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CASE NO.: Appeal (civil)  6341 of 2002

PETITIONER: U.P. State Road Transport Corporation

RESPONDENT: State of U.P. and another

DATE OF JUDGMENT: 29/11/2004

BENCH: CJI., R.C. Lahoti, G. P. Mathur & P.K. Balasubramanyan

JUDGMENT: J U D G M E N T

[with C.A. Nos. 6342-6343/2002,  6344-6345/2002,  6347-6348/2002,   6350-6351/2002,  6353-6354/2002,  8575/2002,  4196/2003, 5258/2003.  C.A  No\005\005\005./2004 @ SLP(Civil) No. 21557/2002 & C.A No\005\005/2004  @ SLP (Civil) No. 19034/2003]   

G. P. MATHUR, J.

Civil Appeal No. 6341/2002

1.      This appeal, by special leave, has been preferred against the judgment   dated 23.7.2002 of Allahabad High Court by which the scheme dated  13.2.1986 published under Section 68-C of the Motor Vehicles Act, 1939  and the approved scheme published on 29.5.1993 was quashed.  

2.      In order to appreciate the contentions raised by learned counsel for the  parties, it is necessary to mention the essential facts, as the case has a long  history.  The Uttar Pradesh State Road Transport Corporation (for short  ’UPSRTC’) prepared a draft scheme to nationalize Saharanpur-Shahdara- Delhi route and the same was published on 29.9.1959 in accordance with  Section 68-C of the Motor Vehicles Act, 1939 (hereinafter referred to as the  ’old Act’).  The scheme was challenged by a number of operators and the  High Court by its judgments dated 31.10.1961 and 7.2.1962 upheld the  scheme as against 50 operators, but quashed the same as against 32 and 18  operators who had filed two groups of writ petitions on the ground that they  should be afforded an opportunity of hearing.  In appeal, the judgment of the  High Court was upheld by this Court in Civil Appeal No. 1616 of 1968  decided on 3.4.1968 (Jeewan Nath Wahal vs. STAT).  The hearing of the  objections could not take place on account of interim orders passed in  various suits, which were filed by some of these operators, and as a result,  the scheme remained pending for over 20 years.  Finally, the matter again  came up to this Court and a two-Judge Bench quashed the scheme by the  judgment dated 23.8.1985 on the ground that the delay of 26 years in  disposing of the objections had resulted in violation of Articles 14 and  19(1)(g) of the Constitution.  It was, however, left open to State Transport  Undertaking to publish a fresh draft scheme if it was necessary to do so.   The judgment is reported in 1985 (4) SCC 169 (Shri Chand vs. Govt. of  U.P.).   

3.      The UPSRTC thereafter published a fresh scheme covering in all 39  routes which was published on 13.2.1986 under Section 68-C of the old Act.  The scheme not only covered Sharanpur-Shahadara-Delhi route, but also 38  other routes.  Objections were filed against the scheme and before they could

