M/S. Raman and Raman Ltd vs The State Of Madras and Others

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 37 of 1958

Decision Date: 18 February, 1959

Coram: Imam, Subba Rao, Sarkar

In this matter, the petitioner was M/S Raman and Raman Ltd and the respondents were the State of Madras together with other parties. The judgment was delivered by a bench of the Supreme Court of India on 18 February 1959. The case concerned the operation of the Motor Vehicles (Madras Amendment) Act, 1948, specifically section 43A, which empowered the State Government to issue orders and directions in respect of motor‑vehicle regulation. The factual backdrop involved several applicants seeking permission to operate a stage carriage. The Regional Transport Authority, after conducting a hearing, granted such a permit to the petitioner. The fourth respondent, also an applicant, appealed this decision, and the Central Road Traffic Board set aside the authority’s order and instead awarded the permit to the fourth respondent. The petitioner then sought a revision from the State Government, but the revision was dismissed. Subsequently, the petitioner approached the High Court under Article 226 of the Constitution, requesting a writ of certiorari to quash both the Central Road Traffic Board’s order and the State Government’s order. A single judge of the High Court annulled those orders and ordered the State Transport Appellate Tribunal, which had been constituted in place of the Central Road Traffic Board, to determine the appeal in accordance with law. The fourth respondent filed a Letters Patent appeal, and the Appellate Bench of the High Court overturned the single judge’s decree and reinstated the Central Road Traffic Board’s order. By special leave, the present appeal was brought before this Court. The core question for determination was whether the permit granted to the petitioner by the Regional Transport Authority, based on an order issued by the State Government under section 43A of the Motor Vehicles Act, 1939, as amended by the 1948 amendment, could be set aside by a later order imposing additional restrictions issued under the same provision while the appeal was still pending before the Central Road Traffic Board, and whether such an order or direction under section 43A possessed the force of law sufficient to create a vested right in the petitioner. The Court, speaking through Justices Jafer Imam and Subba Rao, held that section 43A, when properly construed, must be given a restricted meaning; its jurisdiction is limited to administrative functions. Consequently, any order or direction issued by the State Government under section 43A cannot be regarded as law that regulates the rights of parties but is merely an administrative order. The judgment cited precedents including C.S.S. Motor Service, Tenkasi v. The State of Madras (I.L.R. 1953 Mad. 304) and Gopalakrishnan Motor Transport Co., Ltd. v. Secretary, Regional Transport Authority, Krishna District, Vijayawada (A.I.R. 1957 A.P.).

The Court observed that, because the order of the Central Road Traffic Board was approved, the appellant could not be said to have obtained a vested right that later legislation could defeat. Accordingly, the Board’s order could not be set aside merely because it had decided the appeal on the basis of an order issued after the permit was granted, even if that later order served the public interest. Justice Sarkar explained that the general rule that an appellate court should not consider a law enacted after the original decision does not apply when a quasi‑judicial tribunal is hearing an appeal from another similar tribunal. Therefore, there was no apparent error of law that would justify issuing a writ of certiorari, and the appeal had to fail on that ground. The Court further held that no applicant for a permit under the Motor Vehicles Act possesses a substantive, vested right to the permit, and that the decision of the Regional Transport Authority to grant or refuse a permit does not operate as res judicata. It was unnecessary to determine the precise character of orders that could be issued by the State Government under section 43A of the Act; if such an order conferred a right, any mistake in it would be a basis for a writ of certiorari. The Court referred to the decision in The Mayor of Rochester v. The Queen and distinguished Nagendra Nath Bora v. The Commissioner of Hills Division and Appeals, Assam.

The matter before the Court was Civil Appeal No. 37 of 1958, filed by special leave from the Madras High Court judgment dated 14 September 1956 in Writ Appeal No. 64 of 1956, which itself arose from the High Court’s order of 1 May 1956 in Writ Petition No. 852 of 1955. Counsel for the appellant were present, while counsel for respondent No. 4 appeared on the other side. The judgment was delivered on 18 February 1959. The opinion of Judges Imam and Subba Rao was read, and Judge Subba Rao delivered a separate judgment. Judge Subba Rao noted that this appeal raised the question of how to interpret section 43A of the Motor Vehicles Act, 1939, as amended by the Motor Vehicles (Madras Amendment) Act, 1948, hereinafter referred to as the Act. On 19 February 1955, the Regional Transport Authority of Tanjore, Madras State, the second respondent, invited applications under section 57(2) of the Act for a stage‑carriage permit on the Saliamangalam‑Kodavasal route, thereby setting the factual background for the dispute.

The matter began when the Regional Transport Authority of Tanjore, Madras State, advertised an application for a stage carriage permit on the Saliamangalam‑Kodavasal route. The appellant and the fourth respondent, identified as K. M. Shanmugam, Proprietor of K. M. S. Transport, Ammapet, Tanjore District, together with other applicants, submitted applications seeking the said permit. On 19 April 1955 the Regional Transport Authority convened a meeting, heard the representations of all applicants, and subsequently awarded the permit to the appellant. Dissatisfied, the fourth respondent and two additional parties filed appeals against that decision before the Central Road Traffic Board, Madras, which is designated as the third respondent in the present proceedings. The Central Road Traffic Board, by an order dated 25 June 1955, reversed the Regional Transport Authority’s decision, nullified its grant, and instead granted the permit to the fourth respondent. In response, the appellant instituted a Revision Petition before the State of Madras, the first respondent, challenging the Board’s order; however, the State dismissed the petition by an order dated 14 October 1955. Following that dismissal, the appellant instituted a writ petition numbered 852 of 1955 in the Madras High Court, invoking Article 226 of the Constitution, and sought to set aside both the Central Road Traffic Board’s order and the State’s rejection. Justice Rajagopalan, presiding over the High Court, issued an order on 1 May 1956 that annulled the Government’s order and directed the State Transport Appellate Tribunal—created in place of the Central Road Traffic Board—to adjudicate the appeal in conformity with the law.

