Kerala State Limited Stop/Stage Carriage Operators Association vs Government of Kerala

A.M. Shaffique, J.—In these batch of Writ Petitions Private Stage Carriage Operators challenge the definition given to "Fast Passenger Service", "Luxury Service", "Super Deluxe Service", "Super Express Service" and "Super Fast Service" in the Kerala Motor Vehicles (Amendment) Rules, 2013 (hereinafter referred as ''K.M.V Rules, 2013'') and the Notification issued by the Government of Kerala, Transport (B) Department as per G.O.(P) No. 73/2013 (Tran) dated 16.7.2013, by which the Government approved a Scheme (hereinafter referred as ''Scheme'') under sub-sections (2) and (3) of S. 100 of the Motor Vehicles Act, 1988 (hereinafter referred to as ''MV Act''). The objectionable amendment with reference to the definition of "Fast Passenger Service" is extracted hereunder:

(ea): "Fast Passenger Service" means a service which is operated by a State Transport Undertaking with limited stops on a route having a distance of not less than 70 kilometers covering at least one district or connecting two district head quarters and having a seating capacity of at least 50 excluding its staff.

Similarly clause (ka), (ua), (ub) and (uc) were substituted by confining the operation of such services by the State Transport Undertaking (hereinafter referred as ''STU'')

The objectionable provisions of the Scheme are paragraphs one, three, five and six which read as under:

The proposed route and area of service, its nature and matters relating to the Scheme are as follows:-

According to the petitioners the definition given to ''Fast Passenger Service'' and other higher class of vehicles by way of amendment, is clearly arbitrary and illegal and therefore liable to be quashed. It is their common contention that by virtue of notification G.O.(P) No. 4/99 (Tran) dated 1.2.1999, the Government amended the Motor Vehicles Rules as per S.R.O. No. 118 of 1999 by which definition of ''Fast Passenger Service'' was incorporated giving a meaning as the service which is operated by a fleet owner with limited stops on a route having a distance of not less than 70 kms. and not more than 160 kms. ''Fleet Owner'' was further defined as meaning a person or institution who or which is the registered owner of not less than 50 stage carriages kept for use in the State. A Division Bench of this Court in O.P. No. 9603 of 1999 formed an opinion that the definition of ''Fleet owner'' clearly excludes every other operator other than Kerala State Road Transport Corporation and therefore the said provision is arbitrary and illegal, violating Art. 14 of the Constitution of India. However it is further observed that the Government can initiate a fresh proposal and issue notification following the procedure as contained in the statute to give a reasonable definition to the word "Fleet Owner" so that it shall not militate against Art. 14 of the Constitution. It is the contention of the petitioners that the present amendment has been incorporated to the Rules conferring the very same privilege of operation to the STU which is arbitrary, illegal and in violation of Art. 14 of the Constitution. It is further contended that the amendment is ultra vires S. 212 read with S. 96 of the M.V. Act. S. 96(1) empowers the Government to make rules for the purpose of carrying into effect the provisions of Chapter V. S. 212 is the procedure to exercise the rule making power. Reference is made to the judgment of the Supreme-Court in Mithilesh Garg, Vs. Union of India and others etc. etc., in order to contend that the statement and objects and reasons of the M.V. Act is to liberalise the private sector operations in the field of transportation. Therefore when a rule is framed under S. 96 of the Act, it can only be for the purpose of giving effect to the purposes mentioned in Chapter V and not for giving any undue advantage to STU''s. It is contended that the very intention of K.M.V Rules, 2013 is to exclude private operators from carrying out Fast Passenger Service and other higher class of services, and as a consequence the present operators who are operating such services will be forced to convert their operation to ordinary service.

In regard to the Scheme, the petitioners submit that the very purpose of the Scheme under normal circumstances is to provide efficient, adequate, economical and properly co-ordinated road transport service. Road Transport Service includes stage carriage, contract carriage and goods carriage. As far as stage carriages are concerned, there are only two other distinct classes namely, town services and mofussil services. The argument is that Chapter VI of the M.V. Act or the Rules does not empower a further classification of stage carriage service like Fast Passenger, Super Fast etc. Hence it is contended that all stage carriage services other than city or town services constitute a class in themselves namely mofussil services and a further sub-classification for the purpose of exclusion is not contemplated by the Statute and hence violative of Art. 14. Though it is mandatory that the Scheme should show the maximum and minimum number of vehicles to be operated in relation to each area or road, by the STU, what is incorporated is "as per traffic demand". This, according to the petitioners is a contradiction to the provisions of Chapter VI of the Act. In other words K.S.R.T.C. is given an unfettered discretion to be the sole arbiter of the future traffic demand. Another contention raised is that the reasons mentioned in the Scheme is not in consonance with the objects sought to be achieved. By virtue of decision in Poulose Vs. State of Kerala and Kochi International Airport Society , all existing services which are introduced as ordinary service on a particular route were converted as higher class of service and there was scarcity of ordinary service. This Court found that such conversion is wrong. But on account of amendments made to the Rules classifying the service on the basis of distance, it has become essential to operate certain service in the higher class of service. The notification has therefore nothing to do with the law laid down by this Court. The petitioners also narrate the consequence of the notification, that is, withdrawal of all services for renewal by private operators whose applications are pending on routes having a distance in excess of 140 Kms. According to them, curtailment of route length less than 140 kms. is also an impossibility.

