Karnataka State Tourism Development
Corpn. Ltd. Vs. Karnataka State Transport Tribunal & Ors [1986] INSC 210 (1
October 1986)
REDDY, O. CHINNAPPA (J) REDDY, O. CHINNAPPA
(J) VENKATARAMIAH, E.S. (J)
CITATION: 1986 AIR 2039 1986 SCR (3)1008 1986
SCC (4) 421 JT 1986 606 1986 SCALE (2)579
ACT:
Motor Vehicles Act, 1939: ss. 2(29A), 2(16),
63(7)-Cl.
(iv) of proviso-Rule of
'preference'-Interpretation and application of-Clause (iv)-Whether infringes
Article 14 of the Constitution-"Tourist Vehicle" may include a motor
car, a motor car excludes an omnibus.
Words and Phrases: "Tourist
Vehicle"-Meaning of-ss. 2(29A) and 2(16), Motor Vehicles Act, 1939.
Administrative Law:
Statutory Tribunal-Decision of-Cannot be
pre-empted by executive discretion.
HEADNOTE:
Sub-section (7) of s. 63 of the Motor
Vehicles Act, 1939 empowers the State Transport Authority, for the purpose of
promoting tourism, to grant permits valid for the whole or any part of India,
in respect of such number of tourist vehicles as the Central Government may in
respect of that State specify in this behalf. A proviso to that sub-section,
introduced by s. 24 of the Amending Act of 1978 laid down that preference shall
be given to applications for permits from (i) the India Tourism Development
Corporation; (iii) a State Tourism Development Corporation; (iii) a State
Tourist Department, and (iv) operators of tourist cars, or travel agents,
approved in this behalf by the Central Government.
There were as many as 495 applications before
the Karnataka State Transport Authority for the grant of 14 All India Tourist
Vehicle permits. By its proceedings dated April 30, 1984, the Authority granted
11 permits to the Karnataka State Tourism Development Corporation, one to the
Indian Tourism Development Corporation and two to the Karnataka State Road
Transport Corporation.
1009 On appeals being preferred, the
Karnataka State Transport Appellate Tribunal, by its order dated February 28,
1985 set aside the grant of two permits in favour of the Karnataka State Road
Transport Corporation, three out of eleven permits to the Karnataka State
Tourism Development Corporation, and instead granted three permits to private
operators and increased the number of permits granted to the Indian Tourism Development
Corporation from one to three, on the premises that in view of the rule of
preference enunciated by the proviso to s. 63(7) the applications from the
non-preferred category had to be excluded as the number of applications from
the applicants who were required to be given preference exceeded the number of
permits to be granted. Though some of the appellants before the Tribunal had
better expertise, experience and resources they did not succeed.
The High Court rejected the writ petitions on
the ground that the rule of preference contained in the proviso to s. 63(7)
contemplated exclusion of the 'non-preferred' class, if sufficient number of
applicants from the preferred classes were available.
In these appeals by special leave, it was
contended for the appellants that on a correct interpretation of the proviso to
s. 63(7) the preference became operative only if other things were equal. It
was also urged that the fourth sub-clause of the proviso offended Art. 14 of
the Constitution, and had to be struck down.
Allowing the appeals, the Court, ^
HELD: 1.1 The rule contained in the proviso
to s. 63(7) of the Motor Vehicles Act, 1939 is a rule of preference and not a
rule of exclusion, for it does not say that the permit shall be granted to the
categories of operators specified therein. The claims of eligible applicants
must be considered on merits, applying the rule of preference whenever the
claims are approximately equal. The application of an applicant is not to be
altogether excluded from consideration on the sole ground that another
applicant is entitled to preference. Though the proviso does not expressly
refer to other things being equal, the principle is very much implicit in it. [1015B-E]
