CAG report on DND flyway shocking, says SC, NTBCL gave gold coins to staff

The Supreme Court on Friday said the CAG report looking into the financial record of the DND project in 2016 revealed shocking details including distribution of corporate gifts like gold coins to its employees, sub-staff and drivers.

A bench of Justices Surya Kant and Ujjal Bhuyan upheld the Allahabad High Court order of 2016 directing the private firm Noida Toll Bridge Company Ltd (NTBCL) to stop collecting toll from commuters plying the Delhi-Noida-Direct (DND) flyway connecting South Delhi and Noida. 

"The CAG report shockingly reveals that the directors of NTBCL, including Pradeep Puri (who it seems was a senior bureaucrat), apparently did not perform any responsibility, yet all their expenses, including high-end remuneration were added in the total project cost," it said.

 

Referring to the report, the bench said legal fees amounting to Rs 11 crore, travelling expenses amounting to Rs 400 lakh, and the cost of restructuring deep discount bonds at Rs 33 crore, were also added to the total project cost.

"More egregiously, NTBCL seems to have incurred an expenditure of Rs 72.25 lakh on account of purchase and distribution of 'corporate gifts', including the generous distribution of gold coins to its employees, sub-staff and drivers," it said.

The bench said it is evident that despite approval from various authorities, the formula used for toll collection was far from reasonable.

"The compounding nature of the formula granted NTBCL the right to collect user fees indefinitely; the absence of a cap on O&M expenses allowed for potential inflation of costs by including extraneous expenditures in the total project cost; and the fixed, unrealistic return rate of 20 per cent ensured that the total project cost would escalate yearly without possibility of adjustment by the parties involved," it said.

It added that this situation reflects serious impropriety not only by IL&FS and NTBCL but also by the then officers of NOIDA, the state of Uttar Pradesh, and the NCT of Delhi.

"It is inconceivable that multiple layers of government, advised by some of the most astute financial minds, failed to foresee that this formula would impose an undue and unfair burden on the users - the general public. Such an outcome could only arise through extraneous considerations influencing several stakeholders. This blatant misuse of power and breach of public trust has profoundly shocked the conscience of this court," the bench said.

It added that the manner in which some senior bureaucrats manipulated the siphoning of project funds for their personal gains clearly make out a fit case for investigation under the Prevention of Corruption Act, 1988, although the ship might have sailed for such action at this stage.

"However, NOIDA overstepped its authority by delegating the power to levy fees to NTBCL through the concession agreement and regulations, exceeding the scope of its powers," it said, adding that in complete contradiction and violation of the scheme of the statute, NOIDA in purported exercise of its power to formulate regulations not only delegated the power to collect fee but also authorised NTBCL to revise and levy such charges.

The bench said such a delegation was totally in violation of the provisions of the Uttar Pradesh Industrial Area Development Act, 1976.

"The responsibility to determine the amount and rate of fees lies with NOIDA; by delegating this function to NTBCL via the concession agreement and reinforcing it through the regulations, NOIDA exceeded its authority moored under the 1976 Act," it said.

The bench said, "we concur with the high court's conclusion that the concession agreement, in so far as it sub-delegates the power to levy and collect fees to NTBCL, is unlawful, and the regulations justifying such sub-delegation undermine the objective of Section 6A of the 1976 principal act.