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be finally decided, Motor Vehicles Act 1988 (for short ’1988 Act’) came  into force w.e.f. 1.7.1989 repealing the Motor Vehicles Act, 1939.  The  competent authority thereafter held that the proposed scheme had lapsed by  virtue of Section 100 (4) of the 1988 Act.  The UPSRTC preferred a writ  petition but the High Court also took the view that the scheme had lapsed  and accordingly upheld the order of the competent authority and dismissed  the writ petition.  Some of the existing operators challenged the grant of  permits under Section 80 of the 1988 Act by filing writ petitions, but the  same were also dismissed.  The appeal against the decision of the High  Court was allowed by this Court on 31.3.1992 and the grant of permits under  Section 80 of 1988 Act to the respondents/private operators of Civil Appeal  No. 1198 of 1992 and others on the respective routes, parts or portions of the  nationalized route of the draft scheme dated 13.2.1986 was quashed.  The  competent authority was directed to approve the draft scheme within a  period of 30 days from the date of receipt of the judgment and publish the  same in the Gazette. The judgment of this Court is reported in 1992 (2) SCC  620 (Ram Krishna Verma & Ors. vs. State of U.P. & Ors).  While the  competent authority was hearing the objections, the State Government  published a notification on 29.5.1993 whereby the draft scheme published  on 13.2.1986 under Section 68-C of the old Act was approved.  The  notification specifically mentioned  that the same was being done in view of  the directions given by Supreme Court in Civil Appeal Nos. 1198, 1199,  1200 & 1201 of 1992 [Ram Krishna Verma’s case (supra)].  The approved  scheme covered all the 39 routes, which were proposed in the draft scheme  published on 13.2.1986.  Feeling aggrieved by the approved scheme dated  29.5.1993 several operators filed writ petitions in Allahabad High Court but  the same were dismissed on 19.11.1999 on the ground that the scheme stood  approved by the decisions of the Supreme Court in the case of Ram Krishna  Verma (supra) and also Nisar Ahmad vs. State of U.P. 1994 Supp (3) SCC  460. The appeals preferred against the judgment of the High Court were  allowed by this Court on 1.5.2001 and the judgment is reported in 2001 (5)  SCC 762 (Gajraj Singh & Ors. vs. State of U.P. & Ors).   It was held that the  decision in Ram Krishna Verma’s case (supra) was confined only to one  route namely, Shahranpur-Shahdara-Delhi route, and as a result of the said  decision the draft scheme stood approved only with regard to the said route.   The notification published on 13.2.1986 included not only the Shahranpur- Shahdara-Delhi route, but also 38 other routes and consequently the scheme  had not been approved with regard to these 38 routes and objections filed  thereto required to be considered on merits.  The operative portion of the  judgment is being reproduced below:

"12. The appeals are allowed.  The impugned judgment  of the High Court dated 19.11.1999 is set aside.  The writ  petitions are partly allowed.  It is directed that the  objections filed against the draft scheme dated 13.2.1986  insofar as they relate to the 38 routes listed at Serial Nos.  2 to 39 of the scheme, shall be heard and disposed of by  the competent authority on their own merits and in  accordance with law for which purpose the competent  authority shall, within a period of four weeks from today,  appoint and notify a date for hearing.  We make it clear  that only such of the objections shall be available to be  heard and decided as were filed within 30 days of the  date of publication of the draft scheme in the Official  Gazette and which are maintainable and available to be  heard in accordance with Section 68-D of the 1939 Act  read with sub-section (2) of Section 100 of the 1988 Act.  ..............\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005 \005\005\005\005\005\005\005\005\005\005\005\005\005If all the objections or  any of them are allowed, the draft scheme shall meet the  fate consistently with the decision on objections and the  approved scheme dated 29.5.1993 shall be accordingly  modified or annulled insofar as the routes specified at  Serial Nos. 2 to 39 are concerned.  In the event of the  objections being dismissed, the approved scheme, as

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notified on 29.5.1993, shall continue to remain in  operation. At the risk of repetition we would like to make  it clear that insofar as Saharanpur-Delhi route is  concerned, no objection in that regard shall be heard and  the scheme as regards the said route shall be deemed to  have been approved and maintained in terms of this  Court’s direction in Ram Krishna Verma case."    

4.      The competent authority (Special Secretary Transport, U.P.  Government), after hearing the parties decided the objections by his order  dated 3.11.2001.  Feeling aggrieved by the decision of the competent  authority, the UPSRTC and some private operators preferred writ petitions  in the High Court.  The High Court formulated five questions for  determination and one of the questions was whether the scheme dated  13.2.86 has lapsed by efflux of time in view of Section 100(4) of the New  Act.  The High Court held that the draft scheme dated 13.2.1986 had lapsed  under Section 100(4) of the 1988 Act and, therefore, it could not be  approved or modified and accordingly the draft scheme dated 13.2.1986 and  the approved scheme dated 29.5.1993 as modified by the order dated  3.11.2001, passed by the competent authority, were quashed.

