Dosa Satyanarayanamurty Etc vs The Andhra Pradesh State Road Transport Corporation

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

Court: Supreme Court of India

Case Number: Writ Petitions Nos. 76, 217 to 228 of 1960

Decision Date: 8 September 1960

Coram: Subba Rao J.

In the matter titled Dosa Satyanarayanamurty and others versus the Andhra Pradesh State Road Transport Corporation, the Supreme Court of India delivered its judgment on 8 September 1960. The petitioners, identified as Dosa Satyanarayanamurty and other stage‑carriage permit‑holders, challenged seven schemes that had been approved and brought into force on various dates by the Government of Andhra Pradesh for the nationalisation of road‑transport services in the West Godavari District. The central issues before the Court concerned the constitutional validity of Chapter IV A of the Motor Vehicles Act, 1939, as amended by Central Act 100 of 1956, and the validity of Rule 5 made under the Andhra Pradesh Motor Vehicles Rules, which drew its authority from Section 68(1) of the Act. The contested schemes carried a note, purportedly inconsistent with the Act, which stated: “The frequency of services of any of the notified routes or within any notified area shall, if necessary, be varied having regard to the traffic needs during any period.” The petitioners sought writs to quash these schemes on the grounds that the statutory provisions exceeded parliamentary competence, infringed the fundamental right guaranteed by Article 19(1)(g) of the Constitution, and were not saved by the special protection of Article 19(6). The Court, referring to its earlier decision in H. C. Narayanappa v. State of Mysore, [1960] 3 S.C.R. 742, held that the petitioners could no longer maintain that the provisions of Chapter IV A were ultra vires the Parliament. Moreover, the Court rejected the contention that the chapter was invalid because it violated Article 19(1)(g) and was not protected by Article 19(6). The Court explained that the term “service” in Article 19(6)(ii) is expressed in very broad language, encompassing all forms of motor service, and does not restrict a State’s authority to create a monopoly within a defined area to the exclusion of any persons. The Court observed that Chapter IV A merely distinguishes between a State Transport Undertaking and private transport undertakings, whether those are operated by individuals, firms, or companies, and that this classification bears a reasonable connection to the purpose of the legislation. Consequently, the Court concluded that Chapter IV A does not contravene Article 14 of the Constitution, as it does not bestow arbitrary or discriminatory powers upon the State Transport Undertaking.

The Court observed that the quasi‑judicial procedure prescribed by the chapter was intended to encompass the authority conferred on the State Transport Undertaking. Any exercise of that authority that is dishonest or collusive and results in the deprivation of an individual's rights may justify the annulment of the specific scheme involved. However, such misuse does not constitute a basis for declaring the entire chapter void, because the chapter supplies a comprehensive and satisfactory mechanism for regulating the exclusion of private operators. Accordingly, the provision requires no liberal construction, as it already provides a full framework for the reasonable regulation of all or some private operators within a notified area or route. The Court referred to the earlier decision in Gullapalli Nageswara Rao v. Andhra Pradesh Road Transport Corporation, [1959] SUPP. 1 S.C.R. 319, for guidance on this point. It also considered the precedent set in Saghir Ahmad v. The State of U. P., [1955] 1 S.C.R. 707, in assessing the scope of the statutory power. Thus, the Court concluded that the chapter remained constitutionally valid and could not be struck down solely on the ground of alleged arbitrary power.

The Court distinguished official bias, which may arise in the performance of a statutory duty, from personal bias held for or against any party, as previously pointed out. It held that, in the present case, the State Road Transport Corporation was neither legally nor factually a department of the State Government, and therefore no official bias could be alleged. The State Government, while resolving the dispute between the corporation and private bus operators, was merely exercising its statutory function, which precludes any claim of official prejudice. The Court cited Gullapalli Nageswara Rao v. The State of Andhra Pradesh, [1960] 1 S.C.R. 580, and H. C. Narayanappa v. The State of Mysore, [1960] 3 S.C.R. 742, in support of this reasoning. The observations made in Srinivasa Reddy v. The State of Mysore, concerning the piecemeal implementation of a scheme, were aimed at preventing abuse of power through discrimination between operators under a single scheme. The Court found that the seven schemes in question were designed to avoid the vice inherent in piecemeal implementation and were intended to be applied in their entirety from different commencement dates. Consequently, the earlier observations did not apply to the present schemes, as explained in Srinivasa Reddy v. The State of Mysore, [1960] 2 S.C.R. 130. The Court held that Rule 5 of the Andhra Pradesh Motor Vehicles Rules, which empowers the State Transport Undertaking to vary the frequency of services, effectively permitted a substantial modification of a scheme that is only authorized under Section 68E of the Act. Accordingly, the Court ordered that Rule 5 be declared void, but it held that the note annexed to the schemes under that rule could be separated and removed without affecting the schemes. The Court further clarified that the term ‘route’ in Section 68C does not denote only a pre‑existing route, but may refer to any area, any portion thereof, or even a newly created route. Because no inherent contradiction exists between the concepts of ‘area’ and ‘route,’ the provision permits the framing of a scheme covering any such area or route, whether existing or newly established. The judgment section then lists the original jurisdiction, the writ petition numbers, and the counsel appearing for the petitioners in the various petitions. It notes that the petitions were filed under Article 32 of the Constitution for enforcement of the petitioners’ fundamental right to carry on motor transport business in West Godavari District. The petitioners sought appropriate writs to set aside the road‑transport schemes that had been approved by the Government of Andhra Pradesh.

