Supreme Court Upholds Repeal of Karnataka Contract Carriages Act and Clarifies Delegation of Permit Powers: M/S S.R.S. Travels vs. KSRTC (2025)

Date of the Judgment: February 06, 2025
Citation: 2025 INSC 152
Judges: Vikram Nath, J., Prasanna B. Varale, J.

In a significant judgment impacting public and private transportation in Karnataka, the Supreme Court addressed the constitutional validity of the Karnataka Motor Vehicles Taxation and Certain Other Law (Amendment) Act, 2003, which repealed the Karnataka Contract Carriages (Acquisition) Act, 1976. The court also clarified whether the State Transport Authority (STA) can delegate its power to grant certain permits to its Secretary. This ruling resolves long-standing disputes between private bus operators and the Karnataka State Road Transport Corporation (KSRTC), setting a precedent for regulatory practices in the transport sector. The judgment was delivered by a two-judge bench comprising Justice Vikram Nath and Justice Prasanna B. Varale, with Justice Vikram Nath authoring the opinion.

Case Background

The case originates from the enactment of the Karnataka Contract Carriages (Acquisition) Act, 1976, aimed at acquiring privately operated contract carriages to bring them under public control. This Act vested all corresponding permits and certificates of registration in the State Government, which then transferred them to state-owned corporations like KSRTC.

The 1976 Act was challenged but upheld by the Supreme Court in State of Karnataka v. Ranganatha Reddy (AIR 1978 SC 215) and later reaffirmed in Vijayakumar Sharma v. State of Karnataka (AIR 1990 SC 2072), recognizing its purpose to further the Directive Principles of State Policy under Article 39(b) and (c) of the Constitution.

In 1988, the Motor Vehicles Act, 1988, was enacted, containing provisions relevant to defining contract and stage carriages, and the composition and powers of the State Transport Authority (STA) and Regional Transport Authority (RTA).

Over time, the transport policy in Karnataka shifted due to rising demand, urbanization, and the perceived inability of government corporations alone to meet commuter needs. This led to the enactment of the Karnataka Motor Vehicles Taxation and Certain Other Law (Amendment) Act, 2003, which repealed the 1976 Act to liberalize public transport and encourage private operators.

Following the 2003 repeal, private bus operators began applying for contract carriage permits, which were sometimes granted by Secretaries of the STA or RTAs. KSRTC and its employees challenged the validity of the 2003 Repeal Act and the power of the Secretaries to grant permits, leading to a series of writ petitions and appeals.

Timeline

Course of Proceedings

After the 2003 Repeal Act, private bus operators started applying for contract carriage permits. Secretaries of the STA or RTAs sometimes granted these permits based on delegations under Rule 56. KSRTC and its employees challenged (a) the validity of the 2003 Repeal Act and (b) the power of the Secretaries to grant permits through writ petitions.

On November 17, 2004, a Single Judge of the High Court held that Rules 55 and 56 of the KMV Rules are invalid as they exceed the authority of the MV Act, and that the delegation of the power to issue permits to the Secretary is not allowed. On December 16, 2004, the Single Judge ruled that the repeal of the KCCA Act by Act No. 9/2003 is unconstitutional, noting that the State Government could not repeal an Act that had received the President’s assent.

Appeals were then placed before a Division Bench, which consolidated multiple challenges to the 2003 Repeal Act and the dispute over the Secretary’s authority to grant permits.

On March 28, 2011, the Division Bench of the High Court upheld the constitutionality of repealing the 1976 Act, reasoning that the Legislature had the power to repeal a statute within its legislative domain without requiring fresh Presidential assent. However, the bench rejected the argument that the STA (or RTA) could delegate permit issuance to the Secretary, holding that permit-granting is a quasi-judicial function requiring collective decision-making by the statutory authority itself.

Legal Framework

The judgment considers several key legal provisions:

• Karnataka Contract Carriages (Acquisition) Act, 1976: Enacted to acquire privately operated contract carriages to bring them under state control. It was repealed by the 2003 Repeal Act.
• Karnataka Motor Vehicles Taxation and (Amendment) Act, 2003: This act repealed the 1976 Act, aiming to liberalize public transport and encourage private operators.
• Motor Vehicles Act, 1988:
  • Section 66: States that no owner can use a transport vehicle without a valid permit.
  • Section 68(3): Enumerates the powers and functions of the STA and RTA, including the grant of various permits.
  • Section 68(5): Permits the STA or RTA to delegate any of its powers or functions to any other authority or person, subject to prescribed conditions, if authorized by rules made under Section 96.
• Karnataka Motor Vehicles Rules, 1989:
  • Rule 56: Delegation of Powers by the STA – Rule 56(1)(d) allows the STA to delegate its power to grant “a permit other than a stage carriage permit” to the Chairman, the Secretary, or an officer not below the rank of Regional Transport Officer.

