Holding

Section 47(1‑H) is constitutionally valid and does not offend Articles 14 or 19(1)(g); Section 58(2) does not preclude its operation, and the marking rule assigning preference to State Transport Undertakings is permissible.

Summary

Sher Singh, a private operator holding stage‑carriage permits on an inter‑state route, applied for renewal of his permits under Section 58 of the Motor Vehicles Act, 1939. The Rajasthan State Road Transport Corporation applied for a fresh permit on the same route. The Regional Transport Authority, invoking Section 47(1‑H), gave preference to the State corporation and denied the renewal. The petitioner challenged the constitutional validity of Section 47(1‑H) as violative of Articles 14 and 19(1)(g) of the Constitution and argued that Section 58(2) gave him renewal preference over new applications. The Supreme Court held that Section 47(1‑H) is a valid statutory preference that does not breach equality before law or the freedom to carry on trade, and that the renewal provision of Section 58(2) does not exclude the operation of Section 47(1‑H). The Court also upheld the Tamil Nadu Motor Vehicles Rules 155‑A and the assignment of five marks to State Transport Undertakings as a permissible public‑interest measure. All the Special Leave and writ petitions were dismissed.

Issues considered

Whether Section 47(1‑H) of the Motor Vehicles Act, 1939, which gives preference to State Transport Undertakings for inter‑state stage‑carriage permits, violates Article 14 of the Constitution.
Whether the same provision violates Article 19(1)(g) – the fundamental right to carry on trade.
Whether the renewal preference under Section 58(2) overrides the preference granted by Section 47(1‑H).
Whether the Tamil Nadu Motor Vehicles Rules 155‑A, which assign five marks to State Transport Undertakings, is arbitrary or unconstitutional.
Whether the assignment of marks to State Transport Undertakings defeats the principle of equality.

Legislation cited

Motor Vehicles Act, 1939s. 47(1-H), s. 58(2)
Road Transport Corporations Act, 1950s. 30
Tamil Nadu Motor Vehicles Ruless. 155-A

Subjects

Article 14Article 19(1)(g)Motor Vehicles ActSection 47Section 58State Transport Undertakinginter‑state permitsequality before lawfreedom to tradepreferencerenewal of permitsTamil Nadu Motor Vehicles Rulesmarking system

Judgment

464
SHER SINGH & ORS.

v.
. .

UNION -OF INDiA AND OTHERS

:n f?ctober 21, 1983

(D.A. DESAI, 0. CH!NNAPPA REDDY AND A. VARADARAJAN, JJ.J

Constitution of India 1950 Article 14 & 19 (/) (g)

Motor Vehicles Acf-1939-Secaon 47 (l·H) Preferente to State
c Transport Corporations for grant of inter-state permit over private operators-
Whether denial of equality before law-Denial of right to carry on trade.
~.;"- •
.
Motor Vehicles Act, 1939 Sections 47 (/·H) &'58 (2)-Grant of Jnter·;tate
.
·permit-Preference to Slate transport Corp'orations-Whether violative of-Articles
14 and 19 ,(!) (g) of the Constitution. ·
D Application/or renewal of existini permit by private operator-Whether

-
enlil/ed.to preference over fresh application of a State Transport Unde'.·taking.

Ta1nilnadu 11-fotor .Vehicles Rules 155 A-Assignment of 5 marks to State
Transport Undertaking-Whether valid.

E Words &:Phrases.

''as if"-Meaning of-Se~tion 58 (2) Motor Vehicles Act 1939.

The petitioner in the Special Leave Petition was the holder of a Stage
· carriage permit on an interwState route He held several permits for· operation
or"thc s_aid route and as the period prescribed for a few of them harJ <expjred, he
F applied for renewal under settion 58 of the Motor ·Vehicles Act, 1939 to the
Regional Transport -A\lthority which granted renewal.• In .the meanwhile, the
State Road Tfansport Corporation the 5th ·respondent made an. application for
grant of a stage can:iage permit for operation on the said r~ute. This application
. was advertised and the matter was taken up for .consideration. During the
pendency of this application the Petitio·ner was granted temporary permits
under section 62 which ~ere renewed from time to time. '
G
When the application or"the petitioner for renewal of permits 3.nd _the.
application of the State Road Transport Corporation for .allotment of new
permit were taken up for consideration, an objection was raised on behalf of
.··the Corporation that as the route was an inter-State route it was entitled to the·
permit in prefcrenCe to the p~titioner in vivw of section -47 (1-H). On b~half
of the petitioner it was contended that Secrion 58 entitled the petition~r to
renewal of permit in preference to the Corporation·. The Regional Transport
Authority negatived the· petitioner's contention a~d ailotted the .Permit to the
Road Transport Corporation.
SHER SINGH v. UNION 465
The petitioner in liis wfit petition to the High Court contended that
section'. 47 (1-H) was constitutionally invalid and no prefernce could be granted
in favour of the State Road Transport Gorporation. The Single Judge dismissed
the writ petition and the ·Division -Bench upheld t~e order.

