Holding

The Court held that Section 114A and the Railway Tourist Agent Rules, 1980 are valid exercises of legislative power and do not violate Article 19(1)(g).

Summary

The petitioners, who operated as railway travel agents serving middle‑ and lower‑middle‑class passengers, challenged the constitutionality of Section 114A of the Indian Railways Act, 1890 and the Railway Tourist Agent Rules, 1980, alleging that the provisions imposed unreasonable and arbitrary restrictions on their right to carry on business under Article 19(1)(g). They contended that the eligibility conditions for becoming an authorised agent—such as a minimum paid‑up capital of Rs. 1 lakh, a money‑changer's licence, and a one‑year track record—were designed to favour wealthy operators and effectively barred them from the market. The respondents argued that Section 66 of the Act empowers the railway administration to appoint authorised agents and that the rules were a valid exercise of the rule‑making power under Section 47, intended to prevent black‑marketing and protect passengers. The Court held that when a privilege is granted, reasonable conditions may be imposed, and the criteria prescribed were neither irrelevant nor arbitrary but aimed at financial soundness and consumer protection. Consequently, the provisions of Section 114A and the 1980 Rules were upheld as constitutionally valid, and the writ petitions were dismissed.

Issues considered

Whether Section 114A of the Indian Railways Act, 1890 is ultra vires Article 19(1)(g) of the Constitution.
Whether the Railway Tourist Agent Rules, 1980 are ultra vires the Indian Railways Act and Article 19(1)(g).
Whether the eligibility conditions for authorised railway tourist agents are unreasonable, arbitrary or irrelevant.
Whether the Central Government had authority under Section 47 of the Act to frame the 1980 Rules.

Legislation cited

Indian Railways Act, 1890s. 113, s. 114A, s. 47, s. 66

Subjects

Article 19(1)(g)Indian Railways ActSection 114ARailway Tourist Agent Rulesultra viresarbitrarinessauthorised agentsticketingconstitutional lawregulatory scheme

Judgment

1016

INDER MAL JAIN & ANR. EtC.
.A
v.

UNION OF INDIA & ORS. ETC.

B December 8, 1983

(D.A. DBSAI, R.B, MISRA, R~NGANATH MISRA, JJ.J

The lndian Railways Act, 1890-Sec. J/4A-Valldity of-Whether
u/tra-rlres Art. 1,9(1) (g) of Constitution of lndia. ••
c The Railway Tourist Agent Rules, 1980-Va/idity of-Conditl~hs prescri-
)(
. bed for becoming authorised agent-Whether arbitra~y, unreasonable and
irre/evant--Whether the R1tles ultra vir~s the Act and Art. 19(1) (g) of th'
Constituaon.

The petitioners who claimed to be carrying on the •business as railway·
D travel agents and rendering service to the travelling public.in booking U class
. seats and berths· in various passanger trains, challenged the validity of sec.
114A of lhe Indian Railways Acl, 1890 as being ultra-vires Art. 19(1) (g) of the
Constitution and also the validity of the Railwey Tourist Agent Rules, 1980 as
ultra-vires the Act, and Art. 19(1) (g) of the Constitution on the ground that
the Rules and the Act placed unreasonable restrictions on the petitioners',
E right to carry on their lawful business guaranteed by Art. 19(1) (g) of the
Constitutiion. The petitioners argued that the conditions· of eligibility prescribed
in the Rute·s for obtaining status of authorised agents in their cumulative
effect were impossible of compliance and were so deliberately drawn up as to
. help and encourage wealthy commercial heavy-weights to -obtain recognition'
sim_ultaneously denying the same opportunity to persons like the petitioners
,..,..
who cater to the needs of the. common man. The petitioners urged that
F railways earn bulk of their revenue from second class travelling passengers and
they were the most neglected and to such needy persons, petitioners were
affording some respite from standing in queues for hours, to be jostled out by
shuttiog the ticket window in their face. It was -Eilso stated that the court
should be realistic in taking note of the prevailing corruption in booking
railway tickets which would be further accentuated if every intending
passeng~r had to stand in the queue for hours and return empty-handed.
G
Dismissing the petitions, but directing th~ Railway Board to prepare an
appropriate scheme,

