Full Judgment Text
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PETITIONER:
T. GOVINDARAJA MUDALIAR ETC. ETC.
Vs.
RESPONDENT:
THE STATE OF TAMIL NADU & OTHERS
DATE OF JUDGMENT09/01/1973
BENCH:
GROVER, A.N.
BENCH:
GROVER, A.N.
MUKHERJEA, B.K.
CITATION:
1973 AIR 974 1973 SCR (3) 222
1973 SCC (1) 336
CITATOR INFO :
RF 1988 SC 501 (5)
R 1988 SC1353 (18)
R 1989 SC2105 (6)
RF 1990 SC1277 (5)
ACT:
Constitution of India, Article 19(1)(f)-Motor Vehicle Act
1939, Madras Amendment Act 18 of 1939-Chapter IVA-Sections
47(1)(cc), 58(2)(a), Section 68(cc)-Rules of Business-Rule
23(A)-Scheme for nationalisation of State Carriage whether
violative of Article 19 (1) (f).
Constructive res judicata-The same scheme unsuccesfully
challenged for violation of Art. 19 (1) (g) earlier.
HEADNOTE:
The Scheme for nationalisation of the Stage Carriage issued
under Chapter IVA of the Act was challenged before Supreme
Court on the ground of the alleged violation of Art.
19.(1)(g) of the Constitution. The Supreme Court by its
judgement in A. Samjeevi Naidu etc. V. State of Madras and
another (1970 3 S.C.R. 505) turned down the challenge.
After the decision of the Supreme Court in Rustom Cavasjee
Cooper v. Union of India (1970 3 S.C.R. 530), the said
scheme was again challenged as violative of Art. 19 (1) (f)
of the Constitution. The Scheme was challenged inter alia,
on the ground, that the permit issued under the Act
constitutes property, and the right to apply for permit as
’well as renewal of a permit is a right to hold property
and that the law authorising the nationalisation of Stage
Carriage was violative of Art. 19(1)(f) as the restriction
was not in the public interest. The writ petitions were
dismissed by the Madras High Court. In rejecting the
appeals.
HELD : (i) That there is no merit in the argument of the
appellants that before the decision of the Supreme Court in
Rustom Cavasjee Cooper’s Case, it was not possible for the
appellants to challenge the validity of Chapter IVA of the
Act, as the earlier decisions were based on an theory that
Art. 19 (1) (f) could not be invoked when a case fell within
Art. 31 of the Constitution K. K. Kochuni and Others V.
State of Madras (1963) 3 S.C.R. 887), had earlier laid down
that clause 1 of Art. 31 could no longer be construed as to
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exclude the operation of Art. 19 and a law regarding the
deprivation of property was, therefore, too late in the day
to pursue that line of argument. [229 D]
(ii) By Virtue of the Scheme, the existing permits of any
operator will not be cancelled. None of the properties or
assets of the appellants is going to be acquired. It has
already been held that no operator can claim renewal of
permit as a matter of right. The effect of nationalisation
on the properties or the business of the operator is not
such as cannot be regarded to a reasonable restriction in
the interest of general public within the meaning of Art.
19(5). The tests regarding the validity of Act falling
under Clause 5 or Clause 6 of Article 19 are same, Akadshi
Padhan v. State of Orissa (1963) Supp. 2 S.C.R.. 691)
followed. [232 H]
(iii) Held, the hearing of objections to the Scheme
under s. 68 (b) of the Act by the Home Secretary does not
violate rules of natural justice nor can any bias be imputed
simply because Home Secretary is also
223
the member of a committee which made the report regarding
the Schemes of nationalisation. Dosa Satyanarayana Murthy
v. The Andhra Pradesh State Road Transport Corporation (1961
S. C. R. 642) followed. [233 G]
(iv) Held further, that the nationalisation Scheme, even if
introduced piece-meal on particular routes, is not illegal
unless it is established that there is discrimination
against some operators.
Dosa Satyanarayana Murthy’s case followed.
The mere fact that the Scheme was approved by the Home
Secretary without any modification does not mean that the
discretion, in discharge of the quasi-judicial function
under s. 68(b) was not properly exercised or that there was
no scope for the proper exercise of the discretion due to
the mandatory language contained in Govt. Orders. [235 E]
Saghir Ahmed v. State of U.P. & Ors., [1955] 1 S.C.R. 707,
Ram Chandra Palai and Others v. The State of Orissa & Ors.