Jn the Special LeavePetitions to this Court it was contended on behal!
of the petitioners that the State Road Transport Corporation must eithel,' take
recourse to the provisions contained in Chapter IV-A of the Act, which makes
special provisions relating to State Transport Undertaking or otherwise if it B
wants to compete without recourse to chapter IV·A it must stand in competition
with other applicants for allotment ·of stage carriage permits. Any preference
that the State Road Transport Corporation may enjoy ln respect of all inter-
State route under sub·se~ion (1-H) is violative of Article 14 and the fundamen-
tal freedom to carry on trade under Article 19 (!) (g). Ssction 58 entitled tho
petitioners to renewal of permit in preference to the ai)p~ication for grant of a
new permit made by the State Transport Undertaking.
c
·In.the connected Special Leave Pt":titions, it was contended on behalf of
the petitioner that RU.le ISS-A of the'-Tamilnadu Motor Vehicles Rules provides
for a markillg systen;i uq_der different heads to objectively assess who is the best'
suited for grant of the perrnit,.and consequently an ad hcc assignment of marks
and failure to weed out the application -of the State Transport Corporation o:ri
D
_the ground of disqualification for not providing night~halt cleanefs ·vitiated the
decision of the Transport Authori.ty.

Dismissing the .PCtitions.

HELD : I. (i) Section 47 U-H) would not deny equality before law E
and hence would not offend Article 14. [4.:4-Ej
'
(ii) The Regional Transport Authority under section 47 upon ~judicious
consi4eration of merits aitd demerits of every applicant must in a fair and
reasonable nlanner decide~who amongst the applicants wotilci. perform the duty
_and carry out the obli&ations under the permit: HC;Jwevcr, sub·section (l-H) F
carve~ out an exception, that where an application for stage carriage pern1it on
an inter-state route is made by a State Transport Undertaking it must be· accor-
ded preferen~. But while granting preference, the Regional Tran!.port

,I Authority must.satisfy itself that the Corporation would be able to operate on
the ihter-state route without detri~ent to its responsibility for providing efficient
and adequate road transport service. (471 C·Dl
G
.· Dosa SatyanarayOnamurtY etc. v. The Andhra Pradesh State Road Trans-
port Corporation [1961] I S.C.R. 642 referred to.

(iii)· While considering the applicatioll for stage carriage permit under
section 47, the private operator has an equal chance to get a permit even on an . H,
inter-State route if it shows that .the Undertaking is either unable to provide
· efficient and economical service or that the private operator is better equipP'ed
\:o render the· same. Preference in this context would mean that oiher thin&s
• 466 SUPREME COURT REPORTS (1984) 1 s.c.R.

generally appearing to be qualitatively and quantitatively equal though not
with mathematical accuracy, statutory provisibn will tilt the balance.in favour
of the Undertaking. [474 DJ .

(iv) Section 47 (1-H) provides that in the case of inter-State route; the
Undertaking will have preference in the matter of stage carriage permit. The
expression 'preference' amongst others, 1neans prior right, advantage, prece-
dence etc: It signifies that other things being ~qual, one will have prefereflce
B over the other. [473 BJ

(v) When an application for the stage carriage permit iS being processed
as required by sec. 47, the application of the Undertaking for an inter-State
, route shall be examined as an application of any other private operator. Their
merits a~d demerits must be ascertained keeping 'in view the requirements of
0 clauses (a) to (f) of sec. 47 (l) and after comparing th·e merits and demerits of
both the application of the Undertaking will have preference over others.
• [473 C-D]

(vi) Qualitative and quantitative comparison on broad features of passeri~
ger. transport facility such as fleet, facilities to. travelling public and othei'
D relevant consideration may be undertaken and after balancing these factors
other things being equal, the appliCation of the Undertaking shall be given
preference over other applicants. There is no ciuesiioll of eliminating private
operators merely because the Undertaki.qg applies for a stage carriage permit
under.•Chapter IV. [473 EJ.