HELD : If a privilege is granted to do a certain thing, it would be open
B to prescribe conditions for enjoying the privilege. The railway administration
alone should ordinarily sell its tickets. Sec. 66 of the Act enables the •
administration to appoint authorised agents for sale of tickets. These autho·
JisCd agents must. of necessity fulfil cert~in criteria. The criteria appear to
lNDER MAL v. UNION (lJesai, J.) 1017

have been devised with an eye on extending facility, to foreign· travellelleri as ·
well as the financial viabi1lty to &ccurc against failute to pay for tickets sold by
recognised agents. With this end in view, the conditions for minimum financial
A
\
guarantee and having a Money Changer's licence and other allie4 conditions
were prescribed. Intcndment widerlying the scheme of setting up authorised
agents is not only to check sharp practices, curb fleecing of guUiblc passengers,
., ,. but render efficient service. The Rules cnsurC fulfilment of the intendmcnt
underlying the impugned provisions. Viewed froµi this angle, the conditions
are neither irrelevant nor arbitrary. It is ·stated· by the respondents that as B
many as 17 agents have been &iven the status of authprised railways tourist
aa;cnts in Delhi alone. This is n.ot controverted. Theeefore, the condi~ons
are capable of being complied with. Failure or inability of some of tbc
petitioners to comply with thetll would not be sufficient to reject them as
unreasonable, arbitrary or irrelevant. -The conditions are reasonable and are
conducive to ihc objects sought to be achieved. (1022 A-El
c
Ramtfna Dayaram Shetty v. The International Airport Authority of India
and Ors. (1979] 3 S.C.R. 1014 and M/s Kasturl/al Lakshmi Reddy and Ors. v.
. State of Jammu and Kashmir and Anr., [1980) 4 S.C.C. I refeired to.

Sec. 114A of the Act merely prescribes punishment for ,_unauthorisedly
. carrying on of'business of procuring and supplying rai1way tickets. ·I_~ sec. 66 D
envisages appointmen~ of authorised agents obviously anything to the contrary
would be contravention of sec. 66 and if it is made punishable under sec. 114A
of the Act. the section would not be ultra "Vires_ the Constitution. [1023F]

· An agency has to be devised to cater to the needs of class II passengers,
which can render service in this behalr. The agency has to be subjected to E
strict control and regulatory measures. May be, that the petitioners Were
abusing their activities and were guilty of some sharp practices. It cannOt be
said that all of them were of the same class, and it also should not be forgot~!=n
that their activities were facilitated by. their counter parts in the booking-office.
It can be safely said that to some extent, it was a joint venture. Therefore..
merely dismissing these petitions would be fur\her adding to the miseries Of
thc·traveUing public. The Railway Board is therefore directed· to prepare a F
·acbcmc for recognising travel agents catering to the needs of the class II
passengers with sufficient control over their activities and put the same before
this Court within three months from today. [1024F-HJ

ORIGINAL JURISDICTION : Writ Petitions No. 8200,01/83,
4386-90/82, 4298-4308/82 and 3762/82. G
(Under Article 32 of the Constitution.)

. Anis Shayarwardy and C. P. Pandey for the Petitioners in ·wPs.
s200-01 /83. H
S. S. Khanduja and Yaspal Dhingra for the Petitioners in WPs.
4386-90/82. .
1018 SUi'REME touiit REPORTS [1984] I s.c.R.

