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Judgment
Kesho Ram Passey, C.J.—These are five petitions by the Transport Companies noted on the margin, who for some time past have been carrying on the business of plying buses on hire on different outes in Pepsu with permits granted by the Tate Transport Authority u/s 42(1), Motor Vehicles Act. All of them have prayed that exercise of the powers under Article 226 of the Constitution, this Court may issue a writ in the nature of mandamus or any other appropriate writ, direction or order, restraining the State Government from running their buses on the routes of their (Petitioners'') business.
The petitions raise identical questions of law and have similar facts forming their background.
In October, 1954 the State Government, pursuant to their economic policy and in the interest of the general public decided to embark upon the business of motor transport and from January, 1986 put on the very routes on which the Petitioners'' buses were plying, several buses with the label -''Pepsu Roadways'' for carrying passengers on fixed rates of fares without having obtained any permit from the State Transport Authority.
As some expenditure in connection with the new venture had to be incurred for which approval of the Legislature was necessary a supplementary demand for the amount needed was placed before the State Legislative Assembly in their Budget Sessions 1954-55 and its assent was obtained. To regularize the expenditure the same course was adopted by the Government in the financial year 1955-56 and the grant asked for was sanctioned by the Legislature.
Each time the necessary Appropriation Act was passed and there can be little dispute that the expenditure had thus become authorized by law.
Although the ''Pepsu Roadways'' had been operating since January 1955, no motor trans port concern had any grouse to make till 15-6- 1953, when the. Patiala Bus Service, Petitioner 1, submitted their present petition. Then follow ed the other four petitions and the last was made on 21-6-1955. Before narrating the grounds on which the petitions are founded, it is necessary to repeat here the provisions of Sub-section (1) and Sub-clause (3), Clause (a) of Section 42, Motor Vehicles Act 1939 (Act No. 4 of 1939), hereafter called the Act:
Sub-section (1)
No owner of a transport vehicle shall use or permit the use of the vehicle in any public place save in accordance with the conditions of a per met granted or counter-signed by a Regional or Provincial Transport Authority authorizing the use of the Vehicle in that place in the manner in which the vehicle is being used....
Sub-section (3)
Sub-section (1) shall not apply:
(a) to any transport vehicle owned by or on behalf of the Central Government or a Provincial Government other than a vehicle used in connection with the business of an Indian State Railway....
It may be mentioned here that as things stand at present the Petitioners have not at all been prohibited from carrying on their business nor have their permits or the terms of those permits been in any way touched. The Petitioners do not say that it is their right to run the buses on the routes in question to the exclusion of the State or other private transport concerns nor have they acquired an indefeasible right to continue to make gains as heretofore and to exclude competition.
They, however, have very grave apprehensions of their business inevitably collapsing as they would soon be eclipsed by the ''Pepsu Roadways'' which has large resources making competition impossible. Their greatest fear is that in the name of competition and by this indirect method instead of the direct one by legislation to which if introduced there may be opposition in the State Legislative Assembly itself, the Government would oust them by gradually but quickly giving effect to, their policy of nationalization of the Transport Industry in the State which policy they have not so far clearly pronounced but are cleverly and steadily implementing.
They also state that if the Government wants to enter the field of Motor Transport business, it should like them be bound by the provisions of the Indian Motor Vehicles Act and of the rules framed there under. The State should apply for stage-carriage permits u/s 40 of the Act and when they do so the Regional Transport Authority, although a creature of the Government, will while dealing with those applications have to bear in mind the rules of procedure laid down in Section 47 etc.
While stressing on obvious inequalities between them and the State they refer to the alleged discrimination created by Sub-clause (3), Clause (a) of Section 42 of the Act, dispensing with, in the case of the State, the necessity of taking out permits, as required by Sub-section (1). The petition- biers, therefore, seek to invoke certain provisions of the Constitution of India to their aid and raise the following objections against the State taking to business or trade and in particular to their running stags-coaches:
(a) That since the buses of the Government are being used in connection with the business of the Railway, the Government must obtain permits for running them as even Sub-section (3) of Section 42 of the Act does not dispense with the obtaining of permits under Sub-section (1) where buses are run by the Government in connection with the business of the Indian State Railway.
(b) That the State is not entitled to carry on the business of plying motor vehicles for hire on commercial basis as the business is not incidental to its ordinary-functions.
(c) That the State cannot do transport business on commercial basis without legislative sanction.
