T. N. Raghunatha Reddy Vs. Mysore
State Transport Authority  INSC 40 (24 February 1970)
24/02/1970 SIKRI, S.M.
BHARGAVA, VISHISHTHA VAIDYIALINGAM, C.A. CITATION:
1971 AIR 1662 1970 SCR (3) 780 1970 SCC (1) 541
Motor Vehicles Act 4 of 1939-'Kolar Scheme'
approved and published by Mysore State Government under s. 68-D of
Act-'Existing permit holder' within meaning of cl. (d) of scheme-Who is
Agreement between Mysore and Andhra Governments for counter-signing each other
permits for inter-state routes-Such agreement whether overrides Chapter IV-A of
In 1959 the States of Mysore and Andhra
Pradesh entered into a reciprocal arrangement agreeing thereby that certain
permits issued by the Transport Authorities of one State should be
counter-signed by those of the other. Under s. 43(1) of the Motor Vehicles Act,
1939-the Government of Mysore issued directions to the State Transport
Authority to give effect to the above arrangement. On April 25, 1968 the
Regional Transport Authority Cuddapah, Andhra Pradesh issued a permit to the
appellant for the Cuddapah-Bangalore inter- State route under s. 63 of the Act,
which was to be valid up to May 13, 1971. The appellant then applied to the
State Transport Authority in Mysore for counter-signature of his permit. By
then the Government of Mysore had by its order dated 25-1-1968 approved under
s. 68-D of the Motor Vehicles Act, a scheme called the 'Kolar scheme'. That
scheme provided for exclusive operation by the Mysore State Transport Undertaking
of stage-carriages on the notified routes. Under the scheme existing permit
holders' could continue to operate inter-State routes except that their permits
would be ineffective for the overlapping portions of the notified routes. On
March 1, 1968 the Mysore State Transport Undertaking applied under s. 68F(1) to
operate buses on the notified routes. In December 1968 the Regional Transport
Authority resolved to give effect to the scheme from 1-1-1969. Meanwhile the
appellant's application for counter-signature came up before the Mysore State
Transport Authority on July 6, 1968. By that time, however, writ petitions had
been filed in the High Court, challenging the 'Kolar scheme' and the Court had
made interim orders staying the operation of the, scheme. In that situation the
State Transport Authority, Mysore granted to the appellant counter-signature on
his permit, expressly subject to the decision of the High Court as to the
validity of the scheme.
On October 7, 1968 the High Court dismissed
the said writ petitions and upheld the validity of the scheme. Thereupon the
State Transport Authority issued a notice to the appellant to surrender the
counter-signature slip and stop running the buses. The appellant challenged
this order in a writ petition under Art. 226 of the Constitution. The petition
being dismissed he appealed by special leave to this Court. The appellant
contended inter alia that (i) the counter-signature on the appellant's permit
could not be cancelled as he was an 'existing permit holder' under cl.
(d) of the scheme and for this purpose the
crucial date was 1-1-1969 when the order under. 68F(2) came into effect; (ii)
Inter-State agreement overrides the provisions of Chapter IV-A of the Act
HELD : (i) Assuming, without deciding, that
the date of publication is not the appropriate date, the date on which the
transport Undertaking 781 applies under s. 68F(1) for a permit must be the date
with reference to which the expression "existing permit holder" must
be interpreted. The application by the State Transport Undertaking in the
present cases was made on March 1, 1968.
If this was the crucial date, the appellant
was not an "existing permit holder" because he did not obtain his
countersignature till July 1968. [785 C-D] Abdul Gafoor v. State Mysore, 
1 S.C.R. 909, applied.
Sri Satyanarayana Transports (P) Ltd. Guntur
v. Andhra Pradesh State Road Transport Corporation, C.A. No. 347 of 1961 dt.
(ii) Even if the crucial date be taken as
January 1, 1969 as contended by the appellant, he must still fail on the ground
that he was not a permit holder at all. His counter-signature must be deemed to
have lapsed when the High Court on October 7, 1968 dismissed the writ petitions
in which the 'Kolar scheme' bad been stayed. The order of the Regional
Transport Authority granting the counter- signature "subject to the
decision of the High Court of Mysore about the validity of the Nationalisation
Scheme of the Kilar Pocket" in the context of the case meant that if the
writs failed the counter-signature would automatically lapse. [786 A-B] The
Smarth Transport Co. v. The Regional Transport Authority,  1, S.C.R. 631
at 639, referred to.
