# T. GOVINDARAJA MUDALIAR ETC. ETC v. THE STATE OF TAMIL NADU & OTHERS

- **Citation:** [1973] 3 S.C.R. 222
- **Court:** Supreme Court of India
- **Decided:** 1973-01-09
- **Case number:** Civil Appeals Nos. 672702, 704-710, 722-728, 776-781 of 1972
- **Bench:** A. N. Grover, A. K. Mukherjea
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/t-govindaraja-mudaliar-etc-etc-v-the-state-of-tamil-nadu-others-5806
- **Pages:** 14

## Headnote

Constitution of India, Article 19(1)(f)-Motor Vehicle Act
1939,
Maaras Amendment Act 18 of 1939-Chapter IVA-Sections 47(1)-
•,cc), 58(2)(a), Section 68(cc)-Rules of -Business-Rule
23(A)-
Scheme for nationalisation of
State
Carriage
whethtv
violative
of
Article 19 (1) (f).
Constructive res judicata-The same scheme unsuccesfully challenged
for violation of Art. 19 (l) (g) earlier.
The Scheme for nationalisation of the Stage Carriage issued
u:nder
Chapter IV A of the Act was challenged before Supreme Court on the
ground of the alleged violation of Art.19(1)(g) of the
Constitution.
The Supreme Court by its judgement in A. Samjeevi Naidu etc.
, •.
State of Madras and another
(1970 3 S.C.R. 505)
turned down the
challenge.
After the
decision of the
Supreme Court in
Rustom
Cavasjee Cooper v. Union of India
(1970 3 S.C.R. 530),
the said
>Cherne was again challenged as violative
of Art. 19(1 )(f)
of
the
Constitution. The Scheme was challenged inter ulia, on
the
ground,
that the permit issued under the Act constitutes
property,
and
the
right to apply for permit as wen as renewal of a permit is a right to
holu property and that the law
authorising the nationalisation of Stage
Carriage \Vas violative of Art. 19( 1) (f) as the restriction was not in
the public interest.
The writ petitions were dismissed by the Madras
High Court.
In rejecting the appeals.
HELD : (i) That there is no merit in the argument of the appellants
that before the
decision of the Supreme Court in
Rustom Cavasjee
Cooper's Case, it was not possible for the
appellants to challenge the
validity of Chapter IV A of the Act, as. the earlier decisions were based
o;rt a theory that Art. 19(1) (I) could not be invoked wnen
a
case
fell within · Art. 31
of the
Constitution K. K. Kochuni and Others
v. State of Madras (1963) 3 S.C.R. 887), had earlier laid down that
clause 1 of Art. 31 could no longer be construed as to
exclude
the
operation of Art. 19 and a law regarding the deprivation of property
was, therefore, too late in the
day to punue that line of argument.
[229 DJ
(ii) By virtue of the Scheme, the existing permits of any operator
will not be canct:lled. None of the properties or assets of the appellants
is going to be acquifed.
It has already been held that nd operator
can claim renewal of permit as a matter of
right.
TJ;ie
effect
of
nationalisation on the properties or the business of the operator is not
such Ill cannot be regarded to' a
reasonable
restriction
in the
interest of general public within the meaning of Art. 19(5). The tests
regarding the validity of Act falling under Clause S or Clause 6 of
Article 19 are same, Akadshi Padhan v. State of Orissa
(1963) Supp.
2 S.C.R. 691) followed. [232 HJ
(iii) Held, the hearing of objections to the Scheme under s. 68 (b) of
the Act by the Home Secretary does not violate rules of natural justice
ndr can any bias be imputed simply because Home Secretary is
also
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B
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GOVJNDARAJA V. TAMIL NADU
223
the memb,er of a committee which made the report :regarding
the
Schemes of. inationalisation.
Dosa
Satyanarayana
Murthy
v.
Tht
Andhra Pradesh State Road Transport Corporation (1961 1
S. C.R.
642) followed. [233 0]
(iv) Held further, that the nationalisation Scheme, even if introduced piece-meal on particular routes, is not illegal unless it is established
that there is discrimination against some operators.
Dosa Satyanarayana Murthy's case followed._
The mere fact that the Scheme was approved by the Home Secretary
without any modification does not mean that the discretion, in discharge
of the quasi-judicial function under s. 68(b) was not properly exercised
or. that there was no scope for the proper exercise of the discertion due to
the mandatory language contained in Oovt. Orders. [235 E]
Saghir Ahmed v. State of U.P. & Ors., [1955] 1. S.C.R. 707, Ram
Chandra Palai and Others v. The State of Orissa & Ors. [1956] S.C.R.
29, Bhikaji Narain Dlzakras and Others v. The Stc.te of Madh}•a Pradesh
and Others,
[1955]
2 S

## Text

222
T. GOVINDARAJA MUDALIAR ETC. ETC.
v.
THE STATE OF TAMIL NADU & OTHERS
January 9, 1973
[A. N. GROVER AND A. K. MUKHERJEA, JJ.]
