TaxTMI 
TaxTMI 
1983 (10) TMI 269
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....the bold step of complete nationalisation of the entire transport industry but, unfortunately, it has not yet been able to implement it fully. 3. There are two methods by which the transport industry can be nationalised:- (1) where the Government acts under Chapter IV A (s. 68 (b) & (c) of the Motor Vehicles Act) and after due publication formulates a scheme for taking over route or routes and invites objections thereto. After the objections have been received they are decided and ultimately processed. This method however is dilatory and involves a time consuming process which leads to delaying tactics adopted by the operators. Even so, after the objections have been decided the operators or the persons concerned are not satisfied but go up in appeals to the law courts. These delaying tactics have resulted in most cases in an indefinite postponement of the scheme of nationalisation. Moreover, normally this process is applied to a route or routes selected by the Government and is accomplished by stages which also takes a long time. (2) Another method which is the more effective one is to take over the running of the entire transport services by nationalising the....
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....ribution of wealth and services among the people of the country. Fourthly, the private services run by the operators mainly inspired by profit making motive neither had the will nor the capacity to penetrate as deep as possible into areas so far inaccessible to the travelling public and would confine their running of the services only to serve important points. When the State takes over the entire transport services, it would undoubtedly be its duty to see that the vehicles reach the most distant part or corner of the State and serve as many travelling public as possible so that nobody is caused any inconvenience. These are some of the initial advantages of a total nationalisation scheme, which would be brought to the fore and provide an ideal service for the members of the community at large. It may be that in this process some financiers would suffer loss and some operators may also be wiped out of the business but this cannot be helped as the scheme of our Constitution is that individual rights or benefits must yield to the larger benefits and good of the entire community. Some of these points were very elaborately dealt with in the case of State of Karnataka & Anr. etc. v. Rang....
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....the two important provisions rather than to arrive at conclusions which bring into collision these two provisions-one contained in part III and the other in part IV. We must appreciate that the reason why the founding fathers of our Constitution did not advisedly make these principles enforceable was perhaps due to the vital consideration of giving the Government sufficient latitude to implement these principles from time to time according to capacity, situations and circumstances that may arise. 11. On a careful consideration of the legal and historical aspects of the directive principles and the fundamental rights, there appears to be complete unanimity of judicial opinion of the various decisions of this Court on the point that although the directive principles are not enforceable yet the court should make a real attempt at harmonising and reconciling the directive principles and the fundamental rights and any collision between the two should be avoided as far as possible. 12. In the instant case, we are really concerned with the second limb of the Constitution, viz., the importance and significance of the directive principles contained in part IV. We now propose to discus....
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....ble in the State of Tamil Nadu if it fulfils the conditions of Art. 31C, which it doubtless does. A substantial part of this amendment appears to have been held to be valid by a majority of 7:6 in His Holiness Kesavananda Bharti Sripadagalaveru v. State of Kerala (hereinafter referred to as 'Bharti's case'), but a portion of Art. 31C was held to be invalid. 15. While considering the scope, ambit and constitutional validity of Art. 31C, the majority judgment in Bhararti's case (supra) held that the first part of Art 31C was valid but the second part, viz., "and no law containing a declaration that it is for giving effect to such policy shall be called in question in any court on the ground that it does not give effect to such policy" was held to be invalid. In other words, so far as the present aspect of the case before us is concerned, the majority judgment clearly held that while Art. 31C permitted Parliament to make any law giving effect to the policy of the State towards securing the principles contained in cls. (b) and (c) of Art. 39, such law could not be declared void even if such a course of action violates or abridge any of the rights conferred by Art. 14....
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....ples contained in clauses (b) and (c) of Article 39 will fortify that structure." (Emphasis supplied) 21. In the latest Constitution Bench decision of this Court in Sanjeev Coke Manufacturing Co. v. M/s. Bharat Coking Coal Ltd. & Anr., it has been emphasised that the constitutional validity of Art. 31C is now beyond challenge and in this connection one of us (Reddy, J.) speaking for the Court made the following observations: "In the second place, the question of the constitutional validity of Art.31C appears to us to be concluded by the decision of the Court in Kesavananda Bharati case." 22. In view of the aforesaid decisions, it is not necessary for us to dilate further on the question of the constitutional validity of Art.31C. 23. Another important facet of Art.31C which has been emphasised by this Court is that there should be a close nexus between the statute passed by the legislature and the twin objects mentioned in clauses (b) and (c) of Art.39. In approaching this problem and considering the question of nexus a narrow approach ought not to be made because it is well settled that the courts should interpret a constitutional provision in order to suppress....
