Full Judgment Text
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PETITIONER:
KARNATAKA STATE TOURISM DEVELOPMENT CORPN. LTD. ETC. ETC.
Vs.
RESPONDENT:
KARNATAKA STATE TRANSPORT APPELLATE TRIBUNAL & ORS. ETC.ETC.
DATE OF JUDGMENT01/10/1986
BENCH:
REDDY, O. CHINNAPPA (J)
BENCH:
REDDY, O. CHINNAPPA (J)
VENKATARAMIAH, E.S. (J)
CITATION:
1986 AIR 2039 1986 SCR (3)1008
1986 SCC (4) 421 JT 1986 606
1986 SCALE (2)579
ACT:
Motor Vehicles Act, 1939: ss. 2(29A), 2(16), 63(7)-Cl.
(iv) of proviso-Rule of ’preference’-Interpretation and
application of-Clause (iv)-Whether infringes Article 14 of
the Constitution-"Tourist Vehicle" may include a motor car,
a motor car excludes an omnibus.
Words and Phrases: "Tourist Vehicle"-Meaning of-ss.
2(29A) and 2(16), Motor Vehicles Act, 1939.
Administrative Law:
Statutory Tribunal-Decision of-Cannot be pre-empted by
executive discretion.
HEADNOTE:
Sub-section (7) of s. 63 of the Motor Vehicles Act,
1939 empowers the State Transport Authority, for the purpose
of promoting tourism, to grant permits valid for the whole
or any part of India, in respect of such number of tourist
vehicles as the Central Government may in respect of that
State specify in this behalf. A proviso to that sub-section,
introduced by s. 24 of the Amending Act of 1978 laid down
that preference shall be given to applications for permits
from (i) the India Tourism Development Corporation; (iii) a
State Tourism Development Corporation; (iii) a State Tourist
Department, and (iv) operators of tourist cars, or travel
agents, approved in this behalf by the Central Government.
There were as many as 495 applications before the
Karnataka State Transport Authority for the grant of 14 All
India Tourist Vehicle permits. By its proceedings dated
April 30, 1984, the Authority granted 11 permits to the
Karnataka State Tourism Development Corporation, one to the
Indian Tourism Development Corporation and two to the
Karnataka State Road Transport Corporation.
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On appeals being preferred, the Karnataka State
Transport Appellate Tribunal, by its order dated February
28, 1985 set aside the grant of two permits in favour of the
Karnataka State Road Transport Corporation, three out of
eleven permits to the Karnataka State Tourism Development
Corporation, and instead granted three permits to private
operators and increased the number of permits granted to the
Indian Tourism Development Corporation from one to three, on
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the premises that in view of the rule of preference
enunciated by the proviso to s. 63(7) the applications from
the non-preferred category had to be excluded as the number
of applications from the applicants who were required to be
given preference exceeded the number of permits to be
granted. Though some of the appellants before the Tribunal
had better expertise, experience and resources they did not
succeed.
The High Court rejected the writ petitions on the
ground that the rule of preference contained in the proviso
to s. 63(7) contemplated exclusion of the ’non-preferred’
class, if sufficient number of applicants from the preferred
classes were available.
In these appeals by special leave, it was contended for
the appellants that on a correct interpretation of the
proviso to s. 63(7) the preference became operative only if
other things were equal. It was also urged that the fourth
sub-clause of the proviso offended Art. 14 of the
Constitution, and had to be struck down.
Allowing the appeals, the Court,
^
HELD: 1.1 The rule contained in the proviso to s. 63(7)
of the Motor Vehicles Act, 1939 is a rule of preference and
not a rule of exclusion, for it does not say that the permit
shall be granted to the categories of operators specified
therein. The claims of eligible applicants must be
considered on merits, applying the rule of preference
whenever the claims are approximately equal. The application
of an applicant is not to be altogether excluded from
consideration on the sole ground that another applicant is
entitled to preference. Though the proviso does not
expressly refer to other things being equal, the principle
is very much implicit in it. [1015B-E]
