VHCPL-ADCC PINGALAI INFRASTRUCTURE PVT. LTD. AND ANR. v. UNION OF INDIA & ORS.

Judgment

1. elephant”. - a Chinsese proverb which completely sums up the case in hand. The petitioner, who was awarded a contract for the W.P.(C) No. 13034/2009 page 1 of 121 construction and operation of a project involving a major bridge over the Pingalai river with approaches covering a total stretch of 2.2 km, claims that the Concession Agreement entered into by him in 2004 tantamounts to his having a preferential right of first refusal for award of the contract relating to the project for the four laning of a 66.73 Kms stretch of National Highway-6, being its Talegaon-Amravati KM 100 to KM 166.725 section, in the State of Maharashtra, without participation in the bidding process and completely unmindful of the public interest involved in the matter.

2. The record of the present case discloses, that on behalf of the MORT&H, the Public Works Department of the Government of Maharashtra had invited tenders for this project from eligible persons of construction, operation and maintenance of a major bridge and its approaches across the Pingalai river in KM 113/800 on the Nagpur-Edlabad Road section of N.H.6 with private sector participation on build, operate and transfer ('BOT') basis. It appears that a Memorandum of Understanding dated 21st February, 2003 (Schedule 'V') was entered into by two companies, Vishvaraj Housing Company Pvt. Ltd. and ADCC Computing and Research Centre Ltd. Pursuant thereto, a consortium formed by them for the purpose of bidding for the project, had submitted a bid for the project.

3. The MORT&H accepted the bid submitted by the said consortium and issued a letter of acceptance dated 4th July,

2003. As per the requirements of the tender/bid, this W.P.(C) No. 13034/2009 page 2 of 121 consortium incorporated the 'concessionaire'-petitioner herein, as a special purpose vehicle to implement the said project on BOT basis. Pursuant to the aforesaid acceptance letter, on 14th May, 2004, the President of India represented by the Ministry of Road Transport and Highways of the Government of India entered into a 'Concession Agreement' with the VHCPL-ADCC Pingalai Infrastructure Pvt. Ltd. (the petitioner herein), who has been referred to as the 'concessionaire' in the agreement.

4. The work which forms subject matter of the agreement is described in schedule A of the Concession Agreement and is referred to as “the project” therein. The agreement was entered into on behalf of the President of India by the Ministry of Road Transport and Highways (hereinafter referred to as MORT&H) which is responsible for the development and maintenance of national highways in India.

5. Learned senior counsels for all the parties have extensively relied on the terms of the Concession Agreement dated 14th May, 2004, essential terms whereof are as follows :- “xxxx F. In accordance with the requirements of the said tender/bid submitted by the Consortium, the Consortium has incorporated the Concessionaire as a“ special purpose vehicle to implement the Project on BOT basis, and GOI has agreed to grant to the Concessionaire, the Concession (as hereinafter defined) on the terms, conditions and covenants hereinafter set forth in this Agreement.” Definitions & Interpretations :- W.P.(C) No. 13034/2009 page 3 of 121 “Project” means the project described in Schedule 'A' which the Concessionaire is required to design, engineer, finance, construct, operate, maintain and transfer in accordance with the provisions of this Agreement.” “Project Assets” means all physical and other assets relating to and forming part of the Project including but not limited to (i) rights over the Project Site in the form of license, right of way or otherwise, (ii)tangible assets such as civil works including the foundations, embankments, pavements, road surface, interchanges, bridges, approaches to bridges and flyovers, road overbridges, drainage works, lighting facilities, traffic signals, sign boards, milestones, toll plaza, equipment for the collection of tolls or relating to regulation of traffic, electrical works for lighting on the Project, telephone and other communication systems and equipment for the Project, rest areas, wayside amenities, administration and maintenance depots, relief centers, service facilities etc.(iii) Project Facilities situate on the Project Site, (iv) the rights of the Concessionaire under any Project Agreements, (v) financial assets, such as security deposits for electricity supply, telephone and other utilities, etc.(vi) insurance proceeds subject to Lenders' rights thereto and (vii) Applicable Permits and authorisations relating to or in respect of the Project.” “Project Facility” means collectively the facilities on the Project site to be constructed, built, installed, errected or provided by the Concessionaire for use of the traffic by implementing the Project and more specifically set out in Schedule 'C'. “Project Site” means the real estate particulars whereof are set out in Schedule 'B' on which the Project is to be implemented and the Project Facility is to be provided in accordance with this Agreement. Definition of COD “COD” means the commercial operations date of the Project, which shall be the date on which the independent Engineer has issued W.P.(C) No. 13034/2009 page 4 of 121 the Completion Certificate or the Provisional Certificate upon completion of construction of the Project and which shall, subject to the provisions of this Agreement, be not later than.......

6. Schedule A describes the need for as well as the project and the relevant portion whereof reads as follows :- “ 1. 'Schedule A' Need for the Project The existing Nagpur Edlabad road section of N.H.6 crosses the Pinglai river in Km. 113/800 near Tiwasa village. There is existing submersible bridge having 22 spans of 2.2 mt c/c and width of 6.10 m. The existing bridge gets over topped during heavy floods of river and result interruption to traffic for 4 to 6 hours duration for several times and the traffic is held up. Tiwasa village is situated on just bank of river. Therefore it is necessary to construct high level bridge at an early owing to demand from public.

2. Project Location The project is situated in Amravati District of Maharashtra State. There is existing submersible bridge. The proposed bridge alignment is taken @ 15 m D/s away from the center of existing bridge. The necessary index map is enclosed in indicate drawings for reference...................”

7. Some light on the issues raised before us is also thrown on by the contents of Schedule B defining the Project Site which are as follows :- Schedule B – Project Site “ Description and particulars of Land : The entire project is to be implemented on available departmental land. The land width available is 45 m. The proposal involves construction of 4 lane major bridge with foot path including 4 lane approaches, CD, works, Minor bridges, Under passes, road side drainage, service road and toll plaza complex and other structures included in the project cost within two phases, within the available land W.P.(C) No. 13034/2009 page 5 of 121 width without any new land acquisition.”

8. The scope of the work concerned is described under Schedule C, under the heading of 'Project Facility' which makes a reference to the phases in which the work was to be completed.

9. So far as the concession which was granted under the agreement to the petitioner is concerned, the same is detailed in article 2.1 of Article 2 which reads as follows :- “GRANT OF CONCESSION Subject to and in accordance with the terms and conditions set forth in this Agreement, GOI hereby grants and authorizes Concessionaire to investigate , study, design, engineer, procure, finance, construct, operate and maintain the Project/Project Facility and to exercise and/or enjoy the rights, powers, privileges, authorisations and entitlements as set forth in this Agreement, including but not limited to the rights to levy, demand, collect and appropriate fee from vehicles and persons liable to payment of fee for using the Project/Project Facility or any part thereof (collective “the Concession”).”

10. The petitioner was thus granted such concession, in terms of article 2.2, for a period of twelve years, nine months and nine days commencing from the commencement date, during which the petitioner was authorised to implement the project and operate the project facility. Clause A of article 2.2 envisaged extension, while clause B postulated the concession period as ending with the termination, upon such eventuality.

11. The petitioner has premised its entire claim in the present writ petition on Article 14 of the Concession Agreement, the relevant portion whereof reads as follows :- “Article 14 W.P.(C) No. 13034/2009 page 6 of 121 CAPACITY AUGMENTATION AND ADDITIONAL FACILITY

14.1 Capacity Augmentation of the Project the Project (a) The GOI may following a detailed traffic study conducted by it, at any time after COD decide to augment/increase the capacity of (Capacity Augmentation) with a view to provide the desired level of service to the users of the Project Facility. (b) The GOI shall invite proposals from eligible Persons for Capacity Augmentation. The Concessionaire shall have option to submit Capacity Augmentation. (c) The bid document for Capacity Augmentation shall specify a Termination Payment to be made to the Concessionaire in case the Concessionaire chooses not to submit its proposal or fails or declines to match the preferred offer as mentioned in sub-article (e) below. its proposal (d) in case the Concessionaire, after participating in the bidding procedure, fails to give the lowest offer, the Concessionaire shall be given the first right of refusal to match the preferred offer. If the Concessionaire matches the preferred offer the Parties shall enter into a suitable agreement supplemental to this Agreement to give effect to the changes in scope of the Project, Concession Period and all other necessary and consequential changes. In such an event the Concessionaire shall pay to the bidder who had made the lowest offer sum of Rs.1.05 lacs (One Lac Five Thousand Only) towards bidding costs incurred by such bidder. (e) In case the Concessionaire (i) chooses not to submit its proposal for Capacity Augmentation or (ii) is not the preferred bidder and also fails or declines to match the preferred offer, GOI shall be entitled to terminate this Agreement upon payment to the Concessionaire of the Termination Payment. (f) The Termination Payment referred to in the preceding sub-articles (c) and (e) above shall be the amount equivalent to the amount of Termination Payment set out in W.P.(C) No. 13034/2009 page 7 of 121 Article 16.2(b).

14.2 Additional Facility GOI shall not construct and operate either itself or have the same, interalia, built and operated on BOT basis or otherwise a competing facility, either toll free or otherwise during the Concession Period Provided, GOI may build and operate such a facility subject to the fee charged for vehicles using such facility being at any not less than 133% of Fee for the time being charged for the vehicles using the Project Facility.”

12. The Concession Agreement describes a Force Majeure Event in clause 15.1 of Article 15; a non-political event in clause

15.2; an indirect political event in clause 15.3; a political event in clause 15.4 of the concession agreement. The effect of a force majeure event has been described in clause 15.5 which also describes the eventuality and the manner in which termination of the agreement upon the occurrence of a force majeure event would take place. Clause 15.7 postulates a mutual decision to terminate or continue the agreement on continuation of the Force Majeure event beyond 120 days. Inasmuch as the instant case is not concerned with a force majeure event, it is not necessary to advert to the other clauses of Article 15 dealing with costs, dispute resolution, liability for other losses and other events.

13. Article 16 of the Concession Agreement is concerned with events of default and termination of the Concession Agreement. The present case also does not involve any allegation of a default or breach by the petitioner of the Concession Agreement.

14. Dispute resolution is provided in Article 19 of the W.P.(C) No. 13034/2009 page 8 of 121 agreement. First an effort to amicably resolve any dispute/difference or a controversy of whatsoever nature, however arising out of or in relation to the agreement including completion of the project (clause 19.1) by reference to the Director General (Road Development) Government of India, and the Chairman of the Board of Directors of the concessionaire, is to be attempted. Any dispute which is not so resolved, is to be finally settled as per Clause 19.2 by binding arbitration under Arbitration & Conciliation Act, 1996.

15. A State Support Agreement was also entered into by the petitioner with the President of India in his executive capacity for the Government Of India (referred to as 'GOI' in the agreement and hereafter) represented by MORT&H and the Governor of Maharashtra in his executive capacity for the State of Maharashtra acting through the Public Works Department, Government of Maharashtra on the 14th May, 2004, with the view to facilitate completion and operation of the project by the concessionaire in accordance with the Concession Agreement and to extend continued support and grant certain rights and authorities to the concessionaire.

16. Subsequently, a gazette notification dated 27th July, 2005 was issued by the Government of India under section 48 of the National Highways Act, 1956, whereby the concessionaire was entitled to collect toll from the “users of the major bridge and its approaches across Pingalai river at KM 113/800”.

