http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 36  

PETITIONER: DEEP CHAND

       Vs.

RESPONDENT: THE STATE OF UTTAR PRADESHAND OTHERS(and connected appeal)

DATE OF JUDGMENT: 15/01/1959

BENCH: SUBBARAO, K. BENCH: SUBBARAO, K. DAS, SUDHI RANJAN (CJ) BHAGWATI, NATWARLAL H. SINHA, BHUVNESHWAR P. WANCHOO, K.N.

CITATION:  1959 AIR  648            1959 SCR  Supl. (2)   8  CITATOR INFO :  R          1960 SC1080  (32)  R          1962 SC 594  (16)  RF         1962 SC 981  (14)  RF         1962 SC1517  (22)  E          1962 SC1753  (15,16)  R          1963 SC1019  (18)  R          1963 SC1531  (20)  R          1963 SC1561  (11)  RF         1964 SC 381  (53)  R          1966 SC1780  (5)  RF         1967 SC1091  (11)  D          1967 SC1480  (13,21)  RF         1967 SC1643  (110)  D          1969 SC1225  (7,8)  RF         1972 SC 425  (12)  R          1972 SC1738  (15,21)  RF         1972 SC2205  (26)  RF         1973 SC1461  (915)  RF         1974 SC1300  (33,41)  RF         1974 SC1480  (10)  RF         1979 SC  25  (40)  R          1979 SC 898  (31)  R          1979 SC 984  (11)  R          1983 SC1019  (65,71)  R          1984 SC1260  (14)  RF         1988 SC 329  (13)  R          1990 SC 104  (8)  R          1990 SC 761  (4)  RF         1990 SC2072  (11,16,31,44)  R          1992 SC1310  (8,15)

ACT:        Transport Service-Scheme of nationalisation formulated under        State   enactment  of  Amendment  of   Central   Act-Effect-        Repugnancy--Constitutional validity of State enactment-Uttar        Pradesh Transport Service (Development) Act (IX of 1955), s.        11(5)-Motor  Vehicles (Amendment) Act, 1956 (100  of  1956),        Ch.IV  A--General  Clauses  Act, 1897 (10 of  1897),  s.  6-        Constitution of India-Articles 13, 31, 245, 246, 254.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 36  

HEADNOTE: These  appeals impugned the constitutionality of  the  Uttar Pradesh Transport Service (Development) Act, 1955 (U.  P. IX Of  1955), passed by the State Legislature  after  obtaining the assent of the President, and the validity of the  scheme of  nationalisation framed and the notifications  issued  by the  State Government under it.  The appellants  as  permit- holders  under  the Motor Vehicles Act,  1939,  were  plying buses on different routes in Uttar Pradesh along with  buses owned by the State Government.  The State Government  issued a notification under S. 3 Of the impugned Act directing that the  said  routes along with others  should  be  exclusively served by the State buses, and followed up that notification by  others  under ss- 4 and 8 of the  Act.   The  appellants moved  the  High Court under Art. 226  of  the  Constitution challenging   the   validity  of  the  said  Act   and   the notifications  thereunder.   The High Court  rejected  their petitions and thereafter came into force the Motor  Vehicles (Amendment)  Act (100 Of 1956), inserting Ch.  IVA into  the Act,   which  provided  for  nationalisation  of   transport services.    The   contentions-raised  on  behalf   of   the appellants  were,-(1) that the passing of the  Amending  Act made  the impugned Act wholly void under Art. 254(1) Of  the Constitution, (2) that the scheme framed under the  impugned Act  fell within the purview of s. 68B of the  Amending  Act and ceased to be operative and (3) that even ’assuming  that the  impugned  Act  was valid in so far as  the  scheme  was concerned,  it  violated  Art. 31 as  it  stood  before  the Constitution  (Fourth  Amendment)  Act,  1955.   A   further contention  on the basis of the proviso to Art.  254(2)  was that the impugned Act stood wholly repealed by the  Amending Act,  s.  68B of the latter excluding the operation  of  the General  Clauses  Act.   It was contended,  inter  alia,  on behalf  of  the State that the amendment of Art. 31  by  the Constitution  (Fourth Amendment) Act, 1955, having  removed, before the scheme under the impugned Act had 9 yet  been framed, the constitutional limitation  which  that Article  had imposed on the Legislature when it  passed  the impugned  Act, had the effect of validating that Act  passed by it at a time when it was subject to the limitation. Held, (per curiam), that the Uttar Pradesh Transport Service (Development)  Act,  1955, did not, on the  passing  of  the Motor  Vehicles (Amendment) Act, 1956 (100 of 1956),  become wholly  void  under  Art. 254(1)  Of  the  Constitution  but continued  to be a valid and subsisting law  supporting  the scheme  already  framed under the U.P. Act.   Even  assuming that the Amending Act had the effect, under Art. 254(2),  of repealing  the State Act, such repeal could not nullify  the scheme already framed under that Act, for the provisions  of s. 6 of the General Clauses Act would operate to save it. Nor could it be said, having regard to the provisions of the impugned  Act  and particularly s. II(5)  thereof,  that  it offended Art. 31 of the Constitution as it stood before  the Constitution  (Fourth  Amendment) Act, 1955, by  failing  to provide for the payment of adequate compensation. Per  Das,  C.J., and Sinha J.-There was no  reason  why  the doctrine  of eclipse as explained in Bhikaji Narain  Dhakras v.  The State of Madhya Pradesh, [1955] 2 S.C.R. 589,  could not  also apply to a post-Constitution law that infringed  a fundamental right conferred on citizens alone.  Such a  law, though shadowed and rendered ineffective by the  fundamental right  so far as the citizens were concerned,  would  remain effective so far as noncitizens were concerned.  The  moment

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 36  

the  shadow was removed by a constitutional  amendment,  the law would apply to citizens without re-enactment. John M. Wilkerson v. Charles A. Rahrer, (1891) 140 U.S. 545; 35  L.  Ed.,572 and Bhikaji Nayain Dhakras v. The  State  of Madhya Pradesh, [1955] 2 S.C.R. 589, referred to. The question whether a post-Constitution law that  infringed a  fundamental right guaranteed to all persons, citizens  or noncitizens’  would  be  subject to  that  doctrine  should, however, be left open. Held,  (per Bhagwati, Subba Rao and Wanchoo, jj.),  that  it was apparent from the provisions of Arts. 254, 246 and 13 of the   Constitution,  read  together,  that  the   power   of Parliament  and  the -State Legislature to  make  laws  with regard to any of the matters enumerated in the relevant list in the Seventh Schedule was subject to the provisions of the Constitution   including  Art.  13.   There  was   a   clear distinction between the two clauses of Art.  I3.  Under  cl. (1), pre-Constitution law subsisted except to the extent  of its  inconsistency with the provisions of Part  III  whereas under  Cl. (2) any post-Constitution law contravening  those provisions was a nullity from its inception to the extent of such contravention.  The words "any law" in the second  line of 2 Cl.  (2)  meant an.  Act factually passed in  spite  of  the prohibition contained therein, and did not pre-suppose  that the  law made was not a nullity.  That prohibition  went  to the  root and limited the State’s power of  legislation  and law made in spite of it was a still-born one. In construing the constitutional provisions relating to  the powers of the legislature embodied in Arts. 245 and 13(2) of the  Constitution, no distinction should be made as  between an  affirmative  and  a negative  provision,  for  both  are limitations on that power. K.   C. Gajapati Narayan Deo v. The State of Orissa,  [1954] S.C.R. 1, referred to. A  distinction, well-recognised in judicial decisions,  had, however,  to  be made in judging the effect of law  made  in transgression  of the limits fixed by Arts. 245  and  I3(2), between  an  Act that was void from its  inception  and  one that, though valid when made, was rendered  unconstitutional later on.  On that distinction was based the principle  that an  after-acquired power could not validate a statute and  a law validly made could take effect when the obstruction  was removed. A review of the relevant authorities and judicial  decisions clearly  established,  (1) that  affirmative  conferment  of power to make laws subject-wise and the negative prohibition from infringing any fundamental rights were but two,,aspects of  want of legislative power, (2) that by expressly  making the  power  to  legislate  on the  entries  in  the  Seventh Schedule  subject to other provisions of  the  Constitution, that  power  was subjected to the limitations laid  down  in Part III of the Constitution, (3) that, therefore, a law  in derogation  or  in  excess of such power would  be  void  ab initio  either wholly or to the extent of the  contravention and  that (4) the doctrine of eclipse could be invoked  only in  the  case  of a law that was valid  when  made  but  was rendered    invalid   by   a   supervening    constitutional inconsistency. Newberry  v.  United State, (1912) 265 U.S. 232; 65  L.  Ed. 9I3; John M. Wilkerson v. Charyles A. Rahrer, (1891) 140  U. S. 545; 35 L. Ed. 572; Carter v. Egg and Egg Pulp  Marketing Board,  (1942) 66 C.L.R. 557; Keshavan Madhava Menon v.  The State of Bombay, [1951] S.C.R. 228; Behram Khurshed Pesikaka

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 36  

v. The State Of Bombay, [1955) 1 S.C.R. 589; Saghir Ahmed v. The State of U. P. [1955] 1 S.C.R. 707; Ram Chandra Balai v. State  of Orissa, [1956] S.C.R. 28 and Pannalal  Binjraj  v. Union   of  India,  [1957]  S.C.R.  233,  referred  to   and discussed. The tests of repugnancy between two statutes, one passed  by the Parliament and the other by the State Legislature, were, (1)  whether there was a direct conflict between  them,  (2) whether  Parliament intended to lay down an exhaustive  code in  respect of the subject-matter replacing the Act  of  the State  Legislature, and (3) whether both the  laws  occupied the same field. A comparison of the provisions of the two Acts indicated 11 that  both were intended to operate in respect of  the  same subject matter and the same field but only in respect of the schemes  initiated  after  the Amending Act  had  come  into force,  the latter Act having no retrospective effect.   The State Act must, therefore, yield place to the Central Act to that  extent  and  become void only in  respect  of  schemes framed under the Central Act. Keshavan Madhava Menon v. The State of Bombay, [1951] S.C.R. 228, applied.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 380 to 389, 391 to 399, 401, 429 and 431 to 434 of 1958. Appeals  from  the judgment and decree  dated  December  19, 1956, of the Allahabad High Court in Civil Misc.  Writs Nos. 1574,  1575,  1576,  1577,  1578,  1579,1444,1584,1586,1589, 1631, 1632, 1634, 1635, 1636,1694, 1695,  1697, 1704,  1707, 3726, 1647, 1948 and 1949 and 1956. M.   K. Nambiyar, Shyam Nath Kacker, J. B. Dadachanji, S. N. Andley  and  Rameshwar Nath, for the appellants (in  C.  As. Nos.  380-385, 387-389, 391-399 and 401 of  1958). S.N.Kacker and J. B. Dadachanji, for the appellant (in C. A. No. 386/58). Naunit  Lal, for the appellants (in C. As.  Nos. 429 &  431- 434/58). K.   B. Asthana & G. N. Dikshit, for the respondents. 1959.   January 15.  The judgment of Das, C. J., and  Sinha, J.,  was delivered by Das, C. J. The judgment  of  Bhagwati, Subba Rao and Wanchoo, JJ., was delivered by Subba Rao, J. DAS,  C.  J.-We  have  had the  advantage  of  perusing  the judgment  prepared by our learned Brother Subba Rao and  ’we agree  with the order proposed by him, namely, that all  the above appeals should be dismissed with costs, although we do not subscribe to all the reasons advanced by him. The relevant facts and the several points raised by  learned counsel for the appellants and the petitioners in support of the  appeals have been fully set out in the  judgment  which our  learned  Brother will presently deliver and it  is  not necessary for us to set out the 12 same here.  Without committing ourselves to all the  reasons adopted by our learned Brother, we agree with his  following conclusions,  namely, (1) that the Uttar  Pradesh  Transport Service   (Development)   Act,  1955  (Act  IX   of   1955), hereinafter  referred to as the U. P. Act, did -not, on  the passing of the Motor Vehicles (Amendment) Act, 1956 (100  of 1956),  hereinafter referred to as the Central  Act,  become wholly  void  under  Art. 254(1)  of  the  Constitution  but continued  to be a valid and subsisting law  supporting  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 36  

