Saghir Ahmad vs The State of U.P. and Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeals Nos. 182 and 183 of 1954

Decision Date: 13 October 1954

Coram: B.K. Mukherjea, Ghulam Hasan, Mehar Chand Mahajan, Vivian Bose

Saghir Ahmad filed a petition against the State of Uttar Pradesh and other respondents, seeking relief from the judgment dated 13 October 1954. The matter was heard by a bench of the Supreme Court of India comprising Justice B. K. Mukherjea, Justice Ghulam Hasan, Justice Mehar Chand Mahajan, and Justice Vivian Bose. The bench delivered its opinion on the same date, 13 October 1954, and recorded the decision under the citation 1954 AIR 728 and 1955 SCR 707, with additional references appearing in various law reports including RF 1954 SC 743 (2), R 1955 SC 781 (7, 8, 10), E & D 1956 SC 298 (15, 16), and many others extending through subsequent years up to R 1992 SC 443 (10). The case involved the interpretation of several provisions of the Constitution of India, notably Articles 14, 19(1)(g), 19(6), 31(2), and 301, in relation to the concept of a highway, the rights of citizens to use public highways, and the extent of the State’s authority to regulate such use. The parties also contended with the applicability of the Constitution (First Amendment) Act, 1951, and the Uttar Pradesh Road Transport Act, 1951 (U. P. Act II of 1951), questioning whether the latter statute was ultra vires the Constitution and whether a subsequent constitutional amendment could validate a previously unconstitutional enactment. The headnote of the judgment explained that a highway originates, independent of statutory provisions, from either an express or implied dedication by the landowner granting a public right of passage, which is then accepted by the public. Such dedication is presumed when the public has used a way continuously and without interruption, creating a presumption so strong that it obviates the need to investigate the actual ownership of the land or the owner’s intent. All public streets and roads are vested in the State, which holds them in trust for the public. Consequently, members of the public, as beneficiaries, possess a right to use these highways, a right that is limited only by the comparable rights of other citizens. The State, acting as trustee, may impose reasonable limitations on the character and extent of use, provided these restrictions serve to protect the public’s general rights. Within the bounds of such regulatory limits, a citizen’s right to conduct business by operating transport vehicles on public highways cannot be denied solely because the State owns the highways.

In this case, the Court observed that the State, as trustee for the public, may impose limitations on the extent of users of public highways insofar as such limitations are necessary to protect public rights. However, subject to those limitations, a citizen's right to conduct a transport business on public roads cannot be denied merely because the State owns the highways. The decision in G. S. S. Motor Service v. State of Madras (1952 2 M.L.J. 894) was cited with approval, establishing that member of public may operate motor vehicles on a road within State regulations. It also held that the same person may engage in the business of transporting passengers using such vehicles. It is this carrying on of trade or business that the guarantee in Article 19(1)(g) seeks to protect. A citizen may legitimately challenge any legislation that removes or unduly curtails that right beyond what is permissible under clause (6) of the same article. Article 19(6), introduced by the Constitution (First Amendment) Act, 1951, permits the State to carry on any trade or business, either directly or through State-owned corporations, to the exclusion of private citizens, wholly or partially. The provision of Article 19(6) was not in force when the Uttar Pradesh Road Transport Act, 1951 (U.P. Act II of 1951) was enacted. Therefore, the Court held that the validity of the impugned Act could not be examined by applying that later amendment. A statute that is void for unconstitutionality at the time of its passage cannot be revived by a subsequent constitutional amendment that removes the objection. Instead, the statute must be reenacted if it is to survive. While the ordinary meaning of the word ‘restriction’ suggests a limitation rather than an absolute prohibition, the Court refrained from expressing a final opinion on whether ‘restriction’ includes total prohibition. If ‘restriction’ does not encompass complete prohibition, the impugned Act cannot be justified under Article 19(6) and would be void unless supported by Article 31. Conversely, if ‘restriction’ can, in certain circumstances, be read to include prohibition, the impugned Act imposes a blanket prohibition of private citizens' right to conduct motor-transport business on public roads in Uttar Pradesh. Such a prohibition cannot be sustained as a reasonable restriction in the interests of the general public. Whether a restriction is reasonable depends largely on the nature of the trade and the prevailing conditions. The Court noted that there is nothing inherently improper about the motor-transport trade in the present case, describing it as perfectly innocuous.

The Court observed that the Uttar Pradesh Road Transport Act, cited as Act II of 1951, infringed the fundamental rights of private citizens that are guaranteed under Article 19(1)(g) of the Constitution, and that the Act was not saved by the restriction clause of Article 19(6) as it existed at the time of its enactment; consequently, the Court held that the Act must be declared void under Article 13(2) of the Constitution. The Court further explained that the prohibition imposed by the impugned legislation on the trade or business of the citizens amounted to a deprivation of their property or an interest in a commercial undertaking within the meaning of Article 31(2); because the Act made no provision for compensation, it contravened the requirements of that clause. The Court also noted that the Act could not be struck down on the ground that it violated the equal-protection principle embodied in Article 14 of the Constitution. In addition, the Court discussed whether the Act conflicted with the guarantee of freedom of inter-State and intra-State trade, commerce and intercourse provided by Article 301, outlining the points that could be raised and the possible views that might be taken, while expressly refraining from expressing a final opinion on that issue. The judgment referred to several authorities, distinguishing Cooverjee v. Excise Commissioner, etc. ([1954] S.C.R. 873), and following the decisions in West Bengal v. Subodh Gopal Bose and Others ([1954] S.C.R. 587), Dwarkadas Shrinivas v. Sholapur Spinning and Weaving Co. Ltd. ([1954] S.C.R. 674), Packard v. Banton (68 L.E. 596; 264 U.S. 140), Frost v. Railroad Commission (70 L.E. 1101), Stephenson v. Binford (77 L.E. 288), Motilal v. Uttar Pradesh Government (I.L.R. 1951 All. 257), Municipal Corporation of the City of Toronto v. Virgo ([1896] A.C. 88), A.K. Gopalan v. State ([1950] S.C.R. 88), Lokanath Misra v. State of Orissa (A.I.R. 1952 Orissa 42), Commonwealth of Australia and Others v. Bank of New South Wales and Others ([1950] A.C. 235) and P. & O. Steam Navigation Co. v. Secretary of State (1861 5 B.H.C.R. Appendix 1). The matter before the Court consisted of Civil Appeals Nos. 182 and 183 of 1954, filed under Article 132(1) of the Constitution, challenging the judgment and order dated 17 November 1953 of the Allahabad High Court in Civil Miscellaneous Writ No. 414 of 1953, together with a large number of related writs enumerated in the record. Counsel for the appellants, assisted by two junior counsel, appeared for the appellants, while counsel for the State of Uttar Pradesh, assisted by two junior counsel, appeared for the respondents. The judgment was delivered on 13 October 1954 by Justice Mukherjea, and it concerned appellants who, along with many others, had been carrying on the business of plying motor vehicles on hire.

