Mumbai Metropolitan Region … vs The Fare Fixation Committee And 3 … on 4 December, 2017

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION NO. 2605 OF 2015

Mumbai Metropolitan Region
Development Authority,
an authority established under
the Mumbai Metropolitan
Region Development Authority
Act, 1974, and having
its administrative office at
Bandra Kurla Complex,
Bandra (East), Mumbai 400051. .. PETITIONER

Versus

1 The Fare Fixation Committee,
comprising Mr.Jusice E.Padmanabhan
(Retd), Mr.T.K.Vishwanathan (Retd)
and Mr.Jayanth Kumar Banthia,
through the Ministry of Urban
Development, Union of India

2 Union of India, through the
Ministry of Urban Development,
Nirman Bhavan Maulana Azad Road
New Delhi 110001

3 State of Maharashtra, through
the Department of Urban
Development, Mantralaya
Madam Cama Road,
Mumbai 400032.

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4 Mumbai Metro One Private Limited
a Private Company incorporated
under the provisions of the Companies
Act, 1956 and having its registered
Office at E-4(i) 3rd flor, MIDC area,
Marol, Andheri (East)
Mumbai 400093. .. RESPONDENTS

Mr.Aspi Chinoy, Sr. Advocate with Dr.Birendra Saraf, Mr.Ayush
Agarwala, Ms.Akriti Sarkar, Mr.C. Nageshwaran, Aditya
Thakkar i/b Khaitan Co. for the petitioner.

Mr.Dushyant Kumar, AGP for the State.

Mr.Vijay Kantharia with Mr.D.P. Singh and Mr.Anil Yadav for
Union of India.

Mr.Janak Dwarkadas, Sr. Advocate with Mr.Chirag Kamdar,
Mr.D.J. Kikalia, Tushaar Kikalia i/b M/s.Mulla Mulla for
respondent no.4.

CORAM: DR. MANJULA CHELLUR, CJ.
M.S.SONAK, J.

RESERVED ON: 31st OCTOBER, 2017

PRONOUNCED ON: 4th DECEMBER, 2017

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JUDGMENT (Per Dr.MANJULA CHELLUR, CJ):

1 The present petition is filed challenging the

recommendations and the decision made by the Fare Fixation

Committee (hereinafter referred to as ‘FFC’) for increase in

the Mumbai Metro Fare from Rs.9 – Rs.13 in the year 2014-

15 which came to be increased to Rs.10 – Rs.110 from

January 2015.

2 The petitioner before us is Mumbai Metropolitan

Region Development Authority (hereinafter referred to as

‘MMRDA’). It is an authority established under Mumbai

Metropolitan Region Development Authority Act, 1974 which

is mainly concerned with the Planning, Co-ordination and

Supervision of proper, orderly and rapid development of areas

in the Metropolitan Region of Mumbai. It is also under an

obligation to execute the plans, projects and schemes for such

development as well as matter connected therewith. The

petitioner – MMRDA is also the authority for implementing

Metro project i.e. Versova-Andheri-Ghatkopar Corridor Mass

Rapid Transit System (Metro project). This came to be

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planned by the State Government in order to absolve chaotic

conditions faced by users of public transport i.e. BEST buses

and local trains.

3 The respondent no.1 is the Fare Fixation

Committee constituted by second respondent – Union of India

in terms of Section 34 of the Metro Railway (Operation and

Maintenance) Act of 2002 {for short known as ‘Metro Act’}.

The first respondent was constituted by an order dated 7 th

April 2015 to determine the fares for Metro project.

Respondent no.3 is the State of Maharashtra which has

constituted/designated the petitioner as Project

Implementation Agency for Metro project. Respondent no.4 –

Mumbai Metro One Pvt.Ltd (for short known as MMOPL) is a

private company jointly incorporated by M/s.Reliance Ltd,

Veolia Transport S.A. and the MMRDA and are holding 69%,

5% and 26% shareholding respectively. The MMOPL is a

Special Purpose Vehicle (SPV) to undertake the business of

designing, building, operating and maintaining the Metro

project on Build, Own, Operate and Transfer (BOOT) basis,

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subject to and in accordance with the terms of the Concession

Agreement which came to be entered into between MMRDA

and MMOPL.

4 It is not in dispute that MMRDA as Implementing

Agency for Metro project came out with a Detailed Project

Report (DPR) providing for actual commencement of

operations in 2011, and stipulated that the Metro fares should

be fixed at 1.5 times the ordinary (Non Air-conditioned) BEST

bus fares. This corresponds to fare ranging between Rs.6 to

10 in 2011 to be revised by 11% every four years. The DPR

also estimated Ridership figures ranging from 5.66 lakhs per

day in 2011 to 12.06 lakhs passengers per day in 2041. An

international competitive bidding/global tenders came to be

invited by the MMRDA on 21st August 2004 by a notice. This

was an invitation for proposal of Metro Project on BOOT basis

subject to terms and conditions specified in the request for

proposals. The project was to be implemented on

Private/Public Partnership (PPP) basis. Some of the salient

features in the proposals were mentioned as under :

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(a) The Concession Agreement was to be for 35

years, including the construction period of five
years.

(b) The Metro was to operate on an East-West
corridor of 11.50 kms along 12 stations.

(c) The estimated Ridership was 5.66 lakhs per day
opening at the beginning in the year 2011 and
this was to enhance upto 12.06 lakhs per day at
the end of 30 years term in 2041 from 2011.

(d) The Bidders were, however, required to make
their own estimates of Ridership, financial and
other details.

(e) The initial fare was fixed between Rs.6 – 8 – 10
for the year 2003-04 and was subject to upward
revision by 11% at every four years.

(f) Each of the bidder was required to submit a
Detail Business Plan indicating arrangement of
finances, operation and maintenance plan,
sources and usage of the funds, projected
annual income statement, cash flow statement
etc.

5 The project/concession was to be awarded to the

qualified Bidder whose tender complied with the required

minimum capital contribution, funding – Viability Gap

Funding (VGF) subject to above fare terms.

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6 Apparently, amongst the other bidders, the fourth

respondent consortium comprising Reliance Energy Ltd and

Veolia Transport S.A on 10th January 2006 submitted its

complete business plan along with the bid. It is relevant to

mention that subject to all technical and commercial

considerations being fulfilled, the bidder who ever seeks

minimum finance contribution from MMRDA and the State, in

the form of Viability Gap Funding was to be considered for

the award of Concession Agreement. The Consortium bid

sought Rs.1251 crores which after several negotiations was

reduced to Rs.650 crores.

7 After evaluation of all the bids based on the

recommendations made by MMRDA, the State by resolution

dated 14th June 2006 awarded the concession to the

Consortium. A Letter of Intent dated 20 th June 2006 was

accordingly, issued to the Consortium.

8 On 7th March 2007, Reliance Comex was declared

as the successful bidder and MMRDA executed a Concession

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Agreement with their SPV – MMOPL for implementation for

Metro project on BOOT basis. By virtue of this Concession

Agreement, MMOPL was contractually required to levy and

collect fare from the users of Metro project only in accordance

with the Schedule – L i.e. Rs.6 – 8 – 11 for the year 2011 to be

enhanced by 11% every fourth year. It is not in dispute that

a provision was made for upward revision of the fare beyond

the stipulation in Schedule-L in the event of “any

unanticipated rise in the operating costs of the Metro project”.

9 The said Metro Project which was to be made

operational in the year 2011, was actually made operational

only in the year 2014 – 15. Apparently, a dispute between the

parties is pending for adjudication in arbitration between the

parties as to which of them is liable for delay and who should

bear the escalation in the project costs from estimate of

Rs.2356 crores as contemplated in the bid raised to Rs.4321

crores alleged to have been costed for completion of the

work. The independent consultant one Louis Burger

Consulting Pvt. Ltd in its independent final report dated 25 th

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September 2014 attributed various causes for the delay, as

claimed by MMOPL to the acts on omission and commission

on the part of MMOPL itself. However, the MMOPL disagrees

with the report and blames MMRDA for the delay.

10 A fare order determining the maximum fare which

could be charged from the rider using Metro system came to

be issued by the State on 3rd September 2013. In terms of this

order, as reflected in the Fare Schedule-L to the Concession

Agreement at Rs.6 – 8 – 10 for the year 2011 which has to be

enhanced by 11% every fourth year. Union of India by order

dated 18th November 2013 extended the application of the

Metro Act to the project which includes, inter alia, the

Constitution of a Fare Fixation Committee for the purpose of

recommending fare for carriage of passengers by Metro

Railway. In terms of Metro Act, MMOPL claims to have

become “Metro Railway Administration” as defined under the

Metro Act. MMOPL also assumes the right to determine the

initial fares under the Metro Act. A Meeting of Board of

Directors came to be held on 29th May 2014 wherein MMOPL

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sought to unilaterally revise or increase the initial fares

stipulated in the Concession Agreement from Rs.9 – 13 for the

year 2014-15 to Rs.10 – Rs.40/-. The Directors who were

nominated by MMRDA opposed and voted against the said

resolution.

11 As stated above, the commercial operation of the

Metro project commenced on 8th June 2014, and MMOPL

charged an introductory fare at Rs.10/- and achieved a

Ridership of 3.58 lakhs per day.

12 When unilateral enhancement in the initial fare

came to be made by MMOPL, a dispute arose between

MMRDA and MMOPL which came to be submitted to

arbitration. MMDRDA also initiated Arbitration Petition in

1096 of 2014 under the Arbitration and Conciliation Act,

1996, seeking interim relief restraining the implementations

of the resolution of the Board dated 29th May 2014, revision

of fares were unilaterally done.

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13 This petition came to be dismissed by learned

Single Judge on 24th June 2014. In the Appeal before the

Division Bench, MMOPL made a statement that it would

charge fare between Rs.10 to Rs.20 as an interim measure.

The Division Bench also ordered that the Union of India

should be impleaded, so also the State so as to direct the

expeditious constitution of FFC in terms of Section 34 of the

Metro Act. Ultimately, by an order dated 8th January 2015,

the Appeal came to be dismissed by the Division Bench.

14 SLP No.7034 of 2014 came to be filed wherein a

direction was given on 16th March 2015 for Constitution of

FFC for determination of fares by end of April 2015. This

period again came to be extended upto July 2015. However,

as an interim measure, MMOPL was given liberty to charge

increased fare, subject to condition that 50% of the

differential amount be deposited with the Registry of this

Court on weekly basis. This condition came to be modified

subsequently by order dated 7th August 2015. Since January

2015, MMOPL has been charging fares between Rs.10 to

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Rs.40. By a notification dated 7th April 2015, Union of India

constituted Fair Fixation Committee comprising of Mr.Justice

E. Padmanabhan (Retired), Mr.Justice P.K Vishwanathan

(Retired) and Mr.Jayanth Kumar Banthia (Ex. Chief

Secretary) in terms of Section 34 of the Metro Act to

recommend fare for Metro project. Apparently, in terms of

Section 37 of the Metro Act, recommendations made by FFC

is binding on the Metro Administration.

15 The FFC by order dated 30th April 2015, appointed

three experts bodies/committees i.e. Mr.G. Raghuram,.

Ramakrishna T.S, Prashanath Udayakumar of IIM,

Ahmedabad. The Welingkar Institute of Management and

Development and Research and thirdly Sanjeev Kumar

Lohiya, IRSE to assist FFC to arrive at the fares to be

recommended.

16 On 24th April 2015, MMOPL made an application

seeking revision of fares. MMRDA also made application/

responses on 7th May 2015 followed by 22 nd May 2015 and

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10th June 2016. The above said three Committees submitted

their reports. In addition to the three reports of three

different experts, a report from Price Water House, Cooper

Pvt.Ltd was also placed on record. After analyzing these

reports, the FFC came out with the impugned order dated 8th

July 2015.

17 In the impugned order, the majority members

comprises of Mr. Justice E.Padmanabhan (Retd.) and T.K.

Vishwanathan (Retd) have recommended fare revision from

Rs.9 to Rs.13 (as in the year 2014-15) to Rs.10 – Rs.110 from

the said year onwards. The minority member of the

Committee Mr. Jayanth Kumar Banthia has recommended

fare revision of Rs.18 – Rs.26. Aggrieved by the same,

MMRDA has filed the present Writ Petition challenging the

impugned decision of the FFC dated 8th July 2015.

18 Mr.Aspi Chinoy, learned Senior Counsel arguing

for the petitioner – MMRDA by referring to provisions of

Section 33 and Section 103 of Metro Act, contends that FFC

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has totally misinterpreted those provisions, and further argues

that, at the most, those provisions empowered FFC to

recommend the Metro fares. According to him, while

recommending Metro fares, FFC has to necessarily apply the

terms and conditions of Concession Agreement dated 7 th

March 2007 i.e. the rates and the formula for such revision.

According to him, FFC totally ignoring the terms and

conditions of Concession Agreement dated 7th March 2007,

and misconstruing the provisions of Metro Act, has arrived at

the impugned fare, and this amounts to excluding vital and

relevant considerations.

19 In the alternate, he submits that even though the

Concession Agreement may not be per se binding on the FFC,

nevertheless, the terms and conditions of Concession

Agreement which consists of vital and important relevant

material, ought to have been taken into consideration by the

FFC. To substantiate his contention, he brings to our notice

the DPR, RFP, and the Business Plan submitted by consortium

for the purpose of bidding process. Therefore, his main

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impetus is that FFC has unjustifiably excluded the terms and

conditions of Concession Agreement. According to Mr.Chinoy,

learned Senior Counsel for the petitioner, by excluding the

relevant material, as stated above, FFC has completely

destabilized the integrity of the tender process, by which the

consortium was awarded the contract for the Metro project.

He submits that only on the basis of the Business Plan,

consortium could secure the tender in their favour, especially

having considered the financial and technical issues

mentioned in the Business Plan. Therefore, the impugned

decision of the FFC would impact the terms and conditions of

the Concession Agreement and it amounts to totally ignoring

the binding effect of Concession Agreement, including the

term that during the tenure of the project, the tenderer will

charge from the commuters the fare at a specified rate,

including the revision of the fares as per the specified

formulae in the agreement.

20 In terms of DPR and tender documents, the fares

were fixed and only the ridership would vary. In other words,

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the bidder along with the private partner was to earn profits

by maintaining the fixed fares, but only through increased

ridership. Mr.Chinoy submits that this was the precise

manner in which the Metro project was conceived as a Mass

Rapid Transit System. The impugned decision, by which,

fares have been increased is by many folds compared to the

fares agreed between the parties. Therefore, this would

virtually deprive the public from the benefits of the Metro

project. According to him, if the impugned decision is

allowed, it would change the character of the project thereby

frustrating the very purpose of Metro project under which

several benefits in the form of VGF, public properties and

construction rights over the public properties came to be

granted to the project proponent. Mr.Chinoy submits that the

fares were to correspond to 1.5 times of ordinary, non-air

conditioned bus fares, but the recommended fares by the FFC

is 10 times more than such fares agreed under the terms of

Concession. Therefore, he contends that it deserves to be set

aside.

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21 To substantiate his contentions, Mr.Aspi Chinoy,

learned Senior Counsel brings out several facts, which

according to him, are irrelevant material taken into

consideration by FFC. In other words, according to him, it

appears that FFC was carried away and impressed by the

contentions brought before FFC by MMOPL that the fares

stipulated in the Concession Agreement were on the basis of

the fact that VGF would be Rs.1,251 crores, and the estimated

costs of the construction of the Metro project would be at

Rs.2356 crores. Mr.Chinoy submits that upon mutual

negotiation, the consortium reduced the VGF from Rs.1252

crores to Rs.650 crores. Since there is a serious dispute by

both the parties with regard to the fact who are responsible

for such delay and the quantum of costs overruns, as well as

reasons for such cost being overrun, the dispute between the

parties is pending adjudication in arbitration proceedings. In

the mean while, there was no justification for FFC to take into

consideration the facts and figures submitted by MMOPL. In

other words, according to learned Senior Counsel, there is no

admission of figures projected by the Project proponent

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holding MMRDA as responsible for the cost overruns.

