26 October 1964
Supreme Court


Case number: Appeal (civil) 800 of 1964






DATE OF JUDGMENT: 26/10/1964


CITATION:  1965 AIR  991            1965 SCR  (1) 841  CITATOR INFO :  R          1974 SC1940  (11)

ACT: Nationalisation  of Transport  Services--Scheme  prohibiting private  operators  from  specified  routes-Whether  affects rights  of operators holding permits related not  to  routes but to specified area-Scheme whether satisfies provisions of statute-Services  provided  under scheme  whether  adequate- Section  68C  Motor Vehicles Act, 1939 as amended  by  Motor Vehicles (Amendment) Act, 1956.

HEADNOTE: The appellant, the holder of a permit in respect of contract carriages  in the Agra region challenged a scheme framed  by the  Uttar Pradesh Government nationalising  road  transport services   in  the  Agra  region  and  prohibiting   private operation of the services on, certain specified routes.  His writ  petition before the High Court having  been  dismissed and Letters Patent Appeal also having failed he appealed  to the Supreme Court, by special leave. Three contentions were advanced on behalf of the appellant : (1) The scheme was only a reproduction of an earlier  scheme under  A.  3 of the U.P. Road Transport  (Development)  Act, 1955  which  had been struck down by the  High  Court.   The requirements of s. 68C of the Motor Vehicles Act were  quite different from those of s. 3 of the U.P. Act, and the scheme did not answer them. (2) Under s. 68C of the Motor  Vehicles Act the State was under an obligation to provide  ’adequate’ transport  services to replace those already  in  operation, but  the  scheme  provided only  for  16  contract  carriage services.  As the number of these services could be  changed under  the  scheme,  the  latter  would  be  again  open  to challenge  whenever the change was effected. (3) The  scheme was  not  properly  framed  because  it  provided  for   the operation  of  contract carriages on certain routes  to  the exclusion  of  the appellant who held a permit for  an  area irrespective of any route or routes. HELD : The appeal must be dismissed. (i)  It  is no doubt true that while s. 68C makes a  mention



of   an  "efficient,  adequate,  economical   and   properly coordinated   road   transport  service"  "in   the   public interest",  the U.P. Act merely mentioned "the  interest  of the  general  public"  "subserving the common  good  or  for maintaining  and  developing  efficient  transport  system". However it would be wrong to think that even under the  U.P. Act   Government   would  not  think   of   an   "adequate", "economical"   or  "property  coordinated"  road   transport services  for  the  common  good  and  for  maintaining  and developing  an efficient road transport system.  The  change in  the  language  is  no  doubt  there  but  the  intention underlying  the  words is the same, and even  if  the  exact words  of  s.  68C might not have been  present  before  the framers  of the scheme, it is quite obvious that  they  took into  account  those very factors.  Indeed the  use  of  the words  "adequate  State  road  transport  contract  carriage service" in cl. (3) of the scheme reproduced the language of s.  68C  and  not  that of s.  3.  This  suggests  that  the requirements of s. 68C were probably borne in mind. [845  B- F] 842 (ii) The  scheme  was  read as  providing  sixteen  contract carriages and it was not considered whether it would  become inadequate in the future. [84 A] (iii)     Under  the Motor Vehicles Act there is no doubt  a distinction  between area and route in some of the  sections but  in  others  that  distinction  does  not  seem  to   be preserved.  The provisions of s. 51(2) (i) clearly show that the  area at the commencement of the permit can be cut  down by notifying certain routes and there seems to be no bar  to doing it later in view of the scheme of nationalisation.  By taking away one of the routes the area is as effectively cut down  as when an area is included in the permit  but  routes are indicated on which alone the contract carriages can ply. The  provisions  of  s.  68B also  indicate  that  power  is reserved to modify the existing permits either by curtailing the  area  or  by curtailing the  routes.   Taking  over  of certain  routes  exclusively  for  the  State   undertakings renders  that portion of the area ineffective for a  private operator such as the appellant who holds the permit for  the whole area including those routes. [848 B-G] C.P.C.  Motor  Services, Mysore v. State of  Mysore,  [19621 Supp.   1  S.C.R.  717,  Kondala Rao v.  A.  P.  State  Road Transport  Corporation,  A.I.R.  (1961)  S.C.  82  and  Dosa Satyanarayanamurty   etc.  v.  Andhra  Pradesh  State   Road Transport Corporation, [1961] 1 S.C.R. 642, relied on.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 800 of 1964. Appeal  by special leave from the judgment and  order  dated March  30,  1964,  of the Allahabad High  Court  in  Special Appeal No. 27 of 1964. G.   S. Pathak, B. L. Singhal and B. P. Maheshwari, for  the appellant. C.   B.  Agarwala,  K.  N. Singh and O.  P.  Rana,  for  the Respondents. G.   S. Pathak, A. V. Viswanatha Sastri, B. L. Singhal and B.   P. Maheshwari, for the intervener. The Judgment of the Court was delivered by Hidayatullah J. The appellant who appeals by special leave against  the judgment of the High Court of  Allahabad  dated March  30, 1964 is the holder of a contract carriage  permit granted to him by the Regional Transport Authority, Agra and



