Ramnath Verma 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 Nos. 142-146 of 1962

Decision Date: 17 April 1962

Coram: K.N. Wanchoo, Bhuvneshwar P. Sinha, P.B. Gajendragadkar, N. Rajagopala Ayyangar

In this case the Supreme Court of India recorded that the petition was filed by Ramnath Verma against the State of Rajasthan and that the judgment was delivered on 17 April 1962. The report was authored by Justice K.N. Wanchoo and the bench consisted of Justices K.N. Wanchoo, Bhuvneshwar P. Sinha, P.B. Gajendragadkar, N. Rajagopala Ayyangar, along with additional members T.L. Venkatarama Sinha, Justice Ayyar, and Justice AIYYAR. The citation of the decision appears as 1967 AIR 603, 1963 SCR (2) 152, with further citator references E 1981 SC1636 and RF 1992 SC 888. The matter concerned the Motor Vehicles Act 1939, specifically sections 68C, 68D and 68G, and invoked Article 14 of the Constitution of India.

The factual background explained that the Rajasthan State Roadways, a State Transport Undertaking, issued five transport schemes pursuant to section 68C of the Motor Vehicles Act. The State Government thereafter appointed the Legal Remembrancer to consider objections filed against those schemes. Among the objectors were the appellants, who operated bus services on three of the five routes covered by the schemes. The Legal Remembrancer examined the objections and approved the schemes relating to the three routes after making slight modifications. In contrast, the objectors concerning the remaining two schemes sought a complete withdrawal of the schemes and requested that evidence be taken on the matter.

The Legal Remembrancer, relying on a decision of the Rajasthan High Court, held that he possessed no authority to reject a draft scheme in its entirety or to order the taking of evidence. One of the objectors subsequently filed a writ petition before the High Court, which was dismissed. The aggrieved party appealed to the Supreme Court, arguing that the High Court’s view was erroneous. The Supreme Court overruled the Rajasthan High Court judgment in Chandra Bhan v. State of Rajasthan, holding that the Legal Remembrancer was indeed empowered to reject a draft scheme and to take evidence where necessary, as previously affirmed in Malik Ram v. State of Rajasthan ([1962] 1 S.C.R. 978).

Following the Supreme Court’s pronouncement, a large number of writ petitions were filed in the Rajasthan High Court. The High Court dismissed those petitions that related to the three routes on the ground that the appellants had neither demanded a total rejection of the schemes nor requested the taking of evidence; consequently, the High Court concluded that the appellants were not concerned with the legal issue decided in Chandra Bhan’s case. The High Court observed that the appellants had not, in its proceedings, indicated any intention to introduce evidence that had been excluded by the Legal Remembrancer, and the appellants likewise failed to specify before the Supreme Court the particular evidence they wished to produce in support of their objections.

The Supreme Court held that the appellants could not be permitted to rely upon the decision rendered in Malik Ram v. State of Rajasthan. It was evident that the objections raised by the appellants had been effectively addressed by the Legal Remembrancer without the necessity of taking evidence, and that the order approving the schemes under section 68D of the Motor Vehicles Act was not invalidated by any improper approach taken with respect to the other objections. Consequently, the Court concluded that the appellants’ claim for relief could not be entertained.

In the case of State of Rajasthan reported in 1962 at 1 S. C. R. 978, the Court examined the permissibility of a scheme under section 68C of the Motor Vehicles Act. The Court observed that framing a scheme that partially excludes private operators and renders the permit ineffective for the overlapping portion of a route constitutes a partial exclusion. Such partial exclusion, the Court held, was justified under section 68G of the same Act because it did not amount to a total cancellation of the permit. The Court noted that a permit holder whose permit became ineffective could not claim compensation under section 68G, whereas a holder whose permit was cancelled could claim compensation. Nevertheless, the Court said that no discrimination within the meaning of Article 14 of the Constitution existed in the present case. It required proof that the advantage of picking up passengers on the overlapping part for destinations beyond was unequal to the compensation that would have been available if the permit had been cancelled. The Court further explained that discrimination under Article 14 meant conscious discrimination, not accidental discrimination resulting from an oversight that the State could rectify.

