Case: REGIONAL TRANSPORT AUTHORITY &amp; ANR Vs. SHAJU ETC

For the analysis and the reasoning that will follow, we have held that Rule 174(2)(c) of the Kerala Motor Vehicle Rules,1989 is valid and salutary and does not go beyond the scope of Section 83. We will first refer to the basic facts and the statutory provisions before analyses and determination.3.1 The Respondent was granted a stage carriage operator permit, P.St. 7/362/2012 dated 7.5.2017 in respect of vehicle number KL-41L-1017, a 38- Seater, 2016 model by the Regional Transport Authority (hereinafter referred to as Authority) to conduct transport service on the route Pattimattam-Kakkanad in Kerala. On 19.5.2017, the Respondent applied to the Authority under Section 83 of the Motor Vehicles Act, 1988 (hereinafter referred to as Act) read with Rule 174 of the Kerala Motor Vehicle Rules, 1989 (hereinafter referred to as Rules) for grant of permission to replace the vehicle covered under his permit with another vehicle KL-17E-997, a 33-Seater, 2006 model. Alleging inaction on the part of the Authority, the Respondent filed a Writ Petition before the High Court of Kerala on 12.6.2017. The Learned Single Judge disposed of the writ petition on 13.06.2017 by merely directing the State and the Authority to consider the application on the ground of road-worthiness alone and without reference to the model of the vehicle.3.2 Aggrieved by the Single Judges decision, the Authority preferred Writ Appeals No.1466/2017 before the Division Bench of the High Court of Kerala. Another Writ Appeal No.1470/2017 dealing with similar facts and issues was also taken up along with this case. The Division Bench by the impugned judgment dated 18.07.2017 dismissed the Writ Appeals holding that Rule 174(2) (c) of the Kerala Motor Vehicle Rules, 1989 goes beyond the provision of the Act. The Court concluded:-When in exercise of delegated authority, the subordinate authority i.e., the State, makes the rules, the rules have to be consistent with the Act. The Rules cannot override the Act or restrict the ambit of the Act. When the expression is vehicle of same nature, then if Rule l74(2)(c) restricts that an older vehicle cannot be brought in, it would be restricting the right conferred to a person by the provisions of the Act. Surely such an exercise by a delegate cannot be permitted. Rules have to be consistent with the Act and not restricting or in derogation thereto. Rules to that extent cannot thus be held to be consistent with the Act and would have to be held to be inoperative.3.3 With these findings the Division Bench dismissed the Appeals. It is this order that is challenged before this Court. We heard Sh. G Prakash, Advocate for the appellant State and the Authorities and Sh. Santosh Krishnan, Amicus Curiae.

Reasoning: 13.2 The statutory scheme under Chapter V generally provides for the powers of the State Government to deal with transport vehicles except under Section 88 of the Act where the powers are subject to the rules made by the Central Government. It provides not only the procedure for grants of permits, but also the mechanism by which vehicles used for transportation are regulated. It is in this context that Section 83 relating to replacement of a vehicle occurs. The placement of Section 83 in Chapter V is a recognition of the need to provide a seamless mechanism for replacement of a vehicle during subsistence of a transport permit. Seen in the context of Chapter V relating to transport vehicles, it becomes clear that the provision is intended only to enable the owner to work his permit without any interruption even if there is a need to replace the vehicle covered by the permit. There is no other purpose. It is intended to be a simple transaction and this is reason why the scope of scrutiny is limited only to examining if the vehicle is of same nature as in the permit. This is all that is required.13.3 It is but natural that the replacement would require the Authority to grant the necessary permission as they are the regulators. When an application made under Section 83 is taken up, the Authority is cognizant of the fact that there is a valid and a subsisting permit and the permit holder seeks to continue operating the permit and it is only for this reason that he is seeking replacement of the vehicle. The context in which his scrutiny is called upon, is only to ensure that the conditions of the permit are not deviated from. Therefore, when the statute says same nature, it is only relatable to the permit. The scrutiny is not of the vehicle in itself but the vehicle in relation to the permit. It is for this reason that a scrutiny of the vehicle, stand alone, irrespective of its relation with the permit becomes an irrelevant consideration for the purpose of Section 83.13.4 The phrase, of the same nature seen in the context of provisions proximate to Sections 83, relating to duration and renewals of permits (Section 81), transfer of permits (Section 82) lend clarity to the meaning of the expression. Same nature must necessarily relate to the same nature of the vehicle in the permit. The question to be asked is the nature of the vehicle under the permit. What kind of a vehicle was that? How was that connected to the permit granted? Does the new vehicle serve the same purpose as the old vehicle was serving under the permit?13.5 Questions relating to the vehicle or about the vehicle are matters of concern in Chapter IV, under which the Central Government is empowered to set the norms for the fitness or the age limit of the vehicle. Chapter V, on the other hand contains the legal regime with