Inter-State route nationalisation under the Motor Vehicles Act is valid with prior Central approval and no unconstitutional territorial encroachment.

Section 68D of the Motor Vehicles Act, 1939 permits a State Government, with prior Central Government approval, to approve and publish a nationalisation scheme covering an inter-State route. The statutory proviso shows that the State's competence extends to the entire inter-State route, not merely the segment within its territory. Such approval is treated as action taken under parliamentary authority, so it does not amount to unconstitutional extra-territorial legislation or unlawful encroachment on another State's executive sphere. On that basis, the approved scheme and the resulting cancellation of permits were upheld.

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Issues: (i) Whether a State Government could validly approve and publish a scheme under Section 68D of the Motor Vehicles Act, 1939 in respect of an inter-State route with the prior approval of the Central Government. (ii) Whether such approval, and the consequential cancellation of permits, was unconstitutional on the ground that a State could not act beyond its territorial limits or encroach upon the executive sphere of another State.

Issue (i): Whether a State Government could validly approve and publish a scheme under Section 68D of the Motor Vehicles Act, 1939 in respect of an inter-State route with the prior approval of the Central Government.

Analysis: Section 68C empowered a State transport undertaking to prepare a scheme for nationalisation of transport services, and Section 68D required objections to be considered and the scheme to be approved or modified by the State Government. The proviso to Section 68D(3) specifically contemplated an approved scheme relating to an inter-State route, provided it was published in the Official Gazette with the previous approval of the Central Government. The requirement of Central approval showed that the State Government's competence extended to the whole inter-State route and not merely to the portion within its own territory.

Conclusion: The approval and publication of the inter-State route scheme were valid under the Act, and this issue was decided in favour of the respondent.

Issue (ii): Whether such approval, and the consequential cancellation of permits, was unconstitutional on the ground that a State could not act beyond its territorial limits or encroach upon the executive sphere of another State.

Analysis: The approved scheme was treated as statutory action under parliamentary legislation, not as State legislation made under Article 245 of the Constitution. The definition of law in Article 13(3) did not convert the approval of a scheme into impermissible extra-territorial legislation. The Court also held that the State Government acted under authority conferred by Parliament, and the scheme furthered the object of a State monopoly in transport service without unlawfully invading the executive field of another State. In the facts of the case, the two State Governments were acting in concert, and the challenge based on territorial or executive incompetence could not succeed.

Conclusion: The scheme and the consequential cancellation of permits were not unconstitutional on the grounds urged, and this issue was decided in favour of the respondent.

Final Conclusion: The statutory scheme for nationalisation of the inter-State route was upheld, and the challenge to the notifications and cancellations failed.

Ratio Decidendi: A State Government may approve a scheme for an inter-State route under Section 68D of the Motor Vehicles Act, 1939 with prior Central Government approval, and such statutory approval does not amount to unconstitutional extra-territorial legislation or executive encroachment.

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