# B.A. LINGAREDDYETC. ETC v. KARNATAKASTATE TRANSPORT AUTHORITY & ORS

- **Citation:** [2014] 13 S.C.R. 205
- **Court:** Supreme Court of India
- **Decided:** 2014-12-18
- **Case number:** Civil Appeal Nos. 11690-11712 of 2014
- **Bench:** Jagdish Singh Khehar, Arun Mishra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/b-a-lingareddyetc-etc-v-karnatakastate-transport-authority-ors-29578
- **Pages:** 39

## Headnote

A
B
Motor Vehicles Act, 1988 - s.102 - Scheme for c
providing efficient road transport service in public interest -
Modification of scheme u/s. 102 - Requirement of giving
reasons by the State Government while modifying the
existing scheme uls. 102 - Held: When an authority makes
an order in exercise of a quasi-judicial function, it must record D
its reasons in support of the order it makes - Modification of
scheme is a quasi-judicial function -
Thus modification of
scheme in absence of reasons cannot be said to be in
accordance with the principles of natural justice - In the instant
case, schemes for operating state carriage services were
E
modified whereby providing for operation of the services by
permit holders who had been granted permits to ply their
vehicles on inter-State routes with a condition not to pick up
or set down the passengers on any portion of the routes
overlapping the notified routes- High Court rightly quashed F
the modification on the ground that authority did not apply its
mind to the various objections filed by the Corporation- State
Government to hear the objections and give a reasoned order
- Motor Vehicles Act, 1939- s.68C -Administrative lawQuasi judicial function.
G
Doctrine of Prospective overruling: Held: The power of
prospective overruling is vested only in the Supreme Court
and that too in constitutional matters- The law declared by
205
H
206
SUPREME COURT REPORTS
[2014] 13 S.C.R.
A the Supreme Court is normally assumed to be the law from
inception - Prospective operation is only exception to this
normal rule.
B
Dismissing the appeals, the Court
HELD: 1. It is apparent from Section 102 of the Motor
Vehicles Act of 1988 that the scheme is framed for
providing efficient, adequate, economical and properly
co-ordinated road transport service in public interest.
C Section 102 does not lay down the requirement of
recording any express finding on any particular aspect;
whereas the duty is to hear and consider the objections.
It requires the State Government to act in public interest
to cancel or modify a scheme after giving the State
0 Transport Undertaking or any other affected person by
the proposed modification an opportunity of hearing. The
State is supposed to be acting in public interest while
exercising the power under the provision. However, that
does not dispense with the requirement to record
E reasons while dealing with objections. [Para 18]
[226-G-H; 227-A-B]
2. Modification of the scheme is a quasi-judicial
function. The State Government is duty-bound to
F consider the objections and to give reasons either to
accept or reject them. The rule of reason is anti-thesis to
arbitrariness in action and is a necessary concomitant
of the principles of natural justice. It is apparent from
the order that there was no consideration of the
G objections except mentioning the arguments of the rival
parties. Objections both factual and legal were not
considered much less reasons assigned to overrule
them. Even in brief, reasons were not assigned indicating
how objections were disposed of. Thus, modification of
H
8. A. LINGA REDDY ETC. ETC. v. KARNATAKA STATE
207
TRANSPORT AUTHORITY
the Schemes could not be said to be in accordance with A
the principles of natural justice in the absence of reasons
so as to reach the conclusion that private operators are
meeting the genuine demands of the public in excess of
the service provided by the STOs, hence, it cannot be
said to be sustainable. [Paras 19, 28, 29][227-C;
B
233-G-H; 234-A-C]
Siemens Engineering & Manufacturing Co. of
India Ltd. v. Union of India 1976 (2) SCC 981:
1976 (0) Suppl. SCR 489; S.N. Mukherjee v.
Union of India 1990 (4) SCC 594 : 1990 (1) Suppl.
SCR 44; Krishna Swami v. Union of India & Ors.
1992 (4) sec 605 : 1992 (1) Suppl. SCR 53;
Workmen of Meenakshi Mills Ltd. & Ors. v.
Meenakshi Mills Ltd. & Anr. 1992 (3) SCC 336:
1992 (3) SCR 409; Divisional Forest Oft:cer,
Kothagudem & Ors. v. Madhusudhan Rao 2008
(3) SCC 469 : 2008 (2) SCR 610; Cha

## Text

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[2014] 13 S.C.R. 205
B.A. LINGAREDDYETC. ETC.
v.
KARNATAKASTATE TRANSPORT AUTHORITY & ORS.
(Civil Appeal Nos. 11690-11712 of 2014)
DECEMBER 18, 2014
[JAGDISH SINGH KHEHAR AND ARUN MISHRA, JJ.]
