Project and Infra Notes

There are two operational definitions that are developed with the help of various explanations
given by philosophers
i) Infrastructure is that which provides services and supports which is basic to the
functioning of a community, organization or society, and crucial to its economic
productivity.
ii) Infrastructure is basic physical and organisational capacities and resources
needed for the operation of the society or enterprises, or are necessary for an
economy to function.
Note: Wherever physical capacity is referred to with economic objective, it shall be
understood in context of hard infrastructure, and wherever organisational capacity is
referred to, in social term, it is in context of soft infrastructure

Only three key elements:

- Physical (hard)
- Social or organizational
- Pivotal for functioning of economy
Essential features of Infrastructure:
- Capital good (offers value in return)
- Non-incremental and non-divisible: because the sanctions for infrastructure is given
only up to proposed limit, and another new approval is required for any further
increment, hence it will not be considered as increase in the existing infrastructure.
- Long-lived (exceptions- temporary infrastructure)
- Immovable
- Capital intensive

(Online websites that work as intermediaries, do they fulfil the features of infrastructure?)
Characteristics of Infrastructure:
- It is lumpy with large upfront investment
- Long gestation period
- Long payback period
- Sunk cost
- It is dependent on public planning boards
- Natural monopoly (characteristics)
- Non tradeability of output
- Large externalities- positive and negative
- Inter-connected system

(PPPP)
Interlink between infrastructure and development
- Betterment in several sectors of society
- Reduction of costs e.g. better transport facilities lead to reduction of transportation
costs
- Enhanced producer connectivity with markets
- Reduction in inventory costs
- Linking local market with the global market
- Presenting potential sites for FDI
- Reduction in income inequality
- Equal distribution of benefits
Category of Indicators
i) Physical Indicator-
 E.g. Vehicular Density
 Railway- Rail Density
 Electricity- Generation capacity
 Aircraft- Density
 Tele density
 Health- Number of facilities
 Education: Number of institutes
 Banks- Number of banks available in an area

ii) Utility Indicator

 Number of passengers
 Commodity tariff
 Tariff
 Number of users
 Mortality rate
 Literacy rate
 Deposits and credit ratio
List of cases (Module II)
 Project director, project implementation unit vs PV Krishnamurty, 2021 3 SCC 522
 Bengaluru Development authority vs Sudhakar Hegde 2020 15 SCC 63
 NHAI vs Pandarinath Govindarajalu 2021 6 SCC 693
 Directo General, Road Development NHAI vs Aam Aadmi Lok Manch 2021 11 SCC
566
 UOI vs Kushala Shetty 2011 12 SCC 69
 Soma Isolux MH1 Tollway pvt ltd vs Harish Kumar Puri 2014 6 SCC 75
 Gunasekharan vs Divisional Engineer National Highways, 2021 10 SCC 505 (yeh
mera hai)
 Virener Singh vs State of HP 2018 SCC Online HP 2983
 UOI vs Tarsem Singh 2019 9 SCC 304
 NHAI vs Saydabad Tea Company Ltd 2020 15 SCC 161
 NHAI vs P Nagaraju 2022 SCC Online SC 864
  NHAI vs Madhukar Kumar 2021 SCC Online SC 791
 Chairman NHAI vs R Murli 2015 15 SCC 647
 CG tollway ltd vs NHAI 2021 SCC OnLine Del 4838
 Vinod Kumar vs DM Mau 2023 SCC Online SC 787
 NHAI vs Sheetal Jaidev Vade 2022 SCC Online SC 1070

Public Private Partnership

PPP are the commercial transactions between a public entity and a private party wherein the
private party has to do certain things which are the basis of PPP:
 Private party provides service for a substantial period as per the PPP
 Private party takes certain risks pertaining to construction, operation and
commercialization
 Paid either directly by public authority or through user fees or combination of both
(Profit Sharing)

i) PPP generally involves only the “right to use” the asset and not the right to sell the
physical asset.
ii) Accountability for the provisions with the services rests with the Public Sector,
with a contract setting the terms of the relationship between the pvt. Entity and
public entity.
iii) Government retains a substantial role as the purchaser, service provider and/ or
holder of the asset after concession period

Linear model of PPP implementation

If the PPP is on the agenda then it has to be put on the floor and a decision by voting of the
members of the relevant public body, is made in favour or against of the private partnership.
And then a plan is developed according to which execution is done.
If the implementation is unsuccessful then strengthening of the institution is done. This can
be done with respect to anything related to that institution.
If there is lack of political will then that has to be fortified by the external factors like
opposition parties in the parliament, protests by groups etc to force the political will.
e.g. CSR prior to 2019 was unsuccessful and then amendment was done.