The appellant had been engaged in the business of operating motor vehicles, described as stage-carriage hire, on the Bulandshahr-Delhi route for many years. The operation of such vehicles had been governed for a long period by the Motor Vehicles Act, 1939, which, among other matters, provided for the issuance of driving licences, the registration of vehicles and the regulation of transport vehicles through permits granted by Regional Transport Authorities. Section 42(3) of that Act exempted transport vehicles owned by, or operated on behalf of, the Central Government or a Provincial Government from the requirement to obtain permits, except where the vehicles were employed in connection with the business of an Indian State Railway. After the year 1947, the Government of Uttar Pradesh conceived the idea of running its own buses on public thoroughfares. Initially these state-run buses were introduced as competitors to the private operators, but subsequently the Government decided to eliminate all private bus owners from the market and to establish a complete State monopoly over road-transport services. To achieve that objective the Government relied upon the provisions of the Motor Vehicles Act itself. By invoking section 42(3), the Government reasoned that it was not obliged to obtain permits for its own vehicles and that it could operate any number of buses without securing permits. In furtherance of this policy the Regional Transport Authorities began cancelling permits that had previously been issued to private operators and refused to grant new permits to persons who otherwise would have been entitled to them. In response, a number of private bus owners filed petitions in the Allahabad High Court under article 226 of the Constitution, seeking appropriate writ relief against what they described as the illegal use of the Motor Vehicles Act by the Government of Uttar Pradesh. The petitions were heard by a full bench of five judges, and four separate judgments were delivered addressing the various questions raised by the parties. A majority of the judges expressed the view that the State, claiming authority under section 42(3) of the Motor Vehicles Act, could not lawfully discriminate in its own favour and that the subsection, to the extent that it exempted State transport buses from the obligation to obtain permits, was inconsistent with article 14 of the Constitution. All the judges concurred that the nationalisation of an industry could not be effected merely by an executive order without suitable legislation, and that any such legislation would likely need to be justified under article 19(6) of the Constitution. Consequently, the Transport Authorities were directed to consider applications for permits made by the various private bus owners in strict accordance with the provisions of the Motor Vehicles Act, without being influenced by the State Government’s desire to operate its own buses on particular routes.

In this case, the State Government, which wanted to have the exclusive right to operate Road Transport Services within its territory, sought the assistance of the Legislature and the Uttar Pradesh Road Transport Act (Act II of 1951) was passed and became law on and from the 10th of February, 1951. The constitutional validity of this enactment was the subject-matter of contest in the present proceedings. The preamble to the Road Transport Act, hereinafter called “the Act”, said: “Whereas it is expedient in the interest of the general public and for the promotion of the suitable and efficient road transport to provide for a State Road Transport Service in Uttar Pradesh, it is enacted as follows.” Section 2 gave definitions of certain terms, while section 3, the most material provision, embodied virtually the whole purpose of the Act. Section 3 authorised the State Government, when satisfied that it was necessary in the interest of the general public and for serving the common good, to declare that road transport services in general, or any particular class of such service on any route or portion thereof, shall be run and operated by the State Government exclusively, or by the State Government in conjunction with the railways, or partly by the State Government and partly by others, in accordance with the provisions of the Act. Section 4 required publication of a scheme framed in accordance with the declaration, and section 5 allowed interested persons to make objections to such scheme in the manner prescribed. Once the scheme was finalised, section 7 set out the consequences. So long as the scheme continued in force, the State Government retained the exclusive right to operate Road Transport Services, or, if the scheme so provided, a certain fixed number of transport vehicles belonging to others could also be run on those roads. The State Government was authorised in all such cases to dispense with the necessity of taking out permits for State transport vehicles, or to cancel, alter or modify any existing permits or to add any fresh condition to any permit in respect of any transport vehicle. The remaining portion of the Act laid down how its provisions were to be worked out and implemented. Sections 8 and 9 provided respectively for the appointment of a Transport Commission and Advisory Committees. Under section 10 the State Government could delegate its powers under the Act to an officer or authority subordinate to it. Section 12 made it an offence for any person to drive a public service vehicle or to allow such vehicle to be used in contravention of the provisions of section 7. The other sections were not material for the present purpose. By a notification dated the 25th of March, 1953, the U. P. Government published a declaration in terms of section 3 of the Act, to the effect that the State carriage services, among others, on the Bulandshar Delhi route, shall be run and operated exclusively by the State Government.

