Sri Satya Narain Singh vs District Engineer, P.W.D. and Another

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

Court: Supreme Court of India

Case Number: C. A. No. 435 of 1958

Decision Date: 08 February 1962

Coram: J.R. Mudholkar, Bhuvneshwar P. Sinha, J.L. Kapur, M. Hidayatullah, J.C. Shah

In this matter, the appellant Sri Satya Narain Singh filed a petition before the Supreme Court of India, and the judgment was delivered on 8 February 1962. The case is cited as 1962 AIR 1161 and 1962 SCR Supl.(3) 105, with additional citations recorded in subsequent reports. The bench that heard the appeal comprised Justice J.R. Mudholkar, Justice Bhuvneshwar P. Sinha, Justice J.L. Kapur, Justice M. Hidayatullah and Justice J.C. Shah. The petitioner, Sri Satya Narain Singh, contested the order of the District Engineer, Public Works Department, and another respondent. The judgment notes that the parties were represented by counsel, though the names of the advocates are not reproduced here. The dispute involved the provisions of the Northern India Ferries Act, 1878 (XVII of 1878), particularly section 15, and a notification numbered 252/IX‑209/(10) dated 16 March 1925. The central question related to the right to collect tolls from government‑operated roadway buses that used a ferry crossing on the river at Piprighat, and whether such buses could be treated as exempt vehicles under the cited notification.

The factual background recorded that the appellant had become the highest bidder at a public auction and thereby obtained the license to collect tolls for ferry crossings over the Piprighat river for the year 1954. Historically, up to that year, the licence permitted the collector to levy tolls on every stage‑carriage bus that used the route, and only privately owned stage‑carriage buses operated on the passage. In March 1954 the Uttar Pradesh State Roadways Department assumed control of the route, and the appellant was subsequently informed that tolls would no longer be payable on Roadways vehicles. He was instructed to continue paying the monthly licence fee without any deduction, based on the claimed exemption of the state‑run buses. The issue before the Court was whether the appellant was obligated to allow the Uttar Pradesh Government’s road‑transport buses to cross the river by ferry without charging any toll. The Court held that the 16 March 1925 notification exempts only those vehicles that are engaged in “public or district board service.” It was concluded that motor buses operated as a commercial activity do not fall within the meaning of a public service. Consequently, the vehicles of the Uttar Pradesh Roadways Department could not be regarded as crossing the river on a public service and were not entitled to the exemption. The Court further observed that even when the government provides stage‑carriage buses for the public benefit, the activity remains a commercial undertaking if it is pursued with a profit motive, and therefore the exemption in the notification does not apply. The judgment additionally noted, though not fully elaborated in this excerpt, that activities undertaken in the exercise of sovereign power are to be considered in the analysis.

The Court observed that activities performed by the State in the exercise of sovereign power or governmental functions are unquestionably classified as public services. However, it held that a purely commercial enterprise, even when operated by the Government, does not become a public service merely because it is state‑run. The Court explained that an activity may be beneficial to the public and useful in nature, yet it remains a commercial undertaking if it is of a kind that private persons could also perform and if the Government conducts it with a clear profit motive. Consequently, the ownership and operation of a business by the State does not automatically transform that business into a “public service”.

The judgment concerned Civil Appellate Jurisdiction case No. 435 of 1958, an appeal by certificate from a decision of the Allahabad High Court dated 20 September 1956 in Special Appeal No. 243 of 1955. The appellant was the lessee of the right to collect tolls from persons and vehicles crossing the public ferry at Pipraghat in District Ballia. The principal issue was whether the appellant was obligated to permit State‑run carriage buses of the Government of Uttar Pradesh to use the ferry without paying tolls, or whether the appellant could claim a reduction in licence rent under the proviso to section 15 of the Northern India Ferries Act 1878. The Court set out the factual background: the ferry at the village of Pipraghat is operated under a licence that is awarded each year by public auction to the highest bidder, who then pays a licence fee in monthly instalments. For the year 1954 the appellant had been the highest bidder and was required to pay a licence fee of Rs 31,751. Historically, the lessee was permitted to collect a toll of Rs 5‑1‑0 from each stage‑carriage bus using the ferry. Up to 9 March 1954 only privately owned stage‑carriage buses used the route. After that date the Roadways Department of the State of Uttar Pradesh assumed responsibility for the route. Between 9 March and 16 March 1954 the appellant continued to collect the statutory toll of Rs 5‑1‑0 from the State‑owned buses, following a letter from the first respondent directing the appellant to allow the Roadways buses to use the ferry. The Court then considered the legal arguments concerning the nature of the State‑run bus service and the appellant’s entitlement to tolls or rent abatement.