valid  till  February 1, 1955.  He owns  a  single  contract carriage and his permit covers the whole of the Agra  region which comprises the six districts of Mathura, Agra, Aligarh, Etah, Etawah and Mainipuri.  No special route or routes  are indicated  in his permit and the terminal of  his  operation are the frontiers of this region on all sides.  In 1955, the Government of Uttar Pradesh, purporting to act under S. 3 of the  U. P. Road Transport Services (Development) Act,  1955, framed a scheme for nationalisation of transport services in Uttar Pradesh.  The scheme which was then 843 framed  was  struck down by an order of the  High  Court  of Allahabad  on  the petition of some private  operators.   In 1955,  the  Motor  Vehicles Act, 1939  was  amended  by  the introduction of Chapter IVA dealing with special  provisions relating  to State Transport Undertakings.   This  amendment was  introduced by the Motor Vehicles (Amendment) Act,  1956 with effect from February 16, 1957.  After the amending  Act the  scheme  was reconsidered by the  State  Government  and action was taken under Chapter IVA to notify it under s. 68C of the Motor Vehicles Act.  In this scheme 56 routes,  which were  mentioned by name, were removed from the operation  of contract carriage permits issued to private operators in the Agra  region and Government announced’ that  adequate  State Road Transport contract carriage services would be  provided on  those  routes or portions thereof.  The  functioning  of transport  services other than those put by the  State  Road Transport Services was prohibited on all those routes.   The private  operators objected again but their objections  were over-ruled  and the scheme was published in the  Gazette  on October 17, 1959.  A writ petition (Civil Miscellaneous Writ Petition  No. 26622 of 1959) was filed by the appellant  and others objecting to the scheme on various grounds.  This was allowed on February 1, 1962 by Mr. Justice Oak who set aside the scheme and remanded it for reconsideration in the  light of  his order.  The scheme was not struck dawn in  full  but only  partially  in respect of the petitioners in  the  High Court.   It was ordered, however, that the State  Government would be at liberty to enforce the scheme in other respects. The  main reason for striking down the scheme in respect  of those  petitioners  was  that  their  objections  were   not considered and they were not given a reasonable  opportunity to produce evidence in support of their objections. After  remand  objections were considered and an  order  was passed by the Legal Remembrance on October 18, 1963 by which the  scheme was reaffirmed over-ruling the objections.   The only  change  made  was that instead  of  the  provision  of "adequate"  contract  carriage  service by  the  State  Road Transport Contract Carriage Services it was provided that  " 1 6 contract carriage services or more or less in accordance with  the need from time to time" would be provided  on  the routes   or  portion  thereof  which  were  notified.    The appellant filed a petition in the High Court challenging the scheme.  It was heard by Mr. Justice Broome and rejected  by him  on March 17, 1964.  The appellant then filed a  special appeal under the Letters Patent against the decision of  Mr. Justice Broome.  The High Court by the impugned order 844 dismissed it "summarily" though it passed a fairly  detailed order.  It is against the order that the present appeal  has been filed. The  first contention of Mr. G. S. Pathak is  that  although the scheme purports to be under s. 68C of the Motor Vehicles Act, the requirements of that section were not borne in mind inasmuch as the scheme framed under s. 3 of the U.P. Act was