Counter affidavit is filed by the 2nd respondent inter alia contending that the Rules cannot be struck down merely for the reason that it was inconvenient for the petitioners. It is contended that the State Legislature has necessarily the competence to make the law and the Rule does not take away or abridge any of the fundamental rights of the petitioners. It is further contended that there is no illegality in framing a law providing preference to public sector undertakings and therefore the amendment to the Rules were made in accordance with the statutory provisions and cannot be struck down as bad in law. Reference is made to Sections 98 to 100 of the M.V. Act in order to contend that the Scheme is framed in accordance with the provisions of the said Act. It is further contended that less than 200 buses are operated by private stage carriage operators with route length exceeding 140 kms. K.S.R.T.C. is intending to introduce 500 new buses of higher class/category within two months to cater to the needs of the travelling public in the routes exceeding 200 Kms. The respondents supported amendment to the Rules and the notification by which the Scheme was framed.

The learned counsel appearing for the K.S.R.T.C., in their counter affidavit, relied upon various judgments to support the impugned Scheme as well as the amendment made to the Rule. It is, inter alia, contended that a legislative enactment cannot be struck down unless it is found that the legislature has no legislative competence to make the law or unless the provision of the rule takes away or abridges any of the fundamental rights enumerated in Part III of the Constitution of India as held in State of Andhra Pradesh and others, etc. Vs. McDowell and Co. and others, etc., . It is also contended that while considering the constitutional validity of a Statute and if it is found that two views are possible, one making the Statute constitutional and the other unconstitutional, the interpretation making the statute constitutional has to be preferred as held in Government of Andhra Pradesh and Others Vs. Smt. P. Laxmi Devi, . The judgment in State of Bihar v. Rameshwar Singh, ( AIR 1952 SC 252) is relied upon to contend that legislature is the authority to decide whether a particular Scheme or rule is best for the community and if a rule or a Scheme is made in public interest, for a public purpose, it may not be possible for the courts to substitute its views. The judgment of the Supreme Court in Mohd. Hanif Quareshi and Others Vs. The State of Bihar, is relied upon to explain the meaning and scope of Art. 14 of the Constitution. It is held that Art. 14 forbids class legislation and it does not forbid reasonable classification for the purpose of legislation. In order to pass the test of permissible classification, two conditions must be fulfilled, viz. (1) the classification must be founded on intelligible differentia, which distinguishes persons or things that are grouped together and (2) such differentia must have a rational relation to the object sought to be achieved by the statute in question. Further reliance is placed on Hamdard Dawakhana and Another, Kalipada Deb and Another, Lakshman Shripati Itpure @ Lakshman Shripati Impore and A.B. Choudhri and Another Vs. The Union of India (UOI) and Others, , which lays down another principle regarding the challenge to the constitutionality of an enactment alleging violation of Part III of the Constitution. It is held that in order to ascertain the true nature and character, it is relevant to verify the subject matter in issue, the area in which the statute is intended to operate and its purport and intent also have to be determined. All the surrounding circumstances and conditions are to be verified and the mischief which it intended to suppress, the remedy for the disease which the legislature resolved to cure and the true reason for the remedy have to be ascertained before coming to the conclusion that there is violation of any of the Articles in Part III of the Constitution. The judgment in Karnataka Bank Ltd. Vs. State of A.P. and Others, is also relied upon to contend that the normal rule is to resolve the constitutionality of the law in favour of its validity/In State of M.P. Vs. Rakesh Kohli and Another, , the Supreme Court held that the Court should ordinarily accept the wisdom of the legislature unless the law is enacted about which there can be no manner of doubt about its unconstitutionality. In Indian Drugs and Pharm and Others Vs. Punjab Drugs Manufactures Association and Others, the Supreme Court held that preference shown to public sector undertakings, if it is in public interest, will not be construed as arbitrary so as to give rise to a contention of violation of Art. 14 of the Constitution. In the said judgment, the Supreme Court, at paragraph 16, held as under:

It is clear from the various judgments referred to above that a decision which would partially affect the sale prospects of a company, cannot be equated with creation of monopoly. In Rai Sahib Ram Jawaya Kapur and Others Vs. The State of Punjab, and Naraindass''s (AIR 1974 SC 1232) cases (supra), the Constitution Bench also held that the policy restrictions, as discussed above, can be imposed by exercise of executive power of the State under Art. 162 of the Constitution. Therefore, the contention of the appellants in regard to creation of monopoly and violation of the fundamental right under Articles 19(1)(g) and 19(6) should fail. The judgment cited above also show that preference shown to cooperative institutions or public sector undertakings being in public interest, will not be construed as arbitrary so as to give rise to a contention of violation of Art. 14 of the Constitution. We have noted above that this Court in the cases of The Oil and Natural Gas Commission and another Vs. The Association of Natural Gas Consuming Industries of Gujarat and others, etc. etc., ;Krishna Kakkanth (supra) and Hindustan Paper Corpn. Ltd. Vs. Government of Kerala and Others, , has held that the preference shown to co-operative institutions or public sector undertakings being in public interest, will not be construed as arbitrary so as to give rise to a contention of violation of Art. 14 of the Constitution.

In the counter affidavit, the respondent has also indicated that the total number of superior class passenger service conducted by private operators in the State are 241, which included 155 Private Fast Passenger Stage Carriage permits, 64 Super Fast Stage carriage permits and 22 Super Express Private Stage Carriage Permits. Ext. R2(c) evidences the same. Out of the aforesaid 241 buses, 24 services are operated on the strength of temporary permits. It is contended that even before the expiry of those 241 existing permits of private operators, KSRTC is ready and willing to operate Superior Class services in all those routes which cover the nationalised routes as well. It is therefore their contention that by introducing the Scheme, a very efficient, adequate, economic and proper co-ordinated road transport service can be provided to the public at large.

