Nilkanth Prasad And Others vs State Of Bihar

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

Court: Supreme Court of India

Case Number: Civil Appeals Nos. 524 to 539 of 1961

Decision Date: 1 December, 1961

Coram: M. Hidayatullah, P.B. Gajendragadkar

In this case the Court observed that a transport scheme framed under the Motor Vehicles Act had notified a particular route pursuant to section 68D of the Act, and that the State Transport Undertaking of Bihar had been granted exclusive authority to operate on that route. The notified portion formed a segment of longer routes on which the private operators, who were the appellants, were already conducting omnibus services, and the appellants had applied for renewal of their permits for those routes. The State Transport Undertaking lodged objections to the renewal of the permits in some of the applications, while in other applications it raised no objection. The central question that arose for determination was whether the Regional Transport Authority possessed the power to renew the permits of the private operators in view of the exclusive rights accorded to the State Transport Undertaking. The appellants contended that because the notified segment was incorporated into a larger private route, the two should be regarded as distinct routes; consequently, the private operators could not be barred from operating omnibus services on that segment, even though the segment had been notified under the scheme. The Court, relying on the precedent set in Abdul Gafoor v. State of Mysore, AIR 1961 SC 1956, held that the Regional Transport Authority had no discretion but to refuse a permit to a private operator when the State Transport Undertaking had either applied for a permit or had already been granted one. The Court further noted that where the Regional Transport Authority failed to discharge its statutory duty, the Appeal Board was empowered, under section 64A of the Act, to revise the authority’s order even if the original appeal was incompetent, following the principle laid down in Samarth Transport Co. v. Regional Transport Authority Nagpur, AIR 1961 SC 93. Accordingly, the Court concluded that the appellants were not entitled to operate over those portions of their routes that had been notified as part of the scheme. Those portions could not be treated as separate routes but must be considered as segments of the private operators’ routes from which the private operators were expressly excluded under section 68F(2)(c)(iii) of the Act, with reference to the authorities Kelani Valley Motor Transit Co. v. Colombo Ratnapura Omnibus Co., [1946] AC 338 and Kondala Rao v. Andhra Pradesh State Road Transport Corporation, A.I.R. 1961 SC 82.

In this case, the Court noted that the citation A.I.R. 1961 S.C. 82 was considered. The judgment concerned civil appellate jurisdiction over Civil Appeal numbers 524 to 539 of 1961. These appeals were brought by special leave against judgments and orders of the Patna High Court dated 5 July 1961 in Miscellaneous Judicial cases numbers 670 to 675 of 1959, and also included Civil Appeal number 434 of 1961, which was a special leave appeal against the judgment and order dated 8 August 1960 in Miscellaneous Judicial Case number 334 of 1960. Counsel for the appellants were A.V. Viswanatha Sastri and B.P. Jha, appearing in Civil Appeals numbers 534 to 538 and 434 of 1961. Counsel for the respondents were Lal Narain Sinha, L.S. Sinha and S.P. Verma. The judgment was delivered on 1 December 1961 by Justice Hidayatullah. Justice Hidayatullah explained that the decision in Civil Appeal number 534 of 1961 would dispose of Civil Appeals numbers 535 to 539 of 1961. The matters before the Court involved private omnibus operators who challenged the orders of the Appeal Board of the State Transport Authority. The Appeal Board had set aside the renewal of permits that had previously been granted by the South Bihar Regional Transport Authority, Patna, for certain routes. The appellants had held stage‑carriage permits for those routes, and the permits were scheduled to expire in December 1958 or January 1959. Consequently, the appellants applied for renewal of their permits under section 58(2) of the Motor Vehicles Act. A scheme that had been framed and notified on 8 July 1957 by Notification number P‑2‑203/57T/4794 had placed the route from Gaya to Khijirsarai under section 68D of the Motor Vehicles Act, reserving exclusive operation of that route to the Rajya Transport, Bihar. In Civil Appeals numbers 535 to 538 of 1961 the Rajya Transport, Bihar filed objections to the renewal of the permits, while in Civil Appeals numbers 534 and 539 of 1961 it made no objection. The Gaya‑to‑Khijirsarai route, which the Court may refer to as route ‘AB’, formed part of the routes on which the private operators were running and for which they sought renewal. The South Bihar Regional Transport Authority, however, renewed the appellants’ permits, holding that route ‘AB’ was distinct from the routes for which renewal was sought. The Rajya Transport, Bihar appealed the Regional Transport Authority’s orders in all the cases, whether it had objected or not. During the pendency of those appeals, the State of Bihar, exercising powers under section 3 of the Road Transport Corporations Act, 1950 (Act 64 of 1950), issued a notification on 20 April 1959 establishing, with effect from 1 May 1959, a Bihar State Road Transport Corporation. The notification, identified as No. R.T. Cor. 1/59‑3090, stated that the Governor of Bihar was pleased to establish the corporation and that the corporation would, from that date, exercise all powers and perform all functions previously exercised by the Rajya Transport, Bihar.

