National Highways Authority of India & Others vs Madhukar Kumar & Others

Allowing the appeal, the Court

HELD: 1. This Court would hold that as noticed by the Bench of three Judges in M/s. Mahabir Jute Mills Ltd., Gorakhpore, there is no general duty, when an administrative decision is taken, to give reasons. A Statute may, however, explicitly provide that the Executive Authority must provide reasons and it must be recorded in writing. A case in point is the first proviso to Rule 8 of the Rules itself. The desirability of a general duty, in the case of administrative action to support decisions with reason, is open to question. One of the most important reason is, the burden it would put on the administration. It is apposite, at this juncture, to notice that administrative decisions are made in a wide spectrum of situations and contexts. The executive power of the Union and States are provided in Articles 73 and 162 of the Constitution of India, respectively. Undoubtedly, in India, every state action must be fair, failing which, it will fall foul of the mandate of Article 14. It is, at this juncture, this Court may also notice that the duty to give reasons, would arise even in the case of administrative action, where legal rights are at stake and the administrative action adversely affects legal rights. There may be something in the nature or the context, under which, the administrative action is taken, which may necessitate the authority being forthcoming with rational reasons. There are other decisions, which essentially belong more to the realm of executive policy-making, which ordinarily may not require the furnishing of reasons. The advantages, undoubtedly, of introducing a reasons driven regime, are as follows. [Para 60] [343-C-G]

2. Persons, who may have a right or an interest, would know, what are the reasons which impelled the Administrator to take a particular decision. Judicial review, in India, which encompasses the wide contours of public interest litigation as well, would receive immeasurable assistance, if the reasons for particular decisions, are articulated to the extent possible. The giving of reasons also has a disciplining effect on the Administrator. This is for the reason that the reasons would capture the thought process, which culminated in the decision and it would help the Administrator steer clear of the vices of illegality, irrationality and also disproportionality. Reasons could help establish application of mind. Conversely, the absence of reasons may unerringly point to non-application of mind. The duty to act fairly, may require reasons to be recorded but the said duty, though there is a general duty on all state players to act fairly, may have its underpinnings, ultimately in legal rights. [Para 61][343-G-H; 344-A-C]

3. It is one thing to say that there should be reasons, which persuaded the Administrator to take a particular decision and a different thing to find that the reasons must be incorporated in a decision. The question, relating to duty to communicate such a decision, would arise to be considered in different situations, having regard to the impact, which it, in law, law, produces. In fact, the second proviso to Rule 17 of the Rules, provides not only for there being reasons, but the reasons for refusal to permit barricades, must be communicated. If the law provides for a duty to record reasons in writing, undoubtedly, it must be followed and it would amount to the violation of the Statute, if it were not followed. Even if, there is no duty to record reasons or support an order with reasons, there cannot be any doubt that, for every decision, there would be and there must be, a reason. The Constitution does not contemplate any Public Authority, exercising power with caprice or without any rationale. But here again, in the absence of the duty to record reasons, the court is not to be clothed with power to strike down administrative action for the mere reason that no reasons are to be found recorded. In certain situations, the reason for a particular decision, may be gleaned from the pleadings of the Authority, when the matter is tested in a court. From the materials, including the file noting’s, which are made available, the court may conclude that there were reasons and the action was not illegal or arbitrary. From admitted facts, the court may conclude that there was sufficient justification, and the mere absence of reasons, would not be sufficient to invalidate the action of the Public Authority. Thus, reasons may, in certain situations, have to be recorded in the order. In other contexts, it would suffice that the reasons are to be found in the files. The court may, when there is no duty to record reasons, support an administrative decision, with reference to the pleadings aided by materials. [Para 62][344-C-H] RULE 8 DEMYSTIFIED

4. Rule 8(1) provides that the Executing Authority or the Concessionaire shall establish toll plaza beyond a distance of 10 kilometres from a municipal or local town area limits. In this context, it is useful to bear in mind that under Rule 6, fee levied under the Rules, has to be collected by the Central Government or the Executing Authority or the Concessionaire at the toll plaza. The Executing Authority has been defined in Rule 2(f), as an Officer or Authority notified under Section 5 of the National Highway Act. It would appear, therefore, that the Executing Authority, as defined, or the Concessionaire, is empowered to establish the toll plaza beyond a distance of 10 kilometres from a municipal or local town area limits. [Para 65][347-B-D]

5. The first proviso contemplates power with the Executing Authority to locate or allow the Concessionaire to locate a toll plaza within a distance of 10 km of such municipal or town area limits. However, the proviso engrafts a limitation on the power of the Executing Authority in that the exercise of power under the first proviso, should not result in the toll plaza being located within 5 kilometres of such municipal or local town area limits. A closer look at the first proviso will indicate the following features. Unlike the main Rule, where the power is conferred on the Executing Authority and the Concessionaire, to locate a toll plaza, which must, indeed, be more than 10 kilometres from the municipal or local town area limits, there is no power conferred on the Concessionaire to locate a toll plaza within the distance of

