HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO WRIT PETITION No.19417 OF 2011 ORDER: This writ petition is instituted, in essence, complaining that the respondents are not acting in accordance with the National Highways Fee (Determination of Rates and Collection) Rules 2008, (henceforth noted as User Fee Rules, 2008) and consequently to set-aside the communications sent up by them on 03.07.2011 and 06.07.2011 imposing penalties against the petitioner herein. 2. National Highways Authority of India, (henceforth noted as NHAI), floated ‘Notice Inviting Tenders’ from eligible bidders for procurement of fee collection agencies at toll plazas notified therein for a period of one year. Bids were required to be submitted latest by 11.00 A.M on 06.08.2010. The NIT indicated that pre-bid meeting will be held at 11.00 hours on 21.07.2010 at the concerned Regional Office of the NHAI. The third respondent-Chief General Manager, Hyderabad Region, through his communication dated 27.11.2010 informed the petitioner that it’s bid has been accepted by the competent authority and accordingly called upon the petitioner to deposit a sum of Rs.1,41,75,000/- and also furnish a bank guarantee for a similar amount towards performance guarantee. After the petitioner complied with the same, he was called upon to enter into a contract. On 17.01.2011, the petitioner sought for a clarification as to whether the definitions provided with regard to various classes of vehicles mentioned in the User Fee Rules 2008, should be adopted or not. However, no reply was received from the respondents in this regard. Since the time for executing the contract was drawing to a close, a contract was entered into by and between the parties on 15.02.2011 for a period of one year commencing from 01.03.2011 up to 29.02.2012. However, on 21.03.2011, a communication has been sent up to the petitioner by the Project Officer NHAI alleging collection of higher fee from certain trucks at the rate of Rs.285/- instead of Rs.130/- and to rectify the error in this regard. On 23.03.2011, a clarification has been furnished by the Project Director to the petitioner requiring him not to over charge user fee at rates other than those specified in the gazette notification No.SO 1057 (E) dated 22.07.2005. On 23.03.2011, the petitioner has drawn a detailed explanation thereto and pointed out that the petitioner has been following the User Fee Rules 2008, notified vide GSR.838 dated 05.12.2008, which classified the vehicles into five different categories and also provided for the definition of the said vehicles, in the matter of collection of fee. Towards the end of the said representation, it was asserted that the petitioner has been collecting charges only in terms of the contract, but not otherwise. Further, correspondence ensued on 29.03.2011 and 13.04.2011, but however on 23.06.2011, a show cause notice was issued calling upon the petitioner to explain as to why penalty be not imposed in terms of Clause 18(A) of the contract, for the alleged excess charging from trucks at the toll plaza. The petitioner responded thereto on 04.07.2011 requiring a further period of ten days for submission of the explanation as the necessary information is being collected. Without affording the ten days time as requested, on 06.07.2011 orders were passed imposing a penalty of Rs.8,55,000/- and through another proceedings of the same date, a further penalty of Rs.29,92,500/- has been imposed for the alleged collection of excess charges. This gave rise to the present writ petition. 3. Heard learned counsel Sri B. Adinarayana Rao for the petitioner and Sri K.V. Satyanarayana for the respondents 1 to 4 and the learned counsel for the fifth respondent Sri Jalakam Sampath Kumar. 4. Learned counsel for the petitioner would submit that the NHAI is constituted as an authority in terms of the provision contained in Section 3 of the National Highways Authority of India Act, 1988 (henceforth noted as NHAI Act, 1988). In terms of Section 11 of the said Act, the first respondent-Central Government entrusted to NHAI, a stretch of 233 kilometers of National Highway No.5 running between Kolkata to Chennai. In terms of Section 16 of the said Act, the second respondent is entitled to collect fee on behalf of the first respondent at such rates as may be notified by the Central Government. The second respondent is also empowered to entrust the collection of such fee to any person on such terms and conditions as such prescribed. Under Section 7 of the National Highways Act, 1956, (henceforth referred to as NH Act, 1956) the first respondent is entitled to levy fee for services or benefits rendered in relation to the use of National Highways. Section 9 of this Act enabled rules to be made for carrying out the purposes of the said Act. In exercise of such