In March 1953 the Government of Uttar Pradesh issued a declaration pursuant to section 3 of the State Transport Act stating that State carriage services on the Bulandshahr-Delhi route would be run and operated exclusively by the State Government. A further notification dated 7 April 1953 set out a scheme for the operation of those State carriage services on the same routes. In reaction, the two appellants together with 106 other private bus owners who were then providing bus services on those routes filed petitions under article 226 of the Constitution before the Allahabad High Court. The petitions sought writs of mandamus directing the Uttar Pradesh Government and the State Transport Authorities not to interfere with the operation of the petitioners’ stage-carriage services and to refrain from operating the State Road Transport Service except in accordance with the provisions of the Motor Vehicles Act. The writ petitions challenged the constitutional validity of the Act on several grounds. The primary contentions were that the Act was discriminatory and violated article 14 of the Constitution; that it conflicted with the fundamental right guaranteed under article 19(1)(g) to carry on any occupation, trade or business; that it amounted to an unlawful acquisition of the petitioners’ interest in a commercial undertaking without providing compensation as required by article 31(2); and that it infringed the freedom of inter-State and intra-State trade embodied in article 301. A Division Bench comprising Judges Mukherji and Chaturvedi heard these petitions and, by two separate but concurring judgments dated 17 November 1953, rejected all the contentions of the petitioners and dismissed the writ petitions. The two appellants subsequently obtained certificates of appeal and brought the matter before this Court, with Mr Gopal Swarup Pathak appearing in support of the appeals and reiterating virtually all the grounds that had been raised before the High Court.

The Court first addressed two allied questions: whether the appellants could invoke a fundamental right under article 19(1)(g) that had been violated by the impugned legislation, and whether the Act had deprived them of any “property” that would attract the operation of article 31. Mr Pathak argued that article 19(1)(g) guarantees every citizen the right to carry on any occupation, trade or business, and that the appellants were, up to that point, engaged in the business of plying buses for hire on public highways. Accordingly, he submitted that the Act, by preventing them from pursuing that trade, conflicted with the constitutionally guaranteed right. He further contended that the appellants’ beneficial interest in the commercial undertaking constituted “property” within the meaning of article 31(2) and that, because the Act made no provision for compensation, it should be declared void. Additionally, Mr Pathak advanced a novel argument that the appellants’ right to use a public highway for trade purposes was an easement, and therefore a form of property; consequently, the legislation would have resulted in a deprivation of property. The Court found this easement argument untenable and noted that it had been rightly abandoned by the learned counsel. The Advocate-General for the State of Uttar Pradesh did not dispute that the Constitution guarantees the right to pursue any trade, business or occupation of one’s choice, but the discussion of that point continued in subsequent passages.

It was contended that the legislation which barred the appellants from carrying on their bus-plying business on the public highway directly conflicted with the fundamental right guaranteed by article 19(1)(g) of the Constitution, which secures every citizen’s freedom to practice any occupation, trade or business. The petitioners further asserted that their beneficial interest in the commercial enterprise constituted “property’’ within the meaning of article 31(2) of the Constitution, and that because the Act failed to satisfy the requirements laid down in that article, the Act should be declared void. In addition, counsel for the petitioners advanced a novel argument that the appellants’ right to use a public highway for trade purposes was essentially an easement, and therefore could be regarded as a property right in law; on that basis they claimed that the impugned legislation effected an unlawful deprivation of property. The Court found this line of reasoning untenable and observed that it had been rightly abandoned by the learned counsel.

The Advocate-General for the State of Uttar Pradesh did not dispute the constitutional guarantee that every citizen may pursue any trade, business or occupation of his choice. However, he emphasized that the guarantee does not confer a right to conduct such trade everywhere at will. He explained that a citizen must first possess a legal right to use a particular place for his trade or business before invoking the constitutional protection against interference. In essence, the counsel argued that bus owners, as members of the public, do not possess a legal entitlement to ply buses for hire on any public road; the only right the public enjoys in relation to a highway is the right of passing and repassing over it. The State, which holds ownership of all public ways, alone has the authority to decide whether to allow any citizen to engage in trade or business on a public highway and, if so, to what extent. Consequently, citizens have no inherent right in this respect apart from any sanction granted by the State. The Court therefore concluded that the rights of the appellants, as well as those of other bus owners, are created wholly by State legislation, and that such rights may be withdrawn by the same legislation without violating article 19(1)(g). This position required careful consideration, and the Court noted that the Bulandshahr-Delhi route forms part of the Grand Trunk Road, a recognized public highway. Under English law, which has been applied in India, a highway originates, aside from statutory provisions, from a dedication—either express or implied—by the landowner granting the public a right of passage, coupled with the public’s acceptance of that right. In the majority of cases, such dedication is presumed from long and uninterrupted public use, and the presumption is so strong that inquiry into the landowner’s actual intention or identity is unnecessary. The mere existence of the public’s right to pass and repass does not imply that a highway may be used solely as a footpath; any other mode of use is permissible only with the State’s permission or sufferance. The extent of the right is inferred from the nature of the user, and the settled principle holds that the right extends to all forms of traffic that have been usual, accustomed, and also to those that are reasonably similar and incidental to such traffic.

According to the nineteenth edition of the Law of Highways, on page 13, the presumption that a way is used by the public is so strong that it removes any need to investigate the actual intention of the owner of the soil, and it is not even necessary to determine who the owner was. The Court observed that although members of the public possess a right to pass and repass over a highway, this does not imply that every highway may be used solely as a foot-path or that any other type of user may be permitted only with the explicit consent or tolerance of the State. The extent of the right of passage, the Court explained, must be inferred from the nature of the user, and the settled principle holds that the right extends to all forms of traffic that have been usual and customary, as well as to traffic that is reasonably similar and incidental to those forms. The Court cited Halsbury’s Laws of England, stating: “Where a highway originates in an inferred dedication, it is a question of fact what kind of traffic it was so dedicated for, having regard to the character of the way and the nature of the user prior to the date at which they infer dedication; and a right of passage once acquired will extend to more modern forms of traffic reasonably similar to those for which the highway was originally dedicated, so long as they do not impose a substantially greater burden on the owner of the soil.” The Court noted that there can be no dispute that the Grand Trunk Road, which has existed as a public highway since the fifteenth century A.D., has carried a variety of vehicular traffic that were common at different periods. Although motor vehicles were unknown when the road was first created, the Court held that the modern use of motor vehicles as a means of locomotion and transport could not, under the principle quoted, be regarded as an unwarranted extension of the customary users of the highway. The Court further observed that if any danger to the road arises because of such use, or if the use of one vehicle interferes with the use of others, it is the State’s duty to regulate motor traffic or to limit the number or weight of vehicles on the road in any manner it deems appropriate, and no objection to such regulation could be taken. The Court emphasized that the public’s right to operate motor vehicles on a public road is not a right created by the Motor Vehicles Act; rather, the right existed before any legislation as an incident of the public’s rights over a highway. The State’s role was described as one of controlling and regulating that right in order to ensure safety, peace, health and good morals of the public. Once the Court accepted that a member of the public…

