Case: Vijay Kumar Sharma Vs. State of Karnataka

24. The Karnataka Act, as its title shows, was enacted to provide for the acquisition of contract carriages and for matters incidental, ancillary and subservient thereto. It was enacted under Entry 42 of the Concurrent List read with Article 31 of the Constitution, in furtherence of Article 39(b) and (c) thereof. This is evident from the preamble, and Section 2 of the Act. The preamble states that since the contract carriages and certain other categories of public service vehicles were being operated in the State in a manner highly detrimental and prejudicial to public interest, it was necessary to prevent the misuse, and to provide better facility for the transport of the passengers by road. It was also necessary to give effect to the policy of the State towards securing that the ownership and control of the material resources of the community were so distributed as best to subserve the common good and that the operation of the economic system did not result in the concentration of wealth and means of production to the common detriment. To effectuate the said intention it was considered necessary to enact the legislation. Section 2 of the Act makes a declaration in the following words:"It is hereby declared that this Act is for giving effect to the policy of the State towards securing the principles specified in Clauses (b) and (c) of Article 39 of the Constitution of India and the acquisition therefor of the contract carriages and other property referred to in Section 4."Under Section 4 of the Act every contract carriage owned or operated by. contract carriage operator along with the permit or the certificate of registration or both as the case may be, vested in the State Government absolutely and free from all encumbrances. Further, all rights, title and interest of the contract carriage operators in the lands, buildings, workshops and other places and all stores, instruments, machinery, tools, plants, apparatus and other equipments used for the maintenance, repair of, or otherwise in connection with the service of the contract carriage as the State Government may specify in that behalf and all books of accounts, registers, records and all other documents of whatever nature relating to the contract carriages vested in the State Government absolutely and free from all encumbrances, and all the said property was deemed to have been acquired for public purpose. Section 6 provided for payment of compensation for the acquisition of all the said propertySince the avowed object of the Act was two-fold, namely (i) to prevent the misuse of the operation of the contract carriages and to provide better facilities for the transport of passengers, and (ii) to give effect to the policy underlying Clauses (b) and (c) of Article 39 of the Constitution, it was also necessary to prevent the issue of fresh permits or renewal of the existing permits for running the contract carriages in the State to any private individual. Hence, Section 14 provided for a prohibition of the issue of fresh permit or renewal of the existing permit to any individual or the transfer of such permit to anyone except to the State Government or the Corporation which it may establish under the Karnataka State Road Transport Corporation Act, 1950. To make an alternative arrangement for running the contract carriages and to prevent both the misuse of the permits as well as concentration of wealth in the hands of a few individuals, Section 20 of the Act provided that all contract carriage permits granted or renewed till then would stand cancelled and the Corporation alone would be entitled to the grant or renewal of the said permits to the exclusion of all other persons, and that applications from persons other than the Corporation for the grant of such permit shall not be entertainedIn State of Karnataka v. Ranganatha Reddy (1978) 1 SCC 641 this Court upheld the validity of the said Act holding, among other things, that the Act was for acquisition of property and was in the public interest and for a public purpose. The Act, according to the Court, had nationalised the contract transport service in the State and that was also for a public purpose as declared in the Act. It was also observed that if Articles 38 and 39 are to be given effect to, then the State has progressively to assume the predominant and direct responsibility for setting up new industrial undertakings which would also include development of transport facilities, The State has also to become agency for planned national development, and the socialistic pattern of society as the national objective required that public utility services should be in the public sector. The acquisition of road transport undertakings by the State, therefore, undoubtedly served the public purpose25. It is thus clear from the provisions of the Karnataka Act that the whole object of the Act is to nationalise the contract carriage service in the State with a view to put an end to the abuse of the contract carriage services by the private operators and to provide better transport facilities to the public, and also to prevent concentration of the wealth in the hands of the few and to utilise the resources of the country to subserve the interests of all. To secure the objective of the Act, it was also necessary to prohibit the grant of the contract carriage permits to private individuals and to reserve them exclusively to the State undertaking which was done by Sections 14 and 20 of the Act. Unlike the MV Act 1988, which is admittedly enacted by the Parliament under Entry 35 of the Concurrent List, to regulate the operation of the motor vehicles, the object of the Karnataka Act is not only the regulation of the operation of the motor vehicles. Nor is its object merely to prevent the private owners from operating their vehicles with the exclusive privilege of such operation being reserved in favour of the State or the State Undertaking. For if that were the only object, the same could have been achieved by the Transport Undertakings of the State following the special provisions relating to State Transport Undertakings in Chapter IV-A, ofthe Motor Vehicles Act, 1939 which was in operation when the Karnataka Act was brought into force. The very fact that instead the State undertook the exercise of enacting the Karnataka Act shows that the object of the State Legislature in enacting it was materially different. This is also obvious from the various provisions of the enactment pointed out above.