(vii) Iii an application under Chapter IV, the Corporation has to enter ...
the arena like any other applicant, face the competition and come-up to the
level of other private operators intending to obtain stage Carriage permits and
then in respect of the route in question claim preference. Competition is the
essence of improved commercial service. [473 FJ .
• .
i
·2: (i) There is no substance in the contention of the "'petitioner that
sec. 47 (1-H) .is violative of Art. 19 (I) (g) in that it denies the funC!amental
freedom to Carry on trade becaus~ the petitione~ has not beCn denied his free-
dom to carry on trade.. The petitioner is entitled to make 3.n application under JI
Chapter IV for a stage carriage permit and - n1ust compete with other private
operators as also the Undertaking. [474 FJ

(ii) Th~ Undertaking whos~ nett profits are required to be spent for the
provision of amenities to the passengers using road transport services, -welfare
of labour employed by the Undertaking, for financ_ing the expansion program-
rii.es of the Underi:aking:and the_ balance to be i:nade oVer to the State Govern..
ment for the purpose of road development must receiVe in larger public interest
preference for a permit compared to a private operator whose profits would go.
to agument his private income. [475 A-BJ ·
H
Lachhman Das v. State of Punjab & Ors. [1963] 2 S.C.R. 353; Manna/al &.
Anr. v. Collector of Jhalawar and Ors. [1961] 2 S.C.R. 962 referred to.
SHER SINGH V. UNION 467

3. (i) If an application for ren,ewal of a permit was to be trated differently
than the application for a permit made under section 45 snd perocessed under
section 47 and other connected provisions, it was absolutely unnecessary for the
legislature to provide that an application for renewal of a permit .shall ·be made
and dfaposed ·of as if it were an application for a fresh permit. [476 E]

(ii) The expression "as if'' occ~rring in ~ection 58 (2) in the phrase ''as

r if it were an application for a permit ... " would mean and imply that the a pp Ji ..
cation for renc ..,.:al must be made in the same manner and to the san1e extent as
an appli~ation for a fresh permit and must be processed as such. Thi's means
that even where an existing permit h~lder applies for renewal, it has to be
B

advertised and fresh applicants can apply for a permit. [476' FJ
•
(iiil Section 47 1 l-H) would also came into play when an application is
for renewal of a permit on an inter-State route. Fhere is no conflict between
Section 47 (1-H) a~d Section 58 (2). (476 G]
c
4. Once the assignment of 5 marks to the State Transport Undertaking,
is held to be Vftlid the Trari.sport Authority was perfectly justified in i:efusing
renewal of permits to the petitioners. Regarding failure to explairl absence of
nighthalt cleaners, in the absence of concrete evidence, no inference can be
drawn. [478 G-HJ D

D.R. Venkatachalan1 & Ors. v. Dy Transport Conn11issioner & Ors. [1977]
2 S.C.R. 392 referred to.

C1v1L APPELLATE JuR1so1cTJON: Special Leave Petition (Civil) •
No. 6605 of 1983.
E

From the Judgment and Order dated the 6.4.1983 of the
Rajasthan High Court in D.B. Special Appeal No. 74 of 1983.

WITH · F

· Special Leave Petition Nos. 9678-9680 of 1982.

From the Judgment and Order dated the 4th October, 1982 of
. the. Madras High Court in C.R.P. No: 2880-82/1978, G
AND

Write Petition.Nos. 9600-9601 & 9759-9760 of 1983.
• e
Under Article 32 of the Constitution of India.
' .~

468 . SUPREME COURTRBPORTS (1984] 1 s.c.R.
. .
K.K. .Venugopa/ and Mukul Mudga/ for the Petitioner in SLP.
A 6605/83 .

. Shanti Bhushan, S.K. Jain and B.M. Mathur for the Respon-
. dents in SLP. 6605/83.

B C.S . .Vaidyanathan for the Petitioner in SLP {Civil) Nos. 9678-
9680 of 1982.

Dr. Y.S. Chita/e and A.V. Rangam for the Respondents in
SLP (Civil) Nos. 9678-9680 of 1982. •

c S.N. Kacker and . A.K. Panda for the Petitioners in. Writ
Petitions.

Shanti Bhushan and B.N. Mathur, S.K. Jain & S.D. Sharma for
the Respondents in Writ Petitions.
D.
The Jlldgmeni of the Court was delivered by
'
DESAI, J. In this group of special leave petitions and writ
. petitions, constitutional validity of Sec. 47 (1-H) of the Motor Vehi-
cles Act, 1939 °('Act' for short) directly or indirectly figures. With
E. a view to focussing attention on the context in which the question is
raised, ii may be advantageous to refer to the· factual matrix in
S.L.P.. 6605/83, in which the learned Single Judge and' the Division
Bench of the High Court repelled the challenge. We would first
deal with the princip.al challenge.common to all petitions and then
dispose of sp~cific contention raised in other petitions clubbed
F together here. For representative facts we· would refer to S.L.P.
6605/83.
Re : S.L.P. No. 6605/83 : Petitioner Sher Singh is the holder
of a stage carriage permit on Behror-Rewari via Barrod, Shabjahan-.
· pur inter-State route. A por'tion of the ro~te from Bahror to Natio-
G nal Highway No. 8 via Barrod and Shahjahanpur 28 k.ms. in length
passes through . Rajasthan State and the rest. of. the portion of the
route 22 k.ms. in length lies in Haryana State. It is thus an int~r
State route. Petitioner holds 12 permits for operating on the afdre-
mentioned route. Of the 12 permits, the period prescr.ibed ·under 8
H
. permits expired and the petitioner applied for the renewal of the
permits under Sec. 58 of the Act. Regiqnal Transport Authority
granted re~ewal of the permits upto and inclusive of January 20,
SltER SINGH v. UNION (Des1ii, J.) 469