In 1960 the petitioners filed writ petitions under article 32 of the Constitution seeking enforcement of their fundamental right to carry on motor transport business in West Godavari District, Andhra Pradesh. They asked the Court to issue a writ of certiorari or any appropriate writ, order or direction to set aside the schemes of road‑transport services that had been finally approved by the Government of Andhra Pradesh on 21 March 1960, and also sought incidental relief. The schemes had been prepared under the authority of section 68C of the Motor Vehicles Act, 1939, as amended by Central Act 100 of 1956. The Chief Executive Officer of the Andhra Pradesh State Road Transport Corporation, Shri Guru Pershad, published seven proposals on 7 December 1959 in the Andhra Pradesh Gazette dated 17 December 1959, each proposing a scheme for nationalising road‑transport services in different parts of West Godavari District. The notification invited the public and affected parties to submit objections within thirty days. More than three thousand objections were received. After reviewing the objections, the Government issued notices to the objectors, their representatives and to the Transport Corporation, specifying dates, times and places for hearings. On the hearing dates of 10, 11 and 12 March 1960, about two hundred objectors attended, most being represented by counsel, while the Transport Corporation was represented by its Chief Executive Officer and its legal advisers. The Minister responsible for transport conducted an enquiry, considered the opposing arguments, made definitive findings on the issues raised, rejected all objections except one, and approved the schemes with a slight modification. The seven schemes were ordered to come into force on various dates as specified by the Minister. Dissatisfied operators who felt aggrieved by the Minister’s order filed the present petitions. Counsel for the petitioners raised several points before the Court: (1) that Chapter IVA of the Act exceeded Parliament’s legislative competence because it intruded into the exclusive legislative domain of the States; (2) that the provisions of Chapter IVA infringed the petitioners’ fundamental right under article 19(1)(g) and were not saved by article 19(6); (3) that Chapter IVA violated article 14 of the Constitution; (4) that the Government’s order confirming the schemes was tainted by bias and therefore void; (5) that although seven schemes were framed, they effectively formed components of a single scheme designed to circumvent the Court’s earlier decision in Srinivasa Reddy v. State of Mysore; (6) that the schemes were void because they were prepared and published by the Chief Executive Officer, who was not authorised under section 13 of the Road Transport Corporations Act to act on behalf of the Transport Corporation; (7) that the schemes failed to state the number of vehicles to be operated on each route as required by rule 4 of the Andhra Pradesh Motor Vehicles Rules, and the Minister’s modification did not remedy this deficiency; and (8) that, exercising power under rule 5 of the Rules, the State Transport Undertaking had taken further improper actions.

In the petitions, the counsel for the petitioners argued that the confirmation of the schemes was flawed because it was affected by bias, rendering the confirmation void. They further contended that, although seven separate schemes had been prepared, in reality these schemes constituted components of a single scheme, a device that was employed to evade the decision of this Court in Srinivasa Reddy v. The State of Mysore (1). The petitioners also maintained that the schemes were void because they had been prepared and published by the Chief Executive Officer, who was not authorized under section 13 of the Road Transport Corporations Act to act on behalf of the Transport Corporation. In addition, the petitioners pointed out that the schemes presented by the Transport Corporation failed to specify the number of vehicles to be operated on each route, a requirement mandated by rule 4 of the Andhra Pradesh Motor Vehicles Rules (hereinafter referred to as “the rules”). They argued that the subsequent modification ordered by the Minister, which directed the Transport Corporation to provide such numbers, still did not satisfy the requirements of the rule. Moreover, the petitioners asserted that the State Transport Undertaking, in exercising the power conferred by rule 5 of the rules to vary the frequency of services, had acted inconsistently with the provisions of the Act, thereby rendering that exercise of power void. They further claimed that the proposed schemes included three new routes, an act that was illegal because the Transport Undertaking lacked authority to introduce new routes in a scheme it proposed. Although the petitions raised many other questions, the petitioners chose not to press those issues before the Court. The Advocate General for the State of Andhra Pradesh, on the other hand, sought to have the schemes, as approved by the Minister, sustained in their entirety.

The Court then indicated that it would address the contentions in the order in which they were raised. Regarding the first contention, the Court observed that a detailed consideration was no longer necessary because the issue had already been examined and rejected in H. C. Narayanappa v. The State of Mysore (1). In that earlier decision, Justice Shah, speaking for the Court, had observed: “We are therefore of the view that Chapter IVA could competently be enacted by the Parliament under entry No. 21 read with entry No. 35 of the Concurrent List.” The Court noted that nothing further needed to be said on that point and, with respect, affirmed the earlier decision.

