1. In this writ petition the principal challenge is to the vires of Section 47(1H) of the Motor Vehicles Act, 1939. This provision was introduced in the enactment by Act 47 of 1978. In order, however, to appreciate the several nuances of the challenge, we may advert briefly to the catena of facts.
2. The petitioners before us are a partnership firm, S.H. Motor Transport Company; It claims to be engaged in the trade of carrying passengers by road for the last over 40' years. Upto November 25, 1978, it was operating both over routes as also over inter-State routes. On the said date, however, a scheme under Chapter IV-A of the Motor Vehicles Act, was approved and notified by the State Government. When that scheme came into force, all intra-State routes within the State of Maharashtra were taken over by the Maharashtra State Road Transport Corporation (4th Respondents). Thereafter, the petitioner-firm continued to operate inter-State routes.
3. In this petition we are concerned principally with the inter-State route, Nagpur-Indore, which runs via Amravati, Achalpur, Dharan, Burhanpur and Khandwa The petitioner-firm claims to have been operating on the said route. This was initially on the basis of a temporary permit, and with effect from February 1, 1976, the petitioners were granted a substantive permit under Section 40 of the Motor Vehicles Act, 1939. The said enactment will be referred to as the 'said Act' for the sake of brevity hereafter. The period of permit was three years. It may be mentioned, that at that time there were four applicants for the said route namely, the petitioner-firm, the fourth respondent-Corporation and two other operators. The claims of all four were considered by the State Transport Authority. The said Authority decided in favour of the petitioners as the petitioners agreed to charge 27 paise per six kilometers against 36 paise which were to be charged by. the 4th respondents. The petitioners also undertook to operate vehicles which would not be over two years old. The State Transport Authority thus, preferred them and this must be on the footing, as we shall subsequently clarify when analysing the provisions of the Act, that they would subserve the public interest best. According to the petitioners, the substantive permit which they were granted would expire on March 15, 1979, and before the expiry of the said date and within the period prescribed by the Act, the petitioners filed an application for renewal of their permit. Applications were also received from other operators as also from the 4th respondent-Corporation. It may be. mentioned that, when the petitioners were initially successful in obtaining the permit for the route in preference to the 4th respondents, the provisions of Section 47 of the Act 47 of 1978 (the Amendment Act) had not been enacted and hence, Section 47(1H) was not available to advance the cause of the 4th respondents. The situation had changed by the time the renewal application came to be made because, in the meanwhile, the necessary Amendment Act had been duly passed and brought into force and the said Act, therefore, stood amended with the very vital introduction of Section 47(1H). It is this change which altered the situation vis-a-vis the various applications for permits to ply the said route.
4. These applications came to be considered by the State Transport Authority on March 12, 1979. Pending the decision regarding the substantive permits, the question of granting temporary permits came to be considered by the State Transport Authority on March 12, 1979, and on that date, having regard to the provisions contained in' Section 47(1H), temporary permit was directed to be granted to the 4th respondent and the application made by the petitioners as well as another competitor for the same were rejected. A copy of the brief operative order is annexed as Annexure B, whereas, the detailed reasons are to be found in Annexure C to the Writ Petition. The petitioners being aggrieved by this order, carried the matter in appeal before the State Transport Appellate Tribunal and obtained stay. . The petitioners, thereafter, received a notice that their application filed by the 4th respondent-Corporation and other private operators for fresh grants would be considered by the State Transport Authority. Certain interim directions had in the meantime been obtained by the petitioner-firm from the Appellate Authority to which the matter had been carried, but this arrangement would obviously come to an end when the applications for substantive permits were to be considered. The petitioner-firm was apprehensive, and rightly so, that this consideration would be a mere formality in view of the earlier orders passed by the State Transport Authority and the view taken by it as regards the mandatory character of Section 47(1H). The view was that, by reason of the said provision, the State Transport Authority had no other alternative but to make a grant in favour of the 4th respondent-Corporation subject to a very limited inquiry as provided for by the proviso to Section 47(1H). Since this aspect had also been considered in the earlier order at the stage of granting temporary permit, the petitioners felt and properly so, that an identical conclusion would be reached at the subsequent stage also. It had been contended by the petitioners, apart from the several contentions pertaining to the proper interpretation to be put on the various statutory provisions, that, Section 47(1H) if construed in the manner in which it was done by the State Transport Authority, would be unconstitutional as violative of the fundamental rights of the petitioners. Such challenge, obviously, cannot be gone into by the State Transport Authority or even by the Appellate Tribunal. They would have to proceed on the footing that the provision was valid and effective and would have to be applied. It is in these circumstances, that the petitioner-firm approached this Court and has impugned the said provision on the several grounds set out after para 11 of the petition. Before adverting to these grounds, we may briefly survey the provisions of the said Act with particular reference to those which would .have a certain impact on the points under consideration.
