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Issues: (i) Whether the memorandum dated 11.3.1998 created a legally enforceable extension of the toll collection contract for 30 years in favour of the contractor. (ii) Whether the High Court was justified in granting injunction and continuing a receiver so as to preserve the contractor's possession and toll collection rights after expiry of the initial contract period.
Issue (i): Whether the memorandum dated 11.3.1998 created a legally enforceable extension of the toll collection contract for 30 years in favour of the contractor.
Analysis: The toll collection arrangement was governed by the statutory scheme under the National Highways Act, 1956, the National Highways Authority of India Act, 1988, and the National Highways (Fees for the use of National Highway Section and Permanent Bridge- Public Funded Project) Rules, 1997. Under that framework, collection through a franchisee had to be for a specific period and on competitive terms, on behalf of the Central Government. The memorandum relied upon by the contractor was not communicated as a final operative order, was only a proposal subject to approval by the competent authority, and no amended agreement was executed. In the absence of concurrence of the Central Government and in the teeth of the statutory regime, no enforceable right to a 30-year extension could arise.
Conclusion: The memorandum did not create any legally enforceable extended contract in favour of the contractor.
Issue (ii): Whether the High Court was justified in granting injunction and continuing a receiver so as to preserve the contractor's possession and toll collection rights after expiry of the initial contract period.
Analysis: The High Court's protective orders were based on an assumed prima facie right derived from an inoperative memorandum and ignored the contractor's repeated defaults, the expiry of the one-year contract, and the statutory requirement that toll collection be conducted for the benefit of the Central Government under the applicable rules. Once the Central Government issued the notification under Section 11 of the National Highways Authority of India Act, 1988 entrusting the stretch to NHAI, the State ceased to be the executing agency. In that situation, continuation of injunction and receivership would unlawfully prevent the competent authority from arranging toll collection in accordance with the statutory scheme and would cause serious prejudice to public revenue.
Conclusion: The High Court was not justified in granting or continuing the injunction and receivership.
Final Conclusion: The statutory authority was entitled to take over supervision and toll collection, the contractor acquired no enforceable extended right, and the contrary directions of the High Court could not stand.
Ratio Decidendi: A toll collection franchise governed by statute cannot be extended by an uncommunicated or merely administrative memorandum without the concurrence of the competent Central authority, and equitable relief cannot be used to create a contractual right contrary to the statutory scheme and public revenue interest.
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