Raman and Raman Ltd vs The State Of Madras And Another

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 1 of 1956

Decision Date: 15 March 1956

Coram: Syed Jaffer Imam, Vivian Bose, B. Jagannadhadas, Bhuvneshwar P. Sinha

In this matter, the Supreme Court of India rendered its judgment on 15 March 1956 in the case titled Raman & Raman Ltd. versus The State of Madras and another. The judgment was recorded by Justice Syed Jaffer Imam, who sat on a bench that also included Justices Vivian Bose, B. Jagannadhadas, and Bhuvneshwar P. Sinha. The case is reported in the 1956 volumes of the All India Reporter (AIR 463) and the Supreme Court Reporter (SCR 256). The statutory framework concerned the power of a State Government to set aside orders of subordinate transport authorities under the Motor Vehicles Act, 1939, as amended by the Motor Vehicles (Madras Amendment) Act, 1948, specifically section 64‑A, and the constitutional provision allowing High Courts to issue writs of certiorari under Article 226 of the Constitution of India.

The factual background was that the appellant, Raman & Raman Ltd., together with respondent No 2 and other parties, applied for stage‑carriage permits for two distinct routes. The Regional Transport Authority granted the permit for one route to the appellant and the permit for the other route to respondent No 2. Both parties subsequently appealed to the Central Road Traffic Board, but the Board dismissed both appeals without recording any finding as to which applicant possessed superior facilities for operating the transport service or whether the applications were of equal merit. Each party then invoked section 64‑A of the Motor Vehicles Act, as amended, and sought the intervention of the State Government of Madras. The State Government exercised its authority to set aside the earlier orders of the Regional Transport Authority and the Central Road Traffic Board, and it issued permits for both routes to respondent No 2 on the basis that he had better facilities and would serve the public interest more effectively. In response to this order, the appellant filed a petition in the Madras High Court seeking a writ of certiorari. A single judge of that Court granted the writ, thereby nullifying the State Government’s order. The appellant appealed this decision by way of a Letters Patent appeal, and the appellate court set aside the High Court’s judgment. The appellant maintained that the State Government had exceeded its jurisdiction under section 64‑A by overturning the subordinate authorities’ orders and further argued that the provision itself was ultra vires. The Supreme Court held that the State Government acted within its statutory powers when it issued the order and accordingly dismissed the appeal. The Court affirmed that the State Legislature possessed the competence to insert section 64‑A into the Motor Vehicles Act, and that the legality of this legislative insertion could not be challenged. The Court observed that the clear legislative intent was to empower the State Government to examine the legality, regularity, or propriety of any orders made by subordinate transport authorities in the interest of the general public. Moreover, the Court concluded that the State Government is the final authority to determine which of the competing applicants has the superior facilities for operating a bus service, and that once the State Government has arrived at a decision in favour of an applicant, that decision cannot be interfered with under Article 226 of the Constitution merely because the court might suspect an error in judgment.

The case reached the Supreme Court on a certificate issued by the Madras High Court, which held that the matter presented two important questions. The first question concerned the extent of the powers conferred on the State Government by section 64‑A of the Motor Vehicles Act, 1939, as amended by the Motor Vehicles (Madras Amendment) Act, 1948, to interfere with the orders of subordinate transport authorities on the ground of propriety. The second question related to the limits of judicial review available to the courts under article 226 of the Constitution of India. The judgment in this appeal was delivered by Justice Imam. The appellant and respondent No 2 had each applied for stage‑carriage permits in the Mayuram Town Service for two separate routes, numbered 1 and 2 respectively. Their applications, together with several others, were examined by the Regional Transport Authority at Tanjore. By its order dated 31 May 1954, the Authority granted the permit for route 1 to the appellant and the permit for route 2 to respondent No 2. Dissatisfied with those decisions, both parties filed appeals under section 64 of the Act to the Central Road Traffic Board, which acted as the appropriate authority. The Board dismissed both appeals by its order dated 18 August 1954.

Because section 64‑A gave the State Government what was described in the proceedings as revisional powers, the appellant and respondent No 2 each presented representations to the State Government against the orders issued by the Regional Transport Authority and by the Board. The State Government subsequently set aside those orders and directed that permits for both routes 1 and 2 be issued to respondent No 2. In response to that order, the appellant filed an application under article 226 of the Constitution in the Madras High Court, seeking a writ of certiorari. A single judge of the High Court entertained the application and issued the writ. Respondent No 2 appealed that decision by way of a Letters Patent appeal, and the High Court allowed the appeal, thereby setting aside the single judge’s order. The Regional Transport Authority had originally granted the permits on the basis that the applicant parties were experienced operators of town buses at Kumbakonam. The Central Road Traffic Board affirmed that view, expressing that the applicants possessed the requisite experience. The Board further considered that a certain amount of healthy competition was desirable on the Mayuram Town routes and that the Authority was within its rights in not weighing the aspect of sector coverage by the appellant’s and respondent’s buses. It appeared that respondent No 2 covered the entire route 1 while the appellant covered only a portion of route 2. The State Government, in setting aside the earlier orders, issued an order stating that, in the interest of the public, both permits should be granted to the respondent because it had better facilities for operation and could serve the public more effectively, and consequently declared the Board’s order of 18 August 1954, insofar as it confirmed the Regional Transport Authority’s order, to be improper.

