Partly allowed

M/s B.S.S. Projects PRivate Limikted, v. Governmetn of India, rep. by its

Telangana HC1 Nov 2011WP/19417/2011

Case brief

AI extract

What is this about?

The court held the writ petition maintainable as the contract incorporated statutory user fee rates. It directed the petitioner to collect lower fees for multi-axle vehicles pending contract amendment and quashed the penalty imposed without granting sufficient time for explanation.

What did the court decide?

Petitioner directed to collect user fee at the lower rate specified in the contract Schedule-1 (Rs.130/-) for multi-axle vehicles pending contract amendment. The penalty orders dated 06.07.2011 were t

M/s B.S.S. Projects PRivate Limikted, Vs… — Contract and Commercial Disputes | Telangana HC (2011)

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HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO

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WRIT PETITION No.19417 OF 2011

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ORDER:

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This writ petition is instituted, in essence, complaining that the respondents are not acting in accordance with the National Highways Fee (Determination of Rates and Collection) Rules 2008, (henceforth noted as User Fee Rules, 2008) and consequently to set-aside the communications sent up by them on 03.07.2011 and 06.07.2011 imposing penalties against the petitioner herein.

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2. National Highways Authority of India, (henceforth noted as NHAI), floated ‘Notice Inviting Tenders’ from eligible bidders for procurement of fee collection agencies at toll plazas notified therein for a period of one year. Bids were required to be submitted latest by 11.00 A.M on 06.08.2010. The NIT indicated that pre-bid meeting will be held at 11.00 hours on 21.07.2010 at the concerned Regional Office of the NHAI. The third respondent-Chief General Manager, Hyderabad Region, through his communication dated 27.11.2010 informed the petitioner that it’s bid has been accepted by the competent authority and accordingly called upon the petitioner to deposit a sum of Rs.1,41,75,000/- and also furnish a bank guarantee for a similar amount towards performance guarantee. After the petitioner complied with the same, he was called upon to enter into a contract. On 17.01.2011, the petitioner sought for a clarification as to whether the definitions provided with regard to various classes of vehicles mentioned in the User Fee Rules 2008, should be adopted or not. However, no reply was received from the respondents in this regard. Since the time for executing the contract was drawing to a close, a contract was entered into by and between the parties on 15.02.2011 for a period of one year commencing from 01.03.2011 up to 29.02.2012. However, on 21.03.2011, a communication has been sent up to the petitioner by the Project Officer NHAI alleging collection of higher fee from certain trucks at the rate of Rs.285/- instead of Rs.130/- and to rectify the error in this regard. On 23.03.2011, a clarification has been furnished by the Project Director to the petitioner requiring him not to over charge user fee at rates other than those specified in the gazette notification No.SO 1057 (E) dated 22.07.2005. On 23.03.2011, the petitioner has drawn a detailed explanation thereto and pointed out that the petitioner has been following the User Fee Rules 2008, notified vide GSR.838 dated 05.12.2008, which classified

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the vehicles into five different categories and also provided for the definition of the said vehicles, in the matter of collection of fee. Towards the end of the said representation, it was asserted that the petitioner has been collecting charges only in terms of the contract, but not otherwise. Further, correspondence ensued on 29.03.2011 and 13.04.2011, but however on 23.06.2011, a show cause notice was issued calling upon the petitioner to explain as to why penalty be not imposed in terms of Clause 18(A) of the contract, for the alleged excess charging from trucks at the toll plaza. The petitioner responded thereto on 04.07.2011 requiring a further period of ten days for submission of the explanation as the necessary information is being collected. Without affording the ten days time as requested, on 06.07.2011 orders were passed imposing a penalty of Rs.8,55,000/- and through another proceedings of the same date, a further penalty of Rs.29,92,500/- has been imposed for the alleged collection of excess charges. This gave rise to the present writ petition.

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3. Heard learned counsel Sri B. Adinarayana Rao for the petitioner and Sri K.V. Satyanarayana for the respondents 1 to 4 and the learned counsel for the fifth respondent Sri Jalakam Sampath Kumar.

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4. Learned counsel for the petitioner would submit that the NHAI is constituted as an authority in terms of the provision contained in Section 3 of the National Highways Authority of India Act, 1988 (henceforth noted as NHAI Act, 1988). In terms of Section 11 of the said Act, the first respondent-Central Government entrusted to NHAI, a stretch of 233 kilometers of National Highway No.5 running between Kolkata to Chennai. In terms of Section 16 of the said Act, the second respondent is entitled to collect fee on behalf of the first respondent at such rates as may be notified by the Central Government. The second respondent is also empowered to entrust the collection of such fee to any person on such terms and conditions as such prescribed. Under Section 7 of the National Highways Act, 1956, (henceforth referred to as NH Act, 1956) the first respondent is entitled to levy fee for services or benefits rendered in relation to the use of National Highways. Section 9 of this Act enabled rules to be made for carrying out the purposes of the said Act. In exercise of such power, the Central Government made the National Highways (Fees for the use of National Highways Section and Permanent Bridge-Public Funded Project) Rules, 1997. Further, the first respondent has issued notification in S.O.No.1057 (E) dated 22.07.2005 fixing the rates of fee to be collected from the motor vehicle users of four lane stretch of National Highway No.5 in the State of Andhra Pradesh. Under this

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notification, the vehicles from which the fee can be collected are classified into four categories and the rates of fee to be collected for the one way trip and the multi trips per day were also mentioned. The first respondent has issued User Fee Rules, 2008, and published the same through GSR.No.838 (E) dated 05.12.2008. These rules were brought into force with effect from 05.12.2008. These rules have provided definitions of the vehicles and the petitioner herein has only collected the corresponding fee in accordance with the definition of the vehicles as per the User Fee Rules, 2008. Thus, notwithstanding that the petitioner is acting strictly in furtherance of the User Fee Rules, 2008, the respondents have unjustly proceeded against the petitioner.

