Natural justice in transport scheme approvals: permit regulation was upheld, but the approval process was treated as unfair.

Chapter IV-A of the Motor Vehicles Act, 1939 was analysed as a permit-regulation scheme for state transport services, not a compulsory acquisition of private transport businesses, because it cancelled and substituted permits without transferring ownership or possession of business assets, so the constitutional compensation requirement was not attracted. The text also explains that objections to an approved transport scheme under Section 68-D had to be considered through a fair and impartial hearing; the approval was treated as vitiated where the hearing process lacked natural justice. The Road Transport Corporation was described as competent to implement the scheme as successor to the State transport undertaking.

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Issues: (i) Whether Chapter IV-A of the Motor Vehicles Act, 1939 infringed the fundamental rights of the petitioners by effecting compulsory acquisition of their transport business without compensation; (ii) Whether the scheme approved under Section 68-D was invalid for want of a lawful and impartial hearing and for non-compliance with the statutory procedure; (iii) Whether the Road Transport Corporation was competent to implement the approved scheme.

Issue (i): Whether Chapter IV-A of the Motor Vehicles Act, 1939 infringed the fundamental rights of the petitioners by effecting compulsory acquisition of their transport business without compensation.

Analysis: The statutory scheme regulated permits for carriage on public routes and authorised cancellation or substitution of permits in aid of a State transport scheme. The impugned chapter did not transfer ownership or the right to possession of the petitioners' business assets to the State or to a corporation controlled by the State. Cancellation of a permit and grant of another permit did not amount to transfer of the business undertaking, and the petitioners retained their assets notwithstanding the restriction on use. Accordingly, the legislation did not attract the constitutional compensation requirement for compulsory acquisition.

Conclusion: The provision was held not to infringe the petitioners' fundamental rights, and the challenge to the constitutionality of Chapter IV-A failed.

Issue (ii): Whether the scheme approved under Section 68-D was invalid for want of a lawful and impartial hearing and for non-compliance with the statutory procedure.

Analysis: The statutory process required publication of the proposal, receipt of objections, and consideration of those objections after hearing the objectors and the State transport undertaking. The majority held that, in the setting of a scheme excluding private operators, the State Government was required to act judicially when deciding objections. The hearing given through the Secretary of the Transport Department was vitiated because one side to the dispute participated in the hearing machinery, and because the hearing and decision were split between different persons in a manner inconsistent with the essentials of fair hearing. The process therefore offended natural justice and invalidated the approval.

Conclusion: The approval of the scheme was quashed for breach of the principles of natural justice.

Issue (iii): Whether the Road Transport Corporation was competent to implement the approved scheme.

Analysis: The Corporation was treated as the successor to the State transport undertaking after the governmental transfer of the transport department's management, assets, and liabilities to it. In that capacity, it could enforce the scheme that had been initiated and approved for the undertaking it succeeded.

Conclusion: The Corporation was held competent to implement the scheme.

Final Conclusion: The constitutional challenge to Chapter IV-A was rejected, but the approved scheme failed because the objections had not been decided in accordance with the requirements of fair and impartial hearing; the scheme approval was therefore set aside.

Ratio Decidendi: A statutory scheme that merely cancels and reissues permits does not amount to compulsory acquisition of the permit-holder's business, but where the statute requires objections to be considered after a hearing, the approving authority must act in a manner consistent with natural justice and impartial decision-making.

Concurring Opinion: Wanchoo, J., and Sinha, J. agreed that Chapter IV-A was constitutionally valid but held that the Government acted administratively, not quasi-judicially, in approving the scheme, and therefore the challenge to the approval failed on that ground.

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