TaxTMI 
TaxTMI 
1954 (10) TMI 37
X X X X Extracts X X X X
X X X X Extracts X X X X
.... necessity of obtaining permits unless the vehicles were used in connection Path the business of an Indian State Railway. It appears, that some time after 1947 the Government of U. P. conceived the idea of running their own buses on the public thoroughfares. They first started running buses only as competitors with the private operators but later on they decided to exclude all private bus owners from the field and establish a complete State monopoly in respect to the road transport business. They sought to achieve this object by calling in aid the provisions of the Motor Vehicles Act itself. Under section 42(3) of the Act as mentioned above, the Government had not to obtain permits for their own vehicles and they could run any number of buses as they liked without the necessity of taking out permits for them. The Transport Authorities, in furtherance of -this State policy, began cancelling the permits already issued to private operators and refusing permits to people who would otherwise have been entitled to them. Upon this, a number of private bus owners filed petitions in the Allahabad High Court under article 226 of the Constitution praying for appropriate relief, by way of wri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r any particular class of such service on any route or portion thereof, shall be 'run and operated by the State Government exclusively or by the State Government in conjunction with railway or partly by the State Government and partly by others in accordance with the provisions of this Act. Section 4 provides for publication of a scheme framed in accordance with the above declaration and objections to such scheme can be made by interested persons in the manner laid down in section 5. As soon as the scheme is finalised, certain consequences follow which are detailed in section 7. So long as the scheme continues in force, the State Government shall have the exclusive right to operate Road Transport Services, or if the scheme so provides, a certain fixed number of transport vehicles belonging to others can also be run on those roads. The State Government shall be authorised in all such cases to direct the dispensation of the State Transport vehicles from the necessity of taking out permits, or to cancel, alter or modify any existing permits or to add any fresh condition to any permit in respect of any transport vehicle. The remaining portion of the Act purports to lay down how the pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sisting of Mukherji and Chaturvedi JJ. By two separate but concurring judgments dated the 17th of November, 1953, the learned Judges repelled all the contentions of the petitioners and dismissed the writ petitions. It is against this decision that these two appeals have come up to this Court on the strength of certificates granted by the High Court and Mr. Gopal Swarup Pathak appearing in support of the appeals has reiterated practically all the grounds which were urged on behalf of his clients in the Court below. We will take up these points in proper order and it will be convenient first of all to address ourselves to the two allied questions, viz., whether the appellants could claim any fundamental right under article 19(1)(g) of the Constitution which can be said to have been violated by the impugned legislation, and whether the Act has deprived them of any 'property' which would attract the operation of article 31 of the Constitution? Mr. Pathak argues that a right to carry on any occupation n, trade or business is guaranteed to all citizens by article 19(1)(g) of the Constitution. The appellants in the present cases were carrying on the business of plying buses on hire on a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....i route is a part of the Grand Trunk Road which is a public highway. According to English law, which has been applied all along in India, a highway has its origin, apart from statute, in dedication, either express or implied, by the owner of land of a right of passage over it to the public and the acceptance of that right by the public (1). In the large majority of cases this dedication is presumed from long and uninterrupted (1) Vide Pratt & Mackenzie on Law of Highways, 19th edn. p. 13.user of a way by the public, and the presumption in such cases is so strong as to dispense with all enquiry into the actual intention of the owner of the soil and it is not even material to enquire who the owner was (). The fact that the members of the public have a right of passing and repassing over a highway does not mean however that all highways could be legitimately used as foot passages only and that any other user is possible only with the permission or sufferance of the State. It is from the nature of the user that the extent of the right of passage has to be inferred and the settled principle is that the right extends to all forms of traffic which have been usual and accustomed and also....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on from the State. The learned Advocate-General in support of his contention has referred us to a few American cases on the point. In the case of Packard v. Banton 68 L.E. 596; 264 U.S 140, Sutherland J. observed as follows: " The streets belong to the public and are primarily for the use of the public in the ordinary way. Their use for purposes of gain is special and extraordinary and generally at least may be prohibited or conditioned as the Legislature deems proper. " This decision was approved in Frost v. Railroad Commission7o L.E. 1101 1108, and again in Stephenson v. Binford 77 L.E. 288, 294 , where Sutherland J. practically reiterated his observations in the previous case as follows: "It is a well established law that the highways of the State are public property; that their primary and preferred use is for private purposes; and that their use for purposes of gain is special and extraordinary which generally at least the Legislature may prohibit or condition as it sees fit. We do not think that this is the law of India under our Constitution. The cases referred to