A
B
Motor Vehicles Act, 1988 - s.102 - Scheme for c
providing efficient road transport service in public interest -
Modification of scheme u/s. 102 - Requirement of giving
reasons by the State Government while modifying the
existing scheme uls. 102 - Held: When an authority makes
an order in exercise of a quasi-judicial function, it must record D
its reasons in support of the order it makes - Modification of
scheme is a quasi-judicial function -
Thus modification of
scheme in absence of reasons cannot be said to be in
accordance with the principles of natural justice - In the instant
case, schemes for operating state carriage services were
E
modified whereby providing for operation of the services by
permit holders who had been granted permits to ply their
vehicles on inter-State routes with a condition not to pick up
or set down the passengers on any portion of the routes
overlapping the notified routes- High Court rightly quashed F
the modification on the ground that authority did not apply its
mind to the various objections filed by the Corporation- State
Government to hear the objections and give a reasoned order
- Motor Vehicles Act, 1939- s.68C -Administrative lawQuasi judicial function.
G
Doctrine of Prospective overruling: Held: The power of
prospective overruling is vested only in the Supreme Court
and that too in constitutional matters- The law declared by
205
H
206
SUPREME COURT REPORTS
[2014] 13 S.C.R.
A the Supreme Court is normally assumed to be the law from
inception - Prospective operation is only exception to this
normal rule.
B
Dismissing the appeals, the Court
HELD: 1. It is apparent from Section 102 of the Motor
Vehicles Act of 1988 that the scheme is framed for
providing efficient, adequate, economical and properly
co-ordinated road transport service in public interest.
C Section 102 does not lay down the requirement of
recording any express finding on any particular aspect;
whereas the duty is to hear and consider the objections.
It requires the State Government to act in public interest
to cancel or modify a scheme after giving the State
0 Transport Undertaking or any other affected person by
the proposed modification an opportunity of hearing. The
State is supposed to be acting in public interest while
exercising the power under the provision. However, that
does not dispense with the requirement to record
E reasons while dealing with objections. [Para 18]
[226-G-H; 227-A-B]
2. Modification of the scheme is a quasi-judicial
function. The State Government is duty-bound to
F consider the objections and to give reasons either to
accept or reject them. The rule of reason is anti-thesis to
arbitrariness in action and is a necessary concomitant
of the principles of natural justice. It is apparent from
the order that there was no consideration of the
G objections except mentioning the arguments of the rival
parties. Objections both factual and legal were not
considered much less reasons assigned to overrule
them. Even in brief, reasons were not assigned indicating
how objections were disposed of. Thus, modification of
H
8. A. LINGA REDDY ETC. ETC. v. KARNATAKA STATE
207
TRANSPORT AUTHORITY
the Schemes could not be said to be in accordance with A
the principles of natural justice in the absence of reasons
so as to reach the conclusion that private operators are
meeting the genuine demands of the public in excess of
the service provided by the STOs, hence, it cannot be
said to be sustainable. [Paras 19, 28, 29][227-C;
B
233-G-H; 234-A-C]
Siemens Engineering & Manufacturing Co. of
India Ltd. v. Union of India 1976 (2) SCC 981:
1976 (0) Suppl. SCR 489; S.N. Mukherjee v.
Union of India 1990 (4) SCC 594 : 1990 (1) Suppl.
SCR 44; Krishna Swami v. Union of India & Ors.
1992 (4) sec 605 : 1992 (1) Suppl. SCR 53;
Workmen of Meenakshi Mills Ltd. & Ors. v.
Meenakshi Mills Ltd. & Anr. 1992 (3) SCC 336:
1992 (3) SCR 409; Divisional Forest Oft:cer,
Kothagudem & Ors. v. Madhusudhan Rao 2008
(3) SCC 469 : 2008 (2) SCR 610; Chairman,
Disciplinary Authority, Rani Lakshmi Bai Kshetriya
Gramin Bank v. Jagdish Sharan Varshney & Ors. ·
. 2009 (4) SCC 240: 2009 (5) SCR 326; Manohar
v. State of Maharashtra &Anr. 2012 (13) SCC 14:
2012 (12) SCR 850; Naresh Shridhar Mirajkar &
Ors. v. State of Maharashtra & Anr. 1966 (3) SCR
744; Commissioner of Income Tax, Bhopal v.
G.M. Mittal Stainless Steel (P) Ltd. 2003 (11) SCC
441; Karnataka State Road Transport Corporation
v. Ashraful/a Khan & Ors. 2002 (2) SCC 560 : 2002
. (1) SCR 194; Adarsh Travels Bus Service &Anr.
v. State of UP & Ors.1985 (4) SCC 557; A.P State
Road Transport Corporation v. P V. Ramamohan
Chowdhary 1992 (2) sec 235 : 1992 (1) SCR 830
-relied on.
c
D
E
F
G
H
208
SUPREME COURT REPORTS
(2014] 13 S.C.R.
A
H. C. Narayanappa & Ors. v. The State of Mysore
& Ors. 1960 (3) SCR 742; Capital Multi-purpose
Co-operative Society Bhopal & Ors. v. The State
of M.P & Ors. 1967 (3) SCR 329; Gul/apal/i
Nageswara Rao & Ors. v. Andhra Pradesh State
B
Road Transport Corporation &Anr. AIR 1959 SC
308: 1959 Suppl. SCR 319- referred to.
