B. Rajagopala Naidu vs State Transport Appellate Tribunal and Ors.

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 19 of 1964

Decision Date: 5 March 1964

Coram: P.B. Gajendragadkar, K.N. Wanchoo, J.C. Shah, N. Rajagopala Ayyangar, S.M. Sikri

In this matter, B Rajagopala Naidu challenged the decisions of the State Transport Appellate Tribunal and other respondents. The Supreme Court of India heard the petition on 5 March 1964. The judgment was delivered by a bench composed of Chief Justice P B Gajendragadkar, Justice K N Wanchoo, Justice J C Shah, Justice N Rajagopala Ayyangar, and Justice S M Sikri. The case is reported in the 1964 All India Reporter at page 1573 and in the 1964 Supreme Court Reports, volume 7, page 1. The decision has been cited in numerous later authorities, including cases reported in 1966, 1969, 1970, 1972, 1974, and 1977. The statutory framework relevant to the dispute was Section 43A of the Motor Vehicles Act, 1939, as it stood after amendment by the Madras Amending Act 20 of 1948.

The appellant was a bus operator conducting business in the State of Madras. When the State Transport Authority issued an invitation for applications for two‑stage carriage permits, the appellant submitted his application together with many others. The Authority evaluated the applications and awarded marks according to the procedure prescribed in Madras Government Order No 1298, dated 28 April 1956, which was issued under Section 43A of the Motor Vehicles Act. Based on the marks assigned, the Authority granted two permits to the appellant. Several unsuccessful applicants, including respondents numbered 2 and 3, filed appeals against that order. The Appellate Tribunal re‑allocated marks following the same Government Order and, because respondents 2 and 3 obtained the highest marks after re‑allocation, it granted the permits to them. The appellant challenged the Tribunal’s order through a petition under Article 226 of the Constitution, which was rejected. He then appealed to a Division Bench of the High Court, but that appeal also failed. Subsequently, the appellant sought a certificate to appeal directly to the Supreme Court, and that request was refused. The Supreme Court nevertheless entertained the case on the basis of a special leave to appeal. Before the Court, the appellant argued that Madras Government Order No 1298, dated 28 April 1956, effectively directed the Transport Authority in the exercise of its quasi‑judicial functions, which he claimed exceeded the authority granted by Section 43A, a provision that only permits the State Government to issue directions concerning the Authority’s administrative functions. The Court examined this contention and held that Section 43A indeed empowers the State Government to issue orders and directions to the State Transport Authority solely with respect to its administrative duties. The Court relied on the earlier decision of Raman and Raman v State of Madras, reported in the 1959 Second Report of the Supreme Court of India at page 227, to support this view. The Court further noted that Sections 47, 48, 57, 60, 64 and 64A of the Act deal with the quasi‑judicial functions of transport authorities, indicating that those functions are to be exercised independently of administrative directives. Consequently, the Court concluded that the Government Order in question overstepped the limits of Section 43A and could not validly prescribe the award of marks for the purpose of granting permits.

When the transport authorities consider applications for permits and assess the respective claims of the parties, they are exercising quasi‑judicial functions. Consequently, the orders they issue are considered quasi‑judicial orders and are subject to the jurisdiction of the High Court under Article 226 of the Constitution. The judgments in New Prakash Transport Co. Ltd. v. Suwarna Transport Co. Ltd. (1957) S.C.R. 98, M/s Raman and Raman Ltd. v. State of Madras (1959) 2 S.C.R. 227, and B. Abdulla Rowther v. State Transport Appellate Tribunal, Madras (A.I.R. 1959 S.C. 896) were relied upon in reaching this view.

In interpreting section 43A, the Court may reasonably assume that the legislature intended to uphold the fundamental principle of the rule of law, namely that tribunals created under the Motor Vehicles Act must be allowed to exercise their authority and discharge their quasi‑judicial functions without undue interference. Fair and objective administration of the law requires that the decisions of judges or tribunals remain entirely free from extraneous guidance by the executive or any administrative arm of the State. The order that is the subject of this appeal falls outside the scope of section 43A because it attempts to prescribe directions on matters that have been entrusted to the tribunals established under the Act and which must be dealt with in a quasi‑judicial manner. Since the decision of the appellate Tribunal was based solely on the provisions of that impugned order, and the order itself is held to be invalid, the Tribunal’s decision is consequently also invalid.