Learned Senior Counsel Mr.Cninoy submits that this is

nothing but putting the cart before the horse, which would

cause immense detriment to the interest of the commuter

public.

22 Learned Senior Counsel also contends that the

impugned decision of the FFC is vitiated by non-application of

mind, failure to take into account relevant considerations, but

taking irrelevant considerations, therefore, it has led to

perversity in the order. Learned Senior Counsel brought to

our notice the details with reference to the opinion of the

experts in their reports with regard to the fares vis-a-vis

ridership, and contends that even such reports have been

misconstrued by FFC, and therefore, there are errors

apparent on the face of record. According to learned Senior

Counsel, FFC failed to notice that for the first eight years of

the operation of the Metro, MMOPL was not even expected to

make any profit or offer any returns to the stakeholders. The

impugned decision rather recommends exclusive and

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disproportionate fares which will change the very complexion

of the Metro project which is meant to be a Mass Rapid

Transit System.

23 Mr.Chinoy, learned Senior Counsel submits that

the FFC proceeds on the misdirection that the Metro project

was an ordinary Greenfield Commercial Project, and

therefore, its fare was required to cover all operational costs,

repayment of loan, depreciation, return of share holding etc.

right from the first year of its operation. He further submits

that because of FFC misdirecting itself to consider and realize

the above fact, and prompted the impugned decision in

arriving at the enhanced fare of Rs.9 to Rs.19 and Rs.10 to

Rs.110. According to Mr.Chinoy, most of the contentions

raised and most of the materials produced by MMRDA, in its

letter dated 7th May 2015 and 10th June 2015 are totally

ignored by FFC rather has proceeded to make its

recommendation based on irrelevant considerations like the

reduced offer of VGF and the cost overruns.

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24 According to learned Senior Counsel, the

impugned decision suffers from serious perversity since the

majority, while stating that lower average fare was being

recommended, has in fact, recommended a substantially

higher fare. Even in the brief reasoning, there are serious

contradictions that can be seen from the report of the

majority, is the stand of the learned Senior Counsel.

According to him, virtually the FFC ignored the

contributions made by the State and the MMRDA. Therefore,

for all these reasons, the impugned decision deserves to be set

aside on the grounds of perversity based on unreasonable

considerations. Mr. Chinoy further submits that the decision

has virtually offered a bonanza to MMOPL to charge

exorbitant fares, that too, on irrelevant considerations. He

pointed out that the fares are so exorbitant that even the

MMOPL in its pleadings has referred to them as "Tariff

shock", and resolved not to implement the same to the extent

recommended by the FFC. According to him, if it is left to

MMOPL to charge the fares from commuters at the

recommended rate, then the very public interest will be a

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causality since there might be no restraint upon MMOPL to

increase the fare upto the recommended rate at any time.

25 To substantiate his contention, that FFC is neither

an expert body, nor can its functions be regarded as legislative

in character, proceeds to rely on several decisions which are

referred to below, opining that FFC was dealing only with a

particular situation and a particular entity. He relied upon

(1) Union of India Vs. Cynamide India Ltd. Anr.

(1987) 2 SCC 720.

(2) Shri Sitaram Sugar Company Limited vs. Union of
India
(1990) 3 SCC 223

(3) Rohtas Industries vs. S.D. Agarwal
1969(1) SCC 325

(4) C.I.T. vs. Mahindra and Mahindra Limited
(1983) 4 SCC 392.

26 Mr.Chinoy submits that the principle of

Wednesbury unreasonableness, will have to be invoked in the

present situation, and the impugned decision has to be

interfered with.

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27 According to Learned Senior Counsel, Mr.Chinoy

that even if the impugned decision is regarded as legislative

or quasi legislative, judicial review applying the touchstone of

Wednesbury unreasonableness, is not ruled out. According

to him, since the impugned decision is vitiated by illegality

and irrationality and even procedural impropriety, it is a fit

case where the relevant considerations have been ignored by

taking into irrelevant considerations, therefore, Wednesbury

unreasonableness principle have to be applied.

28 According to him, the impugned decision is

nothing, but a decision without acquiring any authority, but

based on incorrect facts, rather than correct facts. Therefore,

according to him, if only correct principles could have been

applied, FFC would have arrived at a right conclusion. The

impugned decision, according to him, is manifestly

unreasonable and suffers from perversity. Therefore, on all

these grounds, judicial review is possible and permissible.

Therefore, it ought to be an exercise by interfering with the

impugned decision. Mr. Chinoy, after making his submission

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has also filed notes of arguments, re-iterating the above

contention and has sought the impugned decision to be

quashed and set aside.

29 Per contra, learned Senior Counsel Mr.Dwarkadas

arguing for MMOPL, at the outset, questions the locus standi

of MMRDA to maintain the present petition on the ground

that MMRDA being a joint venture partner in MMOPL having

stakes of 26% equity shares, and therefore, contends that as a

shareholder, MMRDA has no right whatsoever, in law to

challenge the actions of MMOPL, unless such challenge is

based on the provisions of Companies Act of 1956. According

to him, a shareholder can speak only through the Company as

its member. It is further contended that once Metro Act came

into existence, MMRDA ceases to be an implementation

agency. Therefore, for want of locus standi, petition deserves

to be dismissed, is the stand of MMOPL. Reliance is plased on

Daman Singh Vs. State of Punjab 1 to substantiate the above

contention.

1 (1985) 2 SCC 670

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30 It is argued that under the RFP, it was accepted

that project of this magnitude requires joint efforts by all the

persons concerned. Minimum assistance from the MMRDA by

way of financial contribution if required during the period of

construction of the Metro project is envisaged. This was for

the purpose of assessment of type of assistance. Form 29

prescribed the financial proposal. The financial proposal in

Format 29 is entirely different from the business plan referred

to by the MMRDA, therefore, according to the learned Senior

Counsel Mr.Dwarkadas, Business Plan was not at all required

and relevant for the purpose of evaluation of the bids or

determining the award of contract.

31 The contract was to be awarded solely on the

basis of the quantum of financial assistance required by the

bidder or the VGF expected by the bidder from the MMRDA

or the State. According to learned counsel, from reading of

clause 27(3) of the RFP, this is clear. Therefore, Mr.

Dwarkadas contends that repeated reference made by

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learned Senior Counsel Mr.Chinoy to the Business Plan is

nothing but misplaced argument since the business plan or

the projections therein are totally irrelevant, so far as not only

with regard to bid evaluation process, but also the fare

determination made by FFC.

32 Learned Senior Counsel Mr.Dwarkadas further

submits that in fact, the consortium had sought for VGF of

Rs.1251 crores as against the estimation of the cost of the

project at Rs.2356 crores. However, for reasons which are

entirely attributable to the MMRDA, the construction of

project was delayed thereby the cost of the construction also

rose to Rs.4260 crores.

33 Learned Senior counsel further points out that the

consortium upon negotiation reduced the VGF demand to

Rs.650 crores from Rs.1251 crores. This was agreed because

of the assurances given by the MMRDA that it would support

a very aggressive construction schedule, high traffic forecast

and aggressive financing work. He further contends that

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there was strong assurance of timely handing over of the site,

grant of all statutory clearances in a time bound manner. To

substantiate his contention, Mr.Dwarkadas refers to

communication dated 10th May 2006 addressed by

consortium indicating several conditions which were to be

adhered to by the MMRDA and the reasons for increase in the

construction cost rising upto Rs.4026 crores. According to

him, none of these conditions were complied with by

MMRDA. According to Mr.Dwarkadas, mere extension of time

for completion of the construction and the fact of not

choosing to opt for cancellation of the contract or imposition

of any penalties would suggest that MMRDA is well aware of

the delay in completion of the project was attributable to

deficits on the part of MMRDA and not the consortium. He

refutes the contention raised by petitioners that there is an

obligation to abide by Business Plan submitted by the

consortium at the time of the bid and the same to be taken

into consideration by FFC.

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34 According to learned Senior Counsel

Mr.Dwarkadas taking into consideration the changed

circumstances as detailed above, it was neither fair, nor

proper to restrict MMOPL to the schedule of the fares set out

in the Concession Agreement dated 7th May 2007. According

to him, by extension of the Metro Act, the fares stipulated in

the Concession Agreement lapses,. and the same are

completely irrelevant so far as determination of fares by FFC.

35 According to him, even assuming that the RFP, the

Business Plan and the Concession Agreement have some

relevancy to the issue of fare determination by the FFC

(which, according to him are not applicable because of

extension of Metro Act), he contends that MMRDA is bent

upon misleading and misconstruing the scope and ambit of

the documents. According to him, there is nothing binding in

the Business Plan which suggest that Metro project was to run

at a loss for the first 8 years since its operation. According

to him, the Business Plan always envisaged that there would

be enough cash surplus at the end of each financial year and

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that is the reason why the project was regarded as bankable

and viable one. He submits that such a cash surplus is

absolutely necessary to cover the operating cost part,

repayment of the principle loan amount borrowed, interest

and other such matters.

36 Mr.Dwarkadas, by referring to certain passengers

from the book "Public-Private Partnership Projects in

Infrastructure - An Essential Guide for Policy Makers" by

Jeffrey Delmon, a Senior Infrastructure Specialist at the

World Bank in Washington D.C. submits that government

support is key to commercial viability in PPP Project.

Mr.Dwarkadas also contends that unbankable or unviable

project is contrary to the very concept of PPP Project.

Therefore, according to him, for all these reasons, the

MMRDA cannot bank upon the DPR, RFP, Business Plan or the

Concession Agreement. He relies upon Section 103 of the

Metro Act to contend that said provision would render all

such instruments/agreements inapplicable since they are

irrelevant to the issue of the fixation of fare to be determined

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by the FFC. He strenuously contends that several clauses in

the Concession Agreement cannot be relied upon since the

position has undergone a sea-change for act of omissions and

commission solely attributable to MMRDA.

37 According to Mr.Dwarkadas, there is

overwhelming material on record in the form of balance-sheet

and other material establishing that estimated cost of the

construction of Rs.2356 escalated to Rs.4026 crores. The

balance-sheets have been approved by Board of Directors of

MMOPL which includes atleast three nominee Directors of

MMRDA, is the stand of Mr.Dwarkadas. The balance-sheet of

MMOPL is said to have been audited by one of the reputed

four accounting firms i.e. M/s.Deloitte Haskins Sells LLP.

Therefore, according to Mr.Dwarkadas, the fares have to be

determined on the basis that MMOPL incurred additional cost

of construction, or at escalated cost, for which they are

required to be suitably compensated if the Metro Project is to

remain bankable or viable.

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38 It is also contended that there is ample material

on record which establishes that the escalation of cost of

construction was primarily attributable to the MMRDA on

account of various breaches committed by MMRDA so far as

terms of Concession Agreement such as delay in handing over

the site, delay in providing right of way, failure to provide

agreed area of land for putting up the construction yard, etc.

Mr.Dwarkadas further points out that MMOPL has also made

a claim for Rs.1939 crores against MMRDA, and the said

claim is pending for consideration before the arbitrators.

39 Mr.Dwarkadas, learned Senior Counsel further

points out that though the MMRDA supports dissenting

report of one Jayant Kumar Banthia, both majority as well

as minority reports accepts and proceed on the basis that

the construction costs have escalated to Rs.4000 crores. Even

the experts appointed by the FFC have verified the same and

have opined indeed that the cost of construction was

escalated to Rs.4000 crores or so. Therefore, according to

Mr.Dwarkadas, the FFC was entirely justified in determining

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the fares based on the escalated costs of construction from

Rs.2356 crores to Rs.4000 crores. Therefore, according to

him, the moment said escalation is accepted, fundamental

assumptions and presumptions set out in the Concession

Agreement cannot apply, and under no circumstances

MMOPL can be tied down to the fares stipulated in the

Concession Agreement.

40 Mr.Dwarkadas further submits that it is nothing

but a misconception to connect the rate of fares to the

ridership. According to him, there is no material either to

support or sustain the nexus between the fares and the

ridership. He submits that even though the impugned

decision permits fares ranging between Rs.10 to Rs.110, the

MMOPL has made it clear that it does not intend to give any

shock so far as tariff is concerned to the commuters/riders

and therefore, for the time being, it desires to increase the

fares from the present rate of Rs.10:20:30:40 to

Rs.10:20:25:35:45. He refers to paragraph no.19 of MMOPL's

affidavit in reply at page 1773 of the paper book for this

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purpose. According to learned Senior Counsel, the admission

of nexus between the fares and the higher ridership

contended by the petitioner is totally a misplaced concept,

since low fares would result in higher losses and higher cash

deficit, even assuming that the ridership would be double

from the existing position. According to him, the experts did

consider all these aspects while proposing the enhanced fares.

The FFC, according to him, preferred the rates which will

cause minimum prejudice to the commuters so that there is

no tariff shock. Mr.Dwarkadas further contends that there is

no unreasonableness or perversity so far as the impugned

decision of the committee while fixing the fares.

41 According to him, the contention of MMRDA that

the Metro is not operating as a Mass Rapid Transit System, is

totally incorrect. He refers to the meaning of the word

"Mass" from the dictionary to mean a large volume of

commuters. According to learned senior counsel, the material

on record establishes that on an average week day ridership

from August 2016 is about 3.5 lakh per day. To run the

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project as a Mass Rapid Transit System, this quantity of

ridership is more than sufficient. Therefore, there is neither

any intention nor any possibility of the project ceasing to

operate as a Mass Rapid Transit System. Mr.Dwarkadas

further contends that MMRDA is misinterpreting the

impugned decision as well as the reports of the experts.

Because of such misinterpretation, the MMRDA is arriving at

an argument of perversity. On the other hand, according to

Mr.Dwarkadas, upon proper construction of the impugned

decision and the reports of the expert, it is apparent that

neither there is perversity, whatsoever involved in the

impugned decision nor absurdity. Mr.Dwarkadas, referring

to the four reports submitted before the FFC attempts to

explain the correct interpretation of the reports of the said

note.

42 According to Mr.Dwarkadas, in terms of Union of

India Vs. Cynamide India Ltd. (supra) and Shri Sitaram

Sugar Company Limited vs. Union of India (supra), the

scope of judicial review in such matters is extremely limited.

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Since the impugned decision of FFC is based upon reports of

experts, scope of judicial review is further limited, since the

Court, in a matter of this nature should always defer to the

opinion of the experts rather than interpreting the same.

Mr.Dwarkadas submits that fare fixation is legislative in

character and the FFC was not even obliged to give reasons in

its impugned decision. In any case, since cogent reasons are

backing the decision, i.e. the reports of experts, there is no

scope for exercising judicial review. Learned Senior Counsel

also places on record notes of arguments in support of

impugned decision.

43 In order to address the controversial issue, it

would be proper to know the salient features of Metro Act,

and the scheme in the said Act. Originally, the Metro Act was

titled as "The Delhi Metro Railway (Co-operation and

Maintenance Act) Act of 2002". This Act was enacted by

Parliament for the purpose of regulating the working of the

Metro Railway in the National Capital Region, apart from

indicating provisions for operation and maintenance of the

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same. Apart from National Capital Region, it also provided

operation and maintenance of Metro Railways in

Metropolitan Area for all the matters connected therewith

and incidental thereto. The Act came into force with effect

from 29th October 2002.

44 An Amendment came to be brought in 2009

known as "Metro Railways" (Amendment Act of 2009). The

short title came to be made by referring to the same as "Metro

Act of 2002". Sub-Section (2) of Section 1 provides that the

Act extends in the first instance to the National Capital

Region and by way of notification, the Central Government,

may, after consultation with the State Government extend the

Act to such other Metropolitan area and Metropolitan city,

except the Metropolitan City of Kolkatta. It further says from

what date, such act comes into effect in the Metropolitan area

and Metropolitan city, shall be specified in the notification

and the provisions of the Act will apply to that Metropolitan

area and Metropolitan city accordingly.

