petitions the issue of shifting of Toll Plaza
adjudicated and attained finality- Matter again agitated and,
while deciding continuance or otherwise of an interim order
in a challenge to show cause notice, High Court in effect
cancelling the agreement and saddling the appellant- E
contractor and its director with huge amounts of fine - Held:
When Division Bencf];of High Court had already settled the
dispute by a speaking judgment permitting the shifting of Toll
· Plaza, no legal authority was left with the Chairman, NHAI to
issue a letter questioning the shifting - High Court also by F
impugned order, ignored the fact that controversy regarding
shifting of Toll Plaza although had been set at rest by a
judicial verdict of High Court, 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 G
of specific clause in the agreement to that effect- High Court
has further failed to visualise 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 appellant
concessionaire-company was ordered to be kept in abeyance H
617
' 618 SUPREME COURT REPORTS [2014] 14S.C.R.

A was fit to be vacated or not and went into the question whether .
the appellant-company was fit to continue with:th~ project
whichhad been handed over to it by NHAI by virtue ofa valid
agreement executed between the parties, primarily on the
ground of delay without really entering into the cause of delay
B and considering the plea at whose instance the contr13ctua/
obligations had been violated- Impugned directions of High
Court are set aside, and appellant is permitted to restore the
construction of the balance stretch/area of H/ghway project- ·
. NHAI is directed to permit the appellant to shift the Toll Plaza ·
·c as indicated in judgment - Directions .given to appellant to
· complete entire construction of Highway and report the
. progress toNHAI.
Res judicata:
Constructive res-judicata - Issue of shifting Toll Plaza
D decided by single Judge of High Court and decision affirmed
in Letters Patent appeal - Matter attained finality ·:C.. Issue
raised again - Held: A question or an issue which has been ·
raised earlier before High Court, adjudicated and on which a
final judgment/order was delivered, cannot be allowed to be
E raised for the second time as that would be clearly barred by
"the principle of constructive res judicata - Therefore, the
issue of shifting of Toll Plaza which fi~lly was dismissed was
not permissible to be referred for arbitration once on the
judicial side permission to shift the Toll Plaza was permitted
F by High Court-Arbitration.
Contract:
Terms of contract- Held: In case of statutory contract,
the terms of the statute prevail over the terms of the contract
G - 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 have ~igned it and
thereafter it would be binding on the contracting partie~: .··.
-, ·_, ·.
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•
MIS. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 619
HARISH KUMAR PURI

A writ petition was filed before the High Court as a A
Public Interest Litigation with the object of improving
management of traffic on G.T. Road (National Highway
No. 1) in the interest of the commuters and the public at
large. The writ petitioner had lost his son in a road
accident in 1996 on the said highway. During the B
. pendency of the writ petition, a concession agreement
was entered into between the appellant company and
respondent authorities to construct, operate and
maintain a project namely 6 laning of a part of NH 1 from
KM 96.00 to KM 387.100. As regards financing and C
investment to Highway Project, the agreement envisaged
that the project would be on the basis of build, operate,.
trade (BOT), mode, meaning thereby, all investment in
the project were to be made by the appellant-company
by the income generated from toll collection and no o
amount was to be invested/received from the National
Highway Authority of India (NHAI). On the contrary, the
. appellant-company as per the agreement offered to pay ·
to the respondent/NHAI premium equal to 20.14% of the
total collection of the toll for the first year and this E
premium was to be increased by 1% every subsequent
year. With regard to relocation of toll from KM 213 to
211.550 as approved by NHAI, CWP no. 21332/2011 was
dismissed by the High Courton 25.1.2012. Further CWP.
no. 23971/2011 challenging the relocation of toll plaza at F
211 KM - 212 KM was dismissed by the High Court on
1.5.2012. The Letters PatentAppeal was also dismissed
by the High Court on 6.12.2012.
However, despite the approval granted by the NHAI
and the order passed by the High Court, the appellant G
was prevented from commencing tolling at located Toll
Plaza at 211 KM and 110 KM and this, as claimed by the
appellant, resulted in loss of substantial fund that could
have been utilized for the construction of the project
H
62{) SUPREME COURT REPORTS [2014] 14 S.C.R.

A When .the appellant had competed 71% of the project
arid the matter of relocation of toll plaza was again
agitated before the High court in C.M no 3301/2013 arising
outofCWP no.13848/1998, the High Court saddled the
appellant-company with a fine of :Rs. 60 crores and Rs. 7
B crores to be paid by the appellant-company and its
director, respectively, by the impugned order and
directed respondent no. 6, NHAI, to proceed in the matter
'forthwith and take possession of the Highway Project
and ensure that collection of toll is deposited in a
c separate account. The.High Court further directed that
the entire matter relating to the contract, the completion
of the work of the Highway, collection of tolls without
existence of 6 lanes be enquired into and a report in that
regard be submitted. It was further directed that the
o Chairman, NHAI would be personally responsible for.
ensuring that the work of 6 laning of the Highway was
completed. Aggrieved, the concessionaire-company,
filed the appeal.
Allowing the appeal the court
E HELD: 1.1 It is an admitted position that the
schedules and annexures to the Concession Agreement
form its integral part and would be in full force and effect
as expressly .set out in the body of the Concession
Agreement. [Para 36][651-G]
F
1.2 In Letters Patent Appeal No. 170/2012, the
Division Bench of the High Court had approved of the
orders of the single Judge permitting shifting of Toll
Plaza, and dismissed the LPA upholding the order of the
G single Judge 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

