24 February 1970
Supreme Court


Case number: Appeal (civil) 1564 of 1969






DATE OF JUDGMENT: 24/02/1970


CITATION:  1971 AIR 1662            1970 SCR  (3) 780  1970 SCC  (1) 541

ACT:      Motor  Vehicles Act 4 of 1939-’Kolar  Scheme’  approved and  published by Mysore State Government under s.  68-D  of Act-’Existing  permit holder’ within meaning of cl.  (d)  of scheme-Who   is   Agreement  between   Mysore   and   Andhra Governments  for  counter-signing  each  other  permits  for inter-state routes-Such agreement whether overrides  Chapter IV-A of Act.

HEADNOTE: In 1959 the States of Mysore and Andhra Pradesh entered into a  reciprocal  arrangement  agreeing  thereby  that  certain permits  issued  by the Transport Authorities of  one  State should  be counter-signed by those of the other.   Under  s. 43(1)  of  the Motor Vehicles Act,  1939-the  Government  of Mysore issued directions to the State Transport Authority to give effect to the above arrangement.  On April 25, 1968 the Regional Transport Authority Cuddapah, Andhra Pradesh issued a permit to the appellant for the Cuddapah-Bangalore  inter- State route under s. 63 of the Act, which was to be valid up to  May 13, 1971.  The appellant then applied to  the  State Transport  Authority in Mysore for counter-signature of  his permit.   By then the Government of Mysore had by its  order dated 25-1-1968 approved under s. 68-D of the Motor Vehicles Act,  a  scheme  called the  ’Kolar  scheme’.   That  scheme provided  for  exclusive  operation  by  the  Mysore   State Transport  Undertaking  of stage-carriages on  the  notified routes.   Under  the scheme existing permit  holders’  could continue  to  operate inter-State routes except  that  their permits would be ineffective for the overlapping portions of the  notified  routes.  On March 1, 1968  the  Mysore  State Transport  Undertaking  applied under s. 68F(1)  to  operate buses on the notified routes.  In December 1968 the Regional Transport  Authority resolved to give effect to  the  scheme from  1-1-1969.  Meanwhile the appellant’s  application  for counter-signature came up before the Mysore State  Transport Authority  on  July 6, 1968.  By that  time,  however,  writ petitions had been filed in the High Court, challenging  the ’Kolar scheme’ and the Court had made interim orders staying the  operation of the, scheme.  In that situation the  State



Transport   Authority,  Mysore  granted  to  the   appellant counter-signature  on his permit, expressly subject  to  the decision of the High Court as to the validity of the scheme. On  October 7, 1968 the High Court dismissed the  said  writ petitions and upheld the validity of the scheme.   Thereupon the  State  Transport  Authority  issued  a  notice  to  the appellant  to surrender the counter-signature slip and  stop running the buses.  The appellant challenged this order in a writ  petition  under  Art. 226 of  the  Constitution.   The petition  being  dismissed he appealed by special  leave  to this Court.  The appellant contended inter alia that (i) the counter-signature  on  the appellant’s permit could  not  be cancelled  as he was an ’existing permit holder’  under  cl. (d) of the scheme and for this purpose the crucial date  was 1-1-1969 when the order under. 68F(2) came into effect; (ii) Inter-State  agreement overrides the provisions  of  Chapter IV-A of the Act       HELD  : (i) Assuming, without deciding, that the  date of  publication  is not the appropriate date,  the  date  on which the transport Undertaking 781 applies  under s. 68F(1) for a permit must be the date  with reference  to which the expression "existing permit  holder" must be interpreted.  The application by the State Transport Undertaking in the present cases was made on March 1,  1968. If  this  was  the crucial date, the appellant  was  not  an "existing  permit  holder"  because he did  not  obtain  his countersignature till July 1968. [785 C-D]     Abdul  Gafoor  v.  State Mysore, [1962]  1  S.C.R.  909, applied.     Sri Satyanarayana Transports (P) Ltd.  Guntur v.  Andhra Pradesh     State  Road Transport Corporation, C.A. No. 347 of  1961 dt. 30-10-1961, distinguished.     (ii)  Even  if the crucial date be taken as  January  1, 1969  as contended by the appellant, he must still  fail  on the  ground  that he was not a permit holder  at  all.   His counter-signature  must  be deemed to have lapsed  when  the High  Court on October 7, 1968 dismissed the writ  petitions in  which the ’Kolar scheme’ bad been stayed.  The order  of the  Regional  Transport  Authority  granting  the  counter- signature  "subject  to the decision of the  High  Court  of Mysore  about the validity of the Nationalisation Scheme  of the  Kilar Pocket" in the context of the case meant that  if the  writs failed the counter-signature would  automatically lapse. [786 A-B]     The  Smarth  Transport  Co. v.  The  Regional  Transport Authority, [1961] 1, S.C.R. 631 at 639, referred to.     (iii) An  inter-State  agreement  cannot  over-ride  the provisions  of Chapter IV-A.  The inter-State  agreement  is not law and to hold that an inter-State agreement over-rides Chapter IV-A would be to completely disregard the provisions of  s.  68-B  of  the Act.  Articles  162  and  298  of  the Constitution had no relevance in this connection.   Assuming that a State hits power to enter into agreement with another State in exercise of its executive powers under Art. 162 and under Art. 298 it can carry on trade or business, the  facts did  not throw any bight on the question for decision.  [786 H-787 A]