The Court then turned to the second contention, which was based on Article 19 of the Constitution. The central question was whether Chapter IVA of the Act was protected by Article 19(6) of the Constitution. The petitioners argued that if the provisions of Chapter IVA, which provided for the nationalisation of road‑transport services in the manner prescribed, were not covered by the protection of Article 19(6), then the provisions would infringe the fundamental right of the petitioners to carry on motor‑transport business. The constitutional validity of Chapter IVA of the Act had previously been examined in Gullapalli Nageswara Rao v. Andhra Pradesh Road Transport Corporation (2). In that case, the argument was raised that Chapter IVA of the Act amounted to colourable legislation whose real purpose was to appropriate the business of the petitioners under the guise of cancelling permits, an argument that had been rejected by the Court. However, no challenge had been made in that earlier case on the ground that Chapter IVA violated Article 19(1)(g) and was not saved by clause (6) of the same article. The present petition therefore raised that point for the first time before the Court.

The Court observed that the petitioners had previously argued that the legislation in Chapter IVA was a colourable law whose real purpose was to appropriate the business of the petitioners by using the cancellation of permits in violation of Article 31 of the Constitution. That particular contention was rejected by this Court. However, the petitioners had not challenged the validity of Chapter IVA on the ground that it infringed the guarantee of Article 19(1)(g), nor had they claimed that it was not saved by clause (6) of the same article. The present case raises that precise issue for the first time. Article 19(1)(g) provides that every citizen has the right to carry on any trade or business. The material portion of clause (6) of Article 19, as amended by the Constitution (First Amendment) Act, 1951, states: “Nothing in sub‑clause (g) of the said clause shall affect the operation of any existing law in so far as it relates to, or prevents the State from making any law relating to … the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise.” The Court noted that the citations accompanying this provision are (1) [1960] 3 S.C.R. 742 and (2) [1959] Supp. 1 S.C.R. 319. The question before the Court therefore becomes the extent to which Article 19(6) shields Chapter IVA from a challenge on the basis that it violates Article 19(1)(g).

Counsel for the petitioners submitted that the protection afforded by Article 19(6)(ii) is limited to a partial exclusion of an entire class of citizens and does not extend to the partial exclusion of some members within that same class. They argued that Section 68C of the Act enables the State Transport Undertaking to devise a scheme that excludes certain individuals belonging to the same class, and that such a scheme is not protected by Article 19(6). The relevant excerpt of Section 68C reads: “Where any State transport undertaking is of opinion that … it is necessary in the public interest that road transport services in general or any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State transport undertaking, whether to the exclusion, complete, or partial, of other persons or otherwise ….” According to counsel, this provision authorises the State to frame a scheme concerning either all road‑transport services or a specific class of such services, to operate the service in any designated area or route, and to exclude either all or some of the persons currently providing that service. The section, they said, permits the State to take over a particular class of service, for example a bus service, and to exclude all or some of the existing operators of that class. Counsel contended that the power conferred by Section 68C is broader than the limits envisaged by Article 19(6)(ii) of the Constitution.

The Court considered the contention that Article 19 sub‑clause (ii) of the Constitution does not allow a partial exclusion of certain persons within the same class of service, while section 68C of the Act apparently permits such an exclusion. To answer this contention the Court examined the true scope of Article 19(6). According to sub‑clause (ii), the State may enact a law governing the carrying on of any particular business, industry or service by the State itself or by a corporation owned or controlled by the State, and that law may be made to the exclusion of citizens, whether that exclusion is complete or partial, or may be made without any exclusion at all. The provision in Article 19(6) is a saving clause; a law that authorises the State to engage in a business is protected from challenge on the ground that it infringes a citizen’s fundamental rights, provided the law does not go beyond the limits of that constitutional provision. The language of sub‑clause (ii) is therefore very expansive. It authorises the State to legislate for a business or service that may exclude all citizens, may exclude only some citizens, may operate throughout the whole territory or only in a specified part of the territory or on a particular route or segment thereof. The term “service” is also interpreted broadly, extending not merely to general motor services but to every variety of motor service. Consequently, there is no constitutional restriction on the State’s power to pass laws that confer a monopoly in a particular area and to designate the person or persons who are to be excluded. In this light, the Court concluded that section 68C does not transgress the limits set by Article 19(6)(ii) of the Constitution.

The Court then turned to the next challenge, namely that Chapter IVA of the Act, and particularly section 68C, violate Article 14 of the Constitution. The argument asserted that Chapter IVA creates a discrimination between the State Road Transport Corporation on one side and private operators or private transport undertakings on the other, and also permits the Transport Corporation to discriminate arbitrarily among private operators themselves. The Court acknowledged that the provisions of the Chapter enable the framing of a scheme that can grant a monopoly to the State in the field of transport services, thereby allowing the partial or total exclusion of other persons. However, the Court observed that the scheme does not differentiate between individual operators of a transport service and private transport undertakings; all such private entities are placed in a single class. The only classification enacted by the legislation is between the State Transport Undertaking and the private transport undertakings, irrespective of whether the private entities are individuals, firms or companies. Accordingly, the Court framed the decisive question as whether this classification, which distinguishes the State entity from all private entities, infringes the equality clause of Article 14.