[1956] S.C.R. 29, Bhikaji Narain Dhakras and Others v. The
State of Madhya Pradesh and Others, [1955] 2 S.C.R. 589,
Gullapalli Nageswara Rao and Others v. Andhra Pradesh State
Transport Corporation and another [1959] Supp. 1 S.C.R.
319, Smt. Sitabati Debi and another v. State of West Bengal
and another, [1967] 2 S.C.R. 949, Mohd. Ayub Khan v.
Commissioner of Police, Madras and another, [1965] 2 S.C.R.
884 Smt. Somavanti and Others. The State of Punjab and
Others [1963] 2 S.C.R. 774, Municipal Committee, Amritsar
and another v. State of Punjab and Others [1969] 3 S.C.R.
447 referred to.
East India Electric Supply & Traction Co. Ltd. v. S. C.
Dutta Gupta and Others, 59 C.W.N. 162, held not applicable.
Srinivasa Reddy and Others v. The State of Mysore and Others
[1969] 2 S.C.R. 130, explained.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 672702,
704-710, 722-728, 776-781 of 1972 & 1057-1062, 1120, 1125,
1200, 1224, 1298-1300 & 2301 of 1972.
Appeals by certificate from the Judgment and Order dated
February 3, 1972 of the Madras High Court in Writ Petitions
Nos. 883, 884, 885, 886, 942, 992, 993, 994, 995 of 1966,
2061, 2649, 3825 of 1970.
A. K. Sen. K. Jayaram, for the appellants, in C.A. No.
672.
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K. Jayaram for the appellants in C.As. Nos. 673-676, 683,
684, 687, 688, 693, 678, 681, 682, 685, 686, 689-698, 694-
695, 776-781, 1298-1300 & 2301.
M. Natesan, K. Jayaram, for the appellants in C.A. No.
677.
K. K. Venugopal and Vineet Kumar for the appellants in
C.A. Nos. 697-702.
224
E. C. Aggarwala, and A. T. M. Sampath for the appellants
in C.As. Nos. 704.710.
K.K. Venugopal and K. B. Nambiyar, for the appellants in
C.As. Nos. 722-728, 1057.1062 & 1200.
K. K. Venugopal and A. S. Nambiyar for the appellants in
C.As. Nos. 1120.1125.
Vineet Kumar for the appellant in C.A. No. 1224.
S. Govind Swaiminadhan, S. Mohan, A. V. Aangam and A.
Subhashini for the Respondents in C.As. Nos. 672-676, 678
for Respondents Nos. 1, 3 & 4 (In C.As. Nos. 677, 679, 680,
697, 702. 704-710, 722-728 and 776-781.
S. Gobind Swaminadhan, A. V. Rangam, N. S. Sivam and A.
Subhashini for the respondents in C.As. Nos. 1057, 1062,
11201125, 1200 and 2301 and all the respondents in C.A. Nos.
1224 and 1298-1300.
The Judgment of the Court was delivered by-
GROVER. J. These appeals by certificate arise out of a
common judgment of the Madras High Court given in a number
of writ petitions filed before it by various stage carriage
operators.
The facts have been set out in detail in the judgment of the
High Court and need be stated only briefly. The policy of
nationalisation of passenger bus Transport in the State of
Madras (now Tamil Nadu) was laid down by the Government
Order dated June 7. 1967. Under that order all routes of 75
miles and above, all routes radiating or terminating in
Madras City and all routes in the Kanvakungi District were
to be nationalised as and when the permits of the private
operators expired. By the Government order dated June 17,
1967 a committee was constituted for implementing the,
above, decision. A Draft scheme was prepared by the
committee for nationalising the routes in question to the
complete elimination of private operators. This scheme was
published under s. 68-C of the Motor Vehicle Act 1939,
hereinafter called the ’Act’. A number of writ petitions
were filed in the High Court in 1967 challenging the
validity of the draft scheme. That scheme was struck down
by the High Court. Thereafter the Governor of Madras
inserted Rule 23-A in the Madras Government Business Rules
in Exercise of his powers under Art. 166 of the Con-
stitution. It was provided thereby that the powers and
functions which the State Transport Undertaking could
exercise under s. 68C shall be exercised by the Secretary to
the Government of Madras in the Industries, Labour and
Housing Department on behalf of the State Government. It
was also provided by that Rule that the powers and functions
of the State Government under s. 68-D of
225
the Act and the Rules relating thereto were to be exercised
by the Secretary to the Government of Madras in the Home
Department on behalf of the State Government. In April 1968
an Ordinance was promulgated by the Governor which was later
replaced by the, Madras Act 18 of 1968 which became
effective from April 1, 1968. By that enactment s. 47(1)
CC, s. 58(2) (A) and s. 68 (CC) were added to the Act.