The Court observed that a person was entitled to operate motor vehicles on a public road simply because he possessed the right of passage over a highway, and that it was therefore irrelevant whether he used the vehicle for personal pleasure or for trade or business. The nature of the right concerning the highway was not altered by the purpose of the vehicle, and the Court could not accept the argument of the Advocate-General that using a public road for trade constituted an extraordinary or special use that could be granted only by a specific sanction from the State. To support his view, the Advocate-General had referred to several American decisions. In Packard v. Banton, Sutherland J. had stated that streets belong to the public and are primarily for ordinary public use, while use for profit was special and extraordinary and could be prohibited or conditioned by the Legislature. The same principle was reaffirmed in Frost v. Railroad Commission and again reiterated in Stephenson v. Binford, where Sutherland J. emphasized that the highways of the State are public property, their primary use is for private purposes, and that profit-oriented use is special and extraordinary, which the Legislature may at its discretion prohibit or regulate. The Court noted that these American rulings did not reflect the law of India under the Constitution. The Allahabad High Court, in a Full Bench judgment in Motilal v. Uttar Pradesh Government, had cited the American cases and two of its judges suggested that the “doctrine of exceptional user” might have been developed by American courts in the same way they developed the doctrine of police powers, but they concluded that this American rule was not the English or Indian law on the matter. The issue was examined in detail by the Madras High Court in C. S. S. Motor Service v. State of Madras. Justice Venkatarama Ayyar, delivering the judgment, explained that the American rule of special or extraordinary use of highways derived from the doctrine of “franchise,” which originated in English common law and was tied to the historic prerogative of the Crown. Although the franchise concept persisted in American law as a remnant of pre-independence privileges, the Court held that such a doctrine had no place in the Indian Constitution.

In the United States, the law that gave special rights through legislative grants treated those rights as a “franchise” or “privilege,” a status distinct from the ordinary liberties enjoyed by ordinary citizens. The operation of transport buses by common carriers on public roads was regarded as such a franchise rather than a right that every citizen could claim under common law. The cases cited earlier demonstrated a clear distinction between contract carriers, who transport passengers or goods under specific contracts, and common carriers, whose activities are of public interest. The state exercised a comprehensive power of control over the latter category. Justice Ayyar correctly observed that the doctrine of franchise has no place in the Indian Constitution. Under the Constitution of India, both contract carriers and common carriers occupied the same position with respect to the guaranteed right under article 19(1)(g), and both were subject to appropriate regulation under clause 6 of that article. The learned judge summed up the law as follows: all public streets and roads belong to the State, but the State holds them in trust for the public. The public, as beneficiaries, are entitled to use these ways as a matter of right, a right that is limited only by the comparable rights of every other citizen to use the same pathways. The State, acting as trustee, may impose any limitations on the character and extent of a user that are necessary to protect the rights of the public generally. However, subject to those limitations, the State could not deny a citizen the right to conduct business in transport vehicles on public pathways merely because the State owned the highways. The Court fully agreed with this statement of law. Within the bounds set by State regulations, any member of the public could operate motor vehicles on a public road, and could also engage in the business of transporting passengers with those vehicles. It is this carrying on of trade or business that brings article 19(1)(g) into play, allowing a citizen to legitimately object if any legislation removes or curtails that right beyond what clause 6 of the article permits. In the case before the Court, the legislation had excluded all private bus owners from participating in the transport business. On its face, this exclusion violated article 19(1)(g) of the Constitution. Consequently, the Court’s task was to determine whether the Legislature’s intrusion upon the fundamental right could be justified.

The Court considered whether the State’s action could be justified under clause (6) of article 19 on the basis that it imposed reasonable restrictions on the exercise of the right guaranteed by article 19(1)(g) in the interest of the general public. After the 1951 amendment, article 19(6) creates a three-fold exception to or limitation upon the freedom of trade, business, occupation or profession contained in clause (1)(g). First, it authorises the State to impose reasonable restrictions on that freedom when such restrictions serve the public interest. Second, it permits the State to prescribe the professional and technical qualifications that are required for practising any profession or for carrying on any occupation, trade or business. Third, as a result of the Constitution (First) Amendment Act of 1951, it enables the State to conduct any trade or business itself, or through a corporation owned or controlled by the State, to the exclusion of private citizens, either wholly or partially. It was not contested that this third provision did not exist at the time the impugned Act was enacted, and the High Court correctly held that the validity of that Act could not be assessed by applying the newly introduced clause. Nevertheless, the learned Judges observed that, apart from this new provision, the creation of a State monopoly in the field of transport services, as effected by the Act, might still be justified as a reasonable restriction on the fundamental right under article 19(1)(g), provided the restriction is in the public interest. The Court therefore posed the question of whether the High Court’s view was correct. To answer this, three issues required examination. The first issue was whether the term “restriction” used in article 19(6) – and similarly in the other sub-clauses of article 19 – includes a total deprivation of the right. If “restriction” were interpreted to cover total deprivation, the remaining two issues would concern whether the restriction is reasonable and whether it serves the public interest. The Court referred to the Oxford Dictionary, which defines “restriction” as a limitation imposed on a person or thing, or a condition or regulation of that kind, while acknowledging that the word can also be used in the sense of suppression. The Court then cited the decision of the Municipal Corporation of the City of Toronto v. Virgo, where Lord Davey, discussing a municipal power to make bye-laws for regulating and governing a trade, observed that regulation and governance may involve imposing restrictions on the exercise of a trade where such restrictions are deemed necessary by the public authority to prevent a nuisance or to maintain order, and that a clear distinction must be drawn between prohibiting a trade altogether and merely regulating it.