Constitution of India, Article 19(1)(f)-Motor Vehicle Act
1939,
Maaras Amendment Act 18 of 1939-Chapter IVA-Sections 47(1)-
•,cc), 58(2)(a), Section 68(cc)-Rules of -Business-Rule
23(A)-
Scheme for nationalisation of
State
Carriage
whethtv
violative
of
Article 19 (1) (f).
Constructive res judicata-The same scheme unsuccesfully challenged
for violation of Art. 19 (l) (g) earlier.
The Scheme for nationalisation of the Stage Carriage issued
u:nder
Chapter IV A of the Act was challenged before Supreme Court on the
ground of the alleged violation of Art.19(1)(g) of the
Constitution.
The Supreme Court by its judgement in A. Samjeevi Naidu etc.
, •.
State of Madras and another
(1970 3 S.C.R. 505)
turned down the
challenge.
After the
decision of the
Supreme Court in
Rustom
Cavasjee Cooper v. Union of India
(1970 3 S.C.R. 530),
the said
>Cherne was again challenged as violative
of Art. 19(1 )(f)
of
the
Constitution. The Scheme was challenged inter ulia, on
the
ground,
that the permit issued under the Act constitutes
property,
and
the
right to apply for permit as wen as renewal of a permit is a right to
holu property and that the law
authorising the nationalisation of Stage
Carriage \Vas violative of Art. 19( 1) (f) as the restriction was not in
the public interest.
The writ petitions were dismissed by the Madras
High Court.
In rejecting the appeals.
HELD : (i) That there is no merit in the argument of the appellants
that before the
decision of the Supreme Court in
Rustom Cavasjee
Cooper's Case, it was not possible for the
appellants to challenge the
validity of Chapter IV A of the Act, as. the earlier decisions were based
o;rt a theory that Art. 19(1) (I) could not be invoked wnen
a
case
fell within · Art. 31
of the
Constitution K. K. Kochuni and Others
v. State of Madras (1963) 3 S.C.R. 887), had earlier laid down that
clause 1 of Art. 31 could no longer be construed as to
exclude
the
operation of Art. 19 and a law regarding the deprivation of property
was, therefore, too late in the
day to punue that line of argument.
[229 DJ
(ii) By virtue of the Scheme, the existing permits of any operator
will not be canct:lled. None of the properties or assets of the appellants
is going to be acquifed.
It has already been held that nd operator
can claim renewal of permit as a matter of
right.
TJ;ie
effect
of
nationalisation on the properties or the business of the operator is not
such Ill cannot be regarded to' a
reasonable
restriction
in the
interest of general public within the meaning of Art. 19(5). The tests
regarding the validity of Act falling under Clause S or Clause 6 of
Article 19 are same, Akadshi Padhan v. State of Orissa
(1963) Supp.
2 S.C.R. 691) followed. [232 HJ
(iii) Held, the hearing of objections to the Scheme under s. 68 (b) of
the Act by the Home Secretary does not violate rules of natural justice
ndr can any bias be imputed simply because Home Secretary is
also
A
B
c
D
E
F
G
H
A
B
D
E
H
GOVJNDARAJA V. TAMIL NADU
223
the memb,er of a committee which made the report :regarding
the
Schemes of. inationalisation.
Dosa
Satyanarayana
Murthy
v.
Tht
Andhra Pradesh State Road Transport Corporation (1961 1
S. C.R.
642) followed. [233 0]
(iv) Held further, that the nationalisation Scheme, even if introduced piece-meal on particular routes, is not illegal unless it is established
that there is discrimination against some operators.
Dosa Satyanarayana Murthy's case followed._
The mere fact that the Scheme was approved by the Home Secretary
without any modification does not mean that the discretion, in discharge
of the quasi-judicial function under s. 68(b) was not properly exercised
or. that there was no scope for the proper exercise of the discertion due to
the mandatory language contained in Oovt. Orders. [235 E]
Saghir Ahmed v. State of U.P. & Ors., [1955] 1. S.C.R. 707, Ram
Chandra Palai and Others v. The State of Orissa & Ors. [1956] S.C.R.
29, Bhikaji Narain Dlzakras and Others v. The Stc.te of Madh}•a Pradesh
and Others,
[1955]
2 S.C.R.
589,
Gullapa//i Nageiwara Ra" and
Others v. Andhra Pradesh State Trc.nsport Corporation
and
another ..
[1959] Supp. 1 S.C.R. 319, Smt, Sitabati Debi and another v. State of
West Bengal and another, [1967] 2 S.C.R.
949,
Mohd. Ayub Khan
v. Commissioner of Police, Madras and another, [1965]
2 S.C.R.
884
Smt. Somavanti and Others. The State of Punjab and Others
[1963] 2
S.C.R. 774, Municipal Committee, Amritsar and another v. State of Pun~
iab and Others [1969] 3 S.C.R. 44 7 referred to.
East India Electric Supply & Traction Co. Ltd. v. S. C. Dutta Gupta
and Others, 59 C.W.N. 162, held not applicable.