Under the first two sections the Regional Transport
Authority was to have due regard to the publication of the
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draft scheme in granting a permit or a renewal of a permit.
The State Transport Undertaking, however, was entitled as of
right to the issuance of a temporary permit on the
publication of a draft scheme under s. 68(CC). In exercise
of the powers and functions under the new Business Rule
23-A schemes of nationalisation were promulgated and
published. A number of operators again filed writ petitions
challenging the draft scheme as also the validity of the
Tamil Nadu Act 18 of 1968. The High Court upheld the
validity of these provisions including the newly added
sections. That decision was affirmed by this Court in A.
Sanjeevi Naidu etc. etc. v. State of Madras & Another. (1)
It was pointed out in that judgment that in the State of
Tamil Nadu the State Transport Undertaking is a Department
of the State Government. Therefore the necessary opinion
had to be formed by that Government. It was held that the
function under the Act had been allocated by the
Governor to the Transport Minister under the Rules and the
Secretary of that Ministry had been validly authorised under
rule 23-A to take action under s. 68 (c) of the Act. The
validity of the provisions of the Madras Act 18 of 1968
which amended the Act had been canvassed before this Court
but it was observed that it was not necessary to decide
that matter while deciding the question of the validity of
the impugned scheme.
As pointed out by the High Court a third attempt was made by
way of filing writ petitions in the High Court out of which
the present appeals have arisen to impugn the validity of
Chapter IV A of the Act as amended by Madras Act 18 of
1968. We shall first state the allegations which are
relevant for deciding the constitutionality of the impugned
provisions. In this connection we may refer to writ
petition No. 780 of 1970 in which the petitioner V.
Krishnamurthy was one of those who had challenged the
validity of the draft scheme published by the Director,
Madras State Trans port Department as well as the draft
scheme published by the Secretary to the Government of
Madras, Industries, Labour and Housing Department. It was
stated in para 7 of the petition that
(1) [1970] 3 S.C.R. 505.
16-631Sup. CI/73
226
by reason of the dismissal of the appeals by this Court the
Secretary to the Government, Home Department, would now be
competent to take up the draft scheme for hearing under S.
68-D of the Act. On finalisation of the scheme the
petitioner’s permit would automatically stand cancelled. In
that event the petitioner’s business would have to be closed
down and he would be seriously affected financially. The
following part of paragraph 7 may be reproduced :
"It would be seen that the result of the
implementation of the Chapter IV-A is that
only two buses operated by me as a commercial
undertaking could have been nationalised, and
the vehicles covered by the permits would be
reduced in value to that of scrap and it would
have no market at all as there would be no
operators who would be coming forward to
purchase these vehicles by reason of the
nationalisation policy of the Government."
According to paragraph 8 of the petition Chapter IV-A of the
Act is violative of the fundamental rights guaranteed under
Art. 19(1) (f) and (g) of the Constitution for the reason,
inter alia, that the permit issued under the Act constitutes
property and the right to apply for a permit as also to be
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granted a renewal of a permit is a right to hold property
and the petitioner would be deprived thereof. The
petitioner’s right under Art. 19(1)(f) could, therefore, be
taken away only by a law relating to nationalisation of
stage carriages if such a law satisfied the test of Article
19(5), namely that it should be a reasonable restriction in
public interest. It was stated that public interest would
in no way be promoted by nationalisation because the
Government undertaking wherever the routes had been
nationalised was running into loss. Another attack was made
on the ground that no procedural safeguards were contained
in the Act before deprivation of the right to property could
take place. It was further pleaded that although S. 68-D
provided for compensation, being paid at the rate of Rs.