scheme already framed under the U. P. Act; (2) that, even if the  Central  Act  be construed  as  amounting,  under  Art. 254(2),  to a repeal of the U. P. Act, such repeal  did  not destroy or efface the scheme already framed under the U.  P. Act,  for the provisions of s. 6 of the General Clauses  Act saved  the same; (3) that the U. P. Act did not  offend  the provisions  of  Art.  31 of the Constitution,  as  it  stood before the Constitution (4th Amendment) Act, 1955, for.  the U.  P. Act and in particular s. 11(5) thereof  provided  for the  payment of adequate compensation.  These  findings  are quite  sufficient  to  dispose of the points  urged  by  Mr. Nambiyar  and  Mr. Naunit Lal in support of the  claims  and contentions of their respective clients. In view of the aforesaid finding that the U. P. Act did  not infringe the fundamental rights guaranteed by Art. 31, it is wholly  unnecessary  to  discuss  the  following  questions, namely,  (a)  whether  the provisions of ’Part  III  of  the Constitution  enshrining  the fundamental  rights  are  mere checks   or  limitations  on  the   legislative   competency conferred on Parliament and the State Legislatures by  Arts. 245  and 246 read with the relevant entries in the Lists  in the Seventh Schedule to the Constitution or are an  integral part of the provisions defining, prescribing and  conferring the  legislative competency itself and (b) whether the  doc- trine of eclipse is applicable only to pre-Constitution laws or  can apply also to any post-Constitution law which  falls under  Art.  13(2) of the Constitution.   As,  however,  our learned Brother has thought fit to embark upon a  discussion of  these  questions, we desire to guard  ourselves  against being understood as 13 accepting or acquiescing in the conclusion that the doctrine of  eclipse  cannot apply to any post-Constitution  law.   A post-Constitution  law  may infringe  either  a  fundamental right  conferred  on citizens only or  a  fundamental  right conferred  on  any person, citizen or non-citizen.   In  the first case the law will not stand in the way of the exercise by  the citizens of that fundamental right  and,  therefore, will  not have any operation on the rights of the  citizens, but it will be quite effective as regards non-,citizens.  In such  a case the fundamental right will, qua  the  citizens, throw a shadow on the law which will nevertheless be on  the Statute  Book as a valid law binding on non-citizens and  if the  shadow is removed by a constitutional  ,amendment,  the law  will  immediately be applicable even  to  the  citizens without being re-enacted.  The decision in John M. Wilkerson v.  Charles  A. Rahrer (1) cited by our learned  Brother  is squarely  in point.  In other words the doctrine of  eclipse as explained by this Court in Bhikaji Narain Dhakras v.  The State  of  Madhya  Pradesh  (2)  also  applies  to  a  post- Constitution law of this kind.  Whether a  post-Constitution law of the other kind, namely, which infringes a fundamental right  guaranteed  to all persons, irrespective  of  whether they are citizens or not, and which, therefore, can have  no operation at all when it is enacted, is to be regarded as  a still  born  law as if it had not been enacted at  all  and, therefore,  not  subject  to the doctrine of  eclipse  is  a matter  which  may be open to discussion.  On  the  findings arrived  at  in this case, however, a  discussion  of  these aspects  of the matter do not call for a considered  opinion and  we reserve our right to deal with the same if and  when it becomes actually necessary to do so. SUBBA  RAO, J.-These twenty-five appeals are by  certificate under  Arts. 132 and 133 of the Constitution granted by  the High Court of Judicature at Allahabad and raise the question

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 36  

of  the validity of the scheme of nationalization  of  State Transport Service formulated by the State Government and the consequential orders made by it. (1) (1891) 140 U.S. 545; 35 L, Ed. 572,  (2) [1955] 2 S.C.R. 589. 14 The  said  appeals  arise out Writ  Petitions  filed  by  he appellants  in  the  Allahabad High  Court  challenging  the validity  of the U. P. Transport Services (Development)  Act of  1955,  being  U.  P. Act No.  IX  of  1955  (hereinafter referred to as the U. P. Act), and the notifications  issued thereunder.   All the appeals were consolidated by order  of the High Court. The  appellants  have  been carrying on  business  as  stage carriage  operators  for a considerable number of  years  on different  routes  in  Uttar Pradesh  under  valid,  permits issued under the Motor Vehicles Act, 1939, along with  buses owned by Government.  The U. P. Legislature, after obtaining the assent of the President on April 23, 1955, passed the U. P. Act and duly  published it on April 24, 1955.  Under s. 3 of the U. P. Act, the Government issued a notification dated May 17, 1955, whereunder it was directed that the  aforesaid routes along with others should be exclucively served by the stage  carriages  of the Government and  the  private  stage carriages should be excluded from those routes.  On November 12,  1955, the State Government published  the  notification under  s. 4 of the U. P. Act formulating the scheme for  the aforesaid  routes  among others.   The  appellants  received notices  under s. 5 of the U. P. Act requiring them to  file objections,  if  any,  to the said  scheme;  and  after  the objections were received, they were informed that they would be  heard by a Board on January 2, 1956.  On that date,  the objections  filed by the operators other than those  of  the Agra region were heard and the inquiry in regard to the Agra region  was adjourned to January 7, 1956.  It  appears  that the operators of the Agra region did not appear on the  7th. The notification issued under s. 8 of the U. P. Act was pub- lished  in the U. P. Gazette on June 23, 1956, and  on  June 25, 1956, the Secretary to the Regional Transport Authority, Agra,  sent  an order purported to have been issued  by  the Transport Commissioner to the operators, of the Agra  region prohibiting  them from plying their stage carriages  on  the routes  and also informing them that their permits would  be transferred to other routes.  On July 7, 1956, a notice  was sent to 15 filed Writ Petitions in the Allahabad High Court challenging the  validity of the U. P. Act and the notifications  issued thereunder. The  facts  in  Civil Appeal No. 429 of  1958  are  slightly different  from  those  in other appeals  and  they  may  be stated:  The  appellant’s  application for  renewal  of  his permanent  permit was rejected in 1953; but, on appeal,  the State  Transport  Authority Tribunal allowed his  appeal  on September 6,1956, and directed his permit to be renewed  for three  years beginning from November 1, 1953.   Pursuant  to the  order  of the Tribunal, the  appellant’s  pert-nit  was renewed  with effect from November 1, 1953, and it was  made valid up to October 31, 1956.  The scheme of nationalisation was  initiated and finally approved between the date of  the rejection of the appellant’s application for renewal and the date when his appeal was allowed.  The appellant applied  on October  11, 1956, for the renewal of his permit and he  was informed by the Road Transport Authority, Allahabad, that no action  on  his application, under reference  was  possible.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 36  

The  appellant’s  contention,  among others,  was  that  the entire proceedings were taken behind his back and  therefore the scheme was not binding on him. The  appellants in thirteen appeals, namely,  Civil  Appeals Nos. 387 to 389, 391 to 394, 396 to 399 and 401 and 429 were offered   alternative  routes.   Though   they   tentatively accepted the offer, presumably on the ground that it was the lesser  of the two evils, in fact they obtained stay  as  an interim  arrangement  and continued to operate  on  the  old routes. The appellants filed applications for permission to urge new grounds in the appeals, which were not taken before the High Court.  The said grounds read :-- (i)  That  by reason of the  coming into  operation  of  the Motor  Vehicles (Amendment) Act, No. 100 of 1956, passed  by Parliament   and   published  in  the   Gazette   of   India Extraordinary dated 31st December, 1956, the impugned U.  P. Act No. IX of 1955 has become void. (ii) That  by reason of Article 254 of the  Constitution  of India, the said impugned Act No. IX of 1955, 16 being  repugnant and inconsistent with the Central  Act  No. 100 of 1956, has become void since the coming into operation of the aforesaid Act No. 100 of 1956 ". The judgment of  the Allahabad  High Court, which is the subject-matter of  these appeals,  was delivered on December 19, 1956.  The  Amending Act  of  1956  was published on December 31,  1956.   It  is therefore manifest that the appellants could not have raised the  aforesaid grounds before the High Court.  Further,  the grounds raise only a pure question of law not dependent upon the elucidation of any further facts.  In the circumstances, we  thought it to be a fit case for allowing the  appellants to  raise the new grounds and we accordingly gave  them  the permission. Mr.  M.  K. Nambiar, appearing for some of  the  appellants, raised  before  us  the  following  points:  (i)  The  Motor Vehicles  (Amendment)  Act  (100 of  1956)  passed  by,  the Parliament is wholly repugnant to the provisions of the U. P Act   and  therefore  the  latter  became  void  under   the provisions of Article 254(1) of the Constitution ; with  the result  that,  at the present time, there is  no  valid  law whereunder  the Government can prohibit the appellants  from exercising  their fundamental right under the  Constitution, namely, to carry on their business of motor transport;  (ii) the  scheme framed under the Act, being one made to  operate in  future and from day to day, is an instrument within  the meaning  of  s. 68B of the Amending Act, and  therefore  the provisions  of the Amending Act would prevail over those  of the  scheme, and after the Amending Act came into force,  it would  have no operative force; and (iii) even if the U.  P. Act was valid and continued to be in force in regard to  the scheme framed thereunder, it would offend the provisions  of Art.   31  of  the  Constitution,  as  it  was  before   the Constitution  (Fourth Amendment) Act, 1955, as,  though  the State had acquired the appellant’s interest in a  commercial undertaking,  no  compensation  for the  said  interest  was given,  as it should be under the said Article.   The  other learned  -Counsel,  who  followed Mr.  Nambiar,  except  Mr. Naunit  Lal,  adopted  his argument.   Mr.  Naunit  Lal,  in addition to the argument 17 advanced by Mr. Nambiar in regard to the first point,  based his  contention  on  the  proviso  to  Art.  254(2)  of  the Constitution rather than on Art. 254(1).  He contended  that by reason of the Amending Act,,, the U. P. Act was  repealed

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 36  

in  toto  and, because of s. 68B of the  Amending  Act,  the operation  of the provisions of the General Clauses Act  was excluded.  In addition, he contended that in Appeal No.  429 of  1958,  the  scheme,  in  so  far  as  it  affected   the appellant’s route was bad inasmuch as no notice was given to him before the scheme was approved. We  shall proceed to consider the argument advanced  by  Mr. Nambiar in the order adopted by him; but before doing so, it would  be convenient to dispose of the point raised  by  the learned  Advocate  General, for it goes to the root  of  the matter, and if it is decided in his favour, -other questions do  not fall for consideration.  The question raised by  the learned  Advocate  General may be posed  thus:  whether  the amendment  of  the Constitution  removing  a  constitutional limitation on a legislature to make a particular law has the effect  of validating the Act made by it when its power  was subject  to that limitation.  The present  case  illustrates the  problem  presented  by the said question.   The  U.  P. Legislature  passed  the  U.  P.  Act  on  April  24,  1955, whereunder  the State Government was authorized to  frame  a scheme   of  nationalization  of  motor  transport.    After following  the  procedure  prescribed  therein,  the   State Government  finally published the scheme on June  23,  1956. The Constitution (Fourth Amendment) Act, 1955, received  the assent  of  the  President on April 27,  1955.   The  -State Government  framed the scheme under the U. P. Act after  the passing  of the Constitution (Fourth Amendment)  Act,  1955. Under  the said Amendment Act, el. (2) of Art. 31  has  been amended  and cl. (2A) has been inserted.  The effect of  the amendment  is that unless the law provides for the  transfer of  ownership or right to possession of any property to  the State or to a Corporation owned or controlled by the  State, it  shall  not  be  deemed to  provide  for  the  compulsory acquisition or 3 18 requisition  of  property within the meaning of cl.  (2)  of that Article and therefore where there is no such  transfer, the condition imposed by cl. (2), viz., that the law  Should fix the amount of compensation or specify the     principles on  which and the manner in which the compensation is to  be determined  and  given is not attracted.  If  the  amendment applies  to  the  U.  P. Act, as there  is  no  transfer  of property  to the State, no question of compensation  arises. On  the other hand, if the unamended Article governs the  U. P.  Act, the question of compensation will be  an  important factor in deciding its validity.  The answer to the  problem so  presented  depends upon the legal effect  of  a  consti- tutional limitation of the legislative power on the law made in  derogation of that limitation.  A distinction is  sought to  be made by the learned Advocate General between the  law made in excess of the power conferred on a legislature under the  relevant List in the Seventh Schedule and that made  in violation of the provisions of Part III of the Constitution. The  former,  it  is  suggested, goes to  the  root  of  the legislative power, whereas the latter, it is said,  operates as  a check on that power, with the result that the  law  so made is unenforceable, and as soon as the check is  removed, the law is resuscitated and becomes operative from the  date the check is removed by the constitutional amendment. Mr. Nambiar puts before us the following two propositions in support  of  his contention that the law so made  in  either contingency  is  void  ab initio:  (i)  the  paramountcy  of fundamental rights over all legislative powers in respect of all the Lists in the Seventh Schedule to the Constitution is

