The State of Bombay v. R. S. Nanji

impugned Acts created a. monopoly in favour of either the Joint-Stock Company or the State by ousting the private Stage Carriage Services from the business and thereby infringed Art. 19(1)(f) was no longer tenable in view of Art. 19'( 6) of the Constitution as a.mended by the Constitution (First Amendment) Act of 1951. Saghir Ahmad v. The State of U. P. ((1955] 1 S.C.R. 707), held inapplicable. Bhikaji Narain Dhakras v. The State of Madhya Pradesh ([1955] ~ S.C.R. 589), applied. That the provisions of the impugned Acts could not be held to contravene Arts. 19(1)(f) and 31(2) of the Constitution as the Act of 194 7 did provide for compensation for premature termination and under the Act of 1949, renewal could not be claimed as a matter of right and any deprivation of proprietary right would be by autho rity of law. That freedom of inter-state or intra-state trade guaranteed by Art. 301 of the Constitution is not one of the fundamental rights that can be enforced under Art. 32 of the Constitution and Art. 305 as a.mended by the Constitution (Fourth Amendment) Act of 1955 was a complete answer to that contention of the petitioners. ORIGINAL JURISDICTION: Petitions Nos. 604, 605, 647-649, 663, 671 and 692 of 1954. Petitions under Article 32 of the Constitution of India for.the enforcement of tundamental rights. 30 SUPREME COURT REPORTS [1956] 1956 S. P. Sinha, (R. Patnaik, with him) for the peti tioners in P. Nos. 604, 605, 649 and 663 of 1954. Ram Ch«nd,.a M. 0. Setalvad, Attorney-General of India, (Porus Palaiandothers . A. Mehta and P.G. Gokhale, with him) for the respon v",, r.ssa d I 0 ta e o, and others . . e etit1ons. . en S Ill a )) th p t Th S •

1956. January 20. The Judgment of the Court was delivered by BHAGWATI J.-These petitions under article 32 of the Constitution are filed by the owners of Stage Carriage Services plying their buses on several routes in the districts of the State of Orissa impugning the provisions of Orissa Act XXXVI of 1947 and Orissa Act I of 1949 as violative of their fundamental rights. They raise a common question of law and can be disposed of by one judgment. The State of Orissa embarked upon a scheme of Nationalised State Transport and, as a first step towards it, enacted an Act styled the Orissa Motor Vehicles (Regulation of Stage Carriage and Public Carrier's Services) Act, 1947 (Orissa Act XXXVI of 1947), which modified the provisions of the Motor Vehicles Act, 1939, for the better regulation of Stage Carriage and Public Carrier's Services in the Province of Orissa. This Act envisaged the formation of a Joint-Stock Company in which the. Central and the Provincial Governments shall together have control ling interests for providing in stages or in one stage a more efficient administration of the {lntire stage carriage and public carrier's services in the Province of Orissa. Such a Company was to be authorised to run stage carriage and public carrier's services in the Province of Orissa to the exclusion of all other per sons in the routes and areas over which it extended its activities, and with that end in view, the provi sions of the Motor Vehicles Act, 1939, were modified as therein specified. Section 4 of the Act provided that the Provincial Government may, if they think fit, by notification direct that the powers conferred by the Motor Vehicles Act, 1939, on a Provincial Trans port Authority or Regional Transport Authority shall S.C.R. SUPREME COURT REPORTS 31 - v. t956 and others Bhagwatt J. be held in abeyance with respect to the issue, renewal, suspension or transfer of permits for stage carriage Ram Chandra services and public carrier's services. Such a notifica- Palai and others tion was to be effective according to the directions either in the whole of the Province or in any speci- The State o/Orissa fied area or in respect of any specified route or routes. - _... On the issue of such a notification, the abovemen- tioned powers conferred on the Provincial Transport Authority or the Regional Transport Authority were to be held in abeyance and all permits issued, renewed or transferred by them were to become inoperative and the Provincial Government alone was to have the power to issue or renew permits or to grant tem porary permits or to suspend or to transfer permits for stage carriage services and public carrier's services. Whilst the State of Orissa was examining the ques tion of the formation of such a Company, the merger of feudatory States of Orissa with the Province of Orissa took place on the lat January, 1948. Some of these Durbars had their own transport services and these were taken over by the State Government of Orissa. Orissa was then divided into 5 zones for the purpose of proper development of road transport, viz., Sambalpur, Keonjhar, Koraput, Ganjam and Cuttack zones. It was decided by the Government to nationalise passenger service transport in the first three zones to be run departmentally based on the nucleus services taken over from the feudatory States