17. On 29th May, 2008, the National Highway Authority of India- W.P.(C) No. 13034/2009 page 9 of 121 respondent no. 2 herein (also referred to as the 'NHAI' hereafter), issued an advertisement in leading newspapers including the Hindustan Times and the Financial Express both dated the 29th of May, 2008 inviting Requests for Qualification ('RFQ' for brevity hereafter) to undertake inter alia the work involving the Talegaon-Amravati KM 100 to KM 166.725 (length- Km 66.73) Section of the National Highway No. 6 in the State of Maharashtra under NHDP Phase III, on design, build, finance, operate and transfer pattern ('DBFOT' pattern). The RFQ document was available from 27th of May, 2008 at a cost of Rs.10,000/- and the last date for its submission was the 15th of July, 2008.

18. The respondent no. 2 has explained that sixteen RFQs were received by the 24th of July, 2008 which was the extended last date for its submission. Though 11 applicants including respondent no. 3 had pre-qualified, as per the prescribed procedure, only names of six top shortlisted candidates were announced on 5th November, 2008. Some of the eligible applicants withdrew. Hence on 12th November, 2008, in terms of clause 2.2 of the RFQ, letters were issued to the next four out of the remaining qualified/eligible parties calling upon them to signify in writing whether they were willing to submit their bid for the project or wished to withdraw. The respondent no. 3 was consequently included in the revised list of short listed bidders in accordance with the notified procedure and vide a letter dated 25th November, 2008 was informed of the same. The final list of W.P.(C) No. 13034/2009 page 10 of 121 5 qualified bidders was announced on 15th December, 2008.

19. So far as the project is concerned, the NHAI-respondent no. 2 has explained, that on 29th September, 2008, a proposal had been sent to the Department of Economic Affairs, Ministry of Finance of the Government of India for taking the approval of the Public Private Partnership Appraisal Committee ('PPPAC' hereafter) of the respondent no. 1 by the NHAI for clearance of the said project, alongwith all relevant documents including the draft concession agreement. A draft preliminary project report and a proposal to buy back the existing toll rights was also enclosed. This communication refers to an earlier decision of the PPPAC in its meeting held on 5th November, 2007 whereby it was decided to adopt a two stage bidding process and that accordingly the RFQ and the RFP had been prepared as per the guidelines of the Ministry of Finance.

20. The PPPAC considered this proposal as agenda item no. 3 in its 23rd meeting held on 20th February, 2009 which refers to it as the “Four laning of Talegaon Amravati section of NH-6 in the state of Maharashtra under NHDP III on DBFOT (Toll) Basis”. The minutes of its meeting recorded on 20th February, 2009 notice the submission of the Chairman of the NHAI that the plan project highway was a 'segment of the Kolkata-Mumbai East- West link in the country' and that its four laning would result in the four laning of the entire east west link. The cost of the project at Rs.9.27 crore per km was considered very high. The PPPAC suggested that the project could be considered for grant W.P.(C) No. 13034/2009 page 11 of 121 of approval subject to the NHAI reviewing the project structures to reduce the project cost to Rs.8 crore per km. It was also noted that the traffic would reach the design capacity of the project highway in 22 years. The PPPAC therefore approved the concession period as being fixed as 22 years instead of 18 years proposed by the sponsoring authority. The proposal was granted final approval, subject to buy back of tolling rights being included in the pre-construction costs and not in the total project costs of the project.

21. The suggestions as made by the PPPAC were duly incorporated and thereafter the Cabinet Committee on Infrastructure ('CCI' hereafter) in its meting dated 30th July, 2009 considered the proposal for the instant project of four laning of the Talegaon-Amravati Section of NH-6 as well as another project relating to NH-9 in the State of Maharashtra and also granted approval to the same. This approval was communicated to the NHAI by a letter dated 10th August, 2009 from the Ministry.

22. The NHAI had issued and published the notice for RFP in leading newspapers and posted the same on the website of the NHAI. The RFP document was purchasable against payment of a non-refundable amount of Rs.10 lakhs and envisaged deposit of a security deposit of Rs.11.01 crores which was to be submitted alongwith the bid. A schedule for the various steps envisaged for submission of the RFP also stood notified.

23. The last date for submission of the RFP was appointed as W.P.(C) No. 13034/2009 page 12 of 121 20th March, 2009 and the pre bid meeting was scheduled on 12th May, 2009. An addendum I to the RFP was issued on 29th May, 2009 while 26th of June, 2009 was appointed as the last date for submission of the bid.

It is at this stage that the petitioner, for the first time, wrote a letter dated 20th June, 2009 to the Chief Engineer of the Ministry of Shipping, Road Transport and Highways referring to a purported claim under article 14.1 of the Concession Agreement dated 14th May, 2004. In furtherance of this letter, the petitioner submits that it also sent reminders dated 14th July, 2009 and a second reminder dated 22nd July, 2009 to the respondent no. 1.

25. Our attention has been drawn to a communication dated 24th July, 2009 addressed by the MORT&H-respondent no. 1 to the NHAI, referring to the claim and representation of the petitioner seeking its comments on the following aspects :- “(i) Did the consultant of the proposed four- laning project of NHAI considered the fact that there exists a BOT project awarded by the Ministry, which forms part of the Section; and if they did; what advise was given to NHAI in this regard. (ii) NHAI did not make any reference to the concessionaire or to the Ministry with regard to this BOT stretch. NHAI may indicate how it is going to deal with this now. (iii) Since the BOT concessionaire has certain rights (Article 14 of Agreement) under existing concession agreement, NHAI should indicate what will be the status of this right in the new scheme of the project.”

26. The NHAI responded to the MORT&H by a letter dated 18th August, 2009, inter alia informing it as follows :- W.P.(C) No. 13034/2009 page 13 of 121 “(i) The consultant of the proposed 4 laning project from Talegaon to Amravati Section of NH- 6 considered the fact that there exists a BOT Project awarded by the Ministry which forms part of the section and advised for buy-back of bridge from existing Concessionaire. The cost of buy- back proposed is Rs.7.97 Cr. which is included in the total project cost. (ii) The cost of buy-back was included in the proposal submitted to Ministry for PPPAC Approval and PPPAC approved the proposal with buy-back of bridge from existing Concessionaire in its meeting held on 20.02.2009, NHAI intends to buy- back the bridge before commercial operation date of the project which is around 3 years from now i.e. October, 2012 (likely). The cost of buy-back shall be borne by NHAI. (iii) Since, the copy of Agreement of existing BOT Concessionaire is not available with NHAI, it is required to provide a copy of the Agreement so that necessary action as per the provisions of the Agreement can be taken for buy-back of the stretch under existing Concession Agreement.”

27. The petitioner also relies on a notice dated 23rd September, 2009 issued as a follow up to its reminders.

28. So far as the acceptance of the bid was concerned, the NHAI- respondent no. 2 issued a letter of acceptance dated 27th August, 2009 to the respondent no. 3 accepting its proposal. All participants in the bidding process have accepted the process initiated and undertaken by the respondent no. 2 (NHAI) as well as the decisions taken by the respondent no. 1.

29. Inter alia, aggrieved by the failure of the respondent no.1 to favourably respond to its requests, the petitioner finally filed the present writ petition on or about the 30th October, 2009 making the following prayers :- issue a writ of mandamus and/or any other “(a) appropriate writ, order or direction quashing and W.P.(C) No. 13034/2009 page 14 of 121 setting aside the entire tender process including RFP dated March 2009 and all subsequent actions of the Respondent No.2 NHAI in pursuance of the said tender/RFP for four laning of Talegaon Amaravati Section of NH-6 from km 100.000 to km 166.725 (length -km66.73) (Annexure-P.4 -; (b) issue a writ of mandamus and/or any other appropriate writ, order of direction declaring the award of contract by Respondent no.2 NHAI for four laning of Talegaon Amravati Section of NH06 from km 100.000 to km 166,725(length- km 66.73) in favour of Respondent no.3, as void and illegal and violative of the Petitioners fundamental rights under Articles 14 & 19 (1) (g) of the constitution of India apart from being contrary to the express terms of the subsisting Concession Agreement and the State Support Agreement dated 14.05.2004, in favour of the Petitioner No.1; (c) issue a writ of mandamus or any other appropriate writ, order or direction prohibiting Respondent Nos 1 & 2 and /or agents/servants/assignees from entering into any contract/Concession Agreement/State Support Agreement etc. with regard to four laning of Talegaon Amravati Section of NH-6 from km 100,000 to km 166.725 (length-km 66.73) with Respondent No.3 ; and issue an appropriate writ, order or direction (d) directing the Respondent Nos. 1 and 2 to give an opportunity to the Petitioners to match the offer of Respondent No.3 with regard to four laning of Talegaon Amravati Section of NH-6 from km100.000 to km, 166.725 (length-km 66.73) in terms of 14.05.2004” concession Agreement

30. In the meantime, pursuant to the letter of acceptance dated 27th August, 2009, NHAI-respondent no.2 also executed a Concession Agreement dated 18th November, 2009 with the respondent no. 3 who was the successful bidder. In this background, an order dated 24th November, 2009 was recorded in the present writ petition, the relevant portion whereof is as follows :- W.P.(C) No. 13034/2009 page 15 of 121 “ xxxx We may also note that the learned counsel for the respondent no. 3 stated that the Letter of Acceptance as well as the Concession Agreement has already been signed by them on 27.08.2009 and 18.11.2009 respectively. However, the learned counsel for the respondent no. 3 states that nothing will happen on the ground till the next date of hearing inasmuch as the actual work would start only after about four months. Renotify on 17.12.2009.” It is noteworthy that this statement on behalf of the respondent no. 3 has continued till date and as a result, work on the public project pursuant to this agreement of 18th November, 2009 has not started till date. Petitioners Contentions and Claim

31. The petitioner has contended that as the work in question was a project of capacity augmentation of the project of the petitioner, it had a preferential right under Clause 14 of the Concession Agreement dated 14th of May, 2004. It is contended that, therefore, it has a right to match the lowest bid with regard to the project which is the subject matter of the Concession Agreement dated 18th November, 2009 and was thus entitled to an individual notice in respect thereof once the project was envisaged. The petitioner's further contention is that having regard to the scheme of Article 14, it is deemed to have pre- qualified for exercise of its right to match the lowest bid received in respect of the project of sixteen laning of the Talegaon-Amravati section of NH-6. The further submission is W.P.(C) No. 13034/2009 page 16 of 121 that, in view of its binding rights under the Concession Agreement of 2004, the respondents have no authority or power to terminate or to enforce their proposal to buy-back the tolling rights conferred on the petitioner. It is based on these submissions, it is contended that the award of the work to the respondent no. 3 is in violation of the rights of the petitioner and deserves to be set aside. Respondents submissions

32. A preliminary objection has been taken by the respondents to the maintainability of the writ petition on the ground that the petitioner has raised contractual disputes which are beyond the permissible scope of judicial review by this court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India. It is further urged, that the writ petition is not maintainable on grounds of availability of an equally efficacious remedy under the Concession Agreement of 2004. The respondents have also objected to the maintainability of the writ petition urging that the petitioner has suppressed and concealed material facts and merits and have sought its dismissal on grounds of gross delays and laches. The respondents have contested the claim of the petitioner on merits as well.