PPP Structure
 Private Mixed Public
Lease Contract Managerial Private
(E.g. Mihan, contract or
MIDC) franchises (e.g.
NEER and
AADHAR etc.)
Mixed Joint Venture Service or Mixed
Management (E.g. Electricity performance
and Private supply) contract
ownership

BOT(Built
Management of operate
Service transfer),
BOOT(Built,
own, operate,
transfer), BOO
(Built own
operate)
Outsourcing Cooperatives Municipal or Public
provisional
Authority
Control of Assets

To identify the role of PPP four factors shall be analyzed:

i) Current status of PPP
ii) What is wrong with the current infrastructure?
iii) How PPP is going to improve the current status of infrastructure?
iv) What will be the impact?

Status of infrastructure without PPP:

i) Low coverage
ii) Low quality
iii) Low reliability
Reason behind such status:
- Insufficiency of funds with the govt
- Poor planning and project selection
- Inefficient and ineffective delivery
- Inadequate maintenance
What PPP offers:
- Additional resources of financing and funding
- Innovative strategy of private sector can be accessed
 - Private Sectors experience and incentives
- Long term investment perspective

Impact of PPP
- Increase in fiscal resources
- Improved public sector capacity and governance

Category of risk in PPP

Political risk -> the political risk should be bared by the government only and not the private
party. In case of failure of the agreement the government should pay the compensation to the
private party and intended beneficiary.
- Bundle of risks
- Commercial risk
- Operation risk
- Maintenance risk
- Demand risk
- Payment risk

Financial Risk and Exchange rate risk:

When there is a change in exchange rate, there is a loss in profits, to reduce this risk, partially
allowing the indexation of tariffs can be done.
When there is a change in__

Interest rate risk and inflation risk:

Private Party bears the risk, however government can help the private parties by their
macroeconomic stability tactics.

Unexpected event risk- mixed R

Unexpected policy risk- government (if expected policy then risk of private party)

Sources of Infrastructure finance

i) Direct budgetary support
ii) Quasi public (eg. PSUs) – Internal and extra budgetary funds of PSU
iii) Private funding
iv) International Sources of funding e.g. UNICEF, IMF etc
Risk mitigation techniques shall be there or infrastructure allocation will be on risk:
i) Partial Credit Guarantee: Whenever the conditional guarantee is given by the
government on default, it is one of the partial credit guarantee.
ii) Full Credit Guarantee: Loans given to farmers, loans on exports etc
iii) Export credit agency: Exim agent
iv) Debt underpinning- Government makes repayments of debts in favour of private
parties regardless of the fact if they can pay it or not.
v) Political Risk Guarantee: Investment Banks (A person is allowed to take recourse
of such mechanisms to protect their investments).

(EXIM Policy recent- Key highlights)

(Reverse merger)