P. Govindan Nair and Alta/ Ahmed for the Petitioners in WPs.
A I 4298-4308/82.

Shankar Ghosh, B. P. Maheshwari and B. P. Singh for the Peti.
tioners in WP. 3762/82. '

V. C. Mahajan, R. N. Poddar, Ms. Halida Khatun and Ms. A.
B Shubhashini for the Respondents.

The Judgment of the Court was delivered by

DESAI, J. Petitio~ers in this group of petitions under Art. 32
..
c of the Constitution claimed to be carrying on the business as railway
travel agents. One of the petitions in this group is.filed by an
association styled as Travellers Service Agents Association (Regd.),
The member of the Association also claimed to carry on business as
railway travel agents. Petitioners and the members of the Association
claim to be engagefl in the business of travel agents over a decade·
D and a half and according to them they are renaering useful service
to· the travelling public in booking seats and berths in. various +
passenger trains. According to them they ordinarily cater to the
needs of middle-class and lower· middle class passanger-the common
•
man-travellin.g by second class in the railways who cannot afford
to wait for long hours standing in queues at raiiway stations and yet
E
cannot afford to avail of the services of the railway touril!'t agents
who generally cater to the needs of the wealthy elite of the society,
Petitioners complain that the railway administration encourage
wealthy and influential railway tourist agents by sacrificing the
interest of the railway tr~vel agents like the petitioners and that
F thereby the railway administration is depriving the large lower middle
class travellers from availing of the services of the petitioners which
is available at a cheap price ofr9ughly Rs. 8 per ticket. According
to the petitioners, the business carried on by them is a lawful one
but since. the introduction of Sec. I 14A in the Indian Railways Act,
1890 ('Act' for short) they are being harrassed, tortured and mulcted
G by the railway administration. They aver that unreasonable restric·
tion are placed on their right to carry on their lawful business
guaranteed by Art. 19(1) (g) of the Constitution by the rules framed
by the Central Government under Sec. 47 of the Act styled as
Railways Tourist Agent Rules, 1980 ('Rules' for short) which are
H ultra-vires the Act as also ultra·vites Art. 19(1) (g) and they are
hounded out of their lawful business. Petitioners accordingly
cqntend that not only the Rules but also Sec. ! 14A which came into
INDER MAL v. UNloN (Desai, J.) 1019

force on May 11, 1982 by which in the absence· of recognition; if the
petitioners carry on their business they are · liable to be prosecuted A
and sentenced to suffer imprisonment are ultra-vires Art. 19(1) (g) of
the Constitution.

A comprehensive counter-affidavit was filed both in Writ
Petition No. f762t82 and Writ Petition Nos; 8200-8201/83 by one B
Vijay Kumar, Joint Director, Traffic Commercial (G) I in the
Ministry of Railways. Broadly stated, the respondents contend that
even before the insertion of Sec. 114A by the lndian Railways
(Amendment Act, 1982, Secs. 70 and 114 Of the Act prohibited
transfer of a ticket or travel on a transferred ticket as also sale of a
ticket or purchase thereof from anyone other than a railway servant c
or agent authorised by the railway administration in this behalf.
Referring to the clandestine business earried on by the petitioners, it
is stated in the counter-affidavit as under :

"It is submitted that unauthorised persons like the
petitioners were, however, taking advantage of (i) the D
absence of any specific provision in •the law· prohibiting
the carrying on of business in purchase and supply of
rail tickets and (ii) of the fact that law does not.require
the intending passenger to personally or physically present
himself as the booking counter for purchase of ticket for E
his journey, were and are purchasing tickets generally in
fictitious names and thereby cornering reserved accommo-
dation .and compelling genuine passengers to turn.to them
for purchase of reserved tickets (booked in fictitious
names) at heavy premia. These unauthorised persons
thus make huge profits but the passengers who were F
found travelling on transferred tickets had to pay heavy
....... penalties and undergo prosecutions. The unauthorised
agents from whom these tickets were purchased invariably ·
remainded untraced. It is to deal with this situation
that the impuged law (S. 114A) was considered G
necessary.''