(iii) An inter-State agreement cannot
over-ride the provisions of Chapter IV-A. The inter-State agreement is not law
and to hold that an inter-State agreement over-rides Chapter IV-A would be to
completely disregard the provisions of s. 68-B of the Act. Articles 162 and 298
of the Constitution had no relevance in this connection. Assuming that a State
hits power to enter into agreement with another State in exercise of its
executive powers under Art. 162 and under Art. 298 it can carry on trade or
business, the facts did not throw any bight on the question for decision. [786
CIVILAPPELLATE JURISDICTION : Civil Appeal
No. 1564 of 1969.
Appeal by special leave from the judgment and
order dated April 15, 1969 of the Mysore High Court in Writ Petition No. 1112
P.Ram Reddy, P. Parameswara Rao and A. V. V.
Nair, for the appellant.
Niren De, Attorney-General, R. Gopalakrishnan
and S. P. Nayar, for respondent No. 1.
Shyamala Pappu and Vineet Kumar, for
respondent No. 2.
The Judgment of the Court was delivered by
Sikri, J. This appeal by special leave is directed against the judgment of the High
Court of Mysore dismissing Writ Petition No. 1112 of 1969 filed by T. N.
Raghumatha Reddy, appellant before us, against the Mysore State Transport
Authority. The 782 appellant had prayed to the Court to quash the
order/endorsement of the respondent, dated March 5110, 1969.
In order to appreciate the points raised
before the High Court and before us it is, necessary to give a few facts. In
1959 the States of Andhra Pradesh and Mysore appear to have entered into a
reciprocal arrangement regarding inter-State road transport. In exercise of the
powers conferred by-sub-s.(1) of S. 43 of the Motor Vehicles Act, 1939 (Central
Act IV of 1939) the Government of Mysore issued a direction to the State
Transport Authority to take necessary action to give effect to the above
On October 8, 1964, the State of Mysore
published under cl.(d) s. 68-C of the Motor Vehicles Act, 1939hereinafter
referred to as the Act-what is called the "Kolar Scheme".
Clause (d) of the scheme reads as follows:
"(d) Whether the services are The state
Transport Under- to be operated by the State taking will operate service State
Transport to the excl- on all the routs to the cousin, complete or partial of complete
exclision of other persons or otherwise persons except that:- (a) that existing
permit holders on the inter-State routes may continue to operate such
inter-State routes, subject to the condition that their permit shall be
rendered ineffective for the over-lapping portions of the notified
It is the case of the appellant that in March
1967 on a proposal made by the State of Mysore, the States of Andhra Pradesh,
and Mysore entered into an agreement for counter- signing a second inter-State
permit on the route Cuddapa to Bangalore, and on April 4, 1967, the Transport
Commissioner of Andhra Pradesh showed willingness to countersign a second
permit. On April 13, 1967 the Transport Commissioner of Mysore State expressed
willingness to countersign the second permit. It is further the case of the
appellant that although the State of Andhra Pradesh carried out the agreement
and countersigned the second permit on the Bangalore-Cuddapa route in favour of
a Mysore operator the Mysore State refused to carry out this agreement. On
January 25, 1968, the Kolar Scheme, as approved, was published in the Gazette
under s.68-D(3) of the Act. On March 1, 1968, the Mysore undertaking applied
under s.68F(1) to operate buses from January 1, 1968, or a later date. On April
25, 1968, the Regional Transport Authority, Cuddapah issued a permit to the
-appellant for Cuddapah-Bangalore route, an inter State route, under S. 63 of
the Act. This permit is valid uptil May 13, 1971. On May 16, 1968, the
appellant applied to the State Transport Authority, Mysore, for
counter-signature under s.63 of 783 the Act, and on May 20, 1968, the Transport
Commissioner, Andhra Pradesh, requested the Transport Commissioner, Mysore, to
countersign the appellant's permit under the agreement.
In the meantime the Kolar Scheme had been
challenged in the High Court and the High Court stayed the Kolar Scheme pending
the decision of the writs.
