# D. NATARAJA MUDALIAR v. STATE TRANSPORT AUTHORITY, MADRAS

- **Citation:** [1979] 1 S.C.R. 552
- **Court:** Supreme Court of India
- **Decided:** 1978-09-06
- **Case number:** CIVIL Af'PELLATE JURISDICTION : Civil Appeal No. 1083 of 1978
- **Bench:** V. R. Krishna Iyer, D. A. Desai
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/d-nataraja-mudaliar-v-state-transport-authority-madras-7593
- **Pages:** 5

## Headnote

Constitution of India, Article 136, application, scope.
Motor Vehicl~s Act, 1939,
S. SO,
unjustified refu~al to renew permit, "'
breach of fundamental right.
The appellant plied a luxury coach for public benefit under a permit of
1971 for five years, in the Tamil Nadu State. He 1>pplicd for a renewal of
the permit two months prior to its expiry, but was refused the same by the
State Transport Authority, on the ground that the facilities provided by tho
public sector undertakings were adequate, and the renewal of the applicant'•
permit would be redundant in the circllmstances ood also result in nnbealtby
competition.
Applications for more permits were invited and some granted
since the impugned refusal. On appeal u;s 64 of the Motor Vehicles· Act,
the State Transport Appellate Tribunal affirmed the rejection, using the same
reasoning.
Thereafter the High Court rejected the appellant's revision applica~
tion, refusing to go into questions of fact.
Allowing the appeal, the Court,
HELD : 1. If a small man, whose heavy investment in a tourist coach
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is to be sterilised altogether, it is a social trauma, and if fundamental rights
are disposed of as if by executive fiats, this Court must intervene under Art
136, to uphold the credibi,lity in the rule of law and prevent ils derailment.
The touchstone is not the little man and his little /is but the large issue and
the deep portent. [554 G-HJ
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2. The Authority must remember that a. permit holder has an ordinary
right- of renewal unless it is shown that outweighing reasons of public interest
lead to a contrary result. The bare i'pse dixit that the S.T.A. considers the
facilities provided by public sector undertakings are adequate is not intelligible,
without some basis. Some objective assessment to exclude the petitioner, based
on tangible data is tbe minimum for a judicial negation of a fuhdamental
right.
Another circumstance effectively negating the story of supernumerary
vehicles is the admitted fact that applications for more permits ha.ve been
invited and some grarited. The basic reason for quashing the order of refusal
is the untenable reason o~.signed to &upport the order. [555 A, H, 556 A. D, FJ
CIVIL Af'PELLATE JURISDICTION : Civil Appeal No. 1083 of 1978.
Appeal by Special Leave from the Judgment dated 23-2-77 of the
Madras High Court in C.R.P. No. 356 of 1977.
Y. S. Chitale, Vineet Kumar and A. K. Srivastava for the Appellant.
A. V. Rangam for the Respondent
552
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D. NATARAJ"A v. STATE TRANSPORT (Krishna Iyer,!.)
553

