V.C. K. Bus Service Ltd vs The Regional Transport Authority

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

Court: Supreme Court of India

Case Number: Civil Appeal Nos. 323 and 324 of 1956

Decision Date: 19 February 1957

Coram: Venkatramana Ayyar

In this case the Supreme Court of India delivered its judgment on 19 February 1957 concerning a dispute between V.C.K. Bus Service Ltd, the petitioner, and the Regional Transport Authority of Coimbatore, the respondent. The controversy arose under the provisions of the Motor Vehicles Act, 1939, particularly sections 57 and 58, which govern the grant and renewal of permits for stage carriage. The petitioner had initially obtained a stage‑carriage permit from the Regional Transport Authority in accordance with the Act. Unsuccessful applicants challenged that permit before the Central Road Traffic Board, the statutory appellate authority, which set aside the original order. The decision of the Central Road Traffic Board was subsequently approved by the Government in a revision proceeding. In response to the cancellation, the petitioner approached the High Court of Madras seeking a writ of certiorari to quash both the Board’s proceedings and the Government’s approval. While the writ petition was pending, the High Court stayed the operation of the order that had cancelled the original permit, thereby allowing the petitioner to continue operating its buses despite the formal cancellation. Before the expiry of the period fixed in the original permit, the petitioner applied for and obtained a renewal of the permit from the Regional Transport Authority under section 58 of the Motor Vehicles Act. After the High Court finally dismissed the writ of certiorari, the question arose whether the renewal remained valid in view of the earlier High Court decision. The matter was again brought before the High Court under article 226 of the Constitution. The High Court held that the renewal had been secured on the basis of a permit that had subsequently been cancelled; consequently the renewal could not be treated as a fresh permit, the original permit, once set aside, was to be regarded as null and void for all purposes, and the renewal itself must therefore be considered a nullity. The petitioner appealed this conclusion to the Supreme Court. The Supreme Court held that, under the Motor Vehicles Act, 1949 and the rules framed thereunder, a renewal is essentially a continuation of the original permit. Because the original permit had been renewed in favour of the petitioner while the High Court proceedings under article 226 were still pending, the renewal was necessarily subject to the outcome of those proceedings. When the order granting the original permit was eventually set aside, the renewed permit consequently became void. The Court noted that the earlier decision in Anjiah v. Regional Transport Officer, Guntur, 1956 (Andhra Law Times, p. 347) was disapproved. The Court further observed that when the petitioner applied for a renewal under section 58, the order of the Regional Transport Authority granting that renewal must be understood as having been made subject to the implied condition that the petitioner’s right to the original permit be recognised by the High Court; therefore, if the original permit was later invalidated, the renewal could not survive and ceased to be effective.

The Court observed that the renewal of the permit was subject to an implied condition that the appellant’s right to the original permit must be recognised by the High Court. Consequently, if the High Court were to set aside the original permit, the renewed permit would cease to be effective. The Court referred to the decision in Veerappa Pillai v. Raman & Raman Ltd., (1952) S.C.R. 583, which was explained and distinguished in the present case.

The matter before the Court was an appeal in civil appellate jurisdiction, specifically Civil Appeals Nos. 323 and 324 of 1956. The appeal was filed against the judgment and orders dated 27 April and 13 July 1956 of the Madras High Court in Writ Appeals Nos. 42 and 88 of 1956, which arose from orders dated 23 March and 9 July 1956 of the same High Court in Writ Petitions Nos. 333 and 564 of 1956. Counsel for the appellant comprised senior lawyers, while counsel for respondents Nos. 3 and 4 included the Solicitor‑General of India and other senior advocates. The judgment was delivered on 19 February 1957 by Justice Venkatarama Ayyar.

The appeals challenged the High Court’s judgment on a certificate issued under Article 133(1)(c) of the Constitution. The core issue concerned the legal nature of a permit when it is renewed under the Motor Vehicles Act, 1939 (IV of 1939), hereafter referred to as “the Act”. To understand the parties’ contentions, the Court set out the material facts.

