Kalyan Singh vs State of U.P

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 325/61

Decision Date: 11 December 1961

Coram: J.C. Shah, Bhuvneshwar P. Sinha, Raghubar Dayal, J.R. Mudholkar

In the matter titled Kalyan Singh versus State of Uttar Pradesh, decided on the eleventh day of December, 1961, the Supreme Court of India delivered its judgment. The opinion was authored by Justice J. C. Shah and the bench comprised Justices J. C. Shah, Bhuvneshwar P. Sinha, Raghubar Dayal and J. R. Mudholkar. The petitioner was Kalyan Singh and the respondent was the State of Uttar Pradesh. The judgment was rendered on 11 December 1961 and the case was cited as 1962 AIR 1183, 1962 SCR Supl. (2) 76, with subsequent citations including F 1963 SC 640 (13), R 1970 SC 1102 (13) and RF 1975 SC 32 (36). The dispute arose under the provisions of the Motor Vehicles Act, 1939, specifically sections 68C, 68D and 68F, concerning the nationalisation of road‑transport routes and the cancellation of a permit.

The factual background disclosed that the appellant held a permit to ply a stage‑carriage service, and the permit was nearing its expiry. He applied to the appropriate authority for renewal of the permit. The renewal application was advertised in the Gazette, thereby inviting objections from any interested parties. Subsequent to this publication, the State Government issued a notification proposing the nationalisation of the route on which the appellant operated. The authority granted a renewal of the permit for a period of three years covering a portion of the route; simultaneously, an endorsement was added to the renewed permit authorising the appellant to continue plying the remaining segment of the route for a further four months.

Following the State Government’s proposal, the appellant and other interested parties lodged objections to the scheme of nationalisation. These objections were examined by the Joint Secretary of the Judicial Department, who, after considering the submissions, approved the scheme with certain modifications. The approved scheme was then published in the Gazette. Thereafter, invoking section 68F of the Motor Vehicles Act, the State issued a notification cancelling the appellant’s renewed permit. Under the terms of the scheme, the stage‑carriages belonging to the State Transport Undertaking were permitted to ply the nationalised route without the need to obtain individual permits.

The appellant challenged both the validity of the nationalisation scheme and the cancellation of his licence. The Court held that the scheme was validly made and that the cancellation of the appellant’s licence was proper. The Court explained that section 68C requires the scheme to be initiated by a State Transport Undertaking. Although in the present case the initiation was carried out by the State Government itself, the Court found no breach of the statutory requirement because there is no legal distinction between an undertaking run by a department of the State Government and one run directly by the State Government; both constitute a State Transport Undertaking within the meaning of section 68C. Consequently, initiation of the scheme by the State Government was deemed initiation by the statutory authority, namely the State Transport Undertaking.

The Court further ruled that the appellant could not be permitted to attack the scheme on the ground that the Joint Secretary was not lawfully empowered to hear objections and approve the scheme, as this point had not been raised at the appropriate procedural stage. In arriving at this conclusion, the Court applied the precedent set in Gullapalli Nageswara Rao v. Andhra Pradesh State Road Transport Corporation, [1959] Supp. 1 SCR 319. The Court observed that, having been validly promulgated and becoming final under section 68D(3), the scheme extinguished all rights of the appellant to operate his stage‑carriage on the route. As a result, the appellant could not maintain a petition under Article 226 of the Constitution to contest the cancellation, and the order of the Regional Transport Authority cancelling his permit was a consequence of the scheme and could not be challenged independently.

