Supreme Court Upholds Cancellation of Private Permits on Notified Route: U.P. State Road Transport Corporation vs. Sandeep Kumar Jain (2017)

Date of the Judgment: 05 September 2017

Citation: (2017) INSC 788

Judges: Arun Mishra, J., Mohan M. Shantanagoudar, J.

Can private bus operators run their vehicles on routes that have been designated for state-run transport services? The Supreme Court of India recently addressed this question, focusing on the rights of private operators versus state transport corporations on notified routes. This case revolves around a dispute over permits issued to private operators on a route that was later designated for the Uttar Pradesh State Road Transport Corporation (UPSRTC). The judgment clarifies the legal position regarding operation of private vehicles on routes that are notified for state transport undertakings. The bench comprised Justices Arun Mishra and Mohan M. Shantanagoudar, with the majority opinion authored by Justice Mohan M. Shantanagoudar.

Case Background

The case originates from a dispute over permits granted to private operators on the Meerut-Mawana-Behsuma-Meeranpur-Bijnore route, which passes through Dewal Bridge. Initially, these routes (Meerut-Bijnore and Muzaffarnagar-Bijnore) were not notified routes when permits were granted to the respondents on 4/5-9-1989 and 11.5.1994. The Muzaffarnagar-Bijnore route originally used a pantoon bridge at Revali Ghat, but a permanent bridge was constructed at Dewal in 1985. This led to a diversion of the Muzaffarnagar-Bijnore route to Muzaffarnagar-Bhopa-Morna-Bera Sadat-Bijnore. Subsequently, the route was further diverted to Muzaffarnagar-Jansath-Meeranpur-Dewal Barrage-Bijnore, and a new scheme was published. The dispute arose when the Regional Transport Authority, Meerut, granted 21 permits in 1989 and one in 1990, which were challenged. The Supreme Court upheld these 21 permits in 1993. Later, the State Transport Authority granted 48 permits on the same route which were subsequently cancelled by the State Transport Appellate Tribunal in 2002. This cancellation was upheld by the Supreme Court in 2006. The Regional Transport Authority then issued show cause notices to the respondents in 2005, leading to the cancellation of their permits, which was challenged in the High Court.

Timeline:

Course of Proceedings

The State Transport Appellate Tribunal cancelled the 48 permits granted by the State Transport Authority on 29.09.1989, which was challenged in the High Court. The High Court dismissed the writ petitions on 04.04.2003, and this decision was upheld by the Supreme Court on 17.1.2006, effectively cancelling the 48 permits. Subsequently, the Regional Transport Authority issued show cause notices to the respondents, leading to the cancellation of their permits. The respondents then challenged these cancellations in the High Court of Judicature at Allahabad, which allowed their writ petition on 30.7.2010. This High Court decision is the subject of the present appeal before the Supreme Court.

Legal Framework

The case primarily concerns the interpretation and application of the Motor Vehicles Act, 1939, specifically Section 68-C, which allows State Transport Undertakings to create schemes for providing road transport services. The Act aims to ensure efficient, adequate, economical, and properly coordinated road transport services. The core issue is whether private operators can operate on routes that have been notified under such schemes. The relevant legal provision is Section 68-C of the Motor Vehicles Act, 1939 which states:

“Chapter IV-A supersedes any inconsistent provisions in Chapter IV. The policy of the Legislature is clear from Section 68-C that the State Transport Undertaking may initiate a scheme for the purpose of providing an efficient, adequate, economical and properly coordinated road transport service to be run and operated by the State Transport Undertaking in relation to any area or route or portion thereof. It may do so if it is necessary in the public interest.”

Arguments

Appellant’s Arguments:

• The appellant argued that the issue is covered by the Division Bench judgment of the Allahabad High Court in Smt. Kanchan & Ors. Vs. State Transport Appellate Tribunal and Ors., which was confirmed by the Supreme Court in Civil Appeal Nos. 7305-7306 of 2003.
• They contended that the route in question, specifically the 11-kilometer stretch between Dewal and Bijnor, is a notified route.
• The appellant argued that the State Transport Authority’s findings on mala fides in granting permits were clearly established in previous cases.
• They emphasized that the Supreme Court had previously cancelled 48 permits on the same route due to the mala fide exercise of jurisdiction by the State Transport Authority.
• The appellant relied on the principle that private operators cannot operate on notified routes unless permitted by the scheme, as established in U.P. State Road Transport Corporation vs. Omaditya Verma and Ors.