At the end of 1952, the authorities exercising powers under the Act decided to issue two additional permits for stage‑carriage services on the Ondipudur‑Agricultural College route in Coimbatore, Madras State. An invitation for applications was issued pursuant to Section 57 of the Act. Thirty‑nine applicants responded. By an order dated 3 December 1952, the Regional Transport Authority granted one permit to applicant No. 24, Thondamuthur Trading Company Ltd., and another permit to applicant No. 30, V.C.K. Bus Service.

Several unsuccessful applicants appealed to the Central Road Traffic Board. By an order dated 19 February 1953, the Board set aside the Regional Transport Authority’s decision and instead granted a permit to Stanes Transports Ltd. and another to Thirumalaiswami Goundar. Aggrieved applicants filed revisions under Section 64‑A of the Act. By an order dated 9 July 1953, the Government confirmed the grant to Stanes Transports Ltd., but set aside the permit to Thirumalaiswami Goundar and re‑granted it to Annamalai Bus Transport Ltd.

Subsequently, applicants Nos. 24 and 30 approached the Madras High Court under Article 226, seeking a writ of certiorari to quash the Central Road Traffic Board’s order of 19 February 1953 and the Government’s order of 9 July 1953. Justice Rajagopala Ayyangar dismissed these applications on 8 March 1954. The dismissals were challenged by filing Writ Appeals Nos. 31 and 32 of 1954.

The writ appeals numbered 31 and 32 of 1954 were presented before the Madras High Court, but both were dismissed by Chief Justice Rajamannar and Justice Panchapakesa Ayyar on 21 March 1956. It was necessary to note that the order dated 19 February 1953, which had cancelled the permits issued by the Regional Transport Authority on 3 December 1952, had been stayed while the revision under section 64‑A and the related writ proceedings were pending. Consequently, both Thondamuthur Trading Company Ltd. and V.C.K. Bus Service, which had received permits on 3 December 1952, continued to operate their buses despite the formal cancellation of those permits on 19 February 1953. Further, in June 1954 the business of V.C.K. Bus Service—the holder of one of the original permits—was transferred to a newly formed company called V.C.K. Bus Service Ltd., which is the appellant in the present case. By an order of the Regional Transport Authority dated 7 July 1954, the new company was recognized as the lawful transferee of the permit previously granted to V.C.K. Bus Service.

The permit that became the subject of the litigation was originally issued for a term of one year and a half and consequently expired on 30 June 1954. Anticipating this expiry, the appellant applied on 15 April 1954 for a renewal of the permit for a further three years. The application was duly notified under section 57, and objections were filed by Stanes Transports Ltd. and Annamalai Bus Transport Ltd. On 5 September 1954, the Regional Transport Authority granted a renewal to the appellant for a period of one year, namely from 1 July 1954 to 30 June 1955, apparently in expectation that the writ appeals would have been decided by then. On 19 March 1955 the appellant sought another renewal, and the application was again notified under section 57. No objections were received, and by an order dated 23 June 1955 the Authority renewed the permit for three years, covering the period from 1 July 1955 to 30 June 1958. This renewed permit constituted the core of the present dispute. It had already been established that writ appeals 31 and 32 of 1954 were dismissed on 21 March 1956. Fearing that the Regional Transport Authority might, in view of the High Court’s judgment, cancel the permit renewed on 23 June 1955, the appellant filed Writ Petition No. 333 of 1956 seeking a writ of prohibition to restrain the Authority from cancelling the permit. That petition was dismissed by Justice Rajagopala Ayyangar on the ground that the cancellation of the original permit rendered any renewal ineffective. The appellant subsequently filed Writ Appeal No. 42 of 1956 against this dismissal, which was heard by Chief Justice Rajamannar and Justice Panchapakesa Ayyar. Their judgment dated 27 April 1956, following a prior decision of the Court, held that a renewal obtained on the basis of a permit later cancelled could not be treated as a fresh permit; when the original permit was set aside, it was deemed null and void for all purposes, rendering the renewal a nullity. Accordingly, the appeal was dismissed, although a certificate under Article 133(1)(c) was issued, recognizing the general importance of the question whether a renewed permit survives when the original is ultimately found to have been improperly granted.