The Court observed that, because the scheme had been validly promulgated, the appellant’s permit to ply stage carriage was extinguished, and consequently he could not maintain a petition under Article 226 of the Constitution. The order issued by the Regional Transport Authority that cancelled the appellant’s permit was deemed to be a direct consequence of the scheme; therefore, the order could not be challenged so long as the scheme itself remained valid. Once the appellant’s right to operate his stage carriage had been lawfully extinguished, the Court held that he could not question the authority of the State transport authority to operate its own stage carriages, whether such operation required a permit or not. The decision in Abdul Gafoor, Proprietor, Shaheen Motor Service v. State of Mysore, AIR 1961 SC 1556, was applied to support this reasoning. The judgment was rendered in the civil appellate jurisdiction in Civil Appeal No. 325/61, which arose from a judgment and decree dated 6 March 1961 of the Allahabad High Court in Writ No. 3116 of 1960, together with Petitions Nos. 180, 181 and 205 of 1961 filed under Article 32 of the Constitution for the enforcement of fundamental rights. Counsel for the appellant in the civil appeal and petitioner in Petition 205 were listed, as were counsel for the respondents and petitioners in the various proceedings. The judgment, delivered by Justice Shah, noted that the appeal and the writ petitions raised essentially the same issues and could be disposed of together. The Court then set out the material facts. The appellant, in Civil Appeal No. 325 of 1961, possessed a permit to ply stage carriage on the Kanpur‑Bela‑Bidhuna route via Chaubepur in Uttar Pradesh. The whole route measured sixty‑eight miles, of which a sixteen‑mile segment from Kanpur to Chaubepur was a notified route and overlapped with the Kanpur‑Chaubepur‑Sarai Miran nationalised route. Accordingly, a condition was affixed to the appellant’s permit prohibiting him from picking up or dropping off passengers between Kanpur and Chaubepur. The permit was scheduled to expire on 10 June 1960. Prior to that date, the appellant applied for renewal, and on 20 May 1960 a notice was published in the Uttar Pradesh Government Gazette inviting objections. On the same day, the State Government published a notification proposing the nationalisation of the route. Because the renewal application could not be decided before the original permit expired, a temporary permit was granted to the appellant. On 19 July 1960 the Regional Transport Authority, Kanpur, considered the renewal application and renewed the permit for three years, effective from 23 July 1966, but only for a portion of the original route, namely the segment beyond the notified section.

The Regional Transport Authority, acting on the directions of the Transport Commissioner, placed an endorsement on the appellant’s renewed permit that permitted him to operate his vehicle between Kanpur and Chaubepur for a period of four months beginning on 23 July 1960. In relation to the government’s proposed nationalisation scheme, the appellant submitted objections on 22 June 1960. These objections were considered by the Joint Secretary of the Judicial Department, who subsequently approved the scheme but incorporated certain modifications. The modified scheme was then published in the Gazette on 8 October 1960, and the notification specified that the scheme would become operative on 5 October 1960 or thereafter. Later, on 12 November 1960, a further notification dated 4 November 1960 was issued under section 68F of the Motor Vehicles Act; this notification cancelled the appellant’s renewed permit with effect from 27 November 1960. According to the nationalisation scheme, stage‑carriage services owned by the State Transport Undertaking were authorised to run on the same route without the requirement of obtaining a permit. In response to these developments, the appellant instituted a petition under article 226 of the Constitution before the High Court of Judicature at Allahabad, seeking a series of orders. The petition prayed that a writ of mandamus be issued directing the respondents not to interfere with the appellant’s right to ply the Kanpur‑Bela‑Bidhuna route via Chaubepur under the renewed permit for the full term of the permit, i.e., until 22 July 1963. It also sought a writ of certiorari to set aside the portion of the Resolution dated 19 July 1960 passed by the Regional Transport Authority, Kanpur, which imposed what the appellant described as illegal conditions on the renewed permit. Further relief requested included a writ of mandamus to disregard the illegal endorsements made on the permit on 23 July 1960 and to deem the permit as having been renewed without those unlawful conditions, as detailed in paragraph 15 of the affidavit. The petitioner also asked for a writ of certiorari to quash three notifications: the one dated 18 May 1960 issued under section 68C of the Act; the notification dated 26 September 1960 issued under section 68D(2) of the Act; and the notification dated 4 November 1960 issued under section 68F(2) of the Act, all of which concerned the Kanpur‑Bela‑Bidhuna route. Additionally, the petitioner requested a writ of mandamus directing respondents numbered one to three not to give effect to any of those three notifications. An interim direction was also sought, asking respondents two and three not to interfere with the appellant’s right to operate on the entire Kanpur‑Bela‑Bidhuna route under the renewed permit, regardless of the alleged illegal conditions or the purportedly unlawful nationalisation scheme. Finally, the petition asked that the costs of the proceeding be awarded to the petitioner.