5. The Motor Vehicles Act, 1939, is an Act to consolidate and amend the law relating to motor vehicles. Section 2 thereof is the definition section, and we may note that the different sub-sections thereof provide for the definition of contract carriage and stage carriage. Chapter II of the said Act provides for licensing of drivers of motor vehicles. We are not concerned with the said provisions. Chapter III, similarly provides for registration of motor vehicles and these provisions need not deter us. We then find Chapter IV, which contains provisions for control of transport vehicles. Section 42 indicates necessity for obtaining permits for transport vehicles. Certain powers are conferred by Section 43 on the State Government to control road transport, and these powers are to be exercised by issuing necessary directions to the State Transport Authority. These powers are to be exercised having regard to the four-fold objectives specified in Section 42(1). The said section provides for tentative decisions being taken,, publicity being given to such decisions and representations invited from parties which may be effected by the decisions. It is only after considering these representations that the official notification has to be issued. Section 44 indicates the two types of authorities, and we are to restrict ourselves to the State Transport Authority. In Section 46 we find the particulars which are to be contained in applications for stage carriage permits. The section provides that the application must contain particulars as to the route or routes or the area or areas to which the application relates, the number of vehicles proposed to be operated in relation to each route or area, the minimum and maximum number of daily trips proposed to be provided in relation to each route or area and the time-table of the normal trips. The application is required, further, to contain particulars regarding the number of reserve vehicles necessary for the maintenance of the service as also to indicate the arrangement intended to be made for housing and repair of vehicles, for the comfort and convenience of passengers and for the storage and safe custody of luggage. Power is also reserved to specify further particulars which may be asked for in such application. We then arrive at Section 47. The marginal note only speaks of .the procedure of the Regional Transport Authority in considering application for stage carriage permit, but when one turns to the actual provisions, one finds not the dry procedural details but effective guidelines laid down indicating the principles to. be followed in considering such applications, and where there are' more than one, in deciding which of the applications is to be chosen. The Regional Transport Authority is directed to have regard to the following matters, namely :
(a) the interests of the public generally;
(b) the advantages to the public of the service to be provided, including the saving of time likely to be effected thereby and any convenience arising from journeys not being broken;
(c) the adequacy of other passenger transport services operating or likely to operate in the near future, whether by road or by other means, between the places to be served;
(d) the benefit to any particular locality or localities likely to be afforded the service;
(e) the operation by the applicant of other transport services, including these in respect of which applications from him for permits are pending;
(f) the condition of the roads included in the proposed route or area.
6. It is clear that (a) in substantially the general principle and (b) to (f) are aspects (not exhaustive) of the general direction contained in (a) illustration the considerations which the Authority must hear in mind. In addition to this, the Regional Transport Authority is obliged to take into consideration any representation made by persons already providing passenger transport facilities by any means along or near the proposed route or area, or by any association representing any persons interacted in the provision of road transport facilities recognised by the State Government, or by any local authority of police authority within whose jurisdiction any part of the proposed route or area lies. At the cost of some repetition we may analyse the provisions as containing the directive that before granting a permit or choosing the operator-applicant to be granted a permit, the Authority must keep itself the interest of the public, the five specific aspects thereof indicated in (b) to (f) and before arriving at the final decision consider the representations, if any, received from the various categories of persons indicated after (f). There is an important proviso at the end of Sub-section (1) of Section 47, which provides that other conditions being equal an application for a stage carriage permit from a co-operative society registered or deemed to have been registered under any enactment in force for the time being shall, as far as may be, be given preference over applications from individual owners. This was the relevant provision of the Act which was taken into account by the Authority at the time of considering the application of the petitioners, the 4th respondents and other operators for the said route initially, in February/ March, 1976. The petitioners succeeded in satisfying the Authority in respect of the points required to be considered and the Authority is presumed to have come to the conclusion that interest of the public would be best served by granting the permit over the Nagpur-Indore route to the petitioners even when the 4th respondents were applying for the same having regard to the various considerations specified in Clauses (a) to .(f) of Section 47(1). This decision was carried in appeal to the Appellate Tribunal which confirmed the decision of the State Transport Authority. The High Court was moved, but challenge to the said decision preferred in the High Court was also rejected. The matter thereafter rests in the Supreme Court.
7. To continue further with the discussion of the provisions of the said Act prior to the enactment of Act 47 of 1978, we may now note Section 58 which provides for duration and renewal of permits. Al stage carriage permit or a contract carriage permit other than a temporary permit issued under Section 62 is to be effective without renewal for not less than three years and not more than five years, as may be specified in the permit. It was because of this provision that the permit initially won by the petitioners was having a duration of three years. Sub-section (2) of Section 58 provides for a legal fiction of a sort and it is specified that a permit may be renewed on an application made and disposed of as if it were an application for a permit. The first proviso to Sub-section (2) prescribes the time within which an application for the renewal of a permit is required to be made. The second proviso is very material for our purposes and it is provided by the same that, other conditions being equal, an application for renewal shall be given preference over new applications for permits. Thus, it would be clear that ordinarily in 1979, the petitioners could have claimed the benefit of this preference, provided that had been able to satisfy the Authority that, other conditions as between themselves and other applicants were equal. Obviously, the Authority would have kept before himself the various aspects indicated in Section 47(1) before arriving at a proper decision but bearing in mind this preference Section 62 contains special provisions for temporary permits, as such permits would be necessary inter alia pending decision on an application for the renewal of a permit. There are special provisions regarding validation of permits granted for use outside the region contained in Section 63 of the said Act, but these need not be gone analysed in detail. This was the position as far as the provisions of the said Act were concerned when the new provision (1H) alongwith several other provisions were introduced in Section 47. As stated earlier, substantial amendments to the Motor Vehicles Act were carried out by the Motor Vehicles Amendment Act, 1978, (Act 47 of 1978). Before touching briefly on the statement of Objects and Reasons or on the notes of several clauses, we should first analyse what was introduced in Section 47 of the said Act of amending Act. The amending Act, it is found, introduced Sub-sections (1A) to (1H) Sub-sections (1A) and (1B) obliged the Government to reserve a percentage of stage carriage permits for the' Scheduled Castes and Scheduled Tribes- Sub-section (1C) permits the State Government to make provisions to reserve a certain percentage of such permits for the economically weaker sections as also for giving preference in approving applications for such permits. Sub-section (ID) provides that the number of permits reserved under Sub-section (1H)) and Clause (a) of Sub-section (1C) shall not exceed fifty per cent of the total number of stage carriers permits granted during a calendar year. The remaining sub-sections deal with the various procedural and similar requirements in order to implement these reservations. Thus, Sub-sections (1A) to (1C) concern themselves with the reservations which are required to be made for Scheduled Castes and Scheduled Tribes and which may be made for the economically weaker sections of the community. It is this reservation which is reflected in the statement of Objects and Reasons. The Statement of Objects and Reason also refers to giving preference to the Tourism Development Corporations, both national and State, the State Tourist Departments and to approved tourist car operators and travel agents in granting all India permits for tourist vehicles. However, we find nothing in the same pertaining to the very important mandate contained in Sub-section (1H) which may now be fully set out. The said sub-section provides as under:
47(1 JH). Notwithstanding anything contained in this section, an application for a stage carriage permit from a State Transport undertaking for operating in any inter-State route shall be given preference over all other applications:
Provided that the authority shall not grant a permit under this sub-section unless 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 in any notified area or notified route as is referred to in Sub-section (3) of Section 68D where the undertaking operate the service.