In the earlier decision of the Court in K. Muthuvadivelu v. Regional Transport Officer (A.I.R. 1956 Mad. 143), the Court held that a renewal obtained on the basis of a permit that was subsequently cancelled could not be treated as a fresh permit; when the original permit was set aside, it was deemed null and void for all purposes, and consequently the renewal was declared a nullity. The Court therefore dismissed the appeal but granted a certificate under Article 133(1)(c), observing that the case raised a question of general importance and framing the issue as follows: when an application for renewal of a permit is made and the renewal is granted, but it is later found that the original permit itself had been wrongly granted, does the renewed permit continue for the period for which it was renewed, or does it automatically cease to be in force when the original permit is finally declared invalid? This question now arises before this Court in Civil Appeal No. 323 of 1956. After the High Court delivered its judgment in Writ Appeal No. 42 of 1956 on 27 April 1956, the respondents—Stanes Transports Ltd. and Annamalai Bus Transport Ltd.—applied to the Regional Transport Authority for permits in accordance with the High Court’s decision, and on 5 May 1956 the Authority cancelled the permit that had been granted on 23 June 1955 in favour of the appellant and instead issued permits to the respondents. In response, the appellant filed Writ Petition No. 554 of 1956 seeking a writ of certiorari to quash the order dated 5 May 1956, relying on the same grounds that had been raised in Writ Petition No. 333 of 1956 and Writ Appeal No. 42 of 1956. That petition was dismissed by Justice Rajagopalan on 9 July 1956, and the subsequent Writ Appeal No. 88 of 1956 against the dismissal was also dismissed by Chief Justice Rajamannar and Justice Panchapakesa Ayyar on 13 July 1956. Leave to appeal that judgment was granted under Article 133(1)(c), because the subject‑matter was identical to that of Writ Appeal No. 42 of 1956 for which leave had already been granted. Civil Appeal No. 324 of 1956 relates to the same dispute. Thus both appeals concern identical facts and raise the same legal question. Counsel for the appellants, Mr A. V. Viswanatha Sastri, argued that the High Court’s view—that a permit set aside should be treated as wholly non‑existent and that any renewal of such a permit must be void—is unsound. He maintained that a proper reading of sections 57 and 58 shows that a renewal functions in practice as a new grant, and that the permit awarded to the appellant for the period 1 July 1955 to 30 June 1958, although described as a renewal, was in substance a fresh permit; therefore the cancellation of the earlier permit should not affect the appellant’s rights under the renewed permit. He further contended that the Act and its accompanying rules contain detailed provisions governing when a permit may be cancelled, forming a complete code on the matter, and that the cancellation of the original permit does not constitute a ground for setting aside a renewed permit, rendering the Authority’s order of 5 May 1956 ultra vires. The Solicitor‑General for the respondents, on the other hand, submitted that a renewal, when correctly construed, is essentially a continuation of the previous permit, and that consequently, when a higher authority sets aside the original permit, the renewal must automatically be set aside as well.

In this case, the appellant contended that the permit granted for the period from 1 July 1955 to 30 June 1958, although described as a renewal, was in substance a fresh permit, and therefore the cancellation of the earlier permit did not affect the appellant’s rights under the newer permit. He further argued that the Act and the rules made thereunder contained detailed provisions governing the circumstances in which a permit could be cancelled, and that those provisions formed a complete code on the subject. Accordingly, he maintained that the cancellation of the original permit was not a ground on which the renewed permit could be set aside, and that the order dated 5 May 1956 issued by the Regional Transport Authority was therefore beyond its legal authority.