1.2 What has been said by this Court in Sher Singh v.
Union of India, [1984] 1 SCR 464, about preference in
relation to s. 47(1-H) applies mutatis mutandis to the
preference contemplated by the proviso to s. 63(7) in the
instant case. [1017C]
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2.1 Clause (iv) of the proviso to s. 63(7) is
arbitrary, unreasonable and unconstitutional. There is no
indication in it as to the manner in which the approval of
the Central Government is to be sought and granted and the
considerations which are expected to weigh with the Central
Government. It compels a tribunal, created by a statute for
the purpose of considering rival claims and granting permits
on merits, to give preference to persons securing the
approval of the Executive Government. To the extent the
clause goes, it pre-empts the decision of the designated
tribunal by executive discretion. [1017E-G]
2.2 The clause provides for a preference not to
operators of tourist vehicles but to operators of tourist
cars and travel agents, though the permits to be granted are
for tourist vehicles. It is difficult to understand why
preference should be given to operators of tourist cars in
the matter of granting permits for tourist vehicles which
may well be omnibuses required to travel long distances.
[1018B-C]
2.3 The experience of running a tourist taxi cannot be
said to be a better qualification than running a tourist bus
when the question is of granting permits for tourist
vehicles. [1018C-D]
3. Having regard to the definitions of ’tourist
vehicle’ and ’motor car’ contained in s. 2(29-A) and s.
2(16) respectively of the Act, the expression ’tourist cars’
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cannot be said to mean ’tourist vehicles’. While a tourist
vehicle may include a motor car, a motor car, by definition,
excludes an omnibus. [1018D-E]
In the instant case, the State Transport Appellate
Tribunal and the High Court have failed to consider the
merits of the claims of the Karnataka State Road Transport
Corporation and the private operators who did not get a
certificate of approval from the Central Government, because
of the rule of preference contained in proviso to s. 63(7).
Their orders are, therefore, set aside. The State Transport
Appellate Tribunal is directed to re-hear the appeals and
dispose them of in accordance with law. [1017C-E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.3677-
3680 of 1986 Etc.
From the Judgment and Order dated 10.3.1986 of the
Karnataka High Court in W.P. Nos. 4053 to 4056 of 1985.
Shanti Bhushan, Dr. Y.S. Chitale, H.B. Datar, K.R.
Nagaraja,
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R.S. Hegde, R.B. Datar, S.S. Jawali, B.P. Singh, N.D.B.
Raju, R.P., Wadhwani, Aruneshwar Gupta, Swaraj Kaushal, KMM
Khan, S.R. Setia, A.T.M. Sampath and C.S. Vaidyanathan for
the appearing parties.
The Judgment of the Court was delivered by
CHINNAPPA REDDY, J. Special leave granted in all the
cases. These appeals raise common questions of law and may
therefore, be disposed of by a common judgment. In exercise
of its powers under s. 63(7) of the Motor Vehicles Act, the
Central Government specified 50 as the number of ’All India
Tourist Vehicle Permits’ which may be granted by the
Karnataka State Transport Authority. By s. 24 of Amending
Act 47 of 1978, a proviso to s. 63(7) was introduced. We are
concerned in these appeals with the vires and interpretation
of this proviso. By the time the proviso came into force, 36
permits had been granted by the Karnataka State Transport
Authority and 14 remained to be granted. There were as many
as 495 applications for the grant of these 14 permits. By an
order dated February 1, 1984, the Supreme Court directed the
Karnataka State Transport Authority to dispose of these
applications. The State Transport Authority, by its
proceedings dated April 30, 1984, granted 11 out of the 14
permits to the Karnataka State Tourism Development
Corporation, one permit to the Indian Tourism Development
Corporation and two permits to the Karnataka State Road
Transport Corporation. A number of appeals were preferred to
the Karnataka State Transport Appellate Tribunal. The
Tribunal by its order dated February 28, 1985 set aside the
grant of the two permits in favour of the Karnataka State
Road Transport Corporation, set aside the grant of three out
of eleven permits to the Karnataka State Tourism Development
Corporation and instead granted three permits to private
operators and increased the number of permits granted to the
Indian Tourism Development Corporation from one to three.