1.2 What has been said by this Court in Sher Singh v.
Union of India, [1984] 1 SCR 464, about
preference in relation to s. 47(1-H) applies mutatis mutandis to the preference
contemplated by the proviso to s. 63(7) in the instant case. [1017C] 1010
2.1 Clause (iv) of the proviso to s. 63(7) is
arbitrary, unreasonable and unconstitutional. There is no indication in it as
to the manner in which the approval of the Central Government is to be sought
and granted and the considerations which are expected to weigh with the Central
Government. It compels a tribunal, created by a statute for the purpose of
considering rival claims and granting permits on merits, to give preference to
persons securing the approval of the Executive Government. To the extent the
clause goes, it pre-empts the decision of the designated tribunal by executive
discretion. [1017E-G]
2.2 The clause provides for a preference not
to operators of tourist vehicles but to operators of tourist cars and travel
agents, though the permits to be granted are for tourist vehicles. It is
difficult to understand why preference should be given to operators of tourist
cars in the matter of granting permits for tourist vehicles which may well be
omnibuses required to travel long distances.
[1018B-C]
2.3 The experience of running a tourist taxi
cannot be said to be a better qualification than running a tourist bus when the
question is of granting permits for tourist vehicles. [1018C-D]
3. Having regard to the definitions of
'tourist vehicle' and 'motor car' contained in s. 2(29-A) and s.
2(16) respectively of the Act, the expression
'tourist cars' cannot be said to mean 'tourist vehicles'. While a tourist
vehicle may include a motor car, a motor car, by definition, excludes an
omnibus. [1018D-E] In the instant case, the State Transport Appellate Tribunal
and the High Court have failed to consider the merits of the claims of the
Karnataka State Road Transport Corporation and the private operators who did
not get a certificate of approval from the Central Government, because of the
rule of preference contained in proviso to s. 63(7).
Their orders are, therefore, set aside. The
State Transport Appellate Tribunal is directed to re-hear the appeals and
dispose them of in accordance with law. [1017C-E]
CIVIL APPELLATE JURISDICTION: Civil Appeal
Nos.3677- 3680 of 1986 Etc.
From the Judgment and Order dated 10.3.1986
of the Karnataka High Court in W.P. Nos. 4053 to 4056 of 1985.
Shanti Bhushan, Dr. Y.S. Chitale, H.B. Datar,
K.R. Nagaraja, 1011 R.S. Hegde, R.B. Datar, S.S. Jawali, B.P. Singh, N.D.B.
Raju, R.P., Wadhwani, Aruneshwar Gupta,
Swaraj Kaushal, KMM Khan, S.R. Setia, A.T.M. Sampath and C.S. Vaidyanathan for
the appearing parties.
The Judgment of the Court was delivered by
CHINNAPPA REDDY, J. Special leave granted in all the cases. These appeals raise
common questions of law and may therefore, be disposed of by a common judgment.
In exercise of its powers under s. 63(7) of the Motor Vehicles Act, the Central
Government specified 50 as the number of 'All India Tourist Vehicle Permits'
which may be granted by the Karnataka State Transport Authority. By s. 24 of
Amending Act 47 of 1978, a proviso to s. 63(7) was introduced. We are concerned
in these appeals with the vires and interpretation of this proviso. By the time
the proviso came into force, 36 permits had been granted by the Karnataka State
Transport Authority and 14 remained to be granted. There were as many as 495
applications for the grant of these 14 permits. By an order dated February 1,
1984, the Supreme Court directed the Karnataka State Transport Authority to
dispose of these applications. The State Transport Authority, by its
proceedings dated April 30, 1984, granted 11 out of the 14 permits to the
Karnataka State Tourism Development Corporation, one permit to the Indian
Tourism Development Corporation and two permits to the Karnataka State Road
Transport Corporation. A number of appeals were preferred to the Karnataka
State Transport Appellate Tribunal. The Tribunal by its order dated February
28, 1985 set aside the grant of the two permits in favour of the Karnataka
State Road Transport Corporation, set aside the grant of three out of eleven
permits to the Karnataka State Tourism Development Corporation and instead
granted three permits to private operators and increased the number of permits
granted to the Indian Tourism Development Corporation from one to three.