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 36  

secured  by  the double process of the prohibition  laid  by Art. 13(2) and the restrictions imposed by Art. 245,  unlike the  mere  implied prohibition implicit in the  division  of power  under Art. 246; and (ii) where the provisions  of  an enactment passed by a legislature after January 26, 1950, in whole or in part-subject to the doctrine of severability-are in conflict with the provisions of Part III, the statute, in whole  or  in part, is void ab initio.   This  question  was subjected to judicial scrutiny by this 19 Court,  but before we consider the relevant authorities,  it would   be  convenient  to  test  its  validity   on   first principles. The relevant Articles of the Constitution read as  follows: Article   245:   "(1)Subject  to  the  provision   of   this Constitution, Parliament may make laws for the whole or  any part  of  the territory Of India, and the Legislature  of  a State may make laws for the whole or any part of the State." Article  246: " (1) Notwithstanding anything in clauses  (2) and  (3)  Parliament has exclusive power to make  laws  with respect  to any of the matters enumerated in List I  in  the Seventh  Schedule (in this Constitution referred to as  the" Union List "). (2)  Notwithstanding anything in clause (3), Parliament and, subject  to clause (1), the Legislature of any  State  also, have power to make. laws with respect to any of the  matters enumerated  in  List III in the Seventh  Schedule  (in  this Constitution referred to as the " Concurrent List"). (3)  Subject to clauses (1) and (2), the Legislature of  any State has exclusive power to make laws for such State or any part  thereof with respect to any of the matters  enumerated in  List  II in the Seventh Schedule (in  this  Constitution referred to as the " State List "). (4)  Parliament  has power to make laws with respect to  any matter  for any part of the territory of India not  included in  a  State notwithstanding that such matter  is  a  matter enumerated in the State List." Article  13:  " (1) All laws in force in  the  territory  of India   immediately   before  the   commencement   of   this Constitution,  in so far as they are inconsistent  with  the provisions  of  this  Part, shall, to  the  extent  of  such inconsistency, be void. (2)  The  State shall Dot make any law which takes  away  or abridges the rights conferred by this Part and any law  made in contravention of this clause shall, to the extent of  the contravention  be void." 20 Article 31 (Before the -Constitution (Fourth Amendment) Act, 1955): "  (1) No person shall be deprived of his property  save  by authority of law. (2)  No  property,  movable  or  immovable,  including   any interest  in,  or in any company owning, any  commercial  or industrial  undertaking,  shall be taken  possession  of  or acquired  for public purposes under any law authorising  the taking  of such possession or such acquisition,  unless  the law  provides  for  compensation  for  the  property   taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which, -and the manner  in which, the compensation is to be  determined  and given The  combined  effect of the said provisions may  be  stated thus:  Parliament and the Legislatures of States have  power to make laws in respect of any of the matters enumerated  in the relevant lists in the Seventh Schedule and that power to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 36  

make  laws is subject to the provisions of the  Constitution including  Art. 13, i.e., the power is made subject  to  the limitations  imposed by Part III of the  Constitution.   The general  power  to that extent is limited.   A  Legislature, therefore, has no power to make any law in derogation of the injunction  contained in Art. 13.  Article 13(1) deals  with laws.in   force  in  the  territory  of  India  before   the commencement of the Constitution and such laws in so far  as they are inconsistent with the provisions of Part III shall, to  the extent of such inconsistency be void.   The  clause, therefore, recognizes the validity of, the  pre-Constitution laws  and  only declares that the said laws  would  be  void thereafter  to the extent of their inconsistency  with  Part III; whereas - cl. (2) of that article imposes a prohibition on the State making laws taking away or abridging the rights conferred  by  Part  III  and declares  that  laws  made  in contravention  of  this clause shall, to the extent  of  the contravention,  be  void.   There  is  a  clear  distinction between the two clauses.  Under el. (1), a  pre-Constitution law subsists except to the extent of its inconsistency  with the  provisions of Part III; whereas,  no  post-Constitution law 21 can  be  made contravening the provisions of Part  III,  and therefore the law, to that extent, though made, is a nullity from  its inception.  If this clear distinction is borne  in mind,  much of the cloud raised is dispelled.  When cl.  (2) of Art. 13 says in clear and unambiguous terms that no State shall  make any law which takes away or abridges the  rights conferred  by  Part  III, it will not  avail  the  State  to contend either that the clause does not embody a curtailment of  the power to legislate or that it imposes only  a  check but not a prohibition.  A constitutional prohibition against a  State  making  certain laws cannot be  whittled  down  by analogy  or  by drawing inspiration from  decisions  on  the provisions of other Constitutions; nor can we appreciate the argument  that the words " any law " in the second  line  of Art. 13(2) posits the survival of the law made in the  teeth of  such prohibition.  It is said that a law can  come  into existence only when it is made and therefore any law made in contravention  of that clause presupposes that the law  made is  not a nullity.  This argument may be subtle but  is  not sound.   The words " any law " in that clause can only  mean an  Act  passed  or  made  factually,  notwithstanding   the prohibition.  The result of such contravention is stated  in that  clause.   A  plain reading of  the  clause  indicates, without  any reasonable doubt, that the prohibition goes  to the root of the matter and limits the State’s power to  make law;  the law made in spite of the prohibition is  a  still- born law. Cooley  in  his book " Constitutional  Limitations"  (Eighth Edition, Volume I), states at page 379: "  From what examination has been given to this subject,  it appears  that whether a statute is constitutional or not  is always a question of power; that is, a question whether  the legislature  in  the  particular case,  in  respect  to  the subject-matter of the act, the manner in which its object is to  be accomplished, and the mode of enacting it,  has  kept within   the   constitutional  limits   and   observed   the constitutional conditions." The  Judicial Committee in The Queen. v. Burah (1)  observed at page 193 as under (1)  (1878) L.R. 5 I. A. 178. 22 The  established courts of Justice, when a  question  arises

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 36  

whether  the prescribed limits have been exceeded,  must  of necessity  determine  that question ; and ,the only  way  in which  they can properly do so, is by ;looking to the  terms of  the instrument by which, affirmatively, the  legislative powers  were  created, and by which,  negatively,  they  are restricted." The Judicial Committee again in Attorney-General for Ontario v. Attorney-General for Canada (1) crisply stated the  legal position at page 583 as follows:- "...............  if the text is explicit the text  is  con- clusive, alike in what it directs and what it forbids." The  same idea is lucidly expressed by Mukherjea, J., as  he then  was,  in K. C. Gajapati Narayan Deo v.  The  State  of Orissa (2).  It is stated at page 11 as follows:- " If the Constitution of a State distributes the legislative powers  amongst different bodies, which have to  act  within their respective spheres marked out by specific  legislative entries,  or  if there are limitations  on  the  legislative authority  in the shape of fundamental rights, questions  do arise as to whether the legislature in a particular case has or has not, in respect to the subject_matter of the  statute or in the method of enacting it, transgressed the limits  of its constitutional powers." The  learned Judge in the aforesaid passage clearly  accepts the doctrine that both the transgression of the ambit of the entry  or  of  the limitation provided  by  the  fundamental rights  are  equally  transgressions of the  limits  of  the State’s constitutional powers. It  is, therefore, manifest that in the construction of  the constitutional  provisions  dealing with the powers  of  the legislature,  a  distinction  cannot  be  made  between   an affirmative provision I and a negative provision; for,  both are   limitations   on   the   power.    The    Constitution affirmatively  confers  a power on the legislature  to  make laws  within the ambit of the relevant entries in the  lists and negatively prohibits it from making laws infringing  the fundamental rights.  It (1) (1912) A.C. 571. (2) [1954] S.C.R. 1. 23 goes further and makes the -legislative power subject to the prohibition  under  Art.  13(2).  Apparent  wide  power  is, therefore, reduced to the extent of the prohibition. If  Arts.  245 and 13(2) define the ambit of  the  power  to legislate,  what  is the effect of a law made in  excess  of that  power ? The American Law gives a direct  and  definite answer  to  this question.  Cooley in his  "  Constitutional Limitations  " (Eighth Edition, Volume I) at page 382  under the heading " Consequences if a statute is void " says :- "  When a statute is adjudged to be unconstitutional, it  is as if it had never been................. And what is true of an  act void in toto is true also as to any part of  an  act which   is   found  to  be  unconstitutional,   and   which, consequently,  is  to be regarded as having  never,  at  any time, been possessed of any legal force." In  Rottschaefer  on Constitutional Law, much  to  the  same effect is stated at page 34: "  The legal status of a legislative provision in so far  as its   application  involves  violation   of   constitutional provisions,  must however be determined in the light of  the theory  on which Courts ignore it as law in the decision  of cases  in  which its application  produces  unconstitutional results.    That   theory  implies  that   the   legislative provisions never had legal force as applied to cases  within that clause."

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 36  

In " Willis on Constitutional Law ", at page 89: "  A  judicial declaration of the unconstitutionality  of  a statute  neither annuls nor repeals the statute but has  the effect  of  ignoring  or  disregarding  it  so  far  as  the determination of the rights of private parties is concerned. The   Courts   generally   say  that  the   effect   of   an unconstitutional statute is nothing.  It is as though it had never been passed......................... "  Willoughby  on Constitution of the United  States  Second Edition, Volume I, page 10: " The Court does not annul or repeal the statute if it finds it in conflict with the Constitution.  It simply refuses  to recognize it, and determines the rights of 24 the  parties    just   as   if   such   statute    had    no application. .................... The   validity  of  a  statute  is  to  be  tested  by   the constitutional  power  of a legislature at the time  of  its enactment  by that legislature, and, if thus tested,  it  is beyond  the  legislative power, it is  not  rendered  valid, without re-enactment, if later, by constitutional amendment, the  necessary  legislative power is granted.  I  An  after- acquired power cannot, ex proprio vigore, validate a statute void ’When enacted’. " However, it has been held that where an act is within  the general  legislative  power  of the enacting  body,  but  is rendered  unconstitutional  by reason of  some  adventitious circumstance,  as, for example, when a State legislature  is prevented  from  regulating a matter by reason of  the  fact that  the Federal Congress has already legislated upon  that matter,  or by reason of its silence is to be  construed  as indicating that there should be no regulation, the act  does not  need to be re-enacted in order to be enforced, if  this cause of its unconstitutionality is removed.  " For  the  former proposition, the decision  in  Newberry  v. United  States  (1)  and  for  the  latter  proposition  the decision  in John M. Wilkerson v. Charles A. Rahrer (2)  are cited.   In  Newberry’s  Case the validity  of  the  Federal Corrupt  Practices  Act of 1910, as amended by  the  Act  of 1911,  fixing the maximum sum which a candidate might  spend to   procure  his  nomination  at  a  primary  election   or convention  was challenged.  At the time of  the  enactment, the   Congress   had  no  power  to  make  that   law,   but subsequently, by adoption of the 17th Amendment, it acquired the said power.  The question was whether an  after-acquired power could validate a statute which was void when  enacted. Mr.  justice McReynolds delivering the opinion of the  court states the principle at page 920 : " Moreover, the criminal statute now relied upon  ante-dates the  17th Amendment, and must be tested by powers  possessed at time of its enactment.  An (1)  (1921) 256 U.S. 232; 65 L. Ed. 913. (2)  (1891) 140 U.S. 545; 35 L. Ed. 572. 25 after-acquired  power cannot, ex proprio vigore, validate  a statute void when enacted." In  Wilkerson’s Case (1) the facts were that in  June  1890, the petitioner, a citizen of the United States and an  agent of  Maynard,  Hopkins  & Co., received  from  his  principal intoxicating liquor in packages.  The packages were  shipped from the State of Missouri to various points in the State of Kansas and other States.  On August 9, 1890, the  petitioner offered  for  sale  and sold two packages in  the  State  of Kansas.   The  packages sold were a portion  of  the  liquor shipped  by Maynard, Hopkins & Co. It was sold in  the  same

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 36  

packages  in  which  it was received.   The  petitioner  was prosecuted  for violating the Prohibitory Liquor Law of  the State  of  Kansas; for, under the said law, "any  person  or persons  who  shall  manufacture, sell  or  barter  any  in- toxicating  liquors, shall be guilty of a misdemeanor ".  On August 8, 1890, an Act of Congress was passed to the  effect that -intoxicating liquors transported into any State should upon  arrival in such State be subject to the operation  and effect of the laws of such State.  It will be seen from  the aforesaid  facts that at the time the State Laws were  made, they  were valid, but they did not operate upon packages  of liquors  imported  into the Kansas State in  the  course  of interstate  commerce,  for  the  regulation  of  inter-State commerce was within the powers of the Congress; and that be- fore the two sales in the Kansas State, the Congress made an Act  making  intoxicating liquors transported into  a  State subject to the laws of that State, with the result that from that  date  the  State  Laws  operated  on  the  liquors  so transported.   Under those circumstances, the Supreme  Court of the United States held : "  It  was not necessary, after the passage of  the  Act  of Congress of August 8, 1890, to re-enact the Law of Kansas of 1899,  forbidding the sale of intoxicating liquors  in  that State, in order to make such State Law operative on the sale of imported liquors." The reason for the decision is found at page 578: (1)  (1891) 140 U.S. 545; 35 L. Ed. 572. 4 26 This  is not the case of a law enacted in  the  unauthorized exercise of a power exclusively confided to Congress, but of a  law  which it was competent for the  State to  pass,  but which  could not operate upon articles occupying  a  certain situation  until the passage of the Act of  Congress.   That Act  in  terms  removed the obstacle,  and  we  perceive  no adequate  ground  for adjudging that a re-enactment  of  the State Law was required before it could have the effect  upon imported which it had always had upon domestic property. A reference to these decisions brings out in bold relief the distinction  between  the two classes of cases  referred  to therein.  It will be seen from the two decisions that in the former the Act was Void from its inception and in the latter it  was valid when made but it could not operate on  certain articles  imported in the course of inter-State  trade.   On that  distinction  is  based the principle  that  an  after- acquired power cannot, ex proprio vigore, validate a statute in one case, and in the other, a law validly made would take effect when the obstruction is removed. The  same principle is enunciated in Carter v. Egg  and  Egg Pulp  Marketing Board (1).  Under s. 109 of  the  Australian Constitution " when a law of a State- is inconsistent with a law  of the Commonwealth, the latter shall prevail, and  the former  shall,  to  the  extent  of  the  inconsistency,  be invalid.   "  Commenting  on that section,  Latham,  C.  J., observed at page 573: "  This section applies only in cases Where, apart from  the operation  of  the section, both the  Commonwealth  and  the State Laws which are in question would be valid.  If  either is invalid ab initio by reason of lack of power, no question can  arise under the section.  The word " invalid " in  this section  cannot be interpreted as meaning that a  State  law which-  is  affected by the section becomes ultra  vires  in whole or in part.  If the Commonwealth law were repealed the State law would again become operative.  " We shall now proceed to consider the decisions of this Court

