Holding

A State Transport Undertaking cannot permit a private operator to use its permit as a nominee; such arrangements are contrary to the Motor Vehicles Act and are unenforceable.

Summary

The petitioner, Brij Mohan Parihar, had an agreement with the Madhya Pradesh State Road Transport Corporation (MPSRTC) to operate his bus as a nominee on a specific route for five years ending in 1982, after which he was allowed to ply on a monthly basis under temporary permits. When the route was later brought under a scheme published under s.68‑C of the Motor Vehicles Act, the corporation invited tenders for private operators to act as its nominees, prompting the petitioner to challenge the advertisement as arbitrary and seek a mandamus directing the corporation to continue his nomination for another five years. The High Court dismissed the petition, holding that the scheme was approved and effective. On appeal, the Supreme Court examined the provisions of the Motor Vehicles Act (ss.42, 59, 68‑C, 68‑D, 68‑FF, 68‑B, 61) and the Road Transport Corporations Act, 1950 (s.19(2)(h)), concluding that a State Transport Undertaking cannot permit a private operator to use its permit as a nominee, and any such agreement is void and unenforceable. Consequently, the corporation must surrender its permit or transfer it with authority approval, and the advertisement inviting tenders is ineffective. The petition was dismissed.

Issues considered

Whether a State Road Transport Corporation can allow a private operator to operate his vehicle as its nominee under a permit issued to the corporation under the Motor Vehicles Act.
Whether the advertisement inviting tenders for nominees is valid in view of the scheme published under s.68‑C/68‑D.
Whether the agreement between the petitioner and the corporation is enforceable under the Road Transport Corporations Act, 1950.

Legislation cited

Motor Vehicles Act, 1939s. 42, s. 59, s. 61, s. 68-B, s. 68-C, s. 68-D, s. 68-FF
Road Transport Corporations Act, 1950s. 19(2)(h)
Uttar Pradesh Motor Vehicles Special Provisions Act, 1976

Subjects

Motor Vehicles Actpermit transferstage carriagenominationState Road Transport Corporationscheme under s.68-Cpublic transport regulationcontract enforceabilitytender advertisement

Judgment

BRIJ MOHAN' PARIHAR
v.
A
Y M.P. STATE ROAD TRANSPORT CORPORATION & ORS.

NOVEMBER 25, 1986

[E.S. VENKATARAMIAH AND M.M. DUTT, JJ.] B

Motor Vehicles Act, 1939: ss. 68-C, 68-D, 68-F, 68-FF, 42 and 59: State
Road Transport Corporation-.J~ermit issued to-Private operator whether
entitled to ply his motor vehicle as nominee of Corporation.

Road Transport Corporation Act, 1950: s./9(2)(h}--State Road C
Transport Corpoiation not authorised to allow private operator to run his
vehicle on a permit issued to the Corporation.

Section 68-FF of the Motor Vehicles Act, 1939 prohibits grant of permit
in respect of notified area or notified route by State Transport Authority or the
Regional Transport Authority except in accordance with the scheme published D
under sub-s. (3) ofs. 68-D but provides for grant of temporary permits in cases
where no application for a permit has been made by the State Transport
Undertaking in respect of such notified area or route. Section 59 bars transfer of
permits from one person to another except with the permission of the
concerned Transport Authority. Section 42 prohibits the owners of transport
vehicles from plying them in public places except in accordance with the E
conditions of the permit.

Under an agreement entered into with the respondent Corporation the

- petitioner was permitted to ply his bus on a specified route as a nominee of the
former for a period of live years ending on December 23, 1982. Thereafter the
respondent was issued temporary permits and the petitioner was permitted by it F
to ply his motor vehicle on monthly basis. The route in question had by then
·~ .. been brought within a scheme published under. s. 68-C of the Act.
A The respondent through an advertisement dated August 12, 1984 invited
tenders from, private operators for the grant of privilege of running buses as
stage carriages as its nominees. Aggrieved by the said advertisement the G
petitioner filed a writ petition in the High Court assailing the decision to invite
tenders as arbitrary and illegal, and for a writ in the nature of mandamus
directing the respondent Corporation to allow him to ply his motor vehicle as
its nominee for a further period of live years. Under an interim order of the
Court he continued to ply his bus as a stage carriage till· May 31, 1985.
Subsequently, the High Court dismissed the petition since the scheme H

369

'
370· SUPREME COURT REPORTS [1987] l S.C.R.

A published under s. 68-C of the Act had been approved and brought into effect
from June I, 1985.

