Malik Ram vs State Of Rajasthan

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 135 of 1961

Decision Date: 14 April 1961

Coram: K.N. Wanchoo, P.B. Gajendragadkar, A.K. Sarkar, S.K. Das, N. Rajagopala Ayyangar

In the matter titled Malik Ram versus State of Rajasthan, the judgment was delivered on 14 April 1961 by the Supreme Court of India. The opinion was authored by Justice K. N. Wanchoo and the bench included Justices P. B. Gajendragadkar, A. K. Sarkar, S. K. Das, and N. Rajagopala Ayyangar. The petitioner was Malik Ram and the respondent was the State of Rajasthan. The case is reported in 1961 AIR 1575 and 1962 SCR (1) 978, with subsequent citations including R 1963 SC 222, RF 1967 SC 603, RF 1967 SC 1815, and RF 1981 SC 660. The dispute involved provisions of the Motor Vehicles Act, 1939, specifically section 68‑D(2), and the Rajasthan State Road Transport Services (Development) Rules 1960, rule 7(6), relating to objections to a transport scheme, the power of the appointed officer to hear objections, the recording of evidence, and the cancellation of the scheme.

The headnote of the judgment explained that under section 68‑D(2) of the Motor Vehicles Act the State Government, after considering objections and after giving the objector and the representatives of the State Transport Undertaking an opportunity to be heard, may approve or modify the scheme, if it so desires. In this case the petitioner's objections to the draft scheme were presented before a legal officer appointed by the State Government pursuant to rule 7(6) of the Rajasthan Rules, which are framed under section 68‑1 of the Act. The petitioner applied to the officer for permission to adduce evidence with the aim of demonstrating that the entire scheme should be rejected. The officer declined the applications, holding that the Rules did not contain a provision for recording evidence and relying on a Rajasthan High Court decision dated 9 November 1960, which held that section 68‑D(2) did not empower him to cancel the draft scheme in its entirety. Consequently the officer heard the arguments on behalf of the petitioner and approved the scheme. After an unsuccessful challenge before the Rajasthan High Court, the petitioner obtained special leave to appeal to the Supreme Court. The Court held that the officer was wrong on both grounds. It observed that section 68‑D(2) clearly implies that the authority which may approve or modify a scheme also possesses the power, if it deems fit, to disapprove the scheme altogether. The phrase “may approve” must, when properly construed, include “may not approve.” The substitution of “shall” in rule 7(6) for “may,” though textually different, does not alter the substantive meaning because the rule mirrors the language of the statutory provision. While hearing objections under section 68‑D(2), the State Government or its officers function as a quasi‑judicial tribunal, and the nature of the objections and the purpose of the hearing inevitably require the production of oral and documentary evidence, which is therefore clearly contemplated by the section. The Court also cited the decision in Gullapalli Nageswara Rao v. Andhra Pradesh State Road Transport Corporation, [1959] Supp. 1 SCR 319, to support its view.

The Court observed that the power to call evidence does not permit either party to introduce an unlimited quantity of material merely to delay the proceeding. It rested with the State Government or the officer appointed under the statute to determine whether any evidence that a party sought to produce was necessary and relevant to the enquiry. If the officer found the evidence to be appropriate, he possessed all the powers that a court exercised for controlling the taking, presentation and recording of such evidence. Consequently, when a draft scheme was rejected under section 68‑D(2) of the Motor Vehicles Act, and therefore stood disapproved, any fresh scheme that might be prepared thereafter had to be framed in accordance with the procedure laid down in Chapter IV‑A of the Act.

In the present appeal, the Court dealt with Civil Appeal No 135 of 1961, which was taken on special leave from the judgment and order dated 3 January 1961 of the Rajasthan High Court in Civil Writ Petition No 1 of 1961. Counsel for the appellant petitioner included senior advocates, while the respondents were represented by the Additional Solicitor‑General of India, the Advocate‑General of Rajasthan and other counsel. The appeal was decided on 14 April 1961, and the judgment was delivered by Justice Wanchoo. The two connected matters before the Court arose from an order that approved a scheme framed under Chapter IV‑A of the Motor Vehicles Act, 1939. The appellant operated a bus service between Jaipur and Ajmer under a three‑year permit issued by a resolution of the Regional Transport Authority, Jaipur, dated 16‑17 December 1958. In August 1960 the State Government promulgated the Rajasthan State Road Transport Services (Development) Rules, 1960, under section 68‑1 of the Act. These Rules were intended to give effect to Chapter IV‑A and provided, among other things, for the formulation of schemes, the hearing of objections, the determination and payment of compensation, and related matters. A draft scheme concerning the takeover of the Jaipur‑Ajmer route was published on 7 September 1960, and the appellant lodged objections within the period specified in the notification. The State Government then appointed the Legal Remembrancer to hear and determine the objections pursuant to rule 7 of the Rules. While these proceedings were pending, certain bus operators filed an application under article 226 of the Constitution before the Rajasthan High Court, challenging the constitutionality of section 68‑D of the Act and the legality of the Rules. The High Court dismissed the application and, while examining rule 7(6), held that the officer hearing the objections did not have the authority to cancel the draft scheme, a view that appeared to deny the officer any power even under section 68‑D(2) of the Act. This decision was rendered on 9 November 1960. The draft scheme subsequently came up for consideration before the officer on  November.