1981. The petitioner again applied for renewal of the permits on
December 29, 1'.180. The Rajasthan State Road Transport Corpo· A
ration, fifth respondent '('Corporation' for short) made an application
Jo the Regional Transport Autflority on April 20, 1981 for stage
carriage permit on the afore-mentioned route. This application was
as usual·advertised. · The application of.the petitioner for the rene,
wal of his permits accordingly was taken up for consideration on
April 30, 1981. Pending the consideration of the application for
B
renewal of permits, petitioner was granted temporary permits under
Sec. 62 for a period of four months commencing from the date of
the expiry of the earlier · permit. The temporary permits were thus
to expire on May 20, 1981. And these temporary permits were.
further renewed for a period of .4 months. Thereafter the· applica-
tion of the petitioner for renewal of his permits and the application
for stage carriage .permit mac)e by the Corporation were taken up
' for con_sideration. An objection was raised by the Corporatipn that ·
as the route in question is an inter-State route, it is entitled to permit
in" preference to the petitioner in view of the provision contained in
Sec. 47. 0-H) of the Act. ·On the other hand, it was contended on · D•
behalf of the petitioner that in view of the provis;on contained in
·Sec, 5S, the petitioner is entitled to renewal of his permits in prefe-
rence to.the Corporation, which has made an application for a fresh
permit. This contention found favour with the Regional Transport
Authority anci the renewal of perll)its .was refused to the petitioner ·E
and the permits were granted to the Corporation. This decision was
questioned in a writ petition filed by the present petitioner in which .
the only conteqtion raised was that the preference was accorded to
J the Corporation for grant ofa permit under Sec: 47. (l-H) of.the ,
.Act which is constitutionally invalid, and once no such preference
could_ be granted, the preference in fifvour of a renewal of permit
a
under Sec. 58 should· have precedence and the renewal ought to
have been granted,

It was contended before the learned Single Judge of the High
Court that Sec. 47 (1-H) is violative both of .Art. 14 and Art. 19 (I)
(gi and is thus constitutionally invalid. That was the only conten'
G
tion canvassed before the learned Single Judge which did not find .
favour with him as well as the Division Bench of.the Rajasthan High
· Court. - Hence the petitioner filed this petition for special leave. A
notice was ordered to be issued to the respondent and it was direc-
ted that the petition be finally disposed of at this stage ·as the only
questio11 raised is one of la)V and no investigation of facts j.s
necessary.
470. SUPREME COURT REPORTS (1984] I S.C.R.

. A brief reference to the relevant provisions of the Act may
A _help us in demarcating the contours of controversy.with precision.
Chapter IV of the Act contains provisions for control of transport
vehicles. For regulating the transport business, a scheme for gran-
ting different types of permits has been statutorily prescribed. There
. '
are various kinds· of permits 'contemplated by the .Act such as stage
carriage permit, contract carriage permit, all India tourist permit,
.B special permit, permits for transport of goods etc. Various authori-
-~·-

ties have been constituted. ·under the Aci for th<: purpose of imple-
menting the Act. Power has been conferred upon specific authorities
for granting different kinds of permits. Sec. 47 prescribes procedure
which the Regional Transport Authority has to follow while exa-
c mining and deciding an application for stage carriage permit. Sec. 47
was specifically amended by Act 4 7 of 1978 which came into force
on January 16, 1979 . By the Amending Act, sub-secs (I-A) to
'(1-H) were added to Sec. 47. The focus of controversy is on sub-
sec. (l'H). Sub-sec. (1 H) reads as under:,
D
"(1-H) : Notwithstandmg anything ·contained in this
section, an application for stage carriage permit from a
State Transport undertaking for operating in any -inter-
siate route shall be given preference over _all other appli-
cations :

Provided that the authority shall not grant a permit
under this sub-section • nnless it is satisfied that the State
transport undertaking would be able to operate in the
• .inter-State route without detriment to its responsibility
for providing efficient and adequate road transport service
1
in any notified area or notified routi: as is referred to ill.
sub-section (3) of Sectio)l 68-D where the undertaking
. . ·the service.
operates
.
Explanation :- For the purposes of this sub-section,
G 'inter-State route' means any route lying contiguously in .
two or more States.'.