In this case, the Court observed that there is a clear difference between prohibiting or preventing a trade altogether and merely regulating or governing that trade, and that a power to regulate and govern presupposes that the activity to be regulated still exists. The Court noted that this reasoning is supported by observations made by several learned Judges of this Court in the judgment of A. K. Gopalan v. The State (2). The issue in that case concerned the constitutional validity of the Preventive Detention Act, and counsel for the appellant argued that the law violated the right to free movement guaranteed by article 19(1)(d) of the Constitution because the restrictions it imposed could not be considered reasonable under clause (5) of that article. The majority of the Judges rejected this argument, holding that a law that authorises deprivation of personal liberty does not fall within the ambit of article 19, and therefore its validity must be examined in accordance with articles 21 and 22 rather than the criteria of article 19. The Court explained that the expression “personal liberty” in article 21 is sufficiently broad to include the specific freedoms listed in article 19(1), and that deprivation of personal liberty under article 21 automatically extinguishes the other freedoms as well. In support of this view the Court referred to the observations of Patanjali Sastri J., who explained that the word “restrictions” in the various sub-clauses of article 19 appears to imply that the rights guaranteed by the article remain exercisable, thereby excluding the notion of incarceration, although “restriction” and “deprivation” can sometimes be used interchangeably when a restriction reaches a point where it effectively becomes a deprivation. He further stated that, when read as a whole and considered among the provisions relating to the right to freedom, article 19 presupposes that a citizen who enjoys these fundamental rights retains a substratum of personal freedom, which is essential for the enjoyment of those rights. The Court distinguished the point that was considered in A. K. Gopalan from the present matter, noting that the question of whether the restrictions enumerated in the various sub-clauses of article 19 could amount to total deprivation of liberty was neither raised nor decided in that earlier case. Nevertheless, the majority of the learned Judges drew a distinction between the negation or deprivation of a right and a restriction upon it, and although a restriction may at times amount to deprivation, a restriction normally presumes the continued existence—even if in a very limited or attenuated form—of the thing upon which the restriction is imposed.

It was observed that a restriction may, in certain circumstances, become so severe that it effectively amounts to a deprivation; however, restrictions ordinarily presuppose that the subject upon which the restriction is placed continues to exist, even if only in a very limited or weakened form. In the judgment of Chief Justice Kania (see page 106), it was expressly stated that Article 19(5) cannot be applied to a substantive law that deprives a citizen of personal liberty, and it was further expressed that the word “deprivation” should not be interpreted to include “restriction” when construing Article 21. Against this position, it may be argued that ordinary language sometimes uses the terms “deprivation” and “restriction” interchangeably, and that in some cases the nature and extent of a restriction may amount to a total negation of the right concerned. The High Court of Orissa, in the case decided by Justice Lokanath Misra, accepted this line of reasoning and distinguished between “regulation” and “restriction.” The learned judges noted that the observations of Lord Davey in Municipal Corporation of the City of Toronto v. Virgo could be distinguished because the expression employed in that case referred to “regulation” and “governing,” not to “restriction.” It has been suggested that the framers of the Constitution were conscious of the difference between the power to “regulate” and the power to “restrict,” a distinction that can be seen by examining sub-clause (a) of clause (2) of Article 25, where the words “regulating” and “restricting” appear side by side, indicating that they were not intended to convey the same meaning. Representing the respondents, counsel also relied heavily on the Supreme Court’s decision in Cooverjee v. Excise Commissioner, in which the validity of the Excise Regulation I of 1915 was examined. In that case, the appellant argued that the Excise Regulation and the auction sales conducted under it were ultra vires because the law attempted to grant a monopoly in that trade to a limited number of persons, thereby conflicting with Article 19(1)(g) of the Constitution. That contention was rejected, and the Court held that, for the purpose of determining what constitutes a reasonable restriction under Article 19(6) of the Constitution with respect to the right guaranteed by Article 19(1)(g), it is necessary to consider the nature of the business and the conditions prevailing in the specific trade. The Court further observed that the State unquestionably possesses the authority to prohibit trades that are illegal, immoral, or detrimental to public health and welfare. The judgment quoted the relevant passage: “Article 19(1)(g) of the Constitution guarantees that all citizens have the right to practise any profession or to carry on any occupation, trade or business, and clause (6) of that article authorises legislation which imposes reasonable restrictions on this right in the interests of the general public.” It was not contested that, in order to determine the reasonableness of a restriction, the nature of the business and the circumstances of the trade must be taken into account.

In determining whether a restriction on a trade is reasonable, the Court emphasized that reference must be made to the nature of the business and to the conditions prevailing in that particular trade, citing precedents (1) A.I.R. 1952 Orissa 42 and (2) [1954] S.C.R. 873. The Court further observed that the State unquestionably possesses the authority to prohibit trades that are illegal, immoral, or harmful to public health and welfare. Accordingly, statutes that forbid the dealing in noxious or dangerous goods or that prohibit trafficking in women are legitimate enactments of prohibition rather than mere regulations. Respondents argued that these observations demonstrate that the phrase “reasonable restriction” found in article 19(6) of the Constitution may, in some circumstances, encompass a total prohibition. The Court noted that the Excise Regulation under consideration is not a prohibitory law that completely bans private citizens from trading in liquor; instead, it seeks to regulate the trade by allocating the right to sell liquor in designated areas to the highest bidder through an auction. Consequently, the general observations quoted must be applied with reference to the factual context of the earlier case. While the Court opined that the ordinary meaning of “restriction” appears to imply a limitation rather than an extinction of a right, it chose not to render a definitive view on the issue at this stage. The Court explained that if the term “restriction” is held not to include total prohibition, the legislation being examined could not be justified under article 19(6) and would therefore be void unless it could be sustained under article 31, a point that would be addressed in another aspect of the appeal. Conversely, if “restriction” in article 19(6) is interpreted to sometimes include prohibition, the question that arises is whether the denial of the right of all private citizens to engage in motor transport on public roads within Uttar Pradesh, as provided by the Act, can be justified as a reasonable restriction imposed in the public interest.