JUDGMENT: CIVILAPPELLATE JURISDICTION : Civil Appeal No. 1564 of 1969.      Appeal by special     leave from the judgment and order



dated  April 15, 1969 of the     Mysore High Court  in  Writ Petition No. 1112 of 1969.      P.Ram Reddy, P. Parameswara Rao and A. V. V. Nair,  for the appellant.      Niren De, Attorney-General, R. Gopalakrishnan and S. P. Nayar, for respondent No. 1.      Shyamala Pappu and Vineet Kumar, for respondent No. 2.      The Judgment of the Court was delivered by      Sikri,  J.  This appeal by special  leave  is  directed against the judgment of the High Court of Mysore  dismissing Writ  Petition  No. 1112 of 1969 filed by T.  N.  Raghumatha Reddy,  appellant  be-fore  us,  against  the  Mysore  State Transport Authority.  The 782 appellant   had   prayed   to  the  Court   to   quash   the order/endorsement of the respondent, dated March 5110, 1969.      In  order  to appreciate the points raised  before  the High  Court  and before us it is, necessary to  give  a  few facts.   In  1959 the States of Andhra  Pradesh  and  Mysore appear  to  have  entered  into  a  reciprocal   arrangement regarding  inter-State road transport.  In exercise  of  the powers conferred by-sub-s.(1) of S. 43 of the Motor Vehicles Act, 1939 (Central Act IV of 1939) the Government of  Mysore issued a direction to the State Transport Authority to  take necessary  action to give effect to the  above  arrangement. On October 8, 1964, the State of Mysore published under  cl. (d)  s.  68-C  of the Motor  Vehicles  Act,  1939hereinafter referred  to as the Act-what is called the  "Kolar  Scheme". Clause (d) of the scheme reads as follows : "(d) Whether the services are   The state Transport Undert- to be operated by the State     taking will operate service State Transport to the excl-    on all the routs to the co- usion,complete or partial of    mplete exclision of other other persons or otherwise      persons except that:-               (a)   that  existing  permit  holders  on  the               inter-State  routes  may continue  to  operate               such   inter-State  routes,  subject  to   the               condition that their permit shall be  rendered               ineffective  for the over-lapping portions  of               the notified routes".      It is the case of the appellant that in March 1967 on a proposal  made by the State of Mysore, the States of  Andhra Pradesh,  and Mysore entered into an agreement for  counter- signing a second inter-State permit on the route Cuddapa  to Bangalore, and on April 4, 1967, the Transport  Commissioner of Andhra Pradesh showed willingness to countersign a second permit.   On  April 13, 1967 the Transport  Commissioner  of Mysore State expressed willingness to countersign the second permit.   It  is  further the case  of  the  appellant  that although  the  State  of  Andhra  Pradesh  carried  out  the agreement  and  countersigned  the  second  permit  on   the Bangalore-Cuddapa  route in favour of a Mysore operator  the Mysore  State  refused  to carry  out  this  agreement.   On January  25,  1968,  the  Kolar  Scheme,  as  approved,  was published  in  the Gazette under s.68-D(3) of the  Act.   On March 1, 1968, the Mysore undertaking applied under s.68F(1) to operate buses from January 1, 1968, or a later date.   On April  25, 1968, the Regional Transport Authority,  Cuddapah issued  a  permit to the -appellant  for  Cuddapah-Bangalore route,  an inter State route, under S. 63 of the Act.   This permit  is valid uptil May 13, 1971.  On May 16,  1968,  the appellant applied to the State Transport Authority,  Mysore, for counter-signature under s.63 of 783 the  Act, and on May 20, 1968, the  Transport  Commissioner,