abo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the learned Judge : "The true position then is, that all public streets and roads vest in the State, but that the State holds them as trustees on behalf of the public. The members of the public are entitled as beneficiaries to use them as a matter of right and this right is limited only by the similar rights possessed by every other citizen to use the pathways. The State as trustees on behalf of the public is entitled to impose all such limitations on the character and extent of the user as may be requisite for protecting the rights of the public generally ;......... but subject to such limitations the right of a citizen to carry on business in transport vehicles on public pathways cannot be denied to him on the ground that the State owns the highways. " We are in entire agreement with the statement of law made in these passages. Within the limits imposed by State regulations any member of the public can ply motor vehicles on a public road. To that extent he can also carry on the business of transporting passengers with the aid of the vehicles. It is to this carrying on of the trade or business that the guarantee in article 19(1) (g) is attracted and a citizen can legitimately c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... article, means and includes total deprivation as well? If the answer is in the affirmative, then only the other two questions would arise, namely, whether these restrictions are reasonable and have been imposed in the interests of the general public ? According to the meaning given in the Oxford Dictionary, the word "restriction" con. notes a 'limitation' imposed upon a person or a thing, a 'condition or regulation' of this nature, though the use of the word in the sense of suppression is not altogether unknown. In the case of Municipal Corporation of the City of Toronto v. Virgo ) [1896] A.C. 88,93, Lord Davey while discussing a statutory power conferred on a Municipal Council to make bye-laws for regulating and governing a trade made the following observation: "No doubt the regulation and governance of a trade may involve the imposition of restrictions on its exercise...... where such restrictions are in the opinion of the public authority necessary to prevent a nuisance or for the maintenance of order. But their Lordships think that there is a marked distinction to be drawn between the prohibition or prevention of a trade and th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y rests." The point for consideration in that case was undoubtedly different from the one that has arisen in the present case and the question whether the restrictions enumerated in the several sub-clauses of article' 19 could go to the length of total deprivation of these liberties was neither raised nor decided in that case. But a distinction was drawn by the majority of learned Judges between negation or deprivation of a right and a restriction upon it and although it was said. that restriction may reach a point where it might amount to deprivation, yet restrictions would normally presuppose the continued existence-no matter even in a very thin and attenuated form-of the thing upon which the restrictions were imposed. Kania C.J. in his judgment (vide page 106) expressly said: Therefore Article 19(5) cannot apply to a substantive law depriving a citizen of personal liberty. I am unable to accept the contention that the word 'deprivation' includes within its scope 'restriction' when interpreting Article 21." Against this view it may be urged that the use of the words 'deprivation" and "restrictions" as interchangeable expressions is not altogether unusual in ordinary language a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the restriction regard must be had to the nature of the business and the conditions prevailing in that trade.......... It can also not be denied that the State has the power to prohibit trades which are illegal or immoral or injurious to the health and welfare of the public. Laws prohibiting trades in noxious or dangerous goods or trafficking in women cannot be held to be illegal as enacting a prohibition and not a mere regulation." It is contended on behalf of the respondents that these observations clearly indicate that the expression "reasonable restriction" as used in article 19(6) of the Constitution might, in certain circumstances, include total prohibition. It may be mentioned here that the Excise Regulation is not a prohibitory statute which prohibits trading in liquor by private citizens altogether. It purports to regulate the trade in a particular way, namely, by putting up the right of trading in liquor in specified areas to the highest bidder in auction sale. The general observations occurring in the judgment cited above must therefore have to be taken with reference to the facts of that case.' Be that as it may, although in our opinion the normal use of the word "....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d may not admit of any dispute but we think that the observations of Lord Porter in the Privy Council case of Commonwealth of Australia and Others v. Bank of New South Wales and Others [1950] A. C. 235, 311 upon which considerable reliance has been placed by the High Court would indicate the proper way of approach to this question' "Their Lordships do not intend to lay it down", thus observed Lord Porter, "that in no circumstances could the exclusion of competition so as to create a monopoly either in a State or Commonwealth agency or in some other body be justified. Every case must be judged,on its own facts and in its own setting of time and circumstance, and it may be that in regard to some economic activities and at some stage of social development it might be maintained that prohibition with a view to State monopoly was the only practical and reasonable manner of regulation". In order to judge whether State monopoly is reasonable or not, regard therefore must be had to the facts of each particular case in its own setting of time and circumstances. It is not enough to say that as an efficient transport service is conducive to the interests of the people, a legislation which mak....
