Case Note & Summary
The case concerned a challenge to cancellation of a lease for collection of tolls on a specified road bridge in Uttar Pradesh. The petitioner, a bidder at an auction, had bid Rs.1,20,000 per annum for the year 1993-94 in an auction held on February 25, 1993. That contract could not be worked out because the previous contractor obtained a stay from the High Court, and the period expired by efflux of time. For the years 1995-97, instead of conducting a fresh auction, the Executive Engineer recommended grant of lease to the petitioner for the same amount for two years on the petitioner's application, and the first respondent Commissioner accepted the recommendation on September 2, 1995. Subsequently, on instructions, the Commissioner cancelled the grant by proceedings dated October 28, 1995. The petitioner challenged the cancellation in the High Court by filing W.P. No. 31606 of 1995. The High Court, by order dated August 27, 1996, treated the grant as an extension of the previous grant and held that the Commissioner lacked power to extend the lease without prior permission of the State Government under Rule 9 of the U.P. Toll Tax Regulations Levy & Collection Rules, 1980. Aggrieved, the petitioner filed a special leave petition before the Supreme Court. The main legal question was whether the Commissioner had jurisdiction to grant the lease for 1995-97 without following the procedure prescribed under Rule 4 of the Rules and without obtaining prior sanction for extension under Rule 9, and whether the subsequent cancellation was valid. The petitioner argued that once the Commissioner granted the lease, he had no power under Rule 7 to cancel his own order and no power of review. The Court examined Rules 4, 7, 8 and 9 of the Rules. Rule 4 sets out a complete procedure for inviting auction bids, scrutinizing bidders, selecting a suitable candidate, executing a standard form contract, and furnishing security. Rule 7 vests power of accepting auction bids and entering into agreements in the Commissioner. Rule 8 requires prior approval of the State Government if a lower bid or negotiated offer is accepted. Rule 9 prohibits extension of lease without prior sanction of the State Government. The Court held that the mode of conducting auction under Rule 4 is a complete code for regulating the right to collect tolls on specified road bridges. The Commissioner was devoid of any power to accept a bid for the previous years which had expired by efflux of time except in the manner prescribed under Rule 4 and the following rules. The grant of lease for 1995-97 by the Commissioner without following that procedure was without jurisdiction and therefore a nullity. Consequently, the State Government was right in directing the Commissioner to cancel the order granting lease. The Court did not find any illegality in the action taken by the respondent and dismissed the special leave petition. The Court also noted that even if the High Court's reasoning on extension was not sound, the decision could be supported on the ground of lack of jurisdiction in the original grant. Thus, the Supreme Court affirmed the cancellation of the lease, holding that statutory procedure for grant of toll collection leases is mandatory and non-compliance renders the grant void.
Headnote
A) Administrative Law - Grant of Lease for Toll Collection - Rule 4 Procedure - U.P. Toll Tax Regulations Levy & Collection Rules, 1980, Rules 4, 7, 8, 9 - The Rules constitute a complete code for auction and grant of lease for toll collection on specified road bridges. The Commissioner's acceptance of a bid for years 1995-97 without following the prescribed auction procedure under Rule 4 and after the previous year's contract had expired by efflux of time was without jurisdiction and a nullity. Held that the State Government was right in directing cancellation of the lease (Paras Not mentioned). B) Administrative Law - Power of Commissioner to Cancel or Review - Rule 7 - U.P. Toll Tax Regulations Levy & Collection Rules, 1980, Rule 7 - Petitioner contended that the Commissioner had no power to cancel his own order granting lease under Rule 7. The Court did not decide that issue, holding that even if the High Court's view on extension was unsound, the original grant was without jurisdiction and void, so cancellation was valid. Held that the special leave petition was dismissed (Paras Not mentioned). C) Interpretation of Rules - Extension of Lease - Prior Sanction - Rule 9 - U.P. Toll Tax Regulations Levy & Collection Rules, 1980, Rule 9 - The High Court treated the grant as an extension of the previous grant and held that prior sanction of the State Government was necessary under Rule 9. The Supreme Court found no need to decide the extension issue because the grant was void ab initio for non-compliance with Rule 4. Held that there was no illegality in the cancellation (Paras Not mentioned).
Issue of Consideration
Whether the Commissioner had jurisdiction to grant a lease for collection of tolls for the years 1995-97 without following the procedure under Rule 4 of the U.P. Toll Tax Regulations Levy & Collection Rules, 1980, and whether the subsequent cancellation of that grant was valid.
Final Decision
Special Leave Petition dismissed. The Supreme Court held that the Commissioner's grant of lease for 1995-97 was without jurisdiction and a nullity because it was not made in accordance with the procedure under Rule 4 of the U.P. Toll Tax Regulations Levy & Collection Rules, 1980. The State Government was right in directing cancellation.
Law Points
- Statutory procedure for grant of lease is mandatory
- acceptance of expired bid without fresh auction is without jurisdiction and nullity
- grant of toll collection lease must comply with Rule 4 of U.P. Toll Tax Regulations Levy & Collection Rules
- 1980
- State Government rightly directed cancellation
- no power to review necessary when order void ab initio
- Rule 9 prior sanction for extension
