D. Nataraja Mudallar Vs. State
Transport Authority, Madras  INSC 155 (6 September 1978)
CITATION: 1979 AIR 114 1979 SCR (1) 552 1978
SCC (4) 290
R 1992 SC 180 (4)
Constitution of India, Article 136,
Motor Vehicles Act, 1939, 5. 50, unjustified
refusal to renew permit, a breach of fundamental right.
The appellant plied a luxury coach for public
benefit under a permit o 1971 for five years, in the Tamil Nadu State. He
applied for a renewal of the permit two months prior to its expiry, but was
refused the same by the State Transport Authority, on the ground that the
facilities provided by the public sector undertakings were adequate, and the
renewal of the applicant's permit would be redundant in the circumstances and
also result in unhealthy competition. Applications for more permits were
invited and some granted since the impugned refusal. On appeal u/s 64 of the Motor
Vehicles Act the State Transport Appellate Tribunal affirmed the rejection,
using the same reasoning.
Thereafter the High Court rejected the appellant's
revision application, refusing to go into questions of fact.
Allowing the appeal, the Court,
HELD: 1. If a small man, whose heavy
investment in tourist coach is to be sterilised altogether, it is a social
trauma, and if fundamental rights are disposed of as if by executive fiats,
this Court must intervene under Art. 136, to uphold the credibility in the rule
of law and prevent its derailment. The touchstone is not the little man and his
little lis. but the large issue and the deep portent. [554 G-H]
2. The Authority must remember that a permit
holder 1st has an ordinary right of renewal unless it is shown that outweighing
reasons of public interest lead to a contrary result. The bare ipse dixit that
the S.T.A. considers the facilities provided by public sector undertakings are
adequate is not intelligible, without some basis. Some objective assessment to
exclude the petitioner, based on tangible data is the minimum for a judicial
negation of a fundamental right. Another circumstance effectively negating the
story of supernumerary vehicles is the admitted fact that applications for more
permits have been invited and some granted. The basic reason for quashing the
order of refusal is the untenable reason assigned to support the order. [555 A,
H, 556 A, D, F]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1083 of 1978.
Appeal by Special Leave from the Judgment
dated 23-2-77 of the Madras High Court in C.R.P. No. 356 of 1977 Y. S. Chitale,
Vineet Kumar and A. K. Srivastava for the Appellant.
A. V. Rangam for the Respondent.
553 The Judgment of the Court was delivered
by A KRISHNA IYER, J. Arbitrary orders and mystical directions have poor
mileage in this Court when irrelevance and unreason are writ on their face even
though the sanctity of concurrent error may give them some shelter.
To ply a contract carriage is a fundamental
right hut it can be restricted reasonably as has been done by the Motor
Vehicles Act, 1939. The perspective is that what is fundamental is the right,
not the restriction . Here , one Mudaliar. the appellant, owner a luxury coach,
plied it for public benefit under a permit of 1971 for five years. The
statutory criteria for grant of such permits is set out in S. 50 and renewals
of permits must be governed by the same considerations, the procedure being
regulated by S. 58.
There is no grievance made that procedure
violations are involved here. All that we know is that the permit was to expire
in March 1976 and so a renewal application was made two months earlier. The
State Transport Authority (for short, S.T.A.) rejected the request for renewal
on the score that the 'ITDC has expanded its activities' and has in the field
many tourist vehicles. Then the Authority added: 'lt is said that the
utilization of these vehicles is in the range of 90 to 100 per cent during the
tourist season only (November to February) and that it is just 60 to 70%"
during" other periods'. The Tamil Nadu State's transport system also has
vehicles on the road and some spare buses.
All told, a few hundred motor vehicles, some
of which arc stage carriages and some contract carriages, serve the travelling,
public on these statements, the conclusion was reached: 'The State Transport
Authority therefore considers that the facilities provided by these public
sector undertakings are adequate. Renewal of the applicants permit will not
only be redundant in the circumstances but also result in healthy competition'.
The order does not indicate that anyone appeared and objected.
The State Transport Appellate Tribunal
(S.T.A.T., to use an acronym ). On appeal under S. 64 affirmed the rejection,
using the same reasoning. About the abundant transport facilities developed
since 1971 the Tribunal said:
'The learned counsel for the appellant has no
doubt stated that there is no material to hold the details (occurring at para 2
of the order) to be correct. The State Transport Authority is dealing with the
provision of transport in the State level and he is expected to be in touch
with the details of the availability of service from different sources and
those particulars furnished by the S.T.A, could not also be said to be in
anyway strange. As the authority is having these details readily available it
was open to the authority, to 554 rely upon those details before coming to
conclusion about the need for renewal as asked for by appellant. It is not
therefore proper to comment on the details made available in para 2 of the
order'. He obscurely encored, without any facts, that there would be 'unhealthy
competition. What is truly occult is the casual dismissal of unanswerable
'The appellant has stated in his affidavit
that in as much as applications have been called for, for the grant of 100
tourist cabs, 15 omni buses and 10 omni tourist buses for the State of Tamil
Nadu, the comment about the absence of need for renewing the permit as made by
the State Transport Authority is not proper-.
