Jagannatham and Bros vs Sowdambigai Motors Service

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 179 of 1963

Decision Date: 08/05/1963

Coram: Mudhorkar

In the matter titled Jagannatham and Bros. versus Sowdambigai Motors Service, the Supreme Court of India delivered its judgment on 8 May 1963. The petition was brought by the appellant, Jagannatham and Bros., against the respondent, Sowdambigai Motors Service. The case concerned an application made under the Motor Vehicles Act, 1939 for a stage‑carriage permit. The Regional Transport Authority had granted permits, but the Transport Appellate Tribunal set aside one of those permits without providing any reasons for the preference it gave to one operator over another. The central issue before the Court was whether the Tribunal’s order was valid, given its duty under the Motor Vehicles Act to state the reasons for any preferential decision.

The Court’s headnote recorded that the appellant, together with respondents 1 and 2 and several other applicants, had all sought the six stage‑carriage permits advertised for service in Erode Town. The Regional Transport Authority, in its meeting held on 16 March 1961, awarded four of the six permits to existing operators and granted a permit on the new Route 5 to each of the two respondents. Dissatisfied with this outcome, the appellant filed an appeal before the State Transport Appellate Tribunal. The Tribunal held that the appellant should be preferred to respondent 1, while it left the permit awarded to respondent 2 undisturbed. Respondent 1 then instituted a writ petition before the Madras High Court, which set aside the Tribunal’s order on the ground that the Tribunal had failed to explain why the appellant should be given preference over respondent 1. The High Court’s decision was upheld by the Supreme Court, which observed that the Tribunal had not addressed the sole question of why one operator should be favored over another, citing Raman and Raman Ltd. v. The State of Madras (1959) Supp. 2 S.C.R. 227. The civil appeal (No. 179 of 1963) arose by special leave from the High Court judgment dated 23 October 1962 in Writ Appeal No. 207 of 1962. Counsel for the appellant were B. Sen, J. Dadachanji, O. C. Mathur and Ravinder Narain; counsel for respondent 1 were A. V. Viswanatha Sastri and R. Ganapathy Iyer; and counsel for respondent 2 were A. V. V. Nair and P. Ram Reddy. The Court noted that a single judge of the Madras High Court had previously set aside the State Transport Appellate Tribunal’s order, which had allowed the appellant company to obtain a permit to operate a bus on Route 5 in Erode Town. An application by the appellant under clause 15 of the Letters Patent to challenge that decision was dismissed in limine. Consequently, the appellant sought review before this Court by way of special leave.

No. 5 was a new route, and the Regional Transport Authority granted a permit to each of the two respondents on that route. The appellant, dissatisfied with this decision, filed an appeal before the State Transport Appellate Tribunal. The Tribunal held that the appellant should be preferred to respondent No. 1. Accordingly, the Tribunal left the Regional Transport Authority’s order untouched with respect to the permit granted to respondent No. 2, but it set aside the order that had awarded a permit to respondent No. 1. In response to that setting aside, respondent No. 1 instituted a writ petition before the High Court. A single judge of the High Court heard the petition and, as previously noted, set aside the Tribunal’s order insofar as it affected the appellant. The judge’s reason for overturning the Tribunal’s order was that the Tribunal had failed to explain why the appellant should be given preference over respondent No. 1 in the grant of a permit. The judges who heard the appellant’s Letters Patent appeal later dismissed the appeal and made the following observation: “The first respondent had this advantage, viz : that he was given the permit by the Regional Transport Authority. Before that permit could be set aside it was the duty of the Appellate Tribunal to have considered the superior merit of the appellant. In considering such superior merit, it was bound to consider the pros and cons of the experience alleged to be possessed by the first respondent as against the claim of the appellant who puts his case only as a new entrant. The Tribunal appears to have taken as a rule of law that new entrants should invariably be preferred as that would give them an enthusiasm and also surcharge the atmosphere with a healthy competition. But it forgot that in all these matters, the paramount question, to be considered was the interest of the public, and, in considering the question, it had a duty to evaluate the rival claims of the two operators.” Consequently, both the learned single judge of the High Court and the appellate judges interfered with the Tribunal’s order on the ground that the Tribunal had failed to address a material issue and therefore had not performed its statutory duty. It was an admitted fact that, although the appellant possessed experience in operating buses on certain routes within the State, it lacked recent experience of operating buses in a town. Accordingly, the appellant could properly be described as a new entrant with respect to town service, a characterization that was never contested. The Regional Transport Authority took this circumstance into account when it granted permits to respondents 1 and 2. The Tribunal, however, referring to Government Order No. 2265 dated 9 August 1958 and to certain observations of this Court in Raman & Raman Ltd. v. The State of Madras, concluded that new entrants ought

The Court observed that the earlier decision of the Tribunal had held that new entrants should be preferred when granting permits, even for town routes. In contrast, the Regional Transport Authority argued that because town traffic is heavy and the streets are narrow, it is advisable to give preference to existing operators rather than to a newcomer. The Authority appeared to rely on a circular dated 14 October 1960 issued by the Transport Commissioner in reaching this view. In that circular the Commissioner interpreted the Government Order of 9 August 1958 and classified routes into three categories—short, medium and long routes. The Commissioner further stated that the Government considered town service routes to be excluded from the category of short routes and to constitute a separate category. The Court noted that this statement represented only the opinion of the Transport Commissioner and did not constitute a Government Order that the Regional Transport Authority was bound to implement. Consequently, one of the reasons relied upon by the Authority might be erroneous. Nevertheless, the Court declined to decide the correctness of that reason because the Tribunal had not specifically addressed why the appellant should be preferred to respondent No 1. While the Tribunal had listed the qualifications possessed by the appellant, it had not examined whether respondent No 1 possessed comparable qualifications. Accordingly, the Court agreed with the High Court that the essential question—whether one operator should be preferred to another—had not been properly determined. Counsel for the appellant argued that the learned single judge should have remitted the matter to the Tribunal after setting aside its order, and that the judge could not confirm the Authority’s order without examining the merits of the competing claims. The Court acknowledged that the single judge’s order was not expressed with great clarity, but inferred that the judge intended the appeal to be reheard by the Tribunal in light of his observations. The Court considered that such a direction would satisfy the appellants’ grievance. Accordingly, the appeal was dismissed without any order as to costs.