The Court observed that Article 14 of the Constitution declares, “The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.” The Court noted that this doctrine of equality has been examined so often by the Court that it requires no further exposition. It reiterated the well‑settled principle that Article 14 does not forbid reasonable classification in legislation, but such classification must not be arbitrary; it must rest on distinctions that have a rational relationship to the purpose sought to be achieved. Applying this principle, the Court recognized that the legislature in the present matter placed the State Transport Undertaking in a class distinct from other undertakings. Consequently, the Court framed the central issue as whether the classification created by Chapter IVA of the Act is just and whether it bears a reasonable relation to the legislative objective.

The Court explained that the purpose of Chapter IVA, as expressed in section 68C, is to provide, in the public interest, an efficient, adequate, economical and properly coordinated road‑transport service. To accomplish this purpose, section 68C confers on the State Transport Undertaking the authority to devise a scheme for operating the service, which may involve the complete or partial exclusion of other persons. The Court held that the classification made by the legislature possesses a reasonable nexus to the intended objective. It observed that, compared with private persons or private undertakings, a State Transport Undertaking is ordinarily in a stronger position administratively, financially and technically to deliver such services for the public’s benefit. The Court listed several advantages, including the ability to supply better‑equipped buses, provide superior amenities to travelers, maintain regular schedules, and promptly repair or replace vehicles in emergencies. It also noted that the State Undertaking can employ efficient supervisory staff to sustain a high standard of operation. While the Court acknowledged that private individuals or companies are capable of running transport services efficiently, it emphasized that the State, by virtue of its greater resources, is better placed to achieve the overarching goal of improving road‑transport services in all respects. The Court further stressed that the legislature, presumed to understand the needs of the people, is justified in drawing a distinction between a State Transport Undertaking and other entities engaged in transport business. Accordingly, the Court rejected the contention that section 68C and other provisions of Chapter IVA grant the State Transport Undertaking an arbitrary power to discriminate among individuals or between individuals and private undertakings. Referring to the earlier decision in Gullapalli Nageswara Rao v. Andhra Pradesh State Road Transport Corporation, the Court explained that Chapter IVA establishes a procedural machinery that restrains the State Transport Undertaking from acting arbitrarily, because section 68C sets out the legislative policy in clear terms.

The Court explained that section 68C of the Act, together with the provisions of Chapter IVA, required the State Transport Undertaking to prepare a scheme only when it intended to provide a road‑transport service that was efficient, adequate, economical and properly coordinated. The statute further required that the scheme be necessary in the public interest. Once a scheme satisfied these conditions, the law mandated that it be published with all necessary particulars in the official Gazette and also in any other manner directed by the State Government. The publication opened a window during which persons who were affected by the scheme could file objections within the time prescribed by law. After the deadline for objections, the State Government was obligated to consider those objections, to give an opportunity to the objectors or their representatives as well as to representatives of the State Transport Undertaking to be heard, and then to either approve the scheme or modify it. Any approved or modified scheme had to be published again. The rules made under the Act also provided for a personal hearing of the parties. If the State Transport Undertaking later wished to modify a scheme that had already been approved, it was required to follow the same procedural steps prescribed in sections 68C, 68D and 68E before making the modification.

In its reasoning, the Court observed that Chapter IVA of the Act compelled the State Transport Undertaking, before proposing a scheme, to reach its decision on the basis of objective criteria. The law gave the parties affected and the public a full opportunity to present their objections to the Government, and it required the Government, after following a prescribed quasi‑judicial process, to confirm or to modify the scheme. Thus, before a scheme became final, it was exposed to public scrutiny, and its validity and appropriateness were tested through a quasi‑judicial procedure that, while not identical to a court, nonetheless embodied the principles of natural justice. The Court rejected the contention that the State Transport Undertaking, being either the State Government itself or a corporation owned or controlled by the State, could use this procedure merely as a cloak for exercising an arbitrary and absolute power. It held that the Legislature had made a sincere effort to protect individual rights from arbitrary executive action. Having accepted that Chapter IVA was constitutionally valid and that the Legislature could lawfully enact provisions for the nationalisation of road‑transport services, the Court concluded that the procedure prescribed for implementing that policy was not unreasonable. However, the Court warned that if, in any particular case, it was shown that the authorities acted in bad faith or colluded to deprive specific persons of the right to carry on road‑transport business or to drive them out of the trade on extraneous considerations, such a scheme could be struck down. The Court affirmed, nevertheless, that the provisions of Chapter IVA could not be invalidated on the ground that they conferred an arbitrary power on the State Transport Undertaking or the State Government to discriminate between individuals, private undertakings or other individuals.

