T. Govindaraja Mudaliar Vs. The State of
Tamil Nadu & Ors  INSC 1 (9 January 1973)
CITATION: 1973 AIR 974 1973 SCR (3) 222 1973
SCC (1) 336
CITATOR INFO :
RF 1988 SC 501 (5) R 1988 SC1353 (18) R 1989
SC2105 (6) RF 1990 SC1277 (5)
Constitution of India, Article 19(1)(f)-Motor
Vehicle Act 1939, Madras Amendment Act 18 of 1939-Chapter IVA-Sections
47(1)(cc), 58(2)(a), Section 68(cc)-Rules of Business-Rule 23(A)-Scheme for
nationalisation of State Carriage whether violative of Article 19 (1) (f).
Constructive res judicata-The same scheme un successfully
challenged for violation of Art. 19 (1) (g) earlier.
The Scheme for nationalisation of the Stage
Carriage issued under Chapter IVA of the Act was challenged before Supreme
Court on the ground of the alleged violation of Art.
19.(1)(g) of the Constitution. The Supreme
Court by its judgement in A. Samjeevi Naidu etc. V. State of Madras and another
(1970 3 S.C.R. 505) turned down the challenge.
After the decision of the Supreme Court in
Rustom Cavasjee Cooper v. Union of India (1970 3 S.C.R. 530), the said scheme
was again challenged as violative of Art. 19 (1) (f) of the Constitution. The
Scheme was challenged inter alia, on the ground, that the permit issued under
the Act constitutes property, and the right to apply for permit as 'well as
renewal of a permit is a right to hold property and that the law authorising
the nationalisation of Stage Carriage was violative of Art. 19(1)(f) as the
restriction was not in the public interest. The writ petitions were dismissed
by the Madras High Court. In rejecting the appeals.
HELD : (i) That there is no merit in the
argument of the appellants that before the decision of the Supreme Court in
Rustom Cavasjee Cooper's Case, it was not possible for the appellants to
challenge the validity of Chapter IVA of the Act, as the earlier decisions were
based on an theory that Art. 19 (1) (f) could not be invoked when a case fell
within Art. 31 of the Constitution K. K. Kochuni and Others V.
State of Madras (1963) 3 S.C.R. 887), had
earlier laid down that clause 1 of Art. 31 could no longer be construed as to
exclude the operation of Art. 19 and a law regarding the deprivation of
property was, therefore, too late in the day to pursue that line of argument.
[229 D] (ii) By Virtue of the Scheme, the existing permits of any operator will
not be cancelled. None of the properties or assets of the appellants is going
to be acquired. It has already been held that no operator can claim renewal of
permit as a matter of right. The effect of nationalisation on the properties or
the business of the operator is not such as cannot be regarded to a reasonable
restriction in the interest of general public within the meaning of Art.
19(5). The tests regarding the validity of
Act falling under Clause 5 or Clause 6 of Article 19 are same, Akadshi Padhan
v. State of Orissa (1963) Supp. 2 S.C.R.. 691) followed. [232 H] (iii) Held,
the hearing of objections to the Scheme under s. 68 (b) of the Act by the Home
Secretary does not violate rules of natural justice nor can any bias be imputed
simply because Home Secretary is also 223 the member of a committee which made
the report regarding the Schemes of nationalisation. Dosa Satyanarayana Murthy
v. The Andhra Pradesh State Road Transport Corporation (1961 S. C. R. 642)
followed. [233 G] (iv) Held further, that the nationalisation Scheme, even if
introduced piece-meal on particular routes, is not illegal unless it is
established that there is discrimination against some operators.
Dosa Satyanarayana Murthy's case followed.
The mere fact that the Scheme was approved by
the Home Secretary without any modification does not mean that the discretion,
in discharge of the quasi-judicial function under s. 68(b) was not properly
exercised or that there was no scope for the proper exercise of the discretion
due to the mandatory language contained in Govt. Orders. [235 E] Saghir Ahmed
v. State of U.P. & Ors.,  1 S.C.R. 707, Ram Chandra Palai and Others
v. The State of Orissa & Ors.