The appeals numbered 142 to 146 of 1962 were filed in the Civil Appellate Jurisdiction, challenging a judgment and order dated 3 May 1961 of the Rajasthan High Court. The writ numbers involved were numbered as 40, 39, 45, 46 and 77, all relating to the year 1961. Counsel for the appellants included senior advocates representing the parties, while the respondents were represented by the Solicitor General of India and additional counsel. The judgment in these matters was delivered by Justice Wanchoo on 17 April 1962 after consideration of all the appeals. All five appeals raised common questions concerning the validity of the schemes and were therefore heard together by the Court. Appeal numbers 142, 144 and 145 concerned the Jaipur‑Bharatpur route, appeal 143 concerned the Jaipur‑Shahpur‑Alwar‑Himkathana route, and appeal 146 concerned the Ajmer‑Kotah route. The Rajasthan State Roadways, a State Transport Undertaking, had published five schemes in pursuance of section 68C of the Motor Vehicles Act, No. 4 of 1939. Subsequently, the Government of Rajasthan appointed the Legal Remembrancer to examine objections raised against these five draft schemes. The objections were primarily filed by stage‑carriage permit holders who were operating services on each of the five routes under consideration. Hearings on the objections relating to the three routes that formed the subject of these appeals were held on 7 and 14 December 1961. The Legal Remembrancer approved the draft schemes, incorporating slight modifications, on 14 and 15 December 1960 after reviewing the submissions. Objectors concerning the Jaipur‑Ajmer and Jaipur‑Kotah routes, which were among the five schemes, raised several grounds of objection. They also requested an opportunity to show that the draft schemes failed to provide an efficient, adequate, economical and properly coordinated road transport service. One of the permit holders on the Jaipur‑Ajmer route was among those who sought to present evidence in support of their contentions.

In the matter before the Legal Remembrancer, the objector was Malik Ram, who argued that the draft scheme should be rejected in its entirety and sought to lead evidence to support that contention. The Legal Remembrancer, relying on an earlier Rajasthan High Court decision in Chandar Bhan v. State of Rajasthan (1), held that he was not empowered to reject the scheme in whole; he could only approve it or modify it. He further stated that he could not take evidence while considering the objections, and that his duty was limited to hearing arguments from the parties. Accordingly, Malik Ram filed a writ petition in the Rajasthan High Court, which was dismissed. He then obtained special leave to approach this Court, challenging the Legal Remembrancer’s view on both the power to reject the scheme and the prohibition against taking evidence. This Court allowed Malik Ram’s appeal and held that the Legal Remembrancer was indeed authorized to reject the draft scheme or to take evidence, if necessary. The Court, however, emphasized that it would be within the discretion of the State Government or its appointed officer to determine whether any proposed evidence was necessary and relevant, and to afford the party seeking to lead evidence a reasonable opportunity to do so. The Court further noted that the State Government or the officer exercising this function possessed all powers of controlling the taking and recording of evidence that any court normally possesses. The decision was rendered on 14 April 1961, as recorded in Malik Ram v. State of Rajasthan (1).

Subsequently, a large number of writ petitions were filed in the Rajasthan High Court challenging the approval of the schemes relating to the three routes that are the subject of the present appeals, as well as the other two routes. These petitions were heard after the Supreme Court’s decision in Malik Ram’s case (2). Regarding the petitions concerning the Jaipur‑Ajmer route, the High Court did not pursue them because this Court had previously set aside the scheme on that route, as reported in Raj. Law Weekly 47 (1961), and had directed the Legal Remembrancer to rehear the objections. Concerning the Ajmer‑Kotah route, the High Court allowed the objections on the basis of the Supreme Court’s decision in Malik Ram’s case (1), observing that the objector in those proceedings had sought to lead evidence to support a total rejection of the draft scheme and had not been given such an opportunity. By contrast, for the three routes that are the subject of the present appeals, the High Court dismissed the writ petitions, holding that there was no indication that the appellants intended to lead evidence in support of a complete rejection of the draft schemes. The High Court therefore concluded that the objections were limited to requests for modification rather than total rejection, and it proceeded to reject the petitions.

It was argued before the High Court that any request by the appellants for the Legal Remembrancer to take evidence would have been futile, because the Legal Remembrancer had already expressed the view that he could not reject the draft schemes in their entirety. The High Court, however, was not persuaded by this argument. It observed that the order issued by the Legal Remembrancer did not indicate that he believed the draft schemes should be totally rejected; rather, the order reflected his inability to do so owing to the judgment of the High Court in Chander Bhan’s case (2). On the contrary, the High Court held that the Legal Remembrancer had examined the objections raised before him in detail and had concluded that the schemes required only partial modification and were otherwise suitable for approval. After this finding, the appellants applied to the High Court for certificates, and the High Court granted those certificates, thereby bringing the present matter before this Court.