The appellate process therefore proceeded through several layers of judicial scrutiny before finally reaching the present Court for final review. Consequent to Justice Rajagopalan’s judgment, the fourth respondent lodged an appeal under the Letters Patent before the Appellate Bench of the Madras High Court, which was composed of Chief Justice Rajamannar and Justice Ramaswami. The Appellate Bench set aside Justice Rajagopalan’s decision, reinstated the Central Road Traffic Board’s original order, and thereby restored the permit in favour of the fourth respondent. The appellant obtained special leave to challenge that High Court judgment before this Court, and the present appeal was thus instituted. The counsel appearing for the appellant, identified only as the advocate for the appellant, presented two principal points for consideration. The first point asserted that the fourth respondent’s appeal to the Central Road Traffic Board was time‑barred by the limitation period, and that the Board had act unlawfully by deciding the appeal without first addressing the limitation issue. The second point contended that the appellant possessed a fundamental constitutional right to engage in the transport business, subject only to reasonable legal restrictions that were applicable at the time he applied for the permit or, at the very least, when the Regional Transport Authority originally granted the permit. The counsel further argued that the Central Road Traffic Board had committed a clear error, evident on the face of the record, by disposing of the appeal according to new restrictions that had been introduced by law while the appeal was pending. This argument was framed as a legal proposition that the appellant had acquired a vested right to operate a transport service, and that such a vested right could not be defeated by a subsequent law that was prospective and enacted during the pendency of the appeal. The counsel submitted that the first argument regarding limitation need not be pursued because the High Court had already found that the appeal to the Central Road Traffic Board was not barred by limitation. Consequently, only the second argument remained for the Court’s careful consideration, analysis and final determination on the merits of the case. The Court would now examine whether the new statutory restrictions could lawfully affect the appellant’s claimed vested right.

The Court observed that the High Court had held, as a matter of fact, that the appeal to the Central Road Traffic Board was not barred, and therefore the Court did not need to address that point. Consequently only the second and sole argument remained for consideration. In order to understand that argument, the Court set out the relevant factual background. On 28 March 1953 the Government issued an order identified as G. O. Ms. No. 1037 Home, allegedly made under section 43A of the Act. The material portion of that order stated that (1) additional buses should not be permitted to ply on existing routes unless there was a clear need for an increase in the number of buses on a particular route, that wasteful competition should be discouraged, but that healthy competition should be encouraged where there was room; and (2) the transport authorities, while granting stage‑carriage permits, should work up to a minimum of five permits with a spare bus for each operator, and the issue of permits should be regulated so as not to encourage benamidars on the one hand and inefficient operators on the other. Later, on 15 November 1954, the Government superseded paragraph 2 of the 1953 order by issuing G. O. Ms. No. 3353 Home. That order directed the Governor of Madras to require each viable stage‑carriage unit in the State to consist of not less than ten buses. It further prescribed, all other things being equal and with a view to building such viable units, a preference order for the grant of stage‑carriage permits: (1) operators with fewer than ten buses but nearer to the mark of ten; (2) operators with ten or more buses; and (3) others, including new entrants. The order also encouraged the liberal transfer of permits to facilitate the amalgamation of existing small units into viable units.

Subsequently, on 15 June 1955 the Government issued another order, G. O. Ms. No. 1689 Home, notifying the Central Road Traffic Board that, pending further Government orders after a re‑examination of the formation of viable stage‑carriage units, the provisions of paragraph 2 of G. O. Ms. No. 1037 Home dated 28 March 1953 would remain in force. The effect of this notice was to restore the 1953 order pending the issuance of final orders. At the time the Regional Transport Authority granted a permit in favour of the appellant, the 1954 order G. O. Ms. No. 3353 Home was the operative rule. When the Central Road Traffic Board later granted a permit to the fourth respondent, the 1955 order G. O. Ms. No. 1689 Home was in operation. Accordingly, the Regional Transport Authority relied on the 1954 order in preferring the appellant over other applicants, whereas the Central Road Traffic Board relied on the restored 1953 order in preferring the fourth respondent.

The court observed that the orders issued by the Regional Transport Authority and by the Appellate Tribunal would be explained in detail in a different argument, but for the purpose of the present discussion the facts already recorded were considered adequate. It then found it useful, before addressing the disputed issue, to set out briefly several well‑established principles that were relevant to the matter. First, every citizen possesses a fundamental right to operate motor vehicles on public roads under article 19(1)(g) of the Constitution, and any state interference with that right may be justified only if it falls within the scope of article 19(6), as explained in the cases of C.S.S. Motor Service, Tenkasi v. State of Madras and Saghir Ahmad v. State of Uttar Pradesh. Second, proceedings before bodies that grant permits are characterised as quasi‑judicial, a principle reiterated in C.S.S. Motor Service, Tenkasi and New Prakash Transport Co. Ltd. v. New Suwarna Transport Co. Ltd. Third, a newly enacted law that removes or diminishes vested rights acquired under earlier law is presumed not to operate retrospectively unless the legislation expressly or implicitly makes it retrospective, a view supported by Maxwell on the Interpretation of Statutes, Garikapatti Veeraya v. N. Subbiah Chowdhury and Seth Gulab Chand v. Kudilal. Fourth, the same presumption applies to a law made while an appeal is pending before an appellate court, as held in P.M. Seshadri v. Province of Madras. The court affirmed that these principles were not in dispute and expressly assumed that they would apply to any law made during an appeal against an order of a quasi‑judicial tribunal. The central controversy, the court noted, turned on whether the orders and directions issued by the State Government under section 43A of the Motor Vehicles Act should be treated as “laws” for the purpose of applying the foregoing principles. The counsel for the appellant argued that the directions issued under section 43A possessed the same legal character as statutory provisions or rules made thereunder. In contrast, the counsel for the respondent contended that, considering the scheme of the Motor Vehicles Act and the various sections that allocate distinct powers to the State Government, the power conferred by section 43A was limited to making administrative orders or issuing directions governing the relationship between the State Government and the Transport Authorities, and that such orders did not affect the legality or validity of the judicial acts of those authorities. To appreciate these opposing views, the court indicated that it was necessary to examine the relevant provisions of the Act, and it listed the authorities cited in support of each position, namely I.L.R. 1953 Mad. 304, 330, 334; [1955] 1 S.C.R. 707, 719; [1957] S.C.R. 98, 118; [1957] S.C.R. 488, 515; [1959] S.C.R. 313, 322; and A.I.R. 1954 Mad. 543. Finally, the court recalled that the Motor Vehicles Act is a Central Act enacted in 1939 and that it has been amended subsequently by both Parliament and state legislatures.

