B.A.LINGA REDDY ETC.ETC. Vs. KARNATAKA STATE TRANSPORT AUTH.& ORS.
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Civil), 11690-11712 of 2014, Judgment Date: Dec 18, 2014
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.11690-11712 OF 2014
[Arising out of SLP [C] Nos.20539-20561/2011]
B.A. Linga Reddy Etc. Etc. ... Appellants
Vs.
Karnataka State Transport Authority & Ors. ... Respondents
With CA No.11719/2014 @ SLP [C] No.17316/2011;
CA No.11714-16/2014 @ SLP [C] Nos.17119-17121/2011;
CA No.11725/2014 @ SLP [C] No.17342/2011;
CA No.11722/2014 @ SLP [C] No.17339/2011;
CA No.11728/2014 @ SLP [C] No.19083/2011;
CA No.11730/2014 @ SLP [C] No.19084/2011;
CA No.11753/2014 @ SLP [C] No.20569/2011;
CA No.11771/2014 @ SLP [C] No.20994/2011;
CA No.11736-740/2014 @ SLP [C] Nos.19959-19963/2011;
CA No.11732-733/2014 @ SLP [C] Nos.19942-19943/2011;
CA No.11756-769/2014 @ SLP [C] Nos.20979-20992/2011;
CA No.11745-11775/2014 @ SLP [C] Nos.20562-20568/2011;
CA No.11774-89/2014 @ SLP [C] No.20996-21011/2011;
CA No.11742/2014 @ SLP [C] No.20193/2011;
CA No.11792/2014 @ SLP [C] No.28339/2011;
CA No.11793/2014 @ SLP [C] No.36420/2011;
CA No.11796-97/2014 @ SLP [C] Nos.2267-2268/2012;
CA No.11799/2014 @ SLP [C] No.6776/2012;
CA No.11803-05/2014 @ SLP [C] Nos.9744-9746/2012;
CA No.11801/2014 @ SLP [C] No.7108/2012;
CA No.11815/2014 @ SLP [C] No.22436/2012;
CA No.11813/2014 @ SLP [C] No.22433/2012;
CA No.11808-09/2014 @ SLP [C] Nos.16743-16744/2012;
CA No.11811/2014 @ SLP [C] No.17918/2012;
CA No.11820/2014 @ SLP [C] No.30971/2012;
CA No.11817/2014 @ SLP [C] No.28859/2012; and
CA Nos.11822-35/2014 @ SLP [C] Nos.31092-31105/2013.
J U D G M E N T
ARUN MISHRA, J.
1. Leave granted in all the SLPs.
2. The question involved in the appeals is whether the State Government
while modifying the scheme under Section 102 of the Motor Vehicles Act,
1988 (hereinafter referred to as 'the Act of 1988') is required to assign
reasons while modifying the existing scheme. The High Court of Karnataka
has quashed the orders modifying the scheme called Bellary Scheme notified
in the Gazette dated 26.7.2003; Kolar Scheme notified on 7.11.2003;
Bangalore and Kanakpura Plans as notified on 11.11.2003, modification of
the scheme called Mysore Scheme, BTS Scheme by notification dated
31.5.2007.
3. The Bellary Scheme was initially notified on 31.10.1962 by Karnataka
State Road Transport Corporation, Bangalore, (for short 'KSRTC') under
section 68C of the Motor Vehicles Act, 1939 (hereinafter referred to as
'the Act of 1939') by which it was proposed to operate stage carriage
services on 86 routes in Bellary sector for the purpose of providing
efficient, adequate, and economical road transport services. The Government
approved the scheme and published it in the Gazette dated 18.4.1964. The
scheme provided for operation of services by the State Transport
Undertakings only and no exemption had been provided therein for operation
of services by the State Transport Undertakings of other States and the
existing inter-State private operators. The said Scheme was modified on
10.1.1980 under section 68E of the Act of 1939 providing for operation of
services by permit-holders who had been granted permits by the Transport
Authorities on the date of publication on the basis of inter-State
agreements entered into by the Government of any other State provided that
the operators on such route shall not be permitted to operate on the routes
which overlap any portion of the notified routes. The Government further
modified the approved scheme on 31.3.2000 under section 102(1) of the Act
of 1988. A provision was made for operation of the services by permit-
holders who had been granted permits to ply their vehicles on inter-State
routes, with a condition not to pick up or set down the passengers on any
portion of the routes overlapping the notified routes.
4. Thereafter, under section 102(2) of the Act of 1988, a proposal was
published in the Gazette dated 26.10.2002 to modify the said Scheme.
Objections and representations were invited. KSRTC also filed detailed
objections with respect to the proposed modifications. Objections were
heard. The impugned notification modifying the aforesaid scheme had been
issued by the State Government permitting operation of services by permit-
holders who had been granted permits to ply their vehicles on inter-State
routes, inter-District routes and intra-District routes and operating their
services after the publication of the modified schemes dated 10.1.1988 and
1.4.2000 and those permits operating on 1.4.2002 and whose routes were
overlapping, the notified routes of the Bellary approved scheme with a
direction not to pick up or set down passengers on any portion of the
routes overlapping the notified routes except at bus-stands.
5. Similarly, Kollar Pocket Scheme was initially notified on 10.1.1968
and later on modified on 10.1.1980. The impugned modified scheme was
published on 7.11.2003. Mysore, BTS, Kanakpura and Bangalore Schemes were
initially notified on 17.11.1960, 16.1.1961, 24.12.1965 and 7.6.1980
respectively. The Mysore Scheme was earlier modified on 21.11.1987. The
impugned notification modifying Mysore, Bangalore and BTS Schemes was
issued on 31.5.2007. The impugned notification of Bangalore and Kanakpura
Plans had been issued on 11.11.2003, modifying the scheme.