10 kilometres. In other words, the Executing Authority is the only Authority, which can locate or allow the Concessionaire to locate within a distance of 10 kilometres but not less than 5 km. In other words, the exercise of power, under the first proviso, can result in the location of a toll plaza at a distance of five or more kilometres and below 10 kilometres from the municipal or local town area limits. The further important sine qua non for the exercise of the discretionary power conferred on the Executing Authority, is that, the Executing Authority must record reasons in writing at the time when he exercises the power to locate or permit the Concessionaire to locate the toll plaza within the distance as already mentioned. [Para 66][347-D-H]

6. Moving forward to the second proviso, it commences with the words “provided further”. Therefore, for all intents and purposes and at first blush, it is a proviso. More about it, a little later. Continuing the narrative, the second proviso, as it is described, consists of the following features. If a section of the national highway, permanent bridge, bypass or tunnel, is constructed within the municipal or town area limits, then, the toll plaza may be established within the municipal or town area limits. This is subject to the only requirement that the construction of the section of national highway, permanent bridge, bypass or tunnel, whichever may be the case, is constructed within the municipal or town area limits, primarily for the use of residents of such municipal or town area limits. If the aforesaid two requirements are fulfilled, then, the embargo that the toll plaza must be located beyond 10 kilometres from the municipal or local town area limits, contained in Rule 8, would cease to apply. Equally, the second proviso contemplates that, if a section of the national highway, permanent bridge, bypass or tunnel is located within 5 kilometres from the municipal or town area limits, then, the last limb of the proviso, would apply, and the toll plaza may be located within a distance of 5 kilometres from such limits. [Para 67] [348-A-D]

7. It will be seen that whether the construction of the section of the national highway, permanent bridge, bypass or tunnel is constructed within the municipal or town area limits or within 5 kilometres from such limits, the common requirement for invoking the power under the second proviso and to locate the toll plaza, either within the municipal limits or town limits or within a distance of 5 kilometres from such limit, is that the construction in question, must be primarily for the use of the residents of such municipal or town area. [Para 68][348-E-F]

8. Therefore, a perusal of the second proviso leaves this Court in no doubt, whatsoever that the statutory requirements to apply the second proviso and to locate a toll plaza within the municipal or town area limits, is the factum of construction of a section of the national highway, inter alia, within the municipal or town area limits, subject to the only condition that it must be primarily for the use of the residents of such municipal or town area. It would be noticed further that, unlike the main Rule and the first proviso, the second proviso does not indicate as to, in whom, the power to locate the toll plaza under the second proviso, stands vested with. In other words, unlike the main Rule and the first proviso, the Rule-maker has not indicated the person or Authority, who is to decide. Lastly, it must also to noticed that, unlike the first proviso, the second proviso does not contemplate that the reasons for exercising the discretionary power, is to be recorded in writing. [Para 70][349-B-D]

9. It would be apposite to enquire into the rationale, why the requirement of reasons being recorded, is not incorporated in the second proviso. The answer is not far to seek. The first proviso does not provide any condition precedent for locating a toll plaza at a distance of less than 10 kilometres but 5 or more kilometres from the municipal or local town area limits. The requirement is the recording of reasons. No other guidance is forthcoming. In fact, the only check on the power to relax the rigour of the Rule, that the toll plaza must be located at a distance of more than 10 kilometres from the municipal or local town area limits, are two in number. Firstly, the power is located only with the Executing Authority. Secondly, the Executing Authority is obliged, in law, to give reasons, which must be recorded in writing. Besides these safeguards, there are no other indispensable requirements to reduce the distance, as provided in the Rule. This is in stark contrast with the purport of the second proviso. The second proviso deals with a specific situation. We have already spelt out the requirements. These requirements alone would justify the location of the toll plaza either within the municipal or town limits or within a distance of 5 kilometres from such limits. The requirements are neatly articulated and cast in stone. They are objective criteria. They become the requirements of the Statue. If those requirements are met, then, the toll plaza can be established, relaxing the Rule. [Para 71][349-D-H]

10. In such circumstances, this Court is of the clear view that the High Court has erred in reading the second proviso in continuation with the first proviso and thereby concluding that, even the requirement of the first proviso, viz., the recording of reasons in writing, would also become necessary to invoke the power under second proviso. [Para 72][350-A-B]