The Tribunal took the view that having regard to the rule of
preference enunciated by the proviso to s. 63(7), the
applications from the ’non-preferred’ category had to be
excluded as the number of applications from the applicants
who were required to be given preference exceeded the number
of permits to be granted. It was on that ground that the
grant of two permits to the Karnataka State Road Transport
Corporation was set aside, though the Appellate Tribunal had
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no doubt regarding the resources and ability of that
corporation to operate the tourist services. It was on that
ground again, it was so stated by the Tribunal, that some of
the appellants
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before the Tribunal had to be denied the grant of permits
though otherwise they would have been entitled to the grant
of permits having regard to their expertise, experience and
resources. The Tribunal rejected their appeals regretfully.
A large number of applicants filed writ petitions in the
High Court. The writ petitions were rejected by the High
Court on the ground that the preference contemplated by the
proviso to s. 63(7) contemplated exclusion of the ’non-
preferred’ class if sufficient number of applicants from the
preferred classes were available. The decision of this Court
in Sher Singh v. Union of India, [1984] 1 SCR 464 was
distinguished on the ground that in that case the court
interpreted the word ’preference’ occurring in s. 47(1-H) in
the back-ground of the provisions of Chapters IV and IV-A of
the Act, under the former of which the State Transport
Undertaking would have preference whereas under the latter
the State Transport Undertaking would have a monopoly. The
Karnataka State Road Transport Corporation, the Karnataka
State Tourism Development Corporation and some other private
operators have filed these appeals by special leave of this
Court under Art. 136 of the Constitution.
Shri Shanti Bhushan, learned counsel for the Karnataka
State Road Transport Corporation, Dr. Chitley, learned
counsel for some of the private operators, Shri Datar,
learned counsel for the Karnataka State Tourism Development
Corporation, Shri Sampat and Shri Javali, learned counsel
for other private operators submitted that the State
Transport Appellate Tribunal and the High Court were wrong
in distinguishing the decision of this court in Sher Singh’s
case and that the true position was that on a correct
interpretation of the proviso to sec. 63(7), the preference
became operative only if other things were equal. It was
also urged that the fourth sub-clause of the proviso
offended Art. 14 and had to be struck down. Shri C.S.
Vaidyanathan, learned counsel for some of the preferred
private operators urged that the view taken by the High
Court and the State Transport Appellate Tribunal was correct
and that the fourth sub-clause of the proviso to s. 63(7)
did not offend Art. 14 of the Constitution.
We may now glance at some of the relevant provisions of
the Motor Vehicles Act. S. 2(33) defines a "transport
vehicle" as meaning a "public service vehicle or a goods
vehicle". A "public service vehicle" is defined in s. 2(25)
as "any motor vehicle used or adapted to be used for the
carriage of passengers for hire or reward, and includes a
motor cab, contract carriage, and stage carriage". A "motor
car" is defined in s. 2(16) as "any motor vehicle other than
a transport vehicle,
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omni-bus, road-roller, tractor, motor cycle or invalid
carriage". A "contract carriage" is defined as, broadly, a
motor vehicle which carries a passenger or passengers for
hire or reward under a contract. "Tourist vehicle" is
defined by s. 2(29-A) as "a contract carriage constructed or
adapted and equipped and maintained in accordance with such
specifications as the State Government may, by notification
in the Official Gazette, specify in this behalf". "Stage
carriage" is defined by s. 2(29) as "a motor vehicle
carrying or adapted to carry more than six persons excluding
the driver which carries passengers for hire or reward at
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separate fares paid by or for individual passengers, either
for the whole journey or for stages of the journey." Chapter
IV, sections 42 to 68, deals with "Control of Transport
vehicles". Section 42 prescribes permits for the use of a
transport vehicle in any public place. Sections 46, 47 and
48 deal with the grant of stage carriage permits. Section
47(1) prescribes the matters to be taken into consideration
in granting stage carriage permits and the first
consideration, naturally, is "the interest of the public
generally." The proviso to s. 47(1) prescribes that, other
things being equal, a registered cooperative society and a
person possessing a licence for driving transport vehicles
shall be given preference over individual owners in granting
stage carriage permits. Section 47(1-A) enables the State
Government to reserve a certain percentage of stage carriage
permits for the Scheduled Castes and Scheduled Tribes.
