NHAI's Toll Collection Contracts Deemed Legal by Delhi High Court

The Delhi High Court recently ruled that the National Highways Authority of India (NHAI) is legally empowered to enter into contracts for the purpose of collecting fee on behalf of the Central Government under Section 7 of the National Highways Act, 1956.

The court’s decision was based on a Public Interest Litigation (PIL) that challenged the process of invitation of tenders by NHAI for collection of toll on plazas and the sharing of the portion of toll with the Toll Collectors/Concessioners.

The bench comprising Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad noted that the 2008 Rules, which prescribes the rate of fee to be levied on national highways, provides under Rule 7 that the prescribed and collected fee is to be remitted to the Central Government by NHAI. The court remarked that nothing had been shown in the writ petition that the fee which is being remitted by NHAI to the Central Government are lesser than the rates prescribed by the Central Government under the 2008 Rules.

The PIL sought a direction to NHAI to amend its contract with the Toll Collectors and make it compliant with Rule 7 of the 2008 Rules. It further sought a direction to NHAI to recover the additional money which has been earned by the Toll Collectors as a result of non-compliance of Rule 7.

The court observed that as per Section 5 of the National Highways Act, the Central Government may, by notification in the Official Gazette, direct that any function in relation to the development or maintenance of any national highway shall also be exercisable by the State Government within which the national highway is situated or by any officer or authority subordinate to the Central Government or State Government.

The court noted that under the National Highways Act, the responsibility for development and maintenance of national highways, which was with the Central Government, has now been entrusted to NHAI. It further took note that in exercise of the powers under Section 14 of the NHAI Act, which gives NHAI the power to enter into and perform any contract for discharge of its functions, NHAI enters into contracts for the purpose of collecting toll.

The court said that the contracts prescribe the fee which can be retained by the contractor from the toll collected. It also added that the fee collected by NHAI, which is one of its functions prescribed under Section 16 of the NHAI Act, for which purpose it enters into contracts for operating toll plazas, and the fee that is being sent to the Central Government, is in accordance with the 2008 Rules.

The bench concluded that the NHAI is free to enter into contracts for the purpose of collecting toll and that toll that is collected takes into account the fee that is to be paid to the Central Government under the 2008 Rules and also the amount that is paid to the toll contractor under the contract. The court dismissed the petition, noting that the fee collected by NHAI, which is one of its functions prescribed under Section 16 of the NHAI Act, for which purpose it enters into contracts for operating toll plazas, and the fee that is being sent to the Central Government, is in accordance with the 2008 Rules.

The Delhi High Court’s ruling is a significant step towards the smooth functioning of the National Highways Authority of India (NHAI) and its ability to collect fee on behalf of the Central Government. It also ensures that the fees collected by NHAI are in compliance with the 2008 Rules and that the toll contractors are being adequately compensated for their services. This ruling will go a long way in ensuring that the quality of services rendered by NHAI is maintained and that the growth of National Highways in the country is not hampered.(alert-passed)