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 36  

to ascertain whether the said principles are (1)  (1942) 66 C.L.R. 557. 27 accepted  or departed from.  The earliest case  is  Keshavan Madhava  Menon  v.  The  State of  Bombay  (1).   There  the question was whether a prosecution launched under the Indian Press (Emergency Powers) Act, 1931, before the  Constitution could  be continued after the Constitution was passed.   The objection taken was that the said law was inconsistent  with fundamental  rights and therefore was void.  In the  context of the question raised, it became necessary for the Court to consider  the impact of Art. 13(1) on the laws  made  before the Constitution.  The Court, by a majority, held that  Art. 13(1) of the Indian Constitution did not make existing  laws which  were  inconsistent with fundamental  rights  void  ab initio,  but  only rendered such laws ineffectual  and  void with  respect to the exercise of the fundamental  rights  on and  after the date of the commencement of the  Constitution and  that  it had no retrospective effect.  Das, J.,  as  he then was, observed at page 233: "  It will be noticed that all that this clause declares  is that  all existing laws, in so far as they are  inconsistent with the provisions of Part III shall, to the extent of such inconsistency,  be  void.   Every  statute  is  prima  facie prospective   unless  it  is  expressly  or   by   necessary implications made to have retrospective operation.  " At  page 234, the learned Judge proceeded to state: " They  are not void for all purposes but they are void only to  the extent they come into conflict with the  fundamental rights.   In other words, on and after the  commencement  of the Constitution no existing law -will be permitted to stand in the way of the exercise of any of the fundamental rights. Therefore,  the voidness of the existing law is  limited  to the      future     exercise     of     the      fundamental rights..................  Such  laws  exist  for  all   past transactions  and for enforcing all rights  and  liabilities accrued before the date of the Constitution.  " At page 235, the same idea is put in different words thus :- ".......................Article 13(1) only has the effect of (1)  [1951] S.C.R. 228. 28 nullifying  or  rendering  all  inconsistent  existing  laws ineffectual  or  nugatory and devoid of any legal  force  or binding  effect  only  with  respect  to  the  exercise   Of fundamental rights on and after the date of the commencement of the Constitution.  " At page 236, the learned Judge concludes: "  So  far as the past acts are concerned  the  law  exists, notwithstanding  that it does not exist with respect to  the future  exercise of fundamental rights." Mahajan,  J.,  as  he then was,  who  delivered  a  separate judgment, put the same view in different phraseology at page 251 : "  The  effect of Article 13(1) is only prospective  and  it operates  in respect to the freedoms which are infringed  by the  State  subsequent  to  the coming  into  force  of  the Constitution but the past acts of a person which came within the  mischief of the law then in force are Dot  affected  by Part III of the Constitution." The  learned Judge, when American law was pressed on him  in support of the contention that even the pre-Constitution law was void, observed thus, at page 256 : "  It is obvious that if a statute has been enacted  and  is repugnant to the Constitution, the statute is void since its very  birth  and  anything done under it is  also  void  and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 36  

illegal.   The courts in America have followed  the  logical result of this rule and even convictions made under such  an unconstitutional  statute  have been set  aside  by  issuing appropriate writs.  If a statute is void from its very birth then  anything done under it, whether closed, completed,  or inchoate, will be wholly illegal and relief in one shape  or another  has to be given to the person affected by  such  an unconstitutional law.  This rule, however, is not applicable in   regard   to   laws  which  were   existing   and   were constitutional  according  to the Government of  India  Act, 1935.  Of course, if any law is made after the 25th January, 1950, which is repugnant to the Constitution, then the  same rule  will  have  to be followed by courts in  India  as  is followed in America and even convictions made under such  an unconstitutional law 29 will  have to be set aside by resort to exercise  of  powers given  to this court by the Constitution." Mukherjea J., as he then was, in Behram Khurshed Pesikaka v. The  State of Bombay (1) says at page 652 much to  the  same effect: "  We  think  that  it is not  a  correct  proposition  that constitutional  provisions in Part 11I of  our  Constitution merely  operate  as a check on the exercise  of  legislative power.   It is axiomatic that when the lawmaking power of  a State is restricted by a written, fundamental law, then  any law enacted and opposed to the fundamental law is in  excess of  the legislative authority and is thus a  nullity.   Both these declarations of unconstitutionality go to the root  of the  power itself and there is no real  distinction  between them.  They represent but two aspects of want of legislative power.   The legislative power of Parliament and  the  State Legislatures  as  conferred by articles 245 and 246  of  the Constitution  stands  curtailed by  the  fundamental  rights chapter of Constitution.  A mere reference to the provisions of  article 13(2) and articles 245 and 246 is sufficient  to indicate  that  there is no competency in  Parliament  or  a State Legislature to make a law which comes into clash  with Part 111 of the Constitution after the coming into force  of the Constitution.  " The effect of the decision may- be stated thus: The  learned judges  did not finally decide the effect of Art.  13(2)  of the  Constitution on post-Constitution laws for  the  simple reason  that  the impugned law was a  pre-Constitution  one. Art.  13(1)  was  held to be prospective  in  operation  and therefore did not affect the preexisting laws in respect  of things done prior to-the Constitution.  As regards the post- Constitution  period, Art. 13(1) nullified or  rendered  all inconsistent  existing laws ineffectual, nugatory or  devoid of  any  legal force or binding effect with respect  to  the exercise of the fundamental rights.  So far as the past acts were concerned, the law existed, notwithstanding that it did not  exist with respect to the future exercise of  the  said rights.  As regards the pre-Constitution laws, (1)  [1955] 1 S.C.R. 613. 30 this  decision contains the seed of the doctrine of  eclipse developed  by  my Lord the Chief Justice in  Bhikaji  Narain Dhakras v. The State of Madhya Pradesh (1) where it was held that  as  the  pre-Constitution law  was  validly  made,  it existed   for  certain  purposes  even  during   the   post- Constitution  period.  This principle has no application  to post-Constitution laws infringing the fundamental rights  as they  would  be ab initio void in toto or to the  extent  of their contravention of the fundamental rights.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 36  

The observations of the learned judges made in the  decision cited above bring out the distinction between pre and  post- Constitution  laws which are repugnant to  the  Constitution and the impact of Art. 13 on the said laws. In Behram Khurshed Pesikaka’s Case(2), this Court considered the legal effect of the declaration made’ in the case of The State of Bombay - v. F. N. Balsara (3) that clause (b) of s. 13 of the Bombay Prohibition Act (Bom.  XXV of 1949) is void under Art. 13(1) of the Constitution in so far as it affects the  consumption  or  use  of  liquid  medicinal  or  toilet preparations  containing  alcohol and held that  it  was  to render  part  of  s. 13(b) of  the  Bombay  Prohibition  Act inoperative,   ineffective   and   ineffectual   and    thus unenforceable.   Bhagwati,  J., at page 620, cited  all  the relevant passages from textbooks on Constitutional Law  and, presumably,  accepted  the  view laid down  therein  to  the effect  that an unconstitutional Act in legal  contemplation is  as though it had never been passed.  Jagannadhadas,  J., at  page 629, noticed the distinction between the  scope  of cls.  (1)  and (2) of Art. 13 of  the  Constitution.   After citing  a passage from " Willoughby on Constitution  of  the United States ", the learned Judge observed : "  This  and  other similar passages  from  other  treatises ’relate,  however, to cases where the entire legislation  is unconstitutional  from the very commencement of the  Act,  a situation  which falls within the scope of article 13(2)  of our  Constitution.  They do not directly cover  a  situation which falls within (1) [1955] 2 S.C.R. 589.      (2) [1955] 1 S.C.R. 613. (3)[1951] S.C. R. 682. 31 article  13(1)............... The- question is what  is  the effect  of  article 13(1) on a pre-existing  valid  statute, which  in  respect  of a  severable  part  thereof  violates fundamental  rights.   Under article 13(1) such part  is,  " void   "   from  the  date  of  the  commencement   of   the Constitution,  while the other part continues to  be  valid. Two  views of the result brought about by this voidness  are possible,   viz.,  (1)  the  said  severable  part   becomes unenforceable, while it remains part of the Act, or (2)  the said   part  goes  out  of  the  Act  and  the  Act   stands appropriately  amended  pro tanto.  The first  is  the  view which  appears to have been adopted by my  learned  brother, Justice  -  Venkatarama  Aiyar,  on  the  basis  of  certain American decisions.  I feel inclined to agree with it.  This aspect, however, was not fully presented by either side  and was  only  suggested  from  the  Bench  in  the  course   of arguments.  We have not had the benefit of all the  relevant material being placed before us by the learned advocates  on either side.  The second view was the basis of the arguments before  us.   It is, therefore, necessary and  desirable  to deal with this case on that assumption." This passage shows that his opinion-though a tentative  one- was  that the severable part became unenforceable  while  it remained  part  of the Act.  But the learned Judge  made  an incidental  observation  that the American view  applied  to cases  that  fall  within the scope of  Art.  13(2)  of  the Constitution,   i.e.,  the  entire  legislation   would   be unconstitutional  from  the very commencement  of  the  Act. Venkatarama  Aiyar,  J., founded his decision on  a  broader basis.  At page 639, the learned Judge observed: "  Another point of distinction noticed by American  jurists between  unconstitutionality  arising by reason of  lack  of legislative competence and that arising by reason of a check imposed  on a competent Legislature may also  be  mentioned.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 36  

While  a  statute  passed  by a  Legislature  which  had  no competence  cannot  acquire validity  when  the  Legislature subsequently acquires competence, a statute which was within the  competence  of  the  Legislature at  the  time  of  its enactment but which infringes a, constitutional 32 prohibition could ’be enforced ’Proprio vigore when once the prohibition is removed." On  the  basis of this distinction, the learned  Judge  held that Art. 13(1) of the Constitution only placed a check   on a  competent legislature and therefore the word " void "  in that  article meant " relatively void ", i.e., the law  only condemned  the  Act as wrong to individuals and  refused  to enforce it against them.  In support of the said  conclusion the  learned Judge cited a passage from " Willoughby on  the Constitution  of  the United States ". A comparison  of  the passage cited with that in the text book discloses that  one important  sentence  which makes all the difference  to  the legal position is omitted by mistake and that sentence is  " An after-acquired power cannot ex proprio vigore validate  a statute  void  when enacted ". The second paragraph  in  the extract on which the learned Judge placed reliance and  also the  decision  relied  upon,  by him  did  not  support  his conclusion.  As already stated, the decision and the passage dealt  not with a case where the State had no power to  make the  law, but with a case where the law lay dormant  till  a law of the Federal Congress removed the conflict between the State Law and the Federal Law.  That case may by analogy  be applied to Art. 13(1) in respect of laws validly made before the  Constitution  but cannot be invoked in the  case  of  a statute which was void when enacted.  By a subsequent order, this  Court  granted  the review and reopened  the  case  to enable the :Bench to obtain the opinion of a larger Bench on the  Constitutional points raised in the judgment  delivered by  the learned Judges.  That matter came up before  a  Con- stitutional  Bench, and Mahajan, C. J., who was a  party  to the decision in Keshavan Madhava Menon’s Case (1)  explained the majority view therein on the meaning of the word "  void " in Art. 13(1) thus, at page 651:- " The majority however held that the word "void" in  article 13(1), so far as existing laws Were concerned, could not  be held to obliterate them from the statute book, and could not make  such  laws  void altogether, because  in  its  opinion article 13 had not been given any (1)  [1951] S.C. R. 228. 33 retrospective effect.  The majority however held that  after the  coming  into force of the Constitution  the  effect  of article  13(1) on such repugnant laws was that it  nullified them,  and made them ineffectual and nugatory and devoid  of any  legal force or binding effect.  It was further  pointed out in one of the judgments representing the majority  view, that the American rule that if a statute is repugnant to the Constitution  the  statute is void from its  birth,  has  no application  to  cases concerning  obligations  incurred  or rights  accrued in accordance with an existing law that  was constitutional  in  its inception, but that if any  law  was made  after the 26th January, 1950, which was  repugnant  to the  Constitution,  then  the same rule  shall  have  to  be followed  in  India  as followed  in  America.   The  result therefore  of  this pronouncement is that the  part  of  the section of an existing law which is unconstitutional is  not law,  and is null and void.  For determining the rights  and obligations  of  citizens the part declared void  should  be notionally taken to be obliterated from the section for  all

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 36  

intents  and purposes, though it may remain- written on  the statute  book and be a good law when a question  arises  for determination  of rights and obligations incurred  prior  to 26th January, 1950, and also for the determination of rights of persons who have not been given fundamental rights by the Constitution.   Thus, in this situation, there is  no  scope for  introducing  terms like " relatively void "  coined  by American  Judges in construing a Constitution which  is  not drawn  up in similar language and the implications of  which are not quite familiar in this country." The learned  Judge, as  we  have already pointed out, rejected  the  distinction made  by Venkatarama Aiyar, J., between lack of  legislative power and the abridgment of the fundamental rights.   Though that  question  did not directly arise,  the  learned  Judge expressed  his view on the scope of Art. 13(2) at  page  653 thus: "  The authority thus conferred by Articles 245 and  246  to make  laws  subjectwise  in the  different  Legislatures  is qualified by the declaration made in 5 34 article 13(2).  That power can only be exercised subject  to the   prohibition  contained  in  article  13(2).   On   the construction  of  article 13(2) there was no  divergence  of opinion  between the majority and the minority   in  Keshava Madhava  Menon v. The State of Bombay (supra).  It was  only on  the  construction of article 13(1) that  the  difference arose  because  it  was felt that  that  article  could  not retrospectively   invalidate  laws  which  when  made   were constitutional according to the Constitution then in force." Das, J., as he then was, in his dissenting judgment differed from  the  majority on other points but does not  appear  to have differed from the aforesaid views expressed by Mahajan, C. J., as regards the scope of Keshava Madhava Menon’s  Case on  the  meaning of the word " void " in Art.  13(1).   This judgment  is  therefore  an  authority  on  two  points  and contains  a weighty observation on the third : (i) when  the law-making  power  of  a  State  is  restricted  by  written fundamental law, then any law opposed to the fundamental law is  in  excess of the legislative authority and  is  thus  a nullity;  (ii) even in the case of a statute to  which  Art. 13(1) applies, though the law is on the statute book and  be a  good  law, when a question arises  for  determination  of rights  and obligations incurred prior to January 26,  1950, the  part  declared void should be nationally  taken  to  be obliterated from the section for all intents and purposes  ; and (iii) on the construction of Art. 13(2), the law made in contravention   of  that  clause  is  a  nullity  from   its inception. The next case is a direct one on the point and that is Sag- hir  Ahmad v. The State. of U. P. (1).  There, the  U.P.Road Transport Act (11 of 1951) was passed enabling the State  to run  stage  carriage  service on a route or  routes  to  the exclusion  of others.  Under that Act, the State  Government made  a declaration extending the Act to a  particular  area and issued a notification setting out what purported to be a scheme  for the operation of the stage carriage  service  on certain  routes.  At the time the said Act was  passed,  the State had no such power to deprive a citizen of his (1)  [1955] 1 S.C.R. 707. 35 right to carry on his transport service.  But after the Act, Art.   19(1)   was  amended  by  the   Constitution   (First Amendment)Act,  1951,  enabling the State to  carry  on  any trade or business either by itself or through,  corporations