Section 47(1-C) enables the State Government to reserve a
certain percentage of stage carriage permits to persons
belonging to economically weaker sections of the community.
Section 47(1-H) prescribes that notwithstanding anything
contained in the section, an application for stage carriage
permit from a State Transport undertaking for operating in
any inter-State route shall be given preference overall
other applications, provided, of course, the authority 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 services in any notified area or notified route.
Sections 49, 50, 51 deal with the grant of contract carriage
permits. Section 52 and 53 deal with private carrier’s
permit and sections 54, 55 and 56 deal with public carrier’s
permit. Section 57 deals, generally with the procedure to be
followed in applying for and granting permits. Section 63(1)
stipulates, broadly, that a permit granted by the Regional
Transport Authority of any one region shall not be valid in
any other region, unless the permit has been countersigned
by the Regional Transport Authority of that other region,
and a permit granted in any one State shall not be valid in
any other State unless countersigned by the State Transport
Authority of
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that other State or by the Regional Transport Authority
concerned. Section 63(7) is the provision with whose
interpretation and vires we are primarily concerned in this
case. It is as follows:
"(7) Notwithstanding anything contained in sub-
section(1) but subject to any rules that may be
made under this Act, any State Transport Authority
may, for the purpose of promoting tourism, grant
permits valid for the whole or any part of India,
in respect of such number of tourist vehicles as
the Central Government may, in respect of that
State, specify in this behalf, and the provisions
of Sections 49, 50, 51, 57, 58, 59, 59-A, 60, 61
and 64 shall, as far as may be, apply in relation
to such permits:
Provided that preference shall be given to
applications for permits from-
(i) the India Tourism Development
Corporation;
(ii) a State Tourism Development Corporation;
(iii) a State Tourist Department;
(iv) such operators of tourist cars, or such
travel agents, as may be approved in this
behalf by the Ministry of the Central
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Government dealing in tourism."
Section 68 enables the State Government to make rules for
the purpose of carrying into effect the provisions of
Chapter IV. Chapter IV-A relates to "special provisions
relating to State Transport Under-takings." Sections 68-C,
68-D and 68-E provide for the preparation and publication of
schemes of road transport service to be provided by State
Transport Undertakings, the procedure to be followed, etc.
Section 68-F(1) prescribes that where, in pursuance of an
approved scheme, a State Transport Undertaking applies for a
stage carriage permit, a contract carriage permit or a
public carrier’s permit in respect of a notified area or
notified route, such permit shall be granted to the State
Transport Undertaking by the State Transport Authority in a
case where the said area or route lies in more than one
region and the Regional Transport Authority in any other
case. This is to be so notwithstanding anything to the
contrary contained in Chapter-IV.