The case before the Court involved a civil appeal, number 19 of 1964, filed by special leave from the judgment and order dated 29 October 1963 of the Madras High Court in Writ Appeal No. 214 of 1962. Counsel for the appellant included S. Mohan Kumar Amagalam, M. N. Rangachari, R. K. Garg and M. K. Ramamurthi. Counsel for respondents 2 and 3 was R. Ganapathy Iyer; for respondent 4, A. Ranganadham Chetty and A. V. Rangam appeared; and the intervener was represented by M. C. Setalvad, N. C. Krishna Iyengar and O. C. Mathur. The judgment was delivered on 5 March 1964 by Chief Justice Gajendra Gadkar. The central issue presented for determination was whether Government Order No. 1298, issued by the Government of Madras on 28 April 1956 under the authority conferred by section 43A of the Motor Vehicles Act 1939 (Central Act IV of 1939) as amended by the Madras Amending Act 20 of 1948, was legally valid. The appellant’s counsel argued that the impugned Government order was invalid because it lay beyond the ambit of section 43A. Although the order had been issued in 1956 and had never previously been challenged in court, the matter of granting permits under the relevant provisions of the Act had repeatedly come before the Madras High Court, bringing the order’s character, scope and effect under scrutiny.

The Court observed that numerous writ petitions had invoked the jurisdiction of the High Court under article 226 of the Constitution to examine various aspects of the order in question. Those petitions had been the subject of frequent references in this Court, which had considered the order’s character, its scope and its effect on several occasions. However, the Court noted that none of those earlier considerations had ever questioned the order’s validity. The Court then described the legislative and judicial background of the order, stating that the pattern of decisions relating to its enforcement, at first glance, suggested that a challenge to its validity was unlikely to succeed. Consequently, the initial judicial attitude toward such a challenge would be expected to be cautious and reluctant. Nevertheless, counsel for the appellant argued that section 43A, under which the order was said to have been issued, clearly placed the order outside the authority granted to the State Government, rendering it void. The Court recognized that if that argument were accepted, it would have a substantial effect on the system used by the State of Madras to grant permits under the Motor Vehicles Act, and therefore, even though the issue was limited in scope, it required careful examination.

The factual background leading to the present appeal followed the usual pattern of permit litigation, in which the grant or denial of a permit was contested through a writ petition under article 226. The appellant, B. Rajagopala Naidu, was a bus operator who ran several buses on different routes within the State of Madras. On 26 June 1956, the State Transport Authority issued a notification inviting applications for two stage‑carriage permits on the Madras‑to‑Krishnagiri express route. The appellant, together with one hundred and seventeen other bus operators—including respondents 2 and 3, namely D. Rajabahar Mudaliar, proprietor of Sri Sambandamoorthy Bus Service, and K. H. Hanumantha Rao, proprietor of Jeevajyoti Bus Service—submitted applications for the two permits. The Authority evaluated the applications on their merits, applied the marking system prescribed by the impugned order, and concluded that the appellant fulfilled the requirements for operating an efficient long‑distance service. Accordingly, the Authority granted the two permits to the appellant on 8 May 1958. Following that decision, eighteen appeals were filed by the unsuccessful applicants, including respondents 2 and 3. All of those appeals were heard together by the State Transport Appellate Tribunal, Madras, in June 1959. The Court noted that, before the Tribunal heard the appeals, the State Government had superseded the principles laid down in the order insofar as