33. The respondents have disputed any similarity between the scope of work entrusted as per the terms of the Concession Agreement of 2004 and 2009. It is submitted that the scope of work in the agreement of 2004 is restricted to the work mentioned in Schedule C of the agreement and that the scope of W.P.(C) No. 13034/2009 page 17 of 121 work entrusted to the respondent no. 3 in accordance with the agreement of 2009 is not limited to the project facility as described in Schedule C of the 2004 agreement. The respondents oppose the contention that the four laning of the Talegaon-Amravati section of NH-6 from KM 100.000 to KM

166.725 (of the length of 66.725 kms) at the instance of the NHAI falls within the meaning of the expression “capacity augmentation of the project” which could entitle the petitioner to invoke its preferential right of first refusal in terms of Article 14 of the Concession Agreement of 2004. The respondents have also made detailed submissions on the difference in the scope, nature and objectives of the two projects and dispute that any detailed traffic study so as to render clause 14.1 applicable, was ever necessitated, commissioned or conducted by the Government of India. The respondents have defended their action and disputed the maintainability of the writ petition on grounds of overriding interest of the public at large. It has further been urged that the proposal to buy-back the tolling rights of the petitioner by the respondent no. 2 has been made so as to create a balance between public interest and fairness to the petitioner. It has also been urged that no final decision in this regard is required to be taken at this stage. Points of dispute

34. In view of the rival contentions, the questions that arise for consideration in this case can be summed up thus :- (I) Whether the writ petition raises matters only in the realm W.P.(C) No. 13034/2009 page 18 of 121 of contract and is therefore barred? (II) Whether the scope of the work under the Concession Agreement dated 18th November, 2009 would be covered within the meaning of the expression 'Capacity Augmentation of the Project' as is appearing in Article 14 of the Concession Agreement dated 14th May, 2004. (III) Whether the petitioner has an absolute preferential right to match the lowest bidder without pre-qualifying or participating in the bidding process for the four laning project in view of Article 14 of the Concession Agreement dated 14th of May, 2004? (IV) Whether the proposal of the respondent no. 2 to buy back the tolling rights of the petitioner under the Concession Agreement of 2004 is legally permissible, justified and sustainable? (V) Whether the petitioner has suppressed material facts and documents and the writ petition suffers from such gross and unexplained delay and laches on its part as would disentitle the petitioner to grant of any relief in this writ petition? (VI) Interest of the public at large and costs of such litigation. These questions, for convenience, are discussed in seriatum hereafter. (I) Whether the writ petition raises matters only in the realm of contract and is therefore barred?

35. Learned senior counsel for the respondent nos. 2 and 3 have taken a strong objection to the maintainability of the writ petition under Article 226 of the Constitution of India. It has W.P.(C) No. 13034/2009 page 19 of 121 been urged that the public law remedy would not be available to the petitioner who is seeking enforcement of a purely contractual right. It is also urged, that the contract between the parties is not a statutory contract in respect of which the writ petition could be maintained.

36. In support of the objection, Mr. Vivek Tankha, learned ASG appearing for the NHAI-respondent no.2 has relied upon the principles laid down in (2008) 8 SCC 172 Pimpri Chinchwad Municipal Corpn. vs. Gayatri Construction Co., in which the Supreme Court held that in matters flowing from a contract, a petition under Article 226 was not maintainable.

37. Similar building contracts by government authorities were the subject matter of consideration in (1996) 6 SCC 22 State of U.P. vs. Bridge & Roof Company (India) Ltd. In the said case, the court held that the contract between the parties was not a statutory contract, fell in the realm of private law governed by the provisions of the Contract Act or by the provisions of the Sale of Goods Act and any dispute relating to the interpretation of the terms and conditions of such a contract cannot be agitated and could not have been agitated in the writ petition. The Supreme Court further stated the principle that the matter was either for arbitration as provided by the contract or for the civil court as the case may be.

38. A challenge was laid to the power or authority of the M.P. Electricity Board to alter terms and conditions of PPAs under W.P.(C) No. 13034/2009 page 20 of 121 Sections 43 and 43A of the Electricity Supply Act in the judgment reported at (2000) 3 SCC 379 India Thermal Power Ltd. vs. State of M.P. In para 11 of the judgment, the court held that “Merely because a contract is entered into in exercise of an enabling power conferred by a statute, that by itself cannot render the contract a statutory contract. If entering into a contract containing the prescribed terms and conditions is a must under the statute then that contract becomes a statutory contract. If a contract incorporates 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 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 43A(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.”

39. The observations of the Supreme Court in paras 10 and 11 of the judgment in (2000) 6 SCC 293 Kerala SEB vs. Kurien E. Kalathil & Ors. also shed valuable light on this question and read as follows:- “10. ..............Learned Counsel has rightly W.P.(C) No. 13034/2009 page 21 of 121 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, the remedy is not the writ petition under ordinarily Article . We are also unable to agree with the 226 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.

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 agreement is a statutory or public body will not of itself affect the principles to be applied. The disputes about the meaning of a covenant 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 . 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 of the Constitution of India 226 W.P.(C) No. 13034/2009 page 22 of 121 have been relegated to other remedies.” (Emphasis by us)

40. This very principle was reiterated in a matter relating to contract involving the NHAI (which is respondent no. 2 before us), in para 6 of the judgment reported at (2003) 7 SCC 410 National Highways Authority of India vs. Ganga Enterprises in the following terms :- “6. The Respondent then filed a Writ Petition in the High Court for refund of the amount. On the pleadings before it, the High Court raised two questions viz. (a) whether the forfeiture of security deposit is without authority of law and without any binding contract between the parties and also contrary to Section 5 of the Contract Act and (b) whether the writ petition is maintainable in a claim arising out of a breach of contract. Question (b) should have been first answered as it would go to the root of the matter. The High Court instead considered question (a) and then chose not to answer question (b). In our view, the answer to question (b) is clear . It is settled law that disputes relating to contracts cannot be agitated under Article 226 of the Constitution of India. It has been so held in the cases of Kerala State Electricity Board v. Kurien E. Kalathil AIR 2000 SC 2573 , State of U.P. v. Bridge & Roof Co. (India) Ltd. AIR 1996 SC 3515 and B.D.A. v. Ajai Pal Singh [1989] 1 SCR 743 , This is settled law. The dispute in this case was regarding the terms of offer. They were thus contractual disputes in respect of which a Writ Court was not the proper forum. Mr. Dave however relied upon the cases of Verigamio Naveen v. Government of A. P. AIR 2001 SC 3609 and Harminder Singh Arora v. Union of India [1986] 3 SCR 63 . These however are cases where the Writ Court was enforcing a statutory right or duty. These cases do not lay down that a Writ Court can interfere in a matter of contract only. Thus on the ground of maintainability the Petition should have been dismissed.”

41. The respondents have raised an objection that the two W.P.(C) No. 13034/2009 page 23 of 121 contracts which are the subject matter of the writ petition are non-statutory and no writ or order can be issued under Article 226 of the Constitution of India so as to compell the respondents to remedy a breach of contract here in simple. (Ref : (1989) 2 SCC 116 Bareilly Development Authority & Anr. vs. Ajai Pal Singh & Ors.; (1996) 6 SCC 22 State of U.P. & Ors. vs. Bridge & Roof Company (India) Ltd.) There can be no dispute with the principles laid down in these judicial pronouncements.

42. On the other hand, Mr. U.U. Lalit, learned senior counsel for the petitioner has urged that the objection on behalf of the respondents that the present writ petition was not maintainable and that, in case the petitioner was aggrieved by any act of the respondent nos. 1 or 2, it had to take recourse to the remedy provided in the arbitration clause which exists in the Concession Agreement dated 14th of May, 2004 as Article 19 between the parties is misconceived in the facts of this case. Learned senior counsel contends that the petitioner had entered into the contract with the respondent no. 1 and that neither the NHAI- respondent no. 2 nor the respondent no. 3 were a party to it and therefore the remedy of arbitration as a dispute redressal mechanism againt them is not available to it.

43. The petitioner has also submitted, that the proposed buy- back arrangement suggested by the respondent nos. 1 and 2 and approved by the PPPAC or the Cabinet Committee, has no basis in the Concession Agreement which governs the relations W.P.(C) No. 13034/2009 page 24 of 121 between the parties and therefore is wholly illegal and unenforceable.

44. It is to be noted, that this submission rests on the interpretation and implementation of clauses in the contract. It also lays a challenge to the proposed action of the respondent no. 2, based on rights asserted under the Concession Agreement which is a contract entered into between the petitioner and the respondent no. 1 alone. The petitioner thereby also challenges the authority of the respondent no. 2 to terminate the concession agreement on any terms whatsoever, apart from challenging on the proposed term suggested by the respondent nos. 1 and 2. As has been observed in para 11 of Kerala SEB vs. Kurien E. Kalathil & Ors. (2000) 6 SCC 293, such grievances of the petitioner do not raise any issue of public law. The terms of the proposed termination or the authority to do so is not even a quasi-judicial act, let alone a judicial act, looked at from any angle.

45. In (1994) 3 SCC 552 State of Gujarat vs. Meghji Pethraj Shah Charitable Trust, the Apex Court held that termination of the arrangement is also not an executive or administrative act which could attract the duty to act fairly. With regard to such matters, a writ petition under Article 226 is clearly not maintainable, since it is a public law remedy which is not available in the private law field especially where the matter is governed by the non-statutory contract. W.P.(C) No. 13034/2009 page 25 of 121

46. The fact that NHAI - respondent no. 2, herein or the private respondent no. 3 are not parties to the said Concession Agreement of 2004, would not impact consideration of the issue as to whether a public law remedy could be available to the petitioner for enforcement of its purported claims or not. Even if the alternate dispute remedy of arbitration as provided by the contract was not available for the reason that all the necessary parties (respondent nos. 2 and 3) to the dispute were not party to the arbitration agreement, nothing precludes the petitioner from bringing a civil suit and seeking adjudication therein of its rights.

47. The plea of the petitioner is that by awarding the contract to the respondent no. 3, the terms of the Concession Agreement of 2004 entered into by the respondent no. 2 with it have been violated. The challenge laid is based on the interpretation of Article 14 of the said agreement. In the present writ petition, the petitioner has also assailed to the award of the contract to the respondent no. 3 on grounds of arbitrariness and violation of Article 14 of the Constitution of India.

48. We, however, find that the prohibition urged by the respondents is not an absolute proposition. The parameters within which the court will interfere in a writ petition under Article 226 of the Constitution of India even in matters relating to contractual obligations of the state or its instrumentalities and even in matters relating to policy of the state or that of a statutory authority are well settled. W.P.(C) No. 13034/2009 page 26 of 121

49. A challenge was laid to the manner in which the Government dispensed its largesse on grounds of violation of Article 14 of the Constitution of India in (1979) 3 SCC 489 Ramana Dayaram Shetty v. International Airport Authority of India . The oft quoted findings of the Apex Court, upon an elaborate consideration of the issue read thus :- “11. xxx The Government cannot be permitted to say that it will give jobs or enter into contracts or issue quotas or licenses only in favor of those having grey hair or belonging to a particular political party or professing a particular religious faith. The Government is still the Government when it acts in the matter of granting largessee and it cannot act arbitrarily. It does not stand in the same position as a private individual.”

50. In R.D. Shetty (supra), the court placed reliance on the earlier pronouncement in Erusian Equipment and Chemicals Ltd. v. State of West Bengal and quoted therefrom as follows :- “12. .......But the Court, speaking through the learned Chief, Justice, responded that the Government is not like a private individual who can pick and choose the person with whom it will deal, but the Government is still a Government when it enters into contract or when it is administering largesse and it cannot, without adequate reason, exclude any person from dealing with it or take away largessee arbitrarily.

20. The rule inhibiting arbitrary action by Government which we have discussed above must apply equally where such corporation is dealing with the public, whether by way of giving jobs or entering into contracts or otherwise, and it cannot act arbitrarily and enter into relationship with any person it likes at its sweet will, but its action must be in conformity with some principle which meets the test of reason and relevance.” W.P.(C) No. 13034/2009 page 27 of 121 (Underlining supplied)

51. In (1990) 3 SCC 752 Mahabir Auto Stores and Ors. v. Indian Oil Corporation and Ors., the appellant had been carrying on business of sale and distribution of lubricants for 18 years. The Indian Oil Corporation abruptly stopped supply of lubricants to the firm without any notice or intimation. No query or clarification was even sought and there was no adjudication as such. The petitioner impeached the action of the respondents contending that its decision in exercise of administrative jurisdiction was impeachable on grounds of arbitrariness and violation of Article 14 of the Constitution of India and on any of the grounds available in the public law field. In this behalf, the court observed thus :- rule against “12. It is well settled that every action of the State or an instrumentality of the State in exercise of its executive power, must be informed by reason. In appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32 of the Constitution. ...................It appears to us that rule of reason arbitrariness and discrimination, rules of fair play and natural justice are part of the rule of law applicable in situation or action by State instrumentality in dealing with citizens in a situation like the present one. Even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance and reasonableness, fair play, natural justice, equality and non- discrimination in the type of the transactions and nature of the dealings as in the present case.