which had merged. In order to give effect to this decision, the Orissa Motor Vehicles (Amendment) Act, 1948 (Orissa Act I of 1949) was enacted which further amended the Motor Vehicles Act, 1939, in the manner therein specified. Section I (3) of that Act provided that the remaining provisions of the Act shall come into force in such specified areas of the district or districts as the Provincial Government may by notification from time to time appoint. The Provincial Government may also by notification with· draw the remaining provisions of the Act from any specified areas. It was further provided that 011 and from the date when the remaining provisions of the Act came into force in any specified areas, the .. .., - 32 SUPREME COURT REPORTS (1956] 1956 provisions of Orissa Act XXXVI of 1947 shall be repealed in respect of the said specified areas and Rarn Chandra Palai and others when the remaining provisions of the Act were with- drawn from any specified areas, the provisions of TheStateofOrissa Orissa Act XXXVI of 1947 shall be deemed to be revived in the said specified areas from the date of publication of the notification of withdrawal. and others v. BhagwaliJ. The effect of these provisions was that in those areas or districts where a notification under section 4(1) of the Orissa Act XXXVI of 1947 was not issued, the provisions of the Motor Vehicles Act, 1939, con tinued to apply; where such a notification was issued, the provisions of Orissa Act XXXVI of 1947 came to be applied except where, by virtue of the power reserved under section 1 of Orissa Act I of 1949, the remaining provisions of that Act were brought into force by a notification issued in that behalf, in which case the provisions of Orissa Act XXXVI of 1947 were repealed in respect of the said specified areas and the provisions of Orissa Act I of 1949 became applicable. These were the three distinct sets of cir cumstances which would prevail at a given time after the enactment of Orissa Act I of 1949 according as the relevant notifications under section 4(1) ofOrissa Act XXXVI of 1947 or under section 1(4) of Orissa Act I of 1949 were issued bringing particular area or areas within the operation of the said respective Acts. Whereas a Joint-Stock Company in which the Central and the Provincial Governments were together to have controlling interests was envisaged in Orissa Act XXXVI of 1947, State Transport Service was envisaged in Orissa Act I of IU49 which defined State Transport Service to mean . a service in which the Orissa State has entire or partial financial interest and which the Provincial Government may by notifi cation declare to be a State Transport Service for the purposes of the Act. A Joint-Stock Company was accordingly formed in 1950 which was called the Orissa Road Transport Co., Ltd. The Transport Ser vices which were run through the Joint-Stock Com pany were termed the "Rationalised Services". The L .. :.: • " '"" > S.C.R. SUPREME COURT REPORTS 33 1956 Services which were run through the State Transport Service were termed the "Nationalised Services". Ram Chandra In pursuance of the above scheme of Nationalised Palai and others v. State Transport, the State Government of Orissa issued notifications and press notes which gave in- Th• state ofOrissa timation to the owners of Stage Carrier Services ope- and othero rating on the several routes within the districts of BhagwatiJ. Orissa that with effect from the 1st January 1955 either the Orissa Road Transport Co., Ltd., or the State Transport Service will be operating the said respective routes. That was the occasion for the above petitions being filed by the owners of the Stage Carriage Services plying their buses on the said res- pectiv.e routes impugning Orissa Act XXXVI of 1947 · and Orissa Act I of 1949 as unconstitutional and void as aforesaid. · . The petitions before us are not confined to the areas and routes where only Rationalised Services or Nationalised Services are contemplated to be intro duced by the State Government. Petitions Nos. 604 of 1954, 648 of 1954, 664 of 1954, 666 of 1954 and 671 of 1954 are concerned with the nationalisation of the services and the routes operated upon by the peti tioners in those petitions are intended to be served by the State Transport Service. Petitions Nos. 605 of 1954, 647 of 1954, 649 of 1954, 663 of 1954 and 665 of 1954 are concerned with the rationalisation of the services and the routes ope~ated upon by the peti tioners in those petitions are intended to be served by the Orissa Road Transport Co .. , Ltd. Petition No. 692 of 1954 is not clear whether the scheme to be put into operation by the State Government in the route operated upon by the petitioner therein is intended to be nationalised or rationalised. One thing, how ever, is common between all these petitioners that their permits under which they have been operating their buses upon those routes for the last several years are liable to be either terminated or cancelled or are not to be renewed under the scheme