C. S. Rowjee And Others vs Andhra Pradesh State Road Transport Corporation

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 770 of 1963

Decision Date: 27 January 1964

Coram: N. Rajagopala Ayyangar, Bhuvneshwar P. Sinha, Raghubar Dayal, J.R. Mudholkar

In the case titled C. S. Rowjee and Others versus Andhra Pradesh State Road Transport Corporation, the Supreme Court of India delivered its judgment on 27 January 1964. The opinion was written by Justice N. Rajagopala Ayyangar, and the bench comprised Justices N. Rajagopala Ayyangar, Bhuvneshwar P. Sinha, Raghubar Dayal and J. R. Mudholkar. The decision is reported in the 1964 All India Reporter at page 962 and in the Supreme Court Reports (Second Series) at volume 6, page 330. The case has been cited in later authorities such as 1965 SC 1848 (10), 1968 SC 1095 (5), 1986 SC 872 (115) and 1987 SC 294 (37). The legal issue concerned the validity of schemes prepared under the Motor Vehicles Act of 1939, as amended by Act 1 of 1956, particularly sections 68C, 68D(3) and 68F(1), together with the Andhra Pradesh Motor Vehicles Rules 1957, rules 4 and 141, which dealt with the nationalisation of road‑transport services, preparation of schemes and issuance of permits to State transport undertakings.

The respondent corporation formed an expert committee to examine the operation of nationalised transport within the State. The committee established criteria for selecting the order in which areas and routes would be nationalised and prepared a list of districts slated for successive nationalisation. According to the committee’s plan, Nellore district would be the next to be taken up, followed by Kurnool district after the completion of nationalisation in Nellore, Chittoor and Cuddapah districts. The committee submitted its report to the corporation in February 1961, and the corporation accepted the recommendations, incorporating them into its Administration Report dated 24 March 1962, which was published in April 1962. Following the general election of 1962, the new Chief Minister assumed office on 12 March 1962. On 19 April 1962 the Chief Minister convened a conference of the corporation and suggested that the nationalisation of bus routes in Kurnool district should be initiated first. Consequently, the corporation passed a resolution on 4 May 1962 altering the previously scheduled order of districts and selecting the western half of Kurnool as the area to be nationalised initially. Motor‑transport operators whose routes lay in the western half of Kurnool filed objections to the schemes before the Transport Minister. The Transport Minister approved the schemes, after which the corporation applied to the Regional Transport Authority for the necessary permits. The operators subsequently challenged the validity of the schemes in the High Court, alleging in an affidavit that the Chief Minister was motivated by bias and personal animus toward the appellants, that he felt disgruntled by the electoral defeat of his supporters, and that he sought to exact vengeance on the motor‑transport operators of the western part of Kurnool, who were his political opponents, by directing the corporation to revise the order in which districts were to be nationalised. These allegations were not denied by the Chief Minister, nor was any affidavit filed by a person capable of personally confirming the truth of the claims.

The petitioners alleged that the Chief Minister had directed a change in the sequence in which the districts were to be nationalised, and that the corporation had acted on those instructions. The Chief Minister did not refute these allegations, and no affidavit was presented by anyone who could personally attest to the truth or falsity of the statements. The High Court examined the allegations and rejected them, consequently dismissing the petition. The petitioners then obtained a certificate of appeal and advanced five principal contentions. First, they claimed that the schemes did not truly represent the corporation’s opinion as required by section 68‑C of the Act, but instead originated from the Chief Minister’s malicious direction to the Transport Undertaking. Second, they argued that the Transport Minister’s approval of the schemes under section 68‑D(3) should be considered invalid because it was tainted by the Chief Minister’s improper motives. Third, they contended that the schemes failed to satisfy the statutory specifications of section 68‑C and rule 4 of the Rules concerning the details that must be included. Fourth, they submitted that certain routes listed in the schemes were inter‑state routes and, under the proviso to section 68‑D(3), could not be deemed approved without prior consent of the Central Government. Finally, they maintained that even when a transport undertaking seeks a stage‑carriage permit under section 68‑F(1), it must also comply with rule 141 of the Rules.

The Court first considered the evidence relating to the alleged influence of the Chief Minister. It observed that the schemes were prepared as a result of the conference held on 19 April 1962, and that the corporation formulated the schemes in order to implement the Chief Minister’s expressed wishes from that meeting. Consequently, the Court held that the schemes were vitiated by malice despite the corporation’s semi‑autonomous status. Although the corporation’s counter‑affidavits denied acting at the Chief Minister’s behest, the Court noted the absence of any explanation for why the western portion of the Kurnool district had been chosen, leading to the conclusion that the schemes did not comply with the requirements of section 68‑C of the Act. Regarding the second contention, the Court found no record indicating that the Chief Minister had influenced the Transport Minister. The Transport Minister, having sworn that he examined the objections under section 68‑D(3) and approved the schemes independently of any direction from the Chief Minister, satisfied the legal criteria, and therefore his approval was not invalidated. On the third point, the Court identified discrepancies between the maximum and minimum numbers of vehicles proposed for certain routes, concluding that these variations contravened rule 4 of the Andhra Pradesh Motor Vehicles Rules, 1957, as illustrated in Dosa Satyanarayanamurthy v. The Andhra Pradesh State Transport Corporation, [1961] 1 S.C.R. 642. The Court then addressed the fourth contention, noting that the route proposed for nationalisation lay wholly within the State, and that the private operators’ right to operate beyond the State border was unaffected; consequently, the proviso to section 68‑D(3) did not apply and the schemes were not defective on that ground. Finally, the Court affirmed the High Court’s finding that the Regional Transport Authority, specifically mentioned in section 68‑F(1), is empowered to issue permits to the transport undertaking despite any contrary provision in Chapter IV, rendering rule 141 inapplicable to cases governed by section 68‑F(1). With a Regional Transport Authority existing in Andhra Pradesh, the Court concluded that this provision could not be extended to other authorities.

The Court observed that the route which the scheme intended to nationalise lay entirely within the territorial boundaries of the State. It noted that none of the schemes interfered with the right of private operators to operate their vehicles beyond the State border. Consequently, the condition contained in the proviso to section 68‑D(3) was not triggered, and the schemes could not be said to suffer from the defects that had been alleged. The Court further held that the High Court was correct in its view that the Regional Transport Authority expressly mentioned in section 68‑F(1) possessed the power to issue a permit to a transport undertaking “notwithstanding anything to the contrary contained in Chapter IV”. The Court explained that this provision rendered rule 141 of the Motor Vehicles Rules inapplicable to matters falling within the scope of section 68‑F(1). It clarified that in a State where no Regional Transport Authority exists, another body performing the functions of such an authority for the purposes of the Act might be treated as covered by section 68‑F(1). However, in Andhra Pradesh there is an established Regional Transport Authority, and it therefore cannot be said that this authority is stripped of its permitting power merely because it is unable to grant permits under Chapter IV.

The appeals, numbered Civil Appeal No. 770 of 1963 together with Civil Appeals Nos. 771‑778, 883 and 884 of 1963, were filed against the common judgment of the Andhra Pradesh High Court dated 19 April 1963. The High Court’s order arose from writ petitions filed under article 226 of the Constitution, challenging the validity of three schemes framed under Chapter IV‑A of the Motor Vehicles Act, 1939, which sought to nationalise motor transport in certain areas of the Kumool District. The appellants were the existing motor‑transport operators whose permits were liable to be altered or cancelled under the schemes. Counsel for the appellants appeared in each of the listed appeals, while counsel for the respondents, including the Advocate‑General of Andhra Pradesh, represented the State and the Corporation. The judgment was delivered on 27 January 1964 by Justice Ayyangar. The Court noted that the batch of eleven appeals had been consolidated for hearing and that it was exercising jurisdiction on the basis of a certificate of fitness granted under article 133(1) of the Constitution by the High Court.