13. The existence of the power of judicial W.P.(C) No. 13034/2009 page 28 of 121 review however depends upon the nature (of) and the right involved in the facts and circumstances of the particular case, it is well settled that there can be "malice in law". Existence of such "malice in law" is part of the critical apparatus of a particular action in administrative law. Indeed "malice in law" is part of the dimension of the rule of relevance and reason as well as the rule of fair play in action.

52. The Supreme Court in Mahabir Auto Store (supra) further held :- “17. We are of the opinion that in all such cases whether public law or private law rights are involved, depends upon the facts and circumstances of the case. The dichotomy between rights and remedies cannot be obliterated by any straight jacket formula. It has to be examined in each particular case. Mr. Salve sought to urge that there are certain cases under Article 14 of arbitrary exercise of such "power" and not cases of exercise of a "right" arising either under a contract or under a Statute. We are of the opinion that that would depend upon the factual matrix.” The court therefore clearly held that even in matters relating to contract, the state or its instrumentality are required to satisfy the tests of their action not being arbitrary or unreasonable.

53. In (1991) 1 SCC 212 Shrilekha Vidyarthi (Kumari) v. State of U.P. it was clearly held by the Supreme Court that such requirement extends even in the sphere of contractual matters in which the state is concerned which would thus be amenable to judicial review :- W.P.(C) No. 13034/2009 page 29 of 121 “29. ........In our opinion, it would be alien to the constitutional scheme to accept the argument of exclusion of Article 14 in contractual matters. The scope and permissible grounds of judicial review in such matters and the relief which may be available are different matters but that does not justify the view of its total exclusion.

30. xxx In view of the wide ranging and, in essence, all-pervading sphere of State activity in discharge of its welfare functions, the question assumes considerable importance and cannot be shelved. The basic requirement of Article 14 is fairness in action by the State and we find it difficult to accept that the State can be permitted to act otherwise in any field of its activity, irrespective of the nature of its functions when it has the uppermost duty to be governed by the rule of law. Non-arbitrariness, in substance, is only fair play in action. We have no doubt that this obvious requirement must be satisfied by every action of the State or its instrumentality in order to satisfy the test of validity.

35. It is now too well settled that every State action, in order to survive, must not be susceptible to the vice of arbitrariness which is the crux of Article 14 of the Constitution and basic to the rule of law, the system which governs us. Arbitrariness is the very negation of the rule of law. Satisfaction of this basic test in every State action is sine qua non to its validity and in this respect, the State cannot claim comparison with a private individual even in the field of contract. This distinction between the State and a private individual in the field of contract has to be borne in the mind.”

54. An objection to the maintainability of the writ petition on the ground of availability of the arbitration clause in the contract fell for consideration before the Apex Court in Harbanslal Sahnia v. Indian Oil Corpn. Ltd. (2003) 2 SCC 107 :- “xxx xxxx xxxx W.P.(C) No. 13034/2009 page 30 of 121

7. So far as the view taken by the High Court that the remedy by way of recourse to arbitration clause was available to the appellants and therefore the writ petition filed by the appellants was liable to be dismissed is concerned, suffice it to observe that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. (See Whirlpool Corporation v. Registrar of Trade Marks). The present case attracts applicability of the first two contingencies. Moreover, as noted, the petitioners' dealership, which is their bread and butter, came to be terminated for an irrelevant and non-existent cause. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings.” (Underlining by us)

55. The same question was also raised before the Supreme Court in (2004 ) 3 SCC 553 ABL International Ltd. and Anr. v. Export Credit Guarantee Corporation of India Limited and Ors. Placing reliance on the principles laid down in the earlier judgments, the court held that in exercise of jurisdiction under Article 226 of the Constitution, depending on the fact situation before it, the high court is adequately empowered to grant the relief. The principles were so enunciated by the court :- “8. As could be seen from the arguments addressed in this appeal and as also from the divergent views of the two courts below one of the questions that falls for our consideration is whether a writ petition under Article 226 of the W.P.(C) No. 13034/2009 page 31 of 121 Constitution of India is maintainable to enforce a contractual obligation of the State or its instrumentality, by an aggrieved party. xxx xxx

23. It is clear from the above observations of this Court, once State or an instrumentality of State is a party to the contract, it has an obligation in law to act fairly, justly and reasonably which is the requirement of Article 14 of the Constitution of India. Therefore, if by the impugned repudiation of the claim of the appellants the first respondent as an instrumentality of the State has acted in contravention of the above said requirement of article 14 then we have no hesitation that a writ court can issue suitable directions to set right the arbitrary actions of the first respondent. xxxx xxxx

28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the Whirlpool exercise of this power [See : Corporation v. Registrar of Trade Marks, Mumbai and Ors. And this plenary right of the High Court to issue a prerogative writ will not normally be exercised by the Court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the court thinks it necessary to exercise the said jurisdiction. xxxx xxxx interest,

53. From the above, it is clear that when an instrumentality of the State acts contrary to public unjustly and unfairly, unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution.” (Emphasis supplied) W.P.(C) No. 13034/2009 page 32 of 121

56. So far as the objection to the maintainability of the writ petition on the ground that the same is beyond the permissible parameters of judicial review is concerned, the same has to be tested on demurrer.

57. The petitioner has also made prayers premised on a challenge to the action of the respondent no. 2 in floating the tender and awarding the contract in favour of respondent no. 3, inter alia on the ground that the same was an arbitrary act and, in view of the covenants contained in the Concession Agreement dated 14th May, 2004, was in the teeth of Article 14 of the Constitution of India. It has also urged that the contracts by the respondent nos. 1 and 2 including the Concession Agreement dated 14th May, 2004 are statutory in nature and are violative of the rights of the petitioner under Article 19(1)(g) of the Constitution of India. It has also been urged that the action of the respondents in failing to issue notice to the petitioner before proceeding with the impugned tender process discloses lack of fairness and action and was violative of the principles laid down by the Supreme Court in (1990) 3 SCC 752 Mahabir Auto Stores and Ors. v. Indian Oil Corporation and Ors.

58. The pleas in the writ petition, therefore, would show that the challenge by the petitioner is premised not on matters arising of contract alone but on assertions of violation of constitutional provisions and is, therefore, sustainable. This is not to say that there is merit in the challenge which we shall W.P.(C) No. 13034/2009 page 33 of 121 consider hereafter. However, in the light of the principles laid down by the Supreme Court in R.D. Shetty vs. IAAI, Mahabir Auto Stores and Ors. v. Indian Oil Corporation and Ors., Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and Ors., ABL International Ltd. and Anr. v. Export Credit Guarantee Corporation of India Limited and Ors. (supra) and the nature of the challenge raised before us, the present petition cannot be rejected on this preliminary objection and requires to be considered on merits.

59. We now propose to examine the other contentions urged by the parties in this matter. (II) Whether the scope of the work under the th November, 2009 would Concession Agreement dated 18 be covered within the meaning of the expression 'Capacity Augmentation of the Project' as is appearing in th May, Article 14 of the Concession Agreement dated 14 2004? It now becomes necessary to consider the objection of the respondents, that Article 14 of the Concession Agreement dated 14th May, 2004 was not applicable, as the work of four laning of the section of NH-6 awarded to respondent no. 3 was effectively not a project to augment/increase the capacity of the petitioner's project and whether the same has been undertaken with a view to provide the desired level of service to the users of the project facility as is envisaged under Article 14 of the Concession Agreement of 2004.

60. It is contended, that any development on the National Highway-6, as a whole or any portion thereof, which includes the W.P.(C) No. 13034/2009 page 34 of 121 Pingalai river bridge or the approaches to the bridge (which forms part of the Concession Agreement dated 14th May, 2004), would require to be treated as capacity augmentation of the project and would render Article 14.1 operative, thus entitling the petitioner to enforce its preferential right to match the lowest bidder. The submission on behalf of the petitioner would suggest that the concession agreement dated 14th May, 2004 prescribes no limits, and is open ended.

61. Article 14.1(a) refers to a decision of the Government of India taken following a detailed traffic study at any time after the COD to 'augment/increase the capacity of the project' with a view 'to provide the desired level of service to the users of the project' while Article 14.2 is concerned with 'additional facilities'. We may note, that there is no dispute before us as to the basic submission that Article 14.1 comes into operation only if a decision for and such capacity augmentation of the project is envisaged under the concession agreement dated 14th May,

62. Unfortunately, the expressions 'capacity'; 'augmentation' or 'capacity augmentation' have not been described under the agreement. These words and the phrases would therefore take their ordinary meaning as applicable in the general context in which these terms are used.

63. So far as the meaning of 'augmentation' is concerned, the petitioner has placed reliance on the meaning of augmentation in the Oxford English Reference Dictionary, 2nd Ed. Revised which W.P.(C) No. 13034/2009 page 35 of 121 reads as follows :- “augmentation : growth; increase; the lengthening of the time-values of notes in melodic parts” enlargement;

64. We may advert to the meaning attributed to 'augmentation' in some other dictionaries as well which shed light on the various nuances of and varied contexts in which the expression appears or is used. In The New Lexicon Webster's Dictionary of the English Lanugage, 'augmentation' is described as follows:- an increasing or being “augmentation : increased; something which is an increase or addition; (in counterpoint) the repeating of a phrase in notes longer than those first used”

65. In the Legal Thesaurus - Deluxe Edition by William C. Burton the meanings assigned to 'augmentation' and the several meanings assigned to 'capacity' are as hereafter :- : accessory, cumulative effect, “augmentation accrual, accruement, accumulation, adding, advance, advancement, aggrandizement, amplification, appreciation, appurtenance, broadening, build- up, cumulativeness, enlargement, development, enlarging, expansion, extension, gain, growth, improvement, increase, increasing, increment, progress, magnification, intensification, proliferation, redoubling, reinforcement, rise, something added, supplement, widening” enhancement, spread, capacity (aptitude), noun:- ability, ableness, aptness, capability, capableness, competence, competency, effectuality, faculty, giftedness, potentiality, power, proficiency, qualification, range, reach, scope, skill, talent capacity (maximum), noun:- ampleness, W.P.(C) No. 13034/2009 page 36 of 121 amplitude, compass, breadth, comprehensiveness, containing power, extent, full complement, full extent, full volume, fullness, greatest amount, greatest extent, greatest size, holding ability, largeness, limit, limit of endurance, limitation, measure, physical limit, plentidue, reach, room, scope, spacious-ness, stretch, tankage, upper limit, volume capacity (sphere), noun:- ambit, area, arena, boundaries, bounds, division, domain, extent, field, jurisdiction, limits, orbit, pale, province, reach realm, region, scope, specialty, stretch, territory.