Court's reasoning:
What is important from our point of view, is the view taken in that case that. when repugnancy is alleged between the two statutes, it is necessary to examine whether the two laws occupy the same field, whether the new or the later statute covers the entire subject matter of the old, whether legislature intended to lay down an exhaustive code in respect of the subject matter covered by the earlier law so as to replace it in its entirety and whether the earlier special statute can be construed as remaining in effect as a qualification of or exception to the later general law, since the new statute is enacted knowing fully well the existence the earlier law and yet it has not repealed it expressly. The decision further lays down that for examining whether the two statutes cover the same subject matter, what is necessary to examine is the scope and the object of the two enactments, and that has to be done by ascertaining the intention in the usual way and what is meant by the usual way is nothing more or less than the ascertainment of the dominant object of the two legislations25. It is thus clear from the provisions of the Karnataka Act that the whole object of the Act is to nationalise the contract carriage service in the State with a view to put an end to the abuse of the contract carriage services by the private operators and to provide better transport facilities to the public, and also to prevent concentration of the wealth in the hands of the few and to utilise the resources of the country to subserve the interests of all. To secure the objective of the Act, it was also necessary to prohibit the grant of the contract carriage permits to private individuals and to reserve them exclusively to the State undertaking which was done by Sections 14 and 20 of the Act. Unlike the MV Act 1988, which is admittedly enacted by the Parliament under Entry 35 of the Concurrent List, to regulate the operation of the motor vehicles, the object of the Karnataka Act is not only the regulation of the operation of the motor vehicles. Nor is its object merely to prevent the private owners from operating their vehicles with the exclusive privilege of such operation being reserved in favour of the State or the State Undertaking. For if that were the only object, the same could have been achieved by the Transport Undertakings of the State following the special provisions relating to State Transport Undertakings in Chapter IV-A, ofthe Motor Vehicles Act, 1939 which was in operation when the Karnataka Act was brought into force. The very fact that instead the State undertook the exercise of enacting the Karnataka Act shows that the object of the State Legislature in enacting it was materially different. This is also obvious from the various provisions of the enactment pointed out above26. It is for this reason that the contention advanced by the petitioners that the object of the Karnataka Act and that of the MV Act, 1988 is the same and that both of them occupy the same field cannot be accepted. A comparison of the provisions of the MV Act, 1939 (old Act) and MV Act, 1988 (new Act) further shows that the latter has merely replaced the former. All that it has done is to update, simplify and rationalise the law on the subject. For this purpose it has made important provisions in the following matters, namely:"a) rationalisation of certain definitions with additions of certain new definitions of new types of vehicles;b) stricter procedures relating to grant of driving licences and the period of validity thereof,c) laying down of standards for the components and parts of motor vehicles;d) standards for anti-pollution control devices;e) provision for issuing fitness certificates of vehicles also by the authorised testing stations;f) enabling provision for updating the system of registration marks;g) liberalised schemes for grant of stage carriage permits on non-nationalised routes, all India Tourist permits and also national permits for goods carriages,(h) to (1) ................."27. The special provisions relating to the State Transport Undertakings which are contained in Chapter VI of the new Act are pari materia with those of Chapter IV-A of the old Act, with only this difference that whereas under the old Act it was the State Transport Undertaking which had to prepare a scheme for running and operating the transport service by it in relation to any area or route or portion thereof exclusively; under the new Act such a scheme has to be prepared by the State Government itself. There is no difference in the legal consequences of the schemes under the two enactments. Both envisage the Operation of the services by the State Transport Undertaking to the exclusion of the rest, and cancellation of the existing permits and compensation only for the deprivation of the balance of the period of the permit. No acquisition of the vehicles or the paraphernalia connected with