The appellants who challenged the schemes were the existing motor‑transport operators whose licences could be altered or cancelled once the schemes became operative. The three impugned schemes had been issued by the Government as Government Orders numbered 292, 293 and 294 of the Home and Transport Department on 5 February 1963, relying on the authority granted by subsection 2 of section 68‑D of the Motor Vehicles Act. The Andhra Pradesh State Road Transport Corporation, hereinafter referred to as the Corporation, together with the State of Andhra Pradesh and the Regional Transport Authority of Kurnool, had been impleaded as respondents to the original writ petitions and therefore appeared as respondents before this Court as well. By virtue of the first scheme, thirty‑four routes were proposed to be taken over; the second and third schemes contemplated the nationalisation of seventeen and thirteen routes respectively, all of which lay in the western part of Kurnool District. Before addressing the matters raised in the appeals, the Court found it useful to set out the statutory provisions governing the nationalisation of road transport, for the decision hinged upon their interpretation. Chapter IV‑A, which contains special provisions concerning “State Transport Undertakings”, had been inserted into the Motor Vehicles Act (Act IV of 1939) by an amendment effected by Central Act 1 of 1956, which came into force on 16 February 1957. This chapter consists of sections numbered 68‑A to 68‑I. Section 68‑A provides definitions, and it is sufficient to note the definition of “State Transport Undertaking”, which includes, inter alia, “any undertaking providing road transport service, where such undertaking is carried on by … any Road Transport Corporation established under sec. 3 of the Road Transport Corporation Act 1950.” The Court observed that the Corporation, the first respondent, is a body created under that enactment. Section 68‑B states that the provisions of this chapter and the rules and orders made thereunder shall have effect notwithstanding any inconsistency with Chapter IV of the Act, any other law then in force, or any instrument having effect by virtue of such law. The provision most directly involved in the appeals is section 68‑C, which reads: “Where any State Transport undertaking is of opinion that for the purpose of providing an efficient, adequate, economical and properly coordinated road transport service, it is necessary in the public interest that road transport services in general or any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State transport undertaking, whether to the exclusion, complete or partial, of other persons or otherwise, the State transport undertaking may prepare a scheme giving particulars of the nature of the services proposed to be rendered, the area or route proposed to be covered and such other particulars respecting thereto as may be prescribed, and shall cause every such scheme …

In that case, the Court explained that a scheme prepared under section 68‑C had to be published in the Official Gazette and could also be published in any other manner that the State Government directed. The first two sub‑sections of section 68‑D allowed any person who was affected by a scheme to file objections to the State Government within thirty days after the scheme’s publication. After receiving the objections, the State Government was required to consider them, but only after giving the objectors and the undertaking an opportunity to be heard. Following that hearing, the State Government could either approve the scheme as it stood or modify it. Once a scheme was approved or modified, it had to be published in the State Gazette; on that publication it became final and was designated the “approved scheme.” Sub‑section (3) of section 68‑D then stated that the scheme, once approved or modified under sub‑section (2), must again be published in the Official Gazette by the State Government, after which it became final and was called the approved scheme, and the area or route covered by it was termed the “notified area” or “notified route.” The provision also included a proviso that any scheme relating to an inter‑State route would not be regarded as an approved scheme unless it had first been published in the Official Gazette with prior approval of the Central Government.

The Court further noted that section 68‑E permitted the State transport undertaking to cancel or modify, at any time, any scheme that had been published under sub‑section (3) of section 68‑D. When a modification was proposed, the procedure laid down in sections 68‑C and 68‑D had to be followed as far as possible, treating the modification as if it were a separate scheme. Section 68‑F dealt with the consequences of an approved scheme. Its first sub‑section required that, when a State Transport Undertaking, in accordance with an approved scheme, applied for a stage carriage permit, a public carrier’s permit, or a contract carriage permit for a notified area or route in the manner prescribed in Chapter IV, the Regional Transport Authority must issue the permit to the State transport undertaking, regardless of any contrary provision in Chapter IV. The second sub‑section empowered the Regional Transport Authority to refuse renewal of any permits held by private operators and to otherwise manage those permits so as to give effect to the scheme. Sections 68‑G and 68‑H concerned the payment of compensation and the methods for computing it, but the Court chose not to quote them because they were not material to the discussion. Finally, section 68‑1 gave the State Government the authority to make rules to implement the provisions of Chapter IV‑A; among the specific purposes for which such rules could be framed was the provision in sub‑section 68‑1(2)(a) that prescribed the form in which any scheme or approved scheme should be published under section 68‑C or sub‑section (3) of section 68‑D, as usual.

In the draft schemes the Corporation prepared, a residuary clause was inserted that read: “any other matter which has to be or may be considered.” These drafts were placed in the official Gazette under section 68‑D on 29 November 1962. Following the publication, the appellants and several other interested parties submitted formal objections to the schemes. The Transport Minister of the State then conducted a hearing of those objections pursuant to section 68‑D(2) on 11 January 1963. After considering the objections, the Minister issued an order on 12 February 1963 approving the schemes, and the finalized schemes were subsequently published in the Gazette on the next day, 13 February 1963. Acting under the authority granted by the approved schemes, the Corporation applied to the Regional Transport Authority for the requisite permits to operate the services. Shortly thereafter the appellants, together with a few additional petitioners, filed writ petitions under article 226 of the Constitution, seeking the High Court’s intervention to set aside the schemes. The High Court heard these petitions and, by a common judgment dated 19 April 1963, dismissed them, holding that the objections raised against the validity of the schemes could not be sustained. Nevertheless, the learned judges, on the appellants’ application, issued a certificate of fitness under article 133, thereby allowing the present appeals to be taken to this Court.

The appellants advanced several substantive arguments to support their claim that the impugned schemes were invalid, and those arguments were essentially the same as those presented before the High Court. First, they asserted that the schemes did not genuinely reflect the Corporation’s own view that, in the public interest, road‑transport services in the specified areas should be operated by the State Transport Undertaking as required by section 68‑C; instead they alleged that the schemes originated from a direction issued by the Chief Minister of Andhra Pradesh, who acted with improper intent in instructing the Transport Undertaking to prepare the schemes. Second, the appellants contended that the Transport Minister’s decision to overrule the objections raised by various road‑transport operators was likewise motivated by the same improper purpose and therefore was also mala fide. Third, they argued that both the draft schemes published by the Corporation and the final schemes published under section 68‑D(3) failed to meet the statutory requirements of section 68‑C and rule 4 of the Rules, which prescribe the specific particulars to be included in a scheme; consequently, they claimed that the core of the scheme violated Rule 68(E) of the Act. Fourth, the appellants pointed out that the schemes covered not only intrastate routes but also interstate transport routes, and that for the interstate portion the procedural safeguards prescribed by the proviso to section 68‑D were not observed, rendering those portions of the schemes defective.

The Court observed that the procedural requirements for the integrated schemes had not been complied with, and consequently the integrated schemes that were challenged were deemed invalid and needed to be set aside. The Court also noted that a small number of minor schemes existed, which would be considered and examined at a later stage. The Court indicated that it would address four specific points in the order in which they had been raised. Before addressing the first point – namely the allegation that the draft scheme referred to in section 68‑D did not originate from the State Transport Undertaking itself but was prepared under the direction of the Chief Minister – the Court found it necessary to provide a brief overview of the development of nationalised road transport in the State of Andhra Pradesh and to summarise certain political events in the State that had become the focus of the allegations presented in the affidavits. The Court explained that the present State of Andhra Pradesh consists of two distinct geographical parts. The first part, referred to as the Telangana area, comprises nine districts that were formerly part of the old Hyderabad State. The second part, called the Andhra area, was separated from the composite Madras State in October 1953 and includes eleven districts. Both parts were merged under the States Re‑organisation Act, 1956, to create the modern State of Andhra Pradesh.

In the Telangana area, road‑transport services had been operated by the Government of the Nizam since 1932, and by 1956 all private motor‑road‑transport operators had been completely eliminated from that region. In contrast, in the Andhra area, which contains the eleven districts, motor‑transport nationalisation had not been undertaken at that time. Consequently, shortly after the formation of the State of Andhra Pradesh, the Andhra Pradesh State Road Transport Corporation was established effective 11 January 1958 with the purpose of extending nationalised transport to the Andhra area. Beginning in 1959, certain routes in three of the eleven districts – Krishna, West Godavari and Guntur – were nationalised. The Vijayawada–Masulipatam and Vijayawada–Guntur routes were nationalised first, and by about September 1959 almost all routes in Krishna district had been brought under nationalisation. The next district to undergo nationalisation was West Godavari, a process that commenced in March 1960 and was almost completed by 1 February 1960, leaving only a few routes un‑nationalised. The Government also sanctioned schemes for nationalising routes in Guntur district, with an anticipated completion date of October 1961. After these steps, the remaining issue for consideration was the method and stages by which nationwide motor‑transport nationalisation could be achieved throughout the entire State. To address this objective, the Corporation passed a resolution in 1960 authorising the appointment of an expert Committee tasked with examining the operation of nationalised transport, recommending measures to improve its efficiency, and preparing plans for future expansion of road‑transport services in the State.