On December 2, 1960 the High Court issued an interim order that barred the State of Uttar Pradesh from interfering with the petitioner’s operation of his vehicle on the Kanpur‑Bela‑Bidhuna route as long as he complied with the terms of his permit. In that writ petition the State of Uttar Pradesh, the Regional Transport Authority and the Secretary to the Regional Transport Authority were named as respondents. All three respondents opposed the petition. Subsequently, on March 6, 1961 a Division Bench of the High Court considered the case, accepted the arguments presented by the respondents and dismissed the petition. The dismissal gave rise to the present appeal.

Writ Petition No. 205 of 1961 was filed in the Supreme Court by another operator who relied on Article 32 of the Constitution. The petitioner was operating a stage‑carriage on the Jaunpur‑Shahganj route in Uttar Pradesh under Permit No. 430, which remained valid up to March 15. The State Government had earlier published, in the Gazette dated July 23, 1960, a notification dated July 15, 1960 under section 68C of the Motor Vehicles Act proposing to nationalise the Jaunpur‑Shahganj route together with an additional route. The petitioner and several other operators lodged objections to the proposed scheme within the prescribed time limit. Those objections were examined by the Joint Secretary of the Judicial Department, who thereafter approved the scheme. The approved scheme was subsequently published in the Uttar Pradesh Official Gazette on February 25, 1961. After that, the Secretary to the Regional Transport Authority, Allahabad, issued a further notification on July 29, 1961 stating that the permits of all operators on the affected routes, including the petitioner’s permit, would be cancelled and that the cancellation would become effective fifteen days after the date of publication of that notification. In response, the petitioner filed the present writ petition seeking: (a) a writ of certiorari to invalidate the three notifications (referenced as Annexures A, B and C); (b) a writ of mandamus directing the respondents not to give effect to those notifications; (c) a writ of mandamus ordering the respondents not to interfere with the petitioner’s right to operate his stage‑carriage on the Jaunpur‑Shahganj route in view of the scheme; and (d) an award of costs of the petition to the petitioner. In addition, Writ Petitions Nos. 180 and 181 of 1961 concerned the Robertasgunj‑Dudhi‑Mamhani route. The State Government had issued a notification on July 13, 1960 proposing to nationalise that route and had published the same in the Gazette on July 23, 1960. The petitioners filed objections, which were heard by the Joint Secretary of the Judicial Department, who ultimately approved the scheme. The approved scheme was notified in the Gazette on May 20, 1961, providing that the State Transport Undertaking would commence stage‑carriage service on the Robertasgunj‑Dudhi‑Mamhani route around July 15, 1961. Aggrieved by the scheme, the petitioners filed writ petitions in this Court seeking reliefs similar to those claimed in the earlier petition.

In the petition, counsel for the petitioner in Writ Petition No. 205 of 1961 presented several submissions. He argued that under section 68C of the Motor Vehicles Act the State transport undertaking was required to form its own opinion, draw up a nationalisation scheme and publish it in the manner prescribed, but in the present matters the State Government had initiated the schemes, rendering them void. He further contended that the objections to the proposed schemes had neither been heard nor approved by the State Government as mandated by section 68D, and therefore the schemes were invalid. He also maintained that the Regional Transport Authority had acted unlawfully in reducing the renewal period, a point that would be considered only on appeal, and that the Authority had not exercised its mind in processing the renewal application but had merely applied the provisions of the proposed schemes mechanically, making its order defective. In addition, counsel submitted that even after the nationalisation schemes were approved, the State‑owned buses were still required to obtain permits under the Act, and that operating buses without such permits was illegal. Finally, he asserted that the Secretary of the Regional Transport Authority lacked jurisdiction to issue an order under section 68F(2) of the Act, because that power was vested solely in the Regional Transport Authority, a question that arose only in Writ Petition No. 205 of 1961. To assess the first contention, it was necessary to refer to the relevant provisions of Chapter IVA of the Motor Vehicles Act, 1939. Section 68A(b) defined a “State transport undertaking” as any undertaking providing road‑transport service that is carried on by the Central Government or a State Government. Section 68C stated that when a State transport undertaking believes that, for public interest, road‑transport services should be run by the undertaking, it may prepare a scheme specifying the nature of services, the area or route covered and other prescribed particulars, and must cause the scheme to be published in the Official Gazette and in any other manner directed by the State Government. Section 68D provided that any person affected by a scheme published under section 68C could, within thirty days of its publication in the Official Gazette, file objections before the State Government, which after considering the objections and giving an opportunity to the objector or his representatives and to the representatives of the State transport undertaking, could approve or modify the scheme.