3. The High Court decision in Ashrafu//a was
reversed by this Court whereby this Court laid down
c that a permit cannot be granted for a non-notified route
which overlaps or traverses the same line of travel as a
portion of notified route. The said decision is of
retrospective operation as it has not been laid down that
it would operate prospectively more so in the case of
D reversal of the judgment. It was held in *Go/ak Nath that
the power of prospective overruling is vested only in the
Supreme Court and that too in constitutional matters.
[Paras 33, 36][236-B-C; 240-B·D]
E
P V. George & Ors. v. State of Kera/a & Ors. 2007
(3) sec 557: 2001 (1) SCR 1198; Golak Nath v.
State of Punjab AIR 1967 SC 1643: 1967 SCR .
762; Ravi S.Naik v. Union of/ndia & Ors. 1994
Suppl. (2) sec 641 : 1994 (1) SCR 754; M.A.
F
Murthy v. State of Karnataka & Ors. 2003 (7) SCC
517: 2003 (3) Suppl. SCR 327 - relied on.
G
H
Case Law Reference:
2002 (1) SCR 194
1960 (3) SCR 742
1967 3 SCR 329
1959 Suppl. SCR 319
referred to Para 7
referred to Para 11
referred to Para 13
referred to Para 15
B. A. UNGA REDDY ETC. ETC. v. KARNATAKA STATE
209
TRANSPORT AUTHORITY
1976 (0) Suppl. SCR 489
relied on
Para 20
A
1990 (1) Suppl. SCR 44
relied on
Para 21
1992 (1) Suppl. SCR 53
relied on
Para 22
1992 (3) SCR 409
relied on
Para 23
B
2008 (2) SCR 610
relied on
Para 24
2009 (5) SCR 326
relied on
Para 25
2012 (12) SCR 850
relied on
Para 26
c
1966 (3) SCR 744
relied on
Para 31
2003 (11) sec 441
relied on
Para 32
2002 (1) SCR 194
relied on
Para 33
D
1985 (4) sec 557
relied on
P~1ra 34
1992 (1) SCR 830
relied on
Para 35
2007 (1) SCR 1198
relied on
Para 36
E
1967 SCR 762
relied on
Para 36
1994 (1) SCR 754
relied on
Para 37
2003 (3) Suppl. SCR 327
referred to
Para 37
F
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
11690-11712 of 2014.
From the Judgment and Order dated 21.04.2011 of the
Division Bench of the High Court of Karnataka at Bangalore G
in W.P. Nos. 1104-1108.1110-1112, 1154-1157, 13133, 1039,
5381-5384, 1150-1153 of 2010 and W.P. No. 4030 of 2004.
WITH
H
210
SUPREME COURT REPORTS
[2014] 13 S.C.R.
A
Civil Appeal Nos.11719, 11714-11716, 11725, 11722,
11728, 11730, 11753, 11771, 11736-11740, 11732-11733,
11756-11769, 11745-11775, 11774-11789, 11742, 11792,
11793, 11796-11797, 11799, 11803-11805, 11801, 11815,
11813, 11808-11809, 11811, 11820, 11817and 11822-11835
B of2014.
K. K. Venugopal, Basava Prabhu S. Patil, Sr. Advs.,
N. 0. B. Raju, N. Rajshekar, Mrs. Bharathi R (For N. Ganpathy),
Yunus Malik, Shashank Malik, Aman Malik (For Sanjeev
c Agarwal), M. E. Nagesh, S. J. Amith (For Or. (Mrs.) Vipin Gupta)
V. Ramasubramanian, M. Gireesh Kumar, Ankur S. Kulkarni,
Sriram P (For Vijay Kumar), R. S. Hegde, Shanti Prakash,
Rajendra Kaushik (For Rajeev Singh), S. N. Bhat, N. P. S.
Panwar, V. N. Raghupathy, Parikshit P. Angadi, Mrs. Rajani K.
0 Prasad (For Ms. Abha R. Sharma) for the appearing parties.
The Judgment of the Court was delivered by
ARUN MISHRA, J. 1. Leave granted in all the SLPs.
E
2. The question involved in the appeals is whether the
State Government while modifying the scheme under Section
102 of the Motor Vehicles Act, 1988 (hereinafter referred to
as 'tl1e Act of 1988') is required to assign reasons while
modifying the existing scheme. The High Court of Karnataka
F has quashed the orders modifying the scheme called Bellary
Scheme notified in the Gazette dated 26.7.2003; Kolar
Scheme notified on 7.11.2003; Bangplore and Kanakpura
Plans as notified on 11.11.2003, modification of the scheme
called Mysore Scheme, BTS Scheme by notification dated
G 31.5.2007.
H
3. The Bellary Scheme was initially notified on
31.10.1962 by Karnataka State Road Transport Corporation,
Bangalore, (for short 'KSRTC') under section 68C of the Motor
B. A. UNGA REDDY ETC. ETC. v. KARNATAKA STATE
211
TRANSPORT AUTHORITY [ARUN MISHRA, J.]