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45 So far as Metro area of Mumbai, the Central

Government, after consultation with the State Government,

by Notification dated 16th October 2009 declared that the

Metro Act shall extend to the Metropolitan area of Mumbai,

Maharashtra with effect from date of publication of the

Notification in the Official Gazette, i.e. 16th October 2009.

46 Section 2 of the Metro Act refers to definitions

and Section 2(e) defines the meaning of 'fare'. According to

section 2(e), 'fare' means the charge levied for the carriage of

the passengers. Section 2(f) defines 'Government Metro

Railway' to mean Metro Railway owned by the Central

Government. The term 'Non Government Metro Railway' is

defined in section 2(l) to mean a Metro Railway other than a

non-government metro railway. The term 'Metro Railway' is

itself defined in section 2(i). The term 'Metro Railway

Administration' is defined in section 2(j) to mean in relation

to Government Metro Railway means the General Manager of

that Railway; or in relation to a 'Non Government Metro

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Railway' means the person who is the owner or the lessee of

that Metro Railway, or the person working at Metro Railway

under an arrangement with the owner or lessee of that Metro

Railway.

47 Chapter VII of the Metro Act deals with 'Fare

Fixation' issue. Section 33 provides that the Metro

Administration shall, from time to time, on recommendations

made by the FFC constituted under the Act can fix the fares

for the carriage of passengers for travelling from one Metro

Railway Station to another. Provided that the Metro Railway

Administration may fix the fare under this section without the

recommendation of the FFC on the initial opening of the

Metro Railway. Section 34 prescribes how the Constitution of

the FFC is made. Section 35 deals with the terms and

conditions as well as the procedure to be followed by the

FFC. Section 36 provides that the FFC shall submit its report

along with its recommendations to the Metro Railway

Administration within such period not exceeding three

months, as may be specified by order made by the Central

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Government. Section 37 provides that the recommendations

made by the FFC shall be binding on the Metro Railway

Administration. Section 103 of the Metro Act provides that

the provisions of the Act shall have effect notwithstanding

inconsistent therewith contained in any enactment other than

the Metro Act, or in any instrument having effect by virtue of

any enactment other than the Act.

48 With the above provisions on hand, we have to

now analyze how FFC report per majority recommended the

fares which led to the impugned decision. The decision is

divided into two. The majority report of Mr.Justice

E.Padmanabhan, Chairperson and T.K. Vishwanathan,

Member which recommended the fares at Rs.10 to Rs.110.

The minority report of Jayanth Kumar Banthia, Member

recommended fare at Rs.18 - Rs.26. As stated above, in

terms of Section 37 of the Metro Act, the recommendations of

the FFC shall be binding on Metro Railway Administration.

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49 At paragraph nos.1 and 2 of the report of the

majority, it makes brief reference to the circumstances in

which the FFC came to be constituted under the Metro Act.

Paragraphs 3 to 8 of the majority report contains material

placed on record by MMOPL and contentions of MMOPL in

support of revision of Metro fares. At paragraph 9, the

majority has observed that a fine balance between the

affordability and the business viability needs to be carefully

evolved. Paragraph 10 refers to public hearings and aspects

to which such public hearings relates to. Paragraph 11 of the

majority report observed that the different persons appeared

before FFC, barring one or two, expressed that for services of

Mumbai Metro, they are willing to pay a higher fare as it

deserves. According to them, the value proposition and the

reduction of traffic congestion along the corridor is

appreciable and there is every justification for the Mumbai

Metro to be operated on self sustainable basis, and they are

agreeable for a revision of fares.

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50 The majority report, again records the contention

of Mumbai Metro that the payment ability of user is one of

the most important factor, rather key factor, to be taken into

consideration. In paragraphs thereafter, especially paragraphs

13 and 14, the majority opined as under :

13. Hence, affordability of the facility is governed
by the ability to pay, willingness to pay by the
commuters across the metro alignment. The
commuters were interviewed by the Welingkar
Institute (independent expert appointed by the Fare
Fixation Committee) on several days throughout
the corridor and it has been reported by the said
experts that the commuters are willing for a
upward revision of the Fare.

14. In other words the commuters belong to a
particular section of the society living along those
who travel from the adjacent railways suburban
systems operated by Western and Central Railways.

They enjoy various conveniences while traveling by
Mumbai Metro, such as air-conditioning, lifts,
escalators, hygiene, cleanliness, toilets, etc being
maintained at top model as against pitiable
conditions prevailing in suburban railways. Being a
prime service, the commuters who belong to a
special class among the common public have a level
of affordability and are willing to pay fares which is
commensurate with the efficiency of service,
security, punctuality, on time availability,
cleanliness, etc. which they get by operations of
Mumbai Metro. The other transport facilities along
the corridor are rather inaccessible and costlier

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also. Ac bus operation is a rarity along the corridor
but only ordinary Non-AC BEST buses are being
operated apart from auto rickshaws and taxis. The
prevailing fare of AC buses in Mumbai,
Autorickshaws and Taxis is as under:

Sl. Mode of Transport                 Fares (Rs)

1. AC BEST Buses Rs.30 to Rs.100 Along the
corridor

2. Autorickshaws Rs.18 to Rs.201 Along the
corridor

3. Taxi (Non Ac) Rs 22 to Rs.245 Along the
corridor

51 At paragraphs 16 and 17 of the majority report,

they briefly make a comparison between the fares of BEST

Buses and fares charged by Delhi Metro Railway Corporation

(DMRC). The distinction drawn is that the BEST fares are

gross subsidized and financing, and scale of operation at

DMRC are entirely on a different footing.

52 Paragraphs 17 and 18 of the report refers to

appointment of three experts (agencies) as well as the report

submitted by Price Water House Corporation Private Limited

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(PWC). In paragraph 19, it states that after the reports were

placed on record by the experts, the FFC Members discussed

and analyzed the same amongst themselves. In this

paragraph, FFC specifically mentions that whilst assessing the

requirement for fare revision, they took into consideration the

following:

        (1)      Entire spectrum of Project cost;

(2) Equity, return on investments

(3) Servicing of debts ;

(4) operation costs, etc.;

(5) Present traffic and collection of the fare for the
past few months.

53 In paragraph 21, there is a general observation

that in any public utility transport project, it is very difficult to

satisfy every sector, and there is bound to be certain amount

of hue and cry from various sectors, including press and

political parties.

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54 In paragraph 22 of the report, certain measures

are suggested to improve the Metro Project including increase

in non-fare box revenue, and provision of operational subsidy

from the Government. However, the majority report, in terms

admits that any recommendation as to such measures "will

not fall within the purview of Fare Fixation Committee".

55 At paragraph 23 of the report of the majority, they

expressed inability to accept the fare revision formula

suggested by MMOPL "as it requires a thorough study of the

formula, and more so, in the absence of any guidelines laid

down under the Metro Railway (Operation and Maintenance)

Act, 2002 for fare fixation."

56 The only reasoning or discussion, if at all, set out

it is mentioned in paragraphs 24, 25 and 26 of the majority

report which reads as follows:

"24. We have considered the reports submitted by the
four expert committees. In terms of reports we find
that they have suggested higher average Fare.

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However, we are fixing the fare hereunder, which
works out to be a lower average Fare than the average
Fare suggested by the four expert committees. Even
after this revision, as set out below, Mumbai Metro will
not be able to break-even and they will sustain loss on
a day to day basis, which would have a far reaching
effect on its finances and operations in due course. In
our considered view, the Mumbai Metro One should at
least be sustainable for the time being not to speak of
return on equity which on a long term basis be able to
earn 17% (post-tax Equity IRR) and it should be in a
position to absorb the shock of loss for some more time
till traffic increases considerably. If the Mumbai metro
turns the corner and makes a profit, it is definitely
open to the Mumbai Metro One Private Limited to pay
dividends to the investors depending upon the income
at that stage and not immediately. The Mumbai
travelling public/commuters expecting convenience,
facilities, punctuality and top ranking operations,
should be ready to sacrifice and should not mind
paying revised fares, otherwise they will have to lose
the Mumbai Metro One facility and convenience of
Mumbai Metro once and for all.

25. There are twelve stations in Mumbai Metro one
with ten intermediate stations placed equidistance
approximately. We fix the Fare at Rs.10 for commuting
from one station to the next station and the said rate of
Rs.10 is to be multiplied by number of stations one
commuters in either direction and such fare shall be
applicable for either direction.

26. In our considered view and an analysis of the
entire materials placed before us including the report
of three expert agencies and the details/statistics etc
placed before the fare fixation committee we have no

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hesitation to fix the above Fare. We are also conscious
of the fact any sharp upward revision will have a far
reaching effect on the operations of the Mumbai Metro
as well as the commuters who travel.

57 Paragraphs 27 to 30 of the majority report records

that Mr.Jayant Kumar Banthia has taken a different view,

MMOPL is at liberty to fix different rates for peak hours and

non-peak hours; MMOPL may consider even giving

concession to the differently abled persons, school going

children etc.. Finally, in paragraph 30, the FFC makes notes

that under section 33 of the Metro Act, there is no necessity

for prescribing guidelines indicating the factors to be taken

into consideration by FFC, so that this will facilitate the task

of the FFC in future. By way of illustration, the majority

report makes reference to factors like rate of return to

investment, affordability to the public etc. The conclusion is

recorded in paragraph 31, which reads as follows:

"31. Conclusion: In terms of the majority
members of the Fare Fixation Committee, the Fare
is fixed as under:

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"Fare is fixed at Rs. 10 for commuting from one station
to the next station and the said rate of Rs.10 is to be
multiplied by number of stations one commutes in
either direction and such fare shall be applicable for
either direction. "

58 The dissenting report submitted by Mr. Jayant

Kumar Banthia, Retired Chief Secretary of Government of

Maharashtra is appended to the report of the majority of the

FFC. As stated above, the dissenting report of the minority

recommended the fares from Rs.18 to 26.

59 The next question which would fall for our

consideration is what is the scope of judicial review in the

present situation ? Learned Senior Counsel on both the sides

raises several contentions on the scope of judicial review so

far as Fare Fixation order. For this, one has to evaluate the

rival contentions. According to Mr.Chinoy, learned Senior

Counsel, the impugned decision is quasi-judicial or, at the

most, it can come under the category of quasi-legislative. For

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this proposition, he placed reliance in Associated Provincial

Picture Houses Limited vs. Wednesbury Corporation1.

60 Per contra, Mr.Dwarkadas, another Senior Counsel

arguing for respondent no.4 (MMOPL) submits that exercise

of Fare Fixation is purely legislative so far as its nature, and

therefore, the scope of judicial review is extremely limited.

He further submits that the impugned decision is backed by

the reports of experts, and therefore, the Court must defer to

the opinion of the experts in a matter of this nature. As

already stated above, for this proposition, he placed reliance

in the case of Cynamide (supra), so also Sitaram Sugar

(supra).

61 Since both learned counsel placed reliance on

Cynamide (supra) and Sitaram Sugar (supra), it would be just

and proper to extract certain passages which are relevant for

the present case, and for the purpose of convenience, relevant

paragraphs are referred herein :

1(1947) 2 ALL E.R. 682

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62 In Cynamide (supra), reliance was placed on

certain passages in paragraphs, 4, 5, 7 and 27.

"4. We start with the observation, "Price
fixation is neither the function nor the forte of the
court". We concern ourselves neither with the
policy nor with the rates. But we do not totally
deny ourselves the jurisdiction to enquire into the
question, in appropriate proceedings, whether
relevant considerations have gone in and
irrelevant considerations kept out of the
determination of the price. For example, if the
legislature has decreed the pricing policy and
prescribed the factors which should guide the
determination of the price, we will, if necessary,
enquire into the question whether the policy and
the factors are present to the mind of the
authorities specifying the price. But our
examination will stop there. We will go no further.
We will not deluge ourselves with more facts and
figures. The assembling of the raw materials and
the mechanics of price fixation are the concern of
the executive and we leave it to them. And, we
will not re-evaluate the considerations even if the
prices are demonstrably injurious to some
manufacturers or producers. The court will, of
course, examine if there is any hostile
discrimination. That is a different "cup of tea"
altogether.

5. The second observation we wish to make is,
legislative action, plenary or subordinate, is not
subject to rules of natural justice. In the case of
Parliamentary legislation, the proposition is self-

evident. In the case of subordinate legislation, it
may happen that Parliament may itself provide for
a notice and for a hearing -- there are several

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instances of the legislature requiring the
subordinate legislating authority to give public
notice and a public hearing before say, for
example, levying a municipal rate -- in which
case the substantial non-observance of the
statutorily prescribed mode of observing natural
justice may have the effect of invalidating the
subordinate legislation. The right here given to
rate payers or others is in the nature of a
concession which is not to detract from the
character of the activity as legislative and not
quasi-judicial. But, where the legislature has not
chosen to provide for any notice or hearing, no
one can insist upon it and it will not be
permissible to read natural justice into such
legislative activity.

7. The third observation we wish to make is,
price fixation is more in the nature of a legislative
activity than any other. It is true that, with the
proliferation of delegated legislation, there is a
tendency for the line between legislation and
administration to vanish into an illusion.
Administrative, quasi-judicial decisions tend to
merge in legislative activity and, conversely,
legislative activity tends to fade into and present
an appearance of an administrative or quasi-
judicial activity. Any attempt to draw a distinct
line between legislative and administrative
functions, it has been said, is "difficult in theory
and impossible in practice". Though difficult, it is
necessary that the line must sometimes be drawn
as different legal rights and consequences may
ensue. The distinction between the two has
usually been expressed as "one between the
general and the particular". "A legislative act is
the creation and promulgation of a general rule of
conduct without reference to particular cases; an
administrative act is the making and issue of a

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specific direction or the application of a general
rule to a particular case in accordance with the
requirements of policy". "Legislation is the process
of formulating a general rule of conduct without
reference to particular cases and usually operating
in future; administration is the process of
performing particular acts, of issuing particular
orders or of making decisions which apply general
rules to particular cases." It has also been said:
"Rule-making is normally directed toward the
formulation of requirements having a general
application to all members of a broadly
identifiable class" while, "an adjudication, on the
other hand, applies to specific individuals or
situations". But, this is only a broad distinction,
not necessarily always true. Administration and
administrative adjudication may also be of
general application and there may be legislation
of particular application only. That is not ruled
out. Again, adjudication determines past and
present facts and declares rights and liabilities
while legislation indicates the future course of
action. Adjudication is determinative of the past
and the present while legislation is indicative of
the future. The object of the rule, the reach of its
application, the rights and obligations arising out
of it, its intended effect on past, present and
future events, its form, the manner of its
promulgation are some factors which may help in
drawing the line between legislative and non-
legislative acts. A price fixation measure does not
concern itself with the interests of an individual
manufacturer or producer. It is generally in
relation to a particular commodity or class of
commodities or transactions. It is a direction of a
general character, not directed against a particular
situation. It is intended to operate in the future. It
is conceived in the interests of the general
consumer public. The right of the citizen to obtain

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essential articles at fair prices and the duty of the
State to so provide them are transformed into the
power of the State to fix prices and the obligation
of the producer to charge no more than the price
fixed. Viewed from whatever angle, the angle of
general application, the prospectiveness of its
effect, the public interest served, and the rights
and obligations flowing therefrom, there can be
no question that price fixation is ordinarily a
legislative activity. Price fixation may occasionally
assume an administrative or quasi-judicial
character when it relates to acquisition or
requisition of goods or property from individuals
and it becomes necessary to fix the price
separately in relation to such individuals. Such
situations may arise when the owner of property
or goods is compelled to sell his property or goods
to the Government or its nominee and the price to
be paid is directed by the legislature to be
determined according to the statutory guidelines
laid down by it. In such situations the
determination of price may acquire a quasi-
judicial character. Otherwise, price fixation is
generally a legislative activity. We also wish to
clear a misapprehension which appears to prevail
in certain circles that price fixation affects the
manufacturer or producer primarily and therefore
fairness requires that he be given an opportunity
and that fair opportunity to the manufacturer or
producer must be read into the procedure for
price fixation. We do not agree with the basic
premise that price fixation primarily affects
manufacturers and producers. Those who are
most vitally affected are the consumer public. It is
for their protection that price fixation is resorted
to and any increase in price affects them as
seriously as any decrease does a manufacturer, if
not more.