200/per month of the unexpired portion of each permit there
was no provision for compensation where as a result of the
approved scheme renewal of the permit was refused.
In the return which was filed on behalf of the respondents
an objection was raised that the writ petition was liable to
be dismissed on the ground of constructive res judicata. A
writ petition had been filed on previous occasion and the
points now sought to be agitated had not been taken. It was
further maintained that according to the scheme it was only
on the expiry of the existing permits,of operators that the
State Transport Undertaking would commence its services
under the scheme of nationalisation. Other allegations made
were denied.
227
The High Court first considered the question whether Chapter
IV-A of the Act is violative of Art. 19(1) (f) of the
Constitution and the same has been canvassed before us
strenuously. The High Court was of the view that a route
permit is property and that although the validity of That
Chapter had corn& up for consideration before this Court
earlier and had been upheld but the decision in those cases
was confined to the attack under clause (g) of Article 19
and not clause (f). Now was it open to challenge before the
decision of this Court in what is known as the Bank
Nationalisation case : Rustom Cavasjee Cooper v. Union of
India.(1) The High Court acceded to the argument of the
Advocate General that a bus with a permit is a valuable
property but without a permit or when the permit expires it
ceases to have more value than what can be fetched in the
market. The motor vehicle is not taken away by the
Government and the permit holder is free to use it. Since
the renewal of a permit is not a matter of right on the
expiry of the permit its holder had no property in it and as
such there was no question of infringement of his funda-
mental rights guaranteed by Article 19(1)(f) or Art. 31 of
the Constitution.
It is necessary to notice the previous decisions in which
the constitutional validity of the provisions similar to
those of the Act was challenged. In Saghir Ahmed v. State
of U.P. & Others (2) it was held that the U.P. Road
Transport Act 1951 violated fundamental rights of private
citizens guaranteed under Art. 1 9 (1) (f ) of the
Constitution and was not protected by clause (6) of Art. 19
as it stood at the time of the enactment. A declaration had
’been made in terms of s. 3 of that Act to the effect that
the stage ,carriage services, among others, on the
Bulandshahr Delhi route shall be run and operated
exclusively by the State Government. A scheme was also
notified for the operation of the stage carriage services on
those routes. This was held to be an infraction of Art.
19(1) (g) of the Constitution. The new clause inserted in
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Art. 19(6) by the Constitution First Amendment Act 1951 did
not apply to the facts of this case. It was observed that
after the insertion of that clause no objection could be
taken to the creation of a monopoly by the State on the
ground that it violated Art. 19
In the next case Ram Chandra Pilai & Others v. The State of
Orissa & Others (3) schemes of nationalisation of stage
carriage services were assailed on various grounds including
infringement of Art. 19(1) (f) and (g). In view of the
amendment made in clause (6) the creation of a state
monopoly by law was found to be permissible under that
clause. Saghir Ahmads case was held to be inapplicable and
the decision in Bhikaji Narain Dhakras
(1) [1970] 3 S.C.R. 530. (3) [1956] S.C.R. 29.
(2) [1955] 1 S.C.R. 707.
228
& Others v. The State of Madhya Pradesh & Another(1) was
followed. It was not considered necessary to examine the
further contention that the fundamental rights guaranteed
under Arts. 19 (1) (f) and 31(2) had been violated. If the
permits held under the Act were prematurely terminated or
cancelled compensation was provided by the Orissa Act
under which the nationalisation had been done. If there
was no renewal of the permits on their expiration after they
had run for their normal period no claim could be made by
the pen-nit holders on the score of such nonrenewal because
renewal was not a matter of right. The concerned transport
authority would be well within its right to refuse such
renewal having regard to the provisions of the amended
sections 47 and 55 of the Act. If at all there was any
deprivation of proprietary rights it would be by authority
of law. in Gullapalli Nageswara Rao & Others, v. Andhra
Pradesh State Transport Corporation & Anr. (2 ) the validity
of the ’provisions contained in Chapter IV-A of the Act was
directly assailed. The Court refused to draw inferences
from the provisions contained in s. 68-G for payment of
compensation to the holder of a permit that the legislature
had assumed that a transfer of the business was involved in
the process laid down in Chapter IV-A. Article 31 of the
Constitution was held not to having been attracted.
