2000 Supreme(SC) 439

2000(2) Supreme 7
SUPREME COURT OF INDIA
(From Allahabad High Court)
S.P. Bharucha, S.N. Phukan and Ruma Pal, JJ.
State of U.P. & Ors. etc. -Appellants
versus
Devi Dayal Singh etc. -Respondents
Civil Appeal No. 385 of 1994
With
Civil Appeal Nos. 386-387 of 1994
Decided on 25-2-2000
Counsel for the Parties :
For the Appearing Parties : A.K. Goel, Additional Solicitor General, Yogeshwar Prasad, Vijay Bhaguna, Sr. Advocates, T.N. Singh, R.B. Misra, Pradeep Misra, P.K. Jain, Ms. Rachna Gupta, Ms. Shobha Dikshit, Advocates.

Headnote:Indian Tolls Act, 1851-Section 2-State Government s power to levy toll -Scope and extent of-For valid imposition of a toll, there must be a corresponding benefit to public-Toll connot be used for augmenting States revenue-State Government can recover by way of toll from public actual expenses of construction, interest on actual expense and cost of maintenance-It could not however, levy toll and reimburse itself on account of stationery and interest on interest.

       The concept of toll is derived from English jurisprudence. Shorn of connotations which are historically irrelevant in this country, a toll may be defined as a sum of money taken in respect of a benefit arising out of the temporary use of land. It implies some consideration moving to the public either in the form of a liberty, privilege or service. In other words, for the valid imposition of a toll, there must be a corresponding benefit. (Para 7)

       The public benefit envisaged under Section 2 of the Tolls Act, 1851 is the making or repairing of any road or bridge at the expense of the State Government. For the advantage obtained by the public by the construction of the roads and bridges, the State Government is entitled to re-imburse itself for providing the service. Although the Section has empowered the State Government to levy rates of tolls as it thinks fit, having regard to the compensatory nature of the levy, the rate of toll must bear a reasonable relationship to the providing of the benefit. No doubt, by virtue of Section 8 of the Act, the tolls collected are part of the public revenue and may be absorbed in the general revenue of the State, nevertheless by definition a toll cannot be used for otherwise augmenting the State s revenue. (Paras 8 & 9)

       In the instant case an interpretation of the relevant paragraph of the notification makes it clear that the intention to levy the toll is to financially self-liquidate the construction and upkeep of bridges and roads. The notification thus allows toll to be collected only for a specified period viz. 50 years from the date of first levy or until the total cost of its construction is realised, whichever is earlier. The total cost of construction has been defined in paragraph III (a) of the notification as including (i) interest on the total expenditure on the bridge, (ii) expenditure in realisation of toll and (iii) maintenance. No interest is recoverable on (ii) or (iii). In terms of the notification, it is also not permissible to recover any amount of interest on the interest chargeable on (i). However, the State Government has, under cover of the notification, levied toll to recover not only (a) the actual cost of construction but also (b) the expenditure on account of stationery, (c) maintenance, (d) interest on the cost of construction, stationery expenditure and maintenance as well as (e) interest on the balance remaining after recovery of toll tax in any particular year. In calculating the balance, the State Government has included the stationery expenditure, maintenance and the interest charged on all the items. In other words, the State Government has charged interest on interest. (Paras 12 &13)

       Clearly, in terms of the notification, the State Government could not levy toll and reimburse itself on account of stationery, nor could it charge interest on maintenance and stationery costs. While there is also no provision in the notification for charging interest on interest, the State Government could in terms of the notification, certainly recover by way of toll from the public, the actual expense of construction, interest on such actual expense and the cost of maintenance. However, by the judgments under appeal, the right to levy the last two items was negatived. Section 2 of the Act itself contains no such limitation. Section 2 enables the State Government to levy toll at such rates "as it thinks fit". It is only with reference to the jurisprudential meaning of the word toll that the State Government must justify the levy with reference to the benefit conferred on the public by the construction of the bridge. (Paras 14 & 18)

       The observations in Jiya Lal & Others v. State of U.P. & Ors., AIR 1981 All. 72 that it is only in such case that the interest paid by the Government or its instrumentality can be said to be included in the cost of the construction of the bridge or road apart from being contrary to the express language of the 1976 notification issued by the State Government, the limitation on the power of the State Government to recoup fully the investment made overlooks the power conferred on the State Government generally to levy toll as a means of revenue collection under Article 246 Entry 59 of List II, Schedule VII of the Constitution. (Para 20)

       The observation in Jiyalal s case (supra) that no toll is chargeable u/s 2 to meet the expenses incurred in the maintenance cannot be accepted. Section 2 of the Act does not in any way restrict the discretion of the State Government to levy toll. It only sets out the pre-conditions when toll may be levied. Neither of the pre-conditions set the limit on the amount of toll which may be recovered. The only restriction is latent in the word toll itself. The maintenance of the bridge in a good condition is certainly a benefit the cost of which may validly be recovered by the levy of toll. We are also of the view that the distinction sought to be drawn between maintenance and repair in the context of construction is virtually without any difference. For maintaining a bridge one would have to keep it in good repair and by repairing a bridge it is also maintained. Finally, and in any event, the cost of maintenance is expressly recoverable under the 1976 Notification, which, as already noted, was not the subject matter of challenge at any stage of these proceedings. (Para 24)

       Held : Ultimately we dispose of the appeals by setting aside the impugned orders of the High Court but at the same time declaring that the State Government may not hereafter take into account for the purpose of levying any toll under the notification in respect of a road or bridge constructed by it, stationery cost (unless incurred in realisation of the toll), interest on stationery cost and maintenance, and interest on the interest payable on account of the actual expenditure incurred in the construction of the road or bridge. (Para 26)