66. The Oxford English Dictionary, 2 nd Edn., Vol.I gives the following meanings of 'augmentation' and 'capacity' :- “augmentation : the action or process of augmenting, making greater, or adding to, extension, enlargement' the action or process of raising in estimation or dignity; exaltation, honouring; theprocess of becoming greater; growth, increase; augmented state or condition; increased size, etc.; amount, increase;........... degree, Capacity : ability to receive or contain; holding power”

67. These words are also defined in Webster's Third New International Dictionary of the English Lanugage Unabridged which read as follows :- the act, action, or process “augmentation : of augmenting: the process of becoming augmented: the state of being augmented : something that augments : the device of modifying a musical subject or theme by repetition in tones of : increase of stipend obtained by a parish minister: an additional charge to a coat of arms given as an honor capacity : the power or ability to hold, receive, or accommodate: an empty space: a hollowed- W.P.(C) No. 13034/2009 page 37 of 121 out area : a containing space: a measure of content for gas, liquid or solid : the amount held : the measured ability to contain: the ability to absorb: attaining to or equaling maximum capacity”

68. The meaning of 'augment' and 'capacity' given in the 'Legal Glossary' is :- “augment : to increase capacity : legal qualification; capability; a position enabling one to do something; a containing space, area or volume”

69. From the above, it is apparent that augmentation is not confined to increase in size alone but takes within its ambit development, enhancement and improvement of an existing facility/situation as well. So far as the context under consideration is concerned, capacity would relate to the limits or the extent to which a facility can accommodate a particular thing. In our view, the expression 'augmentation' cannot be read in isolation of 'capacity' or devoid of the prime objective of the work to which article 14.1 would apply.

70. Mr. Lalit, learned senior counsel for the petitioner has urged that such increase cannot be confined to a lateral or horizontal increase and has to take into its ambit a longitudanal increase as well. In this regard, reliance has also been placed on the pronouncement of the Karnataka High Court reported at 1999 Crl.L.J. 4220 Abdul Khader vs. Secretary to Government of India & Ors. In this case, the court was W.P.(C) No. 13034/2009 page 38 of 121 concerned with the construction of the words 'conservation' and 'augmentation' for the purposes of section 3 of the Conservation of Foreign Exchange & Prevention of Smuggling Activities Act (52 of 1974). In para 8 of this judgment, reliance was placed on a previous judgment of the Division Bench of the Calcutta High Court reported at 1975 Crl.LJ 1790 entitled Mangilal Baid vs. Secy. Home (SPL) Department of State of W.B. on the same question wherein the expression 'augmentation' was held to mean 'the act or process of increasing the size or amount'. The Karnataka High Court also observed that the expression 'conservation' is wider than 'augmentation'.

71. An increase, so far as foreign exchange is concerned, has no correlation to an increase in the capacity of an infrastructure related construction project as in the instant case. Furthermore, the expressions have to be interpreted keeping in view the spirit, intendment and purpose of the agreement. 'Capacity augmentation' in Article 14.1(a) has to derive colour from the intent to provide the 'desired level of services to the users of the project facility'. The principles laid down in the pronouncements of the Karnataka and Calcutta High Court have to be read in the context in which they were laid.

72. It requires to be borne in mind, that so far as a road or highway or any portion thereof is concerned, its capacity is relatable to the volume and intensity of the traffic plying thereon at any point of time. Capacity augmentation with regard to a road or a highway would obviously relate to increase in such W.P.(C) No. 13034/2009 page 39 of 121 volume or intensity of the traffic plying on it. The total length of the petitioner's project was confined to 2.2 Kms. Capacity augmentation of this project would obviously require such steps to be taken as would enable increase of the volume of the traffic plying on this portion of the highway.

73. Dr. A.M. Singhvi and Mr. C.U. Singh, learned senior counsels appearing for the respondent no. 3 have vehemently contended, that increase in the length of the highway or the four laning of the 66.73 kms portion of the NH-6 would not have the effect of increasing the traffic volume or capacity of the 2.2 km portion which forms part of the petitioner's project facility. In order to accommodate increase in traffic intensity or traffic volume on this stretch of 2.2 kms, the width of the section would necessarily require to be increased to accommodate the additional volume.

74. It is further pointed out, that the Pingalai bridge project of the petitioner already stands four laned and there was no further need to widen this bridge. The respondent no. 1 in its affidavit has affirmed that no further widening of the Pingalai river bridge or its approaches is envisaged in the scope of the work allotted to respondent no. 3.

75. We also find that consideration of this issue cannot be from the aspect of traffic volume alone. In order to be covered under Article 14 of the agreement, such augmentation has to be with the intent of providing the desired level of services to the users of the project facility. An increase in traffic volume alone cannot W.P.(C) No. 13034/2009 page 40 of 121 be considered to be a step towards any improvement of the level of service to the users of the bridge or its approaches. Such improvement would more to take into its ambit provision of other facilities and amenities as well.

76. There is another aspect to the contention under examination. It has been urged on behalf of the petitioner that examination of the excerpts of the concession agreement of respondent no. 3 placed on record would show that the respondent no. 3 has to actually carry out work on the stretch on which the petitioner has raised construction pursuant to the agreement of 14th May, 2004.

77. In the rejoinder which has been filed to the counter affidavit of the respondent no.1, it is stated by the petitioner, that the work to be done by the respondent no. 3 in this section is absolutely identical to the work undertaken by the petitioner. It has further been stated that the respondent no. 3 has also to build major and minor bridges under its Concession Agreement. The petitioner has also pleaded similarity of the two works involved in the two projects for the reason that the respondent no. 3 has also been permitted toll collection rights under the concession agreement of November, 2009.

78. It is, therefore, necessary to examine whether the scope of the work entrusted upon the petitioner pursuant to the Concession Agreement dated 14th May, 2004 and that under the Concession Agreement which stands entered into between the respondent nos. 2 and 3 in November, 2009 are indentical. W.P.(C) No. 13034/2009 page 41 of 121

79. Our attention is drawn by Mr. Lalit, learned senior counsel for the petitioner to clause 1 of the Schedule B of this Concession Agreement of November, 2009, which gives the description of the four-laning. Clause 1 relates to the width of the carriage way which is to be provided. Learned senior counsel for the petitioner points out that the village Tiwasa, which is located between the chainage 112/000 to 114/200, has been mentioned in clause 1.1 of the Schedule B of 2009 agreement and that the petitioner's project was at KM 113.800 of NH-6. It is to be noted that Clause 1.1 contains a proviso and describes urban stretches wherein the width of the paved carriageway was to be restricted to 18.00 mtrs. Reliance has also been placed on appendix B-1 which describes the typical cross sections. It has been pointed out that clause 2 of appendix B-I requires that between the chainage from 113/400 to 114/300, for a length of 0.90 KM, cross section, construction of type A has to be provided while from chainage 112/000 to 113/400 for a length of 1.40 KM, type A-2 cross section has to be provided. Learned senior counsel also points out, that the chainage of the petitioner's location is to be found also in details of service road in Appendix B-IV (from 112/000 to 113/400) giving details of services; proposed ROW in Appendix B-V giving the design chainage of KM 112+000 to 114+200; two major intersections in the petitioner's location details whereof are given in Appendix B- VI ; and minor junctions in Appendix B-VII. W.P.(C) No. 13034/2009 page 42 of 121 The petitioner's contention is that the above shows that extensive work is proposed to be carried out on the stretch covered by its project and that its entire project is subsumed in the project of the respondent no. 3.

80. Mr. Goolam Vahanwati, learned Attorney General of India has placed the Concession Agreement of 2009 before us. We find that the Wardha river bridge and the Pingalai river bridge are only listed therein as major bridges physically existing on the site where the respondent no. 3 is to execute the project. It is important to note, that Appendix B-XI of this concession agreement of November, 2009 lists the new major bridges which are required as well as the existing bridges requiring rehabilitation, repair and widening schemes. A similar list of minor bridges is listed in Appendix B-XII. However, in Appendix B-XI, river Wardha bridge is the only new major bridge mentioned as being constructed. Rehabilitation/repair/widening of only the existing Wardha river bridge is also mentioned. The Pingalai river bridge is thus clearly outside the scope of the work which has been assigned to the respondent no. 3.

81. The respondent no. 3 has explained that the documents referred to by the petitioner indicate only the location of junctions, intersections and right of way and that no work is being required to be actually carried out on the existing Pingalai river bridge (which is specifically excluded from the scope of the work under the Concession Agreement of 2009) or the approach roads built by the petitioner. It is pointed out, that the W.P.(C) No. 13034/2009 page 43 of 121 approaches built by the petitioner are already four laned and consequently are not requiring four-laning. So far as building of the service lane or intersections etc are concerned, it is submitted that these are non-toll facilities which are outside the scope of the petitioner's portion of National Highway-6 for which it is collecting toll duty.

82. On a perusal of the Concession Agreements, we find the submission of the petitioner may not be completely correct. From a reading of these extracts in the concession agreement of November, 2009, the exact location, nature or extent of these works is not clear. Therefore, adjudication on the issue as to whether the work which is to be undertaken by the respondent no. 3 includes or is identical to the project assigned to the petitioner, cannot rest on the above features alone. The petitioner's contention that extensive work including main carriageway, minor and major bridges etc have to be rebuilt on the Pingalai river project is certainly not discernible from the scope of work in the Concession Agreement of November, 2009 as placed before this court.

83. It is noteworthy, that the Concession Agreement of the petitioner clearly describes the scope of work to be undertaken by the petitioner as inclusive of a bridge having the length of

92.70 mtrs and collective approach roads of 2.1 km on either side, thus being a total of 2.2 km in KM 113.800 of NH-6. Therefore it is essentially a bridge construction project. So far as the project which the respondent no. 3 has been W.P.(C) No. 13034/2009 page 44 of 121 assigned is concerned, the same relates to four laning of the Talegaon-Amaravati Section of NH-6 from KM 100.000 to KM

166.725 being a length of 66.725 KM under the National Highway Development Project (NHDP)-phase III, which thus is essentially a highway project.

84. We find that the project of the petitioner as defined in Schedule A of the Concession Agreement of 2004 notices that in 2003/2004, the then existing submersible bridge having 22 spans of 2.2 mtr C/C and width of 6.10 mtrs. was susceptible to getting submerged during heavy floods of the river thus resulting in disruption of traffic for 4-6 hours duration several times and its being held up. The Tiwasa Village was situated on the bank of the river. For these reasons, it was necessary to construct a “high level bridge” expeditiously on account of the demand from the public.

85. Schedule B of the petitioner's Concession Agreement of 2004 which describes the 'project site', clearly records that the proposal involved construction in two phases of a four lane major bridge with footpaths including four lane approaches, CD- Works, minor bridge, underpasses, roadside drainage, service road and toll plaza complex and other structures included in the project on the available land. Schedule C states that the first phase would include construction of a two lane high level major bridge with footpath on the left side with RTL 96.40m and construction of 2 lane approaches with retaining wall paved shoulders on the left side. In the second phase, the project W.P.(C) No. 13034/2009 page 45 of 121 envisaged dismantling of the existing bridge, disposing off the dismantled material and construction of a two lane high level major bridge with footpath on the right side with R.T.L. 96.405. The petitioner was entitled to charge a fee from the users of the 'construction of major bridge and its approaches across Pingalai river in KM 113/800' only for the construction raised by it and for nothing beyond.

86. The captioning of the work envisaged under the concession agreement dated 14th May, 2004 clearly shows that the work envisaged was construction of a major four lane high level bridge across the Pingalai river and that the construction of the four lane approaches on either side was merely incidental or ancilliary to the same. Also, even the letter dated 20th June, 2009 written by the petitioner to the Chief Engineer, MORT&H (Ministry of Road Transport & Highways) refers to the petitioner's contract for “construction of a major bridge”. The averments in paragraph 8.1 of the writ petition also refer to the contract of the petitioner as a 'bridge contract'.