such vehicles is envisaged as is the case under the Karnataka ActIt is also not correct to say that the new Act, i.e. M V Act 1988 incorporates a special policy of liberalisation for private sector operations in the transport field. We see no such provision in the Act nor was any pointed out to us. The provisions with regard to the grant of permits under both the old and the new Acts are the same. In any case there is no provision for liberalisation of the grant of contract carriage permits in favour of the private individuals or institutions so as to come in conflict with the Karnataka Act28. Thus the Karnataka Act and the MV Act, 1988 deal with two different subject matters. As stated earlier the Karnataka Act is enacted by the State Legislature for acquisition of contract carriages under entry 42 of the Concurrent list read with Article 31 of the Constitution to give effect to the provisions of Article 39(b) and (c) thereof. The MV Act 1988 on the other hand is enacted by the Parliament under entry 35 of the Concurrent list to regulate the operation of the motor vehicles. The objects and the subject matters of the two enactments are materially different. Hence the provisions of Article 254 do not come into play in the present case and hence there is no question of repugnancy between the two legislations29. Shri Nariman, the learned counsel for the petitioners, however, contended that the provisions of Sections 14 and 20 of the Karnataka Act were in direct conflict with the provisions of Sections 74 and 80(2) of the MV Act 1988. According to him while the Regional Transport Authority (RTA) is enjoined by the provisions of Section 74 read with Section 80(2) of the MV Act 1988, ordinarily not to refuse to grant an application for permit of any kind, the provisions of Sections 14 and 20 of the Karnataka Act prohibit any person from applying for, and any officer or authority from entertaining or granting, application for running any contract carriage in the State. Thus there is a direct conflict between the two legislations, and since the MV Act 1988 is a later legislation, operating in the same area, it should be deemed to have impliedly repealed the provisions of Sections 14 and 20 of the Karnataka Act, even if the latter Act had received the assent of the President. This is so because of the proviso to sub-clause (2) of Article 254 of the ConstitutionThis contention proceeds on the footing that the two legislations occupy the same field. As has been pointed out earlier, the objects of the two legislations are materially different. The provisions of Sections 51 and 57 of the old Act further correspond to provisions of Sections 74 and 80 of the new Act. The Karnataka Act had received the assent of the President in spite of the provisions of Sections 51 and 57 of the old Act. The assent of the president, further as stated by the respondents, was taken by way of abundant precaution, although the subject matters of the two Acts were different. The provisions of Sections 14 and 20 of the Karnataka Act were incidental and necessary to carry out the main object of the said Act. Without the said provisions, the object of the said Act would have been. In the case of State of Karnataka v. Ranganatha Reddy (supra) while repelling the contention that there was a legislative encroachment by the Karnataka Act because it impugned on the subject of Inter-State Trade and Commerce in the Union List as it provided also for acquisition of transport carriages running on inter-State routes, this Court in para 32 of the Judgment has observed as follows:"..........It (the Karnataka Act) is not an Act which deals with any inter-State trade and commerce. Even assuming for the sake of argument that carriage of passengers from one State to the other is in one sense a part of the Inter-State Trade and Commerce the impugned Act is not one which seeks to legislate in regard to the said topic. Primarily and almost wholly it is an Act to provide for the acquisition of contract carriages, the Intra-State permits and the other properties sittizited in the State of Karnataka. In pith and substance it is an Act of that kind. The incidental encroachment on the topic of inter State trade and commerce, even assurnring there is some, cannot invalidate the Act. The MV Act 1939 was enacted under Entry 20 of List III of Schedule Seven of the Government of India Act 1935 corresponding to Entry 35 of List III of the Seventh Schedule to the Constitution. The subject being in the Concurrent List and the Act having received the assent of the President, even the repugnancy, if any between the Act and the Motor Vehicles Act stands cured and cannot be a ground to invalidate the Act. Entry 42 of List III deals with acquisition of property. The state has enacted the Act mainly tirlder this entry......."According to me these observations should put an end to any controversy on the subject, namely, whether the two