Arguments

Arguments by the Appellants (Private Bus Operators and STA)

The learned Senior Counsel for the Appellants, Mr. Devadatt Kamat, advanced the following main submissions:

• Express Provision in the MV Act and KMV Rules:
  The Appellants relied on Section 68(5) of the MV Act and Rule 56(1)(d) of the KMV Rules to argue that the STA has the power to delegate the grant of permits other than stage carriage permits.
  
  “The State Transport Authority and any Regional Transport Authority, if authorised in this behalf by rules made under Section 96, may delegate such of its powers and functions to such authority or person subject to such restrictions, limitations and conditions as may be prescribed by the said rules.” (Section 68(5) of the Motor Vehicles Act, 1988)
• Consistency with Legislative Intent:
  They contended that the MV Act was designed to confer broad administrative discretion on the STA and RTAs, and the power to delegate ensures administrative efficiency in routine matters.
• Practical Necessity and Administrative Efficiency:
  The Appellants argued that delegating routine permit issuance to the Secretary ensures timely and efficient service, as the STA is inundated with diverse functions.
• Reconciliation of Divergent Judicial Approaches:
  They noted that the High Court had previously split on the issue, with one instance holding that the grant of permits is quasi-judicial and cannot be delegated, while another recognized that delegation is permissible if rules are framed under Section 96 of the MV Act.
• Delegation Does Not Subvert Judicial Oversight:
  The Appellants relied on Newtech Promoters & Developers Private Limited v. State of Uttar Pradesh & Others ((2021) 18 SCC 1) to support the view that quasi-judicial functions may be delegated when done so in accordance with statutory provisions.
• Operational Practicalities and the Necessity of Delegation:
  They submitted that requiring the entire STA or RTA to sit on routine permit applications would be impractical and could lead to delays in service delivery.

Arguments by the Respondent Corporation (KSRTC)

The learned Senior Counsel for the Respondent Corporation, Ms. Kiran Suri, advanced the following arguments on behalf of the KSRTC:

• On the Invalidity of Section 3 of the 2003 Act (Repeal of the 1976 Act):
  KSRTC contended that the KCCA Act created exclusive rights for KSRTC, and its repeal was a deliberate statutory measure that should not be overturned.
• Incompatibility of the 2003 Act with Constitutional Requirements:
  The learned Senior Counsel argued that the 2003 Act repeals the 1976 Act by invoking Entry 57 of List II (taxation on vehicles), which deals with a matter entirely distinct from acquisition.
• Undermining of Judicial Precedents and Public Policy:
  The Respondent Corporation argued that repealing the 1976 Act nullifies the binding decisions of the Supreme Court in State of Karnataka v. Ranganatha Reddy (Supra) and Vijayakumar Sharma v. State of Karnataka.
• Financial and Operational Impact on KSRTC:
  It was submitted that the repeal imposed an undue financial and operational burden on KSRTC, jeopardizing its economic viability.
• On the Non-Delegability of the Power to Issue Permits:
  The Respondent Corporation concurred with the High Court’s holding that the power to grant Contract Carriage Permits is a quasi-judicial function, expressly vested in the STA or the RTA as composite bodies.
• Inadmissibility of Delegation to a Single Officer:
  It was submitted that delegation of the permit-granting power to the Secretary is contrary to the statutory scheme.
• Excessive Delegation and Its Consequences:
  It was further asserted that the amended Rules have excessively delegated the power to the Secretary, amounting to a de facto rewriting of Sections 68 and 96 of the MV Act.
• Legislative Intent and Judicial Oversight:
  The Respondent Corporation contended that the legislative intent was unambiguously to vest the power of granting Contract Carriage Permits in a body of high-ranking officials.
• Post-Judgment Developments (Ancillary Submissions):
  Subsequent to the repeal of the 1976 Act, there has been a resurgence of misuse wherein private operators, under the guise of Contract Carriage Permits, have operated their vehicles as stage carriages.
• State Policy Shifts and Recent Developments:
  It was further submitted that recent policy measures underscore the necessity for a robust, state-controlled transport framework.

Arguments Table

Issues Framed by the Supreme Court

The following principal issues arise for determination:

1. Validity of the 2003 Repeal Act:
   Whether the 2003 Repeal Act repealing the KCCA Act is constitutionally valid, particularly given that the 1976 Act had earlier been upheld by this Court.
2. Delegation of Power to Grant Permits:
   Whether, under Section 68(5) of the MV Act, read with Rule 56 of the KMV Rules, the STA and RTAs can lawfully delegate the power to grant contract carriage permits (and related permits) to the Secretary, or whether such power must remain with the multi-member authorities due to its quasi-judicial character.

