Holding

Clause 7‑A is not in conformity with Section 99; a scheme can be framed only when the State Transport Undertaking is to operate the service, and the scheme’s dominant purpose must be public interest.

Summary

The appellants applied for mini‑bus permits on the Dasuya‑Jalalpur via Miani route under the liberalised scheme of Section 80 of the Motor Vehicles Act, 1988. Their applications were rejected by the State Transport Commissioner, but the State Transport Appellate Tribunal (STAT) allowed the appeals and remitted the matters for a survey. After a second rejection, the STAT again allowed the appeals. Existing permit‑holders filed writ petitions; the High Court set aside the STAT orders and remitted the cases for fresh consideration. The appellants then approached this Court, relying on the earlier decision in Jagdip Singh v. Jagir Chand (2001). The Court examined whether Clause 7‑A of the scheme framed under Section 99 is valid when the State Transport Undertaking is not required to operate on the routes and whether the scheme complies with the public‑interest purpose of Section 80(2). It held that Clause 7‑A is not in conformity with Section 99 because a scheme can be framed only when the State Transport Undertaking is to operate the service, and the dominant purpose must be public interest, not a back‑door permit raj. Consequently, the appeals were allowed, the High Court orders were set aside, and the STAT orders in favour of the appellants were restored.

Issues considered

Whether Clause 7‑A of the scheme framed under Section 99 of the Motor Vehicles Act is valid when the State Transport Undertaking is not required to operate on the specified routes.
Whether the State Government may reserve routes for private operators under the liberalised scheme without the State Transport Undertaking’s participation, consistent with Section 80(2) and the public‑interest requirement.
Whether the High Court’s remand of the matter for fresh consideration was proper in view of the earlier Supreme Court decision in Jagdip Singh v. Jagir Chand.

Legislation cited

Motor Vehicles Act, 1988s. 80, s. 99

Subjects

Motor Vehicles ActSection 80Section 99liberalised schememini‑bus permitspublic interestpermit rajState Transport Undertakingcompetition

Judgment

SUBHASH CHANDER AND ANR. A
V.

STATE TRANSPORT APPELLATE TRIBUNAL AND ORS.

MARCH 21, 2002

[M.B. SHA!i, BJSHESHWAR PRASAD SINGH AND D.M. B
DHARMADHIKARJ, JJ.]

Motor Vehicles Act, 1988: Section 80 ond Clauses 7 and 7-A of the
Scheme framed under Section 99.
c
Permit-Operators of mini bus-Grant of-Under liberalised Scheme
framed under Section 80-State Transport Undertaking reserving certain
routes-Validity of-Held, Main purpose of the Scheme is to provide an
efficient, adequate, eConomica/ and properly co-ordinated road transport
service in pub!ic interest-There should not be reservation of some routes on D
mere assumption that State Transport Undertaking would operate upon such
routes in future-Dominant purpose should be public interest to encourage
competition.

Clauses 7 and 7-A of the Scheme formulated under Section 99-
Applicability of-Discussed. E
Appellants applied for grant of mini-bus permits at specified route under
the liberalised scheme introduced under Section 80 of the Motor Vehicle Act.
State Transport Commissioner_ rejected the application. Appellants preferred
appeals. Appellate Authority allowed the appeals and remitted the case to
State Transport Commissioner to conduct survey and decide the case on merit.
Transport Commissioner again rejected the application. Appeals before the
Appellate Authority were allowed.

Respondents preferred Writ Petitions. High Court allowed and set aside
the order passed by the appellate authority and remitted the matter to
appellate authority for consideration afresh. In the meanwhile other aggrieved
persons preferred appeals before this Court. The Court allowed those appeals
vide its Judgment in Jagdip Singh etc. v. Jagir Chand and Anr. etc., [2001] 8
sec 437.
Subsequently, appellants also preferred appeals before this Court. It was
685
686 SUPREME COURT REPORTS (2002] 2 S.C.R.

A contended that in view of Jagdip Singh 's case these appeals may be allowed.

Allowing the appeals, the Court

HELD : 1.1. The State Government is required to formulate a proposal
regarding the Scheme giving particulars of - (a) nature of services proposed
B to be rendered; and (b) the area or route proposed to be covered alongwith
other relevant particulars respecting thereof. The dominant purpose should
be public interest and not to have permit raj through back door, otherwise
the whole purpose of sub-section (2) of Section 80 of the Motor Vehicles Act
would be frustrated. (690-E-F]

C 1.2. Clause 7-A nowhere provides that State Transport Undertaking was
to operate on a particular route. The State Government is empowered to
frame the scheme only in cases where the State Transport Undertaking is to
operate particular class of service in relation to any area or a route or a
portion thereof. But if the Transport Undertaking is not _to operate the said
D routes, then there is no question of framing any scheme. Therefore, reading
clauses 7 and 7-A together also, it would not mean that ther~ \fas any
/
contemplation by the State Transport Undertaking for operating on the routes
linking one village with another village or a town or a municipality in between
the aforesaid two villages or a route linking a village with block head quarter
or a municipality or city. Hence, as stated in Jagdip Singh 's case, clause 7(a)
E nowhere reveals that it is in conformity with Section 99 of the Act
(690-C-D-F-G]

Jagdip Singh etc. v. Jagir Chand and Anr. etc., (2001] 8 SCC 437, relied
on.