In this case the appellant received a letter from the first respondent instructing that, until 31 March 1954, the State‑run Roadways buses should be permitted to use the ferry for crossing and recrossing the river on credit, after which the appellant was to submit his bill for the tolls to the Roadways Department of the Government. The same communication also informed the appellant that further orders would be issued on 1 April 1954. Accordingly, the appellant allowed the Roadways buses to use the ferry, prepared a bill for the tolls, and submitted that bill to the Roadways Department on 31 March 1954. The Department, however, did not pay the amount claimed. On 1 April 1954 the appellant received two further communications from the first respondent. The first communication stated that no toll was leviable on the Roadways vehicles, while the second communication demanded that the appellant pay the monthly instalment of the licence fee without making any deduction, on the ground that the Roadways buses were exempted from tolls. The appellant then approached the High Court of Allahabad under article 226 of the Constitution, seeking a writ that would (i) direct the respondents not to prevent the petitioner from charging tolls from the Roadways buses, (ii) command the respondents to allow an abatement in respect of the exemption of the Roadways buses from the toll liability, and (iii) grant an interim direction restraining the respondents from realizing the unpaid monthly instalments of the licence fee until a final decision was made. Before the petition could be decided, the appellant’s licence expired, and at the subsequent hearing the appellant limited his relief to a single request that the respondents allow a rebate based on the exemption of the Roadways buses from toll liability. The petition was not amended to reflect this limitation. It may be noted that, in addition to the reliefs already described, the appellant had also claimed two further reliefs, one of which was a request for the Court to pass any other order it deemed fit and proper. The learned single Judge of the High Court, who first heard the petition, held that the appellant was entitled to an abatement of rent under the third paragraph of clause 15 of the Northern India Ferries Act, 1878, and therefore directed the issuance of a writ to the respondents ordering them to “perform their statutory duty relating to abatement of rent” payable by the appellant as a consequence of the exemption of the Roadways buses from tolls, before any arrears of rent could be claimed or recovered from him. The respondents appealed this order under the Letters Patent, and a Division Bench of the Allahabad High Court heard the appeal. The learned Judges of that Bench ruled that a licensee is not entitled to an abatement of rent unless the Government makes a declaration under section 15 of the Act after the licence has been granted to the licensee. They observed that the government order numbered 1946/17‑51, dated 11 December 1951, which the single Judge had relied upon, was issued before the licence to collect tolls was granted to the appellant and therefore did not give the appellant a right to claim an abatement.

The Court observed that, although the appellant might have a right to seek a reduction of rent or licence fee on the basis of ordinary law, such a reduction could be pursued only through an ordinary suit and not by invoking the jurisdiction of Article 226 of the Constitution. Consequently, the Court permitted the appeal and ordered the dismissal of the petition filed by the respondents. In doing so, it affirmed that relief concerning abatement of rent could not be granted in a writ proceeding, but must instead follow the procedural route of a civil action.

Section 15 of the Northern India Ferries Act, 1878 was set out in the judgment and reads as follows: “Toll, according to such rates as are from time to time fixed by the State Government, shall be levied on all persons, animals, vehicles and other things crossing any river by a public ferry and not employed or transmitted on the public service: Provided that the State Government may from time to time declare that any persons, animals, vehicles or other things shall be exempt from payment of such tolls. Where the tolls of a ferry have been let under section 8, any such declaration, if made after the date of the lease, shall entitle the lessee to such abatement of the rent payable in respect of the tolls as may be fixed by the Commissioner of the division or such other officer as the State Government may, from time to time, appoint in this behalf by name or virtue of his office.” The proviso attached to this section grants the State Government the authority to periodically declare certain persons, animals, vehicles or other things exempt from the duty of paying the ferry tolls.

The judgment stressed that before any question of granting an abatement of rent or licence fee can be entertained, it is essential first to establish that a valid exemption with respect to the relevant vehicles or other things exists under section 15 of the Act. The provision further stipulates that when a declaration of exemption is issued after the licence to collect tolls has been granted under section 8, the licence holder becomes entitled to a reduction of the rent, the amount of which is to be determined by the Commissioner of the division or by any other officer that the State Government may designate for that purpose. Thus, the existence of a proper governmental declaration is a prerequisite for the licencee to claim any rent relief.