Legislations are enacted under two different entries in the Concurrent List, and whether they occupy different areas or notI am also unable to appreciate the contention that the provisions of Sections 14 and 20 of the Karnataka Act are in conflict with the provisions of Sections 74 and 80 of the new MV Act 1988. Section 98 of the MV Act 1988 in terms clearly states (as did Section 68B of the MV Act 1939) that Chapter VI relating to the special provisions about the State Transport Undertaking and the rules and orders made thereunder, shall have effect notwithstanding anything inconsistent therewith contained in Chapter V or in any other law for the time being in force or in any instrument having effect by virtue of any such law. Sections 74 and 80 relating to the grant of the contract carriage permit and the procedure in applying for the grant of such permits respectively, are in Chapter V. This means that when under Chapter VI, a scheme is prepared by the State Government entrusting the. contract carriage services in relation to any area or route or portion thereof, to a State Transport Undertaking to the exclusion complete or partial of other persons, the provisions of Sections 74 and 80 would have no application and the private transport operators cannot apply for the grant of contract carriage permits under Section 80 nor can such. permits be granted by the Transport Authority. In other words, the MV Act 1988 also makes a provision for nationalisation of routes, and envisages a denial of permits to private operators when routes are so nationalised. Hence it is not correct to say that there is a conflict between the provisions of the two Acts30. It was then contended that when there is a repugnancy between the legislations under Article 254 of the Constitution, the doctrine of pith and substance does not apply, and even if some of the provisions of the impugned State legislation are in conflict with some of the provisions of the Central legislation, the conflicting provisions of the State legislation will be invalid. In support of this contention, reliance was placed on two decisions one of the Federal Court in the case of Meghraj v. Allahrakhiya, AIR 1942 FC 27 and the other of the Privy Council reported in AIR 1947 PC 722 (or AIR 1947 PC 60 -Ed.) confirming the formerThe Federal Court in the above decision has observed that when a provincial Act is objected to as contravening not Section 100 but Section 107 (1) the Government of India Act 1935 (corresponding to Article 254(1) of the Constitution) the question of the pith and substance of the impugned Act does not arise. In that case, the validity of the Punjab Restitution of Mortgage Lands Act was challenged on the ground that some of its provisions were repugnant to certain provisions of the Contract Act and of the Civil Procedure Code. The Court held that there was no repugnancy between the legislations. But while holding so, the Court made a one sentence observation as follows : "In the judgment of the High Court here is some discussion of the question of the "pith and substance" of the Act; but that question does not arise as objection is taken not under Section 100 of the Constitution Act but under Section 107." There is no discussion on the point. The arguments, if any, advanced on the question are neither reproduced nor dealt with. The observation further was not necessary for the decision in that case, since as is pointed out above, the Court had held that there was no repugnancy between the two statutes since, they covered two different subject matters. Hence the issue as to whether the impugned Punjab Restitution of Mortgage Lands Act was valid because the pith and substance of the Act covered an area different from the one covered by the Contract Act and the Civil Procedure Code cud not fall for consideration before the Court. What is more, when the matter went in appeal before the Privy Council, the said point was not even remotely referred to and I find no observation in the judgment either confirming, or dissenting from, the said observations. This being the case the said observations cannot be regarded as more than general in nature. They are not even an obiter dicta much less are they the ratio decided of the case. Hence the said observations do not have a binding effectEven otherwise I am of the view that not to apply the theory of pith and substance when the repugnancy between the two statutes is to be considered under. Article 254 of the Constitution would be illogical when the same doctrine is applied while considering whether there is an encroachment by the Union or the State legislature on a subject exclusively reserved for the other. When the legislative encroachment is under consideration the doctrine of pith and substance comes to the aid to validate a legislation which would otherwise be invalid for the very want of legislative competence. When the repugnancy between the two legislations