power, the Central Government made the National Highways (Fees for the use of National Highways Section and Permanent Bridge-Public Funded Project) Rules, 1997. Further, the first respondent has issued notification in S.O.No.1057 (E) dated 22.07.2005 fixing the rates of fee to be collected from the motor vehicle users of four lane stretch of National Highway No.5 in the State of Andhra Pradesh. Under this notification, the vehicles from which the fee can be collected are classified into four categories and the rates of fee to be collected for the one way trip and the multi trips per day were also mentioned. The first respondent has issued User Fee Rules, 2008, and published the same through GSR.No.838 (E) dated 05.12.2008. These rules were brought into force with effect from 05.12.2008. These rules have provided definitions of the vehicles and the petitioner herein has only collected the corresponding fee in accordance with the definition of the vehicles as per the User Fee Rules, 2008. Thus, notwithstanding that the petitioner is acting strictly in furtherance of the User Fee Rules, 2008, the respondents have unjustly proceeded against the petitioner. 5. It is further contended by the learned Senior Counsel for the petitioner that the User Fee Rules, 1997, do not define various types of vehicles, which were mentioned in the notification dated 22.07.2005. Therefore the definitions found in the User Fee Rules, 2008, have got to be adopted and followed in respect of the categories of vehicles mentioned in the notification dated 22.07.2005. The User Fee Rules, 2008, the moment were brought into force, become applicable and the NHAI cannot either decline or prevent the same from being given effect to. Further, the User Fee Rules, 2008, equates ‘multi axle vehicles’ with heavy construction machinery and earth moving equipment. Therefore, when the petitioner has collected the fee from multi axle vehicles as per the fee rate notified on 22.07.2005 for heavy construction machinery and earth moving equipment, and hence the action of the petitioner cannot be faulted in any manner by NHAI. Further, penalty can be imposed only when it is established that the collecting agency had charged user fee in excess of the prescribed fee but not otherwise. Further, when the petitioner has sought for ten days time, for drawing a detailed explanation in the matter without granting the same, action is initiated imposing penalty. Therefore, the impugned orders are unsustainable in law. 6. Per contra, Sri K.V. Satyanarayana, learned senior counsel for the respondents 1 to 4 would submit that the User Fee Rules, 2008 have suffered an amendment making it very clear that the 2008 rules will not be applicable in cases where bids were invited prior to the said amendment. In the instant case, bids were invited prior to the amendment of the User Fee Rules, 2008 and hence the 2008 rules will not be applicable. It was further contended that the contract has specifically provided for collection of fee only as per the notification dated 22.07.2005 and it has also been specifically provided for in the contract that the petitioner would not be seeking any modification or correction of the rates and for the established breach thereof - as the petitioner has been found charging in excess - very rightly the petitioner has been imposed with the penalty. It is further contended that the petitioner cannot interpret any term of the contract independently on his own and the petitioner cannot proceed unilaterally in the matter by collecting excess fee. It is further contended that a term of contract cannot be got implemented or enforced or interpreted through a legal process under Article 226 of the Constitution and hence the writ petition is not maintainable. 7. It was further pointed by the learned senior counsel that inspite of this Court granting stay of collection of the penalty imposed only and has issued notice only on the interlocutory application moved by the petitioner seeking directions to enable him to collect the fee, as per 2008 rules, but still, contrary to the position taken by him in his explanation dated 29.03.2011, the petitioner continued to collect excess fee and hence imposition of the penalty against him is thoroughly justified. However, learned counsel would submit that the NHAI is willing to reconsider the question of imposition of the penalties against the petitioner provided he submits a detailed explanation within a reasonable period. 8. Sri Jalakam Sampath Kumar, learned counsel appearing for the fifth respondent, Truck Owners Association, would submit that the petitioner has been charging in excess from the truckers and he has solicited specific directions from this Court to enable him to collect the fee as per the User Fee Rules, 2008, but the same was not granted by this Court, so far, but however on the pretext that this writ petition is pending, he is going ahead duly collecting the excess amount. He therefore submits that no equities should be shown towards the petitioner. 