The Government order that was cited by the two High Court judgments was reproduced in full and stated: “Subject: Exemption from payment of toll. I am desired to say that a question has been raised whether the Roadways Motor Vehicles should be exempt from payment of ferry tolls while crossing any river by a public ferry. Government have given their full consideration to this matter and have come to the conclusion that the motor vehicles run by the Roadways with the operational staff accompanying them on duty fall under the exemption granted from payment of ferry toll in paragraphs 2(a) of notification no. 252/-IX‑209/(10) dated March 16, 1925 (published on page 347 of the District, Board Manual). 2. I am, however, to observe that the passengers traveling in these vehicles with their goods and all the private goods, being transported in the Roadways trucks shall be liable to the payment of tolls as heretofore according to the rates fixed by the Local Government. 3. The District Magistrate, District Board and ferry contractors in your division may please be informed accordingly.” It was noted that this order appears to be merely a communication addressed to the relevant authorities and does not, by itself, constitute a formal declaration of exemption.

The communication issued by certain authorities may be treated as a Government order, but it does not itself grant any exemption to the buses operated by the Uttar Pradesh Roadways. Instead, it merely conveys the Government’s view that those buses should be considered exempt under the notification dated 16 March 1925, issued pursuant to section 15 of the Act. The notification reads: ‘All persons, animals and vehicles crossing any river by a public ferry are exempt from tolls when they are employed or transmitted on the public or District Board service.’ It is acknowledged that at the time of that 1925 notification the State was not running any bus services in the United Provinces, now Uttar Pradesh. There is a possibility that no Government‑owned buses existed in any other Indian province at that period ever. It would not be reasonable to assume that a State enterprise of this kind was even contemplated by the then Lieutenant‑Governor and Government. Besides operating a few railways, the State had not entered the commercial field, therefore the historical context must guide the interpretation of the 16 March 1925 notification. The exemption contemplated by the notification applies only to a vehicle crossing a river on ‘public or district board service’. Consequently, it must be examined whether operating motor buses as a commercial activity can be described as providing a public service. Defining ‘public service’ is not simple, and each activity must be assessed individually to determine whether it is carried out as a public service. Activities performed in the exercise of the State’s sovereign power or governmental functions are unquestionably public services, whereas a pure business undertaking, even when run by the Government, cannot be classified as such. When an activity concerns a public utility, a question arises as to whether it falls within the sovereign‑function category or the commercial‑enterprise category. The mere fact that an activity is useful to the public does not automatically render it a public service, especially where it could be performed by private individuals and is pursued by the Government with a distinct profit motive. The mere fact that an activity is useful to the public does not automatically render it a public service. This is especially true where the activity could be performed by private individuals and is pursued by the Government with a distinct profit motive. Even if the Government operates stage‑carriage buses to provide cheap, regular and reliable transport, the activity remains a commercial undertaking when carried out for profit. Private operators also aim to offer comparable facilities to the public, making it difficult to draw a clear distinction between private and Government‑run activities in this context.

In this case the Court observed that there is no essential distinction between an activity performed by private individuals and the same activity performed by the Government; the mere fact that a commercial enterprise is owned and operated by the State does not automatically transform it into a “public service.” The Court noted that it was not contested that the Roadways Department of the Government of Uttar Pradesh was carrying on a profit‑making operation and that it achieved this by excluding all forms of competition. Consequently, the Court held that it was impossible to regard the vehicles of that department which crossed the ferries as providing a public service. Because those vehicles do not qualify as a public service, they are not eligible for any exemption under the notification dated 15 March 1925. Since no exemption applies, the issue of rent abatement does not arise at all.

The Court further recorded that the petitioner, as previously mentioned, had limited his arguments before the High Court to the remedy of rent abatement, relying on a change of circumstances that occurred between the filing of his petition and its hearing. This limitation was made on the basis of a misunderstanding of the legal effect of the notification dated 16 March 1925. The appellant, however, in an alternative submission contained in his statement of the case, contended that the Roadways buses used for carrying passengers are employed by the Government for a commercial undertaking and therefore fall outside the exemption contemplated by the 1925 notification. The Court noted that the petitioner’s relief petition, which also prayed for “other relief,” had not been amended and therefore remained in its original form. In view of the appellant’s alternative contention and the unchanged nature of the petition, the Court found no obstacle to granting the relief sought by the appellant.

Accordingly, the Court allowed the appeal, set aside both the judgment of the Division Bench and the order of the single Judge of the Allahabad High Court, and directed that a writ in the nature of mandamus be issued to the respondents. The writ commands the respondents to pay the appellant the full tolls for every crossing of the Roadways buses over the ferry from 16 March 1954 until the date on which the licence in favour of the appellant expired. The Court also ordered that the costs incurred by the appellant in both the present proceedings and the High Court be borne by the respondents. The appeal was thereby allowed.