In this matter, the Court examined the development of road transport services within the State and the procedure adopted by the Corporation for nationalising those services. The Committee that was created to study the functioning of nationalised transport received a broad set of terms of reference and began its work promptly after its members were appointed. The Chairman of the Committee was Shri S. Anantharama krishnan, who headed Messrs. Simpson & Co. Ltd., Madras, a major motor‑transport operator in the Madras State, and the remaining three members were officials of the Andhra Pradesh State Government. The Committee presented its findings in a Report that it submitted to the Corporation on 9 February 1961. Among the many recommendations contained in that Report, the Court identified the recommendations recorded in Chapter IX and, in particular, those concerning the priorities for taking up nationalisation, as being central to the present appeals and as the basis for the claim that the impugned schemes were tainted by mala fide. In paragraph 124 the Committee enumerated four factors that it considered should guide the sequence in which new areas were to be nationalised: first, that the most profitable areas should be taken up first; second, that expansion should be contiguous from a traffic perspective; third, that it was administratively convenient to nationalise bus services district by district; and fourth, that the proposal to form large‑sized divisions should be borne in view. Applying those criteria, the Committee set out in paragraph 125 a schedule for extending nationalisation of bus transport to the remaining districts in the Andhra area, namely: 1961‑62 Guntur District; 1962‑63 Nellore and Chittor Districts; 1963‑64 Cuddapah and Kurnool Districts; 1964‑65 Anantapur and East Godavari Districts; and 1965‑66 Visakhapatnam and Srikakulam Districts. The Committee further advised in paragraph 126 that a policy decision should be taken by the Government on extending nationalisation to the remaining Andhra districts during the Third Five‑Year Plan, that the Government could also determine the order in which new areas would be taken over, and that the Corporation would then be able to plan well in advance and provide all necessary facilities for expanding its activities to other districts. The Corporation considered this Report of the Anantharamakrishnan Committee and, in March 1962, accepted the recommendation concerning the phased programme of nationalisation of districts in the order indicated. The Corporation incorporated that recommendation into its Administration Report for the period from 1 January 1958, the date of its formation, to 31 March 1961, which it submitted to the Government as required by section 35(2) of the Road Transport Corporation Act, 1960, on 7 April 1962. In that document, the Corporation expressed its view of future trends by stating that the programme for nationalising transport services in the remaining parts of Andhra Pradesh would be as follows: 1961‑62 Guntur District; 1962‑63 Nellore and Chittor Districts; 1963‑64 Cuddapah and Kurnool Districts; 1964‑65 Ananthapur and East Godavari Districts; and 1965‑66 Visakhapatnam and Srikakulam Districts.

The report of the Anantharamakrishnan Committee listed the planned sequence for nationalising transport services in the remaining districts of Andhra Pradesh as follows: Guntur District in 1961‑62, Nellore and Chittor Districts in 1962‑63, Cuddapah and Kurnool Districts in 1963‑64, Ananthapur and East Godavari Districts in 1964‑65, and finally Vishakhapatnam and Srikakulam Districts in 1965‑66. However, the schemes that were challenged altered this order. After the Corporation had successfully completed the nationalisation of Guntur District by the end of 1961, the next districts that should have been taken up in 1962‑63, according to the Committee’s recommendation, were Nellore and then Chittor. The subsequent districts slated for nationalisation were Cuddapah followed by Kurnool. This recommendation had been accepted by the Road Transport Corporation as late as April 1962, and it is noteworthy that the Vice‑Chairman of the Corporation was himself a member of the Anantharamakrishnan Committee. Contrary to this agreed plan, the Corporation passed a resolution on 4 May 1962 deciding that the order would be changed to Kurnool, Nellore and Cuddapah, in that sequence. In the three schemes prepared pursuant to that resolution, the western half of Kurnool District was selected as the area to be nationalised first. The appellants in this case are transport operators whose routes are wholly situated in the western half of Kurnool District. They contend that the alteration of the district order and the specific choice of the western part of Kurnool for immediate nationalisation were motivated by malicious intent on the part of the Chief Minister, and that this motive forms the principal basis for challenging the validity of the schemes. The affidavit filed in support of Writ Petition No. 267 of 1963, which gave rise to Civil Appeal No. 770 of 1963, sets out the factual backdrop of the allegations. It states that the general elections for the Assembly and Parliament were held in February 1962 and that the Congress Party was then divided into two rival factions. Both the former Chief Minister, Shri Sanjivayya, and the incumbent Chief Minister, Shri Sanjiva Reddy, were elected from constituencies in Kurnool District. The then Chairman of the Zila Parishad, Shri Vijaya Bhaskara Reddy, contested unsuccessfully from the Yemmiganur constituency, which lies in the western part of Kurnool District, and he was a vigorous supporter of the present Chief Minister. Similarly, Shri C. Ram Bhopal, who is the son‑in‑law of the sitting Chief Minister, also lost his contest from the Nandikothur constituency, another area in the western part of Kurnool. The candidate who defeated him, Shri P. Venkatakrishna Reddy, who is now a Member of the Legislative Assembly, is a partner in the firm ‘Venkata Krishna Bus Service Nandikothur’. That firm holds two bus permits that are officially registered in the name of Jayaramayya, who acted as the election agent for Shri Venkata Krishna Reddy. The affidavit further mentions two individuals, Shri Ganikhan and Shri Antony Reddy, who were staunch supporters of the present Chief Minister and were also selected as Congress candidates by the Parliamentary Board in Delhi when Shri Sanjiva Reddy was President of the Indian National Congress, but both were defeated in their respective constituencies. The affidavit asserts that the transport operators, including the petitioners, were perceived by many as being responsible for these electoral defeats, which allegedly provoked the Chief Minister’s hostility toward the operators in Kurnool District, especially those whose routes lay in its western areas. It further alleges that, with the intent to cause loss and ruin to those operators, the nationalisation of transport in the western part of Kurnool was embarked upon despite the prevailing Emergency and despite the Road Transport Corporation’s inability to meet its earlier commitments because of a shortage of buses.

In the election that preceded the case, the Parliamentary Board in Delhi chose several staunch supporters of the incumbent Chief Minister, Sri Sanjiva Reddy, to be Congress candidates when Sanjiva Reddy was serving as President of the Indian National Congress. All of those selected candidates were defeated in the constituencies from which they had contested. It was widely alleged that leading transport operators, who are identified as the petitioners, played a decisive role in causing those defeats. According to those allegations, the defeat of the candidates angered Sri Sanjiva Reddy and gave rise to hostile feelings toward the transport operators operating in Kurnool District, especially those whose routes were situated in the western part of the district. The alleged motive, as stated, was to inflict loss on those operators and to ruin their businesses. Consequently, the nationalisation of transport services in the western part of Kurnool was ordered to be carried out despite the existence of an Emergency proclamation and despite the fact that the Road Transport Corporation lacked the capacity to meet its earlier commitments because it did not possess sufficient buses.

Further facts were set out concerning specific individuals. The undivided brothers of Sri T. Narayan, a transport operator, namely Sri Venkataswamy, contested the Assembly election from the Dhone constituency against Sri Sanjiva Reddy, who was returned from that constituency. Sri Venkataswamy refused to withdraw his candidature even though he was subjected to considerable pressure. In addition, Sri Rajasekhara Reddy and Sri Vijayakumara Reddy, who are the sons of Sri P. Ranga Reddy—who had served as a minister in the previous cabinet—are themselves transport operators in Kurnool District. It is a matter of public knowledge that Sri P. Ranga Reddy belongs to a faction that opposes Sri Sanjiva Reddy. Another transport operator, Sri Y. Mahananda Reddy, is a firm supporter of Sri P. Ranga Reddy. When Sanjiva Reddy held the presidency of the Indian National Congress, his own choice of a Congress ticket for a candidate was set aside by him, and the Pradesh Congress Committee selected a different individual, Vengal Reddy, for the ticket.