Srinivasa Reddy and Others v, The State of Mysore and Others [I %9]
2 S.C.R. 130, explained.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 672702, 704-710, 722-728, 776-781 of 1972 & 1057-1062, l l!O,
1125, 1200, 1224, 1298-1300 & 2301 of 1972.
Appeals by certificate from the Judgment and Order dated
February 3, 1972 of the Madras High Court in Writ Petitions Nos.
883,884,885, 886,942,992,993,994,995of 1966,2061,2649,
'.:1825 of 1970.
A. K. Sen. K. layaram, for the appellants, in C.A, No. 672,
K. Jayaram for the appellants in .c.As. Nos. 673-676; 683,
684, 687, 688, 693, 678, 681, 682, 685, 686; 689-698, 694-695,
776-781. 1298-1300 & 2301.
M. Natesan, K. Jayaram, for the appellants in C.A. No. 677.
K. K. Venugopal and Vineet Kumar for the appellants in C.A.
Nos. 697-702.
224
SUPREME COURT REPORTS
[1973] 3 S.C.R.
E. C. Aggarwala, and A. T. M. Sampath for the appellants in
C.As. Nos. 704-710.
K. K. Venugopal and K. B. Nambiyar, for the appellants in
C.As. Nos. 722-728, 1057-1062 & 1200.
K. K. Venugopal and A. S. Nambiyw for the appellants in
C.As. Nos. 1120-1125.
.
B
Vineet Kumar for the appellant in C.A. No. 1224.
S. Govind Swaminadhan, S. Mohan, A. V. Aangam and A.
Subhashini for the Respondents in C.As. Nos. 672-676, 678 for
Respondents Nos. 1, 3 & 4 (In C.As. Nos. 677, 679, 680, 697,
702, 704-710, 722-728 and 776-781.
C
S. Gobind Swaminadhan, A. V. Rangam, N. S. Siyam and A.
Subhashini for the respondents in C.As. Nos. 1057, 1062, 11201125, 1200 and 2301 and all the respondents in C.A. Nos. 1224
and 1298-1300.
The Judgment of the Court was delivered byD
GROVER. J. These appeals by cel'!ificate arise out of a common
judgment of the Madras High Court given in a number of writ
petitions filed before it by various stage carriage operators.
The facts have been set out in detail in the judgment of the
High Court and need be stated only briefly. The policy of
nationalisation of passenger bus Transport in the State of Madras
E
(now Tamil Nadu) was laid down by the Government Order dated
June 7, 1967. Under that order all routes of 75 miles and above
all routes radiating or terminating in Madras City and all ro~
in the Kanyakungi District were to be nationalised as and when
the permits of the private operators expired. By the Government
order dated June 17, 1967 a committee was constituted for implementing the ·above decision.
A Draft scheme was prepared by
the committee for nationalising the routes in question to the complete elimination of private operators. This scheme was published
under s. 68-C of the Motor Vehicle Act 1939, hereinafter called
the 'Act'. A number of writ petitions were filed.in the High Court
in 1967 challenging the validity of the draft scheme. That scheme
was struck down by the High Court.
Thereafter the Governor
of Madras inserted Rule 23-A in the Madras Government Business Rules in Exercise of his powers under Art. 166 of the Constitution. It was provided thereby that the powers and functions
which the State Transport Undertaking could exercise under s. 68C shall be exercised by the Secretary to the Government of Madras
in the Industries, Labour and Housing Department on behalf of
the State Government. It was also provided by that Rule that the
powers and functions of the State Govmment under s. 68-D of
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GOVINDARAJA v. TAMIL NADU (Grover, /.)
225
the Act and the Rules relating thereto were to be exercised by ·the
Secretary to the Government of Madras in the Home Department
on behalf of the State Government. In April 1968 an Ordinance
was promulgated by the Governor which was later replaced by the
Madras Act 18 of 1968 which became effective from April 1,
196g. By that enactments. 47(1) CC, s. 58(2) (A) ands. 68
(CC) were added to the Act.
Under the first two sections the
Regional Transport Authority was to have due regard to the
publication of the draft scheme in granting a permit or a renewal
of a permit. The State Transport Undertaking, however, was
entitled as of right to the issuance of a temporary permit on the
publication of a draft scheme under s. 68 (CC). In exercise of
the powers and functions under the new Business Rule 23-A
schemes of nationalisation were promulgated and published.
A
number of operators again filed writ petitions challenging the draft
scheme as also the validity of the Tamil Nadu Act 18, of 1968.
The High Court upheld the validity of these provisions including
the newly added sections. That decision was affinned by this .
Court in A. San;eevi Naidu etc. etc. v. State of Madras & Aro.
other.(')
It was pointed out in that judgment that ·in the State of Tamil
Nadu the State Transport Undertaking is a Department of the
State Government. Therefore the necessary opinion had to be
formed by that Government. It was held that the function under
the Act had been allocated by the Governor to the Transport
Minister under the Rules and the Secretary of that Ministry .had
been validly authorised under rule 23-A to take action under
s. 68 ( c) of the Act. The validity of the provisions of the Madras
Act 18 of 1968 which amended the Act had been canvassed before this Court but it was observed that it was not necessary to
F
decide that matter while deciding the question of the validity of the
impugned scheme.