Vehicles Act, 1939 (hereinafter referred to as 'the Act of 19.39') A
by which it was proposed to operate stage carriage services
on 86 routes in Bellary sector for the purpose of providing
efficient, adequate, and economical road transport services.
The Government approved the scheme and published it in the
Gazette dated 18.4.1964. The scheme provided for operation B
of services by the State Transport Undertakings only and no
exemption had been provided therein for operation of services
. by the State Transport Undertakings of other States and the
existing inter-State private operators. The said Scheme was
modified on 10 .1.1980 under section 68E of the Act of 1939 C
providing for operation of services by permit-holders who had
been granted permits by the Transport Authorities on the date
of publication on the basis of inter-State agreements entered
into by the Government of any other State provided that the
operators on such route shall not be permitted to operate on D
the routes which overlap any portion of the notified routes. The
Government further modified the approved scheme on
31.3.2000 under section 102(1) of the Act of 1988. A provision
was made for operation of the services by permit-holders who E
had been granted permits to ply their vehicles on inter-State
routes, with a condition not to pick up or set down the
passengers on any portion of the routes overlapping the notified
routes.
4. Thereafter, under section 102(2) of the Act of 1988, a
proposal was published in the Gazette dated 26.10.2002 to
modify the said Scheme. Objections and representations were
invited. KSRTC also filed detailed objections with respect to
F
the proposed modifications. Objections were heard. The G
impugned notification modifying the aforesaid scheme had
been issued by the State Government permitting operation of
services by permit-holders who had been granted permits to
ply their vehicles on inter-State routes, inter-District routes and
intra-District routes and operating their services after the
H
212
SUPREME COURT REPORTS
[2014] 13 S.C.R.
A publication of the modified schemes dated 10.1.1988 and
1.4.2000 and those permits operating on 1.4.2002 and whose
routes were overlapping, the notified routes of the Bellary
approved scheme with a direction not to pick up or set down
passengers on any portion of the routes overlapping th~ notified
B routes except at bus-stands.
5. Simil,arly, Kollar Pocket Scheme was initially notified
on 10.1.1968 and later on modified on 10.1.1980. The
impugned modified scheme was published on 7.11.2003.
c Mysore, BTS, Kanakpura and Bangalore Schemes were
initially notified on 17.11.1960, 16.1.1961, 24.12.1965 and
7.6.1980 respectively. The Mysore Scheme was earlier
modified on 21.11.1987. The impugned notification modifying
Mysore, Bangalore and BTS Schemes was issued on
D 31.5.2007. The impugned notification of Bangalore and
Kanakpura Plans had been issued on 11.11.2003, modifying
the scheme.
6. As against the proposed modifications, detailed
E objections had been filed contending that the State Transport
Authorities have granted permits illegally time and again on
the notified routes. The permits were issued in a mala fide
manner, violation of law was committed repeatedly and such
violations cannot be ratified by the State Government as
F providing efficient services to the public has always been the
main objective of the State Transport Undertakings. The State
Transport Undertakings are on a better footing to provide
efficient, adequate economical and well-co-ordinated services
to cater to the demand of travelling public as compared to the
G private operators. Permits granted illegally cannot be saved
by the Government under the guise of modifying the scheme.
There are number of private operators whose permits have
been rejected and they had been discriminated against while
. others were granted illegal permits. They will also pray for grant
H
B.A. UNGA REDDY ETC. ETC. v. KARNATAKASTATE
213
TRANSPORT AUTHORITY [ARUN MISHRA, J.]
of permits on the notified routes. If the illegal permits are save<;l,
A
it would lead to several complications. Under section 102 of
the M.V. Act, any modification to an approved scheme can
only be made in public interest. The permits were not granted
on the representation of the public. It is at the instance of the
private operators, an exercise had been undertaken. The B
permit-holden? are operating services on nationalised routes
causing heavy financial losses to the Corporation. The saving
of illegal permits will render the Scheme infructuous and its
integrity will be diluted. The Corporation is fully equipped to
meet any additional demand from the travelling public. It has C
taken utmost care to provide modern buses and to make its
fleet environment friendly by controlling the smoke emission
level of its vehicles. It has also framed the scheme of providing
compensation to the passengers of the bus on behalf of the 0
Corporation because of unfortunate accidents. Modern bus .
stands have been constructed with public amenities making
huge investments and also issue free/concessional passes to
the blind, physically challenged, Police and Press reporters.
The Corporation is fully controlled by State and Ce.ntrcil E
Government as such the proposed modification be dropped.
7. The State Government in the order dated 23.3.2003,
passed with respect to modification of Bellary Scheme, has
observed that modifications had been necessitated in view of
the decision of this Court in Karnataka State Road Transport F
Corporation v. Ashraful/a Khan & Ors. [2002 (2) SCC 560].
