Bhikaji Narain Dhakras And Others vs The State Of Madhya Pradesh And Another

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

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 29 September 1955

Coram: Natwarlal H. Bhagwati, Syed Jaffer Imam

In this case, the Supreme Court of India set the date of judgment as 29 September 1955. The petition was filed by Bhikaji Narain Dhakras and other stage-carriage operators of Madhya Pradesh. The respondents were the State of Madhya Pradesh and an additional party. The bench that heard the matter comprised Justices Natwarlal H. Bhagwati, Syed Jaffer Imam and others. The citation for the decision is reported as 1955 AIR 781 and 1955 SCR (2) 589. The legal issue concerned the constitutional validity of the C.P. & Berar Motor Vehicles (Amendment) Act, 1947 (Act III of 1948), which amended the Motor Vehicles Act, 1939 (Central Act IV of 1939). The amendment gave the Provincial Government extensive powers, including the authority to create a monopoly in motor-transport business to its own advantage, thereby excluding all other operators. On 4 February 1955, invoking the newly added provision s. 43(1)(iv), the Government issued a notification stating its intention to take over certain transport routes. The petitioners argued that the Constitution, by guaranteeing fundamental rights, rendered the amendment void under Article 13(1) because it conflicted with Articles 19(1)(g) and 31(2). They relied on the Supreme Court’s earlier decision in Shagir Ahmad v. State of U.P. & others. The respondents contended that the First Amendment Act of 1951 and the Fourth Amendment Act of 1955 removed the inconsistency, thereby reviving the amendment and making it operative again. The petitioners maintained that once an Act is declared void under Article 13(1) it cannot be revived by a later constitutional amendment and must be re-enacted.

The Court held that the precedent set in Shagir Ahmad did not apply to the present matter and accepted the respondents’ arguments. It clarified that the word “void” in Article 13 is limited to the extent of the inconsistency with a fundamental right; the remainder of the Act continues to operate. Consequently, the inconsistency does not erase the entire operation of the law, nor does it invalidate past transactions, rights, or liabilities that arose under it. The Court explained that the voidness created by Article 13 is not an absolute death of the statute; rather, it renders the inconsistent portion inoperative while the rest of the law remains effective. Therefore, the amendment of the Constitution by the First and Fourth Amendments removed the inconsistency, and the impugned Act resumed operation from the date of those amendments, though the retrospective effect of the amendment to Article 19 was expressly provided only for that provision and not for other rights and obligations created under the Act between the commencement of the Constitution and the amendment.

The Court observed that it relied upon the decision in Keshavan Madhava Menon v. The State of Bombay [1961] S.C.R. 288. It explained that the true effect of Article 13(1) of the Constitution is to render an enactment that is inconsistent with a fundamental right inoperative to the extent of that inconsistency. Such a provision is said to be eclipsed by the fundamental right, to remain dormant, but not to be dead. The Court then noted that the amendment made in clause (6) of Article 19 by the First Amendment Act removed the inconsistency between the impugned Act and the Constitution. Consequently, from the date of that amendment the impugned Act began to operate again. However, unlike the amendment of clause (2) of Article 19, which was expressly made retrospective, the Court held that no rights or obligations could be founded on the provisions of the impugned Act for the period between the commencement of the Constitution and the date of the amendment. In this view, the notification issued by the State announcing its intention to take over the bus routes, thereby excluding all other motor-transport operators, was perfectly valid. The Court distinguished the earlier authorities Shagir Ahmad v. The State of U.P. & Others [1955] 1 S.C.R. 707 and Behram Khurshed Pesikaka v. The State of Bombay [1965] 1 S.C.R. 613, holding them inapplicable, and also found American authorities irrelevant. Moreover, applying the same reasoning, the Court held that the impugned Act could no longer be said to infringe the petitioners’ fundamental rights under Article 31(2) because the Constitution (Fourth Amendment) Act of 1956—effective from 27 April 1955—had amended the relevant provision. Since the petitions were filed after that date, the petitioners could not be permitted to challenge the validity of the impugned Act on that ground. The Court further observed that it was not clear that the impugned Act conflicted with section 299 of the Government of India Act 1935 before the Constitution came into force.