Further reference has been made to the judgment of the Constitution Bench of the Supreme Court in J.Y. Kondala Rao v. A.P.S.R.T.C. (AIR 1961 SC 82). The said judgment focuses on the acceptability of a separate legislation in favour of STU. There is no doubt about the above proposition as it has been repeatedly held by the Supreme Court in various judgments that in order to have an efficient and adequate system of transportation, a Scheme for nationalisation can be made which could either be complete or partial. Specific reference is made in the decision in Ramesh Chand and Others Vs. State of U.P. and Others, , wherein the Supreme Court held as under:

It is thus clear that the exact number of vehicles and trips for each route need not be given and all that S. 7 of the amended Act provides is that the draft scheme as well as the approved scheme need not specify the number of services, Hence the failure to specify the number of services would not invalidate the draft scheme or the approved scheme.

On this basis, it is argued that even if the number of services or trips has not been mentioned in the Scheme, the Scheme cannot be held to be invalid.

Another judgment relied on by the learned counsel is Punjab Roadways Moga through its General Manager Vs. Punja Sahib Bus and Transport Co. and Others etc. etc., . In the said judgment, the Supreme Court held that once the Scheme is published, it overrides the field of Chapter V of the Act and it operates against everyone unless it is modified or cancelled by the State Government.

The learned Special Government Pleader as well as the learned counsel appearing for the K.S.R.T.C. made specific reliance on Art. 19(6)(ii) of the Constitution of India and it is contended that when the Government frames a Scheme in favour of a STU, the same cannot be challenged on the ground of violating Art. 14 or 19 of the Constitution of India. Reference is made to the judgment of the Supreme Court in A.P. State Road Transport Corporation Vs. P.V. Ramamohan Chowdhary and others, , wherein it is held that when the statute gives power to the State to exercise discretion for formulating a Scheme in an area or route or part thereof, it necessarily has the effect of excluding the existing or potential private operators from the field to render transport service in that partially prohibited area, such discretion need not be termed as "discriminatory". Further, it is held that the exercise of discretion by the STU in its selective application of partial prohibition is controlled and regulated by the statute. If it is contended that there is violation of Art. 14, it would be upsetting the very scheme itself as the existing or potential operators cannot contend that they are entitled for an equal treatment with that of the State transport undertaking. Learned counsel also relied upon the judgment of the Supreme Court in Kasaragode Bus Owners Association v. State of Kerala (1990 (2) KLT 830 SC) to contend that public inconvenience that may be caused to travelling public cannot be aground for challenging nationalisation of a route.

Sri. P.C. Chacko, the learned counsel for the KSRTC relied upon Constitution Bench judgment in H.C. Narayanappa and Others Vs. The State of Mysore and Others, . It is held that under Entry No. 21 of the Concurrent List, the Parliament is competent to legislate for creating commercial or trading monopolies, and there is nothing in the Constitution which deprives it of the power to create a commercial or trading monopoly in the constituent States. Art. 19(6) is a mere saving provision: its function is not to create a power but to immunize from attack the exercise of legislative power falling within its ambit. The right of the State to carry on trade or business to the exclusion of others does not arise by virtue of Art. 19(6). The right of the State to carry on trade or business is recognised by Art. 298; authority to exclude competitors in the field of such trade or business is conferred on the State by entrusting power to enact laws under Entry No. 21 of List III of the Seventh Schedule, and the exercise of that power in the context of fundamental rights is secured from attack by Art. 19(6). In Akadasi Padhan Vs. State of Orissa, another Constitution Bench held that the amendment made by the Legislature in Art. 19(6) shows that a law relating to the creation of State monopoly should be presumed to be in the interests of the general public. Art. 19(6)(ii) clearly shows that there is no limit placed on the power of the State in respect of the creation of State monopoly. Therefore, the State monopoly in respect of any trade or business must be presumed to be reasonable and in the interests of the general public, so far as Art. 19(1)(g) is concerned. It is argued that the amendment had been incorporated and the Scheme had been formulated under Chapter VI as a policy matter of the Government, which cannot come under the scrutiny of judicial review, unless it is found to be in violation of Art. 14 of the Constitution.

Reference is made to a Full Bench judgment of Madhya Pradesh High Court in Prem Shankar Sharma Vs. Collector and Others, . It is held that Rules made under a wrong provision of the Act is not invalid. Further reference is made to the judgment in High Court of High Court of Gujarat and Another Vs. Gujarat Kishan Mazdoor Panchayat and Others, . It is held that non-mentioning or wrong mentioning of a statutory provision under which power is exercised will not vitiate an order for which there is source of power under the general law or a State law.

Sri. Manilal, the learned Senior Government Pleader placed reliance on Sections 66(4), 95(1) and 96(1) of the M.V. Act to contend that a conjoint reading of the above provisions clearly indicates the power of the Government to frame a law relating to provide definition to ''Fast Passenger Service'' and other higher class of services. That apart, it is contended that the power of Government to frame such a law is upheld by this Court in State of Kerala v. Sebastian (1995 (1) KLT 421). Further it is contended that the Government has the general power under the statute to frame rules with reference to STU which is sufficient to enact the aforesaid Rules. It is further argued that the classification now made is a reasonable classification as there are only 155 Fast Passenger services operating in the State at present. Private operators are not debarred from operating ordinary services, the route length of which is between 70 to 140 Kms. Further reference is made to judgment of the Supreme Court in Akadasi Padhan Vs. State of Orissa, in which the Supreme Court held as under:

