Case: Saghir Ahmad Vs. The State Of U. P. And Others.(With Connected Appeal)

1. The appellants in these two analogous appeals, along with many others, have been carrying on the business of plying motor vehicles as stage carriages on hire on the Bulandshahr-Delhi route from a number of years past. The running of these vehicles has been regulated so long by the Motor Vehicles Act of 1939 which provides, inter alia, for granting of driving licences, the registration of vehicles and exercising control over transport vehicles through permits granted by Regional Transport Authorities. Section 42(3) of the Act exempts transport vehicles, owned by or on behalf of the Central Government or the Provincial Government from the necessity of obtaining permits unless the vehicles were used in connection with the business of an Indian Stateappears, that some time after 1947 the Government of U.P. conceived the idea of running their own buses on the public thoroughfares. They first started running buses only as competitors with the private operators but later on they decided to exclude all private bus owners from the field and establish a complete State monopoly in respect to the road transport business. They sought to achieve this object by calling in aid the provisions of the Motor Vehicles Act itself. Under section 42(3) of the Act as mentioned above, the Government had not to obtain permits for their own vehicles and they could run any number of buses as they liked without the necessity of taking out permits for them.The Transport Authorities, in furtherance of this State policy, began cancelling the permits already issued to private operators and refusing permits to people who would otherwise have been entitled to them. Upon this, a number of private bus owners filed petitions in the Allahabad High Court under Article 226 of the Constitution praying for appropriate relief, by way of writs, against what was described as the illegal use of the provisions of the Motor Vehicles Act by the Government of U.P.These petitions were heard by a Full bench of five Judges and four judgments were delivered dealing with various questions that were raised by the parties. A majority of the judges expressed the opinion that the State purporting to act under section 42(3) of the Motor Vehicles Act, could not discriminate against other persons in their own favour and that the sub-section, in so far as it purports to exempt State Transport buses from the obligation to obtain permits for their use, conflicts with Article 14 of the Constitution. All the judges concurred in holding the nationalisation of an industry was not possible by a mere executive order without appropriate legislation and such legislation would probably have to justified under Article 19(6) of the Constitution. As a result of this decision the Transport Authorities were directed to deal with the applications for permits, made by the various private bus owners, in accordance with the provisions of the Motor Vehicle Act, without in any way being influenced by the consideration that the State Government wanted to run buses of their own on certain routes.2. In view of this pronouncement of law, the State Government, which wanted to have the exclusive right to operate Road Transport Services within its territory, sought the assistance of the legislature and the U.P. Road Transport Act (Act II of 1951) was passed and become law on and from the 10th of February, 1951. It is the constitutional validity of this enactment which is the sub-matter of contest in these present proceedings.3. The preamble to the Road Transport Act(hereinafter called "The Act") saysit is expedient in the interest of the general public and for the promotion of the suitable and efficient road transport to provide for a State Road Transport Services in Uttar Pradesh, it is enacted as2 gives definition of certain terms, while section 3, which is the most material section in the Act, embodies virtually its whole purpose. It provides that where the State Government is satisfied that it is necessary, in the interest of general public and for sub-serving the common good, so to direct, it may declare that the Road Transport Services in general, or any particular class of such service on any route portion thereof, shall be run and operated by the State Government in conjunction with railway or partly by the State Government and partly by others in accordance with the provisions of this4 provide for publication of a scheme framed in accordance with the above declaration and objections to such scheme can be made by interested persons in the manner laid down inAs soon as the scheme is finalised, certain consequences follow which are detailed in section 7. So long as the scheme continues in force, the State Government shall have the exclusive right to operate Road Transport Services or if the scheme so provides, a certain fixed number of transport vehicles belonging to others can also be run on those roads. The State Government shall be authorised in all such cases to direct the dispensation of the State Transport vehicles from the necessity of taking out permits, or to cancel, alter or modify any existing permits or to add any fresh condition to any permit in respect to any transport vehicle. The remaining portion of the Act purports to lay down how the provisions of the Act are to be worked out and8 and 9 provide respectively for the appointment of a Transport Commission and Advisory Committees. Under section 10 the State Government may delegate its powers under the Act to an officer or authority subordinate to it. Section 12 makes it an offence for any person to drive a public service vehicle or allow such vehicle to be used in contravention of the provisions of section 7. It is not necessary to refer to the provisions of the remaining sections as they are not material for our present purpose.4. By a notification dated the 25th of March 1953 the U. P. Government published a declaration in terms of section 3 of the Act, to the effect, that the State carriage services, among others, on the Bulandshahr-Delhi route, shall be run and operated exclusively by the State Government. A further notification issued on the 7th of April following, set out what purported to be a scheme for the operation of the State carriage services on these routes. Thereupon the two appellants as well as several other private bus owners numbering 106 in all, who plied transport buses on these routes, presented petitions under Article 226 of the Constitution before the High Court at Allahabad praying for writs, in the nature of mandamus, directing the U.P. Government and the State Transport Authorities not to interfere with the operation of the stage carriages of the petitioners and to refrain from operating the State Road Transport Service except in accordance with the provisions of the Motor Vehicles Act.The constitutional validity of the Act was challenged on a number of grounds, the principal contentions beingthat the Act was discriminatory in its character and contravened the provisions of Article 14 of the Constitution;(2) that it conflicted with the fundamental rights of the petitioners guaranteed under Article 19(1)(g) of the Constitution;and (3) that it was an invalid piece of legislation as it purported to acquire the interest of the petitioners in a commercial undertaking without making any provision for compensation as is required under Article 31(2) of the Constitution. It was further argued that the Act violated the guarantee of freedom of inter-State and intra-State trade embodied in Article 301 of the Constitution.All these writ petitions were heard by a Division Bench of the High Court consisting of Mukherji and Chaturvedi JJ. By two separate but concurring judgments dated the 17th of November 1953, the learned Judges repelled all the contentions of the petitioners and dismissed the writ petitions. It is against this decision that these two appeals have come up to this Court on the strength of certificates granted by the High Court and Mr. Gopal Swarup Pathak appearing in support of the appeals has reiterated practically all the grounds which were urged on behalf of his clients in the court below.