Modes of Infrastructure financing

- Debt financing
- Equity financing
- Project financing

Challenges in Infrastructural finance

- High fiscal deficit
- Challenges posed by the characteristics of infrastructure
- Bank financing-bank ke paas paisa hai ya nahi
- Underdeveloped bund market
- Impact of externalities
- Insufficient project financing
- Control on tariffs and fees that is charged
Road and Transport Laws
Case- Project director, project implementation unit vs PV Krishnamurty
The case revolved around Bharatmala project aimed for the scheme to provide access to
transportation in shortest time. The segment targeted herein was Chennai and Madurai and
expansion was done in a fresh road to shorten the distance. Multiple extensions were made
and such construction and expansion done was declared as national highway.
Whenever such thing is to be done, there shall be a declaration on basis of which a DPR is
made and after internal discussions, a public announcement is made through notification for
purpose of land acquisition.
Hereon, there are two categories, and one of them does not have any connect with the land
and they have to take the compensation amount as it is, however the other kind has connect
with the land and he gets more affected with such acquisition.
So they went against such notification for land acquisition in the present case mentioning that
the government notification is not valid because national highway declared was a new
construction hence not a NH as per Highway Act of India S.2 (2).
The three grounds that were major arguments:
i) No environment clearance while there is a fresh construction of road which
degrades the environment
ii) No public hearing
iii) Jurisdiction of parliament is limited to existing highways only.
HC gave the decision in favours of land owners using their judicial wisdom.
NHAI filed the appeal against decision contending that the central government had the power
to declare something that is and will be declared as National Highway. (Entry No. 23)
Hence SC held that as mentioned in Central list and State list, the SG and CG have the power
to declare any stretch/section across any state not being a road or existing highway as
national highway. Further, it held that the provision of the constitution unambiguously
indicates that legislative as well as executive vests with the central or state government.
Hence, NHAI has the authority to acquire the land for public purpose. However, they have
obligation to obtain environment clearance but that needs to be done only after the
acquisition has been done and before construction has started. Acquisition process can go on
independently.
Furthermore, the landowners had the right to challenge the acquisition process but not the
notification declaring the national highway.
(JMR)
(DPR)
Expressways have excessive control measures.
- Bengaluru Development Authority v. Sudhakar Hegde
BDA decided to reduce traffic congestion in the city of Bangalore and to address the growing
need of efficient commutation, they also wanted to connect Bangalore Mysore infrastructure
corridor with more access points and also to ensure effective intercity connect. Therefore, the
BDA planned for a PRR (peripheral ring road), this PRR was planned with eight lane carriage
way highway, where four lane provided on each side, along with six lane service road. The
total length of this PRR was 664km.
The salient feature of the project was to decongest traffic in city and improving intercity
connectivity. It was designed to cater high speed commutation, with the possibility of
vehicular moment at a speed of 100km p/h. There was a requirement to acquire the area
around forests, but the BDA decided to construct the road even without environment
clearance hence objection was filed by Environment department, that the activity as to
construction of road shall be restricted till the environment clearance is obtained.
Question raised in the court where it is mentioned that such clearance is prior needed?
There was a notification in 2006 which required certain projects to obtain prior environment
clearance, and as per clause 7(f) of the notification any development construction including
national and state highways.
BDA claimed that they have not notified the construction as national or state highway hence
does not fall under the purview of notification. When the proceedings were pending, the
notification was amended and two new categories were included, which were expressway or
bypass more than 30km.
Bypass and expressway are defined under Indian Road Congress which were relied upon by
the SC.
It defined that expressway is a type of high speed road designed for rapid traffic flow with
limited number of access points, further categorized by excess control methods, high speed
limits, safety features and multiple lane on each direction.
Court held on the basis of this definition that PRR is nothing but an expressway, and a sub-
type of highway, but characterized with specific characteristics. Hence, the Environment
clearance is required in the current project.
Right of way
Suppose the government is deciding to develop a highway from Nagpur to Jablpur. To access
the highway one needs to make the payment of road. Suppose, if a person has a house next to
the highway and he wants to get his vehicle fuelled, and the Petrol payment is around 200
metres away, but the person have to pass through toll gate and make the toll payment Hence,
there is a requirement of right of way for those who do not want to access the highway or
road having toll plaza. Hence, there are service lanes adjacent to highways, so that accessing
the highway does not become mandatory.
However, the government very strategically plans its development, and already takes the
environment clearance for carriage way
- NHAI vs Pandarinath Govindarajalu 2021 6 SCC 693
NHAI planned to widen the existing four lane carriage way from Vellipuram to
Nagapattinam. This was a part of Bharatmala pariyojana. So, the total length of this project
was around 180kms, but NHAI smartly divided it into four segments and mentioned it as
package, wherein no package was more than 60 kms. And they started developing this project
without environment clearance.
Therefore, aggrieved farmers filed an application in High Court, mentioning that environment
clearance has not been obtained. NHAI mentioned that the project has not exceeded the limit
of project mentioned in notification issued by the Ministry of Environment and forest.
The first notification of 2006 specified that, wherever development of any road is more than
30 kms, it requires environment clearance. If additional right of way is more than 20 metres
wide and, Third was project must pass from more than one more state.
Second notification that came in 2013 specified the changed conditions for environment
clearance, first being that the length of the road shall be more than 100kms. They removed
the criteria of going beyond one state. And, increased the scope for right of way to be greater
than 40metres on existing alignment (the manner in which it is already developed). Last
condition was, additional right of way is more than 60metre in case of realignment or bypass.