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 36  

owned  or  controlled  by the State  to  the.  exclusion  of private  citizens wholly or in part.  One of  the  questions raised  was whether the amendment of the Constitution  could be  invoked to validate the earlier legislation.  The  Court held  that  the  Act when passed  was  unconstitutional  and therefore  it was still-born and could not be  vitalised  by the  subsequent amendment of the Constitution  removing  the constitutional  objections but must be re-enacted.  At  page 728,  Mukherjea,  J.,  as he then  was,  who  delivered  the judgment  of the Court, has given the reasons for  the  said view :- "   As   Professor  Cooley  has  stated  in  his   work   on Constitutional  Limitations  (Vol. 1, page 304  note.)  "  a statute  void for unconstitutionality is dead and cannot  be vitalised  by  a subsequent amendment  of  the  Constitution removing the constitutional objection but must be re-enacted ".  We  think that this is sound law and our  conclusion  is that   the  legislation  in  question  which  violates   the fundamental right of the appellants under article 19(1)  (g) of  the  Constitution and is not shown to  be  protected  by clause  (6) of the article, as it stood at the time  of  the enactment,  must be held to be void under article  13(2)  of the Constitution." This  is  a direct authority on the point,  without  a  dis- senting voice, and we are bound by it. The decision given in Bhikaji Narain’s Case, (1) is strongly relied  upon by the learned Advocate General in  support  of his  contention.   Shortly stated, the facts  in  that  case were:  Before  the  Constitution, the C. P.  &  Berar  Motor Vehicles (Amendment) Act, 1947 (C.  P. III of 1948)  amended the  Motor Vehicles Act, 1939 (Central Act IV of  1939)  and conferred  extensive  powers on  the  Provincial  Government including  the  power  to create a  monopoly  of  the  motor transport  business  in its favour to the exclusion  of  all motor transport operators.  It was contended by the affected parties that by reason of Art. 13(1) of the Constitution, (1)  [1955] 2 S.C.R. 589. 36 the Act became void.  On behalf of the State, it was  argued that  the Constitution (First Amendment) Act, 1951, and  the Constitution (Fourth Amendment) Act, 1955, had the effect of removing the inconsistency and the Amendment Act III of 1948 became operative again.  This Court unanimously accepted the contention  of the State.  This decision is one given  on  a construction of Art. 13(1) of the Constitution and it is  no authority on the construction and scope of Art. 13(2) of the Constitution.   The reason for the decision is found in  the following passages in the judgment, at page 598: " ..................... on and after the commencement of the Constitution  the existing law, as a result of its  becoming inconsistent  with the provisions of article  19(1)(g)  read with clause (6) as it then stood, could not be permitted  to stand in the way of the exercise of that fundamental  right. Article  13(1) by reason of its language cannot be  read  as having obliterated the entire operation of the  inconsistent law  or  having  wiped it out altogether  from  the  statute book ............... In short, article 13(1) had the  effect of nullifying or rendering the existing law which had become inconsistent with article 19(1) (g) read with clause (6)  as it then stood ineffectual, nugatory and devoid of any  legal force or binding effect only with respect to the exercise of the  fundamental  right  on  and  after  the  date  of   the commencement  of the Constitution.  Therefore,  between  the 26th  January, 1950, and 18th June, 1951, the  impugned  Act could  not  stand  in  the  way  of  the  exercise  of   the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 36  

fundamental right of a citizen under Article 19(1)(g).   The true  position is that the impugned law became, as it  were, eclipsed,  for the time being, by the fundamental right  The American  authorities refer only to  post-Constitution  laws which   were  inconsistent  with  the  provisions   of   the Constitution.  Such laws never came to life but were  still- born  as it were Such laws were not dead for  all  purposes. They existed for the purposes of pre-Constitution rights and liabilities  and  they remained operative,  even  after  the Constitution, as against non-citizens.  It is only as 37 against  the  citizens that they remained in  a  dormant  or moribund condition." The  aforesaid passages are only the restatement of the  law as   enunciated  in  Keshavan  Madhava  Menon’s  a   Case(1) reaffirmed  in Pesikaka’s Case (2) and an extension  of  the same to meet a different situation.  A pre-Constitution law, stating  in  the words of Das, J., as he  then  was,  exists notwithstanding  that it does not exist with respect to  the future  exercise of the fundamental rights.  That  principle has been extended in this decision, by invoking the doctrine of  eclipse.   As  the law existed on the  statute  book  to support pre-Constitution acts, the Court held that the  said law  was eclipsed for the time being by one or other of  the fundamental  rights and when the shadow was removed  by  the amendment of the Constitution, the impugned Act became  free from   all  blemish  or  infirmity.   The  Legislature   was competent to make the law with which Pesikaka’s Case (2) was concerned  at  the time it was made.  It was not a  case  of want  of legislative power at the time the Act  was  passed, but  one  where  in  the case of  a  valid  law  supervening circumstances cast a cloud.  To the other class of cases  to which  Art.  13 (2) will apply, the views expressed  by  the American  authorities,  by Mahajan, J., as he then  was,  in Pesikaka’s  Case, and by Mukherjea, J., as he then  was,  in Saghir  Ahmad’s Case (3 ) directly apply.  To the  facts  in Bhikaji  Narain’s  Case,  (4) the  principle  laid  down  in Keshavan Madhava Menon’s Case is attracted.  But it is  said that the observations of the learned Judges are wide  enough to  cover  the  case  falling  under  Art.  13  (2)  of  the Constitution  and  further that a logical extension  of  the principle laid down would take in also a case falling  under Art.  13(2).   The  first  contention  is  based  upon   the following passage:- But apart from this distinction between pre-Constitution and post-Constitution  laws, on which however we need  not  rest our   decision,  it  must  be  held  that   these   American authorities  could have no application to our  Constitution. All laws existing or future (1)  [1951] S.C.R. 228. (2)  [1955] 1 S.C.R. 613, (3)  [1955] 1 S.C.R. 707. (4)  [1955] 2 S.C.R. 589. 38 which  are inconsistent with the provisions of Part  III  of our  Constitution, are by express provisions of  article  13 rendered  void  to the extent of such  inconsistency.   Such laws were not dead for all purposes.  They  existed for  the purposes of pre-Constitution rights and liabilities and they remained operative, even after the Constitution, as  against non-citizens.  It is only as against the citizens that  they remained in a dormant or moribund condition." The  first part of the said observation states nothing  more than  the plain import of the provisions of Art.  13(1)  and (2),  namely,  that  they render laws void  only  I  to  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 36  

extent’  of  such  inconsistency.  The second  part  of  the observation directly applies only to a case covered by  Art. 13(1),  for the learned Judges say that the laws  exist  for the purposes of pre-Constitution rights and liabilities  and they remain operative even after the Constitution as against non-citizens.   The  said observation  could  not  obviously apply  to post-Constitution laws.  Even so, it is said  that by a parity of reasoning the post-Constitution laws are also void to the extent of their repugnancy and therefore the law in respect of non-citizens will be oil the statute book  and by  the  application of the doctrine of  eclipse,  the  same result  should  flow  in  its  case  also.   There  is  some plausibility  in  this argument, but it  ignores  one  vital principle,  viz.,  the  existence or  the  non-existence  of legislative power or competency at the time the law is  made governs  the situation.  There is no scope for applying  the doctrine  of  eclipse  to a case where the law  is  void  ab initio  in  whole or in part.  That apart,  in  the  present case-we  do  not  base  our  decision  on  that-Art.   31(1) infringed by the Act, applies to all persons irrespective of whether  they are citizens or non-citizens,  and.  therefore the   entire  law  was  void  ab  initio.   That   judgment, therefore, does not support the respondent as it has bearing only on the construction of Art. 13(1) of the Constitution. In  Ram  Chandra Palai v. State of Orissa  (1),  this  Court followed  the decision in Bhikaji Narain’s Case (2)  in  the case of a pre-Constitution Act.  In Pannalal (1) [1956] S.C.R. 28. (2) [1955] 2 S.C.R. 589. 39 Binjraj  v. Union of India (1), Bhagwati, J.,  quoted,  with approval the extract from Keshavan Madhava Menon’s Case (2), wherein  it was held that Art. 13(1) has only the effect  of nullifying  or  rendering  all  inconsistent  existing  laws ineffectual  or  nugatory or devoid of any  legal  force  or binding  effect only with respect to the fundamental  rights on or after the commencement of the Constitution. The  learned Advocate General relied upon certain  decisions in support of his contention that the word " void " in Arts. 13(1)  and  13  (2) means only  "  unenforceable  "  against persons  claiming fundamental rights, and the law  continues to  be in the statute book irrespective of the fact that  it was  made  in infringement of the fundamental  rights.   The observations of Mukherjea, J., as he then was, in  Chiranjit Lal  Chowdhuri v. The Union of India (3) are relied  on  and they are: "  Article  32,  as its provisions  show,  is  not  directly concerned with the determination of constitutional  validity of  particular legislative enactments.  What it aims  at  is the  enforcing  of  fundamental  rights  guaranteed  by  the Constitution,  no  matter  whether the  necessity  for  such enforcement  arises out of an action of the executive or  of the legislature....................... The rights that could be  enforced under article 32 must ordinarily be the  rights of  the  petitioner himself who complains of  infraction  of such rights and approaches the court for relief." He  also  relies upon the, decision of Das, J., as  he  then was,   in  The,  State  of  Madras  v.  Srimathi   ChamPakam Dorairajan  (4), wherein the learned Judge states  thus,  at page 531 : "  The  directive principles of the State Policy,  which  by article  37  are expressly made unenforceable  by  a  Court, cannot  override  the provisions found in  Part  III  which, notwithstanding   other  provisions,  are   expressly   made enforceable by appropriate Writs, Orders or directions under

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 36  

article 32." Basing his argument on the aforesaid two observations, (1)  [1957] S.C.R. 233. (2) [1951] S C.R. 228. (3)  [1950] S.C.R. 869, 899. (4) [1951] S.C.R. 525, 40 it  is  contended that in the case ’of  both  the  directive principles and the fundamental rights, it must be held  that the infringement of either does not invalidate the  law, but only makes the law unenforceable.  This argument, if we  may say so, mixes up the Constitutional invalidity of a  statute with the procedure to be followed  to      enforce       the fundamental rights of an individual.    The   Constitutional validity of a statute depends upon    the    existence    of legislative power in the State and the right of a person  to approach  the Supreme Court depends upon his possessing  the fundamental right, i.e., he cannot apply for the enforcement of  his right unless it is infringed by any law.  The  cases already  considered  supra  clearly establish  that  a  law, whether pre-Constitution or post-Constitution, would be void and  nugatory  in  so far as it  infringed  the  fundamental rights.  We do not see any relevancy in the reference to the directive principles; for, the legislative power of a  State is only guided by the directive principles of State  Policy. The  directions,  even  if disobeyed by  the  State,  cannot affect the legislative power of the State, as they are  only directory  in  scope  and  operation.   The  result  of  the aforesaid  discussion  may be summarized  in  the  following propositions:  (i)  whether the  Constitution  affirmatively confers  power on the legislature to make laws  subject-wise or  negatively prohibits it from infringing any  fundamental right,   they  represent  only  two  aspects  of   want   of legislative  power; (ii) the Constitution in  express  terms makes  the power of a legislature to make laws in regard  to the entries in the Lists of the Seventh Schedule subject  to the other provisions of the Constitution and thereby circum- cribes  or  reduces the said power by the  limitations  laid down in Part III of the Constitution; (iii) it follows  from the premises that a law made in derogation or in -excess  of that  power would be ab initio void wholly or to the  extent of  the  contravention  as the case may be ;  and  (iv)  the doctrine of eclipse can be invoked only in the case of a law valid  when made, but a shadow is cast on it by  supervening constitutional    inconsistency   or,supervening    existing statutory 41 inconsistency; when the shadow is removed, the impugned  Act is  freed  from  all blemish  or  infirmity.   Applying  the aforesaid  principles to the present case, we hold that  the validity of the Act could not be tested on the basis of  the Constitution  (Fourth Amendment) Act, 1955, but only on  the terms of the relevant Articles as they existed prior to  the Amendment. We shall now proceed to consider the first contention of Mr. Nambiar.   He contends that the Motor  Vehicles  (Amendment) Act (100 of 1956) passed by Parliament was wholly  repugnant to  the  provisions of the U. P. Act and therefore  the  law became  void  under  the provisions of Art.  254(1)  of  the Constitution, with the result that at the present time there is  no  valid  law whereunder the  State  can  prohibit  the appellants  exercising  their fundamental  right  under  the Constitution,  namely,  carrying on the  business  of  motor transport. Mr. Naunit Lal bases his case on the proviso to Art.  254(2)