The Tribunal took the view that having regard
to the rule of preference enunciated by the proviso to s. 63(7), the
applications from the 'non-preferred' category had to be excluded as the number
of applications from the applicants who were required to be given preference
exceeded the number of permits to be granted. It was on that ground that the
grant of two permits to the Karnataka State Road Transport Corporation was set
aside, though the Appellate Tribunal had no doubt regarding the resources and
ability of that corporation to operate the tourist services. It was on that
ground again, it was so stated by the Tribunal, that some of the appellants
1012 before the Tribunal had to be denied the grant of permits though otherwise
they would have been entitled to the grant of permits having regard to their
expertise, experience and resources. The Tribunal rejected their appeals
regretfully.
A large number of applicants filed writ
petitions in the High Court. The writ petitions were rejected by the High Court
on the ground that the preference contemplated by the proviso to s. 63(7)
contemplated exclusion of the 'non- preferred' class if sufficient number of
applicants from the preferred classes were available. The decision of this
Court in Sher Singh v. Union of India, [1984] 1 SCR 464 was distinguished on
the ground that in that case the court interpreted the word 'preference'
occurring in s. 47(1-H) in the back-ground of the provisions of Chapters IV and
IV-A of the Act, under the former of which the State Transport Undertaking
would have preference whereas under the latter the State Transport Undertaking
would have a monopoly. The Karnataka State Road Transport Corporation, the
Karnataka State Tourism Development Corporation and some other private
operators have filed these appeals by special leave of this Court under Art.
136 of the Constitution.
Shri Shanti Bhushan, learned counsel for the
Karnataka State Road Transport Corporation, Dr. Chitley, learned counsel for
some of the private operators, Shri Datar, learned counsel for the Karnataka
State Tourism Development Corporation, Shri Sampat and Shri Javali, learned
counsel for other private operators submitted that the State Transport
Appellate Tribunal and the High Court were wrong in distinguishing the decision
of this court in Sher Singh's case and that the true position was that on a
correct interpretation of the proviso to sec. 63(7), the preference became
operative only if other things were equal. It was also urged that the fourth
sub-clause of the proviso offended Art. 14 and had to be struck down. Shri C.S.
Vaidyanathan, learned counsel for some of the preferred private operators urged
that the view taken by the High Court and the State Transport Appellate
Tribunal was correct and that the fourth sub-clause of the proviso to s. 63(7)
did not offend Art. 14 of the Constitution.
We may now glance at some of the relevant
provisions of the Motor Vehicles Act. S. 2(33) defines a "transport
vehicle" as meaning a "public service vehicle or a goods
vehicle". A "public service vehicle" is defined in s. 2(25) as
"any motor vehicle used or adapted to be used for the carriage of
passengers for hire or reward, and includes a motor cab, contract carriage, and
stage carriage". A "motor car" is defined in s. 2(16) as
"any motor vehicle other than a transport vehicle, 1013 omni-bus,
road-roller, tractor, motor cycle or invalid carriage". A "contract
carriage" is defined as, broadly, a motor vehicle which carries a
passenger or passengers for hire or reward under a contract. "Tourist
vehicle" is defined by s. 2(29-A) as "a contract carriage constructed
or adapted and equipped and maintained in accordance with such specifications
as the State Government may, by notification in the Official Gazette, specify
in this behalf". "Stage carriage" is defined by s. 2(29) as
"a motor vehicle carrying or adapted to carry more than six persons
excluding the driver which carries passengers for hire or reward at separate
fares paid by or for individual passengers, either for the whole journey or for
stages of the journey." Chapter IV, sections 42 to 68, deals with
"Control of Transport vehicles". Section 42 prescribes permits for
the use of a transport vehicle in any public place. Sections 46, 47 and 48 deal
with the grant of stage carriage permits. Section 47(1) prescribes the matters
to be taken into consideration in granting stage carriage permits and the first
consideration, naturally, is "the interest of the public generally."