The Act, which had been enacted as a Central statute in 1939, had been amended periodically both by Parliament and by the legislatures of the individual States. Its chief purpose was to regulate motor traffic within each State for the benefit of the public. The statute was organized into a number of chapters, each dealing with a distinct aspect of motor vehicle regulation. Chapter II dealt with the licensing of drivers of motor vehicles; Chapter III set out the procedures for registering motor vehicles; Chapter IV concerned the control of transport vehicles; Chapter V outlined general requirements relating to the construction, equipment and maintenance of motor vehicles; Chapter VI governed the control of traffic; Chapter VIII addressed the insurance of motor vehicles against third‑party risks; Chapter IX defined offences, prescribed penalties and laid down the procedure for detecting offences and enforcing the penalties; and Chapter X dealt with miscellaneous matters. Within each of these chapters the legislation contained a specific provision that conferred upon the State Government the authority to make rules necessary to give effect to the provisions of that chapter. To accomplish the objectives of the Act, the State Government was empowered to establish a hierarchical structure of officers, including a State Transport Authority, Regional Transport Authorities, Registering Authorities and other bodies. These authorities were entrusted with both administrative duties and quasi‑judicial functions. Chapter IV, the chapter presently under consideration, followed the same structural pattern and was titled “Control of Transport Vehicles”. Section 42 prohibited owners of transport vehicles from employing those vehicles in any public place without first obtaining a permit. Section 43 gave the State Government the power to control road transport. Section 44 authorized the State Government to constitute Transport Authorities to exercise and discharge the powers and functions specified in the Act. Under subsection 44(4), the State Transport Authority was empowered to issue directions to any Regional Transport Authority, and the Regional Authority was required to act in accordance with such directions. Sections 46, 47, 48, 57, 60 and 64 prescribed the procedure for issuing permits and also created a hierarchy of tribunals to hear applications and dispose of appeals; the Court had previously held that this procedure was of a quasi‑judicial character. Sections 67 and 68 gave the State Government the power to make rules regulating the operation of transport carriages and to make rules necessary to implement the provisions of Chapter IV. By virtue of these provisions and the rules made thereunder, the State Transport Authority became the administrative head of all other Transport Authorities operating within the State, while the Central Road Traffic Board functioned as the appellate authority within the tribunal hierarchy established by the Act. As the administrative head, the State Transport Authority was authorized, under section 44(4), to issue directions to any Regional Transport Authority, and those Regional Authorities were required to follow the directions. As an appellate tribunal, the Central Road Traffic Board possessed the authority to dispose of appeals filed against the orders of the subordinate authorities under the Act with respect to the matters specified therein. However, the Central Act itself contained no provision that enabled the State Governments to control either the quasi‑judicial or the administrative components of the machinery created by the Act.

The judgment observed that the original statute contained no provision allowing State Governments to control either the quasi‑judicial or the administrative components of the machinery created under the Act. Although the State Transport Authority possessed the power to issue directions to other Transport Authorities established by the Act, a State Government could not in the same manner give directions to the State Transport Authority or to any of its subordinate authorities. Likewise, while the Central Road Traffic Board, acting in its appellate capacity, could set aside or modify orders made by the subordinate tribunals, the State Government was not empowered to overturn improper orders of those tribunals. Consequently, the legislature enacted the Motor Vehicles (Madras Amendment) Act, 1948 (Mad. XX of 1948), which came into force on 21 December 1948, with the apparent purpose of bringing both the judicial and administrative wings of the transport authority system under State Government control.

The Amendment introduced sections 43A and 64A into the Act. Section 43A states: “The State Government may issue such orders and directions of a general character as it may consider necessary, in respect of any matter relating to road transport, to the State Transport Authority or a Regional Transport Authority; and such Transport Authority shall give effect to all such orders and directions.” Section 64A provides: “The State Government may, on its own motion or on application made to it, call for the records of any order passed or proceeding taken under this Chapter by any authority or officer subordinate to it, for the purpose of satisfying itself as to the legality, regularity or propriety of such order or proceeding and after examining such records, may pass such orders in reference thereto as it thinks fit.” The Court noted that, taken together, section 64A expressly confers a judicial power on the State Government to keep a subordinate judicial tribunal within lawful bounds. Moreover, section 64A, together with sections 45 to 57, 60 and 64, creates a complete code governing the quasi‑judicial disposal of permit issues, requiring that permits be issued in accordance with the Act and the rules made thereunder, following proper judicial procedure. The Court further observed that the language of section 43A is exceptionally broad, allowing the State Government to issue orders and directions of a general character concerning any road‑transport matter. When read apart from its context, this clause could be understood to permit the Government to issue any general order concerning road transport, a construction that would undermine other provisions of the Act and expose the provision to constitutional challenge. The Court warned that such a wide construction would grant the Government a naked, arbitrary power capable of compelling quasi‑judicial tribunals to decide cases in a predetermined manner, enabling the Government to frame its directions in general terms to steer tribunals toward particular outcomes.

In this case, the Court observed that if the State Government were to issue directions under section 43A that were given the status of law, the result would be the destruction of the whole judicial procedure envisioned by the Act and the rules made under it for deciding the specific questions that arise. Such a construction would attribute an inconsistency to the legislature, because the State Government could then make directions that could be turned into rules while ignoring the safeguards that are built into the rule‑making process. Section 133 provides that every power to make rules conferred by the Act is subject to the condition that the rules be published beforehand. It also requires both the Central and the State Governments to lay the rules before the appropriate legislature for at least fourteen days, and it provides that the legislature may amend those rules in the session in which they are presented. The Court noted that all these protective measures could be disregarded if directions under section 43A were treated as law; conversely, if a narrow meaning were given to those directions, as the context demands, there would be a harmonious relationship among the various bodies created by the Act, including the Government.