87. It has been observed that the requirement for the roads on either sides of the bridge was related to the efficient and efficacious utilisation of the Pingalai river bridge and nothing more. The petitioner's have argued that the 'approach' as defined by the Indian Road Congress is the point at which the slope from bridge touches ground level of road. The petitioner contends that the width of the Pingalai river bridge which was constructed by it was only 15 mtr and therefore as per the IRC W.P.(C) No. 13034/2009 page 46 of 121 norms, the approach to the bridge would be of the length of 15 mtrs only. The contention is that the very fact that the petitioner was asked to construct a four laned road of 80 mtr (on the Nagpur side) on one side and 100 mtr (on the Amravati side) on the other side of the bridge would show that the petitioner had constructed not merely approaches to the bridge but had developed a 2.2 km section of NH-6. It is urged, that the petitioner was required to construct the road of 100 mtr on one side and 80 mtr on the other side. However, merely because the petitioner may have been asked to build 80 mtr. road on the Nagpur side and 100 mtr on the Amravati side, which is beyond the width of the bridge as per IRC norms, would not change the real nature of the work which was assigned to the petitioner or be decisive of the main issues which are being urged before this court. The consideration of the issue in the present case has to be confined to the meaning of the expressions under the Concession Agreement. We also find that Schedule C to the Concession Agreement dated 14th May, 2004 which defines project facility contains details of the scope of the work awarded to the petitioner. There is a clear reference in Schedule C of the work of construction of “approach

2.100 KM' to the bridge which the petitioner was required to construct in two phases.

88. We also find that the reference to the petitioner's project as the 'bridge project' relates to the primary work which the petitioner was required to undertake which was to replace the W.P.(C) No. 13034/2009 page 47 of 121 existing bridge on the Pingalai river with the new bridge and construction of the approach roads'. It certainly cannot be contended or held that the approach roads were the primary work which the petitioner was to undertake.

89. In any case, so far as consideration of the identity or similarity of the work undertaken under the two concession agreements is concerned, this would also require an examination of the volume of the work which is involved and would not rest on considerations of whether a particular intersection or a service road is to be constructed at any point of the petitioner's project work alone.

90. It has been brought to our notice that the project executed by the petitioner was captioned as “Construction, operation and maintenance of major bridge and its approaches across Pingalai River in KM 113/800 on Nagpur- Edlabad Road section of NH-6 on Build, Operate, Transfer (BOT) basis”. The work which is to be undertaken by the respondent no. 3 is captioned as “Design, engineering, finance, procurement, construction, operation and maintenance of the 4 laning of Talegaon-Amaravati Section of NH-6 from km 100.000 to km 166.725 in the State of Maharashtra under NHDP-Phase III Design, Built, Finance, Operate and Transfer (DBFOT) basis”.

91. The above would show that in terms of the Concession Agreement dated 14th of May, 2004, the petitioner was assigned the work of replacing the existing bridge and construction of a major bridge over the Pingalai river and provision for approach W.P.(C) No. 13034/2009 page 48 of 121 roads thereof. The total distance over which the petitioner has raised construction admittedly forms a total of about 2.2 kms whereas the respondent no. 3 has been required to undertake work over 66.725 Kms. The project of the petitioner therefore is hardly 3.3% of the work which the respondent no. 3 is to undertake.

92. It has been pointed out, that as per the Concession Agreement of 2004, the total value of the petitioner's project would be between Rs.14 to 15 crores only, which is a smal fraction of the value of the Talegaon-Amravati-NH-6 project and barely more than the security amount of asound of 11.79 crores for it.

93. The total value of the project undertaken by the petitioner was around Rs.14 to 15 crores crores whereas the project which the respondent no. 3 is to undertake is valued at approximately Rs.567 crores. In terms of the costing as well, the work which the petitioner has undertaken thus forms a miniscule percentage of the work which the respondent no. 3 is to undertake.

94. The concerns of the Government in awarding the work to the petitioner were clearly not relating to any other part of the NH-6 but were centered around the plight of the users of the existing bridge who were getting stranded on account of the bridge getting submerged during rains.

95. The petitioner also has not been able to point out any decision of the respondent no. 1 to augment/increase the capacity of is project. Also there is no capacity augmentation of W.P.(C) No. 13034/2009 page 49 of 121 the approaches because no further widening either of the bridge or its approaches is envisaged on the scope of work allotted o respondent no. 3.

96. Generally capacity augmentation may relate to a qualitative and quantitative increase not restricted to either a lateral, horizontal or longitudinal increase of the highway or road. However, in the instant case, such augmentation has to be for the stated object of optimising service level for the bridge users. This would restrict the scope of the expression which certainly cannot be limit less.

97. Other than a bald submission by the petitioner that the impact of traffic on 66 KM to be constructed by respondent no. 6 would have a direct bearing on the Pingalai river bridge, the approach road and the highway, the petitioner does not disclose as to how the widening of the sixty six kilometer stretch would lead to achievement of the “desired level of service to the users of the project facility”. There is therefore nothing to support the submission that the Talegaon Amravati project can be treated as a capacity augmentation of the Pingalai River project so far as the concession agreement dated 14th May, 2004 is concerned.

98. Mr. Goolam Vahanwati, learned Attorney General of India has urged that the project of 2009 has no connection with the petitioner's project and that this is also manifested from the fact that the traffic study as is envisaged under Article 14 of the Concession Agreement of 2004, has not been undertaken before taking the decision for four laning of the Talegaon-Amravati W.P.(C) No. 13034/2009 page 50 of 121 stretch of NH-6.

99. The petitioner has taken a strong exception to this contention of the respondent no. 1. It has been urged on behalf of the petitioner that as per clause 6.1 of the guidelines being, 'IRC SP 19/2001', issued by the Indian Road Congress ; “information about traffic is indispensible for any highway project since it would form the basis for the design of the pavement, fixing the number of traffic lanes, design of intersections and economic appraisal of the project etc.,” A traffic survey analysis is also provided thereunder.

100. Learned senior counsel for the petitioner has also placed reliance on article 29 of the bid document for the respondent no. 3's project, which provides for the effect of variation in traffic growth, suggesting that a study was undertaken prior thereto by the government.

101. These submissions on behalf of the petitioner however, fail to consider, that so far as the claimed rights of the petitioner are concerned, the traffic study which is required to be conducted has to be in terms of article 14.1(a) of the Concession Agreement of 2004 which is envisaged after the commencement of the commercial operations of the Pingalai River bridge project. As urged by the learned Attorney General of India, such study has to be for the singular specified purpose of taking a decision on the capacity augmentation of this project alone so as to provide the desired level of service to the users of the project facility. W.P.(C) No. 13034/2009 page 51 of 121

102. A study undertaken for the purposes of other development/construction work on NH-6 would not be for the purpose envisaged under Article 14. Therefore, reliance on a traffic study undertaken with regard to the NH-6 or any portion thereof, would not be of the nature envisaged under Article

14.1(a). The impact on the project of the petitioner or the provision of the desired level of service to the users of this project may be incidental to any development/construction work undertaken on any portion of NH-6. The petitioner has been unable to place any material to indicate that a study of the nature envisaged under Article 14.1(a) was at all undertaken. Therefore, the submission on behalf of the respondent no. 1 that a detailed traffic study of the Pingalai river bridge after the commercial operation date of the project as stipulated under article 14.1(a) has not been conducted, has to be accepted.

103. The petitioner has also been unable to support the contention that the work which is part of the project awarded to the respondent no. 3 could be considered as providing the 'desired level of services to the users of the project facility' or that there is substantial development or enhancement or improvements being undertaken so far as the Pingalai river bridge or its approach roads are concerned. The project which has been assigned to the respondent no. 3 therefore is clearly not covered within the meaning of the expression “capacity augmentation” of the petitioner's project. The petitioner can take no benefit from the oversight of the NHAI to specifically W.P.(C) No. 13034/2009 page 52 of 121 provide for the exclusion of the 2.2 kms stretch over which the petitioner is operating.

104. In view of the above discussion, the construction of a new highway or expansion of 66.83 kms into a four laned highway awarded to the respondent no. 3, which may have the incidental effect of expediting access to the petitioner's project or such like impact certainly cannot be held to be work undertaken for 'capacity augmentation of the project' with the object of providing the 'desired level of service' to the 'users of the river Pingalai bridge' as envisaged under the Concession Agreement dated 14th of May, 2004.

105. For all the foregoing reasons, it cannot therefore be held that the work carried out by the petitioner and the work allotted to the respondent no. 3 through the Concession Agreement is the same or identical. This contention of the petitioner is wholly misconceived and devoid of merit. (III) Whether the petitioner has an absolute preferential right to match the lowest bidder without pre-qualifying or participating in the bidding process for the four laning project in view of Article 14 of the Concession Agreement dated 14th of May, 2004?

106. The petitioner has premised its challenge and prayers on a claim that Article 14 of the Concession Agreement of 2004 in clear terms gives certain preferential rights to the petitioner as the existing concessionaire in case of any capacity augmentation of the project and thus the respondent no. 1 was bound to give the petitioner the first right of refusal to match the W.P.(C) No. 13034/2009 page 53 of 121 preferred offer. The submission on behalf of the petitioner is that the petitioner is deemed to be eligible for submitting a proposal for the purposes of capacity augmentation and consequently is exempted from participating in the bidding process at the first stage.

107. Detailed submissions have been made on the construction of Article 14.1(e) of the concession agreement dated 14th May,

2004. It is urged that this Article is applicable in two eventualities. The first being the concessionaire chosing not to submit its proposal as part of the bidding and the second being the situation when the concessionaire submits its proposal and is not the preferred bidder. Mr. U.U. Lalit, learned senior counsel for the petitioner, has contended that there is no punctuation in the nature of a “comma” or a “semi-colon” before the word “or” which occurs between these two eventualities in Article 14.1(e). It is contended, therefore, that the words 'also fails or declines to match the preferred offer', qualify both the aforentoiced eventualities which, according to learned senior counsel, is evident from the use of the word 'and' after the second condition.

108. It is also urged that the rule of contra proferentum (Ref : (2009) 5 SCC 313 Bank of India vs. K. Mohan Das) would apply and that the ambiguity in the contract has to be interpreted strongly against the person/party drafting it (Ref : (1963) 3 SCR 183 Khardah Co. Ltd. vs. Raymon & Co. (India) Pvt. Ltd. ; AIR 1965 SC 1288 Central Bank of India W.P.(C) No. 13034/2009 page 54 of 121 vs. Hardford Fire Insurance Co.). Learned senior counsel contends that such an interpretation has to be given to effectuate the rights of the petitioner in Article 14.1. In this regard, reliance is placed on the pronouncements of the Apex Court in (1979) 1 SCC 568 Mohd. Shabir vs. State of Maharashtra and (1988) 4 SCC 21 Dr. M.K. Salpekar vs. Sunil Kumar Shamsunder Chaudhari & Ors.

109. The further submission on behalf of the petitioner is that the preferential right conferred under Article 14.1 is not circumscribed by any condition, nor is the participation of the petitioner at the RFQ stage necessary to enforce its right of first refusal and/or the right to match the preferred offer.

110. Our attention is drawn to the Shipping Circular no. 2 of 2004 which sets out the Guidelines on Chartering of Foreign Flag Dredgers issued by the Directorate General of Shipping dated 16th April, 2004 in the matter of dredging contracts. This circular notifies the parties that in order to exercise such right of first refusal, the participation in the bidding process is a sine qua non. The contention is that no such condition exists or can be imported into Article 14.1(e) of the concession agreement dated 14th May, 2004 which was executed barely about a month after the issuance of the said circular.

111. In support of the contention that the preferential right under Article 14.1 is valid and enforceable, it has been urged that the same is akin to adoption of the 'Swiss Challenge Method' which was approved by the Supreme Court of India in W.P.(C) No. 13034/2009 page 55 of 121 (2009) 7 SCC 462 Ravi Development vs. Shri Krishna Prathisthan.