The Court referred to its earlier decision in Gooverjee v. The Excise, Commissioner, etc. (1) [1954] S.C.R. 873, observing that the reasonableness of any restriction depends substantially on the character of the trade and the prevailing conditions. It found nothing objectionable in the nature of the present trade, describing it as perfectly innocuous. The High Court judges had upheld the validity of the legislation on two principal grounds. First, they relied on an abstract legal proposition that a prohibition intended to create a State monopoly is not automatically unreasonable. One learned judge expressed the view that even a complete cessation of trade on public places and thoroughfares “cannot always” be deemed unreasonable. The Court’s discussion set the stage for further analysis of whether the monopoly over motor transport services, justified as being in the general public’s interest, satisfies the constitutional test of reasonable restriction.

The Court observed that the proposition that a total prohibition on a trade is automatically an unreasonable restriction was not correct. It further noted that transport services are essential to community life and that an efficient system of road transport serves the general public’s interests. The Court pointed out that the preamble to the Act declared that the legislation was enacted in the interests of the public, who undeniably desire a suitable and efficient road-transport service, and that the petitioners had failed to demonstrate that the State-favoured monopoly contemplated for this particular business was not conducive to the common welfare. While the Court accepted that the first ground – that the mere existence of a State monopoly is not per se unlawful – was not disputable, it said that the observations of Lord Porter in the Privy Council case of Commonwealth of Australia and Others v. Bank of New South Wales and Others (1) – heavily relied upon by the High Court – provided the appropriate approach. Lord Porter had observed that “their Lordships do not intend to lay it down…that in no circumstances could the exclusion of competition so as to create a monopoly either in a State or Commonwealth agency or in some other body be justified.” He added that each case must be judged on its own facts, in its own time and circumstances, and that for certain economic activities at particular stages of social development, a prohibition intended to create a State monopoly might be the only practical and reasonable manner of regulation. Consequently, the Court held that determining whether a State monopoly is reasonable requires an examination of the specific facts and circumstances of each case. It rejected the notion that a law providing for an efficient transport service is automatically valid irrespective of its actual effect or the conditions prevailing when it was passed. The Court emphasized that a restriction must not only aim at public benefit but also be reasonable, and that reasonableness can be assessed only by considering the complete set of relevant facts and circumstances. Regarding the second argument, the Court said the learned Judges had not approached the issue from the correct standpoint. Although a presumption exists in favour of a statute’s constitutionality, the Court stated that where a enactment on its face infringes the fundamental right guaranteed under article 19(1)(g) of the Constitution, it must be declared invalid unless the State can demonstrate that the law falls within the exception provided in clause (6) of that article.

The Court observed that, when the respondents fail to produce any evidence showing that the legislation falls within the permissible scope of clause 6, the burden cannot be placed on the appellants to demonstrate in the negative that the law is unreasonable or contrary to public welfare. In the present matter there is a complete absence of material before the Court that would indicate how the creation of a State monopoly over road-transport services in the specific areas might benefit the general public. The Court noted that it lacks information about the current condition of the bus services, the conveniences or inconveniences experienced by passengers, and any indication of how the situation might improve should the State assume control of the transport service, nor does it have details of any additional amenities or advantages that the public might obtain. These omissions were highlighted to show that such facts would be relevant to assessing the reasonableness of the prohibition, yet the record contains none of them. Nevertheless, the Court identified one factor that unquestionably bears on the question of reasonableness, namely the immediate effect that the legislation is likely to produce.

The Court explained that hundreds of individuals earn their livelihood by operating buses on various routes within the State of Uttar Pradesh. Although these operators conduct their business only under permits issued under the Motor Vehicles Act, the statute provides no provision for compensating them. Consequently, the Court held that the enactment would deprive these persons of the means to support themselves and their families, leaving them with buses that would be of no practical use and which they would be unable to sell easily or at a reasonable price. The Court further referred to Part IV of the Constitution, specifically article 39(a), which directs the State to ensure that every citizen has the right to an adequate means of livelihood. While recognizing that the new clause in article 19(6) was introduced to allow a State to create a monopoly in its own favour in any trade or business, the Court emphasized that the amendment does not automatically render such a monopoly a reasonable restriction under the first part of article 19(6). As a result, the amendment would not relieve the State of the duty to justify the action as reasonable in a Court of law, nor would it prevent an objection on the ground that the measure infringes the protected right.

The Court observed that the right to practice any profession, or to carry on any occupation, trade or business is guaranteed under article 19(1)(g) of the Constitution. It noted that, had the impugned statute been enacted after the new provision of article 19(6) came into force, the issue of whether the restriction was reasonable would not have arisen at all, and the appellants’ contention on that point would have been undeniable. Nevertheless, the Court held that such hypothetical considerations could not influence the decision in the present case, because the constitutional amendment introducing article 19(6) was enacted only after the challenged legislation had already been passed. The Court stressed that a later amendment cannot be used to validate an earlier law that was unconstitutional at the time of its enactment. Referring to the scholarly view of Professor Cooley, the Court quoted that “a statute void for unconstitutionality is dead and cannot be vitalised by a subsequent amendment of the Constitution removing the constitutional objection but must be re-enacted.” Accepting this principle as sound law, the Court concluded that the legislation in question violated the fundamental right of the appellants under article 19(1)(g) and was not safeguarded by the new clause of article 19(6) as it existed when the law was enacted. Accordingly, the Court held the statute to be void under article 13(2) of the Constitution.