The amendment made in Art. 19(6) shows that it is open to the State to make laws for creating State monopolies, either partial or complete, in respect of any trade, business, industry or service. The State may enter trade as a monopolist either for administrative reasons, or with the object of mitigating the evils flowing from competition, or with a view to regulate prices, or improve the quality of goods, or even for the purpose of making profits in order to enrich the State ex-chequer. The Constitution-makers had apparently assumed that the State monopolies or schemes of nationalisation would fall under, and be protected by, Art. 19(6) as it originally stood; but when judicial decisions rendered the said assumption invalid, it was thought necessary to clarify the intention of the Constitution by making the amendment. It is because the amendment was thus made for purposes of clarification that it begins with the words "in particular". These words indicate that restrictions imposed on the fundamental rights guaranteed by Art. 19(1)(g) which are reasonable and which are in the interests of the general public, are saved by Art. 19(6) as it originally stood; the subject-matter covered by the said provision being justiciable, and the amendment adds that the State monopolies or nationalisation, schemes which may be introduced by legislation, are an illustration of reasonable restrictions imposed in the interests of the general public and must be treated as such. That is why the question about the validity of the laws covered by the amendment is no longer left to be tried in Courts. This brings out the doctrinaire approach adopted by the amendment in respect of a State monopoly as such.

Another judgment relied upon is State of Bihar and others, etc. etc. Vs. Bihar Distillery Ltd., etc., wherein Supreme Court held as under:

Now coming to the reasoning in the impugned judgment, we must say with all respect that we have not been able to appreciate it. The approach of the court, while examining the challenge to the constitutionality of an enactment, is to start with the presumption of constitutionality. The court should try to sustain its validity to the extent possible. It should strike down the enactment only when it is not possible to sustain it. The court should not approach the enactment with a view to pick holes or to search for defects of drafting, much less inexactitude of language employed. Indeed, any such defects of drafting should be ironed out as part of the attempt to sustain the validity/constitutionality of the enactment. After all, an Act made by the legislature represents the will of the people and that cannot be lightly interfered with. The unconstitutionality must be plainly and clearly established before an enactment is declared as void. The same approach holds good while ascertaining the intent and purpose of an enactment or its scope and application. Now, the result of the impugned judgment is that the Amending Act has become an exercise in futility--a purposeless piece of legislation. And this result has been arrived at by pointing out some drafting errors and some imperfection in the language employed.

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Reliance is also placed on the judgment of the Supreme Court in C. Kasturi and others, etc. Vs. Secretary, Regional Transport Authority and another etc., Supreme Court held asunder:

It would, thus, be clear that once a notified draft scheme has been approved and published, the private operators operate their services on the notified route strictly in accordance with the scheme only and within the exceptions engrafted thereunder. By necessary implication, the "town service" as defined in R. 282(2)(ii) has to be read subject to the scheme in Chapter IV-A of the repealed Act. If so read, clauses 2, 3 and 4 are to operate as an exception and they provide only a right to overlap not more than 8 kms. in the notified route. Otherwise, the town service will cease to be town service and would get transformed into a mofussil route and the private operator would run his stage carriage along the line of the notified route which is impermissible. When so read, though under R. 282(2)(ii) town service extends up to 8 kms. from the municipal limits, that does not give any right to a holder of a town service stage carriage permit to run his vehicle beyond 8 kms. on the notified route nor does it extend to 8 kms. overlapping on the notified route from municipal limits. The memo. is an administrative instruction issued by the Government which cannot have an overriding effect on the scheme since the scheme by itself is law unless the scheme is duly and legally modified under the provisions of the repealed Act or the 1988 Act according to law. The stage carriage holders of permits stand excluded and thereby the private operators cannot operate on the notified area or route overlapping more than 8 kms. on the notified route.

In Bhargavan and sons v. R.T.A. (1977 KLT 141) a Division Bench of this court held that once a draft scheme of nationalisation is published under S. 68C, it is in itself a ''law'' for the purpose of Art. 19(6) of the Constitution. If there is a prohibition to operate on a notified route, no licences can be granted to any private operator whose route traversed or overlapped any part or whole of that notified route.

Heard the learned counsel appearing for the petitioners, the learned Standing Counsel for K.S.R.T.C. and the learned senior Government Pleader. Sri. K.V. Gopinathan Nair led the arguments on behalf of the petitioners and followed by other counsel appearing on behalf of the petitioners.

As far as the scheme is concerned, there is no dispute about the fact that the Government is entitled to formulate a scheme for STU''s. The main contention urged by the learned counsel for the petitioners is that the scheme virtually discriminates all other operators from conducting any stage carriage service. Even going by the scheme, neither the Government nor the STU has a definite stand as to how they are going to operate the routes. It is specified in paragraph 1 of the scheme that the route or routes is all over the State of Kerala. If a route is to be specified as per the provisions of the Act, it has to be a specified route. While making a blanket scheme that all the routes in the State of Kerala will be covered under the scheme, it virtually indicates a monopoly by the STU in all such routes. Paragraph 3 indicates that after the existing permits of private stage carriage operators have expired, no further permits either regular or temporary shall be issued. However, it is further indicated that the exclusions shall be partial till the existing private service operators'' routes are replaced.

With reference to paragraphs 5 and 6 which relates to the maximum number of vehicles and maximum number of trips also, the indication is that it will be as per traffic demand. Therefore, the argument of the petitioners is that the scheme had been formulated without any proper study or any material to formulate such a scheme. It is also contended that a deliberate attempt is made to avoid the private sector operating stage carriages in the State of Kerala.

As far as the amendment to the Rule is concerned, it is argued that by giving a new meaning to "Fast Passenger Service" and other higher class of vehicles, the intention is to exclude private operators from operating stage carriages on a route more than 70 Kms. It is pointed out that presently, Fast Passenger services are operated for a distance upto 160 Kms. The intention is to curtail the operation of private sector in the said routes. It is the common intention of the petitioners that earlier such an attempt was made, which was held to be arbitrary by this Court and the same method is used in a different form for making an amendment to the Rules by giving a different meaning to Fast Passenger Service, which should be operated only by the STU.