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MIS. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 621
HARISH KUMAR PURI ·

Plaza. Thus, the controversy regarding shifting of Toll A
Plaza attained finality in view of final adjudication of the
dispute by the High Court. [Para 40][654-F-H; 655-A]
1.3 In fact, it is only on 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 B
proposal of the appellant for relocation of Toll Plaza was
finally rejected stating therein that in principle, approval
dated 9.11.2010 by NHAI was only conditional in nature
and at the most was only recommendatory, ignoring that
the Independent Engineer, earlier had approved of the C
proposal for shifting the Toll Plaza. In fact, the NHAI
seems to be completely oblivious of the fact that when
the Division Bench of the 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/ D
2012 permitting the shifting, no legal authority was left
with the Chairman, NHAI to issue a letter questioning the
shifting. It is rather strange that NHAI defied the speaking
judgment and order of the High Court in contemptuous
disregard and it is equally strange that the High Court E
also by 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 !?hitting when its Independent Engineer had F
earlier approved of the same and accepted by NHAI in
view of the specific clause in the agreement to that effect
[Para 41][655-E-H; 656-A-D]
2.1 In case of statutory contracts, the terms of the
statute prevail over the terms of the contract. But once G
the contract is signed by the contracting parties
obviously the contract having assumed th~ legal
authority of a concluded contract would govern the
terms and conditions of the contract between the parties
H
622 SUPREME COURT REPORTS [2014) 14 S.C.R.

A who have signed and thereafter would be binding on
the contracting parties. [Para 43][658-B-D]
· 2.2 The Concession Agreement having been signed ..
by the appellaht-jointventure company and respondent·.
No,6-NHAl,'th~·r,ole of the Union of India to express its .
B 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 i.n this regard. [Para 44]
[658q-H]
c 2.3 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 ot central Act, the rol~
.D or the authority of the Union of India to intervene or
contest cannot be allowed as it at the most is a proforma
respondent in this appeal under the prevailing facts and
circumstances. [Para 44][659-8-C]
E 2.4Although the High Court has recorded that it did
not .intend to traverse the contractual obligations and
· liabiliti.es of parties and confined its considerations so
as to see whether public interest require that the interim
order be extended or vacated, it has indeed done. the
same when it directed the NHAI to forthwith take
·F 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 meant that the NHAI would have to invite
fresh tender for construction of the balance 29% area of
G 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 the High Court observed that it was not
H traversing the contractual obligation ignoring its
M/S. SOMAISOLUX NH ONE TOLLWAY PVT. LTD. v 623
HARISH KUMAR PURI

devastating effect on the contracting party who had A
completed 71% of the project arid had at least the right ·
to explain whether the delay in concluding the project
· .·could entirely be attributed to the appellant or atleast ·
some of it could be fastened on the NHAI whi~h had gone
to the extent of not only backing out of its earlier opinion B · ·
but also· conveniently shut its eyes that it was vi9lating
.the order of the High Court which had earlier upheld the.
right of th~ appellant to shift the toll plaza. [Para 49l
·. [663-E-H; .664·A-B] .
. · 2.5 Tile High Court was not justified in recording C · ·· ·
. that the delay had been caused merely at the instanc.e ..·
of t],11La·~.P~llant,130 as. to pass a blanket order for .
trahsferting tile execution ofthe projectto NHAI contrary
t9JiW'. ·~ai:eementwherein it was permissible. {or the
appe)l~ntt9 ~hift th~ Tol(Plazas and the sanie had also D ·.·
. !),en approved by the High Court. [Para 50][664-C-D]
. , .... 2.6 The High Court has further Jailed to visualise
that the matter.with which it was seized was limited to
ttie·question as t9 w'hether the.order by which the show .
cause notice issued by the NHAI to the appellant E
concessionaire"company was ordered to be. kept in
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 · F
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 wheth~r the appellant-
company was fit to .:ontinue with'the project which had
been han<:(ed over to the appellant by the NHAI by virtue G
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.
[Para 50][664-D-G] H
624 SUPREME COURT REPORTS [2014] 14 S.C.R.

A 2. 7 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
B KM. In fact, NHAI neither before the High Court nor before
·this C~urt even remotely has contended that the contract
should be nullified. (Para 51](664-G-H; 665-A].
3.1 In any event, the question of termination of the
Concession Agreement without adjudication could not
C 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
D the High Court terminated the contract itself for all
practical purposes without expr-essly 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
E contra.ct in its entirety. [Para 52](665-F-H; 666-A]
3.2 It is significant to note that the appellant
admittedly. has completed 71 per cent of the 291 KM
stretch and barely 29 per cent is yet to be construc.ted
which is enmeshed in litigation over the question as to
F whether the Toll Plaza should be permitted to·be shifted
or not. This aspect 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 and
others were a party wherein the appellant had been
G permitted to shift the toll plaza. In spite of the dispute
having been settled 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