Court's reasoning:
Over the latter the State claims and exercises a plenary power of control. Ayyar, J. has, in our opinion, rightly pointed out that this doctrine of franchise has no place in our Constitution. Under the Indian Constitution the contract carriers as well as the common carriers would occupy the same position so far as the guaranteed right under Article 19(1)(g) is concerned and both are liable to be controlled by appropriate regulations under clause (6) of that Article.We are in entire agreement with the statement of law made in these passages. Within the limits imposed by State regulations any member of the public can ply motor vehicle on a public road. To the extent he can also carry on the business of transporting passengers with the aid of the vehicles. It is to this carrying on of the trade or business that the guarantee in Article 19(1)(g) is attracted and a citizen can legitimately complain if any legislation takes away or curtails that right any more than is permissible under clause (6) of that article.Article 19(6) of the Constitution as it stands after the amendment of 1951, makes a three-fold provision by way of exception to or limitation upon clause (1) (g) of the Article. In the first place it empowers the State to impose reasonable restriction upon the freedom of trade, business, occupation or profession in the interest of the general public. In the second place it empowers the State to prescribe the professional and technical qualifications necessary for practising any profession or carrying on any occupation, trade or business. Thirdly,....and this is the result of the Constitution (First) Amendment Act of 1951 --- it enables the State to carry on any trade or business either by itself or through a corporation owned or controlled by the State to the exclusion of private citizens wholly or in part.Against this view it may be urged that the use of the words "deprivation" and "restrictions" as interchangeable expressions is not altogether unusual in ordinary language and the nature and extent of restrictions might in some cases amount to a negation of themay be mentioned here that the Excise Regulation is not a prohibitory statute which prohibits trading in liquor by private citizens altogether. It purports to regulate the trade in a particular way, namely, by putting up the right of trading in liquor in specified areas to the highest bidder in auction sale. The general observations occurring in the judgment cited above must therefore have to be taken with reference to the facts of that case.21. Be that as it may although in our opinion the normal use of the word "restriction" seems to be in the sense of limitation and not extinction, we would on this occasion prefer not to express any final opinion on this matter. If the word, restriction does not include total prohibition then the law under review cannot be justified under Article 19(6). In that case the law would be void unless it can be supported by Article 31. That point will be dealt with under the other point raised in the appeal. If however the word "restriction" in Article 19 (6) of the Constitution be taken in certain circumstances to include prohibition as well, the point for consideration then would be, whether prohibition of the right of all private citizens to carry on the business of motor transport on public roads within the State of Uttar Pradesh as laid down by the Act can be justified as reasonable restrictions imposed in the interests of the generalorder to judge whether State monopoly is reasonable or not, regard therefore must be had to the facts of each particular case in its own setting if time and circumstances . It is not enough to say as an efficient transport service is conducive to the interests of the people, a legislation which makes provision for such service must always be held valid irrespective of the fact as to what the effect of such legislation would be and irrespective of the particular conditions and circumstances under which the legislation was passed. It is not enough that the restrictions are for the benefit of the public, they must be reasonable as well and reasonableness could be decided only on a conspectus of all relevant facts andis undoubtedly a presumption in favour of the constitutionality of a legislation. But when the enactment on the face of it is found to violate a fundamental right guaranteed under Article 19 (1)(g) of the Constitution, it must be held to be invalid unless those who support the legislation can bring it within the purview of the exception laid down in clause (6) of the article. If the respondents do not place any materials before the Court to establish that the legislation comes within the permissible limits of clause (6), it is surely not for the appellants to prove negatively that the legislation was not reasonable and was not conductive to the welfare of thething, however, in our opinion, has a decided bearing on the question of reasonableness and that is the immediate effect which the legislation is likely to produce. Hundreds of citizens are earning their livelihood by carrying on this business on various routes within the State of Uttar Pradesh. Although they carry on the business only with the aid of permits, which are granted to them by the authorities under the Motor Vehicles Act, no compensation has been allowed to them under the statute. It goes without saying that as a result of the Act they will all be deprived of the means of supporting themselves and their families and they will be left with their buses which will be of no further use to them and which they may not be able to dispose of easily or at a reasonable price.It may be pointed out in this connection that in Part IV of the Constitution which enunciates the directive principles of State