G
H
As pointed out by the High Court a third attempt was made
by way of filing writ petitions in the High· Court out of which the
present appeals have arisen to impugn· the validity of Chapter JV.
A of the Act as amended by Madras Act 18 of 1968. We shall
first state the allegations which are relevant for deciding the con·
stitutionality of the impugned provisions. In this connection we
may refer to writ petition No. 780 of 1970 in which the petitioner
V. Krishnamurthy was one of those who had challenged the validity
of the draft scheme published by the Pirector, Madras State Transport Depl!J1ment as· well as the draft scheme published by the
Secretary' to the Government of Madras, Industries; Labour and
Housing Department. It was stated in para 7 of the petition that
(I) [1970] 3 S.C.R. SOS.
16-631Sup. CI/73
226
SUPREME COURT REPORTS
[1973] 3 s.c.~.
by reason of the dismissal of the appeals by this Court the Secretary to the Government, Home Department, would now be competent to take up the draft scheme for hearing under s. 68-D of
the Act. On finalisation of the scheme the petitioner's permit
would automatically stand cancelled. In that event the petitioner's
business would have to be closed down and he would be seriously
affected financially.
The following part of paragraph 7 may be
reproduced :
,
"It would be seen that the result of the implementation of the Chapter IV-A is that only two buses operated
by me as a commercial undertaking could have been
nationalised, and the vehicles covered by the pemlits
would be reduced in value to that of scrap and it would
have no market at all as there would be no operators
who would be coming forward
to purchase these
vehicles by reason of the nationalisation policy of the
Government."
According to paragraph 8 of the petition Chapter IV-A of the Act
is violative of the fundamental rights guaranteed under Art. 19(1)
(f) and (g) of the Constitution for the reason, inter alia, that the
permit issued under the Act constitutes property and the right to
apply for a permit as also to be granted a renewal of a permit is a
right to hold property and the petitioner would be deprived thereof.
The petitioner's right under Art. 19( l )(f) could, therefore, be
taken away only by a law relating to nationalisation of stage
carriages if such a law satisfied the test of Article 19 ( 5), namely
that it should be a reasonable restriction in public interest. It was
stated that public interest would in no way be promoted by
nationalisation because the Government undertaking wherever the
routes had· been nationalised was running into loss. Another
attack was made on the ground that no procedural safeguards were
contained in the Act before deprivation of the right to property
could take place. It was further pleaded that although s. 68-D
provided for compensa)ion, being paid at the rate of Rs. 200 / •
per month of the unexpired portion of each permit there was no
provisioo fur compensation where as a result of the approved
scheme renewal of the permit was refused.
In the return which was filed on tiehalf of the respondents an
objection was raised that the writ petition was liable to be dismissed on the ground of constructive res judicata.
A writ petition
had been filed on previous occasion and the points now sought ·to
be agitated had not been taken. It was further maintained that
according to the scheme it was only on the expiry of the existing
permits of operators that the State Transport Undertaking would
commence its services under the scheme of nationalisation. Other
allegations made were denied.
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OOVINDAllAJA v. TAMIL NADU (Grover,/.)
227
The High Court first considered the question whether Chapter IV-A of the Act is violative of Art. 19(1) (f) of the Constitu·
tion and the same has been canvassed before us strenuously. The
High Court was of the view that a route pennit is property and
that although the validity of that Chapter had come up for consideration before this Court earlier and had been upheld but the
decision in those cases was confined to the attack under clause
(g) of Article 19 and not clause (f). Now was it open to challenge before the decision of this Couvt in what is known as the
Bank Nationalisation case: Rustom Cavasjee Cooper v. Union of
India.(') The High Court acceded to the argument of the Advocate General that a bus with a pennit is a valuable property but
without a pennit or when the pennit expires it ceases to have more
value than what can be fetched in the market. The motor vehicle
is not taken away by the Government and the pennit holder is
free to use it. Since the renewal of a pennit is not a matter of
right on the expiry of the pennit its holder had no property in it
and as such there was no question of infringement of his fundamental rights guaranteed by Article 19(1)(f) or Art. 31 of the
Constitution.
It is necessary to notice the previous decisions in which the
constitutional validity of the provisions similar to those of the Act
was challenged. In Saghir Ahmed v. State of U.P. & Others(')· it
was held that the U.P. Road Transport Act 1951 violated fundamental rights of private citizens guaranteed under Art. 19( 1 )(f)
J':
.of the Constitution and was not protected by clause ( 6) of Art.