11. As far as the question, as to who can take a decision under the second proviso, on a conspectus of Rule 8, that, in the absence of any express reference to the power to take a decision, within the meaning of the second proviso, being lodged with any particular Body, the said power must be found vested with the Executive Authority. The Court says this for the reason that, some person must, indeed, take the decision that the situation warrants locating the toll plaza, in exercise of the power under the second proviso. This Court certainly cannot lodge that power with a Concessionaire. The Rule-maker has conferred the power on the Concessionaire, expressly when it declared in Rule 8, that the Concessionaire may, apart from the Executing Authority, locate the toll plaza beyond 10 kilometres from the municipal or town area limits. The power under the first proviso, is conferred only upon the Executing Authority. Having regard to the nature of the power, viz., to locate the toll plaza, in complete contradiction with the mandate of the Rule, within the municipal area, inter alia, this Court holds that, the power to take decision under the second proviso, is lodged with the Executing Authority. [Para 75] [351-D-H]

12. To invoke the second proviso, what is required is, the existence of the conditions, as explained. However, a decision must be taken. It must be taken by the Competent Authority. The Authority is the Executing Authority. It must apply its mind and be convinced that a section of the national highway, inter alia, is constructed within the municipal or town area limits. This is a pure question of fact. Secondly, it must conclude that the said construction is ‘primarily’ or ‘mainly’ for the ‘use’ of the residents of the municipal limits. This is again a factual matter. The second proviso does not compel the Authority to locate the plaza within the municipal or town area limits. It is a matter of discretion to be exercised, no doubt, taking into consideration the maximization of toll collection also and avoiding of leakage of toll, bearing in mind the fact that the Concessionaire is permitted to collect the toll only for the period of the Concessionaire Agreement under Rule 16. To show application of mind, there must be material. Even in the absence of reasons, recorded as such, there must be proper pleadings with materials, unless facts are not in dispute. [Paras 76 and 77][352-A-D]

WHETHER INVOCATION OF THE SECOND PROVISO

TO RULE 8 IN THE FACTS ILLEGAL?

14. The appellants definitely set up the case under Rule 8 in both the counter affidavits filed by it. The statement that the second proviso applies, even if the construction is made within the municipal limits, is emphasised by the Writ Petitioners, to show the non-application of minds. This Court must, in this regard, bear in mind the nature of the lis, as also the rights of the Writ Petitioners. The High Court did not find any Fundamental Rights with the writ petitioners in the matters. The only issue is relating to violation of Rule 8. This Court has already found that upon the satisfaction of the objective criteria laid down in the second proviso, construction of the toll plaza, as provided therein, is permissible. Apart from the statement of the Writ Petitioners themselves, that the road is a national highway and it is merely for the use of the local residents, the undeniable fact is that, in place of the two-lane road, after a huge investment, it was upgraded to a four-lane road and nearly 14 kilometres of the project road, indisputably, passed through the municipal limits and the most important beneficiary of the said construction, can clearly be stated to be the residents in the municipal area. The project road, did enure chiefly to the residents of the Patna Municipality. The road from 180 to 190 kms was found to be a very congested stretch. The construction of the widened road, undoubtedly, helped mainly the residents of the municipal area. There are other features, apart from widening, including the graded separators. No doubt, it may be true that many persons may be using the said stretch, who may not be residents of the Patna Municipality, would also benefit from the construction, but that cannot detract from requirement of the second proviso being fulfilled, viz., that the construction was primarily for the benefit of the residents of the municipal area. The second proviso does not require that the construction must be solely for the benefit of the residents of the municipal area. [Para 85][357-C-H]

15. There is another aspect, which this Court cannot ignore. The construction was completed in accordance with the agreement with the Concessionaire. The Judgment of the Division Bench came to be stayed by this Court and the toll has been collected from the toll plaza. Secondly, the High Court may not be justified in finding that the commercial expediency trumped the law. Commercial expediency is, undoubtedly, a relevant fact. The exact location of the toll plaza is also geared to garner maximum revenue. Concessionaire Agreement lasts for a particular period of time. It is the Concessionaire, who makes the construction, after making the entire investment. The contract contemplates “Design, Build, Finance, Operate and Transfer (the “DBFOT”) under Rule 16 of the Rules, upon the expiry of the agreement, the fee is to be collected by the Central Government or the Executing Authority. Therefore, in such circumstances, any leakage in the toll, would naturally be sought to be avoided. As long as the site of the toll plaza is otherwise supportable, with reference to the second proviso, then, the area of judicial review, in such matters, would be extremely narrow. [Para 86][358-A-D]

16. In the Rules of 2008, Rule 2C defines a bypass as a section of the national highway bypassing a town or a city. Therefore, the question may arise, whether, when Rule 8 speaks of construction of a section of the national highway, which is within a municipal or town area limits, it will include a bypass, in view of the new definition. There is indication in the case that from 178 km, there was an existing bypass. The new construction was over the existing bypass. This Court proceed on the basis that there was construction of a National Highway partly within the municipal limits. [Para 87][358-D-F]

