New NHAI circular on toll tax will cause highway operators loss of ₹4,000 crore: HOAI to Delhi High Court

The Delhi High Court on Thursday orally directed the National Highways Authority of India (NHAI) to refrain from taking coercive steps with regard to its recently issued circular on toll tax calculation [Highway Operators Association (I) v. National Highways Authority of India & Anr].

The High Court was dealing with petitions filed by the Highway Operators Association (HOAI) and Roadstar Infra Investment Trust (RIIT) challenging the NHAI's policy circular dated September 13.

This circular revised the 'linking factor' used for converting wholesale price index (WPI) data between different base years.

Justice Sachin Datta sought NHAI's response to the pleas and directed it to refrain from taking coercive steps against the concessionaires till the next date of hearing.

Senior Advocate Gopal Subramanium appeared for Highway Operators Association and argued that the linking factor has been reduced arbitrarily.

"This linking factor of 1.64 was decided in March 2018. From 2018 to 2025, all the bids have been entered; out of fear, they have suddenly reduced to 1.56. This is going to take a hit of about ₹4,000 crore. We are all concessionaires, all of us have lenders, we have got public funds put in their projects, that is why we have come to court. The Ministry supported us. How does NHAI suddenly reduce the figure? They have blasted this on us suddenly. Today, the downside is on all the financial models that the banks have approved for costing the viability of these financial projects. On the basis of what is this done?"

Senior Advocate Rajiv Nayar appeared for Roadstar Infra Investment Trust. He stated that the reworking of the formula has been done without any notice to the concessionaires.

The linking factor is essentially a multiplier which is used to maintain continuity in the time series data on the WPI. When the base year changes, the linking factor is used to link the WPI of the current series to the WPI of the previous series to ensure that the numbers remain comparable.

The petition states that the circular under challenge has unilaterally, arbitrarily and without any basis, reneged from the agreed linking factor of 1.641 (which was being used consistently for the last 7 years), for converting the WPI of all commodities from the base year 2011-12 to the earlier base year 2004-05.

The petitioners argued that this change is in complete departure from the methodology adopted in the previous circular of 2018.

The matter has been listed next for October 17.

Senior Advocate Gopal Subramanium as well as advocates Gauri Subramanium, Jayavardhan Singh, Raghav Kohli, Adnan Yousuf, Ankit Malhotra and Joel George appeared for HOAI. They were assisted by a team from Cyril Amarchand Mangaldas (CAM) comprising Advocates Raunak Dhillon, Manmeet Singh and Uday Khare (Partners), Isha Malik (Principal Associate), Nihaad Dewan and Niharika Shukla (Senior Associates).

For RIIT, Senior Advocate Rajiv Nayar was assisted by a CAM team of Advocates Raunak Dhillon (Partner), Nihaad Dewan (Senior Associate), Angela Dua and Anusha Sarkar (Associates).