Gandhara Transport Co. Ltd vs The State Of Punjab And Others

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 200 of 1962

Decision Date: 31 October 1962

Coram: J.C. Shah, Bhuvneshwar P. Sinha, P.B. Gajendragadkar, K.N. Wanchoo, K.C. Das Gupta

In the matter titled Gandhara Transport Co. Ltd versus The State of Punjab and Others, the Supreme Court of India delivered its judgment on 31 October 1962. The opinion was authored by Justice J.C. Shah, who was joined by Justices Bhuvneshwar P. Sinha, P.B. Gajendragadkar, K.N. Wanchoo and K.C. Das Gupta. The petitioner was Gandhara Transport Co. Ltd., while the respondents included the State of Punjab and additional parties. The judgment is reported in 1964 AIR 1245 and 1963 SCR Supl. (1) 800, and it has been cited in later authorities such as R 1987 SC 731 (7). The case concerned the law relating to stage‑carriage permits under the Motor Vehicles Act, 1939 (4 of 1939) and the relevant provisions of sections 1947, 57, 58 and 62 of that Act.

By an order issued by the Minister in charge of the Transport Department of Punjab State, a temporary permit was granted to an individual identified as “M” for the purpose of plying motor vehicles on a specified route. When that temporary permit expired, M applied to the Regional Transport Authority for a renewal. The Authority responded by issuing a notice that invited objections to “the further renewal of the permits for a period of three years on a regular basis in favour of M.” Several objections were filed by the appellants and other interested parties, yet the Authority ultimately granted M a regular permit lasting three years. The Provincial Transport Controller subsequently set aside that order on three grounds: first, that M had only sought renewal of a temporary permit; second, that the procedure followed by the Authority did not comply with the statutory requirements; and third, that the order which converted a temporary permit into a three‑year regular permit was therefore invalid. The Secretary of the Transport Department later reversed the Controller’s decision. The appellants then approached the Punjab High Court under Article 226 of the Constitution, seeking to quash the Secretary’s order. The High Court declined, holding that the merits of any dispute concerning the grant or denial of a permit must be determined by the authorities designated under the Motor Vehicles Act. The Supreme Court held that the Regional Transport Authority’s order conferring a regular three‑year permit on M was unlawful because it was plagued by serious procedural defects. Specifically, the Authority (1) entertained a renewal application for a temporary permit although the Motor Vehicles Act, 1939, contains no provision authorising such a procedure; (2) invited objections on the premise of a three‑year regular renewal, thereby misleading competitors who might wish to contest the grant; and (3) failed to consider the factors that Section 47 of the Act requires it to evaluate. The Court further ruled that the High Court’s decision must be set aside and that the Authority’s order declared void, notwithstanding the fact that the period of the regular permit had already expired, because allowing M to make fresh applications would unjustly confer the benefit of the proviso to Section 58(2), which is available only to holders of lawful permits.

In this case the Court noted that the regular permit which had been granted to the respondent had already expired, and that allowing the permit to be treated as still in force would give the applicant an advantage under the proviso to section 58(2), a benefit that the law reserves only for persons who hold lawful permits at the time of filing fresh applications. The matter before the Court arose from a civil appeal numbered 200 of 1962, which challenged a judgment and order dated 15 March 1960 issued by the Punjab High Court at Chandigarh in civil writ number 315 of 1960. Counsel for the appellant and counsel for the third respondent argued the respective positions. The judgment of the Supreme Court was delivered on 31 October 1962 by Justice Shah.

According to the factual record, on 23 October 1956 the Regional Transport Authority of Patiala had granted a permit to a certain Manohar Singh for operating a stage carriage on the Bhatinda‑Khera route (via Bajekhanna) extending to Jaitu‑Kot‑Kapura, a distance of approximately fifty‑five miles. That route overlapped a thirty‑five‑mile segment of the Bhatinda‑Kot‑Kapura‑Faridkot line for which the appellant, M/s Gandhara Transport Co. Ltd., already possessed permits. The appellant contested the authority’s order, and the appellate authority cancelled the permit in favour of Manohar Singh. However, the Minister in charge of the Transport Department of the State of Punjab set aside that cancellation on revision and directed that a fresh temporary permit be issued to Manohar Singh for the same route. Consequently, the appellant filed a petition under article 226 of the Constitution before the Punjab High Court, seeking to overturn the minister’s order. Before the High Court could consider the writ petition, the temporary permit expired, and Manohar Singh applied to the Regional Transport Authority for a renewal.