(Any of the criteria fulfilled will bring the need to obtain environment clearance)
NHAI Claimed that the project does not fit in either 2009 or 2013 notification.
High court held that this segmentation done here is strategically done to evade from fitting in
the criteria. But HC was not clear on the portion of right of way, hence gave its verdict on the
basis of first condition only, and asked NHAI to obtain environment clearance.
NHAI went into appeal to SC claiming that all the three criteria must be fulfilled and not just
one. However, SC upheld the judgement given by the HC stating that if the segmentation has
been done strategically, then in that scenario environment clearance is needed to be obtained,
and length of each package will not be considered separately.
Furthermore, expert committee was set up to give observations as to determine if the
segmentation was done strategically or not.
However, SC set up some observations as guiding principle citing that sometimes one has to
focus on the need of development and environment has to take the backstep, and sometimes
environment benefit has to be given significance if the need of development is not immediate:
Right of way does not mean just the service lane but also the area covered for amenities
adjacent to the road

 Director General, Road Development NHAI vs Aam Aadmi Lok Manch 2021 11
SCC 566
Visakha and her daughter were travelling from Mumbai to pune from NH4 wherein some
mining activities were going on, and a hill was destroyed beside the road. Due to which
various debris and parts of collapsed hill fell on national highway.
On July 6 2013, there was a very heavy rainfall recorded in that region and the water that was
flowing down the hills towards the highway was forming a stock of water on the road which
was created due to debris and collapsed parts of hills on the road, and the only passage was
through the water blocking area.
Visakha and her daughter who were traveling by their alto, had to pass through that water
blockage area died due to accident caused because of situation.
Aam Aadmi lok manch filed a petition to NGT against govt authorities and NHAI,
particularly concerning the illegal mining going on besides the road.
NGT held that both NHAI and local authorities defective in not stopping the illegal mining
thereby leading to death.
Then matter was brought to SC, and NHAI submitted that they had entered into a
concessionary agreement in relation to operation and maintenance of National highway
wherein NHAI was having the duty to appoint expert consultant for insuring the good quality
of construction and maintenance of highway, and also to submit a periodic audit report of the
quality of it, for which these reports were submitted to an expert committee, in which it was
submitted that debris that were there on the road and collapsed hill is making problems for
travelling through the highway.
However, they are not involved in the mining activities, not causing any environmental
degradation hence, NGT did not have any jurisdiction over the matter, and they were
submitting proper reports regularly hence NHAI cannot be liable to pay compensation to any
parties also, thereby shifting all the burden on local authorities.
Based on the audit report submitted by the NHAI, private party also said that they had served
notice to the local authorities regarding the illegal mining, hence its not their fault also.
Supreme Court held in this matter that NHAI must compensate the accidents and deaths
caused in national highways caused due to failure of NHAI in preventing illegal mining
alongside and following observations were made:
i) NHAI was evading its responsibilities from a long period by taking any kind of
responsibility pertaining to accidents in National highways.
ii) The SC said that NHAI is established for maintenance of National Highways, and
national highways are built for the public purpose therefor it is statutory duty of
NHAI to take due care towards every person using national highway
iii) NHAI in this particular scenario was aware of all the facts of the mining activities
which was going on alongside the national highway and their ill effects were also
identified in their reports, therefore there is no prove that NHAI has taken any
significant step to prevent such mining.
iv) Only serving the notice by the local authorities does not amount to taking
substantive measures against the defaulters.

(SAROD website- claims regarding preventive measures)