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27. We are unable to agree with the submissions
of the learned counsel for the respondents either
with regard to the applicability of the principles of
natural justice or with regard to the nature and
the scope of the enquiry and review contemplated
by Paras 3 and 27. While making our preliminary
observations, we pointed out that price fixation is
essentially a legislative activity though in rare
circumstances, as in the case of a compulsory sale
to the Government or its nominee, it may assume
the character of an administrative or quasi-
judicial activity. Nothing in the scheme of the
Drugs (Prices Control) Order induces us to hold
that price fixation under the Drugs (Prices
Control) Order is not a legislative activity, but a
quasi-judicial activity which would attract the
observance of the principles of natural
justice..........."

63 In the case of Cynamide, the issue was with price

fixation under the Drugs (Prices) Control Order of 1979. This

order is relatable to the Essential Commodities Act of 1955.

The Supreme Court, after opining that the price fixation is

neither the function nor the forte of the Court proceeds to say

that the Courts do not totally deny themselves jurisdiction to

enquire into question, in appropriate proceedings, whether

relevant considerations have gone in and irrelevant considerations

are kept out of the determination of the price. The

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Supreme Court has also cleared the misconception prevalent

in certain circles that price fixation affects a manufacturer or

producer primarily, and therefore, fairness requires affording

opportunity to such manufacturer or producer. The Supreme

Court has further held that those who are most vitally

affected in such matters are the consumer public. It is their

protection that price fixation is resorted to, and any increase

in price would affect them as seriously as any decrease would

affect a manufacturer. It is important to note that most of the

observations in Cynamide (supra) were made in the context

of insistence on the part of manufacturers or producers of

drugs that price fixation of drugs without the compliance with

principles of natural justice and fair play was ultra vires,

arbitrary and unconstitutional. The said contention was

rejected by the Apex Court on the above basis. The

observations made in Cynamide (surpa), by the Apex Court

at paragraph 7 are very relevant. It proceeds to explain in

what circumstances price fixation is regarded as legislative in

character, and under what circumstances, it can assume the

character of administrative or quasi judicial. The Apex Court

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further observed that price fixation measure does not concern

with the interests of the individual manufacturer or producer.

It is generally in relation to a particular commodity or class of

commodities or transactions. It is in the nature of a general

character, not directed under any particular situation. The

intention is very clear that it has to operate in the future. It is

conceived in the interest of the general consumer public. The

right of the citizen to obtain essential articles at fair prices,

and the duty of the State to so provide them are transformed

into the power of the State to fix prices, and the obligation of

the producer to charge no more than the price fixed. The

Supreme Court then further observes that price fixation may

occasionally assume the character of administrative or quasi-

judicial especially when it relates to acquisition or requisition

of goods or property from individuals, and it becomes

necessary to fix the price separately in relation to such

individuals.

64 Such situations may arise when the owner of

property or goods is compelled to sell his property or goods to

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the Government or its nominee and the price to be paid is

directed by the legislature to be determined in accordance

with the statutory guidelines laid down by it. In such

situations, the determination of price may acquire the nature

of quasi-judicial character. Otherwise, price fixation is

generally a legislative activity. The Supreme Court, in this

paragraph itself, opines that the contention that price fixation

primarily affects the manufacturer or producer, is not correct.

Those who are most vitally affected are the consumer public.

It is for their protection that price fixation is resorted to, and

any increase in price affects them as seriously as any decrease

does a manufacturer, if not more.

65 So far as Sitaram Sitaram Sugar (supra), reliance

was placed on certain passages in paragraphs 44, 45, 48, 49,

50, 51, 52, 56, 57 and 58, which read as follows :

"44. The individual orders, calculating the
"amounts" payable to the individual producers,
being administrative orders founded on the
mechanics of price fixation, they must be left to
the better instructed judgment of the executive,

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and in regard to them the principle of audi
alteram partem is not applicable. All that is
required is reasonableness and fair play which are
in essence emanations from the doctrine of
natural justice as explained by this Court in A.K.
Kraipak vs. Union of India. See also the
observation of Mukharji, J. as he then was, in
Renusagar. (at SCC p.105).

"45. Price fixation is in the nature of a legislative
action even when it is based on objective criteria
founded on relevant material. No rule of natural
justice is applicable to any such order. It is
nevertheless imperative that the action of the
authority should be inspired by reason: Saraswati
Industrial Syndicate Ltd. [at SCR pp. 961, 962;
SCC p. 636, para 13]. The government cannot fix
any arbitrary price. It cannot fix prices on
extraneous considerations: Renusagar.

48. The doctrine of judicial review implies that
the repository of power acts within the bounds of
the power delegated and he does not abuse his
power. He must act reasonably and in good faith.
It is not only sufficient that an instrument is intra
vires the parent Act, but it must also be consistent
with the constitutional principles: Maneka Gandhi
v. Union of India (SCC pp. 314-15).

49. Where a question of law is at issue, the court
may determine the rightness of the impugned
decision on its own independent judgment. If the
decision of the authority does not agree with that
which the court considers to be the right one, the
finding of law by the authority is liable to be
upset. Where it is a finding of fact, the court
examines only the reasonableness of the finding.

When that finding is found to be rational and

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reasonably based on evidence, in the sense that all
relevant material has been taken into account and
no irrelevant material has influenced the decision,
and the decision is one which any reasonably
minded person, acting on such evidence, would
have come to, then judicial review is exhausted
even though the finding may not necessarily be
what the court would have come to as a trier of
fact. Whether an order is characterized as
legislative or administrative or quasi-judicial, or,
whether it is a determination of law or fact, the
judgment of the expert body, entrusted with
power, is generally treated as final and the judicial
function is exhausted when it is found to have
"warrant in the record" and a rational basis in
law: See Rochester Tel. Corp. v. United States. See
also Associated Provincial Picture Houses Ltd. v.
Wednesbury Corporation.

50. As stated by Lord Hailsham of St.
Marylebone L.C. (HL) in Chief Constable of the
North Wales Police v. Evans:

"The function of the court is to see that lawful
authority is not abused by unfair treatment and
not to attempt itself the task entrusted to that
authority by the law.... The purpose of judicial
review is to ensure that the individual receives fair
treatment, and not to ensure that the authority,
after according fair treatment, reaches on a matter
which it is authorized by law to decide for itself a
conclusion which is correct in the eyes of the
court".

In the same case Lord Brightman says:

"Judicial review, as the words imply, is not an
appeal from a decision, but a review of the
manner in which the decision was made."

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51. A repository of power acts ultra vires either
when he acts in excess of his power in the narrow
sense or when he abuses his power by acting in
bad faith or for an inadmissible purpose or on
irrelevant grounds or without regard to relevant
considerations or with gross unreasonableness.
See Associated Provincial Picture Houses Ltd. v.
Wednesbury Corporation. In the words of Lord
Macnaghten in Mayor C. Westminster
Corporation v. London and North Western
Railway.

"....It is well settled that a public body
invested with statutory powers such as those
conferred upon the corporation must take care not
to exceed or abuse its powers. It must keep within
the limits of the authority committed to it. It must
act in good faith. And it must act reasonably. The
last proposition is involved in the second, if not in
the first."

In Barium Chemicals Ltd. v. Company Law Board,
this Court states: (SCR pp. 359-60, per Shelat, J.)

".... Even if (the statutory order) is passed in
good faith and with the best of intention to
further the purpose of the legislation which
confers the power, since the authority has to act in
accordance with and within the limits of that
legislation, its order can also be challenged if it is
beyond those limits or is passed on grounds
extraneous to the legislation or if there are no
grounds at all for passing it or if the grounds are
such that no one can reasonably arrive at the
opinion or satisfaction requisite under the
legislation. In any one of these situations it can
well be said that the authority did not honestly

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form its opinion or that in forming it, it did not
apply its mind to the relevant facts."

In Renusagar, Mukharji, J., as he then was, states:
(SCC p. 104, para 86)
"The exercise of power whether legislative
or administrative will be set aide if there is
manifest error in the exercise of such power or the
exercise of the power is manifestly arbitrary.
Similarly, if the power has been exercised on a
non-consideration or non-application of mind to
relevant factors the exercise of power will be
regarded as manifestly erroneous. If a power
(whether legislative or administrative) is exercised
on the basis of facts which do not exist and which
are patently erroneous, such exercise of power
will stand vitiated".

52. The true position, therefore, is that any act of
the repository of power, whether legislative or
administrative or quasi-judicial, is open to
challenge if it is in conflict with the Constitution
or the governing Act or the general principles of
the law of the land or it is so arbitrary or
unreasonable that no fair minded authority could
ever have made it.

56. The court has neither the means nor the
knowledge to re-evaluate the factual basis of the
impugned orders. The court, in exercise of judicial
review, is not concerned with the correctness of
the findings of fact on the basis of which the
orders are made so long as those findings are
reasonably supported by evidence. In the words of
Justice Frankfurter of the U.S. Supreme Court in
Railroad Commission of Texas v. Rowan Nichols
Oil Company:

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"Nothing in the Constitution warrants a
rejection of these expert conclusions. Nor, on the
basis of intrinsic skills and equipment, are the
federal courts qualified to set their independent
judgment on such matters against that of the
chosen State authorities.... When we consider the
limiting conditions of litigation -- the adaptability
of the judicial process only to issues definitely
circumscribed and susceptible of being judged by
the techniques and criteria within the special
competence of lawyers -- it is clear that the Due
Process Clause does not require the feel of the
expert to the supplanted by an independent view
of judges on the conflicting testimony and
prophecies and impressions of expert witnesses".

This observation is of even greater significance in
the absence of a Due Process Clause.

57. Judicial review is not concerned with matters
of economic policy. The court does not substitute
its judgment for that of the legislature or its
agents as to matters within the province of either.
The court does not supplant the "feel of the
expert" by its own views. When the legislature
acts within the sphere of its authority and
delegates power to an agent, it may empower the
agent to make findings of fact which are
conclusive provided such findings satisfy the test
of reasonableness. In all such cases, judicial
inquiry is confined to the question whether the
findings of fact are reasonably based on evidence
and whether such findings are consistent with the
laws of the land. As stated by Jagannatha Shetty,
J. in Gupta Sugar Works: (SCC p. 479, para 4)
"... the court does not act like a chartered

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accountant nor acts like an income tax officer. The
court is not concerned with any individual case or
any particular problem. The court only examines
whether the price determined was with due
regard to considerations provided by the statute.
And whether extraneous matters have been
excluded from determination."

58. Price fixation is not within the province of
the courts. Judicial function in respect of such
matters is exhausted when there is found to be a
rational basis for the conclusions reached by the
concerned authority. As stated by Justice Cardozo
in Mississippi Valley Barge Line Company v.
United States of America:

"The structure of a rate schedule calls in
peculiar measure for the use of that enlightened
judgment which the Commission by training and
experience is qualified to form.... It is not the
province of a court to absorb this function to
itself.... The judicial function is exhausted when
there is found to be a rational basis for the
conclusions approved by the administrative body."

66 In Sitaram Sugar (supra), the Supreme Court was

concerned with the price fixation under the Essential

Commodities Act 1955. After holding that such price fixation

was in the nature of legislative action, and no rule of natural

justice was applicable, the Supreme Court added that it is

nevertheless imperative that the action of the authority

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should be inspired by reason. To arrive at this opinion,

Supreme Court placed reliance on its earlier decision in

Saraswati Industrial Syndicate Ltd. Ors. vs. Union of

India (1974) 2 SCC 630. The Apex Court further held that

the Government cannot fix any arbitrary price, or fix any

prices on extraneous considerations. The doctrine of judicial

review implies that the repository of power acts within the

bounds of the power delegated, and it does not abuse its

power. He must act reasonably, and in good faith. It is not

only sufficient that an instrument is intra vires, the parent

Act, but it must also be consistent with the constitutional

principles in Maneka Gandhi vs. Union of India [1978]2

SCR 621. Sitaram Sugar (supra) is relevant for yet another

principle of judicial review which is set out in paragraph 49 as

mentioned above. In this paragraph, the Supreme Court has

emphasized that where a question of law is at issue, the Court

may determine the rightness of the impugned decision on its

own independent judgment. If the decision of the authority

does not agree with that which the Court considers to be the

right one, the finding of law by the authority is liable to be

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upset. This is the same principle established by the House of

Lords in Council of Civil Service Union vs. Minister of Civil

Service - (1984) 3 ALL ER 935 (HL). Therein, Lord Diplock

summarised the principles of judicial review by conveniently

classifying under three heads, i.e., "illegality, irrationality and

procedural impropriety". Illegality was explained to mean

that the decision maker must correctly understand the law

that regulates its decision making power and give effect to it.

Whether he has or not is a justifiable question to be decided,

in the event of dispute, by a court exercising powers of

judicial review.

67 The Wednesbury principle of unreasonableness

was discussed at paragraphs 44, 45, 48, 49, 51 and 52 of

Sitaram Sugar (supra), and says that it can be invoked to

judicially review price fixation, subject ofcourse, to the

limitations, discussed in the said passages. For example, if

judicial review relates to a finding of fact, then, the Court,

will only examine the reasonableness of the finding. When

that finding is found to be rational and reasonably based on

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evidence, in the sense that all relevant material has been

taken into account, and no irrelevant material had influenced

the decision, and the decision is one which any reasonably

minded person, acting on such evidence, would have come to,

then judicial review is exhausted even though the finding may

not necessarily be what the court would have come to if it

was called upon to determine facts, in the first place.

68 In para 51 of Sitaram Sugar (supra), the Supreme

Court after referring to Justice Mukharji, in State of U.P. vs.

Renusagar Power Co. (1988) 4 SCC 59, states that the

exercise of power whether legislative or administrative will

be set aside if there is manifest error in the exercise of such

power or the exercise of such power is manifestly arbitrary.

Similarly, if the power has been exercised on a non-

consideration or non-application of mind to a relevant factor,

the exercise of power will be regarded as manifestly

erroneous. If a power, whether legislative or administrative is

exercised on the basis of facts which do not even exist, and

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which are patently erroneous, such exercise of power will

stand vitiated.

69 The principles of judicial review, as discussed in

Sitaram Sugar (supra) or Renusagar (supra) is essentially, the

Wednesbury unreasonableness principle. Therefore, even

proceeding on the basis that the impugned decision is

legislative in character, limited judicial review as explained in

Cynamide (supra), Sitaram Sugar (supra), Renusgar (supra)

is available and is required to be exercised, if the situation so

warrants.

70 From reading of the above decisions, as discussed

above, certain well defined principles of judicial review, have

emerged so far as price fixation. To begin with, the Court

which is required to exercise judicial review, cannot be

equated or will not assume appellate jurisdiction or review

merits, unless a case of unreasonability or absurdity is made

out. The Court will always keep in mind that the exercise of

fare fixation is ordinarily a legislative exercise in nature. It

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may assume the nature of administrative or quasi judicial

when it concerns/affects the interests of an individual

manufacturer or producer, or is directed against a particular

circumstance. Even where the exercise of price fixation is

legislative in nature, the Court will not deny itself jurisdiction

to enquire into whether relevant considerations have gone in,

and irrelevant considerations are kept out at the time of

determination of price. In matters of price fixation, the

interests of those who are most vitally affected, i.e., the

consumer public cannot be ignored.