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....the principle of Article 14 as included in the principle of Article 39 (b)." 27. We might now mention in passing some important facets of Art. 31C which we shall discuss in detail when we deal with the various provisions of the Act in the light of the reasons given by the High Court and the contentions advanced before us. At this stage, suffice it to say that on a proper and true construction of Art. 31C in the light of the decisions of this Court, the question of compensation becomes totally irrelevant. If, once the conditions mentioned in Art. 31C are fulfilled by the law, no question of compensation arises because the said Article expressly excludes not only Arts. 14 and 19 but also 31 which, by virtue of the 25th amendment, had replaced the word 'amount' for the word 'compensation' in Art. 31(2). As already extracted, Chandrachud, CJ in Waman Rao's case has observed that once Art. 31C is attracted, Arts. 14, 19 and 31 are out of harm's way. 28. The question whether in a case where Art. 31C applies, compensation is necessary to be given, has the following facets:- (a) if Art. 31C is taken, as it must be, to exclude Art. 31(2), the question ....
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....the Supreme Court towards social problems had come to be seriously felt so much so that any policy of nationalisation of assets or State monopoly was held to be so necessary to acquire the goal of building an egalitarian society as to make the restrictions contained in Art. 19(1)(g) reasonable. In other words, even if Art. 31C was not there, the policy of nationalisation of transport services could be held to be valid on the basis of this decision and would not violate Art. 19, being a reasonable restriction. The major part of the spirit of Art. 31C, which was introduced almost a decade after the above decision, was clearly anticipated and accepted in Akadasi Padhan's case (supra) and this Court in a way paved the way for more socialistic reform which may destroy any obstacle coming in the way of achieving the important directive principles of the Constitution. More than this we would not like to say anything regarding this decision because Arts. 14, 19 and 31 are completely excluded by Art. 31C. The provisions to validate laws made to secure the objects in Art. 39 (b) &(c) seem to be the conclusive chapter of a humble beginning with an appeal to the courts to make a doctrinair....
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....ble amount which may or may not be adequate in the circumstances. We feel that in view of the explicit and express provisions of Art. 31C the question of compensation does not arise at all and even if it does, the matter is concluded by a 7-Judge Bench decision of this Court in the Karnataka case. 34. Having dealt with the various aspects of Art. 31C, we now proceed to examine the provisions of the Act in the light of the law laid down by this Court and the aforesaid conclusions reached by us. To being with, the Act gives a detailed preamble describing the ends and objects of the Act. We might mention that in the first paragraph of the preamble, cl. (c) of Art. 39 was not mentioned in the Ordinance but when the Ordinance was replaced by the Act, cl. (c) of Art. 39 was inserted. A perusal of the various clauses of the preamble reveals that the legislation was a purely progressive measure meant not to confiscate the property or destroy the business of the stage carriage operators but to take absolute control of the State transport services by stages in various revenue districts. 35. As already indicated, the Act was preceded by an Ordinance, containing identical provisions, whi....
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....at the operators of the other districts were the nationalisation of the scheme has not been enforced may make due preparations and alternative arrangements in case the concerned districts are also included in the nationalisation scheme by virtue of the notifications issued from time to time under the Act. 38. Section 3 only gives the definitions of the various expressions used in the Act and, for the time being, it may not be necessary for us to give a detailed description of cls. (a) to (s) of this section. 39. Section 4, which is the pivotal section, provides that on and from the date as may be specified by the Government in respect of any stage carriage or contract carriage operator, the permit issued to the operator shall vest in the Government absolutely free from all encumbrances and such carriages or contract carriages, which vest in the Government, shall by force of such vesting be freed and discharged from any trust, obligation and encumbrances, etc. In other words, the intention of the Act was that while nationalising the State transport services the State should not encumber itself with the liabilities that may have been incurred by the bus operators prior to the e....
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....e carriages or the contract carriages used by the operators but also their tools, implements and workshops would be in public interest in order to prevent any legal or constitutional objection being taken against the various moveables which by virtue of the provisions of the Act vest in the Government. 42. Section 5 contains provisions of a routine nature regarding the submission of accounts, agreements, inspection by Government officers, furnishing of data and details and the like. Another important provision of the Act is section 6 which provides for a reasonable amount of compensation to be paid to the operators on their properties vesting in the Government. Sub-s. (1) of s. 6 says that every person interested shall be entitled to receive such amount as may be determined in the second schedule to the Act, that is to say, where the amount can be fixed by agreement, the same shall be determined in accordance with the agreement. Secondly, where no agreement can be reached, the Government shall appoint as arbitrator a person who is or has been or is qualified for appointment as a District Judge. While appointing an arbitrator, the Government may, if necessary, nominate a person h....