The learned Solicitor‑General for the respondents put forward the opposite view. He asserted that, when a permit is renewed, the renewal is, on a proper construction of the statutory provisions, essentially a continuation of the original permit, both in name and in substance. Consequently, he argued, if a higher authority sets aside the original permit, the renewal must automatically be set aside as well. He added that even if a renewed permit were not regarded as a continuation, it is nevertheless granted on the basis of the original permit and is therefore subject to an implied term that it should cease if the original permit is cancelled.

From these opposing submissions, the Court identified two questions that required resolution. The first question was whether a renewed permit constitutes a continuation of the original permit or whether it is, in fact, a new permit. The second question was, assuming that a renewed permit is not a continuation, whether the grant of the renewed permit carries an implied condition that it will be liable to cancellation if the original permit is cancelled.

To address the first question, the Court examined the relevant provisions of the Act. Section 57 laid down the procedure for granting stage‑carriage permits. Sub‑section (2) required that applications for such permits be made not less than six weeks before the date appointed by the Regional Transport Authority. Sub‑section (3) mandated that the applications be published in the prescribed manner and that a provision be made for representations to be filed in connection with the applications. When a representation was received, sub‑section (5) provided that the person making the representation must be given an opportunity to be heard either in person or through a duly authorised representative, and that the application for the permit should be disposed of at a public hearing.

Section 58 dealt specifically with renewals. Sub‑section (1) stated that a permit, other than a temporary permit issued under section 62, would be effective without renewal for a period of not less than three years and not more than five years, as the Regional Transport Authority might specify in the permit. It further provided that, in the case of a permit issued or renewed within two years of the commencement of the Act, the permit could be effective for a period of less than three years as prescribed by the Provincial Government. Sub‑section (2) permitted a permit to be renewed on an application that was to be made and disposed of in the same manner as an application for a new permit. It also provided that, all other conditions being equal, an application for renewal should be given preference over new applications for permits.

Section 58(2) of the Act stipulated that an application for renewal was to be dealt with in the same manner as an application for a fresh permit. The counsel for the appellant argued that, because of this provision, the renewal application had to be notified under section 57, that representations concerning the renewal had to be invited, and that the matter had to be heard in public, exactly as required for a new permit. The appellant further maintained that the only advantage afforded to a renewal applicant was a preference clause, which operated only when all other conditions were equal, and therefore the renewal decision was to be made after an independent assessment of the merits, making it indistinguishable from a new grant. It was submitted that the proviso to section 58(2) was of little substance, since it was well settled that a permit was never a matter of right and that the transport authority retained the power to refuse a renewal while granting a fresh permit to another applicant. In addition, the counsel contended that the term “renewal” did not accurately describe the situation, because in ordinary legal usage renewal implied that the same transaction continued on the same terms, as with a lease, whereas a transport permit could be renewed with altered conditions, a different operating period, or other modifications. Consequently, the use of the word “renewal” should not lead to the inference that the original permit was simply being continued unchanged.

The Court acknowledged that the appellant’s contentions possessed some merit, but observed that other provisions of the Act clarified the legislative intention to treat a renewal as a continuation of the earlier permit. Section 58(1) provided that a permit was effective for the period specified therein, but this statement was qualified by the words “without renewal”. Hence, when a renewal occurred, the period of effectiveness was no longer the original duration but the period granted by the renewal, indicating that the life of a renewed permit was a single, uninterrupted term. This interpretation was reinforced by the rules made under the Act, particularly Rule 184(1), which required that when a renewal was granted it be endorsed on the permit itself, thereby confirming that the renewed instrument was, in effect, the same permit extended for a further period. The Court therefore concluded that the renewal process was intended to produce a continuous permit rather than a fresh, separate authority.