19 as it stood at the time of the enactment A declaration had
been made in terms of s. 3 of that Act to the effect that the stage
carriage services, among others, on the -Bulandshahr Delhi route
shall be run and operated exclusively by the State Government. A
scheme was also notified for the operation of the stage carriage
services on those routes. This was held to be an infraction of
Art. 19 ( 1) (g) of the Constitution. The new clause inserted in
F
0
Art. 19(6) by the Constitution First Amendment Act 1951.did
not apply to the facts of this case. It V(as observed that after .the
insertion of that clause no objection could be taken to the 'Creation
of a monopoly by the State on the ground that it violated A ... 19
(1) (g).
-
In the next case Ram Chandra Pilai & Others v; Thi!' •State .of
Orissa & Others (1) schemes of nationalisation ot stage citrrla'ge
services were assailed on various grounds intruding· Infringement
of Art. 1 !I (1 ) ( f) and ( g) . In view of the lll:Delldll'lent made 'In
clause ( 6) the creation of a state monopoly liy law was found to
be permissible under that clause. SaghirAhmaif's ease was .held
to be inapplicable and the decision in Bhikaji-. Nflr,-aJn,, Dhakras
(I) [1970] 3 S.C.R, 530.
(2) [1955] I S.C.R. 707.
·
(3) [1956] s.c.R· 29.
228
SUPREME COURT REPORTS
[19731 3 s.c.R.
&.Others v. The State of Madhya Prade.rh & Another(!) was
A
followed. It was not considered necessary to exainine the further
contention that the fundamental rights guaranteed under Arts. 19
(1 )( f) and 31 ( 2) had been violated. If the permits held under
the Act, were prematurely terminated or cancelled compensation
was provided by the Orissa Act under which the nationalisation
had been done. If there was no renewal of the permits on their
expiration after they had run for their normal period no claim
could be made by the permit holders on the score of such non·
renewal because renewal was not a matter of right. The concerned
transport authority would be well within its right to refuse such
renewal having regard to the provisions of the amended sections
47 and 55 of the Act. If at all there was any deprivation of
proprietary rights it would be by authority of law. In Gul/apalli
Nageswara Rao & Others, v. Andhra Pradesh State
TrQJ'lsport
Corporation & Anr. {2 ) the validity of the provisions contained in
Chapter IV ·A of the Act was directly assailed. The Court refused
to draw inferences from the provisions contained in s. 68-G for
payment of compensation to the holder of a permit that the legislature had assumed that a transfer of the business was involved in
the process laid down .in Chapter IV-A. Article 31 of the Constitution was held not to having been attracted.
Before thp decision in K. K. Kochuni & Others v. State of
Madras & Others(•) this Court had held in the State of Bombll)' v.
Bhanji Munji & Another(') which was followed in certain other
cases that the substantive provisions of law relating to acquisition
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of property were not liable to be challenged on the ground that
they imposed unreasonable restrictions on the right to hold property. In other words, in cases falling under Art. 31(2) the provisions of Art. 19(1) (g) could not be invoked. In Kochuni's
case. however, the effect of the Constitution Fourth Amendment
F
Act 1955 on Art. 31 was considered. It was held tha( that
Article was no longer a self-contained' Article providing for a subject different from that dealt with by Art. 19. It dealt with two
different subjects.
Clauses 2 and 2A dealt with acquisition and
requisition and clause 1 with deprivation of property by authority
of law. Clause 1 of Article 31 could no longer be so construed as
to exclude the operation of Article 19. Bhanjl Munji's case was
distinguished on the ground that after the Constitution Fourth
Amendment Act it no longer held the field. In Smt~ Sitabati Debi
& Anr. v. State of West Bengal & Anr.(5) it was pointed <Jut that
Kochuni's case was not concerned with a Jaw of requisition or
acquisition. Therefore the observations therein had to be under-
(!) [1955] 2. S.C.R. 589.
(2) [1959] Supp. S.C.R. 319.
(3) [1960] 3 S.C.R. 887.
(4) [1955] 1 S.C.R. 777.
(5) [1967] 2 S.C.R. 949.
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GOVINDARAJA v. TAMIL NADU (Grovet, /,)
229
stood as meaning that Bhanji Munji's case no longer govetned a
case of deprivauon of property by means other than requisition
and acquisition. In other words any deprivation oi property under
Art. 31 ( 1 ) had to satisfy the .guarantee of other fundl!lnnetal rights
including A-rt. 19(1) (f). In Rustom Cavasjee Coope's case
however, this Court settled the whole position by holding that the
limitation prescribed Tur ensuring due exercise of the authority of
the State to deprive a person of his property and tile power to
compulsorily acquire the property were specific clauses of limitation on the right of private propel'IY falling under Art. 19 ( 1) (0.
Thus the Coun came to the .con.clusion that Arts. 19.( 1) (f) alid
31 ( 2) were not mutually exclusive.
The argument of the appellants is that prior to the decis;:,n in
Rustom Cavasjee Cooper's case it was not possible to c'..iallenge
Chapter IV-A of the Act owing to the decision of this Court that
Art. 19(1) (f) could not be invoked when a case. fe& within Art.