(d) That the running of parallel buses by the State on the very routes for which the Petitioners hold permits is not only gravely injurious to the Petitioners'' business but interferes with their right to carry on that business which right is guaranteed by Article 19, Clause (I) Sub-clause (g), and that it also attacks and violates their right to hold property and causes deprivation of their property in contravention of Article 31 of the Constitution.
(e) That the provisions of Sub-section (3). Clause (a) of Section 42 of the Act are ultra vires of the Constitution as they constitute an arbitrary discrimination in favour of .the State and offend Article 14 of the Constitution and are consequently in the light of Article 13 of the Constitution void.
The affidavit of Shri J.D. Khanna, Under-Secretary to Government of Pepsu in the; Home Department, makes contention (a) unten- 1 able for it states and proves that the ''Pepsu 1 Roadways'' is exclusively owned by the Government of Pepsu and that none of its vehicles is being used in connection with the business of the Railway. The mere fact that the Government vehicles are being run from the bus stand used by all Government or public motor vehicles, which is close to the Railway Station and the timings of those vehicles are adjusted to agree with the time of arrival of railway trains so that the passengers alighting from trains have the facility of catching vehicles that would take then to their destination, can be no presumptive evidence of the fact that the State is carrying on its transport business in connection with the business of the Railway.
It is not alleged that the ''Pepsu Roadways'' are agents of any Railway nor do they, as a part of the business of the Railway, carry any passengers or goods for it.
The question raised in connection with (b) is a large one but not difficult to answer and it has to be answered with the context of the pattern of our policy in view. The people of India solemnly resolved from 26-1-1950 to constitute India into a Sovereign Democratic Republic and India is now essentially a Socialistic Welfare State. It is difficult if not impossible to lay down once for ever and rigidly as to what are or should be the indisputable primary functions of a State nor is it similarly possible to enumerate with precision the functions ancillary to or necessarily flowing from its essential or primary functions.
They must vary with the advance and requirements of the times and the change in the character of the State due to its increasingly complex and manifold obligations to the subject and no prediction can, therefore, he hazarded with regard to the extent of the change they might undergo. The many kinds of commercial or industrial businesses that were discarded by the State on the score of undesirability and were left to be taken by individuals or. Corporations, can now in view of the State''s trend towards Socialism be legitimately embarked upon by it.
The functions of a State have to rise in proportion to the increase in its activities and it is undoubtedly one of the foremost duties of a State to promote the economic interests of its people. I may refer to p. 485 of Garner''s book ''Political Science and Government'', 2nd Edition, where under the head ''Socialistic Functions'' the author has said that "while Socialism in its extreme form has never been attempted by any modern State, with the exception of Russia, all States perform various functions that are socialistic in character, some more than others and one of the marked political tendencies of the time has been the drift in this direction.
In various countries of Europe, the State owns and operates railroads, telegraphs, mines, banks, and breweries; monopolizes the manufacture of_ certain commodities like brandy, tobacco, matches and gun-powder; owns and operates or subsidized theatres and opera houses; aids art encourages literature, science, and art; insures people against sickness, accidents, and old age; and through the local governments manages many public utilities such as water-works, gas and electric light plants, and State railways". In Allen''s book ''Law in the Making'' at p. 5G4 the question has been posed and answered what then is the true State?
In Modern law, it has become a central agency not for the exercise of public power but for the performance of public service. In recent1 years the idea of the responsibility of the State has grown so greatly as to change the whole character of the State in social and legal theory.
It must be admitted and recognized that good of the public generally must take precedence over individual benefit or convenience and if the enterprise of the Government is for common welfare, individual interests must give way to it. One has to be conscious of the fact that to keep pace with the economic developments in the State revenues have to be raised and for raising revenues the State cannot be forced to restrict itself to taxation.
But even the reconsideration of whether the Government in taking to such an activity, is moving in the exercise of its legitimate functions must come in. It will have, therefore, to be decided in each particular case of objection to governmental activity whether that activity falls within or outside the scope of its essential or ancillary functions. The conclusion is clear and inevitable that, the State which had in earlier Limes for its functions, defence, police, law and order, can now guarantee many other public services and the entry of the Pepsu Government, in pursuance of its economic policy, in the business of motor transport does not, in my view, suffer from any legal or other disqualification.
Reference may here profitably be made to Articles 38, 39, 289 and 19 of the Constitution which impose certain duties on the Government. Article 38 enjoins upon the State to promote the welfare of the people by ensuring a social order in which justice-social, economic and political- shall inform all the institutions of the national life and Article 39 interlaid requires the State to so direct its policy as to secure that the ownership and control of the material resources of the community are so distributed as best to sub serve the common good and that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.