On 21 November 1960 the appellant filed an application before the officer requesting permission to adduce evidence on factual matters set out in the application, so that the officer could decide the objections fairly. The officer rejected this request, stating that the Rules did not contain any provision for recording witness evidence. The matter was again placed before the officer on 23 November 1960 for further consideration by the appellant. On that date the appellant submitted another application seeking to lead evidence that the draft scheme should be rejected in its entirety. The applicant also contended that the Rajasthan High Court’s finding that the officer could not cancel a draft scheme was incorrect. The officer dismissed this second application, observing that he was bound by the High Court’s decision and that any error in that interpretation must be addressed through a different remedy. Subsequently the officer conducted a hearing in which he listened to the arguments presented by the appellant and then issued an order on 7 December 1960 approving the draft scheme. The approved draft scheme was formally published in the official Gazette on 12 December 1960, thereby giving it legal effect. On 9 January 1961 the Regional Transport Authority notified the appellant that his permit would be cancelled effective 26 January 1961, or on any later date when Rajasthan State Roadways began operating on the route. In the interim the appellant unsuccessfully challenged the matter before the Rajasthan High Court, and his request for permission to appeal to this Court was also denied. The appellant subsequently applied for special leave to appeal to this Court, which was granted, thereby bringing the present dispute before us.

The appellant contended that the officer erred in holding that he could not reject the draft scheme in its entirety. He also argued that the officer was wrong in concluding that he was limited to hearing arguments without taking any oral or documentary evidence. He argued that because of these two errors the officer’s procedure in dealing with objections under section 68‑D was fundamentally defective, resulting in no effective hearing of the objections. Section 68‑D(2), which governs the matter, provides the following language. “The State Government may, after considering the objections and after giving an opportunity to the objector or his representatives and the representatives of the State transport undertaking to be heard in the matter, if they desire,” The provision then authorises the State Government to either approve or modify the scheme in accordance with the hearing. Accordingly, he submitted that any approval of the draft scheme made under those circumstances should be set aside. He further claimed that he was entitled to be heard in the true sense intended by subsection (2) of section 68‑D. In his view, the statutory language required the officer to consider both oral testimony and documentary material before reaching a decision on the scheme. He therefore urged the Court to set aside the officer’s approval and to order a fresh hearing consistent with the requirements of section 68‑D(2).

The Court reproduced the statutory language contained in section 68‑D(2), which reads: “The State Government may, after considering the objections and after giving an opportunity to the objector or his representatives and the representatives of the State transport undertaking to be heard in the matter, if they so desire, approve or modify the scheme.” The Rajasthan High Court, in its decision dated 9 November 1960, held that this provision did not support what it described as the cancellation of the scheme. The Court disagreed with that construction. In its view, the provision expressly authorises the State Government, after hearing the parties, either to approve the draft scheme or to make modifications to it. This language, the Court explained, necessarily implies that the authority also retains the discretion to refuse approval entirely. The draft scheme, at the stage where the hearing under sub‑section 2 is required, remains only a proposal presented to the State Government. The provision merely states that the Government “may approve or modify” the scheme; it does not compel the Government to approve it, whether with or without alterations. Accordingly, the words “may approve” must be interpreted to include the possibility of “may not approve.” As long as the hearing has not concluded, the scheme continues to be a proposal and will become operative only if the State Government decides to accept it, either as is or after amendment. The Court further noted that this power of non‑approval logically follows from the language of the statute and does not conflict with any other provision.

The Court distinguished the power to reject a draft scheme under section 68‑D(2) from the concept of cancellation provided in section 68‑E. Section 68‑E deals with the cancellation of a scheme that has already been approved under section 68‑D(3); in that context, the term “cancellation” is appropriate. However, the existence of a cancellation provision for an already approved scheme does not remove the State Government’s authority, under section 68‑D(2), to decline approval after hearing objections. If the State Government, after considering the objections, decides that it will not approve the draft scheme at all, the scheme is deemed rejected, and the State Transport Undertaking must prepare a fresh scheme in accordance with the procedures set out in Chapter IV‑A. The Court concluded that the officer had erred in holding that he possessed no power to withhold approval entirely. The officer’s mistaken belief stemmed from reliance on the earlier decision of the Rajasthan High Court, which the Court now found to be incorrect.