A bare' reading of the provision c~ntained in sub-sec. (l·H)
sh.ows that where a CorporatioJ1 set up under the Road Transport
H. Corporations Act, 1950 is one of the applicants for a stage carriage
permit on an inter-State route, then as between other applicants and
a"State Transport Undertaking ('Undertaking' for short), the latter
SHER SINGH v. UNION (Desai, J.) 471

will !iave preference over others. Routine statutory procedure pres-
cribed in Sec. 47 for grant of. a stage carriage permit requires the
Regional Transport Authority which has the power to grant permit
before seleciing who .amongst the numerous applicants should be
granted the permit must take into consideration various things that
are enumerated in Sec. 47. Fair approach would be that after
examining the credentials of every applicant, the Regional Transport
B
Authority shall grant permit to the person who in its opinion would
best serve the travelling public .. The Regional Transport ~uthority
upon a judicious consideration of merits and demerits of every
applicant must in a fair and reasonable manner decide who amongst
the applicants would perform the duty and carry out the obligations
under the permit. However, sub"sec. (l·H) carves out an exception c
to this generally well-recognised principle that an administrative
authority has to adopt while exercising the power conferred upon it
by the statute, that where an application for a stage carriage permit
.- on an inter-State route is made by all intending applicants which
includes a State Transport undertaking, its application must be accor, D
ded preference. ·But while granting preference, the Regional Trans-
port Authority must satisfy itself tliat the Corporation would be able
to operate on the inter-State route without detriment to its responsi-
• bility for providing efficient and adequate road transport service in
any notified area or notified route as is referred to id sub-sec. (3) of
Sec. 68-D where the underta-ki~g operates the service. E
•
- At. this stage, a reference to Sec. 58 would be useful. It provi-
des for duration and renewal of stage carriage and contract carriage
permits other than temporary permit granted under Sec. 62. An
existing holder of permit may apply for renewal oTpermit. Sub-sec.
(2) of Sec. 58 requires that a permit may be renewed on an applica·
tion made and disposed of as if it were an application for a permit.
There is a proviso to sub-sec. (2) which prescribes 'the time Jim t
within which an application "for renewal of·different kinds of permi~ .<
. re· may be made. There is a second proviso which is material and
which may be extracted r G
"Provided further that other conditions being equal,
an application for renewal shall be given preference over
new applications for permits."
H
Chapter IV -A was introduqed in tho Act by Amending Act JOO .
of 1956 which came into force on February 2, 1957, Chapter IV·A
makes special provisions relating to State Transport Undertaking.
'472 SUPREME COURT REPORTS [1984] 1 s.c.R.

The broad scheme of Chapter IV-A is that a State Transport Under·
A taking may prepare and J?ub!ish ,a scheme on road transport service.
On the publication of the scheme, objections can be-filed as provided
•
in Sec. 68-D. Sec. 68-E confers .powers for modification and can·
· cellation of the Scheme. Then comes Sec. 68:F which provides that
where, in pursuance of· an approved scheme, any· State transport
undertaking applies, in such a manner as may be prescribed by the
Sta.le Government in this behalf, for a· stage carriage permit or a
contract carriage permit in respect of a notified area· or notified
route, t.he State Transport Authority in any case where the said area
or route lies in more than one region and the Regional Transport
Autl).ority in any other case· shall issue permit to the State Transport
undertaking, notwithstanding anything to the contrary contained ~n
Chapter IV. In short. in respect of a notified area or a notified
route, an application for permit by State Traµsport undertaking shall
be granted to the exclusion of any other operator. Apart from this
specific provision in Sec. ·68-F, ·this outcome to some extent also

D•
emerges from the provision contained in Sec. 68-B which provides
.that the provisions of Chapter IV-A and the rules and orders made
thereunder shall have· effect notwithstanding anything. inconsistent
there with 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 Ia w..

The first contention raised on behalf of ·the petitioner' was that·
'the State Transport Undertaking m'mt either take recourse to p(ovi·
sion in Chapter· IV·A or otherwise if it wants to compete without
recourse to Chapter IV-A, it must stand in competitfon . with other
·.applicants for. stage carriage permit.and any preference that it may
enjoy.in respect of inter-State route under sub-sec .. (1-H) of Sec. 47
-
is violative of Art. 14 and is denial of fundamental freedom to carry

,
· pn trade guar~nteed to !letitioners by Art. 19 (I) (g).
. . '
At.the outset it ·is necessary to bear in mind the .legal position
of-a State Transport· Undertaking when dealt with under Chapter

