The Samarth Transport Co. (P) Ltd vs The Regional Transport Authority, Nagpur and Others

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

Court: supreme-court

Case Number: Petition No. 67/1960

Decision Date: 8 September 1960

Coram: Bhuvneshwar P. Sinha, J.L. Kapur, P.B. Gajendragadkar, K.N. Wanchoo, Subbarao

In this matter, the petitioner was The Samarth Transport Co. (P) Ltd and the respondents were the Regional Transport Authority, Nagpur, together with other parties. The case was listed before the Supreme Court of India and a judgment was delivered on 8 September 1960. The bench that heard the petition comprised Justices Bhuvneshwar P. Sinha, J. L. Kapur, P. B. Gajendragadkar and K. N. Wanchoo, and the opinion was recorded on behalf of the court. The official citation for the judgment is 1961 AIR 93 and 1961 SCR (1) 631, with additional citator references R 1962 SC1135, RF 1963 SC640, RF 1971 SC1662. The statutory framework discussed in the judgment relates to the Motor Vehicles Act, 1939 (as amended by Act 100 of 1956) and specifically sections 57, 58, 62 and 68F, which govern applications for renewal of stage‑carriage permits, the approval of a scheme of nationalisation by the Government, the jurisdiction of the Regional Transport Authority to reject applications, and the duty of the Authority to dispose of applications within a reasonable time.

The petitioner’s stage‑carriage permits were scheduled to expire on 31 December 1959. In anticipation of the expiry, the petitioner filed applications for renewal on 24 August 1959. On 29 December 1959 the Regional Transport Authority granted the petitioner a temporary permit for one month, and subsequently extended a further temporary permit that remained in force until 31 March 1960. The proceedings were repeatedly adjourned, and on 28 April 1960 the Authority finally rejected the renewal applications on the ground that a scheme of nationalisation, which included the petitioner’s routes, had been approved by the Government on 20 April 1960. The petitioner then invoked Article 32 of the Constitution and sought a writ to set aside both the rejection order and the nationalisation scheme, alleging that the Authority acted in bad faith and that the purpose of the adjournments was to enable the Government to approve the scheme. The petitioner also requested an order directing that the renewal applications be disposed of according to law as of the date they were filed. The Court held that the petition failed. It observed that the Motor Vehicles Act, 1939 does not prescribe a specific time limit for disposing of renewal applications and therefore the Authority did not act without jurisdiction in rejecting the applications, even though several months had elapsed after the permits had expired and notwithstanding the limitation in section 62 that permits the issue of only one temporary permit. Nonetheless, the Court noted that the relevant provisions require that a renewal application be ordinarily disposed of before the expiry of the existing permit or within a reasonable time thereafter. Consequently, if the petitioner was aggrieved by the delay, it could have sought a mandamus directing the Authority to dispose of the applications within a reasonable time. The Court further explained that section 68F(1) applies only when a State Transport Undertaking seeks a permit under an approved scheme, whereas section 68F(2) is not limited by that condition.

The Court explained that the limitation mentioned in the provision does not apply to the term “entertain” used therein. That term does not refer to an application that is filed for renewal of a permit after the scheme has received approval. Rather, the word describes the scope and duty imposed by the clause and indicates that the Authority is not empowered to decide the merits of an application; instead, it may reject the application as not maintainable either at the time it is filed or at any later stage. The Court emphasized that statutory bodies are bound to act promptly, efficiently, and without bias, even when the Government has an interest in the matter. Accordingly, the Court found the conduct of the Regional Transport Authority in the present case to be unacceptable, because the Authority granted adjournments not for the reasons it claimed, but ostensibly to allow the Government to approve the scheme. The Court therefore disapproved of that conduct.

The judgment originated in the original jurisdiction under Petition No. 67/1960, which was filed under Article 32 of the Constitution of India for the enforcement of fundamental rights. Counsel for the petitioners appeared on behalf of the petitioner, while counsel for the respondents, including the Solicitor‑General of India, represented the respondents. The judgment was delivered by the presiding judge. The petition sought to set aside the order dated 28 April 1960 issued by the first respondent, to quash the scheme dated 20 April 1960, and to direct the first respondent to process the petitioner’s application for renewal of its permit in accordance with the law. The petitioner had been engaged in motor transport business in Bombay State for more than twenty years and held four permanent stage‑carriage permits that had been periodically renewed to operate buses on two routes: (i) Yeotmal‑Umerkhed with two return trips, and (ii) Yeotmal‑Pusad with four return trips. The most recent permits expired on 31 December 1959. Approximately four months before the expiry, on 24 August 1959, the petitioner filed an application for renewal of the permits under section 58(2) of the Motor Vehicles Act, 1939. Subsequently, on 29 October 1959, the State Transport Department published a proposed scheme for the nationalisation of road‑transport services covering the area that included the petitioner’s routes. On 9 November 1959, the petitioner wrote to the Secretary of the Regional Transport Authority, Nagpur, enquiring why its renewal application had not been published as required by section 57 of the Act, and expressing concern that the failure to publish was intended to assist the State Transport Department in removing the petitioner from the routes and to coerce it into accepting temporary permits under section 62(d) of the Act. The Secretary responded by letter dated 11 November 1959, stating that the renewal application had…

