1. Ferry toll lessee — Dispute over toll exemption for state-owned buses — Claim for rent abatement or toll payment under Section 15, Northern India Ferries Act, 1878. (Para 1 , 2 , 3 , 4 )
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1962 Supreme(SC) 56
SUPREME COURT OF INDIA
8th February, 1962
B.P. SINHA, C.J.I., J.L. KAPUR, M. HIDAYATULLAH, J.C. SHAH AND J.R. MUDHOLKAR, JJ.
Satya Narain Singh, Appellant
Versus
District Engineer, P. W. D., Ballia and another, Respondents.
Civil Appeal No. 435 of 1958.
Advocates appeared
Mr. Naunit Lal, Advocate, for Appellant; M/s. G. N. Dikshit and C. P. Lal, Advocates, for Respondents.
Advocates:
C.P.LAL, G.N.DIKSHIT, NAUNIT LAL
C.P.LAL, G.N.DIKSHIT, NAUNIT LAL
State-owned commercial undertakings run with a profit motive do not constitute "public service" simply by virtue of state ownership or public benefit, and thus cannot claim exemptions reserved for public services.
Headnote:(A) Northern India Ferries Act, 1878 - Section 15 - Tolls on public ferry - Exemption for vehicles on "public service" - Definition of "public service" - Whether state-owned buses run as a commercial activity with profit motive fall under the category of "public service" - An activity, however beneficial to the people, cannot be reasonably regarded as public service if it is of a type which may be carried on by private individuals and is carried on by government with a distinct profit motive - Mere ownership by the State does not ipso facto make a commercial undertaking a public service. (Para 10)
Facts of the case:
The appellant was the lessee of the right to collect tolls from a public ferry. The state government took over the bus route and directed the lessee to allow state-owned buses to use the ferry without collecting tolls. The lessee sought a rebate on the licence fee or payment of tolls, contending that the state-owned buses were not exempt. The government relied on a notification exempting vehicles employed on "public service" to justify the exemption.
Findings of Court:
The state-owned buses were run as a profit-making commercial activity. Such an activity does not constitute "public service" regardless of its benefit to the public or state ownership. Consequently, the buses were not exempt from tolls under the relevant notification, and the question of abatement of rent did not arise.
Issues: Whether state-owned buses plying for commercial purposes constitute "public service" under the Northern India Ferries Act, 1878, thereby exempting them from the payment of ferry tolls.
Ratio Decidendi: A commercial undertaking run by the State with a profit motive, which could also be carried on by private individuals, does not qualify as "public service" simply because it is owned by the State or is beneficial to the public.
Result: Appeal allowed.
Legal Category Hierarchy
Table of Contents
2. Whether state-owned commercial buses qualify as public service for toll exemption — Entitlement to rent abatement upon government-declared exemption of vehicles. (Para 1 , 4 , 5 )
3. Commercial activities run by government for profit do not constitute public service, regardless of public benefit, and thus cannot claim exemptions reserved for public service. (Para 9 , 10 )
4. A government-run commercial undertaking operated with a profit motive is not a public service, even if it provides a public utility. (Para 10 )
5. Appeal allowed — Mandamus issued directing the government to pay full tolls for state-owned buses for the period of the licence. (Para 12 )
6. What constitutes public service for the purpose of toll exemptions under the Northern India Ferries Act?
Public service includes activities undertaken in the exercise of sovereign power or governmental functions. However, a pure business undertaking run by the government, even if beneficial to the public, is not public service if it is of a type that can be carried on by private individuals and is run with a profit motive. (Para 10 )
7. Are state-owned commercial bus services considered public service for toll exemption?
No. Plying stage carriage buses is a commercial activity. Since the Roadways department runs a profit-making activity, its vehicles are not regarded as crossing on public service and are not entitled to exemption. (Para 10 )
8. When is a lessee entitled to abatement of rent under Section 15 of the Northern India Ferries Act?
A lessee is entitled to abatement of rent if the State Government makes a declaration exempting certain persons, animals, or vehicles from payment of tolls after the date of the lease. (Para 6 , 7 )
Judgment
MUDHOLKAR, J. : This is an appeal by certificate from the judgment of the High Court of Allahabad reversing the decision of a single Judge of that Court directing the issue of a writ of Mandamus against the respondents under Art. 226 of the Constitution. The points which arise for consideration in the appeal are whether the appellant who was at the relevant time the lessee of a right to collect tolls from persons, vehicles etc., crossing the river by public ferry at Pipraghat, District Ballia was bound to allow State carriage buses belonging to the Government of Uttar Pradesh to cross the river by the ferry without collecting any toll or was entitled to claim abatement of rent from the Government under the proviso to S. 15 of the Northern India Ferries Act, 1878 (hereafter referred to as the Act).
2. In order to appreciate the points a few facts need to be stated. There is a ferry at the village Pipraghat, district Ballia for crossing the river and the right to collect tolls in respect of that ferry is put to public auction annually. The highest bidder at the auction gets the right. The rent or licence fee is collected from him in monthly instalments during the year with respect to which the right was purchased by the licensee. The appellant was the highest bidder for the year 1954 and the licence fee payable by him was Rs. 31,751/-. The practice right upto 1954 was to allow the lessee to collect a toll of Rs. 5-1-0 from every stage carriage bus. Till March 9 of that year only privately owned stage carriage buses used to ply on the route in which the ferry crossing was comprised. Thereafter the route has been taken over by the Roadways Department of the State of Uttar Pradesh. From March 9 to March 16, the appellant realised tolls at Rs. 5-1-0 from the State-owned stage carriage buses when he was informed by a letter by the first respondent that he should allow the Roadways buses to use the ferry for crossing and recrossing the river on credit till March 31, 1954 and should thereafter submit his bill with respect to the tolls to the Roadways Department of the Government. He was also informed that further orders will be issued on April 1, 1954. The appellant accordingly, allowed the Roadways buses to use the ferry for crossing and recrossing the river and submitted his bill to the Roadways Department on March 31, 1954. That bill was, however, not paid.
3. On April 1, 1954 he received two communications from respondent No. 1 by one of which he was informed that no toll is leviable on the Roadways vehicles and by another he was asked to pay the monthly instalment of the licence fee without making any deduction therefor consequent upon the exemption of the Roadways buses from tolls.
4. The appellant had moved the High Court of Allahabad under Art. 226 of the Constitution for the issue of a writ directing the respondent "to refrain from precluding the petitioner from charging tolls from the Roadways buses" to issue a writ commanding the respondents to allow abatement to the appellant and to issue an interim direction to the respondents asking them to refrain from realising the unpaid monthly instalments of the licence fees till the decision was given. Before the petition was decided the appellant s licence had run out and, therefore, at the hearing the appellant confined himself to one relief, that is, commanding the respondents to allow rebate on account of the exemption of the Roadways buses from liability to pay the tolls. The petition was, however, not amended, we may incidentally mention that apart from the reliefs above referred to, the appellant claimed two more reliefs, one of which was to pass any such order and further order as may be deemed fit and proper.
5. The learned single Judge of the High Court who decided the petition in the first instance came to the conclusion that the appellant was entitled to abatement of rent under the third paragraph of S. 15 of the Act and directed the issue of a writ to the respondent