By order of the Governor of Bihar, the Road Transport Corporation was directed to exercise all the powers and perform all the functions that were then being exercised and performed by the Rajya Transport, Bihar. The order was signed by K. B. Sharma, Deputy Secretary. At the hearing of the appeals filed against the renewal orders, government counsel appeared on behalf of the Road Transport Corporation. Two objections were raised concerning the competence of those appeals. First, in the cases where the Rajya Transport, Bihar, had not raised any objection to the renewal of the permits before the Regional Transport Authority, it was argued that the Rajya Transport lacked any locus standi to institute appeals. Second, in the cases where the Rajya Transport had objected, the contention was that, under law, the Road Transport Corporation could not represent the Rajya Transport in the appeals that the latter had filed. On the merits, it was submitted that the Regional Transport Authority’s finding that route ‘AB’, although forming part of the routes for which renewal was sought, was a separate route, and that the State Corporation’s exclusive right to ply omnibuses on route ‘AB’ did not impair the appellants’ right to operate omnibuses on routes that were entirely different. The government counsel argued, by analogy with Order 22, Rule 10 of the Civil Procedure Code, that the Road Transport Corporation, having been vested with the powers and functions of the Rajya Transport, Bihar, was entitled to prosecute the appeals. In the alternative, the counsel said that he also represented the Rajya Transport, Bihar, and therefore the appeals were not defective. The Appeal Board accepted the counsel’s arguments and set aside the renewal orders passed by the Regional Transport Authority. Consequently, the appellants filed petitions under Articles 226 and 227 of the Constitution challenging the Board’s order on numerous grounds.

The High Court, in a judgment dated 5 July 1961, dismissed all of those petitions. In the order that is now before this Court, the High Court examined the question of the competence of the appeals and held that the Rajya Transport, Bihar, was competent to prosecute the appeals before the Appeal Board. Regarding whether the Appeal Board could interfere with the Regional Transport Authority’s order at the instance of the Rajya Transport in those cases where the Rajya Transport had not lodged any objection under the Motor Vehicles Act, the High Court observed that it was unnecessary to express an opinion on the correctness of the argument because the Regional Transport Authority was not empowered to grant a renewal; such a grant would have directly violated the scheme approved by the State Government and published in the Official Gazette. On the merits, the High Court opined that, under section 68F(2)(c)(iii), the Regional Transport Authority was authorised to curtail the length of the route covered by a permit and to exclude the portion that overlapped a notified route. The present appeals have been filed against the order of the High Court.

The appeals were entertained with the special leave of this Court, and the matter therefore proceeded as two distinct groups of appeals. The first group comprised Civil Appeals numbered 534 and the series from 539 to 538 of 1961. In those appeals the renewal of the transport permits had been granted by the Regional Transport Authority without any objection being lodged by the Rajya Transport. The second group consisted of appeals in which the Rajya Transport had nevertheless filed objections against the renewal of the permits. Although the factual backdrop differed between the two groups, the question of whether the Appeal Board possessed the jurisdiction to entertain the appeals arose in both categories, albeit on different factual foundations. Despite the differing factual premises, the Court observed that the answer to the respective objections converged on the same legal principle.

The Court referred to the earlier decision in Abdul Gafoor v. State of Mysore, wherein the effect of a scheme that had been formally notified under Chapter IVA of the Motor Vehicles Act was examined. That decision explained that, once a scheme is notified, a private operator who applies for a permit on a route that falls within the notified scheme cannot be granted such a permit if the State Transport Undertaking has either applied for a permit on the same route or has already been granted one. Applying that reasoning to the present matters, the Court noted that in every case the State Transport Undertaking already held a valid permit covering the segment of road identified as route “AB”. Consequently, if the private operators—namely the appellants—were not entitled, under law, to obtain renewal of their permits for any routes that also incorporated route “AB”, the Regional Transport Authority had no alternative but to refuse to renew those permits.