F CIVIL APPELLATE ruRISDICTION : Civil Appeal Nos. 2326-2328
of 2002.

From the Judgment and Order dated 30.3.2000 of the Punjab & Haryana
High Court in C.W.P. Nos. 14509, 16579, 16642 of 1999.

G WITH

C.A. Nos. 2329-2330 and 233 l of 2002.

Parag P. Tripathi, Ms. Sudha Paul, Rani Chhabra, Ms. Anusuya Salwan,
Ms. Priya Kumar for Ms. S. Janani, R.K. Kapoor, Anis Ahmed Khan, Rohit
H Kapoor, Rajesh K. Sharma for Goodwill lndeevar, K.G. Bhagat for Debasis
SUBHASH CHANDER v. ST ATE TRANSPORT APPELLATE TRIBUNAL [SHAH, .I] 687

Misra, Ranbir Yadav and Rajeev Sharma for the appearing parties. A
The Judgment of the Court was delivered by

SHAH, J. Leave granted.

These cases reveal how the persons who got benefit of permit raj are
trying to avoid competition despite the liberalised policy introduced by the B
Parliament under Section 80 of the Motor Vehicles Act, 1988. in our view,
the question involved is concluded by the decision rendered by this Court in
Jagdip Singh etc. v. Jagir Chand and Anr. etc., [2001] 8 SCC 437. However,
to avoid the competition and to have privilege of running mini-buses, operators
who were having permits are trying to create all hurdles. As such, State C
Transport Undertaking as well as the State has no objection with regard to
grant of permits to the appellants.

This would be clear from the facts of one of the appeals. For the sake
of convenience, we would refer to the facts of Civil Appeals arising out of
SLP{c) Nos. 18207-18209 of2001 (Subhash Chander's case). Appellant nos. I D
and 2 preferred applications before the State Transport Commissioner, Punjab
for grant of mini-bus permits at Dasuya - Jalalpur via Miani route under the
liberalised scheme introduced by Section 80 of the Motor Vehicles Act,
T
1988. That application was rejected on 10th September, 1996. Against that
order, appellants preferred an appeal before the State Transport Appellate
Tribunal (STAT) and the Tribunal vide its judgment and order dated 3.4.1997 E
allowed the appeal and remitted the case to State Transport Commissioner,
Punjab to conduct survey and decide the application on merits. The State
Transport Commissioner, Punjab vide order dated 11.12.1997 again rejected
the applications. Against that order, appellants preferred an appeal before the
State Transport Appellate Tribunal (STAT). That appeal was allowed. p
Against th.e said judgment, respondents who were holding mini bus
permits· preferred Writ Petition No. I 6579 of 1999 in the High Court of
Punjab and Haryana at Chandigarh. That writ petition was heard along with
group of other petitions and by a common judgment and order dated 30th
March, 2000, the High Court allowed all the appeals and set aside the order G
passed by the STAT and remitted the matter for co.nsideration afresh.
'
Before the appellants approached this Court, other aggrieved persons
whose matters were remitted back by the High Court approached this Court
and this Court allowed those appeals bearing Civil Appeal No.7085 of 200 I
etc. [Jagdip Singh 's case (supra)]. H
688 SUPREME COURT REPORTS [2002] 2 S.C.R.

A Learned counsel for the appellants submitted that in view of the
aforesaid decision, these appeals are required to be allowed. As against this,
learned counsel for the respondents - mini-bus permit holders submitted that
in the matters decided by this Court, Clause 7 ·of Scheme framed under
Section 99 of Motor Vehicles Act was considered and that Clause 7-A is
B required to be read along with clause 7 of the Scheme framed by the State
Government under Section 99 of the Motor Vehicles Act. According to his
contention, Clause-7 applies to all future operators of routes other than routes
specified in previous clauses. He referred to Clauses 7 and 7-A of the Scheme,
which read as under: -

c "7. All future operators of routes other than the routes specified in
clauses 2, 3 and 4 on District and other roads shall be undertaken by
the State Transport Undertakings and private operators in the ratio of
50:50 on the basis of the passenger road transport needs as so assessed
by the State Transport Commissioner, Punjab from .time to time.

D 7-A.While granting permits for operations on routes, linking one
village with another village without any city or a town or municipality,
in between the aforesaid two villages, or a route linking a village
with the block headquarter or a municipality or city the use of the
mini buses may be allowed on the basis of passenger road transport
• needs a~ assessed by the State Transport Commissioner, Punjab from
E time to time.