The Regional Transport Authority issued, on 16 April 1958, a notice inviting objections to the further renewal of the permit for a period of three years on a regular basis in favour of Manohar Singh on the Bhatinda‑Khera (via Bajekhanna)‑Jaitu‑Kot‑Kapura route. The appellant and other interested parties lodged objections to the proposed three‑year regular renewal. The authority scheduled the hearing of those objections for 30 July 1958. In the interim, the appellant sought an interim order from the High Court directing the Regional Transport Authority to stay any pronouncement on Manohar Singh’s application until the writ petition was finally disposed of. By an order dated 29 July 1958, the High Court refused the interim relief, observing that the appellant could approach the Regional Transport Authority to request a postponement of its decision. The Regional Transport Authority declined to postpone and, on 1 August 1958, directed that a regular permit for three years be granted to Manohar Singh for the notified route. The writ petition was subsequently heard by the High Court on 7 August 1958.

In the petition before the High Court the appellants sought to overturn the grant of a temporary permit to Manohar Singh, arguing that only that temporary permit was challenged. The Court noted that the temporary permit had already expired, and consequently it could not grant any effective relief to the appellants with respect to that permit. The Court explained that the appropriate remedy for the appellants lay in challenging the order of the Regional Transport Authority that had issued a fresh permit, and that such a challenge must be made before the transport authorities empowered under the Motor Vehicles Act. The Court observed that it was conceivable that the fact that Manohar Singh held a temporary permit may have biased the Regional Transport Authority to award him a permanent permit. Nevertheless, the Court held that the appellants were free to raise this issue before the appellate and revisional authorities. If those authorities failed to provide relief, the appellants could then approach the court under article 226 of the Constitution, provided that sufficient grounds existed for invoking its extraordinary powers.

The High Court further stated that the mere existence of a temporary permit in the hands of respondent No. 4, Manohar Singh, could not by itself justify the grant of a permanent permit. The authorities responsible for granting a permanent permit were required to act in accordance with the provisions of the Motor Vehicles Act and to consider all matters prescribed by that statute. Following the Regional Transport Authority’s decision, the appellants appealed to the Provincial Transport Controller, Punjab. By an order dated 29 May 1959, the Controller set aside the Regional Transport Authority’s order, holding that Manohar Singh had only applied for the renewal of his temporary permit and that no application for a regular permit had been presented before the Authority. Consequently, the procedure followed by the Authority was not in conformity with the law, rendering the renewal and conversion of the temporary permit into a three‑year stage‑carriage permit invalid. The Controller directed that any future allocation of permits should be reconsidered afresh after the necessary formalities were observed. That order of the Transport Controller was subsequently overturned by the Secretary of the Transport Department, State of Punjab, who exercised revisional authority under section 64(h) of the Motor Vehicles Act as amended by Punjab Act 28 of 1948. The appellants then filed a petition under article 226 of the Constitution seeking to quash the Secretary’s order, arguing, among other points, that the order was illegal because it disregarded the effect of the temporary permit on which the permanent permit to Manohar Singh was based, and that the Secretary failed to note that the Regional Transport Authority had not invited public applications for the route but had merely notified the renewal of the third respondent’s permit.

In the proceedings before the High Court, the petitioners contended that the permit held by the third respondent could not be lawfully renewed because the Motor Vehicles Act contained no provision authorising the conversion of a temporary permit into a permanent one. The High Court dismissed this contentions. The Court observed that every possible argument had been earlier presented before the Regional Transport Authority and that the Authority had duly considered those arguments. Consequently, the Court held that the bodies empowered under the Motor Vehicles Act were the appropriate forums for adjudicating the merits of the competing claims concerning the grant of the permit.

Section 62 of the Motor Vehicles Act, 1939, confers upon the Regional Transport Authority the power to issue permits that are effective for a limited period not exceeding four months, without the requirement to follow the procedure prescribed in Section 57. The authority may impose such conditions as it deems necessary. The permits under Section 62 may be issued for (a) the conveyance of passengers on special occasions such as fairs or religious gatherings, (b) seasonal business activities, (c) a specific identified need, or (d) pending the decision on an application for renewal of a permit. The amendment effected by Act 100 of 1956 introduced two restrictions on the exercise of this power: first, a temporary permit could not be granted for any route or area that was the subject of a pending application for a new permit under Sections 46 or 54; second, a temporary permit could not be granted more than once for any route or area that was the subject of a pending renewal application.

The Court noted that permits issued under Section 62 were unmistakably intended to meet temporary requirements of the kinds enumerated in that provision, and that the formalities laid down in Section 57 were not applicable to such permits. It further observed that, in the State of Punjab, the prevailing practice was to issue all stage‑carriage permits as temporary permits under Section 62, while regular permits under Section 57 were not issued at all. This practice was expressly acknowledged in the order of the Regional Transport Authority in the present case, and no dispute was raised about this point.