The learned counsel for petitioners placed reliance on the Constitution Bench judgment in The Parbhani Transport Co-operative Society Ltd. Vs. The Regional Transport Authority, Aurangabad and Others, , wherein the Supreme Court while considering the statutory provision under the Motor Vehicles Act, 1939 held that:

The Act lays down two independent sets of provision in regard to the running of buses by the Government, one under Chapter 4 and the other under Chapter 4(A). Ch. 4(A) was intended to give the Government a special advantage. When the Government chooses to proceed under that Chapter, it becomes entitled as a matter of right under S. 68F(1) to the necessary permits. Under Chapter 4, the Government does not have any such advantage, it has to compete with other applicants, to secure permits to be able to run its buses. The powers under the new chapter are therefore different.

Another judgment relied upon is Sher Singh Vs. Union of India (UOI) and Others, . Paragraphs 6 and 7 are relevant which reads as under:

At the outset it is necessary to bear in mind the legal position of a State Transport Undertaking when dealt with under Chapter IV-A and Chapter IV of the Act. If an approved scheme in respect of a notified area or a notified route is in force. State Transport Undertaking alone is entitled to operate vehicles and therefore is entitled to obtain stage carriage permits both regular and temporary depending upon whether the scheme provides for total or partial exclusion of private operators. 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 Chap. 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. S. 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, advantage, precedence etc. But how would it be possible to give precedence one over the other? It signifies that other things being equal, one will have preference over the others. When an application for a stage carriage permit is being processed as required by S. 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 yardstick 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 Chap. IV. That situation is catered to under Chap. 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. Competition is the essence of improved commercial service. After ensuring competition in matter of rendering more efficient transport service a public sector Undertaking is assured statutory preference, remember no monopoly, there is no denial of equality guaranteed by Art. 14? A similar argument when the vires of the provisions contained in Chap. IV-A were questioned in Dosa Satyanarayanamurty etc. Vs. The Andhra Pradesh State Road Transport Corporation, did not commend to the Constitution Bench when it repelled the challenge observing as under: "Ordinarily a State Transport Undertaking should be in a better position than others to carry on the said services for the benefit of the public; administratively, financially and technically it can be expected to be in a far better position than others. It can provide more well equipped buses, give better amenities to the travelling public, keep regular timings repair or replace the buses in emergencies. It may also employ efficient supervisory staff to keep things going at an appreciably high standard."

This would apply mutatis mutandis to the present situation. But 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. Viewed from this perspective the provision contained in S. 47(1-H) would not deny equality before law and hence would not offend Art. 14.

In Ishwar Singh Bagga and Others Vs. State of Rajasthan, the Supreme Court held as under:

From the reading of the provisions of the Act and of the Corporations Act it is evident that the Corporation is just another operator of motor vehicles which is entitled to run motor vehicles in accordance with law after obtaining permits. When the Corporation applies for permits under Chapter IV of the Act it has to compete with other applicants to obtain permits in accordance with the provisions of that chapter. When an approved scheme is brought into operation under Chapter IV-A of the Act it is no doubt entitled to get permits to the exclusion, complete or partial, of other operators. It is also true that when the approved scheme provides that other operators are excluded completely or partially, no private operator can operate his motor vehicles along the notified route or in the notified area in question except in accordance with the approved scheme. Barring what is stated above and some other liabilities from which the Corporation is expressly exempted under the Act, the Corporation is subject to all the obligations and responsibilities which are imposed on other private operators by the Act. It is subject to the powers of supervision and control of the transport authorities under the Act and to the Rules governing the proper maintenance of transport vehicles.

In Mangal Sinhji Dolatsinhji, etc. Vs. State of Gujarat, the Supreme Court held as under:

A comparative reading of the provisions of the Act and the old Act make it clear that the procedure for grant of permits under the Act has been liberalised to such an extent that an intending operator can get a permit for the asking irrespective of the number of operators already in the field.

The Parliament in its wisdom has completely effaced the above features. The scheme envisaged under Sections 47 and 57 of the old Act has been completely done away with by the Act. The right of existing operators to file objections and the provision to impose limit on the number of permits have been taken away. There is no similar provision to that of S. 47 and S. 57 under the Act. The Statement of Objects and Reasons of the Act shows that the purpose of bringing in the Act was to liberalise the grant of permits. S. 71(1) of the Act provides that while considering an application for a stage carriage permit the Regional Transport Authority shall have regard to the objects of the Act. S. 80(2), which is the harbinger of liberalisation, provides that a Regional Transport Authority shall not ordinarily refuse to grant an application for permit of any kind made at any time under the Act. There is no provision under the Act like that of S. 47(3) of the old Act and as such no limit for the grant of permits can be fixed under the Act. There is, however, a provision under S. 71(3)(a) of the Act under which a limit can be fixed for the grant of permits in respect of the routes which are within a town having population of more than five lakhs.

In Ajith Kumar Vs. Regional Transport Authority, a learned single Judge of this Court held that preference is available to STU u/s 71(3) only when it applies for permit and the conditions are complied and there is no reservation for STU.

Indian Council of Legal Aid and Advice, etc. etc. Vs. Bar Council of India and another, , Laghu Udyog Bharati and Another Vs. Union of India and Others, Jagdish Parsad Sinha and Others Vs. Bhagwat Prasad and Others, are relied upon to emphasize various instances when the Rules were struck down on the finding that it is ultra vires the statute.