 S.C.R. 29, Bhikaji Narain Dhakras and
Others v. The State of Madhya Pradesh and Others,  2 S.C.R. 589,
Gullapalli Nageswara Rao and Others v. Andhra Pradesh State Transport
Corporation and another  Supp. 1 S.C.R.
319, Smt. Sitabati Debi and another v. State
of West Bengal and another,  2 S.C.R. 949, Mohd. Ayub Khan v.
Commissioner of Police, Madras and another,
 2 S.C.R.
884 Smt. Somavanti and Others. The State of
Punjab and Others  2 S.C.R. 774, Municipal Committee, Amritsar and
another v. State of Punjab and Others  3 S.C.R.
447 referred to.
East India Electric Supply & Traction Co.
Ltd. v. S. C.
Dutta Gupta and Others, 59 C.W.N. 162, held
Srinivasa Reddy and Others v. The State of Mysore
and Others  2 S.C.R. 130, explained.
CIVIL APPELLATE JURISDICTION : Civil Appeals
Nos. 672702, 704-710, 722-728, 776-781 of 1972 & 1057-1062, 1120, 1125,
1200, 1224, 1298-1300 & 2301 of 1972.
Appeals by certificate from the Judgment and
Order dated February 3, 1972 of the Madras High Court in Writ Petitions Nos.
883, 884, 885, 886, 942, 992, 993, 994, 995 of 1966, 2061, 2649, 3825 of 1970.
A. K. Sen. K. Jayaram, for the appellants, in
K. Jayaram for the appellants in C.As. Nos.
673-676, 683, 684, 687, 688, 693, 678, 681, 682, 685, 686, 689-698, 694695,
776-781, 1298-1300 & 2301.
M. Natesan, K. Jayaram, for the appellants in
K. K. Venugopal and Vineet Kumar for the
appellants in C.A. Nos. 697-702.
224 E. C. Aggarwala, and A. T. M. Sampath for
the appellants in C.As. Nos. 704.710.
K.K. Venugopal and K. B. Nambiyar, for the
appellants in C.As. Nos. 722-728, 1057.1062 & 1200.
K. K. Venugopal and A. S. Nambiyar for the
appellants in C.As. Nos. 1120.1125.
Vineet Kumar for the appellant in C.A. No.
S. Govind Swaiminadhan, S. Mohan, A. V.
Aangam and A.
Subhashini for the Respondents in C.As. Nos.
672-676, 678 for Respondents Nos. 1, 3 & 4 (In C.As. Nos. 677, 679, 680,
697, 702. 704-710, 722-728 and 776-781.
S. Gobind Swaminadhan, A. V. Rangam, N. S.
Sivam and A.
Subhashini for the respondents in C.As. Nos.
1057, 1062, 11201125, 1200 and 2301 and all the respondents in C.A. Nos. 1224
The Judgment of the Court was delivered byGROVER.
J. These appeals by certificate arise out of a common judgment of the Madras
High Court given in a number of writ petitions filed before it by various stage
The facts have been set out in detail in the
judgment of the High Court and need be stated only briefly. The policy of
nationalisation of passenger bus Transport in the State of Madras (now Tamil
Nadu) was laid down by the Government Order dated June 7. 1967. Under that
order all routes of 75 miles and above, all routes radiating or terminating in
Madras City and all routes in the Kanvakungi District were to be nationalised
as and when the permits of the private operators expired. By the Government
order dated June 17, 1967 a committee was constituted for implementing the,
above, decision. A Draft scheme was prepared by the committee for nationalising
the routes in question to the complete elimination of private operators. This
scheme was published under s. 68-C of the Motor Vehicle Act 1939, hereinafter
called the 'Act'. A number of writ petitions were filed in the High Court in
1967 challenging the validity of the draft scheme. That scheme was struck down
by the High Court. Thereafter the Governor of Madras inserted Rule 23-A in the
Madras Government Business Rules in Exercise of his powers under Art. 166 of
the Constitution. It was provided thereby that the powers and functions which
the State Transport Undertaking could exercise under s. 68C shall be exercised
by the Secretary to the Government of Madras in the Industries, Labour and
Housing Department on behalf of the State Government. It was also provided by
that Rule that the powers and functions of the State Government under s. 68-D
of 225 the Act and the Rules relating thereto were to be exercised by the
Secretary to the Government of Madras in the Home Department on behalf of the
State Government. In April 1968 an Ordinance was promulgated by the Governor
which was later replaced by the, Madras Act 18 of 1968 which became effective
from April 1, 1968. By that enactment s. 47(1) CC, s. 58(2) (A) and s. 68 (CC)
were added to the Act.