- UOI vs Kushala Shetty 2011 12 SCC 69
Govt. Of India was aiming to develop a project in Karnataka in order to improve its road
connectivity and transport. Consequently, u/s 3A central govt released a notification on Aug.
10. 2005 that certain lands was proposed to be acquired in 18 villages of Mangalore for
widening of NH 17, 48,13. Description of land, name of villages, nature, survey No. (s) and
area of land was also provided in notification, including all the facilities available on the land.
Notification also allowed inspection from SLAO (Acquisition officer).
(any person who has any problem with such notification shall file an objection with SLAO
within 21 days.)
One of the landowner challenged the acquisition of her property for the project alleging that
the decision of acquiring her land was tainted by malafide and aimed to benefit certain
individuals. She further claimed that the centreline of the highway was changed to exclusion,
such as exclusion of certain govt properties, and bars and restaurants of some politically
influencing individuals.
When the matter went to SC , SC relied on the objectives of NHAI Act, 1956 and 1988.
The objective included to declare any road as highways for the purpose and to develop,
construct or maintain for the purpose of national highways. Inferring that the construction of
National highways will require land acquisition and hence there is nothing wrong in doing
that. Furthermore, the Court held that the NHAI’s plan was based on thorough planning and
studies made on DPR made by a group of experts who gave suggestion of realigning a certain
road. The judiciary is not equipped to access the technical viability and feasibility hence,
shall be left with the experts only. Therefore, NHAI and Central govt are equipped with
expertise to declare certain road as national highways for public purpose, and in absence of
any proof there cannot be held that there is any malafide intention.
(sky is under the scanner).
- Soma Isolux NH 1 Toll way Pvt. Ltd. v. Harish Kumar Puri 2014 6 SCC 75
There was a highway under construction adjacent to a residential area. However, for
movement from one point to another in the residential area, a person had to travel through a
stretch of the under-construction highway. The highway had multiple pot holes and it was not
properly maintained. One day son of Harish Kumar Puri, while travelling on the highway met
with an accident and died.
Harish Kumar Puri contended that there was criminal negligence on part of traffic police. He
contended that there was failue of NHAI regarding management of traffic and safety on the
highway.
The petition was not for compensation but for public interest.
NHAI tried to avoid their responsibility by stating that it had executed a concessionaire
agreement with soma isolux to construct, operate and maintain a six lane highway between
Panipat and Jalandhar. The project was structured under BOT model. Since it was a BOT
model and there was a concessionaire agreement, the finances were to be borne solely by
soma isolux. Soma isolus would obtain the toll fee. NHAI submitted that accordingly, the
construction was not completed by Soma Isolux within the given period. Hence the liability
should lie with soma isolux.
Delay in execution was denied by soma isolux. The delay was caused due to 1) delay in
necessary clearances and approvals from various departments of the state 2) refusal of
permission to clear trees for construction 3) refusal of NHAI in relocation of proposed of toll
plaza. Relocation was necessary for effective toll fee collection. Due to this delays, soma
isolux refused to develop the remaining stretch of the highway and therefore, there was delay
in construction. High Court did not accept the contentions of Soma Isolux and imposed huge
fine on soma isolux and nullified the contract between NHAI and soma isolux.
Actions of the high court constitute judicial overreach and High Court was not the dispute
redressal mechanism as per the contract. Therefore, this is judicial overreach.
Supreme court held that the order of the HC was not justified and permitted soma isolux to
resume the construction of the remaining stretch of the highway. However, they directed a
new timeline to soma isolux and held that if the remaining stretch is not developed within the
period, a very heavy penalty would be imposed on soma isolux. Further, it held that the
NHAI has the duty to develop the roads for public purpose (highways are to be declared for
public purpose) therefore, it has the duty to ensure that the development is also in the interest
of public at large. Therefore, the relocation should be allowed so that the constructor can
complete the construction in the interest of the public purpose. Public interest is of paramount
importance but it cannot override the contractual obligations.
Infrastructure should have a balance between public interest and contractual rights. NHAI
should look after the public interest and soma isolux should fulfill its contractual obligations
within the new deadline.
- Gunasekharan vs Divisional Engineer National Highways
Gunasekhran received various notices pertaining to encroachment of a property in the area of
National Highway. These notices were sent under Section 28(2)(ii) of the Tamil Nadu State
Highway Act, 2001 by Divisional Engineer. For removal of encroachment from national
highways. One of the recipient of notices, Gunasekhran, claimed that these notices were
invalid because the authority that has issues these notices lacks the jurisdiction to send such
notices. He claimed that the Act is not valid anymore after the enactment of the Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act,
2013, and the authority under State Act became invalid, and such notices can only be sent
under National Highways Act, 1956 or the Control of National Highways (Land and Traffic)
Act, 2002.
High Court dismissed the submissions made by Gunasekharan on the ground that he did not
have any claims to prove any kind of malafides at the part of state, and it were only the show
cause notices and not to be interfered by the court unless there was any lack of jurisdiction or
malafides, as states were authorized to have their own wing and authorities to take such
action. High Court also said that the notices were issued as part of broader efforts of state to
remove encroachment on the road of national highway.
However, SC emphasized only on the provisions of National Highways Act to provide better
clarity, wherein the SC found that the SCNs were unauthorized as they were issued under the
State Act of 2001 and not under National Highways Act, 1956 or the Control of National
Highways (Land and Traffic) Act, 2002.
It further held that the Authority defined under the National Highways Act specifies the
establishment of Highway authority and such authority is established under National
Highway of India Act. Further, if S.26 is r/w S.5 and objectives of National Highway of India
Act, it is found that Highway Authority only are empowered to take actions against the
encroachment of the National Highways. However, SC held that it is not preventing any
action by the competent authority from taking any action against encroachment.