On November 8 1959 the Regional Transport Authority announced that the petitioner's application for renewal of its stage‑carriage permits had been published, and it assured the petitioner that the application would be considered before the permits expired, adding that there was no prospect of temporary permits being required. Subsequently, on November 19 1959 the Assistant Manager of the State Transport Department, acting for the Department, lodged applications before the Authority seeking the issuance of permits for the two routes in question, among others. Those applications referred to a notification issued in the Bombay Government Gazette on October 29 1959, which indicated that the Provincial Transport Services intended to assume control of the same routes from 1 January 1960. In the same filing the Provincial Transport Services entered objections to the renewal of the petitioner's permits. On December 10 1959 the applications were again published in the Gazette, which invited any interested party to submit representations by 15 December 1959. The Gazette notice further stated that the objections together with the permit applications would be examined at a meeting of the Regional Transport Authority to be held in December 1959 at Nagpur or at a later date that might be notified. On December 21 1959 the Secretary of the Authority wrote to the petitioner informing it that, because of a “heavy agenda,” the meeting scheduled for 31 December 1959 could not consider the petitioner’s renewal applications. The letter also suggested that the petitioner apply for temporary permits, which could be granted before the renewal deadline. The petitioner replied on the same day, contending that the cited heavy agenda was merely a pretext to further the Provincial Transport Services’ plans, and, without prejudice to its rights, it applied for the temporary permits as advised. Consequently, on December 29 1959 temporary permits were issued for one month beginning 1 January 1960; these were subsequently extended for an additional month, remaining in force until 31 March 1960. The next scheduled meeting of the Authority, originally set for 5 February 1960, was postponed to 24 February 1960. Meanwhile, on 22 January 1960 the Chief Minister of Bombay issued notices to the petitioner and other interested parties indicating that objections to the proposed scheme would be heard on 24 February 1960. On that date, however, the Authority did not dispose of the applications, holding that the matter was sub judice before the Bombay High Court. On 17 March 1960 the Provincial Transport Services filed a fresh application before the Authority under Chapter IVA of the Act, seeking permits to operate buses on the disputed routes and indicating its intention to commence operations on 1 May 1960 or on any other date that the Authority might determine.

In this matter, the petitioner sought to operate the routes in question beginning on 1 May 1960 or on any other date that the Regional Transport Authority might fix. The second application appears to have been filed because the earlier one was submitted under Chapter IV rather than under Chapter IVA of the Act, which dealt with the proposed scheme. On 31 March 1960 the Regional Transport Authority reconvened, but it did not consider the petitioner’s renewal applications at that meeting. It was argued that the authority could not have taken up those applications because fewer than thirty days had elapsed since the Provincial Transport Services had filed its own applications. Subsequently, on 14 April 1960 the Chief Minister of Bombay heard objections to the scheme, and on 19 April 1960 the Government approved a modified scheme, publishing it on 20 April 1960. The approved scheme covered only those routes for which temporary permits had been issued and expressly excluded the routes for which permanent permits had been granted; nonetheless, the scheme did include the petitioner’s routes. On 20 April 1960 the pending applications were again adjourned to 29 April 1960. The petitioner then moved a petition under Article 32 of the Constitution on 26 April 1960, and the petition was dismissed on 28 April 1960 as premature. Despite being informed on that same day that the petitioner had approached the Court, the Regional Transport Authority rejected the renewal applications, relying on the fact that the Government had approved the scheme. The present petition was filed on 29 April 1960 seeking the reliefs previously claimed.