Clause (1) of Article 289 says that the property and income of a State shall be exempt from Union Taxation, but Clause (2) authorizes the Parliament to by law provide for the extent of the imposition of a tax in respect of a trade or business of any kind carried on by or on behalf of the Government of a State or any operation connected therewith. Clause (6) of Article 19 as amended by the Constitution (First) Amendment Act 1951, has brought a transformation in the fundamental right guaranteed by Clause (g) of Clause (1) in favour of the State.
From the time it came into force the State became immune from liability to justify its ''action as reasonable, it being free to make gains through trade, business or industry like any other individual. In - '' Rai Sahib Ram Jawaya Kapur and Others Vs. The State of Punjab, their Lordships of the Supreme Court have held that the executive function of the State comprises both the determination of the policy as well as carrying it into execution which evidently includes the initiation of legislation, the maintenance of order, the promotion of social and economic welfare, the direction of foreign policy, in fact the carrying on or supervision of the general administration of the State.
They have also laid down that the function of a State like the police States of old are not confined to mere collection of taxes or maintenances of laws and protection of the realm from external or internal" enemies and that a modern State is certainly expected to engage in all activities necessary for the promotion of the social and economic welfare of the community. I have, therefore, no hesitation at all in holding that it should now be idle to contend that trade or business is not a legitimate function of the State or that ait departs preposterously from its sovereign'' function when it indulges in those activities.
I now come to objection (c) of the learned Counsel that the State cannot do transport business on commercial basis without legislative sanction. I have referred above to the provisions of Articles 19, 38, 39 and 289 of the Constitution to which Article 298 may be added and they all appear to me to authorise the State to take to business in which the industry in question is apparently included.
In that view of the law no legislative sanction to start or run the business of plying motor vehicles for hire would be necessary. Agarwala J. in - '' Moti Lal and Others Vs. The Government of the State of Uttar Pradesh and Others, had express ed the view that if the State wanted to run a bus service it must be authorised by an Act of the Legislature but that was held by the Supreme Court in (S) Rai Sahib Ram Jawaya Kapur and Others Vs. The State of Punjab, to be too nar row and unsupportable. On the contrary, their Lordships held that "where the ministry or the executive government of a State formulates a particular policy in furtherance of which they want to start a trade or business, a specific legislation legislating such trade activities before they could be embarked upon is not always necessary. If the trade or business involves expenditure of funds, it is certainly required that Parliament. should authorise such expenditure either directly or under provisions of a Statute......
Specific legislation may indeed be necessary if the Government require certain powers in addition to what they possess under ordinary law in order to carry on the particular trade or business. Thus when it is necessary to encroach upon private rights in order to enable the Government to carry on their business, a specific legislation sanctioning such course would have to be passed.
In the present case no encroachment has been made by the State on any private rights by the mere fact that it has come in the field as a competitor. No specific Act is therefore necessary to validate the running of motor buses by it, particularly when legislative sanction in the form of the necessary Appropriation Act to incur expenditure on the venture and consequent implicit approval of the State Assembly has already been obtained, and this should be enough to serve the purpose of making a specific law. The objection has, therefore, to be discarded.
The learned Counsel dealt with contention (d) only in an half-hearted manner, for neither Article 19 nor Article 31 of the Constitution come into play as none of the rights guaranteed by those Articles has been taken away. Neither by any executive action nor by any enactment has any of the Petitioners been deprived of his right to carry on his business and no property belonging to any of them has been appropriated or is said to be in danger of being appropriated by the State.
The State has not even curtailed the number or nature or extent of the operation of the Petitioners'' permits nor has it placed any other ban or impediment upon them. They might have had a very lucrative business but they have no right fundamentally their own which has been impaired by the entry of the State in the arena of the business where for some time past they alone were supreme.
While advancing reasons in support of contention (e) the learned Counsel drawing attention to the provisions of Article 14,of the Constitution that the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India, stressed that when the State starts commercial business it necessarily converts itself into a businessman like any other person to whom that epithet can apply and should, therefore, if it takes to motor transport business, be bound by the laws governing and regulating that business. If it comes as a competitor it should have no peculiar facilities or privileges over others in the business and that looked at from that angle Sub-section (3) of Section 42 of the Act, which exempts the State from the operation of Clause (1), not only tends to hoodwink Sections 46 and 47 of the Act but is loudly discriminatory and directly attacks the Petitioner''s right guaranteed by Article 14 of the Constitution.
A plain reading of that Article would show that a duty is cast on the State that no part or agent of it shall exercise its powers in a manner refusing equal protection of the laws to any person, or in other words it prohibits the State from making any distinction between a person and a ''person'' which word might include corporation as well so far as the protection given by the laws of the country is concerned.