It was noted that the State Government had issued a further direction concerning the grant of stage‑carriage permits under section 43A. This direction was G.O. 2265, dated 9 August 1958. By virtue of that order the Government introduced a new set of criteria for selecting applicants and also devised a revised system of assigning marks to the applications. When the State Transport Appellate Tribunal examined the claims of the competing bus operators it applied the marking principles that had been laid down in the earlier order, rather than the new criteria contained in G.O. 2265. Consequently the two respondents identified as respondents 2 and 3 obtained the highest marks among all applicants. Their appeals were therefore allowed, the original order that had granted the permits to the appellant was set aside, and two stage‑carriage permits were instead issued in favour of respondents 2 and 3. The Tribunal’s order effecting this reversal was dated 4 July 1959. Following that order the appellant approached the Madras High Court under article 226 of the Constitution, filing writ petition No. 692 of 1959. In that petition the appellant contested the validity of the Tribunal’s order on several grounds, one of the grounds being that the foundational order on which the Tribunal had relied was itself invalid. The single judge who heard the petition rejected all of the appellant’s contentions and dismissed the writ on 18 October 1962. The appellant then filed a Letters Patent Appeal, number 214 of 1962, before a division bench of the same High Court. The division bench affirmed the single judge’s decision and dismissed the appellant’s appeal. An application for leave to appeal to the High Court was subsequently made but was denied, leading the appellant to seek special leave to appeal to the Supreme Court. Special leave was granted on 14 November 1963, and on that basis the appellant brought the present appeal before the Supreme Court for final determination.

Before addressing the substantive points raised in the present appeal, the Court found it necessary to revisit the background of the impugned order, which required reference to an earlier decision of the Madras High Court in Sri Rama Vilas Service Ltd. v. The Road Traffic Board, Madras, reported by its Secretary. In that earlier case the appellant had challenged the legality of Government order No. 3898, issued by the Madras Government on 9 December 1946. That order sought to direct the transport authorities to issue only temporary permits because the Government intended to nationalise motor transport. Instruction 2 of the order stipulated that when applications were made for new routes or for altered timings on existing routes, preference should be given to smaller operators rather than to established, larger ones. Acting in accordance with that instruction, the transport authority rejected the appellant’s application for a permit, stating that the rejection was made in the public interest pursuant to section 47(1)(a) of the Act. The appellant then lodged an appeal against that rejection before the Central Board, identified as the Provincial Transport Authority. The High Court’s reasoning in that matter, which held that G.O. 3898 conflicted with the proviso to section 58(2) of the Act and was therefore invalid, was cited as a relevant precedent for understanding the authority of the State Government to issue instructions of the kind contained in the later order that formed the basis of the Tribunal’s decision now under review.

In that case the appellant first approached the Provincial Transport Authority, which had been established by the Government under section 44 of the Act, seeking a renewal of his bus permit. His appeal was rejected, and consequently he filed a petition in the Madras High Court invoking section 45 of the Specific Relief Act, requesting that the Road Traffic Board, Madras, be directed to consider his application in accordance with the provisions of the Act and the rules framed thereunder for renewal of permits to ply buses.

The High Court examined Government Order No. 3898 and held that the order conflicted directly with the proviso to section 58 sub‑section (2) of the Act, and therefore declared the order invalid. The Court explained that the decision demonstrated that the State Government possessed no statutory authority or right to issue instructions such as those contained in the impugned order. In reaching this conclusion, the Court emphasized that both the Central Transport Board and the Regional Transport Board were completely independent of the Government, subject only to the notifications made under section 43 of the Act.

The Court also recognised that when the Government functioned as an Appellate Tribunal it performed judicial functions, but those functions did not include the power to give orders to any Board that was dealing with an application for renewal of a permit. Accordingly, the Court established that, as the Act then stood, the State Government could not direct how applications for permits or their renewal should be processed by the Tribunals created under the Act. The judgment was pronounced on 19 November 1947.

Following that judgment, the Madras Legislature amended the Central Act by enacting Act XX of 1948, which came into force on 19 December 1948. Among the amendments introduced by that Act was the insertion of section 43A, the provision under consideration in the present appeal. That section endowed the State Government with the power to issue certain directions and orders. The present appeal therefore turns on the question of whether the order now under challenge falls within the scope of the authority conferred on the State Government by section 43A, a question that will be addressed when the Court interprets the language of that section.

The amendment of the Central Act gave rise to a further dispute between bus operators and the State Government, leading to the Madras High Court decision in C.S.S. Motor Service Tenkasi v. State of Madras and another. In that case the validity of several provisions of the Act, including those introduced by the Madras Amendment Act, was challenged. The appellant argued that, under article 19(1)(g) of the Constitution, it possessed a fundamental right to ply motor vehicles on public pathways, and that the impugned provisions infringed that right without justification under article 19(6).