is under consideration, what is in issue is whether the provision of the State enactment, though otherwise constitutionally valid, has lost its validity because the Parliament has made a legislation with a conflicting provision on allegedly the same matter. If it is open to resolve the conflict between two entries in different List, viz. the Union and the State List by examining the dominant purpose and therefore the pith and substance of the two legislations, there is no reason why the repugnancy between the provisions of the two legislations under different entries in the same List, viz. the Concurrent List should not be resolved by scrutinising the same by the same touchstone. What is to be ascertained in each case is whether the legislations are on the same subject matter or not. In both cases the cause of conflict is the apparent identity of the subject matters. The tests for resolving it therefore cannot be different31. I may in this connection refer to some of the authorities relied upon by the parties. In Municipal Council Palai v. T. J. Joseph (1964) 2 SCR 87 , this Court had to consider the respugnancy between the resolution passed by the appellant Municipal Council in exercise of the powers vested in it under Sections 286 and 287 of the Travancore District. Municipalities Act 1941, and the provisions of Section 42 of the Travancore-Cochin Motor Vehicles Act 1950 which came into force on January 5, 1950, providing for the use of a public bus stand constructed for stage carriage buses starting from and returning to the Municipal limits or passing through its limitsThe respondent operators challenged the resolution of the Council by contending that the provisions of Sections 286 and 287 of the Municipalities Act stood repealed by implication by virtue of the provisions of Section 42 of Travancore-Cochin Motor Vehicles Act, 1950. That Section read as follows:"Government or any authority authorised in this behalf by Government may, in consultation with the local authority having jurisdiction in the area concerned, determine places at which motor vehicles may stand either indefinitely or for a specified period of time, and may determine the places at which public service vehicles may stop for a longer time than is necessary for the taking up and setting down of passengers."The High Court accepted the contention of the respondents and allowed the Writ Petition. In appeal against the said decision, this Court discussed the law relating to the repugnancy between two legisiations by referring to various decided cases foreign as well as Indian. The court pointed out that in Daw v. The Metropolitan Board of Works, (1862) 142 ER 1104 after stating the general principles of construction, the Court there had said that when the legislation was found dealing with the same subject matter in two Acts, so far as the later statute derogates from and is inconsistent with the earlier one the legislature must be held to have intended to deal in the later statute with the same subject matter which was within the ambit of the earlier one. This court further observed that in that case the English Court was concerned with the statutes which covered more or less the same subject matter and had the same object to serve. That decision further had kept open the question whether the powers conferred upon one authority by an earlier Act could continue to be exercised by that authority, after the enactment of a provision in a subsequent law which conferred wide powers on another authority which would include some of the powers conferred by the earlier statute till the new authority chose to exercise the powers conferred upon it. Referring to the case of The Great Central Gas Consumers Co. v. Clarke (1863) 143 ER 331, the Court observed that the foundation of that decision was that the later statute was a general one whereas the previous one was a special one and, therefore, the special statute had to give way to the later general statuteReferring to the case ofGoodwin v. Phillips, (1908) 7 CLR 16the Court observed that the doctrine of implied repeal was well recognised, and that repeal by implication was a convenient form of legislation and that by using this device, the legislature must be presumed to intend to achieve a consistent body of law. The Court then went on to say that it is undoubtedly true that the legislature can exercise the powers of repeal by implication, but it is an equally well settled principle of law that there is a presumption against an implied repeal. Upon the assumption that the legislature enacts laws with a complete knowledge of all existing laws pertaining to the same subject, the failure to add a repealing clause indicates that the intent was not to repeal existing legislationWhat is important from our point of view, is the view taken in that case that. when repugnancy is alleged between the two statutes, it is necessary to examine whether the two