State of Tamil Nadu and Another Vs. P. Krishnamurthy and Others, is relied upon to narrate the grounds for challenging the subordinate legislation. Paragraphs 15 and 16 are relevant which reads as under:

There is a presumption in favour of constitutionality or validity of a subordinate legislation and the burden is upon him who attacks it to show that it is invalid. It is also well recognised that a subordinate legislation can be challenged under any of the following grounds:

(a) Lack of legislative competence to make the subordinate legislation.

(b) Violation of fundamental rights guaranteed under the Constitution of India.

(c) Violation of any provision of the Constitution of India.

(d) Failure to conform to the statute under which it is made or exceeding the limits of authority conferred by the enabling Act.

(e) Repugnancy to the laws of the land, that is, any enactment.

(f) Manifest arbitrariness/unreasonableness (to an extent where the court might well say that the legislature never intended to give authority to make such rules).

The court considering the validity of a subordinate legislation, will have to consider the nature, object and scheme of the enabling Act, and also the area over which power has been delegated under the Act and then decide whether the subordinate legislation conforms to the parent statute. Where a rule is directly inconsistent with a mandatory provision of the statute, then, of course, the task of the court is simple and easy. But where the contention is that the inconsistency or non-conformity of the rule is not with reference to any specific provision of the enabling Act, but with the object and scheme of the parent Act, the court should proceed with caution before declaring invalidity.

In Sindhi Sahiti Multipurpose Transport Cooperative Society Ltd. Vs. State of Madhya Pradesh and Others, it is held that the scheme can be challenged as being ultra vires the provisions of Chapter IV-A (now Chapter VI) even though the Chapter itself is included in Schedule IX of the Constitution. In Shrinivasa Reddy and Others Vs. State of Mysore and Others, it is held that the Scheme cannot be implemented ''piece meal''.

Constitution Bench judgment in Smt. Saraswati Devi and Others Vs. State of Uttar Pradesh and Others, is relied upon in which it is held as under:

We may in passing refer to what are called objections of a "personal" nature. These may be of two types: (1) those challenging the scheme on the ground that it harms an existing operator and (2) those which indicate the details of the services afforded by an existing operator for the purpose of showing that the service envisaged by the scheme would in comparison not be efficient, adequate, etc. Objections of the second type, as we have just above concluded, would be admissible for the reasons stated. Those of the first type, however, would be wholly irrelevant to the determination of the validity of the scheme in view of the postulates of S. 68C and would, therefore, be inadmissible. This proposition may appear at first sight to run counter to those observations of Subba Rao, J., in Gullapalli Nageswara Rao and Others Vs. Andhra Pradesh State Road Transport Corporation and Another, which we have extracted above but this is not really so. Those observations were made in the course of consideration by this Court of the sole question whether the State Government, in deciding objections under S. 68D acted judicially or purely in an administrative capacity. The answer to that question, according to Subba Rao, J., depended on whether the matter before the State Government amounted to a lis: and it was in that connection that he said that the citizen may object to the scheme on public grounds or on personal grounds and also that the Court did not agree with the contention that the grounds of objection against the scheme were confined only to those mentioned in S. 68C. The Court was not called upon to decide as to whether the schemes of Sections 68C and 68D embraced objections of a "personal" nature or not and it was only incidentally that reference thereto was made. We conclude that Gullapalli''s case (supra) is no authority for the preposition that "personal" objections not confined to the scope of the requirements of S. 68C are admissible, under S. 68D.

First of all, I shall consider whether the K.M.V. Rules, 2013 is ultra vires the statute. The rule has been framed exercising the power of the Government under sub-section (1) of S. 212 of the M.V. Act. S. 212 reads as under:

Publication, commencement and laying of rules and notifications.--(1) The power to make rules under this Act is subject to the condition of the rules being made after previous publication.

(2) All rules made under this Act shall be published in the Official Gazette, and shall unless some later date is appointed, come into force on the date of such publication.

(3) Every rule made by any State Government shall be laid, as soon as may be after it is made before the State Legislature.

(4) Every rule made by the Central Government under this Act, every scheme made by the Central Government under sub-section (1) of S. 75 and sub-section (1) of S. 163 and every notification issued by the Central Government under sub-section (4) of S. 41, sub-section (1) of S. 58, sub-section (1) of S. 59, the proviso to sub-section (1) of S. 112, [sub-section (4) of S. 163-A] and sub-section (4) of S. 213 shall be laid, as soon as may be after it is made, before each House of Parliament while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule, scheme or notification or both Houses agree that the rule or scheme should not be made or the notification should not be issued, the rule, scheme or notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule, scheme or notification.

The scheme of the M.V. Act as evident from various judgments of the Supreme Court referred above clearly indicates that there is no distinction between private stage carriage operators and STU''s. Whereas as far as STU''s are concerned separate statutory provision has been made under Chapter VI of the M.V. Act. S. 98 of Chapter VI reads as under:

Chapter to override Chapter V and other laws.--The provisions of this Chapter and the rules and orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in Chapter V or in any other law for the time being in force or in any instrument having effect by virtue of any such law.

32 Therefore the provisions of Chapter VI, the rules and orders made thereunder shall have effect notwithstanding anything inconsistent contained in Chapter V. S. 99 coming under chapter VI gives the power to the State Government to formulate a proposal regarding a Scheme giving the particulars of the nature of services proposed to be rendered and other specifications and to formulate such scheme for the effective co-ordinated transport service in public interest. S. 99 reads as under:

Preparation and publication of proposal regarding road transport service of a State transport undertaking.--[(1)] Where any State Government is of opinion that for the purpose of providing an efficient, adequate, economical and properly co-ordinated road transport service, it is necessary in the public interest that road transport services in general or any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State transport undertaking, whether to the exclusion, complete or partial, of other persons or otherwise, the State Government may formulate a proposal regarding a scheme giving particulars of the nature of the services proposed to be rendered, the area or route proposed to be covered and other relevant particulars respecting thereto and shall publish such proposal in the Official Gazette of the State formulating such proposal and in not less than one newspaper in the regional language circulating in the area or route proposed to be covered by such scheme and also in such other manner as the State Government formulating such proposal deem fit.