5.      The learned Solicitor General, who was assisted by Shri Pramod  Swarup, appearing for UPSRTC, has submitted that the view taken by the  High Court that the draft scheme dated 13.2.1986 had lapsed by virtue of  sub-section (4) of Section 100 of 1988 Act, is patently erroneous as the said  provision would apply only to a scheme which had been published under  sub-section (1)of Section 100 of the Act and can have no application  to  a  scheme which was published under Section 68-C of the old Act, as is the  case here.  Learned Solicitor General has further submitted that a clear  finding had been recorded in Ram Krishna Verma’s case that the draft  scheme dated 13.2.1986 had not lapsed under sub-section (4) of Section 100  of 1988 Act, and further in view of the direction issued by this Court in the  case of Gajraj Singh, only certain objections were required to be heard by  the competent authority and the already approved scheme published on  29.5.1993 was to stand modified consistent with the decision on the  objections.  It has thus been submitted that the scope of the writ petitions  which had been filed in the High Court challenging the decision of the  competent authority was a limited one, namely, to examine the correctness  or otherwise of the decision of the authority and it could not have enlarged  the controversy and thereafter to hold that the whole scheme had lapsed.     

6.      Shri Abhishek Singhvi, learned senior counsel, who has appeared for  private operators  who have been granted permits after 1.7.1989 under the  1988 Act has, on the other hand, submitted that by virtue of Section  217(2)(e) of the said Act, a scheme framed under Section 68-C of the old  Act which was in force and was pending immediately before the  commencement of the 1988 Act, had to be disposed of in accordance with  the provision of Section 100 of the 1988 Act and, consequently, sub-section  (4) of Section 100 of the said Act was clearly applicable.  The draft scheme  published on 13.2.1986 having not been approved within one year of the  enforcement of the 1988 Act i.e. by 30.6.1990, the said scheme lapsed.   Reliance has also been placed on Krishan Kumar vs. State of Rajasthan  1991(4) SCC 258 in support of the proposition that a scheme framed under  Section 68-C of the old Act had to be approved within one year from the  date of enforcement of the 1988 Act i.e. by 30.6.1990, otherwise it would  lapse.     

7.      We have given our careful consideration to the submissions made by  learned counsel for the parties.  In our opinion, having regard to the earlier  litigation and the decisions of this Court rendered with regard to the scheme  in question, i.e. which was published under Section 68-C of the old Act on  13.2.1986, the view taken by the High Court that the same had lapsed is  wholly erroneous in law.      

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8.      As mentioned earlier, the competent authority had at an earlier stage  held that the scheme had lapsed by virtue of sub-section (4) of Section 100  of the 1988 Act and the writ petition filed by UPSRTC against the said  decision had been dismissed by the High Court on 16.3.1990.  The aforesaid  decision of the High Court holding that the scheme had lapsed was  challenged in Ram Krishna Verma’s case (supra) and the Court specifically  considered the question as to whether the draft scheme dated 13.2.1986 had  lapsed under sub-section (4) of Section 100 of the 1988 Act.  A clear finding  was recorded that the scheme had not lapsed and the relevant part of  paragraph 11 of the said report is being reproduced below:    

"11\005.\005The hearing authority, therefore, wrongly  concluded that the draft scheme stood lapsed.  The High  Court also equally committed illegality following its  earlier view, which now stood overruled by this court in  Krishan Kumar case. Accordingly it must be held that  the view of the High Court and the hearing authority is  clearly illegal.   

In paragraph 15 of the reports, it was reiterated that the fresh draft  scheme dated February 13, 1986 had not lapsed and would continue to be in  operation and further that it would be confined only to 50 operators.  The  relevant part of operative portion of the order (paragraph 17 of the report) is  being reproduced below:  

"17.  The appeals are accordingly allowed.  The grant of  permits to all the respondents/private operators and  respondents 7 to 285 in C.A. No. 1198 of 1992 (SLP No.  9701 of 1990) under Section 80 of the Act or any others  on the respective routes, parts or portions of the  nationalized routes of February 13, 1986 draft scheme are  quashed.  The hearing authority shall lodge the objections  of the 50 operators including the appellants herein.  The  competent authority shall approve the draft scheme of  1986 within a period of 30 days from the date of receipt  of the judgment; and publish the approved scheme in the  gazette."  

