2015 (2) TMI 1376 - HC - Indian Laws

Court clarifies grounds for challenging new permits, affirms permit holders' rights under Article 226.

The court held that a writ petition by existing operators challenging the grant of fresh permits to new operators is maintainable if based on grounds of ... Constitutional concept of equality - grant of fresh permits in favour of new operators - Bogey of liberalized policy relating to grant of permits under the Motor Vehicles Act, 1988 - HELD THAT:- The Motor Vehicles Act, 1988 and the rules or policy guidelines framed thereunder bind the transport authorities to act in a particular manner in the matter of grant of permits or allowing commercial plying of vehicles. Several of these statutory provisions have been noticed in the first order of reference and have been referred to by the writ petitioners in course of the present proceedings. Since statutory authorities are bound to act in accordance with law, and the manner in which the law requires them to act, the actions of the statutory authorities are justiciable. If there is a complaint that the grant of a permit or like action is in derogation of the statutory provisions or the rules or policy guidelines framed thereunder or in colourable exercise of authority, the acts complained of can be subjected to judicial review, subject to the complainant suffering or being likely to suffer a degree of prejudice thereby. If the complaint is of the irregular or illegal exercise of authority which results in the complainant being affected or likely to be affected, the status of the complainant as a business rival of the beneficiary of the irregular or illegal executive largesse will not stand in the way of the complaint being received for judicial review. The primary question raised in the two orders of reference is answered thus: subject to the considerations as to there being an efficacious alternative remedy, a writ petition at the instance of existing operators providing stage-carriage services on different routes, who seek to challenge the grant of fresh permits in favour of new operators (either on the self-same routes on which they have been operating or touching a portion of the same) by the transport authorities is maintainable if the challenge is on the ground of illegality or arbitrariness or colourable exercise of power or otherwise being violative of Article 14 of the Constitution, notwithstanding that the action may be impelled by the commercial interests of the existing operator; provided that, the substance of the challenge is not founded only on the commercial interests of the existing operator being prejudiced by the acts complained of. Subject to the considerations as to there being an efficacious alternative remedy, the court exercising jurisdiction under Article 226 of the Constitution of India may entertain applications by holders of stage or contract-carriage permits under the Motor Vehicles Act, 1988 questioning any action or inaction on the part of the transport authorities in dealing with complaints or allegations in relation to acts of other operators in plying their vehicles for carrying passengers, whether holding permits or not, which acts constitute violation of the provisions of the Act or the rules or policy guidelines framed thereunder; provided that, the substance of the challenge is not founded only on the commercial interests of the existing operators being prejudiced by the acts complained of. The reference is disposed of. Issues Involved:1. Maintainability of a writ petition by existing operators challenging the grant of fresh permits to new operators under the Motor Vehicles Act, 1988.2. Jurisdiction of the court under Article 226 of the Constitution of India to entertain applications by permit holders regarding actions or inactions of transport authorities.Detailed Analysis:Issue 1: Maintainability of a Writ Petition by Existing OperatorsThe primary question addressed is whether existing operators providing stage carriage services can maintain a writ petition to challenge the grant of fresh permits to new operators, especially when such grants appear to be grossly illegal, patently arbitrary, or in colorable exercise of power, thus offending the constitutional concept of equality.The court examined the precedent set by the Supreme Court in Mithilesh Garg v. Union of India: AIR 1992 SC 443, which held that existing operators cannot challenge the grant of permits to new operators solely on the ground that their business would be affected. However, the court clarified that Mithilesh Garg should be confined to challenges based on business interests and does not preclude challenges based on illegality or arbitrariness in the grant of permits.The court noted that several Division Bench judgments had misinterpreted Mithilesh Garg to imply that existing operators have no locus standi to challenge any grant of permits. These judgments included Sekhar Chatterjee v. Abdur Rahim Mondal, Sanjit Chakraborty v. State of West Bengal, and Mobesher Hossain Mondal v. Sekhar Chatterjee. The court emphasized that these interpretations were incorrect as they overlooked the distinction between business rivalry and challenges based on illegal acts by transport authorities.The court concluded that a writ petition by existing operators is maintainable if the challenge is based on grounds of illegality, arbitrariness, or colorable exercise of power, and not merely on the basis of commercial interests being affected.Issue 2: Jurisdiction of the Court Under Article 226The supplemental question addressed whether the court exercising jurisdiction under Article 226 of the Constitution of India can entertain applications by holders of stage or contract carriage permits questioning the actions or inactions of transport authorities in dealing with complaints about other operators violating the Motor Vehicles Act, 1988, or related rules.The court affirmed that such applications are maintainable. It emphasized that statutory authorities are bound to act in accordance with the law, and their actions are justiciable. Complaints about illegal or irregular acts by transport authorities can be subjected to judicial review, provided the complainant demonstrates a degree of prejudice suffered due to such acts.The court also noted that the existence of an efficacious alternative remedy should be considered, and the High Court should be slow to entertain such complaints unless the act complained of is demonstrably and ex facie without jurisdiction or in complete violation of the principles of natural justice.Conclusion:The court held that:1. A writ petition by existing operators challenging the grant of fresh permits to new operators is maintainable if the challenge is based on grounds of illegality, arbitrariness, or colorable exercise of power, and not merely on commercial interests.2. The court under Article 226 can entertain applications by permit holders regarding actions or inactions of transport authorities if the complaints are based on violations of the Motor Vehicles Act, 1988, or related rules, subject to the consideration of an efficacious alternative remedy.The reference was disposed of with these clarifications, and the judgments of the Division Bench were overruled to the extent they were inconsistent with this interpretation.