It was stated that, when a permit is renewed, the renewal must be endorsed on the permit itself and the prescribed Form No 33 must be used. Form No 33 contains the wording, “This permit is hereby renewed up to the day of ….” Consequently, the object that is renewed is the permit itself. In order to understand this, reference must be made to the definition of “permit” contained in section 2(2) of the Act, which describes a permit as “the document issued by a Provincial or Regional Transport Authority.” Rule 1985, which is highly relevant to the present discussion, provides the following: if an application for renewal of a permit has been made in accordance with the rules and the prescribed fee has been paid by the prescribed date, the permit shall continue to be effective until the authority passes orders on the application or until three months have elapsed from the date of receipt of the application, whichever occurs first. If the authority does not pass orders within those three months, the permit‑holder is entitled to have the permit renewed by the Transport Authority for the period specified in the application or for one year, whichever is less. In such a case, the Transport Authority shall require the permit‑holder to produce the registration certificate or certificates and Part B or Parts A and B of the permit, as appropriate, and to endorse the renewal in Parts A and B of the permit, after which the endorsed documents shall be returned to the permit‑holder. Under this rule, once an application for renewal is filed, the originally granted permit remains in force until an order is passed, and, importantly, if no order is issued within the three‑month period, the permit is automatically renewed for the period mentioned in the rule. This provision strongly supports the respondents’ contention that, according to the scheme of the Act, renewal is a continuation of the original permit. It should also be noted that the rules distinguish between the forms required for an application for a fresh permit and those required for a renewal, and the fees payable for each type of application are also different. A careful reading of the relevant provisions of the Act and of the rules therefore leads inevitably to the conclusion that a renewal constitutes a continuation of the previously granted permit. The fact that the granting of a renewal is not automatic, or that the authorities may impose new conditions at the time of renewal, does not alter the fundamental character of a renewed permit when it is, in fact, renewed. The Court then turned to consider the authorities cited by counsel for the appellant, which were claimed to support the view that a renewal under the Act is equivalent to a fresh permit. In Mahabir Motor Co. v. Bihar State, the question for determination was whether an appeal could be brought under section 64(f) against an order granting a renewal of a permit. The appellant argued that the Act distinguished between the grant of a permit and its renewal, and that section 64(f) provided a right of appeal only against an order granting a permit, thereby excluding an appeal against a renewal order.

In the earlier case, an argument was advanced that the Act distinguished between the original grant of a permit and a renewal of that permit, and that section 64 (f) of the Act provided an appeal only against an order granting a permit, thereby excluding an appeal against an order granting a renewal. The Court rejected this argument by observing that both a grant and a renewal “stand more or less on the same footing” because of sections 47, 57 and 58 of the Motor Vehicles Act. The Court explained that this observation related to the procedural steps to be followed in renewing a permit and the right of appeal that section 64 creates as part of that procedure; it did not speak to the substantive character of a permit once it had been renewed. The Court also considered another decision on which the appellant relied, namely Anjiah v. Regional Transport Officer, Guntur. In that case an order of suspension had been issued for breach of one of the permit conditions. The suspension was challenged before higher authorities without success, and meanwhile the original permit period expired and the permit was renewed. The question before the Andhra High Court was whether the suspension could be enforced against the renewed permit. The Court held that it could not, because the renewal was, in essence, a new permit and not merely a continuation of the old one. The judgment explained that “there is no right of renewal as such and when a permit is renewed, there is no right either, on the part of the permit‑holder to insist upon the continuance of the old terms. It would be undesirable that there should be any such restrictions upon the right of the authorities to grant the permit to anybody they choose or subject to any conditions that they think necessary to impose, provided that they are acting all the time in the public interest and subject to the provisions of the Motor Vehicles Act and the Rules made thereunder.” While acknowledging that these considerations had some force, the Court said they could not outweigh the inference to be drawn from the other provisions previously cited, and therefore it could not agree with the decision in Anjiah.

Accepting that, under the Act and the Rules, a renewal is a continuation of the original permit, the Court found that the rights of the appellant were clear. The proprietor of V.C.K. Bus Service had been granted a permit by the Regional Transport Authority on 3 December 1952, and that grant was expressly made subject to the outcome of a pending decision by higher authorities. When the permit was renewed in favour of the appellant on 5 September 1954, that renewal likewise remained subject to the decision of the High Court in Writ Appeal No. 32 of 1954, which was still pending at the time. The renewed permit dated 5 September 1954 was again renewed on 23 June 1955, and this second renewal was also conditioned on the pending decision in the same writ appeal. Subsequently, the High Court delivered its judgment on 21 March 1956, upholding the cancellation of the original permit dated 3 December 1952. As a result, the permit that had been renewed on 23 June 1955 became ineffective, at least from that date. The Regional Transport Authority therefore acted correctly in treating the renewed permit as void and in issuing new permits to the respondents by its order dated 5 May 1956.