of Nation alised Road Transport Services and either the State Government or the Transport Authorities will grant the permits on those routes only to the Orissa Road 6 SUPREME COURT REPORTS (1956] 1956 Transport Co. Ltd., or the State Transport Service as the case may be. f and other• Ram Chantlra Palal and others v. k d The provisions o the impugn Acts were attac e on the ground thattherewasdiscriminationin.favour Th• Slat• o/ 0,1 .. a of the State Transport Service and the Orissa Road Transport Co. Ltd. It was urged that the State could not discriminate against persons in its own favour as BhagwatiJ. well as in favour of the Joint-Stock Company formed for carrying on motor transport business as that would be a negation of equality guaranteed under article 14 of the Constitution. It was also urged that zonal and territorial discrimination in the applica tion of the impugned Acts arbitrarily offended against article 14 of the Constitution. A further ground of attack was that the said provisions of the impugned Acts and the rules framed thereunder infringed arti cle 19(l)(f) and (g) of the Constitution as they put restrictions on tile citizens regarding their rights to hold property and to practice trade or business. Arti cle 31(2) was also alleged to have been infringed be cause the Gazette Notification of the State of Orissa purporting to take away the petitioners' motor trans port business amounted to confiscation and the inte- rests of the petitioners in a commercial undertaking were purported to be acquired without making any provisions for compensation. The impugned Acts, it was alleged, also violated the guarantee of freedom of inter-State and intra-State trade embodied in arti- cle 301 of the Constitution. Our attention was drawn to the relevant provisions of the Motor Vehicles Act, 1939, Orissa Act XXXVI of 1947 and Orissa Act I of 1949 regarding the issue and renewal of permits. Under the Motor Vehicles Act, 1939, the Provincial Transport Authority and the Regional Tran11port Authority were invested with the requisite powers in this behalf. Sections 47 and 55 prescribed the matters to be ·considered by the Regional Transport Authority in considering applica- tions for stage carriage permits and public carrier's permits and section 58 provided for the dura~ion and renewal of permits. So far as renewals of permits were concerned, it was provided that, other conditions ~ - " ~ ~ S.C.R. SUPREME COURT REPORTS 35 v. 1956 andothers being equal, applications for renewal shall be given preference over new applications for permits. When Ram Chandra a notification was issued under section 4(1) of Palai and others Orissa Act XXXVI of 1947, the powers conferred on the Provincial Transport Authority or the. Regional Th• State of Orissa Transport Authority by the Motor Vehicles Act, 1939, were held in abeyance and the Provincial Gov- ernment alone was invested with the power to issue or renew permits. In the granting or refusing to grant such permits, the Provincial Government was not bound to take into consideration the matters specified in sections 47 or 55 of the Mot.or Vehicles Act, 1939. The Provincial Government was also authorised by notification to cancel any permit grant- ed under the Motor Vehicles Act, 1939, without following the provisions of section 60 of that Act. The only provision which was made in section 6 of Orissa Act XXXVI of 1947 in this behalf was that when a permit became inoperative under section 4(2) or was cancelled under section 5 of that Act, compen- sation as therein prescribed was payable to such per- mit holder. Bhagwati J. Sections 3 and 4 of Orissa Act I of 1949 added two further clauses to sections 47 and 55 of the Motor Vehicles Act, 1939, viz., "(g) other conditions being equal, in the interest of proper co-ordination of transport facilities, the ex pediency of giving due consideration to a State Trans port Service; (h) the necessity for preventing unhealthy com petition in any route or routes or area on which the State Transport Service may ply;" It was pointed out that the whole scheme of Orissa Act XXXVI of 1947 and Orissa Act I of 1949 was to oust the owners of stage carriage service from busi ness and create a virtual monopoly in favour of the Orissa Road Transport Co. Ltd. or the State Trans port Service and thus discriminate against persons in favour of the Joint-Stock Company or the State. Even though the Provincial Government was invested with power to issue or renew the permits which would become inoperative, under section 4(2) (b) of Orissa 36 SUPREME COURT REPORTS [1956] v. 1956 and others BhagwatiJ. Act XXXVI of 1947, that power woul<l be exercised only having regard to the obi"ect which the State Gov Ram Chandra Palai and others ernment had in view in enacting that Act and the only result would be the issue of permits in favour of The State of Orissa the Orissa Road Transport Co. Ltd. The position under Orissa Act I of 1949 would be no better in spite of clauses (g) and (h) having been added to sections 47 