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5. It is further contended by the learned Senior Counsel for the petitioner that the User Fee Rules, 1997, do not define various types of vehicles, which were mentioned in the notification dated 22.07.2005. Therefore the definitions found in the User Fee Rules, 2008, have got to be adopted and followed in respect of the categories of vehicles mentioned in the notification dated 22.07.2005. The User Fee Rules, 2008, the moment were brought into force, become applicable and the NHAI cannot either decline or prevent the same from being given effect to. Further, the User Fee Rules, 2008, equates ‘multi axle vehicles’ with heavy construction machinery and earth moving equipment. Therefore, when the petitioner has collected the fee from multi axle vehicles as per the fee rate notified on 22.07.2005 for heavy construction machinery and earth moving equipment, and hence the action of the petitioner cannot be faulted in any manner by NHAI. Further, penalty can be imposed only when it is established that the collecting agency had charged user fee in excess of the prescribed fee but not otherwise. Further, when the petitioner has sought for ten days time, for drawing a detailed explanation in the matter without granting the same, action is initiated imposing penalty. Therefore, the impugned orders are unsustainable in law.

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6. Per contra, Sri K.V. Satyanarayana, learned senior counsel for the respondents 1 to 4 would submit that the User Fee Rules, 2008 have suffered an amendment making it very clear that the 2008 rules will not be applicable in cases where bids were invited prior to the said amendment. In the instant case, bids were invited prior to the amendment of the User Fee Rules, 2008 and hence the 2008 rules will not be applicable. It was further contended that the contract has specifically provided for collection of fee only as per the notification dated 22.07.2005 and it has also been specifically provided for in the contract that the

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petitioner would not be seeking any modification or correction of the rates and for the established breach thereof - as the petitioner has been found charging in excess - very rightly the petitioner has been imposed with the penalty. It is further contended that the petitioner cannot interpret any term of the contract independently on his own and the petitioner cannot proceed unilaterally in the matter by collecting excess fee. It is further contended that a term of contract cannot be got implemented or enforced or interpreted through a legal process under Article 226 of the Constitution and hence the writ petition is not maintainable.

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7. It was further pointed by the learned senior counsel that inspite of this Court granting stay of collection of the penalty imposed only and has issued notice only on the interlocutory application moved by the petitioner seeking directions to enable him to collect the fee, as per 2008 rules, but still, contrary to the position taken by him in his explanation dated 29.03.2011, the petitioner continued to collect excess fee and hence imposition of the penalty against him is thoroughly justified. However, learned counsel would submit that the NHAI is willing to reconsider the question of imposition of the penalties against the petitioner provided he submits a detailed explanation within a reasonable period.

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8. Sri Jalakam Sampath Kumar, learned counsel appearing for the fifth respondent, Truck Owners Association, would submit that the petitioner has been charging in excess from the truckers and he has solicited specific directions from this Court to enable him to collect the fee as per the User Fee Rules, 2008, but the same was not granted by this Court, so far, but however on the pretext that this writ petition is pending, he is going ahead duly collecting the excess amount. He therefore submits that no equities should be shown towards the petitioner.

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9. Under entry 23 of List I of the Seventh Schedule of our Constitution, Parliament has the exclusive power of legislation with respect to highways which are declared to be National Highways by or under law made by Parliament. Accordingly, when certain highways are proposed to be declared as National Highways so that the Central Government may exercise the necessary power in respect of construction, development and maintenance of such highways and also with a view to authorize collection of fee for certain types of services rendered on national highways, the National Highways Act 1956, has been enacted by the Parliament. In terms of Sub-section 1 of Section 2 of the NH Act 1956, each of the highways specified in the schedule appended to the said Act

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has been declared to be a National Highway. The highway starting from its junction near Bahragora and connecting, Cuttak, Bhubaneshwar, Visakhapatnam, Vijayawada and Madras (since now rechristened as Chennai) has been declared as National Highway No.5 in the schedule to the NH Act 1956. In terms of Section 4 of this Act all national highways vest in the Union and in terms of Section 5, it shall be the responsibility of the Central Government to develop and maintain in proper repair all national highways. Section 7 of this Act empowers the Central Government, by notification in the Official Gazette to levy fees at such rates as may be laid down by rules made in this behalf for services or benefits rendered in relation to the use of ferries, bridges, tunnels and the use of sections of national highways. Sub-section 2 of Section 7 empowers collection of such fee in accordance with the rules made under this Act. Section 9 conferred the rule making power on the Central Government for carrying out the purpose of this Act. In exercise of this power, the National Highways Fee (Determination of Rates and Collection) Rules, 2008 (User Fee Rules 2008 for short) have been framed. These rules were published on 05.12.2008 in the Gazette of India and thus were brought into force with effect from the said date. Under Rule 3, the Central Government was empowered, by notification to levy fee for use of any section of the National Highway. Rule 4 provided for prescription of the rate of fee for use of the Section of National Highway. Sub-rule 2 of Rule 4 provided for the base rate of fee per kilometer for various types of motor vehicles. It reads as under together with the explanation:-