6. As against the proposed modifications, detailed objections had been
filed contending that the State Transport Authorities have granted permits
illegally time and again on the notified routes. The permits were issued in
a mala fide manner, violation of law was committed repeatedly and such
violations cannot be ratified by the State Government as providing
efficient services to the public has always been the main objective of the
State Transport Undertakings. The State Transport Undertakings are on a
better footing to provide efficient, adequate economical and well-co-
ordinated services to cater to the demand of travelling public as compared
to the private operators. Permits granted illegally cannot be saved by the
Government under the guise of modifying the scheme. There are number of
private operators whose permits have been rejected and they had been
discriminated against while others were granted illegal permits. They will
also pray for grant of permits on the notified routes. If the illegal
permits are saved, it would lead to several complications. Under section
102 of the M.V. Act, any modification to an approved scheme can only be
made in public interest. The permits were not granted on the representation
of the public. It is at the instance of the private operators, an exercise
had been undertaken. The permit-holders are operating services on
nationalised routes causing heavy financial losses to the Corporation. The
saving of illegal permits will render the Scheme infructuous and its
integrity will be diluted. The Corporation is fully equipped to meet any
additional demand from the travelling public. It has taken utmost care to
provide modern buses and to make its fleet environment friendly by
controlling the smoke emission level of its vehicles. It has also framed
the scheme of providing compensation to the passengers of the bus on behalf
of the Corporation because of unfortunate accidents. Modern bus stands have
been constructed with public amenities making huge investments and also
issue free/concessional passes to the blind, physically challenged, Police
and Press reporters. The Corporation is fully controlled by State and
Central Government as such the proposed modification be dropped.
7. The State Government in the order dated 23.3.2003, passed with
respect to modification of Bellary Scheme, has observed that modifications
had been necessitated in view of the decision of this Court in Karnataka
State Road Transport Corporation v. Ashrafulla Khan & Ors. [2002 (2) SCC
560]. During the period 4.12.1995 and 14.1.2002 considering the
interpretation with regard to "overlapping", "intersection" and "corridor
restriction" of the High Court of Karnataka, the Transport Authorities had
granted the permits to private operators in accordance with the Act of 1988
and the Rules made thereunder considering the need of the travelling public
as these operators are meeting the genuine demand of the travelling public
in excess of services provided by the State Transport Undertakings. So it
has become necessary to save all the permits granted by the RTAs. which
were in operation as on 1.4.2002 with the condition that they shall not
pick up or set down the passengers except in the bus-stands.
8. With respect to the modification in Mysore, Bangalore, BTS and
Kanakpura, order dated 25.5.2007 had been passed in which it has been
mentioned that it is to provide exemption to the permits which are granted
by the Transport Authorities and are pending renewal as on 9.3.2007 in
respect of the routes operating on inter-State, inter-District and intra-
District routes overlapping the road section of notified routes modified as
per the approved notification dated 9.3.2007, in the order, no reason -
good, bad or otherwise - has been given. While in the notification which
has been issued, it has been mentioned that it was considered necessary in
public interest so to do. Schemes of Mysore, Bangalore and BTS have been
modified. In the notification dated 11.11.2003 modifying the Bangalore and
Kanakpura Schemes, it has been mentioned that the Temple Committee had
submitted a representation on which a proposal had been initiated to modify
the scheme and accordingly modification has been made. On behalf of the
State Government, it was stated before the High Court that it was ready to
pass fresh orders after considering various objections raised by KSRTC.
9. The High Court of Karnataka by impugned orders has quashed the
modifications so made in the various Schemes. The High Court of Karnataka
vide order dated 21.4.2011 has quashed the notification dated 31.5.2007
with respect to Mysore, Bangalore and BTS Schemes. After looking into the
original records, it was observed that the Ministers held a cross-sitting
held by the Corporation regarding notification of the Shimoga Scheme and an
order was passed on 17.4.2007 modifying the Shimoga Scheme. There was no
application of mind to the various objections filed by the Corporation and
without considering them, an order has been passed. The State Government
had been directed to consider the objections and pass a fresh order in
accordance with law within 3 months, providing an opportunity of hearing to
the Corporation and other private operators, the permit-holders holding
valid permits as on the date of the order and if they are authorised to run
the vehicles otherwise for a period of 3 months had been permitted to
operate. Similar is the order passed with respect to Bangalore and
Kanakpura Schemes. Vide order dated 14.9.2011, the notification dated
11.11.2003 with respect to Bangalore and Kanakpura Schemes has also been
quashed. Similarly, other modifications have also been quashed.
10. Mr. K.K. Venugopal, learned senior counsel for the appellants, has
submitted that reasons have been assigned by the State Government while
modifying the schemes. It was not necessary to cull out the reasons in
detail. The exercise has been undertaken in public interest. Thus, there
was no reason to quash the modifications made in the schemes.
11. Learned counsel for the appellants has placed reliance on the
decision of this Court in H.C.Narayanappa & Ors. v. The State of Mysore &
Ors. [1960 (3) SCR 742]. Following paragraphs have been relied upon :
"Re. 3 :
The plea that the Chief Minister who approved the scheme under
s. 68D was biased has no substance. Section 68D of the Motor Vehicles Act
undoubtedly imposes a duty on the State Government to act judicially in
considering the objections and in approving or modifying the scheme
proposed by the transport undertaking. Gullapalli Nageswara Rao v. Andhra
Pradesh State Road Transport Corporation and another (1959) Supp. 1 S.C.R.
319. It is also true that the Government on whom the duty to decide the
dispute rests, is substantially a party to the dispute but if the
Government or the authority to whom the power is delegated acts judicially
in approving or modifying the scheme, the approval or modification is not
open to challenge on a presumption of bias. The Minister or the officer of
the Government who is invested with the power to hear objections to the
scheme is acting in his official capacity and unless there is reliable
evidence to show that he is biased, his decision will not be liable to be
called in question, merely because he is a limb of the Government. The
Chief Minister of the State has filed an affidavit in this case stating
that the contention of the petitioners that he was "biased in favour of the
scheme was baseless"; he has also stated that he heard such objections and
representations as were made before him and he had given the fullest
opportunity to the objectors to submit their objections individually. The
Chief Minister has given detailed reasons for approving the scheme and has
dealt with such of the objections as he says were urged before him. In the
last para. of the reasons given, it is stated that the Government have
heard all the arguments advanced on behalf of the operators and "after
giving full consideration to them, the Government have come to the
conclusion that the scheme is necessary in the interest of the public and
is accordingly approved subject to the modifications that it shall come
into force on May 1, 1959". In the absence of any evidence controverting
these averments, the plea of bias must fail.