- Virender Singh v State of Himachal Pradesh

State govt of HP, issued a notification prohibiting the sleeper buses of other states in the
territory of Himachal [Link] prohibition were not in consonance with Rule 93 and 128
of Central Motor Vehicle Rules, which discuss the width and seats etc that these buses consist
of.
Virender Singh who was one of the owner and operator of such buses having All india permit
challenged this notification, stating that this notification was ultra vires on certain ground.
First was, this notification challenged the provisions of National Highways Act, since such
control vests with Central Govt. Second, the notification was in conflict with MV Act 1988,
because it provides and allows the issuance of All India tourist permit permissing the plying
of vehicles through the nation. Third, it was against land and traffic Act, holding National
highway administration as responsible for management of National Highways. Last ground
was, the notification according to Virender Singh was violative of FRs Art. 14, 19.

State claimed that under S.115 MV Act, State has right to prohibit or restrict the driving of
any motor vehicle of any specified class, categories, or description in any specified area or on
a specified road.

However, the High Court interpreted that such specified area should be belonging to that
state, but the national highway is not an area belonging to state, it belongs to central govt,
hence HC held that whatever is related to national highway cannot be under purview of state.
And, the state never mentioned that such movement is not prohibited on national highway,
hence the specified area, which the state government has authority upon.

- UOI v. Tarsem Singh 2019 9 SCC 304 - Siddhant Modi & Gaurav Khatwani
§ S. 3J of the National Highways Act provides that the land acquisition
act will not apply
§ Notification issued by Central Government under S. 3A NHA
intending to acquire the land belonging to various land owners including Tarsem Singh.
Acquisition was done for the purpose of Jalandhar Pathankot stretch of NH1A. Following this
notification, it was declared that the land was vested in the State. This brings a mandate that
the possessor of the land cannot challenge the acquisition of the land but can only challenge
the compensation given in exchange.
§ The competent authority under the act created and notified the
compensation award. The amount of compensation was disputed by Tarsem Singh on the
primary ground that the amount awarded by the competent authority was insufficient and it
did not reflect the true market value at the time of acquisition. Further, he also submitted that
there was no consideration of solacium and the interest on the compensation amount.
Therefore, it was unjust because solacium is meant for emotional distress and the loss of
livelihood associated with the compulsory acquisition of land. He also submitted various
precedents where solacium and interest were applied on the land which was acquired under
land acquisition act. Therefore, the principles of fairness and equity should be applied
similarly in his case despite different legal frameworks. Further he claime dthat the lack of
provision for solacium and interest constitutes discrimination which has violated right to
equality under Art 14.
§ The arbitrator, after taking all factors such as the prevailing market
conditions, market price and the specific characteristics of the land, which were overlooked
by NHAI in the initial assessment, greatly enhanced the compensation.
§ NHAI contended that the compensation awarded by the arbitrator
was not justified because according to them the arbitrator did not adhere to the legal
standards or legal provisions, as provided under the National Highways Act. NHAI
highlighted that the NHA did not provide for solacium and interest because the intention of
the act was to provide for expeditious acquisition process and a universal streamlined process
for calculating the compensation. The act of arbitrator was beyond his jurisdiction. NHA is a
complete code in itself which completely excludes the application of land acquisition act.
Therefore, the solacium and interest given under land acquisition act is not applicable to
proceedings under NHA.
§ The Supreme Court stated that the NHA is a self-contained code and
therefore, if the NHA does not talk about anything related to solacium or interest, you cannot
apply the same in this particular case. The arbitrator did not apply solacium or interest. He
solely emphasised on the market price of the land which was required for awarding the
compensation after the acquisition. Therefore the award of the arbitrator is also valid as per
the NHA. There was consideration of the market value of the land which should have been
done by the competent authority. The arbitrator decided the market value and .
§ There is no such infringement of NHA done by the arbitrator. Further
they also stated that this is only in relation to this case and there cannot be differential
treatment under different laws. If there is land acquisition for the purpose of national
highway, and for any other purpose, both these will be treated differently. This is not correct.
Therefore, the court held that s. 3J is unconstitutional to the extent of calculation of solacium
and interest. Therefore, the benefits of land acquisition act must also apply to the acquisition
done for the purpose of national highway.
This case stated that the benefit of land acquisition act (solacium and interest) is also
available to acquisition of the land under NHA and the operation of S. 3J NHA is limited.