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Type of Vehicle	Base rate of fee per km (in Rupees)
Car, Jeep, Van or Light Motor Vehicle	0.65
Light Commercial Vehicle, Light Goods	1.05
Vehicle or Mini Bus
Bus or Truck	2.20
Heav y Construction Machinery (HCM) or Earth Moving	3.45
Equipment (EME) or Multi Axle Vehicle (MAV) (three to six axles)
Oversized Vehicles (seven or more axles)	4.20

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Explanation:- For the purposes of this rule,-

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(a) “car” or “jeep” or “van” or “light motor vehicle” means any mechanical vehicle the gross vehicle weight of which does not exceed seven thousand five hundred kilograms or the registered passenger carrying capability as specified in the certificate of registration issued under the

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Motor Vehicles Act, 1988 does not exceed twelve excluding the driver;

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(b) “light commercial vehicle” or “light goods vehicle” or “mini bus” means any mechanical vehicle with a gross vehicle weight exceeding seven thousand five hundred kilograms but less than twelve thousand kilograms or the registered passenger carrying capability as specified in the certificate of registration issued under the Motor Vehicles Act, 1988, exceeds twelve but does not exceed thirty two excluding the driver;

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(c) “truck” or “bus” means any mechanical vehicle with a gross vehicle weight exceeding twelve thousand kilograms but less than twenty thousand kilograms or the registered passenger carrying capability as specified in the certificate of registration issued under the Motor Vehicles Act, 1988, exceeds thirty-two, excluding the driver;

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(d) “heavy construction machinery” or “earth moving equipment” or “multi axle vehicle” means heavy construction machinery or earth moving equipment or mechanical vehicle including a multi axle vehicle with three to six axles or vehicle with a gross vehicle weight exceeding twenty thousand kilograms but less than sixty thousand kilogram; and

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(e) “oversized vehicle” means any mechanical vehicle having seven or more axles or vehicle with a gross vehicle weight exceeding sixty thousand kilograms.

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Rule 6 empowered the Central Government or the executing authority or the concessionaire, as the case may be, to collect the fee levied under these rules at the toll plazas, in perpetuity or for a specified period in accordance with the terms of the agreement entered into by the concessionaire. In respect of public funded projects, the fee levied under these rules shall be collected by the Central Government, or the executing authority, as the case may be, through its own officials or through a contractor. Rule 13 provided for recovery of the excess fee collected along with additional sum equal to 25% of the excess fee collected, provided that no such recovery shall be made unless an opportunity of hearing has been given to the executing authority or concessionaire, as the case may be.

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10. It is important to note that the User Fee Rules 2008, have been made in supersession of the National Highways (Collection of Fees by any person for the

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use of Section of National Highways / permanent Bridge / Temporary Bridge on National Highway) Rules 1997, National Highways (Fees for the Use of National Highways Section and Permanent Bridge – Public Funded Project) Rules, 1997, the National Highways (Rate of Fees) Rules 1997, except as respects things done or omitted to be done before such supersession.

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11. With a view to provide for the constitution of an authority for the development, maintenance and management of National Highways and for matters connected therewith or incidental thereto the National Highways Authority of India Act, 1988, (NHAI Act, 1988 for convenience) has been enacted by the Parliament. In terms of Section 3 of this NHAI Act 1988, the Central Government constituted NHAI. Section 11 of this Act empowered the Central Government by notification in the Official Gazette to vest or entrust to NHAI, such National Highway or any stretch thereof specified in such notification. Section 12 has dealt with the effect of transfer of assets and the liabilities of the Central Government to the NHAI upon publication of the notification under Section 11. Section 14 empowered the NHAI to enter into and perform any contract necessary for the discharge of its functions under this Act. Section 16 provided for the functions of the NHAI. Sub-section 1 of Section 16 makes it explicitly clear that it shall be the function of the NHAI, subject to the rules made by the Central Government to develop, maintain and manage the National Highways and any other highways vested in or entrusted to it by the Central Government. Sub-section 2 provided the detailed functions which NHAI may perform, without prejudice to the generality of the functions enumerated under Sub-section (1) thereof. Clause (h) of Subsection 2, which has been brought forth by amending Act 16 of 1997, enabled the NHAI to engage or entrust any of its functions to any person on such terms and conditions as may be prescribed. Section 33 empowers the Central Government to issue such directions on questions of policy in the matter of discharge of functions and duties by the NHAI under this Act. Section 34 enables the Central Government to make rules by notification in the official gazette for carrying out the provisions of this Act. Clause (dd) of Sub-section 2 of Section 34 provided for the terms and conditions subject to which the functions of the NHAI may be entrusted to any person. Under Clause (h) of Sub-section 2 of Section 16. Section 37 provides for the Parliamentary control over the subordinate legislation/delegated legislation resorted to under this Act.