112. The respondents on the other hand refute these contentions. It is further contended that if the terms of the Concession Agreement of 2004 were so construed, the respondents action would be violative of Articles 14, 16, 19 and 21 of the Constitution of India and be liable to interference by this court.

113. We have carefully considered the rival contentions. The pronouncement of the Supreme Court relied on by the petitioner, reported at (1979) 1 SCC 568 Mohd. Shabir vs. State of Maharashtra was concerned with a construction of Section 27 of the Drugs & Cosmetics Act, 1940. The court held that this section postulated three separate categories of cases and no other and that 'stocks or exhibits for sale' is one indivisible whole category. It was held that section 27 took within its sweep not merely stocking of drugs, but stocking the drugs for the purposes of sale and unless all the ingredients of the category were satisfied, section 27 would not be attracted. In so holding the Supreme Court had held that the three categories in section 27 namely 'manufature for sale', 'sell' have a comma after each clause but there is no comma after the clause 'stocks or exhibits for sale'. The absence of any comma after the word 'stocks' indicates that the clause 'stocks or exhibits for sale' is one indivisible whole and it contemplates not merely stocking the drugs but stocking the drugs for the purposes of sale. W.P.(C) No. 13034/2009 page 56 of 121

114. In (1988) 4 SCC 21 Dr. M.K. Salpekar vs. Sunil Kumar Shamsunder Chaudhari & Ors. also relied on by the petitioner, the court was concerned with the existence of a punctuation in a rent control statute in sub-clause (v) of clause 13(3) of the C.P. and Berar Letting Houses and Rent Control Order, 1949.

115. There can be no dispute at all to the proposition laid down by the court. However, the judgment has to be examined in the context of the issues which were before the court. Issue arising out of interpretation of statutory provisions were raised in the cases discussed above. The Supreme Court was not concerned with interpretation or construction of the terms of a contract, especially one relating to creation of a preferential right on the happening of a specified contingency. This very issue has been further considered in several later pronouncements as well, and the contention raised before us has been held to be not of universal or absolute application, even in matters involving statutory interpretation.

116. In (1982) 1 SCC 561 State of West Bengal vs. Swapan Kr. Guha & Ors., relied upon by the petitioner, the court was concerned with the interpretation of section 2(c) of the Prize, Chits and Money Circulation Scheme (Banning) Act, 1978. On the issue of the use of commas in the legislation, and their effect, the court had observed as follows :- “7. Grammar and punctuation are hapless victims of the pace of life and I prefer in this case not to go merely by the commas used in Clause W.P.(C) No. 13034/2009 page 57 of 121 (c) because, though they seem to me to have been placed both as a matter of convenience and of meaningfulness, yet, a more thoughtful use of commas and other gadgets of punctuation would have helped make the meaning of the clause clear beyond controversy. Besides, how far a clause which follows upon a comma governs every clause that precedes the comma is a matter not free from doubt. I, therefore, consider it more safe and satisfactory to discover the true meaning of Clause (c) by having regard to the substance of the matter as it emerges from the object and purpose of the Act, the context in which the expression is used and the consequences necessarily following upon the acceptance of any particular interpretation of the provision, the contravention of which is visited by penal consequences.” (Underlining supplied)

117. It is clearly evident from the reading of the aforenoticed observations of the Supreme Court, that there is no absolute rule to the effect that a clause which follows upon a comma, governs every clause that preceeds the comma. Even in the context of statutory interpretation, the Supreme Court has held that the substance of the matter as emerges from the object and purpose of the Act has to be given regard to, and also the context in which the expression is used as well as the consequences which would necessarily follow upon the acceptance of any particular interpretation of the provision, the contravention of which is visited by penal consequences.

118. In (2009) 5 SCC 313 Bank of India vs. K. Mohan Das, also relied upon by the petitioner, the court was concerned upon the construction of a Voluntary Retirement Scheme, 2000 made available to employees of the public sector banks. The scheme was held to be contractual. The court was concerned with issues W.P.(C) No. 13034/2009 page 58 of 121 relating to construction of the contract. The observations of the court relevant for the present consideration, read as follows :- “28.The true construction of a contract must depend upon the import of the words used and not upon what the parties choose to say afterwards. Nor does subsequent conduct of the parties in the performance of the contract affect the true effect of the clear and unambiguous words used in the contract. The intention of the parties must be ascertained from the language they have used, considered in the light of the surrounding circumstances and the object of the contract. The nature and purpose of the contract is an important guide in ascertaining the intention of the parties. Xxx xxx

31. It is also a well-recognized principle of construction of a contract that it must be read as a whole in order to ascertain the true meaning of its several clauses and the words of each clause should be interpreted so as to bring them into harmony with the other provisions if that interpretation does no violence to the meaning of which they are naturally susceptible. [(The North Eastern Railway Company v. L. Hastings) 1900 AC 260].

32. The fundamental position is that it is the banks who were responsible for formulation of the terms in the contractual Scheme that the optees of voluntary retirement under that Scheme will be eligible to pension under Pension Regulations, 1995, and, therefore, they bear the risk of lack of clarity, if any. It is a well-known principle of construction of contract that if the terms applied by one party are unclear, an interpretation against that party is preferred. [Verba Chartarum Fortius Accipiuntur Contra Proferentum].” (Emphasis by us) This judgment also does not lay down the absolute proposition suggested on behalf of the petitioner and it was observed that discretion is conferred on the court to construe W.P.(C) No. 13034/2009 page 59 of 121 the contract based on words used therein.

119. The pronouncement of the Apex Court reported at AIR 1962 SC 1810 Khardah Co. Ltd. vs. Raymon & Co. (India) Pvt. Ltd. has made similar observations and laid down the following principles in para 18 :- “18. But it is argued for the respondents that unless there is in the contract itself a specific clause prohibiting transfer, the plea that it is not transferable is not open to the appellants and that evidence allunde is not admissible to establish it and the decisions in (1951) 1 MLJ 147 Boddu Seetharamswami vs. Bhagwathi Oil Company, AIR 1954 Mad 87 Illuru Hanumanthiah vs. Umnabad Thimmaiah and Hussain Kasam Dada vs. Vijayanagaram Comm. Asson. are relied on it support of this position. We agree that when a contract has been reduced to writing we must look only to that writing for ascertaining the terms of the agreement between the parties but it does not follow from this that it is only what is set out expressly and in so many words in the document that can constitute a term of the contract between the parties. If on a reading of the document as a whole, it can fairly be deduced from the words actually used therein that the parties had agreed on a particular term, there is nothing in law which prevents them from setting up that term. The terms of a contract can be express or implied from what has been expressed. It is in the ultimate analysis a question of construction of the contract. And again it is well established that in construing a contract it would be legitimate to take into account surrounding Therefore on the question circumstances. whether there was an agreement between the parties that the contract was to be non- transferable, the absence of a specific clause forbidding transfer is not conclusive. What has to be seen is whether it could be held on a reasonable interpretation of the contract, aided by such considerations as can legitimately be taken into account that the agreement of the parties was that it was not to be transferred. When once a conclusion is reached that such was the understanding of the parties, there is W.P.(C) No. 13034/2009 page 60 of 121 nothing in law which prevents effect from being given to it. That was the view taken in AIR 1956 Mad 110 Virjee Daya & Co. vs. Ramakrishna Rice & Oil Mills, and that in our opinion is correct.” (Emphasis supplied)

120. In para 5 of AIR 1965 SC 1288 Central Bank of India Ltd. vs. Hartford Fire Insurance Co. Ltd., the Supreme Court has reiterated the well settled principle that, “it is the court's duty to give effect to the bargain of the parties according to their intention and when that bargain is in writing, the intention is to be looked for in the words used unless they are such that one may suspect that they do not convey the intention correctly”. The Supreme Court had further stated that “if those words are clear, there is very little that the court has to do. The court must give effect to the plain meaning of the words however it may dislike the result”. In para 6 of the judgment, the court held that plain and categorical language cannot be radically changed by relying upon the sorrounding circumstances. In para 7, referring to Halsbury's Laws of England (3rd Edn.) Volume II, paragraph 640, page 391, it was observed that the rule laid down therein did not permit a court to speculate and that the court must be able to say with certainty what the intention was, in order that it may add something to the language used by the parties.

121. The submission on behalf of the petitioner fails to consider an important aspect of the matter. The two eventualities contemplated under Article 14 of the Concession Agreement may not be separated by use of a comma. However, there is W.P.(C) No. 13034/2009 page 61 of 121 separation by numerical enumeration between the two possible situations which establishes a clear demarcation between them. The latter part of the second eventuality cannot be construed as applicable to the first one as well.

122. The aforenoticed judicial pronouncements of the Supreme Court relied upon by the petitioner also lay down the principle that regard has to be had to the intention of the parties, as well as the nature and purpose of the contract, surrounding circumstances and object of the contract which would guide the construction which has to be placed on the terms thereof. Clearly sub-article (e) of Article 14.1 cannot be read disjunctively or in isolation and has to be read in conjunction with the other sub clauses having regard to the entire spirit, intendment and scheme of Article 14 and the other stipulations in the Concession Agreement of 2004. The argument of the petitioner based on lack of punctuation severing the two portions is, therefore, not acceptable.

123. We may now examine the scheme of Article 14 of the Concession Agreement of 2004. Sub-article (b) of article 14.1 enables the respondent no. 1 to invite proposals from eligible persons for capacity augmentation of the project which is the subject matter of the Concession Agreement dated 14th of May,

2004. It requires that the petitioner be given the option to submit its proposal for work involving capacity augmentation of the existing project. So far as 'eligible persons' are concerned, the respondent no. 1 is entitled to scrutinise the eligibility of W.P.(C) No. 13034/2009 page 62 of 121 persons who apply for the capacity augmentation work.

124. Further, sub-article (c) of article 14.1 stipulates that in case the concessionaire chooses not to submit its proposal or upon finalisation of the bid, fails or declines to match the preferred offer, in terms of sub-article (e), the bid document for 'capacity augmentation' shall specify a termination payment to be made to it. From a reading of sub-article (c), it is apparent that termination payment was envisaged in two eventualities; the first being the concessionaire choosing not to submit its proposal, and the second being the contingency when the concessionaire's offer is not the preferred offer or the concessionaire fails to or declines to match the preferred offer. This sub-article clearly suggests that failure on the part of the concessionaire or its declining to match the preferred offer does not apply to the eventuality when the concessionaire chooses not to submit its proposal.

125. This scheme of Article 14.1 is evident from a bare reading of the further provisions of Sub-article (d) which provides the manner in which the parties would proceed if the concessionaire matches the preferred offer. It states in case the concessionaire, after participating in the bidding, fails to give the lowest offer, it shall be given the first right of refusal to match the preferred offer and, that if the concessionaire matches the preferred offer, the parties are required to enter into a suitable agreement which would be suplemental to the concession agreement dated 14th May, 2004. In such an event, sub-article W.P.(C) No. 13034/2009 page 63 of 121 (d) stipulates that a payment of Rs.1.05 lakhs is required to be made by the concessionaire to the bidder who had made the lowest offer towards the bidding costs which were incurred by it. No such provision has been made if the concessionaire does not participate in the bidding.

126. Sub-article (e) is the entire basis of the rights asserted before us. The petitioner would like us to read this contractual provision as conferring the first right of refusal to match the preferred offer being available to the concessionaire whether or not it chooses to submit its proposal for capacity augmentation or not. We find that the specification of a termination payment is specified in sub-article (c). This payment is to be made to the concessionaire in case it chooses not to submit its proposal or fails or declines to match the preferred offer. Sub-article (e) of Article 14.1 further states that in case the concessionaire chooses not to submit its proposal for capacity augmentation or is not the preferred bidder and also fails or declines to match the preferred offer, GOI shall be entitled to terminate this agreement upon payment to the concessionaire of the termination payment.