NHAI vs Saydabad Tea Company Ltd 2020

NHAI issued a notification as per which NHAI acquired a certain land in the area of
Sahibabad. After the acquisition, the competent authority determined the compensation for
the loss of land, reasonable expenses incurred due to relocation and the current market value
of land. However, Sahidabad tea company requested Central govt for the appointment of
arbitrator being dissatisfied with compensation.
When CG did not take any action, STC applied under S.11 of Arbit and Concil Act, which
was held valid by High court and HC appointed an arbitrator.
However, such appointment was contested by NHAI, and they challenged the maintainability
of the application and submitted that National Highway Act, being a special law provides a
mechanism for appointment of an arbitrator. It further submitted that CG has exclusive
authority under S. 3 (6) allows such appointment as contended by STC. Hence, such
appointment was held valid.
Matter then went to SC, wherein SC emphasised on the National Highway Act provisions,
and observed that it is a comprehensive code for the land acquisition for the construction of
national highways, including provision for compensation and dispute resolution. When a
special law provides for a complete mechanism for a specific issue, the general law will not
apply. Held that, how the process of arbitration after the appointment of arbitrator will be
done under A&C Act. The manner in which the award shall be binding will also be done
under A&C Act, rest all will be done under National Highway Act.

- NHAI v. P. Nagaraju
NHAI initiated the acquisition for the development of National highway, which is governed
by Land acquisition Act. The SLAO determined the compensation for acquired land based on
the guiding values which were provided in the notification that was issued prior to the
notification.
However, P. Nagaraju was dissatisfied with the compensation that was awarded by the
SLAO. Therefore, he filed a petition before arbitrator u/s3(g) for seeking reassessment of the
compensation awarded. Arbitrator issued an award which enhanced the compensation for the
acquired land drastically. The award of the arbitrator was based on the market value
determined by him, but during the determination/assessment, this adjustment was based on
the subsequent notification issued for the guideline values for residential and industrial
properties.
However, the property in this question in this case was an Agricultural Land. Therefore, the
award was challenged by NHAI, on the basis that the award did not adequately indicate the
reason to adapt new guideline. Further, the NHAI challenged that the arbitrator failed to
provide the reason why the guideline values were uniformly adapted, since the acquisition
was based on the indicated layout.
It was also claimed that the arbitrator did not provide adequate opportunity to NHAI to
contest the material that was relied upon by the arbitrator. The arbitral award was set aside
and SC was to decide the new compensation.
SC emphasized the need of adequate reasoning and fair opportunity to both the parties,
holding that Arbitral award in this case was flawed due to not being sufficient reasoning. SC
further determined that it would not modify the award and can only set aside it, remitting the
matter back to arbitration, and instructing the arbitrator to reconsider the market value and
use the missing reasoning.
Judicial trend favours minimal interference with arbitral award.
NHAI v. Madhukar Kumar 2021 SCCOnline SC 791
▪ NHAI is required to take objections and have a public consultation before the construction
of National Highway. Accordingly, NHAI invited objections regarding the proposed location.
(objections can only be for location not with regard to kind of PPP because the commercial
element in regard to construction of toll plaza). No public consultation was done but around
74 objections were submitted and NHAI successfully convinced the people who objected to
support the project. However, Mr. Madhukar did not submit the objection when it was invited
by the NHAI
▪ He submitted that the decision to make the toll plaza was made without proper
consideration of the need of local residents. Also, NHAI did not fulfil the statutory
requirements with relation to public consultations.
▪ The HC found that Madhukar Kumar had no locus standi to complain about the
establishment of toll plaza at a given location and it opined that he writ petition of Madhukar
Kumar was a proxy litigation on behalf of local business interest. However, the HC also held
that NHAI also had not adequately justified the commercial viability of the toll plaza at that
particular location. HC interfered with the decisions making power of NHAI with relation to
that particular location.
▪ HC directed NHaI to submit its jusstifiable reason for establishment of toll plaza at that
particular location only.
▪ NHAI did not like this. They filed appeal in the SC and stated that NHAI has the exclusive
authority to decide on the location on establishment of toll plaza and hter is only one
requirement, as per statutory provisions, to invite objections and conduct public consultation.
Therefore, the NHAI has followed the due process.
▪ This contention of the NHAI was also supported by the concessionaire because the
establishemnt at that particular location was necessary for the financial viability of the project
and the location was chosen thorough assessment done by the NHAI.
▪ If objections were not raised and construction has started and then a writ is filed by any of
the agrieved parties, the writ will not be entertainable because the procedure is already
conducted by the NHAI.
▪ There is a tussle between commercial interest and public interest.
The SC emphasised on interpretation of statutory provisions and the authority of the NHAI in
relation to establishment of toll plaza.
□ SC recognises the role of NHAI as a statutory body responsible for the development and
maintenance of national highway. The complete authority for develoipment and maintenance
is with the NHAI. Hence they can delegate the same to the concessionaires at terms decided
by the NHAI only. through this power, they have complete authoirty over establishment of
toll plaza. The concessionaire is the one actually developing the toll plaza but NHAI has the
authority. Accordingly the SC upheld the exclusive authority to establish toll plaza as it is
derived from the NHA and the NHAI Act.
□ SC emphasised that there is an importance of following the procedural compliance on the
NHAI while establishing the toll plaza which includes the requirement to conduct public
consultation and inviting objections. There is no such mandatory requirement to have a
separate consultation after inviting objections. However, if under the objections itself,
objection is filed for conducting a public consultation, then the NHAI is required to conduct
public consultation.
In cases where there is no clear indication of illegality, irrationality or procedural lapsse,
court will not interfere. Since NHAI is better equiped with the technical and financial
expertise, it has the complete freedom to make the decision with relation to location of toll
plaza, as long as it fulfils the statutaory requirement.