Under the first two sections the Regional
Transport Authority was to have due regard to the publication of the draft
scheme in granting a permit or a renewal of a permit.
The State Transport Undertaking, however, was
entitled as of right to the issuance of a temporary permit on the publication
of a draft scheme under s. 68(CC). In exercise of the powers and functions
under the new Business Rule 23-A schemes of nationalisation were promulgated
and published. A number of operators again filed writ petitions challenging the
draft scheme as also the validity of the Tamil Nadu Act 18 of 1968. The High
Court upheld the validity of these provisions including the newly added
sections. That decision was affirmed by this Court in A.
Sanjeevi Naidu etc. etc. v. State of Madras
& Another. (1) It was pointed out in that judgment that in the State of
Tamil Nadu the State Transport Undertaking is a Department of the State
Government. Therefore the necessary opinion had to be formed by that Government.
It was held that the function under the Act had been allocated by the Governor
to the Transport Minister under the Rules and the Secretary of that Ministry
had been validly authorised under rule 23-A to take action under s. 68 (c) of
the Act. The validity of the provisions of the Madras Act 18 of 1968 which
amended the Act had been canvassed before this Court but it was observed that
it was not necessary to decide that matter while deciding the question of the
validity of the impugned scheme.
As pointed out by the High Court a third
attempt was made by way of filing writ petitions in the High Court out of which
the present appeals have arisen to impugn the validity of Chapter IV A of the
Act as amended by Madras Act 18 of 1968. We shall first state the allegations
which are relevant for deciding the constitutionality of the impugned
provisions. In this connection we may refer to writ petition No. 780 of 1970 in
which the petitioner V. Krishnamurthy was one of those who had challenged the
validity of the draft scheme published by the Director, Madras State Trans port
Department as well as the draft scheme published by the Secretary to the
Government of Madras, Industries, Labour and Housing Department. It was stated
in para 7 of the petition that (1)  3 S.C.R. 505.
16-631Sup. CI/73 226 by reason of the
dismissal of the appeals by this Court the Secretary to the Government, Home
Department, would now be competent to take up the draft scheme for hearing
68-D of the Act. On finalisation of the
scheme the petitioner's permit would automatically stand cancelled. In that
event the petitioner's business would have to be closed down and he would be
seriously affected financially. The following part of paragraph 7 may be
"It would be seen that the result of the
implementation of the Chapter IV-A is that only two buses operated by me as a
commercial undertaking could have been nationalised, and the vehicles covered
by the permits would be reduced in value to that of scrap and it would have no
market at all as there would be no operators who would be coming forward to
purchase these vehicles by reason of the nationalisation policy of the
Government." According to paragraph 8 of the petition Chapter IV-A of the
Act is violative of the fundamental rights guaranteed under Art. 19(1) (f) and
(g) of the Constitution for the reason, inter alia, that the permit issued
under the Act constitutes property and the right to apply for a permit as also
to be granted a renewal of a permit is a right to hold property and the
petitioner would be deprived thereof. The petitioner's right under Art.
19(1)(f) could, therefore, be taken away only by a law relating to
nationalisation of stage carriages if such a law satisfied the test of Article
19(5), namely that it should be a reasonable restriction in public interest. It
was stated that public interest would in no way be promoted by nationalisation
because the Government undertaking wherever the routes had been nationalised
was running into loss. Another attack was made on the ground that no procedural
safeguards were contained in the Act before deprivation of the right to
property could take place. It was further pleaded that although S. 68-D
provided for compensation, being paid at the rate of Rs.
200/per month of the unexpired portion of
each permit there was no provision for compensation where as a result of the
approved scheme renewal of the permit was refused.