The Court explained that section 68E allowed the State transport undertaking to cancel or modify a scheme, and that the same procedure prescribed for framing a scheme had to be followed in such cases. It held that, for the purposes of the present inquiry, the effect of the relevant provisions could be summarised as follows: the State transport undertaking was an entity that provided road‑transport services and was carried on by the State or by any other corporation or authority mentioned in section 68A. This definition created a statutory authority that was distinct from the authorities that actually operated the transport service. The Court pointed out that section 68C required the State transport undertaking itself to form the necessary opinion, and that section 68C further mandated the undertaking to publish the proposed scheme in the Official Gazette and in any other manner prescribed by the State Government. The distinction between the two entities was reinforced by section 68D(2), which obliged the State Government to hear the representatives of the State transport undertaking before taking any action. In brief, the Court stated that the statutes created a statutory authority called the State transport undertaking, authorised it to initiate a scheme for the nationalisation of road transport, gave aggrieved parties the opportunity to file objections, and empowered the State Government to hear both the aggrieved parties and the representatives of the State transport undertaking and to approve or modify the scheme as appropriate. Counsel for the appellant argued that the scheme could not be implemented unless a clear separation was maintained between the State transport undertaking and the State Government; otherwise the State Government would be acting as a judge of its own cause, and therefore a separate and distinct authority was necessary to enable the scheme to be initiated in accordance with law. Counsel for the State countered that a transport undertaking run by the State Government was itself a State transport undertaking, and that consequently any scheme initiated by the State Government that ran the undertaking was a scheme initiated by that undertaking. The Court agreed that the provisions did maintain a distinction between the State transport undertaking and the State Government, and it also recognised that the State Government was required to hear objections from both the aggrieved parties and the representatives of the State transport undertaking before approving or modifying the scheme. This indicated that the State Government had to resolve any dispute that might arise between the two participants. While the functions of the different bodies were clearly demarcated where the undertaking was run by a corporation, the Court observed that an overlap existed when the undertaking was run directly by a State Government, which could create an anomalous situation. However, the Court noted that in practice such a problem could be avoided if the State Government established a separate department to manage the undertaking and to hear objections and approve or modify the scheme in a manner that complied with the principles of natural justice.

In this case, the Court explained that a department can be designated to manage the transport undertaking, to receive objections to a scheme, and to approve or modify that scheme provided that the process does not breach the principles of natural justice. The Court clarified that the term “State transport undertaking” includes, among other things, any undertaking that is run by a State. Accordingly, the statutory authority that is created under the legislation is itself an undertaking operated by the State. The State is capable of operating an undertaking only through its officers; it may delegate the conduct of the transport service either to a particular officer or to a department of the State, but in every circumstance it is the State Government that is operating the undertaking. Consequently, the statutory authority, that is, the State transport undertaking, is required to form an opinion as contemplated by section 68C of the Act, and that opinion must necessarily be the opinion of the State Government which actually runs the undertaking. When the State Government that runs an undertaking formulates an opinion, it is proper to say that the statutory authority – the State transport undertaking – has formed that opinion.

The Court then referred to the decision in Gullapalli Nageswara Rao v. Andhra Pradesh State Road Transport Corporation. Before the formation of Andhra Pradesh in November 1956, the Motor Vehicles (Hyderabad Amendment) Act, 1956 applied to the Telangana area. Under that Act, a “State transport undertaking” was defined as the road‑transport department of the State that provided road service. After Andhra Pradesh was created, the same department initiated a scheme, and the Court held that the department clearly fell within the definition of a State transport undertaking. The Court quoted its earlier observation: “The State Government maintained the department for providing road transport service and therefore the department clearly falls within the definition of State Transport Undertaking.” The Court reasoned that when a State directly runs an undertaking, it can do so only through a department, and that, in law, there is no distinction between an undertaking run by a department of a State Government and one run directly by the State Government. In both situations the undertaking is run by the State and therefore qualifies as a State transport undertaking within the meaning of section 68C of the Act.