In considering rule 7(6) of the Rules, the Court observed that the language of the rule mirrors the provision of section 68‑D(2) and therefore must be given the same meaning that was previously explained for section 68‑D(2). The rule employs the word “shall” where the statute uses the word “may”. If the substitution of “shall” were intended to restrict the discretion of the officer who hears the objections, the rule would exceed the authority granted by section 68‑D(2) and would be invalid. However, the Court did not accept that view. It held that the use of “shall” in rule 7(6) is merely a matter of grammatical convention and does not carry a stronger meaning than the word “may” in the statute. The learned Additional Solicitor‑General appearing for the State of Rajasthan did not dispute the Court’s interpretation of either section 68‑D(2) or rule 7(6). Consequently, the Court concluded that the rule is consistent with the statutory provision and does not limit the officer’s power beyond what the statute permits.

The next issue addressed by the Court was the extent of the hearing that must be afforded under section 68‑D(2). The officer had held that the hearing was limited solely to the exchange of arguments and therefore refused the appellant’s request to produce oral or documentary evidence. The Court referred to its earlier decision in Gullapalli Nageswara Rao v. Andhra Pradesh State Road Transport Corporation, where it was held that a State Government functions as a quasi‑judicial tribunal when it conducts a hearing under section 68‑D. The purpose of such a hearing is to enable the State Government to verify whether the opinion of the State Transport Undertaking—expressed in section 68‑C—that the scheme aims to provide an efficient, adequate, economical and properly coordinated road‑transport service—is correct. Objections are raised precisely to demonstrate that the scheme may fail to meet those criteria. To reach a proper conclusion, the quasi‑judicial authority may, in appropriate cases, call for the production of evidence, both oral and documentary. The Court therefore reasoned that, given the nature of the objections and the objective of the hearing, it may be necessary for the parties to produce evidence to enable the State Government to reach a just determination on the draft scheme. Accordingly, the Court could not agree with the officer’s view that no evidence could be taken at a hearing under section 68‑D(2). It held that the hearing contemplated by the provision includes the possibility of taking evidence, subject to the court’s discretion to limit evidence to what is necessary and relevant.

The Court held that the production of evidence, whether oral or documentary, falls within the hearing contemplated by section 68‑D(2). Accordingly, the officer was erroneous in concluding that the parties were prohibited from presenting evidence before him and were limited merely to advancing arguments based on the draft scheme and to filing written objections. The Court further observed that allowing parties to produce evidence does not grant them a license to submit an unlimited volume of material that would unduly prolong the proceedings, nor does it leave the State Government powerless to control such a hearing. It was emphasized that although evidence may be taken under section 68‑D(2), it is not required in every instance. Consequently, the responsibility rests with the State Government, or in the present case the concerned officer, to determine, when a party wishes to lead evidence, whether such evidence is necessary and relevant to the inquiry. If the officer deems the evidence necessary, the Court said he must afford the party a reasonable opportunity to present evidence that is pertinent and proportionate, and that the officer possesses the same powers to manage the taking and recording of evidence as are vested in a court of law. Subject to this overarching authority of the State Government or the hearing officer, the parties are therefore entitled to offer documentary or oral evidence during a hearing conducted under section 68‑D(2). In view of the foregoing, the Court found the officer’s approach in this case to be defective on both counts. First, the officer was incorrect in holding that he could not reject the scheme in its entirety and withhold approval altogether. Second, the officer was wrong in asserting that he could not take oral or documentary evidence, although, as noted, the control of such evidence remains with him. The Court concluded that this erroneous approach resulted in the appellant being denied the hearing to which he was statutorily entitled under section 68‑D(2). Accordingly, the Court held that the approval of the scheme was issued without a proper hearing under the said provision, and that the existence of a full hearing on arguments alone does not cure the defect, thereby vitiating the officer’s approval. The appeal was allowed, the order approving the scheme was set aside, and the draft scheme was directed to be reconsidered by the same officer or any other officer appointed by the State Government, after conducting a proper hearing in accordance with the observations made herein. The appellant was awarded costs against the State of Rajasthan. No further order was deemed necessary in the writ petition, which was dismissed.

In the matter of the writ petition, the Court examined the request that costs be awarded in connection with that petition. After careful consideration of the submission concerning costs, the Court concluded that it would not make any order regarding costs in the writ petition. Consequently, the Court proceeded to dispose of the petition by dismissing it. The dismissal of the petition meant that the relief sought therein was not granted and that the proceedings relating to the writ petition were brought to an end. No further direction or order concerning costs was issued by the Court, and the docket related to the writ petition was closed without a cost award. The Court’s determination therefore left the parties without a formal cost order in respect of the writ petition, and the petition itself was dismissed, concluding the judicial consideration of that matter.