Re. 4 :
The argument that the Chief Minister did not give "genuine
consideration" to the objections raised by operators to the scheme in the
light of the conditions prescribed has no force. The order of the Chief
Minister discusses the questions of law as well as questions of fact. There
is no specific reference in the order to certain objections which were
raised in the reply filed by the objectors, but we are, on that account,
unable to hold that the Chief Minister did not consider those objections.
The guarantee conferred by s. 68D of the Motor Vehicles Act upon persons
likely to be affected by the intended scheme is a guarantee of an
opportunity to put forth their objections and to make representations to
the State Government against the acceptance of the scheme. This opportunity
of making representations and of being heard in support thereof may be
regarded as real only if in the consideration of the objections, there is a
judicial approach. But the Legislature does not contemplate an appeal to
this Court against the order passed by the State Government approving or
modifying the scheme. Provided the authority invested with the power to
consider the objections gives an opportunity to the objectors to be heard
in the matter and deals with the objections in the light of the object
intended to be secured by the scheme, the ultimate order passed by that
authority is not open to challenge either on the ground that another view
may possibly have been taken on the objections or that detailed reasons
have not been given for upholding or rejecting the contentions raised by
the objectors."
12. This Court observed that while dealing with these quasi-judicial
matters like modifying the scheme, the Act of 1939 imposed a duty on the
State Government to act judicially in considering the objections while
approving or modifying the scheme. The same is not open to question on the
presumption of bias. It has been observed that the Chief Minister had given
detailed reasons for approving the scheme and had dealt with such technical
and legal objections filed before him. It has also been observed that the
ultimate order passed by the Authority is not open to challenge on the
ground that another view may possibly have been taken on the objections or
that detailed reasons have not been given. It is apparent that reasons have
to be given, factual and legal objections have to be dealt with.
13. Reliance has also been placed by the learned senior counsel for the
appellants on Capital Multi-purpose Co-operative Society Bhopal & Ors. v.
The State of M.P. & Ors. [1967 (3) SCR 329] wherein this Court dealt with
the mode of hearing of the objections and the question of adequate and real
hearing. The paragraph relied upon is reproduced hereunder :
"The third contention raised on behalf of the appellants is that the orders
approving and modifying the schemes in this case do not show that the
authority had applied its mind to the question whether the schemes were
such as to subserve the purposes of providing an efficient, adequate,
economical and properly co-ordinated transport service. Reliance in this
connection is placed on certain. American cases which hold that the lack of
an express finding necessary under a statute to validate an order of an
administrative agency cannot be supplied by implication. When therefore
such an administrative agency is required as a condition precedent to an
order to make a finding of facts the validity of the order must rest upon
the needed finding. If it is lacking the order is ineffective and the lack
of express finding cannot be supplied by implication. It is unnecessary for
us to refer to the American cases in detail; it is enough to say that the
principles enunciated above may be unexceptionable where the existence of a
finding is necessary for taking action, but that depends upon the words of
the statute and therefore we must now turn to the words of Section 68-C and
Section 68-D. We have already indicated that the State Transport
Undertaking publishes a scheme when it has arrived at a certain opinion.
After the scheme is published under Section 68-C any person affected by it
can object within 30 days under Section 68-D (1). Thereafter the State
Government considers the objections and gives an opportunity to the
objector to be heard and also to the State Transport Undertaking.
Thereafter the State Government or the authority authorised by it either
approves or modifies the scheme or even rejects it. There is no express
provision in these two sections laying down that the authority hearing
objections must come to some finding of fact as a condition precedent to
its final order. As such no express finding as envisaged in the American
cases is necessary under Section 68-C read with Section 68-D that the
scheme provides an efficient, adequate, economical and properly co-
ordinated road transport service. Besides we are of opinion that the whole
object of hearing objections under Section 68-D is to consider whether the
scheme provides an efficient, adequate, economical and properly co-
ordinated road transport service. After hearing objections the State
Government, or the officer authorised by it has either to approve or
modify, or if necessary to reject the scheme. Where the scheme is approved
or modified it necessarily follows in our opinion that it has been found to
provide an efficient, adequate, economical and properly co-ordinated
transport service; if it is not of that type, the State Government or the
authority appointed to hear objections would reject it. In the absence of a
provision requiring an express finding in these two sections it seems to us
that the very order of the State Government or the authority appointed by
it to hear objections must be held to mean either, where the scheme is
approved or modified, that it subserves the purposes mentioned in Section
68-C, or, where it is rejected, that it does not subserve the purposes.
Section 68-D (2) does not require in our opinion any express finding, and
even if there is none in the present case, it would not invalidate the
orders passed by the authority hearing the objections. The argument on
behalf of the appellants under this head is also rejected."
14. It has also been observed that there is no power or authority in the
State Government to compel attendance of witness or to compel production of
documents. This Court has emphasised that no express finding is necessary
under section 68C read with section 68D that the scheme provides efficient,
adequate, economical and properly co-ordinated road transport service as
abovesaid is the purpose of the entire exercise. If the scheme is modified,
it follows that it has been to provide efficient, adequate, economical and
proper transport service. This Court has considered the question whether
section 68D requires recording of any particular finding as condition
precedent to exercise the power conferred thereunder. The decision does not
dispense with the requirement to mention the reasons.
15. Reliance has also been placed by the operators on Gullapalli
Nageswara Rao & Ors. vs. Andhra Pradesh State Road Transport Corporation &
Anr. [AIR 1959 SC 308] in which it was laid down that an express recital of
the formation of the opinion that the scheme was necessary in public
interest, is not made a condition of the validity of the scheme. This Court
has laid down that the framing of scheme is manifestation of such opinion.