and 55 of the Motor Vehicles Act, 1939, because the expediency of giving due consideration to a State Transport Service and tbe necessity for preventing unhealthy competition therein mentioned would also have the effect of eliminating the private-owned stage carriage service altogether and replacing in its stead the State Transport Service. It was also pointed out that the State Government had arbitrarily and without any rational basis selected certain districts like Gan-jam and Puri and parts of Cuttack District for starting the Orissa Road Trans port Co. Ltd., and had introduced Staie Transport Service in certain other districts such as Sambalpur, Keonjhar, Bolangir and some parts of Cuttack Dis trict. Orissa Act XXXVI of 1947 was applied to the former Districts while Orissa Act I of 1949 was ap plied to the latter Districts. The provisions of both the Acts being materially different as set out above the application nf one Act to particular districts of the State and of the other Act to the other districts of the State was violative of the guarantee of equal protection of laws enshrined in Article 14 of the Con stitution. The owners of stage carriage services to whom Orissa Act XXXVI of 1947 applied had the additional advantage of having compensation grant ed to them in accordance with the terms of section 6 thereof which advantage was not available to those owners of stage carriage services to whom Orissa Act I of 1949 was applied. There was also a further advantage which was available to the persons to whom Orissa Act XXXVI of 1947 applied and it was section 8 of the Act which provided that, when per mits had been cancelled by the Provincial Govern ment under the provisions of the Act, the Provincial Government may, by notification, require such "- -. ... - S.C.R. SUPREME COURT REPORTS 37 permit holders or owners to sell any specified vehicle or vehicles and any other movable or immoveable Ram Chandra property used in connection with the operation and Palai 01,d others maintenance of such vehicle or vehicles, to the Com- pany, when so constituted, at the rates assessed in the The state o/Orissa prescribed manner. This advantage was not available to the persons to whom Orissa Act I of 1949 applied. and others v. 1956 Bhagu-ati J. - It has, however, to be remembered that the Scheme of Nationalised State Transport had its origin in the White Paper published by the Government of India towards the end of the year 1944 with a view to removing the difficulties coming in the way of proper development of road transport and the need for cheap, efficient and rapid road transport services and the elimination of wasteful competition had been emphasized therein. The matter was discussed at the meeting of the Transport Advisory Council held in 1945 and the Transport Advisory Council had then drafted a code of principles and practice for regula ting the co-ordination of rail-road transport services which were later ratified by the State Government and accepted by the Government of India. It was this scheme which was embarked upon by the State of Orissa and several steps were taken by the State Government in order to implement that scheme. The first step towards such implementation was the enact ment of Orissa Act XX XVI of 1947 which envisaged the formation of a Joint-Stock Company in which the Central and the Provincial Governments shall together have controlling interests. Before such a Company could be formed the feudatory States in Orissa had merged in the Province on the 1st January 1948 and the State Government had on its hand transport ser vices which were owned by such States and had been taken over by the State Government of Orissa. These transport services formed the nucleus on the basis of which the State Government thought of adopting another mode of implementing the scheme of Nation alised State Transport and Orissa Act I of 1949 was passed envisaging the State Transport Service which would also serve the same purpose. When these two modes of implementation, viz., the formation of a 38 SUPREME. COURT REPORTS [1956] T, . 1956 and others Bhagwati}, Joint-Stock Company and the starting of the State Ram Chandra Transport Service, were adopted by the State Gov Palai anti others ernment, the question naturally arose as to how these two different ideas could be worked out for the fulfil- The.SM• of Orissa ment of the end in view. The nucleus of transport services which had been owned by the State Govern- ment had to be utilised so far as it was available and h avmg regard to the situation as it obtained, the State Government naturally thought of applying Orissa Act I of 1949 to certain districts of the State leaving the other districts to be served by the mode envisaged in Orissa Act XXXVI of 1947. Such a zonal or territorial or geographical division of the several districts of the State for implementa tion of the scheme of Nationalised State Transport by either the formation of a Joint-Stock Company or the running of the State Transport Service was based on