Delhi High Court
T Suryanarayana Reddy vs National Highways Authority Of India on 3 July, 2026
Author: Sachin Datta
Bench: Sachin Datta
$~J
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment pronounced on: 03.07.2026
+ W.P.(C) 10788/2025, CM APPL. 44573/2025, CM APPL.
49808/2025
T SURYANARAYANA REDDY .....Petitioner
versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA .....Respondent
+ W.P.(C) 11106/2025, CM APPL. 45719/2025, CM APPL.
50560/2025, CM APPL. 59395/2025, CM APPL. 50561/2025
M/S AK CONSTRUCTION COMPANY .....Petitioner
versus
NATIONAL HIGHWAYS AUTHOITY OF INDIA THROUGH ITS
CHAIRMAN & ANR.
.....Respondent
+ W.P.(C) 11172/2025, CM APPL. 51854/2025, CM APPL.
59731/2025, CM APPL. 68537/2025, CM APPL.13686/2026
M/S AK CONSTRUCTION PRIVATE LIMITED .....Petitioner
versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA & ANR.
.....Respondents
+ W.P.(C) 11684/2025, CM APPL. 47829/2025, CM APPL.
50506/2025
M/S SPC INFRASTRUCTURE PRIVATE LIMITED .....Petitioner
versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA THROUGH
CHAIRMAIN & ANR. .....Respondents
+ W.P.(C) 12044/2025, CM APPL. 49219/2025
R K JAIN INFRA PROJECTS PRIVATE LIMITED .....Petitioner
versus
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NATIONAL HIGHWAY AUTHORITY OF INDIA .....Respondent
+ W.P.(C) 12091/2025, CM APPL. 49370/2025, CM APPL.
52709/2025, CM APPL. 61818/2025
M/S MAA NARMADA TRADERS .....Petitioner
versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA THROUGH
ITS CHAIRMAN & ANR. .....Respondents
+ W.P.(C) 12363/2025, CM APPL. 50445/2025
M/S ANIL KUMAR SHUKLA .....Petitioner
versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA THROUGH
ITS CHAIRMAN & ANR. .....Respondents
+ W.P.(C) 12780/2025, CM APPL. 52187/2025
ASHISH AGARWAL .....Petitioner
versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA THROUGH
ITS CHAIRMAN & ANR. .....Respondents
+ W.P.(C) 14768/2025, CM APPL. 60781/2025, CM APPL.
72953/2025
BHOLANATH RAJPATI SHUKLA .....Petitioner
versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA .....Respondent
Presence: Mr. Ram Babu and Mr. Angad Mehta, Advs. (through v/c) for
petitioner in W.P.(C) 10788/2025.
Mr. Nalin Kohli, Sr. Adv., Ms. Nimisha Menon, Mr. Parmod
Kalirana, Mr. Manish Choudhary, Mr. Amaya Vaid and Mr.
Aman Yadav, Advs. for petitioners in W.P.(C) 11106/2025 and
W.P.(C) 11172/2025.
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Mr. Pinaki Mishra, Sr. Adv., Mr. Parmod Kalirana, Mr. Manish
Choudhary, Ms. Amaya Vaid and Mr. Aman Yadav, Advs. for
petitioners in W.P.(C) 11684/2025 and W.P.(C) 12780/2025.
Mr. Parmod Kalirana, Mr. Manish Choudhary, Mr. Aman
Yadav and Ms. Amaya Vaid, Advs. for petitioners in W.P.(C)
12091/2025 and W.P.(C) 12363/2025.
Mr. Ashim Sood, Mr. Vedant Sharma, Mr. Prateek Kundu, Mr.
Aman Naqvi, Mr. Ashish Kumar Pandey and Ms. Gauri Anand,
Advocates for petitioner in W.P.(C) 12044/2025.
Mr. Sanjay Jain, Sr. Adv., Mr. Santosh Kumar, SC, Ms.
Dharitya Phookan, Mr. Devansh Malhotra, Mr. Aditya Ramani
and Mr. Ritik Dwivedi, Advs. for NHAI.
Mr. Makarand. D. Adkar, Ms. Amita Sachdeva, Mr. Shantanu
M. Adkar and Mr. Mohit Kumar Singh, Advs. (through v/c)
W.P.(C) 11106/2025.
Mr. Annirudh Sharma, Adv., NHAI in W.P.(C) 11106/2025.
Mr. Namit Saxena and Mr. Awnish Maithani, Advs. for NHAI
in W.P.(C) 12044/2025 and W.P.(C) 14768/2025.
Mr. Arnav Vats, Adv., NHAI (through v/c) in W.P.(C)
12091/2025.
Mr. Shantani Sagar, Mr. Anil Kumar, Mr. Gunjesh Ranjan, Mr.
Abhishek Kumar Gupta, Mr. Prakash Kumar and Mr.
Mangalam, Advs. for NHAI in W.P.(C) 12363/2025.
Ms. Shreya Sethi and Mr. Anirudh Bhatia, Advs. for petitioner
in W.P.(C) 14768/2025.
CORAM:
HON'BLE MR. JUSTICE SACHIN DATTA
JUDGMENT
1. The present petitions have been filed by the petitioners, who are
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private contractors/agencies engaged by the respondent/National Highway
Authority of India (NHAI) for user fee collection at the fee plazas under the
NHAI. The petitioners assail communications/letters issued to them between
18.07.2025 and 18.08.2025 by the respondent/NHAI, in terms whereof,
following actions have been taken against them: –
(i) the petitioners have been debarred from participating in future
tender/s issued by the respondent no.1 for a period of one year;
(ii) ongoing contracts of the petitioners in W.P(C)11106/2025; W.P(C)
11172/2025; W.P(C) 11684/2025; W.P(C)12044/2025; W.P(C)
12091/2025 have been terminated [by invoking the certain provisions
of the Contract Agreement executed between the parties];
(iii) the performance securities furnished by the petitioners with respect to
the contract agreements, for operating the subject fee plazas, have
sought to be encashed.
2. At the outset, it is noted that impugned communications have been
issued by the respondent in identical factual conspectus and the petitioners
raise similar ground of challenge against the common respondent. In the
circumstances, it is considered apposite to dispose of the petitions by way of
a common order.
3. Further, for the sake of convenience, W.P.(C) 12780/2025 captioned
as M/s Ashish Agarwal vs National Highways Authority of India and Anr.,
is taken up as the lead matter. The reference to the facts as noted, unless the
context indicates otherwise, are the facts as obtained from the said petition.
FACTUAL MATRIX
4. Pursuant to a raid carried out on 22.01.2025 by the Uttar Pradesh Task
Force (hereinafter referred as “the UPSTF”) at Shivgulam Toll Plaza,
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Atraula, PS Lalganj, District Mirzapur, three individuals were arrested for
allegedly causing losses to the national exchequer by creating, installing and
operating parallel/counterfeit software at various toll plazas of NHAI.
Subsequent thereto, an FIR bearing no. 0017/2025 was registered and one of
the arrested persons/accused (Mr. Alok Kumar) in his confessional
statement identified certain toll plazas, including that of the petitioners, and
claimed that he had installed and operated parallel software systems for
embezzlement of toll fees.
5. On the basis of the aforementioned statement, the UPSTF issued a
press statement no.36 dated 22.01.2025 recording names of the toll plazas
identified thereof as under [translated version alongwith true copy annexed
as Annexure P-17 in W.P.(C) 12780/2025] :
“SPECIAL TASK FORCE, UTTAR PRADESH, LUCKNOW.
PRESS NOTE NO. 36, DATED 22.01.2025
03 members of gang have been arrested for causing loss to the National
Revenue by way of embezzling of Toll Tax worth Crores of Rupees by
committing fraud through additional concomitant/parallel software from
vehicles without fast tag at various toll plazas of National Highway
Authority of many States.
On 21.01.2025, Special Task Force (STF), Uttar Pradesh achieved
remarkable success in arresting 03 members of gang for causing loss of
national revenue by embezzling Toll Tax worth Crores of Rupees by
committing fraud through parallel software from vehicles without fast tag
at various Toll Plazas of National Highway Authority of many states
DETAILS OF ARRESTED ACCUSED:-
1. Alok Kumar Singh Son of Late Arun Kumar Singh Resident of
Faridabad Siddikpur, ITI, Police Station Sarai Khwaja, District Jaunpur.
Present address at SSR Tower – 116 (C) Harhua, Kazisarai, Varanasi,
Uttar Pradesh.
2. Manish Mishra Son of Mohan Lal Mishra Resident of Kanjwar Police
Station Majhauli, Sidhi, Madhya Pradesh.
3. Rajiv Kumar Mishra Son of Brijesh Mishra Resident of Paranipur,
Police Station Meja, Prayagraj, Uttar Pradesh.