The High Court examined the first component of the petitioners’ argument, namely the claim that a citizen possessed a fundamental right to operate motor vehicles on public roads, whether for hire or otherwise, and that any statutory provision that sought to curtail that right required assessment under the appropriate clause of Article 19 of the Constitution. After a detailed consideration, the Court affirmed that such a fundamental right existed and that any law appearing to abridge it would have to be tested against the relevant provision of Article 19. Turning then to the broader dispute, the Court reviewed the validity of several challenged sections of the Act. Concerning Section 43A, the Court concluded that the section was constitutionally valid, while cautioning that specific orders issued under the section could still be subject to a challenge on constitutional grounds. The Court’s principal justification for upholding Section 43A was its view that the provision was designed to empower the Government to issue directions of an administrative nature. Consequently, Section 43A was held to be valid, a conclusion that was not contested in the present proceedings. The judgment in which this determination was made was delivered on 25 April 1952.

Several years after that judgment, the Government issued an order on 28 April 1956 that purported to give effect to the Madras High Court’s decision by issuing instructions for the tribunals created under the Act. The order drew reference to the earlier High Court case and sought to implement the Court’s ruling by exercising the authority conferred by the now‑validated Section 43A. The order addressed five distinct matters. The first matter set out the criteria to be observed when screening applicants for transport permits, allowing the authorities to disqualify applicants on one or more of the principles enumerated in clauses 1 to 4 of that segment. The second matter introduced a system for assigning marks to each claimant across four columns, with the purpose of ensuring precise handling of permit applications and enabling swift evaluation of each claimant’s merits. The order further stipulated that, in circumstances where the marking system operated unfairly, the Regional Transport Authority could disregard the marks awarded, provided that it gave reasons for doing so. This marking system represented a distinctive feature of the adjudication process for permit claims, forming a central element of the government’s regulatory framework as outlined in the impugned order.

The order issued by the State of Madras was divided into five distinct parts, labelled “A” through “E” in the Government order. Parts A and B covered the principles for screening applicants for permits and the system of assigning marks to claimants, while Part C dealt with the variation or extension of routes that had been granted under those permits. Part D addressed the revision of timings for the operation of services, and Part E related to the suspension or cancellation of permits. After this order became effective, the tribunals constituted under the Act began to process applications for permits in accordance with the prescribed principles, and their decisions were subsequently challenged frequently before the Madras High Court, with many of those disputes also reaching this Court. In those cases, the character of the orders passed by the tribunals was examined, the nature of the instructions contained in the impugned order was considered, and the rights of parties aggrieved by the quasi‑judicial decisions of the tribunals were also discussed. A recurring question was whether a party dissatisfied with a tribunal’s decision could argue that the decision was based on a misconstruction of the impugned order or was rendered in contravention of it. The prevailing judicial opinion held that the proceedings before the tribunals were quasi‑judicial and therefore could be reviewed under Article 226 of the Constitution. It was also well established that the impugned order was not a statutory rule and consequently possessed no force of law; it was an administrative or executive direction that bound the tribunals but did not create any enforceable right in a citizen. Accordingly, a citizen could not contend that a misinterpretation of the order or its violation by a tribunal should be corrected under Article 226. In M/s Raman and Raman Ltd. v. The State of Madras and others (1), this Court, by a majority, gave a restricted meaning to section 43A of the Act as amended by the Madras Amendment Act, 1948, holding that the jurisdiction conferred on the State Government to issue orders and directions was confined to administrative functions, and that any order issued under that section did not acquire the status of law regulating parties’ rights. Similarly, in R. Abdulla Rowther v. The State Transport Appellate Tribunal, Madras and others (1), the Court held by a majority that orders and directions issued under section 43A were merely executive or administrative in character, and that their breach, even if obvious, would not justify the issuance of a writ of certiorari.