During the perio-9 4.12.1995 and 14.1.2002 considering the
interpretation with regard to "overlapping", "intersection" and
"corridor restriction" of the High Court of Karnataka, the G
Transport Authorities had granted the permits to private
operators in accordance with the Act of 1988 and the Rules
made thereunder considering the need of the travelling public
as these operators are meeting the genuine demand of the
travelling public in excess of services provided by the State
H
214
SUPREME COURT REPORTS
[2014] 13 S.C.R.
A Transport Undertakings. So it has become necessary to save
all the permits granted by the RTAs. which were in operation
as on 1.4.2002 with the condition that they shall not pick up or
set down the passengers except in the bus-stands.
B
8. Witl:! respect to the modification in Mysore, Bangalore,
BTS and Kanakpura, order dated 25.5.2007 had been passed
in which it has been mentioned that it is to provide exemption
to the permits which are granted by the Transport Authorities
· and are pending renewal as on 9.3.2007 in respect of the routes
c operating on inter-State, inter-District and intra-District routes
overlapping the road section of notified routes modified as
per the approved notification dated 9.3.2007, in the order, no
reason - good, bad or otherwise- has been given. While in
the notification which has been issued, it has been mentioned
D that it was considered necessary in public interest so to do.
Schemes of Mysore, Bangalore and BTS have been modified.
In the notification dated 11.11.2003 modifying the Bangalore
and Kanakpura Schemes, it has been mentioned that the
Temple Committee had submitted a representation on which
E a proposal had been initiated to modify the scheme and
accordingly modification has been made. On behalf of the
State Government, it was stated before the High Court that it
was ready to pass fresh orders after considering various
objections raised by KSRTC.
F
9. The High Court of Karnataka by impugned orders has
quashed the modifications so made in the various Schemes.
The High Court of Karnataka vi de order dated 21.4.2011 has
quashed the notification dated 31.5.2007 with respect to
G Mysore, Bangalore and BTS Schemes. After looking into the
original records, it was observed that the Ministers held a
cross-sitting held by the Corporation regarding notification of
the Shimoga Scheme and an order was passed on 17.4.2007
modifying the Shimoga Scheme. There was no application of
H
B.A. UNGA REDDY ETC. ETC. v. KARNATAKASTATE
215
TRANSPORT AUTHORITY [ARUN MISHRA, J.)
mind to the various objections filed by the Corporation and
A
without considering them, an order has been passed. The State ..
Government had been directed to consider the objections and
pass a fresh order in accordance with law within 3 months,
providing an opportunity of hearing to the Corporation and other
private operators, the permit-holders holding valid permits as
B
on the date of the order and if they are authorised to run the
vehicles otherwise for a period of 3 months had been permitted
to operate. Similar is the order passed with respect to
Bangalore and Kanakpura Schemes. Vide order dated
14.9.2011, the notification dated 11.11.2003 with respect to C
Bangalore and Kanakpura Schemes has also been quashed.
Similarly, other modifications have also been quashed.
10. Mr. K.K. Venugopal, learned senior counsel for the
appellants, has submitted that reasons have been assigned D
by the State Government while modifying the schemes. It was
not necessary to cull out the reasons in detail. The exercise
has been undertaken in public interest. Thus, there was no
reason to quash the modifications made in the schemes.
11. Learned counsel for the appellants has placed
reliance on the decision of this Court in H. C.Narayanappa & •
Ors. v. The State of Mysore & Ors. [1960 (3) SCR 742).
Following paragraphs have been relied upon :
"Re.3:
E
F
The plea that the Chief Minister who approved the
scheme under s. 680 was biased has no substance.
Section 680 of the Motor Vehicles Act undoubtedly
imposes a duty on the State Government to act judicially G
in considering the objections and in approving or
modifying the scheme proposed by the transport
undertaking. Gullapalli Nageswara Rao v. Andhra
Pradesh State Road Transport Corporation and another
H
216
A
B
c
D
E
F
G
H
SUPREME COURT REPORTS
(2014] 13 S.C.R.
(1959) Supp. 1 S.C.R. 319. It is also true that the
Government on whom the duty to decide the dispute
rests, is substantially a party to the dispute but if the
Government or the authority to whom the power is
delegated acts judicially in approving or modifying the
scheme, the approval or modification is not open to
challenge on a presumption of bias. The Minister or the
officer of the Government who is invested with the power
to hear objections to the scheme is acting in his official
capacity and unless there is reliable evidence to show
that he is biased, his decision will not be liable to be
called in question, merely because he is a limb of the
Government. The Chief Minister of the State has filed an
affidavit in this case stating that the contention of the
petitioners that he was "biased in favour of the scheme
was baseless"; he has also stated that he heard such
objections and representations as were made before him
and he had given the fullest opportunity to the objectors
to submit their objections individually. The Chief Minister
has given detailed reasons for approving the scheme
and has dealt with such of the objections as he says were
urged before him. In the last para. of the reasons given,
it is stated that the Government have heard all the
arguments advanced on behalf of the operators and "after
giving full consideration to them, the Government have
come to the conclusion that the scheme is necessary in
the interest of the public and is accordingly approved
subject to the modifications that it shall come into force
on May 1, 1959". In the absence of any evidence
controverting these averments, the plea of bias must fail.