The Court examined the distinction between the State Transport Undertaking, private transport operators, and private individuals, a question that had previously arisen in the decision of Saghir Ahmad v. State of U.P. (1). That earlier case dealt with the provisions of the Uttar Pradesh Road Transport Act, 1951 (U.P. Act II of 1951). Under section 42(3) of that Act, the Government was exempted from the requirement to obtain permits for its own vehicles and was permitted to operate any number of buses without securing permits. In furtherance of a policy aimed at creating a complete State monopoly over road‑transport services, the transport authorities began cancelling permits that had already been issued to private operators and also refused to issue permits to other persons who would otherwise have been entitled to them. The constitutional validity of section 42(3) was consequently challenged.

The judgment noted that, although the decision was rendered after the Constitution (First Amendment) Act, 1951, it was not based on that amendment because the pre‑amendment Constitution governed the parties’ rights at the relevant time. Referring to the argument founded on Article 14 of the Constitution, Justice Mukherjea, then a judge of the Court, observed at page 731:

“There is no doubt that classification is inherent in the concept of a monopoly; and if the object of legislation is to create monopoly in favour of the State with regard to a particular business, obviously, the State cannot but be differentiated from ordinary citizens and placed in a separate category so far as the running of the business is concerned and this classification would have a perfectly rational relation to the object of the statute.”

Section 3 of the Uttar Pradesh Act provided that, where the State Government was satisfied that it was necessary in the public interest and for the common good, it could declare that road‑transport services generally, or any particular class of such service on any route or portion thereof, shall be run exclusively by the State Government, or by the State Government in conjunction with the railway, or partly by the State Government and partly by others in accordance with the provisions of the Act. It was contended that because the State could select any person it liked to associate with the transport service and because no rules were prescribed to guide that discretion, the provision violated Article 14. The State, however, pointed out that the discretion under section 3 was not unfettered, as it could be exercised only by granting permits pursuant to the Motor Vehicles Act. Accepting that construction, the Court held that the discretion conferred on the State was a regulated discretion guided by statutory rules. In the present case, however, no such regulating rules were found.

The Court observed that it was unnecessary to apply a liberal construction to the provisions because Chapter IVA of the Act, in its explicit terms, already supplied a complete and appropriate mechanism for reasonably regulating the exclusion of either all or some private operators from a notified area or route. Accordingly, the Court held that the provisions of Chapter IVA of the Act did not violate the equality clause embodied in Article 14 of the Constitution.

Regarding the fourth point of contention, the learned counsel challenged the validity of the scheme on the ground that the Government acted with bias against private bus operators in West Godavari District and had, in effect, predetermined the outcome. The petitions alleged that the Government exercised total control over the Road Transport Corporation, that the entire administration and management of the undertaking were vested in the Government, that the Chief Secretary of the Government of Andhra Pradesh served as the chairman, and that, consequently, the whole scheme—from its conception to its final approval—was essentially a governmental act. On this basis, it was argued that the Government had become a judge in its own cause and that its decision was therefore tainted by legal bias. Additionally, it was pleaded that a sub‑committee comprising Ministers, Secretaries and officers of related departments, presided over by the Minister in charge of transport, had resolved in its meeting of 28 January 1960 that, under the nationalisation scheme, the State Government would take over bus services in West Godavari District and Guntur District before the end of that year. The contention was that, because the transport Minister had predetermined the issue, he was disqualified from deciding the dispute between the State Transport Undertaking and the petitioners. Similar questions had arisen in Gullapalli Nagestvara Rao v. The State of Andhra Pradesh (1), where it was asserted that the Chief Minister, who also held the transport portfolio, could not act as a judge in his own cause due to bias against private operators. The Court distinguished between official bias—arising from a statutory duty inherent in the authority’s function—and personal bias, which favors or disfavors a particular party. After examining relevant English decisions, the Court quoted paragraph 587, noting that English law permits a statutory invasion of the common‑law objection to bias only within the narrow confines of the statutory exception. It further remarked that, while the supremacy of Parliament in England allows a statutory law, however contrary to natural‑justice principles, to remain valid, in India any law enacted by Parliament or a State Legislature must satisfy the test of fundamental rights.