The judgment recorded that the original jurisdiction concerned Petitions Nos. 189 to 193 of 1955, filed under Article 32 of the Constitution for the enforcement of fundamental rights. Counsel appearing for the petitioners included G.S. Pathak, assisted by Rameshwar Nath and Rajinder Narain, for Petition No. 189; Rameshwar Nath and Rajinder Narain for Petition No. 190; and Sri Narain Andley together with Rajinder Narain for Petitions Nos. 191 to 193. For the respondents, the Advocate-General of Madhya Pradesh, T.L. Shevde, appeared with I.N. Shroff. The judgment was dated 29 September 1955 and was delivered by Chief Justice C.J. The Court indicated that the judgment would dispose of all five petitions, which had been heard together because they raised the identical question concerning the constitutional validity of the C.P. & Berar Motor Vehicles (Amendment) Act 1947 (Act III of 1948). The factual background, as set out, was that each petitioner had been carrying on business as a stage-carriage operator for a considerable number of years under permits granted under section 58 of the Motor Vehicles Act 1939 (Central Act IV of 1939).

In this case, the original provision 58 of the Motor Vehicles Act, 1939, before it was amended by the C.P. & Berar Motor Vehicles (Amendment) Act, 1947 (Act III of 1948), read as follows: “58(1). A permit other than a temporary permit issued under section 62 shall be effective without renewal for such period, not less than three years and not more than five years, as the Regional Transport Authority, may in its discretion specify in the permit. Provided that in the case of a permit issued or renewed within two years of the commencement of this Act, the permit shall be effective without renewal for such period of less than three years as the Provincial Government may prescribe. (2) A permit may be renewed on an application made and disposed of as if it were an application for a permit: Provided that, other conditions being equal, an application for renewal shall be given preference over new applications for permits.” From this wording it was clear that a permit granted under section 58 remained valid for a term of at least three years and at most five years. Moreover, when the holder of such a permit applied for renewal, the law required that, all other things being equal, the renewal application be treated preferentially compared with applications from persons seeking a fresh permit for the same route, and the renewal would ordinarily be granted. The C.P. & Berar Motor Vehicles (Amendment) Act, 1947 introduced extensive changes to the Motor Vehicles Act, 1939 as it applied to the Central Provinces and Berar. Section 3 of the amending Act substituted the original item (ii) of subsection (1) of section 43 of the Central Act with several new provisions. The substituted text reads: “(ii) fix maximum, minimum or specified, fares or freights for stage carriages and public carriers to be applicable throughout the province or within any area or any route within the province, or (iii) notwithstanding anything contained in section 58 or section 60 cancel any permit granted under the Act in respect of a transport vehicle or class of such permits either generally or in any area specified in the notification: Provided that no such notification shall be issued before the expiry of a period of three months from the date of a notification declaring its intention to do so: Provided further that when any such permit has been cancelled, the permit-holder shall be entitled to such compensation as may be provided in the rules; or (iv) declare that it will engage in the business of road transport service either generally or in any area specified in the notification.” In addition, section 8 of the amending Act inserted a new subsection (3) after subsection (2) of section 58 of the Central Act. That new subsection states: “(3) Notwithstanding anything contained in subsection (1), the Provincial Government may order a Regional Transport Authority or the Provincial Transport Authority to limit the period for which any permit or class of permits is issued to any period less than the minimum specified in the Act.” Finally, section 9 of the amending Act added a further provision, designated as section 58-A, which extended governmental powers in relation to stage-carriage permits.

In this case the Court explained that after section 58 a new provision was inserted and labeled section 58-A. The text of that provision reads: “Notwithstanding anything herein before contained, the Provincial Government may by order direct any Regional Transport Authority or the Provincial Transport Authority to grant a stage-carriage permit to the Provincial Government or to any undertaking in which the Provincial Government is financially interested, or to a permit-holder whose permit has been cancelled under section 43, or to any local authority specified in the order.” The Court observed that these amendments gave the Government a series of consequential powers. First, the Government received authority to fix fares or freights throughout the whole Province, or for any specified area or any particular route. Second, the Government could cancel any permit after three months from the date of a notice declaring its intention to do so, provided that compensation prescribed in the Rules was paid. Third, the Government could publicly declare its intention to engage in the road-transport business either generally or in any area specified in such a notice. Fourth, the Government could limit the period of a licence to a term shorter than the minimum period ordinarily prescribed by the Act. Fifth, the Government could direct the relevant Transport Authority to grant a permit, among other things, to the Government itself or to any undertaking in which the Government had a financial interest.

The Court then turned to the factual situation in Madhya Pradesh. It noted that, at the time the writ petitions were filed, two motor-transport companies operated in the State: C. P. Transport Services Ltd. and Provincial Transport Co. Ltd. In each of these companies the State of Madhya Pradesh together with the Union of India owned about eighty-five percent of the share capital. The Court further recorded that after the petitions were filed the entire businesses of both companies were purchased by the State of Madhya Pradesh, and that the State subsequently began to operate transport services on certain routes for which those companies had previously obtained permits.