Provided that-

(e) The total length of each such route does not exceed 25 kilometers
and the total operation per bus does not exceed 250 kilometers
p per day.
(f) Not more than half of the total routes length runs across a National
Highway or" State Highways.
(g) At least one of the terminal of the route shall be a village and
shall not include more than one municipality except on a local
G route falling within the municipal limits of a town, municipality
or city wherein both the starting and the terminating points may
be the same or may fall within the same town, municipality or
city, as the case may be, and
(h) It shall be ensured that the interest of the State Transport
H Undertakings are not affected adversely on such routes."
SUBHASHCHANDER' STATE TRANSPORT APPELLATE TRIBUNAL [SHAH, J.] 689

It is the contention of the learned senior counsel for respondents Mr. A
Tripathi that by amending the scheme, operation of the mini buses is covered
and the ratio determined under clause 7 is-50% for State Transport Undertaking
and 50% for private operators and same principle would be applicable to
clause 7-A of the scheme.

In our view, this submission is totally misconceived. In Jagdip Singh 's B
case (supra), this aspect was considered and court held as under-

"Relevant clause is clause (7-A) and it nowhere reveals that it is
in conformity with Section 99 of the Act. Under Section 99 of the
Act if the State transport undertaking is to operate on a particular C
route, then only the scheme could be made applicable. The aforesaid
scheme does not provide that the routes mentioned in clause (7-A)
are to be covered and operated completely or partially by the State
Transport Undertaking. In such cases, Section 80(2) would be
. applicable as under Section 99, the State Government is not empowered
to provide that only a few private operators would operate on a D
particular route/routes and the Regional Transport Authority or other
prescribed authority cannot ordinarily refuse to grant an application
r for permit of any kind made at any time under the Act."

Further, it was made clear in the aforesaid case that before framing of E
the scheme under Section 99, the State Government has to arrive at a
conclusion that-

(I) for the purpose of providing an efficient, adequate, economical
and properly co-ordinated road transport service;
F
(2) it is necessary in the public interest;

(3) that the road transport services in general or in 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;
G
(4) to the exclusion,
,, complete or partial of other persons or otherwise;
(5) the State Government is required to formulate a proposal regarding
the scheme giving particulars of

(a) nature of services proposed to be rendered, H
690 SUPREME COURT REPORTS (2002] 2 S.C.R.

A (b) the area or route proposed to be covered, and
..
(c) other relevant particulars respecting thereto;

(6) and the State shall publish such proposal
(a) in the Official Gazette of the State formulating such proposal;
B (b) in not less than one newspaper in the regional language circulating
in the area or route proposed to be covered by such scheme; and
(c) in such other manner as the State Government formulating such
proposal deem fit.

C The aforesaid legislative mandate is to be adhered to before framing
the scheme under Section 99 and all the requirements stated above are to be
fulfilled.

Clause 7-A quoted above nowhere provides that State Transport
D Undertaking was to operate on the said routes. As ~tated above, the State
Government is empowered to frame the scheme only in cases where the State
Transport Undertaking is to operate particular class of service in relation to
any, area or a route or a portion thereof. But if the Transport Undertaking is
not to operate the said routes, then there is no question of framing any
scheme. Further the main purpose of the scheme should be to provide an
E efficient, aqequate, economical and properly coordinated road transport service
in public interest. The sclieine cannot be vague reserving some routes on the
assumption that in future State Transport Undertaking would operate upon
such routes. On the contrary, under the Act, the State Government is required
to formulate a proposal regarding the Scheme giving particulars of-(a) nature
of services proposed to be rendered; and (b) the area or route proposed to be ,
F covered along with other ~elevant particulars respecting thereof. Under the
scheme also, dominant purpose should be public interest and not to have
permit raj, through back door, o~herwise whole purpose of sub-section (2) of
Section "8b' would be frustrated. Hence, reading clauses 7 and 7A together
also, it would not mean that there was any contemplation by the State Transport
G Undertaking for operating on the routes linking one village with another
village or a town or. a municipality in between the aforesaid two villages or
a route linking a village with block head quarter or a municipality or city.
Hence, as stated in Jagdip Singh 's case (supra), clause 7(A) was not in
conformity with Section 99 of the Act. Hence, there is no substance in the
contention raised by the learned counsel for the respondents-privileged mini-
H bus operators.
SUB HASH CHANDER '· STA TE TRANSPORT APPELLATE TRIBUNAL [SHAH, J .] 69 J

In the result, the appeals are allowed. The judgments and orders passed A
by the High Court are set aside and the orders passed by the State Transport
Appellate Tribunal, Punjab at Chandigarh in favour of appellants are restored.
There shall be no order as to costs.

S.K.S. • Appeals allowed.