The petitioners pointed out that the three nationalisation schemes that had been formulated for the Kurnool District specifically targeted the areas where the above‑named operators ran their bus services. Conversely, the areas of Kurnool District where the Chief Minister’s supporters held transport permits were deliberately excluded from all three schemes. In the Nandyal area, for example, most of the transport operators are supporters of the incumbent Chief Minister, and their routes were omitted from the nationalisation plans. The petitioners argued that the purpose of the schemes was to strike at those operators who had fallen out of favour with the Chief Minister while protecting those who remained in his confidence, as evidenced by the selective inclusion and exclusion of routes across different parts of the district.

Two additional matters were raised to support the allegation of mala‑fides. The first matter concerned the original programme that had been approved and confirmed by the Road Transport Corporation in its Administration Report dated 7 April 1962. According to that programme, the next phase of expansion was to involve routes in Nellore District. The Anantharamakrishnan Committee Report identified specific routes in Nellore that were both contiguous to existing services and commercially profitable, and those routes had been surveyed accordingly. Nevertheless, despite the apparent suitability of those routes for inclusion in the corporation’s expansion plan, the nationalisation of the western part of Kurnool was pursued instead, while the Nellore scheme was abandoned.

In the matter of extending services to Nellore, the Court noted that the Corporation had considered two principal factors. First, contiguity existed because certain buses owned by the Corporation and operating from Guntur were already running in the Nellore District. Second, the profitable nature of the proposed extension had been evaluated by the Anantharamakrishnan Committee, whose recommendations the Corporation examined and approved. Despite these favorable conditions, the Corporation chose not to nationalise the routes in Nellore and instead decided to focus on the western part of Kurnool. The Court further observed that, in early November 1962, the National Defence Council issued a resolution urging the postponement of any further nationalisation of transport services. Nevertheless, at a meeting attended by the Chief Minister, the Corporation published its schemes for the nationalisation of transport services in Kurnool District on 29 November 1962, seemingly in contravention of the Council’s recommendation.

The Court then explained the legal framework governing the schemes that were being challenged. It emphasized that the schemes had been formulated by the Andhra Pradesh State Road Transport Corporation, an independent semi‑autonomous body created by the State Government under the Road Transport Corporation Act of 1950. Under section 68‑C of the Motor Vehicles Act, the Corporation, acting as the State Transport Undertaking, is required to form an opinion on whether, for the purpose of providing an efficient, adequate, economical and properly coordinated road transport service, it is necessary in the public interest that the service be run and operated by the State Transport Undertaking. Moreover, the Corporation must be satisfied that such services should be provided in the public interest for any particular area or route. In the present case, the Court observed that it was indeed the Corporation that published the schemes pursuant to section 68‑C, and that the Corporation itself had considered and decided on the two matters mentioned above.

The Court noted that the appellants did not dispute that, regardless of the Chief Minister’s personal inclinations, desires or motives, the validity of the schemes could not be successfully challenged merely because the schemes appeared to fulfill an alleged grudge held by the Chief Minister against certain operators. The appellants advanced a two‑fold argument. First, they claimed that the opinion required by section 68‑C was not actually formed by the Corporation but by the Chief Minister. Second, they alleged that the Chief Minister was driven by extraneous considerations, specifically an intention to strike at his political opponents—those who had opposed him or his supporters and relations in the February 1962 elections—by devising the schemes to cause them financial loss and eventual ruin. A subsidiary allegation was also raised, asserting that the Transport Minister, who had heard objections under section 68‑D(2), was similarly influenced by the Chief Minister.

In the matter before the Court, it was asserted that the Chief Minister exercised dominant influence over every stage of the formulation of the schemes and that these schemes were, in reality, the product of his improper intention to defeat his political opponents. The respondent did not dispute that, should those allegations be established, the schemes would be invalid and should be set aside. The learned Judges of the High Court addressed this aspect of the case by making three principal findings. First, they observed that the allegations levelled against the Chief Minister had not been proven on the record. Second, they held that even assuming the Chief Minister had been motivated by political considerations to harm his opponents, the schemes that were eventually published had been prepared by the Corporation on the basis of its own independent judgment and not merely at the behest of the Chief Minister. Third, the High Court concluded that there was no evidence to show that the Transport Minister, who had heard the objections raised by the appellants under section 68‑D(2), had been influenced by the Chief Minister or had acted on his instructions, and therefore the schemes that were framed and approved complied fully with the requirements of section 68‑C. These conclusions have been contested before this Court, and the first issue that requires examination is whether the allegations against the Chief Minister have been sufficiently established. The question must be considered from two distinct viewpoints. The initial viewpoint concerns whether the factual allegations, which are said to have formed the basis of the Chief Minister’s animus toward the transport operators in the western part of Kurnool, have been proved. Regarding this point, the affidavit presented is not vague; it supplies a series of specific details. The affidavit states that during the General Elections of 1962 there existed two factions within the Congress Party, one headed by the Chief Minister and the other led by an individual named Mr. Sanjivayya. It further alleges that, in those elections, certain candidates who were identified as belonging to the Chief Minister’s faction suffered defeat. Those contested constituencies were located in the western portion of the Kurnool District. The affidavit claims that the defeats were caused by members of the rival faction, whose names are also enumerated in the document. Moreover, it alleges that a number of the members supporting the dissident faction were motor‑transport operators who took a prominent part in the electoral process and contributed to the defeat of the candidates associated with the Chief Minister’s group. The affidavit also refers to matters concerning an individual named Ranga Reddy and his sons, among other points. These matters constitute what may be described as objective facts. If the Court were to find that these allegations have not been proved, then the entire contention of the appellants on this portion of the case would fail, because there would be no foundation on which to base the submission that the Chief Minister acted in bad faith. Conversely, if the Court were to hold that these facts have indeed been established, the analysis must then proceed to the second aspect, which examines whether the established facts demonstrate that the Chief Minister entertained personal hostility toward the transport operators because of the support they gave to the opposing group, thereby motivating him to direct the Corporation to alter the order of district nationalisation in a manner that favoured his political objectives.

In the present matter the Court first found that the factual allegations set out by the petitioners were established, and then turned to the second issue, namely whether there was any material before the Court to conclude that those established facts caused the Chief Minister to develop personal hostility toward the motor‑transport operators because the operators had assisted candidates who belonged to the political group opposing him, a circumstance that allegedly resulted in the defeat of the Chief Minister’s own party candidates. On this point the petitioners alleged that the Chief Minister had been deeply displeased by the loss of his party’s candidates and supporters, and that, wishing to take revenge on the motor‑transport operators of the western part of Kurnool who were his political adversaries, he directed the State Road Transport Corporation to alter the sequence in which districts were to be nationalised, ordering that Kurnool be taken first, contrary to a decision that the Corporation had adopted only a short time earlier. The petitioners further alleged that the Corporation complied with the Chief Minister’s instructions, not only by commencing nationalisation in Kurnool ahead of the other districts but also by removing the private operators from the western portions of Kurnool, those operators being identified as the Chief Minister’s political opponents. The Court observed that these allegations could be assessed only on a basis of probability and inference, since no direct documentary or eyewitness evidence had been produced to substantiate them. The Court also noted that accusations of malice and improper motive on the part of those in authority are frequently made, and that the frequency of such allegations appears to have risen in recent times. It further expressed regret that many of these accusations are unfounded and are advanced merely to create prejudice or in the hope that, even if lacking factual basis, some portion of the claim might survive. Consequently the Court said it must examine such allegations with great care so as not to be swayed by unsubstantiated claims. The Court further stated that a more satisfactory resolution would be achieved if the respondents, against whom the allegations are made, presented affidavits or other material either denying the allegations or offering their own version of events, thereby enabling the Court to determine whether the burden of proof, which lies on the party alleging malice, has been discharged. In the absence of any such affidavits or evidential material from the respondents, the Court remarked that it is left to evaluate the truth of the allegations solely on the basis of probability, without any more concrete answer. The Court concluded that this is precisely the predicament it faces in the present case.

