Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 6
PETITIONER:
K.M. VISWANATHA PILLAI
Vs.
RESPONDENT:
K.M. SHANMUGHAM PILLAI
DATE OF JUDGMENT:
25/11/1969
BENCH:
SIKRI, S.M.
BENCH:
SIKRI, S.M.
HEGDE, K.S.
CITATION:
1969 AIR 493 1969 SCC (1) 188
ACT:
Motor Vehicles Act (4 of 1939), ss. 49(1) and 60(1)(c)-
Persons owning buses benami-Whether bar for obtaining
permit.
HEADNOTE:
The appellant was the owner of 5 buses. The Vehicles stood
in the name of the respondent, appellant’s benamidar, and
the stage carriage permits were also obtained in the
respondent’s name. The appellant, who was running the buses,
flied a suit claiming the buses along with their permits.
It was decreed by the trial court, and the lower appellate
court confirmed the decree in respect of 4 buses. The High
Court, in further appeal, held that the appellant and the
respondent together practised fraud in contravention of as.
41(1) and 60(1)(c) of the Motor Vehicles Act, 1939 in as
much as the respondent representing himself to be the owner
falsely obtained the permits in his own name, and allowed
the true owner, who had no permit to conduct the actual
business and dismissed the suit in toto. In appeal this
Court,
HELD: There is nothing in the Motor Vehicles Act, which
expressly or by implication bars benami transactions or
persons owning buses benami and applying for permits on
that basis.
Section 42(1) does not require that the owner himself
should obtain the permit; it only requires the owner to see
that the transport vehicles shall not be used except in
accordance with the conditions of the permit. The definition
of ’permit’ itself shows that all permits need not be in the
name of the owner because the latter part of the definition
shows that it is only in the case of a private earner or a
public carrier that a permit has to be in the owner’s name.
The same inference follows from the definitions of ’private
carrier’ and ’public carrier’. [899 H]
The amended s. 60(1)(c) provides for one of the
contingencies in which permit can be cancelled. According
to it, it is permissible for the Transport Authority to
cancel a permit if the holder of it ceases to own the
vehicle covered by the permit. It is only a permissive
clause and the Transport Authority has only been g/yen a
discretion to cancel the permit in that contingency. It may
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 6
or may not cancel it, even if the holder of the permit
ceased to own the vehicles covered by it. But it is by no
means necessary that cl. (c) should be applicable to the
case of every permit holder. There may be permit holders
who own the vehicle covered by the permit and there may be
permit holders who do not own the vehicle. This clause
appears to apply only to the former case and not to the
latter. [900]
Veerappa Pillai v. Raman & Raman, [1952] S.C.R. 583,
followed.
Khallil-ul-Rahman Khan v. State Transport Appellate
Tribunal, A.I.R. 1963 All. 383, Gut Narayan v. Sheolaf
Singh, (1919) 46 Cal. 566 (P.C.) and C.I.T. Gujarat v.
Abdul Rahim & Co., 55 I.T.R. 651, approved.
Varadarajulu Naidu v. Thavasi Nadar, (1963) 2 M.LJ.
20 and Chavali Venkataswami v. Chavali Kotayya, (1959) 2
and W.R. 407, disapproved.
897
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1453 of 1966.
Appeal from the judgment and decree dated September. 14,
1965 of the Madras High Court in Second Appeal No. 1394 of
1963.
A. K. Sen, R.M. Mehta and J.B. Dadachanji, for. the
appellant.
R. Gopalakrishnan, for the respondent.
The Judgment of the Court was delivered by
Sikri, J. This appeal by certificate granted by the High
Court of Madras is directed against its judgment and decree
modifying the decree passed by the District Judge.
The relevant facts for the determination of the points
raised before us are as follows: The plaintiff, K’. M.
Viswanatha pillai, appellant before us and hereinafter
referred to as the plaintiff, and K.M. Shanmugham Pillai,
respondent before us and hereinafter referred to as the
defendant, were originally members of a Joint Hindu Family.
On June 29, 1953, the six brothers who constituted the Joint
Hindu Family entered into a partition of the properties
belonging to the Joint Family, evidenced by a registered
document Ex. A-35. A motor bus MDH 662 fell to the share
of the plaintiff. At the time of partition the permit was
not in the name of the defendant and some proceedings for
the transfer of the permit to his name were pending.