This Court has laid down thus :
"14. The learned counsel then contends that the scheme published does not
disclose that the State Transport Undertaking was of the opinion that the
scheme was necessary in the interests of the public and therefore, as the
necessary condition for the initiation of the scheme was not complied with,
the scheme could not be enforced. Section 68-C says that where any State
Transport Undertaking is of opinion that for specified reasons it is
necessary in the public interest that road transport service should be run
or operated by the State Transport Undertaking, it may prepare a scheme
giving particulars of the scheme and publish it in the Official Gazette. An
express recital of the formation of the opinion by the Undertaking in the
scheme is not made a condition of the validity of the scheme. The scheme
published in terms of the section shall give particulars of the nature of
the service proposed to be rendered, the area or route proposed to be
covered and such other particulars respecting thereto. It is true that the
preparation of the scheme is made to depend upon the subjective opinion of
the State Undertaking as regards the necessity for such a scheme. The only
question, therefore, is whether the State Transport Undertaking formed the
opinion before preparing the scheme and causing it to be published in the
Official Gazette. The scheme published, as already noticed, was signed by
Guru Pershad, General Manager, State Transport Undertaking, Andhra Pradesh
Road Transport. The preamble to the scheme reads:
"In exercise of the powers conferred by section 68-C of the Motor Vehicles
Act, 1939, it is hereby proposed, for the purpose of providing an
efficient, adequate, economical and properly co-ordinated road transport
service in public interest, to operate the following transport services as
per the particulars given below with effect from a date to be notified by
the Government."
We have already held that Guru Pershad represented the State Transport
Undertaking. The scheme was proposed by the said Undertaking in exercise of
the powers under Section 68-C of the Act for the purpose of providing an
efficient, adequate, economical and properly coordinated road transport
service in public interest. Except for the fact that the word 'opinion' is
omitted, the first part of the Section 68-C is incorporated in the preamble
of the scheme; and, in addition, it also discloses that the scheme is
proposed in exercise of the powers conferred on the State Transport
Undertaking under Section 68-C of the Act. The State Transport Authority
can frame a scheme only if it is of opinion that it is necessary in public
interest that the road transport service should be run or operated by the
Road Transport Undertaking. When it proposes, for the reasons mentioned in
the section, a scheme providing for such a transport undertaking, it is a
manifest expression of its opinion in that regard. We gather from a reading
of the scheme that the State Transport Undertaking formed the necessary
opinion before preparing the scheme and publishing it. The argument of the
learned counsel carries technicality to a breaking point and for the
aforesaid reasons, we reject it."
16. Sections 68-C, 68-D and 68-E of the Act of 1939 which came up for
consideration are reproduced hereunder :
"68-C. Preparation and publication of scheme of road transport service of
a State Transport Undertaking.- Where any State Transport Undertaking is of
opinion that for the purpose of providing an efficient, adequate,
economical and properly co-ordinated road transport service, it is
necessary in the public interest that road transport services in general or
any particular class of such service in relation to any area or route or
portion thereof should be run and operated by the State Transport
Undertaking, whether to the exclusion, complete or partial, of other
persons or otherwise, the State Transport Undertaking may prepare a scheme
giving particulars of the nature of the services proposed to be rendered,
the area or route proposed to be covered and such other particulars
respecting thereto as may be prescribed, and shall cause every such scheme
to be published in the Official Gazette and also in such other manner as
the State Government may direct."
"68-D. Objection to the scheme - (1) On the publication of any scheme in
the Official Gazette and not less than one newspaper in regional language
circulating in the area or route which is proposed to be covered by such
scheme, -
any person already providing transport facilities by any means along or
near the area or route proposed to be covered by the scheme;
any association representing persons interested in the provision of road
transport facilities recognised in this behalf by the State Government; and
any local authority or police authority within whose jurisdiction any part
of the area or route proposed to be covered by the scheme lies,
may within thirty days from the date of its publication in the Official
Gazette, file objections to it before the State Government."
"68-E. Cancellation or modification of scheme.-(1) Any scheme published
under sub-section (3) of Section 68-D may at any time be cancelled or
modified by the State Transport Undertaking and the procedure laid down in
Section 68-C and Section 68-D shall, so far as it can be made applicable,
be followed in every case where the scheme is proposed to be cancelled or
modified as if the proposal were a separate scheme :
Provided that the State transport undertaking may, with the previous
approval of the State Government, modify without following the procedure
laid down in Section 68-C and Section 68-D, any such scheme relating to any
route or area in respect of which the road transport services are run and
operated by the State transport undertaking to the complete exclusion of
other persons in respect of the following matters, namely, --
(a) increase in the number of vehicles or the number of trips;
(b) change in the type of vehicles without reducing the seating capacity;
(c) extension of the route or area without reducing the frequency of the
service; or
(d) alteration of the time-table without reducing the frequency of the
service.
[(2) Notwithstanding anything contained in sub-section (1), the State
Government may, at any time, if it considers necessary in the public
interest so to do, modify any scheme published under sub-section (3) of
Section 68-D, after giving -
(i) the State transport undertaking, and
(ii) any other person who, in the opinion of the State Government, is
likely to be affected by the proposed modification,
an opportunity of being heard in respect of the proposed modification]."
17. The pari materia provisions contained in sections 99 and 102 of the
Act of 1988 are reproduced hereunder:
"99. Preparation and publication of proposal regarding road transport
service of a State transport undertaking.-[(1)] Where any State Government
is of opinion that for the purpose of providing an efficient, adequate,
economical and properly co-ordinated road transport service, it is
necessary in the public interest that road transport services in general or
any particular class of such service in relation to any area or route or
portion thereof should be run and operated by the State transport
undertaking, whether to the exclusion, complete or partial, of other
persons or otherwise, the State Government may formulate a proposal
regarding a scheme giving particulars of the nature of the services
proposed to be rendered, the area or route proposed to be covered and other
relevant particulars respecting thereto and shall publish such proposal in
the Official Gazette of the State formulating such proposal and in not less
than one newspaper in the regional language circulating in the area or
route proposed to be covered by such scheme and also in such other manner
as the State Government formulating such proposal deem fit.
[(2) Notwithstanding anything contained in sub-section (1), when a proposal
is published under that sub-section, then from the date of publication of
such proposal, no permit shall be granted to any person, except a temporary
permit during the pendency of the proposal and such temporary permit shall
be valid only for a period of one year from the date of its issue or till
the date of final publication of the scheme under section 100, whichever is
earlier.]
x x x x x
102. Cancellation or modification of scheme.-(1) The State Government may,
at any time, if it considers necessary, in the public interest so to do,
modify any approved scheme after giving-
(i) the State transport undertaking; and
(ii) any other person who, in the opinion of the State Government, is
likely to be affected by the proposed modification,
an opportunity of being heard in respect of the proposed modification.
