JUDGMENT

BHAGWATI, J.:—This appeal by special leave raises a short but interesting question of law relating to the interpretation of certain provisions of the Motor Vehicles Act 1939 (hereinafter referred to as the Act). The question is whether Section 47, sub-section (3) of the Act is attracted when an application is made by the holder of a permit for extension of the route for which the permit has been granted to him. In order to appreciate the question, it is necessary to state a few facts giving rise to the appeal.

2. The appellants are a partnership firm and at all material times they held a stage carriage permit granted to them by the Regional Transport Authority for the route Dabra-Karera via Lodi Mata extended up to Gwalior. It appears that on 22nd June, 1978 this route for which the permit was held by the appellants was modified at the request of the appellants and the portion of the route from Karera to Shivpuri was deleted. Thereafter by a Notification dated 4th Aug., 1978 certain routes were nationalised under Scheme No. 11-M which came into force with effect from 25th Sept., 1978 and under Cl. 7 (b) of this Scheme, the portion of the routes from Shivpuri to Satanwara was deleted and the permit of the appelllants remained operative only for the remaining portion of the route, namely, Satanware-Gwalior via Dabra. This state of affairs continued from 25th September 1978 until 18th December 1978 when the State Government by a Notification issued in exercise of the powers conferred under sub-section (2) of Section 68-F of the Act made the following modifications in the various schemes approved by it under Section 68-D sub-section (2), including Scheme No. 11-M :

"Notwithstanding anything contained in this Scheme, the private operators way be permitted to ply stage carriages for hire or reward subject to the following conditions, namely :

(1) Whereas the notified route connects a district Head-quarter, the portion thereof covered by the permit shall not exceed 20 kilometers and in other cases it shall not exceed 10 kilometers.

(2) The private operators shall ply the stage carriage over the distance, other than the distance of the notified route, which shall not be less than twice the distance of the notified route covered by the permit;

(3) The private operators shall not pick-up or set-down passengers on the notified route. Since this modification permitted plying of stage carriages by private operators even on portion of a nationalised route connecting a district headquarters and not more than 20 kms. in length, the appellants made an application to the Regional Transport Authority for restoring the portion of the route from Shivpuri to Satanwara on the ground that Shivpuri was a district headquarters and the portion of the route between Shivpuri and Satanwara was less than 20 kilometers. The Regional Transport Authority however took the view and in our opinion rightly, that the modification made by the State Government in Scheme No. 11-M under the Notification dated 18th December, 1978 did not have any retrospective effect and the appellants were therefore not entitled to automatic restoration of the portion of the route front Shivpuri to Satanwara and in this view, the Regional Transport Authority rejected the application of the appellants.

3. The appellants thereupon filed a regular application in the prescribed form for extension of the route specified in their permit from Satanwara to Shivpuri. The application was published in the Gazette on 11th April, 1980 and on coming to know about it, M. P. State Road Transport Corporaties which in the 2nd respondent before us filed its objections against the grant of, such extension. The application together with the objections was heard by the Regional Transport Authority and by an order dated 11th September 1980 the Regional Transport Authority rejected the application an two grounds. The first ground was that "the specific order of the State Government curtailing the Satanwara