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12. The User Fee Rules 2008, have been amended, once on 03.12.2010 and again on 12.01.2011. The amendments brought about on 03.12.2010 may not

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have much of significance for the present case on hand but however the amendments brought about on 12.01.2011 have some significance. Sub-rule 3 of Rule 1 of 2011 rules sets outs that the amended rules shall not apply to agreements and contracts executed and bids invited prior to the publication of these rules. It is apt to notice that bids in the instant case have been invited prior to the publication of these amended rules on 12.01.2011 and the bid of the writ petitioner has been accepted, in fact on 27.11.2010. By Rule 2(a) of the amended rules 2011, the table incorporated in Sub-rule 2 of Rule 4 of User Fee Rules 2008, as well as the explanation in para (d) there under have been substituted with the following table and explanation (d).

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2. (a) In National Highways Fee (Determination of Rates and Collection) Rules, 2008 (hereinafter referred to as the said rules), in sub-rule (2) of rule 4,-

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(i) for the table, the following table shall be substituted, namely:-

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Type of Vehicle	Base rate of fee per km (in Rupees)
Car, Jeep, Van or Light Motor Vehicle	0.65
Light Commercial Vehicle, Light Goods	1.05
Vehicle or Mini Bus
Bus or Truck	2.20
Heav y Construction Machinery (HCM) or Earth Moving	3.45
Equipment (EME) or Multi Axle Vehicle (MAV) (three to six
axles)
Oversized Vehicles (seven or more axles)	4.20

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(ii) in the explanation, for para ‘(d)’, the following shall be substituted, namely:-

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“(d) ‘Heavy construction machinery’ or Earth moving

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equipment’ or Multi-axle vehicle’ means heavy construction machinery or earth moving equipment or mechanical vehicle including a multi-axle vehicle with for to six axles or vehicle (inclusive of the axle of the trailer, if any) with a gross vehicle weight exceeding twenty five thousand kilograms but less than sixty thousand kilograms;”;

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13. By notification No.S.O.78 (E) dated 04.02.1999, the Central Government exercised the power available with it under Section 11 of NHAI Act, 1988 and entrusted the stretch from Km 0.00 to Km 233.00 of National Highway No.5 in the

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State of Andhra Pradesh to the NHAI. Thereafter, the Central Government in exercise of power available to it under Section 7 of the NH Act 1956, read with Rules 3,5 and 11 of the National Highways (Fees for the Use of National Highways Section and permanent Bridge – Public Funded Project) Rules 1997 and Sub-rule 2 of Rule 3 of the National Highways (Rate of Fee) Rules 1997, through Notification No.1057 (E), notified the levy and collection of fee on mechanical vehicles for the use of four lane stretch from Kms. 160.00 to Kms. 226.15 (Km 543.204 to Km 477.054) between Nandigam to Ichapuram of National Highway No.5 in the State of Andhra Pradesh at the rates specified in the schedule annexed thereto in perpetuity. This notified fee is authorized to be collected departmentally by NHAI or through private contractor who may be appointed on the basis of competitive bidding. The rates specified in the schedule of this notification are as follows:

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Rate of fee to be recovered from the users of four laned stretch from Km 160.00 to Km 226.15 (Km 543.204 to Km 447.054) of National Highway No.5 in the State of Andhra Pradesh.

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The fee shall be collected at single location only within the stretch.

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Serial Number	Type of Vehicle	Fee rate for Vehicle for one way trip (for 66.15 Km. length) (In Rupees)	Fee rate for multiple trip in a day (In Rupees)
(1)	(2)	(3)	(4)
1.	Car/ Jeep / Van	40	55
2.	Light Commercial Vehicle	65	100
3.	Truck / Bus	130	200
4.	H e a v y Construction Machinery / Earth Moving Equipment	285	425

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14. Immediately after this table, notes were also appended and note 4 thereof reads as under:

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“No fee shall be levied and collected from a mechanical vehicle, which is not covered by the said Schedule.”

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15. As was already noticed supra, parties have entered into a contract on 15.02.2011 reducing the terms and conditions subject to which the writ petitioner shall carry out the job of User Fee Collection. Clause No.3 specified that the contractor shall collect user fee at such rates only and from such vehicles only as have been notified by the Central Government vide notification No.S.O.1057 (E) dated 22.07.2005, which is appended as Schedule 1 to the contract. Clauses 3

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(b) and (c) of the contract read as under:

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“(b) The Contractor specifically undertakes not to claim during continuity of the Contract any change including addition, deletion and change in the classification mentioned or the rate of User Fee specified in the Notification referred above and appended to this Contract a s Schedule I for any reason whatsoever, under any circumstance.

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(c) The Contractor shall not be allowed to make its own interpretation about a particular type of vehicle attracting a particular rate so as to charge a higher rate from a particular type of vehicles. Decision of the Authority on such matter shall be final and binding.”