Before the decision in K. K. Kochuni & Others v. State of
Madras & Others(3) this Court had held in the State of
Bombay v. Bhanji Munji & Another(4) which was followed in
certain other cases that the substantive provisions of law
relating to acquisition of property were not liable to be
challenged on the ground that they imposed unreasonable
restrictions on the right to hold property. In other words,
in cases falling under Art. 31(2) the provisions of Art.
19(1) (g) could not be invoked. In Kochuni’s case, however,
the effect of the Constitution Fourth Amendment Act 1955 on
Art. 31 was considered. It was held that that Article was
no longer a self-contained Article providing for a subject
different from that dealt with by Art. 19. It dealt with
two different subjects. Clauses 2 and 2A dealt with
acquisition and requisition and clause 1 with deprivation of
property by authority of law. Clause 1 of Article 31 could
no longer be so construed as to exclude the operation of
Article 19. Bhanji Munji’s case was distinguished on the
ground that after the Constitution Fourth Amendment Act it
no longer held the field. In Smt. Sitabati Debi & Anr. v.
State of West Bengal & Anr.(5) it was pointed out that
Kochuni’s case was not concerned with a law of requisition
or acquisition. Therefore the observations therein had to
be under-
(1) [1955] 2. S.C.R. 589.
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(3) [1960] 3 S.C.R. 887.
(2) [1959] Supp. S.C.R. 319.
(4) [1955] 1 S.C.R. 777.
(5) [1967] 2 S.C.R. 949.
229
stood as meaning that Bhanji Munji’s case no longer governed
a case of deprivation of property by means other than
requisition and acquisition. In other words any deprivation
of property under Art. 3 1 (1) had to satisfy the guarantee
of the fundamental rights including Art. 19(1) (f). In
Rustom Cavasjee Cooper’s case however, this Court settled
the whole position by holding that the limitation prescribed
for ensuring due exercise of the authority of the State to
deprive a person of his property and the power to
compulsorily acquire the property were specific clauses of
limitation on the right of private property falling under
Art. 19 (1) (f).
Thus the Court came to the conclusion that Arts. 19 (1) (f)
and 31(2) were not mutually exclusive. The argument of the
appellants is that prior to the decision in Rustom Cavasjee
Cooper’s case it was not possible to challenge Chapter IV-A
of the Act owing to the decision of this Court that Art.
19(1) (f) could not be invoked when a case fell within Art.
31 and that was the reason why this Court in all the
previous decisions relating to the validity of Chapter IV-A
proceeded on an examination of the argument whether there
was infringement of Art. 19(1) (g), and clause (f) of that
Article could not possibly be invoked. We are unable to
hold that there is much substance in this argument. Bhanji
Munji and other decisions which followed it were based
mainly on an examination of the inter-relationship between
Article 19(1) (f) and Art. 31(2). There is no question of
any acquisition or requisition in Chapter IV-A of the Act.
The relevant decision for the purpose of these cases was
only the one given in Kochuni’s case after which no doubt
was left that the authority of law seeking to deprive a
person of his property otherWise than by way of acquisition
or requisition was open to challenge on the ground that it
constituted infringement of the fundamental rights
guaranteed by Art. 19 (1) (f ). It was, therefore, open to
those affected by the provisions of Chapter IV-A to have
agitated before this Court the question which is being
raised now based on the guarantee embodied in Art. 19(1) (f)
which was never done. It is apparently too late in the day
now to pursue this line of argument, in this connection we
may refer to the observations of this Court in Mohd. Ayub
Khan v. Commissioner of Police Madras & Another(1) according
to which even if certain aspects of a question were not
brought to the notice of the court it would decline to enter
upon-re-examination of the question since the decision had
been followed in other cases. In Smt. Somavanti & Others
v. The State of Punjab & Others(2) a contention was raised
that in none of the decisions the argument advanced in that
case that a law may be protected from an attack under Art.
31 (2) but it would be still open to challenge under Art.
19(1) (f), had
(1) [1965] 2 S.C.R. 884.
(2) [1963] 2 S.C.R. 774.
230
been examined or considered. Therefore, the decision of the
Court was invited in the light of that argument. This
contention, however, was repelled by the following
observations at page 794 :-
"The binding effect of a decision does not
depend upon whether a particular argument was
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considered therein or not, provided that the
point with reference to which an argument was
subsequently advanced was, actually decided."