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 23 of 36  

of  the  Constitution rather than on cl.  (1)  thereof.   He contends  that by reason of the Amending Act, the U. P.  Act was  repealed  in  toto; and because  of  Section  68B,  the operation  of  the  provisions of the  General  Clauses  Act saving things done under the repealed Act was excluded.  The learned Advocate General attempted to meet the double attack by  pressing on us to hold that there was no  repugnancy  at all between the provisions of the Central Act and the U.  P. Act and therefore the U. P. Act had neither become void  nor was  repealed by necessary implication by the  Central  Act. We  shall  now  examine the provisions of  Art.  254(1)  and 254(2). Article 254: "(1) If any provisions of a law made by the Legislature of a State  is  repugnant  to  any provision of  a  law  made  by Parliament which Parliament is competent to enact, or to any provision  of  an existing law with respect to  one  of  the matters enumerated in the Concurrent List, then, subject  to the  provisions of clause (2), the law made  by  Parliament, whether  passed  before  or  after  the  law  made  by   the Legislature of 6 42 such State, or, as the case may be, the existing law,  shall prevail  and  the law made by the Legislature of  the  State shall, to the extent of the repugnancy, be void. (2)  Where  a law made by the Legislature of  a  State  with respect  to one of the matters enumerated in the  Concurrent List  contains any provision repugnant to the provisions  of an  earlier law made by Parliament or an existing  law  with respect  to  that  matter,  then, the law  so  made  by  the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his  as- sent, prevail, in that State. Provided   that  nothing  in  this  clause   shall   prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or  repealing  the  law so made by the  Legislature  of  the State." Article  254(1) lays down a general rule.  Clause (2) is  an exception  to  that Article and the  proviso  qualifies  the exception.   If there is repugnancy between the law made  by the State and that made by Parliament with respect to one of the matters enumerated in the Concurrent List, the law  made by Parliament shall prevail to the extent of the  repugnancy and  the law made by the State shall, to the extent of  such repugnancy, be void.  Under cl. (2), if the Legislature of a State makes a provision repugnant to the provisions. of  the law made by Parliament, it would prevail if the  legislation of the State received the assent of the President.  Even  in such a case, Parliament may subsequently either amend,  vary or  repeal the law made by the Legislature of a  State.   In the  present case, the Uttar Pradesh  Legislative  Assembly, after  obtaining  the assent of the President on  April  23, 1955, passed the U. P. Act.  Parliament subsequently  passed the   Motor   Vehicles  (Amendment)  Act  (100   of   1956). Therefore,  both the clauses of Art. 254 would apply to  the situation.  The first question is whether the provisions  of the Union law, i.e., the Motor Vehicles (Amendment) Act (100 of  1956), are repugnant to the provisions of the U. P.  Act and if so to 43 what extent.  Before we proceed to examine the provisions of the  two  Acts,  it  may be convenient  to  notice  the  law pertaining to the rule of repugnancy.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 24 of 36  

Nicholas  in his Australian Constitution, 2nd Edition,  page 303, refers to three tests of inconsistency or repugnancy :- "(1)   There may be inconsistency in the actual terms of the competing statutes; (2)  Though there may be no direct conflict, a State law may be inoperative because the Commonwealth law, or the award of the  Commonwealth  Court  is  intended  to  be  a   complete exhaustive code; and (3) Even in the absence of intention, a  conflict may  arise when  both  State and Commonwealth seek  to  exercise  their powers over the same subject matter." This Court in Ch.  Tika Ramji v. The State of Uttar  Pradesh (1) accepted the said three rules, among others,  as  useful guides to test the question of repugnancy.   In    Zaverbhai Amaidas v. The State of Bombay     (2), this Court laid down a similar test.  At page 807, it is stated: "  The  principle  embodied in section  107(2)  and  Article 254(2)  is that when there is legislation covering the  same ground both by the centre and by the Province, both of  them being  competent  to enact the same, the law of  the  Centre should prevail over that of the State."- Repugnancy  between two statutes may thus be ascertained  on the basis of the following three principles: (1)  Whether  there  is  direct  conflict  between  the  two provisions ; (2)  Whether  Parliament intended to lay down an  exhaustive code  in respect of the subject matter replacing the Act  of the State Legislature; and (3) Whether the law made by Parliament and the    law   made by the State Legislature occupy the same field. We shall now examine the provisions of both the Acts in some detail  in order to ascertain the extent of  the  repugnancy between them.  The Scheme of (1) [1956] S.C.R. 393. (2) [1955] 1 S.C.R. 799. 44 the U. P. Act may be summarized thus: Under the U. P. Act  " State Road Transport Service " is defined to mean  transport service  by  a  public service vehicle owned  by  the  State Government.  Under s. 3: "  Where the State Government is of the opinion that  it  is necessary  in  the interests of the general public  and  for subserving   the  common  good,  or  for   maintaining   and developing efficient road transport system so to direct,  it may,  by notification in the official Gazette  declare  that the  road transport services in general, or  any  particular class of such service on any route or portion thereof as may be  specified, shall be run and operated exclusively by  the State  Government, or by he state Government in  conjunction with  railways  or be run and operated partly by  the  State Government and partly by others under and in accordance with the provisions of the Act". After  the publication of the notification under s.  3,  the State Government or, if the State Government so directs, the Transport  Commissioner publishes in such manner as  may  be specified  a scheme as to the State Road  Transport  Service providing for all or any of the matters enumerated in cl (2) of s. 4. Clause (2), of s. 4 directs that, among others, the scheme  should  ’provide the particulars of  the  routes  or portions thereof over which and the date on which -the State Transport  Service  will commence to operate, the  roads  in regard  to which private persons may be allowed  to  operate upon,  the  routes  that  will  be  ’served  by  the   State Government in conjunction with railways , the curtailment of the  routes covered by the existing -permits or transfer  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 25 of 36  

the permits to other route or routes.  Section 5 enjoins the Transport  Commissioner to give notice to the  permit-holder requiring  him  to lodge a statement in writing  whether  he agrees to the transfer of the permit and in cl. (2) thereof, it is prescribed that in case he accepts the transfer, he is nit  entitled to any compensation, but if he does not  agree to the transfer,his permit will be cancelled subject to  his right  to  get compensation under the Act.  Under s.  6  any person whose interests are affected may within 30 days  from the publication of the scheme, file objections 45 on  it before the Transport ’Commissioner who shall  forward them to the Board constituted under s. 7, consisting of  the Commissioner  of a Division, Secretary to Government in  the Transport  Department and the Transport  Commissioner.   The Board shall consider the objections, if any, forwarded under s.  6  and may either confirm, modify or alter  the  scheme. The  Scheme so confirmed or modified or altered under  s.  7 shall  be  published in the Official  Gazette.   Any  scheme published  under  s.  8  may at any  time  be  cancelled  or modified  or  altered by the State Government.   Section  10 gives  the  consequences  of the  publication  under  s.  8. Section 11 provides compensation for premature  cancellation of  permits  or curtailment of route or routes,  as  may  be determined  in accordance with the principles  specified  in Schedule  1.  In  Schedule 1,  compensation  is  payable  as follows: " (1) For every complete month or Rupees one part of a month exceeding  fifteen days of hundred. the unexpired period  of the permit. (2) For part of a month not exceed-        Rupees ing fifteen days of the unexpired          fifty. period of a permit. Provided always that the amount of compensation shall in  no case be less than rupees two hundred." Section 12 authorises the State Government, in a case  where the permit has been cancelled, to purchase the motor vehicle covered  by it if the holder of the permit offers  to  sell, upon terms and conditions laid down in Schedule 11  provided the vehicle is of the type of manufacture and model notified by  the  State  Government and provided  secondly  that  the vehicle  is mechanically in a sound condition  or  otherwise declared  fit by the Transport Commissioner or his  nominee. Sections  13  to 18 provide for a State  Machinery  for  the development of motor transport industry.  Sections 19 to  22 are  provisions which are consequential in nature.   Shortly stated, under the U. P. Act the State Government initiate  a scheme  providing  for  the  nationalization  of  the   road transport  in whole or in part; the objections filed by  the persons affected by the scheme are heard by a 46 Board  of three officers appointed by the State  Government; the Board after hearing- the objections may confirm,  modify or  alter  the  scheme;  the  scheme  so  confirmed  may  be cancelled,  modified or altered by ,the State Government  by following  the  same  procedure  adopted  for  framing   the original scheme; and the holders of permits cancelled may be given new’ permits if they choose to accept and if not  they will be paid such compensation as prescribed under the  Act. Under  the Amendment Act 100 of 1956, whereby a new  chapter was  inserted  in  the  Motor  Vehicles  Act  of  1939,  the procedure  prescribed is different.  Under s. 68-A  of  that Act,  ’State Transport Undertaking’ is defined to  mean  any undertaking  providing  road transport service,  where  such undertaking is carried on by,-(i) the Central Government  or

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 26 of 36  

a  State  Government; (ii) any  Road  Transport  Corporation established  under  s. 3 of the Road  Transport  Corporation Act,  1950; (iii) the Delhi Transport Authority  established under s. 3 of the Delhi Road Transport Authority Act,  1950; and  (iv)  any municipality or any  corporation  or  company owned or controlled by the State Government.  Under s.  68C, the State Transport Undertaking initiates a scheme if it  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  service  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.  Section 68D says  that  any person  affected  by the Scheme may file objections  to  the said   Scheme  before  the  State  Government;   the   State Government  may, after considering the objections and  after giving   an   opportunity   to  the   objectors   or   their representatives   and  the  representatives  of  the   State Transport Undertaking to be heard in the matter, approve  or modify the Scheme.  Any Scheme published may at any time  be cancelled  or  modified by the State  Transport  Undertaking following  the  same procedure; for the  purpose  of  giving effect 47 to the Scheme, the Regional Transport Authority, inter alia, may  cancel the existing permits or modify the terms of  the existing permits.  Section 68G lays down the principles  and method of determination of compensation.  Under that section compensation  is, payable for every completed month or  part of a month exceeding fifteen days of the unexpired period of the permits at Rs. 200 and for part of a month not exceeding fifteen  days of the unexpired period of the permit  at  Rs. 100.  Under the Amending Act, the gist of the provisions  is that  the  Scheme  is  initiated  by  the  State   Transport Undertaking  carried  on  by any of  the  four  institutions mentioned  in  s.  68A,  including  the  State   Government; objections are filed by the affected parties to the  Scheme, the  affected parties and the Undertaking are heard  by  the State  Government,  which,  after  hearing  the  objections, approves or modifies the Scheme.  There is no provision  for transfer  of  permits  to  some other  routes,  or  for  the purchase of the buses by the State Government.  Compensation payable  is  twice  that fixed under the  U.  P.  Act.   One important  thing  to  be noticed is that the U.  P.  Act  is prospective,  i. e., comes into force only from the date  of the passing of the Amending Act and the procedure prescribed applies  only  to  schemes  that  are  initiated  under  the provisions of the U. P. Act. A  comparison of the aforesaid provisions of the U.  P.  Act and  the  Amending  Act indicates that  both  the  Acts  are intended  to operate, in respect of the same subject  matter in the same field.  The unamended Motor Vehicles Act of 1939 did  not  make  any provision  for  the  nationalization  of transport services, but the States introduced amendments  to implement  the scheme of nationalization of road  transport. Presumably,  Parliament with a view to introduce  a  uniform law  throughout  the  country  avoiding  defects  found   in practice  passed the Amending Act inserting Chapter IV-A  in the  Motor  Vehicles  Act,  1939.   This  object  would   be frustrated  if the argument that both the U. P. Act and  the Amending  Act  should co-exist in respect of schemes  to  be framed  after  the Amending Act, is accepted.   Further  the authority to initiate