The Court observed that the relevant provision was declared in Part III of the Constitution, as reported in (1) [1960] 1 S.C.R. 580. It then held that the enactment under consideration did not permit any departure from the principles of natural justice, because the statute anticipated that, in the event of a dispute between the transport undertaking and private‑bus operators, the State Government would act as the adjudicating authority to resolve the conflict. A comparable view was expressed by Justice Shah in H. C. Narayanappa v. The State of Mysore, (1) [1960] 3 S.C.R. 742, although his wording differed slightly. Justice Shah stated: “It is also true that the Government on whom the duty to decide the dispute rests is substantially a party to the dispute, but if the Government or the authority to whom the power is delegated acts judicially in approving or modifying the scheme, the approval or modification is not open to challenge on a presumption of bias. The Minister or the officer of the Government who is invested with the power to hear objections to the scheme is acting in his official capacity and unless there is reliable evidence to show that he is biased, his decision will not be liable to be called in question, merely because he is a limb of the Government.” In the earlier cases the transport department of the Government itself functioned as the transport undertaking. In the present matter, however, the transport authority is the State Road Transport Corporation, a body corporate that possesses perpetual succession and a common seal. Although the Act grants the State Government a degree of control over the Corporation, it cannot be said, either legally or factually, that the Corporation is a department of the Government. Consequently, when the State Government adjudicates the dispute between the corporation and the private operators, it is merely exercising its statutory function, and the objection that this creates bias lacks merit. Moreover, the Court found no evidence that the Minister responsible for transport acted with personal bias. The mere fact that the Minister chaired the sub‑committee formed to implement the nationalisation scheme for bus services in West Godavari District does not, by itself, establish bias, as noted in the earlier citation (1) [1960] 3 S.C.R. 742. The counter‑affidavit filed on behalf of the first respondent did not admit the contents or authenticity of the sub‑committee’s reports published in the Telugu daily “Andhra Pradesh.” Even assuming the sub‑committee reached a conclusion, that conclusion cannot be described as a final and irrevocable decision that contravenes the Act; it was a policy decision that advised the State Government to pursue nationalisation of bus services in that district. Such advice does not, either expressly or by necessary implication, predetermine the issue, but merely indicates that the policy would be implemented subject to the provisions of the Act.

It was held that the Minister who headed the transport portfolio was not shown to have any personal prejudice against private bus operators. Consequently, the Court found that there was no proof that the Minister’s alleged bias disqualified him from considering objections filed under Chapter IVA of the Act. The next issue raised by the petitioners relied on the observations made by this Court in Shrinivasa Reddy v. State of Mysore. After discussing the scope of section 68C of the Act, Justice Wanchoo explained at page 136 that a scheme must be capable of being implemented in one step, which is why the undertaking was given authority to frame a scheme for a specific area, route, or portion thereof. He warned that if the undertaking were allowed to execute the scheme in parts, it could misuse its powers, discriminate between operators, and undermine the integrity of the scheme, thereby violating section 68E. Based on those observations, the petitioners contended that the State Government had originally intended to prepare a single scheme for the whole district, as indicated in the 1960 citation, but because the government could not implement it all at once, it allegedly broke the single scheme into seven separate schemes to evade the Court’s directive. In response, the first respondent’s counter‑affidavit argued that each scheme was framed with reference to the undertaking’s available manpower, material, and financial resources, ensuring that every scheme could be executed in its entirety without compromising its integrity. The respondent further stated that the State Transport Undertaking would implement each published scheme on a date that the State Government would determine for that particular scheme. The Minister’s order also addressed this point, stating that seven distinct schemes had been prepared, each constituting an independent scheme. According to the order, each scheme would become effective on a date fixed by the Government, and although different dates might be assigned, every scheme would be carried out in full, with no part of any scheme being implemented piecemeal. The order indeed specified particular commencement dates for each of the seven schemes, thereby confirming the Government’s intention to avoid fragmentary implementation.

The Court further observed that it had not ruled out the possibility of a phased programme for nationalising transport services within a State or a district, nor had it prohibited the existence of more than one scheme for a district or part of a district. The observations made by this Court concerning piecemeal implementation were intended to prevent the misuse of power that could result in discrimination among operators within a single scheme. In the present matter, the seven schemes were not designed to circumvent the Court’s guidance but rather to avoid the disadvantages inherent in a piecemeal approach. Each scheme covered a separate area of the district, and the Government made it clear that every scheme would be introduced in its entirety on different commencement dates. Accordingly, the Court found no valid objection to the framing of the seven separate schemes. The petition also questioned the validity of the schemes on the ground that the Chief Executive Officer of the Andhra Pradesh Road Transport Corporation lacked authority to publish them, and thus the schemes were allegedly not validly published. The Court noted that, in exercising the powers granted by section 68C of the Act, the validity of the publication process would be examined, but it did not conclude that a phased or multi‑scheme approach was impermissible.

In the present matter, the Court observed that a district or a part of a district could be covered by more than one scheme. The observations made by the Court regarding the prohibition of piecemeal implementation of a scheme were intended to prevent an abuse of power that might arise if some operators were discriminated against while others were favoured within a single scheme. In the case at hand, the seven schemes that had been framed were not designed to evade the Court’s earlier observations; rather, they were created to avoid the disadvantage that is inherent in a piecemeal implementation. The government not only divided the district into separate areas for each of the seven schemes, but also expressly stated that each scheme should be executed in its entirety, with each scheme commencing on a different date. Accordingly, the Court found no legitimate ground to object to the framing of the seven distinct schemes.