Explanation. For the purpose of this sub-section, 'inter-State route' means any route lying, continuously in two or more States.
8. In order to evaluate the impact of the constitutional challenge, it becomes necessary to interpret the impugned provisions. What exactly does Section 47(1H) provide for? In this connection, our attention was drawn to the decision of a single Judge of this High Court in Kishore Atmaram Parab v. State of Maharashtra (1979) Misc. Petition No. 1813 of 1979 (Bom. Original Side) decided on December 13, 1979 by Sawant J. (Unrep.). In this Misc. Petition', which was tried by a single Judge on the Original Side at Bombay, it had been contended that Section 47(1H) did not abrogate consideration of the other aspects earlier indicated in Section 47(1H). the plea was not accepted by the learned single Judge. Before us, neither the petitioners nor the 4th respondents contended that, after introduction of Section 47(1H), it was still open to the State Transport Authority to consider the interests of the public generally or the other aspects indicated in Section 47(1H) to 47(1F) in the face of an application for stage carriage permit from a State Transport Undertaking. In our opinion, the petition is made amply clear by the non-obstante clause contained in the opening part of Sub-section (1H). The said clause is restricted to things contained in the said section, and it is clear to us that, by reason thereof, the various aspects which were hitherto being required to be considered by the State Transport Authority before a stage carriage permit could be granted, would not have to be considered if the application for such permit emanates from a State Transport Undertaking. The words further are, that if, there is such application from a State Transport Undertaking, it shall be given preference over others. In the context of the user, preference obviously means to choose or select before others. It is clear, therefore, that by Sub-section (1H), in the matter of an application for a stage carriage permit, if the State Transport Undertaking is one of the many applicants, it shall be chosen or selected before the other applicants. The only limited field of enquiry is that contained in the proviso.
9. It is impossible to hold that even after the incorporation of Sub-section (1H) in Section 47 the aspects which the State Transport Authority was required to consider by reason of 47(1)(a) to (f) are still open for consideration and would have to be considered before making the mandatory choice of the State Transport Undertaking. It may be mentioned at this juncture that the State Transport Undertaking is defined in Section 68A of the said Act. The definition to be found in Section 68A (b) reads as under :
68 A (b) 'State transport undertaking' means any undertaking providing road transport service, where such undertaking is carried on by : (i) the Central Government or a State Government; (ii) any Road Transport Corporation established under Section 3 of the Road Transport Corporations Act, 1950; (in) XXX; (iv) any municipality or any Corporation or company owned or controlled by the Central Government or one or more State Governments, or by the Central Government and one or more State Government.
10. It is obvious from this definition that the preferred candidates whose applications are proposed to be advanced by Section 47(1H) would be not only the Road Transport Corporations or similar undertakings departmentally carried on by the Central Government or the State Government, but would also include undertakings providing road transport service, carried on by a Corporation or Company owned or controlled by the Central Government or one or more State Governments, or by the Central Government and one or more State Governments. This would bring within the ambit of the purview of the definition Tourism Development Corporation such as the Maharashtra Tourism Development Corporation and the India Tourism Development Corporation.
11. It was submitted on behalf of the petitioners that a harmonious construction is required to be given to the preference given to a party making an application for renewal of a permit, which preference, as we have noted earlier is provided for by the second proviso to Section 58(2) and the preference given to a State transport undertaking by Section 47(1H). it has to be noted, however, that (subject to satisfying the enquiry contemplated in the proviso to the preference incorporated in Section 47(1 H) is unconditional and absolute, whereas, that contained in the second proviso to Section 58(2) is subject to a qualifying expression viz. 'other conditions being equal'. It is true, that prior to the enactment by Parliament of Act 47 of 73, the other conditions which had to be equal, referred to the various aspects indicated in Section 47(1). If the assessment of the various applicants on these several considerations was equal, then, the operator already having a permit for a route and being an applicant for a renewal permit would have to be preferred having regard to the second proviso of Section 58(2). As far as the State Transport Undertakings are concerned, however, after the introduction of Sub-section (1H), the State Transport Authority is obliged to grant then a permit and in our view, the considerations provided for a Sub-section (1) of Section 47 are no longer to be considered or scrutinized at this stage as between a State Transport Undertaking and an applicant for a renewal permit the statute has rendered things unequal and in view of the statutory inequality, where the contest is between these two, then, an applicant for a renewal permit will not be able to claim the preference which is provided for in the second proviso to Section 58(2). In these very terms the preference is not available.
12. It is with this Background of the statutory provisions that we may now set down the constitutional challenge, which is principally based on the contention that the provision which we have interpreted, namely, Section 14(1H) is violative of Article 14 of the Constitution of India as also of the fundamental rights of the petitioners under Article 19(1)(g). It has to be submitted further and it was so submitted that the provision will not be saved by reason of the provisions contained in Article 19(6) of the Constitution. We may first deal with the challenge postulated by reason of the provisions contained in Article 14 of the Constitution. It was the submission of the learned Counsel appearing for the petitioners that, this provision i.e. Section 47(1H) was a legislation for a class, to benefit the State Transport Undertakings and it did not constitute proper classification which has been held permissible by the law Courts. It was conceded that the State transport undertakings would be a class by itself, but it was contended that this classification had no nexus or a reasonable relationship with the objects of the statute, namely, the said Act, and hence the classification was not permissible. In other words, if the provisio obviously conferring a privilege or a preference obviously to the advantage of this class did not constitute permissible classification, then the provision would amount to hostile discrimination against the petitioners, which hostile discrimination was not permitted by Article 14.