In the present matter, the Court observed that the learned Judges of the High Court had rejected the allegations contained in the affidavits that had been set out earlier, and they had done so on grounds and for reasons that the Court did not find persuasive. Because the learned Advocate‑General had not attempted to support those grounds or the reasoning of the High Court, the Court considered it unnecessary to repeat or examine them. Setting aside the reasons offered by the High Court, the Court noted that the petition contained allegations expressed with particularity and detail. The Court recalled that it had earlier listed and classified those allegations as objective facts. No party, including the Transport Minister, had denied those objective facts. Although the Transport Minister had filed an affidavit, his affidavit was limited to the claim that he had been dictated to by the Chief Minister when he approved the schemes; the Court recognized that the Minister could have denied the allegations with the same specificity with which they were presented in the petition. The learned Judges of the High Court had not rejected the objective‑facts allegations on the basis that they were patently improbable or absurd, and the Advocate‑General had made no submission on that ground either. The next issue for the Court was the inference that could be drawn from those facts, which, in the absence of any denial, had to be taken as true. The Court expressed considerable uneasiness at this point because, if the facts forming the basis of the claim of mala fides were established, the remaining question would be whether it was reasonable to infer mala fides on the part of the Chief Minister. The Court found itself compelled to proceed without any effective answer as to the propriety of drawing the inference sought by the appellants. There had been no denial by the Chief Minister, nor any affidavit from any person who could personally attest to the truth of the allegations. The Secretary to the Home Department, identified as Mr S. A. Lyengar, submitted a counter‑affidavit in which he formally denied the previously set out allegations. In his statement he declared, “I have been expressly instructed and authorized by the Hon’ble Chief Minister to state that the allegations suggesting personal animus and giving mandate are false and mischievous and have been deliberately made to create an atmosphere of sympathy.” The Advocate‑General did not argue that the Court could rely on this second‑hand denial, observing that the statement by Mr Lyengar was merely hearsay. Consequently, the Court was constrained to hold that the allegations that the Chief Minister was motivated by bias and personal ill‑will against the appellants remained unrebutted. Recognizing this position, the Advocate‑General adjusted his submissions accordingly.

The counsel for the respondent requested that the Court proceed on the assumption that the allegations made against the Chief Minister were proven and that he indeed possessed bias and ill‑will toward the appellants. The counsel further submitted that even if that assumption were accepted, the appellants had failed to produce any evidence showing that the Andhra Pradesh State Road Transport Corporation, which is an autonomous body, was motivated in the same manner, and therefore the alleged bias of the Chief Minister would be irrelevant to the corporation’s actions. The Court agreed with that submission. This agreement led to the examination of whether the corporation carried out a mandate purportedly issued by the Chief Minister, as the appellants claimed, or whether the impugned schemes were formulated by the corporation on the basis of its own independent opinion that the schemes were necessary in the public interest under section 68‑C of the Act.

To address this issue, the corporation filed an affidavit denying the appellant’s allegation that it acted merely as a tool of the Chief Minister to implement his wishes. In that affidavit the corporation asserted that the decision to frame the schemes resulted from an independent assessment made after a thorough examination of the entire question. The rival assertions of the corporation and the appellants were the subject of intense debate before the Court during the hearing of the appeals.

Several factual matters already set out in the record are relevant to this question. The Anantharamakrishnan Committee had formulated criteria for determining the sequence in which areas and routes should be selected for nationalisation. Applying those principles, the Committee prepared a list of the remaining districts in which nationalisation should be undertaken successively. According to that order, Nellore would have been the next district to be nationalised, and the turn of the Kurnool district would have arisen only after the completion of nationalisation in the Nellore, Chittoor and Cuddapah districts. The Committee’s report was submitted to the corporation in February 1961. After a detailed examination of the recommendations, the corporation accepted the suggested order of districts and incorporated that approval in its Administration Report dated 24 March 1962, which was published in April 1962. It is also necessary to note that the corporation had previously surveyed the routes in Nellore.

In February 1962 general elections to the Assembly and Parliamentary constituencies were held, and the appellants’ allegations related to sentiments that arose during the electoral process. The present Chief Minister assumed office on 12 March 1962. On 19 April 1962, the Chief Minister summoned a conference of the corporation and its officials, at which he is admitted to having suggested that the nationalisation of bus routes in the Kurnool district should be taken up first. This admission establishes the factual background against which the Court must determine whether the corporation’s actions were the result of an independent opinion under section 68‑C or were directed by the alleged mandate of the Chief Minister.

In this case the Court recorded that the Chief Minister had expressly directed that the Kurnool District should be the first district taken up for nationalisation. The appellants contended that the change in the sequence of districts to be nationalised resulted from a mandate issued by the Chief Minister at a conference, and not from an independent assessment by the Corporation of what was required in the public interest under section 68‑C. The Court noted the statement made by the Chief Minister in the Assembly on 26 July 1962, in which he said, “To say that the Corporation will do everything for the simple reason that it is an autonomous body, and also to say that we will not at all interfere, is not fair. It will not be fair. Now and then we shall have conferences. For example, the Corporation wanted to nationalise Chittoor district. We had discussions. Kurnool is surrounded by three nationalised districts; one side Mahaboobnagar, one side Guntur and the other side the district of Nellore which is going to be nationalised. I questioned as to why the district of Kurnool which is surrounded by three nationalised districts is left out, and instead the district of Chittoor which is abutting the borders of Madras and Bangalore is sought to be taken up. They could not explain. I said Kurnool district is a very compact one and three districts around it are nationalised. They thought that was more practicable and reasonable. Therefore they changed their minds. As a result of such discussions, once in a way we (Government) do interfere but will not interfere in day to day administration.” The Court observed that the conference referred to by the Chief Minister was held on 19 April 1962. Following that meeting the Corporation passed a resolution on 4 May 1962, which read, “The Corporation noted the discussion which took place in the office of the Chief Minister on 19th April, 1962, in regard to the programme of nationalisation of Road Transport Services during the Third Five Year Plan period and resolved that during the Third Five Year Plan three more districts in the order mentioned could be nationalised, viz., Kurnool, Nellore and Cuddapah in view of difficult financial position….” The resolution further recorded that the Chief Executive Officer explained that, because there was a depot at Kurnool and because Kurnool was contiguous to the already nationalised districts, it would be easier to nationalise Kurnool rather than Nellore. It was also stated that nationalisation could be extended to Nellore after Kurnool had been nationalised, and that consequently the Corporation resolved that Kurnool district could be taken up for nationalisation in preference to Nellore. In the counter‑affidavit filed by the Corporation in response to the writ petition, the Chief Executive Officer denied that the Corporation acted with malice in formulating the three impugned schemes. He affirmed that the Corporation’s acceptance of the recommendation of the Anantharamakrishnan Committee was provisional and that it could not bind the Corporation from exercising its powers and duties under the statute.

The Corporation explained that it could not be prevented from exercising its powers and duties under the statute, and it set out several reasons for choosing to nationalise road‑transport services in a part of Kurnool district rather than in other areas. First, it noted that a Government depot already existed at Kurnool. Second, it observed that Kurnool was contiguous to the whole of the Telangana area, which had already been rationalised, and also shared a border with the nationalised area of Guntur. The Corporation further stated that its choice was motivated by the need to maintain service contiguity and coordination, and it added that the impending completion of the Rangapur Bridge over the river Krishna would, when finished, enable direct services to run from Hyderabad through Kurnool to the regions beyond.

In addition, the Corporation asserted that, as an autonomous statutory authority, it possessed powers under the Road Transport Act, and therefore it was malicious to allege that the decision to prepare the impugned schemes had been influenced by the Chief Minister or issued under any mandate from him. The Corporation claimed that, in formulating the schemes, it had obtained the necessary opinion required by section 68‑C on its own. The learned judges of the High Court accepted this statement on behalf of the Corporation and rejected the challenge that the schemes had not been prepared pursuant to the Corporation’s own opinion. The learned Advocate‑General praised this approach and endorsed the High Court’s conclusion for the Supreme Court’s acceptance.

The Advocate‑General further pointed out that the Anantharama‑krishnan Committee, in paragraph 126 of its report, had indicated that the order in which new areas would be taken over for nationalisation might be decided by the Government. Consequently, the Committee did not prescribe a rigid, hard‑and‑fast rule for the sequence of districts to be nationalised; rather, it treated the order as flexible and capable of being modified by the Government on policy grounds, taking into account not only the finances available for nationalisation but also other relevant considerations. The Supreme Court, after careful consideration, could not agree with the High Court’s conclusion.

The Court observed that the element of time and the sequence of dates were crucial. It noted that the Corporation had, as late as March 1962, examined the entire subject and had accepted the Anantharama‑krishnan Committee’s recommendation regarding the order of nationalisation of transport in the various districts. The Corporation had recorded these conclusions in its Administration Report covering the three‑year period from 1958 to 1961. Accordingly, it must be inferred that every factor the Committee had deemed relevant and material for determining the order of districts had been independently investigated, examined, and concurred with by the Corporation before those recommendations were formally approved.