The Court continued that a careful reading of the new provisions introduced by the amending Act shows that they conferred very extensive powers on the Provincial Government. By exercising those powers the Government was authorised not only to regulate fares and freights, but also to take over the whole motor-transport business in the Province, to run that business in direct competition with existing operators, and even to exclude other operators altogether. The Court gave specific examples of how the Government used those powers. Under the newly added sub-section (3) of section 58 the Government limited the validity of a transport permit to four months at a time. Under the new section 43(1)(iv) the Government issued a notification declaring its intention to take up certain routes. The Court concluded that the breadth of these powers was intended to enable the Provincial Government to implement a policy of nationalisation of the road-transport sector that had been adopted by the Government.

Finally, the Court observed that when the amending Act—referred to as Act III of 1948—was passed, there was no constitutional guarantee of fundamental rights for citizens. Accordingly, at that time the enactment of such powers was considered to be within the legitimate legislative competence of the Provincial Legislature.

The Court noted that the Provincial Legislature possessed the legislative competence to enact the law in question and that it was admitted that, at the time of its passage, the amending Act of 1948 was a perfectly valid piece of legislation. The Court then observed that the Constitution of India came into force on 26 January 1950, and that Part III of the Constitution, titled “Fundamental Rights,” comprises Articles 12 to 35. Under Article 19(1) the Constitution guarantees every citizen the right to freedom in seven distinct heads. Although the language of Article 19(1) is unqualified, the Court explained that none of those rights is absolute because each may be curtailed by any of the clauses set out in sub-sections (2) to (6) of Article 19, depending on the particular right involved. In particular, the right to practice any profession or to carry on any occupation, trade or business, which is guaranteed by Article 19(1)(g), is subject to the limitation contained in clause (6). Before its amendment, clause (6) read as follows: “(6) Nothing in sub-clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, nothing in the said sub-clause shall affect the operation of any existing law in so far as it prescribes or empowers any authority to prescribe, or prevent the State from making any law prescribing or empowering any authority to prescribe, the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business.” The Court further pointed out that Articles 14 to 35 are protected by Article 13, whose relevant provisions state: “13. (1) All laws in force in the territory of India immediately before the commencement of this Constitution, insofar as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void. (2) The State shall not make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void.”

Applying these principles, the Court held that the amending Act (III of 1948) was, at the commencement of the Constitution, an existing law. The new provisions introduced by that Act authorized the Provincial Government to exclude all private motor-transport operators from the transport business. Prima facie, the Court observed, such exclusion infringed Article 19(1)(g) and would therefore be void under Article 13(1), unless the Provincial Legislature could justify the intrusion on the fundamental right by invoking clause (6) of Article 19 on the ground that it imposed a reasonable restriction in the public interest. The Court then referred to the earlier decision in Shagir Ahmad v. The State of U.P. & Others (1), which examined the scope of “restriction” under clause (6) and the permissibility of total prohibitions on a trade. The Court indicated that this precedent would be relevant to determining whether the amending Act could be sustained as a reasonable restriction.

In the earlier decision, the Court had held that if the term “restriction” in clause (6) of article 19 was understood to mean merely a limitation rather than a complete extinction of the right, then a law such as the amending Act, which, like the statute now under consideration, authorized an outright prohibition on the right to carry on a motor-transport business could not be justified under article 19 (6). The Court further observed that even if “restriction” were interpreted in certain situations to include a prohibition, the nature of the trade—being entirely innocent—and the large number of persons who depended on this occupation for their livelihood meant that the impugned law could not be regarded as a reasonable restriction. Consequently, the Court concluded that the amending Act, to the extent that it conflicted with article 19 (1)(g) read with clause (6) of that article, became void under article 13(1) “to the extent of such inconsistency,” and, had no other considerations been relevant, the matter would have been entirely resolved by that earlier judgment. However, on 18 June 1951, the Constitution (First Amendment) Act, 1951 was enacted. By section 3(1) of that Act, a new sub-clause was inserted into clause (2) of article 19, and the amendment was expressly made retrospective. Clause (6) of article 19 was also amended, and the amended wording now read: “(6) Nothing in sub-clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevents the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, nothing in the said sub-clause shall affect the operation of any existing law in so far as it relates to, or prevents the State from making any law relating to— (i) the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or (ii) the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise.” It was noted that, unlike the amendment to clause (2), the amendment to clause (6) was not made retrospective. The respondents contended that, although the amending Act had become void against citizens on 26 January 1950 pursuant to the decision in Shagir Ahmad’s case, the subsequent amendment of clause (6) on 18 June 1951 removed the inconsistency with article 19 (1)(g). Therefore, they argued, the amending Act ceased to be inconsistent with the fundamental right as read with the newly amended clause (6), because the amended provision now permitted the creation of a State-monopoly in the motor-transport sector, rendering the Act operative again even against citizens.