The Court further explained that the legislative power of the Government is recognised in sections 67 and 68 of the Act, its judicial power is maintained in section 64A, and its administrative power is affirmed in section 43A. Chapter IV together with the rules made thereunder confer administrative powers on the Regional Transport Authorities and the State Transport Authority. Section 43A enables the State Government to make orders and issue directions of a general character concerning those administrative functions, so that the authorities may give effect to all such orders and directions. The Court pointed out that the placement of section 43A, coming after the provisions that deal with permits in section 42 and the specific powers of the Government in section 43, and before the sections that confer quasi‑judicial powers on tribunals, indicates that the jurisdiction created by section 43A is limited to administrative matters rather than judicial ones. If the legislature had intended to give the Government a legislative power, the provision would have been placed after section 64A or nearer the end of the Chapter. Although this is not a decisive test, the fact that sections 43A and 64A were inserted by the same amending Act suggests that section 43A was meant to govern the administrative functions of the tribunals. The wording of the section, using the terms “order” and “directions,” also supports this conclusion. The Court observed that whenever the legislature intends to affect the rights of parties, it uses the word “rules”; in this provision, however, it deliberately employed the terms appropriate to the control of administrative machinery.

In this provision the legislature deliberately employed terminology that is suited to the regulation of administrative machinery. The words “directions” and “order” are defined in a legal lexicon as follows: “Direction contains most of instruction in it; order most of authority. Directions should be followed; orders obeyed. It is necessary to direct those who are unable to act for themselves; it is necessary to order those whose business it is to execute the orders.” The meaning given to these terms therefore aligns more closely with administrative control than with rules of law that affect the rights of parties. Moreover, the section declares that the orders and directions issued under it shall be binding on the authorities to whom they are addressed. This declaration indicates that such instruments are not statutes, because if they were statutes no such declaration would be required. In addition, the section does not require that the orders and directions be published; they may, at the Government’s discretion, be communicated secretly to the concerned authorities. There is therefore no foundation for the argument that, merely because the directions are issued under a statutory power, they become “laws”. The source of the power does not alter the character of the acts performed in the exercise of that power. Whether an instrument is a law or an administrative direction depends on the nature and character of the orders or directions authorized to be issued under the conferring power, a determination that must be made on the considerations previously discussed. The Court’s view concurs with that expressed by a Division Bench of the Madras High Court in C. S. S. Motor Service, Tenkasi v. The State of Madras. In that case the constitutional validity of sections 42, 43A, 47, 48 and 64A of the Act was examined. While analysing section 43A, Justice Venkatarama Ayyar observed at page 335 of the report (I.L.R. 1953 Mad. 304, 330, 334) that it was argued that the provision confers on the Provincial Government “wide and unlimited powers to issue all such orders and directions of a general character as they may consider necessary”, that transport authorities are bound to give effect to such orders and directions, that nothing prevents the Government from issuing directions concerning the judicial functions of those authorities, that such directions would not be disregarded, and that the provisions of section 47 could in practice be evaded. He also noted that the provision was introduced to nullify the effect of the decision in Sri Rama Vilas Service Ltd. v. The Road Traffic Board, Madras, where the transport authorities had been found to have failed in discharging their judicial function by meekly complying with a governmental order contrary to the Act’s provisions.

Section 43‑A of the Act was understood by the Court to be aimed at giving the Government the power to issue directions that are administrative in nature, and on that basis the provision was held to be valid. The present proceedings did not challenge any particular order or direction made by the Government as being invalid; consequently the discussion concerning the validity of the provision remained largely academic. The Court affirmed that the provision itself must be regarded as valid, although it recognized that individual orders issued under it could be subject to constitutional challenge if they overstepped the limits of the authority conferred. From these observations it was clear that the learned Judge interpreted section 43‑A as granting the State Government the capacity to issue administrative directions. Had the Judge arrived at a different construction, he would have declared the section constitutionally infirm, as he had done with respect to other sections. The High Court of Andhra Pradesh, in the case of Gopalakrishna Motor Transport Co. Ltd. v. Secretary, Regional Transport Authority, Krishna District, Vijayawada (2), examined the scope of section 43‑A. In that case the State Government had issued an order under section 43‑A prescribing the method for checking a bus for over‑loading. The Regional Transport Authority, which is empowered under section 60 of the Act to suspend a permit on the ground of over‑loading, failed to follow the prescribed procedure. One argument advanced was that because the Government’s direction under section 43‑A was mandatory, the Authority should have concluded that there was no over‑loading when it exercised its powers under section 60. The High Court rejected this contention, observing at page 885 that the Government possesses the authority to frame rules and to issue administrative directions of a general character under section 43‑A. The Court noted that where an order is expressed in mandatory terms, the officers concerned are obligated to comply, but such an instruction cannot displace the discretionary power vested in the Transport Authority by section 60. Accordingly, the Court held that the Government’s order comprised only administrative instructions issued under section 43‑A. While some of those instructions impose a mandatory duty on the officers and may attract disciplinary action for non‑compliance, failure to follow them does not affect the Authority’s independent determination on the issue of over‑loading. In the present matter, the learned Chief Justice, who had been a party to the earlier decision in C. S. S. Motor Service v. The State of Madras (1), appears to have relied on that judgment and observed that the Government orders, being general administrative directions to transport authorities, do not create any enforceable or indefeasible right in any applicant for a stage‑carriage permit. The discussion therefore leads to the conclusion that the appellant retained a fundamental right to carry on his motor‑transport business, subject only to reasonable legal restrictions, and that the directions issued under section 43‑A pertained solely to the administrative sphere and could not alter the substantive legal considerations governing the issuance of permits.