.. IV•A and Chapter IV of the Act. If an approved· scheme in respect
of a notified area or a notified route is in force, State Transport
Undertaking alone is entitled to operate vehicles al\d therefore is
entitled tO obtain stage carriage permits bpth regular .and temporary
depending upcn whether the scheme provides for total or partial
'exclusion·of private operator'i: . However, when an application for a
. vermit iS made under Chapter IV, t~e Undertaking has .to c.ompete
,
SHER SINGH v.· UNION (Desai, J.) 473

with private ope~ators who may as well make an application for
permit. When the Undertaking applies for permit under Chapter A
IV, it must satisfy the Regional Transport Authority that it is better
suited than. the private operator to render transport facility to the
travelling public. ·Sec. 47 (1-H) however, provides that in the case
of inter~State route •. the Undertaking will have preference .in the
. ~. matter of stage carriage permit.. · Does preference of this nature deny
equality guaranteed by Art. 14 ? The expression 'preference'
B
amongst others means prion·ight, advantage, precedence etc. But
how would it 'be possible to give precedence one over the other. ·n
signifies that other things being equal, one will have preference over
the others. When an application for a· stage carriage permit is being
processed a"required by Sec. 47, the application of the Undertaking c
for an inter-State route shall be examined as application· o( auy other
• private operator. Their merits and . demerits must be a.scertained .
keeping in view the requirements of (a) to (f) of Sec. 47 (I) and
"after comparing the merits and demerits of both, not with the yard-
stick of mathematical accuracy, but other things being equal, the _
application of the Undertaking will have preference .over others.
Qualitative and quantitative comparison on broad features of passen-
ger trans!lort facility snch as fleet, facilities to travelling public and
other rolevant consideration may be. undertaken and after balancing

.• these factors other things ·being equal, the application of the Under-
taking shall be given preference over other applicants. There is no
question of eliminating private operators merely' because the Under-
E
akiilg applies fqr a stage carriage permit under Chapter IV. That
situ~tion is catered to under Chapter IV-A. In a11'application under
Chapter IV, Corporation has to enter tlie arena like any other appli-
cant, face the competition and come-up to the level of other private
operators intending to obtain stage carriage permits a11d then in F
respect of the route in question claim preference. ·would this statu-
tory provision violate equality guaranteed by Art. 1.4 ? The answer · ·
is obviously in the negative. Competition i~ the essence of improved
commerciaf service,. After ensuing competition in matter of render-
ing more efficient transport servfoe a public sector undertaking is
assured statutory· preference, remember nci monopoly, there is no
denial of equality guaranteed by Art. 14? A similar argument when
the vires of the provisions contained in Chapter IV-A were questio-
ned in Dosa Satyanarayanamurty etc. v. The ,Andhra Pradesh State
Road Transport Corporation (') did not commend to the Constitution B
Bench when it repelled the challenge observing as under :
~l [1961J 1 sci 642 ..
474 SUPREME COURT REPORTS [1984) l s.c.R.
'
"Ordinarily a State Transport Undertaking should
A be in a better position than others to carry on the said
services for the benefit of the public; administratively, .• ·
financially and technically it can be expected to be in a
far better position than others. It can provide more well
equipped buses, give better amenities to the travelli)lg
B public, keep regular timings repair or replace the buses
in emergencies. It may" also employ efficient supervisory
staff to keep things going at an appreciably .high stan-
'dard." '

c This would apply mutatis mutandis to the. present situation.
But let it. be made clear that while considering the application for
stage carriage permit under Sec. 47, the private operator has an equal
chance to get a permit even on inter-State route if it shows that the
•
Undertaking is either unable to provide efficient and .economical'·
service or that the private operator is better equipped to render the
D same. Preference in this context would mean that other things
generally appearing to be qualitatively and quantitatively equal .
though not with mathematical accuracy, statutory provisiol\ will tilt
the balance in favour of the Undertaking. Viewed from this perspec'.
tive the provision contained in Sec. 47 (I-Fi) would not deny equality
before law and hence would not effend Art. 14.

The next contention was that Sec.'47 (1-H) is violative of·Art.
19 (!) (g) in that it denies to the petitioner the fundamental freedom
to carry on trade. There is no substance in this contention because -
F the petitioner has not been denied his freeed~m to carry on ·trade.
The petitioner is entitled to make an application under Chapter IV for
·a stage carriage permit and must compete with. other private operators
as also the· Undertaking. •.It is too late in the day to contend that a
preference in favour of the Undertaking would be violative . of Art.
19 (!) (g) for the obvious reason that Undertaking like all other
applicants for permit has tci compete for a permit. It may' be recalled
that when it came to the provisions of Chapter IV·A, tliis Court has
more often than once upheld t_he validity of the provisions contained
in Chapter IV-A and repelled the challenge of its being violative of
Art. 19 (!) (g), even though the private operator may be wholly
.. e . excluded from even applyi~g for a permit in respect of a· notified area
or a notified route being part of an approved scheme. From a slightly
different angle, the challenge may be repelled in that other things
SHB!l SINGH P. UNION (Desai,/.) ~7S
•'