RECOVERY:
(1) 02 Laptops
(2) 01 PrinterSignature Not Verified
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(3) 05 Mobile Phones
(4) 01 Vehicle Maruti XL – 6
(5) Cash amount of Rs. 19,580/-
PLACE/DATE OF ARRESTING:
Shivgulam Toll Plaza Atraula Police Station Area Lalganj District
Mirzapur. Date: 22.01.2025 Time 03.50 AM.
For the past several days, STF Uttar Pradesh was receiving information
about fraudulent Toll Tax embezzlement from vehicles without Fast Tag
or with insufficient funds in the Fast Tag account at various toll plazas of
National Highways by using separate software in addition to the NHAI
software/server in the Toll Plaza booth computer. In relation to which, a
team was formed under the supervision of Shri Vinod Kumar Singh,
Additional Superintendent of Police, STF Varanasi and Shri Vimal
Kumar Singh, Deputy Superintendent of Police, STF Lucknow and
accordingly action was being taken for collecting information.
During the course of collection of information, it was found that a person
who makes and installs software other than NHAI’s software/server was
in Varanasi. On the information of the secret informer, a team consisting
of Inspector Shri Deepak Singh, Inspector Rizwan, Inspector Anil Kumar
Singh, U.N. Satyaprakash Singh, Sub Inspector Ranvijay Tiwari, Alok
Rai, Ajay Jaiswal, Aniruddh Suvan Tripathi, Constable Akit Singh and
Pushp Kumar on 21-01-2025 at 16.00 pm from near Babatpur Airport
for interrogation brought one person named Alok Kumar Singh.
On being asked Alok Kumar Singh told that he is an MCA and having
good knowledge of software development. He has also worked at Toll
Plazas in the past. He has worked with Riddhi-Siddhi Company, Sawant
and Sukhantu in the past. From there, he came in the contact of
companies/firms who undertake/take contracts for Toll Plazas. He knows
that Fast Tag is mandatory at all Toll Plazas in India. Vehicles passes
through Toll Plazas without Fast Tag are charged Double Toll Tax as
penalty. With the aim of embezzling double fee from vehicles Without
Fast Tag, thereafter, Alok Kumar Singh, in connivance with Toll Plaza
owners/managers has created a software that is installed in the system
installed at one of the Booths of the Toll Plaza in which NHAI software is
installed. And with the connivance of IT personnel working at the Toll
Plaza through various means in the same he got installed the software
(online or offline). He has direct online access to it from his personal
laptop. Double Toll Fee charged from vehicles Without Fast Tag passing
through Toll Plaza is collected through software developed by Alok
Singh. Its printed slip is similar to the NHAI software. Details of every
Toll/Booth/Transaction are displayed on Alok Singh’s laptop. As per
rules, 50% of the Toll Tax collected from vehicles Without Fast Tag has
to be deposited by the Toll Plaza in the account of NHAI. But through the
aforesaid software installed by Alok Singh, the Toll Plaza
Owners/Managers embezzle the amount collected from vehicles WithoutSignature Not Verified
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Fast Tag. After the said illegal collection/embezzlement the vehicle is
allowed to pass by showing it as exempted from vehicle Fee. On an
average, 05% of the Toll Tax collected from vehicles Without Fast Tag is
collected through the original software of NHAI. So that no one has any
doubt that the Toll Tax of vehicles Without Fast Tag is not going to the
account of NHAI. The Toll Plaza Owners/Managers illegally distribute
the embezzled amount among the Toll Plaza IT personnel, other
personnel and themselves and Alok Singh and his associates and take
advantage of the same. Alok Singh also told that under the supervision of
his Associates Sawant and Sukhantu, Toll Tax is being embezzled by
installing such software at more than 200 toll plazas in
the country. Alok Singh has installed his software at 42 Toll Plazas and
receives the money received from it online/offline in his own, family
members and his fatherin-law’s bank account/wallet.
Alok Singh also told that he has been doing this work for the last two
years. On an average of Rs. 45,000/- Toll Tax embezzlement was found
daily from the said software installed at Atraila Shiv Ghulam Toll Plaza
Lalganj, Mirzapur. Investigation is being continued about other Toll
Plazas. Based on the information received from Alok Singh, the employee
Manish Mishra who used to collect money from vehicles Without Fast
Tag and issue Toll Slips through phone and Toll Manager Rajiv Kumar
Mishra were arrested from Atraila Shiv Ghulam Toll Plaza Lalganj
Mirzapur. The aforesaid items/case property were recovered from them.
Investigation is being continued about other facts.
The list of toll plazas where accused Alok Singh has installed separate
software apart from NHAI server is as follows:
1. Harro Toll Plaza Prayagraj U.P.
2. Mungari Toll Plaza Prayagraj U.P.
3. Umapur Toll Plaza Prayagraj U.P.
4. Andi Toll Plaza Lohara, Azamgarh U.P. (A.K.C.C.
Company)
5. Baghpat Toll Plaza Baghpat U.P. (A.K.C.C.
Company)
6. Faridpur Toll Plaza Bareilly U.P.
7. Patni Pratappur Toll Plaza Shamli U.P.
8. Atraila Shiv Ghulam Toll Plaza Mirzapur U.P.
9. Nainsar Toll Plaza Gorakhpur U.P.
10. Chikli Toll Plaza Madhya Pradesh
11. Jangabani Toll Plaza Madhya Pradesh
12. Mohtara Toll Plaza Madhya Pradesh (A.K.C.C.
Company)
13. Shalibada Toll Plaza Madhya Pradesh
14. Shahdol Toll Plaza Madhya Pradesh
15. Gahara Toll Plaza Madhya Pradesh
16. Phulera Toll Plaza Jaipur Rajasthan
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17. Kadashahna Toll Plaza Rajasthan (AKCC
Company)
18. Shahpur Toll Plaza Rajasthan
19. Shauli Toll Plaza Rajasthan Company Anuvejan
20. Madanpur Toll Plaza Assam Company RK Jain
21. Balachera Toll Plaza Assam
22. Bhojpuri Toll Plaza Chhattisgarh Company AKCC
23. Maharajpur Toll Plaza Chhattisgarh
24. Mudiyapara Toll Plaza Chhattisgarh
25. Kumhari Toll Plaza Durg Chhattisgarh
26. Van Toll Plaza Jammu
27. Dashrkhed Toll Plaza Maharashtra
28. Khani Bade Toll Plaza Belbadi Maharashtra
29. Mokha Toll Plaza Gujarat Company AKCC
30. Rohisa Toll Plaza Gujarat Company AKCC
31. Okha Mandi Toll Plaza Gujarat
32. Kuchadi Toll Plaza Gujarat
33. Nawasari Toll Plaza Jharkhand
34. Turup Toll Plaza Jharkhand Company AKCC
35. Tand Balidha Toll Plaza Jharkhand
36. Lal Toll Plaza Punjab
37. Jigha Toll Plaza Punjab Company AKCC
38. Gobari Toll Plaza West Bengal
39. Paschim Madati Toll Plaza West Bengal
40. Kadli Gadh Toll Plaza Odisha
41. Sanwara Toll Plaza Himachal Pradesh
42. Jangaon Toll Plaza Telangana.
The Case being Case Crime No. 17/2025 for the charges of offence
punishable U/s 316(2), 319(2), 318 (4), 338, 336 (3), 340 (2) Bhartiya
Nyaya Sanhita (BNS) at Police Station Lalganj, District Mirzapur got
registered against arrested accused persons. Further legal action shall
be initiated by local police.”
6. Thereafter, a show cause notice dated 25.01.2025 came to be issued
by the NHAI to the petitioner followed by a letter/communication dated
18.03.2025, inter-alia debarring the petitioner for a period of 2 years from
participating in any tender issued by the NHAI. The relevant portion of the
said letter/communication dated 18.03.2025 reads as under:
“6. After giving you an ample opportunity of being heard and finding
your replies unsatisfactory and considering the seriousness of the issue
involved; the Authority has decided to Terminate the Contract AgreementSignature Not Verified
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for the subject fee plaza by invoking Clause 35(3) of the Contract
Agreement and also Debar you/your Firm (including Directors/Owners)
for a period of Two (02) years as per the Clause-21 (i) of the Contract
Agreement and Clause 3.1 & 3.2 of the RFQ. Further, considering that
you have failed to disprove the finding of UP STF regarding
unauthorized cash collection and non- deposition of actual double fee
collected from non-FASTag vehicles to NHAI Account, the Performance
Security (Cash+BG) for the subject fee plaza, is being en-cashed in
violation of the provisions of the Contract Agreement.”