In 1951 the amendment Act ceased to be inconsistent with the fundamental right guaranteed by article 19(1)(g) read together with the amended clause six of that article. The amendment was effective because the revised clause six now permits the legislature to create a State monopoly, for example in the motor transport business, even against citizens. The petitioners argued that once a law was declared void for unconstitutionality it could not be revived by a later constitutional amendment unless the law was reenacted. They supported this view by citing Professor Cooley’s work on Constitutional Limitations, volume one, page three hundred eighty-four, as referenced in the judgment of Shagir Ahmad’s case and similar authorities. The respondents raised a question that had not been presented by the learned Advocate-General in that earlier case. Nevertheless, the Uttar Pradesh Government issued a notification on 25 March 1953 and published the proposed scheme on 7 April 1953, both dates well after the Constitution (First Amendment) Act of 1951 had been enacted. This issue was not examined by this Court in Shagir Ahmad’s case, where it was conceded, as recorded on page 720 of the report, that the validity of the Uttar Pradesh Act—similar to the present C.P. & Berar Act—could not be decided by applying the amended clause six. Nor was the problem raised before or considered by this Court in Behram Khurshed Pesikaka v. State of Bombay. Consequently, the Court finds it appropriate to address the new question now before it and to determine the effect of the amended clause six on the impugned Act. This requires construing article thirteen of the Constitution, particularly the meaning of the term ‘void’ as no longer a matter to be decided afresh. The Court must apply the principle established by the majority in Keshavan Madhava Menon v. State of Bombay, which clarified the interpretation of ‘void’ in article thirteen. Accordingly, the impugned Act was an existing law when the Constitution came into force and it imposed restrictions on the exercise of the right guaranteed by article nineteen one g. Those restrictions could not be justified as reasonable under clause six as it then stood, and therefore, under article thirteen one, the law became void to the extent of its inconsistency with the Constitution. The precedent in Keshavan Madhava Menon makes clear that a law declared void does so only to the extent of its inconsistency, not in its entirety, nor for all persons or all times. Thus, the voidness of the impugned Act applied only to the portion that conflicted with the fundamental rights contained in Part Three of the Constitution.

It did not become void independently of the rights that Part III of the Constitution guarantees. In other words, from the moment the Constitution commenced, the existing statute could not be allowed to stand in the way of exercising the fundamental right because it had become inconsistent with article 19(1)(g) read with clause (6) as it existed at that time. The language of article 13(1) cannot be interpreted as having eliminated the entire operation of the inconsistent law or having wiped it out completely from the statute book; the citations to (1) [1955] 1 S.C.R. 613 and (2) [1951] S.C.R. 228 illustrate this point. Such a law continued to exist for all transactions that took place before the Constitution came into force and for the enforcement of rights and liabilities that had accrued before that date, as held in the case of Keshavan Madhava Menon. The law also remained in force after the Constitution’s commencement with respect to persons who were not citizens and therefore could not claim the fundamental right. In short, article 13(1) had the effect of nullifying or rendering ineffective the existing law that had become inconsistent with article 19(1)(g) read with clause (6) as it then stood, making that law devoid of any legal force or binding effect only insofar as it affected the exercise of the fundamental right after the Constitution began to operate. Consequently, between 26 January 1950 and 18 June 1951 the impugned Act could not impede a citizen’s exercise of the fundamental right falling under article 19(1)(g). The proper description of the situation is that, for that period, the impugned law was eclipsed, temporarily, by the fundamental right. The Constitution (First Amendment) Act 1951 removed that eclipse and restored the impugned Act to a state free from any blemish or infirmity. If this were not so, it would be incomprehensible what “existing law” could have been intended to be saved from the operation of article 19(1)(g) by the amended clause (6) insofar as it authorised a State monopoly, because, hypothetically, all existing laws creating such a monopoly had already become void at the Constitution’s commencement in view of clause (6) as it then stood. The American authorities refer only to post-Constitution laws that were inconsistent with constitutional provisions; those laws never came into existence but were, in effect, never born. Therefore, those American precedents cannot be fully applied to pre-Constitution laws that were perfectly valid before the Constitution. Apart from this distinction between pre-Constitution and post-Constitution statutes, which does not require further decision, it must be held that the American authorities have no application to our Constitution. All laws, whether existing or future, that are inconsistent with the provisions of Part III of our Constitution are, by the explicit provision of article 13, rendered void “to the extent of such inconsistency”. Such laws were not dead in every sense; they remained operative for purposes and liabilities that arose before the Constitution and for persons who were not citizens.