A further contention was raised that if the petitioners want to carry
on their business.as travel agents they must comply with the Rules
framed by the Central Government under Sec. 47 of the Act and on H
being recognised under the Rules they would be entitled to carry on
their business and therefore it is idle to contend that ari embargo ha•
been placed on the business carried on by · the petitioners. It was
1020 SUPREME COURT REPORTS (1984) 1 8.C.R.

contended that it had become necessary to save the travelling public
A from the unlawful activities of persons carrying on business .as rail-
way travel agents and that regulator-y rules have to be framed and it
cannot be said that these rules impose any unreasonable restriction
on 'the petitioners' right to carry on their bush1ess. Qua Sec. 11'4A,
it was stated that on receipt of persistent complaints from the public
regarding blackmarketing in reservations by unauthorised travel
B agents and other persoo.s . .it was decided to provide a suitable check
on their activities. A penal provision was enacted providing that ·
the carrying on gusiness. of procuring and. supplying tickeis or
reserved accommodation for journey by train unless so authorised by
railway administration would constitute an offence and the same
c would be' punishable. That is the genesis of the introduction of Sec.
114A in the Act.

Mr. Shanker Ghosh, who led on behalf of the petitioners
followed by Mr. Govindan Nayar could not seriously contend that
D either the Rules or Sec. l 14A were ultra vires the Act or the Cons-
titution. The Rules were framed in exercise of the power conferred
on the <;:entral Governm'!mt by Sec. 47 which provides that the
·Central Governmeni shall make general rules consistent with the Act
for. the purposes set out in various clauses, the last clause being
'generally' for regulating the travelling upon, and the use, working
E and management of the railway.' Sec. 66 of the Act provides that
every person desirous.of travelling on a railway, shall, upon payment
6f his fare, be supplied with a ticket by a railway· servant or an agent
authorised by the railway administration in this behalf, specifying
the class of carriage for which; and the place from and the place to
F which, the fare has been paid, and the amount of the fare. Travel-
ling without a proper ticket is an offence punishable under Sec. 113
of the Act. The railway administration is therefore under an obli·
gatian to make arrangement for sale of tickets and Sec. 66 enables
it either to make arrangement to sell tickets on its own or through or
by an agent authorised by the railway administration in this behalf. ·
G If Sec. 66 enables the railway administration to appoint authorised
agent for sale of tickets obviously it was necessary for the Central
Government to prescribe by rules, the conditions of eligibility, lay
down criteria and guidelines· for appointment of authorised railway
agents, enjoying power to sell tickets which ·the railway .administra-
H tion would be bound to honour. With this end in view, the Central
· Government framed the Ruli:s. ·
.INDER MAL~. UNION (Desai, J.) 1021

The Rules prescrible conditions and criteria for appointment
as a railway tourist agent. Briefly stated, they are.: 1) that the A
intending agent must posses a trade licence from the competent
authority to carry on the business of a tourist agent in India; 2) must
be financially sound and should possess the latest Income-tax
Clearance Certificate (l.T.C.C.) from the Income-tax Authority of
India; 3) such an intending agent sh.ould have minimum paid-up B
capital of not less than rupees one Lakh to t~eat him as financially
sound; 4) he should have obtained recognition to act as a travel
agent from the Government; 5)·he should have been carrying on the
business of a travel agent for a minimum period of one year; 6) he
should possess a Money Changer's licence ftom a competent autho-
rity to deal with and handle the foreign exchange in India; 7) he c
must have an office and th,e• premises properly maintained with
adequate conveniences at a central place in the city so as to accom-
modate the visit of sufficient number of customers and to provide
- them with the reasonable conveniences. The question is whether
the criteria or conditions for eligibility for recognition as authorised
railway tourist agent prescribed in the Rules are irrelevant or
D
arbitrary. It was contended that the requirements amongst others
that such a person must have a minimum paid-up capital of not
less than rupees one Lakh, and that he must be carrying on the
business as a travel Agent for a minimum period of one year and
that he should possess a Money Changer's licence were considered E
so irrelevant by this Court that while granting interim relief of
Oct. 8, 1982, interim injunction was granted restraining the railway
admiriistration from enforcing these conditions. The question is.
whether any or all of these conditions individually or collectively
are so irrelevant to the object sought to be achieved by the Rules or
are such as would smack or arbitrariness ? The argument was that F
these conditions were .so deliberately dra~n up as to help and
~ncourage wealthy commercial heavy-weights to obtain recognition
simultaneously denying the same opportunity to · persons like the
petitioners who cater to the needs of the common man.

