N. Sathianathan vs B.K.P.M. Amaravathi Ammal and Others

P. Ramakrishnan, J.—The principal appeal out of which this batch are connected, is W.A. No. 222 of 1962 and it arises from W.P. No.

1168 of 1959 filed before this Court by Sri Balasubramania Bus Service (Private), Ltd., Tiruvannamalai. The circumstances under which these

Writ Appeals are filed are briefly the following:

For the route Hosur to Tiruvannamalai, a distance of about 99 miles, the Regional Transport Authority, Salem, invited applications for the stage

carriage permits. After considering the claims of the various applicants, the Regional Transport Authority granted the two permits to S. B. Sri

Ranga Vilas (Private), Ltd., and to Sri B.K. Periamunuswami Goundar respectively. There were number of appeals filed by the disappointed

applicants to the State Transport Appellate Tribunal, Madras. The State Transport Appellate Tribunal confirmed the grant of one permit to S.B.

Sri Ranga Vilas (Private), Ltd., but set aside the grant of the other permit to Sri B.K. Periamuniswami Goundar, and allotted it to N. Sathianathan

the proprietor of N.S. Motor Service, Salem. Among the disappointed appellants, before the State Transport Appellate Tribunal, was Sri

Balasubramania Bus Service (Private), Ltd., who was screened by the Regional Transport Authority on the ground that in 1948, 1949 and 1950

one Devaraja Mudaliar the managing director of this Company, who owned the bulk of the shares therein, had trafficked in permits. In the appeal

also, the State Transport Appellate Tribunal confirmed this finding, and disqualified Sri Balasubramania Bus Service (Private), Ltd., before granting

the second permit to Sri Sathianathan. Aggrieved with this decision, Sri Balasubramania Bus Service (Private), Ltd., filed W. P. No. 1168 of 1959

before this Court, praying for a writ of certiorari, to quash the order of the State Transport Appellate Tribunal. The other disappointed appellants

also filed Writ Petitions, and these are W.P. No. 892 of 1959 (leading to W. A. No. 220 of 1962) by B.K. Periamuniswami Goundar, W.P. No.

233 of 1960 (leading to W.A. No. 221 of 1962) by V. Dhanamull Sowcar and W.P. No. 693 of 1960 (leading to W. A. No. 223 of 1962) by G.

Subramania Mudaliar. The learned Judge, Srinivasan, J., who heard and disposed of these Writ Petitions held that the grievances of

Periamuniswami Goundar, Dhanamull Sowcar and G. Subramania Mudaliar in their respective Writ Petitions, in which they attacked the decision

of the State Transport Appellate Authority could not be sustained. But while dealing with the claim of Sri Balasubramania Bus Service (Private),

Ltd., in W.P. No. 116 of 1959 the learned Judge held that the decision on which this applicant was screened for trafficking in permits, involved an

erroneous conception of what trafficking meant and also the extent of the Regional Transport Authority''s power to go into a question which must

be considered to have been concluded on an earlier occasion, when the Regional Transport Authority had approved the transfer of the permits.

The learned Judge allowed W. P. No. 1168 of 1959 and quashed the order of the State Transport Appellate Tribunal. Though the State Transport

Appellate Tribunal had found against the contentions of the petitioners in the other three Writ Petitions above referred to the learned Judge felt that

as a consequence of the allowing of the Writ Petition of Sri Balasubramania Bus Service (Private), Ltd., it was necessary to allow these petitions

also, and he set aside the order of the State Transport Appellate Tribunal so far as the grant of the second permit was concerned, while preserving

the grant of the first permit to S. B. Sri Ranga Vilas Motors (Private), Ltd. The State Transport Appellate Tribunal was directed to dispose of the

appeals afresh in the light of the observations in the judgment.

We may recall that the State Transport Appellate Tribunal granted the second permit to N.S. Sathianathan. He is the appellant before us in the

present four appeals directed against the decision of Srinivasan, J.