It is common ground in the present cases that the validity
of Chapter IV-A of the Act has been upheld on all previous
occasions. Merely because the aspect now presented based on
the guarantee contained in Art. 19 (1 ) (f) was not
expressly considered for a decision given thereon will not
take away the binding effect of those decisions on us.,
The learned Advocate General who appears for the respondents
has invited our attention to certain decisions which do not
relate to the provisions of the Act but in which the
principle which is sought to be invoked on behalf of the
appellants based on Art. 19(1)(f) has been examined. In
Akadshi Padhan v. State of Orissa(1) the question was
whether the monopoly in the trade of Kendu leaves which the
State of Orissa took over constituted restriction on the
fundamental right of the petitioner who used to carry on
extensive trade in the sale of Kendu leaves. The attack
against the Orissa Act by which the monopoly was created was
based on the alleged contravention of the fundamental rights
under Art. 19(1)(f) and (g). The rival contentions which
were advanced were that the effect of the change made by the
Constitution First Amendment Act 1951 in Art. 19(6) was not
to exempt the law passed for creating a State monopoly from
the application of the rule prescribed by the first part of
Art. 19(6). On the other hand it was contended by the State
that the object of the amendment was to put the monopoly
laws beyond the pale of challenge under Art. 19(1) (f) and
(g). The scope and effect of Art. 19 (6) after its
amendment was fully considered. The Court felt no
difficulty in rejecting the argument that the creation of a
State monopoly must be justified by showing that the
restrictions imposed by it were reasonable and were in the
interest of the general public. It was stated emphatically
that the amendment clearly indicated that the State monopoly
in respect of any trade or business must be presumed to be
reasonable and in the interest of general public so far as
Art. 19(1) (g) was concerned. The Court proceeded to hold
that the effect of the amendment made in Art., 19(6) was to
protect the law relating to the creation of monopoly and
that meant it were only these provisions of that law which
were integrally and essentially connected with the creation
of the monopoly which were protected The rest of the
provisions which
(1) [1963] Supp. 2 S.C.R. 691.
231
might be incidental did not fall, under the later part of
Art. 19(6) and would inevitably have to satisfy the test of
the first part of that Article. The question which is more
relevant for our purpose was next considered, namely, the
effect of the amendment, on the other fundamental rights
guaranteed by Art. 19(1). The following observations at
page 710 on this point may be reproduced :
"The position, therefore, is that a law
creating a State monopoly in the narrow and
limited sense to which we have already
referred would be valid under the later part
of Art. 19(6), and if it indirectly impinges
on any other right, its validity cannot be
challenged on that ground. If the said law
contains other incidental provisions which are
not essential and do not constitute an
integral part of the monopoly created by i.e.,
the validity of those provisions will have to
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be tested under the first part of Art. 19(6),
and if they directly impinge on any other
fundamental right guaranteed by Art. 19 (1),
the validity of the said clause will have to
be tested by reference to the corresponding
clauses of Art. 19. It is obvious that if the
validity of the said provisions has to be
tested under the first part of Art. 19(6) as
well as Art. 19(5), the position would be the
same because for all practical purposes, the
tests prescribed by the said two clauses are
the same."
The instances given in the above decision of the State mono-
poly in respect of road or air transport are pertinent. A
law relating to such a monopoly would not normally impinge
upon the citizens’ fundamental right under Art. 19 (1) (f).
Similarly a State monopoly to manufacture steel, armaments
or transport vehicles or railway engines and coaches would
not normally impinge on Art. 19(1) (f). If the law creating
such monopolies were, however, to make incidental provisions
directly infringing the citizens’ right under Art. 19 (1)
(f) that would be a different matter. (see pages 710, 711).
In Municipal Committee, Amritsar & Anr. v. State of punjab &
Others(1) the validity of the Punjab Cattle Fairs
(Regulation) Act 1967 came up for examination. The Act
declared that the State had the monopoly to hold cattle
fairs and it prohibited all local authorities and
individuals from holding such fairs at any place in the
State. Shah J., delivering the judgment of the Court said
at page 456
"By imposing restrictions upon the right to
hold a fair, the citizens are not deprived of
their property, and the freedom guaranteed by
Art. 19 (1 ) (f) is not infring-
(1) [1969] 3 S.C.R. 447.