## Text

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D. NATARAJA MUDALIAR
v.
STATE TRANSPORT AUTHORITY, MADRAS
September 6, 1978
[V. R. KRISHNA IYER AND D. A. DESAI, JJ.]
Constitution of India, Article 136, application, scope.
Motor Vehicl~s Act, 1939,
S. SO,
unjustified refu~al to renew permit, "'
breach of fundamental right.
The appellant plied a luxury coach for public benefit under a permit of
1971 for five years, in the Tamil Nadu State. He 1>pplicd for a renewal of
the permit two months prior to its expiry, but was refused the same by the
State Transport Authority, on the ground that the facilities provided by tho
public sector undertakings were adequate, and the renewal of the applicant'•
permit would be redundant in the circllmstances ood also result in nnbealtby
competition.
Applications for more permits were invited and some granted
since the impugned refusal. On appeal u;s 64 of the Motor Vehicles· Act,
the State Transport Appellate Tribunal affirmed the rejection, using the same
reasoning.
Thereafter the High Court rejected the appellant's revision applica~
tion, refusing to go into questions of fact.
Allowing the appeal, the Court,
HELD : 1. If a small man, whose heavy investment in a tourist coach
E
is to be sterilised altogether, it is a social trauma, and if fundamental rights
are disposed of as if by executive fiats, this Court must intervene under Art
136, to uphold the credibi,lity in the rule of law and prevent ils derailment.
The touchstone is not the little man and his little /is but the large issue and
the deep portent. [554 G-HJ
F
G
H
2. The Authority must remember that a. permit holder has an ordinary
right- of renewal unless it is shown that outweighing reasons of public interest
lead to a contrary result. The bare i'pse dixit that the S.T.A. considers the
facilities provided by public sector undertakings are adequate is not intelligible,
without some basis. Some objective assessment to exclude the petitioner, based
on tangible data is tbe minimum for a judicial negation of a fuhdamental
right.
Another circumstance effectively negating the story of supernumerary
vehicles is the admitted fact that applications for more permits ha.ve been
invited and some grarited. The basic reason for quashing the order of refusal
is the untenable reason o~.signed to &upport the order. [555 A, H, 556 A. D, FJ
CIVIL Af'PELLATE JURISDICTION : Civil Appeal No. 1083 of 1978.
Appeal by Special Leave from the Judgment dated 23-2-77 of the
Madras High Court in C.R.P. No. 356 of 1977.
Y. S. Chitale, Vineet Kumar and A. K. Srivastava for the Appellant.
A. V. Rangam for the Respondent
552
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D. NATARAJ"A v. STATE TRANSPORT (Krishna Iyer,!.)
553
The Judgment of the Court was delivered by
KRISHNA IYER, J.
Arbitrary orders and mystical directions have
poor mileage in this Conrt when irrelevance and unreason are writ on
their face even though the sanctity of concurrent error may give them
some shelter.
To ply a contract carriage is a fundamental right but it can be
restricted reasonably as has been done by the Motor Vehicles Act, 1939.
The perspective is that what is fundamental is the right, not the restriction.
Here, one Mudaliar, the appellant, owned a luxury coach, plied
it for public benefit under a permit of 1971 for five years.
The statutory criteria for grant of such permits is set out in S. 50 and renewals
of permits must be governed by the same considerations, the procedure
being regulated by S. 58. There is no grievance made that procedural
violations are involved here.
All that we know is that the permit was
to expire in March 1976 and so a renewal application was made two
months earlier.
The State Transport Authority (for short, S.T.A.)
rejected the request for renewal on the score that the 'ITDC has expanded its activities' and has in the field many tourist vehicles. Then
the Authority added : 'It is said that the utilisation of these vehii:les is in
the range of 90 to 100 per cent during the tourist season only (November to February) and that it is just 60 to 70% during other periods'.
·The Tamil Nadu State's transport system also has vehicles on the road
and some spare buses.
All told, a few hundred motor vehicles, some
of which are stage carriages and some contract carriages, serve the
travelling public.
On these statements, the conclusion was reached :
'The State Transport Authority therefore considers that the fadlities ·
provided by these public sector undertakings are, adequate.
Renewal
of the applicant's permit will not only be redundant in the circumstances
but also result in unhealthy competition'.
The order does not indicate
that anyone appeared and objected.
The State Transport Appellate Tribunal (S.T.A.T., to use
an
acronym), 011 appeal under S. 64, affirmed the rejection, using the same
reasoning.
About the abundant transport facilities developed since
1971, the Tribunal said : 'The learned counsel for the appellant has
no doubt stated that there is 110 material to hold the details (occurring
at para 2 of the order) to be correct. The State Transport Authority is
dealing with the provision of transport in the State level and he is
expected to be in touch with the details of the availability of service
from different sources and those particulars furnished by the S.T.A,
could not also be said to be in anyway strange. As the authority is
having these details readily available it was open to the autl10rity, to
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554
SUPREME COURT REPORTS
(1979] ! S.C.R.
rely upon those details before coming to conclusion about the need fm
renewal as asked for by appellant.
It is not therefore proper to comment on the details made available in para 2 of the order'.
He obscurely encored, without any facts, that there would
be
'unhealthy
competition.
What is trully occult is the casual dismissal of an unanswerable factor : 'The appellant has stated in his affidavit that in as
much as applications have been called for, for the grant of JOO tourist
cabs, 15 omni buses and 10 omni tourist buses for the State of Tamil
Nadu, the comment about the absence of need for renewing the permit
as made by the State Transport Authority is not proper.
The Departmental Representative has filed a Memo. of objection
stating that application have been called for for the issue of permits valid
to ply throughout India and the same is not a relevant material, as the
applicant's permit is in respect of the State of Tamil Nadu alone. The
learned counsel for the appellant would contend that for the limited
purpose of making out that there is need for additional service, this
factor may also be considered'. 'No doubt, it is 'admitted that applications have been called for, for the issue of permits to be effective all over
India.
The appellant's permit is having a restricted applicatimr within
the S~.e. As such as fact that applications have been called for, for