13. That the citizens have a right to use a highway both to pass and repass over the same or to take their vehicles over the same or to ply their vehicles over the same, including plying for reward or hire, has been settled quite early by the Supreme Court in a number of decisions, one of the principal ones being Saghir Ahmed v. State of U.P. : 1SCR707 . The argument advanced on behalf of the State based on American decisions that the use of the highway for purposes of gain is special and extraordinary and can be prohibited or conditioned as the Legislature deems proper was decisively rejected. Thus the petitioners and persons similarly constituted, namely, private operators have been conceded the right to ply their vehicles, of course, subject to the regulatory machinery prescribed by the said Act. It is not an absolute right, but one subject to regulations and even to certain reasonable restrictions. To leave the question of restriction of such right and Article 19 aside for the time being, we must consider the question whether, this statutory provision giving preference to another class of transport operators, namely, the State transport undertakings vis-a-vis private operators who have been conceded the right to ply their trade over the highways by the highest Court, constitutes hostile discrimination under Article 147'.
14. It is now well settled that, when a challenge is made on this ground the Court will have to pose and attempt to answer the questions :
1. What is the object of the enactment?
2. Whether there is arbitrary differentiation or some classification implicit in the legislative pronouncement? If there is total absence of any classification but just arbitrary selection of some or deprivation of another or others, then, the statute would be liable to be struck down without any further consideration. On the other hand, even if there is some classification, that by itself is not sufficient, and,
3. There must be some co-relationship, a reasonable nexus between the classification and the object of the legislation.
15. It was submitted strenously and contended vigorously by the counsel for the petitioners that, if the object of the said Act is expected to be the regulation of motor vehicle operators in order to subserve the public interest, then, the provision giving an almost absolute right to the State transport undertaking and which would necessarily abrogate consideration by the State Transport Authority of the various aspects depicted in Section 47(1) cannot satisfy the third requirement which we have enunciated earlier. It is this argument which will require a somewhat elaborate consideration. There are a large number of decisions of the Supreme Court laying down the considerations which are to be applied when statutory provisions are impugned on the basis of Article 14. We need not refer to more than one. It will be sufficient for our purpose to indicate a few of the propositions enunciated in Ram Krishna Dalmia v. Justice Tendolkar : 1SCR878 . S.R. Das, C.J. after setting down a number of decisions of the Supreme Court pertaining to the question of applying Article 14 proceeds, speaking for the Bench to observe (at pp. 202, 203 of 61 Bom. L.R. 192) :
The decisions of this Court further establish (a) that a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself;
(b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles;
(c) that it must be presumed that the Legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds;
(d) that the Legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest;
(e) that in order to sustain the presumption of constitutionality the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation; and
(f) that while good faith and knowledge of existing conditions on the part of a Legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the Court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation.
16. The above principles will have to be constantly borne in mind by the Court when it is called upon to adjudge the constitutionality of any particular law attacked as discriminatory and violative of the equal protection of the laws.
17. S.R. Das, C.J. in Dalmia's case goes on thereafter to .indicate how a statute is required to be judged. In our case, the statute which is impugned, namely, Section 47(1H) itself clearly indicates that the special preference is intended to apply to State transport undertakings. We have only to examine whether the basis of the classification appears on the face of the statute or may be gathered from the surrounding circumstances brought to the notice of the Court. We have then to consider whether the differentia established between State transport undertakings and other operators is reasonably related to the objective sought to be achieved by the statute. It makes no difference whether the provisions of the statute are intended to apply to and benefit and consequently to discriminate against only a particular person or a class of persons. It is clear from the analysis that we have made that, the statutory provision does assist the State transport undertakings in obtaining inter-State permits and the State Transport Authority is. almost obliged to grant this permit to a State transport undertaking provided it chooses to apply, undoubtedly subject to the limited enquiry permissible under the proviso. Thus, a statutory preference is conferred on such undertakings, which must in practice operate to the prejudice of a private operator where such operator applies for the first time or is already operating on that route. In order to consider whether this classification has any basis and whether the basis has any co-relation with the object of the statutory provisions, the Court will have to keep before itself the principles earlier extracted from para of the judgment of S.R. Das, C.J. and in particular principles (c) and (e). However, whilst applying these principles, the covets or the warning contained in sub-para (f) is also required to be borne in mind.
18. Before applying these principles, it will be appropriate in our opinion to briefly survey the provisions of the Road Transport Corporation Act, 1950. The establishment and the working of the 4th respondent Corporation is governed by these provisions and in order to consider the validity of the preference conferred on it, these provisions must assume significance.
19. Under the Road Transport Corporation Act, 1950, we find Section 3 in the first place indicating what the legislature considered the justification for establishment of Road Transport Corporation in States. These are to be established by the State Government having regard to :
(a) the advantages offered to the public, trade and industry by the development of road transport;
(b) the desirability of co-ordinating any form of road transport with any other form of transport;
(c) the desirability of extending and improving the facilities for road transport in any area and of providing an efficient and economical system of road transport service therein.
