Statutory preference for State transport undertakings in permit selection upheld as a valid public-interest criterion.

A statutory preference for a State transport undertaking in stage carriage permit selection on inter-State routes was upheld as a valid public-interest criterion, because it operated only after comparative assessment where applicants were otherwise equal and did not exclude private operators from competition. Renewal applications were required to be treated as fresh permit applications, so the same preference rule continued to apply and was not displaced by the renewal preference provision. The marking system used in Tamil Nadu for permit selection, including the allocation of 5 marks to a State transport undertaking, was treated as a permissible objective assessment method, and the challenge to the selection process failed.

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Issues: (i) Whether the preference given to a State transport undertaking for a stage carriage permit on an inter-State route under Section 47(1-H) of the Motor Vehicles Act, 1939 is unconstitutional under Articles 14 and 19(1)(g) of the Constitution of India; (ii) Whether the renewal preference under Section 58(2) excludes the operation of Section 47(1-H) when renewal is sought on an inter-State route; (iii) Whether the Tamil Nadu marking rule and the 5 marks assigned to a State transport undertaking in permit selection could vitiate the grant of permit.

Issue (i): Whether the preference given to a State transport undertaking for a stage carriage permit on an inter-State route under Section 47(1-H) of the Motor Vehicles Act, 1939 is unconstitutional under Articles 14 and 19(1)(g) of the Constitution of India.

Analysis: Section 47(1-H) did not exclude private operators from competition. The statutory preference operated only after comparative assessment of applicants and on the basis that other conditions were equal. The provision reflected a legislative judgment that a State transport undertaking, being a public sector agency serving public transport needs, could legitimately be preferred when broadly comparable on merits. The preference was therefore treated as a valid adjustment within the permit-granting scheme and not as arbitrary discrimination or a denial of the freedom to carry on trade.

Conclusion: The challenge under Articles 14 and 19(1)(g) failed and Section 47(1-H) was upheld.

Issue (ii): Whether the renewal preference under Section 58(2) excludes the operation of Section 47(1-H) when renewal is sought on an inter-State route.

Analysis: An application for renewal is required to be made and disposed of as if it were an application for a permit. That language incorporates the provisions governing fresh applications, including the preference rule under Section 47(1-H). The renewal preference in Section 58(2) applies only where conditions are otherwise equal, and it does not displace the statutory preference available to a State transport undertaking under Section 47(1-H). The two provisions were read as operating consistently.

Conclusion: The renewal claim did not override the preference in favour of the State transport undertaking and the contention was rejected.

Issue (iii): Whether the Tamil Nadu marking rule and the 5 marks assigned to a State transport undertaking in permit selection could vitiate the grant of permit.

Analysis: The challenge to the screening and marking process was not entertained on procedural grounds, and in any event no substance was found in it. The marking system was regarded as a public-interest measure for objectively assessing rival claimants, and the assignment of 5 marks to a State transport undertaking was treated as a valid criterion. The objection relating to night halt cleaners was also found unsupported by concrete evidence.

Conclusion: The challenge to the permit selection process failed.

Final Conclusion: The statutory preference scheme for State transport undertakings was sustained, the renewal provisions were harmonized with that preference, and the petitions were dismissed.

Ratio Decidendi: A statutory preference for a State transport undertaking in permit selection is valid when it operates only after comparative assessment on equal conditions and serves public interest, and renewal applications are to be processed as fresh permit applications so that the same statutory preference applies.

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