The Court observed that the appellant’s original permit had been issued by the Regional Transport Authority on 3 December 1952, subject to the outcome of Appeal No 32 of 1954, which was then pending before the High Court. The permit was first renewed on 5 September 1954, and that renewal was again renewed on 23 June 1955. Both renewals were expressly conditioned on the result of the pending Writ Appeal No 32 of 1954. On 21 March 1956 the High Court delivered its judgment in that writ appeal, upholding the cancellation of the original permit granted on 3 December 1952. Consequently, the Court held that the renewal dated 23 June 1955 became ineffective from that date, because the original permit on which it was based had been set aside. The Regional Transport Authority therefore acted correctly in treating the June 1955 renewal as void. Accordingly, the Authority issued new permits to the respondents by an order dated 5 May 1956, reflecting the legal consequence that the earlier renewal could no longer subsist.

The second issue concerned the respondents’ alternative argument that, even if the renewal were regarded as an independent grant rather than a continuation of the original permit, it must be understood to be subject to an implied condition that the renewal would cease if the original permit were ultimately nullified. Counsel for the appellant, Mr Sastri, challenged this contention. He argued that a document embodying the terms of a contract cannot contain an implied condition that contradicts or varies its express terms. To read into the permit a condition that it would terminate should the High Court’s decision go against the appellant would, in his view, alter the explicit term that the permit was effective until 30 June 1958, and thus could not be implied. He further relied on Lord Parker’s observation in P A Tamplin Steamship Company Limited v Anglo‑Mexican Petroleum Products Company Limited, emphasizing that a term inconsistent with the contract’s express provisions or the parties’ intention cannot be implied. The Court noted that it is settled law that no condition inconsistent with the written terms of a contract or grant may be implied. However, the respondents were not seeking to modify the permit’s terms; rather, they contended that the entire permit, with all its duration provisions, should be held inoperative as a condition subsequent triggered by the cancellation of the original permit. The Court indicated that the cited observation on implied terms did not apply to this assertion.

In addressing the question of whether a condition could be implied into the renewal of a permit, the Court referred to a later remark made by Lord Parker in the case of F. A. Tamplin Steamship Company Limited v. Anglo‑Mexican Petroleum Products Company, Limited. Lord Parker observed that “some conditions can be more readily implied than others. Speaking generally, it seems to me easier to imply a condition precedent defeating a contract before its execution has commenced than a condition subsequent defeating the contract when it is part performed.” The Court held that this observation meant that there was no legal impediment to implying a condition whereby the renewal would be cancelled if the High Court were to negate the appellant’s right to the original permit. Consequently, the discussion turned to the factual enquiry of whether, on examining the permit and the circumstances surrounding its grant, it could be inferred that the Regional Transport Authority intended the renewal to be contingent upon the outcome of the pending High Court appeal.

The original permit granted to V. C. K. Bus Service on 3 December 1952 was cancelled on 19 February 1953, and the bus was allowed to operate only because of stay orders. When the appellant sought renewal on 15 April 1954, both respondents objected, relying on a Government decision dated 9 July 1953. In response to that objection, the Regional Transport Authority renewed the permit for a period from 1 July 1954 to 30 June 1955. The appellant applied again for renewal on 19 March 1955; the respondents did not object this time, but the High Court appeals were still pending, giving the respondents a reasonable basis to expect that any renewal would not prejudice rights that might later be awarded to them by the High Court. All documents relating to the original permit and the subsequent proceedings were before the Authority when it renewed the permit on 23 June 1955, leading to the conclusion that the Authority intended the renewal to be effective only subject to the High Court’s decision. It was crucial to note that the appellant sought a renewal, not a fresh permit, and the Authority exercised its powers under Rule 134‑A read with section 58 of the Act. Because the Authority did not expressly state that the renewal was subject to the High Court’s decision, the Court inferred that such a condition was implicitly understood in any renewal. The appellant’s understanding of this implication was evident from the actions it took immediately after the High Court’s judgment.