The petitioner’s counsel contended that the Regional Transport Authority acted with mala fide in handling the renewal applications. According to the counsel, the authority, although legally bound by the provisions of the Act to renew the petitioner’s permits, repeatedly adjourned the matter with the ulterior purpose of allowing the Government to approve the scheme. The counsel argued that the appropriate remedy was to set aside the authority’s order and direct it to decide the petitioner’s renewal applications as of the dates on which they were filed. To assess this argument, it is necessary to examine the relevant statutory provisions. Section 58 of the Act provides that a stage‑carriage or contract‑carriage permit shall remain effective without renewal for a period not less than three years and not more than five years, as specified by the Regional Transport Authority. Clause 2 of that section mandates renewal of permits upon application, treating the renewal as a fresh permit application. Section 57 prescribes the procedure for disposing of permit applications. Sub‑section 1 of Section 57 allows an applicant to file a permit application at any time. The court’s analysis therefore required reference to these provisions to determine whether the authority’s adjournments were justified or whether they constituted an abuse of process.

In the judgment, the Court explained that under section 57 clause 2 of the Act, an application for a permit had to be filed at least six weeks before the date on which the applicant wanted the permit to become effective. Clause 3 required the Regional Transport Authority, upon receiving such an application, to publish it in the manner prescribed and to invite representations, with the deadline for receiving those representations set at not less than thirty days after the date of publication. After hearing any objections and representations, the authority was obliged to dispose of the applications in accordance with the provisions of the Act. Section 62 authorised the Regional Transport Authority to issue a temporary permit without following the procedure laid down in section 57, but such a temporary permit could be effective for a limited period not exceeding four months. The second proviso to section 62 further stipulated that a temporary permit could not be granted more than once for the same route or area that was specified in a renewal application while that renewal application was still pending. Section 68F permitted the State Transport Undertaking, when acting under an approved scheme, to apply for a stage‑carriage permit in the manner prescribed in Chapter IV for a notified route, and on such an application the Regional Transport Authority was required to issue the permit to the undertaking notwithstanding any contrary provision in Chapter IV. Clause 2 of section 68F empowered the authority, for the purpose of giving effect to an approved scheme concerning a notified area or route, to issue an order refusing to entertain any renewal application for any other permit, to cancel any existing permit, or to modify the terms of any existing permit. Section 68G set out the principles and method for determining compensation payable when permits were cancelled or modified. The Court then summarized the relevant provisions as follows: a stage‑carriage operator could apply for renewal of his permit not less than sixty days before its expiry; such an application would be treated as a fresh permit application and, all other things being equal, the operator would receive preferential treatment; the Act did not prescribe a fixed outer limit for the disposal of a renewal application, as the time required depended on other applications filed and compliance with the conditions in section 57; however, the requirement that the renewal application be filed at least sixty days before expiry, the restriction that a temporary permit could be granted only once during the pendency of a renewal application, and the four‑month maximum period for a temporary permit indicated that, although there was no explicit statutory prohibition, the renewal application was expected to be disposed of before the existing permit expired or, if unavoidable, within a reasonable time thereafter.

Section 62 of the Act states that, although there is no explicit statutory prohibition, an application for renewal of a permit is normally expected to be decided before the existing permit expires, or, if a delay is unavoidable, within a reasonable period after the expiry. The provision further provides that once a scheme has received approval, if the State Transport Undertaking submits an application for a permit, the Regional Transport Authority must issue the permit to that undertaking. To implement the approved scheme, the Authority is also empowered to refuse to consider any renewal application for another permit and to cancel or modify any existing permit. Whenever the Authority cancels or modifies a permit, the operator whose permit is affected is entitled to compensation.

In the matter before the Court, the relevant permits had ceased to be effective on 31 December 1959. The petitioner had filed renewal applications on 24 August 1959. Those applications were later rejected on the basis that an approved scheme had been issued on 28 April 1960. Subsequently, on 29 December 1959, the Authority granted temporary permits for a period of one month, and after those expired issued another set of temporary permits for an additional month, which lasted until 31 March 1960. Although the second proviso to Section 62 specifies that a temporary permit may not be granted more than once, the Court held that the Authority’s breach of that limitation did not bear on the principal issue before it.

The Act does not prescribe a fixed time limit for deciding renewal applications. Consequently, the Court could not conclude that the Authority acted without jurisdiction when it rejected the petitions several months after the permits had expired. If the delay in disposing of the applications had been excessive, the affected party could have sought a writ of mandamus to compel the Authority to decide within a reasonable time. The petitioner, however, did not pursue such a remedy; instead, it filed a writ petition in the High Court seeking other reliefs.