The application of the appellant, dated May
16, 1968, for the grant of counter-signature of the permit came up for
consideration before the Mysore State Transport Authority on July 6, 1968.- The
learned counsel for the appellant urged before it that "counter-signature
may be given with any timings found suitable by the Authority for their service
which is an express service and does not stop in all stations as the shuttle services
of the (in the case of) objectors." He also urged that
"counter-signature may be considered and granted as there is a stay order
of the High Court of Mysore in W.P. No. 1390 of 1968 against the operation of
the Kolar Nationalisation Scheme and that his permit was granted before the
Scheme was approved and that the permit is issued under reciprocal
agreement." The grant of counter-signature was opposed by a number of
The Law Officer of the Mysore State
Undertaking argued that though there was ,a stay order against the Kolar Scheme
and its implementation it did not authorise any Transport Authority to grant
any fresh permits for counter-signature.
The Transport Authority observed:
"After considering the elaborate
arguments of the counsels for the petitioner and objectors and taking all
aspects of the matter and facts as disclosed from the records and the large
number of existing services on the route or sectors of the route, the S.T.A. resolved
to grant the counter-signature subject to the decision of the High Court of
Mysore about the validity of the Nationalisation Scheme of Kolar Pocket and
with the following modification to the timings already granted by the R.T.A.
Cuddapah." In pursuance of this resolution actual counter- signature was granted
on July 6, 1968. On October 7, 1968, the High Court dismissed the writs
relating to the Kolar Scheme and the Regional Transport Authority its meeting
on December 30, 1968, passed a series of orders which it deemed fit consequent
on the implementation of the Kolar Scheme.
On March 10, 1969, the State Transport
Authority, Mysore, issued a notice to the appellant to surrender the counter-
signature slip and stop running the buses. On March 15, 1969, the appellant
filed writ petition No. 1112 of 1969 challenging this order.
784 Before the High Court two points were
raised on behalf of the appellant; (1) That the State Transport Authority
should have heard the appellant before calling upon him to surrender the
counter-signature and the Secretary of the State Transport Authority had no
power to issue the impugned endorsement; (2) As the permit had been granted to
the petitioner in pursuance of an inter-State agreement, the State Transport
Authority in Mysore had rightly granted the counter-signature and the counter-signature
could not be revoked later.
The first point is not raised before us.
Regarding the second point the High Court held that "a scheme under
Chapter IV-A (of the Act)will override any agreement including an inter-State
agreement. Unless such scheme itself exempts permits granted in pursuance of
inter-State agreements such permits will also be subject to the scheme."
The High Court further held that "as the Kolar Scheme does not exempt
permits granted in pursuance of inter-State agreements, the petitioner cannot
claim countersignature of his permit when the operation, of his stage carriage
in this State is inconsistent with the scheme." Before us the learned
counsel for the appellant, Mr.
Ram Reddy, has raised four points : (1) As
the appellant is an existing permit holder within clause (d) of the Scheme, the
counter-signature cannot be revoked; (2) Assuming that the appellant does not
come under clause (d); the counter- signature should not be revoked. it could
only be modified with the condition that the appellant should not pick up or
drop passengers on the overlapping portion of the route; (3) that inter-State
agreements override the provisions of Chapter IV-A of the Act, and (4) that the
scheme imposing total exclusion of private carriers offends the provisions of
Art. 301 of the Constitution.
Regarding the first point, the learned
counsel urges that the expression "existing permit holder" in clause
(d) of the Scheme has to be interpreted as if the scheme is read on January 1,
1969 when orders under S. 68F(2) of the Act came into effect. He refers to the
following passage in the order of the Regional Transport Authority, dated
December 30, 1968 :
"Further we have resolved to give effect
to the Approved Scheme of Kolar Scheme with effect from 1-1-1969 in accordance
with Section 68F(2) and resolved to take the following action under Section
68F(2) of the M.V. Act 1939 (as appended hereto)." It seems to us that
this is not a correct way of interpreting the Scheme. The scheme as approved,
was published in the Government Gazette under s. 68D(3) on January 25, 1968,
and 785 on March 1, 1968, the Mysore undertaking applied under s. 68 F(1) to
operate buses from January 1968 or a later date. As held by this Court in Abdul
Gafoor v. State of Mysore(') "when a scheme prepared and published under
s. 68-C has been approved and an application has been made in pursuance of the
scheme and in the proper manner as specified in Ch. IV nothing more remains to
be, decided by the Regional Transport Authority and it has no option to refuse
the grant of the permit" and "when taking action under s. 68-F(1) the
Regional Transport Authority does not exercise any quasi- judicial function and
acts wholly in a ministerial capacity." It seems to us that even if the date
of publication may not be the appropriate date-we do not decide that it is not
an appropriate date-atleast the date on which the transport undertaking applies
under s. 68F(1) for a permit must be the date with reference to which the
expression "existing permit holder" must be interpreted. If this is
the crucial date, then it is quite clear that the appellant was not an existing
permit holder because he did not obtain his countersignature till July 1968.