Accordingly it was provided in the partition deed as
follows:
"As soon as its route permit and
registration etc. are transferred in the name
of Shanmugam Pillai, he shall have the same
transferred in the name of the 4th individual
of us, Viswanatha Pillai."
In September 1953, the permit was transferred in the
name of the defendant. In April 1954, the plaintiff
purchased two more vehicles, namely, MDO 1106 and MDH
730, but the permits were obtained in the name of the
defendant in whose name the vehicles were also actually
acquired. As the defendant was going to Kuala Lumpur on
business he executed a general power of attorney, Ex. A-55,
in favour of the plaintiff. In this power of attorney the
defendant admitted that the three buses above mentioned
belonged to the plaintiff and were plying in his name as
requested by the plaintiff. Two more buses seem to have been
acquired since then.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 6
The plaintiff’s case in brief was that the defendant was
carrying on business on his behalf as a benamidar. He
accordingly prayed for a declaration that the five buses
alongwith the stage
898
carriage permits belonged to him and that he was entitled to
run the same in terms of the power of attorney which was
irrevocable. The defendant had joined with the plaintiff
earlier in filing a joint application for transfer of
permits before the Regional Transport Authority. The
defendant, however, withdrew his consent and the application
was rejected. The plaintiff, accordingly, seeks a mandatory
injunction directing the defendant to execute necessary
documents required to effectuate the transfer of the
permits.
The suit was decreed entirely by the Trial Court, but
the District Judge confirmed the decree only with reference
to four of the buses. With reference to Bus No. MDU 4069
the decree was set aside.
The High Court held that "the plaintiff and the
defendant practiced a fraud upon the authorities,
conjointly, in contravention of the express provision of the
Motor Vehicles Act. The benamidar of the vehicles,
representing himself to be the owner, falsely obtained the
permits in his name, and allowed the true owner, who had no
permit, to conduct the actual business; there cannot be a
more flagrant violation of the basic requirements of the
Act, or of its scheme." The High Court, accordingly, felt
that they could not possibly grant mandatory injunction
compelling ’the defendant to co-operate in any further
application for transfer, since that would, in effect, give
recognition to the fraudulent contrivance and effectuate
rights on the very basis of that contrivance. The High
Court also agreed with the District Judge that the plaintiff
could not get a declaration as far as bus No. MDU 4069 was
concerned.
The learned counsel for the appellant, Mr. A.K. Sen
urges ’before us that no provision of the Motor Vehicles
Act, 1939 (IV of 1939) hereinafter referred to as the Act
has been contravened and that it is not necessary under the
Act that a permit should be obtained only by the real owner
of the bus.
The relevant statutory provisions may now be noticed,
and they ’are as follows:
"The Motor Vehicles Act, 1939 Section
2.
(3) "contract carriage" means a motor
vehicle which carries a passenger or
passengers for hire or reward under a contract
expressed or implied for the use of the
vehicle as a whole at or for a fixed or agreed
rate or sum and from one point to another
without stopping to pick up or set down along
the line of route passengers not included in
the contract; and includes a motor cab
899
notwithstanding that the passengers may pay
Separate fares."
(19) "owner" means, where the person in
possession of a motor vehicle is a minor, the
guardian of such minor, and in relation to a
motor vehicle which. is the
subject of a hire-purchase agreement, the
person in possession of the vehicle under that
agreement."
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 6
(20) "permit" means the document issued
by the commission or a State. or Regional
Transport Authority authorising the use of a
transport vehicle as a contract carriage, or
stage carriage, or authorising the owner as a
private carrier or public carrier to use such
vehicle."
(22) "private carrier" means an owner of
a transport vehicle other than a public
carrier who uses that vehicle solely for the
carriage of goods which are his property or
the carriage of which is necessary for the
purposes of his business not being a business
of providing transport, or who uses the
vehicle for any of the purposes specified in
sub-section (2) of section 42.
(23) "public carrier" means an owner of
a transport vehicle who transports or
undertakes to transport goods, or any class of
goods, for another person at any time and in
any public place for hire or reward, whether
in pursuance of the terms of a contract or
agreement or otherwise, and includes any
person, body, association or company engaged
in the business of carrying the goods of
persons associated with that person, body,
association or company for the purpose of
having their goods transported."