31 and that was the reason why this Court io a,ll the previous
decisions relating to the validity of Chapter IV-A proceeded on an
examination of the argument whether there was infringement o(
Art. 19(1) (g), and clause (f) of that Article could not possibly
be invoked. We are unable to hold that there is much substance
in this argument. Bhanji Munji and other decisions which followed it were based mainly on an examination of the inter-relationship
between Article 19(1) (f) and Art. 31(2). There is no question
of any acquisition or,requisition in Chapter IV-A of the Act. The
relevant decision for the purpose of these cases was only the one
given in Kochuni's case after which no doubt was left that the
authority of law seeking to .deprive a person of his property otherwise than by way of acquisition or requisition was open to challenge on the ground that it constituted infringement of the fundamental rights guaranteed by Art. 19(1)(f). It was, therefore,
open to those affected by the provisions of Chapter IV-A to have
agitated before this Court the question which is being raised now
based on the guarantee embodied in Art. 19(1) (f) which was
never done. It is apparently too late in the day now to pursue this
line of argument, in this connection we may refer to the observa·
tions of this Court in Mohd. Ayub Khan v. Commissioner of Police
Madras d: Another(') according to which even if certain aspects
of a question were not brought to the notice of the court it would
Jeclinc to enter upon-re-examination of the question since the
decision had been followed in other cases'. In Smt. Somavanti &
Others v. The State of Punjab & Others(') a contention was
raised . that in none of the decisions the ergument advanced in that
case that a law may be protected from an attack under Art. 31 (2)
'but it would be still open to chaUenge under Art. 19 (1 )( f), had,
:(1) I196S] 'i S.C.R. 884.
(2) (1963] 2 S.C.R. 774.
230
SUPREME COURT RBPORTS
[1973] 3 S.C.R.
bllen examined or considered.
Therefore, 'the decision of the Court
was invited in the light of that argument. This contention, however, was repelled by the following observations at page 794 :-
"The binding effect of a decision does not depend
upon whether a particular argument was
considered
therein or not, provided that the point with reference to
which an argument was subsequently advanced was
actually decided."
It is common ground in the present cases that the
validity of
Chapter IV -A of the Act has been upheld on all previous occa·
sions.
Merely because the aspect now presented based on
the
guarantee contained in Art. 19 (1) (f) was not expressly considered for a decision given thereon will not take away the binding
et::'~ct of those decisions on us.
T11e learned Advocate General who appears for the respondents has invited our attention to certain decisions which do not
relate to the provisions of the Act but in which the principle
which is sought to be invoked on behalf of the appellants based on
Art. 19(1)(f) has been examined. In Akadshi Padhan v. State
of Orissa( 1) the question was whether the monopoly in the trade of
Kendu leaves which the State of Orissa took over constituted
restriction on the fundamental right of the petitioner who used to
carry on extensive trade in the sale of Kendu leaves. The attack
against the Orissa Act by which the monopoly was created was
based on the alleged contravention of the fundamental rights under
Art. 19(l)(f) and (g).
The rival contentions which were advanced were that the effect of the change made by the Constitution
First Amendment Act 1951 in Art. 19( 6) was not to exempt the
law passed for creating a State monopoly from the application of
the rule prescribed by the first part of Art. 19 ( 6). On the other
hand it was contended by the State that the object of the amendment was tc Jut the monopoly laws beyond the pale of challenge
under Art.
J(l) (f) and (g). The scope and effect of Art. 19
( 6) after its amendment was fully considered.
The Court felt no
· difficulty in rejecting the argument that the creation of a State
monopoly must be justified by showing that the restrictions imposed by it were reasonable and were in the interest of the general
public. It was stated emphatically that the amendment clearly
indicated that the State monopoly in respect of any trade or business must be presumed to be reasonable and in the interest of
gen~ral public so far as Art. 19(l)(g) was concerned. The Court
proceeded to hold that the effect of the amendment made in Art.
19 ( 6) was to protect the law relating to the creation of monopoly
and that meant it were only these provisions of that law which
were integrally and essentially connected with the creation of the
monopoly which were protected. The rest of the provisions which
(1} [1963] Supp. 2 S.C.R. 691.
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might be incidental did not fall. under the later part of Art. 19 ( 6)
and would inevitably have to satisfy the test of the first part of
that Article.
The question which is more relevant for our purpose was next considered, namely, the effect of the amendment, on
the other fundamental rights guaranteed by Art.
19( 1). The
following observations at page 710 on this point may be reproduced:
"The position, therefore, is that a law creating a
State monopoly in the narrow and limited sense to which
we have already referred would be valid under the later
part of Art. 19 ( 6), and if it indirectly impinges on any
other right, its validity cannot be challenged on that
ground. If the said law contains other incidental provisions which are not essential and do not constitute an
integral part of the monopoly created by i.e., the validity of those provisions will have to be tested under the
first part of Art. 19 ( 6), and if they directly impinge
on any other fundamental right guaranteed by Art. 19
( 1 ) , the validity of the said clause will have to be tested
by reference to the corresponding clauses of Art. 19.