7. Against the communication/letter dated 18.03.2025 issued by the
NHAI, the petitioner preferred W.P(C) 3640/2025 before this Court. Vide an
order dated 28.03.2025, the communication/letter dated 18.03.2025 came to
be set-aside by this Court on account of being issued in violation of the
principles of natural justice, particularly on account of the failure of NHAI
to afford the petitioner an opportunity of personal hearing, and also various
discrepancies in the impugned communication. However, NHAI was given
liberty to issue a fresh show cause notice and pass a speaking/reasoned
order, after granting petitioners an opportunity of personal hearing. The
relevant portion of the said order reads as under: –
“4………It is submitted that the impugned letter fails to even notice much
less deal with the submissions made by the petitioners in response to the
show cause notice.
5. Further, it is brought to the attention of this Court that whereas the
show cause notice sought to debar the petitioner only for a period of one
year, the impugned letter purports to terminate the contract and also
debar the petitioner for a period of two years.
6. It is further submitted that the show cause notice made no reference to
any termination action by the respondent.
7. Lastly, it is submitted that the impugned communication have been
passed in utter violation of the principles of natural justice inasmuch as
no hearing whatsoever was afforded to the petitioner. This is not refuted
by learned counsel for the respondent.
8. The respondent seeks to justify the impugned order on the basis of the
statement made by one Mr. Alok Kumar Singh to the UPSTF. The same
is, however, vehemently denied by learned senior counsel for the
petitioner.
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9. Respective counsel for the parties have been heard at some length.
10. It is noticed that communications / letters issued by the NHAI which
are similar to the impugned communication in the present case and were
issued in an identical factual matrix, have been set aside by this Court
vide order dated 21.03.2025 in W.P.(C) 3513/2025 and W.P.(C)
3515/2025.
11. In the circumstances and considering the aforementioned
discrepancies in the impugned communication/s, and particularly
considering that no opportunity for personal hearing was afforded to the
petitioner prior to issuance thereof, the same is clearly unsustainable in
law. Accordingly, the impugned communication/s are set aside.
12. However, it is clarified that the same shall not preclude the
respondent from issuing a fresh show cause notice, followed by an
opportunity of hearing to the petitioner, and thereafter pass a speaking
order. Let the said exercise be done as expeditiously as possible.”
8. Pursuant thereto, a fresh Show-Cause Notice dated 23.06.2025 was
issued to the petitioners by the NHAI. Further, on 26.06.2025, an
opportunity of hearing was also afforded by the NHAI to the petitioners.
9. Consequently, NHAI relying upon confessional statement of the
accused in FIR bearing no. 017/2025; Press Note No.36 dated 22.01.2025
issued by the UP STF and post-raid surge in figures of cash collection,
debarred the petitioners [in terms of clause 21(i) of the Contract Agreement]
for a period of 1 year from participating in future tender/s issued by the
NHAI and also sought to encash performance security furnished by the
petitioner as stipulated in Clause 17(c) of the Contract Agreement. In
addition to the aforesaid, it was decided to terminate the ongoing contracts
of the petitioners in W.P (C) 11106/2025; W.P(C) 11172/2025; W.P(C)
11684/2025; W.P(C) 12044/2025; and W.P(C) 12091/2025.
10. Aggrieved, the petitioners preferred the present batch of petitions
assailing the impugned decisions undertaken by the NHAI.
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SUBMISSIONS ON BEHALF OF THE PETITIONERS
11. Learned counsels appearing on behalf of the petitioners have
advanced the following common submissions: –
i. The impugned decision is premised upon mere conjectures and
surmises inasmuch as the primary basis for passing of the impugned
decision is that the name of the petitioners have been recorded in the
press statement issued by the UP STF. However, NHAI failed to take
into consideration the fact that neither were the petitioners named in
the chargesheet nor any incriminating material was found/seized by
the UP STF during the said raid against them.
ii. Prior to the raid dated 22.01.2025 conducted by UP STF, during
regular inspections (undertaken by the respondent, its officials, system
integrators, and authority engineer) no irregularity whatsoever was
discovered at the concerned toll plazas. Furthermore, even pursuant to
the said raid, despite the toll plazas undergoing detailed
investigations, no irregularity or seizure, particularly pertaining to the
usage of any illegal software/POS was discovered and on contrary,
the NHAI itself gave clearance to the petitioners.
iii. NHAI has a three-layered mechanism to supervise the user fee
collections. All software at fee plazas are installed by the
respondent/NHAI and its operation and maintenance are also
undertaken by the agencies appointed by the NHAI. Therefore, the
petitioners have no involvement, as regards thereto.
iv. Data relied upon by NHAI to substantiate sudden pre-raid and post-
raid surge in toll cash collection is premised upon the data/report
which the petitioners submit to the respondent on a regular basis. NoSignature Not Verified
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discrepancy was reported by the respondent to the said data/report
before or after the raid dated 22.01.2025. However, abruptly, just to
justify lack of evidence against the petitioners, NHAI took refugee
behind fluctuation in cash collection at the toll plazas of the
petitioners to somehow implicate/ make allegations against the
petitioners.
v. Undisputedly, toll collection is directly proportionate to the traffic
flow, which depends upon variety of factors such as time,
geography/location, regional events, weather conditions etc. Thus,
considering that traffic patterns are subjective in nature, there can be
no correlation between Electronic Toll Collection (ETC) and cash
collection; and sudden surge in cash flow recorded during the
concerned period was attributable to Maha Kumbh Mela 2025,
regional tourism to major pilgrimage sites, infrastructural changes,
seasonal variations etc. The same can also be substantiated from the
collections recorded by various other toll plazas across the country,
which have not been named in the press note released by UP STF.
vi. Cash collection is only a minimal percentage when compared to the
FASTag collection. It is only due to the low base value that the
variation in cash flow percentage seems more significant than that of
FASTag. Furthermore, the variation in FASTag collection has not
been considered by the NHAI.
vii. Without any lapse on part of the petitioners, on mere assumptions, the
decision to debar, terminate contracts and encash Performance
Security was taken. The same is highly disproportionate and arbitrary,
especially in the light of the settled position of law that debarring/ of aSignature Not Verified
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firm is equivalent to its civil death and should be issued cautiously
and sparingly by the concerned authorities.
12. Further, the learned counsel on behalf of the petitioners in W.P(C)
12044/2025 and W.P(C) 14768/2025 submitted that at the time when the
alleged misappropriation was discovered at the concerned toll plaza, the
predecessor agency was operating fee collection therein and not the
petitioners, thus, debarment of the petitioner is arbitrary.
13. It has also been contended by the learned counsel on behalf of the
petitioner in W.P(C) 14768/2025 that contrary to the modus operandi
alleged and the insinuations made i.e. post raid reduction the ratio of exempt
vehicles and cash collection would reduce and ratio of cash collection
increase, there has been an increase in both the exemption ratio and cash
ratio in post raid period. Furthermore, a seasonal spike is not uncommon,
even in the year 2024, petitioners cash collection went from 0.90% in March
to 4.86% in April and then to 1.36% in May.
SUBMISSIONS OF BEHALF OF THE RESPONDENT NO.1/NHAI
14. Learned counsel for the respondent submitted that the purview of
judicial review is limited and an interference is only warranted if the
impugned action is perverse, arbitrary or in violation of principle of natural
justice. However, in the present petitions, judicial review is unwarranted
inasmuch as the impugned decisions are reasoned and have been undertaken
by the respondent in compliance with the principles of natural justice. Prior
to passing of the impugned decision, the petitioners were issued detailed
Show Cause Notices and also afforded an opportunity of hearing.
15. It is also submitted that debarment order is a reasoned administrative
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decision, premised upon cogent and credible material contained in the FIR
and subsequent investigations undertaken by the UP-STF, including the
statement of principal accused during the investigation, which expressly
named 42 toll plazas, including that of the petitioners.
16. The tolling operators/ petitioners herein are responsible for ensuring
that their respective toll plazas are operated without manipulation. The
petitioner cannot shift responsibility onto IHMCL or the System Integrator,
as the Contract imposes independent and non-derogable obligations upon the
toll contractor. Further, the IHMCL only checks the proper functioning of
the system, is not embedded in the petitioners’ staffing hierarchy, does not
control their employees, and cannot physically prevent the toll operator from
adopting a parallel off-system practice that is not reflected in the ETC data.
Thus, role of a system integrator is very limited.
17. On merits, it is contended that pursuant to the raid conducted by the
UP-STF, an extraordinary and statistically inexplicable surge in cash
collection came to be recorded across the toll plazas operated by the
petitioners. Attribution of the said surge to regional tourism to major
pilgrimage sites including Maha Kumbh Mela 2025; infrastructural changes;
seasonal variations etc., is untenable inasmuch as (i) raid was undertaken on
a weekday (with no long weekend/holidays around the corner) (ii) even if
traffic truly surged as alleged, Electronic Toll Collection (ETC) collections
ought to have also necessarily reflected proportionate increase (which did
not occur). Absent manipulation, spike only in cash collection is statistically
impossible (iii) Maha Kumbh Mela 2025 began much earlier and the sudden
abrupt surge in cash collection immediately from the day pursuant to the
raid clearly servers any causal link and instead points towards the cessation
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of illicit suppression mechanism.