Respondents’ Arguments:

• The respondents argued that they are existing operators and therefore protected under the scheme of the notified route, including the portion between Dewal and Bijnor.
• They contended that their permits were valid when granted and should not be cancelled.

The core of the appellant’s argument was that the previous judgments of the Allahabad High Court and the Supreme Court had already settled the issue that the Dewal-Bijnor route was a notified route and that the State Transport Authority had acted mala fidely in granting permits on this route. They further argued that the law was clear that private operators could not operate on notified routes unless specifically allowed. The respondents, on the other hand, claimed that they were existing operators and should not be affected by the notification. They argued that their permits were valid when they were issued and that the subsequent notification should not affect their rights.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a numbered list. However, the core issues addressed by the Court were:

• Whether private operators can operate on the notified route between Dewal and Bijnor.
• Whether the High Court was correct in setting aside the orders of the State Transport Appellate Tribunal and Regional Transport Authority which cancelled the permits of the respondents.

The sub-issue was whether the respondents were protected as existing operators.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Court relied on several authorities to reach its decision. These are categorized by the legal point they support:

On the issue of notified routes and private operators:

• Smt. Kanchan & Ors. Vs. State Transport Appellate Tribunal and Ors. (Allahabad High Court) – This case was about the same route and was confirmed by the Supreme Court.
• U.P. State Road Transport Corporation vs. Omaditya Verma and Ors., 2005 (4) SCC 424 (Supreme Court) – This case established that private operators cannot operate on notified routes unless permitted by the scheme.
• Adarsh Travels Bus Service vs State of U.P. and Others (1985) 4 SCC 557 (Supreme Court) – This Constitution Bench judgment clarified that no private operator can operate on a notified route unless authorized by the scheme.
• G. T. Venkataswamy Reddy vs State Transport Authority & Ors. (2016) 8 SCC 402 (Supreme Court) – This Constitution Bench judgment reiterated the principles laid down in Adarsh Travels and clarified the legal position regarding notified routes.

On the issue of mala fide exercise of power:

• Smt. Kanchan & Ors. Vs. State Transport Appellate Tribunal & Ors. (Civil Appeal No.7306 of 2003) (Supreme Court) – This case confirmed that the State Transport Authority had acted mala fidely in granting 48 permits on the route in question.

Relevant Legal Provisions:

• Section 68-C of the Motor Vehicles Act, 1939 – This section allows State Transport Undertakings to create schemes for providing road transport services.
• Section 68-B of the Motor Vehicles Act – States that Chapter IV-A supersedes any inconsistent provisions in Chapter IV.
• Section 68-FF of the Motor Vehicles Act – States that once a scheme formulated under Section 68-D gets approved under 68-D(3) of Chapter IV-A, then all the permits in the route / area covered by the scheme will get frozen.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Smt. Kanchan & Ors. Vs. State Transport Appellate Tribunal and Ors. (Allahabad High Court) – The Court relied on this judgment, stating that the matter was fully covered by it.
• Smt. Kanchan & Ors. Vs. State Transport Appellate Tribunal & Ors. [Civil Appeal No.7306 of 2003] (Supreme Court) – The Court followed this judgment, noting that it had confirmed the High Court’s decision and established the mala fide exercise of power by the State Transport Authority.
• U.P. State Road Transport Corporation vs. Omaditya Verma and Ors., 2005 (4) SCC 424 – The Court reiterated the principle established in this case, that private operators cannot operate on notified routes.
• Adarsh Travels Bus Service vs State of U.P. and Others (1985) 4 SCC 557 – The Court followed this Constitution Bench judgment, emphasizing that no private operator can operate on a notified route without authorization.
• G. T. Venkataswamy Reddy vs State Transport Authority & Ors. (2016) 8 SCC 402 – The Court relied on this Constitution Bench judgment, which reaffirmed the principles laid down in Adarsh Travels.

What weighed in the mind of the Court?

The Supreme Court’s decision was heavily influenced by the established legal principles regarding notified routes and the need to protect the interests of state transport undertakings. The Court emphasized the following points:

• The route between Dewal and Bijnor was a notified route, and private operators could not operate on it without permission from the scheme.
• The previous judgments of the Allahabad High Court and the Supreme Court had already settled the issue, and the State Transport Authority had acted mala fidely in granting permits.
• The principle that private operators cannot operate on notified routes unless permitted by the scheme was reiterated.
• The Court also noted that the High Court had not properly appreciated the impact of the judgment of this Court in the case of U.P. State Road Transport Corporation vs. Omaditya Verma and Ors.