respect to operations of transport vehicles. It is under this Chapter that the Parliament intended that there must be a provision for replacement of a vehicle covered under a permit so that the permit granted could continue and subsist till the end of its tenure. Chapters IV and V operate in their own field subserving the purpose and objects mentioned therein.13.6 For the reasons stated above, we are of the view that Rule 174 (2) (c) made by the State Government to enable replacement of the vehicle under a Transport permit, does not impinge upon the powers of the Central Government with respect to fixation of the age of the vehicle, or fitness of the vehicle conferred upon it under Sections 56 and 59 in Chapter IV. The scrutiny under Rule 174 is only to enable the Authority to ensure that the subsisting permit is not interrupted and at the same time public interest is not compromised by deviating from the permit. The Rule will have no bearing on the power of the Central Government and as such it would not be ultra vires the provisions of the Act.13.7 There is yet another aspect which can lend a certain amount of clarity to this position. The vehicle which the Authority may not approve for replacement under section 83 on the ground that it is older than the vehicle covered under the permit, can be used as a transport vehicle within the State. There is no prohibition for such a usage as the said vehicle may continue to be fit and within the age limit prescribed by the Central Government. The rigour of Rule 174 (2) (c) is only in the context of a subsisting transport permit and not as a condition for transport vehicles as such.13.8 For the reasons stated above, we are not inclined to accept the submission that Rule 174(2)(c) is ultra vires the provisions of the statute.15. We are of the opinion that Rule 174 (2) (c) is intended to ensure that the conditions under which a transport permit is granted is not diluted when the vehicle covered by the permit is sought to be replaced by a new vehicle. The purpose and object of mandating replacement by a vehicle of the same nature in Section 83 is only to ensure that the scrutiny and the conditions that were undertaken and imposed at the time of the grant continue even during the subsistence of the permit. The legal regime involved in the grant of the permit as evidenced by the statutory provisions, rules, forms and certification establish this principle. We will explain this position.16.1 Section 83 is to be understood only in the context of a subsisting permit. The present is a case of a stage carriage permit, the application for which is to be made under Section 70. When an application under Section 70 for grant of a stage carriage permit is made, it shall contain particulars such as (i) the type and seating capacity of the vehicle [Section 70(1)(b)]; (ii) the number of vehicles to be kept in reserve; and (iii) such other details as may be prescribed. Such application should also be accompanied by the documents as may be prescribed [Section 70(2)].18.1 Grant of a transport permit is an important function that the statutory authority under the Act would perform. This Court had an occasion to consider the serious consequences of motor accidents leading to large number of deaths and injuries to human body. This unfortunate fact was noted by this Court in S. Rajaseekaran v. Union of India and Ors. [S. Rajaseekaran v. Union of India (2018) 13 SCC 532 (Judgment dated 30.11.2017)].90. During this hearing, we sought to impress upon all concerned that road safety issues should be taken seriously both by the Central Government as well as by the State Governments. We also noted that huge amounts running into hundreds of crores of rupees had been earmarked for road safety and it was also highlighted that a very large number of deaths had been taking place due to road accidents. We noted that the insurance companies had spent an amount of Rs. 11,480 crores by way of compensation for deaths, injuries, third -party property damage and other damage due to road accidents during the financial year 2015-2016.91. On 7.11.2016 we again noted that there was one death almost every three minutes as a result of road accidents. Unfortunately, the legal heirs of half the victims were not compensated (perhaps being unaware of their entitlement)…..18.2 If this reality has to be addressed, the primary obligation is on the transport regulates the Authorities. The scrutiny that they must exercise in granting licences and permits in todays world is much more than ever. At the same time, Courts have the obligation to interpret the provisions of the statute and the rules made thereunder in a manner that will sub-serve an effective scrutiny by the regulator. This Court, as well as the High Courts have approached the problem in this perspective and in fact, the judgments that we will advert to, not only underline and emphasise the importance of the information of the vehicle in the application for permit, but also approved the condition of a maximum age of the vehicle prescribed by the Authorities.19.2 The Division Bench judgment of the High Court of Madhya Pradesh was approved by this Court in the case of Subhash Chandra v. State of U.P (Subhash Chandra and Ors. v. State of U.P. and Ors. (1980) 2 SCC 324) , wherein Justice Krishna Iyer in his inimitable expression observed as under:3…. The State must remember that it has responsibilities not merely to minibus owners, but also to avoid the daily tragedies on the Indian highways under the little wheels of these whirling carriages. Section 51(2) Motor vehicles act, 1939, is