TaxTMI 
TaxTMI 
1983 (2) TMI 328
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....nder Section 68-C of the Motor Vehicles Act, 1939) to all eligible applicants: Now, therefore, in exercise of the powers under Section 43-A of the Motor Vehicles Act, 1939, the Governor of Uttar Pradesh is pleased to direct that the stage carriage permits (except in respect of routes or areas for which schemes have been published under Section 68-C of the Motor Vehicles Act, 1939) shall be granted according to the provisions of the Act to all eligible applicants and there shall be no upper limit to the number of stage carriages for which permits may be granted. By Order Karnail Singh, Sachiv II. Notification No. 241 T/XXX-4-15-P/79 Dated : January 23, 1981 The Governor being satisfied that it is expedient in the public interest so to do, is pleased to direct in exercise of the powers under Section 43-A of the Motor Vehicles Act, 1939 (Act No. 4 of 1939) that while considering applications for stage carriage permits, the State Transport Authority or a Regional Authority: (i) shall have regard only to matters referred to in Clauses (a), (b), (d) and (f) of Sub-section 1 of Section 47 of the said Act and shall also take into consideration representations made by the ....
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....nts were entrusted with the duty of framing rules on various matters connected with the topics dealt with by the Act. The subject of regulation of motor vehicles being within the scope of Entry 35-mechanically propelled vehicles including the principles on which taxes on such vehicles are to be levied-in List III of the Seventh Schedule to the Constitution, various amendments were made from time to time by several State Legislatures with the assent of the President of India either adding to or modifying the provisions of the Act. Chapter IV of the Act which includes Section 42 to Section 68 contains provisions pertaining to the control of motor vehicles. Section 42 of the Act provides that no owner of a transport vehicle shall use or permit the use of the vehicle in any public place whether or not such vehicle is actually carrying any passenger or goods save in accordance with the conditions of a permit granted or countersigned by a Regional or State Transport Authority or the Commission authorising the use of the vehicle in that place in the manner in which the vehicle is being used. A 'transport vehicle' is defined in Section 2(33) of the Act as a public service vehicle o....
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....her means, between the places to be served. (d) the benefit to any particular locality or localities likely to be afforded by the service; (e) the operation by the applicant of other transport services, including those in respect of which applications from him for permits are pending; (f) the condition of the roads included in the proposed route or area; and shall also take into consideration any representations made by persons already providing passenger transport facilities by any means along or near the proposed route or area, or by any association representing persons interested in the provision of road transport facilities recognised in this behalf by the State Government, or by any local authority or police authority within whose jurisdiction any part of the proposed route or area lies: Provided that other conditions being equal, an application for a stage carriage permit from a cooperative society registered or deemed to have been registered under any enactment in force for the time being shall, as far as may be, be given preference over applications from individual owners. (2) A Regional Transport Authority shall refuse to grant a stage carriage permit if it a....
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.... is subject to revision by the State Transport Appellate Tribunal under Section 64-A of the Act. Sub-section 1 of Section 43 of the Act which confers power on the State Government to control transport reads thus: 43. Power to State Government to control transport- (1) A State Government having regard to: (a) the advantages offered to the public, trade and industry by the development of motor transport, (b) the desirability of coordinating road and rail transport, (c) the desirability of preventing the deterioration of the road system, and (d) the desirability of preventing uneconomic competition among motor vehicles, may, from time to time, by notification in the Official Gazette, issue directions to the State Transport Authority: (i) regarding the fixing of fares and freights (including the maximum and minimum in respect thereof) for stage carriages, contract carriages and public carriers; (ii) regarding the prohibition or restriction, subject to such conditions as may be specified in the directions, of the conveying of long-distance goods traffic generally, or of specified classes of goods, by private or public carriers; (iii) regarding the grant of permits fo....
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....nal constituted under Section 64 shall proceed to consider and decide all applications, appeals and revisions in that behalf (including any pending applications, appeals and revisions) as if- (a) in Section 47- (i) for Sub-section 1 the following Sub-sections were substituted: (ii) A Regional Transport Authority shall in considering an application for a stage carriage permit, have regard to the following matters, namely- (a) the interest of the public generally; (b) the advantage to the public of the service to be provided including the saving of time likely to be effected thereby and any convenience arising from journeys not being broken; (c) the benefit to any particular locality or localities likely to be afforded by the service; and shall also take into consideration any representation made by any local authority or police authority within whose jurisdiction any part of the proposed route or area lies ; and (ii) Sub-section 3 were omitted" . . . 6. The above U.P. Act was preceded by the U.P. Ordinance which contained more or less the same provisions. The Ordinance was substituted by the said U.P. Act. The object of enacting Section 43-A of the Act was set....