It is obvious that if the validity of the said provisions
has to be tested under the first part of Art. 19 ( 6) as
well as Art. 19 ( 5), the position would be the same
because for all practical purposes, the tests prescribed
by the said two clauses are the same."
The instances given in the above· decision of the State monopoly in respeot of road or air transport are pertinent.
A law
relating to such a monopoly would not normally impinge upon
the citizens' fundamental right under Art. 19 ( 1 )( f). Similarly a
State monopoly to manufacture steel, armaments or transport
vehicles or railway engines and coaches would not normally impinge on Art. 19(1) (f). If the law creating such monopolies
were, however, to make incidental provisions directly infringing
the citizens' right under Art. 19(l)(f) that would be a different
matter.
(see pages 710. 711).
In Municipal Committee, Amritsar & Anr. v. State of punjab
& Others(') the validity of l!he Punja~ Cattle Fairs (Regulation)
Aot 1967 came up for examination. The Act declared that the State
had the monopoly to hold cattle fairs and it prohibited all local
authorities and individuals from holding such fairs at any place in
the State. Shah J., delivering the judgment of the Court said at
page 456 :-
"By imposing restrictions upon the right to hold a
fair, the citizens are not depriyed of their property, and
the freedom guaranteed by Art. 19(1) (f) is not infring-
(1) [1969] 3 S.C.R. 447.
232
SUPREME COURT REPORTS
[1973] 3 s.c.R.
ed. The primary object of the Act is to give a monopoly to the State to hold cattle fairs.
As a necessary
concomitant of
that monopoly,
holding of
cattle
fairs by local authorities and individuals is prohibited.
The prohibition flows directly from the assumption of
monopoly by the State and falls within the terms of
Art. 19( 6) of \he Constitution. It is a provision of the
law creating monopoly "basically and essentially necessary" for creating the State monopoly to prevent other
persons from conducting the same business''.
The learned Advocate General maintains that it follows from the
above decisions that when nationalisation of a transport service
is made which is fully protected by Art. 1916) no question arises
of any deprivation of property. It is possible and likely that the
value of the buses owned by the operators may be prejudicially
affected or that they may not be able to carry on trade or business on the nationalised routes. According to the clear instance
given in Akadshi Padhan's case to which reference has already
been made a law relating to such a monopoly would not normally
infringe the citizens' fundamental right under Art. 19( 1 )(f).
Mr. Natesan for the appellants has pointed out that while
promulgating the schemes of nationalisation temporary permits
have been granted to the State Road Undertaking and the compensation which is sought to be paid t9 the permit holders is
either nil or too small and there is no provision for payment of any
compensation the operators for being deprived of the transport
business or for the effect of the non-renewal of their permits.
While examining the above contentions it may be stated that there
is no dispute on certain matters. The first is that according to the
schemes of nationalisation which have been impugned all existing
permits must come to an end before each scheme will become
enforceable on a particular route.
In. other words by virtue of
the scheme the existing permits of any operator will not be cancelled. None of the properties or assets of the appellants is going
to be acquired.
So far as the renewal of a permit is concerned
this Court has already held that no operator can claim renewal as
a matter of right.. Section 68-G of the Act, contains the principle
and method of determination of compensation if any existing permit is cancelled or its terms are modified. In the present cases.
however. no such question arises because no occasion for cancellation of existing permits can arise in view of the terms of the
impugned scheme. The effect of nationalisation on the properties
or business of the operators is not such as cannot be regarded to
be a reasonable restriction in the interest of the general public
within Art. 19 ( 5) in the same way as a state monopoly must be
presumed to be reasonable and in the interest of the general public
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GOVINDARAJA v. TAMIL NADU (Grover, J.)
233
so far as Art. 19 ( I ) ( g) and Art. 19 ( 6) are concerned this is
view of the fact that the tests prescribed by clauses 5 and 6 of Art.
19 are the same: (vide Akadshi Padhan's case).
We are ac·
cordingly unable to sustain the challenge under Art. 19(1) (f)
even of such a challenge is open to the appellants in the light of
what has been observed earlier.
It bas next been argued that the nationalisation scheme were
vitiated for various reasons. The first submission is that a policy
decision was taken by the government which was embodied in the
Government Order dated June 17, 1967. It was stated therein
that the Government had considered carefully the question of
extension of nationalisation of passengers transport in the State.
In modification of the existing policy the Government had decided
that the types of routes set out should be nationalised. The
Government proceeded to direct that the routes in the categories
mentioned should be nationalised as and when the permits of the
private operators expired. On the same day by another Government Order the Government constitutej an ad hoc committee "to
work out the details in all aspects for implementing the policy .
decision." One of the members of that committee was the Secretary to the Government, Home Department. The Committee was
to submit its report within a fortnight. After the report had been
submitted schemes were published under s. 68-C by the Secretary,
Industries, Labour and Housing Department, hereinafter referred
to as the Secretary industries. He purported to do so under rule
23A of the Rules of business. Objections which were fixed by
the operators were heard and the schemes considered by the Secre·
tary Home, under s. 68-D who had been so authorised under s.