H
M/S. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 625
HARISH KUMAR PURI

passed by the High Court in CWP No.21332/2011 and A
LPA No.170/2012 challenging such permission.
{Para 54]{666-E-F; 667-B-C]
3.3 However, while nullifying the contract on the
ground of delay, the dispute regarding shifting of Toll
Plaza, which was clearly the only contentious issue for B
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 C
the Agreement. [Para 56][667-G-H; 668-A-B]
3.4 Besides, a question or an issue which had been
raised earlier before the High Court, adjudicated and on
which a final judpment/order was delivered, cannot be
allowed to be raised for the second time as that would 0
be clearly barred by the principle of constructive res
judicata. Therefore, the issue of shifting of Toll Plaza
which finally was dismissed was not permissible to be
referred for arbitration once on the judicial side
permission to shift the Toll Plaza was permitted by the E
High Court by 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. [Para 57]
{668-B-C; E-F]
F
3.5 In fact, it needs to be highlighted that in terms
1
of Article 48.1 of the 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. who conveyed his approval G
to the change of location as proposed by the appellant
and, therefore, the same cannot be allowed. to be re-
a9itated despite confirmation of the same by the High
Court by its judgment and order passed in the writ
H
626 SUPREME COURT REPORTS (2014] 14 S.C.R.

A petitions and the LPA against ,Which no appeal was
preferred either by the NHAI or the PIL petitioner or any
other res.pondent. [Para 58][669-B-D] ·
3.6 Thus, the stand of the NHAI appears to be clearly
illegal and arbitrary and a clear case of an afterthought
B taken in the instant proceedings before this Court, as
the N.HAI ad idem was in complete agreement with the .
appellant as regards its right for relocation of Toll Plazas.
The same is recorded and clearly reflected in. the
correspondence of various officers of NHAI, minutes of
C meeting, stand of Independent Engineer including its
stand before the High Court and, therefore, the NHAI
cannot be permitted to resile from its stand atthis distant
point of time as the affidavits were filed as early as 2011
which finally upheld the location of the Toll Plazas.
D (Para 59][669-D-F] . •
3.7 Moreover, based on, in principle, approvals·
granted by NHAI and its stand, the lenders continued to
di.sburse funds and the appellant continued to invest in
the project on the plea that the implementation of the
E decision to relocate the Toll Plazas would be done after
tht;! decision of the High Cpurt upholding the relocation
of Toll Plazas. It is, therefore;. too late in the day for the
NHAI to take such specious and uritenable plea with a·
view t6 wriggle out of its obligation which cannot be
F permitted by this Court. [Para 59][670-A-C]
3.8 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
.G side permitting relocation of the Toll Plazas, the dispute ·
did not set at rest and the High Court while dealing with
the Pll has not even taken note of the fact that it w'as
nullifying the Concession Agreement on the ground <if
delay of the project witl:tout entering into the rights and
' {,

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M/S. SOMA ISOLUX NH ONE TOLLWAY PVT LTD. v 627
HARISH KUMAR PURI

obligations of the Concessionaire-appellant and A
respondentNo;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. [Para 61][670-F-H; 671cA] ·
3.9 Besides, NHAI is not funding the project in any· B,
manner as the agreement is in the nature of BOT mode
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 ill"
BOT mode, all investment in the project has to be made C.
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 D
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 with their reven!Je and
approval prior to th~ con:imence~e~t of.the P..':~~cJ:_JJ:ie.J:. ~- .
appellant-Conces51ona1re, -thef-efore;slates lhatlns
committed to the completion of the project asserting that
its endeavour is to complete the six laning works,atthe
earliest since it is not a gainer in any manner ifthe project
is at a standstill and the appellant also would gain only if F
the project is started. [Para 63][671-E-H; 672-A-B] · '
3. fo In course of oral argument before this Court,
NHAI had yielded and did not seriously dis'pute th.e
shifting of Toll Plaza from KM 212 to KM 211 and rig_htly
so as the shifting is hardly at a distance of 1KM which is G
negligible and the shifting has already taken place.
[Para 64][672-G-H] ··

H
628 SUPREME COURT REPORTS [2014) 14 S.C.R.

A 4.1 The impugned directions of the High Court are
set aside, and the appellant is permitted to restore the
construction of the balance stretch/area of the highway
project. The NHAI is directed to permit the appellant to
shift the Toll Plaza from KM 146 to any point between
B KMs 110 and KMs 117 with concurrence of the NHAI. The
exact point of 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
c granted by the Independent Engineer in terms of the
Agreement which also had been approved by the High
Court earlier. [Para 66][674-H; 675-A-B]
.
4.2 However, the High Court although by its order
permitted shifting of the Toll•Plaza in dispute to point
D KM 11 o, 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, it is directed that the shifting although may
E 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. · ·
[Para 66][675-B-D]
--=~4.3 Therefore;"in"order to facilitate and expedite- .. '
F completion of the Highway Project, this Court directs the
respondent NHAI to permit shifting of Toll Plaza from 146
to anywhere between KMs 110 and KMs 117
expeditiously. The appellant thereafter shall forthwith
restart the construction including setting up of Toll Plaza
G 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 31.3.2015 failing which the appellant/

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0

M/S. SOMA ISO LUX NH ONE TOLLWAY PVT. LTD. v 629
HARISH KUMAR PURI

concessionaire company shall be liable for penal A
consequences to be determined by the NHAI in terms of
the Concession Agreement. [Para 67][675-F-H; 676-A] ·
4.4 The appellant/concessionaire company is
further directed to report/update the progress/
development of the construction to the NHAI referred to B
in the Concession 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, it C
is made 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 D
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 heed to resort to E
such an eventuality in regard to the Highway Project
referred to in the Agreement. [Para 68][676-B-E]
Monarch Infrastructure (P) Ltd. v. Commissioner,
Ulhasnagar Municipal Corporation, 2000 (3)
SCR 1159: (2000) 5 SCC 287 - cited. F
CASE LAW REERENCE
2000 (3) SCR 1159 cited para 37 .
CIVILAPPELLATE JURISDICTION: Civil Appeal No(s).
4611 of2014. G
From the Judgment and Order dated 27.05.2013 of the
High Court of Punjab &Haryana at Chandigarhin C. W. P. No.
13848 of 1998.