without   any  change  approved  and  notified   after   the successive  remands  by  the High Court.   It  is  therefore necessary to see how far the two provisions differ in  their requirements.  Section 3 of the U.P. Act laid down the power of  the State Government to run Road ’Transport Services  as follows :-               "3. Power of the State Government to run  Road               Transport Services.-               (1)   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  services  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."               Section 68C of the Motor Vehicles Act provided               as follows:-               "68C.   Preparation and publication of  scheme               of road transport service of a Slate Transport               undertaking.               Where  any State transport undertaking  is  of               opinion  that for the purpose of providing  an               efficient,  adequate. economical and  properly               coordinated  road  transport  service,  it  is               necessary  in  the public interest  that  road               transport   services   in   general   or   any               particular  class of such service in  relation               to any area or route or portion thereof should               be  run  and operated by the  State  transport               undertaking,   whether   to   the   exclusion,               complete  or  partial,  of  other  persons  or               otherwise, the State transport undertaking may               prepare a scheme giving particulars of                                    845               the  nature  of the services  proposed  to  be               rendered,  the  area  or  route  proposed   be               covered and such other particulars  respecting               thereto as may be prescribed, and shall  cause               every  such  scheme  to be  published  in  the               Official Gazette and also in such other manner               as the State Government may direct." It is contended that the requirements of the former  section which  were the conditions precedent for action are not  the same  as  the requirements of s. 68C.  It is no  doubt  true that  while  s.  68C  makes  a  mention  of  an  "efficient, adequate, economical and properly coordinated road transport service"  "in  the  public interest"  the  U.P.  Act  merely mentioned "the interest of the general public" "  subserving the common good or for maintaining and developing  efficient road  transport  system." The change of  verbiage,  however, does  not  make a change in the requirements.  It  would  be wrong to think that even under the U.P. Act Government would not  think  of  an  ’adequate’,  ’economical’  or  ’properly



coordinated’ road transport service when it chose to provide road  transport  services  for  the  common  good  and   for maintaining and developing efficient road transport  system. The  change in language is no doubt there but the  intention underlying the words is the same and even if the exact words of s. 68C might not have been present before the framers  of the scheme, it is quite obvious that they took into  account those very factors.  Indeed, the use of the words  "adequate State  road transport contract carriage service" in cl.  (3) of  the  scheme framed and notified in 1959  reproduces  the language of s. 68C and not that of s. 3. This suggests  that the  requirements  of s. 68C were probably  borne  in  mind. Even if they were not and only the requirements of the  U.P. Act  were  borne in mind, we find no difficulty  in  holding that  as  the  requirements  are  basically  the  same,  the exercise of power must be referred to s. 68c under which  it has validity, and not to s. 3 of the U.P. Act.  This  ground of objection was rightly over-ruled by the High Court. It  was  next contended that the provision of  "16  contract carriages  or  more or less’ under cl. (3)  of  the  present scheme  does  not carry out s. 68C either in  spirit  or  in terms.   Section  68C  requires ’adequate’  services  to  be maintained and the fixing of 16 carriages in advance, it  is said, does not carry out the purpose of that provision.   It is  also  contended  that as this number  is  likely  to  be changed  the scheme itself would be open to challenge  when- ever  the number is less than the adequate number  required. It  may  be  pointed out that on  the  former  occasion  the provision 846 about ’adequate’ carriages was challenged as too vague.   It is because of that challenge that the number of carriages is now shown and it is provided that this number may be more or less  as  the  occasion  demands.  We  read  the  scheme  as providing sixteen contract carriages.  We need not  consider whether  it would become inadequate in the future.   At  the moment  it is stated that 16 carriages will be provided  and it  is  not  affirmed  that  this  number  is  in  any   way inadequate. The  last  contention  is the most serious of  all.   It  is submitted that the scheme is not properly framed because  it provides for the operation of contract carriages on  certain routes to the exclusion of the appellant who holds a  permit for  an  area irrespective of any route or  routes.   It  is contended  that  the  framers of the  scheme  have  confused between  a  stage carriage permit and  a  contract  carriage permit, since the former is granted for a route or route and the latter only for an area.  The argument is that if  State road  transport contract carriages were to be  provided  the scheme  should have indicated an area in which they were  to operate  and that area should have been excluded instead  of dismembering  the  area of the appellant by  mentioning  the routes.   Such a procedure, it is submitted, is contrary  to the  scheme of the grant of permits under Chapter IV of  the Motor  Vehicles  Act.   On behalf of the  respondent  it  is submitted  that the notification of the 56  routes  curtails the  area such as it was and that there is no breach of  the provisions of the Motor Vehicles Act. Under the Motor Vehicles Act there is no doubt a distinction between area and route in some of the sections but in others that  distinction  does not seem to  be  preserved.   ’These terms-route  and  area-were  explained in  C.  P.  C.  Motor Services, Mysore v. The State of Mysore and A nr. (1) and it was pointed out that under the scheme of the Motor  Vehicles Act,  1939 these two words sometimes stand for the  road  on