23A. According to the appellants the Secretary, Home, while
hearing the objections under s. 68-D of the Act was acting as a
quasi-judicial tribunal. Since he was a member of the committee
which had made the report in accordance with which the schemes
had been published under s. 68-C it is claimed that the Secretary,
Home, acted as a Judge in his own cause. In other words, he
participated in the policy decision of the Government and then
he exercised the powers under s. 68-D of hearing objections -and
considering the merits of the schemes.
This, it is suggested, is
wholly contrary to the rules of natural justice the hearing by the
Secretary, Home, being vitiated by bias.
Learned single Judge
of the Calcutta High Court in East India Electric Supply & Traction Co., Ltd. v. S. C. Dutta Gupta & Ors.( 1) held that where a
number of a rating Committee had already pre-judged at least one
of the issues that had been raised before it, his inclusion as a
member made the Rating Committee and its functioning contrary
to law. In Dosa Satyanarayanamurthy etc. v. The Andhra Pradesh
en 59 c.w.N. 162.
234
SUPREME COURT REPORTS
[1973] 3 s.c.I(,
State Road Transport Corporation ( 1) the Minis till' in charge of
the portfolio of Transport had presided over the sub-committee
constituted to implement the scheme of nationalisation of bus services. It was contended there that the same. Minister could not
be a Juclge in his own case as he was biased against tl:!e private
operators.
That contention was negatived by this Court. It was
pointed out that any decision arrived at by the Sub-Committee was
not final or irrevocable and it was only a policy decision.
The
sub-committee was only meant to advise the State Government how
to implement the policy of nationalisation. That could not either
expressly or by necessary implication involve a predetennination
of the issue. The Minister, therefore, could not be said to have
any such bias ~ disqualified him from hearing objections under
_ Chapter IV-A of the Act in which s. 68•D occurs. This case is
quite apposite for disposing of the submission based on bias.
Th~ second reason advanced in support of the challenge to
the schemes is based on what is described as complete absence of
coordination so far as the various schemes are ~oncemed. The
objectionable feature of the schemes is stated to be that there was
no proper coordination of the services on the various routes which
are to be nationalised and which should have been done by an
integrated scheme. We are unable to see that if the schemes conformed to the requirements of s. 68-C why they should be struck
down on the only ground that routes were to be nationalised as
and when pennits of private operators on those routes expired.
Section 68-C pennits the State Transport undertaking to op~rate
a service in relation to any area or route or even a portion thereof
and to the exclusion complete or partial, of· other per;ons. The
decision in Shrinivasa Reddy & Others v. The State of Mysore
& Others(') can be of no avail to the appellants because no
question arose of coordination of service on the various routes
which were to be nationalised and in respect of which
the
.nationalisation was to become effective from different dates. In
that case it was pointed out that piecemeal nationalisation of a
particular route is not permissible. It is quite clear that each
route can be nationalised and it is difficult to comprehend that
when the law empowers that to be done any further conditions
should be superimposed of coordinating the services on all the
routes which are proposed to be nationalised.
The follO\\ing
observations with regard to the above decision in Dosa Satyanarayanamurthy's case explain the law on the point :
"This Court did not lay down that there cannot be
any phased programme in the nationalisation of transport services in a State or in a district nor did it hold
(l) [1951] l S.C.R. 642.
(2) (1960) 2 S.C.R. ll-0.
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GOVINDARAJA v. TAMIL NADU (Grover, J.)
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that there cannot be more than one. scheme for a district
or a part oi a district, the observations of this Court in
regard to the implementation of a scheme piecemeal
were aimed at to prevent an abuse of power by dis-·
criminating against some operators and in favour of
others in respect of a single scheme".
Learned Counsel for the appellants laid a great deal of empha~
sis on the manner in which the policy decisions were taken by the
Gove.rnment and the mandatory language contained in the Government Orders already referred to which hardly left any discretion
or choice to the authority considering the objections under s. 68-D
of the Act. We are unable to see how any authority who exercises
individual power under s. 68-D is bound by what has been stated
as a policy decision of the Government. In fact his main function
is to hear such objections as may be re(erred to the schemes published under s. 68C and approve or modify the s.chemes so published after giving an opportunity to. the objector. His function
being of a quasi-judicial nature he is to bring a judicial approach
to the matter and even if he happens to be a servant of the government he is not bound in any way to carry out or endorse the
policy of the Government without discharging his duties as contemplated by s. 68-D. We are unable to hold nor has anything
been shown to us except the suggestion that the schemes as. published under s. 68-C were approved in toto that the authority
acting under s. 68-D had not discharged his duties in a proper and
judicial manner. The mere fact that the schemes were approved
without any modification cannot establish that the Secretary, H<~me
who exercised the functions of the State Government under s. 68D had failed to carry out his functions as laid down in s. 68-D
or that he had approved the schemes without any modification
merely because the Government orders ·contained language of
mandatory nature.
In the result these appeals fail and they are ·dismissed but
owing to the nature of the points raised there will be no order as
to costs.
S.B.W.
Appeals dismissed:.