20. The constitution of the Road Transport Corporation is provided for in Section 5. The Chairman of the Corporation can be removed by the State Government and this power is conferred by Section 2 and Advisory Council may be established by the State Government under Section 17. The general duties of the Corporation are indicated in Section 18. . These duties, although material, cannot be enforced by any directive of the Court. It has been laid down that, it shall be the general duty of such Corporation to exercise its powers progressively to provide or secure or promote the provision of an efficient, adequate, economical and properly co-ordinate system or road transport service in the State or part of the State for which it is established and in any extended area. The definition of 'extended area' is to be found in Section 2(e). The powers of the Corporation are indicated in Section 19. Section 20 contains special provisions providing for the extension of the operation of the road transport service of a Corporation to areas within another state. It is clear that the procedure enjoined on the Corporation by this provision must have been undergone before the application was made by the 4th respondents for the inter-State permit to the State Transport Authority on the Nagpur-Indore route. If Section 20 is analysed, it provides in the first place, for the Corporation if it desires to extend the operation of its road transport service to any route or area situated within another state to negotiate with that other State. Such negotiations, however, can be undertaken only after obtaining the permission of the State Government. It, as a result of such negotiations the approval of the other State Government is secured, then, a scheme can be prepared by the Corporation for the extension and this scheme also has to be submitted to the other State Government for its consent. When the scheme is expressly sanctioned by the other Government, it would become effective after sanction by the Government of the State which has established the Corporation. It is only thereafter that it becomes competent for the Corporation to extend the operation of its road transport service to the said route or area, and for this purpose it will have to make an application to the State Transport Authority. We have already seen how under the Motor Vehicles Act, that application will receive preferential treatment after the introduction of Section 47(1H) by Act 47 of 1978. Before, however, this application could be made, it is pertinent to point out that almost each step is with the approval of the State Government and the State Government does not rest content only with general control over the Corporation envisaged by the other provisions of this Act. In the matter of operating over an extended area, which may transgress into another state, specific provisions are to be found in the Road Transport Corporation Act, providing for specific permission being sought and approval being granted. There are a number of other provisions in the said Act indicative of overall supervision, almost amounting to control by the State Government over the Road Transport Corporation. Section 30 is a provision for disposal of its net profits and after providing for various compulsory disbursements, if there is a reminded it has to be made over to the State Government for the purpose of road development an object intimately connected with transport vehicles. 'Section 33 contains provisions for accounts and audit, and the accounts of the Corporation as certified by the Controller and Auditor-General of India or any person appointed by him in that behalf together with the audit report is to be annually forwarded to the State Government and the State Government is further enjoined to cause the some to be placed before the Legislature of the State. Section 34 gives specific powers to the State Government to give general instructions which are to be followed by the Corporation and these may include directions relating to the recruitment, conditions of service and training of its employee, wages to be paid to the employees, reserves to be maintained by it, disposal of its profits pr stocks. These are mandatory instructions and cannot be departed from, except with the previous permission of the State Government. Under Section 35, from time to time returns, statistics, accounts and other information with respect to its property or activities has to be furnished by the Corporation to the State Government. At the end of each financial year, the Corporation has to submit to the Central and the State Governments a report on the exercise and performance by it of its powers and duties under the Act during the year as also of its policy and programme. The State Government is enjoined by Sub-section (3) of Section 35 to cause the said annual report to be laid before the State Legislature, The State Government has been given under Section 36, 37 and 38 the power to order inquiries, the power to control a part of the undertaking of a Corporation and finally the power to supercede the Corporation. However, before the power of supersession can be exercised, which may be on the basis that the Corporation is unable to perform or has persistently made default in the performance of its duties imposed on it or has exceeded or abused its powers, the State Government is required to obtain the previous approval of the Central Government. Section 44 contains the usual power to make rules. Leaving aside Section 20 for the time being, which depicts the detailed steps for extending operations beyond the limit of a particular State to another State, even the other provisions indicate that there is almost total supervision of the State Government over the activities of the Corporation extending from the time of creation to the possible ultimate supersession. These provisions will ensure that the State Government can prod the Corporation in a proper direction towards the performance of its duties as indicated by Section 3. These directions are mandatory and the extent to which the Corporation has achieved its objectives is presented annually to the Government in the form of annual reports, which reports are also to be laid before the Legislature. It is in this background that one has now to consider the two points vis-a-vis the object of the Legislation.
21. At this juncture we may now usefully refer to certain observations made in a recent 'judgment of the Supreme Court. These observations are to be found in the principal judgment of A.N. Roy, C.J. and Krishna Iyer, J. in D.H. Venkatachaian v. Dy. Transport Commissioner : 2SCR392 . A Bench of three Judges of the Supreme Court was considering the vires of Rule 183 A of the Tamil Nadu Motor Vehicles Rules. By the said rule there was a scheme to aware marks whilst considering applications for permits and by the impugned rule, five marks were to. be awarded to an applicant falling within the proviso to Clause (c) of Section 62-A of the Motor Vehicles Act, 1939. These applicants were the State Government, Central Government, or any Corporation or Company owned by the Central Government or State Government. (See Section 62-A of the Motor Vehicles Act as amended in Tamil Nadu). The challenge was preferred on the basis that there was no justification for the grant of five marks to such applicants and the fact that the applicant is owned by the State Government is irrelevant to the objectives of the statute. It was contended that this provision amounts to sacrifice of public interest at the alter of Government interest and would amount to a flagrant partiality and it transgresses the limits of equal consideration implicit in Section 47(1). The submission made by the learned Counsel for the appellant before the Supreme Court proceeded on the footing that, as contrasted with part IVA of the Motor Vehicles Act, which provides for monopolistic award of permits to the State transport undertakings, Part IV puts everyone on a competitive basis, regardless of whether one was a State undertaking or not and the most meritorious had the rights to win the battle. The argument put in other words was that, Section 47(1) contained no implied negative mandate to prefer a State undertaking unless it was as good as a private operator. It is clear that the arguments which were utilised to impugn the vires of Rule 155-A would be available with even greater force in respect of the challenge to the statutory provision such as incorporated in Section 47 by Act 47 of 1978, namely, Sub-section (1H). In this connection, Krishna Iyer, 3. speaking for himself and A.N. Ray, C.J.; proceeded to repel the contentions advanced on behalf of the petitioner by certain general prepositions enunciated in paras 8 to 11 of the aforesaid decision. In our opinion, the said paras may be fully extracted in order to appreciate and understand their impact (at pp. 846 to 848) :
8. Public law, in our piebald economy and pluralist society responds to societal challenges -and constitutional changes. To miss the ideological thrust of our Constitution and the economic orientation of our nation while construing legislation relating to public law and scanning them for their validity is to fall in understanding the social philosophy that puts life and meaning into the provisions of the Act. The .law, being realistic, reckons with the socialistic sector covering State and co-operative enterprises.