Section 42(1) on which the High Court has
relied reads thus:
"42(1) No owner of a transport vehicle
shall use or permit the use of the vehicle in
any public place, save in accordance with the.
conditions of a permit granted or
countersigned by a Regional or State Transport
Authority or the Commission authorising the
use of the vehicle in that place in the manner
in which the vehicle is being used; .... "
This section does not, in our view, on the language require
that the owner himself should obtain the permit; it only
requires the owner that the transport vehicle shall not be
used except in accordance with the conditions of the permit.
The High Court would add the words "to him" after the words
"permit granted",
900
but, in our view, there is no justification for inserting
those words. The definition of the "permit" itself shows
that all permits need not be in the name of the ,owner
because the latter part of the definition shows that it is
only in the case of a private carrier or a public carrier
that a permit has to be in the owner’s name. The same
inference follows from the definitions of "private carrier"
and "public carrier". This Court came to the same
conclusion in Veerappa Pillai v. Raman & Raman(1).
Some reliance was placed on the amendments
made in s. 60( 1 ) (c). The, section as’
amended reads :,
"60 (1) The transport authority which
granted a permit may cancel the permit or may
suspend it for such period as it thinks fit--
(c) if the holder of the permit ceases to
(own)(2) the vehicle or vehicles covered by
the permit," ....
There has been a conflict of opinion between the different
High Courts as to the inference following that amendment.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 6
It seems to us that the High Court of Allahabad in
Khalil-ul-Rahman Khan v. State Transport Appellate
Tribunal(3) rightly gives the effect of the amendment.
Srivastava, J., observed:
"A reference was, however, made to cl.
(c) of sub-section (1) of Section 60 of the
Act and on the basis of that clause it was
urged that it assumed that the permit holder
should be the owner of the vehicle. That
clause provides for one of the contingencies
in which a permit can be cancelled. According
to it, it is permissible for the Transport
Authority to cancel a permit if the holder of
it ceases to own the vehicle covered by the
permit. It is only a permissive clause and
the Transport Authority has only been given a
discretion to cancel the permit in that
contingency. It may or may not cancel it,
even if the holder of the permit ceases to own
the vehicle covered by it. But it is by no
means necessary that el. (c) should be
applicable to the case of every permit holder.
There may be permit holders who own the
vehicle covered by the permit and there may be
permit holders who do not own the vehicle.
This clause appears to apply only to t
he former
case and not to the latter. On its basis,
therefore, it cannot be held to be a
requirement of the
(1) [1952] S.C.R. 583..
(2) Substituted by s. 54 of the Motor Vehicles (Amendment)
Act, 1956 (100 of 1956) for "possess" (w.e.f. 16-2-1957).
A.I.R. 1963 All. 383, 388.
901
Act that in each case the person in whose
favour a permit has been issued should
necessarily be the owner of the vehicle
covered by it."
We agree with these observations. The contrary view
held in Varadarajulu Naidu v. Thavasi Nadar(x) that s. 42(1
) contemplates that only an owner will have a permit is
erroneous.
The decision of the Andhra High Court in Chavali
Venkataswami v. Chavali Kotayya(2) that s. 60(1)(c) of the
Act envisages the grant of a permit to the owner alone must
also. be dissented from.
The learned counsel for the respondent says that at any rate
the Act does not contemplate persons applying for permits
benami. In India benami transactions are recognised and not
frowned upon. (see Gut Narayan v. Sheolal Singh)(a). In
C.I.T. Gujarat v. Abdul Rahim & Co. (4) it was held by this
Court that the registration of the partnership deed under s.
26A of the Indian Income Tax Act, 1922, could not be refused
on the ground that K was the benamidar of V.
We see nothing in the Act which expressly or by
implication bars benami transactions or persons owning buses
benami and applying for permits on that basis.
In the result the appeal is allowed, the decree of the
High Court set aside and the decree passed by the District
Judge restored. We may mention that Mr. Sen did not press
the claim regarding the fifth bus, MDU 4069. The appellant
will have half costs in this Court. The parties. will bear
their own costs in the High Court.
y.p. Appeal allowed.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 6
(1) (1963) 2 M.L.J.
(2) (1959) 2 Andh. W.R. 407.
(3) (1919) 46 Cal. 566 (PC).
(4) 55 I.T.R. 651.
902