The Court then considered whether the Authority had exceeded its statutory powers in refusing the renewal applications. For this purpose it referred to Section 68F, which provides that, when an approved scheme is being implemented, a State Transport Undertaking may obtain a stage‑carriage permit from the Authority, and the Authority may, by order, refuse to entertain any renewal application for any other permit in order to give effect to the scheme. Counsel for the petitioner argued that Section 68F applies only when a State Transport Undertaking makes a permit application after the scheme has been approved, and therefore it should not apply to the present case because the petitioner's application was filed before the scheme received approval.

In this case the Court observed that section 68F obliges the Regional Transport Authority to grant a permit to a State Transport Undertaking only when the application is made in pursuance of an approved scheme. Consequently, in the present proceedings the Authority did not grant any permit to the State Transport Undertaking. However, sub‑section (2) of section 68F is not subject to that same limitation. Under sub‑section (2) the Authority is empowered, for the purpose of giving effect to an approved scheme, to refuse to “entertain” an application for renewal of any other permit. The Court explained that this power does not require that the State Transport Undertaking first present an application for a new permit. Instead, the power becomes exercisable as soon as the Authority is made aware that an approved scheme exists and that, in order to give effect to that scheme, the renewal application cannot be dealt with. By the time the renewal applications were being considered, the scheme had already been approved by the Government of Bombay and the routes involved were included in that scheme. Accordingly, the Authority was within its legal authority to decline to entertain the petitioner’s renewal applications. The petitioner argued that the word “entertain” should be read to refer only to applications filed after the scheme’s approval, and that the provision does not apply to renewal applications filed before that date. The Court examined the ordinary meaning of “entertain” and noted that it can mean “to receive on file or keep on file”. In that sense the Authority may refuse to keep an application on its file by rejecting it either at the moment of filing or later. The term does not convey a temporal limitation; it merely describes the scope of the duty imposed by the clause. Accordingly, the Authority may not decide the merits of the application but may reject it as non‑maintainable. The Court held that interpreting “entertain” in any other way would produce an anomalous result: even if the scheme’s approval were brought to the Authority’s notice, the Authority would be compelled to order the renewal of the permit and then later cancel it on a subsequent application, a construction the legislature did not intend. A broader reading of “entertain” therefore facilitates the proper operation of the section, and the Court rejected the narrower interpretation proposed by counsel. Consequently, the Court concluded that the Regional Transport Authority possessed the power under section 68F(2) to reject the petitioner’s renewal applications. The Court then turned to the petitioner’s next submission, which alleged that the scheme was discriminatory because, although it barred the petitioner from operating on the Yeotmal‑Umerkhed route, it permitted other operators to ply that route.

The Court observed that the petitioner's claim that other operators were allowed to run their buses on the route from Akola to Umerkhed or from Amravati to Umerkhed lacked any support in the affidavit filed in support of the writ petition. Consequently, the Court held that it could not permit the petitioner to raise this plea for the first time before it and therefore rejected the submission. The Court then turned to the petitioner’s argument that the Chief Minister had confirmed the scheme on considerations extraneous to section 68C of the Act. The Court cited paragraph 24 of the Chief Minister’s order, which stated, “On merits, it is quite clear to me that having regard to the resources of the P. T. S. and the amenities that it provides to the public, it is in the public interest that the scheme submitted by the P. T. S., Nagpur, should be approved.” Under section 68C, the issue before the Chief Minister was whether transport services should be operated by the State Transport Undertaking to the exclusion of the petitioner and whether such exclusion was necessary in the public interest to provide an efficient, adequate, economical and properly coordinated road‑transport service. The Court noted that the Chief Minister, after examining the material placed before him, concluded that approval of the scheme submitted by the Provincial Transport Services was necessary in the public interest. In reaching that conclusion, the Chief Minister considered that the Provincial Transport Services possessed sufficient resources and were better positioned to provide amenities to the public, and therefore should be given preference over private bus operators. The Court found no indication that the Chief Minister relied on any extraneous considerations. However, the Court criticised the record for showing a lack of promptness and efficiency in the Regional Transport Authority’s discharge of its statutory functions. The various dates, the reasons given for repeatedly postponing the disposal of renewal petitions, and the manner and timing of the final disposal, could legitimately give rise to an allegation that the Authority was not, at the very least, fair and impartial. The Court emphasized that a statutory tribunal must perform its duties fairly and without bias even when governmental interests are involved. In view of the facts and circumstances, the Court could not say that the petitioner’s complaint—that the adjournments were not for the reasons stated in the orders but were intended only to give the Government time to approve the scheme—was wholly unjustified. Accordingly, the Court dismissed the petition but did not award any costs against the respondents.