The Court then turned to the second issue, which was closely linked to the first. It asked whether the prohibition imposed by the impugned law on the appellants’ trade or business amounted to a deprivation of their property or interest in a commercial undertaking within the meaning of article 31(2) of the Constitution, and whether the legislation therefore infringed that provision because the Act made no provision for compensation. The Court noted that the respondents did not seriously dispute that the appellants’ right to ply motor vehicles for profit constituted an interest in a commercial undertaking, and that the appellants had indeed been deprived of that interest. The High Court, however, had held that article 31(2) could not be invoked in the present circumstances. In support of that view, a learned judge was quoted as saying: “The question is whether by depriving the private operators of their right to run buses on certain routes and by deciding to run the routes itself the State acquired the right which was of the petitioners? To me it appears that it could not be said that there was by the State any acquisition of the right which was formerly of the petitioners, whether such right was property or an interest in a commercial or industrial undertaking.” The judge further explained that the vehicles operated by the private operators had not been taken over by the State, nor had any other tangible property used in the petitioners’ business been acquired. What had occurred, the Court noted, was that the petitioners were prohibited from operating their buses on the designated routes, a restriction that did not amount to a constitutional acquisition of property requiring compensation.

The Court observed that the High Court had held the petitioners’ right to operate buses on certain routes was not transferred to the State, because the State always possessed an equal right to run its own buses on those routes. Accordingly, the High Court concluded that the mere deprivation of the petitioners’ right to run buses or their interest in a commercial undertaking did not trigger article 31(2) of the Constitution, since the deprivation occurred pursuant to authority of law within the meaning of clause (1). The High Court further maintained that clause (2) would apply only if the State had actually acquired or taken possession of the petitioners’ right or interest, that is, only if the right to operate buses had become vested in the Government. It noted that the State unquestionably possessed the right to operate its own buses on public thoroughfares and that such right did not depend on the petitioners’ rights.

The present Court found that reasoning untenable in view of the majority decisions in State of West Bengal v. Subodh Gopal Bose and Others and Dwarkadas Shrinivas v. The Sholapur Spinning and Weaving Co. Ltd. Those decisions established that clauses (1) and (2) of article 31 were not mutually exclusive but were to be read together as addressing the same subject—the protection of property rights by limiting State power. Under that view, the deprivation contemplated in clause (1) was essentially an acquisition or taking possession of the property described in clause (2). The Court therefore rejected the Advocate-General’s insistence that this should be the legal position. The Court also rejected the argument that the fact that the appellants’ buses had not been physically acquired by the Government was immaterial, noting that a business’s property may be both tangible and intangible. While the statute might not permit the Government to dispossess the appellants of their buses or other physical assets, it nonetheless deprived them of the business of operating buses for hire on public roads. Consequently, the Court held that the legislation conflicted with article 31(2) because the requirements of that clause had not been satisfied, rendering the legislation invalid on that ground.

The Court then turned to the question of whether the Act or any of its provisions were discriminatory and violated the principle of equal protection embodied in article 14. Counsel for the petitioner, Mr Pathak, raised a two-fold contention. First, he argued that the State could not be favored over private individuals in the business of carrying passengers for hire on public roads. He conceded that the State, as a legal person, belonged to a different class from private citizens, but contended that when the State acted as a merchant it occupied the same position as private traders and its actions in that context could not be treated as sovereign acts. He relied heavily on the judgment of Sir Barnes Peacock in P. and O. Steam Navigation Co. v. The Secretary of State to support this view. Second, he asserted that the Act granted the State an unregulated and unfettered discretion to select persons with whom to associate in the transport business, thereby permitting discrimination among citizens without any guiding rules. The Court noted that, as to the first ground, it was well settled that mere differentiation did not render legislation objectionable.

In this case, the Court considered the issue of whether the State may engage in the business of operating buses for hire on public roads. It was acknowledged that the State, as a legal person, belongs to a different class from private individuals. However, the argument presented was that when the State functions as a merchant, it occupies the same position as private traders, and its actions in that context cannot be characterized as sovereign acts. Counsel supporting this view relied heavily on the decision of Sir Barnes Peacock in the case of P. and O. Steam Navigation Co. v. The Secretary of State. Another objection raised by counsel was that the Act confers an unchecked and unrestricted discretion on the State to select persons to associate with it in the transport business, thereby permitting discrimination between citizens because no rules are prescribed to guide the State’s choice. Regarding the first ground, it is well settled that mere differentiation does not render legislation violative of the equal protection clause. The Legislature has the authority to make classifications, provided that such classifications are not arbitrary and must bear a reasonable (1) (1861) 5 B.H.C.R. Appendix 1. relation to the object which the legislation has in view. Classification is inherent in the concept of a monopoly; if the legislative purpose is to create a monopoly in favor of the State for a particular business, the State must necessarily be distinguished from ordinary citizens and placed in a separate category for the operation of that business. Such a classification would have a rational connection to the statutory objective. If, however, the creation of a State-favored monopoly itself contravenes constitutional provisions, the statute would be invalid on that basis, and the question of discrimination would become moot. In the Court’s view, the contention advanced by Mr. Pathak—that the State ceases to act as a State the moment it engages in trade like a private trader—cannot be accepted as a sound legal proposition under the Constitution of India today. In the previous century, when laissez-faire doctrine prevailed, the primary function of the State was regarded as maintaining law and order, while all other activities were left to private competitors. That conception has changed; the modern view replaces the ‘police State’ of the past with a ‘welfare State.’ Chapter IV of the Constitution, which sets out the Directive Principles of State Policy, clearly delineates the duties of the State, including many activities that could not have been regarded as State functions at the time of P. and O. Steam Navigation Co. v. The Secretary of State.