232
ed. The primary object of the Act is to give a
monopoly to the State to hold cattle fairs.
As a necessary concomitant of that monopoly,
holding of cattle fairs by local authorities
and individuals is prohibited. The
prohibition flows directly from the assumption
of monopoly by the State and falls within the
terms of Art. 19(6) of the Constitution. It
is a provision of the law creating monopoly
"basically and essentially necessary" for
creating the State monopoly to prevent other
persons from conducting the same business".
The learned Advocate General maintains that it follows from
the above decisions that when nationalisation of a transport
service is made which is fully protected by Art. 19(6) no
question arises of any deprivation of property. It is
possible and likely that the value of the buses owned by the
operators may be prejudicially affected or that they may not
be able to carry on trade or business on the nationalised
routes. According to the clear instance given in Akadshi
Padhan’s case to which reference has already been made a law
relating to such a monopoly would not normally infringe the
citizens’ fundamental right under Art. 19(1) (f).
Mr. Natesan for the appellants has pointed out that while
promulgating the schemes of nationalisation temporary
permits have been granted to the State Road Undertaking and
the compensation which is sought to be paid to the permit
holders is either nil or too small and there is no provision
for payment of any compensation the operators for being
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deprived of the transport business or for the effect of the
non-renewal of their permits. While examining the above
contentions it may be stated that there is no dispute on
certain matters. The first is that according to the schemes
of nationalisation which have been impugned all existing
permits must come to an end before each scheme will become
enforceable on a particular route. In other words by virtue
of the scheme the existing permits of any operator will not
be cancelled. None of the properties. or assets of the
appellants is going to be acquired. So far as the renewal
of a permit is concerned this Court has already held that no
operator can claim renewal as a matter of right. Section
68-G of the Act, contains the principle and method of
determination of compensation if any existing permit is
cancelled or its terms are modified. In the present cases.
however. no such question arises because no occasion for
cancellation of existing permits can arise in view of the
terms of the impugned scheme. The effect of nationalisation
on the properties or business of the operators is not such
as cannot be regarded to be a reasonable restriction in the
interest of the general public within Art. 19 (5) in the
same way as a state monopoly must be presumed to be
reasonable and in the interest of the general public
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so far as Art. 19(1)(g) and Art. 19(6) are concerned this is
view of the fact that the tests prescribed by clauses 5 and
6 of Art. 19 are the same : (vide Akadshi Padhan’s case).
We are accordingly unable to sustain the challenge under
Art. 19(1) (f) even of such a challenge is open to the
appellants in the light of what has been observed earlier.
It has next been argued that the nationalisation scheme were
vitiated for various reasons. The first submission is that
a policy decision was taken by the government which was
embodied in the Government Order dated June 17, 1967. It
was stated therein that the Government had considered
carefully the question of extension of nationalisation of
passengers transport in the State. In modification of the
existing policy the Government had decided that the types of
routes set out should be nationalised. The Government
proceeded to direct that the routes in the categories
mentioned should be nationalised as and when the permits of
the private operators expired. On the same day by another
Government Order the Government constituted an ad hoc
committee "to work out the details in all aspects for
implementing the policy decision." One of the members of
that committee was the Secretary to the Government, Home
Department. The Committee was to submit its report within a
fortnight. After the report had been submitted schemes were
published under s. 68-C by the Secretary, Industries, Labour
and Housing Department, hereinafter referred to as the
Secretary industries. He purported to do so under rule 23A
of the Rules of business. Objections which were fixed by
the operators were heard and the schemes considered by the
Secretary Home, under s. 68-D who had been so authorised
under s. 23A. According to the appellants the Secretary,
Home, while hearing the objections under s. 68-D of the Act
was acting as a quasi-judicial tribunal. Since he was a
member of the committee which had made the report in
accordance with which the schemes had been published under
s. 68-C it is claimed that the Secretary, Home. acted as a
Judge in his own cause. In other words, he participated in
the policy decision of the Government and then he exercised
the powers under s. 68-D of hearing objections and
considering the merits of the schemes. This, it is
suggested, is wholly contrary to the rules of natural
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justice the hearing by the Secretary, Home, being vitiated
by bias. Learned single Judge of the Calcutta High Court in
East India Electric Supply, & Traction Co., Ltd. v. S. C.