The Court observed that the rules issued under the challenged provision were binding only on the transport authorities for whom they were intended as guidance, and that those rules did not create any enforceable right in favour of a private citizen. Consequently, a petition seeking correction of an alleged breach of those rules by means of an appropriate writ was rejected. The Court further held that while a breach of the rules might expose the Tribunal to disciplinary measures or other appropriate actions, such a breach could not give a citizen standing to file a complaint under Article 226 of the Constitution. It was also necessary to stress that, in both of the earlier cases cited, no party had argued that the impugned order itself was invalid or should be disregarded by the Tribunal while exercising its quasi‑judicial powers under the relevant sections of the Act. The Court, therefore, was required to examine the nature of the impugned order. Some of the reasons offered in support of classifying the order as administrative or executive suggested that, on its face, the order might be inconsistent with the provisions of section 43A, a provision that the Court had previously interpreted in a narrow and limited manner. However, because the issue of the order’s validity had not been raised before the Court at that time, the Court did not investigate that aspect and proceeded on the assumption that the order was valid. Now that the validity of the impugned order has been explicitly raised before this Court, it became necessary to scrutinise whether the order was indeed valid.

Before addressing the scope and effect of section 43A, the Court said it must keep two general considerations in mind. The first consideration relates to the overall structure of the Motor Vehicles Act and, more specifically, to the layout of Chapter IV. The Act is divided into ten chapters and primarily deals with administrative matters concerning motor vehicles. Chapter XI governs the licensing of drivers, Chapter IIA deals with the licensing of conductors of state carriages, and Chapter III provides for the registration of motor vehicles. Chapter IV is dedicated to the control of transport vehicles and contains the provisions relating to applications for permits, the assessment of those applications, and other related matters. Chapter IVA, as cited in the All India Reporter, contains provisions concerning State Transport Undertakings. Chapter V addresses the construction, equipment, and maintenance of motor vehicles; Chapter VI concerns traffic control; Chapter VII deals with motor vehicles temporarily leaving or visiting India; Chapter VIII relates to insurance of motor vehicles against third‑party risks; Chapter IX prescribes offences, penalties, and the procedures for trying such offences; and Chapter X comprises miscellaneous provisions. This arrangement demonstrates that the hierarchy of transport authorities created by the Act is vested with both administrative and quasi‑judicial powers. It is well settled that sections 47, 48, 57, 60, 64 and 64A expressly confer quasi‑judicial authority and functions on the relevant bodies.

When a person files an application for a permit under the relevant provisions of the Act, the transport authority must consider that application on its merits and evaluate the claims of the parties involved. In doing so, the authority is exercising powers that are described as quasi‑judicial, and it is performing functions that are likewise quasi‑judicial. Consequently, any order that the authority issues while exercising those powers is a quasi‑judicial order. Such orders fall within the jurisdiction of the High Court under Article 226 of the Constitution, as shown by the decisions in New Prakash Transport Co. Ltd. v. New Suwarna Transport Co. Ltd., M/s Raman and Raman Ltd. v. The State of Madras and others, and R. Abdulla Rowther v. The State Transport Appellate Tribunal Madras and others. Therefore, when the validity of the impugned order is examined, it must be remembered that the order concerns matters that proper transport authorities are required to determine while exercising their quasi‑judicial powers and performing their quasi‑judicial functions.

The Act also contains three separate groups of provisions that grant the State Government legislative, judicial and administrative powers. Sections 67 and 68 give the State Government the legislative authority to make rules relating respectively to stage carriages and contract carriages, and to matters covered by Chapter IV of the Act. Rules framed under these sections become statutory rules and possess the force of law. The exercise of these legislative powers is constrained by the safeguard contained in Section 133. Sub‑section 133(i) requires that any rule made by the State Government must be published before it is brought into effect. Sub‑clause (2) of Section 133 further mandates that all rules made under the Act be published in the Official Gazette after they are made, and, unless a later date is specified, they shall come into force on the date of such publication. Clause 3 is particularly important because it obliges the Government to lay each rule before the appropriate Legislature for a minimum period of fourteen days as soon as possible after the rule is made, and it permits the Legislature to amend the rule during that session if it deems such amendment necessary or expedient. Accordingly, any statutory rule created by the Government under the legislative powers conferred by Sections 67 and 68 is subject to legislative control, allowing the appropriate Legislature to modify the rule. The requirement of publishing a rule before it is made, together with the requirement of publishing it after it is made, provides an additional statutory safeguard. This dual publication requirement illustrates the nature of the legislative power that has been conferred on the State Government.