Andhra   Pradesh,  requested  the  Transport   Commissioner, Mysore,  to  countersign the appellant’s  permit  under  the agreement.     In the meantime the Kolar Scheme had been challenged  in the  High Court and the High Court stayed the  Kolar  Scheme pending the decision of the writs.     The  application of the appellant, dated May  16,  1968, for the grant of counter-signature of the permit came up for consideration before the Mysore State Transport Authority on July  6, 1968.- The learned counsel for the appellant  urged before  it  that "counter-signature may be  given  with  any timings  found suitable by the Authority for  their  service which  is  an  express  service and does  not  stop  in  all stations  as  the shuttle services of the (in the  case  of) objectors."  He  also urged that "counter-signature  may  be considered and granted as there is a stay order of the  High Court  of  Mysore  in  W.P. No. 1390  of  1968  against  the operation  of the Kolar Nationalisation Scheme and that  his permit  was granted before the Scheme was approved and  that the permit is issued under reciprocal agreement." The  grant of  counter-signature was opposed by a number of  objectors. The Law Officer of the Mysore State Undertaking argued  that though there was ,a stay order against the Kolar Scheme  and its  implementation  it  did  not  authorise  any  Transport Authority to grant any fresh permits for  counter-signature. The Transport Authority observed:                   "After considering the elaborate arguments               of   the  counsels  for  the  petitioner   and               objectors and taking all aspects of the matter               and  facts as disclosed from the  records  and               the  large number of existing services on  the               route  or  sectors of the  route,  the  S.T.A.               resolved   to  grant   the   counter-signature               subject  to the decision of the High Court  of               Mysore    about    the   validity    of    the               Nationalisation  Scheme  of Kolar  Pocket  and               with the following modification to the timings               already granted by the R.T.A. Cuddapah."      In   pursuance  of  this  resolution  actual   counter- signature was granted on July 6, 1968.  On October 7,  1968, the  High  Court dismissed the writs relating to  the  Kolar Scheme  and the Regional Transport Authority its meeting  on December 30, 1968, passed a series of orders which it deemed fit  consequent on the implementation of the  Kolar  Scheme. On  March 10, 1969, the State Transport  Authority,  Mysore, issued  a notice to the appellant to surrender the  counter- signature  slip  and stop running the buses.  On  March  15, 1969,  the  appellant filed writ petition No. 1112  of  1969 challenging this order. 784     Before  the High Court two points were raised on  behalf of  the  appellant; (1) That the State  Transport  Authority should  have heard the appellant before calling upon him  to surrender  the  counter-signature and the Secretary  of  the State Transport Authority had no power to issue the impugned endorsement;  (2)  As  the permit had been  granted  to  the petitioner  in  pursuance of an inter-State  agreement,  the State Transport Authority in Mysore had rightly granted  the counter-signature  and  the counter-signature could  not  be revoked later.      The first point is not raised before us.  Regarding the second  point  the  High Court held  that  "a  scheme  under Chapter  IV-A  (of  the  Act)will  override  any   agreement including  an  inter-State  agreement.  Unless  such  scheme itself  exempts permits granted in pursuance of  inter-State



agreements such permits will also be subject to the scheme." The  High Court further held that "as the Kolar Scheme  does not  exempt  permits  granted in  pursuance  of  inter-State agreements, the petitioner cannot claim countersignature  of his permit when the operation, of his stage carriage in this State is inconsistent with the scheme."      Before  us the learned counsel for the  appellant,  Mr. Ram Reddy, has raised four points : (1) As the appellant  is an  existing permit holder within clause (d) of the  Scheme, the  counter-signature cannot be revoked; (2) Assuming  that the  appellant does not come under clause (d); the  counter- signature  should not be revoked. it could only be  modified with the condition that the appellant should not pick up  or drop passengers on the overlapping portion of the route; (3) that  inter-State  agreements  override  the  provisions  of Chapter  IV-A of the Act, and (4) that the  scheme  imposing total  exclusion of private carriers offends the  provisions of Art. 301 of the Constitution.      Regarding  the first point, the learned  counsel  urges that  the expression "existing permit holder" in clause  (d) of the Scheme has to be interpreted as if the scheme is read on  January 1, 1969 when orders under S. 68F(2) of  the  Act came into effect.  He refers to the following passage in the order  of the Regional Transport Authority,  dated  December 30, 1968 :                    "Further we have resolved to give  effect               to  the Approved Scheme of Kolar  Scheme  with               effect   from  1-1-1969  in  accordance   with               Section  68F(2)  and  resolved  to  take   the               following  action under Section 68F(2) of  the               M.V. Act 1939 (as appended hereto)."      It  seems  to  us that this is not  a  correct  way  of interpreting  the  Scheme.   The  scheme  as  approved,  was published  in  the  Government Gazette under  s.  68D(3)  on January 25, 1968, and 785 on March 1, 1968, the Mysore undertaking applied under s. 68 F(1) to operate buses from January 1968 or a later date.  As held  by  this Court in Abdul Gafoor v. State  of  Mysore(’) "when a scheme prepared and published under s. 68-C has been approved  and an application has been made in  pursuance  of the scheme and in the proper manner as specified in Ch.   IV nothing  more  remains  to  be,  decided  by  the   Regional Transport Authority and it has no option to refuse the grant of the permit" and "when taking action under s. 68-F(1)  the Regional  Transport Authority does not exercise  any  quasi- judicial   function  and  acts  wholly  in   a   ministerial capacity."  It  seems  to  us  that  even  if  the  date  of publication may not be the appropriate date-we do not decide that it is not an appropriate date-atleast the date on which the  transport  undertaking applies under s.  68F(1)  for  a permit  must  be  the  date  with  reference  to  which  the expression "existing permit holder" must be interpreted.  If this  is the crucial date, then it is quite clear  that  the appellant  was not an existing permit holder because he  did not obtain his countersignature till July 1968.       The   observations  of  Raghubar  Dayal,  J.  in   Sri Satyanarayana Transports (P) Ltd.  Guntur v. Andhra  Pradesh State  Road  Transport  Corporations(’) do  not  assist  the appellant.   In  that case the Court was  dealing  with  the objection  that  it  was  the duty  of  the  Road  Transport Corporation  to furnish the date of implementation  of  each scheme as a part of the proposal, the date being a  material particular.  In this connection the Court observed                    "The    question   whether   the    State