Dutta Gupta & Ors. (1) held that where a number of a rating
Committee had already prejudged at least one of the issues
that had been raised before it, his inclusion as a member
made the Rating Committee and its functioning contrary to
law. In Dosa Satyanarayanamurthy etc. v. The Andhra Pradesh
(1) C.W.N. 162.
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State Road Transport Corporation(1) the Minister in charge
of the portfolio of Transport had presided over the sub-
committee constituted to implement the scheme of
nationalisation of bus services. It was contended there
that the same Minister could not be a Judge in his own case
as he was biased against the private operators. That
contention was negatived by this Court. It was pointed out
that any decision arrived at by the Sub-Committee was not
final or irrevocable and it was only a policy decision. The
sub-committee was only meant to advise the State Government
how to implement the policy of nationalisation. That could
not either expressly or by necessary implication involve a
predetermination of the issue. The Minister, therefore,
could not be said to have any such bias as disqualified him
from hearing objections under Chapter IV-A of the Act in
which S. 68-D occurs. This case is quite apposite for
disposing of the submission based on bias.
The second reason advanced in support of the challenge to
the schemes is based on what is described as complete
absence-of coordination so far as the various schemes are
Concerned. The objectionable feature of the schemes is
stated to be, that there was no proper coordination of the
services on the various routes which are to be nationalised
and which should have been done by an integrated scheme. We
are unable to see that if the schemes conformed to the
requirements of S. 68-C why they should be struck down on
the only ground that routes were to be nationalised as and
when permits of private operators on those routes expired.
Section 68-C permits the State Transport undertaking to
operate a service in relation to any area or route or even a
portion thereof and to the exclusion complete or partial, of
other persons. The decision in Shrinivasa Reddy & Others v.
The State of Mysore & Others(2) can be of no avail to the
appellants because no question arose of coordination of
service on the various routes which were to be nationalised
and in respect of which the nationalisation was to become
effective from different dates. In that case it was pointed
out that piecemeal nationalisation of a particular route is
not permissible. It is quite clear that each route can be
nationalised and it is difficult to comprehend that when the
law empowers that to be done any further conditions should
be superimposed of coordinating the services on all the
routes which are proposed to be nationalised. The following
observations with regard to the above decision in Dosa
Satyanarayanamurthy’s case explain the law on the point :
"This Court did not lay down that there cannot
be any phased programme in the nationalisation
of transport services in a State or in a
district nor did it hold
(1) [1961] 1 S.C.R. 642. (2) (1960) 2 S.C.R. 130.
235
that there cannot be more than one scheme for
a district or a part of a district, the
observations of this Court in regard to the
implementation of a scheme piecemeal were
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aimed at to prevent an abuse of power by dis-
criminating against some operators and in
favour of others in respect of a single
scheme".
Learned Counsel for the appellants laid a great deal of
emphasis on the manner in which the policy decisions were
taken by the Government and the mandatory language contained
in the Government Orders already referred to which hardly
left any discretion or choice to the authority considering
the objections under s. 68-D of the Act. We are unable to
see how any authority who exercises, individual power under
s. 68-D is bound by what has been stated as a policy
decision of the Government. In fact his main function is to
hear such objections as may be referred to the schemes pub-
lished under s. 68C and approve or modify the schemes so
published after giving an opportunity to. the objector. His
function being of a quasi-judicial nature he is to bring a
judicial approach,. to the matter and even if he happens to
be a servant of the government he is not ’bound in any way
to carry out or endorse the policy of the Government without
discharging his duties as contemplated by s. 68-D. We are
unable to hold nor has anything been shown to us except the
suggestion that the schemes as published under s. 68-C were
approved in toto that the authority acting under s. 68-D had
not discharged his duties in a proper and judicial manner.
The mere fact that the schemes were approved’ without any
modification cannot establish that the Secretary, Home. who
exercised the functions of the State Government under s.
68-D, had failed to carry out his functions as laid down in
s. 68-D or that he had approved the schemes without any
modification, merely because the Government orders contained
language of mandatory nature.
In the result these appeals fail and they are dismissed but
owing to the nature of the points raised there will be no
order as, to costs.
S.B.W. Appeals dismissed.
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