Forbes India 15th Anniversary Special

Delhi Noida Direct Flyway: Legal battle continues over toll collection

Pending SC order on Delhi-Noida flyway could set the tone for collection across the country

Samar Srivastava
Published: Nov 30, 2016 07:05:57 AM IST
Updated: Nov 30, 2016 03:21:43 PM IST

Delhi Noida Direct Flyway: Legal battle continues over toll collection
A citizens’ group claims the company running the stretch has made much more than the promised returns
Image: Burhaan Kinu / Hindustan Times via Getty Images

Collecting tolls on Indian roads has long been fraught with risks. Protestors can, at short notice, disrupt traffic at toll booths, while eminent citizens, who are often lawmakers, refuse to pay at times. Then, there is the threat of litigation, which has resulted in at least one toll plaza, on the Delhi-Gurugram highway, being shut down in 2014.

In the last few weeks, the 9.5-kilometre Delhi Noida Direct (DND) Flyway, a major traffic artery connecting Delhi with Noida in Uttar Pradesh, has been the focal point of anti-toll protestors. The dispute, which has wound itself up from the Allahabad High Court to the Supreme Court (SC), is now at a critical juncture and may end up rewriting how toll rights are awarded and administered.

The legal feud began in 2012, when the Federation of Noida Residents’ Welfare Association filed a public interest litigation in the Allahabad High Court. Among the several reliefs that were sought was the scrapping of the toll on the DND Flyway. The federation alleged that the company running the expressway, the Noida Toll Bridge Company Limited (NTBCL), had already made much more than the 20 percent return that was guaranteed to it under the concession agreement, a point which NTBCL disputes. The development is being closely monitored by industry watchers and road building companies, who noted that the cancellation of toll-collection rights could have a chilling effect on investments in the sector.

The key question here is: Are courts competent enough to decide what rate of return is acceptable for a road built by a private company? For the DND Flyway, the rate was agreed to by the Delhi and UP governments as well as the Asian Development Bank.

For now, the Supreme Court has suspended the collection of toll while the case is being heard. “As there is a dispute on whether this amount has been recovered, we suggested to the court that the Comptroller and Auditor General assist the Supreme Court in deciding whether the profitability has been achieved,” says Raj Kumar Bhargava, chairman of NTBCL. He points out that in 1999-2001, when the bridge was financed, interest rates were 16-17 percent and setting a rate of return of 20 percent was reasonable. “No one would have lent us the money otherwise,” says Bhargava. The loans were restructured in 2006-07 at 10-12 percent interest rates.

The residents’ federation alleges that the company does not maintain its books properly and can continue to collect toll indefinitely without ever admitting that it has garnered the returns.

A month from now, the SC is expected to pass an order on whether NTBCL can continue to collect the toll. If the court rules against it, Bhargava says NTBCL would probably have to be liquidated as the revenue from advertising rights doesn’t even cover maintenance expenses. He says the company might even sue the Delhi and UP governments for compensation. But most importantly, a favourable outcome would embolden anti-toll agitators across the country.

(This story appears in the 09 December, 2016 issue of Forbes India. To visit our Archives, click here.)