For all purposes the statutes that had been in force before the Constitution continued to exist for the purposes of pre-Constitution rights and liabilities and they remained operative after the Constitution as against non-citizens. Against citizens, however, those statutes were only dormant or moribund. The Court held that after clause (6) of Article 19 was amended on 18 June 1951, the impugned Act ceased to be unconstitutional, was revived, and became enforceable both against citizens and against non-citizens. Because the amendment of clause (6) was not made retrospective, the Court observed that the Act could not operate against citizens during the period from 26 January 1950 to 18 June 1951, and no rights or obligations could be founded on its provisions during that interval. By contrast, clause (2), which was expressly made retrospective, had effect even during that period. After the amendment of clause (6) the Act became fully operative against citizens as well. The notification announcing the State’s intention to take over the bus routes, to the exclusion of all other motor-transport operators, was published on 4 February 1955, at a time when the State was fully within its constitutional authority to do so. The Court found that the contentions advanced by the respondents concerning the effect of the Constitution (First Amendment) Act 1951 were well founded, and that the objections raised by the petitioners were untenable and had to be rejected.

The petitioners then argued that, even assuming that the impugned Act could not be challenged on the ground of infringement of their fundamental right under Article 19(1)(g) read with clause (6), they suffered another violation of their fundamental rights because they were deprived of their property—that is, the right to ply motor vehicles for profit, which is an interest in a commercial undertaking. Accordingly, they claimed that the Act conflicted with Article 31(2) of the Constitution and relied upon the Court’s decision in Shagir Ahmad’s case. The Court noted that, if no other provision existed, such a contention might have been difficult to answer. However, the Court pointed out the existence of the Constitution (Fourth Amendment) Act 1955, which came into force on 27 April 1955. By section 2 of that Act, Article 31 was amended, and clause (2) of Article 31 was replaced by the following wording: “(2) No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation or specifies the principles on which, and the manner in which, the compensation is to be determined and given; and no such law shall be called in question in any court on the ground that the compensation provided by that law is not adequate.” The amendment also introduced clause (2-A), stating that where a law does not provide for the transfer of ownership or possession of any property to the State or to a corporation owned or controlled by the State, it shall not be deemed to provide for compulsory acquisition or requisitioning of property, even though it may deprive a person of his property.

In this case the Court observed that the amendment of article 31 introduced a provision stating that even if a law transferred ownership or the right to possession of any property to the State or to a corporation owned or controlled by the State, such transfer would not be deemed to provide for compulsory acquisition or requisitioning of property, even though it might deprive a person of his property. The Court further noted that article 31-A had also been amended. Accordingly, if the amended provisions were applicable, the impugned law could not be said to provide for compulsory acquisition or requisitioning, because the law did not provide for the transfer of ownership or possession of any property. The petitioners, however, contended that the amendments which came into force on 27 April 1955 were not retrospective and therefore could not apply to the present proceedings. The Court replied that the impugned law had indeed been inconsistent with article 31 from the commencement of the Constitution on 26 January 1950, as held in the Shagir Ahmad decision, and that this inconsistency continued until the amendment on 27 April 1955, rendering the law void under article 13(1) to the extent of the inconsistency. The amendment of 27 April 1955 removed that inconsistency. Since the writ petitions were filed on 27 May 1955, a month after the amendment became effective, the petitioners could not be allowed to challenge the constitutionality of the impugned law from the date the amendment took effect, and that objection could not succeed. The petitioners’ counsel also attempted to raise the question of the law’s invalidity on the basis of the period before the Constitution, when there were no fundamental rights and section 299 of the Government of India Act, 1935—corresponding to article 31—had been interpreted by the Federal Court in Rao Bahadur Kunwar Lal Singh v. The Central Provinces and Berar and other cases to mean actual transfer of ownership, not the broader deprivation later given to the term in Subodh Gopal Bose’s case. Consequently, it was not clear that the impugned law conflicted with section 299 of the 1935 Act. Moreover, this objection had not been raised in the petitions and could not be introduced at this stage. Accordingly, the Court concluded that the petitions must be dismissed.

In the present case, the Court observed that, given the particular circumstances, it would not make any order concerning the payment of costs. The judgment also cited three prior authorities for reference. The first authority was reported in the 1944 volume of the Federal Court Reports at page 284. The second authority appeared in the 1952 first volume of the Madhya Pradesh Law Journal on page 174, with further discussion on pages 193 to 194. The third authority was reported in the 1954 volume of the Bihar Civil Reporter at page 587.