geared to public safety, not private profits and cast a solemn duty not to be deterred by any pressure except the pressure of social justice to Indian lives moving in buses, walking on roads or even standing on margins. If the top killer – road accident – is to be awarded death sentence, Section 51 and like provisions must receive severe enforcement. In this spirit – although backtracking from 4-year-old vehicles to 7-year-old models – the State imposed condition 18. This was challenged artfully but unsuccessfully before the High Court and is attacked before us as ultra-vires Section 51(2) of the Act. We will examine briefly the submissions to reach the conclusion that mere lexical legalism cannot sterilize the sensible humanism writ large on Section 51(2)(c). It is not ultra vires Indian law every condition to save life and limb is intra wires such salvation re- provision. This perspective of social justice simplifies the problem and upholds the High Court.4…. The short question is whether the prescription that the bus shall be at least a 7-year-old model one is relevant to the condition of the vehicle and its passengers comparative safety and comfort on our chaotic highways. Obviously, it is. The older the model, the less the chances of the latest safety measures being built into the vehicle. Every new model incorporates new devices to reduce danger and promote comfort. Every new model assures its age to be young, fresh and strong, less likely to suffer sudden failures and breakages, less susceptible to wear and tear and mental fatigue leading to unexpected collapse… We have no hesitation to hold, from the point of view of human rights of road users, that the condition regarding model of the permitted bus is within the jurisdiction and not to prescribe such safety clauses is abdication of statutory duty.5. ….We are clear that a later model is a better safeguard and, more relevantly to the point, the year of the make and the particulars of the model or part of the description (This judgment is followed by this Court in a subsequent decision in the case S.K. Bhatia and Ors.v. State of U.P and Ors. (1983) 4 SCC 194) .20.1 The principles and observations made by the Full Bench of the High Court of Kerala on the powers and duties of the Authorities while considering competing applications for grant of a permit are noteworthy. Of course, the Court was dealing with a slightly different issue, i.e., whether an applicant for stage carriage permit who has given the particulars of the vehicle he proposes to put on road should be preferred over an applicant who does not provide such information before-hand. The Full Bench of the Kerala High Court held as under:10. As repeatedly pointed out in the various decisions of the Supreme Court and the High Courts, the paramount consideration that should weigh with the Regional/State Transport Authority in taking a decision regarding the grant of a stage carriage permit is the advancement of public interest. Such decision will have to be reached by the authority on a comparative evaluation of the qualifications possessed by the various applicants as on the date of consideration of the subject by it. If, on the date of consideration of the applications, an applicant is found to be possessed of a vehicle of the required specifications regarding its model, seating capacity etc. and if in respect of other matters he is found to be possessed of better qualifications than a rival applicant who might have furnished the particulars of his vehicle in his application itself it will not be in the public interest and, hence, also legally not right to overlook the superior claims of the former and prefer the latter for the grant of the permit merely on the ground of his having furnished in his application particulars of his vehicle. As already observed by us, an application for the grant of a stage carriage permit cannot be treated as invalid merely on the ground that it does not contain particulars of the vehicle proposed to be used for the service nor can the applicant be disqualified or excluded from consideration on the said ground. If all other qualifications are equal as between the two applicants, one of whom had furnished in his application the particulars of his vehicle and the other had furnished such particulars only at a later stage before the matter was taken up for consideration by the Regional/State Transport Authority and the vehicle offered by the latter is found to be of a later model and better quality (providing better comforts for the passengers) than the vehicle offered by the former, the Regional/State Transport Authority will be perfectly justified in taking the view that it will be in the public interest to grant the permit to the applicant who has offered the better vehicle (see Ikram Khan v. The State Transport Appellate Tribunal, (1976) 4 SCC 1  : AIR. 1976 SC. 2333) . However, if in such a case the vehicles offered by both the applicants are found to be substantially of the same type, quality, model etc. and if in respect of other matters both the applicants are equally qualified it will be open to the Regional/State Transport Authority in its discretion to prefer for the grant the applicant who had furnished the particulars of his vehicle in the application itself treating the said circumstance as aground for tilting the balance as between the two persons whose qualifications are equal in all other respects.20.2 The judgment of the Full Bench of the Kerala High Court has been followed in a number of cases (Bheem Singh Bhati v. State of MP and Ors. (2013) SCC Online MP 8381; Ushakumari