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 27 of 36  

48 the  scheme, the manner of doing it, the authority  to  hear the   objections,  the  principles  regarding   payment   of compensation under the two Acts differ in import ant details from  one  another.  While in the U. P. Act  the  scheme  is initiated by the State Government, in the Amendment Act,  it is  proposed by the State Transport Undertaking.   The  fact that a particular undertaking may be carried on by the State Government also cannot be a reason to equate the undertaking with the State Government; for under s. 68A the  undertaking may  be carried on not only by the State Government  but  by five other different institutions.  The undertaking is  made a statutory authority under the Amending Act with a right to initiate the scheme and to be heard by the State  Government in regard to objections filed by the persons affected by the scheme.   While  in  the  U.  P.  Act  a  Board  hears   the objections,  under  the Amending Act  the  State  Government decides  the  disputes.  The provisions of the  scheme,  the principles  of  compensation and the manner of  its  payment also differ in the two Acts.  It is therefore manifest  that the  Amending Act occupies the same field in respect of  the schemes  initiated after the Amending Act and  therefore  to that  extent  the  State Act must yield  its  place  to  the Central  Act.   But the same cannot be said of  the  schemes framed under the U. P. Act before the Amending Act came into force.   Under  Art. 254(1) " the law  made  by  Parliament, whether  passed  before  or  after  the  law  made  by   the Legislature of such State............ shall prevail and  the law  made  by  the legislature of the State  shall,  to  the extent of the repugnancy, be void." Mr. Nambiar contends that, as the U. P. Act and the Amending Act  operate  in  the  same field in  respect  of  the  same subject-matter, i. e., the nationalization of bus transport, the  U.  P.  Act  becomes void  under  Art.  254(1)  of  the Constitution.  This argument ignores the crucial words "  to the extent of the repugnancy " in the said clause.  What  is void  is  not the entire Act but only to the extent  of  its repugnancy with the law made by Parliament.  The identity of the  field  may  relate to the pith  and  substance  of  the subject-matter 49 and also the period of its. operation.  When both  coincide, the  repugnancy is complete and the whole of the  State  Act becomes  void.   The  operation  of the  Union  Law  may  be entirely  prospective leaving the State Law to be  effective in  regard  to thing already, done.  Sections 68C,  68D  and 68E,  inserted by the Amending Act, clearly show that  those sections  are concerned only with a scheme  initiated  after the  Amending  Act came into force.  None of  the  sections, either expressly or by necessary implication, indicates that the  schemes already finalised should be reopened and  fresh schemes  be  framed  pursuant to  the  procedure  prescribed thereunder.  Therefore, under Art. 254(1), the law under the U. P. Act subsists to support the schemes framed  thereunder and it becomes void only in respect of schemes framed  under the Central Act.  A similar question arose in the context of the  application  of Art. 13(1) to  a  pre-Constitution  law which  infringed  the  fundamental rights  given  under  the Constitution. In Keshavan Madhava Menon’s Case (1), which we have referred to  in a different context the question was  whether  Indian Press  (Emergency Powers) Act, 1931, was void as  infringing the  provisions of Art. 13(1) of the Constitution;, and  the Court held that the said Act was valid and would continue to be  in  force to sustain a prosecution launched for  an  act

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 28 of 36  

done be fore the Constitution.  In the words of Das, J.,  as he then was: "  Such  laws  exist  for  all  past  transactions  and  for enforcing all rights and liabilities accrued before the date of the Constitution." (p. 234). "  So  far as the past acts are concerned  the  law  exists, notwithstanding  that it does not exist with respect to  the future exercise of fundamental rights.", (pp. 235-236). Article  13(1), so far as it is relevant to the present  in- quiry, is pari materia with the provisions of Art. 254(1) of the  Constitution.   While -under Art. 13(1)  all  the  pre- Constitution laws, to the extent of their inconsistency with the provisions of Part III, are void, under (1)  [1951] S.C.R. 228. 7 50 Art. 254(1) the State Law to the extent of its repugnancy to the law made by,Parliament is void.  If the pre-Constitution law exists for the post-Constitution period for all the past transactions, by the same parity of reasoning, the State law subsists after the making of the law by Parliament, for past transactions.   In this view, both the laws can co-exist  to operate during different periods. The  same decision also affords a solution to  the  question mooted,  namely,  whether  if  the  law  was  void  all  the completed  transactions  fall with it.  Mahajan, J.,  as  he then  was,  draws  a distinction between a void  Act  and  a repealed  Act vis-a-vis their impact on  past  transactions. At page 251, the learned Judge says: The expression is void " has no larger effect on the statute so  declared  than  the word " repeal ".  The  expression  " repeal " according to common law rule obliterates a  statute completely as if it had never been passed and thus  operates retrospectively  on  past transactions in the absence  of  a saving  clause or in the absence of provisions such  as  are contained  in  the  Interpretation Act-,  1889,  or  in  the General  Clauses Act, 1897, while a provision in  a  statute that  with  effect from a particular date  an  existing  law would  be void to the extent of the repugnancy has  no  such retrospective  operation  and  cannot  affect  pending  pro- secutions  or  actions taken under such laws.  There  is  in such a situation no necessity of introducing a saving clause and  it does not need the aid of a legislative provision  of the  nature  contained  in the  Interpretation  Act  or  the General Clauses Act.  To hold that a prospective declaration that  a statute is void affects pending oases is to give  it indirectly  retrospective  operation  and  that  result   is repugnant to the clear phraseology employed, in the  various articles in Part III of the Constitution." The said observation directly applies to a situation created by  Art.254(1). As the U. P. Act was void from the  date  of the  Amending Act, actions taken before that date cannot  be affected.   In  whichever  way  it  is  looked  at,  we  are satisfied  that  in  the present case,  the  scheme  already framed subsists and the 51 State  law  exists to sustain it even after  the  Parliament made the law.  In this view we reject the contention of  Mr. Nambiar based on Art 254(1)of the Constitution. The alternative argument advanced by Mr. Naunit Lal may  now be considered.  It is not disputed that under the proviso to Art.  254(2), the Parliament can repeal the law made by  the Legislature  of a State and that Parliament can  repeal  the repugnant  State  law  whether  directly  or  by   necessary implication.   Assuming that Parliament in the present  case

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 29 of 36  

by enacting the Amending Act repugnant to the State law with respect to the same subject-matter i. e., nationalization of road  transport, impliedly repealed the State law, would  it have  the  effect of effacing the scheme already made  ?  If there  was a repeal, the provisions of s. 6 of  the  General Clauses  Act of 1897 are directly attracted.   The  relevant part of s. 6 of the General Clauses Act reads: "  Where  this Act, or any Central Act  or  Regulation  made after  the commencement of this Act, repeals  any  enactment hitherto  made  or  hereafter to be  made,  then,  unless  a different intention appears, the repeal shall not- (a) revive anything not in force or existing at the time  at which the repeal takes effect; or (b)  affect  the  previous  operation of  any  enactment  so repealed or anything duly done or suffered thereunder." The  express words used in clause (b)certainly take  in  the scheme framed under the -repealed Act.  It was a thing  duly done  under  the  repealed  Act.  But  it  is  said  that  a comparison  of  the provisions of s. 6 with those of  s.  24 would indicate that anything duly done excludes the  scheme. Section  24 deals with the continuation of orders,  schemes, rules, forms or bye-laws. made or issued under the  repealed Act.   But  that  section applies only to the  repeal  of  a Central  Act but not a State Act.  But the exclusion of  the scheme  is  sought  to  be supported on  the  basis  of  the argument that in the case of a repeal of a Central Act, both the sections apply and, in that context, a reasonable 52 interpretation  would  be to exclude  what  is  specifically provided  for from the general words used in s. 6.  Whatever justification  there may be in that context, there  is  none when  we  are concerned with the repeal of a  State  Act  to which  s. 24 does not apply.  In that situation, we have  to look to the plain words of s. 6 and ascertain whether  those words  are comprehensive enough to take in a scheme  already framed.   We have no doubt that a scheme framed is  a  thing done under the repealed Act. A  further  contention  is  raised  on  the  basis  of   the provisions  of  s. 68B to achieve the same  result,  namely, that the said section indicates a different intention within the meaning of s. 6 of the General Clauses Act.  Section 68B reads: "  The provisions of this Chapter and rules and orders  made thereunder   shall  have  effect  notwithstanding   anything inconsistent  therewith contained in Chapter IV of this  Act or  in any other law for the time being in force or  in  any instrument having effect by virtue of any such law.  " This  section embodies nothing more than the bare  statement that   the   provisions   of   this   Act   should   prevail notwithstanding the fact that they are inconsistent with any other  law.  We have expressed our view that the  provisions of  this Act are prospective in. operation  and,  therefore, nothing  in those sections, which we have already  analysed, is  inconsistent  with the provisions of the  State  law  in regard  to  its  operation  with  respect  to.  transactions completed  thereunder.  Assuming without deciding  that  the word ’instrument’ in s. 68B includes a scheme, we do not see any  provisions in the Act which are inconsistent  with  the scheme framed under the State Act.  The provisions  starting from  s. 68C only contemplate a scheme initiated  after  the Amending  Act  came  into force and  therefore  they  cannot obviously be inconsistent with a scheme already framed under the State Act before the Amending Act came into force.   We, therefore,  hold that s. 6 of the General Clauses Act  saves the scheme framed under the U. P. Act.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 30 of 36  

The next contention of the learned Counsel Mr. 53 Nambiar,  namely, that the scheme being a  prescription  for the  future,  it has a continuous operation even  after  the Amending  Act  became law, with the result  that  after  the Amending Act, there was no valid law to sustain it, need not detain  us;  for, we have held that the State  law  subsists even after the Amending Act to sustain the things done under the former Act. This  leads  us to the contention of  the  learned  Advocate General  that  even if the Constitution  (Fourth  Amendment) Act, 1955, could not be relied on to sustain the validity of the  U. P. Act, there was no deprivation of property of  the appellants  within  the  meaning of the  decisions  of  this Court in The State of West Bengal v. Subodh Gopal Bose  (1); Dwarkadas  Shrinivas  of Bombay v. The Sholapur  Spinning  & Weaving  Co.  Ltd. (2) and Saghir Ahmad’s Case  (3).   Those cases  have held that cls. (1) and (2) of Art. 31 relate  to the same subject matter and that, though there is no  actual transfer  of  property to the State, if by the  Act  of  the State, an individual has been substantially dispossessed  or where  his  right  to use and enjoy his  property  has  been seriously  impaired  or the value of the property  has  been materially  reduced,  it  would  be  acquisition  or  taking possession  within  the  meaning  of el.  (2)  of  the  said Article.  After a faint attempt to raise this question,  the learned  Advocate  General  conceded that  in  view  of  the decision  in  Saghir Ahmad’s Case he could not  support  his argument  to the effect that the State did not  deprive  the petitioners  of their interest in a commercial  undertaking. In  the said case, this Court held in express terms that  U. P.  Transport  Act, 1951, which, in  effect  prohibited  the petitioners   therein  from  doing  their  motor   transport business  deprived them of their property or interest  in  a commercial  undertaking within the meaning of Art. 31(2)  of the Constitution.  Mukherjea J., as he then was, observed at page 728 : " It is not seriously disputed on behalf of the  respondents that  the appellants’ right to ply motor vehicles  for  gain is, in any event, an interest in a (1) [1954] S.C.R. 587.           (2) [1954] S.C.R. 674. (3)  [1955] 1 S.C.R. 707. 54 commercial  undertaking.   There is no doubt also  that  the appellants  have  been  deprived--of  this  interest." The learned Judge proceeded to state at page 729 : "  In view of that majority decision it must be taken to  be settled  now that clauses (1) and (2) of article 31 are  not mutually exclusive in scope but should be, read together  as dealing with the same subject, namely, the protection of the right   to   property  by  means  of  limitations   on   the State’s.powers,  the deprivation contemplated in clause  (1) being no other than acquisition or taking possession of  the property  referred to in clause (2).  The  learned  Advocate General  conceded this to be the true legal  position  after the.  pronouncements of this Court referred to  above.   The fact  that  the buses belonging to the appellants  have  not been  acquired by the Government is also not material.   The property of a business may be both tangible and  intangible. Under  the  statute  the  Government  may  not  deprive  the appellants of their buses or any other tangible property but they are depriving them of the business of running buses  on hire  on  public roads.  We think therefore  that  in  these circumstances   the  legislation  does  conflict  with   the provisions  of article 31(2) of the Constitution and as  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 31 of 36  

requirements of that clause have not been complied with,  it should be held to be invalid on that ground. The above observations are clear and unambiguous and they do not  give  scope for further argument on  the  subject.   It follows  that if the Act does not provide for  compensation, the  Act  would  be  invalid  being  in  conflict  with  the provisions of Art. 31(2) of the Constitution. The next question is whether in fact the provisions of  Art. 31(2)  of the Constitution, before the Constitution  (Fourth Amendment) Act, 1955, were complied with.  Under Art.  31(2) no  property shall be taken possession of or  acquired  save for  a  public purpose and save by authority  of  law  which provides  for compensation for the property so  acquired  or requisitioned   and   either  fixes  the   amount   of   the compensation  or specifies the principles on which, and  the manner in which, the compensation is to be determined and 55 given.   In The State of West Bengal v. Mrs.  Bela  Banerjee (1), Patanjali Sastri, C. J., has defined the meaning of the word I compensation’ at page 563, as under "  While  it  is  true that the  legislature  is  given  the discretionary  power  of laying down  the  principles  which should govern the determination of the amount to be given to the  owner  for the property appropriated,  such  principles must  ensure  that  what is determined as  payable  must  be compensation,  that is, a just equivalent of what the  owner has  been  deprived  of.  Within the limits  of  this  basic requirement  of  full indemnification  of  the  expropriated owner, the Constitution allows free play to the  legislative judgment   as   to   what  principles   should   guide   the determination   of   the  amount  payable.    Whether   such principles take into account all the elements which make  up the  true  value of the property appropriated  and,  exclude matters which are to be neglected, is a justiciable issue to be  adjudicated  by  the  Court.,  This,  indeed,  was   not disputed.  " On  the  basis  of  the  aforesaid  principle,  Mr.  Nambiar contends  that  the  U. P. Act does  not  provide  for  com- pensation  in the sense of giving the operator  deprived  of his interest a just equivalent of what he has been  deprived of, or fix any principles to guide the determination of  the amount  payable.  The U.P. Act, the argument proceeds,  does not  provide at all for compensation payable in  respect  of the  interest of the operator in a  commercial  undertaking, but only gives compensation for the unexpired period of  the permit.   On  the other hand, the learned  Advocate  General contends that the appellants would be entitled only to  just equivalent  of  the  interest that  they  are  deprived  of, namely,  the interest in a commercial undertaking  and  that the cumulative effect of the provisions of the U. P. Act  is that  just equivalent of the said interest is given.  As  it is  common  case  that  what the Act  should  give  is  just compensation   for  the  interest  of  the  operator  in   a commercial undertaking, we Shall now examine the  provisions of the U. P. Act to ascertain whether it (1)  [1954] S.C.R. 558. 56 provides  a  quid pro quo for the interest the  operator  is deprived of The provisions of the U. P. Act relating to compensation pay usefully be read at this stage: Section 5 : " (1) Where the scheme published under section 4 provides  for  cancellation of any existing  permit  granted under Chapter IV of the Motor Vehicles Act, 1939, or for the transfer  of  such permit to any other route or  routes  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 32 of 36  