Re.4:
The argument that the Chief Minister did not give
"genuine consideration" to the objections raised by
B.A UNGA REDDY ETC. ETC. v. KARNATAKASTATE
217
TRANSPORT AUTHORITY [ARUN MISHRA, J.]
· operators to the scheme in the light of the conditions A
· prescdbedhas no force. The order of the Chief Minister
discusses the questions of law as well as questions of
. fact. There is no specific reference in the order to certain
objections which were raised in the reply filed by the
· objectors, but we are, on that account, unable to hold B
that the Chief Minister did not consider those objections.
The guarantee conferred bys. 680 of the Motor Vehicles
Act upon persons likely to be affected by the intended
scheme is a guarantee of an opportunity fo put forth their
objections and to make representations to the State C
Government against the acceptance of the scheme. This
··opportunity of making representations and of being heard
in support thereof may be regarded as real only if in the
consideration of the objections, there is a judicial D
.. approach: f3ut the Legislature does not contemplate an
... · ap.Pea1 to this court against the order passed by the State
. Government. approving. or modifying the $Cherne.
Provided the authority invested with the power to consider
· the objections gives an opportunity to the objectors to
E
be heard in the matter and deals with the objections in
the light of the object intended to be secured by the
scheme, the ultimate order passed by that authority is
not open to challenge either ori the ground that another
viewmay possibly have been taken on the objections or F
that detailed reasons have not been given for upholding
or rejectingthe contentions raised by the objectors." .
12. This Court observed that while dealing with these
quasi-judicial matters like modifying the scheme, the Act of G
1939 imposed a duty on the State Government to act judicially
in considering the objections while approving or modifying the ·
scheme .. The same is not open to question on the presumption
of bias. It has been observed that the Chief Minister had given
detailed reasons for approving the scheme and had dealt with H
218
SUPREME COURT REPORTS
[2014] 13 S.C.R.
A such technical and legal objections filed before him. It has also
been observed that the ultimate order passed by the Authority
is not open to challenge on the ground that another view may
possibly have been taken on the objections or that detailed
reasons have not been given. It is apparent that reasons have
B to be given, factual and legal objections have to be dealt with.
13. Reliance has also been placed by the learned senior
counsel for the appellants on Capital Multi-purpose Cooperative Society Bhopal & Ors. v. The State of MP. &. Ors.
C (1967 (3) SCR 329] wherein this Court dealt with the mode of
hearing of the objections and the question of adequate and
real hearing. The paragraph relied upon is reproduced
hereunder:
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"The third contention raised on behalf of the appellants
is that the orders approving and modifying the schemes
in this case do not show that the authority had applied its
mind to the question whether the schemes were such as
to subserve the purposes of providing an efficient,
adequate, economical and properly co-ordinated
transport service. Reliance in this connection is placed
on certain. American cases which hold that the lack of
an express finding necessary under a statute to validate
an order of an administrative agency cannot be supplied
by implication. When therefore such an administrative
agency is required as a condition precedent to an order
to make a finding of facts the validity of the order must
rest upon the needed finding. If it is lacking the order is
ineffective and the lack of express finding cannot be·
supplied by implication. It is unnecessary for us to refer
to the American cases in detail; it is enough to say that
the principles enunciated above may be unexceptionable
where the existence of a finding is necessary for taking
action, but that depends upon the words of the statute
B. A. UNGA REDDY ETC. ETC. v. KARNATAKA STATE
219
TRANSPORT AUTHORITY [ARUN MISHRA, J.]
and therefore we must now turn to the words of Section A
68-C and Section 68-D. We have already indicated that
the State Transport Undertaking publishes a scheme
when it has arrived at a certain opinion. After the scheme
is published under Section 68-C any person affected by
it can object within 30 days under Section 68-D ( 1 ).
B
Thereafter the State Government considers the
objections and gives an opportunity to the objector to be
heard and also to the State Transport Undertaking.
Thereafter the State Government or the authority
authorised by it either approves or modifies the scheme C
or even rejects it. There is no express provision in these
two sections laying down that the authority hearing
objections must come to some finding of fact as a
condition precedent to its final order. As such no express D
finding as envisaged in the American cases is necessary
under Section 68-C read with Section 68-D that the
scheme provides an efficient, adequate, economical and
properly co-ordinated road transport service. Besides
we are of opinion that the whole object of hearing E
objections under Section 68-D is to consider whether
the scheme provides an efficient, adequate, economical
and properly co-ordinated road transport service. After
hearing objections the State Government, or the officer
authorised by it has either to approve or modify, or if F
necessary to reject the scheme. Where the scheme is
approved or modified it necessarily follows in our opinion
that it has been found to provide an efficient, adequate,
economical and properly co~ordinated transport service;
if it is not of that type, the State Government or the G
authority appointed to hear objections would reject it. In
the absence of a provision requiring an express finding
in these two sections it seems to us that the very order of
the State Government or the authority appointed by it to
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hear objections must be held to mean either, where the
scheme is approved or modified, that it subserves the
purposes mentioned in Section 68-C, or, where it is
rejected, that it does not subserve the purposes. Section
68-D (2) does not require in our opinion any express
B
finding, and even ifthere is none in the present case, it
would not invalidate the orders passed by the authority
hearing the objections. The argument on behalf of the
appellants under this head is also rejected."
