JUDGMENT

MADON, J. :— This appeal has been filed by the Karnataka State Road Transport Corporation pursuant to a certificate granted by the Karnataka High Court against its Judgment and Order in Writ Appeal No. 949 of 1974 on the following two questions of law :-

"1. Whether the conditions of a permit can be varied so as to increase the number of trips and/or the number of vehicles allowed to be operated under that permit?

2. Whether the conditions of a permit held by an existing operator on an inter-State route exempted under the Kolar Pocket Scheme, can be varied so as to allow an increase in the number of vehicles operating under that permit?"

2. Before embarking on a discussion of the above questions, it will be convenient to relate the facts which have given rise to this appeal. On February 2, 1966, the first respondent, B. A. Jayaram, had been granted by the Regional Transport Authority, Bangalore, a stage carriage permit on the inter-State route Cuddapah in the State of Andhra Pradesh to Bangalore in the State of Karnataka for one trip only and a stage carriage permit No. 20/65-66 in respect of this route was issued to him on Mar. 16, 1966. This permit was countersigned by the State Transport Authority, Andhra Pradesh, on March 21, 1967. By Notification No. S. O. 111 dated Jan. 10, 1968, published in the Mysore Goverment Gazette dated Jan. 25, 1968, the Government of Mysore (now Karnataka) granted its approval under sub-sec. (2) of Section 68D of the Motor Vehicles Act, 1939 (IV of 1939) (hereinafter referred to as "the said Act") to a scheme set out in the Schedule to the said Notification. The said scheme covered 87 intra-State routes in the State of Karnataka set out in the Appendix to the said scheme. The effect of the said scheme was to nalionalize passenger transport service between Bangalore and various places in the Kolar District as also certain routes within the Kolar District. For this reason, the said scheme was popularly known as the Kolar Pocket Scheme. The class of service covered by the said scheme was "Stage Carriages, Mofussil". Clause 4 of the said scheme inter alia provided as follows :

"Whether the services are to be operated by the State Transport Undertaking to the exclusion, complete or partial, of other persons or otherwise :

The State Transport Undertaking will operate services on all the routes to the complete exclusion of other persons except that : (a) that existing permit holders on the inter-State routes may continue to operate such inter-State routes, subject to the conditions that their permit shall be rendered ineffective for the overlapping portions of the notified routes ..........."

The said scheme was implemented with effect from Jan. 1, 1969, by issuing a stage carriage permit to the Appellant under sub-section (1) of Sec. 68-F of the said Act.

3. The route between Bangalore and Royalpad in the State of Karnataka formed part of the route between Bangalore and Cuddapah and was covered by the said scheme. Accordingly, the first respondents permit for the said portion of the Bangalore-Cuddapah route became ineffective with the result that the vehicles operated by the first respondent could not either pick up or set down passengers on the Bangalore-Royalpad portion of the Bangalore-Cuddapah route though they could traverse the said portion. On Jan. 24, 1973, the first respondent made an application to the Karnataka State Road Transport Authority, the second respondent before us, for varying the conditions of the stage carriage permit granted to him by increasing the number of trips on the Bangalore-Cuddapah route from one trip per day to two trips per day. This was apparently done to eliminate an overnight halt at either of the two termini. The said application was rejected by the second respondent on April 22, 1974, as not being maintainable in view of the said scheme, without publishing it for inviting objections thereto. The first respondent thereupon filed a writ petition in the Karnataka