v. Abdul Azeez & Ors (2000) SCC Online Ker 269). In another case of Babu Goverdhan (Maharashtra State Road Transport Corporation v. Babu Goverdhan Regular Motor Service and Ors. (1969) 2 SCC 746) , this Court emphasised on the importance of the requirement of Form P.St.S.A along with the stage carriage permit application. It was held that the Form is an integral part of the legal regime which the State Government is authorised to take note of. The importance of furnishing all the details of a vehicle has also been affirmed in the case of Shaheed Khan (Shaheed Khan v. State of MP (2011) SCC Online MP 2228).79. In the instant case we have already held that the conditions imposed by the impugned amendments in the Rules of 1994 are with a view to ensure safe, secure and convenient transport services to the passengers to provide cheaper and safer facilities to rural public, to protect and preserve the road conditions, for better traffic management and to reduce traffic on long routes thereby reducing chances of untoward incidents and accidents and as such are in the interest of public at large. It is, therefore, clear that although we have already held that the petitioners do not have a fundamental right to operate stage carriages even otherwise, the impugned amendments in the rules are in consonance with and in furtherance of the object and purpose of the Act and are reasonable restrictions which can legitimately be imposed as provided by and permissible under Article 19(6) of the Constitution of India on the fundamental right to trade and commerce granted under Article 19(1) (g) of the Constitution of India.21.1 The reasoning adopted by the Division Bench in the impugned order that Rule 174 (2) (c) has overridden the Act is not correct because a subordinate legislation must be interpreted to effectuate the statutory purpose and objective. The Rule should enable the transport Authorities considering applications for replacement to insist upon the permit holder to abide by the same rigour and regulation that he was put to when the permit was granted. In our view, the High Court has not appreciated the context in which Rule 174 (2) (c) read with Section 83 is to be construed.21.2 The Section as well as the Rule are to be seen in the context of Chapter V relating to control of transport vehicles with respect to which the State Government has the jurisdiction and power grant and regulate transport permits. Rule 174 (2) (c), gives effect to that regulatory regime of the State. Replacement of a vehicle during the subsistence and continuation of a transport permit is only an incident in the working of a transport permit. While addressing such an incident, the Authority cannot be oblivious of the history and background in which the permit is granted.21.3 Further, the assumption in the impugned judgment that the expression same nature is confined only to, mean a bus by bus, a mini-bus by mini-bus and not bus by a minibus…. is not a correct way to read the provision. There is no need to restrict the meaning of an expression same nature. In fact, expressions such as this are better kept open ended to enable courts to subserve the needs of changing circumstances [Madan Singh Shekhawat v. Union of India (1999) 6 SCC 459,  Para 15; Kailash Chand and Anr v. Dharam Dass (2005) 5 SCC 375,  Para 12 and 13; Bangalore Turf Club Limited v. Regional Director, Employees State Insurance Corporation (2014) 9 SCC 657,  Para 61].21.4 Having examined Rule 174 (2) (c), intended to implement the purpose of section 83 and also having examined Section 83 in the context of Chapter V, in contrast to Chapter IV, we are of the view that the rule is neither beyond nor contrary to Section 83.22.2 Discretion is to be exercised wherever necessary in order to render the exercise of power reasonable, fair and non-arbitrary. Discretion could be express or implied. Rule 174(2) is a provision where the Government has expressly enabled the Authority to apply discretion, wherever necessary, while exercising the power to grant replacement of a vehicle under a permit. This discretion will have to be exercised reasonably, fairly as the facts and circumstance would clearly demonstrate. For instance, where the vehicle sought to be substituted is marginally and inconsequentially older than the vehicle covered under the permit, the Authority may perhaps be justified in permitting such an application. The Authority will also bear in mind the circumstances in which the permit holder was chosen in cases of comparative merit under which the rival applicants would have offered their own vehicles. Needless to say, that if the exercise of the discretion is not based on just reasonable and non-arbitrary principles, such a decision would be vulnerable and subject to correction in appeal and a further review. There is no need to delve on this issue any further.23. As we have held that Rule 174 (2) (c) is neither ultra vires the Act, nor has overridden Section 83, as held by the High Court, there is no need to deal with this issue.24. The Special Leave Petition against the order impugned was filed immediately after the decision of the Division Bench of the High Court and the matter has been pending adjudication before this Court. Apart from the fact that the matter has been sub-judice, the decision that we have arrived at is based on the interpretation of statutory provisions and the principles concerning construction of subordinate legislation. As the judgment of the High Court is contrary to law, it is compelling and inevitable that we set aside the judgment and rule upon the correct position of law.