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The general scheme of the Act in the matter of grant of
permits for stage carriages and contract carriages appears
to be that except in the case of a notified route or
notified area, where under s. 68-F(1) the permit has to be
necessarily granted to the State Transport Undertaking, in
all other cases, the claims of all eligible applicants must
be considered on merits, applying the rules of preference
wherever the claims are approximately equal. Except in the
case of a notified route or notified area, the application
of no applicant may be altogether excluded from
consideration on the sole ground that another applicant is
entitled to preference under one or the other provisions of
the statute. The proviso to s. 47(1) for example, provides
that other conditions being equal, an application for a
stage carriage permit from a cooperative society or a person
holding a valid licence for driving transport vehicles shall
as far as may be, be given preference over applications from
individual owners. There is no problem here since the
proviso itself says that the rules of preference will apply
only if other conditions are equal. Section 47(1-H) also
enunciates a rules of preference and says that an
application for stage carriage permit from State Transport
Undertaking for operating in any inter-State route shall be
given preference overall other applications. While it is
true that s. 47(1-H) does not expressly refer to "other
things being equal", it appears to be implicit in the
provision that other things are equal. The rule is a rule of
preference and not a rule of exclusion. Section 47(1-H) does
not say, for example, like s. 68-F(1) that the permit shall
be granted to the State Transport Undertaking. That is how
s. 47(1-H) was interpreted in Sher Singh’s case. Desai, J.,
speaking for the court observed:
"However, when an application for a permit is made
under Chapter IV, the Undertaking has to compete
with private operators who may as well make an
application for permit. When the Undertaking
applies for permit under Chapter IV, it must
satisfy the Regional Transport Authority that it
is better suited than the private operator to
render transport facility to the travelling
public. Sec. 47(1-H) however, provides that in the
case of inter-State route, the Undertaking will
have preference in the matter of stage carriage
permit. Does preference of this nature deny
equality guaranteed by Art. 14? The expression
’preference’ amongst others means prior right,
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advantage, precedence etc. But how would it be
possible to give precedence to one over the other.
It signifies that other things being equal,
1016
one will have preference over the others. When an
application for a stage carriage permit is being
processed as required by sec. 47, the application
of the Undertaking for an inter-State route shall
be examined as application of any other private
operator. Their merits and demerits must be
ascertained keeping in view the requirements of
(a) to (f) of s. 47(1) and after comparing the
merits and demerits of both, not with the yard-
stick of mathematical accuracy, but other things
being equal, the application of the Undertaking
will have preference over others. Qualitative and
quantitative comparison on broad features of
passenger transport facility such as fleet,
facilities to travelling public and other relevant
consideration may be undertaken and after
balancing these factors other things being equal,
the application of the Undertaking shall be given
preference over other applicants. There is no
question of eliminating private operators merely
because the Undertaking applies for a stage
carriage permit under Chapter IV. That situation
is catered to under Chapter IV-A. In an
application under Chapter IV, Corporation has to
enter the arena like any other applicant, face the
competition and come-up to the level of other
private operators intending to obtain stage
carriage permits and then in respect of the route
in question claim preference. Would this statutory
provision violate equality guaranteed by Art. 14?
The answer is obviously in the negative."
..................................................
..................................................
"................ let it be made clear that
while considering the application for stage
carriage permit under s. 47, the private operator
has an equal chance to get a permit even on inter-
State route if it shows that the Undertaking is
either unable to provide efficient and economical
service or that the private operator is better
equipped to render the same. Preference in this
context would mean that other things generally
appearing to be qualitatively and quantitatively
equal though not with mathematical accuracy,
statutory provision will tilt the balance in
favour of the Undertaking."
What has been said by the Court with reference to the
preference
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provided for in s. 47(1-H) applies with equal force to the
preference provided for by the proviso to s. 63(7). In the
judgment under appeal, the High Court attempted to
distinguish the decision of this Court in Sher Singh’s case
on the ground that any other interpretation would have wiped
out the difference between Chapter IV and Chapter IV-A. We
do not think the High Court was right in distinguishing the
case in that fashion. The reference to Chapter IV-A there
was for the purpose of contrasting the exclusion
contemplated by s. 68.F(1) with the preference to be given
under s. 47 (1-H) and so to interpret the word ’preference’
occurring in s. 47(1-H). We have no hesitation in saying
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that all that has been said about ’preference’ in Sher
Singh’s case in relation to s. 47(1-H) applies mutatis
mutandis to the preference contemplated by the proviso to s.
63(7). Since the State Transport Appellate Tribunal and the
High Court have failed to consider the merits of the claims
of the Karnataka State Road Transport Corporation and the
private operators who did not get a certificate of approval
from the Central Government, because of the rule of
preference contained in proviso to s. 63(7), the proper
course for us is to set aside the orders of the State
Transport Appellate Tribunal and the High Court and to
direct the State Transport Appellate Tribunal to re-hear the
appeals and dispose them of in accordance with law, after
considering the claims of the eligible applicants in the
manner indicated in Sher Singh’s case and now.