Before those recommendations received formal approval, the Corporation, by March‑April 1962, had examined every material factor and arrived at a conclusion that was exactly the same as the one reached by the Anantharamakrishnan Committee. The subsequent event was a meeting held on 19 April 1962 between the Corporation, its officials, and the Chief Minister. No record of the proceedings of that meeting was placed on the file, and the court found no evidence that any written minutes had been prepared. Nevertheless, the court could rely on a statement that the Chief Minister delivered on the floor of the State Assembly, in which he described what had occurred during his interaction with the Corporation and its officers. The court had already extracted the essential parts of that speech, and three specific points emerged from it. First, the Chief Minister asserted that he possessed the authority to prescribe policy rules for the guidance of the Corporation; the Advocate‑General further informed the court that, under the Road Transport Corporation Act of 1950, the Government indeed held the power to issue policy directions to the Corporation. Second, the policy direction he issued specifically addressed the sequence in which the districts should be nationalised. Third, using the criterion that a district to be nationalised ought to be contiguous to districts where nationalised services already operated, the Chief Minister found that Kurnool satisfied this requirement more effectively than Chittoor; consequently, he recommended that Kurnool, rather than Chittoor, should be the next district to undergo nationalisation. From these observations, it follows that the decision to proceed with Kurnool after Guntur was a direct result of the policy decision taken by the Chief Minister and the direction he gave to the Corporation. It is also noteworthy that, if the Chief Minister’s instruction qualified as a policy decision, the Corporation was legally obligated to implement it, as mandated by section 34 of the Road Transport Corporation Act, 1950. The court clarified that it was not required to decide whether a policy decision under section 34 could touch upon matters that, under section 68‑C of the same Act, were left to the unrestricted discretion and judgment of the Corporation when the corporation functioned as a State undertaking, nor whether such a policy decision needed to be issued in a formal written Government order. What mattered was whether the evidence before the court demonstrated that the Corporation acted upon the direction as an obligatory instruction and complied with it. If, as alleged, the Chief Minister was motivated by personal animus toward road‑transport operators in the western part of Kurnool and therefore directed the Corporation to alter the originally planned order of districts so as to disadvantage his political opponents, and the Corporation nevertheless carried

In the present matter, the Court observed that the actions taken by the Transport Corporation in implementing the Chief Minister’s instructions could not be presented without acknowledging that the resulting scheme was tainted by bad faith, even though the Corporation was a semi‑autonomous body. The Court noted that the Chief Minister, while addressing the Legislative Assembly, had asked the Corporation why Kurnool had not been selected as the next district for nationalisation, and that the Corporation’s officials were unable to provide any answer. It was found remarkable that the Corporation and its officials remained silent, especially because the Vice‑Chairman of the Corporation had served as a member of the Anantharamakrishnan Committee, which had examined the entire issue, laid down the criteria for determining priority, and applied those tests to rank the districts. Moreover, the entire Corporation had studied the Committee’s report, rejected some recommendations, but had accepted the specific recommendation concerning the sequence in which districts should be taken up, and this acceptance occurred only a month or so before the Conference referred to by the Chief Minister.

The Court further stated that, in these circumstances, the appellants’ claim that the Corporation’s views were merely the result of compulsion to follow the Chief Minister’s wishes was not an unreasonable inference from the facts. The Court found it noteworthy that, within a little over two weeks after the Conference and its resolution dated 4 May 1962, the Corporation omitted Nellore—a district contiguous to Guntur—from its nationalisation programme, and instead proceeded to nationalise routes in the western part of Kurnool district, offering reasons for that decision. In the Corporation’s resolution of 4 May 1962, only a single reason was given for preferring Kurnool over Nellore, namely the existence of a depot at Kurnool; the other reason suggested—that Kurnool was contiguous to an area already nationalised—applied equally to Nellore and had itself been one of the criteria used by the Anantharamakrishnan Committee to rank districts.

Regarding the depot at Kurnool, counsel for the appellants argued that this justification was fabricated to conceal the true, political motive behind the change and to mask the fact that the reason was not to provide adequate service. The counsel further contended that the so‑called depot was in reality just a garage equipped with a few repairing tools, rather than a fully equipped workshop. However, the Court observed that none of the affidavits submitted on behalf of the appellants made any specific allegation about the nature or adequacy of the facility described as a depot.

The Court observed that none of the affidavits submitted by the appellants contained any allegation about the character of the facility that was described as a ‘depot’, and consequently the Court could not base its decision merely on the arguments that had been advanced before it. It was pointed out, however, that the very existence of this so‑named depot at Kurnool had escaped the notice of the Anantharamakrishnan Committee. In the Committee’s report, some attention was given to the requirement for depots and the equipment such depots should possess, and the report also identified certain deficiencies in the depots that the Committee inspected. The officials of the Transport Corporation evidently failed to bring the Kurnool depot to the Committee’s attention. Likewise, when the Corporation, in its Administration Report, accepted the recommendations regarding the order in which districts should be nationalised, the presence of the Kurnool depot also appears to have been overlooked by the Corporation itself as a factor to be considered in choosing the district. The Court clarified that it was not drawing any conclusion from this oversight. When the Transport Corporation filed its counter‑affidavit, it did not limit itself to the reasons set out in the resolution that had been relied upon in reaching the decision. Instead, it added an additional reason – namely, the impending completion of the bridge at Rangapur across the Krishna – and asserted that this factor had also been taken into account in the decision‑making process. The Court explained that the issue before it was not whether, in theory or on the basis of the arguments now raised, the selection of Kurnool as the next district for transport nationalisation was wise or unwise. The real question was whether the choice of Kurnool was made by the Corporation in conformity with section 68‑C, or whether, as alleged by the appellants, the decision was in fact taken by the Chief Minister and implemented through the Corporation’s machinery. After examining the evidence, the Court was satisfied that the schemes now challenged had been formulated by the Corporation as a result of the conference held on 19 April 1962, and in order to give effect to the wishes of the Chief Minister expressed at that conference. The learned Advocate‑General then submitted that, even if the Chief Minister had directed the order in which districts were to be nationalised, the scheme prepared by the Corporation could not be challenged as being inconsistent with the requirements of section 68‑C of the Act, provided that the Corporation alone made the choice of the “area” and the routes to be operated. The argument was based on the premise that, even assuming the Chief Minister had directed the Corporation to commence nationalisation of routes in the Kurnool district, there was no allegation that he had specified any particular area within that district or the particular routes to be taken.

In the matter before the Court, the appellants contended that the Chief Minister had not issued any instruction concerning the specific area within the district or the particular routes to be selected. The Court found this argument unconvincing. Even if the Chief Minister had indeed determined which district was to be nationalised, the fact that the Corporation subsequently chose a limited portion of that district and identified the routes within that portion could not, on any reasonable construction of section 68‑C, be regarded as sufficient compliance with the statutory requirement. The Court preferred to read the term “area” in the provision as referring to the whole of the State, to be selected by the Corporation as it deemed appropriate, rather than as a confined part of the State fixed by an external authority, as the learned Advocate‑General had suggested. Moreover, the Corporation offered little or no explanation for its decision to exclude private operators initially from the western segment of the Kurnool district. The principal allegation of bad faith against the Chief Minister, put forward by the appellants, was intended to demonstrate that the schemes were designed to eliminate operators whose routes lay on the western side of the district. Affidavits submitted by the parties further indicated that friends or supporters of the Chief Minister were operating motor transport in the eastern part of Kurnool, which suggested a selective motive. Consequently, the Court expected that the counter‑affidavits would provide a rational basis for why the western portion of the district had been chosen in preference to the remainder. However, the resolution of the Corporation dated 4 May 1962 offered no assistance on this point, and although the counter‑affidavits denied that the Corporation acted under the Chief Minister’s direction, they failed to explain the choice of the western segment. Accordingly, the Court concluded that the impugned schemes were invalid because they did not conform to the requirements of section 68‑C.