The observations of Raghubar Dayal, J. in Sri
Satyanarayana Transports (P) Ltd. Guntur v. Andhra Pradesh State Road Transport
Corporations(') do not assist the appellant. In that case the Court was dealing
with the objection that it was the duty of the Road Transport Corporation to
furnish the date of implementation of each scheme as a part of the proposal,
the date being a material particular. In this connection the Court observed
"The question whether the State Government can fix a date or not is not
for determination in this appeal and we do not express any opinion on that
point. Suffice it to say that the Regional Transport Authority has the power to
fix a date after the scheme has been approved by the State Government, as it is
that authority which has, under s. 68F, to issue a permit to the State
Transport Undertaking for plying motor vehicles and to cancel existing permits.
The date up to which the existing permits are to continue and the date for the
State Transport Undertaking to commence plying motor vehicles should be such
that there be a continuity of transport services on the notified route and that
there be no dislocation of transport arrangements." The Court was not
considering the crucial date for the purpose of interpreting the expression
"existing permit holder in a scheme.
(1)  1 S.C.R. 909.
(2) Civil Appeal No. 347 of 1961 judgment on
October 3, 1961.
786 Apart from that the appellant must fail
on the ground that he was not a permit holder at all even if the crucial date
be January 1, 1969. His counter-signature must be deemed to have lapsed when
the High Court dismissed the writ petitions in which the Kolar scheme had been
stayed on October 7, 1968. In our opinion the order of the Regional Transport
Authority granting the counter-signature "subject to the decision of the
High Court of Mysore about the validity of the Nationalisation Scheme of Kolar
Pocket," in the context which we have reproduced -above, means that if the
writs failed the, counter-signature would automatically lapse. It will be
recalled that this Court held in The Samrath Transport Co. v. The Regional
Transport Authority(-) that the Regional Transport Authority is within its
rights not to entertain an application if the Scheme had been approved and
published. This Court observed :
"The Regional Transport Authority is
authorized for the purpose of giving effect to an approved scheme to refuse to
entertain an application for renewal of any other permit.
This power does not depend upon the
presentation of an application by the State Transport Undertaking for a permit.
This power is exercisable when it is brought to the notice of the Authority
that there is an approved scheme and, to give effect to it, the application for
renewal cannot be entertained." The Regional Transport Authority must have
been aware of this and it must be because of the stay order that the
counter-signature was granted to the appellant by it.
In view of our decision that the appellant's
counter- signature lapsed when the writ petitions were dismissed, the second
point does not arise.
Regarding the third point, we were unable to
appreciate how an inter-State agreement overrides the provisions of Chapter
IV-A. The inter-State agreement is not law and to hold that an inter-State
agreement overrides Chapter IV-A would be to completely disregard the
provisions of s. 68 B of the Act which provides that "the provisions of
this Chapter and the rules and orders made there under shall have effect
notwithstanding anything inconsistent therewith contained in Chapter IV of this
Act or in any other law for the time being in force or in any instrument having
effect by virtue of any such law." In this connection reference was made
to Art. 162 and Art. 298 of the Constitution. But we were unable to appreciate
what relevance these articles (1)  1 S.C.R. 631 at 639.
787 have to the point at issue. Assuming that
a State has power to enter into agreement with another State in exercise of its
executive powers under Art. 162, and under Art. 298 it can carry on trade or
business, we are unable to see what light these facts throw on the question
We stopped the learned counsel from
developing the fourth point because this point was not taken up in the High
In the result the appeal fails and is
dismissed. In the circumstances there will be no order as to costs in this
G.C. Appeal dismissed..