bein& equal, ev111 apart from the statutory preference, the Under·
taking whose net profits are required to be spent for the provision of
amenities to the passengers using road transport services, welfare of.
lt- Jabour employed by the Undertaking, for financing the expansion
programmes of the Undertaking, and the balance to be made over
to the State Gov.ernment for the purpose of road development must
receive in larger public interest preference for a permit compared to B
a private operator whose profits would ·go to augment his private
income. Sec. 30 of the Road Transport Corporation Act, 1950 makes
statutory provision for disposal of net profits qf a State Transport·
Undertaking. In a slightly different context, this Court fo Lachman
Das v. State of Punjab & Ors.(1) while repelling the chaHenge to the
validity of Patiala Recovery of State Dues Act, IV of 2002 BD appro· c
ved the ratio in Manna/al & Anr. v. Collector of Jhalawar and Ors.(')
in which it was held that 'the dues of the Government of a State are
the dues of the entire people of the State. This being the position,
a law giving special facility for.the recovery of such dues cannot, in
any event, be said to offend Art. 14 of the Constituti ou.' Th!s very
approach requfres to be adopted while-examining the cha.Henge under
D
Art. 19. (I) (11).

It was next contended that petitioner was an existing permit
holder and therefore, under Sec. 58 it was entitled to renewal of its
permits .in preference to the applications for new permits made by E

- the Undertaking. The second proviso to Sec. 58 (2) does provide
that 'other condlti.ons being.equal, an application for renewal shall
be given preference over new applications for permits.' What has
supr1sed us the most is that wpile the petitioners have a serious griet-
vance against the preference acc;prded to the Undertaking for a permit
on the inter-State route under Sec. 47 (l·H), the same petitioner is
'

F
keen to protect preference in favour of the renewal of a permit
against a new applicant statutorily provided in Sec. 58. But Sec. 5g·
also manifests the legislative intention when it uses the expression
-J preference with .an adjectival clause 'that other conditions being
equal', an application for renewal will have a preference over the
G
new applications: ·

The first submission in this behalf is that . when an application
is made for a renewal of l\ permit, .it has to be considered only under
H-
(1) (1963] 2 S.C.R. °fS3
(2) (196!) 2 S.C.R.. 962
.. ~76. SUPREME COURT REPoRTS (1984) 1 s.c.R.
~ ~
· Sec. 58 and the preferepce therein provided excl~des ariy considera- .
A a
tion of an application for permit under Sec. 4 7. Approaching the
matter ·from this angle, it was. contended that as the present
petitioner bas made an application for the renewal of the permit, . he·~
should hav_e been accorded preference as mandated by· the. second · ;,.
proviso to Sec. 58(2} over the fresh applicatii>n "of the Undertaking
and consideration of- the application of the renewal of the permit ~ '
under Sec. 58 excludes importing of the provisions of Sec. 47. This
approach overlooks a· specific provision enacted in sub·sec. (2) of
Sec. 58 which provides as. und~r :
"58 (2) A permit may be renewed on an application '
c made and disposed of as if ii were. an application for a
perm1't .....

When a statute prescribes that ,an application for renewal of a
permit shall be made and disposed of as if it ·were an application
for a permit, the legislature incorporated_ by pen and ink all those
D provisions which are applicable for grant of a permit upon a fresh
.I application made in this behalf.. If an application for . renewal of
a permit was to be. treated differently than the application for a
Permit made under Sec. 45 and processed under Sec. 47 and other
connected provisions, it was· absolutely. unnecessary for the legis-
lature to provide that an application for renewal ofa permit shall
E be made. and disposed Of as if it were an application fo'r a fresh•

I!' ,
0
permit. The expression 'a~ if' is used· to make one applicable in
respect of other. Therefore, the expression 'as if' used in Sec. 58 (2)
would mean and imply that the application for renewal must be
made in the same manner and to same extent an applcation. for a
fresh permit and ipust be processed as such. This would mean that.
-
even where an existing permit holder applies for a ·renewal of his
· permit, it has to be advertised· and fresh applicants can as well apply
for a permit to ply vehicles on the same route for which the previous
holder of permit has applied for renewal of his permit. After consi-
dering all such applications, other conditions being equal, an existing •
G operater who has applied for renewal will . have prefrence. There·
fore, by necessary. interpretation, s~. 47 (1-H) would also come into
play whin an application is for renewal of a· permit on an inter·.·
State route. There is no conflict between Sec. 47. (l·H) and Sec. 58
(2). It is therefore, not possible to accept the submission that while
H
considering the application for renewal of a permit, Sec. 47 (1-H) is
not attra~ted. ·
SllER s!NOH i>. UNION (IJ111al, J.) 417
It appears that the State of Rajasthan lmd amended Sec. S8 (2)
in its application to ·that State by engrafting a third proviso to A
sub-sec. (2) of Sec. 58 by Rajastban Act 8 of 1973, which reads as
Ji.· under:
•
.. •' •"Provided also.that other conditions being equal, .an·
·application for stage carriage permit by a State Tra~s
port Undertakings, as defined in Section 68-A, whether
B
an application for renewal ·or a new application shall be
given prefrence over all other applications for renewal:"