The Court then turned to the question of whether the approval of the schemes by the Transport Minister under section 68‑D(3) was likewise tainted by the alleged bad faith of the Chief Minister. The appellants argued that, like the Corporation, the Transport Minister had simply carried out the wishes of the Chief Minister, and therefore his approval should be considered void. In addressing this claim, the Court noted two relevant points. First, the record contained no evidence that the Chief Minister had influenced his fellow minister. Apart from the fact that both individuals were members of the same Council of Ministers, there was no indication of any direction or pressure exerted by the Chief Minister upon the Transport Minister. Second, the Transport Minister had affirmed on oath that, when considering the objections under section 68‑D(3) and deciding whether to approve the schemes, he had acted independently and without influence from the Chief Minister. In light of these findings, the Court held that there was no basis for concluding that the Transport Minister’s approval failed to satisfy the legal requirements. Because the schemes were already found to be non‑conforming with section 68‑C and therefore had to be set aside, the Court deemed that the remaining objections did not require further examination, although it briefly noted them for the record.

In the matter before the Court, the Transport Minister testified under oath that his decision to approve the schemes was made without any influence from the Chief Minister. Accordingly, the Court found no basis to conclude that the Minister’s approval failed to satisfy the legal requirements. Because the Court determined that the schemes must be set aside for not complying with section 68‑C of the Act, the remaining objections could ordinarily have been left unexamined. Nevertheless, the Court chose to address those objections briefly in view of the arguments that were presented. The next contention raised by the appellants was that, apart from the earlier ground, the schemes also failed to meet the provisions of section 68‑C for a different reason. Section 68‑C obliges any scheme published by a Transport Undertaking to disclose “particulars of the nature of the services proposed to be rendered and such other particulars respecting thereto as may be prescribed,” the word “prescribed” meaning that such details must be laid down by rules. The Court observed that these particulars must be set out in the scheme so that (a) operators of vehicles on the affected routes can become aware that the scheme applies to them and, if they find sufficient cause, may raise objections under section 68‑D(1); and (b) the operators and other interested parties can formulate their objections in a proper manner, especially by pointing out any deficiency or inadequacy in the services proposed for the approving authority’s consideration. The appellants argued that the impugned scheme did not provide the particulars required by the provision. The draft scheme, as initially published under section 68‑C and as finally approved, consisted of six columns headed respectively as follows: (1) Serial Number; (2) Name of the Route, indicating its course; (3) Length of the route in miles; (4) Number of vehicles proposed to be operated on each route; (5) Total number of trips each way to be performed on each route; and (6) The nature of the services. The Court noted that columns four and five did not contain the exact number of vehicles to be operated nor the exact total of trips to be made each day. However, each of these columns was further divided into two sub‑columns, labelled 4 and 4(a), and 5 and 5(a). Under column 4 the minimum number of vehicles to be operated was shown, while column 4(a) displayed the maximum number. In a similar fashion column 5 set out the minimum number of total trips each way, and column 5(a) the maximum number. The Court observed that in several entries the difference between the minimum and maximum figures in columns four and five was only one or two; for example, where the minimum was one, the maximum was two, or where the minimum was two, the maximum was four. Yet there were other entries where the variation was markedly larger. For instance, in scheme number one, serial number fifteen showed a minimum of one and a maximum of three in both columns four and five, and serial number sixteen displayed an even greater proportion between the minimum and maximum figures.

The disparity between the maximum and minimum figures became especially large in column four where the range extended from one to four units. A comparable situation was observed for serial number twenty, where the stated minimum and maximum values also exhibited a wide gap. The objection raised against this method of indicating both a maximum and a minimum for the number of vehicles and the corresponding trips is that one of the principal aims of the schemes is to ensure an adequate road‑transport service. All parties accepted that persons affected by the schemes have a right to challenge the schemes on the ground that they fail to provide adequate service. Such a challenge constitutes a material consideration for the authority that is responsible for granting approval to the scheme. Consequently, counsel for the appellants argued that the published schemes do not disclose the actual number of vehicles to be deployed. They also stated that the schemes fail to specify the exact number of trips each vehicle will make, thereby preventing objectors from raising meaningful objections to the adequacy of the service. The appellants further contended that the lack of precise information also deprives the approving authority, under section 68D(3), of the data necessary to decide whether to grant approval.

Rule four of those rules, which carries statutory force under section 68-C, mandates that both draft and approved schemes must include, among other details, the number of vehicles proposed for each route. The rule also requires that the total number of daily trips for each route be clearly specified in the scheme documents. On 26 December 1958, the State Government introduced Rule five, which allowed the State Transport Undertaking, at its discretion, to vary the frequency of services on any notified route. The rule further permitted the undertaking to adjust service frequency within any notified area, taking into account prevailing traffic conditions and passenger demand at the time. The rule also permitted variation by either increasing or decreasing the number of trips of existing buses or by increasing or decreasing the number of buses. The validity of Rule five was challenged before this Court in the case of Dosa Satyanarayana Murty v. The Andhra Pradesh State Road Transport Corporation. In that case, the Court held that Rule five conflicted with the provisions of section 68-E, rendering it invalid. Section 68-E provides that any scheme published under subsection 68-D(3) may be cancelled or modified by the State Transport Undertaking. It further mandates that the procedures set out in sections 68-C and 68-D be applied, as far as possible, to the modification, treating it as a separate scheme. The Court consequently struck down Rule five, finding that it was repugnant to the provisions of section 68-E and could not be sustained. Following that decision, the State Government deleted Rule five, while Rule four remained in force and continued to govern the formulation of transport schemes.

Rule 5 had been deleted, but Rule 4 continued to apply as previously set out. The Court then considered whether the inclusion of maximum and minimum figures in columns 4 and 5 of the schemes complied with the requirements of Rule 4. Counsel for the appellants argued that the purpose of inserting those maxima and minima was to circumvent the operation of section 68‑E and to overcome the Court’s earlier decision striking down Rule 5. They further contended that, for the same reason that motivated the decision in Dosa Satyanarayanamurty’s case (1), the prescription of maxima and minima was inconsistent with section 68‑E because it functioned in a manner indistinguishable from the now‑invalid Rule 5, and that this defect permeated the entire scheme, warranting the setting aside of all three schemes. In support of this submission, the appellants relied on an affidavit filed by the Assistant Secretary to the Transport Department, which explained that the maxima‑minima provision was adopted because “it enabled the Corporation to provide adequate services with reference to the public needs, without having to go through the elaborate gamut of modifying the approved scheme for the purpose.” The High Court judges dismissed this argument, relying on an analogy drawn from sections 46 and 48 of the Act, which require private operators seeking State carriage permits to state both the minimum and maximum number of daily services for each route or area. The judges held that this analogy indicated that a scheme specifying maximum and minimum numbers of buses and services was consistent with, and did not violate, Rule 4. The Advocate‑General echoed this reasoning, asserting that the language of Rule 4 did not expressly forbid specifying a minimum and a maximum, and that the now‑repealed Rule 5, which the Court had found repugnant to section 68‑E, would only become relevant if the scheme actually departed from the stated maxima or minima. While conceding that an excessively wide gap between the minimum and maximum could contradict Rule 4, the Advocate‑General maintained that the differences observed in the three schemes before the Court—specifically between columns 4 and 4(a) and between columns 5 and 5(a)—were minimal and therefore did not constitute a failure to fix the number of vehicles to be operated or the trips they would make on the routes. The Court noted that, in light of its own conclusion, some of the variations between the maxima and minima in the number of vehicles proposed for each route were such that, applying the test suggested by the Advocate‑General, they did not amount to a breach of Rule 4.

The Court noted that it had not found it necessary to finally decide the broader issue of whether the mere prescription of maximum and minimum figures, especially in light of the reasons set out in the affidavit of the Assistant Secretary to the Transport Department, amounted to a violation of section 68‑E and also of Rule 4 of the Motor Vehicles Rules, 1957, which would require the provisions to be struck down. In passing, the Court observed that it was not persuaded by the argument founded on sections 46 and 48. It recalled that the matter concerned a requirement contained in Chapter IV‑A and, under section 68‑B of the Act, the rules made under that Chapter were to operate notwithstanding any provisions in Chapter IV in which sections 46 and 48 appear. The rule‑making authority, although aware of the analogy with sections 46 and 48, deliberately chose not to employ the same wording used in those sections. Further, the Court recognised that the provisions of Chapter IV‑A encroach upon the rights of private operators to conduct business, but that such encroachment was justified as a reasonable restriction in the public interest. Accordingly, the Court suggested that a more precise indication in the scheme might have assisted a quasi‑judicial assessment of its adequacy before the scheme became effective. Nevertheless, the Court held that it was unnecessary to reach a final decision on that point because it had already concluded that the scheme violated Rule 4 according to the test proposed by the Advocate‑General.