The proviso to s. 47(1) prescribes that, other things being equal, a registered
cooperative society and a person possessing a licence for driving transport
vehicles shall be given preference over individual owners in granting stage
carriage permits. Section 47(1-A) enables the State Government to reserve a
certain percentage of stage carriage permits for the Scheduled Castes and
Scheduled Tribes.
Section 47(1-C) enables the State Government
to reserve a certain percentage of stage carriage permits to persons belonging
to economically weaker sections of the community.
Section 47(1-H) prescribes that
notwithstanding anything contained in the section, an application for stage
carriage permit from a State Transport undertaking for operating in any
inter-State route shall be given preference overall other applications,
provided, of course, the authority is satisfied that the State Transport
Undertaking would be able to operate in the inter-State route without detriment
to its responsibility for providing efficient and adequate road transport
services in any notified area or notified route.
Sections 49, 50, 51 deal with the grant of
contract carriage permits. Section 52 and 53 deal with private carrier's permit
and sections 54, 55 and 56 deal with public carrier's permit. Section 57 deals,
generally with the procedure to be followed in applying for and granting
permits. Section 63(1) stipulates, broadly, that a permit granted by the
Regional Transport Authority of any one region shall not be valid in any other
region, unless the permit has been countersigned by the Regional Transport
Authority of that other region, and a permit granted in any one State shall not
be valid in any other State unless countersigned by the State Transport
Authority of 1014 that other State or by the Regional Transport Authority concerned.
Section 63(7) is the provision with whose interpretation and vires we are
primarily concerned in this case. It is as follows:
"(7) Notwithstanding anything contained
in sub- section(1) but subject to any rules that may be made under this Act,
any State Transport Authority may, for the purpose of promoting tourism, grant
permits valid for the whole or any part of India, in respect of such number of
tourist vehicles as the Central Government may, in respect of that State,
specify in this behalf, and the provisions of Sections 49, 50, 51, 57, 58, 59,
59-A, 60, 61 and 64 shall, as far as may be, apply in relation to such permits:
Provided that preference shall be given to
applications for permits from- (i) the India Tourism Development Corporation;
(ii) a State Tourism Development Corporation;
(iii) a State Tourist Department;
(iv) such operators of tourist cars, or such
travel agents, as may be approved in this behalf by the Ministry of the Central
Government dealing in tourism." Section 68 enables the State Government to
make rules for the purpose of carrying into effect the provisions of Chapter
IV. Chapter IV-A relates to "special provisions relating to State
Transport Under-takings." Sections 68-C, 68-D and 68-E provide for the
preparation and publication of schemes of road transport service to be provided
by State Transport Undertakings, the procedure to be followed, etc.
Section 68-F(1) prescribes that where, in
pursuance of an approved scheme, a State Transport Undertaking applies for a
stage carriage permit, a contract carriage permit or a public carrier's permit
in respect of a notified area or notified route, such permit shall be granted
to the State Transport Undertaking by the State Transport Authority in a case
where the said area or route lies in more than one region and the Regional
Transport Authority in any other case. This is to be so notwithstanding
anything to the contrary contained in Chapter-IV.
1015 The general scheme of the Act in the
matter of grant of permits for stage carriages and contract carriages appears
to be that except in the case of a notified route or notified area, where under
s. 68-F(1) the permit has to be necessarily granted to the State Transport
Undertaking, in all other cases, the claims of all eligible applicants must be
considered on merits, applying the rules of preference wherever the claims are
approximately equal. Except in the case of a notified route or notified area,
the application of no applicant may be altogether excluded from consideration
on the sole ground that another applicant is entitled to preference under one
or the other provisions of the statute. The proviso to s. 47(1) for example,
provides that other conditions being equal, an application for a stage carriage
permit from a cooperative society or a person holding a valid licence for
driving transport vehicles shall as far as may be, be given preference over
applications from individual owners. There is no problem here since the proviso
itself says that the rules of preference will apply only if other conditions
are equal. Section 47(1-H) also enunciates a rules of preference and says that
an application for stage carriage permit from State Transport Undertaking for
operating in any inter-State route shall be given preference overall other applications.