71 In exercise of judicial review, the question as to

whether the decision maker has arrived at the conclusion by

acting arbitrarily or unreasonably, can be looked into. Where

a question of law is at issue, the Court may determine the

validity of the impugned decision on its own independent

judgment and upset the decision, if the decision of the

authority does not agree with that which the Court considers

to be the right one. However, where the question of finding of

fact is involved, judicial review is only concerned with the

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issue of perversity or unreasonableness. Thus, where a finding

of fact is found to be rational and reasonably based on

evidence, in the sense that all relevant material has been gone

into/taken into account; no irrelevant material has influenced

the decision; and the decision is one which any reasonably

minded person acting on such material would have come to

such conclusion, then judicial review is exhausted even

though the finding may not necessarily correspond to what

the Court would have come to, if it was called upon to

determine the facts, in the first instance. If power, legislative

or administrative, has been exercised on basis of facts which

do not exists or are patently erroneous, such exercise of

power will stand vitiated.

72 Even though price fixation may be a legislative

action, it is imperative that the action should be inspired by

reason, and not arbitrary or extraneous consideration. The

legislative action, therefore, must be consistent with

constitutional principle. When the judgment is entrusted to

an expert body, the same is generally treated as final and

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judicial function. It is exhausted when it is found to have

warrant in the record and rational basis in law; the Court is

not supposed to supplant the feel of the experts by its own

views. However, even a legislative action will be set aside, if

there is any manifest error in exercise of power or the

exercise of power is manifestly arbitrary. Similarly, if power,

whether legislative or administrative has been exercised on a

non-consideration or non-application of mind to relevant

factors, the exercise of power will be regarded as manifestly

erroneous.

73 The circumstances, in the present case, differ from

the circumstances in Cynamide (supra) or Sitaram Sugar

(supra) on certain issues or crucial aspects. In the present

case, the price fixation measure is directed against a

particular situation. The price fixation measure concerns a

particular agency, i.e., MMOPL. At least that is the manner in

which the FFC has approached the issue. Therefore, we see

some substance in the contention of Mr. Chinoy, learned

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Senior Counsel that the impugned decision partakes a quasi

judicial nature. However, we propose to exercise judicial

review on the basis that the impugned decision is legislative

or quasi legislative in nature. As stated above, even a

legislative or quasi legislative exercise of price fixation is not

immune from judicial review, though the grounds of judicial

review may be quite restricted/limited.

74 According to respondent no.4 - Project Proponent,

the petitioner has no locus standi to file the present petition

since the petitioner is a joint venture partner along with

respondent no.4 holding 26% equity stake. The balance 74%

is held by consortium of Reliance Energy Ltd and Veolia

Transport S.A. They also rely upon judgment in Daman

Singh Vs. State of Punjab (supra). In order to consider the

locus standi, we have to analyze the background in which the

consortium in question came to be formed. Apparently,

MMRDA has not instituted the present petition either in its

capacity in a MMOPL or to question any action of MMOPL or

its other shareholders.

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75 Apparently, there is no dispute that MMRDA was

appointed as Project Implementation Agency to complete the

Metro Project, and it was appointed at the behest of the State

of Maharashtra. The petition is instituted by MMRDA as the

Project Implementation Agency. Rather, in this character,

MMRDA certainly has sufficient interest to contend that the

impugned decision, if, permitted to prevail, will be contrary

to the interest of the riders or contrary to public interest. It is

the case of MMRDA that if the fare determined as per the

impugned decision is permitted to be corrected, then the very

character of the Metro Project as a 'Rapid Mass Transit

System' will be destroyed.

76 MMRDA was a party before the FFC. It was also

allowed to urge its contention wherein MMRDA urged that

there should be revision of the fare only as stipulated in the

Concession Agreement dated 7th March 2007. MMRDA, apart

from raising this issue, pleaded before the FFC that the fare

scheduled in the Concession Agreement, was at least a very

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relevant consideration required to be taken into account

while fixing the fares. Though FFC has not accepted this

contention of the MMRDA, quite rightly did not deny or

question locus standi of the MMRDA when it addressed its

grievance before the FFC.

77 MMRDA in its capacity as the Project

Implementing Agency, is the best person to represent the

interest of various stakeholders of the Metro Project, specially

the interests of the commuters and members of the public.

As a matter of fact, the FFC entertained the applications of

MMRDA. When the contentions of MMRDA were not

accepted by FFC, the MMRDA certainly has a right to seek

judicial review. Therefore, its locus standi cannot be

questioned.

78 Two commuters initiated Writ Petition No. 863/16

wherein there is specific challenge to the impugned decision

dated 8th July 2015 on several grounds, including the ground

that section 33 of the Metro Act is itself unconstitutional.

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Similarly, another Public Interest Litigation No. 39 of 2016

initiated by NGO called 'Public Concerned for Government

Trust' (PCGT) , in which again, a challenge is made to the

Notification dated 16th October 2009, in terms of which, the

Metro Act was made applicable to the Metro Project. In these

petitions, they have sought a restraint order against MMOPL

from charging commuter fare, except in accordance with the

provisions of Concession Agreement dated 7 th March 2007.

These petitions were to be considered along with the present

writ petition. However, on account of constraint of time, it

was not possible to take up these two Writ Petitions for final

disposal along with the present petition. There is no serious

challenge to the locus standi of the petitioners in the said two

writ petitions. The circumstance of MMRDA holding 26%

stake in MMOPL, is certainly not some statutory bar to

MMRDA to question the impugned decision of the FFC,

merely because majority of the shareholders of MMOPL or the

MMOPL itself regards the impugned decision as favourable to

them. As noted earlier, MMRDA has neither instituted this

petition in its capacity as shareholder of MMOPL, nor does

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the petition question any action of MMOPL or its other

shareholders.

79 Now, let us consider whether the decision in

Daman Singh (supra), is applicable to the facts of the

present case. In Daman Singh's case, the challenge before

the Supreme Court was to the vires of section 13(8) of

Punjab Cooperative Societies Act, which provided for the

compulsory amalgamation of cooperative societies if it is in

the interest of Cooperative Societies. In this context, one of

the contentions was that section 13(8) did not make express

provision for issue of notice to members of concerned

cooperative societies, and therefore, the provision was

violative of principles of natural justice. In the alternate, it

was contended that principles of natural justice should be

read into the provision and notice to members be regarded as

imperative. It is in this context, that the Apex Court observed

that once a person becomes a member of a cooperative

society, he looses his individuality qua the society, and he has

no independent right except those given to him by the Statute

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and bye-laws. He must act and speak through the society or

rather, the society alone can act and speak for him qua the

rights and duties of the society as a body. The notice to the

society in such a case will be deemed as notice to all its

members. Although, the challenge to vires of section 13(8)

was rejected by the Supreme Court, such rejection was on

merits and not on the ground that the members of the

societies proposed to be amalgamated, had no locus standi to

challenge the same. In the light of observations of the Apex

Court, in Daman Singh's case, we are of the opinion the

decision in Daman Singh's case does not apply to the facts of

the present case, and we reject the challenge raised to the

locus standi of the petitioner to file this petition. We hold

that the present petition filed by the petitioner is

maintainable.

80 Now, we come to the contention of the petitioners,

rather challenge made by the petitioner to the FFC report

impugned in this Writ Petition. According to the petitioner,

on account of irrelevant facts being taken into consideration,

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by excluding relevant considerations by FFC, it has directed

itself to come to wrong conclusion, and therefore, the

decision of FFC is vitiated. According to them, there was no

justification for FFC to exclude consideration of vital and

relevant material which were placed before them in the form

of DPR, RFP, Bid Documents, Business Plan and the

Concession Agreement dated 7th March 2007 while

determining the Metro fares. According to them, the FFC

arriving at the conclusion in determination of the fares only

based on the material relied upon by 4th respondent which

were totally irrelevant and immaterial, is erroneous. It is

further contended that FFC did not even give reasons why

relevant material, as stated above, was excluded from

consideration. According to them, only during the pleadings

filed by MMOPL and the submissions made by them, they

tried to defend the exclusion of material by FFC.

81 According to 4th respondent, the consortium at the

time of the bid, sought VGF to the extent of Rs.1251 crores

equivalent to 53% of the estimated project costs. However,

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same was reduced to Rs.650 crores equivalent to 28% of the

then estimated project cost. The total cost of the project

turned out to be Rs.4026 crores and VGF actually made by

MMRDA, till date, was Rs.567 crores out of Rs.650 crores,

which is equal to only 14% of the actual project cost. They

further contend that the petitioners have misread the Business

Plan. According to 4th respondent, a close scrutiny of the

Business Plan would indicate that it was always envisaged

that there would be a cash surplus at the end of each financial

year. It is for this reason why project became fundable.

According to them, cash surplus would mean it is surplus

after providing for all operating cost as well as part

repayment of the principal loan amounts, and serving of

interest thereof as per the financing agreements. The figures

of cash surplus as per the Business Plan, would clearly

indicate cash surplus in crores by 2019 as Rs.51 crores and

project profit as Rs.33 crores. By reason of delay on the part

of the petitioner to secure right of way and the land for

construction of the project, the 4 th respondent has suffered a

cash loss i.e. actual profit in crores in 2015 was Rs.277 crores

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and actual cash surplus was Rs.161 crores; in 2016 actual

profit was Rs.287 crores and actual cash surplus was Rs.145

crores; and in 2017 (projected) actual profit was Rs.348

crores and actual cash surplus was Rs.203 crores. This was

despite the fares being fixed at Rs.10-20-30-40. According to

them, suffering as annual cash loss effectively meets the

Metro project unviable and it becomes no longer bankable.

According to them, this was specifically recognized by FFC in

the following terms :

"8 (b)(ii) An affordable fare is critical for
attracting ridership which in turn is key to the
business viability and also to serve the
commuters need.

9. It can be construed to be a fine balance
between the affordability and the business
viability needs to be carefully considered. It is
pointed out that there is a large revenue gap at
the existing fare structure and the revenue gap
to be bridged aggregated to Rs.573 crores for
the year 2014-15.

24. We have considered the reports
submitted by the four expert committees. In
terms of reports we find that they have
suggested higher average Fares. However, we
are fixing the fare hereunder, which works out
to be a lower average Fare than the average
Fare suggested by the four expert committees.

Even after this revision, as set out below,
Mumbai Metro will not be able to break-even
and they will sustain loss on a day to day basis,

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which would have a far reaching effect on its
finances and operations in due course. In our
considered view, the Mumbai Metro One
should be at least be sustainable for the time
being not speak of return on equity which on
an long term basis be able to earn 17% (post
tax Equiry (IRR) and it should be in a position
to absorb the shock of loss for some time till
traffic increases considerably. If the Mumbai
Metro turns the corner and makes a profit, it is
definitely open to the Mumbai Metro One
Private Limited to pay dividents to the
investors depending upon the income at that
stage and not immediately. The Mumbai
travelling public/commuters expecting
convenience, facilities, punctuality and top
ranking operations, should be ready to sacrifice
and should not mind paying revised fares,
otherwise they will have to lose the Mumbai
Metro One facility and convenience of Metro
once and for all.

They also rely upon the observations made by Professor G.

Raghuram "IAM - Ahmedabad Report".

"6.4 With all the above efforts, the issue of
bridging the viability gap would remain a
significant one for the Mumbai Metro, as per their
own projections (Exhibit-8). The deficit is
increasing year on year, primarily due to
increasing borrowings to cover the cash
losses. Hence there is urgency in financial
restructuring to enable viability of the
metro.

As per our analysis, the full cost fare over the
next five years would stabilize at Rs.12 per
km, resulting in an average passenger fare of
Rs.60 with a 5 km (sic) lead. However, as already

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discussed in Section 3.6, this is not a viable fare,
being significantly higher than the revenue
maximizing fare, which for the peak is Rs.7.25 per
km and with a significant discount for the offpeak.
The weighted revenue maximizing fare can at best
yield an increase in revenue of 16 over what is
projected by MMOPL.

For a target year like 2016-17, we are looking
at a deficit of about Rs.560 cr including a
cash deficit of over Rs.180 cr. The cash
deficit can be reduced at best by Rs.30
cr due to the revenue maximizing fare,
and Rs.40 crore due to non fare box revenues
and possibly Rs.20 cr due to improved (10%
efficiency) operations and maintenance.
This would still leave a cash deficit of nearly
Rs.100 cr, which will need additional
financing resulting in increased cash
outflows due to interest.

The cash deficit needs to be plugged at
the earliest. MMOPL would require an
amount subsidy of over Rs.100 cr or a
one time grant of Rs.1000 cr. This can at
best stop the 'bleeding'

Additional funds to cover the replacement
costs and return to shareholders would be
required to the tune of Rs.360 cr per
annum.

82 On perusal of opinion of the FFC, we note that

FFC had excluded vital and relevant material from its

consideration with reference to DPR, RFP, Bid Documents,

Business Plan and the Concession Agreement dated 7 th March

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2007. The members of FFC who submitted the majority

report have ignored the above material. Even in the

pleadings as well as submissions, there is not even a whisper

by MMOPL that such material was taken into consideration by

FFC, and they do not even say on what grounds and why they

were excluding such material. On the other hand, MMOPL

tries to defend by making the statement that FFC was justified

in excluding such material from its consideration at the time

of arriving at the fares. On the other hand, there is an

attempt to contend that consideration of such material might

have vitiated the very exercise because it is settled position in

administrative law that reliance on irrelevancies vitiates the

decision based thereon. In the pleadings as well as

submissions of MMOPL, it defended the exclusion of the

material by FFC broadly on the following three grounds.

(1) That by virtue of the provisions in section 33 and 103
of the Metro Act, all such material stands obliterated and
therefore, cannot even be looked into for the purposes of
fare determination by FFC;

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(2) The material in the form of Business Plan was not
even the basis for evaluation of MMOPL bid or award of
the contract of Metro Project on BOOT basis. The selection
of concessionaire was totally based on the capital
contribution of VGF demanded by the bidder, and this is
clearly indicated at Clause 27.3 of the RFP that the
bidder who required minimum capital requirement would
be selected; and

(3) That there has been a sea-change in circumstances
from the time of submission of Business Plan and the
Concession Agreement that was entered into between the
parties. At that stage, MMOPL was persuaded to reduce
the demand for VGF from Rs.1251 crores to Rs.650 crores
based upon certain assurances by MMRDA and the State.
The assurances were never honored by the two agencies.
Further, the rates in the Concession Agreement or the
formula of upward revision of fares by 11 percent at every
4th year was on the basis of construction estimate of Rs.
2356 crores. In reality, for reasons entirely attributable to
MMRDA, there was delay in completing the construction,
and therefore, there was consequent escalation to Rs.4026
crores. In such drastically changed circumstances,
according to 4th respondent, it would be neither legal nor
fair to tie down MMOPL to the fares stipulated in the
Concession Agreement or forcing them to stick to the
Business Plan submitted at the stage of filing bids.

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83 Based upon three contentions, learned Senior

Counsel Mr. Dwarkadas arguing for 4th respondent

strenuously contends that reasons are obvious, why the DPR,

RFP, Bid Documents, Business Plan and the Concession

Agreement were not considered by the FFC. According to

him, they were not considered since they were irrelevant and

immaterial documents. Before we proceed to examine the

above three grounds alleged by Mr.Dwarkadas, it is pertinent

to mention that the majority report of the FFC really makes

no reference to any such grounds as justification for

exclusion of the material in the form of DPR, RFP, Bid

Documents, Business Plan and the Concession Agreement.

Inferentially, it can be said that the FFC has excluded such

material from consideration based on its interpretation of

sections 33 and 103 of the Metro Act.