Chairman of NHAI v. R Murli 2015 (15) SCC 647

Nhai constructed a toll plaza on NH7. Located in Tamil nadu Which was facilitating long
distance travel and this route was also crucial for long distance traffic and local traffic. NHAI
established toll plaza at cuppa lur to collect tax from local stretch. This establishment of toll
plaza was relatively closed to residential area this proximity of. The toll plaza to the
residential area raised concerns among the local resident, they argued that they were being
charged toll fees for using only a small stretch. Accordingly the location of toll plaza was
challenged on the basis of rule 8 of national highway fee determination and collection rules
2008. According to rule 8 it was provided that the toll plaza should generally be located
beyond 10 kms from municipal or local town area limits unless specific conditions are met.
Mr. R Murli filed a petition and submitted that this cuppa lur was within the distance and did
not meet the criteria to be close to the local area. Matter went to HC and HC found that the
toll was situated within the limits, which imposed undue toll charges in the local users that
too considering fact that the locals were only using a short stretch of the Highway. That is
why the HC directed the NHAi to relocate the toll plaza. NHAI filed an application before
the court and gave following submissions
First submission NHAI contended that the toll collection was essential for maintenance and
development of Highways which benefitted all the users.
The toll plaza was strategically Positioned at that place for toll collection and the revenue
generated can be used for maintenance
It further submitted that the plaza was solely for the benefit of long distance traveller but also
served the broader purpose of maintaining highway standards and safety.
Further NHAI presented evidences to prove that the toll Plaza was constructed to relieve
traffic congestion in nearby town.
Further NHAI highlighted that they had the provisions in place for local users such as
monthly passes at reduced rates. Therefore according to them this concession was aiming to
reduce financial burden on local residents.
SC held that the Location of this plaza was justified by NHAI as the concerns of the local
residents were appropriately addressed by ensuring the provision of concession in toll plaza.

- Centre for PIL v. UOI 2012 3 SCC 1

Government of India initiated the process of spectrum allocation for 2g licences. The
framework drafted for the same mentioned that the allocation will be done on the first
come first serve basis. Recommendation was submitted by TRAI in this respect wherein it
suggested that the spectrum shall be allocated through competitive bid price mechanism
aka auction to ensure transparency and fairness. TRAI also suggested that the pricing
shall be based on market value with a periodic review. However, government did not
accept since the suggestions were only advisory and not- mandatory. They also did not
specify a cut off date for submission of application which created chances of favouritism.
Market forces were also kept out of the price determination.
The applications submitted by various service providers were reviewed in a very
inconsistent manner. CAG also published their report wherein they mentioned that a
public exchequer has caught with severe loss due to improper allocation. Hence, PIL were
started getting filed with regard to this matter, to review the spectrum allocation process
and cancel the licenses granted under this process. Supreme Court found that the
allocation was arbitrary and it required transparency with respect to spectrum allocation.
There was lack of due diligence with respect to evaluation criteria. Whatever decision
was taken by the govt for granting the license were unreasonable because govt failed to
justify the first come first serve process, keeping the market forces out of forces, lack of
evaluation criteria.
Supreme court hence cancelled all the licenses holding the process arbitrary and
unconstitutional, and ordered the government to reassess the spectrum allocation policy
by including an auction process for spectrum allocation.
Therefore, it was also determined that Supreme Court can pitch in and cancel the licences
in such situations.