 This very scheme again came up for consideration in Nisar Ahmad’s case  (supra) and a similar contention was raised that the scheme had lapsed under  sub-section (4) of Section 100 of the 1988 Act.  The challenge was repealed  and the relevant part of the judgment reads as under:

"3. \005..What is required by the proviso to sub-section (3)  of Section 100 is a scheme proposed under the Act.  The  present one is not a scheme proposed under the Act and  that, therefore, the prior approval of the Central  Government under the Act is not necessary.  It is also to  be seen that sub-section (4) of Section 100 is clearly  inapplicable in the facts of this case.  The scheme  published by the State Government on 13.2.1986 was  under the Act 4 of 1939.  The draft scheme was pursuant  to the directions issued by this Court, in consequence to  the closing of hearing directed by this Court in Jeewan  Nath Wahal case became final.  The hearing was delayed  due to dilatory tactics adopted by the operators and as per  the directions of this Court in Ram Krishna Verma case  the draft scheme was approved. In view of that matter  and since this Court has already approved the draft  scheme not only dated 26.2.1959 but also of 13.2.1986,  the question of the lapse under sub-section (4) of Section  100 does not arise.  The appeals are accordingly  dismissed with costs of Rs. 1 lakh."

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9.      In Gajraj Singh’s case (supra), the Court noticed the earlier decisions  rendered in Nisar Ahmad and Ram Krishna Verma, and also the finding  recorded therein that the scheme had not lapsed under sub-section (4) of  Section 100 of the 1988 Act.  Keeping in view the said finding and also the  provisions of sub-section (4) of Section 100 of the Act, the Court gave a  right to the operators to be heard under sub-section (2) of Section 100 of the  Act.  The notification issued on 29.5.1993 by which the draft scheme dated  13.2.1986 had been approved was not quashed, but merely a direction was  issued that if the objections are allowed, the draft scheme shall meet the fate  consistent with the decision on the objections and the approved scheme  dated 29.5.1993 shall be modified accordingly.  These decisions clearly hold  that the scheme had not lapsed under sub-section (4) of Section 100 of the  Act.      

10.     In Daryao & others vs. State of U.P. & others AIR 1960 SC 1457, a  Constitution Bench considered the application of rule of res judicata in writ  petitions.  It was held that if a writ petition filed by a party under Article 226  is considered on the merits as a contested matter and is dismissed, the  decision thus pronounced would continue to bind the parties unless it is  otherwise modified or reversed by appeal or other appropriate proceedings  permissible under the Constitution.  Similarly, in  Devilal Modi vs. Sales  Tax Officer AIR 1965 SC 1150, which is also a decision by a Constitution  Bench, it was held that it would not be right to ignore the principle of res  judicata altogether in dealing with writ petitions filed by citizens alleging the  contravention of their fundamental rights.  It was further held that  considerations of public policy cannot be ignored in such cases, and the  basic doctrine that judgments pronounced by the Supreme Court are binding  and must be regarded as final between the parties in respect of matters  covered by them must receive due consideration.  In Direct Recruit Class II  Engineering Officers’ Association vs. State of Maharashtra and others 1990  (2) SCC 715, the Constitution Bench emphasized that the binding character  of judgments of courts of competent jurisdiction is in essence a part of the  rule of law on which the administration of justice, so much emphasized by  the Constitution, is founded and a judgment of the High Court under Article  226  passed after a hearing on the merits must bind the parties till set aside in  appeal as provided by the Constitution and cannot be permitted to be  circumvented by a petition under Article 32.   

11.     The principle of res judicata is based on the need of giving a finality  to judicial decisions. The principle which prevents the same case being twice  litigated is of general application and is not limited by the specific words of  Section 11 of Code of Civil Procedure in this respect.  Res judicata applies  also as between two stages in the same litigation to this extent that a court,  whether the trial court or a higher court having at an earlier stage decided a  matter in one way will not allow the parties to re-agitate the matter again at a  subsequent stage of the same proceedings. (See Satyadhan vs. Smt. Deorajin  Devi AIR 1960 SC 941).

12.     This Court having specifically considered the question in two earlier  decisions as to whether the draft scheme dated 13.2.1986 had lapsed under  sub-section (4) of Section 100 of the Act and having recorded a clear finding  that the scheme had not lapsed, it was not at all open to the High Court to  examine the said question all over again and to hold that the draft scheme  had lapsed.  The decision rendered by this Court concluded the controversy  and it was not permissible to any party or to any authority/tribunal or court,  including the High Court to re-open the issue and to record a contrary  finding.  We are clearly of the opinion that the High Court committed  manifest error of law in re-examining the question and recording a finding,  which is totally in variance with the earlier decisions of this Court.           