84 The statutory scheme of the Metro Act, is

indicated above, and so also the situation in which Sections

33 and 103 of the Metro Act appear. Section 33 of the Metro

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Act provides that the FFC shall recommend the fares for the

carriage of passengers in a Metro Rail. Section 37 of the

Metro Act provides that such recommendation shall be

binding on the Metro Railway Administration. Section 103 of

the Metro Act deals with the effect of the Act on any other

enactments or instruments which may be inconsistent with

the Metro Act.

85 Section 33 of the Metro Act and the proviso reads

as follows:

"33. Fixation of Fare for carriage of
passengers : The Metro railway administration
shall, from time to time, on the recommendations
made to it by the Fare Fixation Committee
constituted under sub section (1) of section 34, fix,
for the carriage of passengers, fare for travelling
from one station to another of the metro railway.

Provided that the metro railway administration
may fix the fare under this section without
recommendations of the Fare Fixation Committee on
the initial opening of the metro railway."

Section 37 of the Metro Act reads as follows :

37 Recommendations to be binding on metro
railway administration : The recommendations
made by the Fare Fixation Committee shall be
binding on the metro railway administration.

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Section 103 of the Metro Act reads as follows :
"103. Effect of Act inconsistent with other enactments .-
The provisions of this Act shall have effect
notwithstanding anything inconsistent therewith
contained in any enactment other than this or in any
instrument having effect by virtue of any enactment
other than this Act."

86 On perusal of FFC report, in its introductory

grounds, it refers to the interim orders made by this Court

while disposing of an application under section 9 of the

Arbitration and Conciliation Act, 1996 in the context of

MMOPL asserting rights to fix the initial fare of the Metro and

further since, Mr. Dwarkadas relies upon such orders, a brief

reference to them will not be out of place.

87 In Arbitration Petition (L) No. 890/14 disposed of

on 24th June 2014, learned Single Judge of this Court

expressed prima facie opinion that MMOPL was entitled to fix

the initial fare without being bound by the stipulation in the

Concession Agreement. This prima facie opinion was upheld

by the Division Bench of this Court in Appeal No. 621 of 2014

by an order dated 8th January 2015. The Division Bench also

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expressed the prima facie opinion that once Metro Act was

extended to Metro Line - 1, the fixation of fare could be done

by MMOPL only on the recommendation of Fare Fixation

Committee under the substantive part of section 33, but for

fixation of initial fare, MMOPL cannot be held to be bound by

the fare structure provided in the Concession Agreement

without the operation of Clause 6.5.2 for upward revision.

The regime of contractual obligations under the Agreement in

relation to fixation of fares, cannot, therefore, be

straightaway read into the proviso to section 33 for the

purpose of tying down the MMOPL to the fare structure under

the agreement without any scope for upward revision. The

Division Bench at paragraph 22 clarified that the observations

in the order are for the limited purpose of decision under

Section 9 petition and the Arbitral Tribunal or the FFC shall

not be influenced by the observations made in the order. The

SLP, challenging these orders were also disposed of.

88 The aforesaid orders were made to dispose of

application under Section 9 of the Arbitration and

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Conciliation Act, 1996 taken out by MMRDA to restrain

MMOPL from fixing the initial Metro fares contrary to the

stipulation in the Concession Agreement. It was made clear

that the observations were only prima facie and for the

limited purpose of decision under section 9 petition, and the

Arbitral Tribunal or the Fare Fixation Committee shall not be

influenced by the observations made in the order. Besides, all

the observations state that prima facie MMOPL cannot be

held to be bound by the fare structure or the formula of

revision stipulated in the Concession Agreement. None of the

orders specifically held that the Concession Agreement stands

obliterated or that the fares stated in the Concession

Agreement are totally irrelevant while determination of the

fares by FFC.

89 As to the construction of Section 103 of the Metro

Act, no doubt, the provision contains a non obstante clause.

Therefore, the provisions of the Metro Act shall have effect

notwithstanding anything inconsistent therewith contained,

in any enactment, other than the Metro Act, or in any

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instrument having effect by virtue of any enactment other

than this Act.

90 In the present case, it was not even the contention

of any of the parties that any enactment other than the Metro

Act was in issue or was sought to be enforced even though the

provisions of such other enactments were inconsistent with

anything contained in the Metro Act. The contentions,

though are not very clearly formulated, it was argued that the

Concession Agreement is an instrument having effect by

virtue of some enactment, other than the Metro Act. Again,

none of the parties specified which was such enactment, by

virtue of which the instrument or the concession agreement

was having effect. This factor is very relevant in the light of

the observations of Supreme Court in Sharda Devi vs. State

of Bihar1 wherein it has held that the expression

'notwithstanding anything contrary to any enactment' cannot

take away effect of any provision in law, which is an

enactment.

1 2002 (3) SCC 705

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91 The principles of statutory interpretation of non-

obstante clause in a Statute are well settled by now. While

construing a non-obstante clause, it is necessary to determine

the purport and object for which the same was enacted. The

non-obstante nature of a provision although, may be of wide

amplitude, the interpretative process thereof must be kept

confined to the legislative policy. A non-obstante clause must

be given effect to, to the extent Parliament intended and not

beyond the same. This is well settled by the Apex Court in

the case of ICICI Bank Ltd. Vs. SIDCO Leathers Ltd. and

ors.1

92 In A.G. Varadarajulu and anr. Vs. State of Tamil

Nadu and ors.2 the Supreme Court has held that it is well

settled that while dealing with a non-obstante clause under

which the legislature wants to give overriding effect to a

section, the Court must try to find out the extent to which the

legislature had intended to give one provision overriding

1(2006) 10 SCC 452
2(1998) 4 SCC 231

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effect over another provision. Such intention is to be gathered

from the enacting part of the section.

93 In Madhav Rao Scindia vs. Union of India 1, the

Supreme Court again observed that the non - obstante clause

is no doubt a very potent clause intended to exclude every

consideration arising from other provisions of the same

Statute or other Statute, but for that reason alone, the scope

of the provision must be determined strictly. When such

section containing non-obstante clause does not refer to any

particular provision which it intends to override, but refers to

the provisions of the Statute generally, it is not permissible to

hold that it excludes the whole Act and stands all alone by

itself. A search has, therefore, to be made with a view to

determine which provision answers the description and

which does not.

94 Again in Central Bank of India vs. State of

Kerala and ors,2 the Supreme Court opined that non-

1(1971) 1 SCC 85
2(2009) 4 SCC 94

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obstante clause is generally incorporated in the Statute to

give overriding effect to a particular section or the Statute as

a whole. While incorporating non-obstante clause, the Court

is required to find out the extent to which the legislature

intended to do so, and the context in which the non-obstante

clause is used. By reference to State of West Bengal vs.

Union of India,1 it was held that the Court must ascertain the

intention of the legislature by directing its attention not

merely to the clauses to be construed, but to the entire

Statute; it must compare the clause with other parts of the

law and the setting in which the clause to be interpreted

occurs.

95 In R.S. Raghunath Vs. State of Karnataka 2 , the

three Judge Bench of the Supreme Court, after making

reference to earlier judgments in Aswini Kumar Ghose vs.

Arabinda Bose3, Dominion of India vs. Shrinbai A. Irani4,

1AIR (1963) SC 1241
2(1992) 1 SCC 335
3AIR 1952 SC 369,
4 AIR 1954 SC 596,
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Union of India vs. G.M. Koil1, and Chandavarkar Sita

Ratna Rao vs. Ashalata S. Guaram 2 observed that the non

obstante clause is appended to a provision with a view to give

the enacting part of the provision an overriding effect in case

of a conflict. But the non-obstante clause need not

necessarily and always be coextensive with the operative part

so as to have the effect of cutting down the clear terms of an

enactment, and if the words of the enactment are clear and

are capable of a clear interpretation on a plain and

grammatical construction of the words "the non obstante

clause" cannot cut down the construction and restrict the

scope of its operations. In such cases, the non obstante clause

has to be read as clarifying the whole position and must be

understood to have been incorporated in the enactment by

the legislature by way of abundant caution and not by way of

limiting the ambit and scope of the Special Rules.

96 In the light of above principles, or the law

declared by the Apex Court with regard to the word non-

1(1984) Supp SCC 196
2(1986) 4 SCC 447
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obstante clause in a Statute, we have to now consider the

effect of such non-obstante clause in Section 103 of the Metro

Act. Even if we regard the Concession Agreement as an

instrument having effect by virtue of the another enactment

i.e. Contract Act, Section 103 of the Metro Act, in terms

provides that the provisions of the Metro Act shall have effect

notwithstanding anything inconsistent therewith in any

instrument having effect by virtue of any enactment other

than the Metro Act. Applying the principles of statutory

interpretation as discussed above, it is not possible to accept

the extreme position that the concession agreement totally

stands obliterated on account of non-obstante clause

contained in section 103 of the Metro Act. The section itself

states that the provisions of the Metro Act shall prevail over

"anything inconsistent therewith" in any instrument having

effect by virtue of any enactment other than the Metro Act.

Therefore, it becomes relevant and necessary to determine

whether there is anything inconsistent between the

Concession Agreement and the provisions of the Metro Act. To

the extent of inconsistency however, the provisions of Metro

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Act shall prevail. This is the proper manner in which one has

to construe the provisions of section 103 of the Metro Act.

The extreme position that section 103 of the Metro Act

completely obliterates the Concession Agreement, or even

obliterates the portions of Concession Agreement not

inconsistent with the provisions of Metro Act is not

acceptable. The acceptance of such an extreme position might

render the very authority of MMOPL to embark upon or

operate the Metro project, itself vulnerable.

97 In the present case, we are not concerned with the

right of MMOPL to seek fixation and Metro fares without the

recommendation of FFC on the initial opening of the Metro

Rail. That issue admittedly is pending consideration in an

arbitration proceeding. However, in the context of the legal

submissions made, there is bound to be some unavoidable

overlapping. The real issue in the present petition is whether

FFC, upon consideration of section 103 of the Metro Act, was

entitled to virtually ignore the Concession Agreement, or treat

the Concession Agreement as obliterated or completely

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regard the fares and formulae in the Concession Agreement as

irrelevant, extraneous and redundant to the determination of

Metro fares.

98 In terms of the Concession Agreement, MMOPL is

obliged to collect fares from riders at the Metro Project as per

the rates set out in Schedule - L, i.e., Rs.6-8-10 with upward

revision of 11% every fourth year. This corresponds to fare of

Rs.9-11-13 in the year 2014. The Concession Agreement also

provides for upward revision of fare beyond the stipulation in

Schedule - L in case of any unanticipated rise in the operating

costs of the Metro Project. The determination in this regard

was left to the State Government. These provisions in the

Concession Agreement may, to the extent, they provide for a

fixed fare or a fixed formula for determination of the fare, be

regarded as inconsistent with the scheme of determination of

Metro fares in sections 33 and 37 of the Metro Act. To the

extent of inconsistency, therefore, the provisions of the Metro

Act will prevail and the inconsistent provisions of Concession

Agreement may have to give way. The inconsistency arises if

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the fare or the formula of revision stipulated in the

Concession Agreement is held as binding on the parties to the

Concession Agreement. The inconsistency may also arise if

the fare or the formula of revision stipulated in the

Concession Agreement is held as binding on the FFC in the

discharge of its statutory functions under section 33 of the

Metro Act. To the extent of such inconsistency, the binding

nature of the stipulation as to fare or the formula of revision,

will have to yield or give way.

99 There is no question of any inconsistency if the

rate or formula for revision stipulated in the Concession

Agreement is to be taken into consideration by the FFC as

some relevant material for determining the Metro fare. The

stipulation about rates may not be binding but that does not

mean that the same is irrelevant when it comes to

determination of the fares. On the basis of stipulation in the

Concession Agreement, it may not be possible for MMRDA to

insist that the FFC determines the same fares and the FFC,

may not be bound to determine the same fares or apply the

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same formula for revision. However, that does not mean that

the FFC can refuse to look into the stipulation of fares or the

formula for revision. The binding nature of the stipulation in

the Concession Agreement is one thing and relevancy, is quite

another. The relevancy lies in the admitted fact that the

stipulation in the Concession Agreement were consensual and

contractual. It is not in dispute that these stipulations were

freely agreed to by the parties. There was consensus while

making the agreement. This is not even a case where the

parties can plead any inequality in bargaining power. This is,

in our view, the harmonious manner to interpret the

provisions of section 103 of the Metro Act and the stipulation

in the Concession Agreement. The extreme contention that

the Concession Agreement stands obliterated, might, then

render the position of MMOPL as Metro Railway

Administration, vulnerable.

100 By applying the principles of statutory

interpretation to the construction of non - obstante clause in

section 103 of the Metro Act, and adopting the principle of

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harmonious construction the statutory scheme in sections 33

and 37 of the Metro Act will have to be respected. This

means that FFC will have jurisdiction to recommend revision

of metro fares, notwithstanding the specification of fares and

the formula of revision in the Concession Agreement. There

is distinctly a distinction between an instrument operating as

a binding instrument and instrument affording evidence or

material on some vital and relevant factor to be taken into

consideration for determination of fares. The FFC, by

misconstruing the provisions of section 103 of the Metro Act,

appears to have lost sight of this distinction pointed out

above. In determining the fares, therefore, the FFC was

not justified in ignoring the fares fixed or formula for

revision in the Concession Agreement. This is particularly

because the fares fixed and the formula prescribed in the

Concession Agreement were based upon the terms and

conditions agreed between the parties i.e. MMOPL and

MMRDA. If the provisions of the Metro Act were not to be

extended to the Mumbai Metropolitan Area, the contractual

relation between MMOPL and MMRDA would be governed by

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such fares and such formula as prescribed in the Concession

Agreement. The consortium, in its Business Plan, had in fact

agreed to such fares and such formula. The consortium had

submitted its demand for VGF on basis of such fares and such

formula. Thus, although, such fares or formula prescribed in

the Concession Agreement may not be binding upon the FFC,

nevertheless, the same constitutes at least one of the relevant

factors to be taken into consideration which the FFC could

not have ignored on the basis of improper legal construction

of the provisions in section 103 of the Metro Act. Since this is

an error of law, judicial review will have to be exercised, as

held in Sitaram Sugar (supra) and Council of Civil Services

(supra).

101 By way of recapitulation, reference is necessarily

to be made to Sitaram Sugar (supra), upon which strong

reliance was placed by Mr. Dwarkadas, Senior Counsel

arguing for MMOPL. At paragraph 49 of the judgment, the

Supreme Court, has, in turn, held that where a question of

law is at issue, the court may determine the rightness of the

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impugned decision on its own independent judgment. If the

judgment of the authority does not agree with that which the

court considers to be the right one, the finding of law by the

authority is liable to be upset.

102 Similarly, in the case of Council of Civil Services

(supra), Lord Diplock has explicitly explained what illegality

means. According to Lord Diplock, 'illegality' means that the

decision maker must correctly understand the law that

regulates its decision making power and give effect to it.

Whether he has or not is a justifiable question to be decided,

in the event of dispute, by a court exercising powers of

judicial review. The other ground upon which learned Senior

Counsel Mr. Dwarkadas was contending was for exclusion of

material like DPR, RFP or the business plan was that such

material was never the basis for selection of the bidder /

Consortium. We are afraid this may not be a correct

proposition. The award of the Metro Project on BOOT basis

to the Consortium was upon evaluation of the bid of the

Consortium which essentially included its business plan and

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the VGF demanded by it. Clause 27 of the RPF specifically

required the bidders to submit business plan with financial

projections, projected annual income statements, cash flow

statements and balance-sheets. This clause also stipulated

that the Bid Evaluation Committee (BEC) will evaluate and

compare only the bids to determine the eligibility in

accordance with clause 27.2 of RFP. This sub clause makes

specific reference to business plans and other detailed

information to be submitted or provided by the bidders in the

prescribed formats. Finally, clause 27.3 of RFP stipulated

that the bidder who required minimum capital contribution

would be selected, predicated that the bid made on

evaluation under clauses 27.1 and 27.2 had been found to be

compliant and acceptable.