Fact:Law Ratio

The Court’s reasoning was primarily based on the legal framework and precedents, with a lesser emphasis on the factual aspects of the case.

The Court’s reasoning is as follows:

The Court considered the fact that the route in question was a notified route. The Court then applied the legal principle that private operators cannot operate on a notified route unless permitted by the scheme. The Court also considered the previous judgments of the Allahabad High Court and the Supreme Court, which had already settled the issue. The Court concluded that the private operators’ permits on the notified route were invalid.

The Court rejected the argument that the respondents were protected as existing operators, stating that the route over which they were plying earlier did not include Dewal to Bijnor. The Court emphasized that since they were now plying on the notified route Bijnor-Dewal, they could not be permitted to do so. The Court also noted that the High Court had not properly appreciated the impact of the judgment of the Supreme Court in the case of U.P. State Road Transport Corporation vs. Omaditya Verma and Ors.

The Court quoted from the judgment: “It is well settled law and it is reiterated by this Court in the case of U.P. State Road Transport Corporation vs. Omaditya Verma and Ors., 2005 (4) SCC 424 that the private operators cannot be permitted to ply the vehicles on notified/nationalized route unless permitted by the Scheme.”

The Court further quoted: “As the route has become a notified route pursuant to the Nationalization Scheme dated 05.11.1997, and since it is a settled principle of law that no private operators can be permitted to operate/ply vehicles on the notified route except as permitted by the Scheme, the respondents cannot be permitted to ply the vehicles on the notified route.”

The Court also quoted: “Having regard to the totality of the facts and circumstances of the case, we are of the considered opinion that the High Court is not justified in setting aside the orders passed by the State Transport Appellate Tribunal and Regional Transport Authority.”

Key Takeaways

• Private operators cannot operate on notified routes unless specifically permitted by the scheme.
• The State Transport Undertakings have primacy on notified routes.
• Existing permits are not a guarantee to operate on a notified route.
• The judgment reinforces the importance of adhering to the legal framework governing road transport services.
• The decision has implications for private operators who may have been operating on routes subsequently notified for state transport undertakings.

Directions

The Supreme Court restored the orders of the Regional Transport Authority and the State Transport Appellate Tribunal, which had cancelled the permits of the private operators. This means that the private operators were not allowed to operate on the notified route between Dewal and Bijnor.

Development of Law

The ratio decidendi of this case is that private operators cannot operate on notified routes unless specifically permitted by the scheme. This judgment reinforces the principle that the State Transport Undertakings have primacy on notified routes. The Court has not changed the previous position of law but rather reaffirmed the settled position of law.

Conclusion

The Supreme Court allowed the appeal filed by the U.P. State Road Transport Corporation and dismissed the appeal filed by the private operators. The Court held that the private operators could not operate on the notified route between Dewal and Bijnor. The judgment reinforces the primacy of state transport undertakings on notified routes and the legal principle that private operators cannot operate on such routes unless specifically permitted by the scheme.

Category

Parent Category: Motor Vehicles Act, 1939

Child Categories:

• Section 68-C, Motor Vehicles Act, 1939
• Notified Routes
• State Transport Undertakings
• Private Operators
• Road Transport Law
• Transportation Law
• Permits and Licenses

FAQ

Q: Can private buses operate on routes designated for state transport?
A: No, private buses cannot operate on routes that have been notified for state transport undertakings unless specifically permitted by the scheme.

Q: What happens if a private operator already has a permit for a route that is later notified for state transport?
A: The existing permit does not guarantee the right to operate on the notified route. The private operator will not be allowed to operate on that route unless permitted by the scheme.

Q: What is a notified route?
A: A notified route is a route that has been designated for operation by a state transport undertaking under a scheme framed under Section 68-C of the Motor Vehicles Act, 1939.

Q: What is the purpose of having notified routes?
A: Notified routes are intended to provide efficient, adequate, economical, and properly coordinated road transport services by state transport undertakings in the public interest.

Q: What should a private operator do if their route is notified for state transport?
A: Private operators should cease operations on the notified route unless they have been specifically permitted to operate under the scheme.