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.... above said notification the Government of Uttar Pradesh realised that it was necessary to review the whole question of issuing permits to all eligible applicants. Accordingly the State Government issued a Notification on September 24, 1975 which ran as follows: Whereas, in exercise of the power conferred by Section 43-A of the Motor Vehicles Act, 1939 the State Government was by notification No. 1188-T/XXX-4, dated March 30, 1972, pleased to direct that stage carriage permits (except in respect of routes or areas aforesaid) contract carriage permits and public carrier permits shall be granted according to the provisions of the said Act to all eligible applicants: And whereas, on further consideration the State Government is of opinion that the policy of granting such permits to all eligible applicants requires review with a view to: (a) Preventing unproductive expenditure and under utilization of capital and fuel. (b) Preventing elimination of small operators due to unfair competition resulting from the issue of more permits than required for a route. (c) Facilitating long term planning of passenger road transport services. And whereas, such review is likely to take some ....
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....o or the quota to be fixed for, specially deserving categories, such as Ex. Army personnel, educated unemployed persons, such persons holding driving licences as are members of cooperative societies formed for passenger transport business, persons belonging to the Scheduled castes and Scheduled Tribes. (c) the procedure for grant of permits, and for selection from among the applicants, including selection by drawing of lots from among persons belonging to the same category. (3) Any direction under Sub-section 1 may be issued with retrospective effect. (4) Where any direction is issued under Sub-section 1 to any Transport Authority, then any appeal or revision pending before the State Transport Appellate Tribunal shall also be decided in such manner as to give effect to such directions. (5) Where any direction is issued under Sub-section (1) with retrospective effect then (a) any Transport Authority or the State Transport Appellate Tribunal may review any order passed earlier by it with a view to making it conform to such direction and may for that purpose cancel any permit already issued. (b) any Transport Authority may apply to the High Court earlier with a view to ena....
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....ure as per the norms as laid down by the State Government from time to time.... 13. The above notification also contained directions regarding the principle to be followed in determining the number of permits that could be issued and reservation of permits for operators displaced by nationalisation, educated unemployed, members belonging to the Scheduled Castes, the Scheduled Tribes and other backward classes, unemployed army drivers and cooperative societies. 14. These directions were superseded by the issue of a fresh notification under Section 43-A by the State Government on October 12, 1977 which was superseded by a Notification dated October 15, 1978. 15. Within a fortnight from the date of the last Notification referred to above Parliament amended the Act by enacting the Motor Vehicles (Amendment) Act, 1978 (Act 47 of 1978) which inter alia amended the proviso to Sub-section 1 of Section 47 of the Act and inserted Sub-sections (1A) to (1H) in that Section. After this amendment, the proviso to Sub-section 1 of Section 47 of the Act reads thus: 47. (1).... Provided that other conditions being equal, an application for a stage carriage permit from a co-operative society r....
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....carriage permits granted during a calendar year. (1E) In giving effect to the provisions of Sub-section (1B) and Clause (a) of Sub-section (1C) the Regional Transport Authority or the State Transport Authority may, if it considers necessary or expedient so to do, group the various routes within its jurisdiction, (1F) Where any stage carriage permit is to be granted from the quota reserved under Sub-section (1B) or Clause(a) of Sub-section (1C) to any cooperative society registered or deemed to have been registered under any enactment in force for the time being or any firm to which the provisions of the Indian Partnership Act, 1932 (9 of 1932), apply, no permit shall be granted to such society or firm unless the members of the co-operative society or the partners of the firm belong to the Scheduled Castes, the Scheduled Tribes or economically weaker Sections of the community: Provided that where the members of such co-operative society or the partners of such firm are partly from the Scheduled Castes, partly from the Scheduled Tribes and partly from the economically weaker sections of the community, or from any two of these categories, any permit under this Sub-section shall ....