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.... 7. More than five years but not exceeding six years 59 8. More than six years but not exceeding seven years 41 9. More than seven years but not exceeding eight 29 years 10. More than eight years but not exceeding nine 21 years 11. More than nine years but not exceeding ten years 14 12. More than ten years but not exceeding eleven 10 years 13. More than eleven years but not exceeding twelve 7 years 14. More than twelve years but not exceeding thirteen 5 years 15. More than thirteen years 4 46. It would be seen from a perusal of these guidelines that heavy compensation has not been provided for, obviously because if compensation at the market rate is given it would amount to a huge drain on the State treasury which may cause a complete financial breakdown and thus frustrate the very policy of nationalisation. We might mention here that the respondents argued that the rates of compensation were wholly inadequate and absolutely illusory because the arbitrator or the High Court cannot travel beyond the second schedule in assessing the compensation. Mr. S.S. Ray, appearing for the appellant State fairly conceded....
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.... and before the notified date, is prohibited. It further provides that no person shall after the aforesaid date transfer by way of sale or gift any stage or contract carriage liable to be acquired under the Act. 51. Section 16 provides for grant of temporary permits to the operators and the circumstances under which and the period for which they could be extended or transferred and as a consequence of the pivotal Section it also provides that no stage or contract carriage operator would be able to obtain any temporary permit in respect of any area or route which has been notified in the Act. 52. Section 17 prohibits transfers of any stage or contract carriage and enjoins that if any transfer is made, the shall be void and is liable to be acquired by the Government. Section 18 makes a provision for the appointment of administrators for arranging the taking over of the acquired property and for carrying out the duties assigned to them. Section 19 also makes an identical provision for appointment of authorised officers. Section 20 is also an important provision which has been introduced for the purpose of safeguarding the existing staff of the operators for being absorbed in the....
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....s contention for the reasons given hereafter. 56. By and the large the provisions of the two Acts appear to be identical in many respects and the general structure and the fundamental features of the two Acts are almost the same. The broad features of the two Acts may be summarised as follows: (a) both the Acts aim at the policy of nationalisation of transport services (Karnataka Act started with only stage carriages but the Act has also taken within its fold contract carriages), (b) both the Acts clearly mention that the object of nationalisation was to secure the ends of Art. 39 (b) & (c), (c) both the Acts seem to convey that being a national policy evolved by the Government itself, it would undoubtedly be in great public interest, (d) the process of distribution of material resources and the units taken over is more or less the same, (e) by and large the scope and ambit, the manner and method of formulation of the nationalisation policy are identical, and (f) the principles of compensation and the machinery provided for determining the same in both the Acts are absolutely similar with minor and negligible variati....
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....ficient to state here for the purpose of this case that so far as Art. 31C is concerned, it was unanimously held by the entire Court that the first part of Art. 31C, introduced by the Constitution 25th Amendment Act, was valid. (3) Thus, it is manifest that Art. 31C gives a complete protective umbrella to any law passed with the object of achieving the aims and goals of Art. 39 (b) & (c) so as to make it immune from challenge on the ground that the said law violates Arts. 14, 19 or 31. The only condition for application of Art. 31C is that there should be a direct and reasonable nexus between the law and the provisions of Art. 39 (b) & (c), and the reasonableness would be regarding the nexus rather than the law. 59. In view of the aforesaid developments, most of the conclusions arrived at and the important reasons given by the High Court no longer survive and fade into oblivion. The counsel for the parties also realising this difficulty did not press all the arguments that were advanced before the High Court or accepted it but confined their arguments to the framework and applicability of Art. 39 (b) & (c). In fairness to the High Court, we cannot blame it because the l....
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....sis supplied) 62. The lines underlined by us contain an important emphasis to show that the complexion of the necessity of compensation has completely changed in view of the 25th Amendment by which Art. 31 C was introduced and Untwalia, J. was, therefore, careful enough not to imply that even after the passing of the 25th Amendment, the question of compensation would still be necessary. 63. In the same strain, Iyer, J., in that very case observed as follows: "Full compensation with a formal difference: The court will not question the 'adequacy' directly, but 'interpret' the amended articles into the same desideratum. The Court could satisfy itself only about the amount not being a monstrous or unprincipled under- value...................... The payment may be substantially less than the market value, the principles may not be all-inclusive, but the court would not, because it could not, upset the taking save where the principles of computation were too arbitrary and illusory to be unconscionably shocking." 64. Thus, from a perusal of Bharati's as also Karnataka cases the following principles for assessing compensation....
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....n addition to what we have stated, it may be observed that once a policy of nationalisation is in public interest and for public good, some losses, some damages, some prejudices and some harsh consequences are bound to follow but this does not mean that the aforesaid considerations should result in a stalemate of the policy of State monopoly or nationalisation otherwise the country cannot move forwarded even an inch from where it was when out Constitution came into force. Gajendragadkar, J., in Akadasi Pabhan's case (supra) had pointed out that these are matters of high policy and the courts cannot go behind the policy unless the policy itself is patently unconstitutional or arbitrary. 69. We have found that the compensation awarded or the principles contained in the various sections of the Act are not illusory but amount to a just and sufficient compensation to the operators whose properties are taken away. In fact, it was to meet such situations that Art. 31C was introduced so that any obstacle resulting in evil consequence to the operators or persons whose properties are taken over is completely removed. For these reasons, we reject this argument of the respondents' c....