9. The special status of a government-owned transport undertaking in a Welfare State is obvious. It has large resources to cater to the traffic needs. It has, within its range of influences and co-ordination, many services useful to the travelling public, which may be beyond the reach of private ownership. Its functional motto is not more profits at any cost but service to citizens first and in a far larger measure than private companies and individuals, although profitability is also a factor even in public utilities. Its sensitivity to community welfare and encouragement of labour participation, its accountability to the Government, the legislature and the public put It in a category by itself. It is socially conscious, not profit obsessed. We are aware of the short-falls of some public-sector undertakings in some respects but it needs little argument to hold that to classify state transport systems on a separate footing is realistic and is ordinarily no sin before the principle of 'equality before the law'. The legislative body has done, in the given circumstances, what it thought was sound policy and we find no vice in the policy.
To classify what is conceptually and operationally different into a separate category is intelligence, not impertinence. The judicial art of interpretation and appraisal is imbued with creativity and realism, especially where fundamental changes have been brought by the Constitution in our approach to public sector enterprises, Legal Darwinism, adapting the rule of law to new social developments, so as to survive and serve the social order is necessary :
That Court best serves the law which recognizes that the rules of law which grew up in a remote generation may, in the fullness of experience, be found to serve another generation badly, and which discards the old rule when it finds that another rule of law represents what should be according to the established and settled judgment of society, and no considerable property rights have become vested in reliance upon the old rule. It is thus great writers upon the common law have discovered the source and method of its growth, and in its growth found its health and life. It is not and it should not be stationary changes of this character should not be left to the legislature. If judges have woefully misinterpreted the mores of their day, or if the mores of their day are no longer those of ours, they ought not to tie in helpless submission, the hands of their successors (Cardozo : The Nature of the judicial process rate university press pp. 151-152).This refreshing perspective guides us to look at the submissions advanced. Both the contentions can be shot down by three considerations. Firstly, a State enterprise, in 3 truly welfare state, is charged with a social consciousness and responsibility 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 are expected to be model employers and model servants, planning their budgets, subjecting themselves to public audit and criticism and inquest by legislative committees and the Houses of the -legislature. Profits are their concern but, more imuurtantly, public weal is their commitment. Such is the philosophy of the State sector in our socialistic pattern of society. Article 19(6)(ii) and Article 38 of the Constitution, Section 47(1), especially the proviso, and Chapter IVA of the Act (now governed by the impregnable Ninth Schedule to the 'Constitution) throw light on this policy of the paramount law. Here, therefore, the rule making authority, having regard to all relevant circumstances has decided to award to a State Transport Undertaking 5 marks. 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 all, private enterprise has its primary motivation in profit, although, under State direction, it is becoming socially responsive. The superiority in many respects (not all respects) of State Transport Undertakings, in the legislative judgment, has led to Rule 155A. This classification has noetic nexus with and rational relation to the object of augmenting the good of the passenger community. The theory, rooted in the obsolescent laissez faire economics, that only cold competition among claimants to run businesses brings out the best operator has serious limitations in fields where the focus is on public service, not gains of business. Public law, adapting itself to this socio-economic view, shifts its emphasis. This is what we have earlier called legal darwinism. We, therefore, hold that the assignment of marks under Rule 155A is geared to public interest, which is the desideratum of Section 47(1) of the Act.
22. After upholding Rule 155 A and rejecting the argument that it was not compatible with the scheme of public interest which is envisaged by Section 47(1), Krishna Iyer 3. proceeded to examine the alleged fatal incapability between the proviso to Section 47(1) and Rule 155A. Thus there were two contentions before the Supreme Court and the first of the two contentions was repelled by the approach and observations contained in paras 8 to 11. The latter branch of the argument was rejected subsequently in para 12 onwards.
23. Mr. Madkholkar on behalf of the petitioners contended that the approach which is approved by the observations is limited to the consideration of a rule giving a lightest preference such as Rule 155A and is not opposite in the context of the statutory compulsion of the nature embodied in Sub-section (1H) of Section 47. The next submission was that, this was a largesse or bounty mandatorily to be conferred by the State Transport Authority on a State Transport Corporation irrespective of the question whether it was the fittest or the best suited to run a particular route. We find nothing in these observations of the Supreme Court which we have extracted to permit restriction of the approach to such rules as Rule 155 A or even indicating that the application of the same approach to other statutory provisions which may give preference to State transport undertakings would be improper. Whether the preference is minimal or total, the approach to be followed by the High Court will have to be in accordance with the tenor of these observations. We find further, although the Road Transport Corporation Act is not referred to in that detail -as we have done, that the approach and particularly the observations contained in para 11 of the Supreme Court judgment is fully consistent with the scheme of the statutory provision permitting State Transport Corporations to be established. It has been observed in the said paragraph that the classification which constitutes the basis of Rule 155A, namely, the preference by five marks has a rational nexus with and relation to the object of augmenting the good of the passenger community. These words and the following words rejecting the adolescent liaises faire theory that 'cold competition' along can bring out the best operator must be followed by us and even apart from the fact that these observations from the Supreme Court are binding on the High Court would seem to constitute a proper approach. The public good to .be subserved is not necessarily the good only of the passengers of that particular route, the concept of public good takes within its compass not only the good, or the well-being or the interest of this limited class, but all other people living along the route or plying their vehicles along the route, the employees who are to man and run the transport service and indeed, it must take within its ambit the benefit and the well-being of the entire community and not necessarily any particular section thereof. In a contest between two private operators, the aspects of benefit to the public to be considered may assume a narrower range or may require a more restricted approach and perhaps will have to be determined on the competitive footing as was contended for. The theory propounding the desirability of 'cold competition' may still be valid when the contest is between two private operators. It no longer holds good and is invalid