13.     There is another aspect of the matter. The competent authority heard  the objections in view of the directions issued by this Court in Gajraj Singh’s  case.   It was clearly provided in the judgment that the draft scheme shall  meet the fate consistent with the decisions on objections and the draft

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scheme dated 29.5.1993 shall be accordingly modified.  In the writ petitions  which was filed in the High Court, what was assailed was the decision of the  competent authority.   Therefore, the scope of the writ petition was very  narrow and the High Court could only examine whether the competent  authority had considered the objections in accordance with the directions  issued by this Court.  In such a writ petition, the High Court could not have  gone  into the question as to whether the scheme had lapsed under sub- section (4) of Section 100 of the Act.  The view taken by the High Court that  the scheme had lapsed is, therefore, wholly uncalled for and beyond the  scope of the writ petition.      

14.     Krishan Kumar’s case (supra) which has been strongly relied upon by  Shri Singhvi for urging that the draft scheme dated 13.2.1986 had lapsed by  virtue of sub-section (4) of Section 100 of the Act can be of no assistance to  him.  In the said case, it was observed that if the period of one year from the  date of publication of the proposed scheme is applied to the pending  schemes under Section 68-C of the old Act, the purpose and object of saving  the old schemes under clause (e) of Section 217(2) of the 1988 Act would be  frustrated.  It was also observed that the scheme published under Section 68- C of the old Act pending on the date of commencement of the new Act  would be a scheme proposed under sub-section (1) of Section 100 and,  therefore, the rigour of period of one year as applicable to a scheme  proposed under sub-section (1) of Section 100 would not apply to a scheme  under Section 68-C pending on the date of commencement of the Act.   However, after observing that it was not meant that a scheme under Section  68-C of the old Act pending on the date of commencement of the new Act  may be approved or finalized at leisure without any time limit, the Court,  applying the principle of harmonious construction, held that it would be  legitimate to hold that in the case of a scheme under Section 68-C of the old  Act pending on the date of enforcement of the new Act, namely, July 1,  1989, the period of one year as prescribed under Section 100(4), should be  computed from the date of commencement of the new Act.  Therefore,  according to this decision, a draft scheme made under Section 68-C of the  old Act would lapse after 30.6.1990.  But in the present case, the competent  authority long before 30.6.1990 held that the scheme had lapsed and the writ  petition preferred against the said decision was also dismissed on 16.3.1990  on the same finding.  The decision of the High Court was then reversed by  this Court in Ram Krishna Verma’s case (supra) and a specific direction was  issued to the competent authority to approve the draft scheme and publish  the same.  Therefore, on the facts of the present case, it cannot at all be held  that the scheme had lapsed.

15.     Shri Dinesh Dwivedi, learned senior counsel for some of the  operators, who have been granted permits under 1988 Act has submitted that  principle of res judicata can have no application if there is a statutory  prohibition, and in support of his submission he has relied upon Municipal  Committee, Amritsar and others vs. State of Punjab and others 1969(1) SCC  475,  Mathura Prasad Bajoo Jaiswal and others vs. Dossibai N.B.Jeejeebhoy  1970 (1) SCC 613, Nand Kishore vs. State of Punjab 1995(6) SCC 614 and  Allahabad Development Authority vs. Nasiruzzaman and others 1996 (6)  SCC 424.  The principles laid down in these decisions can have no  application here having regard to the factual position discussed above that  the scheme was declared to have lapsed much before the expiry of period of  one year and the said decision was ultimately reversed by this Court in Ram  Krishna Verma’s case (supra), wherein a direction was issued to publish the  approved scheme, and also the fact that in Gajraj Singh’s case (supra), the  matter was remitted to the competent authority for a very limited purpose.