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16. Clause No.5 dealt with the impact of any change in the rate of user fee that might be brought about by the Central Government. Clause No.18 provided for penalty for charging excess user fee. It granted liberty to the respondents to impose a penalty of an amount equal to fifty times amount so charged per day for thirty days. Clause No.26 listed out the disputes with regard to matters covered under Condition No.3, amongst others, as non-arbitrable disputes. With regard to rest of the disputes not covered by the said Clause, the resolution mechanism has been provided for by way of arbitration. The dispute in this case is centering around Clause 3 of the contract. Hence, it is not arbitrable.

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17. The various types of vehicles which have been mentioned in the Notification No.S.O.1057 (E) dated 22.07.2005 have not been specifically defined therein. However, truck and bus are shown at Serial No.3 of the said notification and for one way trip of such a vehicle, Rs.130/- is the fee prescribed as chargeable. In contrast thereto, at Serial No.4, Heavy Construction Machinery / Earth Moving Equipment have been notified as chargeable at Rs.285/- per one way trip. Significantly, this notification has not clubbed `Multi Axle vehicles’ in the same class along with Heavy Construction Machinery or Earth moving equipment. The allegation thrown against the petitioner is that he is charging Rs.285/- per one way trip on ‘Multi Axle Trucks’ whereas, the claim of the respondents is that such vehicles are liable to be charged only Rs.130/- per one way trip. A perusal of the terms settled in the contract clearly indicated that the

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rates of user fee liable to be collected by the writ petitioner are to be regulated by the rates specified in notification No.1057(E) dated 22.07.2005. That is a conscious decision arrived at by and between the parties. Notification No.1057(E) is issued by the Central Government in exercise of the power available to it under Section 7 of the NH Act, 1956. Therefore, it has a statutory basis and enforceability. The National Highways(Fees for the use of National Highways Section and Permanent Bridge – Public Funded Project) Rules, 1997, (henceforth referred to as User Fee Rules, 1997) are of very little help, in the present context, in as much as these rules did not attempt to define the various types of motor vehicles that might hit the national highways. Further, Rule 3 of the User Fee Rules, 1997, has only set out that there shall be levy of fee on mechanical vehicles at the rates notified by the Central Government in the Official Gazette in respect of such National Highway Section. Therefore, the 1997 Rules are of little guidance to us.

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18. The User Fee Rules, 2008, were framed by the Central Government in exercise of the power conferred by the Section 9 of NH Act, 1956 and in supersession of various rules including the User Fee Rules, 1997. They were brought into force prior to floating of tenders by the respondents and also acceptance of the bid of the writ petitioner. Rule 4 of the User Fee Rules, 2008 classified the various vehicles for the purpose of collection of fee into five different types. While there is no difficulty with regard to the vehicles which are enumerated at serial numbers 1 to 3 of the Rule 4, as they are almost identical with those mentioned at serial numbers 1 to 3 of the Notification No.1057 (E) dated 22.07.2005, at Serial No.4 of the table incorporated under Rule 4 of 2008 Rules, three different classes of vehicles were included, they are, Heavy Construction Machinery (HCM) / Earth Moving Equipment (EME) / Multi Axle Vehicles (MAV) (3 to 6 axles). At Serial No.5, the next class of vehicle was shown as Over-Sized vehicles (having 7 or more axles). Therefore, the question is whether the writ petitioner is justified in charging Multi Axle Vehicles which are having 3 to 6 axles at par with Heavy Construction Machinery and Earth Moving Equipment. It is no doubt true that in the Notification No.1057 (E) dated 22.07.2005, there is no mention of Multi Axle Vehicle or the Over-Sized vehicles. Does it mean that if a over-sized vehicle having more than seven axles were to hit that stretch of the national highway, the petitioner shall only collect of Rs.130/- for one way trip, considering the said over-sized vehicle also as a mere truck? Significantly, the Notification No.1057 (E) uses the expression mechanical

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vehicle in Note No.4 appended down below the table. The said notification does not define what is meant by a mechanical vehicle. Such an expression has been defined in 1997 User Fee Rules in Rule 2(c) in the following terms.

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“(c) “mechanical vehicle” means any laden or unladen vehicle designed to be driven under its own power including a motor vehicle as defined in clause (28) of Section 2 of the Motor Vehicles Act, 1988 (59 of 1988);”

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19. It is, therefore clear to my mind that the Notification No.1057 (E) published by the Central Government is intended to give effect to Rule 3 of the 1997 User Fee Rules. When once the 1997 User Fee Rules are superseded by the User Fee Rules 2008, can the respondents still fall back upon the Notification No.1057 (E)?