(2) The State Government shall publish any modification proposed under sub-
section (1) in the Official Gazette and in one of the newspapers in the
regional languages circulating in the area in which it is proposed to be
covered by such modification, together with the date, not being less than
thirty days from such publication in the Official Gazette, and the time and
place at which any representation received in this behalf will be heard by
the State Government."
18. It is apparent from the provisions that the scheme is framed for
providing efficient, adequate, economical and properly co-ordinated road
transport service in public interest. Section 102 of the Act of 1988 does
not lay down the requirement of recording any express finding on any
particular aspect; whereas the duty is to hear and consider the objections.
It requires the State Government to act in public interest to cancel or
modify a scheme after giving the State Transport Undertaking or any other
affected person by the proposed modification an opportunity of hearing. The
State is supposed to be acting in public interest while exercising the
power under the provision. However, that does not dispense with the
requirement to record reasons while dealing with objections.
19. Modification of the scheme is a quasi-judicial function while
modifying or cancelling a scheme. The State Government is duty-bound to
consider the objections and to give reasons either to accept or reject
them. The rule of reason is anti-thesis to arbitrariness in action and is a
necessary concomitant of the principles of natural justice.
20. In Siemens Engineering & Manufacturing Co. of India Ltd. v. Union of
India [1976 (2) SCC 981], it was held :
"6. x x x It is now settled law that where an authority makes an order in
exercise of a quasi-judicial function, it must record its reasons in
support of the order it makes. Every quasi-judicial order must be supported
by reasons. That has been laid down by a long line of decisions of this
Court ending with N.M. Desai v. Testeels Ltd.. But, unfortunately, the
Assistant Collector did not choose to give any reasons in support of the
order made by him confirming the demand for differential duty. This was in
plain disregard of the requirement of law. The Collector in revision did
give some sort of reason but it was hardly satisfactory. He did not deal in
his order with the arguments advanced by the appellants in their
representation dated December 8, 1961 which were repeated in the subsequent
representation dated June 4, 1965. It is not suggested that the Collector
should have made an elaborate order discussing the arguments of the
appellants in the manner of a Court of law. But the order of the Collector
could have been a little more explicit and articulate so as to lend
assurance that the case of the appellants had been properly considered by
him. If courts of law are to be replaced by administrative authorities and
tribunals, as indeed, in some kinds of cases, [pic]with the proliferation
of Administrative Law, they may have to be so replaced, it is essential
that administrative authorities and tribunals should accord fair and proper
hearing to the persons sought to be affected by their orders and give
sufficiently clear and explicit reasons in support of the orders made by
them. Then alone administrative authorities and tribunals exercising quasi-
judicial function will be able to justify their existence and carry
credibility with the people by inspiring confidence in the adjudicatory
process. The rule requiring reasons to be given in support of an order is,
like the principle of audi alteram partem, a basic principle of natural
justice which must inform every quasi-judicial process and this rule must
be observed in its proper spirit and mere pretence of compliance with it
would not satisfy the requirement of law. x x x."
21. This Court in Rani Lakshmi Bai Kshetriya Gramin Bank's case (supra)
while relying upon S.N. Mukherjee v. Union of India [1990 (4) SCC 594] has
laid down thus :
"8. The purpose of disclosure of reasons, as held by a Constitution Bench
of this Court in S.N. Mukherjee v. Union of India (1990 (4) SCC 594), is
that people must have confidence in the judicial or quasi-judicial
authorities. Unless reasons are disclosed, how can a person know whether
the authority has applied its mind or not? Also, giving of reasons
minimises the chances of arbitrariness. Hence, it is an essential
requirement of the rule of law that some reasons, at least in brief, must
be disclosed in a judicial or quasi-judicial order, even if it is an order
of affirmation."
22. A Constitution Bench of this Court has laid down in Krishna Swami v.
Union of India & Ors. [1992 (4) SCC 605] that if a statutory or public
authority/functionary does not record the reasons, its decision would be
rendered arbitrary, unfair, unjust and violating Articles 14 and 21 of the
Constitution. This Court has laid down thus :
"Undoubtedly, in a parliamentary democracy governed by rule of law, any
action, decision or order of any statutory/public authority/functionary
must be founded upon reasons stated in the order or staring from the
record. Reasons are the links between the material, the foundation for
their erection and the actual conclusions. They would also demonstrate how
the mind of the maker was activated and actuated and their rational nexus
and synthesis with the facts considered and the conclusions reached. Lest
it would be arbitrary, unfair and unjust, violating Article 14 or unfair
procedure offending Article 21. But exceptions are envisaged keeping
institutional pragmatism into play, conscious as we are of each other's
limitations.
23. In Workmen of Meenakshi Mills Ltd. & Ors. v. Meenakshi Mills Ltd. &
Anr. [1992 (3) SCC 336] while considering the principles of natural
justice, it has been observed that it is the duty to give reasons and to
pass a speaking order; that excludes arbitrariness in action as the same is
necessary to exclude arbitrariness. This Court has observed thus :
"We have already dealt with the nature of the power that is exercised by
the appropriate Government or the authority while refusing or granting
permission under sub-section (2) and have found that the said power is not
purely administrative in character but partakes of exercise of a function
which is judicial in nature. The exercise of the said power envisages
passing of a speaking order on an objective consideration of relevant facts
after affording an opportunity to the concerned parties. Principles or
guidelines are insisted on with a view to control the exercise of
discretion conferred by the statute. There is need for such principles or
guidelines when the discretionary power is purely administrative in
character to be exercised on the subjective opinion of the authority. The
same is, however, not true when the power is required to be exercised on
objective considerations by a speaking order after affording the parties an
opportunity to put forward their respective points of view.
x x x x x
We are also unable to agree with the submission that the requirement of
passing a speaking order containing reasons as laid down in sub-section (2)
of Section 25-N does not provide sufficient safeguard against arbitrary
action. In S.N. Mukherjee v. Union of India [1990 (4) SCC 594], it has
been held that irrespective of the fact whether the decision is subject to
appeal, revision or judicial review, the recording of reasons by an
administrative authority by itself serves a salutary purpose, viz., "it
excludes chances of arbitrariness and ensures a degree of fairness in the
process of decision-making."