The learned Counsel for the appellant attacked before us the finding of the learned Judge, on the question of '' trafficking in permits '', the

disqualification alleged against Sri Balasubramania Bus Service (Private), Ltd. It was also urged by the learned Counsel for the appellant, that the

learned Judge after having found against the other three writ petitioners on the merits of their case, should not have left their claims for re-

consideration by the State Transport Appellate Tribunal.

We will take up first, the question of '' trafficking in permits '' alleged against Sri Balasubramania Bus Service (Private), Ltd., The State

Transport Appellate Tribunal has given the facts about this disqualification thus:

The order of the R.T.A. does not give any detail for their trafficking, but the remarks of the R.T.A. on the appeal memorandum at page 367 c.f.

show that the R.T.O., relied on the particulars furnished by the R.T.O., North Arcot before the meeting commenced, according to which Sri T.V.

Devaraja Mudaliar had transferred permits on three occasions... 5 permits to Sri Dhanamull Sowcar on 19th October, 1948. 3 permits to Sri G.

Subramania Mudaliar in 1949 and 4 permits to Gajalakshmi Ammal in l950.

The position of Devaraja Mudaliar in Sri Balasubramania Bus Service (Private) Ltd., was this. Out of 2,020 shares in this company 2,000 shares

were owned by Devaraja Mudaliar, 15 shares by his wife and 6 shares by a stranger. The company appears to have been formed after the above

transfers were made, with Devaraja Mudaliar as its managing director. After making the transfer, Devaraja Mudaliar still retained 9 permits with

him. A verification of the book value of the buses sold to Dhanamull Sowcar, and the sale price, showed that Devaraja Mtrdaliar made a profit of

Rs. 20,000 on the sale. The sale consideration was utilised by him for purchasing second-hand buses and a Ford Diesel chassis for body building

and paying the Income Tax and the balance of Rs. 16,000 and odd was merged in his "" proprietory bus business."" The particulars available in the

Income Tax assessment order showed that the sale of three buses to Subramania Mudaliar would have fetched a good profit. There were no data

for estimating the profit in the case of the sales to Gajalakshmi Ammal of three buses, but there was room to infer that there must have been good

profit on this transaction also. This appeared, therefore, to be a clear case where Devaraja Mudaliar effected the sales of buses for three years in

succession followed by transfer of 12 permits to the transferees, making for himself a substantial profit by the transactions. Since Devaraja

Mudaliar held practically the entire interest in Sri Balasubramania Bus Service (Private), Ltd., the disqualification earned by him by trafficking in his

permit would also attach itself to Balasubramania Bus Service (Private), Ltd.

There Was, however, a fairly long interval (nearly eight years) between the last of the sales above mentioned and the present application for

permits. In a decision of Rajagopala Ayyangar, J., (as he then was) in W.P. No. 25 of 1957 the question of trafficking in permits, and also the

weight to be given to the interval between the time of the trafficking and the time of the application for permits came for consideration. The State

Transport Appellate Tribunal referred to the above decision and held that in the present case, even though eight years had elapsed between the last

of the sales of the permits and the present application, it was necessary in the public interest to uphold the order of disqualification, but on a future

occasion the case of the appellant could be considered favourably.

Before Srinivasan, J., the several claims on behalf of Sri Balasubramania Bus Service (Private), Ltd., which were urged before the State

Transport Appellate Tribunal were reiterated, namely, that Devaraja Mudaliar was a different entity from Sri Balasubramania Bus Service

(Private), Ltd., that there was no complaint from the other rival applicants about trafficking, that the alleged trafficking was long before the

application of the company, and that the policy of the Government was, at the relevant period, to permit operators to build up viable units and to

encourage transfers. He repelled these objections, but he observed, however, that the most important circumstance in the case was that the

transfers of bus permits could be effected only with the permission of the Regional Transport Authority and that, in the present case, all these

transfers had received the approval of the Regional Transport Authority and were recognised under the provisions of the Act. He concluded that

where a lawfully constituted authority empowered to sanction transfers of permits and vehicles, had purported to do so, after an examination of the

matter, it was not open to the Tribunal, the more so when it was not sitting in appeal over the question of transfer even if such an appeal lay to

canvass the grounds for the transfer and to come to a conclusion which had practically the effect of upsetting the validity of the transfer. The State