16.     Shri A. Singhvi has also submitted that the UPSRTC cannot provide  transport facility to the people in the area and, therefore, the nationalization  of the routes is not in public interest.  During the course of hearing an  additional affidavit has been filed by Shri Arvind Dikshit, one of the  respondents in Civil Appeal Nos. 6350-51/2002 wherein it is averred that  though the population in the area has greatly increased in the last about 15  years resulting in proportionate increase in traveling public, the  number of

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buses being operated by UPSRTC has considerably gone down and many of  such buses are over-age and in extremely bad condition. The UPSRTC has  suffered a loss of Rs. 282.75 crores during the period 1996-97 to 2000-01.    It has thus been urged that the UPSRTC is not at all in a position to cater to  the needs of the people in the area by providing an efficient transport  service.  Learned counsel has further submitted that nearly 500 operators  who have been granted permits after 1.7.1989 had taken loans from banks  and finance companies at a very high rate of interest to purchase buses and  in case the scheme of nationalization is enforced now, they will be  completely thrown out of business landing them in serious financial trouble.   The drivers, conductors and other staff employed by them will also be  thrown out of employment.  An affidavit in reply has been filed by Shri H.N.  Aggarwal, General Manager, UPSRTC, Ghaziabad, wherein it is averred  that though earlier UPSRTC was sustaining losses, but subsequently  stringent measures have been adopted and in the year 2002-03 it earned a  profit of Rs. 92 lakhs and in a period of five months i.e. from April to  August, 2004, it has earned a profit of Rs.52.10 crores.  It has also been  averred that 2262 new buses  have been inducted by UPSRTC in the last 2- 1/2 years.   

17.     The contention sought to be raised by Shri Singhvi on the basis of the  additional affidavit filed by Shri Arvind Dikshit, cannot be accepted for  several reasons.  As discussed earlier, the draft scheme covering 39 routes  was published on 13.2.1986 and the same  was approved on 29.5.1993.  In  view of the decision in Gajraj Singh (supra), the competent authority was  required to hear only such objections which were filed within 30 days of the  publication of the draft scheme and the approved scheme as notified on  29.5.1993 was to stand modified consistent with the decision on the  objections.  No such plea as is sought to be raised now, was raised when the  cases of Ram Krishna Verma (supra), Nisar Ahmad (supra) and Gajraj Singh  (supra) were decided by this Court.  It has been also submitted on behalf of  the UPSRTC that it did not put in many buses on the routes in question on  account of illegal running of buses by private operators  who have been  granted permits subsequent to 1.7.1989 and after such illegal running of  buses is stopped, more buses will be inducted on the routes.  Therefore, the  contention of Shri Singhvi that the traveling public will suffer great hardship  if the scheme is allowed to stand on account of the fact that UPSRTC does  not have sufficient number of buses to run on the routes in question, does not  appear to have any substance, in view of the clear stand of UPSRTC that it is  now making profit and will induct more buses on the routes in question.  By  virtue of Section 103(1-A) of the Motor Vehicles Act (as amended in the  State of U.P.),  the UPSRTC can enter into agreements with bus owners to  ply their buses on the nationalized routes.  Such an arrangement may be  beneficial to the existing private operators.  On overall consideration of the  matter, we are clearly of the opinion that the factors sought to be highlighted  by Shri Singhvi cannot be taken into consideration to have the approved  scheme annulled and nullified.   

18.     In view of the discussion made above, the appeal is allowed with costs  and the impugned judgment dated 23.7.2002 of the High Court is set aside.   The writ petition preferred by UPSRTC against the decision of the  competent authority and connected writ petitions shall be heard afresh by the  High Court in the light of the direction issued by this Court in the case of  Gajraj Singh (supra) after impleading all such parties who have been granted  relief by the competent authority.

Civil Appeal Nos. 6342-43/2002, 6344-45/2002, 6347-48/2002,   6350-51/2002, 6353-54/2002, 8575/2002 & 4196/2003

        19.     In view of the decision in Civil Appeal No. 6341of 2002  (UPSRTC  vs. State of U.P. & Anr), the appeals are allowed and the impugned  judgment dated 23.7.2002 of the High Court is set aside..

Civil Appeal No.5258 of 2003

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20.     The appellants were granted permits on 11.2.1991 after the High  Court had held on 16.3.1990 that the Scheme had lapsed.   In view of our  finding that the Scheme had not lapsed, the appellants are not entitled for  renewal of their permits.   The appeal is accordingly dismissed.

Civil Appeal No\005\005./2004 @ S.L.P. (Civil) No.21557/2002 and  Civil Appeal No\005\005/2004 [@ S.L.P.(Civil) No. 19034/2003]    

21.     Leave granted. In view of the decision in Civil Appeal No. 6341 of 2002, the appeals  are allowed and the impugned judgment dated 23.7.2002 of the High Court  is set aside.