the availability of the transport services acquired by the State Government from the various merging States and if such a division was made having regard to the situation as it thus obtained, no challenge could be made against it on the ground of discrimi natfon or the denial of equal protection of laws. What was·essential was that, as between the owners of stage carriage services operating on a particular route or in a particular area, no discrimination should be made and all should be treated alike. "If each one of such owners had the same Act applied to them they could not be heard to complain about any dis crimination. They formed a separate group or class by themselves to be treated in a particular manner having regard to the exigencies of the situation and the Government was the best judge of the circum stances which obtained within the particular locality which necessitated the application of one Act or the other for the implementation of the scheme. If the State Transport Services were not sufficient in number and could not fully serve the purpose sought to be achieved, the State Government would well be within its rights to form a Joint-Stock Company as envisaged in Orissa Act XXXVI of 1947 a,nd if such a Joint Stock Company could not be formed within a - S.C.R. SUPREME COURT REPORTS 39 1966 v. measurable distance of time, the State Government could very well allow the old order of things· to continue Ram Chandra under which the owners of stage carriage services Palai and others would be governed only by the provisions of the Motor Vehicles Act, 1939. It all depended upon the The State of Orissa administrative convenience as to whether the State Government could adopt one mode of implementation of the scheme or the other and no blame could be laid at its door if, in the circumstances of this case, it adopted one mode of implementation in one district or part of a district and adopted another mode of implementation in another district or another part of a district provided, however, as we have stated above, all persons who were operating on a particular route or routes or were located in a particular area or dis- trict were treated equally and without any discrimi- nation inter se. Such zonal or territorial or geogra- phical division, therefore, would not be violative of the equal protection of laws. BlragwatiJ. and others A further argument which was addressed before us on behalf of the petitioners may be noted here and it was thatOrissa Act I of 1949 had been applied to some of them and that Act provided for no compensa tion to be given to them as in the case of those owners of stage carriage services to whom Orissa Act XX XVI of 1947 had been applied. That, it was contended, was discriminatory as between the several owners of stage carriage services and thus violated Article 14 of the Constitution. This argument, however, ignores the fact that under Orissa Act XXXVI of 1947, the permits issued or renewed in favour of the owners of stage carriage services by the Provincial Transport Authority or the Regional Transport Authority cease t'o be operative or are cancelled by the Provincial Government as the case may be and compensation is given to such permit holders for such premature ter mination or cancellation of their permits. The owners of stage carriage services to whom Orissa Act I of 1949 is applied stand, however, on a different footing. Their permits continue for the normal period and the considerations which are laid down in clauses (f) and (g) which have been thereby added to sections 47 and 55 of the Motor Vehicles Act, 1939, would come into .. 40 SUPREME COURT REPORTS (1956] · f v. • 1956 and others Bhagwati J. play when these permits which have expired by lapse of time come to be considered for renewal on applica Rani Chandra Palai and others tions made by permit holders in that behalf. These permits may or may not be renewed in favour of these The State of Orissa permit holders but the non-renewal of such permits would not be on a par with the premature termina tion or cancellation of the permits held by the owners o stage carnage services to w om t e provisions of Orissa Act XXXVI of 1947 were applied. The two positions, therefore, are not similar and the permit holders under Orissa Act I of 1949 do not fall in the same class or group as the permit holders under Orissa Act XXXVI of 1947. There is no question, there fore, of any discrimination between these two classes or groups of permit holders and it cannot be validly urged that the provisions of the impugned Acts in so far as they applied to different classes or groups of permit holders are in any manner violative of the fundamental right embodied in article 14 of the Con stitution. h h r- - The argument that the provisions of the impugned Acts were designed with a view to oust the private stage carriage services from business altogether and were intended to create a virtual monopoly in favour of the Joint-Stock Company or the State as the case may be is also now of no avail. Saghir