Treatment of the Issue by the Court

Authorities

The court relied upon the following cases and legal provisions:

• Validity of the 2003 Repeal Act:
  • State of Karnataka v. Ranganatha Reddy (AIR 1978 SC 215) – Supreme Court of India: Affirmed the constitutional validity of the KCCA Act at the time of its enactment.
  • Vijayakumar Sharma v. State of Karnataka ((AIR) 1990 SC 2072) – Supreme Court of India: Reaffirmed the constitutional validity of the KCCA Act.
  • Ramakrishna v. Janpad Sabha (AIR 1962 SC 1073) – Supreme Court of India: Held that the power to repeal a law is coextensive with the power to enact it.
• Delegation of Power to Grant Permits:
  • Section 68(5) of the Motor Vehicles Act, 1988: Permits the STA or RTA to delegate any of its powers or functions to any other authority or person, subject to prescribed conditions, if authorized by rules made under Section 96.
  • Rule 56(1)(d) of the KMV Rules: Allows the STA to delegate its power to grant “a permit other than a stage carriage permit” to the Chairman, the Secretary, or an officer not below the rank of Regional Transport Officer.
  • Newtech Promoters & Developers (P) Ltd. v. State of U.P. ((2021) 18 SCC 1) – Supreme Court of India: Affirmed that even quasi-judicial functions may be delegated if the statute provides for it and if appropriate safeguards are in place.

Authorities Table

Judgment

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

How each authority was viewed by the Court?

✓ State of Karnataka v. Ranganatha Reddy (AIR 1978 SC 215):* Considered in the context of the validity of the KCCA Act but not binding on the power to repeal.

✓ Vijayakumar Sharma v. State of Karnataka ((AIR) 1990 SC 2072):* Considered in the context of the validity of the KCCA Act but not binding on the power to repeal.

✓ Ramakrishna v. Janpad Sabha (AIR 1962 SC 1073):* Relied upon to affirm that the power to repeal a law is coextensive with the power to enact it.

✓ Section 68(5) of the Motor Vehicles Act, 1988:* Relied upon to support the power of the STA to delegate its functions.

✓ Rule 56(1)(d) of the KMV Rules:* Relied upon to clarify that the STA can delegate its power to grant permits other than stage carriage permits.

✓ Newtech Promoters & Developers (P) Ltd. v. State of U.P. ((2021) 18 SCC 1):* Relied upon to affirm that even quasi-judicial functions may be delegated if the statute provides for it and if appropriate safeguards are in place.

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by several factors, including the legislative intent behind the 2003 Repeal Act, the practical realities of modern transport policy, and the need for administrative efficiency. The court emphasized that the repeal of the KCCA Act was a deliberate policy decision aimed at fostering a more dynamic and responsive transport framework. Additionally, the court recognized that the delegation of routine permit-granting powers is necessary to meet the practical demands of an evolving transport sector.

Fact:Law Ratio

Logical Reasoning

Key Takeaways

• Constitutional Validity Upheld: The Supreme Court upheld the constitutional validity of the Karnataka Motor Vehicles Taxation and Certain Other Law (Amendment) Act, 2003, which repeals the Karnataka Contract Carriages (Acquisition) Act, 1976.
• Delegation of Powers Affirmed: The State Transport Authority (STA) possesses the power to delegate its functions under Section 68(5) of the MV Act, as expressly provided by the statute and further clarified by Rule 56(1)(d) of the KMV Rules.
• Administrative Efficiency: The delegation of routine permit-granting powers is necessary to meet the practical demands of an evolving transport sector.

Directions

The Supreme Court directed the appropriate authorities to take all necessary measures to implement the findings and ensure that the delegation of permit-granting power is exercised in a manner consistent with the statutory provisions and the objectives of efficient public transport administration.

Development of Law

The ratio decidendi of the case is that the power to repeal a law is coextensive with the power to enact it, and the STA has the power to delegate the issuance of contract carriage, special, tourist, and temporary permits to its Secretary, as long as it is consistent with statutory provisions and the objectives of efficient public transport administration. This judgment clarifies the law on delegation of powers and affirms the state’s authority to make policy decisions regarding public transport.

Dissenting Opinion

There was no dissenting opinion in this case. The judgment was delivered unanimously by the two-judge bench comprising Justice Vikram Nath and Justice Prasanna B. Varale, with Justice Vikram Nath authoring the opinion.

Queries

During the proceedings, the court raised the following key queries:

1. Whether the 2003 Repeal Act is constitutionally valid, considering the earlier affirmation of the 1976 Act by the Supreme Court.
2. Whether the delegation of permit-granting power to the Secretary of the STA is permissible under the Motor Vehicles Act, 1988, and the Karnataka Motor Vehicles Rules, 1989.
3. Whether the delegation of permit-granting power to the Secretary of the STA is an excessive delegation of power.