The Court observed that the requirement that rules be published after they are made provides an additional statutory safeguard. This safeguard reflects the nature of the legislative authority granted to the State Government. Section 64A of the Act confers judicial power on the State Transport Authority, because the provision expressly gives that authority revisional jurisdiction over the orders specified therein, subject to the limitations and conditions set out in the two provisos to the section. This language clearly confers judicial power on the State Transport Authority.

In addition to the legislative and judicial powers that have been conferred, the State Government also possesses administrative power under section 43A. Section 43A states: “The State Government may issue such orders and directions of a general character as it may consider necessary, in respect of any matter relating to road transport, to the State Transport Authority or a Regional Transport Authority; and such Transport Authority shall give effect to all such orders and directions.” The interpretation of this clause is the foundation of the challenge to the validity of the impugned rules raised in the present appeal. It may be acknowledged that certain words in the section are contested by the counsel. The phrase “in respect of any matter relating to road transport” is certainly broad enough to encompass not only administrative matters but also matters that fall within the quasi‑judicial jurisdiction of the Tribunals created under the Act. There are no express limiting words in this clause, and consequently it is possible to view these matters as those examined by the appropriate authorities when exercising their quasi‑judicial functions. Likewise, the State Transport Authority and the Regional Transport Authority mentioned in the section are endowed with both administrative power and quasi‑judicial jurisdiction, so that reference to these authorities and to “any matter relating to road transport” suggests that both administrative and quasi‑judicial matters fall within the ambit of section 43A.

Nevertheless, several other considerations support the counsel’s construction. First, the context in which the section was enacted is relevant. The Legislature introduced section 43A in response to the Madras High Court decision in the C.S.S. Motor Service case, indicating that the Madras Legislature intended to give the State Government the authority to issue administrative orders or directions of a general character. Moreover, the two preceding sections—section 42, section 43, and the succeeding section 44—reinforce the view that the field covered by section 43A, like the fields covered by sections 42, 43 and 44, is administrative and does not extend to the quasi‑judicial domain exercised by the Tribunals. Additionally, the use of the words “orders and directions” would be inappropriate in relation to matters that are to be determined by bodies exercising quasi‑judicial powers; such terminology is more suited to executive matters. Finally, the requirement that the relevant transport authority shall give effect to all orders and directions issued under section 43A would be unnecessary if those instructions were intended merely to guide quasi‑judicial bodies. If the Government issues an order under section 43A for the purpose of guiding a tribunal performing quasi‑judicial functions, it would be superfluous to stipulate that the authority must give effect to such directions. Conversely, if section 43A is valid and permits the issuance of orders and directions of a general character that have the force of law, those orders would already be binding on the transport authorities for whose guidance they are made, rendering the additional provision that they are binding unnecessary.

It was observed that the expression “orders and directions” would be suitable only when it relates to executive matters and not to matters that must be considered by authorities exercising quasi‑judicial powers. The provision requiring the relevant transport authority to give effect to every order and direction made under section 43A would be inappropriate if those instructions were intended to guide quasi‑judicial bodies. When a direction is issued by the appropriate Government in the exercise of its powers under section 43A and is meant for the guidance of a tribunal that performs quasi‑judicial functions, it is hardly necessary to add that the authority must give effect to such a direction. If section 43A is valid and it permits the issuance of general‑character orders and directions that have the force of law, then those orders or directions would already be binding on the transport authorities for whose guidance they are made, making a separate provision declaring them binding redundant. Conversely, if the orders and directions are merely administrative in nature, they do not possess the force of statutory rules and cannot be treated as law; therefore, it would not be inappropriate for the provision to require the appropriate tribunals to follow those administrative orders and directions.