the grant of All India Permits, does not in any way become relevant or
important and the same can be ignored'.
The ST AT has countered
the appellant's claim of meritorious service by reference to past infirmities not adverted to anywhere in the order of the STA.
The High Court, in revision, washed its hands off the case by the
observation : 'It is not for this court to traverse into these questions of
fact and find out whether there is any need for adequacy under the
revisional jurisdiction.
How many permits the India Tourism Development Corporation should have been granted is not the rnbject matter
of this revision petition.
This concerns merely with the refosal to renew
the permit which, in my view, has been done on very valid and tenable
reasons'.
The whole issue has been made more fishy by the STA granting two
contract carriage permits in 1978 after rejecting the renewal application
holding there were already too many vehicles.
Should the court interfere under Art. 136 ? Ordinarily, no.
But
if a small man, \Vhose heavy investn1ent in a tourist coach is to be sterilised aitogether, it is a social trauma; and if fundamental rights arc
disposed of as if by executive fiats, this Court must interwne to uphold
the credibility in the rule of law and prevent its derailment.
The touchstone is not the little man and his little /is but the large issue and the
deep portent.
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I), NATARAJA v. STATE TRANSPORT (Krishna Iyer, /.)
5 5 5
S. 50 specifies the guidelines.
The transport tribunals function
quasi-judicially and this imports some imperath<es.
You must tell the
men whose fundamental right you propose to negative the materials you
may use in your decision.
You must act on relevant considerations,
properly before you, not on rumour or hearsay, ex cathedra assertions
or inscrutable hunch.
The Authority must, remember that a permit holder has an ordinary
right of renewal unless it is shown that outweighing reasons of public
interest lead to a contrary result
Permits are not bounty but right,
restricted reasonably by the Motor Vehicles Act.
The key criterion when a contract carriage permit is sought, is to
ask oneseU whether an extra vehicle is unnecessary or undesirable in
the public interest, and whether, further, the permits already granted
are sutlicient for or in excess of the needs of the region. After all, a few
hundred vehicles admitt~dly ply and one contract carriage operator is
asking for a single permit.
What makes it unnecessary or undesirable
in the pubhc interest ? Ordinarily, having regard to the explosive
increase in traffic in our country, more vehicles are needed. Of course,
if the roads are in a precarious condition or competitive racing or reckless driving on the roads make for hazards or if the operator is otherwise
disqualified one may reduce the number of vehicles and refuse permit
or renewal.
Nothing of the sort is mentioned in any of the orders
rejecting the permit.
ASsuming there are around 300 or 400 motor
vehicles, how does one more become too many ? It is a preposterous
proposition to say so, in the absence of some evidence. If there is no
evidence to warrant such a conclusion, the right to the permit must
prevail.
Is there any evidence in this case ? The Authority asserts that the
utilisation of existing vehicles is of the order of '90 to 100 per cent'
during the tourist season. This indicates that at least during the tourist
season one more tourist coach will be welcome to relieve congestion.
The Authority further states that it is said . . . . "just 60 to 70 per
cent" 1s utilised during the other period. "It is said" -by whom, to
whom, when, how, and was it put to the applicant? All this is shrouded
in mystery. Whatever is said by someone, somewhere, is not material
here. It must be on the record. While the STA may know the total
number of vehicles on the road it must have made a •tudy of specific
materials to ascertain whether there is unused
vehicular
potential.
Merely to rely on 'it is said' fa the passive voice is not judicial. Moreover, not to put it to the applicant before rejecting his renewal is not
fair. The bare ipse dixit that the 'State Transport Authority considers
the facilities provided by public sector undertakings are adequate', is
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SUPREME COURT REPORTS
[1979] J S.C.R.
not intelligible, without some basis. Nor does 'public sector' and 'private sector' enter the picture. Some objective assessment to exclude
the petitioner based on tangible data is the minimum for a
judicial
negation of a fundamental right. The reference to 'unhealthy competition' is baffling. If there are 300 or more buses and one more is
sought to be added, what is the ill-health in the traffic system that will
be injected by this addition? We must remember that the tourist
coach of the petitioner is to travel all round Tamil Nadu and so tbe
image of a particular route overcrowded with too many buses making
for cut-throat competition and imperilling passenger's lives does not
arise.
The ST A has no research staff to investigate the untapped transport
or traffic potential and if it has any, such report must be put to the
applicant.
Moreover, it is obvious that the State Transport Authority should
have granted one permit less to the ITDC, if its case of redundancy
were true. For, the appellant had a current permit then.
Another circumstance effectively negating the story
of
supernumerary vehicles is the admitted fact that applications for more
permit~ have been invited and some granted. And, before us two orders
granting permits for contract carriages since the
impugned
refmal
have been filed. And yet Mudaliar goes to the wall, on a cavalier ·~o·
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to his application for renewal.
Fair consideration of his claim has been denied to the appellant;
his huge investment has gone to waste because of non-renewal.
We see no relevant ground justifying the order; there is breach ,if
natural justice; there is importation of non-materials: there is unawareF
ness of the fact that a fundamental right is involved and that a costly
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coach is condemned to non-use. The basic reason for quashing the
"lorder of refusal is the untenable reason assigned to support the order.
We allow the appeal, set aside the refusal of renewal and having
regard to the long delay and abscnco of disqualifications direct the
State Transport Authority to reconsider the grant of renewal within
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two weeks of receipt of this order.
We repeat for emphasis that ordinarily this Court is loath to reinvestigate questions relating to motor vehicle permits; but every rule
has an exception even as every case has a martyr.
M.R.
Appeal allowed.
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