103 From the material on record, it is apparent that

even the Consortium was clear in its understanding of the

terms of the RFP and tender notice. In particular, the

Consortium was quite clear as to the position of the Business

Plan which was required to be submitted as a part of the bid

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document. The consortium, in its business plan, specifically

stated that ridership forecast is the most critical parameter

for evaluating the viability of the project. The ridership

forecast estimated by MMRDA and provided in RFP and other

documents has been validated by the "REL LED Consortium".

Further, the bid document accepts that the structure for fare

provided in terms of Schedule L of the Concession Agreement

is the base for the fare rates used in financial model. This

corresponds to rate of Rs. 6 upto 3 kms.; Rs. 8 between 3

kms. and 8 kms.; and Rs.10 beyond 8 kms. The Schedule

contemplates upward revision of fares at 11% every fourth

year. Detailed financials were enclosed by the Consortium

along with the bid as required by RFP. The Consortium

specifically stated that the survey conducted at the time of

ridership estimation indicates the local population is willing

to use the Metro Project so long as the fare as in the range as

available in public modes of transport i.e. BEST buses and

local trains. All this is quite sufficient to reject the arguments

of learned Senior Counsel Mr. Dwarkadas that the Business

Plan was an irrelevant document to be considered in the bid

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evaluation process or that the bids had to be evaluated solely

on the basis of VGF demanded by the bidders.

104 The next contention urged by Mr. Dwarkadas for

exclusion of material like DPR, RFP, business plan and the

Concession Agreement was that there was a sea change in

circumstances since such material was issued or documents

were executed. This ground is more in the nature of

objections to the weight to be attached to such material, and

not to the very exclusion of such material from consideration.

The FFC, has completely excluded such material from

consideration. The aspect of any alleged sea change finds no

reference or even reflection in the majority report. At the

most, it can be said that there is reference to escalation of

construction costs from Rs.2356 crores to Rs.4000 crores or

thereabouts. The majority report, however, proceeds on the

basis that it is the MMRDA which was solely responsible for

delay and cost overruns. In proceeding so, the FFC does not

even advert to the material placed on record by MMRDA like

Louis Berger Report or the reports submitted by Lenders

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Engineers (SOWIL Limited and CREEC, China) which suggest

that MMRDA was not responsible for the cost overruns.

Based upon such presumption, the majority report places the

brunt of increased fares on the commuting public since,

MMRDA is held to represent the interests of the commuting

public. In our opinion, there is unreasonableness on the part

of the FFC to proceed on the basis that it is the MMRDA

which was solely responsible for the delay and the consequent

cost overruns. The reports are said to have suggested that it is

MMOPL which has padded up the expenses.

105 We are also unable to agree with Mr. Dwarkadas's

contention that since the MMRDA extended the period for

completion of the construction without terminating the

contract or without even levying any penalty, it should be

presumed that the MMRDA has accepted that it was solely

responsible for the delay and the consequent cost overruns.

The issue of the quantum of cost overruns and the

responsibility for the delay is actually pending adjudication in

arbitration proceedings, where, MMOPL has raised a claim for

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Rs.1939 crores or thereabouts. The FFC, was therefore, not at

all justified in proceeding on the basis that it is the MMRDA

which was responsible for the delay and the consequent cost

overruns and on this basis, proceeding to determine the fare,

which, even the MMOPL chooses to style as 'tariff shock'.

106 While MMOPL refuting the contention of MMRDA

significantly, placed reliance on Louis Berger report and other

material contending that since all issues are pending

adjudication in the Arbitration Proceedings, the same are of

no relevance to the present petition. However, the 4th

respondent MMOPL, abandons this yardstick when it defends

the FFC presumption that MMRDA is responsible for the delay

and the consequent cost overruns. Reference to the averments

in paragraphs 31 and 32 of MMOPL's affidavit-in-reply dated

3rd June 2016 is relevant in the context.

"31. I say that Respondent No.4 accordingly incurred
substantial cost overruns, primarily on account of
the Petitioner failing to comply with its
obligations under the Concession Agreement as
well as its duties at the time of accepting the re-

negotiated offer dated 10th May 2006. I say that
the Respondent No. 4 was, therefore, constrained
to initiate arbitration proceedings against the

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Petitioner seeking indemnification and
compensation for these breaches by the Petitioner.
I say that the said arbitration proceedings are
currently going on and the issues of breaches
committed by the Petitioner is sub judice therein.

32. I say that the reliance placed by the Petitioner on
the report submitted by the Lenders Engineers
(SOWIL Ltd. And CREEC, China) and the report
submitted by the Louis Berger Consulting Pvt.
Ltd., is wholly misplaced. In any event, I say that
the subject matter of both reports is currently
pending adjudication before the Arbitration
Tribunal and, therefore, the same is of no
relevance for the present matter i.e. whether or
not the Impugned Report made by Respondent
No.1 must be interfered with.

107 There is now a serious fallacy, both in the

contentions of MMOPL and approach of FFC in virtually

proceeding on the basis that it is MMRDA which was

responsible for the cost overruns. In the arbitration

proceedings, if ultimately it is held that MMRDA was not

responsible for the delay and the consequent cost overruns,

then, the prejudice to public interest, will be irreversible. At

the very least, MMOPL will be unjustly enriched at the cost of

commuters. Even if MMOPL succeeds in the arbitration

proceedings and is awarded the claimed amount of Rs.1939

crores, even then, the issue of unjust enrichment at the cost of

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commuters and tax payers will arise. This is because the

MMOPL, by then, will have recovered substantial amounts by

way of the enhanced fares, and will further have to be paid

compensation amount. The FFC, has altogether glossed over

this vital and relevant consideration, particularly as the

payments to MMOPL have to come from the commuters or

the tax payers. In a sense, in the present situation, the

impugned decision amounts to grant of substantial interim

monetary relief in the pending arbitration proceedings even

before the issue of liability for delay and cost overrun is yet to

be adjudicated.

108 In all probability, perhaps realizing the fallacies

which would arise out of such unjust enrichment, MMOPL

persistently submitted that in case its claim is upheld in the

arbitration proceedings, and if there is an award for

compensation, the MMOPL will pass on the benefit of such

award to the commuters. Reliance was placed upon the

interim orders granted by this Court in the context of fixation

of initial fares by MMOPL to urge that such a course is

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permissible. According to us, such reliance is misplaced

because the learned Single Judge as well as the Division

Bench noted that the FFC, was to determine the fares within a

period of three months. Therefore, they observed that there

would be no serious prejudice to the commuting public if the

initial fares fixed by the MMOPL continued for a period of

three months or thereafter. If ultimately, the FFC rules

against the MMOPL, adjustments could always be made. Such

a proposition does not operate in the present context. Besides,

when the issue is of larger public interest of the commuting

public, the prima facie observations made in the interim

orders, can neither be applied out of context nor can they

even otherwise support the contention of MMOPL. The

contention that VGF was reduced by the Consortium from the

bid amount of Rs.1251 crores to Rs.650 crores, is, at least

prima facie, not a relevant factor. At least, no material was

placed before us to suggest that such reduction was on the

basis of certain assurances made by the MMRDA and the

State Government. Further, there is no allegation that such

alleged assurances were not complied with by the MMRDA or

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the State Government. The unilateral address of letter dated

10th May 2006 by the Consortium is hardly of any evidence.

The Concession Agreement was executed on 7 th March 2007.

There is no reference to any such alleged assurances in the

said Concession Agreement. The reduction was obviously a

commercial judgment or a commercial call taken by the

Consortium for the reasons best known to it. This is surely

not a case involving any inequality of bargaining power, and

fortunately there is no such plea raised by the 4th respondent.

On such ground therefore, the FFC could not have ignored

the Business Plan or the Concession Agreement.

109 The FFC has completely ignored the Business Plan

submitted by the MMOPL which was vital and relevant

material to the exercise of fare determination. In the DPR and

RFP, certain estimates as to ridership as well as financials had

been made known to the prospective bidder. However, it was

made clear that the bidder must undertake independent

surveys or independently assess such factors before

submission of their bids, which essentially included the

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Business Plan. In this case, the consortium actually agreed

with the estimates and then submitted its Business Plan. From

the DPR and RFP, it is quite clear that the business model

contemplated was of reasonable fares which would attract

high ridership, which is to sustain the Metro project. One of

the prime objectives of the Metro project was to reduce the

burden on the existing infrastructure. The consortium, in

its Business Plan submitted in the prescribed format as a part

of its bid, accepted the estimates of ridership of 5.66 lakhs per

day corresponding to fare and non-fare revenue of Rs.226

crores. Upon excluding the operating expenses, interest

outgoings etc. in the first year of operations itself, i.e. 2011,

provision has to be made for depreciation of 137 crores, a

notional loss of Rs.115 crores was projected.

110 The projections so far as 2019, i.e. after 8 year of

operations where the ridership assumed to be increased to

6.60 lakhs per day. The aggregate revenue was projected at

Rs.420 crores. Upon exclusion of operating expenses, interest,

depreciation, tax, there would be actual surplus of Rs.33

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crores. The project was expected to break even from the 9 th

year. From the first 8 years of operations, the Business Plan

submitted by the consortium did not contemplate any

payment of dividend or return of equity to the promoters. For

the first 5 years of operations, there was to be no repayment

of loans. Finally, the Business Plan, also projected the position

in the 30th year of operations, i.e. in the year 2041. By this

year, the ridership was to increase to 12.11 lakhs per day and

profits projected were Rs.754 crores. Over a 30 year period,

the consortium, was to make profits of Rs. 8519 crores. There

is ample material on record which throws light on the

business model of Metro project. Since, this was to be a Mass

Rapid Transit System, the emphasis was on reasonable fares

and high ridership. The consortium also understood the

fundamentals of business model in this manner itself, which is

clear from the Business Plan submitted by it. One should not

forget that it is on evaluation of such Business Plan that the

consortium was selected for award of contract. The FFC, by

even refusing to look to the business plan, much less, take the

same into consideration, has virtually relieved the MMOPL of

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the very basis on which it got the contract. There is

accordingly, the issue of integrity of the tender process,

which, was not an irrelevant circumstance when it comes to

fare determination. If there was any indication in the DPR or

the RFP that revision of fares will not be restricted to the

formula of 11 percent every 4th year or revision in exceptional

circumstances of unanticipated increase in costs, it is possible

that other bidders might have offered more competitive

terms. Though, after the extension of the Metro Act, the fares

or the formula for the revision in the Concession Agreement

may not be binding, it is not correct to say that the same are

irrelevant, extraneous and therefore, liable for exclusion from

consideration.

111 The FFC, or for that matter, at least the three

experts appointed by the FFC, as directed by the FFC, have

not assessed the issue of Metro fares by taking into

consideration the entire spectrum of project cost, equity,

return on investments, servicing of debts, operation costs, and

such other parameters specifically referred to in paragraphs

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17 and 18 of the majority report. It is a situation whether

incorrect questions are put to, which will obviously result in

securing incorrect answers. If, as per the Business Plan

submitted by the consortium, there was to be no return on

equity for the first 8 years, there was to be no repayment of

loans for the first 5 years and host of such other factors, as

reflected in the business plan, then, assessment of fares by

ignoring all such relevancies, calls for judicial review. These

were the matters which were relevant to the issue for fare

determination. All such issues were squarely raised by

MMRDA in its submissions dated 7th May 2015 and 10th June

2015. However, the impugned decision "majority report"

reflects no consideration of the submissions and the issues

raised by MMRDA in their submissions. The objective for the

extension of the Metro Act was certainly not an act to relieve

the MMOPL of the representations held out in its business

plan, which was one of the considerations for the evaluation

of the bid. The objective was also certainly not to merely

relieve the MMOPL of the contractual obligations undertaken

by it under the Concession Agreement. The objective was to

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consider all price fixation mechanisms usually go into to

arrive at a fair fare, which would balance the interests of the

operator and the commuting public. A fare, which would

retain the character of the project as a Mass Rapid Transit

System, a fare which would retain the character of a PPP

model.

112 The FFC, by virtue of its statutory position, can

undoubtedly disregard the fare stipulated in the contract

between the parties. In a given case, it may determine fares,

even lesser than the stipulated contractual rates. Similarly, in

a given case the fares may be higher than the stipulated

contractual rates. As held in Cynamide (supra) a price

fixation measure does not concern itself with the interest of

an individual manufacturer or a producer, which in this case,

will imply the operator MMOPL. It is generally in relation to

a particular commodity or a class of commodities or

transactions, which, in this case, will imply, the operator

MMOPL. It is done in relation to a particular commodity or a

class of commodities or transactions, which, in this case, will

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mean the riders of the Metro Project. Most importantly, a

price fixation measure is conceived in the interests of the

general consumer public. The right of the citizens to obtain

essential articles at fair prices and the duty of the State to

provide them so are transformed into the power of the State

to fix prices and the obligation of the producer to charge no

more than the price fixed. Again, the Supreme Court has

clarified that price fixation is not something which primarily

affects only the manufactures and the producers. Those who

are most vitally affected are the consumer public. It is for

their protection that the price fixation is resorted to, and any

increase in price affects them as seriously as any decrease

does a manufacturer, if not more.

113 Even the MMOPL tacitly concedes that the fare

recommended by FFC i.e. Rs. 10 to 110, if implemented,

will amount to giving a 'tariff shock' to its valued

commuters. In order to avoid giving such 'tariff shock' to its

commuters, the MMOPL states that it chose to defer any fare

revision till 30th November 2015, and have a dialogue with

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the State of Maharashtra with an intention to find out a

viable solution. The MMOPL has stated that for the present,

though, in terms of the recommendation of the FFC it is

entitled to increase the fares to Rs.10 - 110, proposed

increase to Rs.10 - 40.

114 The averment with regard to tariff shock is set

out in the MMOPL's affidavit dated 7th December 2015 at

paragraph 18(e) which reads as follows :

"(e) The FFC had recommended a fare structure of Rs.

10 to Rs. 110 in July 2015 after detailed scrutiny
of all aspects but the 4th Respondent chose to defer
any fare revision till November 30, 2015 and
engage with the GoM with an intent to finding a
viable solution and to avoid giving any tariff
shock to its valued commuters.

115 According to us, the defence raised by MMOPL

that though FFC recommended fare structure of Rs.10 to 110,

they did not want to implement the same immediately to

avoid 'tariff shock' to commuters, may not be much assistance

to them to defend the impugned decision. Once the

recommendation is allowed to prevail, it will be left open to

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MMOPL to implement the fare of Rs.10 to Rs.110 at anytime

they want. Recommendation by FFC is nothing but an

authorization to MMOPL to implement the increased fares

upto maximum absolutely according to its discretion. In that

case, the commuter public would be at the mercy of the

MMOPL so far as the fares are concerned. It would be

nothing but defeating the very purpose of 'Rapid Mass Transit

System''. Further, it is not certainly the objective for

prescribing price fixation measures. By adoption of this

methodology, even any attempts at future fare fixation, it may

be pre-empted by urging that the fare actually levied is less

than the maximum recommended.

116 In terms of DPR and RFP when the project was

conceived it was fixed at 1.5 times the BEST ordinary non-air

conditioned bus fare, on the other hand, when MMOPL filed

application for revision of fares, it pleaded that Metro fares

should be priced well above BEST fares because Metro travel

is time saving, reliable, comfortable and safe. It is best

comparable to A.C. Bus fare for the purpose of fixing of fares.

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117 In order to achieve higher ridership, it was

conceived to pay the fares to 1.5 times the BEST ordinary

non-air conditioned bus fare, since Metro project was

conceived as Mass Rapid Transit System. There is no merit in

the argument of the 4th respondent MMOPL that there is no

nexus between the low fares and high ridership. Even FFC

has not accepted such proposition, though the FFC may not

have paid much attention to the same. Even the Welingkar

Report, upon which, MMOPL relies has stated that with 20%

increase in the existing fares, ridership will be decreased by

33.71%.