The Court further emphasized that an opinion must be formed by a person to whom, under the rules of business, the conduct of the business is entrusted; in law that opinion is the opinion of the State Government. The counter‑affidavit in the present matter stated that all the officials of the Department of Transport examined the draft scheme and that the scheme was ultimately approved by the Secretary of the Transport Department before the notification was issued. It was not contested that the Secretary of that Department possessed authority under the rules of business to act on behalf of the State Government. Accordingly, the Court held that, in the present case, the opinion was indeed formed by the State transport undertaking within the meaning of section 68C of the Act and that there was nothing unlawful in the manner in which the scheme was initiated. The Court then noted that the appellant’s second ground of contention – that the scheme was invalid because…

The Court observed that the objections to the transport scheme were heard and the scheme was thereafter approved by the Joint Secretary of the Judicial Department, although the Court noted that the Joint Secretary was not lawfully invested with the authority to do so for reasons that would be explained later and were not open to the appellant. Under the first sub‑section of section 68D, the Court reiterated that every person affected by a transport scheme has the right to file objections to that scheme. Section 68D(2) further provides that the State Government may approve or modify the scheme after it has considered any objections, provided that the objector or his representatives, as well as the representatives of the State transport undertaking, are given an opportunity to be heard. According to sub‑section (3), the State Government must publish the approved or modified scheme in the Official Gazette, and the scheme becomes final upon such publication.

The Court then pointed out that neither the petition under article 226 of the Constitution filed in the High Court, which gave rise to Civil Appeal No. 325 of 1961, nor the writ petition under article 32 (Petition No. 205 of 1961) presented to this Court, raised any plea that the Joint Secretary of the Judicial Department lacked the authority to hear the objections and to approve the scheme. In the writ petition under article 32, paragraph 10, the petitioner stated that “the petitioner filed objections under s. 68D(1) of the Act, against the scheme of the State Government, and it also heard its own representatives in opposition to the petition,” and further asserted that “at the time of hearing of the petitioner's objections under section‑68‑D, before the State Government it was argued on behalf of the petitioner that the aforesaid scheme was bad….” In the petition under article 226, paragraph 25, the petitioner claimed that “no State Transport Undertaking having been constituted the State Government initiated the scheme and heard its own representatives on 13.8.1960. The petitioner has bonafide belief that the Joint Secretary to the Government of Uttar Pradesh (Judicial Department) who heard the objections acted with bias against the petitioner.” The appellant’s contention that the Joint Secretary was not authorized was not raised in the special leave petition to this Court, nor was it mentioned in the High Court’s judgment. Consequently, the Court held that raising the validity of the scheme on this ground for the first time before this Court was impermissible, as the settled practice of this Court does not allow a party to introduce a new argument at this stage except in exceptional circumstances, which were absent in the present case. The Court also noted that counsel had argued that Rule 7 of the State Land Transport Services Development Rules 1958, in effect at the relevant time, stipulated that “the objections received shall be considered by the judicial Secretary to Government of U.P. or” an officer not below the rank of Joint Secretary nominated for that purpose. The Court recognized that this argument related to the same issue of authority, but it had never been raised in the earlier petitions or the High Court’s judgment.