The petitioners raised a further contention that the schemes were invalid because the Chief Executive Officer of the Andhra Pradesh Road Transport Corporation did not possess the authority to publish the schemes, and therefore the schemes had not been validly published. The corporation, exercising the powers conferred by section 68C of the Act, had proposed the schemes and had caused them to be published in the Andhra Pradesh Gazette, Part 11, page 1310. The proposed schemes bore the signature of Guru Pershad, who held the position of Chief Executive Officer of the State Transport Undertaking, Andhra Pradesh Road Transport Corporation. At this stage, the Court noted the relevant provisions of the Road Transport Corporations Act, 1950 (Act LXIV of 1950). Section 4 of that Act provided that “Every Corporation shall be a body corporate by the name notified under section 3 having perpetual succession and a common seal, and shall by the said name sue and be sued.” The pertinent portions of section 12 read: “A Corporation may from time to time by resolution passed at a meeting … authorize the Chief Executive Officer or General Manager, or any other officer of the Corporation subject to such conditions and limitations if any as may be specified in the resolution to exercise such powers and perform such duties as it may deem necessary for the efficient day‑to‑day administration of its business.” Section 13 further stipulated that “All orders and decisions of a Corporation shall be authenticated by the signature of the Chairman or any other member authorized by the Corporation in this behalf and all other instruments issued by a Corporation shall be authenticated by the signature of the Chief Executive Officer or General Manager or any other officer of the Corporation authorized in like manner in this behalf.” Relying upon these provisions, the petitioners argued that the preparation and publication of the schemes under section 68C of the Act constituted orders or decisions of the corporation and therefore should have been authenticated by the signature of the Chairman or another member authorized under section 13, rather than by the Chief Executive Officer. The first respondent, in its counter‑affidavit, attempted to meet this contention.

The first respondent asserted that the Corporation, by means of a resolution, had authorized the Chief Executive Officer to exercise such powers and perform such duties as it might consider necessary for the efficient day‑to‑day administration of its business, and that, relying on that authorization, the Chief Executive Officer had published the schemes in the Gazette. The respondent based this claim on section 12 of the Road Transport Corporations Act, rather than on section 13, to sustain the Chief Executive Officer’s power to publish the schemes. The Court found no reason to reject the respondent’s statement that a resolution had indeed been passed by the Corporation in accordance with section 12(c) of the Act. Consequently, the remaining question was whether the act of publishing the proposed schemes in the Gazette fell within the scope of day‑to‑day administration of the Corporation’s business. Under the Act, the Chief Executive Officer possessed no authority to formulate a scheme; such authority rested solely upon the State Transport Undertaking, as provided by section 68C, which empowers that body to prepare a scheme and to cause its publication in the official Gazette and by any other means directed by the State Government. Accordingly, the scheme did not have to be published directly by the Corporation; the Corporation could merely cause the scheme to be placed in the Gazette. Publication in the Gazette was held to be a ministerial act, involving no discretion and constituting a purely mechanical step performed in the ordinary course of administration. Viewing the publication in this light, there could be no difficulty in characterizing it as a ministerial act that the Chief Executive Officer, by virtue of the resolution, could perform under section 12(c) of the Act. For the purposes of the case, it was presumed that the Corporation had decided the terms of the proposed schemes and that such decision had been duly authenticated by the Chairman or another duly authorized member, while the Chief Executive Officer’s role was limited to publishing the scheme as part of his administrative functions. Accordingly, the Court held that the Chief Executive Officer acted within his authority when he published the proposed schemes in the Andhra Pradesh Gazette.

Regarding point (7), the argument turned on rule 4 of the Andhra Pradesh Motor Vehicles Rules, which provides that the scheme or approved scheme to be published in the official Gazette under section 68C or 68D must contain specific particulars, including “the number of vehicles proposed to be operated on each route.” In certain schemes, the number of vehicles was not specified for each individual route; instead, a single figure was listed for two or more routes grouped together. When an objection was raised before the Government concerning this deficiency, the Minister accepted the objection and directed that the schemes be modified so that each route would display its own separate vehicle count. Following the minister’s direction, the schemes were amended accordingly, and the revised approved schemes were published in the Gazette dated 21 March 1960. The Court noted that, as modified, the approved schemes complied with rule 4(2) because they now contained the number of vehicles proposed for each route. Nevertheless, the contention remained that the Minister should have himself fixed the number of vehicles for each route rather than merely ordering the necessary modification to the approved schemes. The record did not reveal any dispute before the Minister regarding how the vehicle numbers originally bracketed between routes should be allocated; the sole issue raised pertained to the presentation of those numbers, which had been resolved by the Minister’s directive to amend the schemes.

The Minister received an objection concerning the way the number of vehicles was shown in the scheme, and he ordered that the scheme be altered so that the number of vehicles to be operated on each route was recorded separately. In compliance with this direction, the schemes were revised to list the vehicle count for each individual route, and the revised schemes were formally published in the Gazette on 21 March 1960. Consequently, the approved schemes, after being modified, fulfilled the requirements of rule 4(2) of the Andhra Pradesh Motor Vehicles Rules because they now contained the number of vehicles proposed for each route. One argument advanced was that the Minister should himself have fixed the exact number of vehicles for each route rather than merely directing that the existing schemes be amended. The record does not show any dispute before the Minister regarding how the vehicles shown in the combined figures should be divided among the routes; the only issue raised was that presenting a single figure for two or more routes violated rule 4. Although the Minister’s order consisted only of a directive, the actual apportionment of vehicles was not carried out by the State Transport Authority but by the Government, since the approved schemes were issued by the State Government and not by the Chief Executive Officer. It is therefore to be assumed that the Minister approved the allocation, and the objection to the process lacks merit.