In this case the appellant possessed a fundamental right to conduct his motor‑transport business, subject to reasonable restrictions imposed by law, as recognized by the Constitution under article 19(6). Chapter IV of the Motor Transport Act contains such reasonable restrictions, and the appellant obtained a permit on the basis that those statutory restrictions were applicable to his right. The orders and directions issued under section 43A of the Act are confined to the administrative actions of the officers concerned; consequently, those directions do not constitute law that defines the substantive rights of the parties. Accordingly, an order or direction made pursuant to section 43A cannot be added to the considerations enumerated in section 47, which alone empower the tribunal to grant or refuse a permit. Because no alteration in the law occurred during the pendency of the appeal, the appellant’s vested right remained unaffected. Therefore the appellant could not successfully challenge the validity of the decision of the Central Road Traffic Board on the ground that the Board had decided the appeal based on a law that was enacted after the permit had been issued. The same conclusion could be reached by an alternative line of reasoning. The appellant’s constitutional right to engage in motor‑transport activities was subject to reasonable statutory restrictions under article 19(6). One such restriction authorized the State Government to issue general orders and directions to the State Transport Authority concerning any matter relating to road transport. When the appellant applied for a permit, he was deemed to be aware that his application would be processed by the State Transport Authority in accordance with such general orders and directions issued by the State Government. Those directions were not newly created law that emerged during the appeal; they were issued under the existing provision of section 43A, which was already in force at the time of the appellant’s application. That provision allowed the Government to issue binding directions to the relevant authorities, and the application had to be decided subject to that law until a final order from the highest tribunal terminated it. On this basis the appellant’s contention lacks merit. Turning to the merits, the respondent’s counsel argued that there is no material difference between Government Order No 1037 and Government Order No 3353, except for a single circumstance that is irrelevant to the present issue. In Government Order No 1037 the transport authority is instructed to operate up to a minimum of five units with a spare bus, whereas in Government Order No 3353 the viable unit is fixed at not less than ten buses and the authority is directed to work up to that limit. The counsel pointed out that the only distinction lies in the size of the viable unit and that the fourth respondent’s case falls squarely within the first category of preference prescribed in Government Order No 3353 of 1954. The appellant’s counsel, however, contended that the order of preference is based on achieving the object of building viable units of ten permits; the appellant possessed only four permits, well below the viable unit, and therefore could not be given preference over a competitor who held more than thirty permits. The dispute must be resolved by a reasonable interpretation of the plain wording of Government Order No 3353 of 1954 read in conjunction with its expressed object.

In the present dispute the Court compared the provisions of two different government orders. The first order required a minimum of five units together with a spare bus, whereas the second order fixed the viable unit at not less than ten buses and directed the concerned authority to operate up to that higher limit. The Court noted that the sole distinction between the two orders lay in the definition of a “viable unit.” It further observed that the fourth respondent’s situation clearly fell within the first category of preference that was set out in Government Order No. 3353 of 1954. Counsel for the appellant argued that the order of preference was intended to achieve the object of creating viable units of ten permits. The appellant admitted that it possessed only four permits, which was far below the ten‑permit threshold, and therefore could not be given preference over the appellant who held more than thirty permits. The Court held that the issue could be resolved only by a reasonable construction of the plain language of Government Order No. 3353 of 1954, read in light of the purpose that the order sought to accomplish. To aid this construction the Court read the order without the superfluous words and set out its substance. The order, dated 15 November 1954, recorded a recommendation of the Planning Commission that existing private operators should, wherever possible, amalgamate into larger viable units so as to obtain better returns and maintain higher standards of operation. The Government concluded that the public interest required road‑transport services to be provided by operators possessing at least ten stage‑carriage units, and therefore declared that each viable unit should consist of a minimum of ten stage carriages. Exercising the powers conferred by Section 43‑A of the Motor Vehicles Act, 1939, and superseding the earlier order dated 28 March 1953, the Governor of Madras directed that each viable stage‑carriage unit in the State shall consist of not less than ten buses. The Governor further specified, “other things being equal,” that to build up such viable units the order of preference shall be: (1) operators with fewer than ten buses but nearer the mark of ten; (2) operators with ten or more buses; and (3) others, including new entrants. He also ordered that permits may be transferred liberally to facilitate the amalgamation of existing small units into viable units. The Court explained that the purpose of the order was to induce operators to amalgamate wherever possible into larger viable units, thereby achieving better returns and higher operational standards, and that the Government had decided that a unit of at least ten buses was necessary to meet that purpose. The policy was to be implemented by the measures outlined in the order.

The order required that every viable stage‑carriage unit consist of at least ten buses and, in order to develop such viable units, it instructed that, all other things being equal, the prescribed order of preference be observed. The order of preference was divided into three separate categories, each excluding the others, and it did not contain any internal rule of preference for operators that fell within the same category. It was therefore presumed that the transport authorities would determine any intra‑category priorities by applying the considerations set out in section 47. Counsel for the fourth respondent relied upon the first category, which was phrased as “operators with less than ten buses but nearer the mark of ten.” He argued that, given the purpose of the government order—to create viable stage‑carriage units of ten buses—if no other operator possessed a fleet closer to the ten‑bus mark than the fourth respondent, then the fourth respondent should receive a permit ahead of the appellant, provided that all other factors were equal. His argument emphasized the word “nearer,” asserting that the term created a preference rule among operators within that category, so that an operator such as the fourth respondent would be favoured when no other operator was nearer to ten. While the argument appeared persuasive, the Court considered it inconsistent with the overall scheme of the order. The Court acknowledged that the language of category (1) was not elegantly drafted and might even be grammatically flawed, yet the intended meaning was clear. Firstly, the preference rule was intended to achieve the objective of forming a viable unit of ten permits; secondly, the rule was meant to operate only among the three broad categories, not between individual operators within each category. If operators far below the ten‑bus threshold were placed in the first category, the term “others” used in category (3) would lose its meaning. The Court therefore adopted a more reasonable interpretation that aligned with the State Government’s intention: assuming equal conditions, competition among the three categories should give priority to operators whose fleet size was nearer to ten. If no such operator existed, the second preference should go to operators possessing ten or more buses. Failing the presence of such operators, the third preference should be given to “others,” meaning operators who were not nearer to ten and new entrants. This hierarchy of preference was not expected to cause injustice because the restriction on permit transfers had been lifted, allowing small operators to amalgamate their existing units into viable ones. Although the policy failed to produce the anticipated outcome and instead encouraged monopolistic tendencies, the Court’s interpretation of the preference structure remained grounded in the order’s express terms.