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....s in favour of persons belonging to the Scheduled Castes and the Scheduled Tribes in the same ratio as in the case of appointments made by direct recruitment by a State Government to public services in that State. Since it was considered necessary to promote the well being of economically weaker sections of the community, the State Government was empowered under certain circumstances either to reserve certain percentage of permits for stage carriages for persons belonging to economically weaker sections of the community or to give preference to them in the prescribed manner. It was, however, provided that the number of permits reserved under Section 47(1B) and (1C)(a) of the Act should not exceed fifty percent of the total number of stage carriage permits granted in a calendar year. It was also provided that if a State Transport Undertaking applied for a stage carriage permit operating in any inter-State route, such application should be given preference over all other applications provided the authority was satisfied that the Undertaking would be able to operate in the inter-State route without detriment to its responsibility for providing efficient and adequate road transport ser....
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....eading of these two notifications shows that the State Government ignored, first, the legislative policy underlying the Uttar Pradesh Act 15 of 1976 by which the new Sub-section 2 of Section 43-A was enacted in substitution of the former Sub-section 2 with retrospective effect. As stated earlier, the State Legislature introduced the new Sub-section 2 of Section 43-A after it realised the mistake committed by the State Government in issuing the notification in the year 1972 directing the issue of bus permits liberally in favour of all eligible applicants which had resulted in investment of unproductive capital expenditure and under utilisation of capital and fuel and in unreasonable competition which eventually eliminated small operators from business. The State Government also ignored the new policy governing the issue of permits introduced by Parliament by amending Section 47 of the Act. It was argued on behalf of the State Government before the High Court that the State Government d not contravened either Section 43-A or the provisions of Section 47 as amended in the year 1978. The High Court dismissed the writ petitions observing that the Statement of Objects and Reasons attache....
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.... The High Court further proceeded to observe that though the impugned notifications did not follow the procedure prescribed by Sub-section 2 of Section 43-A as it is now in force in the State of Uttar Pradesh, they could be sustained under Sub-section 1 of Section 43-A which authorised the State Government to issue such directions of a general character as it might consider necessary or expedient in the public interest in respect of any matter relating to road transport to the State Transport Authority or to the Regional Transport Authority and which required such authority to give effect to any such directions. The High Court also relied upon the decision of this Court in Hans Raj Kehar's case (supra) to hold that larger number of buses operating on different routes would be for the convenience and benefit of the travelling public. 20. We may here state that any observations made in Hans Raj Kehar's case (supra) would be inapplicable so far as these cases presently before us are concerned. In that case the Court was concerned with Sub-section 2 of Section 43-A of the Act as it stood then which was a provision enacted by the Legislature. That Sub-section provided that with....
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.... of the Act did not comprehend within its scope the power to issue directions for issuing permits to all eligible applicants without any sort of restriction relevant to the scheme of the Act. What does Section 43-A(1) after all say? It says that the State Government may issue such directions of a general character as it may consider necessary in the public interest. What is the meaning of the term 'public interest'? In the context of the Act, it takes within its fold several factors such as, the maximum number of permits that may be issued on a route or in any area having regard to the needs and convenience of the travelling public, the non-availability of sufficient number of stage carriage services in other routes or areas which may be in need of running of additional services, the problems of law and order, availability of fuel, problems arising out of atmospheric pollution caused by a large number of motor vehicles operating in any route or area, the condition of roads and bridges on the routes, uneconomic running of stage carriage services leading to elimination of small operators and employment of more capital than necessary in any sector leading to starvation of capi....
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....ion on the number of permits to be issued. The observation of the High Court that preferences have to be shown and reservations have to be made only when there is scarcity of permits and since there are no restrictions on the number of permits to be issued there is no necessity to make any such provision really shocks us. The High Court erred in not noticing that it was dealing with a vital economic activity which could be carried on at a huge cost both to the operator and to the Government and that by issuing the notification containing a direction to the Transport Authorities to issue limitless number of permits, the State Government had attempted to circumvent Sub-sections (1) and (1A) to (1H) of Section 47 of the Act. Preferences and reservations have value only when there is a limit on the number of permits to be issued and in the context of the Act there should necessarily be a limit on the issue of permits to operate motor vehicles in respect of any route or area. By the method adopted by it the State Government has virtually allowed the rich and well-to-do businessman who can bear the loss for some time to introduce any number of vehicles on a route or in any area until all....