which the omnibuses run or portions thereof.  A similar view was  earlier  expressed in Kondata Rao v. A. P.  State  Road Transport Corpn. (2) In Dosa Satyanarayanamurty etc. v.  The Andhra  Pradesh State Road Transport  Corporation("),  Subba Rao I., observed :               "Under  s.  68C of the Act the scheme  may  be               framed in respect of any area or a route or  a               portion  of any area or a portion of a  route.               There is no inherent inconsis-               (1)[1962]  Supp. 1 S.C.R. 717      (2)  A.I.R.               1961 S.C. 82.               (3)   [1961] 1 S.C.R. 642 at 664.                                    847               tency  between an "area" and a  "route".   The               proposed route is also an area limited to  the               route  proposed.   The  scheme  may  as   well               propose  to  operate a  transport  service  in               respect of a new route from point A to point B               and  that  route would certainly  be  an  area               within the meaning of s. 68C." The argument thus loses a great deal of its force but  there are  other  reasons too which show that  the  contention  is misconceived. By s. 2(3) a contract carriage is defined as a motor vehicle which  carries a passenger or passengers on hire  or  reward under a contract from one point to another without  stopping to  pick  up  or  set down along  the  line  of  that  route passengers  not included in the contract.  A stage  carriage is  defined as a motor vehicle carrying or adopted to  carry passengers for hire or reward at separate fares paid for the whole journey or for stages of the journey.  The distinction between  the two is this: the contract carriage  is  engaged for the whole of the journey between two points for carriage of a person or persons hiring it but it has not the right to pick  up other passengers en route.  The stage  carriage  on the other hand, runs between two points irrespective of  any prior contract and it is boarded by passengers en route  who pay  the fare for the distance they propose to travel.   Mr. Pathak  contends that if one examines the scheme of  ss.  46 and  49 one finds that the application for a stage  carriage permit  is  for a route or routes or area or areas  but  the application for a contract carriage is only for an area  for which the permit is required.  He contends, therefore,  that as  contract  carriages  do  not  ply  on  routes  a  scheme curtailing a contract carriage permit must be for a part  of the  area covered by the permit and that it cannot be for  a route  or  routes.  He also refers to s. 68G  in  which  two separate  principles  and methods for the  determination  of compensation  for  the curtailment of areas  and  routes  is provided  and  submits  that this also  points  out  that  a contract  carriage permit is by an area and not by  a  route and  consequently the indication of the route on  which  the carriages of State undertakings would ran is ineffective  to curtail  the area of a private operator and the scheme  must therefore  fail.  On the other hand, it may be  pointed  out that S.   51(2) of the Motor Vehicles Act itself provides as follows               "51(2) : The Regional Transport Authority,  if               it  decides  to  grant  a  contract   carriage               permit, may, subject to any rules that may  be               made under this Act, attach to               848               the  permit any one or more of  the  following               conditions, namely:-               (i)   that  the vehicle or vehicles  shall  be



             used  only  in  a  specified  area  or  on   a               specified route or routes; This   provision  clearly  shows  that  the  area   at   the commencement  of  the permit can be cut  down  by  notifying certain  routes  and there seems to be no bar  to  doing  it later in view of a scheme of nationalisation. In  our  judgment, the argument of the respondents  must  be accepted.   If under S. 51 (2) (1) a permit for  a  contract carriage  could  be  limited to specified  route  or  routes notwithstanding that the petition for such a permit must  be for  an  area there is no difficulty in accepting  a  scheme which  cuts down the area by subtracting a few  routes.   By the taking over of the routes the area is as effectively cut down  as when an area is included in the permit  but  routes are indicated on which alone the contract carriages can ply. There  are two other arguments which support the  contention of the respondents.  Under S. 68B the provisions of  Chapter IVA  apply notwithstanding anything  inconsistent  therewith contained  in Chapter IV of the Act.  Sections 46 to 49  are in  Chapter IV and no inconsistency between a scheme  framed under  S. 68C and any provision of Chapter IV can be made  a ground  of attack.  Secondly, under s. 68F when the  permits are  issued  to  a State  transport  undertaking  for  stage carriages  or  contract carriages it is  provided  that  the Regional  Transport  Authority may modify the terms  of  any existing permit so as to "curtail the area or route  covered by  the  permit  in so far as such  permit  relates  to  the notified area or notified route".  This would indicate  that power  is reserved to modify the existing permits either  by curtailing the area or by curtailing the routes.  The taking over   of   certain  routes  exclusively   for   the   State undertakings  renders that portion of the  area  ineffective for  a  private operator such as the appellant who  holds  a permit for the whole area including those routes.  The  High Court was, therefore, right in holding that by the  notified scheme the routes which were mentioned must be taken to have been  subtracted from the area to which the permit  applied. In other words, there is no merit in the appeal.  The appeal fails and is dismissed with costs. Appeal dismissed. 845