Transport Appellate Tribunal took an erroneous view of what trafficking meant, and upon the scope of its powers to enter into a question which

had been already decided by the appropriate authorities on the proper occasion. The learned Judge also referred to the fact that the decision of

Rajagopala Ayyangar, J., (as he then was) in W.P. No. 25 of 1957 had been reversed by a Bench of this Court in W.A. No. 138 of 1957 and the

appellate Judgment was delivered after the order of the State Transport Appellate Tribunal. The petition of Sri Balasubramania Bus Service

(Private), Ltd. was allowed and the other petitions were also allowed as a consequential result though, on the merits, the contentions of these other

petitioners were found against.

Now the word "" trafficking "" in connection with permits has not been defined, either in the Motor Vehicles Act or in the Rules framed

thereunder. The ordinary dictionary meaning of the word "" trafficking "", gives a fairly accurate idea of its import. Murray''s New English Dictionary

defines it as:

To carry on a trade in, to buy and sell ; often with a sinister implication ; used in disparaging sense, or said of dealing considered improper.

We may also refer to the use of phrases like slave traffic, opium traffic, trafficking in men''s lives, and so on. The term will cover a case where

there are repeated sales conducted as a business, that is a profit motive, in a commodity, whose sales would be improper or would carry a stigma.

No doubt, as pointed out by the learned Judge, the Motor Vehicles Act itself allows for transfer of stage carriage permits in certain contingencies.

Therefore, the mere fact of the transfer of permit as such, without further evidence, may not carry any stigma to satisfy the test of trafficking.

Section 59(1) says:

Save as provided in Section 61, a permit shall not be transferable from one person to another except with the the permission of the transport

authority which granted the permit and shall not without such permission operate to confer on any person to whom a vehicle covered by the permit

is transferred any right to use that Vehicle in the manner authorised by the permit.

Section 61, to which the saving clause refers, provides for the user of a permit by the successor-in-title of the permit-holder on the latter''s death,

for a period of three months, provided that within 30 days of the death of the holder, he has informed the transport authority of the death. After this

period of grace, the successor-in-title has necessarily to get orders recognising the transfer u/s 59 of the Act. Now if a transfer is made in the

normal circumstances of business, or through the exigencies of the death of the operator, obviously it will be a bona fide transfer. But when sales of

buses along with the transfer of the permits are resorted to repetitively when the normal course of the business of the operator does not demand it,

and the sales are effected with the clear motive of making a profit by such transfers it is obvious that the operator is taking an undue advantage of

his position as a permit-holder, to make profits on sales of his permits. This will attract the stigma of trafficking, and it will not be desirable to prefer

him, as he had shown himself to be a person who has abused the permits granted to him.

Again, it is a matter of ordinary knowledge, that when a permit is transferred to another person, only the transferor and the transferee will be

interested in the transfer, and they are expected to apply to the Regional Transport Authority for recognising the transfer. There is no direction in

Section 59 of the Act that the Regional Transport Authority should hold an elaborate enquiry or should give notice to the other operators on the

route or to the public, before giving his sanction to the transfer. There is also no rule that the applicant should give information about the prior sales.

On the application, the Regional Transport Authority makes only a rough and ready enquiry. No doubt, if his enquiry was comprehensive and

sufficiently penetrating, it might be possible for him to discover that there was a profit motive in the application for transfer of the permit or that

there were previous sales of a similar character, and hence the application was not bona fide. On the other hand, the Regional Transport Authority

at that stage might not have had the facilities for making a detailed investigation or might have failed to make it for one reason or other. But, as

pointed out already, these transfers could have gone without challenge by other interested persons at the time of their recognition u/s 59(1) of the

Act, and the Regional Transport Authority should not be blamed if he had dealt with the application in a routine manner, without a searching

enquiry. There is no appeal provided against his decision in such cases, because no one at that stage could be deemed as aggrieved by his order.