24. In Divisional Forest Officer, Kothagudem & Ors. v. Madhusudhan Rao
[2008 (3) SCC 469], this Court has laid down thus :
"20. It is no doubt also true that an appellate or revisional authority is
not required to give detailed reasons for agreeing and confirming an order
passed by the lower forum but, in our view, in the interests of justice,
the delinquent officer is entitled to know at least the mind of the
appellate or revisional authority in dismissing his appeal and/or revision.
It is true that no detailed reasons are required to be given, but some
brief reasons should be indicated even in an order affirming the views of
the lower forum."
25. In Chairman, Disciplinary Authority, Rani Lakshmi Bai Kshetriya
Gramin Bank v. Jagdish Sharan Varshney & Ors. [2009 (4) SCC 240], it was
observed that :
"8. The purpose of disclosure of reasons, as held by a Constitution Bench
of this Court in S.N. Mukherjee v. Union of India (supra), is that people
must have confidence in the judicial or quasi-judicial authorities. Unless
reasons are disclosed, how can a person know whether the authority has
applied its mind or not? Also, giving of reasons minimises the chances of
arbitrariness. Hence, it is an essential requirement of the rule of law
that some reasons, at least in brief, must be disclosed in a judicial or
quasi-judicial order, even if it is an order of affirmation."
26. In Manohar v. State of Maharashtra & Anr. [2012 (13) SCC 14] it has
been laid down that in the context of State Information Commission, it has
to hear the parties, apply its mind and record the reasons as they are the
basic elements of natural justice. This Court has laid down thus:
"17. The State Information Commission is performing adjudicatory functions
where two parties raise their respective issues to which the State
Information Commission is expected to apply its mind and pass an order
directing disclosure of the information asked for or declining the same.
Either way, it affects the rights of the parties who have raised rival
contentions before the Commission. If there were no rival contentions, the
matter would rest at the level of the designated Public Information Officer
or immediately thereafter. It comes to the State Information Commission
only at the appellate stage when rights and contentions require
adjudication. The adjudicatory process essentially has to be in consonance
with the principles of natural justice, including the doctrine of audi
alteram partem. Hearing the parties, application of mind and recording of
reasoned decision are the basic elements of natural justice. It is not
expected of the Commission to breach any of these principles, particularly
when its orders are open to judicial review. Much less to Tribunals or such
Commissions, the courts have even made compliance with the principle of
rule of natural justice obligatory in the class of administrative matters
as well."
27. Now we come to the order passed in the instant case with respect to
the Bellary Scheme which is to the following effect :
"The objections and representations received in this regard is examined and
the arguments advanced by the representatives of the STUs and private
operators for and against the modification proposed by the State Government
is considered in the light of the provisions of the Motor Vehicles Act,
1988.
Sec. 102 of the M.V.Act, 1988 empowers the State Government, at any time,
if it consider necessary in the public interest so to do, modify any
approved scheme.
Therefore, what is paramount for modifying the scheme is that it should be
in the public interest. The modification now proposed is necessitated in
view of the stand taken by the Hon'ble Supreme Court of India in Ashrafulla
Khan's case reported in AIR 2002 SC 629. During the period from 04.12.1995
and 14.01.2002, considering the interpretation with regard to the words
"overlapping", "intersection" and "corridor restriction" of the Hon'ble
High Court of Karnataka, the Transport Authorities have granted the permits
to the private operators in accordance with the provisions of M.V.Act, 1988
and rules made thereunder considering the need of the travelling public, as
these operators are meeting the genuine demands of the travelling public in
excess of the services provided by the STUs. Hence, it has become necessary
to save all the permits, granted by the RTAs which were in operation as on
1.4.2002 in the interest of the travelling public.
Therefore, on the facts and averments made before me, I do not find the
sufficient grounds is established to support the objections and
representations received and made in person opposing the modification of
the approved Bellary and Raichur schemes published in Notification
No.HD/22/TMP/64 Dated 18.4.64 and TD/140/TMI/82, dated 03.11.1987. Hence,
the draft notification modifying the above schemes published in
Notification No.HTD/122/TMA97 dated 25.10.2002 is upheld and approved. All
the permits held as on 1.4.2002 are saved with the condition that they
shall not pick up of set down passengers except in the bus stands."
28. It is apparent that there is no consideration of the objections
except mentioning the arguments of the rival parties. Objections both
factual and legal have not been considered much less reasons assigned to
overrule them. Even in brief, reasons have not been assigned indicating how
objections are disposed of.
29. Situation is worse in the orders modifying other schemes. Thus,
modification of the Schemes could not be said to be in accordance with the
principles of natural justice in the absence of reasons so as to reach the
conclusion that private operators are meeting the genuine demands of the
public in excess of the service provided by the STOs., hence, it cannot be
said to be sustainable.
30. It was also urged on behalf of the appellants that the permits were
granted in the light of the Full Bench decision of the High Court in the
case of KSRTC v. Ashrafulla which held the field at the relevant time.
Thus, the permits had been validly granted in accordance with the
prevailing interpretation of "overlapping" and "inter-section".
31. On behalf of the appellants, reliance has been placed on a decision
of this Court in Naresh Shridhar Mirajkar & Ors. v. State of Maharashtra &
Anr. [1966 (3) SCR 744] to contend that the decision of the High Court is
binding upon subordinate courts, tribunals etc. Reliance has been placed on
the following passage :
"60. There is yet another aspect of this matter to which it is necessary to
refer. The High Court is a superior Court of Record and under Art. 215,
shall have all powers of such a Court of Record including the power to
punish contempt of itself. One distinguishing characteristic of such
superior courts is that they are entitled to consider questions of their
jurisdiction raised before them. This question fell to be considered by
this Court in Special Reference No. 1 of 1964 (1965) 1 S.C.R. 413. In that
case, it was urged before this Court that in granting bail to Keshav Singh,
the High Court had exceeded its jurisdiction and as such, the order was a
nullity. Rejecting this argument, this Court observed that in the case of a
superior Court of Record, it is for the court to consider whether any
matter falls within its jurisdiction or not. Unlike a court of limited
jurisdiction, the superior court is entitled to determine for itself
questions about its own jurisdiction. That is why this Court did not accede
to the proposition that in passing the order for interim bail, the High
Court can be said to have exceeded its jurisdiction with the result that
the order in question was null and void. In support of this view, this
Court cited a passage from Halsbury's Laws of England where it is observed
that prima facie, no matter is deemed to be beyond the jurisdiction of a
superior court unless it is expressly shown to be so, while nothing is
within the jurisdiction of an inferior court unless it is expressly shown
on the face of the proceedings that the particular matter is within the
cognizance of the particular Court." (Halsbury's Laws of England, Vol. 9,
p. 349). If the decision of a superior Court on a question of its
jurisdiction is erroneous, it can, of course, be corrected by appeal or
revision as may be permissible under the law; but until the adjudication by
a superior Court on such a point is set aside by adopting the appropriate
course, it would not be open to be corrected by the exercise of the writ
jurisdiction of this Court."