While it is true that s. 47(1-H) does not expressly refer to "other things
being equal", it appears to be implicit in the provision that other things
are equal. The rule is a rule of preference and not a rule of exclusion.
Section 47(1-H) does not say, for example, like s. 68-F(1) that the permit
shall be granted to the State Transport Undertaking. That is how s. 47(1-H) was
interpreted in Sher Singh's case. Desai, J., speaking for the court observed:
"However, when an application for a
permit is made under Chapter IV, the Undertaking has to compete with private
operators who may as well make an application for permit. When the Undertaking
applies for permit under Chapter IV, it must satisfy the Regional Transport
Authority that it is better suited than the private operator to render
transport facility to the travelling public. Sec. 47(1-H) however, provides
that in the case of inter-State route, the Undertaking will have preference in
the matter of stage carriage permit. Does preference of this nature deny
equality guaranteed by Art. 14? The expression 'preference' amongst others
means prior right, advantage, precedence etc. But how would it be possible to
give precedence to one over the other.
It signifies that other things being equal,
1016 one will have preference over the others. When an application for a stage
carriage permit is being processed as required by sec. 47, the application of
the Undertaking for an inter-State route shall be examined as application of
any other private operator. Their merits and demerits must be ascertained
keeping in view the requirements of (a) to (f) of s. 47(1) and after comparing
the merits and demerits of both, not with the yard- stick of mathematical
accuracy, but other things being equal, the application of the Undertaking will
have preference over others. Qualitative and quantitative comparison on broad
features of passenger transport facility such as fleet, facilities to
travelling public and other relevant consideration may be undertaken and after
balancing these factors other things being equal, the application of the
Undertaking shall be given preference over other applicants. There is no
question of eliminating private operators merely because the Undertaking
applies for a stage carriage permit under Chapter IV. That situation is catered
to under Chapter IV-A. In an application under Chapter IV, Corporation has to
enter the arena like any other applicant, face the competition and come-up to
the level of other private operators intending to obtain stage carriage permits
and then in respect of the route in question claim preference. Would this
statutory provision violate equality guaranteed by Art. 14? The answer is
obviously in the negative."
..................................................
..................................................
"................ let it be made clear
that while considering the application for stage carriage permit under s. 47,
the private operator has an equal chance to get a permit even on inter- State
route if it shows that the Undertaking is either unable to provide efficient
and economical service or that the private operator is better equipped to
render the same. Preference in this context would mean that other things
generally appearing to be qualitatively and quantitatively equal though not
with mathematical accuracy, statutory provision will tilt the balance in favour
of the Undertaking." What has been said by the Court with reference to the
preference 1017 provided for in s. 47(1-H) applies with equal force to the preference
provided for by the proviso to s. 63(7). In the judgment under appeal, the High
Court attempted to distinguish the decision of this Court in Sher Singh's case
on the ground that any other interpretation would have wiped out the difference
between Chapter IV and Chapter IV-A. We do not think the High Court was right
in distinguishing the case in that fashion. The reference to Chapter IV-A there
was for the purpose of contrasting the exclusion contemplated by s. 68.F(1)
with the preference to be given under s. 47 (1-H) and so to interpret the word
'preference' occurring in s. 47(1-H). We have no hesitation in saying that all
that has been said about 'preference' in Sher Singh's case in relation to s.
47(1-H) applies mutatis mutandis to the preference contemplated by the proviso
to s. 63(7). Since the State Transport Appellate Tribunal and the High Court
have failed to consider the merits of the claims of the Karnataka State Road
Transport Corporation and the private operators who did not get a certificate
of approval from the Central Government, because of the rule of preference
contained in proviso to s. 63(7), the proper course for us is to set aside the
orders of the State Transport Appellate Tribunal and the High Court and to
direct the State Transport Appellate Tribunal to re-hear the appeals and
dispose them of in accordance with law, after considering the claims of the
eligible applicants in the manner indicated in Sher Singh's case and now.