The appellants reiterated before this Court the same contentions they had raised before the High Court. They maintained that they had not been afforded a proper hearing by the Legal Remembrancer because, in his view, he was not permitted to reject the schemes in their entirety and because they were denied an opportunity to present evidence to persuade him that the schemes should be wholly rejected. It is undisputed that the appellants never made an application to the Legal Remembrancer indicating a desire to lead evidence on any point in support of their objections. Only in one writ petition, namely C. A. 144 of 1962, was it alleged that the Legal Remembrancer had refused to allow the appellants to lead evidence. That allegation is, in our opinion, incorrect, as the Legal Remembrancer has filed an affidavit stating that no such oral request for evidence was made by the objectors concerning the three routes that are the subject of these appeals. Consequently, the High Court was correct in concluding that it could not be said that the Legal Remembrancer had excluded evidence which the objectors wished to produce. The appellants, however, argue that because the Legal Remembrancer had already formed a view in the Jaipur‑Ajmer route, any application by them to lead evidence would inevitably have been rejected in light of the earlier judgment of the Rajasthan High Court referred to above. Even if that were the case, it is noteworthy that this circumstance did not prevent the objectors on the Jaipur‑Ajmer and Jaipur‑Kotah routes from making applications to the Legal Remembrancer seeking total rejection of the draft schemes and an opportunity to lead supporting evidence.

It was observed that the objection that the draft schemes should be totally rejected and that the objectors should be allowed to lead evidence in support of such a rejection was not a ground on which the appellants could have sought relief at the time the Legal Remembrancer was hearing the objections. The record showed that the appellants did not make any application to the Legal Remembrancer for the opportunity to lead evidence, and there was no indication that they had intended to do so while their objections were being considered. Moreover, when the writ petitions were filed in the High Court, the appellants did not allege that they had been denied a chance to present evidence before the Legal Remembrancer. Only after the decision in Malik Ram’s case (1) did the appellants file applications, apparently to take advantage of that judgment and to argue that the Legal Remembrancer’s refusal to reject the draft scheme in its entirety had deprived them of an effective hearing. Even then, the submissions did not demonstrate that the appellants had sought to lead any evidence before the Legal Remembrancer, nor did they identify the specific evidence they could have produced to support their objections. At no stage, even before this Court, did the appellants specify the nature of the evidence they might have relied upon. A review of one of the objections filed before the Legal Remembrancer in C.A. 1492 of 1962, presented as a representative sample, showed that the objections were of a general character and did not require the production of evidence. The objectors merely requested that the State Government consider their objections in light of the actual conditions on the route, by means such as a public inquiry on site, inspection of past records of the service provided by the objector, examination of the objector’s vehicle, and comparison with the facilities offered by the objector. In other words, the objections focused on the suitability of the draft schemes rather than on a claim that the schemes were inefficient, inadequate, uneconomical, or improperly coordinated. The appellate submissions therefore appeared to be motivated by an attempt to invoke the Malik Ram decision rather than by a genuine desire to present substantive evidence that the schemes, taken as a whole, should be rejected.

In this matter, the Court observed that the objectors were already providing a transport service that was more efficient, adequate, economical and properly coordinated than the service that had been proposed in the draft schemes. However, the Court held that this fact alone could not justify a wholesale rejection of the draft schemes. The Court further examined the order of the Legal Remembrancer that summarized the objections falling under Section 68D and found that those objections were of a character that would ordinarily require the production of evidence to support them, although the factual issues raised were not contested. Consequently, the Court concluded that an effective hearing could still be conducted before the Legal Remembrancer if the objectors were permitted to present their arguments in support of the objections even in the absence of documentary evidence. On this basis, the Court expressed the opinion that the appellants could not, in the present circumstances, rely on the decision in Malik Ram’s case (1) [1962] 1 S.C.R. 978 to defeat the approval of the draft schemes. The Court noted that, on the facts and circumstances of the present appeals, the appellants had been given an effective hearing and that the Legal Remembrancer’s order approving the schemes was not invalidated by any erroneous view that he lacked authority to reject the draft schemes in their entirety. The Court further observed that the Legal Remembrancer appeared to have evaluated the draft schemes on their merits as required by Sections 68C and 68D, and had held that they complied with the requirements of Section 68C. The Court explained that certain factual variations—such as a possible reduction in the number of buses, an increase in fares, or the need to curtail some direct services where their routes overlapped with those in the three draft schemes—did not necessarily lead to the conclusion that the draft schemes failed to meet the standards of Section 68C. Accordingly, the Court rejected the contention that relied on the judgment in Malik Ram’s case (1) [1962] 1 S.C.R. 978 as inapplicable to the present facts. In addition to this primary objection, the appellants raised three subsidiary points. The Court described that, in some instances, the objectors’ routes overlapped the three routes that were being taken over. In certain cases, the permits of the objectors were cancelled for the overlapping portions of the routes; in other cases, the objectors were allowed to continue operating on the overlapping sections but were prohibited from picking up passengers whose destinations lay within those overlapping sections. The Court identified this latter approach as “making the permits ineffective for the overlapping part.” The Court noted that the grievance of those whose permits had been rendered ineffective on this basis was two‑fold: first, the claim that such a step could not be lawfully taken; and second, the argument that, even if it could be taken, the effect would be that those permit‑holders would not be eligible for compensation under Section 68G read with