A question was raised before us about the vires of the
fourth clause of the proviso to s. 63(7). Clauses (i) to
(iii) of the proviso providing for preference to be given to
applications for permits from the Indian Tourism Development
Corporation, the State Tourism Development Corporation and
the State Tourist Department were not questioned, but the
preference provided for by clause (iv) and to be given to
"such operators of tourist cars, or such travel agents, as
may be approved in this behalf by the Ministry dealing in
tourism" was questioned as an infringement of Art. 14 of the
Constitution. We find it difficult to sustain this clause
and uphold its validity. The very idea that a Tribunal
created by a statute for the purpose of considering rival
claims and granting permits on merits should be compelled to
give peference to persons securing the approval of the
executive Government, appears to us to be arbitrary and
unreasonable. To the extent that it goes, the clause pre-
empts the decision of the designated tribunal by executive
discretion. It was said that the clause contained sufficient
guidelines for the exercise of discretion in granting
approval by the Central Government. It was said that the
object of the proviso to s.
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63(7) was very obviously the promotion of tourism and the
approval of the Central Government would be given to those
operators of tourist cars and travel agents who may be
expected to serve that purpose.
It is difficult to agree with these submissions. In the
first place, clause (d), it is seen, provides for a
preference, not to operators of tourist vehicles but to
operators of tourist cars and travel agents. Though the
permits to be granted are for tourist vehicles, the
preference is confined to operators of tourist cars and
travel agents. One may understand a preference granted to
operators of tourist vehicles but it is difficult to
understand why preference should be given to operators of
tourist cars in the matter of granting permits for tourist
vehicles which may well be omnibuses required to travel long
distances. Surely it cannot be said that experience of
running a tourist taxi is a better qualification than
running a tourist bus when the question of granting permits
for tourist vehicles arises. The High Court of Karnataka
tided over the difficulty by interpreting the expression
"tourist cars" as meaning "tourist vehicles". It is
difficult to agree with the interpretation of the Karnataka
High Court having regard to the definitions of "Transport
Vehicle" and "motor car" contained in s. 2(29-A) and s.
2(16) respectively. While a tourist vehicle may include a
motor car, a motor car, by definition, excludes an omnibus.
In the second place, we have no indication as to the manner
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in which the approval of the Central Government is to be
sought and granted and the considerations which are expected
to weigh with the Central Government. Shri C.S.
Vaidyanathan, learned counsel for the ’Preferred’ Operators
has placed before us ’a Scheme for granting approval to
tourist transport operators in India.’ The scheme makes no
reference to the proviso to sec. 63(7) of the Motor Vehicles
Act. On the other hand, it mentions that approval carries
with it certain privileges, such as, allotment of ex-STC
vehicles and that it is, therefore, necessary that the
department is able to exercise some control on the
functioning of these operators. The terms and conditions to
be fulfilled are that ’the party must have been in the car-
hire business for a period of 2 years with the help of cars
of indigenous make or cars obtained from elsewhere and
should have sufficient contacts with travel agencies
hoteliers/airlines, etc. and should be financially sound or
that they should be owning and operating five vehicles as
tourist taxies of either indigenous make or acquired from
elsewhere regardless of the period in the car-hire business
or that they should be ex-Defence Service personnel, who
satisfy certain prescribed conditions. It is seen that the
scheme excludes omnibus operators and requires applicants to
have
1019
either two years’ experience in the car hire business with
contacts in the tourist business or to own five tourist
taxies. There are no guidelines as to how the discretion to
grant approval is to be exercised once the minimum
conditions are fulfilled. The matter appears to be left to
the total discretion of the Central Government, virtually as
we said, pre-empting the decision of the statutory tribunal.
We think that clause (iv) of the proviso to s. 63(7) is
unconstitutional and we so declare it.
In the result we set aside the orders of the State
Transport Appellate Tribunal and the High Court and direct
the State Transport Appellate Tribunal to hear the appeals
in the light of what we have said.
P.S.S. Appeals allowed.
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