c
14. It has also been observed that there is no power or
authority in the State Government to compel attendance of
witness or to compel production of documents. This Court has
emphasised that no express finding is necessary under section
68C read with section 680 that the scheme provides efficient,
D adequate, economi_cc:il and properly co-ordinated road
transport service as abovesaid is the purpose of the entire
exercise. If the scheme is modified, it follows that it has been
to provide efficient, adequate, economical and proper transport
service. This Court has considered the question whether
E section 680 requires recording of any particular finding as
condition precedent to exercise the power conferred
thereunder. The decision does not dispense with the
requirement to mention the reasons.
F
15. Reliance has also been placed by the operators on
Gul/apalli Nageswara Rao & Ors. vs. Andhra Pradesh State
Road Transport Corporation & Anr. [AIR 1959 SC 308] in
which it was laid down that an express recital of the formation
of the opinion that the scheme was necessary in public interest,
G is not made a condition of the validity of the scheme. This Court
has laid down that the framing of scheme is manifestation of
such opinion. This Court has laid down thus:
"14. The learned counsel then contends that the scheme
H
B.A. LI NGA REDDY ETC. ETC. v. KARNATAKASTATE
221
TRANSPORT AUTHORITY [ARUN MISHRA, J.]
published does not disclose that the State Transport A
Undertaking was of the opinion that the scheme was
necessary in the interests of the public and therefore, as
the necessary condition for the initiation of the scheme
was not complied with, the scheme could not be.enforced.
Section 68-C says that where any State Transport B
Undertaking is of opinion that for specified reasons it is
necessary in the public interest that road transport
service should be run oroperated by the State Transport
Undertaking, it may prepare a scheme giving particulars
of the scheme and publish it in the Official Gazette. An C
express recital of the formation of the opinion by the
Undertaking in the scheme is not made a condition of
the validity of the scheme. The scheme published in terms.
of the section shall give particulars of the nature of the 0
service proposed to be rendered, the area or route
proposed to be covered and such other particulars
respecting thereto. It is true that the preparation of the
scheme is made to depend upon the subjective opinion
of the. State Undertaking as regards the necessity for E
such a scheme. The only question, therefore, is whether
the State Transport Undertaking formed the opinion
before preparing the scheme and causing it to be
published in the Official Gazette. The scheme published,
as already noticed, was signed by Guru Pershad, General F
Mein ager, State Transport Undertaking, Andhra Pradesh
Road Transport. The preamble to the scheme reads:
"In exercise of the powers conferred by section 68-C
of the MotorVehiclesAct, 1939, it is hereby proposed, G
for the purpose of providing an efficient, adequate,
economical and properly co-ordinated road transport
service in public interest, to operate the following
transport services as per the particulars given below
with effect from a date to be notified by the H
222
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Government."
We have already held that Guru Pershad represented
the State Transport Undertaking. The scheme was
proposed by the said Undertaking in exercise of the
powers under Section 68-C of the Act for the purpos.e of
providing an efficient, adequate, economical and properly
coordinated road transport service in public interest.
Except for the fact that the word 'opinion' is omitted, the
first part of the Section 68-C is incorporated in the
preamble of the scheme; and, in addition, it also discloses
that the scheme is proposed in exercise of the powers
conferred on the State Transport Undertaking under
Section 68-C of the Act. The State Transport Authority
can frame a scheme only if it is of opinion that it is
necessary in public interest that the road transport
· service should be run or operated by the Road Transport
Undertaking. When it proposes, for the reasons
mentioned in the section, a scheme providing for such a
transport undertaking, it is a manifest expression of its
opinion in that regard. We gather from a reading of the
scheme that the State Transport Undertaking formed the
necessary opinion before preparing the scheme and
publishing it. The argument of the learned counsel carries
technicality to a breaking point and for the aforesaid
reasons, we reject it."
16. Sections 68-C, 68-D and 68-E of the Act of 1939
which came up for consideration are reproduced hereunder:
"68-C. Preparation and publication of scheme of
road transport service of a State Transport
Undertaking.- Where any State Transport Undertaking
is of opinion that for the purpose of providing an efficient,
adequate, economical and properly co-ordinated road
B. A. UNGA REDDY ETC. ETC. v. KARNATAKA STATE
223
TRANSPORT AUTHORITY [ARUN MISHRA, J.]
transport service, it is necessary in the public interest A
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
B
State Transport Undertaking may prepare a scheme
giving particulars of the nature of the services proposed
to be rendered, the area or route proposed to be covered
and such other particulars respecting thereto as may be c
prescribed, and shall cause every such scheme to be
published in the Official Gazette and also in such other
manner as the State Government may direct."