Dismissing the petition for special leave, the Court,

HELD: I.I It is not permissible under the Motor Vehicles Actfor a State
B Transport Undertaking to obtain a permit under Chapter IV-A and to allow a
private operator as its nominee to opera!< under that permit his motor vehicle
as a stage carriage on the notified route. It cannot by granting such permission
collect any money either as nomination .fees or as royalty or supervision
charges. Section 42 and 59 of the Act which equally apply to permits issued
under Chapter IV-A, debar all holders of permits, including the State
·4--.-
,
'
C Transport Undertakings from indulging in such unauthorised trafficking in
permits. [373E, 374A, DJ

1.2 The petitioner was not, therefore, entitled to the issue of a writ in the
nature of mandamus to the respondent Corporation to allow him to operate his
motor vehicle as a stage carriage under the permit obtained by the latter, as its
D nominee. The agreement entered into by 1he petitioner with the respondent was
clearly contrary to the Act and could not be enforced. The advertisement issued
by the respondent was equally ineffective. [374E]

2. If the respondent Corporation ':annot run its vehicle under a permit
issued to it,_ it must surrender it so that the Regional Transport Authority may
E grant the permit to some other deserving applicant or it must transfer it to
somebody else with the permission of the Regiopal Transport Authority
granted under s.59 of the Act. It cannot :1llow the permit to be used by others
either for consideration or without consideration. If it does so it would be
exercisinr the power of the Regional Transport Authority. The Corporation
-
cannot ,dus indirectly dutch at the jurisdiction of the Regional Transport
F ,Authority. [374F]

3.1 Even though the Corporation was established by the State
Government under the Road Transport Corporations Act, 1950 and the State
Government had by an executive order approved the action of the Corporation
io allow private operators to operate their vehicles under the permits issued to
G the Corporation, the Corporation could not in law allow its nominees to exploit
the permits in such manner. [374B] ·

3.2 Section 19(2)(h) of the Road Transport Corporation Act only
authorises the Corporation to purcha< e or other\vise secure by agreenient
vehicles owned or possessed by the owner of any other undertaking for use
H thereof for the purpose of its unde.rtaking. It does not authorise the
J

B.M. PARIHAR v. M.P.S.R.T. CORP. [VENKATARAMIAH, J.] 371

Corporation to permit another person to run his vehicle on his own under a A
permit issued to the Corporation by paying some amount to the Corporation.
[375B]

3.3 It would have been different if there had been a law corresponding to
the Uttar Pradesh Motor Vehicles Special Provisions Act (27 of 1976) under
which the competent authority can authorise such operation subject to the B
conditions specified therein. [374C]

~--
Adarsh Travels Bus Service & Anr., v. State of U.P. & Ors., [1985] 4
S.C.C. 557; Sumer Chand Sharma & Anr., v. State of U.P. & Anr., [1986] 3
S.C.C. 263, referred to.

CIVIL APPELLATE JURISDICTION: Special Leave Petition (Civil)
c
No. 3486 of 1986. ·

From the Judgment and "order dated 6.1.1986 of the Madhya Pradesh
High Court in Misc. Petition N_o. 2577 of 1984.
D
K.K. Venugopal, G.L. Sanghi, M.N. Krishnamani and Diwan Balak
Ram for the Petitioner.

Rameshwar Nath for the Respondents.

The order of the Court was delivered by
E
.VENKAJARAMIAH, J. The petitioner in the above petition filed
under Article 136 of the Constitution has prayed for special leave to appeal
against the judgment of the High Court of Madhya Pradesh in Miscellaneous
Petition No. 2577 of 1984 dated 6.1.1986. In the petition filed under Article 226
of the Constitution before the High Court the petitioner had questioned ·the'
. validity of an advertisement issued by the Madhya Pradesh Road Transport F
Corporation (hereinafter referred to as 'the Corporation') inviting tenders from
owners of motor vehicles for plying their vehicles on the routes mentionid
therein as nominees of the Corporation under the permits issued in favour of
the Corporation under the provisions of the Motor Vehicles Act, 1939
(hereinafter referred to as 'the Act). It is alleged that the petitioner who was an' ·
unemployed graduate entered into an agreement with the Corporation to ply G
his bus as a nominee on the route Gwalior to Chinor via Dabra for a period of
five years ending on December 23, 1982. The route in question came within
scheme No. 38 published under section 68-C of the Act. The permit of the
Corporation was to expire on 23.12.1982. Therefore the Corporation applied
for renewal of its permit but since it took time for finalisation, temporary
permits were issued from time to time. The petitioner was pennitted to ply his H
372 SUPREME COURT REPORTS [1987] I S.C.R.

