IMPORTANT POINTS
(1) Replacement of vehicle covered under transport permit – Right to replace vehicle under a permit is subject to permission of Authority – Right, as well as power to grant permission, are subject to condition that vehicle to be replaced is of same nature.
(2) Discretion is to be exercised wherever necessary in order to render exercise of power reasonable, fair and non-arbitrary. Discretion could be express or implied.
(3) Words and Phrases – When words in the Section allow multiple interpretations, Courts of Law have developed art and technique of finding correct meaning by looking at words in their context.

JUDGMENT :

PAMIDIGHANTAM SRI NARASIMHA, J.

1. Leave granted.

2. Section 83 of the Motor Vehicles Act, 1988 enables replacement of the vehicle covered under an existing transport permit by another vehicle of the same nature. Can a State Government make Rules, enabling the road transport authority to reject an application for replacement if the proposed vehicle is older than the one covered under the existing permit? This is the question we are tasked to answer. For the analysis and the reasoning that will follow, we have held that Rule 174(2)(c) of the Kerala Motor Vehicle Rules,1989 is valid and salutary and does not go beyond the scope of Section 83. We will first refer to the basic facts and the statutory provisions before analyses and determination.

Facts:

3.1 The Respondent was granted a stage carriage operator permit, P.St. 7/362/2012 dated 7.5.2017 in respect of vehicle number KL-41L-1017, a 38Seater, 2016 model by the Regional Transport Authority (hereinafter referred to as ‘Authority’) to conduct transport service on the route Pattimattam-Kakkanad in Kerala. On 19.5.2017, the Respondent applied to the Authority under Section 83 of the Motor Vehicles Act, 1988 (hereinafter referred to as ‘Act’) read with Rule 174 of the Kerala Motor Vehicle Rules, 1989 (hereinafter referred to as ‘Rules’) for grant of permission to replace the vehicle covered under his permit with another vehicle KL-17E-997, a 33-Seater, 2006 model. Alleging inaction on the part of the Authority, the Respondent filed a Writ Petition before the High Court of Kerala on 12.6.2017. The Learned Single Judge disposed of the writ petition on 13.06.2017 by merely directing the State and the Authority to consider the application on the ground of road-worthiness alone and without reference to the model of the vehicle.

3.2 Aggrieved by the Single Judge’s decision, the Authority preferred Writ Appeals No.1466/2017 before the Division Bench of the High Court of Kerala. Another Writ Appeal No.1470/2017 dealing with similar facts and issues was also taken up along with this case. The Division Bench by the impugned judgment dated 18.07.2017 dismissed the Writ Appeals holding that Rule 174(2) (c) of the Kerala Motor Vehicle Rules, 1989 goes beyond the provision of the Act. The Court concluded:-

“When in exercise of delegated authority, the subordinate authority i.e., the State, makes the rules, the rules have to be consistent with the Act. The Rules cannot override the Act or restrict the ambit of the Act. When the expression is vehicle of same nature, then if Rule l74(2)(c) restricts that an older vehicle cannot be brought in, it would be restricting the right conferred to a person by the provisions of the Act. Surely such an exercise by a delegate cannot be permitted. Rules have to be consistent with the Act and not restricting or in derogation thereto. Rules to that extent cannot thus be held to be consistent with the Act and would have to be held to be inoperative.”

3.3 With these findings the Division Bench dismissed the Appeals. It is this order that is challenged before this Court. We heard Sh. G Prakash, Advocate for the appellant State and the Authorities and Sh. Santosh Krishnan, Amicus Curiae.

Contentions:

4.1 Shri G. Prakash, learned counsel on behalf of the State and Authority submitted that the purpose of Rule 174(2)(c) is to ensure the safety of the travelling public and therefore the prohibition for replacement of a vehicle covered under a permit with an older model would be legal and justified as it will also ensure that the vehicle of the ‘same nature’ as prescribed under Section 83. Alternatively, it is also submitted that the requirement under Rule 174(2)(c) must be seen in the context of discretion to be exercised by the Authority while considering the application for replacement. It is his case that rejection is not automatic as it is within the power of t