32. Reliance was also placed on Commissioner of Income Tax, Bhopal v.
G.M. Mittal Stainless Steel (P) Ltd. [2003 (11) SCC 441] in which this
Court considered the question that the decision of the High Court will bind
the authority under the Central Act within the State where the decision has
been rendered. The fact that the decision of another High Court is pending
disposal before the Supreme Court, was irrelevant and the decision of the
jurisdictional High Court was binding upon the authority within the State.
33. The decision in Ashrafulla was reversed by this Court in Karnataka
State Road Transport Corporation v. Ashrafulla Khan & Ors. [2002 (2) SCC
560] in which this Court had laid down that a permit cannot be granted for
a non-notified route which overlaps or traverses the same line of travel as
a portion of notified route. Exception can only be made in case where non-
notified route cuts across or intersects a notified route. It is not of
significance whether the area of overlapping is a small area or a larger
area or whether it falls within the local limits of a town or a village.
The decision of Full Bench of the High Court of Karnataka holding that
small portions falling within the limits of a town or a village on a
notified route are to be treated as only an intersection of the notified
route and not as overlapping, had been reversed. In Ashrafulla (supra),
this Court has laid down that on the representation of the travelling
public, the State Undertaking, as the case may be, the State Government has
to consider the matter of modification of the Scheme. In case the State
Undertaking lacks vehicles or other infrastructure to provide an efficient
and well-co-ordinated transport service to travelling public, it may modify
the Scheme. This Court has laid down thus :
"9. Since there was a conflict between the two sets of decisions rendered
by this Court in Ram Sanehi Singh v. Bihar SRTC, Mysore SRTC v. Mysore
State Transport Appellate Tribunal and Mysore SRTC v. Mysore Revenue
Appellate Tribunal the matter was referred to a Constitution Bench of this
[pic]Court. A Constitution Bench of this Court in Adarsh Travels Bus
Service v. State of U.P. distinguished the decision in Ram Sanehi Singh v.
Bihar SRTC for having been decided on particular facts of its case but did
not approve it. However, the decision in Mysore SRTC v. Mysore Revenue
Appellate Tribunal was expressly not approved, whereas the decision in
Mysore SRTC v. Mysore State Transport Appellate Tribunal was approved. The
Constitution Bench settled the law by laying down that once a Scheme is for
total exclusion prohibiting private operators from plying stage carriages
on a whole or part of a notified route, no permit can be granted on the
notified route or portion thereof."
x x x x x
"29. Before we part with the case, we would like to observe that the need
and convenience of the travelling public is of paramount consideration
under the Act. A situation may arise when the Transport Undertaking may be
found not catering to the needs of the travelling public. In such a
situation, on representation of the travelling public, the State
Undertaking or the Government, as the case may be, may consider the matter
and provide adequate transport services if it is required. In case the
Government finds that the Undertaking lacks vehicles or other
infrastructure to provide an efficient and well-coordinated transport
services to the travelling public, it may modify the Scheme as to permit
private operators to ply vehicles on such route or routes. In any case it
is always permissible to the legislature to amend law by providing private
operators to run an efficient and well-coordinated transport services on
such route or routes on payment of adequate royalty to the State
Government.
34. It has also been laid down by this Court in Ashrafulla that its
decision in Adarsh Travels Bus Service & Anr. v. State of U.P. & Ors. [1985
(4) SCC 557] taking the same view as to overlapping still holds the field.
It prevailed as per the mandate of Article 141 of the Constitution of
India. In Adarsh Travels (supra), this Court has laid down thus :
"7. A careful and diligent perusal of Section 68-C, Section 68-D(3) and
Section 68-FF in the light of the definition of the expression "route" in
Section 2 (28-A) appears to make it manifestly clear that once a scheme is
published under Section 68-D in relation to any area or route or portion
thereof, whether to the exclusion, complete or partial of other persons or
otherwise, no person other than the State Transport [pic]Undertaking may
operate on the notified area or notified route except as provided in the
scheme itself. A necessary consequence of these provisions is that no
private operator can operate his vehicle on any part or portion of a
notified area or notified route unless authorised so to do by the terms of
the scheme itself. He may not operate on any part or portion of the
notified route or area on the mere ground that the permit as originally
granted to him covered the notified route or area. We are not impressed by
the various submissions made on behalf of the appellants by their several
counsel. The foremost argument was that based on the great inconvenience
which may be caused to the travelling public if a passenger is not allowed
to travel, say, straight from A to B on a stage carriage, to ply which on
the route A to B a person X has a permit, merely because a part of the
route from C to D somewhere between the points A and B is part of a
notified route. The answer to the question is that this is a factor which
will necessarily be taken into consideration by the State Transport
Undertaking before publishing the scheme under Section 68-C, by the
Government under Section 68-D when considering the objections to the scheme
and thereafter either by the State Transport Undertaking or by the
Government when the inconveniences experienced by the travelling public are
brought to their notice. The question is one of weighing in the balance the
advantages conferred on the public by the nationalisation of the route C-D
against the inconveniences suffered by the public wanting to travel
straight from A to B. On the other hand it is quite well known that under
the guise of the so-called "corridor restrictions" permits over longer
routes which cover shorter notified routes or "overlapping" parts of
notified routes are more often than not misutilised since it is well nigh
impossible to keep a proper check at every point of the route. It is also
well known that oftentimes permits for plying stage carriages from a point
a short distance beyond one terminus to a point a short distance beyond
another terminus of a notified route have been applied for and granted
subject to the so-called "corridor restrictions" which are but mere ruses
or traps to obtain permits and to frustrate the scheme. If indeed there is
any need for protecting the travelling public from inconvenience as
suggested by the learned counsel we have no doubt that the State Transport
Undertaking and the Government will make a sufficient provision in the
scheme itself to avoid inconvenience being caused to the travelling public.