A bus on the monthly basis during that period. Under the agreement the
petitioner was liable to pay periodically certain amount to the Corporation as
nomination fees or supervision charges and additional taxes. But on 12.8.1984,
as stated earlier, tenders were invited by the Corporation from private
operators for the grant of the privilege of running buses as stage carriages as the
nominees of the Corporation. Aggrieved by the said advertisement the
B petitioner filed the writ petition, referred ·:o above, in the High Court. The
petitioner contended that even though he had been regularly paying the
nomination fees and taxes, yet t_he Corporal.ion in order to earn more money by
way of nomination fees had invited tender> from others with a stipulation that
tenders of those giving the highest offers by way of nomination fees would be
accepted and they would be appointed nominees of the Corporation to ply the
C stage carriages. The petitioner further contended that the decision to invite
tenders was arbitrary and illegal. In the Writ Petition he obtained an interim
order dated 11.9.1984 under which he was allowed to operate his motor vehicle
as a stage carriage on the same terms and conditions as the nominee of the
Corporation. The petitioner continued to ply his motor vehicle on the route in
question on the basis of the temporary permits issued in the name of the
D Corporation till 31.5.1985. _Since no temporary permit was obtained by the
Corporation thereafter tfie petitioner co Jld not ply his motor vehicle in
question. In the meanwhile under the orders passed by this Court in Special
Leave Petition Nos. 941, 4667 to 4669, and 7115-7117 of 1985 dated July 22,
1985 filed by some others, the petitioners therein who were similarly situated
were allowed to ply their motor vehicles on some other routes as the nominees
E of the Corporation for a period offive yearn. The above order, it is alkged, was
passed on a concession made by the C)rporation. The said order is not
supported by reasons. The petitioner relying upon the above order contended
before the High Court in the writ petition filed by him that he should also be
permitted to ply his motor vehicle as a nominee of the Corporation for a further
F period of five years. The High Court declined to grant the request of the
petitioner since by then the scheme No. 3E had been approved and had come
into effect from June 1, 198S and dismissed the writ petition onJanuary6, 1986:
Aggrieved by the order of the High Court the petitioner has filed this petiti~n.

It is contended on behalf of the petitioner that since the petitioner had ·
been permitted to operate his motor veh:cle as a stage carriage service as a
G nominee of the Corporation under a programme called 'Half a Million Job
Programme'· initiated by the Government of India which was being
implemented by the State of Madhya Pradesh he could not be denied the.
privilege of continuing to operate his motor vehicle on the notified route in
question. Reliance is also placed by the learned counsel for the petitioner on the
H order passed by this Court on July 22, 1985 in some of the special leave petitions
referred to above permitting the petitioners therein to operate their motor
B.M. PARIHAR v. M.P.S.R.T. CORP. IVENKATARAMIAH, J.] 373

vehicles as the nominees of the Corporation for a further period of five years. A
After the disposal of the special leave petitions referred to above on July 22,
1985 by this Court, on October 17, 1985 a Constitution Bench of this Court
delivered its judgment in Adarsh Travels Bus Service & Anr., v. State ofU. P. &
Others. [1985] 4 S.C.C. 557. In that case the Constitution Bench held that
reading sections 68-C, 68-0(3) and 68-FF of the Act together it was clear that
once a scheme was published under section 68-D of the Act in relation to any B
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
Undertaking could operate a stage carriage on the notified route or in the
notified area except as provided in the scheme itself.

Admittedly, the approved scheme published under section 68-D of the c
Act has come into operation in respect of the route in question excluding the
operntion of stage carriages by all others. Section 68-FF of the Act states that
where an approved scheme has been published under sub-section (3) of section
68-D of the Act in respect of any notified area or notified route the State
Transport or the Regional Transport Authority, as the case may be, shall not
D
grant any permit except in accordance with the provisions of the scheme. It
further provides that where no application for a permit has been made .by the
State Transport Undertaking in respect of any notified area or notified'route in
pursuance of an approved scheme, the State Transport Authority or the
Regional Transport Authority, as the case .may be, may grant temporary
permits to any person in respect of such notified area or notified route subject to
the condition that such permit shall cease to be effective on the issue of a permit E
to the State Transport Undertaking in respect of that area or route. It is not,
however, permissible under the Act for the Corporation to obtain a permit
under Chapter IV-A of the Act and to allow a private operator as its nominee to
operate under that permit his motor vehicle as a stage carriage on the notified
route. It cannot by granting such permission collect any money either as
nomination fees or as royalty or supervision charges. Section 59 of the Act
F
which lays down the general condit.ions attached to all permits provides that
save as provided in section.61 of the Act, a permit shall not be transferable from
one person to another except with the permission of the Trans port Authority
which granted the permit and shall not without such permission operate to
confer on any person to whom a vehicle covered by the permit is transferred any
right to use that vehicle in the manner authorised by the permit. Section 61 of G.
the Act only deals with the question of transfer of the permit on the death of the
holder of the permit in favour of his successor. Sectioi:i 42 of the Act provides
that ·no owner of a transport vehicle shall use or permit the use of the vehicle in
any public place whether or not such vehicle is actually carrying any passenger
or goods save in accordance with the conditions of a permit granted or
H
countersigned by a Regional or State Transport Authority or the Commission
374 SUPREME COURT REPORTS [1987] I S.C.R.