laws occupy the same field, whether the new or the later statute covers the entire subject matter of the old, whether legislature intended to lay down an exhaustive code in respect of the subject matter covered by the earlier law so as to replace it in its entirety and whether the earlier special statute can be construed as remaining in effect as a qualification of or exception to the later general law, since the new statute is enacted knowing fully well the existence the earlier law and yet it has not repealed it expressly. The decision further lays down that for examining whether the two statutes cover the same subject matter, what is necessary to examine is the scope and the object of the two enactments, and that has to be done by ascertaining the intention in the usual way and what is meant by the usual way is nothing more or less than the ascertainment of the dominant object of the two legislationsThe contention was that the expression "any other law" covered by the impugned State Act which was in force in the State immediately before the commencement of the Essential Commodities Act in so far as it controlled or authorised the control of production, supply and distribution of and trade and commerce in sugar cane (which was), an essential comniondity under the Central Act and Clause (7) of the Sugar Cane Control Order. The contention advanced on behalf of the U.P. State was that under the proviso to Article 254(2), the power to repeal a law passed by the State Legislature was incidental to enacting a law relating to the same matter as is dealt with in the State legislation and that a statute which merely repeals a law passed by the State Legislature without enacting substantive provisions on the subject would not be within the proviso, as it could not have been the intention of the Constitution that on a topic within the concurrent sphere of the legislation, there should be a vacuum. The Court observed that there was considerable force in the said contention and there was much to be said for the view that a repeal simpliciter was not within the scope of the proviso. The Court, however, stated that it was not necessary to give its decision on the said point as the petitioner in that case would fail on another ground. The Court then observed that while the proviso to Article 254(2) does confer on Parliament a power to repeal a law passed by the State Legislature, that power is, under the terms of the proviso, subject to certain limitations. It is limited to enacting a law with respect to the same matter adding to, amending, varying or repealing a "law so made by the State Legislature". The law referred to here is the law mentioned in the body of Article 254(2). It is a law made by the State Legislature with reference to a matter in the Concurrent List containing provisions repugnant to an earlier law made by Parliament and with the consent of the President. It is only such a law that could, be altered, a mended or repealed under the proviso. The impugned Act was not a law relating to any matter, which is the subject of an earlier legislation by Parliament. It was a substantive law covering a field not occupied by Parliament, and no question of its contain in any provisions inconsistent with a law enacted by Parliament could therefore arise. To such a law, the proviso had no application and Section 16(1)(b) of Act X of 1955 and clause 7(1) of the Sugarcane Control Order, 1955 must, in this view, be held to be invalid. (sic)34. The aforesaid review of the authorities makes it clear that whenever repugnancy between the State and Central Legislation is alleged, what has to be first examined is whether the two legislations cover or relate to the same subject matter. The test for deter mining the same is the usual one, namely, to find out the dominant intention of the two legislations. If the dominant intention, i.e. the pith and substance of the legislations is different, they cover different subject matters. If the subject matters covered by the legislations are thus different, then merely because the two legislations refer to some allied or cognate subjects they do not cover the same field. The legislation, to be on the same subject matter must further cover the entire field covered by the other. A provision in one legislation to give effect to its dominant purpose may incidentally be on the same subject as covered by the provision of the other legislation. But such partial coverage of the same area in a different context and to achieve a different purpose does not bring about the repugnancy which is intended to be covered by Article 254(2). Both the legislations must be substantially on the same subject to attract the Article35. In this view of the matter I am of the view that there is no repugnancy in the provisions of Sections 14 and 20 of the Karnataka Act and Sections 74 and 80 of the MV Act 1988. The petitions must therefore fail and are hereby dismissed