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....for commercial purposes if the exigencies of the situation so require, A particular commercial activity of the State may itself be for a public purpose." 74. In the instant case also, it would appear that the State has nationalised the stage and contract carriages for the purpose of providing a general and expeditious transport at reasonable rates to the members of the public and in view of the observations referred to above, we can come to no other conclusion except that such a policy is undoubtedly in public interest and involves an important public purpose. 75. As a limb of this argument, the High Court held that Art. 39 would not be applicable in the present case. As extracted above, Untwalia, J., in the Karnataka case summarily rejected this very argument and further pointed out that where a legislature thought of preventing misuse in the running of the vehicles by private operators and in order to provide better facilities to the transport passengers or to the general public, acquisition of vehicles or for that matter the rights and interests in the contract carriage operators alongwith their land, buildings, workshops, etc., would always be permissible. We cannot conce....
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....oney, property.)" 80. In words and Phrases (Permanent Edition), Vol. 37A, the word 'Resources' has been defined at page 16 thus: "Resources included products of farm, forest, manufacture, art, education, etc... The "resources" of a county include its land, timber, coal, crops, improvements, railways, factories and everything that goes to make up its wealth or to render it desirable." In the Karnataka case, Iyer, J., observed thus: "And material resources of the community in the context of re-ordering the national economy embraces all the national wealth, not merely natural resources, all the private and public sources of meeting material needs, not merely public possessions." 81. The question as to the connotation of 'material resources, as mentioned in Art. 39 (b) & (c) came up for consideration in a recent constitution-Bench decision of this Court in Sanjeev Coke Manufacturing Co's case (supra) where one of us (Reddy, J.) made the following observations: "The next question for consideration is whether the Coking Coal Mines (Nationalisation) Act is a law directing the policy of the State towards securing "that the ownership and c....
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....o, in the instant case, as pointed out above, there is a clear mode of compensation provided which is to be assessed by an arbitrator and is subject to judicial scrutiny by the highest court in the State, namely, the High Court. The schedule which contains the principles of compensation is wide enough to ensure a fairly reasonable compensation to be given to the operators whose vehicles are taken over. The court in such matters cannot interfere with the amount so fixed unless it is shown to the court's satisfaction that the amount fixed is so monstrous as to shock its conscience. Having regard to the provisions in the schedule and the manner and mode of grant of compensation, we are unable to hold that the compensation provided for is wholly inadequate or absolutely monstrous. 86. Thus, so far as this aspect of the matter is concerned, two conclusions broadly emerge:- (1) that in view of the express provisions of Art. 31C which excludes Art. 31 (2) also where a property is acquired in public interest for the avowed purpose giving effect to the principles enshrined in Art. 39 (b) & (c), no compensation is necessary and Art. 31 (2) is out of the harm's wa....
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....ce); the marketing or merchandising of commodities." 90. In 'Family Word Finder' published by Readers Digest the word 'distribution' has been defined at page 237 thus: "dissemination, scattering, spreading, circulation, grouping, organisation, apportionment, allotment, allocation, division." 91. It is obvious, therefore, that in view of the vast range of transactions contemplated by the word 'distribution' as mentioned in the dictionaries referred to above, it will not be correct to construe the word 'distribution' in a purely literal sense so as to mean only division of a particular kind or to particular persons. The words, apportionment, allotment, allocation, classification, clearly fall within the broad sweep of the word 'distribution'. So construed, the word 'distribution' as used in Art.39(b) will include various facets, aspects, methods and terminology of a broad-based concept of distribution. In other words, the word 'distribution' does not merely mean that property of one should be taken over and distributed to others like land reforms where the lands from the big landlords are taken away and given to l....
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....e Act seems to achieve in securing the objects contained in Art.39(b)&(c) of the Constitution. 95. By nationalising the transport services the transport business which was run by a handful of capitalists would prevent the concentration of wealth in the hands of a few and would therefore benefit the community at large. 96. This aspect of the matter was also argued in the Karnataka case but strongly repelled, were Untwalia, J. pointed out that taking over the transport services was undoubtedly for the common good of the people and was not meant for augmenting the revenue of the State because the profits, if any, made by the services would go to accomplish projects for the betterment of the community and made the following observations: "The legislature thought that to prevent such misuse and to provide for better facilities to transport passengers and to the general public it is necessary to acquire the vehicles, permits and all rights, title and interest of the contract carriage operators in or over lands, buildings, workshops and other places and all stores, instruments, machinery, tools, plants, etc., as mentioned in sub-section (2) of section 4 of the Act." 97. ....