In this case, the Board observed that a certain amount of healthy competition was necessary on the Mayuram Town routes. It also concluded that the Regional Transport Authority acted within its authority when it chose not to consider the extent of sector coverage provided by the muffassil buses operated by the appellant and respondent No 2. The factual record showed that respondent No 2 covered the entire route No 1, whereas the appellant operated only a portion of route No 2. When the State Government set aside the orders of the Regional Transport Authority and the Board, it issued the following directive: “Considering the claims of Sri Raman & Raman Ltd. and Sri Sathi Vilas Bus Service, the Government is of the opinion that it will be in the public interest to grant both permits to Sri Sathi Vilas Bus Service, Poryar, because it possesses better facilities for operation and will be able to serve the public more effectively. Accordingly, the Government of Madras declares the order of the Central Road Traffic Board No R 27792/A2/54 dated 18 August 1954, insofar as it confirms the Regional Transport Authority, Tanjore’s grant of one permit for route No 1 to Sri Raman & Raman Ltd., to be improper, and directs that the two permits in question be granted to Sri Sathi Vilas Bus Service, Poryar.” Before addressing the arguments presented on behalf of the appellant, the Court found it appropriate to refer to several provisions of the Motor Vehicles Act concerning the grant of permits. Section 42 of the Act prohibits an owner of a transport vehicle from using, or allowing the use of, that vehicle in any public place except in accordance with the conditions of a permit issued by a Regional Transport Authority. Section 43 confers specific powers on the State Government to regulate road transport. Section 44 authorises the State Government to establish both a State Transport Authority and a Regional Transport Authority to carry out the functions enumerated therein. Section 47 outlines the factors that a Regional Transport Authority must consider when deciding whether to grant or refuse a stage‑carriage permit. Section 64 provides that any person aggranted by an order of the Regional Transport Authority, who is aggrieved by that order, may appeal to the prescribed authority. Section 64‑A further provides that the State Government may, either on its own motion or upon application, call for the records of any order or proceeding taken under this Chapter by any subordinate authority or officer, for the purpose of ascertaining the legality, regularity, or propriety of such order or proceeding, and after examining those records, may pass such order as it deems appropriate. Counsel for the appellant, Mr Pathak, argued that, in light of section 64‑A, the State Government’s power to intervene operates in two stages. The first stage constitutes a condition precedent for the Government to assume jurisdiction over the matter, requiring a determination of a collateral fact – namely, whether the order issued by any subordinate authority or officer was in fact illegal, irregular, or improper. Only if that determination is affirmative does the State Government acquire jurisdiction to revise the contested order.

In this case the Court explained that Section 64‑A requires the State Government to satisfy a two‑step condition before it may revise an order made by any authority or officer that is subordinate to it. The first step, known as the condition precedent, is to determine whether the subordinate order was in fact illegal, irregular or improper. Only if that determination is affirmative does the State Government acquire jurisdiction to issue a revisional order. The Court noted that a court hearing a petition for a writ of certiorari may examine both the factual and legal aspects of the State Government’s decision and may decide whether the revisional order itself is illegal, irregular or improper. The Court further observed that, in the present proceedings, there was no allegation of illegality or irregularity in the orders of the Regional Transport Authority or the Board; the sole issue was whether those orders were improper. The Court clarified that “improper” does not merely mean “incorrect.” An order is improper only when some factor outside the order itself renders it defective. A mere difference of opinion as to the facts between the State Government and the subordinate authority does not, by itself, make the subordinate order improper. The second step—the power of the State Government to pass an order “as it thinks fit”—can be exercised only after the first step has been satisfied. The Court found that the State Government had revised the subordinate order on the basis that respondent No 2 possessed better facilities and therefore could serve the public more effectively. However, the subordinate authorities had received full representations from both the appellant and respondent No 2, together with other applicants, stating all material facts. The authorities therefore concluded that the appellant and respondent No 2 had essentially equal facilities and that, on an equal footing, each should be granted a permit for a different route. The Court held that this conclusion was not improper. Consequently, the Court concluded that the condition precedent for the State Government’s jurisdiction was absent, and that the State Government had acted beyond its lawful authority in revising the orders of its subordinate bodies. Counsel for the appellant further contended that the State Government’s order contained an error on the face of the record because it failed to consider seniority or experience in motor transport as a factor, and he cited paragraph 8 of the affidavit filed on behalf of the State Government in the High Court as support for that claim.