[(2) Notwithstanding anything contained in sub-section (1), when a proposal is published under that sub-section, then from the date of publication of such proposal, no permit shall be granted to any person, except a temporary permit during the pendency of the proposal and such temporary permit shall be valid only for a period of one year from the date of its issue or till the date of final publication of the scheme under S. 100, whichever is earlier.]

Section 100 of the Act relates to the consideration of objections by the Government before approving the Scheme. S. 102 gives power to the State Government to modify the Scheme at any point of time after complying with certain requirements. S. 103 relates to issuance of permits to STU''s which reads as under:

Issue of permits to State transport undertakings.--(1) Where, in pursuance of an approved scheme, any State transport undertaking applies in such manner as may be prescribed by the State Government in this behalf for a stage carriage permit or a goods carriage permit or a contract carriage permit in respect of a notified area or notified route, the State Transport Authority in any case where the said area or route lies in more than one region and the Regional Transport Authority in any other case shall issue such permit to the State transport undertaking, notwithstanding anything to the contrary contained in Chapter V.

(2) For the purpose of giving effect to the approved scheme in respect of a notified area or notified route, the State Transport Authority or, as the case may be, the Regional Transport Authority concerned may, by order,--

(a) refuse to entertain any application for the grant or renewal of any other permit or reject any such application as may be pending;

(b) cancel any existing permit;

(c) modify the terms of any existing permit so as to--

(i) render the permit ineffective beyond a specified date;

(ii) reduce the number of vehicles authorised to be used under the permit;

(iii) curtail the area or route covered by the permit in so far as such permit relates to the notified area or notified route.

(3) For the removal of doubts, it is hereby declared that no appeal shall lie against any action taken, or order passed, by the State Transport Authority or any Regional Transport Authority under sub-section (1) or sub-section (2).

Section 104 relates to the restriction on grant of permits in respect of a notified area or notified route which reads as under:

Restriction on grant of permits in respect of a notified area or notified route.--

Where a scheme has been published under sub-section (3) of S. 100 in respect of any notified area or notified route, the State Transport Authority or the Regional Transport Authority, as the case may be, shall not grant any permit except in accordance with the provisions of the scheme:

Provided that where no application for a permit has been made by the State transport undertaking in respect of any notified area or notified route in pursuance of an approved scheme, the State Transport Authority or the Regional Transport Authority, as the case may be, may grant temporary permits to any person in respect of such notified area or notified route subject to the condition that such permit shall cease to be effective on the issue of a permit to the State transport undertaking in respect of that area or route.

Section 107 gives power to the State Government to make rules for the purpose of carrying into effect the provisions of Chapter VI.

Power of State Government to make rules.--(1) The State Government may make rules for the purpose of carrying into effect the provisions of this Chapter.

(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:--

(a) the form in which any proposal regarding a scheme may be published u/s 99;

(b) the manner in which objections may be filed under sub-section (1) of Section 100;

(c) the manner in which objections may be considered and disposed of under sub-section (2) of Section 100;

(d) the form in which any approved scheme may be published under sub-section (3) of Section 100;

(e) the manner in which application under sub-section (1) of Section 103 may be made;

(f) the period within which the owner may claim any article found left in any transport vehicle u/s 106 and the manner of sale of such article;

(g) the manner of service of orders under this Chapter;

(h) any other matter which has to be, or may be, prescribed.

On a reference to the aforesaid statutory provisions and as held by the Supreme Court in various judgments, specific statutory provision has been enacted to ensure formulation of a proper procedure for an effective and efficient road transport service in the State through STUs.

The argument of the petitioners is that though the State Government can formulate a scheme under the M.V. Act, it cannot amend the Rule by virtually curtailing the right of private stage carriage operators from operating fast passenger services and other higher class of services. While considering the above argument, what is relevant to be considered is the statutory provision relating to the rule making power of the Government. Chapter V of the M.V. Act deals with control of transport vehicles. S. 66 emphasises the need of obtaining a permit for use of a vehicle as a transport vehicle in any public place. S. 67 gives the power to the State Government to issue directions to the State Transport Authority and Regional Transport Authority in respect of certain matters specified therein like fixing fares etc. The chapter contains the procedure for applying for stage carriage permits, the grant of such permits, cancellation and suspension of permits, grant of temporary permits, the authorities under the Act to carry out the objects of Chapter V. S. 95 gives the State Government power to make rules in respect of stage carriages and contract carriages which reads as under:

Power of State Government to make rules as to stage carriages and contract carriages.--(1) A State Government may make rules to regulate, in respect of stage carriages and contract carriages and the conduct of passengers in such vehicles.

(2) Without prejudice to the generality of the foregoing provision, such rules may--

(a) authorise the removal from such vehicle of any person contravening the rules by the driver or conductor of the vehicle, or, on the request of the driver or conductor, or any passenger, by any police officer;

(b) require a passenger who is reasonably suspected by the driver or conductor of contravening the rules to give his name and address to a police officer or to the driver or conductor on demand;

(c) require a passenger to declare, if so demanded by the driver or conductor, the journey he intends to take or has taken in the vehicle and to pay the fare for the whole of such journey and to accept any ticket issued therefore;

(d) require, on demand being made for the purpose by the driver or conductor or other person authorised by the owners of the vehicle, production during the journey and surrender at the end of the journey by the holder thereof of any ticket issued to him;

(e) require a passenger, if so requested by the driver or conductor, to leave the vehicle on the completion of the journey the fare for which he has paid;

(f) require the surrender by the holder thereof on the expiry of the period for which it is issued of a ticket issued to him;

(g) require a passenger to abstain from doing anything which is likely to obstruct or interfere with the working of the vehicle or to cause damage to any part of the vehicle or its equipment or to cause injury or discomfort to any other passenger;

(h) require a passenger not to smoke in any vehicle on which a notice prohibiting smoking is exhibited;

(i) require the maintenance of complaint books in stage carriages and prescribe the conditions under which passengers can record any complaints in the same.