Consequently, a fair and reasonable construction of section 43A leads to the conclusion that the section authorises the State Government –R. [1931] Mad. 304 – to issue only general‑character orders and directions concerning administrative matters that fall within the jurisdiction of the State Transport Authority or Regional Transport Authority under the relevant provisions of the Act, and only when those authorities act in their administrative capacity. In reaching this view, the Court considered additional relevant and material factors. The interpretation assumes that the legislature intended to uphold the fundamental rule of law, whereby tribunals created under the Act must be free to exercise their quasi‑judicial functions according to their own judgment, without interference. Fair and objective administration requires that the decision of a judge or tribunal remain completely unfettered by any extraneous guidance from the executive or administrative branches of the State. Any direction that controls the discretion of a quasi‑judicial tribunal would place improper restraints on its authority, rendering the process inconsistent with accepted judicial principles. While the law may regulate the exercise of judicial powers by specifying the matters tribunals should adjudicate, such regulation must not be effected through administrative or executive orders.

In this discussion, the Court observed that statutes may by specific provisions lay down the principles that tribunals must follow when dealing with particular matters. The Court explained that the jurisdiction of tribunals created by legislation can be properly regulated by the enactment itself, and that the legislature may also prescribe principles to guide those tribunals, provided that such provisions do not conflict with the fundamental rights guaranteed by the Constitution. However, the Court warned that what the law and statutory provisions may legitimately achieve cannot be accomplished through administrative or executive orders. The Court said that this principle was firmly settled, and therefore it was reluctant to conclude that, when the Madras Legislature enacted section 43A, it intended to give the State Government authority to intrude into the domain of judicial power. The Court further noted that, if the Legislature had indeed intended such an intrusion and if the true effect of section 43A were to permit the State Government to exercise judicial functions, then section 43A would constitute an unreasonable infringement of citizens’ fundamental rights and might have to be declared unconstitutional. Consequently, the Madras High Court, while examining the validity of section 43A, had specifically observed that the provision merely intended to empower the Government to issue directions of an administrative character and nothing beyond that. The Court expressed regret that, although judicial decisions had consistently emphasized this limitation, no occasion had yet arisen to assess the validity of a Government order that, according to the respondent’s construction, would clearly encroach upon the quasi‑judicial domain.

The Court then turned to another important consideration. It pointed out that if section 43A authorized the State Government to issue directions or orders in a broad sense, then section 68 would become redundant, and the safeguards elaborately provided in section 133 would lose their meaning when the State Government claimed to act under section 68. The Court argued that, where orders and directions issued by the State Government were indistinguishable from statutory rules, it was difficult to understand why section 68 dealt with that subject separately and why section 133 established safeguards to control the exercise of that power. The Court also highlighted that directions and orders issued under section 43A were not required to be published nor communicated to the parties whose claims were affected. Since proceedings before the tribunals concerning applications for permits were of a quasi‑judicial nature, the Court found it unusual that tribunals would be compelled to act on executive orders or directions issued under section 43A without providing citizens a right to know the content of those orders and to ensure that they were properly enforced. Finally, the Court observed that judicial decisions consistently treated these orders and directions as administrative or executive in nature, noting that they did not confer any right on citizens, and this characterization underscored the true position of the law.

In the case, the Court observed that the orders and directions issued by the State Government are not statutory rules and therefore cannot be used to restrict the quasi‑judicial powers that have been granted to the Tribunals for handling applications for permits and other related matters. The Court noted that it had been submitted that the principles contained in the impugned order were sound, that the order set out healthy principles, and that therefore its validity could not be challenged. It was further argued that the order amounted to an expert opinion provided by the State Government to assist the Tribunals that decide on the grant of permits. The Court rejected this line of reasoning. It held that it is not the role of the executive to aid quasi‑judicial Tribunals by issuing directions under the powers conferred by section 43A. Moreover, if section 43A were valid and a direction issued under it fell within its scope, the State Government could, in theory, compel the Tribunal to follow that direction in every case without question. The Court recognised that the impugned rule introduced a marking system and that the Tribunal retained the discretion not to adopt that system, provided it recorded its reasons. However, the Court pointed out that even if the impugned order were valid, nothing would prevent the State Government from issuing a further order mandating that the marking system must always be applied. Since section 43A itself requires that orders issued under it be given effect, any order made under section 43A that commands compliance would be binding on the Tribunal without exception. Consequently, the Court said it could not accept the argument advanced on behalf of respondent No 1 that the order could not be challenged merely because its principles were deemed sound and healthy. The Court concluded that the impugned order lies outside the ambit of section 43A because it attempts to dictate matters that have been assigned to the Tribunals created under the Act, matters that must be decided by those Tribunals in a quasi‑judicial fashion. The Court further emphasized that the Act’s validity, especially the provisions dealing with the grant and refusal of permits, has been largely upheld because that critical function has been entrusted to the Tribunals, which are required to act fairly and objectively in exercising their quasi‑judicial powers. Any attempt to encroach on the jurisdiction of these Tribunals, therefore, must be considered beyond the scope of section 43A. The Court was mindful of this principle.