X X X X Extracts X X X X
X X X X Extracts X X X X
....esh. Although they carry on the business only with the aid of permits, which are granted to them by the authorities under the Motor Vehicles Act, no compensation has been allowed to them under the statute. It goes without saying that as a result of the Act they will all be deprived of the means of supporting themselves and their families and they will be left with their buses which will be of no further use to them and which they may not be able to dispose of easily or at a reasonable price. It may be pointed out in this connection that in Part IV of the Constitution which enunciates the directive principles of State policy, article 39(a) expressly lays down that the State shall direct its policy towards securing "that the citizens, men and women equally, have the right to an adequate means of livelihood." The new clause in article 19(6) has no doubt been introduced with a view to provide that a State can create a monopoly in its own favour in respect of any trade or business; but the amendment does not make the establishment of such monopoly a reasonable restriction within the meaning of the first clause of article 19(6). The result of the amendment is that the State would not ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....question is whether by depriving the private operators of their right to run buses on certain routes and by deciding to run the routes itself the State acquired the right which was of the petitioners ? To me it appears that it could not be said that there was by the State any acquisition of the right which was formerly of the petitioners, whether such right was note property or an interest in a commercial or industrial undertaking. The vehicles which were being operated by the private operators have not been acquired by the State nor has any other tangible property which was used by the petitioners for their business been acquired. What has been done is that the petitioners have been prohibited from operating their buses on certain routes. This right of the petitioners has in no way been vested in the State inasmuch as the State always had an equal right with the petitioners to run their buses on these routes." According to the High Court, therefore, mere deprivation of the petitioners' right to run buses or their interest in a commercial undertaking is not sufficient to attract the operation of article 31(2) of the Constitution as the deprivation has been by the authority of law ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ire on public roads. The State as a person, it is conceded, comes under a different class or category from private citizens; but the contention is that when the State carries on trade as merchants it occupies the same position as private traders and its acts in this respect cannot be regarded as acts of the sovereign. Much reliance has been placed by the learned counsel in sup-port of this view on the judgment of Sir Barnes Peacock in P. and O. Steam Navigation Co. v. The Secretary of State (1861) 5 B.H.C.R. Appendix 1. The other objection taken by the learned counsel is, that the Act gives an unguided and unfettered discretion to the State to associate such persons as it likes in the transport business and thereby allows it to discriminate between one citizen and another. No rules are laid down to regulate the choice of the State in such cases. So far as the first ground is concerned, it is well settled that mere differentiation does not make a legislation obnoxious to the equal protection clause. The Legislature has always the power to make classification and all that is necessary is that the classification should not be arbitrary but must bear a reasonable relation to the objec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....being associated with the transport service and there are no rules to guide its discretion, plainly the provision would offend against article 14 of the Constitution. The learned Advocate-General pointed out however that the State is only to choose the routes or portions of routes on which the private citizens would be allowed to operate and the number of persons to whom permits should be given, and that the granting of permits would necessarily be regulated by the provisions of Motor Vehicles Act. This does not appear to us to be an unreasonable construction to be put upon the relevant portion of section 3 of the Act and it receives support from what is laid down in section 7(c) of the Act. On this construction the discretion to be exercised by the State would be a regulated discretion guided by statutory rules. We hold therefore that the appellant cannot make any grievance on this score and that the statute does not offend against article 14 of the Constitution. The last point that remains to be considered is, whether the Act conflicts with the guarantee of freedom of inter- State and intrastate trade, commerce and intercourse provided for by article 301 of the Constitution ? Ar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ost the same language as article 301 of our Constitution, it has been definitely held by the Judicial Committee in the case of Commonwealth of Australia v. The Bank of New South Wales (supra), that the rights of individuals do come within the purview of the section. It is true, as Lord Porter observed, that section 92 does not create any new juristic rights but it does give the citizens of the State or the Commonwealth, as the case may be, the right to ignore and, if necessary, to call on the judicial power to help him to resist legislative- or executive actions which offend against the section. It follows from this, as his Lordship pointed out, that the application of section 92 does not involve calculations as to the actual present or possible future effect upon the total value of inter-State trade, the difficulty in applying such a criterion being too obvious. If this view is adopted in regard to article 301 of our Constitution it can plausibly be argued that the legislation in the present case is invalid as contravening the terms of the article. The question of reasonable restrictions could not also arise in this case, as the bill was not introduced with the previous sanction o....