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20. Notification No.1057 (E) dated 22.07.2005, was issued plainly for giving effect to Rule 3 of the User Fee Rules, 1997, but whereas the User Fee Rules, 2008, are a comprehensive set of rules. They have provided for the base rate of fee and defined the various types of mechanical vehicles and the annual revision of rate of fee and other related matters. The User Fee Rules, 2008, have been brought into force with effect from 05.12.2008. There is no alternative for the respondents except to act in furtherance thereof. The User Fee Rules, 2008, have statutory backing and they have enforceability. The only exception carved out to their application was set out in the very preamble, that is, as respects things done or omitted to be done before such supersession. In other words after the 1997 User Fee Rules are superseded, the respondents have no authority to regulate their affairs as respect things to be done henceforth. In other words, if a contract has not been entered into or bids are not invited otherwise by 05.12.2008 by the respondents, they are bound to regulate their affairs in that respect in accordance with User Fee Rules. It is no doubt true that the learned senior counsel for the respondents has rightly pointed out that the 12.01.2011 amendment brought about to the User Fee Rules, 2008, makes the position clear that they shall not be applicable, in case bids are invited prior to 12.01.2011. Therefore, the amendment brought about on 12.01.2011 to the User Fee Rules, 2008, will not get attracted to the case on hand as bids were invited and the bid of the petitioner was accepted on 27.11.2010, prior to such an amendment. But however, it is the pre-amended table provided under Rule 4 of the User Fee Rules 2008, which should be rendered applicable to the case of the petitioner.

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21. It is therefore appropriate to notice the table appended under Rule 4 of the 2008 Rules, which was modified by 12.01.2011 amended rules. They read as under.

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Table A: User Fee Rules, 2008

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Type of Vehicle	Base rate of fee per km (in Rupees)
Car, Jeep, Van or Light Motor Vehicle	0.65
Light Commercial Vehicle, Light Goods	1.05
Vehicle or Mini Bus
Bus or Truck	2.20
Heav y Construction Machinery (HCM) or Earth Moving	3.45
Equipment (EME) or Multi Axle Vehicle (MAV) (three to six axles)
Oversized Vehicles (seven or more axles)	4.20

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Table B: Amended Table by Notification dated 12.01.2011

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Type of Vehicle	Base rate of fee per km (in Rupees)
Car, Jeep, Van or Light Motor Vehicle	0.65
Light Commercial Vehicle, Light Goods	1.05
Vehicle or Mini Bus
Bus or Truck (Two Axles)	2.20
Three-axle commercial vehicles	2.40 *
Heav y Construction Machinery (HCM) or Earth Moving	3.45
Equipment (EME) or Multi Axle Vehicle (MAV) (four to six
axles)
Oversized Vehicles (seven or more axles)	4.20

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[This was newly introduced]

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22. It therefore becomes intensively clear that the base rate of fee for Car, Jeep, Van or Light Motor Vehicle and Light Commercial Vehicle, Light Goods Vehicle or Mini Bus and Heavy Construction Machinery (HCM) or Earth Moving Equipment (EME) or Multi Axle Vehicle (MAV) and Over-sized vehicles remained the same. The base rate of fee is amended only in respect of three axle commercial vehicles, while for the truck or the bus which is also included at Serial No.3 of the notification, the base rate of fee has not been altered to them. Only with regard to three axle vehicles, the new base rate of fee has been prescribed which is slightly higher than the base rate chargeable for a truck or a bus. It is therefore clear that three axle commercial vehicles are sought to be charged differently pursuant to the amendment brought about to the rules on 12.01.2011,

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at a higher rate than that of a truck or a bus. Therefore, these amended base rates of fee notified on 12.01.2011 cannot be chargeable by the petitioner. However, the base rate of fee prescribed by the User Fee Rules, 2008, has got to be adopted and applied to the contracts in question, since bids were invited and accepted after 05.12.2008, the date on which the 2008 Rules were brought into force.

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23. It is important to notice that it is a settled principle of law, that the disputes relating to Ordinary contracts cannot be agitated under Article 226 of the Constitution of India as was laid down in Bareilly Development Authority Vs. Ajai Pal Singh^[1] , State of U.P. Vs. Bridge and Roof Co. (India) Ltd .^[2] , State of Bihar Vs. Jain Plastics and Chemicals Limited^[3] , National Highways Authority of India Vs. Ganga Enterprises^[4] , Assistant Excise Commissioner Vs. Issac Pete r^[5] .

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24. Learned senior counsel for the respondents has placed reliance upon the Judgment of the Supreme Court rendered in Kerala State Electricity Board Vs. Kurien E Kalathi l^[6] . In paragraphs 10 and 11, the following principles have been enunciated therein.

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“10. We find that there is a merit in the first contention of Mr. Rawal. Learned counsel has rightly questioned the maintainability of the writ petition. The interpretation and implementation of a clause in a contract cannot be the subject-matter of a writ petition. Whether the contract envisages actual payment or not is a question of construction of contract? If a term of a contract is violated, ordinarily the remedy is not the writ petition under Article 226, we are also unable to agree with the observations of the High Court that the contractor was seeking enforcement of a statutory contract. A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. We are also unable to agree with the observation of the High Court that since the obligations imposed by the contract on the contracting parties come within the purview of the Contract Act, that would not make the contract statutory. Clearly, the High Court fell into an error in coming to the conclusion that the contract in question was statutory in nature.

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11. A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the

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agreement is a statutory or public body will not of itself affect the principles to be applied. The disputes about the meaning of a convenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a petition under Article 226 of the Constitution of India. That is a matter for adjudication by a civil Court or in arbitration if provided for in the contract. Whether any amount is due and if so, how much and refusal of the appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have been relegated to other remedies.”

