1. Co-operative society challenges rejection of stage carriage permit renewals and grant of permits to the State under Chapter IV of the Motor Vehicles Act, 1939. (Para 1 , 6 )
Back
Next 
1960 Supreme(SC) 61
SUPREME COURT OF INDIA
B.P.Sinha, C.J.I., A.K.Sarkar, J.C.Shah, K.N.Wanchoo, Syed Jafar Imam, JJ.
Parbhani Transport Co Operative Society Limited
Versus
Regional Transport Authority.Aurangabad
Case No. : 110 of 1959
Date of Decision : 3/7/60
Advocates Appeared: Anand Shankar : Dhebar R.H. : Iyengar B.R.L. : Krishnan R.Gopal : Sen B. : Sen T.M. : Setalvad M.C.
Advocates:
B.R.L.Iyengar, B.SEN, M.C.SETALVAD, R.GOPAL KRISHNAN, R.H.Dhebar, Shankar Anand Zinjarde, T.M.SEN
B.R.L.Iyengar, B.SEN, M.C.SETALVAD, R.GOPAL KRISHNAN, R.H.Dhebar, Shankar Anand Zinjarde, T.M.SEN
The State government can obtain transport permits either through the general competitive process under Chapter IV of the Motor Vehicles Act or through the special scheme-based process under Chapter IVA. State competition with private citizens for such permits is constitutionally valid under Article 19(6).
Headnote:(A) Motor Vehicles Act, 1939 - Sections 42, 47, 68A, 68C, 68F(1) - Constitution of India - Articles 14, 19(1)(g), 19(6) - Grant of permits for stage carriages - Whether State government is restricted to obtaining permits only under Chapter IVA or can also apply under Chapter IV - State government can apply for permits under Chapter IV as any other owner for commercial enterprises, as Chapter IV and Chapter IVA provide independent sets of provisions - The special advantage provided under Chapter IVA does not exclude the general power to apply under Chapter IV (Paras 8, 9, 10).
(B) Constitution of India - Article 19(6) - State competition with private citizens - State may carry on any business either as a monopoly or in competition with any citizen; such competition does not infringe fundamental rights under Article 19(1)(g) (Para 14).
(C) Motor Vehicles Act, 1939 - Section 47(1) - Preference to co-operative societies - Proviso to Section 47(1) provides preference to co-operative societies over individual owners; since the State is not an individual owner, such preference cannot be claimed against the State (Para 15).
(D) Constitution of India - Article 14 - Equality before law - Decision of a quasi-judicial body in granting permits does not offend Article 14 even if it is perceived as incorrect; appropriate legal remedies are available (Para 17).
Facts of the case:
A co-operative society challenged the rejection of its permit renewals and the grant of permits to the State government for the same routes. The society contended that the State could only operate buses under a specific scheme under Chapter IVA of the Motor Vehicles Act and not by competing under Chapter IV. It further alleged violation of Article 14 and failure to grant preference to co-operative societies over the State.
Findings of Court:
The State government is entitled to apply for permits under Chapter IV of the Act for commercial purposes. The existence of a special procedure under Chapter IVA does not preclude the State from using the general procedure under Chapter IV. Competition by the State with private citizens is permissible under Article 19(6) and does not violate Article 14.
Issues: Whether the State government is restricted to obtaining permits only under Chapter IVA of the Motor Vehicles Act and whether the State's competition with private citizens for permits violates Articles 14 and 19(1)(g) of the Constitution.
Ratio Decidendi: The court held that the Act provides two independent mechanisms for the State to operate transport services: one under Chapter IV (competitive) and one under Chapter IVA (scheme-based). The statutory language of Section 42(3)(a) implies the State must obtain permits for commercial enterprises. Furthermore, Article 19(6) explicitly allows the State to engage in trade or business in competition with citizens.
Result: Petition dismissed with costs.
Legal Category Hierarchy
Table of Contents
2. State is restricted to obtaining permits under Chapter IVA and cannot compete with private citizens under Chapter IV, violating Articles 14 and 19(1)(g) of the Constitution. (Para 7 , 12 , 13 , 14 , 15 , 17 , 18 )
3. Chapter IV and Chapter IVA provide independent mechanisms for government permits; the former requires competition, while the latter grants permits as a right under approved schemes. (Para 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 )
4. The State may carry on commercial business in competition with citizens under general permit provisions, as such competition does not infringe fundamental rights under Article 19(6). (Para 9 , 14 , 16 , 18 )
5. Petition dismissed with costs. (Para 19 )
6. Can the State apply for transport permits under general provisions if special provisions for State undertakings exist?