35. Reliance was placed on behalf of the respondents on a decision of
this Court in A.P. State Road Transport Corporation v. P.V.Ramamohan
Chowdhary [1992 (2) SCC 235] in which it has been laid down that the power
of cancellation or modification under section 68E would be de hors the
permit granted under section 68-D of the Act of 1939. The conditions
precedent therein are that the Government must objectively come to a
finding and the Government should follow the procedure prescribed in the
statute. It would be either on the initiative of the State Transport
Undertaking or on an application or representation by the general public of
the necessity in public interest to modify the scheme approved under
section 68D(2). It is not at the behest of the erstwhile holders of
permits. It was also laid down that even on partial overlapping of approved
scheme, private operators have been totally prohibited to have corridor
shelters and could no longer enter into the frozen area, route or part
thereof.
36. The view of the High Court in Ashrafulla (supra) has been reversed by
this Court. The decision is of retrospective operation, as it has not been
laid down that it would operate prospectively; more so, in the case of
reversal of the judgment. This Court in P.V.George & Ors. v. State of
Kerala & Ors. [2007 (3) SCC 557] held that the law declared by a court will
have a retrospective effect if not declared so specifically. Referring to
Golak Nath v. State of Punjab [AIR 1967 SC 1643] it had also been observed
that the power of prospective overruling is vested only in the Supreme
Court and that too in constitutional matters. It was observed :
"19. It may be true that when the doctrine of stare decisis is not adhered
to, a change in the law may adversely affect the interest of the citizens.
The doctrine of prospective overruling although is applied to overcome such
a situation, but then it must be stated expressly. The power must be
exercised in the clearest possible term. The decisions of this Court are
clear pointer thereto.
x x x x x
29. Moreover, the judgment of the Full Bench has attained finality. The
special leave petition has been dismissed. The subsequent Division Bench,
therefore, could not have said as to whether the law declared by the Full
Bench would have a prospective operation or not. The law declared by a
court will have a retrospective effect if not otherwise stated to be so
specifically. The Full Bench having not said so, the subsequent Division
Bench did not have the jurisdiction in that behalf."
37. In Ravi S.Naik v. Union of India & Ors. [1994 Supp (2) SCC 641], it
has been laid down that there is retrospective operation of the decision of
this Court. The interpretation of the provision becomes effective from the
date of enactment of the provision. In M.A. Murthy v. State of Karnataka &
Ors. [2003 (7) SCC 517], it was held that the law declared by the Supreme
Court is normally assumed to be the law from inception. Prospective
operation is only exception to this normal rule. It was held thus :
"8. The learned counsel for the appellant submitted that the approach of
the High Court is erroneous as the law declared by this Court is presumed
to be the law at all times. Normally, the decision of this Court
enunciating a principle of law is applicable to all cases irrespective of
its stage of pendency because it is assumed that what is enunciated by the
Supreme Court is, in fact, the law from inception. The doctrine of
prospective overruling which is a feature of American jurisprudence is an
exception to the normal principle of law, was imported and applied for the
first time in L.C. Golak Nath v. State of Punjab [AIR 1967 SC 1643]. In
Managing Director, ECIL v. B. Karunakar [1993 (4) SCC 727], the view was
[pic]adopted. Prospective overruling is a part of the principles of
constitutional canon of interpretation and can be resorted to by this Court
while superseding the law declared by it earlier. It is a device innovated
to avoid reopening of settled issues, to prevent multiplicity of
proceedings, and to avoid uncertainty and avoidable litigation. In other
words, actions taken contrary to the law declared prior to the date of
declaration are validated in larger public interest. The law as declared
applies to future cases. (See Ashok Kumar Gupta v. State of U.P. [1997 (5)
SCC 201] and Baburam v. C.C. Jacob [1999 (3) SCC 362]). It is for this
Court to indicate as to whether the decision in question will operate
prospectively. In other words, there shall be no prospective overruling,
unless it is so indicated in the particular decision. It is not open to be
held that the decision in a particular case will be prospective in its
application by application of the doctrine of prospective overruling. The
doctrine of binding precedent helps in promoting certainty and consistency
in judicial decisions and enables an organic development of the law besides
providing assurance to the individual as to the consequences of
transactions forming part of the daily affairs. That being the position,
the High Court was in error by holding that the judgment which operated on
the date of selection was operative and not the review judgment in Ashok
Kumar Sharma case No. II [1997 (4) SCC 18]. All the more so when the
subsequent judgment is by way of review of the first judgment in which case
there are no judgments at all and the subsequent judgment rendered on
review petitions is the one and only judgment rendered, effectively and for
all purposes, the earlier decision having been erased by countenancing the
review applications. The impugned judgments of the High Court are,
therefore, set aside."
38. It was also submitted on behalf of one of the operators that as some
of the permits granted were illegally cancelled, fixation of the cut off
date and validating the permits held on the cut off dates would be
discriminatory as that would create monopoly in favour of the incumbent
private operators who were operating their vehicles on the cut off date.
39. It was submitted on behalf of KSRTC that it was at the behest of the
private operators that the exercise of modification had been undertaken by
the State Government.
40. We refrain to dilate upon the various aforesaid aspects as these
were required to be considered by the State Government when such objections
had been taken before it by KSRTC. It was necessary to consider, inter
alia, the objections raised by the KSRTC as to the necessity of
modification, legality of the permits which were granted and the plea of
discrimination so raised by other operators including the observation made
above by this Court in KSRTC v. Ashrafulla Khan (supra).
41. Resultantly, the appeals being bereft of merits are hereby dismissed.
Let State Government hear the objections, consider and decide the same in
accordance with law by a reasoned order within 3 months. In the
intervening period, the arrangement as directed by the High Court in the
impugned order to continue.
.........................................J.
(JAGDISH SINGH KHEHAR)
........................................J.
(ARUN MISHRA)
New Delhi,
December 18, 2014.
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