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•

630 ' SUPREME COURT REPORTS (2014] 14 S.C.R.

A Dr.Al;Jhishek Manu Singhvi, Sr.Adv.,Arunabh Chowdhury,
Sumeet Goel, Parthiv K. Goswami, Amit Bhandari, Rahul
Pratap, Vaibhav Tomar, Prashant Kumar, Mis. Ap & J
Chambers, Advs.for the Appellant..
Ms. lndu Malhotra, P. S. Patwalia, Narender Hooda, Sr..···
B Advs., Manjit Singh AAG, T. S. Sidhu, Sumit Gupta, Ashish
Suman, Ms. Pallavi Mohan, Ganesh Karnath, Mukesh Kumar,
Ms:Meenakshi Sood, Ms. Tanu Priya Gupta, Prateek Khanna,
Mis. M. V. Kini &Associates, Tushar Bakshi, S. Ranjith Kumar,
Ms. Nupur Chaudhry, Tarjit Singh, Vinay Kuhar, Dr. Monika
C Gusain, Kamal Mohan Gupta, ShadmanAli, Ms. Madhurima
· Mridal,D. S. Mahra; Advs. forthe Respondents. ·
The Judgment of the Court was delivered by
. GYAN SUDHA MISRA, J. 1. Leave granted.
D 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. 330112013 arising out
of CWP No. 1384811998 whereby certain advers.e directions
to be related hereinafter were issued having grave implication
E on the contractual rights of the appellant- Mis. Soma lso.lux 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
F were to be deposited with the Registrar General of the High ·
Court within one mon!h 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
. G ensure that collection of toll is deposited in a separate account
·and the work of rep.airs 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,
H the completion of the work of the highway, collection from tolls
M/S. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 631
HARISH KUMAR PURI [GYAN SUDHA MISRA, J.]

without existence of six-lanes be enquired into and a report in A
that regard be placed before the High 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~ B
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 c
up to this Court challenging the impugned .order passed by ·.
the High Court.
3: The substantial questions of.law of general and public
· ·.. • .· · imp,ortance that emerge for consideration iri this appeal inter
alia may be crystallised as follows: .. ~. · · D
Whether: the directions issued by the High.Court ·
.. whiCh ha\/e 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 E
the rights and obligations arising therefrom in a
Public Interest Litigation while exercisingjurisdiction
• under Article 226 of the Constitution of India is an
act of judicial overreach under the garb of public
interest?.· · · · · · . . F ·
ii Whether the terms and conditions ofa concluded'
·contract can be nullified by the High Court by issuing
sweeping directions in an ongoing Public lnteresf
Litigation Petition which renders the terrhs and
. ·conditions of the Concession Agreement between G
. the contracting parties redundant, aHhe instan6eand . . .
initiative of the Court itself when stich directiorishas
· · ' not even been sought by any of the parties•tc:ithe
Public 1.nterei>tPetition?
H
632 SUPREME COURT REPORTS (2014] 14 S.C.R.

A iii Whether 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
B High Court nullifying the contractual rights of the
affected party?
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
C 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
D 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
E 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.
F 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 comr:nuters and the public
at large over the years metamorphosed into a long drawn
litigation alleging breach of contractual obligations between
G the appellant-concessionaire company and the r'espondent
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
H
MIS. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 633
HARISH KUMAR PURI [GYAN SUDHA MISRA, J.]

had been filed as also the construction of the Highway for which A
a concession agreement had been executed between the
· appellant-concessionaire comp.any 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. B
6. While tracing out the background of the matter, bereft
of not so essential factual details, it may be sufficient to state
thatthe Division Bench of the High 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.· C
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 D
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 E
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 F
awarding the contract, the credentials and track record of the
appellant was taken note of which indicated that the appellant
Mis Soma lsolux NH One Tollway Pvt. Ltd. is a joint venture
company with lsolux Corsan Group which is a multinational
company having vast experience of Infrastructure Development G
in various part of the world including Europe, South America,
Nort.h America and Asia and has successfully developed
Highway Projects in various countries including Spain, Mexico,
Brazil, India etc. lsolux Corsan Group is the leading European
Investor in infrastructure in India 'and Mis Soma Enterprise Ltd. H
634 SUPREME COURT REPORTS [2014] 14 S.C.R.

