Toll collection after recovery of project cost was unjustified; opaque concession terms and sub-delegated fee powers failed.

The SC upheld a public interest challenge to a toll regime, finding the writ maintainable because the association had sufficient interest and the grievance arose from a continuing levy, so delay and laches did not bar relief. It held that awarding the project without tender was opaque and inconsistent with fairness, and that the power to levy fees or tolls could not be impermissibly sub-delegated to the concessionaire. Article 14 of the Concession Agreement and Annexure F were found contrary to public policy and severable. On the accepted material, project cost and substantial returns had been recovered, so continued collection of user fees or tolls was unjustified.

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Issues: (i) whether the writ petition in public interest was maintainable, including locus standi and delay and laches; (ii) whether the award of the project contract without tender and the delegation of power to levy fees or tolls to the concessionaire were valid; (iii) whether Article 14 of the Concession Agreement read with the formula in Annexure F was opposed to public policy; and (iv) whether the Total Project Cost and returns had been recovered so as to justify continued collection of user fees or tolls.

Issue (i): whether the writ petition in public interest was maintainable, including locus standi and delay and laches.

Analysis: The petition was held to be a genuine public interest challenge brought for the benefit of commuters affected by the toll regime. The association had sufficient interest to approach the Court, and no material was shown to establish proxy litigation or collusion. Delay and laches were not accepted as a bar because the grievance arose from a continuing levy and the cause of action was continuing in nature.

Conclusion: The writ petition was maintainable and the objections based on locus standi, delay and laches failed.

Issue (ii): whether the award of the project contract without tender and the delegation of power to levy fees or tolls to the concessionaire were valid.

Analysis: The award of the project to the concessionaire without any tender or competitive bidding was found to be opaque and inconsistent with the constitutional requirement of fairness and non-arbitrariness in State action. On the statutory scheme, the Authority could authorise collection of fees, but the power to levy fees remained vested in the Authority. The agreement and the Regulations were treated as an impermissible sub-delegation insofar as they attempted to vest the power to levy fees or tolls in the private concessionaire.

Conclusion: The contract award was held to be unfair and the delegation of the power to levy fees or tolls to the concessionaire was invalid.

Issue (iii): whether Article 14 of the Concession Agreement read with the formula in Annexure F was opposed to public policy.

Analysis: The formula for calculating project cost and returns was found to be inherently unreasonable because it allowed compounding of unrecovered amounts, included open-ended expenses, and ensured escalating returns without adequate control. The arrangement was treated as one that enabled unjust enrichment and made the concession commercially oppressive and effectively perpetual. The severability doctrine was applied to excise the offending clause rather than sustain the full arrangement.

Conclusion: Article 14 of the Concession Agreement, read with the formula in Annexure F, was held to be contrary to public policy and severable.

Issue (iv): whether the Total Project Cost and returns had been recovered so as to justify continued collection of user fees or tolls.

Analysis: On the material accepted by the Court, including the independent report, the project cost had substantially been recovered and the concessionaire had earned significant profits. Continued collection of tolls after recovery of costs and substantial profits was treated as unjustifiable, particularly where the public had already borne the burden for years.

Conclusion: The project cost and substantial profits had been recovered, and continued levy and collection of user fees or tolls was not justified.

Final Conclusion: The appeal was found to disclose no ground for interference, and the High Court's substantive directions against continued toll collection were sustained. The issue relating to outdoor advertisement dues was left outside the scope of the appeal.

Ratio Decidendi: In a public infrastructure concession involving State instrumentalities, a private concessionaire cannot be allowed to continue collecting user charges once the project cost and substantial returns have been recovered, and any contractual or regulatory arrangement that is opaque, excessively delegated, or structurally oppressive to the public may be struck down as contrary to Article 14 and public policy.

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