In the earlier discussion the Court noted that the decision in the case of State (Supra) fell within the legitimate scope of State duties, and it referenced the decision in Lokanath Misra v. State of Orissa (supra) for the same reason. The Court then turned to the second argument raised by Mr Pathak concerning article 14 of the Constitution. Although that argument appeared somewhat plausible at first glance, the Court found it to be unsound. Section 3 of the Act empowered the State Government to declare that road-transport services, either generally or on particular routes, should be operated exclusively by the State, or by the State together with the railway, or partly by the State and partly by others, in accordance with the provisions of the Act. The difficulty, the Court observed, was how the last part of that section should be implemented. If the State were free to select any person it liked to associate with the transport service without any rules to guide its discretion, the provision would plainly violate article 14. The learned Advocate-General, however, explained that the State’s role was limited to selecting the routes or portions of routes on which private citizens could operate, determining the number of permits to be issued, and that the granting of those permits would necessarily be regulated by the Motor Vehicles Act. The Court considered this construction reasonable and noted that it was supported by section 7(c) of the Act. Under this interpretation the State’s discretion would be a regulated discretion guided by statutory rules. Consequently, the Court held that the appellant could make no grievance on this point and that the statute did not offend article 14 of the Constitution. The Court then addressed the remaining issue, namely whether the Act conflicted with the constitutional guarantee of freedom of inter-State and intra-State trade, commerce and intercourse contained in article 301. Article 301 declares that, subject to other provisions of the Part, trade, commerce and intercourse throughout the territory of India shall be free. Article 302 authorises Parliament to impose restrictions on that freedom between States or within any part of India as may be required in the public interest. Under article 304(b) a State Legislature may also impose reasonable restrictions in the public interest, provided that any such bill or amendment first obtains the President’s sanction before being introduced in the State Legislature. The Court noted that article 301 is analogous to section 92 of the Australian Constitution and is even broader than that provision, which deals only with inter-State trade.

In this case the Court observed that article 301 of the Constitution dealt only with the freedom of inter-State trade. The High Court had rejected the appellants’ submission on this issue, holding that article 301 did not apply to the facts before it. It was explained that article 301 furnished protections for trade as a whole rather than for the rights of any individual to engage in trade. In other words, the provision concerned the movement of goods or persons across State boundaries, not the personal commercial activities of citizens. The Court noted that the individuals’ right to trade was addressed by article 19(1)(g) of the Constitution, and that the two articles were enacted to achieve separate objectives. Although the Court acknowledged that the question presented some difficulty, it indicated that, because it had already declared the impugned Act unconstitutional on two other grounds, it saw no need to pronounce a separate decision on the applicability of article 301. Nevertheless, the Court expressed a wish to set out the possible arguments and the different viewpoints that might arise on this point, so that the Legislature could consider them if it contemplated legislation on the subject. The Court then turned to a comparative observation concerning section 92 of the Australian Constitution, which employs language almost identical to that of article 301 with respect to inter-State trade. In the Judicial Committee’s decision in Commonwealth of Australia v. The Bank of New South Wales, it was held that section 92 does encompass the rights of individuals. Lord Porter, speaking for the Committee, observed that while section 92 does not create new legal rights, it does empower the citizens of a State or of the Commonwealth to disregard, and if necessary to invoke judicial authority against, legislative or executive measures that offend the provision. He further explained that the application of section 92 does not require a calculation of the present or future impact on the overall volume of inter-State trade, a requirement that would be unmanageably difficult. The Court suggested that if the same approach were applied to article 301, a persuasive argument could be made that the legislation under scrutiny was invalid because it contravened the constitutional guarantee. Finally, the Court noted that the issue of reasonable restrictions could not be raised, since the bill authorising the measure had not been introduced with the prior sanction of the President, a condition mandated by the proviso to section 304(b). Although presidential consent was obtained later, the proviso explicitly required such sanction to precede the introduction of the bill, rendering any subsequent approval ineffective for the purpose of validating the restriction.

The Court observed that the argument presented stated that freedom of trade does not, as Lord Porter noted in the Australian Bank case, imply an absolute or unqualified liberty, and that regulation of trade can coexist with the concept of trade freedom. In contrast, the Court pointed out that the Constitution itself, through articles 302 and 304(b), expressly provides the manner in which reasonable restrictions may be placed upon the freedom of trade and commerce, and it would therefore be inappropriate to hold that such restrictions could be imposed outside of those constitutional provisions. The Court further considered the question of how the phrase “reasonable restrictions” should be interpreted and whether the same analytical tests applied to article 19(6) of the Constitution should also be applied in this context. A material consideration noted was that, although the Constitution was amended in 1951 by adding a clause to article 19(6) that removed state monopolies in trade or business from the scope of article 19(1)(g), no comparable amendment was made to article 301 or article 304. Consequently, article 301, as it presently stands, guarantees freedom of trade, commerce and intercourse subject only to the limitations contained in Part XIII of the Constitution, and not to the other parts of the Constitution that deal with fundamental rights. The Court also observed that the Australian Constitution contains no provision corresponding to article 19(1)(g) of the Indian Constitution, and it is a debatable issue whether article 19(1)(g) addresses only the rights of individuals, thereby leaving the freedom of trade and commerce—understood as the unrestricted movement of persons and goods within or between states—to be governed by article 301 and the related articles. The Court made clear that only the possible arguments and viewpoints had been outlined and that no final opinion on these interpretative questions was being expressed, as such an opinion was unnecessary for the present case. Accordingly, the Court concluded that the appeals must be allowed, set aside the judgment of the High Court, and issue a writ of mandamus against the respondents restraining them from enforcing the provisions of the U.P. State Road Transport Act, 1951 against the appellants or any persons working under them. No order as to costs was made, and the appeals were allowed.