The second contention concerned rule 5, which the State Government had framed under the authority granted by section 68(1). It was alleged that rule 5 conflicted with section 68B of the Act and was therefore void. The schemes prepared by the State Transport Authority included a note stating that “the frequency of services on any of the notified routes or within any notified area shall, if necessary, be varied having regard to the traffic needs during any period.” This note was essentially a reproduction of the note appended to rule 5. The question posed was whether rule 5 and the accompanying note were inconsistent with section 68E of the Act. Section 68E provides that any scheme published under sub‑section (3) of section 68D may at any time be cancelled or modified by the State transport undertaking, and that the procedures set out in sections 68C and 68D must, insofar as they are applicable, be followed whenever a scheme is proposed to be modified, as if the proposed modification were a separate scheme. The core issue, therefore, was whether the State Transport Undertaking’s power to vary the frequency of service amounted to a modification of a scheme within the meaning of section 68E. The rule was not regarded as trivial by the learned Advocate‑General of Andhra Pradesh.

In this case the Court observed that the rule permitting the State Transport Undertaking to vary the number of trips made by existing buses, or to vary the frequency of service by increasing or decreasing the number of buses, could be exercised without any reference to the public and without hearing any representations from them. The Court noted that such an increase or decrease could be undertaken only for the purpose of providing an efficient, adequate and economical transport service in relation to a particular route, as contemplated by section 68C of the Act. The Court further explained that when the original schemes are first proposed, persons who are affected by those schemes may file objections asserting that the number of buses on a particular route should be increased or decreased from the amount originally proposed. The Government, on receiving such suggestions, may accept them and accordingly modify the schemes. However, under the rule in question the authority is empowered to modify the schemes without any reference to the public or to the Government.

The Court rejected the counsel’s contention that the note annexed to the rule merely provided for an emergency. The Court held that both the rule and the note are sufficiently broad to encompass not only emergencies but also any modification of the scheme for any period of time, even for an indefinite duration. Consequently, the Court was of the opinion that the rule conferred upon the State Transport Undertaking a power to substantially modify the scheme in one respect, although such power could be exercised only in accordance with section 68E of the Act and the procedure prescribed therein. The Court declared the rule to be void and therefore regarded the note as having been illegally inserted into the schemes. Nonetheless, the Court stated that the schemes themselves could not be held void on that ground because the note was easily severable from the schemes without affecting their overall structure. The Court observed that, without the note, the schemes remained self‑contained and it was impossible to conclude that the schemes would not have been framed in the same manner if the note had not been included. Accordingly, the Court directed that the note be deleted from the schemes while the schemes, save for that deletion, were to be considered valid.

Regarding the final argument concerning the inclusion of new routes in the schemes, the Court examined the contention that sections 68C dealt only with existing routes. The petitioners relied upon the language of section 68C, which states that where a State transport undertaking believes it is necessary in the public interest that road‑transport services in general or any particular class of such service in relation to any area or route or portion thereof should be operated by the State transport undertaking, it may propose a scheme. The petitioners argued that the term “route” in that provision must refer to a pre‑existing route because the words “route or portion thereof” apparently indicate an existing route, and a scheme could not be framed for a portion of a proposed route. The Court found no merit in this argument. It held that under section 68C a scheme may be framed with respect to any area, any route, or any portion of an area or route, and there is no inherent inconsistency between the concepts of “area” and “route.” The Court explained that a proposed route is also an area limited to the route proposed, and a scheme may validly propose to operate a transport service on a new route from point A to point B, which would constitute an area within the meaning of section 68C. Consequently, the Court concluded that section 68C certainly empowers the State Transport Undertaking to propose a scheme that includes new routes such as the Eluru‑to‑Kovvur and Nidadavol‑to‑Jeelugumilli routes.

In this case, the argument was that the term “route or portion thereof” in section 68C must refer only to an existing route, because the language supposedly shows that a scheme cannot be made concerning a portion of a route that has not yet been created. The Court found no merit in that argument. It observed that section 68C permits a scheme to be drawn up with respect to any area, any route, or any portion of an area or of a route. The Court explained that there is no logical conflict between the concepts of “area” and “route” within the provision. A proposed route can itself be treated as an area that is confined to the stretch of road to be introduced. Consequently, a scheme may lawfully propose to run a transport service on a brand‑new route connecting point A with point B, and that route will qualify as an area under the meaning of section 68C. Accordingly, the Court held that section 68C clearly authorises the State Transport Undertaking to propose schemes that incorporate new routes. The Court noted that other matters mentioned in the affidavits were not pursued further. As a result, the Court ordered that the note concerning the frequency of services attached to the schemes be removed, and it declared that, apart from this, the petitions failed. The petitions were therefore dismissed, with costs awarded, including one set of hearing fees.