Section 96 is again a general power given to the Government to make rules for the purpose of carrying into effect the provisions of the said chapter.

Sri. Manilal, Learned Senior Government Pleader also relied upon the State Government''s power to make rules under S. 65 of the M.V. Act with reference to Chapter IV which deals with registration of motor vehicles. Apparently the said provision has no application, as we are not concerned with registration of a vehicle.

The issue involved is whether the power under S. 212 read with S. 95 or 96 can be relied upon to support the amended provision. It is not in dispute that as far as Chapter V is concerned, there is no differentiation between STU and private stage carriage operators. The judicial opinion is enormous and it is clear from the Supreme Court judgments in Sher Singh Gandhimas Transport (supra), Ishwar Singh Bagga (supra), Mithilesh Garg (supra) etc. that the STU will have to compete with the private stage carriage operators in regard to the grant or otherwise of the permit under Chapter V. Therefore when a rule is framed by giving a meaning to ''fast passenger service'' and other higher class of services, stating that it can be operated only by STU, it virtually excludes private operators from the field. It is not in dispute that while formulating a scheme, definitely STU can be given preference under Chapter VI.

Section 212 of the M.V. Act does not give any separate power to the Government to make rules. Each chapter contains specific provisions providing the rule making power. S. 212 only relates to the procedure for publication of the rule and the procedure to be followed while enacting the rule. Therefore S. 212 will not enable the Government to make a rule, which is available only under Chapter IV, V or VI, as the case may be. Therefore one has to verify whether such a rule can be brought into effect. No doubt, Chapter VI only gives power to the Government to formulate a scheme. As far as stage carriage operators are concerned, their rights are confined to Chapter V. The decisions referred above clearly indicates that as far as Chapter V is concerned there cannot be any differentiation between the stage carriage operators in private sector and STU. Viewed in that angle, the source of power to introduce such a definition excluding private operators is lacking. In State of Tamil Nadu and Another Vs. P. Krishnamurthy and Others, the Supreme Court has narrated the well recognised grounds for challenging a subordinate legislation, one of which is failure to conform to the statute under which it is made or exceeding the limits of authority conferred by the enabling Act. Hence I am of the view that the meaning given to "Fast Passenger Service" and other higher class of vehicles confining the operation to STU alone in the K.M.V. Rules, 2013 is ultra vires the M.V. Act. As far as the scheme is concerned, it is notified after complying with the procedure prescribed under Chapter VI of the M.V. Act. The contention of the petitioners is that the scheme is vague and it does not have the required particulars. Under S. 99 of the M.V. Act, it is open for the State Government in public interest to formulate a scheme for the purpose of providing an efficient, adequate, economical and properly co-ordinated road transport service. Such road transport service shall be in general or any particular class of service. It could be in relation to any area or route or any portion thereof to be run and operated by the STU. The exclusion could be complete or partial. The scheme should give particulars of the nature of the services proposed to be rendered, the area or route proposed to be covered and other relevant particulars. S. 99 of the M.V. Act, therefore, does not impose any restriction on the Government in undertaking to operate on all routes in the State, to operate such number of services or trips as per traffic demand. In Ramesh Chand (supra) the Supreme Court held that failure to specify the number of services would not invalidate the draft scheme or the approved scheme. True that the said judgment came to be passed in slightly different factual circumstances, but in so far as the scheme has been formulated after complying with the procedural formalities and it being a policy of the Government, supported by statutory provisions and also Art. 19(6)(ii) of the Constitution of India, despite the contentions urged on behalf of the learned counsel for petitioners, I do not think that this Court can exercise the power of judicial review to set aside the scheme. The scheme is a policy of the Government and it is after notice to the stakeholders that the scheme has been formulated. If the Government decides to exclude private operators from certain routes or all the routes in the State, in so far as the power is available with the State Government under Chapter VI and as stated above, the scheme cannot be brushed aside. Though it is contended that the scheme is arbitrary and violative of Art. 14 of the Constitution of India, as long as the State Government is vested with the power to formulate such schemes for an effective, efficient, adequate co-ordinated transport service in public interest, the fact that the Government does not have such facilities or the STU has no such facilities cannot be gone into at this stage of the proceedings. Once the scheme is formulated, it is for the Government and the concerned STU to decide regarding the implementation of the Scheme. This Court cannot proceed on the basis that the Government will not be in a position to implement the said Scheme. It might be true that some or all the private stage carriage operators will be affected by the Scheme and the Government intends to control the entire transportation service by operating through STU, but in so far as the statute clearly prescribes the nature of power and the right of the Government to formulate such schemes, the scheme thus framed cannot be stated to be inconsistent with any other provisions of the M.V. Act especially in view of S. 98 of the Act. Hence, I am of the view that the petitioners have not succeeded in challenging the validity of the Scheme. In the result, these Writ Petitions are disposed of declaring that amendment to the definition of ''Fast Passenger Service'' and other higher class of services in clauses (ea), (ka), (ua), (ub) and (uc) of the K.M.V. Rules, 2013 is ultra vires the M.V. Act and upholding the Scheme published by the Government.