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25. It is important to notice the features of a statutory contract as laid down in India Thermal Power Limited Vs. State of M.P. and others^[7] . In paragraph 11, it stated as under.

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“11. It was contended by Mr. Cooper learned senior counsel appearing for appellant GBL and also by some counsel appearing for other appellants that the appellant/IPPs had entered into PPAs under Sections 43 and 43-A of the Electricity (Supply) Act and as such they are statutory contracts and, therefore, MPEB had no power or authority to alter their terms and conditions. This contention has been upheld by the High Court. In our opinion the said contention is riot correct and High Court was wrong in accepting the same. Section 43 empowers Electricity Board to enter into arrangement for purchase of electricity on such terms as may be agreed. Section 43-A(1) provides that a generating company may enter into a contract for the sale of electricity generated by it with Electricity Board. As regards the determination of tariff for the sale of electricity by a generating company to the Board, Section 43(1)(2) provides that the tariff shall be determined in accordance with the norms regarding operation and plant load factor as may be laid down by the authority and in accordance with the rates of depreciation and reasonable return and such other factors as may be determined from time to time by the Central Government by a notification in the official gazette. These provision clearly indicate that the agreement can be on such terms as may be agreed by the parties except that the tariff is to be determined in accordance with the provision contained in Section 43-A(2) and notifications

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issued thereunder. Merely because a contract is entered into in exercise of an enacting power conferred by a statute that by itself cannot render the contract a statutory contract. If entering into a con-j tract containing prescribed terms and conditions is a must under the statute than that contract becomes a statutory contract. If a contract incorporate certain terms and conditions in it which are statutory then the said contract to that extent is statutory. A contract may contain certain other terms and conditions which may not be of a statutory character and which have been incorporated therein as a result of a mutual agreement between the parties. Therefore, the PPAs can be regarded as statutory only to the extent that they contain provisions regarding determination of tariff and other statutory requirements of Section 43-A(2). Opening and maintaining of an Escrow Account or an Escrow Agreement are not the statutory requirements and, therefore, merely because PPAs contemplate maintaining Escrow Accounts that obligation cannot be regarded as statutory.”

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26. When we apply the principle enunciated in India Thermal Power Limited to the present case, it emerges that the present contract is not a mere contract entered into by virtue of an enabling provision but it has incorporated certain terms and conditions in terms of and in accordance with the provisions contained in Sections 11 & 16 of NHAI Act, 1988 read with Section 7 of NH Act, 1956. Thus, to that extent, the contract becomes statutory contract. It is for the Central Government to specify user rates chargeable for the services rendered on National Highways, by framing Rules in terms of Section 9 of the NH Act, 1956. Rules in this respect have been framed by the Central Government once in 1997 and while superseding them, new set of Rules are framed in 2008. Hence, to the extent that the present contract incorporated, the rates of user fee liable to be collected by the petitioner, it retains the statutory flavour. Therefore, in my opinion, the writ petition is maintainable and it stands entirely on different footing from the ordinary commercial contract. The principles enunciated in various judgments noticed supra, are therefore, distinguishable.

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27. From an analysis of the provisions of NHAI Act, 1988, it emerges that the NHAI and it’s officials are only entitled to enter into contracts with private contractors for collection of user fee, but they cannot independently negotiate any terms relating to the quantum of user fee that is liable to be collected from the national highway motor vehicle users. Such rates of fee, as determined and notified by the Central Government in exercise of the power available to it under Section 7 of the NH Act, 1956, have to be incorporated in every such contract

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which the respondent NHAI enters into. In other words, it can neither increase nor decrease the rates of user fee as prescribed by the Central Government. NHAI has no such power or competence. The power to levy fees at such rates for services rendered on National Highways has been conferred exclusively on the Central Government by the Parliament in terms of Section 7 of the NH Act, 1956. Section 16 of the NHAI Act, 1988 merely enabled the NHAI, either to collect the said fee by itself or enter into a contract with a 3^rd party for collecting the said fee. Therefore, the demand of the writ petitioner to incorporate the 2008 User Fee Rates is legitimate and justified.

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28. In the instant case, mercifully, the contract has provided for severability in Clause 28 and for amendment in Clause 39. Of course, such an amendment has got to be the result of mutual agreement by the parties.

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29. Learned Senior Counsel for the respondents has rightly pointed out that there is a direct linkage between the classification of the vehicles and the user fee chargeable for such vehicles and the bid amount, liable to be collected from the petitioner. It stands to reason and logic to understand the intricate relationship between the classification of vehicles and the user fee rate prescribed therefor. The impact that is left on the road by usage of the vehicle, undoubtedly forms one of the determinative factors behind fixation of the user fee. Depending upon the user fee rate liable to be collected, proportionately, the bid amount can be determined. Higher the rate of user fee, it is reasonable for the respondents to expect higher quantums of bid amounts. Therefore, it is open to the respondents, while affecting the amendment to the contract entered into herein with the petitioner for securing an increase in the bid amount.