when the contest is between a private operator and a public service such as a State Transport Undertaking. That approach has been commended by the Supreme Court and the dictum of the Supreme Court is mandatorily to be followed by us. Even otherwise, the approach has much to commend and is a proper approach to be followed in this day and in these times. Chapter IV of the Motor Vehicles Act provides for control of transport vehicles and various authorities are constituted and guidelines conferred on these authorities to regulate transport operators. To ensure that the powers conferred on the authorities are not misused and to ensure proper consideration of the claims of various competing operators, we have useful guidelines for selecting one of many claimants. Section 47(1H) is in a way a guideline, which in that particular contingency takes away the discretion of the State Transport Authority except to the limited extent as provided by the proviso. The provision compels the said Authority to give preference to the State Transport Corporation when it applies for an inter-State transport route. We are unable to appreciate how this would constitute a largesse or bounty. This is not directing the State Transport Authority to give compulsory preference to a particular party equally placed as the petitioners or other operators but a statutorily established Corporation, whose every stage is supervised by the State Government and ultimately by the Legislature and which is established to subserve public needs and requirements as indicated by Section 3 of the Road Transport Corporation Act. It is established by and subservient to the executive of the State. Its policies, its programmes and its failures are subject to public scrutiny in the Legislature. It is in theory controlled by the State Legislature, the legal sovereign, but in the ultimate political theory by the political sovereign, namely, the voters of the State. The democratic system, itself provides for the final safeguard for the proper control and maintenance of such Corporation. Once the very concept of State Corporation is properly understood particularly the State Transport Corporation, with all the provisions and safeguards contained in the Road Transport Corporation Act, then, both the questions which are required to be answered, fall in a proper pattern and have to be answered in a manner which is consistent with the validity of the provisions as far as Article 14 of the Constitution is concerned. Regulated transport and the public good are the objects of the legislation. As between private operators, they are secured by their satisfying the guidelines indicated in Section 47(1), it is provided and desirable that as amongst two competitors, equally constituted, both being private the permit is to be given to a better one or the one who satisfies these guidelines better in the opinion of the State Transport Authority such considerations are unnecessary and irrelevant when the applicant is a State transport undertaking. It is the Legislature's acceptance of the superiority of the State Transport Corporation which is reflected in rules such as Rule 155 A or a provision such as Sub-section 47(1H). There is a specific class to which preference has to be given and this classification is quite germane to the object of the Act and it cannot be attacked on the footing that it has no rational nexus with the object of the Act. In this view of the matter, the challenge to the legislation on the basis of transgression of Article 14 will have to be rejected.
24. We must now consider the other limb of the argument, namely, that this is an unreasonable restriction on the rights of the private operators to carry on their business particularly an operator such as the petitioners, who were on the relevant date in fact running the said route and had earlier secured in open competition, a substantive permit to run the said route even as against the claims of the 4th Respondent-Corporation. It has been accepted that subject to necessary regulations, there is a right to ply vehicles along the highway and this is no extra-ordinary user even for reward. This right extends to carrying passengers and goods thereon even for reward and this is no largesse or bounty or extra-ordinary permission emanating from the Government. If that be so, it would not be correct to hold that where right over only one route is taken away, the right of the petitioners to carry on their trade or business cannot be considered to have been affected. It is possible to conceive of a transport operator running only one inter-State route. He may be operating it for several years running and enjoying the preference provided for in his case in the second proviso to Section 58(2). When after this long period of continuous and presumably satisfactory operation, he faces a possible ouster from that route depending upon the volition of the State Transport Corporation to apply to have a permit to ply that route, then, certainly his right to carry on business is affected and abridged and his grievance cannot be brushed aside by saying that he can carry on his business of transport operator or passenger carrier on another route. He may not be interested in another route. He may have special qualifications or predilection only for that particular route and by reason of that qualification or predilection he may be the most efficient operator vis-a-vis that route and may not be as efficient an operator for another route. Once it is realised that the petitioner-firm is only a compendious name for the group of persons, namely, its partners trading in the firm name and has a right to carry on its business over this route, the question that will be required to be considered would be whether, the law by which this right is abridged is saved by any subsequent provision to be found in Article 19 of the Constitution or saved by reason of any other consideration brought out in a binding decision of the Supreme Court. The right of the petitioner-firm is secured under Article 19(1)(g) and we find a power conferred on the Legislature to pass laws abridging this freedom embodied in Article 19(1)(g) provided for in Article 19(6) of the Constitution. Article 19(6) falls in two parts. The original provision permitted the State to make a law, imposing in the interest of the general public, reasonable restriction on the exercise of the right conferred by the said- sub-clause. After the Constitution (1st Amendment) Act, 1981, certain words in the latter portion of Article 19(6) were substituted and in addition to the opening words which we have extracted, it is now provided that nothing in Article 19(1)(g) shall prevent the State from making any law relating to the carrying on by the State or by a Corporation owned or controlled by the State of any trade, business industry or service whether to the exclusion, complete or partial of citizens or otherwise.
25. Mr. Madkholkar submitted that the enabling provision contained in both parts of Article 19(6) was not available to save the impugned provision which voilated Article 19(1)(g). According to him, in the first place, as far as this particular inter-State route was concerned, this was no restriction but a total abrogation of the rights of the petitioners. In other words, total exclusion cannot be regarded as a reasonable restriction and would not be saved by the saving provision in the first part of Article 19(6) of the Constitution of India. As far the second enabling provision to be found in Article 19(6) is concerned, it was contended by him that it must be an enactment, namely the law which must provide for the exclusion complete or partial of citizens from that trade or portions of a trade, and a statutory provision which did not itself .provide for such exclusion but left it to the volition of a party, such as the State Transport Corporation to bring about the result would not be saved by the provision contained in the latter part of Article 19(6) viz. that provided in (ii).