Ahmad's case(1) was particularly relied upon by the petitioners in support of their contentions but article 19(6) of the Constitution as amended by the · Constitution (First Amendment) Act, 1951, enacts that "Nothing in sub-clause (g) shall affect the opera ti on of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause,. and, in particular, nothing in the said sub-clause, shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to,- (i) .......................... . (ii) the carrying on by the State, or by a corpo ration owned or controlled by the State, of any trade, (1) [1956] 1 S.C.R. 707. S.C.R. SUPREME COURT REPORTS 41 1956 Ram Chandra business, industry or service, whethe1· to the exclu- sion, complete or partial, of citizens or otherwise". This amendment excludes all argument in regard to Palai and others the alleged ousting of the private-owned stage carri- age services and the creation of a virtual monopoly in The State of Orissa favour of the Joint-Stock Company or the State. The Orissa Road Transport Co. Ltd. which is a Joint-Stock Company formed under the provisions of Orissa Act XXXVI of 1947 and the State Transport Services which are envisaged in Orissa Act I of 1949 would, therefore, be able to carry on their business even if it resulted in the complete elimination of the private- owned stage carriage services without any violation of the fundamental right guaranteed under article 19(1)(g) ofthe Constitution. BhagwatiJ. andothers v. ,I It was attempted to be argued on behalf of the petitioners that the amendment of article 19(6) of the Constitution would not affect the position as it obtained under t.he impugned Acts because these Acts had been long in operation before the amendment came into force and the petitioners were entitled to relief based on our decision in Saghir Ahmad's case, supra. A similar argument was sought to be ad vanced before us in Petitions Nos. 189 to 193 of 1955 -Bhikaji Narain Dhakras v. The State of Madhya Pradesh & Another(1)-and that argument was repelled by us in the manner following: "The contention of the respondents before us is that although the amending Act, on the authority of our decision in Saghir Ahmad's case (supra), became on and from the 26th January 1950 void as against the citizens to the extent of its inconsistency with the provisions of article 19(1)(g), nevertheless, after the 18th June 1951 when clause (6) was amended by the Constitution (First Amendment) Act, 1951 the amending Act ceased to be inconsistent with the fundamental right guaranteed by article 19(1)(g) read with the amended clause (6) of that article, because that clause, as it now stands, permits the creation by law of State monopoly in respect, inter alia~ of motor transport business and it became operative again (1) (1955) 2 S.C.R. 589. 6 42 SUPREME COURT REPORTS [1956] 1956 even as against the citizens ................ In our judgment the contentions put forward by the respondents as to the effect of the Constitution (First Amendment) Act, 1951 are well-founded and the objections urged The State o/Orissa against them by the petitioners are untenable and Ram Chandr'a Palai and others v. a .. d others must be negatived". BhagwatiJ, ·"- - · h h h d b It is hardly necessary for us to consider the further · content10n urge y t e petitioners, viz., t at t e fundamental right guaranteed under article l9(l)(f) and under article 31 (2) had been violated. If the permits held by them under the Motor Vehicles Act, 1939, were prematurely terminated or cancelled under the provisions of Orissa Act XXXVI of 1947 compensation was provided by the Act itself. If there was no renewal of their permits on the expira tion thereof after they had run for their normal period by virtue of the provisions of Orissa Act I of 1949, no claim could be made by them on the sc·ore of such non-renewal because renewal was not a matter of right. The Provincial Transport Autho rity or the Regional Transport. Authority would be well within their rights to refuse such renewal having regard to the provisions of the amended sections 47 and 55 of the Motor Vehicles Act, 1939, and, if at all there was any deprivation of their proprietary rights, it would be by authority of law. Nor need we pause to consider the last contention urged on behalf of the petitioners that the impugned Acts violated the guarantee of freedom of inter-State and intra-State trade or business embodied in article 301 of the Constitution. In the first instance, it is not a fundamental right conferred by Part III of the Constitution which can be enforced by a petition under article 32. Moreover, article 305 as it stood before tbe amendment and the amended article 305 which came into effect after the Constitution (Fourth Amendment) Act, 1955, afford a complete answer to this contention of the petitioners. The result, therefore, is that there is no substance in any of the contentions urged on behalf of the peti tioners and the petitions must, therefore, stand dis missed as ordered by us already. .. ·