It was observed that the Government was required to rescind the order dated June 15, 1955 within approximately six months after its issuance; however, that requirement did not influence the way in which the relevant clause was to be interpreted. Accordingly, the Court held that, if the wording of Government Order No. 3353 of 1954 were read strictly, the fourth respondent would not have been entitled to obtain the permit in question. Nevertheless, the Court also noted that the order of June 15, 1955 had been characterised earlier as merely an administrative direction rather than a law, and therefore it could not invalidate a later order issued by the Central Road Traffic Board provided that the Board had acted in accordance with the considerations prescribed in section 47 of the Motor Vehicles Act. Section 47 requires the Regional Transport Authority, when deciding whether to grant or refuse a carriage permit, to take into account the general public interest. After examining the facts, the Central Road Traffic Board found that the appellant possessed certain advantages: the appellant already operated a three‑route permit that overlapped the route under dispute, the appellant’s performance record was satisfactory, and the appellant was not deemed inefficient. On that basis the Board concluded that granting the permit to the fourth respondent would promote healthy competition and would also enable the respondent to meet the statutory minimum of five permits. The Court acknowledged that, if the 1954 order were the sole controlling factor for selecting a permit holder, the Board’s main rationale would be erroneous. The question of whether a small operator or a larger operator better serves the public interest remains inherently debatable, and reasonable minds may differ on the issue. One line of reasoning holds that an operator described as a fleet‑owner, because of his extensive experience, would be better positioned to maintain a workshop, keep spare buses for emergencies, and thereby ensure uninterrupted service and punctuality for the public, in contrast to a lone bus operator. The opposite view is that favouring large, viable units may lead to monopolistic tendencies, and the resulting lack of competition could cause a decline in service quality. Conversely, new entrants and operators who own only a few buses are likely to give greater attention to public needs, especially when they face competition from other operators in the same market. The existence of both perspectives is demonstrated by the State Government’s frequent changes of policy on this matter; indeed, the cancellation of Government Order No. 3353 of 1954 within six months of its issuance—presumably after the Government had assessed the practical experience gained during that period—clearly indicates that, in the Government’s view, promoting large units was not in the public interest. If this is accepted, it follows that the Central Road Traffic Board cannot be said to have acted without jurisdiction when it accepted

The Court observed that the opinion that smaller operating units would better serve the public interest than larger units did not, by itself, render the order of the Central Road Traffic Board unlawful. Moreover, the fact that the Board had accepted the prevailing view of the Government on this issue did not diminish the legality of the order, provided that the view was relevant to one of the matters listed in section 47 of the Motor Vehicles Act. The Court noted that both viewpoints – favouring small units and favouring large units – were possible, and consequently the Board acted within its authority when it concluded that granting the permit to the fourth respondent would advance the public interest given the specific circumstances of the case. In that regard, the Court found no further question requiring consideration. Accordingly, the Court affirmed that the order of the Madras High Court was correct and dismissed the appeal, ordering the appellant to pay costs. Justice Sarkar then turned to the substantive facts. The appellant was a company that operated public motor‑bus services in the State of Madras and claimed that it had been wrongly denied a permit to run a bus. The services in question involved transporting passengers for compensation on public highways, described in the statutes as “stage‑carriage services.” These services were regulated by sections 42 to 68 of Chapter IV of the Motor Vehicles Act, 1939. The Act stipulated that no vehicle could be used as a stage carriage unless a permit was obtained from a regional Transport Authority established by the State Government. Section 47 of the Act required a Regional Transport Authority, when deciding whether to grant or refuse such a permit, to consider several factors, one of which was the general interest of the public. Section 68 authorised the State Government to formulate rules to give effect to the provisions of Chapter IV.

The rules made under section 68 contained no specific guidance for Regional Transport Authorities on the grant of permits, except that rule 150 mandated that the Authority must in all matters be subject to the orders of the Government and must give effect to every order passed by the Government, whether the order arose on appeal or otherwise. Section 43‑A of the Act, however, empowered the State Government to issue general orders and directions to a Regional Transport Authority concerning any matter relating to road transport, and required the Authority to implement those orders. The statutory language of section 43‑A read: “The State Government may issue such orders and directions of a general character as it may consider necessary, in respect of any matter relating to road transport, to the State Transport Authority or a Regional Transport Authority; and such Transport Authority shall give effect to all such orders and directions.” The Court clarified that it was not concerned with the State Transport Authority for the purposes of this appeal. The Motor Vehicles Act was a Central Act, and section 43‑A had been incorporated into it by an amendment enacted by the legislature of the Province of Madras. From time to time, the Government of Madras issued orders under this section, providing certain considerations to guide Regional Transport Authorities in deciding applications for the grant of permits. These government orders formed the backdrop against which the Board’s decision was evaluated.

In this matter the appellant argued that the permit which had been denied to it was refused on the basis of a government order that was not applicable to its situation. Under section 64 of the Act an appeal may be filed with an appellate authority against a refusal of a permit by a Regional Transport Authority, and in Madras the appellate authority is the Central Road Traffic Board. Section 64‑A, also added by an amendment of the Madras legislature, authorises the Government to examine the records of any case concerning the grant of a permit and to issue any order it deems appropriate. On 28 March 1953 the Government issued an order made under section 43‑A, identified as G. O. Ms. No. 1037, which set out certain considerations to be observed when granting permits. Subsequently, on 15 November 1954, the Government issued another order, G. O. Ms. No. 3353, which expressly superseded G. O. Ms. No. 1037 and introduced fresh provisions in its place. The Court does not find it necessary to recite the terms of these orders; it is sufficient to treat G. O. Ms. No. 3353 as having wholly replaced G. O. Ms. No. 1037.

The appellant, together with respondent No. 4 and eight other persons, applied for a permit on a route for which applications had been invited, although the exact dates of those applications are not recorded. On 9 April 1955 the Regional Transport Authority, after hearing all competing applicants, granted the permit to the appellant pursuant to G. O. Ms. No. 3353, which was the order then in force. Shortly thereafter, on 20 May 1955, the Government issued a new order, J. O. Ms. No. 1403, which cancelled G. O. Ms. No. 3353. A further order, G. O. Ms. No. 1689, was issued on 15 June 1955 and, for the purposes of this case, may be regarded as restoring the effect of G. O. Ms. No. 1037. Around 23 June 1955 respondent No. 4, the only respondent who contested the matter, filed an appeal before the Central Road Traffic Board against the Regional Transport Authority’s decision. Other disappointed applicants may also have lodged appeals, but they are not before this Court. The Board heard the representations of all parties and, on 25 June 1955, issued an order setting aside the Regional Transport Authority’s decision and granting the permit to respondent No. 4. According to the appellant, the Board based its order on G. O. Ms. No. 1037. The appellant contended that this was erroneous because G. O. Ms. No. 1037 was not in force at the time the Regional Transport Authority considered the application, having been replaced by G. O. Ms. No. 3353, and that the Board, hearing only an appeal from the Authority, should have applied the order that was in effect when the Authority made its decision rather than a later order.