The Court illustrated its conclusion by referring to specific routes. In Scheme 1, routes 15, 16, 18 and 20 displayed variations in the number of vehicles of 1‑to‑3, 1‑to‑4 and 3‑to‑8 respectively. In Scheme 2, route 1 showed a variation of 6‑to‑12 vehicles, and in Scheme 3, route 1 showed a variation of 5‑to‑9 vehicles. The Court clarified that it had considered not only the proportion but also the absolute variation in numbers, and that these examples were presented merely as illustrations; an exhaustive list of all routes was not deemed necessary because the same principle applied to the remaining routes. The Court then turned to the objection that certain routes were inter‑State and that, under the proviso to section 68‑D(3), a scheme could not be approved without prior approval of the Central Government. The Court rejected this objection, noting that the route proposed for nationalisation lay entirely within the State and that the schemes did not affect the right of private operators to operate vehicles beyond the State border. Consequently, the proviso to section 68‑D(3) was not triggered, and the scheme was not afflicted by the alleged defect.

The Court observed that a further objection concerned the wording used in column six of the schemes to describe the nature of the service. It was argued that the language was vague, and that because of this perceived vagueness the operators who were in fact covered by the scheme believed that the words did not apply to them. As a result, those operators allegedly failed to file objections that they were entitled to make under section 68‑D(2). The Court examined the actual wording in column six and concluded that the objection did not merit serious consideration. It was not satisfied that any party was misled by any ambiguity in the phrasing of column six. Moreover, the learned Counsel for the respondents did not pursue this objection after the matter was discussed during the oral arguments. Consequently, the Court found no merit in the claim that the scheme’s language concealed its effect from the affected operators.

Subsequent objections to the schemes arose in Civil Appeals Nos. 771 to 778. The most forcefully pleaded contention related to an alleged illegality in the way the scheme had been implemented. Under section 68‑(1) the State Transport Undertaking is required to make an application for a “Stage Carriage permit …” in the manner prescribed in Chapter IV‑A, and that application is to be addressed to the Regional Transport Authority, which is then directed to grant the permit notwithstanding any contrary provision in Chapter IV. In compliance with this provision, the State Road Transport Corporation submitted an application to the Regional Transport Authority for the issuance of the requisite permits. The objection raised was that, for routes whose length exceeds one hundred miles and which run on a Trunk Road, the application should have been made only to the State Transport Authority, which alone is competent to entertain such applications. Three routes in Scheme 2, which are the subject of Civil Appeals Nos. 773, 776 and 777, each exceed one hundred miles in length and each lies on a Trunk Road. Rule 141 of the Madras Motor Vehicles Act Rules provides that permits for routes covering a distance of more than one hundred miles on Trunk Roads may be granted solely by the State Transport Authority. It was, in fact, that Authority which granted the permits for those three routes to the respective appellants. The argument advanced was that even when a transport undertaking seeks a stage‑carriage permit under section 68‑F(1), it must still obey the requirements of Rule 141. Relying on this reasoning, the appellants in the three civil appeals applied for a writ of prohibition against the Regional Transport Authority, before which the applications had been filed. Section 68‑F(1) reads: “68‑F(1). Where, in pursuance of an approved scheme any State transport undertaking applies in the manner specified in Chapter IV for a stage carriage permit or a public carrier’s permit or a contract carriage permit in respect of a notified area or notified route, the Regional Transport Authority shall issue such permit to the State transport undertaking, notwithstanding…”

The Court observed that Section 68‑F(1) contains the clause “notwithstanding anything to the contrary contained in Chapter IV.” The High Court had held that the Regional Transport Authority expressly mentioned in that provision was authorised to grant a permit to a transport undertaking “notwithstanding anything to the contrary contained in Chapter IV,” and that the provision rendered Rule 141 of the Motor Vehicles Rules inapplicable wherever Section 68‑F(1) applied. The Court agreed with that reasoning. In addition, Section 68‑B provides that “the provisions of this Chapter and the rules and orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in Chapter IV of this Act or in any law for the time being in force or in any instrument having effect by virtue of any such law.” Consequently, any rule in Chapter IV that conflicts with the provisions of Chapter IV‑A is superseded to the extent of the inconsistency. Although the wording of Section 68‑F(1) refers to an application made “in the manner specified in Chapter IV,” which could be read as describing the authority to which the application must be addressed, the statute further specifies that the Regional Transport Authority is the authority that must issue the permit and that it must do so notwithstanding any contrary provisions of Chapter IV. Thus, any rule in Chapter IV or the rules made thereunder that assign the power to grant the permit to an authority other than the Regional Transport Authority is displaced. The Court noted that Rule 141 vests the State Transport Authority with the powers of the Regional Transport Authority for routes of the description under discussion, but held that this distinction did not affect the conclusion that Section 68‑F(1) prevails.

The Court also considered the situation in a State where no Regional Transport Authority exists, referring to the proviso to Section 44(1), and explained that another authority performing the functions of a Regional Transport Authority could be contemplated within Section 68‑F(1). However, because Andhra Pradesh does have a Regional Transport Authority, the Court could not accept the argument that the authority was stripped of its power to issue permits merely because it could not grant permits under Chapter IV. Several additional points raised in Civil Appeal No. 771 depended on the premise that the Regional Transport Authority to which applications under Section 68‑F(1) were made lacked competence to entertain the application and to issue a permit. Since the Court concluded that the Regional Transport Authority is competent, those arguments no longer arose. The Court then turned to a minor point raised in Civil Appeals Nos. 883 and 884, which concerned the description of routes in the scheme being allegedly vague and misleading. The Court found this contention entirely without substance, noting that the scheme merely specifies terminal points and that such specification necessarily implies that transport between the two termini is covered. Accordingly, the objection was dismissed as frivolous. In view of the determination that the schemes were invalid for failing to comply with the requirements of Section 68‑C and the associated rules, the Court affirmed the relief sought.

In this case the Court observed that the scheme under consideration was described in such vague and misleading terms that the appellants failed to register any objections before the Government. The Court illustrated the point by referring to Civil Appeal No. 883, where an operator who provided a service from Uravakonda to Adoni pointed out that Serial No. 16 of Scheme No. 1 described the route only as “Adoni to Uravakonda.” The operator argued that because the scheme listed the route in the opposite direction, his own Uravakonda‑to‑Adoni service was not covered by the scheme and therefore his interests were not affected. The Court found this objection to be frivolous on its face, explaining that the scheme consistently identified only the terminal points of each service and that such identification plainly implied that the transport operations between those two terminals were intended to be brought under nationalisation. The Court noted that the complaint presented in Civil Appeal No. 884 was identical in substance, differing solely in the specific route involved. Having examined all the points raised before it, the Court concluded that the schemes were fundamentally defective because they did not comply with the requirements of section 68‑C and the Rules made thereunder. Consequently, the Court held that the schemes had to be set aside as they were not authorised by law. The appeals were therefore allowed, and the appellants were granted a declaration that the schemes were invalid and could not be enforced. In addition, the Court ordered that the appellants were entitled to recover their costs both in this proceeding and in the earlier High Court proceedings, describing the cost award as a “one hearing fee.” The judgment was pronounced on 27 January 1964 by Justice Ayyangar. Shortly after that pronouncement, the learned advocate for the appellants brought to the Court’s attention an order issued on 10 June 1963, which related to the earlier interim stay of the schemes. That order recorded that the stay had been vacated on the application of the State Government and that the learned Advocate‑General for Andhra Pradesh had given an undertaking to compensate the appellants for any loss suffered during the period when the appeals were pending, loss that arose because the appellants were prevented from operating their buses on the routes for which they held permits. The Advocate‑General further undertook that the quantum of compensation would be determined in the present proceedings and that no order as to costs would be made at that stage. The counsel for the appellants then requested that the Court issue appropriate directions to give effect to this undertaking. In response, the Court added to the judgment pronounced on 27 January 1964 a supplementary paragraph stating that, in view of the 10 June 1963 order which recorded the State’s undertaking to compensate the appellants for the loss incurred while the appeals were pending, a declaration to that effect would be made and that the High Court would be tasked with determining the amount payable and issuing suitable directions for its payment.

The Court directed that the High Court should issue appropriate directions for the payment of the amount that it determines to be payable.