A is a renowned Development Construction firm.and has several
Natiqnal 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.
B 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 (a) NHAI
is/was required to provide right of way and the appellant-
company is/was entitled to demand and collect appropriate
C 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 ·
D Document) and, therefore, ne_itherthe 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
E appellantccompany 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
F invested/received from the NHAI. On the contrary, the
appellant-company 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
G on a detailed analysis of the Concession Agreement. the NHAI
thus is not only notfunding 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 allthe amount

H
.
collected by way of toll were to be deposited in the ESCROW .
M/S, SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 635
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.)

account as a result of which any amount from this account · A
cannotbe 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 B
project implementation. All the financial agreement dealing in
the administration occurred between lending institutions and
the appellant and the financial model for the project had been
submitted regarding revenue and approval prior to the
commencement of the project. Agreement entered into c
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, D
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. Asper the
agreement six laning was to be retrofitted on the existing four-
lane as per standards and specifications which temporarily E
· 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 F
hereinbefore was executed between the 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 aut.horities for
mobilization of resources by the appellant-company. The G
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 H
535·. SUPREME COURT REPORTS [2014] 14 S.C.R.

A 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 Pl L. ·
10. The High Court thereafter vide order dated 2.1.2012
on an oral request impleaded the appellant-company as a party
B 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 Hig~ Court in the pending
C PIL info[ming the status of Panipat- Juilundur 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
D 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.
E 11. rhe 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
F 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 part of the appellant/
concessionaire com pa fl¥ or the delay was on account of the
G 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
H · in the Agreement which were conveniently ignored by the NHAI
MIS. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 637
HARISH KUMAR PURI [GYAN SUDHArvilSRA, J.]

contrary to the opinion of its own Independent Engineer whose A
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/ B
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 theNHAI which was contrary
to the terms and conditions of the Concessionaire Agreement •. C
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-lncharge
of the Project to remain present in Court on the adjourned date D
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 raisea by the Court with regard to E
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 F
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 was expected to
be complete by March 2013. The High Court however failed
to scrutinise the cause of delay and refused to take into G
consideration the terms of the Concession Agr~ement 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 bbserved that
there has been inordinate delay in conducting tHe project and H
638 SUPREME COURT REPORTS (2014] 14 S.C.R.

A hence directed the appellantccompany 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·
B· 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/
C ·concessionaire Company in achieving the project completion:
However, it was acjded 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
D · 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
E 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 ta.ken to remove the obstructions and
difficulties in completing the construction of the highway if that
F 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.
15. In pursuance to the order passed by the High Court,
G a meeting was held on 12.4.2012 under the Chairmanship of
Secretary to the Government of Punjab, Department of Public
Works (B & R) betvlfeen 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
H
M/S. SOMAISOLUX NH ONE TOLLWAY PVT. LTD. v 639 ·
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.]

officers of the State of Haryana, the officers of the appellant- A·
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 B
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 thatthe appellant-company is C
not serious about the undertaking 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 D
and March 2013 which were the dates furnished by the
appellant-com·pany 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 E·
would be personally liable to the extent of Rs. 5 crores. The
High Court further ob.served 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 F
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.
17. The appellant in the meantime preferred a Special G
Leave petition (Civil) No. CC 897 4/2012 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 H
.640 SUPREME COURT REPORTS [2014] 14·S.C.R.

A 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
B the High Court, the counsel forthe 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
causi; notice issued by the NHAI be kept in abeyance till further
C . orders. In the said order, the High Court also directed the
Ministry of Defence, Government of India to pass an appropriate
order regarding the land needed for widening of NH 1 falling
within the area of Jullundur Gantt. in the State of Punjab and
granted 15 days time to the authorities concerned to do the
D 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
E 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 direc~ons issued by the High Court. The Ministry
of Defence, Government of India, thereafter handed over the
F 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.
G 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
H pending disposal. It was stated therein that the appellant/
M/S. SOMAISOLUXNH ONE TOLLWAY PVT. LTD. v 641
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.]

concessionaire company was making every effort to complete A
the six laning works at the earliest provided therewas 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 B
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 appellanthas beeri diligently C
proceeding with the work 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 D
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 E
date has completed 71. 06 per cent of the work in the project •
highway as on May 2013. However, due to ce.rtain
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 F
conditions since c;ommencement 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 has been submitted on behalf of
the appellant that the appellant-Concessionaire is fully geared G
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 H
642. SUPREME COURT REPORTS (2014] 14 S.C.R.

A 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.
B 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
C has sought 'lo explain the reasons in detail for the alleged
· slowing down 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,
D 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,·
E 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 contes.ted and is the core
contentious issue between the appellant and the respondent-
F 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 Karna! and Ambala for
which the appellant-Concessionaire had approached the
appropriate authqrity ever since March 2010 which is
G 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
H
M/S. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 643.
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.]

construction of the project from four laning to six laning.Article A
3 of the Concession Agreement which grants the
Concessionaire by virtue .of Article 3.1.2. (d) entitled the
Conce.ssionaire 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 B ·
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 C
submitted that the Concession Agreement aliows the appellant
company to choose the location of Toll 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 Ag~eement. In this con.text, attention of this · D
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 forthe purpose of regulating the E,
entry and exist of vehicles in accordance with the
provisions of this Agreement and shall include all land,
buildings, equipment and other facilities tequired.in
accordance with or inddental to the provisions .of this·' F
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 G
"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 accordanc(:} H
644 SUPREME COURT REPORTS [2014) 14 S.C.R.