118 Some extracts of its application read as follows:

"3.3.1.3. Affordability of the services

As discussed above, the Affordability of the facility will
be governed by the ability to pay, willingness to pay by a
majority of the strata of the potential commuters across
the metro alignment.

Ridership need to be optimized since very low fares will
attract very high ridership but it will generate lower
revenue and on the other side very high fare may take
away the affordability of the facility and attract very low

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ridership and thus low revenue. The strategy needs to
adopt a balanced approach and since the system is
dynamic it should be able to cater to different segments
of the society by allowing time of the day fares wherein
peak hours may invite a differentially higher fare than
non-peak hour thereby allowing optimal capacity
utilization and safe running of the system.

"3.3.2. Comparison with Competing Modes of
Transport
In this section, we have compared the fare structure of
different modes of transport in the city (metro, buses,
AC buses, auto-rickshaws, and taxi) and have compared
the different parameters like time, security, safety,
comfort, reliability, automation for each of transportation
systems.

3.3.2.1 Bus :

Bombay Electric Supply and Transport Undertaking
(BEST) operate the bus transportation system in the city
of Mumbai. The following fares are applicable for the
same; however, the bus operation has been heavily
subsidized with total revenue deficit of Rs.768 Crores in
the year 2013-14. Further, Rs.917 Crores has been
estimated as revenue deficit for year 2014-15.

Table 3 : Current BEST fares

Current Fare
Sl. No. Distance Ordinary AC Buses
(Bus) Rs. (Rs.)
1 0 to 2 km 8 30
2 2 km to 4 km 10 35
3 4 km to 6 km 14 55
4 6 km to 10 km 18 65
5 10 km to 14 km 22 80

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"3.3.3. Comparison between various Parameters
for different modes of transport
Various models of transport have been compared to
understand the value proposition they provide and the
cost of using the same :

Table - 10

Para -- Metro Best Bus Auto Taxis
meters
Time -21 minutes 60 minutes - 50 50 minutes -
Taken 100 minutes minutes - 90minutes
90minutes
Comfort Air- AC available No Option avai-
conditioned and not lable at a very
available on high price
metro route
Last Mile No No Yes Yes
connecti-
vity
Fare Automatic Pass facility Manual Manual
Collection available,
manual
otherwise
Reliabi-
lity on High Low Medium Medium
travel
time
Cost Intial fares Rs.8 - Rs.30 Rs.17-187 Rs.21-230
fixed as AC bus;
Rs.10-40 Rs.30 - Rs.100
Availa- Throughout Frequent Available Available on
bility the day call

Auto- High-Limited Low: Human Low:Driver Dependent,there
mation human Intervention have been various complaints
Intervention required to RTO regarding non-
compliance.

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Safety High Low Low Medium
Trains to not People Unbalanced
move without hanging out on
door closure the doors from
the bus
Security Security None None None
Cameras and
round the
clock security
presence
Wait Average 2 to 4 Average 15 to Average 5 Average 5 to
time minutes 20 mins to 30 mins 30 mins

Hence, it is evident that :

(a) Metro brings in a significant amount of time
saving in comparison to all other modes of
transportation

(b) The reliability of certainty of journey is highest
because of the dedicated right of way

(c) Highly safe system, secured in comparison to all
other modes

(d) Comfortable mode with Air-Conditioned coaches
and automated fare collection system; thus scores
above all other mode of transportation systems.

Thus, air-conditioned metro should be priced well above
BEST fares because of the various value proposition it
provides viz. time saving, comfort, reliability, safety etc.
It is best comparable to AC bus services for the purpose of
fixation fares".

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119 According to us, the contention raised by MMOPL

that since the Metro Project, even with the enhanced fares

will be catering eventually to atleast 1 - 2 lakh riders each

day, the same is sufficient for the project to retain its Mass

Rapid Transit System, is not acceptable. According to them,

placing reliance on the dictionary meaning of the term "Mass"

is quite misplaced if the context in which it has to be

appreciated, is taken into consideration. It is also noticed that

the Mumbai Suburban Railway (local trains) commute 7.5

million or 75 lakh commuters each day. This is reported to be

2.5 times its capacity. The contention completely ignores the

profile and the basic structure of the project which came to be

reflected in the DPR, RFP and even the Business Plans.

120 The comparison made by MMOPL between the

Metro and the BEST A.C buses is also quite misconceived.

The percentage of such buses and the number of commuters

which used such buses is nothing compared to the percentage

of buses and commuters in BEST buses ordinary non-air-

conditioned ones. Apparently, in order to ease out pressure

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on the existing infrastructure i.e. the local trains and BEST

buses, or even on the congested public roads to reduce the

congestion, the Metro Project was envisaged. Because of this

purpose, construction was permitted on / above public roads

and public properties. Public property is leased at a nominal

rent of Rs.1/- for the Metro Project. The Metro Project is

expected to cater to the different class of commuters like

those commuting in air-conditioned buses or air-conditioned

taxis, virtually amounts to converting the character of a "Mass

Rapid Transit System" to a "Class Rapid Transit System".

According to us, these are all relevant considerations which

the FFC was bound to atleast take into account in determining

the Metro fares.

121 We are also of the opinion that FFC, appears to

have determined the fares on the basis that the Metro Project

was some Greenfield project. It has totally ignored the

circumstance why competitive bids were invited from the

bidders across the globe. The bidders, in terms of

requirement, under the RFP, have submitted their business

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plans which are to be evaluated for the purpose of

determination of the bidder. In such matters, the bidders are

required to make their own commercial judgments, including

commercial judgments, and then offer their own projections.

On the extension of the Metro Act, it is possible that such

projections may not be binding on FFC, but one cannot call

them irrelevant facts.

122 The issue of bankability or viability referred to by

Jeffrey Delmon, is no doubt a relevant consideration to a PPP

Project. Apparently, the Consortium submitted its bid

together with the business plan, there is no reason

whatsoever to doubt that the Consortium took into

consideration the issues of bankability or viability of the

project. There is reason to believe that the Consortium

took these vital aspects into consideration when it reduced

VGF demand from Rs.1251 crores to Rs.650 crores. Now,

MMOPL is raising the issues of bankability or viability on the

ground of escalation of construction costs, or the alleged

non-compliance of some assurances given to the Consortium

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at the stage of reduction of VGF demand. As stated above,

these are the issues pending for consideration/adjudication in

arbitration proceedings. According to us, FFC was disentitled

to proceed on the basis that it is MMRDA which was

responsible for the delay in the project which led to the

consequence of cost overruns. Again, viability of only the

private partner cannot be the sole or relevant consideration.

The viability of the project, in total, is an important and

relevant consideration. This, according to us, includes

reference to the payment capacity of the consumers of the

project. This again, has to be with reference to basic

structure of the project as a Mass Rapid Transit System. All

we want to say is that these were relevant facts and valid

considerations which ought to have been gone into in the

process of decision making by the FFC.

123 The FFC says it has taken into consideration the

reports of the the following expert/expert bodies to study the

equity investments, project costs, operational costs of Mumbai

Metro :

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(1) Professor G. Raghuram, (IIM), Ahmedabad;

(2) L. Welingkar Institute of Management
Development Research, Mumbai;

(3) Mr. S. K. Lohia, Chief Engineer, Northern
Railways Ex-OSD (Urban Transport) Ministry of
Urban Development, Govt. of India.

124 In addition to the above experts, the majority of

the FFC states that the Price Water House Coopers (PWC)

Report also was placed before them for consideration since

FFC thought it imminently fit to evaluate various policies that

are being followed in India and across the world.

125 The majority report at paragraph 20 notes that

Raghuram and Lohia Reports are recommended average fare

of Rs.60 and PWC has recommended increasing the fare by

3.5 times the existing fare.

126 On perusal of Raghuram Report, it is true that it

recommends average fare of Rs.60 as "Revenue Maximizing

Fare". This corresponds to peak hour fare of Rs.10 - 87 and

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non peak hour fare of Rs.10 - 32. At least, prima facie, this

was an 'all inclusive fare' in the sense it would cover not only

OPEX or Service of Interest on Loan, but also include like

repayment of the loan amounts, depreciation, return to

shareholders and several such factors, which, in terms of the

business plan, were not to be included for at least the first

eight years of operations. Most pertinently, even, the

Raghuram Report sounds the following caveats if the average

fare of Rs.60 is recommended :

"It is important to note that the fare estimated to cover
the cash outflows and the full cost does not provide for
any elasticity of demand with respect to fare. At such
high fares, in reality, the traffic would be driven away,
reducing the fare box revenues lower than that at the
revenue maximizing level".

"From the affordability point of view, the full cost based
fare (option v. elaborated in section 3.5) would be
impractical, since it does not recognize elasticity of
demand and the competitive fares. It would not even
work from the viability perspective, since elasticity of
demand from the fare would drive away the passengers."

"Going forward, we recommend drawing on the principle
of revenue maximization, subject to validation based on
competitive fares. It is important to note that even under
this scenario the viability of the project is not
guaranteed."

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127 From the aforesaid reading, it is very clear that

the Raghuram Report had very guardedly recommended the

average fare of Rs.60 corresponding to the fare range of Rs.10

- 87, subject to several caveats. In fact, the report suggests

that even at these rates, the riders would be driven away. On

the other hand, the majority report misconstrues this

recommendation as some firm or unconditional

recommendation, and then proceeds to determine the fare

not even in the range of Rs.10 - 87, but in the range of Rs.10

- 110.

128 The Lohia Report draws distinction between

'Technical Fare' and 'Public Fare'. The Technical fare would

enable the operator to cover full cost, including reasonable

return to the shareholders. This was determined at average

fare of Rs.68 in the range of Rs.22 - 136. The Public fare was

determined on the basis of affordability, and was stated to be

Rs.60 in the range of Rs.10 - 120. Again, even this Public

fare included return to the shareholders at the rate of 10%,

and took into account interest payments and OPEX, much in

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excess of what was projected in the Business Plan. Finally,

the Lohia Report concludes that the average Public fare

should be around Rs.68 per passenger, if the State or the

MMRDA were willing to bridge the viability gap by making

an interim payment of Rs.35 crores. The report also notes

that at these rates, the ridership would fall to about 1.90

lakhs per day. As noted earlier, the Raghuram Report, in

terms, has stated that even at the average fare of Rs.60 per

passenger, the commuters/riders will be driven away from the

Metro Project, and therefore, it was neither practical nor

viable to operate the Project at such rates. This is more or

less the position reflected from the pleading of Lohia Report

as well. Both the reports almost black out the Business Plan

and the projections submitted by the Consortium.

129 The Welingkar Report states that if there is 20%

increase in the fare structure from the existing Rs.10 - 40

levels, there would be reduction in ridership by about

19.14%. Increase of 30% in the fare would reduce ridership

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129 WP-2605-15

by 33.71%, and users of the Metro Project would switch to

bus or train for their daily commuting. The report says that

66% and 80% of the commuters interviewed, were agreeable

for fare hike of 20% or 30% respectively. However, the

report also notes that 52% of the non metro users stated that

they were deterred even the existing fares of Rs.10 - 40,

which according to them, is too expensive. The Welingkar

Report, after referring to the caveats in fall in ridership,

ultimately, recommended fare increase by 20% to 30% i.e. in

the range of Rs.12 - 48 or Rs.13 - 52. The FFC has only

picked up the statement that 66% and 80% of the existing

users were agreeable to fare hike, and does not refer to any

other statement or details mentioned in the report.

130 The PCW Report had opined that the existing fare

of Rs.10 - 40 was adequate to meet OPEX, but not interest

payments. The report also states that fare of Rs.30 - 80

would be adequate to meet OPEX interest and depreciation.

Again, even the figures taken into account by PCW are much

in excess of the figures projected in the business plan.

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131 From the aforesaid, at least one thing is quite

clear i.e. none of the reports recommended fare ranging

between Rs.10 - 110. Such fares may have been discussed in

the reports, but were definitely not recommended. On the

other hand, the FFC, in paragraph 24 of the majority report,

however states as follows :

"24. We have considered the reports submitted by
the four expert committees. In terms of the report
we find that they have suggested the higher
average fare. However we are fixing the fare
hereunder, which works out to be lower average
fare than the average fare suggested by the four
expert committee."

132 After stating as stated above, the majority report

of the FFC proceeds to fix the fare in the range of Rs.10 -

110, which is certainly not the lower average fare than the

average fare suggested by the four experts. Even otherwise,

on what basis they arrive at such rates is not forthcoming.

133 Definitely, this is a case of manifest

unreasonableness. The FFC, it appears, has misread and

misconstrued the reports of the experts appointed by it. The

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experts, by virtue of the incorrect terms of reference made to

them, have in turn, ignored several relevant considerations

like the projections in the business plans, and the financials

submitted by MMOPL itself along with its bid documents.

The experts, have naturally, not even gone into the issue of

liability for delay and cost overruns. This is, therefore, not a

case where we propose to supplant the feel of the experts by

our own views. According to us, even applying the limited

parameters of judicial review to the matter on hand, we are of

the opinion interference is warranted.

134 In the light of above discussion and reasons, we

are of the opinion that the impugned decision dated 8th July

2015 deserves to be set aside. Fresh assessment is required.

The Union of India has to once again resort to the exercise

contemplated in terms of Section 34 of the Metro Act for

constitution of the Fare Fixation Committee within a period of

one month from today. The FFC once constituted is to

consider the issue of Metro fare determination in accordance

with law. It is left open to them to seek opinion of experts if

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they think it is necessary in the circumstances that exist.

However, once FFC is constituted within a month, as stated

above, it shall submit its report along with the

recommendations as expeditiously as possible, and in any

case, within a period not exceeding three months in terms of

Section 36 of the Metro Act.

135 Since the fare fixation issue on the initial opening

of the Metro Railway is pending in arbitration, MMRDA's plea

for interim relief stands rejected, the MMOPL subject to result

of the arbitration proceedings or the determination of the

fares by FFC, whichever is earlier, may continue with the

present fare structure of fares not exceeding Rs.10 - Rs.40/-.

136 We once again clarify that we have not examined

the issue of the constitutional validity of the Metro Act or the

Notifications by which said Act is made applicable to the

Mumbai Metropolitan area and the Metro-I line, since these

issues are pending consideration in WP No.863/2016 and PIL

No.39/2016. They could not be disposed of along with this

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petition on account of time constraint. Therefore, we clarify

that the determination of fares by the FFC under the

provisions of the Metro Act, will be ultimately subject to the

orders in WP No.863/2016 and PIL 39/2016 pending for final

hearing.

137 Accordingly, we dispose of the petition with the

following order :

(1) The impugned decision dated 8th July 2015 by the Fare
Fixation Committee recommending increase in the fares
of Metro from Rs.9 - 13 to Rs.10 - 110 effective from
2014-15 is hereby set aside ;

(2) The Union of India is directed to proceed in terms of
Section 34 of the Metro Act within a period of one
month from today.

(3) The FFC, once comes into existence, shall consider the
issue of Fare Fixation in accordance with law and on its
own merits in the light of our observations in this order
and submit its Report along with the recommendations, as
expeditiously as possible, and in any case, within a period
of three months from the date of reference by the Union
of India, in terms of the Metro Act;

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(4) The MMOPL, subject to result of the arbitration

proceedings relating to fare fixation on the initial
opening of the Metro Railway or the determination of
Fares by FFC as now directed, whichever is earlier, may
continue with the present fare structure i.e. fares not
exceeding Rs.10 - 40.

(5) Since the above process/exercise takes, in all, four
months period, no directions are issued for deposit of
excess amount of fares collected by MMOPL. However,
MMOPL is directed to file a statement before the FFC in
this regard.

There is no order as to costs.

   (M.S. SONAK, J)                            (CHIEF JUSTICE)

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