In the affidavit, the petitioner argued that the record contained an error because the Government had acted on an incorrect view of its own jurisdiction. He further asserted that section 64‑A was an invalid provision. As an alternative plea, he maintained that a court or authority exercising revisional powers could not adopt a factual view that differed from that taken by the subordinate court or authority. Such revisional power, he said, could be exercised only where the subordinate body had adopted a perverse view of the facts, arriving at a conclusion that no reasonable person could have reached. To support this first contention, the petitioner relied upon paragraph 116 on page 59 of the third edition, volume 11 of Halsbury’s Laws of England, and also on paragraph 117 on page 60 of the same volume. Those passages indicated that, in certain cases, the jurisdiction of an inferior tribunal might depend upon the fulfillment of a condition precedent or upon the existence of a particular fact that was collateral to the main matter before the tribunal. The determination of that collateral fact logically preceded the determination of the substantive issue that the tribunal was required to decide. Consequently, in a certiorari proceeding, a higher court could examine the correctness of the inferior tribunal’s finding on the collateral fact and could set aside that finding if, on the material before it, the decision appeared erroneous. However, the passages also explained that some tribunals, by virtue of the legislation that created them, possessed the power to finally determine the preliminary facts on which the further exercise of their jurisdiction depended. In such instances, even if the tribunal’s decision was wrong in fact or law, it could not be corrected by a writ of certiorari. Moreover, where the fact in question formed part of the very issue that the inferior tribunal was required to investigate, a higher court would not issue a writ of certiorari even if the tribunal arrived at an erroneous conclusion about that fact. Applying these principles to the present case, the petitioner contended that the only possible collateral fact to be decided was whether the appropriate authority had actually issued any order that would trigger the powers under section 64‑A. It was not contested that orders had indeed been issued by the Regional Transport Authority and the Board, both of which were subordinate to the State Government, and that those orders were in existence when the appellant and respondent No 2 moved the Government to exercise its powers under section 64‑A. Accordingly, the condition precedent and the existence of a collateral fact, as required for the exercise of powers under that section, were present at the time the State Government acted.

In examining whether an order was legal, regular or proper, the State Government was not engaged in ascertaining the existence of a separate collateral fact; rather, it was directly addressing the question of the order’s legality, regularity and propriety. Consequently, the Government’s satisfaction in this respect represented merely its own opinion rather than a factual determination upon which its jurisdiction to act under section 64‑A depended. The Court then considered the character of the functions carried out under the Act by the Regional Transport Authority, the Board and the State Government in relation to the grant or refusal of a transport permit. Although it is undisputed that these functions are not judicial, it has been argued that they are not purely administrative either, but rather quasi‑judicial, and thus fall within the jurisdiction of a court empowered to issue a writ of certiorari. The proceedings contemplated by sections 47, 64 and 64‑A of the Act do not involve a determination of any individual’s rights; from that standpoint the actions of these authorities may be classified as executive or administrative. Yet, one might also contend that a person possesses a fundamental right to carry on the business of operating buses, and therefore is entitled to have the statutory functions of those authorities exercised correctly, which would render those functions quasi‑judicial. Assuming that perspective, it remains necessary to decide whether the State Government acted beyond its legal authority. Chapter IV of the Act contains provisions governing transport vehicles. The Act empowers the State Government to create a State Transport Authority and Regional Transport Authorities, and, subject to its provisions, to control road transport. Primarily, the power to grant or refuse a permit lies with the Regional Transport Authority, but its order is not final because an aggrieved party may appeal under section 64 to the appropriate authority. Before the legislature of Madras inserted section 64‑A, one could have argued that a Regional Transport Authority’s order, if not appealed, and the appropriate authority’s order under section 64, when appealed, could not be interfered with by the State Government because it lacked statutory authority. By enacting section 64‑A, the legislature clearly intended that this limitation be removed and that the State Government should be empowered to intervene whenever it is convinced that the order in question is illegal, irregular or improper. By granting this power, the legislature intended that the State Government itself decide whether any order was illegal, irregular or improper. Accordingly, a court exercising certiorari jurisdiction could not intervene merely because it might disagree with the State Government’s view of the order’s propriety.