# Addition of this proviso merely makes explicit what was implicit in
sub-sec. (2) of Sec.. 58. Nothing was pointed out to us to .. hold .c
that the Rajasthan· State Legislature lacked competence to add the '
afore-mentioned proviso to sub-sec. (2) of Sec. 58.

. .
Re: SL.Ps. Nos. 9678 to 9680/82:
•
In this group of petitions for special leave, it was contended D
before the High Court that as Palla van Transport Corporation Ltd.,
the ilrst respondent, did not make provision for ni.gbt halt cleaners,
the application for permits made by them were liable to be screened'.
The High Court declined to examine this contention on the short
ground tbat this contention was not raised before the State Transport
Appellate Tribunal. For the ·same reason, we could as well

-· have declined to examine this contention. However, it may· as well
be pointed out that even if the contention is to be examined on·
merits, there is no substance in it. The State of· Tamil Nadu has.
framed what are styled as Tamil Nadu Motor Vehicles Rules.
Rule 155-A provides for a marking sy~tem under different beads. to 11'
rival claimants for permit to . objectively assess V'/hO amongst them
is the best to whom permit. shonld be granted. Before proceeding to
assign marks under different beads, the Transport Authority has to
screen applications so as to 'weed out those unsnitabJe· on one or
· the other ground mentioned in the tule. One such disqualification
is the failure to provide for night bait cleaners. It was urged ,that . G
after the Transport Authority made the enquiry from the first
. respondent-Corporation whether . it, has provision for night haft
cleaners, without waiting for the clarification, the Transport Authority
proceeded to dispose of the application. It was next pointed out
H
that Rule 155-A (3) (d) provides that 5 marks shall be awarded to
the applicant falling within the proviso to cl.. (c) of Sec. 62 of the
Act which means and implies a .State Transport Undertaking. Tb~
\478 SUPREME COURT REPORTS (1984] l s.c.a.

~ievance is that such adboc assignment of marks and failure to
,..A
'weed out the application on the ground of' disqualification for not
·providing night halt cleaners bas vitiated the decision of the Trans·
port Authority. The validity of Rule 155-A and its .various sub-
·clauses came up for consideration of this Court in D.R. Venkacha/atn

D
& Ors. vs. Dy. Transport Commissioner & Ors.(') This Court repelled
the challange . especially to the provision for assigning 5 marks to a .
· · State Transport .Undetaking observing as under :
...
"A State enterprise, in a truly Welfare Sfllte, is
charged with a social consciousness and reponsibility for
its citizens, an attention to serve them and a willingness
to embark on public utility , undertakings· better to fulfil
people's demands. ·The public sector' enterprises ar.e
expected . to be model employers and model servants

·D
.
planning their budgets, subjecting themselves to public
.audit and criticism and inquest by legislative committees
.
and the Houses of the legislature. Profits are their co11· ·
cern but, more importantly, public weal is their commit·
ment. Such is the philosophy of the State seCtor in our •
socialistic pattern o(society."

On the question of assignment of 5 marks to State Transport Under·
E' taking this Court held that 'this is not an arbitrary stroke of

·-
favouritism because . there are many promotional factors bearing
. on the interest of the travelling public which a State enterprise qua
· State enterprise will, but a private enterprise qua private enterprise
will.not, take care of. After al~ private enterprise has its primary
F motivation in profit'. The Court further observed that 'the superi·
ority in many respects of State Transport Undertakings, in the
legislative judgment, bas led to r. 155-A'. The Court ultimately
held that the assignment of marks under r. 155-A is geared to public
interest, which is the desideratum of s. 47 (I) of the Act. Once the
assignment of 5 marks to State Transport Authority Undertaking
G is held to be valid, the Transport Authbrity was perfectly justified
in ·refusing renewal of permits to· the petitioners in comparison to
the State Transport Undertaking. As for failure to explain absence
· of night halt cleaners, in the absence of concerte evidence, no infe:
rence can be drawn. This was the only additional contention in
H this group of petitions and we. find no substance· in it.
~

(I) [1977} 2 S.C.R. 392
•
SHER SINGH v. UNION (Desaf. J.) 479.

These are all the contentions in this group of petitions .and as
A

•
we find no substance in any of .them, all the petitions ate 1dismissed
with no 'order. as to costs.

N.V.K. Petitions dismissed.

•

. '"t .

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