The Court observed that the order being challenged was issued only after, and apparently as a reaction to, the judgment of the Madras High Court in the matter of C.S.S. Motor Service. The High Court had apparently suggested that rules should be framed under section 68 of the Act. It was not disputed that the principal purpose of the State Government in promulgating the order was to eliminate uncertainty and to bring an element of certainty and objectivity into the process of adjudicating competing claims made by applicants for transport permits. The State Government may have been of the view that, if the tribunals were permitted to exercise their discretion without any guiding framework, divergent decisions could arise in different regions, which in turn could generate public dissatisfaction. The Court noted, however, that in certain other States the problem of granting permits has been settled without resorting to any marking system. Even assuming that a properly applied marking system might render decisions on the grant of permits more objective, fair and consistent, the Court could not see how that consideration would aid in resolving the specific issue that was before it. If the State Government believes that the adoption of some form of marking system is essential for the fair administration of the Act, it may pursue that course to the extent permitted by law.

The Court then turned to the statutory requirements under section 47(1)(a), which obliges the Regional Transport Authority, inter alia, to keep in mind the general interests of the public while evaluating applications for stage‑carriage permits. The provision also refers to other matters that must be considered, but the Court found it unnecessary to enumerate those for the present purpose. The Legislature has the power to amend section 47 to insert additional considerations that the Transport Authority must bear in mind, or to expressly confer on the State Government a specific authority to make rules for that purpose. Alternatively, the State Government may simply make rules under section 68 without amending section 47. All of these options are available if it is thought appropriate to issue directions of the kind contained in the impugned order. The Court, however, stated that it was not concerned with those possibilities and chose not to express any opinion on them. Emphasising its usual caution in constitutional matters, the Court reiterated that it must avoid making obiter observations on issues not directly raised for decision. Accordingly, while the Court listed possible alternatives that the State Government could adopt if it deemed a marking system helpful for administering the Act, it made clear that it was not expressing any view on the validity of any of those alternatives. The only remaining point for consideration was the argument put forward by counsel for the petitioner that, even if the order were valid, it should not affect the decision of the Appellate Tribunal which had been upheld by the High Court in the present writ proceedings.

The Court observed that the argument put forward contended that there was no reason to set aside the order issued by the Appellate Tribunal, an order that had already been affirmed by the High Court in the present writ proceedings. The submission further maintained that the Appellate Tribunal had acted upon sound principles and that the fact that those principles were articulated in an order later found to be invalid should not, in the Court’s view, invalidate the Tribunal’s own decision. While the Court recognised that this line of reasoning appeared at first sight to be plausible, a closer analysis revealed a fundamental flaw. The Court noted that if the Appellate Transport Authority had independently examined the matters on its own initiative, without being compelled by the impugned order, the situation might have been different. However, the order pronounced by the Appellate Authority plainly and unmistakably showed that the Authority considered itself bound to follow the impugned order, unless it chose to depart from it after exercising its discretion and recording the reasons for such departure. The Court further held that it would be unreasonable to suggest that any Transport Authority operating within the State would ordinarily refuse to obey an order issued by the State Government itself. Consequently, the Court had no hesitation in concluding that the decision of the Appellate Tribunal was founded solely on the provisions of the impugned order. Because that order had been declared invalid, the Tribunal’s decision likewise had to be set aside by way of a writ of certiorari. Accordingly, the Court allowed the appeal, set aside the order of the High Court in Writ Petition No. 692 of 1959, and directed that the writ petition be allowed. No order as to costs was made. In line with this determination, a writ of certiorari was to be issued to annul the order of the Appellate Tribunal and the matter was to be remitted to the Regional Transport Authority for disposal in accordance with law. The appeal was thereby allowed.