A 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
Kamal, Ambala, Ludhiyana, Jalandhar cities and
Gharonda, Nilokhere, Kurushetra, Shahabad, Rajpura,
B 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."
C 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 AgreemenHo choose
D 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 3rd Toll Plaza at KM
328 retained at the existing location in view of the contractual
, E 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 respectivelyvide letter dated 9.11.2010 issued by the
Ministry of Road Transport and Highways to the Regional
F Officer (Punjab and Haryana), National Highways~uthority 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 t.o KM 211 in consultation with the respondent. It
G 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
H approval was granted earlier.
M/S. SOMAISOLUX NH ONE TOLLWAY PVT. LTD. v 645
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.]

25. In order to honour the proposal of Haryana A
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 B
Concession Agreement while communicating its willingness
to follow the proposal of Haryana Government as suggested
by the respondent. Subsequently, the respondent NHAI gave
approval for relocation ofTollfrom KM 213 to KM 211.550 to
212.250 on the basis of recommendation of the Independent c
Engineer, consent of appellant and the Government of Haryana
vi de 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 D
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 E
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 F
. as per the agreement. 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.".
G
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 I decision to shift Toll Plaza H
646 SUPREME COURT REPORTS [2014]14 S.C.R.
'

A within 1.5 KM from Ambala Muncipal Limifdoes 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 b~ing 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
C another Bench of the High Court had also not found any infirmity
in the decision of the respondents (appellant herein and NHAJ)
to relocate the Toll Plaza and they were held to be well within
their right to evaluate the location of the Toll Plaza considering .
tile fact that they were being Jocat_ed with reference to the entire
D project of291 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 bottler:iecks. The Court went on to hold that such
detisions were to be left to the wisdom of the agencies
·E '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
a
Judge by filing Letters PateritAppeal bearing LPANo. 170/
F 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 argumerit that the shifting of the toll plaza is
G
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
H
MIS. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 647 ·
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.]

constructed to e.ase the traffic flow within stipulated A
time as 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 B
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 wou Id have to pay the toll at much lesser
rate, which is projected at Rs. 1501- per month per C
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 D
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 E
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."
F
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.
29. However, despite the orders passed by the High G
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 H
648 SUPREME COURT REPORTS [2014) 14 S.C.R.

A 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 Plata
relocation is as per the Concession Agreement. Based on this
assurance, the lenders have continued disbursement to the
B 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 NHAJ has now reversed its
decision after 2 Yi years in spite of giving the in principal
c approval.
30. It has been submitted by Dr. Singhvi that the above
change in stand of the respondent on the Toll Plaza relocation
and disallowing the appellant-Concessionaire's rights under
the Concession Agreement has a material adverse affect on
D 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
E the project without the appellant being allowed to coHect toll
from the new locations.
31. It appears thatthe appellant although had succeeded
in the High Court of Punjab and Haryana on the dispute
regarding shifting of Toll Plaza, the appellant approached the
F High Court of Delhi i.n 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
G . Delhi including the issues of mining as well as the relocation
of the Toll Plaza. It was informed that OMP Nci. 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
H Punjab and Haryana as already related hereinbefore.
M/S. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 649
HARISH KUMAR PURI [GYAN SUDHA MISRA, J.]

32. However, the High Court in its impugned order A
manifestly appears to have ignored or failed to take notice of
the orders by which the High Courtvide 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 highw<ay project entrusted to the B
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 % years
when a new Chairman of the NHAI took over the charge on C
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 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 D ·
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 E
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 F
competent to approve or disapprove the shifting. Confronted
with the glar\ng contradiction, the then counsel representing
the NHAI V{ent on to advance other arguments which were never
raised before the High Court at any point of time earlier.
34. Contesting the plea of the appellant and supporting G
the directions issued by the High Court in its impugned order,
Ms. lndu 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 H
650 SUPREME COURT REPORTS [2014] 14 S.C.R.

A 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
B 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
c that the appellant has practically suspended work on the
.National Highway ever since November 2012 even though toll
is being _collected 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
o 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
E 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 witti.
35. On the most contentious issue regarding shifting,
· F relocation of the Toll Plaza, it has been submitted thatthere 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 lias also been
submitted that Clause 48.1 of the Concession Agreement.put
G forth by the appellant that it has an unff)ttered 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
H is contrary to the provjsions and the overall scheme of the
MIS. SOMAISOLUXNH·ONETOLLWAYPVT. LTD. v 651
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.)

Concession Agreement. Such interpretation, if accepted, A
· 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 B
to unjust enrichment of the concessionaire at the cost of local
public which is not liable to pay such userfee 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 C
read Clause 48.1 of the Concession Agreement in isolation
and in complete disregard to its schedules and 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 ofthe Concession Agreement.and Clause 2.1 of D
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 ano 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 E
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 F
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 G
Agreement and would be 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 H
652 SUPREME COURT REPORTS [2014) 14 S.C.R.