A authorising the use of the vehicle in that place in the manner in which the vehicle
is being used. Section 42 and section 59 of the Act which are in Chapter IV of
the Act apply to permits issued under Chapter IV-A of the Act also since in
Chapter IV-A of the Act we do not find any provision which is inconsistent with
these two sections. Section 68-B of the Act only provides that Chapter IV-A of
the Act ·and the rules and orders made thereunder shall have effect
B notwithstanding .anything inconsistent therewith contained in Chapter IV of
the Act or any other law for the time being in force or in any instrument having
effect by virtue of any such law. Even though the Corporation is established by
the State Government under the Road Transport Corporations Act, 1950 and
the State Government has by an executive order approved the action of the
Corporation to allow private operators to operate their vehicles under the
c permits issued to the Corporation as th•: nominees of the Corporation, the
Corporation cannot in law allow its nominees to exploit the permits by running
their motor vehicles against payment of scme amount to the Corporation since
there is no statutory provision authorising the grant of such permission. It
would have been different if there had be,,n a law corresponding to the Uttar
Pradesh Motor Vehicles Special Provisirns Act (27 of 1976) under which the
D competent authority can authorise such operation subject to the conditions
specified therein (See Sumer Chand Sharma and Another v. State o[U.P. and
Another, [1986] 3 S.C.C. 263). The pro·1isions of the Act and in particular
sections 42 and 59 clearly debar all holders of permits including the
Corporation from indulging in such una1thurised trafficking io permits. The
agreement entered into by the petitioner with the Corporation is clearly
E contrary to the Act and cannot, therefore, be enforced. In the circumstances,
the petitioner is not entitled to the issue of a writ in the nature of mandamus to
the Corporation to allow him to operate his motor vehicle as a stage carriage
under the permit obtained by the Corporation as its nominee. It follows that the
advertisement issued by the Corporatior, is equally ineffective. The position
would not be different even where the permit is issued in favour of the
F Corporation under Chapter IV of the Act. If the Corporation cannot run its
vehicle under a permit issued to it, it must surrender it so that the Regional
Transport Authority may grant the perrni: to some other deserving applicant or
it must transfer it to some body else \\ith the permission of the Regional
Transport Authority granted under section 59 of the Act. It cannot however
allow the permit to be used by somebody else to run his vehicle either for
G consideration or without consideration. 1::· it does so it would be exercising the
power of the Regional Transport Authority. The Corporation cannot thus
indirectly clutch at the jurisdiction of the Regional Transport Authority. It is
hoped that the Corporation will desist from entering into such agreements with
third parties, which are wholly illegal and from continuing to allow them to run
their vehicles as its nominees. The con"":rned Regional Transport Authority
H should immediately take action to stop such illegal operation of transport
B.M. PARIHAR v. M.P.S.R.T. CORP. (VENKATARAMIAH, J.] 375

vehicles on all routes, both notified and non-notified routes. A

It is seen that in one of the doc'!ments filed before the High Court it was
asserted that the Corporation could allow private operators to operate their
vehicles in the name of the Corporation under section 19(2)(h) of the Road
Transport Corporation Act, 1950. That provision only authorises the B
Corporation to purchase or otherwise secure by agreement vehicles owned or
possessed by the owner of any other undertaking for use thereof by the
Corporation for the purposes of its undertaking. It does not however authorise
the Corporation to permit another person to run his vehicle on his own under a
permit issued to the Corporation by paying some amount to the Corporation.
Hence no reliance can be placed on 'the above provision.
c
It was lastly contended on behalf of the petitioner that since the
Corporation was not in a position to operate its motor vehicles on the notified
routes in accordance 'with the approved scheme, the scheme itself is liable to be
quashed. Since the said prayer is not made in the writ petition, we cannot
consider the ·said question It is open to the petitioner if he is so advised to
approach the High Court for appropriate relief in this regard. We may,
D
however, record here that .in the counter-affidavit filed before this Court it is
stated that t}_le Corporation is already operating its own motor vehicles on the
route in question. The Special Leave Petition is, however, dismissed.

P.S.S. Petition dismissed.
E