18. Further, the illegal parallel system was admittedly designed to operate
covertly and through mobile devices, enabling its instantaneous removal or
disabling upon the risk of detection, as admitted by the principal accused
himself. Consequently, the non-recovery of any physical device or software
neither negates the misconduct nor undermines the material relied upon by
NHAI, especially when supported by contemporaneous investigative inputs
and corroborative circumstantial evidence.
19. It is further contended that the reliance placed by the petitioner upon
an inspection report dated 18.03.2025 [in W.P(C) 10788/2025] and
17.03.2025 [in W.P(C) 10788/2025] which records that no incriminating
material was found pursuant to inspection at the toll plaza of the petitioner,
is also misplaced since the said report was prepared much after the
impugned event, providing the petitioners sufficient opportunity to rectify
and/or disable/alter the system configurations. The said circumstances,
evidently rendered the inspection unreliable for determination of a past
conduct.
20. It is submitted that administrative actions including debarment, do not
require proof of fraud or guilt equivalent to the standard applicable in
criminal proceedings, or even to the strict standard of a civil trial. The
governing test is existence of a reasonable grounds leading to a loss of
confidence in the contractor’s integrity and is sufficient to justify preventive
administrative action and exercise of a public authority’s inherent right to
decide with whom it will contract.
REASONING AND CONCLUSION
21. The legal position is well settled that blacklisting/debarment of an
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entity is akin to its civil death, and the same is amenable to judicial review
under Article 226 of the Constitution of India on the touchstone of
adherence to procedural due process, Wednesbury unreasonableness, the
principles of natural justice, and proportionality. The said position has been
reiterated by the Supreme Court time and again in catena of judgments
including in Kulja Industries Limited vs. Chief General Manager, Western
Telecom Project Bharat Sanchar Nigam Limited and Others, (2014) 14
SCC 731 which reads as under:-
“20. It is also well settled that even though the right of the writ petitioner
is in the nature of a contractual right, the manner, the method and the
motive behind the decision of the authority whether or not to enter into a
contract is subject to judicial review on the touchstone of fairness,
relevance, natural justice, non-discrimination, equality and
proportionality. All these considerations that go to determine whether the
action is sustainable in law have been sanctified by judicial
pronouncements of this Court and are of seminal importance in a system
that is committed to the rule of law. We do not consider it necessary to
burden this judgment by a copious reference to the decisions on the
subject. A reference to the following passage from the decision of this
Court in M/s Mahabir Auto Stores & Ors. v. Indian Oil Corporation Ltd.,
(1990) 3 SCC 752 should, in our view, suffice:
“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. Reliance in this connection may
be placed on the observations of this Court in Miss Radha Krishna
Agarwal and Ors. v. State of Bihar and Ors., [1977] 3 SCR 249 … In
case any right conferred on the citizens which is sought to be
interfered, such action is subject to Article 14 of the Constitution, and
must be reasonable and can be taken only upon lawful and relevant
grounds of public interest. Where there is arbitrariness in State action
of this type of entering or not entering into contracts, Article 14
springs up and judicial review strikes such an action down.
Every action of the State executive authority must be subject to rule of
law and must be informed by reason. So, whatever be the activity of
the public authority, in such monopoly or semi-monopoly dealings, it
should meet the test of Article 14 of the Constitution. If a
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contracts, fails to satisfy the test of reasonableness, the same would be
unreasonable. It appears to us that rule of reason and rule against
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 dealing as in the present case.”
22. Similarly, in Diwan Chand Goyal vs. National Capital Region
Transport Corporation, 2020 SCC OnLine Del 2916, a coordinate Bench of
this Court, after taking note of various judgments rendered by the Supreme
Court as regards debarment/blacklisting, summarized the general principles
governing legality of such action. The relevant portion of the said judgment
reads as under:
“45. Upon a reading of the aforesaid judgments cited on behalf of both
the parties, the general principles, which emerge, with respect to
blacklisting are:
(a) Principles of natural justice have to be complied with before the
order of blacklisting is passed;
(b) Natural justice or audi alteram partem does not always require a
hearing to be granted. Serving of show cause notice and affording an
opportunity to reply to the same, is considered as being adequate
opportunity and is sufficient adherence to the principles of natural justice
(c) Blacklisting constitutes civil death and has extremely grave
consequences. Thus, the same is amenable the judicial review if the same
is by governmental authorities;
(d) Any order of blacklisting ought to contain proper reasons. The
reasons need not be detailed or elaborate. It is sufficient to be brief, pithy
and concise
(e) Reasons should be supplied to the affected party;
(f) Decision taken ought not to be arbitrary or discriminatory.
(g) Blacklisting orders being amenable to judicial review can be judged
on the standard of proportionality. Thus, the period of blacklisting as
also terms and conditions thereof have to be proportionate to the
irregularities or conduct of the bidder.”
(emphasis supplied)
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23. Reference is also apposite to the judgment of the Supreme Court in
Erusian Equipment & Chemicals Ltd. vs State of West Bengal & Anr.
(1975) 1 SCC 70 wherein it was observed that considering the extreme
nature and consequences of debarment/blacklisting, the concerned authority
must arrive at an “objective satisfaction” before resorting to such measures.
The relevant portion of the said judgment reads as under: –
“15. The blacklisting order does not pertain to any particular contract.
The blacklisting order involves civil consequences. It casts a slur. It
creates a barrier between the persons blacklisted and the Government in
the matter of transactions. The blacklists are “instruments of coercion”.
20. Blacklisting has the effect of preventing a person from the privilege
and advantage of entering into lawful relationship with the Government
for purposes of gains. The fact that a disability is created by the order of
blacklisting indicates that the relevant authority is to have an objective
satisfaction. Fundamentals of fair play require that the person concerned
should be given an opportunity to represent his case before he is put on
the blacklist.
24. Similarly, in A.K.G Constructions and Developers Pvt. Ltd vs State
of Jharkhand and Ors. 2026 SCC OnLine SC 520 the Supreme Court held
that considering the adverse consequences of debarment/blacklisting, the
same must be based on sufficient evidence, clear application of mind and
adherence to the principles of natural justice. The relevant portion of the
said judgment reads as under: –
“2. While exercising judicial review over administrative actions of the
State and its instrumentalities in relation to contracts provisioning
clauses and rules relating to termination and/or blacklisting, Courts must
apply distinct standards of legality, rationality and proportionality. Such
an approach is compelling as conditions for imposing such measures, as
also the consequences of such actions, have differing gravity.
xxx xxxxxx
23. The contractual relationship between the parties is governed by two
legal regimes. While GCC governs termination, the 2012 Rules govern
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proceedings for blacklisting. In the latter action, what is at stake is the
future of the contractor. A blacklisting order assumes that the contractor
is an incorrigible entity, at least for some time to come, in this case such
an assumption was intended to operate for five years. For giving effect
to such a premise, there has to be sufficient evidence, clear application
of mind and stronger adherence to principles of natural justice. The
blacklisting order dated 23.08.2004 falls short of this requirement and is
liable to be set aside.”
25. Furthermore, in Blue Dreamz Advertising (P) Ltd. v. Kolkata
Municipal Corpn., (2024) 15 SCC 264 the Supreme Court observed that an
order of blacklisting/debarment, is not justified simply because it contains
some reasoning. The real question is whether the rationale provided is such
as to justify blacklisting and whether the penalty is proportionate. The
relevant portion of the said judgment reads as under: –
“34. The Division Bench has, in our opinion, not appreciated the case in
its proper perspective. Merely saying that the blacklisting order carried
reasons is not good enough. Do the reasons justify the invocation of the
penalty of blacklisting and is the penalty proportionate, was the real
question.”
26. Thus, while adjudging the legality of a debarment/blacklisting action,
the jurisdiction of this Court extends both to examining the decision, and
also the decision-making process, on the touchstone of settled principles. A
blacklisting/debarring order must be based on ‘objective satisfaction’ (as
opposed to any “subjective satisfaction”) arrived at on application of mind to
the relevant material as also the defences pleaded by the debarred entity, and
after adherence to the principles of natural justice.
27. In light of the aforesaid principles laid down by the Supreme Court, I
have considered the rival submissions advanced by learned counsel for the
parties and perused the material placed on record. Upon such consideration,
I find that the debarring orders qua the petitioners are unsustainable for the
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following reasons:-
Petitioners not arraigned as accused in FIR No.0017/2025
28. A perusal of the impugned communications/letters reveal that the
impugned actions initiated against the petitioners are primarily premised
upon a press note issued by the UP STF, prepared on the basis of
confessional statement of an accused (in the concerned FIR), naming certain
toll plazas, including that of the petitioners for alleged involvement in usage
of alternate/illegal software for fee collection and an inexplicable post-raid
surge noticed in cash collection data of the concerned toll plazas.