9. Under entry 23 of List I of the Seventh Schedule of our Constitution, Parliament has the exclusive power of legislation with respect to highways which are declared to be National Highways by or under law made by Parliament. Accordingly, when certain highways are proposed to be declared as National Highways so that the Central Government may exercise the necessary power in respect of construction, development and maintenance of such highways and also with a view to authorize collection of fee for certain types of services rendered on national highways, the National Highways Act 1956, has been enacted by the Parliament. In terms of Sub-section 1 of Section 2 of the NH Act 1956, each of the highways specified in the schedule appended to the said Act has been declared to be a National Highway. The highway starting from its junction near Bahragora and connecting, Cuttak, Bhubaneshwar, Visakhapatnam, Vijayawada and Madras (since now rechristened as Chennai) has been declared as National Highway No.5 in the schedule to the NH Act 1956. In terms of Section 4 of this Act all national highways vest in the Union and in terms of Section 5, it shall be the responsibility of the Central Government to develop and maintain in proper repair all national highways. Section 7 of this Act empowers the Central Government, by notification in the Official Gazette to levy fees at such rates as may be laid down by rules made in this behalf for services or benefits rendered in relation to the use of ferries, bridges, tunnels and the use of sections of national highways. Sub-section 2 of Section 7 empowers collection of such fee in accordance with the rules made under this Act. Section 9 conferred the rule making power on the Central Government for carrying out the purpose of this Act. In exercise of this power, the National Highways Fee (Determination of Rates and Collection) Rules, 2008 (User Fee Rules 2008 for short) have been framed. These rules were published on 05.12.2008 in the Gazette of India and thus were brought into force with effect from the said date. Under Rule 3, the Central Government was empowered, by notification to levy fee for use of any section of the National Highway. Rule 4 provided for prescription of the rate of fee for use of the Section of National Highway. Sub-rule 2 of Rule 4 provided for the base rate of fee per kilometer for various types of motor vehicles. It reads as under together with the explanation:- Type of Vehicle Base rate of fee per km (in Rupees) Car, Jeep, Van or Light Motor Vehicle 0.65 Light Commercial Vehicle, Light Goods Vehicle or Mini Bus 1.05 Bus or Truck 2.20 Heav y Construction Machinery (HCM) or Earth Moving Equipment (EME) or Multi Axle Vehicle (MAV) (three to six axles) 3.45 Oversized Vehicles (seven or more axles) 4.20 Explanation:- For the purposes of this rule,- (a) “car” or “jeep” or “van” or “light motor vehicle” means any mechanical vehicle the gross vehicle weight of which does not exceed seven thousand five hundred kilograms or the registered passenger carrying capability as specified in the certificate of registration issued under the Motor Vehicles Act, 1988 does not exceed twelve excluding the driver; (b) “light commercial vehicle” or “light goods vehicle” or “mini bus” means any mechanical vehicle with a gross vehicle weight exceeding seven thousand five hundred kilograms but less than twelve thousand kilograms or the registered passenger carrying capability as specified in the certificate of registration issued under the Motor Vehicles Act, 1988, exceeds twelve but does not exceed thirty two excluding the driver; (c) “truck” or “bus” means any mechanical vehicle with a gross vehicle weight exceeding twelve thousand kilograms but less than twenty thousand kilograms or the registered passenger carrying capability as specified in the certificate of registration issued under the Motor Vehicles Act, 1988, exceeds thirty-two, excluding the driver; (d) “heavy construction machinery” or “earth moving equipment” or “multi axle vehicle” means heavy construction machinery or earth moving equipment or mechanical vehicle including a multi axle vehicle with three to six axles or vehicle with a gross vehicle weight exceeding twenty thousand kilograms but less than sixty thousand kilogram; and (e) “oversized vehicle” means any mechanical vehicle having seven or more axles or vehicle with a gross vehicle weight exceeding sixty thousand kilograms. Rule 6 empowered the Central Government or the executing authority or the concessionaire, as the case may be, to collect the fee levied under these rules at the toll plazas, in perpetuity