A .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
B 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 ConcessionAgreef11ent and further clarified
c in the reply to the pre-bid meeting, to another pointthat 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
relocated within 20 KMs and 10 KMs from the notified urban
o limits of the respective cities mentioned therein. Admittedly,
the proposed location of Toll .Plaza at KM f10 falls within a
distance of 10 KMs of Municipal Limits of Gharonda and within
20 KMs of Municipal Limits of Kamal as well as of Panipat. In
view thereof the relocation of Toll Plaza at KM 110 as set up by
E 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
F 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
G 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 the Public Private
Partnership Appraisal Committee and subsequent thereto the
project was approved by the Cabinet Committee on Economic
H Affairs. It is only then the bids for the project were invited with
MIS. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 653
HARISH KUMAR PURI [GYAN SUDHA MISRA, J.]

the pre-determined locations of Toll Plazas specifically A.
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 B
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. c
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 arena, it is like
change the rules of the game after it had begun, which would o
be patently ~nfair 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 E
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 tbe F
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 G
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 proposed
locations contradicted the provisions of definition of Toll Plaza
and Concession Agreement. Therefore, the Independent H
654 SUPREME COURT REPORTS r2014J 14 s,c.R.

A' 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
B the Independent Engineer vide his letter dated 30.6.2010
expressed that it is not in disagreement with the shifting of
Kamal 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
C 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." Counselfor the NHAI
D however has still harped upon the previous background
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
E shifting of the Toll Plaza vide lettefdated 30.6.2010.
40. However, the same could not be made effective as
approval of the Independent Engineer to shift the Toll Plaza
gav·e rise to at least two public interest litigations referred to
herein before challenging the shifting of Toll Plaza whereby the
F 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.
G 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 constructive res judicata
and above all rule of law, the controversy regarding shifting of
H
M/S. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 655
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.]

Toll Plaza attained finality in view of final adjudication of the A
dispute regarding shifting of Toll Plaza by the Hjgh 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 B
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 C
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 ofToll
Plaza missing out that the dispute relating to shifting of Toll. D
Plaza.had already been dealt with on the judicial side by 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 E
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 F
was finally rejected stating therein thatthe 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 G ·
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 shifting. In fact, the NHAI seems to H
656 SUPREME COURT REPORTS (2014] 14 S.C.R.

A 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 LPANo.170/2012 permitting
the shifting, what legal authority was left with the Chairman,
B 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 thatthe High Court also vide
c 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
o accepted by NHAI in view of the specific clause in the
agreement to that effect.
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
E 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:S Union of India appeared which was given·
a notice by this Court merely to facilitate and resolve the
F 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
G 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
H for development of national highways. Inter alia it was
MIS. SOMAISOLUX NH ONE TOLLWAY PVT. LTD. v 657
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.]

submitted that Section 4 read with Section 8 A(1) of the A
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 B
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 C
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 ·D
the provision also urider Section 11 and Section 15 (2) and
(3) of the National Highway Authorities Act 1988 and Section
15 (2) of the said Act clearly lays down that subject to the
provisions ~f sub-section (1 ), "the form and manner in which
any contract shall be made under this Act shall be such as E
may be provid!?d 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 th is 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 F
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. G
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 invested, reasonable return, the volume of traffic and
period of such agreement.
H
658 SUPREME COURT REPORTS [2014] 14 S.C.R.

A 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
B 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
. C 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
o contract would govern the terms and conditions of the contract
between the parties who 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
E 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
. F 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 respor:ident No.6- NHAI, the role of the Union
G 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 car.i only issue the notification in this regard. We, therefore,
do not wish to go further in regard to the correctness or
H otherwise of the contentions urged on behalf of respondent
M/S. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 659
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.]

No.6 - Union of India as its status under the prevailing facts A
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 Ag"reement suffered from
the vice of some statutory violation. Since it is the appellant-
joint venture company and respondent No.6- NHAI which alone B ·
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. 0. I. to intervene or contest cannot be allowed
as the U.0.1. atthe most is a proforma respondent in this appealc
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 D
entered appearance in the matter and 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 E
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 F
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/ G
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
should have been spent on the project. It had been added that H
660 SUPREME COURT REPORTS [2014) 14 S.C.R.

A 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
B 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
c 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 throu.gh the Toll Plaza and the
commuters of Haryana will have to pay a huge toll forthe entire
Haryana portion which at present is more than Rs.100/- per
o vehicle at the Karnala Toll Plaza. If the Toll Plaza is shifted
close to the Panipat area, people traveling for 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
E 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
F 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
G 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
H service lanes. According to re.spondent No.1 highway traveling
M/S. SOMAISOLUX NH ONE TOLLWAY PVT. LTD. v 661
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.]

is a nightmare for the traveling public faced with heavy traffic A
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 B
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 C
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 o
concessionaire/appellant herein.
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 E
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 F
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 G
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 construction of the Highway for H
662 SUPREME COURT REPORTS [2014] 14 S.C.R.

A 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,
B 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
c 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
D respectively on the appellant-company and its director holding
them exclusively responsible for delay and non-completion of
construction of the highway 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
E 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 pas~ed earlier by a
co-ordinate Bench of the High Court referred to earlier.
48. Learned senior counsel Dr. Abhishek Manu Singhvi,
F 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 counterin§ the arguments advanced by the NHAI
and the respondent No.1 Mr. Harish Kumar Puri has focused
G. 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
H of the Concession Agreement. Learned counsel elaborated
M/S. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 663
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.]

that the controversy adjudicated by the High Court vide the A
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 B
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 c
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 D
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 ord(:)r of 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 E
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
thatthe said order be extended or vacated, it has indeed done
the same when it directed the NHAI to forthwith take possession F
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 G
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 H
664 SUPREME COURT REPORTS [2014] 14 S.C.R.