29. Admittedly, the petitioners and/or their employees are neither
arraigned as accused in FIR No. 0017/25 dated 22.01.2025 registered by the
UP STF nor any charges have been framed against them in either the
chargesheet/final report dated 19.04.2025 or the supplementary chargesheet
dated 07.06.2025 submitted by the Investigating Officer before the
concerned trial court. It is paradoxical that even though none of the
petitioners have been accused of any wrongdoing in the ongoing criminal
proceedings, yet the same has been made the basis for debarring the
petitioners.
30. Further, besides the confession statement of one accused person
arrested by the UP STF during raid on 22.01.2025 at Shivgulam Toll Plaza,
which forms the basis for the press note relied upon by the respondent, the
respondent and/or any other investigating agency has neither recovered
parallel/counterfeit software during any raid/surprise checks/inspections nor
any incriminating evidence for the alleged period (pre-raid period) from the
toll plaza of the petitioners to corroborate the rationale for debarring the
petitioner entities. As such, the impugned order, on the face of it, is
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predicated on an untenable factual premise.
31. In the context of W.P(C) 14768/2025, it is relevant that even in the
‘confessional statement’, the petitioner therein is not named as an alleged
defaulting agency in relation to the Amdi Toll Plaza (currently operated by
the petitioner); on the contrary, installation of alleged POS machine at the
said Plaza has been attributed to the predecessor contractor.
No evidence of wrong doing revealed despite the contractually inbuilt
robust mechanism/safeguards for detection of unauthorized activities at
the toll plazas
32. It is also noticed that the contractual stipulation in the respective
contracts mandates NHAI to significantly monitor, control and supervise the
day-to-day functioning of the concerned toll plazas in the following terms: –
“21. OPERATIONAL TRANSPARENCY:
The Contractor shall be solely responsible for efficient and transparent
working and management of User Fee collection at all points of time.
The Contractor shall ensure the following:
(i) All transactions including cash, violations, and
exemptions/concessions will be processed through ETC System available
at fee plaza. Usage of electronic ticketing machine or any such devices
like handheld Point-of-Sale (POS) terminal, POS Billing machine etc. is
strictly prohibited for user fee collection at NH fee plazas. Furthermore,
the deployment or usage of any alternate software/system for user fee
collection at NH fee plaza, except for the TMS through which FASTag
transactions are processed, is also strictly prohibited. Any instance of
usage of such handheld devices or unauthorized software/system shall be
treated as Fraudulent Activity and any User Fee Collection agency (ies),
including the Director(s) of such entities or owner, found practicing such
fraudulent activities at NH fee plazas will attract penal action as per
clause 20 of the contact agreement including debarment from NHAI for a
period up to (1) year.
(ii) Lane IDs will be correctly mapped in transaction files and no
fraudulent transaction will be hosted to Acquirer host.
(iii) Valid users are to be added into discount category through User fee
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transactions shall process using FASTag only.
(iv) Chargeback raised by Acquirer bank is to be validated timely as per
timeline defined in latest PG/ICD document.
(v) No fraudulent/parallel system in lanes to process cash/exempt
transaction.
(vi) Video recording system of toll plaza will be provided to Command
Centre on 24*7 basis and is not be mishandled.
22. AUTHORISED REPRESENTATIVE OF THE AUTHORITY:
(a) The Authority has designated (to be authorised), NHAI Project
Implementation Unit / Corridor Management Unit (PIU Korba) as “the
Authority” to carry out all functions on its behalf under this Contract
and may change the authorised representative from time to time.
(b) The said Representative of the Authority shall have the overall
authority to control and supervise the work of collection of User Fee
carried on by the Contractor with a view to ensure that collection of User
Fee is carried out smoothly, efficiently and without any hindrance or
harassment to the users of National Highway.
(c) The Authority or any other officer of the Authority or any agency as
authorized by the Authority or by the Authority, shall have right and
authority to inspect and check the receipt books (used/unused/
counterfoils), registers and books of accounts maintained by the
Contractor at any time without giving any notice.
(d) The instructions given from time to time by the Authority or his
authorised representative in this regard shall be complied with promptly
by the Contractor.
(e) The Contractor shall keep records of all the complaints received and
replied directly or otherwise by it and forward a copy on fortnightly
basis to the Authority.
23. OBLIGATIONS OF THE CONTRACTOR:
(a) The Contractor undertakes the responsibility of the complete job of
User Fee collection, upkeep/maintenance of adjacent Toilet blocks
including recouping the consumable items maintenance of all records,
maintenance of User Fee collection account, maintenance of vehicle type
wise Traffic Data on shift to shift basis, maintaining the cleanliness of
User Fee plazas/User Fee collection booths and surrounding area etc.
and any other duty as may be assigned by the Authority from time to
time.
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The upkeep/maintenance of Toilet blocks including recouping the
consumable items shall be as per SLA attached at Schedule-II.
(b) The Contractor shall make appropriate arrangement for management
of the traffic at its own cost and shall ensure that the processing time for
a vehicle at the User Fee counter should not be more than 30 seconds for
the purpose of issuing USER Fee. All the lanes shall be kept open at all
times irrespective of peak or off peak hours.
(c) The Contractor specifically undertakes to abide by all the instructions
issued by the Authority from time to time on operational matters and
further agrees not to raise any dispute against the same including any
additional cost that the Contractor may be required to bear to comply
with such instructions.
(d) During the contract Period, the contractor shall furnish to the
Authority, within 7 (seven) days of completion of each month, a statement
of User Fee substantially in the form set forth in Schedule- V (the
“Monthly User Fee Statement”). Proper record is to be maintained at
the plaza for the purpose of providing such information. The Contractor
shall also submit such information sought by the Authority in such
format, as may be prescribed by the Authority from time to time.
(e) The Contractor shall, prior to the close of each day, send to the
Authority, by facsimile or e-mail, a report stating accidents and unusual
occurrences on the Road Section within 500 meters on either side of the
plaza relating to the safety and security of the Users and Road Section. A
weekly and monthly summary of such reports shall also be sent within
three days of the enclosing of each week and month, as the case may be.
For the purposes of this Clause 23 (e) accidents and unusual occurrences
on the Road Section shall include:
(i) death or injury to any person;
(ii) damaged or dislodged fixed equipment;
(iii) any obstruction on the Road Section, which results in slow down of
the services being provided by the Contractor;
(iv) disablement of any equipment during operation;
(v) communication failure affecting the operation of Road Section smoke
or fire;
(vi) flooding of Road Section; and
(vii) such other relevant information as may be required by the Authority.
(f) The contractor also agrees to abide by the requirement of clause 21 in
order to maintain operational transparency at the fee plaza.
(g) The contractor also agree to abide by the requirement of clause 12 &
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clause 13 specifically on deployment of the personnel for the purpose of
this Contract.
(h) The Contractor agrees that maintaining adequate change/ coins and
giving correct change to the road users, while paying / receiving user fee
is his sole responsibility and undertakes not to indulge in wrong
practices like giving namkeen/ coffee/wafer packets, etc. instead of giving
change for the balance amount to the road users. A placard shall be
placed at all Fee Booths in the format enclosed at Schedule-IX for
information of the road users. In case it is found during the surprise
checks that the Contractor is giving namkeen/ coffee/ wafer packets in
lieu of change, the Contractor at his cost shall issue an advertisement in
the local newspapers asking the road users to approach the Fee Plaza
Office for getting back the change by returning namkeen/coffee/ wafer
packets by showing the user fee payment receipt.
(i) The contractor also agree to abide by the requirement of Standing
Operating Procedure ( Policy circular No 17.5.86/2023 dated
05.10.2023 ) during violence/Anticipated Violence at Toll Plazas
attached under Schedule XI of the Agreement.”
33. A perusal of the aforesaid reveals that contractual provisions
expressly prescribe NHAI access to the video recording system of the
concerned toll plaza on 24×7 basis. Further, in terms of clause 22 (b) and
22(c) of the contracts, an authority or its authorized representative
designated by the NHAI have the overall authorization to control and
supervise collection of User Fee carried out by the contractor and; inspect
and check the receipt books, cash registers and books of account maintained
by the contractor, without any prior intimation. Furthermore, clause 23(d) of
the contract obligates the contractor to furnish to the NHAI/concerned
authority, a monthly user fee statement, within seven days of completion of
each month.