or for a specified period in accordance with the terms of the agreement entered into by the concessionaire. In respect of public funded projects, the fee levied under these rules shall be collected by the Central Government, or the executing authority, as the case may be, through its own officials or through a contractor. Rule 13 provided for recovery of the excess fee collected along with additional sum equal to 25% of the excess fee collected, provided that no such recovery shall be made unless an opportunity of hearing has been given to the executing authority or concessionaire, as the case may be. 10. It is important to note that the User Fee Rules 2008, have been made in supersession of the National Highways (Collection of Fees by any person for the use of Section of National Highways / permanent Bridge / Temporary Bridge on National Highway) Rules 1997, National Highways (Fees for the Use of National Highways Section and Permanent Bridge – Public Funded Project) Rules, 1997, the National Highways (Rate of Fees) Rules 1997, except as respects things done or omitted to be done before such supersession. 11. With a view to provide for the constitution of an authority for the development, maintenance and management of National Highways and for matters connected therewith or incidental thereto the National Highways Authority of India Act, 1988, (NHAI Act, 1988 for convenience) has been enacted by the Parliament. In terms of Section 3 of this NHAI Act 1988, the Central Government constituted NHAI. Section 11 of this Act empowered the Central Government by notification in the Official Gazette to vest or entrust to NHAI, such National Highway or any stretch thereof specified in such notification. Section 12 has dealt with the effect of transfer of assets and the liabilities of the Central Government to the NHAI upon publication of the notification under Section 11. Section 14 empowered the NHAI to enter into and perform any contract necessary for the discharge of its functions under this Act. Section 16 provided for the functions of the NHAI. Sub-section 1 of Section 16 makes it explicitly clear that it shall be the function of the NHAI, subject to the rules made by the Central Government to develop, maintain and manage the National Highways and any other highways vested in or entrusted to it by the Central Government. Sub-section 2 provided the detailed functions which NHAI may perform, without prejudice to the generality of the functions enumerated under Sub-section (1) thereof. Clause (h) of Sub- section 2, which has been brought forth by amending Act 16 of 1997, enabled the NHAI to engage or entrust any of its functions to any person on such terms and conditions as may be prescribed. Section 33 empowers the Central Government to issue such directions on questions of policy in the matter of discharge of functions and duties by the NHAI under this Act. Section 34 enables the Central Government to make rules by notification in the official gazette for carrying out the provisions of this Act. Clause (dd) of Sub-section 2 of Section 34 provided for the terms and conditions subject to which the functions of the NHAI may be entrusted to any person. Under Clause (h) of Sub-section 2 of Section 16. Section 37 provides for the Parliamentary control over the subordinate legislation/delegated legislation resorted to under this Act. 12. The User Fee Rules 2008, have been amended, once on 03.12.2010 and again on 12.01.2011. The amendments brought about on 03.12.2010 may not have much of significance for the present case on hand but however the amendments brought about on 12.01.2011 have some significance. Sub-rule 3 of Rule 1 of 2011 rules sets outs that the amended rules shall not apply to agreements and contracts executed and bids invited prior to the publication of these rules. It is apt to notice that bids in the instant case have been invited prior to the publication of these amended rules on 12.01.2011 and the bid of the writ petitioner has been accepted, in fact on 27.11.2010. By Rule 2(a) of the amended rules 2011, the table incorporated in Sub-rule 2 of Rule 4 of User Fee Rules 2008, as well as the explanation in para (d) there under have been substituted with the following table and explanation (d). 