In the proceedings before the Regional Transport Authority, the application was examined while the relevant Government Order, G. O. Ms. No. 1037, had not yet been brought into force. When the Central Road Traffic Board later considered the appeal that arose out of the Authority’s decision, the Board was constrained to apply the order that was in effect at the time the Authority rendered its decision, and it could not rely on a later order that had been issued after the original hearing. The appellant consequently approached the Government under section 64‑A of the Act, seeking interference, but the Government declined to intervene. Undeterred, the appellant filed a petition in the Madras High Court for a writ of certiorari, requesting that the Court set aside both the Board’s order granting a permit to the respondent and the Government’s order refusing to interfere. The learned Judge Rajagopalan, who heard the petition, held that the Government had failed to exercise its jurisdiction because it had not decided a material question that had been raised before it: whether the respondent’s appeal to the Board had been filed within the time prescribed by law. Accordingly, Judge Rajagopalan set aside the Government’s order and remitted the matter for fresh consideration. The respondent appealed this decision, and the appeal was heard by a bench of the same High Court consisting of Chief Justice Rajamannar and Justice Ramaswami. That bench allowed the appeal, holding that Judge Rajagopalan was incorrect in his view that the Government had neglected to determine the timeliness of the appeal. The bench also rejected the appellant’s contention that the Board’s order should be invalid because it was made on the basis of G. O. Ms. No. 1037, which was not the operative order when the Regional Transport Authority decided the case. In directing its reasoning, the Court observed that such Government orders are merely general administrative directions to transport authorities and do not confer any indefeasible right upon any applicant for a stage‑carriage permit. The Court further stated that the mere existence of a particular Government order at the time the Authority disposed of the application does not vest any vested right in an applicant, and that it was permissible for the Central Road Traffic Board to decide the dispute between the parties according to the order that was in force at the time the Board was hearing the appeal.

The appellant subsequently sought special leave to appeal the High Court’s judgment before this Court. The sole ground raised on behalf of the appellant, by counsel Mr Pathak, was that the Central Road Traffic Board is a quasi‑judicial tribunal and, therefore, an order issued by it is susceptible to be set aside by a writ of certiorari where the order displays an error that is apparent on its face. Counsel further contended that the Board’s order dated 25 June 1955 was erroneous in law because it decided the case on the basis of G. O. Ms. No. 1037, which had been brought into force after the Regional Transport Authority had made its decision and had not been given retrospective operation. He argued that, since the Board was hearing an appeal from the Authority, it could only examine whether the Authority had erred in applying the provisions that were in force at the time of the Authority’s hearing, namely those contained in G. O. Ms. No. 3353. He maintained that this error was evident from the record because the Board expressly stated that it was deciding the case pursuant to G. O. Ms. No. 1037. The appellant did not dispute the quasi‑judicial nature of the Board, acknowledging that it is plainly so, and cited numerous decisions of this Court that affirm that position. He further relied on established jurisprudence that a writ of certiorari may be issued where a quasi‑judicial tribunal commits an error apparent on the face of the record.

The Board had decided the case by applying the terms of G. O. Ms. No. 1037, a regulation that came into force after the Regional Transport Authority had rendered its decision and that had not been given retrospective effect. Consequently, the Board, while hearing an appeal from the Authority, could only examine whether the Authority had erred in applying the provisions that were in force at the time of its hearing, namely the provisions contained in G. O. Ms. No. 3353. The counsel further submitted that such an error was apparent on the face of the record because the Board expressly stated in its decision that it was deciding the case by reference to G. O. Ms. No. 1037. No party had contested before the Court that the Board was not a quasi‑judicial tribunal; the Court recognized that it clearly was a quasi‑judicial tribunal, and, in view of the many decisions of this Court in similar matters, a contrary view would be untenable. The Court also noted the firmly established principle that a writ of certiorari may be issued where the decision of a tribunal discloses an error of law apparent on its face. The Court was therefore also clear that, if it was an error for the Board to have followed G. O. Ms. No. 1037, such error was evident because the Board expressly purporting to be guided by that regulation. The remaining issues were whether an error existed and whether it was apparent; the Court proceeded to discuss these points. It was acknowledged that G. O. Ms. No. 1037 had been superseded by G. O. Ms. No. 3353 on 15 November 1954, but that G. O. Ms. No. 1037 was revived by G. O. Ms. No. 1689 issued on 15 June 1955—after the Regional Transport Authority’s decision of 9 April 1955, at a time when G. O. Ms. No. 3353 was the prevailing regulation. The Court assumed, for purposes of analysis, that G. O. Ms. No. 1689 did not give retrospective force to G. O. Ms. No. 1037. The question then arose whether the Board erred in applying G. O. Ms. No. 1037 when it decided the appeal from the Authority’s decision. The Court was of the view that it did not err. While it is generally accepted that a regular court hearing an appeal from another court cannot usually consider a law enacted after the original decision, the Court observed that it is far from clear that the same rule applies when an appeal from the order of a quasi‑judicial tribunal is heard by another such tribunal, as in the present case. No authority was cited to support the proposition that the later rule could not be applied, and the Court was not prepared to accept such a proposition. Accordingly, the Court concluded, and found it sufficient for the present case, that it was far from established that a quasi‑judicial tribunal like the Board before it was prohibited from applying a rule that came into existence after the decision under appeal.

In this case, the Court observed that a tribunal hearing an appeal from another similar tribunal is not automatically prohibited from applying a rule that came into existence after the decision being appealed. Because the point is not crystal‑clear, the Court concluded that no error is apparent on the face of the record. The Court emphasized that such a tribunal is not enforcing a vested right that one party holds against another party; rather, the tribunal’s function is to select, from a pool of applicants, the person who is most suitable to be granted a permit. The paramount interest in that selection belongs not to the parties before the tribunal but to the travelling public, who are not parties to the proceedings. The lower tribunal is entitled to be heard on an appeal under section 64, a procedural mechanism that does not apply to appeals from decisions of courts of law. As a general rule, a court gives effect at trial to the substantive rights of the parties that existed on the date of the writ, and for that reason a subsequent change in the law is ordinarily not taken into account in an appeal. The Court held that this general consideration does not apply to the present facts.