26. It is unnecessary today or in this case to go into a detailed discussion on how Article 19 and the other articles are to be read. It has been emphasised in a number of judicial decisions that, this is a fundamental and binding provision under the Constitution but, it has been equally emphasised that all portions of the Constitution are to be read together harmoniously and user of the expression fundamental does not necessarily mean that rights conferred in Article 19(1) are to be read or applied in any particular manner. As a matter of fact, Article 19 itself provides for a commendable balancing of an individual's rights and the public weal. It is necessary for the Court to which a complaint is made that the right under Article 19(1) is abridged to attempt to reconcile the individual's interests with the public good and in our opinion, attempting that task which is not always easy, it would appear that the portion of Act 47 of 1978 which is impugned in this Petition would be saved under both parts of Article 19(6). The right to carry on trade or business is provided for by Article 19(1)(g) and the right to carry on operations over a particular route can be regarded and ought rightly to be regarded as part of the right to carry on trade or business. When the right to carry on a trade over a particular route is exclusively conferred on the State Transport Corporation (and for the purpose of this argument the method of conferment whether by law, by rule, by notification, by option or by application is irrelevant) the right to carry on trade is only restricted and not totally abridged. Total abridgement or abrogation of the right over a particular route cannot be accepted as equivalent to total abrogation of the right of trade or business although, for a particular individual or a firm, it may be the only trade or business it may be carrying on. If the earlier part of Article 19(6) then is to be applied, two questions would be required to be considered. Can the restriction be considered to be reasonable as also in the interest of the general public?
27. We have already seen whilst considering the challenge under Article 14 the basis of the impugned provisions, namely, 47 .(1H) and once that basis is properly understood and appreciated, the answer to our query on the first part of Article 19(6) will be self-evident. Judicial Darwinism to use an expression of Krishna Iyer, J. would require acceptance that the restriction is both reasonable and in the interest of the general public. Mr. Hegde dealt at length on the various schemes undertaken by the 4th respondents to improve passenger transport undertaking within the State, to open up new routes not conditioned by the element of profit and to confer amenities on the public travellers and the employees. In Dalmia's Case (supra) the Courts are enjoined to take notice of certain facts, and having regard to the facts of which judicial notice can be taken, it must be. concluded that the restriction is both reasonable and in the interest of the general public. It does not amount to a mindless largesse or bounty given to the State Transport Corporation. It is a legislative preference an option exercised by the Legislature in favour of the State Transport Corporation but for good reason. The Legislature was fully aware of the reasons why such Corporations were constituted, it was equally aware- of the control which was exercised by the State Government over the Corporation as also of the ultimate control which the Legislature itself could exercise over it. It was alive to the public good when it introduced Section 47(1H) and on that basis, the restriction on the petitioner's rights must be accepted as both reasonable and made in the interest of the general public.
28. We are also unable to see any merit in the argument that the law itself must provide for the exclusion, complete or partial of citizens, in order to be upheld under the latter part of Article 19(6). Normally, the legislative provisions are also brought into effect by a notification of the State Government. Often in various enactments, power is given to the State Government to introduce the statutory provision partially and gradually, sometimes in certain areas or occasionally by reference to some specific requirement. The latter portion of Article 19(6) in our opinion does not indicate that the law itself must provide for exclusion directly. The law may contain a mechanism which results in such exclusion and may contain a condition on the happening or exercise of which the exclusion results. Even such a law which provides for exclusion, which may be complete or partial is conferred by the latter portion of Article 19(6). Thus, although the petitioners' rights conferred by Article 19(1)(g) of the Constitution are affected by introduction of Sub-section (1H) in Section 47, that introduction, would seem to be saved by Article 19(6) and the challenge on this footing also must fall. As far as Article 14 was concerned, there was one aspect emphasised in the submission by Mr. Madkholkar that, under Section 47(1) the State Transport Authority or other authorities considering the permit was given certain guidelines to select the best operator. According to him, after Section 47(1H) was introduced, in all cases in which the State Transport Corporation applies, this power of taking appropriate decisions and granting permits to the best operator is taken away. According to him, this itself would amount to a voilation of the Constitutional guarantee embodied in Article 14. The answer to this argument is very simple. Even the original provision for this quasi-judicial scrutiny conferred on the State Transport Authority was conferred by the Legislature. We have already noted how such scrutiny is necessary and has to be provided for in a contest between two private operators. When Sub-section (1H) was introduced by Parliament, the Legislature obviously applied its mind to the status of the State Road transport Corporation vis-a-vis private operators and having arrived at, in the legislative process, a decision that the former was required to be preferred for good and valid reasons, the Legislature did away with the quasi-judicial scrutiny which is otherwise required for private operators. We can find no fault with the legislative procedure and cannot accept the contention that the same is violative of Article 14. Once it is understood that the State Transport Corporation falls in a separate class and a preference to that class is consistent with the object of the Act, then, there is no substance whatsoever in this argument and it does not advance the cause of the petitioners in the a lightest extent.
29. We may add that the vires of the provisions have also been upheld by Sawant, Order sitting singly on the Original Side of this High Court at Bombay in Kishore Atmaram Parab v. State of Maharashtra (supra). We had occasion to go through his judgment but have considered the question independently and have arrived at the same conclusion regarding the vires of the provisions, though perhaps not on the identical footing.
30. In the result, the challenge falls and it is directed that the rule will stand discharged. Mr. Madkholkar applies orally for leave to appeal to the Supreme Court under Article 132 read with Articles 133(2) and 134A of the Constitution of India. We direct the petitioners to make a written application as we are not inclined to consider leave matter on oral application. The interim directions given 'in this petition to remain operative till February 15, 1981, unless varied by this Court earlier. Parties to bear their own costs.