Yes. The court held that Chapter IV and Chapter IVA of the Motor Vehicles Act are independent. While Chapter IVA provides a special advantage by granting permits as a right under approved schemes, the State remains entitled to apply under Chapter IV and compete with private applicants. (Para 8 , 9 , 10 )
7. Does State competition with private citizens for business permits violate Article 19(1)(g) or Article 14?
No. Article 19(6) explicitly allows the State to carry on any trade, business, industry, or service, whether as a monopoly or in competition with citizens, and such competition does not infringe the fundamental rights of citizens. (Para 14 , 18 )
8. Does the preference given to co-operative societies over individual owners in permit grants extend to the State?
No. The court observed that the proviso granting preference to co-operative societies applies specifically to individual owners. It does not prohibit the government from applying for permits, nor does it grant the society preference over the government. (Para 15 )
9. Is a quasi-judicial decision by a permit authority to grant a permit to the State a violation of Article 14?
No. A mistake in a quasi-judicial decision does not necessarily offend Article 14. The aggrieved party should seek appropriate legal remedies for the decision rather than claiming a breach of fundamental rights. (Para 17 )
A.K. SARKAR, J.
(1) THE petitioner is a co-operative society duly registered and it carries on the business of plying motor buses as stage carriages on the public highways in the State of Bombay. Its case in this petition is that it has been deprived of its right to carry on this business and has also been subjected to discriminatory treatment in the matter of the grant of permits to run its buses. It complains of the infringement of its fundamental rights under arts. 19(1)(g) and 14 of the Constitution.
(2) THE questions raised in this matter turn on some of the provisions of the Motor Vehicles Act, 1939, as amended by Act 100 of 1956. These provisions have to be examined before proceeding to discuss the questions that arise. We are concerned only with Ch. IV and IVA of the Act. Ch. IV comprises ss. 42 to 68 and Ch. IVA, which was in its entirety introduced by the amending Act, consists of ss. 68A to 68-I.
(3) TAKING Ch. IV first, we find that s. 42(1) provides that no owner of a transport vehicle shall use or permit the use of the vehicle in any public place save in accordance with the conditions of a permit granted under the Act. A ` transport vehicle ` is defined in s. 2(33) as a public service vehicle or a goods vehicle. Clause (a) of sub-sec. (3) of s. 42 as it originallystood provided that sub-sec. (1) of that section would not apply to any transport vehicle owned by or on behalf of the central government or a State government other than a vehicle used in connection with the business of a railway. So under it the government could ply stage carriages on. the public highways without having to obtain permits in respect of them. The amending Act of 1956 substituted a, new clause (a) in s. 42(3) for the old clause. The new cl. (a) provides that sub-sec. (1) shall not apply to any transport vehicle owned by the central government or a State government and used for government purposes unconnected with any commercial enterprise. Since the amendment, therefore, the government cannot run stage carriages on the public highways without a permit, just as a private owner of stage carriages cannot do, because such use of the vehicles will not be for a purpose unconnected with a commercial enterprise. Section 44 authorises a State government to constitute a State Transport Authority and Regional Transport Authorities for different areas in that State to carry out the duties specified. Section 45 provides that every application for a permit shall be made to the Regional Transport Authority of the region in which it is proposed to use the vehicle. Section 47 specifies the matters to which a Regional Transport Authority shall have regard in considering an application for the grant of a permit.
(4) WE now come to Ch. IVA. Section 68A(b) defines a ` State transport undertaking ` for the purpose of the Ch. to mean an undertaking providing road transport service, carried on, among others, by a State government. Section 68B provides that the provisions of Ch. IVA shall have effect notwithstanding anything to the contrary contained in Ch. IV. Section 68C is in these terms: 68C. Where any State transport undertaking is of opinion that for the purpose of providing an efficient, adequate, economical and properly coordinated road transport service, it is necessary in the public interest that road transport services in general or any particular class of such service, in relation to any area or route or portion thereof should be run and operated by the State transport undertaking, whether to the exclusion, complete or partial, of other persons or otherwise, the State transport undertaking may prepare a scheme giving particulars of the nature of the services proposed to be rendered, the area or route proposed to be covered and such other particulars respecting thereto as may be prescribed, and shall cause every such scheme to be published in the Official Gazette and also in such other manner as the State government May direc