In this case, the Court observed that Rule 7 of the State Land Transport Services Development Rules 1958 required that objections be considered by the Judicial Secretary to the Government of Uttar Pradesh or by an officer of his department not below the rank of Joint Secretary nominated by the former for that purpose. Consequently, no lawful authority was conferred upon the Joint Secretary, and the proceedings undertaken by the Joint Secretary in purported exercise of powers under section 68D(2) were without jurisdiction. The Court noted that this point represented another aspect of the same argument, but a careful review of the petitions presented before the High Court and before this Court, as well as the High Court’s judgment, showed that the issue had never been raised. The Court further held that the scheme had been duly published under section 68D(3). Accordingly, if an objection to the scheme’s validity on the ground that the objections were not heard by a competent authority could not be permitted for the first time at this stage, the statutory consequences prescribed by section 68F had to follow. By clause 7 of the scheme, the appellant’s permit was cancelled. The scheme, as approved, was published in the Uttar Pradesh Gazette on 8 October 1960 and was to come into operation on 15 October 1960 or thereafter. A subsequent notification, issued on 4 November 1960 under section 68F(2) of the Act, cancelled the appellant’s permit with effect from 27 November 1960. As a result, the appellant ceased to have any right to ply his vehicles on the route and no longer possessed the right to object to the vehicles of the State transport undertaking plying on that route. If the scheme had been validly promulgated and had become final within the meaning of section 68D(3), it extinguished all of the appellant’s rights to operate his vehicles under the permit. After the cancellation of his permit, the appellant could not maintain a petition for a writ under Article 226 because such a petition requires a subsisting personal right in the claim that the petitioner seeks to protect. The Court acknowledged that the appellant, at the time the petition was filed in the High Court, held a permit which was to remain effective until 27 November 1960. However, if the permit was validly terminated from the specified date, the appellant was not entitled to any relief, even if he possessed a subsisting right at the date of filing. Consequently, Ground No. 2 of the appellant’s challenge failed. The Court then turned to consider Grounds 3 and 4, wherein the appellant contended that the Regional Transport Authority acted illegally in curtailing the period of renewal and failed to apply its mind to the renewal application, merely following the scheme mechanically.

The scheme expressly provided that the Regional Transport Authority possessed no discretionary power to vary the terms affecting the appellant’s right to operate his vehicles, thereby leaving the Authority without any discretion in the matter. Accordingly, the appellant’s entitlement to operate his vehicles was confined by the terms of the scheme, and once that scheme attained final and binding status, the Regional Transport Authority was legally barred from granting the appellant permission to ply his vehicles. The order that the Authority subsequently issued was purely consequential upon the scheme, and because the scheme itself was not open to judicial challenge, any orders emanating from it were likewise insulated from challenge. The Court relied on its earlier observation in Abdul Gafoor: Proprietor, Shaheen Motor Service v. The State of Mysore, quoting: “It appears to us that when deciding what action to take under s. 68F(1) the authority is tied down by the terms and conditions of the approved scheme and his duty is merely to do what is necessary to give effect to the provisions of the schemes. The refusal to entertain applications for renewal of permits or cancellation of permits or modification of terms of existing permits really flow from the scheme. The duty is therefore merely mechanical and it will be incorrect to say that there is in these matters any lie between the existing operators and the State Transport Authority. There is no justification therefore for saying that when taking action under s. 68F(2) is really independent of the issue of the permits under s. 68F(1). Once the scheme has been approved, action under s. 68F(1) flows from it and at the same time action under s. 68F(2) flows from the same scheme”. The Court stated that it was bound by that decision and therefore was not required to examine whether State‑owned buses were being operated without permits under section 68F(1) of the Act. If the appellant’s right to operate his buses had been lawfully extinguished, he could not maintain an appeal challenging the State Transport undertaking’s right to operate its buses, whether or not those buses held permits. The Court further observed that no fundamental right of the appellant was infringed by the State Transport undertaking’s operation of buses without permits, and consequently a petition under Article 32 of the Constitution could not be entertained because such a petition requires infringement of a fundamental right. The Court found no merit in the appellant’s final contention. The orders issued under sections 68F(2)(a) and (b) derived their authority from the duly approved scheme, and because the Secretary issued the order on behalf of the Regional Transport Authority in a purely administrative capacity, the order was not quasi‑judicial and therefore not open to challenge. The Court distinguished the present case from the petitioner in W. P. 209/61, where the issue was the unauthorised nature of the order. The present contention that the order was quasi‑judicial and that the power to make it could not be delegated was rejected, because, as already explained, the order was administrative, not quasi‑judicial. Consequently, the Court concluded that the appeal and the petitions must fail and ordered their dismissal with costs.