Transport  Commissioner  shall cause notice  thereof  to  be served  on  the  permit holder concerned and  on  any  other persons  to  whom in his opinion special  notice  should  be given.   The notice shall also require the permit-holder  to lodge  a  statement  in  writing within  the  period  to  be specified. therein whether he agrees to the transfer of  the permit. (2)  If  the  permit-holder agrees to the  transfer  of  his permit,  he  shall,  provided  the  permit  is  actually  so transferred  ultimately,  be  not  entitled  to  claim  com- pensation  under  section  11 but the  transference  of  the permit  shall  be deemed to be in lieu of  compensation  and complete discharge therefor of the State Government.  Where, however,  the permit-holder does not agree to the  transfer, the  permit  shall, without prejudice to the  right  of  the permit-holder to get compensation under the said section  be liable to be cancelled." Section 11 :" (1) Where in pursuance of the Scheme published under section 8 any existing permit granted under Chapter IV of  the  Motor Vehicles Act, 1939, is or is deemed  to  have been  cancelled  or the route or routes covered  by  it  are curtailed or are deemed to have been curtailed, the  permit- holder  shall, except in cases where transfer of the  permit has  been agreed to under sub-section (2) of section  5;  be entitled  to  receive and be paid such compensation  by  the State  Government  for  and  in  respect  of  the  premature cancellation  of  the  permit or, as the case  may  be,  for curtailment of the route or routes covered by the permit  as may  be determined in accordance with the principles  speci- fied in Schedule I. (2)  The  compensation payable under this section  shall  be due as from the date of order of cancellation 57 of  the  permit or curtailment of the route covered  by  the permit. (3)  There  shall  be paid by the State  Government  on  the amount  of  compensation  determined  under  subsection  (1) interest at the rate of two and one-half per cent. from  the date of order of cancellation or curtailment of route to the date of determination of compensation as aforesaid. (4)The  compensation  payable under this  section  shall  be given in cash. (5)  The  amount of compensation to be given  in  accordance with  the provisions of sub-section (1) shall be  determined by  the Transport Commissioner and shall be offered  to  the permit-holder  in  full  satisfaction  of  the  compensation payable  under this Act and if the amount so offered is  not acceptable to the permit-holder, the Transport  Commissioner may within such time and in such manner as may be prescribed refer the matter to the District Judge whose decision in the matter shall be final and shall not be called in question in any Court.  " Section 12: " Where a permit granted under Chapter IV of the Motor Vehicles Act, 1939, has been cancelled or the route to which the permit relates has been curtailed in pursuance  of the  scheme published under section 8, the State  Government may  if the holder of the permit offers to sell,  choose  to purchase the motor vehicles covered by the permit upon terms and conditions laid down in Schedule II: Provided,   firstly,  that  the  vehicle  is  of   a   type, manufacture and model notified by the State Government; and Provided,  secondly, that the vehicle is in  a  mechanically sound  condition  and  is  otherwise  declared  fit  by  the Transport Commissioner or his nominee. SCHEDULE I.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 33 of 36  

"Paragraph  1: The compensation payable under section 11  of the  Act  for cancellation of a contract carriage  or  stage carriage or public carrier’s permit under clause (e) of sub- section (1) of section 10 of the 8 58 Act  shall  be computed for every’ vehicle  covered  by  the permit as follows, namely: (1) For every complete month or part      Rupees One Rupees of a month exceeding fifteen         hundred days of one the unexpired period of the permit. (2) For part of a month not exceeding        Rupees fifteen days of the unexpired period          fifty of a permit. Provided always that the amount of compensation shall in  no case  be  less  than rupees two hundred. Paragraph 2: The compensation payable under section 1 1  for curtailment  of  the  route or routes  covered  by  a  stage carriage  or public carrier permit under clause (d) of  sub- section  (1)  of section 10 of the Act shall  be  an  amount computed in accordance with the following formula:                         Y x A                        -------                           R In this formula- Y means the length in mile by which the route is curtailed. A  means the amount computed in accordance with Paragraph  1 above. R  means the total length in miles of the route  covered  by the permit." The aforesaid provisions constitute an integrated scheme for paying compensation to the person whose permit is cancelled. The  gist of the provisions may be stated thus:  The  scheme made   by   the  State  Government  may  provide   for   the cancellation  of a permit, for curtailment of the  route  or routes or for transfer of the permit to other routes.  Where a  transfer  of the permit is accepted by the  operator,  he will  not  be entitled to any compensation; if he  does  not accept,  compensation will be paid to him with  interest  in respect  of the premature cancellation of the permit, or  as the  case may be for the curtailment of the route or  routes covered  by the permit.  The amount of compensation  to  be’ given shall be deter mined by the Transport Commissioner  in accordance with the provisions of the Act, and if the amount so 59 offered   is  not  acceptable  to  the  permit-holder,   the Transport  Commissioner  may, within such time and  in  such manner  as  may  be  prescribed, refer  the  matter  to  the District Judge whose decision in the matter shall he  final. There  is  also  a  provision  enabling  the  Government  to purchase  the motor vehicles covered by the permit,  if  the holder  of  the permit offers to sell and  if  the  vehicles satisfy  the  specifications  laid down  in  the  Act.   The question  is whether these provisions offer a quid  pro  quo for  the  interest  of the  petitioners  in  the  commercial undertaking  i.e.,  business  in motor  transport.   Let  us examine the question from the standpoint of a business deal. If the transport business is sold, the seller gets his value for the assets minus the liabilities and for his  good-will. In the case of a scheme framed under the Act, the assets are left  with the holder of the permit and under  certain  con- ditions the State purchases them.  As the scheme is a phased one,  it cannot be said, though there will be  difficulties,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 34 of 36  

that  the  assets cannot be sold to other operators.   If  a permit  is  not cancelled but only  transferred  to  another route, it may be assumed that if the transfer is voluntarily accepted  by  the permit-holder, he is  satisfied  that  the route given to him is as good as that on which he was  doing his  business.  On the other hand, if he chooses  to  reject the  transfer  of  his permit to  another  route  and  takes compensation,  the  question  is  whether  the  compensation provided by s. 11 is anything like an equivalent or quid pro quo for the interest in the commercial undertaking  acquired by  the State.  If cl. (5) of s. 11 had not been  there,  we would have had no hesitation to hold that a flat rate of Rs. 100  or  less irrespective of the real loss  to  the  holder would not be compensation within the meaning of Art.  31(2). But,  in our view, s. 11(5) gives a different complexion  to the entire question of compensation.  Under that clause.,  a permit-holder aggrieved by the amount of compensation  given by  the  Transport Commissioner may ask  for  referring  the matter  to the District Judge for his decision in regard  to the   adequacy   of  the  compensation.   This   clause   is susceptible of both a strict as well as a 60 liberal interpretation.  If it is strictly construed, it may be   held  that  what  the  District  Judge  can   give   as compensation  is only that which the Transport  Commissioner can,  under the provisions of s. 11(1) i. e., at  the  rates mentioned in the Schedule.  But a liberal interpretation, as contended  by the learned Advocate General, can be given  to that  clause  without doing violence to  the  language  used therein and that interpretation will carry out the intention of  the  legislature.  If the jurisdiction of  the  District Judge  relates only to the calculation of figures, the  said clause becomes meaningless in the present context.   Section 11  read with the Schedule gives the rate  of  compensation, the  rate of interest, the dates from which and up to  which the said compensation is to be paid with interest.  The duty of calculating the said amount is entrusted to the Transport Commissioner  who  will be a fairly senior  officer  of  the Government.  If he made any mistake in mere calculations, he would certainly correct it if the permit-holder pointed  out the mistake to him.  In the circumstances, is it  reasonable to assume that the legislature gave a remedy for the permit- holder   to  approach  the  District  Judge  for  the   mere correction of the calculated figures ? It is more reasonable to  assume  that  the intention of the  legislature  was  to provide  prima  facie  for, compensation at  flat  rate  and realising  the  inadequacy  of the rule  of  thumb  to  meet varying  situations,  it  entrusted the duty  of  the  final determination  of compensation to a judicial officer of  the rank  of a District Judge.  The provisions of s.  11(5),  in our  view,  are  certainly susceptible of  such.  an  inter- pretation  as to carry out the intention of the  legislature indicated  by  the general scheme of  the  provisions.   The crucial  words  are  "  if the  amount  so  offered  is  not acceptable to the permit-holder ". The amount offered is  no doubt the amount calculated in accordance with s.11(1).  But a  duty is cast on the Transport Commissioner to  refer  the matter  to the District Judge if the amount offered  is  not acceptable  to the permit-holder.  The word" acceptable"  is of very wide connotation and it does not limit the objection only  to the wrong calculation under s. 11(1).  The  permit- holder may 61 not  accept  the  amount on  the  ground  that  compensation offered  is  inadequate and is not a quid pro  quo  for  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 35 of 36  

interest  of which he is deprived.  It is therefore for  the District Judge, on the evidence adduced by both the parties, to  decide  the  proper compensation to be paid  to  him  in respect  of  the  right  of which  he  is  deprived  by  the cancellation  of the permit.  The language of s.  11(5)  not only  bears the aforesaid construction but also carries  out the  intention of the legislature, for it cannot be  imputed to  the legislature that it intended to deprive  a  valuable interest by giving a nominal amount to the permit-holder. Section  11(5)  speaks of the time limit within  which  such reference  may  be made to the District Judge, but  no  such rule  has  been brought to our notice.  We  hope  and  trust that,  without  standing  on  any  such  technicality,   the Transport  Commissioner,  if  so required,  will  refer  the matter of compensation to the District Judge.  Having regard to the entire scheme of compensation provided by the Act, we hold that the Act provided for adequate compensation for the interest  acquired within the meaning of Art. 31(1)  of  the Constitution. It is said that out of the twenty five appeals appellants in thirteen  appeals  had accepted to take a  transfer  of  the permits to different routes; but on behalf of the appellants it is denied that the acceptance was unequivocal and  final. They  say that it was conditional and that, as a  matter  of fact, they have not been plying the buses on the transferred routes  and indeed have been operating them only on the  old routes.   In  these circumstances, we cannot hold  that  the said appellants accepted the alternative routes.  If they or some  of them choose to accept any alternative routes,  they are  at  liberty to do so, in which event they will  not  be entitled to any compensation. Lastly, the learned Counsel for the appellants contends that el. (2) of s. 3 of the U. P. Act infringes their fundamental rights  under Art. 31(2) inasmuch as it prevents  them  from questioning the validity of the scheme on the ground that it is not for public purpose.  Section 3 reads: 62 (1)  Where the State Government is of the opinion that it is necessary  in  the interest of the general  public  and  for subserving   the  common  good,  or  for   maintaining   and developing efficient road transport system so to direct,  it may,  by notification in the official Gazette  declare  that the  road transport services in general, or  any  particular class of such service on any route or portion thereof as may be  specified, shall be run and operated exclusively by  the State Government, or by the State Government in  conjunction with  railways  or be run and operated partly by  the  State Government and partly by others under and in accordance with the provisions of this Act. (2)  The   notification  under  sub-section  (1)  shall   be conclusive evidence of the facts stated therein.  " The argument of the learned Counsel on the interpretation of this section appears to be an after-thought; for the records do  not disclose that the appellants attempted  to  question the said fact before the Government and they were  precluded from  doing  so on the basis of cl. (2) of s. (3).   We  are not,  therefore, prepared to allow the appellants  to  raise the contention for the first time before us. The  last contention, which is special to Civil  Appeal  No. 429  of  1958, is that during the crucial  period  when  the scheme of nationalization was put through, the appellant had no  permit,  it having been cancelled by the  order  of  the appropriate tribunal; but subsequently, after the scheme was finalised,  the  said order was set aside by  the  Appellate Tribunal  retrospectively  and therefore the  order  of  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 36 of 36  

State Government made behind the back of the appellant  does not bind him.  The appellant’s permit was not renewed by the Regional  Transport Authority.  Against the said  order,  he preferred  an appeal to the State Transport Tribunal,  which by an order dated September 6, 1956, allowed the appeal  and directed  that the appellant’s permit be renewed  for  three years beginning from November 1, 1953.  In disposing of  the appear the State Transport Tribunal observed: "  We  are  told that in the meantime this  route  has  been notified and the Government buses are plying 63 on it.  The effect of this order will be that the  appellant shall be deemed to be in possession of a valid permit and he shall  have  to  be  displaced  after  following  the  usual procedure  prescribed by the U. P. Road  Transport  Services (Development) Act." Pursuant  to  their  order, it  appears  that  the  Regional Transport  Authority renewed his permit on October 11,  1956 with  effect from November 1, 1953 to October 31, 1956.   In the circumstances, as the petitioner was not a permit-holder when  the Government made the order, no relief can be  given to  him  in this appeal.  This order will not  preclude  the appellant  in  Civil Appeal No. 429 of 1958, if he  has  any right,  to  take appropriate proceedings against  the  State Government. In the result, all the appeals are dismissed with one set of costs to the State of Uttar Pradesh.                     Appeals dismissed.