The Departmental Representative has filed a
Memo. Of objection stating that application ave been called for the sinner of
permits valid to ply throughout India and the same is not relevant material, as
the applicant's permit is in respect of the State of Tamil Nadu alone. The
learned counsel for the appellant would contend that for the limited purpose of
making out that there is need for additional service, this factor may also be
considered'. No doubt, it is admitted that applications have been called for,
for the issue of permits to be effective all over India. The appellant's permit
is having a restricted application within the State. As such as fact that
applications have been called for the grant of All India Permits does not in
any way become relevant or important and the same can be ignored'. The STAT has
countered the appellants claim of meritorious service by reference to past
infirmities not adverted to anywhere in the order of the STA The High Court, in
revision, washed its hands off the case by the observation: 'It is not for this
court to traverse into these questions of fact And find out whether there is
any need for adequacy under the revisional jurisdiction. How many permits the
India Tourism Development Corporation should have been granted is not the
subject matter of this revision petition. This concerns merely with the refusal
to renew the permit which, in my view, has been done on very valid and tenable
The whole issue has been made more fishy by
the STA granting two contract carriage permits in 1978 after rejecting the
renewal application holding there were already too many vehicles.
Should the court interfere under Art. 136 ?
ordinarily, no. But if' a small man, whose heavy investment in a tourist coach
is to be sterilised altogether it is a social trauma;
'and if fundamental rights are disposed of as
if by executive fiats, this Court must intervene to uphold the credibility hl
the rule of law and prevent its derailment.
The touch stone is not the little man and his
little lis but the Large issue and the deep portent.
555 S.50 specifies the guidelines. The
transport tribunals function quasi-judicially and this imports some
imperatives. You must tell the men whose fundamental right you propose to
negative the materials you may use in your decision. You must act on relevant
considerations, properly before you, not on rumour or hearsay, ex cathedra
assertions or inscrutable hunch.
The Authority must, remember that a permit
holder has an ordinary right of renewal unless it is shown that outweighing
reasons of public interest lead to a contrary result. Permits are not bounty
but right, restricted reasonably by the Motor Vehicles Act.
The key criterion when a contract carriage
permit is sought, is to ask oneself whether an extra vehicle is unnecessary or
undesirable in the public interest, and whether, further, the permits already
granted are sufficient for or in excess of the needs of the region. After all,
a few hundred vehicles admittedly ply- and one contract carriage operator is
asking for a single permit. What makes it unnecessary or undesirable in the
public interest ? ordinarily, having regard to the explosive increase in
traffic in our country, more vehicles are needed. Of course if the roads are in
a precarious condition or competitive racing or reckless driving on the roads
make for hazards or if the operator is otherwise disqualified one may reduce
the number of vehicles and refuse permit or renewal. Nothing of the sort is
mentioned in any of the orders rejecting the permit. Assuming there are around
300 or 400 motor vehicles, how does one more become too many ? It is a
preposterous proposition to say so, in the absence of some evidence. If there
is no evidence to warrant such a conclusion. the right to the permit must prevail.
Is there any evidence in this case ? The
Authority asserts that the utilisation of existing vehicles is of the order of
'90 to 100 per cent' during the tourist season.
This indicates that at least during the
tourist season one more tourist coach will be welcome to relieve congestion.
The Authority further states that it is said
.... "just 60 to 70 per cent" Is utilised during the other period.
"It is said"-by whom, to whom, when, how, and was it put to the
applicant ? All this is shrouded in mystery. Whatever is said by someone,
somewhere, is not material here. It must be on the record. While the STA may
know the total number of vehicles on the road it must have made a study of
specific materials to ascertain whether there is unused vehicular potential.
Merely to rely on 'it is said' 'in the passive voice is not judicial. Moreover,
not to put it to the applicant before rejecting his renewal is not fair. The
bare ipse dixit that the 'State Transport Authority considers the facilities
provided by public sector undertakings are adequate', is 556 not intelligible,
without some basis. Nor does 'public sector' and 'private sector' enter the
picture. Some objective assessment to exclude the petitioner based on tangible
data is the minimum for a judicial negation of a fundamental right. The
reference to 'unhealthy competition' is baffling. If there are 300 or more
buses and one more is sought to be added, what is the ill-health in the traffic
system that will be injected by this addition ? We must remember that the
tourist coach of the petitioner is to travel all round Tamil Nadu and so the
image of a particular route overcrowded with too many buses making for
cut-throat competition and imperilling passenger's lives does not arise.
The STA has no research staff to investigate
the untapped transport or traffic potential and if it has any, such report must
be put to the applicant.
Moreover., it is obvious that the State
Transport Authority should have granted one permit less to the ITDC, if its
case of redundancy were true. For, the appellant had a current permit then
Another circumstance effectively negating the story of super- numerary vehicles
is the admitted fact that applications for more permits have been invited and
some granted. And before us two orders granting permits for contract carriages
since the impugned refusal have been filed. And yet Mudaliar goes to the wall,
on a cavalier `no' to his application for renewal.
Fair consideration of his claim has been
denied to the appellant; his huge investment has gone to waste because of
We see no relevant ground justifying the
order; there is breach of natural justice; there is importation of non-
materials; there is unawareness of the fact that a fundamental right is
involved and that a costly coach is condemned to non-use. The basic reason for
quashing the order of refusal is the untenable reason assigned to support the
order. We allow the appeal, set aside the refusal of renewal and having regard
to the 'long delay and absence of disqualifications direct the State Transport
Authority to reconsider the grant or renewal within two weeks of receipt of
We repeat for emphasis that ordinarily this
Court is loath to reinvestigate questions relating to motor vehicle permits;
but every rule has an exception even as every case has a martyr.
M.R. Appeal allowed.