RULE 17: CLOSING OF SERVICE ROADS

17. Rule 17 permits additional barriers to prevent evasion of fees at the toll plaza. At places, other than “at the toll plaza”, with prior permission of the Central Government or Executing Authority, additional barriers are permitted but within 10 kilometres from the toll plaza. The Court notice these provisions to pronounce on the complaint of the Writ Petitioners that there is blocking of the service roads near the toll plaza. This Court makes it clear that barriers shall be permissible only in compliance with Rule 17 of the Rules. [Para 88][358-F-H]

WHETHER THE DECISION IS ARBITRARY

18. It is the case of the Writ Petitioners that the decision to locate site of toll plaza at 194 kilometre is arbitrary. Under Article 14 of the Constitution, no State action can pass muster, if it is found to be arbitrary. But, then, a different or even an incorrect decision, would not make an otherwise lawful decision vulnerable to judicial scrutiny. An arbitrary decision would be one which is bereft of any rationale or which is capriciously wrong, and not merely an erroneous view, in the perception of the Court. Any other view would tantamount to substituting its view for that of the Authority. Judged by the said standard, and also the nature of dispute, it cannot be held that toll plaza, having been located at a point where there was sufficient space and which would prevent the leakage of traffic, and also noticing that stretch itself consisted of a little over 50 kilometres, quite clearly, the case based on arbitrariness, is only to be repelled. [Para 94][361-F-H; 362-A]

19. This Court has found that the Executing Authority is the Competent Authority to take decision under the second proviso to Rule 8 of the Rules. This Court, no doubt, has found, there is no duty to record reasons. [Para 95][362-B]

20. The upshot of the above discussion is as follows: (1) The construction of the toll plaza at 194 kilometre was not illegal or arbitrary; (2) The direction by the High Court, to shift toll plaza, cannot be upheld and it is liable to be set aside; (3) The appellants will look at the barricades (closing of service roads) in regard to the toll plaza and permit such barricades only as are permitted in Rule 17 of the Rules. Any unauthorised barricades will be removed without any delay. (4) The First Appellant will issue suitable directions to all Executive Authorities to maintain distinct records containing the decision, invoking the second proviso to Rule 8 of the Rules. Such direction shall be issued within 3 weeks from today. (5) This Court directs the appellants as also the Concessionaire to extend the fullest benefits of the concessions under Rule 9 of the Rules. (6) Resultantly, this Court allows the Appeal and set aside the impugned Judgment of the High Court and the direction to shift the toll plaza is set aside. [Para 97][362-D-H; 363-A]

Union of India and others v. E.G. Nambudiri (1991) 3 SCC 38 : [1991] (2) SCR 451; Maharashtra State Board of Secondary and Higher Secondary Education v. K.S. Gandhi and others (1991) 2 SCC 716 : [1991] (1) SCR 772; C.B. Gautam v. Union of India and others (1993)

1 SCC 78 : [1992] (3) Suppl. SCR 12; Rajeev Suri v. Delhi Development Authority and others Transferred Case (Civil) No. 229 of 202; M/s. Mahabir Jute Mills Ltd., Gorakhpore v. Shri Shibban Lal Saxena and others (1975) 2 SCC 818 : [1976] (1) SCR 168 – relied on. Chairman, National Highways Authority of India & others v. R. Murali & others (2015) 15 SCC 647; Shenoy and Co. and others v. Commercial Tax Officer, Circle II, Bangalore and others (1985) 2 SCC 512 : [1985]

(3) SCR 659; S.N. Mukherjee v. Union of India (1990)

4 SCC 594 : [1990] (1) Suppl. SCR 44; Star Enterprises and others v. City and Industrial Development Corpn. of Maharashtra Ltd. And others (1990) 3 SCC 280 : [1990] (2) SCR 826; Sarat Kumar Dash and others v. Biswajit Patnaik and others 1995 Supp (1) SCC 434 : [1994] (5) Suppl. SCR 223; Kranti Associates (P) Ltd. v. Masood Ahmed Khan (2010) 9 SCC 496 : [2010]

(10) SCR 1070; Mohan Kumar Singhania v. Union of India 1992 Supp (1) SCC 594 : [1991] (1) Suppl. SCR 46; Commissioner of Commercial Taxes, Board of Revenue, Madras & Anr. v. Ramkishan Shrikishan Jhaver etc. AIR 1968 SC 59 : [1968] SCR 148; Indore Development Authority v. Manoharlal and others 2020

(8) SCC 129 : [2020] (3) SCR 1 – referred to.

Regina v. Secretary of State for the Home Department (Original Appellant and Cross-respondent) ex parte Doody (A.P.) (1994) 1 A.C. 531; Dover District Council v. CPRE Kent (2017) UKSC 79; Regina v. Higher

Education Funding Council Ex parte Institute of Dental Surgery [1994] 1 WLR 242; Mullins vs. Treasurer of Survey 1880 QBD 170 – referred to.