policy, Article 39(a) expressly lays down that the State shall direct its policy towards securing "that the citizens, men and women equally, have the right to an adequate means of livelihood."The new clause in Article 19(6) has no doubt been introduced with a view to provide that a State can create a monopoly in its own favour in respect of any trade or business but the amendment does not make the establishment of such monopoly a reasonable restriction within the meaning of the first clause of Art. 19(6). The result of the amendment is that the State would not have to justify such action as reasonable at all in a court of law and no objection could be taken to it on the ground that it is an infringement of the right guaranteed under Article 19(1)(g) of theamendment of the constitution, which came later, cannot be involved to validate an earlier legislation which must be regarded as unconstitutional when it wasthink that this is sound law and our conclusion is that the legislation in question which violates the fundamental right of the appellants under Article 19(1)(g) of the Constitution and is not shown to be protected by the Clause (6) of the Article as it stood at the time of the enactment, must be held to be void under Article 13(2) of theview of that majority decision it must be taken to be settled now that Clause (1) and (2) of Article 31 are not mutually exclusive in scope but should be read together as dealing with the same subject, namely, the protection of the right to property by means of limitations on the States powers, the deprivation contemplated in Clause (1) being no other than acquisition or taking possession of the property referred to in Clausefact that the buses belonging to the appellants have not been acquired by the Government is also not material. The property of a business may be both tangible and intangible. Under the statute the Government may not deprive the appellants of their buses or any other tangible property but they are depriving them of the business of running buses on hire on public roads. We think therefore that in these circumstances the legislation does conflict with the provision of Article 31 (2) of the Constitution and as the requirements of that clause have not been complied with, it should be held to be invalid on thatis well settled that mere differentiation does not make a legislation obnoxious to the equal protection clause. The Legislature has always the power to make classification and all that is necessary is that the classification should not be arbitrary but must bear a reasonable relation to the object which the legislation has in view. There is no doubt that classification is inherent in the concept of a monopoly; and if the object of legislation is to create monopoly in favour of the State with regard to a particular business, obviously the State cannot but be differentiated from ordinary citizens and placed in a separate category so far as the running of the business is concerned and this classification would have a perfectly rational relation to the object of the statute. No doubt if the creation of a monoply in favour of the State is itself bad on the ground of violating some constitutional provisions, the statute would be invalid for those reasons and the question of discrimination would not be material at all. In our opinion, the argument of Mr. Pathak that the State ceases to function as a State as soon as it engages itself in a trade like ordinary trader cannot be accepted as a sound proposition of law under the Constitution of India at the present3 of the Act authorises the State Government to declare that the road transport service in general or on particular routes should be run and operated by the State Government exclusively or by the State Government in conjunction with railway or partly by the State Government and partly by others in accordance with the provisions of the Act. The whole question is how is the last part of the section to be implemented and carried out ? If the State can choose any and every person it likes for the purpose of being associated with the transport service and there are no rules to guide its discretion, plainly the provision would offend against Article 14 of thedoes not appear to us to be an unreasonable construction to be put upon the relevant portion of Section 3 of the act and it receives support from what is laid down in Section 7(c) of the act. On this construction the discretion to be exercised by the State would be a regulated discretion guided by statuary rules. We hold therefore that the appellant cannot make any grievance on this score and that the statute does not offend against Article 14 of theagainst this it may be pointed out that the constitution itself has provided in Art.302 and 304 (b) how reasonable restrictions could be imposed upon freedom of trade and commerce and it would not be proper to hold that restrictions can be imposed aliunde these provisions in the Constitution. The question would also arise as to what interpretation should be put upon the expression "reasonable restrictions" and whether or not as would have to apply the same tests as we have applied in regard to Article 19(6) of the Constitution. One material thing to consider in this connection would be that although the constitution was amended in 1951 by insertion of an additional clause in Article 19(6) by which State monopoly in regard to trade or business was taken out of the purview of Article 19(1)(g) of the Constitution, yet no such addition was made in Article 301 or Article 304 of the Constitution and Article 301, as it stands, guarantees freedom of trade, commerce and intercourse subject only to Part XIII of the Constitution and not the other parts of the Constitution including that dealing with fundamental rights.