The Court further observed that Abdul Gafoor had characterized the duty of the Regional Transport Authority as essentially mechanical: the authority was required merely to take note of the routes that had been notified and to adjust its orders so that they conformed strictly to the notified scheme. In view of the fact that the scheme had been duly notified and that route “AB” had already been allotted to the Rajya Transport and/or the State Transport Undertaking, the Regional Transport Authority therefore lacked competence to renew a permit that would cover any portion of route “AB”. Because the Regional Transport Authority had failed to perform the duty imposed upon it by law, the Appeal Board was consequently empowered, when the complete record was before it, to revise the order of the Regional Transport Authority even if the appeal itself was technically incompetent. This power derived from the extensive revisionary authority conferred by section 64A of the Motor Vehicles Act, which, without regard to its provisos, provides: “The State Transport Authority may, either on its own motion or on an application made to it, call for the record of any case in which an order has been made by a Regional Transport Authority and in which no appeal lies, and if it appears to the State Transport Authority that the order made by the Regional Transport Authority is improper or illegal, the State Transport Authority may pass such order in relation to the case as it deems fit.”

Having considered these points, the High Court concluded that it should not exercise its discretionary powers under Articles 226 and 227 to interfere with the order of the Appeal Board, because even …

If an appeal was, for any reason, incompetent, the Appeal Board nevertheless possessed the record and applied the correct legal position that stemmed from the notified scheme. The same conclusion had been reached in Samarth Transport Co. v. Regional Transport Authority, Nagpur. The Court held that it should not interfere on that ground. Consequently, the distinction between the two groups of cases that arose solely on whether Rajya Transport, Bihar, had objected vanished completely. The Court’s present focus was on the substantive issue of whether, when a scheme designates a segment of a larger route as a separate “route,” that segment must be treated as a different route, thereby preventing a private operator from being stopped from operating his omnibuses on that segment even though it had been notified as part of the larger route.

The Court relied on the Privy Council decision in Kelani Valley Motor Transit Co., Ltd. v. Colombo‑Ratnapura Omnibus Co., Ltd. In that case the Privy Council examined two Ceylon Ordinances: the Motor Car Ordinance (No. 45 of 1938) and the Omnibus Service Licensing Ordinance (No. 47 of 1942). The first schedule, paragraph I, of the latter Ordinance stipulated that when two or more persons applied for road‑service licences for the same route, preference should be given firstly to an application submitted by a company or partnership that comprised all the licence‑holders then existing under the Motor Car Ordinance authorising omnibus use on that route, and secondly to an application by a company or partnership that comprised the majority of those licence‑holders. Section 7, sub‑section 1, further provided that the Commissioner must regulate the issue of licences so that different persons were not authorised to operate regular omnibus services on the same section of any highway. However, the Commissioner could, if he considered it necessary for the public’s needs and convenience, grant licences to more than one person for regular omnibus services that used the same highway section, provided that the common section was not the whole or the predominant part of any of the routes involved.

The central question before the Privy Council was whether the appellant could, for the purpose of applying the first schedule, count six omnibuses that had been licensed for the route from Panadura to Badulla via Colombo and the low‑level road. The geography of the route was as follows: Panadura lay sixteen miles along the coast from Colombo; from Colombo to Ratnapura the distance was fifty miles; and from Ratnapura to Badulla the distance added another eighty miles.