34. Additionally, in terms of clause 24 of the contract, the NHAI reserves
the right to conduct checks including surprise checks upon the activities
undertaken by the contractor at the toll plaza/s to ensure that the user fee
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collection at plaza/s is being carried out properly by the personnel deployed
by the contractor. The said clause reads as under: –
“24. RIGHT OF INSPECTION:
(a) The Authority reserves the right to conduct checks including
surprise checks at any time, to check/observe/witness the activities
of the Contractor including the User Fee collection Plaza(s) and to
monitor or to ensure that any or all the activities including User
Fee collection enunciated by this Contract are being carried out
properly by the personnel deployed by the Contractor.
(b) The Authority may exercise any check/control to ensure
discharge of various obligations by the Contractor under the
Contract including but not limited to following:
i) Correctness of the User Fee charges recovered from users, as
prescribed
ii) Issue of proper Receipts to all Vehicles;
iii) Maintenance of proper registers including those relating to
collection of User Fee from different type of vehicles;
iv) Weekly remittance of amount due from the Contractor by the
prescribed day;
v) Checking of data in electronic/soft form;
vi) Maintain User Fee Plaza(s) and its appurtenances by the
Contractor at his cost and ensure that they are in good running
condition;
vii) Arrangement for lighting and water are in order;
viii) There is no delay to the traffic due to procedure of collection
of User Fee and also there is no traffic jam at the User Fee
Plaza(s); and
ix) Any other check or control as considered appropriate by the
Authority including through its authorised representative.
(c) The above rights of inspection by the Authority also extends to
the Toilet blocks handed over to the Contractor.”
35. Significantly, NHAI Policy Circular no. 17.5.87/2024 dated
25.01.2024 states that the concerned Project Director and Authority
Engineer shall continuously monitor revenue cash collection at the cash lane
and ensure that no parallel software is being used by the contractor. The
relevant portion is extracted as under: –
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36. It is also noticed that vide communications dated 18.03.2025 [in
W.P(C) 10788/2025]; 17.03.2025 [in W.P(C) 12780/2025]; 12.02.2025 andSignature Not Verified
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10.03.2025 [in W.P(C) 14768/2025]; and 16.03.205 [in W.P(C)
11684/2025] the toll plazas of the petitioners were given clearance as
regards usage of any alternate software, pursuant to inspections conducted
by the official/s of the NHAI itself.
37. In communication dated 18.03.2025 [in W.P(C) 10788/2025] issued
by the Project Director, Korba, NHAI to CGM (Tech) R/O Chhattisgarh,
NHAI it has been categorically recorded that pursuant to an inspection on
17.03.2025, no parallel software was found installed at the concerned toll
plaza. The same reads as under: –
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38. Similarly, the communication dated 17.03.2025 [in W.P(C)
12780/2025] addressed to the Regional Officer, NHAI Shimla (H.P) by the
Project Director NHAI PIU Shimla records that no parallel software was
discovered by the Assistant Engineer (AE) upon conducting an inspection at
the petitioner’s toll plaza. The said communication is as under:-
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39. Likewise, pursuant a joint inspection carried out by NHAI Site
Engineer Representative and the Independent Engineer, vide a
communication dated 16.03.2025 [in W.P.(C) 11684/2021] it was intimated
to the Project Director, NHAI that no illegal software was found at the
petitioner’s toll plaza. The said letter reads as under: –
Ref-KJPPL/JOB480/SO/IE/O&M/PO-DW/2024-2025/807
Date: 16.03.2025
To,
The Project Director,
National Highways Authority of India,
PIU-Rajkot Banglow No.1 & 2,
Manharpur-1, Jamnagar Highway Road,
Behind Muthoot Finance,
Post-Madharpur, Dist-Rajkot-360006 (Gujarat)
Email Id: – [email protected]Project: Independent Engineer (IE) Services for Operation and
Maintenance Stage under HAM mode of Four laning with Paved
Shoulder of Porbander-Dwarka Section of NH-51 from Km.
356.766 (Design Chainage Km. 379.100) to 473.000 (Design
Chainage Km. 496.848) in the State of Gujarat.
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Subject:- Show Cause Notice for Debarment for 1 year for
Fraudulent practices observed by STF of UP at Toll Plaza (without
prejudice).
Reference:-
1. MORTH&Highways Governemnt of India letter no.
NHAI/13013/CO/2024/E-272743 dated 25.01.2025.
2. RO letter no. NHAI/2014/01/2023/RO-GNR/Tech./D-309
dated 27.01.2025.
3. Authority letter no. NHAI/2025/PIU-RAJKOT/POR-
DWK/Toll/Vol.04/D-280 date 29.01.2025.
4. SPC Agency letter dated 03.02.2025.
Dear Sir,
With reference to the subject cited above, the Independent Engineer
acknowledges receipt of your communication vide reference (1)
and (2) regarding the Show Cause Notice for Debarment for one
year due to alleged fraudulent practices observed by the STF of
Uttar Pradesh at the Toll Plaza (Without Prejudice).
Based on the information provided in the Authority’s letter, the
Independent Engineer understands that the NHAI Regional Office
(RO) letter no. D-309, dated 27.01.2025, reference in (3) and (4),
has been forwarded to this office by the PD, PIU Rajkot. The said
Show Cause Notice has been issued to the agency for debarment for
one year due to fraudulent practices identified by the STF of Uttar
Pradesh at the Toll Plaza. The notice pertains to both the Kucchadi
and Okhamadhi Toll Plazas, where the toll agency has been
collecting revenue. As per the STF report, violations of Clause
21(i) and (v) of the Contract Agreement have been observed.
Furthermore, the Authority has already initiated proceedings in
accordance with the policy circular dated 24.01.2024 and the
Contract Agreement.
In response, the Toll Agency has submitted a letter dated
03.02.2025 (a copy of which is attached under reference (4)
stating:
“It is reiterated that our firm is dedicated to maintaining the
highest levels of integrity in our operations and is willing to assist
NHAI in addressing the allegations in FIR No. 0017. You wouldSignature Not Verified
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appreciate that we have been associated with NHAI for the past
nine years and have never been found indulging in unethical
business practices.”
In this context, the PIU Rajkot requested the Independent Engineer
to review and provided comments on the subject matter.
Accordingly, the Indepenent Engineer’s site team conducted an
inspection of both toll plazas on dated 25.01.2025, alongwith the
NHAI site Engineer Representative, Mr. Amit Parasar. The
Independent Engineer carried out a thorough joint inspects and
scrutiny of all software in accordance with the UP STF’s
allegations, however, no illegal software was found at either at
Kuchhadi or Okhamadhi Toll Plaza.
This is submitted for your necessary action.
Yours Faithfully
For K&J Projects Private Limited
Sourabh Kumar
Resident cum Highway Engineer
Enclosed As above.”
40. Notably, the communications dated 12.02.2025 and 10.03.2025 [in
W.P(C) 14768/2025] issued by the GM (Tech) cum Project Director, NHAI,
PIU- Azamgarh to the Regional Office, NHAI records that pursuant to
surprise inspections conducted on 29.01.205, 13.02.2025 and 25.02.2025
(post raid) record of all transaction pertaining to the vehicles used in surprise
inspection have been found in the Toll Management System (TMS). The
same reads as under:-
“11015/NHAI/PIU-Azamgarh/NH-28(oldNH-233)/2024-25/10,212
Date: 12.02.2025
To,
The Regional Officer,
National Highways Authority of India,Signature Not Verified
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Regional Office (UP-East) Varanashi
S-2/656, A-3B, Varuna Vihar Colony,
2nd & 3rd Floor, Sikraul, Varanasi – 221002Sub: 4-laning of Ghaghra Bridge to Varanasi section of NH-233
from Km. 121+800 to Km. 180+420 (Package-1) from Ghaghra
Bridge Abutment on Basti side to Bhudanpur Urban section in the
State of Uttar Pradesh under NHDP Phase-IV on EPC Mode.
Standard Operating Procedure for ensuring Operational
Transparency in Tolling Operation especially with respect to cash
and overload fee collection. -reg.
Ref: (i) M/s Bloom Companies LLC. Letter no. 333 dated
11.02.2025
(ii) Regional Office, RO-UP(East), Varanasi letter no. 23683
dated 10.02.2025
(iii) Regional Office, RO-UP(East), Varanasi letter no. 23545
dated 23.01.2025
(iv) NHAI HQ Policy Circular no. 17.5.87/2024 dated
25.01.2024Sir,
With reference to above cited subject and referred letters of
RO-UP(East), Varanasi, for ensuring Operational Transparency in
Tolling Operation especially with respect to cash and overload fee
collection in order to ensure proper monitoring of Toll Plaza and to
avoid illegal and unauthorised usage of parallel software and other
fraudulent activities.
In this regard, Supervision Consultant, M/s Bloom Companies LLC
letter dated 11.02.2025 vide under ref. (i) has also inspected the
toll plaza on 29.01.2025 from 10:00 PM to 11:00 PM (in night
time) and conducted surprise check of certain commercial vehicles
(annexure attached) as per the directions mentioned in RO-
Varanasi letter dated 23.01.2025. It is found that transactions of all
inspected vehicles are found in the TMS at Toll Plaza which were
recorded manually from a location close to the Toll Plaza.