127. It is important to note, that no provision has been made in Article 14.1 for availability of the right of refusal to match the preferred offer in case the concessionaire did not participate in the bidding process, nor any procedure laid out for the exercise of an opportunity to the concessionaire without such W.P.(C) No. 13034/2009 page 64 of 121 participation. It also does not provide for execution of any supplementary agreement in case such right, even if available without participation in the bidding, was exercised. This intention of the parties is evident from the fact that the contract does not even contemplate a supplementary agreement or payment of bidding costs to the lowest bidder if such opportunity was to be provided. It is therefore evident, that if the concessionaire chooses not to submit its proposal, it does not have the right to match the preferred offer. Such right is found given to the concessionaire in sub-article (d) which clearly shows that after participating in the bidding procedure, in case the concessionaire fails to give the lowest offer, then it is to be given the first right of refusal to match the preferred offer. It also stipulates the manner in which the parties would proceed in case the concessionaire exercised the option. It is noteworthy, that clause (c) of Article 14.1 is a clear warning to the concessionaire that if it did not participate in the bidding, it would suffer termination of the Concession Agreement. It is clearly evident therefrom that the clauses set out thereafter would be neither attracted nor applicable. The scheme of article 14.1 read as a whole, permits no other interpretation.

128. The petitioner has also placed reliance on Article 14.2, which is in the nature of a non-compete clause, whereby the respondent no. 1 is prohibitted from constructing and operating, W.P.(C) No. 13034/2009 page 65 of 121 either itself or having the same, built and operated, on BOT basis or otherwise, a competing facility, either toll free or otherwise during the concession period. The respondent no. 1 is however permitted to build and operate such a facility only subject to the fee charged for the vehicles using such facility being at not less than 133% of the fee for the time being charged for vehicles using the project facility constructed by the petitioner. Even this Article imposes only a limited prohibition on the Government, and it is entitled to construct and maintain, build and operate even a competing facility during the operation of the petitioner's contract, subject to payment of the toll at the rates prescribed in this sub-article.

129. The petitioner has also raised an issue that no individual notice was issued to him in accordance with the preferential right in terms of Article 14.1 of the Concession Agreement. In response, the respondent no. 2 - NHAI has stated that it was not a party to the Concession Agreement dated 14th May, 2004. It is also stated that the petitioner was fully aware of all steps taken by the respondents.

130. The respondent no. 2 has also pointed out, that the advertisements were issued notifying applications for the Request For Qualification ('RFQ' hereafter) by public advertisement which were published and circulated on 29th May, 2008 in national dailies including the Hindustan Times and the Financial Express for two major highway projects including the project in question. Additionally the RFQ document was also W.P.(C) No. 13034/2009 page 66 of 121 posted on the website of the NHAI, notifying the public of the decision to carry out the bidding process for selection of the bidders.

131. The notice clearly informed the public that the NHAI intended to pre-qualify and shortlist suitable applicants who would be eligible for participation for awarding the project through an open competitive process in accordance with the procedure notified in the advertisement.

132. The RFQ document which has been placed on record, has stipulated a two stage bidding process. The first stage has been described as the 'qualification stage' of the process, which involves qualification of interested parties/consortiums who make an application in accordance with the provisions of the RFQ. At the end of this stage, the NHAI was required to announce a shortlist of up to seven suitable pre-qualfiied applicants who shall be eligible for participation in the second stage of the bidding process, which is the 'bid stage', comprising of the 'Request For Proposals' ('RFP' hereafter). Article 1.2.2 of the RFQ clearly declared that only those applicants that are pre- qualifed and shortlisted by the NHAI shall be invited to submit their bids for the project. This declaration was clear, unequivocal and without exception. The public was also notified that the authority was likely to provide a comparatively short time span for submission of the bids for the projects. The applicants were advised to visit the site and familiarise themselves with the project. W.P.(C) No. 13034/2009 page 67 of 121

133. Article 1.2.3 of the RFQ also informed that so far as the bid stage (RFP stage) was concerned, the bidders would be called upon to submit their financial offers in accordance with the RFP and other documents provided by the NHAI. Such bidding documents for the project would be provided to every bidder against payment of Rs.50,000/- only.

134. In terms of the Article 1.2.4 of the RFP, a bidder was required to deposit along with its bid, a bid security amount of Rs.11.79 crores, refundable not later than 60 days from the bid due date, except in the case of the bidder who sought the lowest amount of grant from the authority or shared the highest premium/revenue and whose bid security would be retained till it had provided a performance security under the Concession Agreement. So far as evaluation of the bid was concerned, in Article 1.2.8 of the RFQ, the NHAI had stated that bids would be invited for the project on the basis of the lowest financial grant required by a bidder for implementing the project. A bidder could instead of seeking a grant, offer to pay a premium to the NHAI for award of the concession. The grant/premium amount would constitute the sole criteria for evaluation of bids.

135. Stringent conditions were also prescribed for assessing eligibility of the applicants. So far as the technical capacity was concerned, Article 2.2.2(A) of the RFQ stipulated possession of experience over the past five financial years, in eligible projects such that the total sum of the projects was more than Rs.500 crores which had been referred to as the 'Threshhold Technical W.P.(C) No. 13034/2009 page 68 of 121 Capability' ; Article 2.2.2(B) of the RFQ prescribed that the applicant was required to have a minimum net worth (financial capacity) of Rs.154.75 crore at the close of the preceeding financial year and positive net cash accruals during any three years preceeding the application due date. The eligibility requirements of a consortium were differentially prescribed. In terms of Article 3.2.6 of the RFQ, the method of construing the applicant's experience was provided. The RFQ provided for several declarations and undertakings which the participant was required to submit.

136. It is not the petitioner's case before us, that the eligibility requirement for the Pingalai river project and the project relating to the four laning of the Talegaon-Amravati section of NH-6 are the same.

137. It is noteworthy, that neither the consortium which had participated in the bidding for Pingalai River bridge project and incorporated the petitioner as a special purpose vehicle for the execution of the same, nor the petitioner participated in or submitted the RFQ for the project in question.

138. There is nothing on record at all either in any of the communications opted to be placed on record by the petitioner or in the petition which could even remotely suggest that the petitioner, or even the consortium, met the prescribed eligibility conditions or had the capacity or expertise or were at all interested or had consented to the execution of the work which is the subject matter of the present writ petition. We also do not W.P.(C) No. 13034/2009 page 69 of 121 find any power or authority in the respondent no. 2 to waive or relax any of the aforenoticed stipulations.

139. The petitioner first wrote to the Chief Engineer, MORT&H on 20th June, 2009 wherein it asserted rights based on Article 14 of the Concession Agreement. The petitioner also claimed that the NHAI should have issued the RFP to it as well and only on their refusing to participate and writing could the open bidding excluding them be proceeded with. It sought stoppage of the bidding process. Other than this, nothing was mentioned which could even remotly suggest that the petitioner met the required eligibility criteria or had the capacity or expertise to execute the said project. In the further letters dated 14th July, 2009 and 21st July, 2009 too, other than making a bald claim about the clauses in the Concession Agreement and claiming a violation of the terms of the Concession Agreement occurring by the invitation of the bids, nothing about the credentials of the petitioner to execute the said project or about the existence of any consortium was mentioned.

140. Interestingly, the petitioner has addressed a letter dated 6th August, 2009 to the Minister for Road, Transport and Highways for the first time, submitting that it had grown with time, had already qualified and was undertaking Rs.500 crore projects in the public private sector for the Government of Maharashtra and claimed that it was capable of handling the proposed length by W.P.(C) No. 13034/2009 page 70 of 121 the National Highway Authority of India. This communication does not refer to any consortium which had been created by the petitioner. It also does not state its technical or financial ability with regard to the execution of the contract which facts could suggest the petitioner's eligibility. The petitioner purports to exercise an absolute right of first refusal without anything more. Other than this bald claim, there is no material at all placed either before the respondents or before this court with regard to the capability and eligibility of the petitioner to undertake the work in question.

141. It may be noted, that this submission on behalf of the petitioner that it is deemed to have pre-qualified and it is not required to undergo the requirements of even meeting the eligibility requirements under the new proposal has been developed during the pendency of the matter. There is no contention in the writ petition that the petitioner was deemed to have pre-qualified or was exempted from participation in the pre-qualification procedure.

142. For all these resons, we find no merit in this submission of the petitioner and hold that even to operate Article 14 of the Concession Agreement of 2004, it was essential for the petitioner to have participated in the pre-qualification and bidding process.

143. On a detailed consideration, we have also arrived at a conclusion that the project of 2009 was not in the nature of capacity augmentation/additional facility which has already been W.P.(C) No. 13034/2009 page 71 of 121 discussed in detail so as to bring the desired level of service to the users of the Project Facility within the meaning of Article 14 of the Concession Agreement of 2004. We have also held that even if Article 14 of the Concession Agreement became applicable, the petitioner had failed to participate in the bidding process and was, therefore, disentitled to match the preferred offer. We find that the petitioner has not asserted that it had any preferential right after the project of 2009 was initiated at the relevant stages when it ought to have asserted rights, if any. The petitioner made no complaint that the respondents had not disclosed to the potential bidders, in the notice inviting RFQs, of the rights of the petitioner. The petitioner also never made any grievance that the termination payment postulated under Article 14 had not been notified. Therefrom, it is amply clear, that the petitioner also did not consider the project awarded to respondent no. 3 as tantamounting to capacity augmentation of its project facility. For this reason, it did not make any claim as has been raised in the present writ petition. In this background, we further hold that there was no necessity of an individual notice to be issued or served upon the petitioner notifying it to exercise a preferential right to match the preferred offer. In any case, in view of the clear knowledge of the petitioner with regard to the notice issued by the respondent no.2 inviting RFQs and the process for award of the said contract undertaken by the NHAI, even if individual notice was required, no prejudice has enured to the petitioner for non-service thereof and the action of W.P.(C) No. 13034/2009 page 72 of 121 the respondents cannot be faulted for this reason.

144. There is yet another submission on behalf of the respondents which would disentitle the petitioner to grant of relief in the present writ petition. It has been urged that the National Highway Authority of India has been statutorily created in exercise of powers under the NHAI Act, 1982. The stretch of NH-6 has been vested with the respondent no. 2 by virtue of Gazette Notification dated 22nd September, 2009 of the Government of India-respondent no. 1 herein. It is its statutory duty to undertake the work of development improvement etc of national highways. The NHAI has power to enter into contracts by virtue of Section 14 of the NHAI Act. It is stated that in view of the principles laid down in R.D. Shetty vs. IAAI (supra), award of any contract to undertake these responsibilities by the NHAI, tantamounts to distribution of state largesse.

145. Mr. Vivek Tankha, learned ASG on behalf of the respondent no. 2, has placed reliance on the pronouncement of the Supreme Court in (2006) 13 SCC 382 Nagar Nigam, Meerut vs. Al Faheem Meat Exports (P) Ltd. & Ors. contending that the NHAI is a public authority and has to adopt a transparent and open process of awarding a contract, failing which, its action would be in the teeth of article 14 of the Constitution of India. It is urged that for this reason the stipulation in the Concession Agreement of 2004 cannot be read in the manner urged by the petitioner.

146. It needs no elaboration that the question as to who should W.P.(C) No. 13034/2009 page 73 of 121 be given the contract for construction of the highway and on what terms is for the respondent nos. 1 and 2 to decide and not for the courts.

147. So far as the issue of award of a contract or disposition of the largesse by the State or any authority within the meaning of Article 12 of the Constitution is concerned, the authorities are to be guided by well settled principles in respect thereof. As back