It was observed that the road connecting Panadura with Badulla did not coincide with, nor was it substantially the same as, the road connecting Colombo with Ratnapura. Nevertheless, the court held that if a licence issued for an omnibus to travel on the Panadura‑to‑Badulla road also authorised the vehicle to operate on the Colombo‑to‑Ratnapura road, then the six omnibuses run by the appellant could be considered when balancing the interests of the parties. In explaining the meaning of the term “route,” Sir John Beaumont was quoted as saying: “If ‘route’ has the same meaning as ‘highway’ in the Ordinance this argument must prevail, since admittedly an omnibus running on the highway from Panadura to Badulla will pass over the whole of the highway between Colombo and Ratnapura, but in their Lordships’ opinion it is impossible to say that ‘route’ and ‘highway’ in the two Ordinances are synonymous terms. A ‘highway’ is the physical track along which an omnibus runs, whilst a ‘route’ appears to their Lordships to be an abstract conception of a line of travel between one terminus and another, and to be something distinct from the highway traversed.” The appellants relied on this distinction between “route” and “road” to argue that the notified route, which the court had labelled ‘AB’, was different from the routes for which the renewal of permits had been sought, even though route ‘AB’ might constitute only a segment of the road used by the appellant’s omnibuses on their respective routes. The court acknowledged that the Privy Council’s distinction was correct, but noted that it had been made with reference to the specific wording of the Ordinances under consideration. The court then posed the question of whether a comparable distinction could be drawn within the framework of the Motor Vehicles Act. Counsel for the appellants, Mr Viswanatha Sastri, guided the court through sections 42 to 57 of the Motor Vehicles Act and highlighted those provisions where the word “route” was employed in contrast to the word “area.” He contended that, throughout the Act, “route” signified a notional line joining two termini and was deliberately set against the concept of an “area.” The court recalled the earlier decision in Kondala Rao v. Andhra Pradesh State Road Transport Corporation, where it had declined to create such a separation between “route” and “area.” In that case, Justice Subba Rao had observed at page 93: “Under s. 68C of the Act the scheme may be framed in respect of any area or a route or a portion of any area or a portion of a route. There is no inherent inconsistency between an ‘area’ and a ‘route’. The proposed route is also an area limited to the route proposed. The scheme may as well propose to operate a transport service in respect of a new route from point A to point B and that route would certainly be an area within the meaning of s. 68C.” Thus, the court affirmed that the Motor Vehicles Act did not endorse a strict differentiation between the terms “route” and “area” as had been suggested by the appellants.

Section 68C of the Motor Vehicles Act provides that a scheme may notify either a whole route, a whole area, a portion of a route or a portion of an area. The scheme may therefore exclude private operators from the entire route or area, or from only a part of the route or area, and such exclusion may be complete or partial. Section 68F(2)(c)(iii) further authorises the Regional Transport Authority to amend the terms of any existing permit so as to “curtail the area or route covered by the permit, in so far as such permit relates to the notified area or notified route.” This provision means that when the notified route and the route for which a permit is sought share a common sector, the curtailment effected by the notified scheme operates by excluding that common portion of the road. In practice the distinction between a “route” as a notional line and a “road” as the physical track disappears under Chapter IVA, because a route cannot be curtailed without curtailing a segment of the road itself. The Court’s earlier ruling, which was cited, demonstrates that even where the routes differ, the area involved is essentially the same. The decision of the Judicial Committee, however, cannot be applied to the Motor Vehicles Act, particularly Chapter IVA, where the legislative intent is to prevent private operators entirely from operating on certain sectors or routes that are vested in State Transport Undertakings. Accordingly, the Court held that the appellants were correctly found to be disallowed from operating over those portions of their routes that had been notified as part of the scheme. Those portions are not separate routes but are portions of the private operators’ routes from which they are excluded under Section 68F(2)(c)(iii). Consequently, the decision under appeal was affirmed as correct in all the circumstances. The matter then turned to Civil Appeal No. 434 of 1961, where the same question arose and was decided in the same manner as the other appeals on their merits. The Chief Justice and a Judge had previously referred to an earlier decision (M.J.C. No. 354 of 1960 decided on 13 May 1960) that applied the Privy Council case and distinguished a longer route that overlapped a part of the notified route from the notified route itself. In the judgment from which Civil Appeal No. 434 of 1961 originated, the Chief Justice declined to follow his earlier ruling, considering it to have been given per‑incuriam, because the provisions of Section 68F(2)(c)(iii) of the Motor Vehicles Act had not been taken into account. After considering the matter, the Court reached the same conclusion as in the earlier appeals.

Having examined the provisions of the statutory section that was the subject of discussion, the Divisional Bench arrived at a conclusion that was identical to the conclusion reached by this Court. The reasoning adopted by the Divisional Bench was almost the same as the reasoning set out in the present judgment. Accordingly, the Court noted that the observations made in Civil Appeal No 534 of 1961 were controlling for the matter now before it. Because the reasoning and the conclusion in Civil Appeal No 534 of 1961 required the dismissal of that appeal, the same result necessarily applied to Civil Appeal No 434 of 1961. The Court therefore held that Civil Appeal No 434 of 1961 could not succeed and must be dismissed. In the final analysis, the Court ordered that both of the appeals under consideration be dismissed. However, after taking into account the particular circumstances of the case, the Court chose not to make any order as to the award of costs. The ultimate effect of the judgment was that the appeals were dismissed without any cost direction being imposed.