In order to ensuring Operational Transparency in Tolling
Operation especially with respect to cash and overload fee
collection, it was directed to Supervision Consultant to conduct
weekly surprise toll checks regarding strict implement of the above
Policy Circular No. 17.5.87/2024 dated 25.01.2024 in compliance
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with the activities mentioned at sl. No. 3&4 and submit the action
taken report in this regard to this office by 7th of each month
without fail.
Accordingly, the report submitted by Supervision Consultant in
compliance of Regional Office, RO-UP(East), Varanasi letter dated
23.01.2025 and 10.02.2025 is submitted for kind information
please.
(-Sd-)
(SP Pathak)
GM(Tech) Cum Project Director
NHAI, PIU-Azamgarh”
“11015/NHAI/PIU-Azamgarh/NH-28(old NH-233)/2024-25/10344
date: 10.03.2025
To,The Regional Officer,
National Highways Authority of India,
Regional Office (UP-East) Varanasi
S-2/656, A-3B, Varuna Vihar Colony,
2nd & 3rd Floor, Sikraul, Varanasi – 221002Sub: 4-laning of Ghaghra Bridge to Varanasi section of NH-233
from Km. 121+800 to Km. 180+420 (Package-1) from Ghaghra
Bridge Abutment on Basti side to Bhudanpur Urban section in the
State of Uttar Pradesh under NHDP Phase-IV on EPC Mode.
Standard Operating Procedure for ensuring Operational
Transparency in Tolling Operation especially with respect to cash
and overload fee collection. -reg.
Ref: (i) M/s Bloom Companies LLC. Letter no. 340 dated
05.03.2025
(ii) Regional Office, RO-UP(East), Varanasi letter no. 23683 dated
10.02.2025
(iii) Regional Office, RO-UP(East), Varanasi letter no. 23545 dated
23.01.2025
(iv) NHAI HQ Policy Circular no. 17.5.87/2024 dated
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Sir,
With reference to above cited subject and referred letters of
RO-UP (East), Varanasi, for ensuring Operational Transparency in
Tolling Operation especially with respect to cash and overload fee
collection in order to ensure proper monitoring of Toll plaza and to
avoid illegal and unauthorised usage of parallel software and other
fraudulent activities.
In this regard, Supervision Consultant, M/s Bloom Companies
LLC letter dated 05.03.2025 vide under ref. (i) has inspected the
toll plaza on 13.02.2025 from 08:45 PM to 11:00 PM (in night
time) and on dated 25.02.2025 from 08:25 PM to 10:00 PM (in
night time) conducted surprise check to certain commercial
vehicles (annexure attached) as per the directions mentioned in
RO-Varansi letter dated 23.01.2025. It is found that transactions of
all inspected vehicles are found in the TMS at Toll plaza which
were recorded manually from a location close to the Toll plaza.
In order to ensuring Operational Transparency in Tolling
Operation especially with respect to cash and overload fee
collection, it was directed to Supervision Consultant to conduct
weekly surpirze toll checks regarding strict implement of the above
Policy Circular No.17.5.87/2024 dated 25.01.2024 in compliance
with the activities mentioned at sl. No. 3 & 4 and submit the action
taken report in this regard to this office by 7th of each month
without fail.
Accordingly, the report submitted by Supervision Consultant
in compliance of Regional Office, RO-UP(East), Varanasi letter
dated 23.01.2025 and 10.02.2025 is submitted for kind information
please.
(SP Pathak)
GM (Tech) cum Project Director
NHAI, PIU-Azamgarh”
41. It is thus evident that at each toll plaza, authority appointed by NHAI
supervises and controls the user fee collection particularly cash collection
and conducts monthly inspections of all equipments present thereof.
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incriminating evidence to support its hypothesis for justifying debarment.
There is simply no objective material to justify the debarring action, and the
same is based solely on the statement of a single accused in a criminal case,
where the investigative agency did not deem fit to level any charges against
the present petitioners.
Discrepancies in the inferences sought to be derived by the NHAI on the
basis of alleged post-raid surge.
42. It is the case of the petitioners that cash collections constitute only a
minor portion of the overall toll revenue when compared to FASTag
collections and it is only due to the low base value of pre-raid cash
collection that even the modest variation in cash flow percentage seems
more significant than that of FASTag (which has been considered from a
higher base value).
43. A perusal of the data relied upon by the NHAI (to show inexplicable
post raid surge in cash collection), for example in W.P. (C.) No. 12363/2025
reveals that the increase in cash collection during the post-raid period ranged
only between Rs. 905/- and Rs. 2,500/- (approximately) whereas the
corresponding increase in Electronic Toll Collection (ETC) /FASTag ranged
between Rs. 5,000/- and Rs. 8,000/-. Despite the same, the impugned order
relying upon percentage increase in cash collection records the percentage
increase in cash collections as ranging from 617% to 1670%, while the
percentage increase in ETC/FASTag collections as only 9.24% to
14.06%.The relevant extract of data relied upon by NHAI in the impugned
order reads as under: –
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44. Similarly, in the debarment order assailed in W.P. (C.) No.
11106/2025, the NHAI adopting the same methodology observed as under: –
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45. A conjoint reading of Tables A and B again demonstrates that the
apparent surge in cash collections is largely attributable to the exceptionally
low pre-raid base value of cash collections. For instance, at Turup Toll
Plaza, cash collections increased from Rs. 1,713/- to Rs. 13,800/- i.e., an
increase of Rs. 12,087/-, resulting in a 705% increase. By comparison, the
ETC collection (at Turup Toll Plaza) increased from Rs. 9,59,443/- to Rs.
10,95,685/-, i.e., by approximately Rs. 1,36,242/-, and was referred to as
only a 14% increase since the base value of pre-raid ETC collection was
relatively at a higher level.
46. Likewise, in W.P(C) 11172/2025 the learned counsel for petitioner has
brought attention to the fact that at Baleni fee plaza, although the increase in
cash collection is between Rs. 1000/- and 1200/-, and the total amount of
cash collection is less than 1% of the complete revenue collection, however,
in percentage terms, the increase in cash collection appears substantial in
comparison to FASTag collection (despite the actual variation being
miniscule in absolute terms) due to the low base value of pre-raid cash
collection. Further, high cash collection is stated to have been observed at
Rohisa Fee Plaza even between 10.01.2025 and 12.01.2025 i.e., pre-raid
period (prior to 22.01.2025) and similar variation of more than Rs.
1,00,000/- was also observed in FASTag collection between 14.01.2025 and
16.01.2025.
47. Further, the learned counsel for the petitioner in W.P(C)14768/2025
has drawn attention to the inherent inconsistency in interpreting the toll
collection data by the NHAI. It is submitted that if the petitioner was in
violation, as per the modus operandi recorded in the FIR in the aftermath of
the raid, there would have been a decline in the ratio of “exempt vehicles”
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and a simultaneous increase in cash collection ratio. However, contrary to
the alleged modus operandi, exemption ratio of 8.16% and cash ratio of
0.28% recorded in pre-raid period (i.e., from 10.01.2025 to 13.01.2025)
moderately increased to 8.19% (exemption ratio) and 0.93% (cash ratio)
respectively in the post raid period. A detailed tabulation illustrating the
same has been set-out by the petitioner in W.P(C)14768/2025 as under: –
48. It is thus evident that the manner in which inferences have been
sought to be drawn from data/statistics, is fraught with difficulties. Such
‘probabilistic’ inference/s can hardly be said to meet the requirement of an
“objective satisfaction”. Where the very foundation of the decision is based
on an erroneous methodology or a selective reading of the material on
record, there is inherent arbitrariness in the decision making process and the
same is unsustainable.
Non-consideration of external factors causing increase in cash collection
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at toll plaza
49. There is no cogent basis to rule out the possibility that the alleged
‘surge’ in cash collection being attributable to external factors such as Maha
Kumbh Mela 2025, regional tourism to major pilgrimage sites,
infrastructural changes, seasonal variations, local regional events etc.
50. It is noticed that the petitioners in their respective replies to the show-
cause notices, specifically contended that toll collection is directly
proportionate to traffic flow, which is inherently dynamic and influenced by
several external factors. The petitioners brought to the notice of the NHAI
that the toll plazas in question are strategically located on routes leading to
major pilgrimage centres and tourist destinations, including routes
witnessing exceptionally high traffic during events such as the Mahakumbh
2025, religious and other large-scale public gatherings; and also, seasonal
tourism due to snowfall etc. It was thus submitted that any variation in toll
collection must necessarily be assessed in light of these fluctuating traffic
patterns and cannot be attributed, in isolation, to any alleged irregularity
51. The petitioners in W.P(C) 11106/2025; W.P(C) 11172/2025; W.P(C)
12780/2025 and W.P(C)12363/2025 brought to the notice of this Court that
similar trend of increase in cash collection, reported at the toll plazas of the
petitioners, have been also reported at other toll plazas namely Balluna Fee
Plaza, Kot Karol Fee Plaza, Tamsabad Fee Plaza, Kobadi Toll Plaza and
Kishorpura Fee Plaza, Sherpur Chamraha Fee Plaza and Kothiya Fee Plaza
which are not mentioned in the UP STF press release but are located on the
same highway as that of the petitioners.