In the return which was filed on behalf of
the respondents an objection was raised that the writ petition was liable to be
dismissed on the ground of constructive res judicata. A writ petition had been
filed on previous occasion and the points now sought to be agitated had not
been taken. It was further maintained that according to the scheme it was only
on the expiry of the existing permits,of operators that the State Transport
Undertaking would commence its services under the scheme of nationalisation.
Other allegations made were denied.
227 The High Court first considered the
question whether Chapter IV-A of the Act is violative of Art. 19(1) (f) of the
Constitution and the same has been canvassed before us strenuously. The High
Court was of the view that a route permit is property and that although the
validity of That Chapter had corn& up for consideration before this Court
earlier and had been upheld but the decision in those cases was confined to the
attack under clause (g) of Article 19 and not clause (f). Now was it open to
challenge before the decision of this Court in what is known as the Bank
Nationalisation case : Rustom Cavasjee Cooper v. Union of India.(1) The High
Court acceded to the argument of the Advocate General that a bus with a permit
is a valuable property but without a permit or when the permit expires it
ceases to have more value than what can be fetched in the market. The motor
vehicle is not taken away by the Government and the permit holder is free to
use it. Since the renewal of a permit is not a matter of right on the expiry of
the permit its holder had no property in it and as such there was no question
of infringement of his fundamental rights guaranteed by Article 19(1)(f) or
Art. 31 of the Constitution.
It is necessary to notice the previous
decisions in which the constitutional validity of the provisions similar to
those of the Act was challenged. In Saghir Ahmed v. State of U.P. & Others
(2) it was held that the U.P. Road Transport Act 1951 violated fundamental
rights of private citizens guaranteed under Art. 1 9 (1) (f ) of the
Constitution and was not protected by clause (6) of Art. 19 as it stood at the
time of the enactment. A declaration had 'been made in terms of s. 3 of that
Act to the effect that the stage ,carriage services, among others, on the
Bulandshahr Delhi route shall be run and operated exclusively by the State
Government. A scheme was also notified for the operation of the stage carriage
services on those routes. This was held to be an infraction of Art.
19(1) (g) of the Constitution. The new clause
inserted in Art. 19(6) by the Constitution First Amendment Act 1951 did not
apply to the facts of this case. It was observed that after the insertion of
that clause no objection could be taken to the creation of a monopoly by the
State on the ground that it violated Art. 19 In the next case Ram Chandra Pilai
& Others v. The State of Orissa & Others (3) schemes of nationalisation
of stage carriage services were assailed on various grounds including
infringement of Art. 19(1) (f) and (g). In view of the amendment made in clause
(6) the creation of a state monopoly by law was found to be permissible under
that clause. Saghir Ahmads case was held to be inapplicable and the decision in
Bhikaji Narain Dhakras (1)  3 S.C.R. 530. (3)  S.C.R. 29.
(2)  1 S.C.R. 707.
228 & Others v. The State of Madhya Pradesh
& Another(1) was followed. It was not considered necessary to examine the
further contention that the fundamental rights guaranteed under Arts. 19 (1)
(f) and 31(2) had been violated. If the permits held under the Act were
prematurely terminated or cancelled compensation was provided by the Orissa Act
under which the nationalisation had been done. If there was no renewal of the
permits on their expiration after they had run for their normal period no claim
could be made by the pen-nit holders on the score of such nonrenewal because
renewal was not a matter of right. The concerned transport authority would be
well within its right to refuse such renewal having regard to the provisions of
the amended sections 47 and 55 of the Act. If at all there was any deprivation
of proprietary rights it would be by authority of law. in Gullapalli Nageswara
Rao & Others, v. Andhra Pradesh State Transport Corporation & Anr. (2 )
the validity of the 'provisions contained in Chapter IV-A of the Act was
directly assailed. The Court refused to draw inferences from the provisions
contained in s. 68-G for payment of compensation to the holder of a permit that
the legislature had assumed that a transfer of the business was involved in the
process laid down in Chapter IV-A. Article 31 of the Constitution was held not
to having been attracted.