If what has been stated in the counter-affidavit filed on behalf
of the railway administration that the petitioners or atleast some of
them were guilty of cornering reserved accommodation and thereby
compelling genuine passengers to turn to them for purchase of H
· res~rved tickets booked in fictitious names at high premia, it w11•
absolutely necessary to cheque these illegal activities permitting
exploitation of the - harrassed travelling public. If a privilege is
1022 SUPREME COURT REPORTS (1984] I s.c.R.

·granted.to do a certain thing, it would he open to prescribe condi·
A lions for enjoying the privilege. The railway administration alone
should ordinarily sell itflickets. Sec. 66 enables the administration
to appoint authorised agents for sale of tickets. These authorised
·agents must of necessity fulfil certain criteria. The criteria appear· to
have been devised with an ·eye on extending facility to foreign
B travellers as well as the financial V!ability to secure against failure to
pay for tickets sold by recognised agents. With this end in view,
the cenditions for minimum financial guarantee and having a Money
Changer's licence and other allied conditions were prescribed. The ·'
long-term view appears to be that those seeking service of tourist
agents, must get a comprehensive service at one place, such as
c railway ticket~, foreign exchange conversion, exertise about the •
business, easy access and legitimacy in jJusiness and indisputably the
conditions extracted above assure the saine. Intendment underlying
the scheme of setting up authorised agents is not only to check sharp
practices, curb fleecing of gullible passengers, but render efficient
D service. The Rules ensure fulfilment of the intendment underlying
the impU!;ned provisions. Viewed froin this angle, tbe conditions
are neither irrelevant nor arbitrary. It may be that the petitioners
may not be able to.fulfil the same, but that by itself cannot render ...\
them unreasonable. The conditions are reasonable and are condu-
(
cive to the objects sought .to be achieved. Failure or inability of
E some of the petitione.rs to comply with them would not be sufficient
to reject them as unreasonable, arbitrary or irrelevant. ~
'
In this connection, however, Mr. Govindan Nayar relied upon
Romana Dayaram Shetty v. The International Airport Authority of ir
F India and Ors.( 1) wherein. it is observed that' in a welfare state, the
government activities have· expanded so wide that licences are requir·
ed before one can engage in many kinds of business or work and the
.
power to give licence means power to withhold them and this gives L.
control to the Government or to the agents of the Government or
many people It was further observed that many individuals and
many more bussinesses enjoy largest in the form of Government
contracts and that the Government cannot give or withhold large;s
arbitrary discretion or at its sweet wiJI. Even, in the matter of
Governmental largess, it was stated that the Government cannot
act arbitrarily.' We fail to see bow this observation. would be of
H · any assistance in this case. Similarly, the decision in M /s Kasturi/a/

(I) [197913 SCR 1014.
. . . .
. INDER MAL v. UNION (Desai, J.)
. .
Lakshmi' Reddy and Others v. State of Jammu and Ka~mir and
1023

Another(') would hardly be of any assistance. Sec. 66 enabled the
.railways to sell tickets through authorised agents. The . Central
Government framed rules. for obtaining recognition as authorised
agents and the Rules prescribed relevant conditions for ellicieilt
working of a recognised agent. There is no question of distributing
Qovernment largess in this case nor any. arbitrariness in Govern-
mental action. The challenge to the Rules on the ground of arbitra-
riness must fail. · . · . · ..
·~
•

.., -. One more coutention may be noticed. It was urged· that the ·
conditions of eligibility for obtaining status of authorised. agents· in C·
their cumulative effect were impossible of compliance with the· result
that under the pretext of regulatory weasures a total embargo is
)r placed on the business of the petition~rs and theret"ore also the
restrictions are unreasonable. In the counter-affidavit it is .'titated
that as many as· seventeen agents have been given the ~atus of
( authorised railway tourist agents in Delhi alone. This in no,t con-. . D
' troverted. Therefore the conditions are capable of being complied
with. If the petiti()ners cannot afford to do the saine, fhat would
~ not render conditions unreasonable. Apart from this, we are of the
' ..
opinion that conditions can be complied with.