The permit that had been granted to Manohar Singh pursuant to the order of the Minister of the Transport Department was a temporary permit. When the fixed period of that temporary permit expired, Manohar Singh did not apply for a regular permit under Section 57. Instead, he filed an application for a renewal of his temporary permit. The Court pointed out that the Act does not contemplate the renewal of temporary permits; renewal is permissible only for regular permits under Section 58. The Regional Transport Authority, in response to Singh’s application for a “renewal of the permit for a period of three years on a regular basis,” invited objections from interested parties, but it failed to indicate that Singh’s existing permit was a temporary one.

The Court observed that on the route specified in the application no regular permits had ever been issued under section 57 of the Motor Vehicles Act and that every permit the Regional Transport Authority had issued for that route was a temporary permit under section 62. Consequently, the Authority was, for the first time, required to issue a regular permit under section 57, and it could reasonably have, before examining applications submitted by holders of temporary permits, called for applications from any persons who were interested in applying for a regular permit for the same route. When the Authority evaluates an application for a stage‑carriage permit, it must examine the factors enumerated in clauses (a) to (f) of section 47, namely the general public interest, the advantages to the public of the proposed service including any time savings, the adequacy of other passenger‑transport services already operating or likely to operate soon, the benefit that any particular locality or localities might obtain from the service, the applicant’s operation of other transport services (including any permits for which the applicant has pending applications), and the condition of the roads that form the proposed route or area. In addition, the Authority must decide whether the number of stage‑carriages in general or of any particular type that may be permitted should be limited in a specified area or on a specified route within the region. If a transport service already exists on the route in question and is operated by holders of regular permits, the Authority may rely on the investigations already carried out and on enquiries or surveys previously made concerning some of the matters listed in section 47, but it must still consider each of those matters. Moreover, the proviso to subsection (2) of section 58 provides that, where all other conditions are equal, an application for renewal must be given preference over a new application for a permit. Clearly, different considerations apply when dealing with applications for temporary permits, regular permits, and renewals of regular permits. A temporary permit may be granted merely to meet a short‑term need. By contrast, the issuance of a regular permit requires a detailed procedure that includes a hearing and a judicial assessment of each applicant’s claim in the broader context of the public interest. When considering a renewal application, the Authority must afford the existing operator a pre‑emptive opportunity, again provided that all other conditions are equal. Since no operator held a regular permit on the route, the Authority was obliged to conduct a thorough enquiry under section 57 with special attention to the statutory requirements. Nevertheless, the Court held that the Regional Transport Authority erred at the very outset of its proceedings by entertaining an application that is not contemplated by any provision of the Act and by inviting objections to that application in terms that were misleading.

The authority’s description of the objections was somewhat misleading, thereby preventing other applicants from coming forward to apply, and it failed to apply its mind to matters that had to be considered under section 47 of the Motor Vehicles Act. Consequently, when the Regional Transport Authority entertained an application for renewal of a temporary permit and invited objections to that renewal, it was entertaining an application that was not legally maintainable; moreover, by characterising the objection as a request for a three‑year regular renewal, it in substance misled parties who wished to compete, causing them to refrain from filing their own applications. In the Court’s view, those proceedings were therefore vitiated due to grave procedural errors. Counsel for the respondents argued that the regular permit previously granted to Manohar Singh had already expired, that the Regional Transport Authority was now required to consider fresh applications for permits, and that any irregularities in the earlier issuance could no longer be corrected; consequently, they contended that any declaration by this Court concerning those irregularities would be purely academic. Nevertheless, the Court considered it necessary to declare the correct legal position so that, when fresh applications are evaluated, the mistakes originally committed would not be repeated. Furthermore, affirming the High Court’s decision would confer upon Manohar Singh a benefit to which he is not lawfully entitled. If the permit issued by the Regional Transport Authority on August 1, 1958, had not been lawfully granted, Manohar Singh would not be entitled to the benefit provided by the proviso to sub‑section (2) of section 58; instead, his application for a permit would have to be made under section 57 and would need to be evaluated in competition with other claimants for permits on the same route. Accordingly, the Court does not agree that the consideration of objections to the validity of the procedure followed by the Regional Transport Authority has become academic, as submitted by counsel for the respondents. Accordingly, the Court set aside the order of the High Court and declared that the order of the Regional Transport Authority granting a permit in favor of Manohar Singh was unlawful for the reasons previously articulated. The appellant was awarded costs of the appeal, and the appeal was allowed.