With due respect to the learned Judge, it will not be therefore, proper in our opinion, to deal with the decision of the Regional Transport Authority

recognising the transfer of a permit, as conclusive on the question of the bona fides of the transfer and to hold that the question of bona fides of the

transfer would not directly arise, before the Regional Transport Authority at a subsequent time, when the alleged trafficker is screened along with

other applicants for the grant of new permit. In our judgment, the question is certainly open for consideration at that time and should be considered

by the Regional Transport Authority when it is brought before it, either by the objections raised by rival applications u/s 59(4), or is made apparent

to the Regional Transport Authority on the basis of the usual enquiry that he makes through departmental channels, for the purpose of satisfying

himself of the position of the various applicants, to enable him to determine the rival claims, bearing in mind the principles laid down in Section 47

of the Act. This is what the Regional Transport Authority did when he screened Balasubramania Bus Service (Private), Ltd., and that screening

was confirmed by the State Transport Appellate Tribunal in appeal. We are therefore unable to uphold the main ground on which the learned

Judge set aside the decision of the State Transport Appellate Tribunal.

We will briefly refer to the point that the decision of Rajagopala Ayyangar, J., (as he then was) in W.P. No. 25 of 1957 has been reversed by

a Bench of this Court in W.A. No. 138 of 1957. In that particular case, one Kanniah Pillai who was an applicant, had been screened by the

Regional Transport Authority on the ground that on the prior occasion when an application for transfer of his permits came before the Regional

Transport Authority, it was observed that he would have no preference for a new permit. The Regional Transport Authority considered this single

occasion as amounting to trafficking and screened him. The State Transport Appellate Tribunal reversed the order because the remarks of the

Regional Transport Authority In 1952 on a single occasion, would not serve to prove trafficking and also observed that the interval, which had

elapsed subsequently was long enough to nullify the effect, if any, of the earlier remarks. Rajagopala Ayyangar, J., (as he then was) reversed the

decision of the State Transport Appellate Tribunal holding that the onus was on the applicant to prove that the transfer was bona fide and that the

Tribunal could have re-examined the circumstances of this transfer and reached its own finding on the point. The condonation of the lapse of five

years without reference to any other fact was also held to be vitiated by error. When the matter came up by way f appeal, in W.A. 138 of 1957,

this Court held that the duty lay on the objectors to place before the Tribunal the circumstances under which the transfer was made to show that it

amounted to trafficking in permits, that it was not the duty of the Tribunal to embark on such an enquiry, and that the condonation of delay involved

no error which could justify interference by a writ of certiorari. It was a pure question of fact within the province of the State Transport Appellate

Tribunal to decide whether by reason of one incident of transfer made by the applicant in 1952, he could be held to be guilty of trafficking. The

finding that it did not so amount to trafficking was one of fact, which could not be interfered with in a Writ Petition under Article 226 of the

Constitution.

There is no allegation in this case, that the State Transport Appellate Tribunal put the onus of establishing the bona fides of the transfers on the

applicant Sri Balasubramania Bus Service (Private), Ltd. The question whether the transfer amounted to trafficking was decided as a question of

fact on the data placed before it including the Income Tax statements and auditor''s report without reference to the onus of proof. In our view,

adequate reasons have not been shown to interfere with that decision, in these writ proceedings.

We therefore allow the appeal (W.A. No. 222 of 1962) set aside the order of the learned Judge and dismiss W.P. No. 1168 of 1959. In the

remaining Writ Petitions the learned Judge has agreed with the State Transport Appellate Tribunal on the merits of the finding against the petitioner.

The connected Writ Appeals are also allowed, and the connected Writ Petitions Nos. 892 of 1959, 233 of 1960, and 673 of 1960 are dismissed.

Sri Chengalvarayan appearing for Sri Ranga Vilas Motors (Private), Ltd., the grantee of the other permit, pointed out that the position of Sri

Ranga Vilas Motors (Private), Ltd., should be left unaffected. We agree. There has been no attack on the validity of that permit before us. The

result of our allowing the appeals and the dismissal of the Writ Petitions, is that the order of the State Transport Appellate Tribunal granting the first

permit to Sri Ranga Vilas Motors (Private), Ltd., and the second permit to Sathianathan, the appellant herein, will be left unaffected. The appellants

to get their costs from the respondents.