In regard to the first contention, the Court held that it lacked merit. The Court explained that under section 68C a Scheme may be devised that partially excludes private operators, and that rendering permits ineffective solely for the overlapping portion of a route constitutes such a partial exclusion. Accordingly, an order that makes a permit ineffective only for the overlapping stretch was considered justified under section 68C. Turning to the second contention, the Court observed that where a permit is made ineffective, the holder is not entitled to any compensation under section 68G, as established in the precedent reported in (1962) 1 S.C.R. 978. The argument was made that this created discrimination between operators whose permits were cancelled for the overlapping part – who would receive compensation – and those whose permits were merely made ineffective – who would receive none. The Court noted that making a permit ineffective for the overlapping segment while still permitting the holder to carry passengers beyond that segment actually conferred an advantage on the holder. The Court further stated that if any permit‑holder preferred a full cancellation with compensation, it was his responsibility to raise that objection before the State Government or the officer handling objections. Failure to do so, the Court said, precluded the holder from claiming discrimination, especially where the holder might still be better off than a counterpart whose permit had been cancelled. The Court emphasized that, absent a factual record showing that the benefit of an ineffective permit for the overlapping portion is not equivalent to the compensation that would follow a cancellation, there can be no claim of discrimination under Article 14 of the Constitution. In the present appeals, no such factual basis had been established, and therefore the Court rejected the discrimination argument. The Court then addressed a second allegation that certain permit‑holders had neither had their permits cancelled nor made ineffective for the overlapping route, which was presented as discrimination. The State replied that this situation arose from an oversight and that the permits would have been corrected had it not been for the stay order obtained from the Court. The Court clarified that discrimination contemplated under Article 14 requires conscious and purposeful distinction, and that a disparity resulting merely from an oversight does not constitute the prohibited discrimination.

In this case the Court observed that there was no discrimination whatsoever. The Court explained that the apparent disparity had arisen solely because of an administrative oversight, which the State had indicated it would correct. The Court noted that the appellants had not shown that the few permit‑holders who remained on the overlapping route were being favoured intentionally or for any ulterior purpose. Accordingly, the Court accepted the State’s explanation that a small number of permit‑holders had been unintentionally omitted from the cancellation process and that, once the stay order issued by this Court was lifted, those permits would be treated in the same way as the permits of the appellants. The Court therefore found that the contention of discrimination had no merit and rejected it. The Court then turned to the argument that permits on the Ajmer‑Kotah route had been cancelled or rendered ineffective only between Deoli and Ajmer, and that consequently the permit‑holders should be allowed to operate between Deoli and Kotah. The Court observed that the Deoli‑Kotah segment of the Ajmer‑Kotah route coincided with the Jaipur‑Kotah route from Deoli to Kotah, and that orders excluding permit‑holders had already been issued in connection with the Jaipur‑Kotah route. The Court further noted that the scheme relating to the Jaipur‑Kotah route had been set aside by the High Court and remitted for reconsideration, in accordance with this Court’s decision in Malick Ram’s case (1962) 1 S.C.R. 978. Consequently, the Court held that the question of whether the permit‑holders could ply on the Deoli‑Kotah portion of the Ajmer‑Kotah route would depend on the outcome of the rehearing of the Jaipur‑Kotah scheme. If that scheme were upheld, the exclusion would continue; if it were not upheld, the situation might have to be reassessed with respect to the Deoli‑Kotah segment. In view of these circumstances, the Court concluded that no relief could be granted to the appellants concerning the Ajmer‑Kotah route at this stage. Accordingly, the appeals were dismissed, with the order that the appellants pay one set of hearing costs.