A question was raised before us about the
vires of the fourth clause of the proviso to s. 63(7). Clauses (i) to (iii) of
the proviso providing for preference to be given to applications for permits
from the Indian Tourism Development Corporation, the State Tourism Development
Corporation and the State Tourist Department were not questioned, but the
preference provided for by clause (iv) and to be given to "such operators
of tourist cars, or such travel agents, as may be approved in this behalf by
the Ministry dealing in tourism" was questioned as an infringement of Art.
14 of the Constitution. We find it difficult to sustain this clause and uphold
its validity. The very idea that a Tribunal created by a statute for the
purpose of considering rival claims and granting permits on merits should be
compelled to give peference to persons securing the approval of the executive
Government, appears to us to be arbitrary and unreasonable. To the extent that
it goes, the clause pre- empts the decision of the designated tribunal by
executive discretion. It was said that the clause contained sufficient
guidelines for the exercise of discretion in granting approval by the Central
Government. It was said that the object of the proviso to s.
1018 63(7) was very obviously the promotion
of tourism and the approval of the Central Government would be given to those
operators of tourist cars and travel agents who may be expected to serve that
purpose.
It is difficult to agree with these
submissions. In the first place, clause (d), it is seen, provides for a
preference, not to operators of tourist vehicles but to operators of tourist
cars and travel agents. Though the permits to be granted are for tourist
vehicles, the preference is confined to operators of tourist cars and travel
agents. One may understand a preference granted to operators of tourist
vehicles but it is difficult to understand why preference should be given to
operators of tourist cars in the matter of granting permits for tourist
vehicles which may well be omnibuses required to travel long distances. Surely
it cannot be said that experience of running a tourist taxi is a better
qualification than running a tourist bus when the question of granting permits
for tourist vehicles arises. The High Court of Karnataka tided over the
difficulty by interpreting the expression "tourist cars" as meaning
"tourist vehicles". It is difficult to agree with the interpretation
of the Karnataka High Court having regard to the definitions of "Transport
Vehicle" and "motor car" contained in s. 2(29-A) and s.
2(16) respectively. While a tourist vehicle
may include a motor car, a motor car, by definition, excludes an omnibus.
In the second place, we have no indication as
to the manner in which the approval of the Central Government is to be sought
and granted and the considerations which are expected to weigh with the Central
Government. Shri C.S. Vaidyanathan, learned counsel for the 'Preferred'
Operators has placed before us 'a Scheme for granting approval to tourist
transport operators in India.' The scheme makes no reference to the proviso to
sec. 63(7) of the Motor Vehicles Act. On the other hand, it mentions that
approval carries with it certain privileges, such as, allotment of ex-STC
vehicles and that it is, therefore, necessary that the department is able to
exercise some control on the functioning of these operators. The terms and
conditions to be fulfilled are that 'the party must have been in the car- hire
business for a period of 2 years with the help of cars of indigenous make or
cars obtained from elsewhere and should have sufficient contacts with travel
agencies hoteliers/airlines, etc. and should be financially sound or that they
should be owning and operating five vehicles as tourist taxies of either
indigenous make or acquired from elsewhere regardless of the period in the
car-hire business or that they should be ex-Defence Service personnel, who
satisfy certain prescribed conditions. It is seen that the scheme excludes
omnibus operators and requires applicants to have 1019 either two years'
experience in the car hire business with contacts in the tourist business or to
own five tourist taxies. There are no guidelines as to how the discretion to
grant approval is to be exercised once the minimum conditions are fulfilled.
The matter appears to be left to the total discretion of the Central
Government, virtually as we said, pre-empting the decision of the statutory
tribunal.
We think that clause (iv) of the proviso to
s. 63(7) is unconstitutional and we so declare it.
In the result we set aside the orders of the
State Transport Appellate Tribunal and the High Court and direct the State
Transport Appellate Tribunal to hear the appeals in the light of what we have
said.
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