Before the decision in K. K. Kochuni &
Others v. State of Madras & Others(3) this Court had held in the State of
Bombay v. Bhanji Munji & Another(4) which was followed in certain other
cases that the substantive provisions of law relating to acquisition of
property were not liable to be challenged on the ground that they imposed
unreasonable restrictions on the right to hold property. In other words, in
cases falling under Art. 31(2) the provisions of Art.
19(1) (g) could not be invoked. In Kochuni's
case, however, the effect of the Constitution Fourth Amendment Act 1955 on Art.
31 was considered. It was held that that Article was no longer a self-contained
Article providing for a subject different from that dealt with by Art. 19. It
dealt with two different subjects. Clauses 2 and 2A dealt with acquisition and
requisition and clause 1 with deprivation of property by authority of law.
Clause 1 of Article 31 could no longer be so construed as to exclude the
operation of Article 19. Bhanji Munji's case was distinguished on the ground
that after the Constitution Fourth Amendment Act it no longer held the field.
In Smt. Sitabati Debi & Anr. v.
State of West Bengal & Anr.(5) it was
pointed out that Kochuni's case was not concerned with a law of requisition or
acquisition. Therefore the observations therein had to be under(1)  2.
(3)  3 S.C.R. 887.
(2)  Supp. S.C.R. 319.
(4)  1 S.C.R. 777.
(5)  2 S.C.R. 949.
229 stood as meaning that Bhanji Munji's case
no longer governed a case of deprivation of property by means other than
requisition and acquisition. In other words any deprivation of property under
Art. 3 1 (1) had to satisfy the guarantee of the fundamental rights including
Art. 19(1) (f). In Rustom Cavasjee Cooper's case however, this Court settled
the whole position by holding that the limitation prescribed for ensuring due
exercise of the authority of the State to deprive a person of his property and
the power to compulsorily acquire the property were specific clauses of
limitation on the right of private property falling under Art. 19 (1) (f).
Thus the Court came to the conclusion that
Arts. 19 (1) (f) and 31(2) were not mutually exclusive. The argument of the
appellants is that prior to the decision in Rustom Cavasjee Cooper's case it
was not possible to challenge Chapter IV-A of the Act owing to the decision of
this Court that Art.
19(1) (f) could not be invoked when a case
fell within Art.
31 and that was the reason why this Court in
all the previous decisions relating to the validity of Chapter IV-A proceeded
on an examination of the argument whether there was infringement of Art. 19(1)
(g), and clause (f) of that Article could not possibly be invoked. We are
unable to hold that there is much substance in this argument. Bhanji Munji and
other decisions which followed it were based mainly on an examination of the
inter-relationship between Article 19(1) (f) and Art. 31(2). There is no
question of any acquisition or requisition in Chapter IV-A of the Act.
The relevant decision for the purpose of
these cases was only the one given in Kochuni's case after which no doubt was
left that the authority of law seeking to deprive a person of his property
otherWise than by way of acquisition or requisition was open to challenge on
the ground that it constituted infringement of the fundamental rights
guaranteed by Art. 19 (1) (f ). It was, therefore, open to those affected by
the provisions of Chapter IV-A to have agitated before this Court the question
which is being raised now based on the guarantee embodied in Art. 19(1) (f)
which was never done. It is apparently too late in the day now to pursue this
line of argument, in this connection we may refer to the observations of this
Court in Mohd. Ayub Khan v. Commissioner of Police Madras & Another(1)
according to which even if certain aspects of a question were not brought to
the notice of the court it would decline to enter upon-re-examination of the
question since the decision had been followed in other cases. In Smt. Somavanti
& Others v. The State of Punjab & Others(2) a contention was raised
that in none of the decisions the argument advanced in that case that a law may
be protected from an attack under Art.
31 (2) but it would be still open to
challenge under Art.
19(1) (f), had (1)  2 S.C.R. 884.
(2)  2 S.C.R. 774.