The High Court rendered its judgment in the matter. The appellant, however, contended that the decision in Veerappa Pillai v. Raman and Raman Ltd. (1) demonstrated that merely knowing that the parties’ rights were the subject of ongoing litigation did not justify imposing a condition on a permit that it should remain subject to the outcome of that litigation, especially when the permit was expressed to be unconditional. The Court did not accept that the cited decision supported such a broad proposition. In the Veerappa Pillai case, the dispute concerned five permits that had originally been issued to a person named Balasubramania. Raman and Raman Ltd. obtained a transfer of the buses associated with those permits and subsequently applied to the transport authorities for the permits to be transferred to its own name. Later, Veerappa Pillai obtained a transfer of the same buses from Balasubramania and applied for the permits to be transferred to his name. On 3 October 1944, Veerappa instituted suit in the Sub‑Court at Kumbakonam to establish his title to the buses against Raman and Raman Ltd., and the Sub‑Court decreed in his favour on 2 May 1946. Raman and Raman Ltd. appealed that decree to the Madras High Court, which on 2 September 1949 reversed the Sub‑Court’s decision and held that Raman and Raman Ltd. was entitled to the buses. While these proceedings were pending, the transport authorities, on 28 March 1944, suspended the permits originally granted to Balasubramania and began issuing temporary permits intermittently to Veerappa, who had been appointed receiver in the Sub‑Court suit. On 29 March 1949, the Government decided to end the policy of granting temporary permits indefinitely and consequently granted permanent permits to Veerappa. Veerappa then applied for renewal of these permanent permits on 14 October 1949, and the Regional Transport Authority granted the renewal on 3 January 1950.

The question before the Court was whether the renewal order dated 3 January 1950 was flawed because it allegedly contradicted the High Court’s decision that Raman and Raman Ltd. possessed a valid title to the buses. The Court held that ownership of the buses constituted merely one factor among many to be considered when granting permits, and that the Regional Transport Authority, having evaluated all the relevant facts, was within its authority to grant the renewal; consequently, its decision could not be challenged under Article 226. It is important to note that the renewal granted on 3 January 1950 pertained to permanent permits that had been issued pursuant to the Government order dated 29 March 1949. That order explicitly declared as a matter of policy that, notwithstanding the pendency of litigation between the parties, permanent permits should be granted to Veerappa. Therefore, there could be no implication that the permits were to be conditioned on the outcome of the Court’s decision. Moreover, the renewal was issued after the litigation had concluded on 2 September 1949, and any challenge to that renewal would have to be made by way of an appeal, which had not been pursued.

It was recorded that the litigation between the parties had come to an end on 2 September 1949. The Court observed that after that date any challenge to the order granting the renewal could be made only by filing an appeal against the order, and that no such appeal had been lodged. Consequently, the Court expressed the view that the earlier decision in Veerappa Pillai v. Raman & Raman Ltd. (1) offered no assistance to the appellant in the present proceedings. The Court then proceeded to affirm the decision of the High Court on two distinct grounds. First, the Court held that the renewal dated 23 June 1955 was in substance a continuation of the permit that had been granted on 3 December 1952. Second, the Court noted that the permit issued on 3 December 1952 had later been set aside by the judgment of the High Court in Writ Appeal No. 32 of 1954, which was delivered on 21 March 1956. The Court further observed that the renewal of 23 June 1955 was impliedly conditioned upon the validity of the earlier High Court decision, and therefore, once that decision was annulled, the renewal could no longer remain effective. On the basis of these findings, the Court concluded that the appeals under Civil Appeal No. 323 of 1956 failed. Accordingly, the appeals were dismissed and costs were awarded against the appellants.