             Government  can fix a date or not is  not  for               determination  in  this appeal and we  do  not               express any opinion on that point.  Suffice it               to  say that the Regional Transport  Authority               has  the power to fix a date after the  scheme               has been approved by the State Government,  as               it is that authority which has, under s.  68F,               to  issue  a  permit to  the  State  Transport               Undertaking  for plying motor vehicles and  to               cancel existing permits.  The date up to which               the  existing permits are to continue and  the               date  for the State Transport  Undertaking  to               commence plying motor vehicles should be  such               that  there  be  a  continuity  of   transport               services on the notified route and that  there               be no dislocation of transport arrangements."       The Court was not considering the crucial date for the purpose  of  interpreting the  expression  "existing  permit holder in a scheme. (1)  [1962] 1 S.C.R. 909. (2)  Civil  Appeal  No. 347 of 1961 judgment on  October  3, 1961. 786 Apart  from that the appellant must fail on the ground  that he  was not a permit holder at all even if the crucial  date be January 1, 1969.  His counter-signature must be deemed to have lapsed when the High Court dismissed the writ petitions in  which  the Kolar scheme had been stayed  on  October  7, 1968.   In our opinion the order of the  Regional  Transport Authority  granting  the counter-signature "subject  to  the decision  of the High Court of Mysore about the validity  of the Nationalisation Scheme of Kolar Pocket," in the  context which  we  have reproduced -above, means that if  the  writs failed the, counter-signature would automatically lapse.  It will  be  recalled  that  this Court  held  in  The  Samrath Transport  Co. v. The Regional Transport  Authority(-)  that the Regional Transport Authority is within its rights not to entertain an application if the Scheme had been approved and published.  This Court observed :               "The    Regional   Transport   Authority    is               authorized for the purpose of giving effect to               an  approved scheme to refuse to entertain  an               application  for renewal of any other  permit.               This   power   does  not   depend   upon   the               presentation  of an application by  the  State               Transport  Undertaking  for  a  permit.   This               power is exercisable when it is brought to the               notice  of  the  Authority that  there  is  an               approved scheme and, to give effect to it, the               application    for    renewal    cannot     be               entertained."      The  Regional Transport Authority must have been  aware of  this and it must be because of the stay order  that  the counter-signature was granted to the appellant by it.      In  view of our decision that the appellant’s  counter- signature lapsed when the writ petitions were dismissed, the second point does not arise.      Regarding the third point, we were unable to appreciate how  an  inter-State agreement overrides the  provisions  of Chapter  IV-A.  The inter-State agreement is not law and  to hold  that an inter-State agreement overrides  Chapter  IV-A would  be to completely disregard the provisions of s. 68  B of  the  Act  which provides that "the  provisions  of  this Chapter and the rules and orders made thereunder shall  have effect   notwithstanding  anything  inconsistent   therewith



contained in Chapter IV of this Act or in any other law  for the  time being in force or in any instrument having  effect by virtue of any such law." In this connection reference was made  to Art. 162 and Art. 298 of the Constitution.  But  we were unable to appreciate what relevance these articles (1)  [1961] 1 S.C.R. 631 at 639. 787 have to the point at issue.  Assuming that a State has power to  enter into agreement with another State in  exercise  of its  executive powers under Art. 162, and under Art. 298  it can  carry on trade or business, we are unable to  see  what light these facts throw on the question before us.      We  stopped  the learned counsel  from  developing  the fourth point because this point was not taken up in the High Court.      In  the result the appeal fails and is  dismissed.   In the circumstances there will be no order as to costs in this Court. G.C.                       Appeal dismissed.. 788