52. However, while passing the impugned orders, the aforesaid aspect/s
appear to have been overlooked and summarily discarded. For instance, in
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the impugned order dated 18.08.2025 [in W.P(C) 12780/2025] is as under: –
“v. Your submission regarding increase in Cash Due to MAHAKUMB
and Nepal Traffic not holds ground as only cash collection increases
drastically, however, similar variation not observed in ETC collection.”
53. It is trite law that a debarment/blacklisting order must contain reasons,
reflecting due consideration/application of mind to the material on record
including the defences/justification as may have been set-out in the response
to show-cause notice by the affected party/entity. Failure to consider a
relevant and material explanation, particularly one which offers an
alternative basis for the alleged conduct, imparts further arbitrariness to the
decision-making process.
Decision of debarment/blacklisting cannot be predicated on surmises
and conjectures
54. Debarment/blacklisting is not an ordinary administrative measure, as
has been held repeatedly by the Supreme Court; it is akin to civil death. A
sanction of such severity demands a foundation of commensurate strength.
The Supreme Court has repeatedly emphasized that such action must be
based on a strong, independent and cogent material; it cannot be based on
surmises or conjectures or speculative inferences. The present case is
illustrative of the precise antithesis of that standard inasmuch as the action
taken is not based on any semblance of independent evidence. Rather, a
chain of assumptions have been made. Essentially, it has been concluded
that the rise in toll collection post the raid by UPSTF, can only be explained
by inferring prior pilferage. This is clearly an assumption/conjuncture. The
law does not permit an authority to reason backwards in this matter to
convert ‘suspicion’ into ‘guilt’ in the absence of a single piece of
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independent evidence.
55. As such, it is quite clear that the debarring action in the present cases,
is based on a ‘theory’ rather than any ‘objective’ facts. Given the nature of
fraudulent conduct sought to be imputed, the same cannot be countenanced
in law. It is well settled that allegations of fraudulent conduct are required to
be proved at a much higher threshold. The said position has been enunciated
by the Supreme Court time and again, including in Union of India v.
Chaturbhai M. Patel & Co., (1976) 1 SCC 747, as under:
“7. The High Court has carefully considered the various circumstances
relied upon by the appellant and has held that they are not at all
conclusive to prove the case of fraud. It is well settled that fraud like any
other charge of a criminal offence whether made in civil or criminal
proceedings, must be established beyond reasonable doubt: per Lord
Atkin in A.L.N. Narayanan Chettyar v. Official Assignee, High Court,
Rangoon [AIR 1941 PC 93 : 196 IC 404] . However suspicious may be
the circumstances, however strange the coincidences, and however grave
the doubt, suspicion alone can never take the place of proof. In our
normal life we are sometimes faced with unexplained phenomenon and
strange coincidences, for, as it is said truth is stranger than fiction. In
these circumstances, therefore, after going through the judgment of the
High Court we are satisfied that the appellant has not been able to make
out a case of fraud as found by the High Court. As such the High Court
was fully justified in negativing the plea of fraud and in decreeing the
suit of the plaintiff.”
56. In A.C. Ananthaswamy v. Boraiah, (2004) 8 SCC 588, the Supreme
Court held as under:
“5. We do not find any merit in this appeal. Firstly, in the present case,
Patel Chikkahanumaiah had moved an application under Order 9 Rule
13 CPC for setting aside the ex parte decree on the ground of non-
service of summons in which fraud was not alleged. As stated above,
Patel Chikkahanumaiah had moved RA No. 54 of 1977 in which there
was no such allegation. Secondly, the present suit has been instituted to
set aside the ex parte decree on the ground that the decree was obtained
by fraud and misrepresentation. Fraud is to be pleaded and proved. To
prove fraud, it must be proved that representation made was false to the
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could have no reasonable belief that it was true. The level of proof
required in such cases is extremely higher. An ambiguous statement
cannot per se make the representor guilty of fraud. To prove a case of
fraud, it must be proved that the representation made was false to the
knowledge of the party making such representation. [See Pollock &
Mulla: Indian Contract & Specific Relief Acts (2001), 12th Edn., p.
489.]”
57. The Bombay High Court in Oswal Agro Mills. Ltd. vs. The
Custodian & Ors, (2004) 3 BC 352, held as under:
“32. During the course of arguments, learned counsel for the Custodian
pointed out that when the party to whom show-cause notice is issued has
received payment and is not in a position to explain as to why the
payment is made, a fact which is within the exclusive knowledge of the
party, then the Custodian is justified in alleging that it is fraudulent. I am
afraid, I cannot accept this argument. The fact that payment is not in
normal course of business, the fact that the transactions were not in
normal course, does not absolve the Custodian in making out a case of
fraud as pointed out earlier and in the absence of such a case being
made out in the show-cause notice, the show-cause notice becomes
invalid in law and any action based on such vague notice cannot be
legally sustained. To accept that since payment was not in normal
course, it is fraudulent and would give rise to a presumption of fraud.
There can be presumption of illegality and there can be no presumption
of fraud. Illegality and fraud are required to be alleged with all the
necessary details. Fraud is to be established and proved to the hilt and
the burden is always on the party which alleges fraud. It was absolutely
necessary for the Custodian to show in the show-cause notice as to how
he was satisfied and the facts on the basis of which he has reached the
satisfaction must be stated in categorical terms. Mere reference to the
report of any Committee or the chartered accountants and quoting
opinion of the chartered accountants that the payment does not appear to
be in normal course does not lead even to proper allegation of fraud and
is not sufficient to make out a case of fraud. What was expected of the
Custodian is to have a deep probe into the matter and if possible to make
out a case of fraud having been practiced. It was also necessary to allege
whether the petitioners have practiced fraud on the notified party or
whether the notified party and the petitioners joined hands in practicing
fraud and if so who was the target or victim of the said fraud.”
58. The Supreme Court in Kulja Industries Limited (supra); Erusian
Equipment & Chemicals Ltd (supra); A.K.G Constructions and Developers
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Pvt. Ltd (supra) and Blue Dreamz Advertising (P) Ltd (supra) has held that
since the debarment entails long-term adverse effect upon an entity, the
rationale/basis thereof must be founded on an ‘objective satisfaction’, based
on sufficient evidence/s. This standard has clearly not been met in the
present cases.
59. Even the legal opinion dated 15.04.2025 bearing letter no. J.D
ABHI.MIR/152/2025 issued by the Office of Joint Director, Prosecution,
District Mirzapur notes deficiencies/shortcomings in the investigation
conducted by the respondent/NHAI viz. the concerned toll plazas as under
[translated version annexed as Annexure P21 (colly) in W.P(C)
12363/2025]:-
“The investigation conducted in the matter has following shortcomings:
1. The goods recovered in the above case for examination
have not been sent to the Forensic Science Laboratory.
2. The details of all the toll plazas are not attached as to
which and which persons at which and which toll plaza
through the said software are making illegal recovery.
3. It is also not clear that how much money has been
recovered by which persons from which toll plazas.
4. Certificate of Section 63 of Indian Evidence Act in relation
to the software computer has also not been attached.”
CONCLUSION
60. In the circumstances, the impugned debarring action cannot withstand
the scrutiny of law in light of the legal position settled by the Supreme
Court, inter-alia, in Kulja Industries Limited (supra); Erusian Equipment
& Chemicals Ltd (supra); A.K.G Constructions and Developers Pvt. Ltd
(supra) and Blue Dreamz Advertising (P) Ltd. (supra). The impugned
debarment actions against the petitioners in this batch of petitions, are,
accordingly, set aside.
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61. However, it is made clear that this Court is not inclined to interfere
with the termination of the contract/s of the petitioners in W.P(C)
11106/2025; W.P(C) 11172/2025; W.P(C) 11684/2025; W.P(C)12044/2025;
W.P(C) 12091/2025 and the forfeiture of performance guarantee furnished
by the petitioners. The petitioners are at liberty to avail prescribed
contractual/civil remedies with regards thereto.
62. Needless to say, this order shall not be construed as an expression of
opinion of this Court as regards the merits of any such remedy that may be
resorted to by the petitioners.
63. The present petitions are disposed of in the above terms. Pending
applications also stand disposed of.
SACHIN DATTA, J
JULY 3, 2026/sl
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