2. (a) In National Highways Fee (Determination of Rates and Collection) Rules, 2008 (hereinafter referred to as the said rules), in sub-rule (2) of rule 4,- (i) for the table, the following table shall be substituted, namely:- Type of Vehicle Base rate of fee per km (in Rupees) Car, Jeep, Van or Light Motor Vehicle 0.65 Light Commercial Vehicle, Light Goods Vehicle or Mini Bus 1.05 Bus or Truck 2.20 Heav y Construction Machinery (HCM) or Earth Moving Equipment (EME) or Multi Axle Vehicle (MAV) (three to six axles) 3.45 Oversized Vehicles (seven or more axles) 4.20 (ii) in the explanation, for para ‘(d)’, the following shall be substituted, namely:- “(d) ‘Heavy construction machinery’ or Earth moving equipment’ or Multi-axle vehicle’ means heavy construction machinery or earth moving equipment or mechanical vehicle including a multi-axle vehicle with for to six axles or vehicle (inclusive of the axle of the trailer, if any) with a gross vehicle weight exceeding twenty five thousand kilograms but less than sixty thousand kilograms;”; 13. By notification No.S.O.78 (E) dated 04.02.1999, the Central Government exercised the power available with it under Section 11 of NHAI Act, 1988 and entrusted the stretch from Km 0.00 to Km 233.00 of National Highway No.5 in the State of Andhra Pradesh to the NHAI. Thereafter, the Central Government in exercise of power available to it under Section 7 of the NH Act 1956, read with Rules 3,5 and 11 of the National Highways (Fees for the Use of National Highways Section and permanent Bridge – Public Funded Project) Rules 1997 and Sub-rule 2 of Rule 3 of the National Highways (Rate of Fee) Rules 1997, through Notification No.1057 (E), notified the levy and collection of fee on mechanical vehicles for the use of four lane stretch from Kms. 160.00 to Kms. 226.15 (Km 543.204 to Km 477.054) between Nandigam to Ichapuram of National Highway No.5 in the State of Andhra Pradesh at the rates specified in the schedule annexed thereto in perpetuity. This notified fee is authorized to be collected departmentally by NHAI or through private contractor who may be appointed on the basis of competitive bidding. The rates specified in the schedule of this notification are as follows: Rate of fee to be recovered from the users of four laned stretch from Km 160.00 to Km 226.15 (Km 543.204 to Km 447.054) of National Highway No.5 in the State of Andhra Pradesh. The fee shall be collected at single location only within the stretch. Serial Number Type of Vehicle Fee rate for Vehicle for one way trip (for 66.15 Km. length) (In Rupees) Fee rate for multiple trip in a day (In Rupees) (1) (2) (3) (4) 1. Car/ Jeep / Van 40 55 2. Light Commercial Vehicle 65 100 3. Truck / Bus 130 200 4. H e a v y Construction Machinery / Earth Moving Equipment 285 425 14. Immediately after this table, notes were also appended and note 4 thereof reads as under: “No fee shall be levied and collected from a mechanical vehicle, which is not covered by the said Schedule.” 15. As was already noticed supra, parties have entered into a contract on 15.02.2011 reducing the terms and conditions subject to which the writ petitioner shall carry out the job of User Fee Collection. Clause No.3 specified that the contractor shall collect user fee at such rates only and from such vehicles only as have been notified by the Central Government vide notification No.S.O.1057 (E) dated 22.07.2005, which is appended as Schedule 1 to the contract. Clauses 3 (b) and (c) of the contract read as under: “(b) The Contractor specifically undertakes not to claim during continuity of the Contract any change including addition, deletion and change in the classification mentioned or the rate of User Fee specified in the Notification referred above and appended to this Contract a s Schedule I for any reason whatsoever, under any circumstance. (c) The Contractor shall not be allowed to make its own interpretation about a particular type of vehicle attracting a particular rate so as to charge a higher rate from a particular type of vehicles. Decision of the Authority on such matter shall be final and binding.” 16. Clause No.5 dealt with the impact of any change in the rate of user fee that might be brought about by the Central Government. Clause No.18 provided for penalty for charging excess user fee. It granted liberty to the respondents to impose a penalty of an amount equal to fifty times amount so charged per day for thirty days. Clause No.26 listed out the disputes with regard to matters covered under Condition No.3, amongst others, as non-arbitrable disputes. With regard to rest of the disputes not covered by the said Clause, the resolution mechanism has been provided for by way of arbitration. The dispute in this case is centering around Clause 3 of the contract. Hence, it is not arbitrable. 17. The various types of vehicles which have been mentioned in the Notification No.S.O.1057 (E) dated 22.07.2005 have not been specifically defined therein. However, truck and bus are shown at Serial No.3 of the said notification and for one way trip of such a vehicle, Rs.130/- is the fee prescribed as chargeable. In contrast thereto, at Serial No.4, Heavy Construction Machinery / Earth Moving Equipment have been notified as chargeable at Rs.285/- per one way trip. Significantly, this notification has not clubbed `Multi Axle vehicles’ in the same class along with Heavy Construction