Kerala High Court Quashes Transport Scheme Modification Citing Procedural Lapses and Lack of Reasoning

Kochi: The Kerala High Court has set aside a scheme notification issued by the State Government that sought to modify existing road transport service schemes, effectively restricting the route length for private stage carriage operators. Justice D. K.Singh , presiding over a batch of writ petitions, found that the notification dated 03/04.05.2023 failed to comply with mandatory procedural requirements under Section 102 of the Motor Vehicles Act, 1988 (MV Act) and Rule 246 of the Kerala Motor Vehicles Rules, 1989 (KMV Rules).

The petitions were filed by private operators holding 'saved permits' – permits granted prior to 14.07.2009 under a previous scheme. These operators challenged the impugned notification which proposed to restrict their route length to a maximum of 140 Kms, essentially confining them to 'ordinary service' definition under Rule 2(oa) of the KMV Rules. This restriction contradicted earlier court judgments that allowed 'saved permits' to operate without this specific distance limit.

Case Background:

The dispute stems from a history of schemes framed by the State Government under the MV Act to regulate stage carriage services, often creating partial or complete monopolies for the Kerala State Transport Undertaking (KSRTC). A 2009 scheme partially included private operators. A proposed modification in 2016 aimed to save existing permits as of 14.07.2009, allowing them to operate ordinary/limited stop services without the 140 Km restriction. However, the approved modification in 2017 erroneously applied the 140 Km limit to these saved permits.

The High Court, in KSRTC v. Saju Varkey (2018), had quashed the restrictive clause in the 2017 modification, holding that the 140 Km limit in Rule 2(oa) did not apply to 'saved permits'. This judgment entitled petitioners and others to operate their services without the distance cap.

Following Saju Varkey , KSRTC objected to permit renewals for routes exceeding 140 Kms, relying on a government order. While challenges to this order were pending, the State Government initiated a fresh modification process under Section 102 MV Act, publishing a draft scheme on 14.09.2020 which again proposed the 140 Km restriction for saved permits operating as ordinary service. This draft scheme led to the final notification challenged in the current batch of petitions.

Arguments Presented:

The petitioners argued that the final notification was invalid because: 1. There was no evidence that the objections raised against the draft scheme were actually considered or disposed of with reasons, beyond a mere statement that objectors were heard. 2. The draft notification (published in Form E under Rule 246) was fundamentally defective as it failed to specify the mandatory date, time, and place for hearing objections, preventing potential objectors from participating. 3. The significant delay (over two and a half years) between the draft (September 2020) and final (May 2023) notifications suggested a lack of genuine public interest driving the modification.

Advocates for KSRTC and the State Government contended that the final scheme was published strictly according to the law (in Form F as required by Rule 246). They claimed objections were invited, objectors heard, and consideration given, asserting that detailed reasons for rejecting objections were not mandatory as long as the final notification indicated consideration. They also argued that unlike Section 100, Section 102 has no time limit for publishing the final notification.

Court's Analysis and Findings:

Justice Singh referred to Chapter VI of the MV Act, particularly Sections 99 (scheme formulation), 100 (procedure for scheme approval), and 102 (cancellation/modification of scheme), and Rule 246 of the KMV Rules governing scheme modifications. The court noted that modification under Section 102, like scheme formulation, requires the State Government to act in public interest and provide an opportunity of hearing to affected parties.

Crucially, Section 102(2) and Rule 246 mandate the publication of the proposed modification scheme in Form E, which must include the date, time, and place where representations will be heard. The court found that the draft notification published on 14.09.2020 lacked this essential information, rendering it defective and contrary to the mandatory requirement of Rule 246 and Form E. This procedural non-compliance alone was sufficient to invalidate the final notification based on a defective proposal.

Furthermore, the court examined the requirement for considering objections. Citing Supreme Court precedents, including H.C Narayanappa v. State of Mysore and B. A Linga Reddy v. Karnataka State Transport Authority , the judgment reiterated that modifying a scheme is a quasi-judicial function. While detailed reasons might not be required for every single contention, the authority is duty-bound to consider objections judicially and the final order/notification must reflect that due consideration was given, often requiring some reasoned explanation for rejection.

Justice Singh observed: "From the impugned scheme, it is evident that there are no reasons even in brief coming forth for rejecting the objections filed by the petitioners to the proposed scheme dated 14.09.2020 except for the saying that the objections were considered, and objectors were heard as mentioned in the final impugned notification..." The court found that neither the final notification nor the counter-affidavit from the State Government provided any material to show how the objections were considered or the reasons for their rejection.

The court dismissed the argument that publication in Form F alone satisfied the legal requirements, emphasizing that the form itself cannot substitute the substantive requirement of judicial consideration of objections and providing reasons.

Regarding the delay, while noting that Section 102 doesn't prescribe a time limit like Section 100, the court remarked that a delay of over two years and eight months between proposal and final notification, especially when the final scheme was verbatim the proposed scheme, raised questions about the urgency and public interest asserted by the State.

The Verdict:

Based on the dual findings of the defective draft notification (non-compliance with Rule 246/Form E) and the failure to demonstrate reasoned consideration of objections (violating Section 102 and established principles of natural justice), the court allowed the batch of writ petitions.

The impugned notification dated 03/04.05.2023 was quashed. This decision implies that the legal position regarding 'saved permits' reverts to that established by the Saju Varkey judgment, allowing private operators holding such permits as of 14.07.2009 to operate their services without the restriction of a maximum route length of 140 Kms, until a valid modification scheme is properly formulated and approved in accordance with the law. The court did not impose costs.