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30. However, the petitioner has started collecting Rs.285/- for a single way trip from three or multi axle vehicles. That is plainly contrary to the agreed terms wherein, User Fee Rates notified on 22.07.2005 have been incorporated in the contract. Till such time an amendment is brought about replacing Schedule 1 of the contract with the User Fee Rates of 2008, as they stood prior to 12.01.2011, the petitioner is not liable to charge Rs.285/- any such multi axle truck, treating it as a Heavy Construction Machinery (HCM) or Earth Moving Equipment (EME). A Multi Axle Vehicle (MAV), as a Heavy Construction Machinery (HCM) or Earth Moving Equipment (EME). They stand apart. Notification dated 22.07.2005 did not talk of multi axle vehicles at all. Multi axle vehicles have been brought forth only by the 2008 User Fee Rules. Again by 12.01.2011 amendment, three axle

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vehicles are segregated from multi axle vehicles and over-sized vehicles. Therefore, the petitioner shall not collect Rs.285/- from three or multi axle vehicles, till such time the amendment is brought about to the contract, he entered into with NHAI.

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31. The writ petitioner has pointed out that prior to his taking over the toll plaza, it was operated by NHAI departmentally. During that tenure, NHAI has itself collected Rs.285/- from Multi Axle Trucks. Possibly, that could be justified in view of the User Fee Rules, 2008, which enabled Rs.285/- to be charged to such trucks. However, I do not wish to pronounce a final opinion thereon, as that is a matter, which requires further investigation, for confirmation as a matter of fact that NHAI did collect Rs.285/- or not and other related aspects.

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32. The fact remains the petitioner has been put on show cause notice by the NHAI. He sought for ten days time on 04.07.2011 for furnishing a detailed response thereto. Instead of granting the said time, the respondents proceeded to impose penalty through their order dated 06.07.2011. Learned senior counsel appearing for the respondent is gracious enough to suggest that the order of penalty imposed on 06.07.2011 be set-aside and the matter be remitted back to enable the petitioner to file his detailed explanation within a reasonable period of time. This suggestion deserves to be accepted, in as much as Rule 13 of the User Fee Rules 2008 clearly specified that, before imposing penalty, an opportunity of hearing should be provided. While an opportunity has been provided to the petitioner by issuing him a show cause notice, but however when he prayed for time of ten days to gather necessary material in support of his defence, such a genuine request has been turned down by the respondents. Whereas, the second penalty order has not even put the writ petitioner on prior notice. Therefore, it is infirm from the very beginning.

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33. I therefore direct the petitioner to treat the two orders passed by the NHAI on 06.07.2011 as preliminary conclusions reached by the respondents and file his detailed explanation thereto within fifteen days from today. Upon consideration of that explanation only, the respondents will finalize the entire matter.

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34. I consider it reasonable to accord a thirty day period for the petitioner as well as the respondents to re-negotiate the terms to bring about the amendment to the contract in question. Till such time, the petitioner will collect the user fee

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strictly in accordance with Schedule (1) of the contract and shall not charge Rs.285/- from three or multi axle vehicles but shall charge only Rs.130/-.

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35. In the result, the writ petition is allowed to the extent indicated, but however, without costs.

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___________________________ NOOTY RAMAMOHANA RAO, J

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1^st November, 2011 Sp/knk LR copy to be marked (b/o) Knk

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*THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO

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+WRIT PETITION NO.19417 OF 2011

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% 01-11-2011

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Between: M/s. B.S.S. Projects Private Limited Plot No.65, Street No.1, Sagar Society, Banjara Hills, Road No.2, Hyderabad Rep. by its Managing Director ..... PETITIONER

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AND

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1. The Government of Andhra Pradesh, Rep. by its Secretary, Ministry of Shipping, Road Transport and Highways New Delhi.

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2. National Highways Authority of India, G 5 & 6,Sector-10, Dwarka, New Delhi-110 075.

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3. The Chief General Manager, Hyderabad Regional National Highways Authority of India Dr.No.8-2-334/18, Road No.13, Banjara Hills, Hyderabad

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4. The Project Director, Project Implementation unit, National Highways Authority of India House No.3-58, Visakha Road Colony, Srikakulam-532 001

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5. The Andhra Pradesh lorry Owners Association GF Surya Towers, NCB Towers, Benz Circle

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Vijayawada-520 010 Rep. by its President, P. Gopal Naidu

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.....RESPONDENTS

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For the Petitioner : M/s B. Adinarayana Rao For the Respondents : Sri M.Radhakrishna for R1 to R4. Sri Jalakam Sampath Kumar for R5 < Gist: > Head Note: ? CITATIONS: 1. 1989 (2) SCC 116 2. 1996 (6) SCC 22 3. (2002) 1 SCC 216 4. (1994) 4 SCC 104 5. 2000 (6) SCC 293 6. 2000 (3) SCC 379

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[1] 1989 (2) SCC 116 [2] 1996 (6) SCC 22 [3] (2002) 1 SCC 216 [4] 2003 (7) SCC 410 [5] (1994) 4 SCC 104 [6] 2000 (6) SCC 293 [7] 2000 (3) SCC 379

M/s B.S.S. Projects PRivate Limikted, v. Governmetn of India, rep. by its

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M/s B.S.S. Projects PRivate Limikted, v. Governmetn of India, rep. by its

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