230 been examined or considered. Therefore,
the decision of the Court was invited in the light of that argument. This
contention, however, was repelled by the following observations at page 794 :"The
binding effect of a decision does not depend upon whether a particular argument
was considered therein or not, provided that the point with reference to which
an argument was subsequently advanced was, actually decided." It is common
ground in the present cases that the validity of Chapter IV-A of the Act has
been upheld on all previous occasions. Merely because the aspect now presented
based on the guarantee contained in Art. 19 (1 ) (f) was not expressly
considered for a decision given thereon will not take away the binding effect
of those decisions on us., The learned Advocate General who appears for the
respondents has invited our attention to certain decisions which do not relate
to the provisions of the Act but in which the principle which is sought to be
invoked on behalf of the appellants based on Art. 19(1)(f) has been examined.
In Akadshi Padhan v. State of Orissa(1) the question was whether the monopoly
in the trade of Kendu leaves which the State of Orissa took over constituted
restriction on the fundamental right of the petitioner who used to carry on
extensive trade in the sale of Kendu leaves. The attack against the Orissa Act
by which the monopoly was created was based on the alleged contravention of the
fundamental rights under Art. 19(1)(f) and (g). The rival contentions which
were advanced were that the effect of the change made by the Constitution First
Amendment Act 1951 in Art. 19(6) was not to exempt the law passed for creating
a State monopoly from the application of the rule prescribed by the first part
of Art. 19(6). On the other hand it was contended by the State that the object
of the amendment was to put the monopoly laws beyond the pale of challenge
under Art. 19(1) (f) and (g). The scope and effect of Art. 19 (6) after its
amendment was fully considered. The Court felt no difficulty in rejecting the
argument that the creation of a State monopoly must be justified by showing
that the restrictions imposed by it were reasonable and were in the interest of
the general public. It was stated emphatically that the amendment clearly
indicated that the State monopoly in respect of any trade or business must be
presumed to be reasonable and in the interest of general public so far as Art.
19(1) (g) was concerned. The Court proceeded to hold that the effect of the
amendment made in Art., 19(6) was to protect the law relating to the creation
of monopoly and that meant it were only these provisions of that law which were
integrally and essentially connected with the creation of the monopoly which
were protected The rest of the provisions which (1)  Supp. 2 S.C.R. 691.
231 might be incidental did not fall, under
the later part of Art. 19(6) and would inevitably have to satisfy the test of
the first part of that Article. The question which is more relevant for our
purpose was next considered, namely, the effect of the amendment, on the other
fundamental rights guaranteed by Art. 19(1). The following observations at page
710 on this point may be reproduced :
"The position, therefore, is that a law
creating a State monopoly in the narrow and limited sense to which we have
already referred would be valid under the later part of Art. 19(6), and if it
indirectly impinges on any other right, its validity cannot be challenged on
that ground. If the said law contains other incidental provisions which are not
essential and do not constitute an integral part of the monopoly created by
i.e., the validity of those provisions will have to be tested under the first
part of Art. 19(6), and if they directly impinge on any other fundamental right
guaranteed by Art. 19 (1), the validity of the said clause will have to be
tested by reference to the corresponding clauses of Art. 19. It is obvious that
if the validity of the said provisions has to be tested under the first part of
Art. 19(6) as well as Art. 19(5), the position would be the same because for
all practical purposes, the tests prescribed by the said two clauses are the
same." The instances given in the above decision of the State monopoly in
respect of road or air transport are pertinent. A law relating to such a
monopoly would not normally impinge upon the citizens' fundamental right under
Art. 19 (1) (f).
Similarly a State monopoly to manufacture
steel, armaments or transport vehicles or railway engines and coaches would not
normally impinge on Art. 19(1) (f). If the law creating such monopolies were,
however, to make incidental provisions directly infringing the citizens' right
under Art. 19 (1) (f) that would be a different matter. (see pages 710, 711).
In Municipal Committee, Amritsar & Anr.
v. State of punjab & Others(1) the validity of the Punjab Cattle Fairs
(Regulation) Act 1967 came up for examination. The Act declared that the State
had the monopoly to hold cattle fairs and it prohibited all local authorities
and individuals from holding such fairs at any place in the State. Shah J.,
delivering the judgment of the Court said at page 456 "By imposing
restrictions upon the right to hold a fair, the citizens are not deprived of
their property, and the freedom guaranteed by Art. 19 (1 ) (f) is not infring(1)
 3 S.C.R. 447.
232 ed. The primary object of the Act is to
give a monopoly to the State to hold cattle fairs.