Articles 12 and 14 fall in Part III of the Constitution and Article 12 dinning the term ''the State'' says that in this part, unless the context otherwise requires, the ''State'' includes the Government and the Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India. In all the Articles falling in Part III the word ''State'' is to have that meaning unless of course a different meaning is indicated by the context.
I am unable to see how the context of Article 14 or the context of the controversy before me can suggest a definition of the word ''State'' so as to reduce it to a ''person'' as used in the Article. In Article 14 the ''State'' cannot mean a person, for obviously if the words ''a person'' are substituted in place of the word ''State'', the Article would present irreconcilable language.
The two words ''State'' and ''person'' appear in the same Article and evidently the one does not include the other, and,has its separate import leading to the necessary inference that the Article does not give any protective guarantee to an individual when the discrimination is between him and the State.
The learned Counsel has tried to draw distinction between what he would call the private functions of the State and its governmental functions by urging that when it engages in a commercial undertaking, it acts in a private capacity and becomes a ''juristic person'', but it is not ''a person'' when it exercises the essential functions of the Government.
Even if that difference of capacity be actually a real one, Article 289 of the Constitution gives tacit recognition to its function, of indulging in trade or business as one of its ordinary functions or at any rate as one essentially connected with its ordinary functions and further it creates scope for distinction between a State and a person in the matter of taxation.
In ''Kesheo Parshad v. State of Madhya Pradesh'', (S) AIR 1955 Nag 177 (C), it has been held that any trade or business or any class of trade or business which the State undertakes as incidental to the ordinary functions of the Government cannot be dissociated from those functions and would not therefore constitute the State a, ''person'' as understood in Article 14 and that in a case of this type the State does not lose its character as such for it is in furtherance of its functions of Government that it engages in any such commercial enterprise.
In '' Rai Sahib Ram Jawaya Kapur and Others Vs. The State of Punjab, the Supreme Court has held that the argument, that the State ceases to function as a State when it enters any trade like any other trader, can stand no scrutiny and cannot be accepted as a sound proposition of law under the Constitution of India at the present day.
The learned Counsel of the Petitioners referred to - ''General Motor Bus Service, Tonic V. Regional Transport Authority, Jaipur AIR 1955 Raj 14 (D), in which it had been held that the exemption of the State Government from obtaining permits allowed u/s 42(3) was inconsistent with Article 14 of the Constitution, and was accordingly invalid and the Government Trans port Service had to obtain permits fur plying Government owned buses.
The learned Judges, who decided that case, gave no reasons for the conclusion and simply by reference to the majority decision in Moti Lal and Others Vs. The Government of the State of Uttar Pradesh and Others, accepted as correct the contention of the Petitioner''s counsel that the Government could not run their buses without obtaining permits.
A case ''Simla Hill Transport Service Ltd., Kalka v. The State of Punjab'', Civil Misc. Writ Case No. 545 of 1950, D/- 10-6-1951 (Funj) (E), exactly similar to the one before me, came up before a Division Bench of the Punjab High Court consisting of Eric Weston C. J. and Fal- shaw J. and they disagreed with the majority view in ''Motipal''s case (B)''. I may repeat what the learned Chief Justice said in his judgment
Mr. Tek Chand''s contention however is supported by views expressed by a majority of a Pull Bench of the Allahabad High Court reported in Moti Lal and Others Vs. The Government of the State of Uttar Pradesh and Others, The view taken by the majority appears to have been that as the word ''person'' must be given varying meanings in the various Articles of the Constitution in which it appears and as the ''State'' for the purposes of litigation may be said to be a juridical person, so therefore in Article 14 the word ''person'' must be taken to include the State. It seems to me, with respect, that the final conclusion is of the nature of assumption.
The numerous cases cited do not really touch the point at all. In my opinion there is no reason to take Article 14 of the Constitution to mean more than its plain words indicate, namely, that the State shall not discriminate between individuals, including, no doubt, corporation, in respect of equality before the law and in respect of protection afforded by laws.
I do not see any ground therefore for holding that the provisions in Section 42, Motor Vehicles Act expressly exempting transport) vehicles owned by or on behalf of the State of the Punjab from the necessity of taking out permits from the Provincial Transport Authority have become ultra vireos by reason of Article 14 of the Constitution.
I am in respectful agreement with this view of the scope of Article 14 and have no doubt that Sub-section (3) of the Act is not hit by that Article.
The petitions are dismissed with costs, counsel''s fee being assessed at Rs. 100/- in each of them.