"68-D. Objection to the scheme- (1) On the publication
of any scheme in the Official Gazette and not less than D
one newspaper in regional language circulating in the
area or route which is proposed to be covered by such
scheme, -
(i) any person already providing transport facilities by any E
means along or near the area or route proposed to
be covered by the scheme;
(ii) any association representing persons interested in
the provis!on of road transport facilities recognised in
-
_,.,
this behalf by the State Government; and
F
(iii) any local authority or police authority within whose
jurisdiction any part of the area or route proposed to
be covered by the scheme lies,
G
may within thirty days from the date of its publication in
the Official Gazette, file objections to it before the State
Government."
"68-E. Cancellation or modification of scheme.-(1 )Any H
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[2014] 13 S.C.R.
A
scheme published under sub-section (3) of SectiQn 68-·
D may at any time be cancelled or modified by the State
Transport Undertaking and the procedure laid down in
Section 68-C and Section 68-D shall, so far as it can be
made applicable, be followed in every case where the
B
scheme is proposed to be cancelled or modified ·as if
the proposal were a separate scheme :
Provided that the State transport undertaking may, with
the previous approval of the State Government, modify
c
without following the procedure laid down in Section 68C and Section 68-D, any such scheme relating to any
route or area in respect of which the road transport
. services are run and operated by the State transport
undertaking to the complete exclusion of other persons
D
in respect of the following matters, namely, -
E
F
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(a) increase in the number of vehicles or the number of
trips;
(b) change in the type of vehicles without reducing the
seating capacity;
(c) extension of the route or area without reducing the
frequency of the service; or
(d) alteration of the time-table without reducing the
frequency of the service.
((2) Notwithstanding anything contained in sub-section
(1 ), the State Government may, at anytime, if it considers
necessary in the public interest so to do, modify any
scheme published under sub-section (3) of Section 68D, aftergiving-
(i) the State transport undertaking, and
(ii) any other person who, in the opinion of the State
B.A. UNGA REDDY ETC. ETC. v. KARNATAKASTATE
225
TRANSPORT AUTHORITY [ARUN MISHRA, J.]
Government, is likely to be affected by the proposed A
modification,
an opportunity of being heard in respect of the proposed
modification]."
17. The pari materia. provisions contained in sections B
99 and 102 of the Act of 1988are reproduced hereunder:
"99. Preparation and publication of proposal
regarding road transport service of a State
transport undertaking.-[(1 )] Where any State C
Government is of opinion that for the purpose of providing
an efficient, adequate, economical and properly coordinated 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 D
or route. or portion thereof should be run and operated
by the State trar:isport 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
E
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 F
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 sch.eme and also in
such other manner as the State Government formulating
such proposal deem fit.
G
[(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
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[2014] 13 S.C.R.
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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 section 100, whichever
is earlier.]
B
c
xxxxx
102. Cancellation or modification of scheme.-(1)
The State Government may, at any time, if it considers
necessary, in the public interest so to do, modify any
approved scheme after giving-
(1) the State transport undertaking; and
(ii) any other person who, in the opinion of the State
0
Government, is likely to be affected by the proposed
modification,
an opportunity of being heard in respect of the proposed
modification.
E
(2) The State Government shall publish any modification
proposed under sub-section (1) in the Official Gazette
and in one of the newspapers in the regional languages
circulating in the area in which it is proposed to be
covered by such modification, together with the date, not
F
being less than thirty days from such publication in the
Official Gazette, and the time and place at which any
representation received in this behalf will be heard by
the State Government."
G
18. It is apparent from the provisions that the scheme is
H
framed for providing efficient, adequate, economical and
properly co-ordinated road transport service in public interest.
Section 102 of the Act of 1988 does not lay down the
requirement of recording any express finding on any particular
B. A. LIN.GA REDDY ETC. ETC. v. KARNATAKA STATE
227
TRANSPORT AUTHORITY [ARUN MISHRA, J.]
aspect; whereas the duty is to hear and· consider the A
objections. It requires the State Government to act in public
interest to cancel or modify a scheme after giving the State
Transport UndE!rtaking or any other affected person by the
proposed modification an opportunity of hearing. The State is
supposed to be acting in public interest while exercising the B
power under the provision. However, that does not dispense
with the requirement to record reasons while dealing with
objections.
19. Modification of the scheme is a quasi-judicial function c
while modifying or cancelling a scheme. The State Government
is duty-bound to consider the objections and to give reasons
either to accept or reject them. The rule of reason is anti-thesis
to arbitrariness in action and is a necessary concomitant of
the principles of natural justice.
D
20. In Siemens Engineering & Manufacturing Co. of
India Ltd. v. Union of India [1976 (2) SCC 981], it was held:
"6. xx x It is now settled law that where an authority makes
an order in exercise of a quasi-judicial function, it must E
record its reasons in support of the order it makes. Every
quasi-judicial order must be supported by reasons.