A h?d at least the right to explain whether ttie 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
B 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
C 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,
D 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 N HAI to the appellant concessionaire-
company was ordered to be kept in abeyance was fit to be
vacated or not as the High Court was essentially adjudicating
E 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
F 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
G 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
H
M/S. SOMAISOLUX NH ONE TOLLWAY PVT. LTD. v 665
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.]

should not be shifted from 146 KM to 110 KM. In fact, the A
respondent No.6 NHAI neither before the High Court nor before
this Court even remotely had 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 B
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 C
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 D
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 E
case the 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 F
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 G
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
H
666 SUPREME COURT REPORTS . [2014) 14 S.C.R.

A 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 limited question as to
B 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
C 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
D 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
E 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 question as to whether
the Toll Plaza should be permitted to be shifted or not This
aspect as was contended by the res·pondent No.1, had not
F been gone into by the High Court clearly missing that this
question had been raised in the PIL before the High Court
wherein the N HAI & 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·
G 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
H petitions as noted earlier, an LPA was also filed in the High
M/S. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 667
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.]

Court but the same was dismissed and the dispute regarding A
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 clearly attained finality, the respondent NHAI B
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 C
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 herein before, D
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 E
under the Concession Agreement had been overriding a
statutory provision of any central legislation 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 F
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 G
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 H
668 SUPREME COURT REPORTS [2014] 14 S.C.R.

A 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.
57. Beside the above, it is more than well settled that a
B 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
C 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
D 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
E arbitration once on the judicial side permission to shift the Toll
Plaza was permitted by the High Court of Punjab and Haryana
vide 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.
F 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
G 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
H
M/S. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v · 669
HARISH KUMAR PURI [GYAN SUD HA MISRA, J.]

subsequently the Independent Engirieer, Project Director and A
CGM NHAI in their recommendations recorded their view that
the location of two Toll Plazas is for differentfacilities 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 Concession Agreement, liberty has B
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 c
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 Pl L petitioner or any other concerned respondents.
59. Thus, the stand of the NHAI appears to be clearly D
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 E
of NHAI, minutes of meeting, stand of Independent Engineer
including its stand before the High Court of Punjab and Haryana
and 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. F
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 G
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 H
670 SUPREMECOURfREPORTS [2014] 14 S.C.R.

A 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 implementation of the
B 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
fortheNHAI to take such specious and untenable plea with a
view to wriggle out of its obligation which cannot be permitted
C 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
D 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
E 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 Concession Agreement
ignoring the ord.~rs passed py the High Court qn t_he judicial
side in two PIL petitions which were filed challenging the order
F 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
G 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
H could not have been permitted to get away from the onus of
MIS. SOMA ISOLUX NH ONE TOLLWAY PVT. LTD. v 671
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.]

delaying the project when it failed to honour its contractual A
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 and the orders
passed by the High Court while dealing with limited issue in B
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 C
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 D
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 wlien the Toll Plaza is constructed and the
revenue from toll at present is being deposited in the E
ESCROW account. It further cannot be overlooked that the
NHAI is not funding 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, F
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
respondentNo. 6 NHAI acknowledges and confirms the role G
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 H
672 SUPREME COURT REPORTS (2014] 14 S.C.R.

A 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 is not a
gainer in any manner if the project is at a stand still and the
B 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
C 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
D 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
E take over the project from the appellant-company overlooking
the bonafide of the 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
F 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
G 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
H respondent No.5 NHAI has raised serious objections in regard
MIS. SOMA ISOLUX NH ONE TOLLVVAY PVT LTD. v 673
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.]

to shifting of the Toll Plaza from KMs 146 to KM 110 which A
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 Independent Engineer in terms ofthe
agreement had granted approval to the same way back on •
30.6.2010. In addition, the dispute regarding shifting of Toll B
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
c
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 o
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 concjitions of the contract
and directed for undertaking from the appellant attributing the E
entire 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 F ·
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 G
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 3rd party being a new player is bound to
get entangled giving rise to further legal complications in the
whole process.
H
674 SUPREME COURT REPORTS [2014] 14 S.C.R.

A 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 ordered to be
,kept in abeyance by order of ihe High Court itself; was fit to
B 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
C 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
o 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 issuan.ce of any direction which may conflict or
E jeopardise the public ·interest. But the same cannot be
allowed to reach to the extent or affect 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
F 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 fhe rule of law which cannot be
G 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
H restore the construction of the balance stretch/area of the
MIS. SOMAISOLUX NH ONE TOLLWAY PVT LTD. v 675
HARISH KUMAR PURI [GYAN SUDHAMISRA, J.]

highway project by further directing the NHAI to permit the A
appellant to shift the Toll Plaza from KM 146 to any point
between KMs 11 Oand KMs 117 with concurrence of the NHAI.
The exact point of 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 B
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 c
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 o
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 E
populated and would not be 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 F
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 G
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 H
676 SUPREME COURT REPORTS [2014] 14 S.C.R.

A Highway on or before 31 51 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
B directed to report/update the progress/development of the
construction to the NHAI referred to in the Concession
Agreement after every three months from the date of
compliance of the required statutory. notification for shifting
of Toll Plaza atthe instance of the NHAI and the Ministry of
C 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
D 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 libertytO seek such other
orfurther direction from this Court in case there is bona fide
E 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.

Rajendra Prasad Appeal allowed.

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