The Court noted that the law does not state that a person who makes an application for a permit acquires a right to have his application decided according to the statutory provision then in force. The only requirement, the Court said, is that the Transport Authority consider each application according to the order that is in force at the time it hears the application. Accepting this view, the Court found that the reasoning which would prevent an appellate authority from considering a Government order issued after the original order disappears. The Court also referred to the argument that a court of appeal cannot consider a new law because “a matter of substantive right which has become res judicata cannot be upset by a subsequent general change of the law,” citing Re a Debtor, Ex parte Debtor (1). The Court found it impossible to say that an applicant for a permit possesses a substantive, vested right to the permit, nor could the decision of a Regional Transport Authority in granting or refusing a permit be said to operate as res judicata.

Consequently, the Court concluded that there is no justification for applying the general rule that bars courts of law hearing appeals from subordinate courts from taking notice of a new law to tribunals such as those involved in the present case. The Court added that even in strictly defined appeals, a court hearing the appeal may take cognizance of new laws that are made applicable to pending cases, referring to Quilter v Mapleson (2). The Court further explained that it had previously proceeded on the assumption that Government Order No 1689 had no retrospective effect at all, but now recognized that this assumption required reconsideration.

In assessing the effect of General Order No. 1689, which revived General Order No. 1037, the Court expressed serious doubt that the order was not intended to apply to appeals already pending. The order was addressed solely to the Central Road Traffic Board, the body that heard those appeals, and that circumstance suggested that the legislature meant for the Board to apply the order when deciding the appeals that were then before it. Consequently, it could not be said with certainty that General Order No. 1689 was not meant to have at least a retroactive effect. The form of the order itself appears to indicate that it was intended to operate retrospectively, and if that is so, another reason exists for concluding that the Board was not in error by applying the order. The Court therefore held that no error was apparent on the face of the Board’s decision in applying General Order No. 1037 to the appellant’s case, and accordingly the appeal was dismissed. The Court then turned to an argument raised on behalf of the respondent concerning the nature of orders made under section 43‑A. The respondent contended that only administrative orders could be issued under that provision, that such orders were not statutes, and that a mistake concerning them could not be characterised as an error of law worthy of a writ of certiorari. The Court could not accept that submission. It observed that merely labeling the orders as “administrative” did not resolve the legal question, especially because the precise meaning of that label was unclear. The Court therefore found it unnecessary to investigate the exact classification of orders that might be issued under section 43‑A. In the Court’s view, if an order issued under the section creates a right to which a person is entitled to obtain observance, then that order functions as law; a mistake in applying such an order therefore justifies the issuance of a writ on the party’s own initiative. The essential purpose of a writ of certiorari is to prevent a manifest injustice from persisting where no other remedy is available. It would be anomalous for a person to be entitled to the enforcement of a rule yet be denied any remedy when that rule is breached, regardless of the label applied to the rule. The Court cited the opinion expressed by Pollock C. B. and Martin B. in The Mayor of Rochester v. The Queen, emphasizing the duty to apply the constitutional remedy of certiorari wherever a reasonable construction permits its use. Finally, the Court identified the core issue as whether the applicants for permits were entitled to the observance of the orders in question, referring to the 1858 citation.

In the matter before the Court, the orders under consideration had been issued pursuant to a specific statutory provision, and the Court held that such statutory origin automatically conferred a binding character upon the orders. The enactment itself expressly mandates that the Transport Authority shall give effect to all such orders and directions, and it applies universally, granting every individual the benefit of its operation. Consequently, any person who has a legitimate interest possesses a right to insist that an order issued under the relevant section be observed by the Transport Authorities. The respondent, having made exactly that claim, actually received the benefit of one of those orders. It was submitted, however, that although the Transport Authorities indeed owed a duty to observe the orders, that duty was owed solely to the Government, and a breach of it would merely expose the authorities to disciplinary action by the Government without invalidating their decisions. The Court examined the language of the provision and found no limiting words that would restrict the scope of the duty owed by the Transport Authorities to anything less than full compliance. The character of the orders makes it impossible to conclude that the legislature intended the breach of such orders to be remedied only by disciplinary measures. The orders lay down substantive principles that govern whether an individual should be granted or denied a permit; they materially affect persons, including their livelihood. It is therefore difficult to accept that the sole sanction for non‑compliance could be disciplinary action. The notion that judicial bodies, when performing their functions, should be subject only to disciplinary sanction is abhorrent. The Court observed that a statute which creates quasi‑judicial tribunals empowered to affect individuals in a material way, yet binds those tribunals solely by the threat of disciplinary action while denying the affected persons a right to enforce the rules, would be highly unusual. Accordingly, the Court could not regard the Motor Vehicles Act as a statute of that type. The Court then referred to the decision in Nagendra Nath Bora v. Commissioner of Hills Division and Appeals, Assam, a case concerning a licensing authority for liquor‑hops. That case held that a breach of certain executive instructions issued to the licensing authority did not amount to an error of law. The Court distinguished that case on the ground that it dealt with executive instructions, not with orders issued under a statutory power, and there was no indication that the licensing authority was bound by a duty to obey those instructions. Moreover, the existence of an appellate hierarchy in that case suggested that, absent such a hierarchy, the authority might not have been characterized as a quasi‑judicial body at all. The earlier judgment also held that no one possessed an inherent right to a settlement of a liquor shop, and therefore, that authority could not be invoked to determine the present issue concerning orders issued under section 43‑A.

In this matter, the Court observed that the earlier decision concerning the writ of certiorari did not aid in determining the effect of orders issued under section 43‑A. The Court noted that the previous judgment, at page 412, described the purpose of a writ of certiorari as limited to examining the record in order to decide whether the inferior tribunal had exceeded its jurisdiction or had failed to proceed in accordance with the essential requirements of the law which it was meant to administer. The Court stressed that the expression “law which it was meant to administer” was highly significant. Accordingly, the Transport Authorities involved in the present case were undeniably tasked with administering the orders made pursuant to section 43‑A. The Court added another observation, explaining that an order which the Transport Authority is bound to obey may contain a certain degree of discretion, but that, in the Court’s view, this does not make the order any less a law. The Court reasoned that if the discretion provided by the statute is duly exercised, there is no error of law, because the statute itself confers that discretion. Consequently, it is the bounden duty of the tribunal to observe the statutory law and, when necessary, to exercise the discretion that the law provides. For the reasons previously set out, the Court agreed that the appeal must be dismissed, and accordingly the appeal was dismissed.