As a necessary concomitant of that monopoly,
holding of cattle fairs by local authorities and individuals is prohibited. The
prohibition flows directly from the assumption of monopoly by the State and
falls within the terms of Art. 19(6) of the Constitution. It is a provision of
the law creating monopoly "basically and essentially necessary" for
creating the State monopoly to prevent other persons from conducting the same
The learned Advocate General maintains that
it follows from the above decisions that when nationalisation of a transport
service is made which is fully protected by Art. 19(6) no question arises of
any deprivation of property. It is possible and likely that the value of the
buses owned by the operators may be prejudicially affected or that they may not
be able to carry on trade or business on the nationalised routes. According to
the clear instance given in Akadshi Padhan's case to which reference has
already been made a law relating to such a monopoly would not normally infringe
the citizens' fundamental right under Art. 19(1) (f).
Mr. Natesan for the appellants has pointed
out that while promulgating the schemes of nationalisation temporary permits
have been granted to the State Road Undertaking and the compensation which is
sought to be paid to the permit holders is either nil or too small and there is
no provision for payment of any compensation the operators for being deprived
of the transport business or for the effect of the non-renewal of their
permits. While examining the above contentions it may be stated that there is
no dispute on certain matters. The first is that according to the schemes of
nationalisation which have been impugned all existing permits must come to an
end before each scheme will become enforceable on a particular route. In other
words by virtue of the scheme the existing permits of any operator will not be
cancelled. None of the properties. or assets of the appellants is going to be
acquired. So far as the renewal of a permit is concerned this Court has already
held that no operator can claim renewal as a matter of right. Section 68-G of
the Act, contains the principle and method of determination of compensation if
any existing permit is cancelled or its terms are modified. In the present
however. no such question arises because no
occasion for cancellation of existing permits can arise in view of the terms of
the impugned scheme. The effect of nationalisation on the properties or
business of the operators is not such as cannot be regarded to be a reasonable
restriction in the interest of the general public within Art. 19 (5) in the
same way as a state monopoly must be presumed to be reasonable and in the
interest of the general public 233 so far as Art. 19(1)(g) and Art. 19(6) are
concerned this is view of the fact that the tests prescribed by clauses 5 and 6
of Art. 19 are the same : (vide Akadshi Padhan's case).
We are accordingly unable to sustain the
challenge under Art. 19(1) (f) even of such a challenge is open to the
appellants in the light of what has been observed earlier.
It has next been argued that the
nationalisation scheme were vitiated for various reasons. The first submission
is that a policy decision was taken by the government which was embodied in the
Government Order dated June 17, 1967. It was stated therein that the Government
had considered carefully the question of extension of nationalisation of
passengers transport in the State. In modification of the existing policy the
Government had decided that the types of routes set out should be nationalised.
The Government proceeded to direct that the routes in the categories mentioned
should be nationalised as and when the permits of the private operators
expired. On the same day by another Government Order the Government constituted
an ad hoc committee "to work out the details in all aspects for
implementing the policy decision." One of the members of that committee
was the Secretary to the Government, Home Department. The Committee was to
submit its report within a fortnight. After the report had been submitted
schemes were published under s. 68-C by the Secretary, Industries, Labour and
Housing Department, hereinafter referred to as the Secretary industries. He
purported to do so under rule 23A of the Rules of business. Objections which
were fixed by the operators were heard and the schemes considered by the
Secretary Home, under s. 68-D who had been so authorised under s. 23A.
According to the appellants the Secretary, Home, while hearing the objections
under s. 68-D of the Act was acting as a quasi-judicial tribunal. Since he was
a member of the committee which had made the report in accordance with which
the schemes had been published under s. 68-C it is claimed that the Secretary,
Home. acted as a Judge in his own cause. In other words, he participated in the
policy decision of the Government and then he exercised the powers under s.
68-D of hearing objections and considering the merits of the schemes. This, it
is suggested, is wholly contrary to the rules of natural justice the hearing by
the Secretary, Home, being vitiated by bias. Learned single Judge of the
Calcutta High Court in East India Electric Supply, & Traction Co., Ltd. v.