t The next attack was on the validity of Sec. ! 14A of the Act.
Sec. 114A merely prescribes punishment for unautborisedly carrying
on of business of procuring and supplying railway tickets. If Sec. 66
envisages appointment of authorised agents obviously anything to
the <:ontrary would be contravention of Sec. 66 and if it is made
punishable under Sec. 114A of the Act, we fail to see how the section
.would be ultra vires the Constitution. Therefore·the contention must
be negativated.

Both Mr. Shanker Ghosh and Mr. Govindan Nayar strenous!y G
contended that even if the Rules and Sec. 114A !Ire not ultra vires the

(I) (1980] 4 SCR !.
H

•
1024 SUPREME COURT _RBPOR\S (19841 I s.c,R. -

Constitution, the provisions of.the Rul~s are. so design.ed as to help
big houses to.carry on business as a_uthorised .tourist agent and, they
·.would hardly be_interested in catering to .the needs of common .man
belonging to lower _middle-class passengers .forming bulk ..of the.
travelling pllblic, travelling by seconcj class and, paradoxically, contri!
l;luting major share in railway revenues. They also pointed out that·
, :B going to the station half an hour before the departure of .the train,
.. · buy_ the ticket.and enter the train, find a seat or standing at:eommo·
dation and perform the journey is a chapter in remote past. It was
urged with some. vehemence and acerbity but with.· full justification
.that railways earn bulk of their revenue from second-class, travelling .
· passengers and they are the most neglected and to such needy per•.
c son_s, petitioners:were affording some Fespite from standi~g in queues
for flours". to be jostled out by the .shutting the ticket window in
\beirface. · !t was also ·stated that the Court should be .realistic in
• taking note of the prevailing corruption in . booking railway-tickets .
· which would be further accentuated if every intending passenger has
to stand° in the queue for'hours and return empiy-handed .. By way ..
of an additional limb to this submission, it was submitted that if
someone from a long distance' wan ts to -come to Delhi :and return·
the next d,;'y, h~w is he. going to.· arrange for. his ticket. Coul_d he
everJhink of going to Thomas .Cook and agents 'of their ilk a:nd .
would • he doI his work for .
which••
he
. :
has come
•
to Delhi or• stand in a
queue .to purchase the return ticket ? We see considerable force in
this submissiOn. Ji is a very realistic appraisal of the situation and we '. ·f
would not permit ·railway administration, a monopoly,· turning blind
eye to· this desperate situation. It is said that· comparatively it is easy
to enter heaven than obtain a railway ticket. Add to this malaise the .
_r.< _ . misery of the people coming from outside having no relations who
.,
"" . can afford' to waste their time to get the ticket. Therefore an agency
has to be devised to cater to ihe needs of class II passengers, which .
can renqer sen.ice in this behalf. The agency has to be subjected . to ·
strict control and"regulatory measures. May be, that .the petitioners
were abusing 'their activities and were guilty of some sharp practices,
G It cannot be said that all of them were of the same class, _and it also
should n<)t be forgotten that their activities were faciUtated ·by their ,
counter-parts in the booking-office. we· can safely say that, to some .
extent, it.was a joint ventu.re. Therefore merely dismissing these
· petitions . ~ould be further adding lo the llliseries ·of the travelling
public. We therefore direct 'the Railway Board to prepare a scheme
for recognising travel agents catering to the needs of class II passen·

•
'
JNDER MAL.'· UNION (Desai; J.) · 102s

.gees with sufficient control over their activitiel and put· the .sal)le
before this Court withili three months from today. ·. . A

With these observations, all t~!I writ )llltitiops al'C' dismissed ·
with no order as to costs.

·H.S.K.

•
,. •
~··

..