The Court noted that the State Government’s view had been described as erroneous, but highlighted that the term “propriety” was not defined in the Act and could bear many meanings. Referring to the Oxford English Dictionary (Vol. VIII), the Court listed the dictionary’s definition as “fitness; appropriateness; aptitude suitability; appropriateness to the circumstances or conditions; conformity with requirement, rule or principle; rightness, correctness, justness, accuracy.” The Court explained that if the State Government believed that respondent No. 2 possessed superior facilities for operation compared with the appellant and that such superiority would benefit the public, it could not be said that the Government erred in thinking the Board’s confirmation of the Regional Transport Authority’s order was improper. The Court reminded that, under section 47 of the Act, a Regional Transport Authority, in deciding whether to grant or refuse a permit, must consider, among other factors, the general public interest and the advantages to the public of the service to be provided. Assuming that the parties were substantially alike in experience, the Court observed that better operating facilities held by respondent No. 2 would promote the public interest and constitute an advantage of the service, thereby becoming an overriding factor when all other considerations were equal. However, the Court pointed out that neither the Regional Transport Authority nor the Board had recorded any finding as to which party possessed the better facilities, nor had they stated that the facilities of the two parties were of equal merit. Consequently, the State Government did not have the benefit of knowing, from the face of the authorities’ orders, the view these bodies had adopted. Even if it were assumed that the authorities’ orders implied that the facilities of the appellant and respondent No. 2 were of equal merit, the Court held that the State Government was still not in a position to ascertain the material on which that opinion was based or to determine whether it was reasonable. To satisfy itself, the State Government examined the materials before it and concluded that respondent No. 2 had the better facilities; the Court remarked that it would be unreasonable to hold the contrary. The learned single Judge of the High Court, on several occasions, found that material existed before the State Government to justify its finding that respondent No. 2 had superior facilities, and he further held that this fact limited the High Court’s jurisdiction under article 226 of the Constitution. The Judge indicated that, although this conclusion should have resolved the matter for the High Court, he thought that the State Government’s conclusion was not the only possible one.

Mere disagreement on the conclusions to be drawn from the materials on record, when both conclusions could be considered reasonable, was not sufficient to demonstrate that the orders issued by the Board and the Regional Transport Authority were improper within the meaning of section 64‑A. Consequently, the view that the State Government had acted beyond its jurisdiction could not be sustained. In the Court’s assessment, the order of the State Government, as it presently stands, cannot be characterised as exceeding its jurisdiction, nor can it be said that recording a finding that respondent No. 2 possessed superior facilities for operation and would better serve the public amounted to a usurpation of power, especially in the absence of any contrary finding by the subordinate authorities. The public interest and the advantages to the public of the proposed service were very important, if not the most important, considerations in deciding whether to grant or refuse a permit. Faced with the conflicting claims of the appellant and respondent No. 2 regarding the facilities each possessed for operating a bus service, the State Government was obligated, in the interest of the public generally, to determine which party had the better facilities. This determination fell squarely within the scope of the State Government’s authority, and a court reviewing the matter by certiorari should not intervene in that discretionary decision. To hold that the opinion of the Regional Transport Authority and the Board—that the facilities for operation were equal between the two parties—was a reasonable view would effectively make the court the final authority on a matter that, under the provisions of the Act, was expressly entrusted to the State Government. Accordingly, the Court was not prepared to conclude that the State Government had acted beyond the limits of its statutory authority. There was no error apparent on the face of the record concerning the State Government’s order, and reference to paragraph 8 of the State Government’s affidavit filed in the High Court did not establish any such error. That paragraph was a response to paragraphs 13 and 14 of the appellant’s affidavit and set out the State Government’s contentions regarding the extent of its powers. Nothing in that paragraph indicated that the State Government had refused to consider seniority or experience in the selection process. No substantial ground was advanced to suggest that section 64‑A was an unlawful provision. The State Legislature possessed the competence to insert section 64‑A into the Act, and the provision was reasonable within the overall scheme of the Act governing transport vehicles and the control of road transport. Regarding the extent of revisionary powers vested in a court or authority, the Court chose not to express any opinion in this case, maintaining the view that the State Government’s order could not be interfered with by the writ of certiorari.

The matter before the Court concerned whether a writ of certiorari should be entertained. The High Court had issued a certificate on the basis that the question involved the limits of judicial review exercisable by the courts under article 226 of the Constitution. The Court noted that the scope of such judicial review has been examined in a number of earlier decisions of this Court, and that those earlier authorities sufficiently explained the principle, so that a fresh recapitulation was unnecessary. After considering the submissions, the Court formed the view that it would not be reasonable to hold that the State Government had acted beyond the authority granted to it by law. Consequently, the Court concluded that there was no ground for interference with the State Government’s action and therefore dismissed the appeal. In addition, the Court ordered that the costs of the proceedings be awarded to the second respondent.