Dutta Gupta & Ors. (1) held that where a
number of a rating Committee had already prejudged at least one of the issues
that had been raised before it, his inclusion as a member made the Rating
Committee and its functioning contrary to law. In Dosa Satyanarayanamurthy etc.
v. The Andhra Pradesh (1) C.W.N. 162.
234 State Road Transport Corporation(1) the
Minister in charge of the portfolio of Transport had presided over the subcommittee
constituted to implement the scheme of nationalisation of bus services. It was
contended there that the same Minister could not be a Judge in his own case as
he was biased against the private operators. That contention was negatived by
this Court. It was pointed out that any decision arrived at by the
Sub-Committee was not final or irrevocable and it was only a policy decision.
The sub-committee was only meant to advise the State Government how to
implement the policy of nationalisation. That could not either expressly or by
necessary implication involve a predetermination of the issue. The Minister,
therefore, could not be said to have any such bias as disqualified him from
hearing objections under Chapter IV-A of the Act in which S. 68-D occurs. This
case is quite apposite for disposing of the submission based on bias.
The second reason advanced in support of the
challenge to the schemes is based on what is described as complete absence-of
coordination so far as the various schemes are Concerned. The objectionable
feature of the schemes is stated to be, that there was no proper coordination
of the services on the various routes which are to be nationalised and which
should have been done by an integrated scheme. We are unable to see that if the
schemes conformed to the requirements of S. 68-C why they should be struck down
on the only ground that routes were to be nationalised as and when permits of
private operators on those routes expired.
Section 68-C permits the State Transport
undertaking to operate a service in relation to any area or route or even a
portion thereof and to the exclusion complete or partial, of other persons. The
decision in Shrinivasa Reddy & Others v.
The State of Mysore & Others(2) can be of
no avail to the appellants because no question arose of coordination of service
on the various routes which were to be nationalised and in respect of which the
nationalisation was to become effective from different dates. In that case it
was pointed out that piecemeal nationalisation of a particular route is not
permissible. It is quite clear that each route can be nationalised and it is
difficult to comprehend that when the law empowers that to be done any further
conditions should be superimposed of coordinating the services on all the
routes which are proposed to be nationalised. The following observations with
regard to the above decision in Dosa Satyanarayanamurthy's case explain the law
on the point :
"This Court did not lay down that there
cannot be any phased programme in the nationalisation of transport services in
a State or in a district nor did it hold (1)  1 S.C.R. 642. (2) (1960) 2
235 that there cannot be more than one scheme
for a district or a part of a district, the observations of this Court in
regard to the implementation of a scheme piecemeal were aimed at to prevent an
abuse of power by discriminating against some operators and in favour of others
in respect of a single scheme".
Learned Counsel for the appellants laid a
great deal of emphasis on the manner in which the policy decisions were taken
by the Government and the mandatory language contained in the Government Orders
already referred to which hardly left any discretion or choice to the authority
considering the objections under s. 68-D of the Act. We are unable to see how
any authority who exercises, individual power under s. 68-D is bound by what
has been stated as a policy decision of the Government. In fact his main
function is to hear such objections as may be referred to the schemes published
under s. 68C and approve or modify the schemes so published after giving an
opportunity to. the objector. His function being of a quasi-judicial nature he
is to bring a judicial approach,. to the matter and even if he happens to be a
servant of the government he is not 'bound in any way to carry out or endorse
the policy of the Government without discharging his duties as contemplated by
s. 68-D. We are unable to hold nor has anything been shown to us except the
suggestion that the schemes as published under s. 68-C were approved in to that
the authority acting under s. 68-D had not discharged his duties in a proper
and judicial manner.
The mere fact that the schemes were approved'
without any modification cannot establish that the Secretary, Home. who
exercised the functions of the State Government under s.
68-D, had failed to carry out his functions
as laid down in s. 68-D or that he had approved the schemes without any
modification, merely because the Government orders contained language of
In the result these appeals fail and they are
dismissed but owing to the nature of the points raised there will be no order
as, to costs.
S.B.W. Appeals dismissed.