Case: Kumaon Motor Union Owners Ltd. And Another Vs. The State Of Uttar Pradesh

The appellant, Kumaon Motor Owners Union Limited (hereinafter referred to as the union) was established in 1939 and had at the date of the writ petitions, 330 members all of whom owned transport vehicles. These members have public carrier permits as well as stage carriage permits, which are in force in the Kumaon region except on certain notified routes. The permits of the various members of the union are valid upto various dates falling in the years 1966 and 1967.2. On August 17, 1964, the State Government purporting to exercise powers under Cls. (gg) and (i) of sub-rule (2) of R. 131 of the Defence of India Rules, 1962 (hereinafter referred to as the Rules) issued a notification by which it was directed that with effect from October 1, 1964, no private operators shall ply any vehicle or class of vehicles for the carriage of persons or goods on, and no vehicles or class of vehicles operated by the private operators shall pass through, Tanakpur-Dharchula route of Kumaon region. It was further directed in the notification that on this route, the U. P. Government Roadways vehicles alone shall ply for the carriage of passengers and goods. The result of this notification was to stop plying of all vehicles belonging to the members of the union on the route in question and this led to the filing of the two petitions in the High Court. The union was party to both the petitions, which were in the same terms.3. In the petitions the appellants challenged the notification of August 17, 1964, and this challenge was based on four grounds. In the first place, it was contended that no order of the kind passed on August 17, 1964 could be passed under R. 131 (2) (gg) and (i). In the second place, it was contended that the U. P. Government was contemplating nationalisation of this route in the Kumaon region for a long time prior to August 1964. Eventually, however, instead of proceeding with the scheme of nationalisation which would have necessitated payment of compensation to operators plying in the region, the Government decided to circumvent the provisions of Ch. IV- A of the Motor Vehicles Act, (No. 4 of 1939) and introduced nationalisation through the device of an order under Cls. (gg) and (i) of R. 131 (2) of the Rules. So it was contended that the action of the State Government in passing the challenged order was mala fide. Thirdly, it was contended that S. 44 of the Defence of India Act, No. 51 of 1962, (hereinafter referred to as the Act) had been contravened by the order. Lastly, the contention was that the satisfaction necessary for passing the order under the Act and the Rules had not been shown by the affidavits filed on behalf of the State Government and therefore the condition precedent to the passing of such an order was absent.4. The petitions were opposed on behalf of the State Government. It was not disputed that at one time prior to August 1964 the State Government had thought of nationalising this route and this matter was under consideration for sometime since 1962. But the State Government justified the passing of the impugned order on the ground that since 1960 reports had started coming in from the State Intelligence Department that certain anti-national and subversive elements were infiltrating the transport organisation and were exercising influence over the drivers, employees and other private operators of the union. As far back as October 1960, the Deputy Commissioner, Almora had sent a report to Government that it was necessary in the interest of national security that no new routes in Pithoragarh should be given for operation to the union and that their operation should be limited to Almora proper. Thereupon in a meeting of high officials on November 14, 1960, it was decided that the Deputy Inspector General Intelligence should supply the Transport Commissioner with a list of the ring leaders of such antinational elements and the Transport Commissioner should make efforts for the elimination of such elements from the transport organisation. It was also decided that the management of the union should be asked to screen their employees before they were employed and the police would be ready to render assistance in the matter of verification of antecedents of persons to be employed by the union. Finally, it was also decided that the Transport Commissioner should consider the question of running buses exclusively owned by Government on the border routes.5. Further meetings were held in January and August 1961 in which it was pointed out that it was difficult to eliminate undesirable elements from transport organisations on account of existing labour laws. In the meantime more reports had come in of undesirable activities by workers of transport organisations in the border region. Therefore, in May 1962, it was tentatively decided by the State Government that the real solution to the problem lay in the operation of transport in the border areas by Government alone. In the meantime the Transport Commissioner informed the Government that as the union was a private concern, the transport department could do nothing itself to eliminate these anti-national elements from the union and that the management of the union also appeared to be powerless in the matter. Consequently in October 1962, the transport department was asked to consider the question of nationalisation of some of the border routes from the point of view of security.6. This was the situation when the Chinese attacked in October 1962. In November 1962, an employee of the union had to be detained under R. 30 (1) (b) of the Rules as his activities were considered prejudicial to the defence of India and public safety. The matter remained under consideration for another year and in October 1963 it was again impressed on the Transport Commissioner to eliminate anti-national elements from the transport organisations including the union serving in the border areas. The Transport Commissioner however expressed his inability to do so and was then asked to examine the implication of nationalisation of border routes on the ground of security. In January 1964 it appears that the transport department reported that nationalisation would not be economical and that the Government would stand to lose if it eliminated all private operators from this route and substituted government owned vehicles in their place. Even so, it was finally decided in August 1964 after the matter was put up before the Chief Minister who dealt with matters arising out of the Act and Rules that in the interest of security, this route should be taken away from private operators like the union and that the transport department should run its own vehicles on it. It was in consequence of this decision of the Chief Minister finally made in July 1964 that the impugned notification was issued on August 17, 1964.7. On these averments, it was contended on behalf of the State Government in the High Court that there was no mala fides in eliminating operators from this route and entrusting it to the transport department. It was further contended that there was no contravention of S. 44 of the Act. Further it was urged that the order in question was justified within the terms of R. 131 (2) (gg) and (i) of the Rules. Lastly it was contended that the order had been passed after the necessary satisfaction of the Chief Minister.8. The High Court negatived all the contentions raised on behalf of the appellants. As to the satisfaction of the Chief Minister before the issue of the impugned order, the High Court was of the view that the affidavit filed on behalf of the State Government was not very satisfactory; but on the whole it came to the conclusion that the order had been issued after the necessary satisfaction and consequently the petitions were dismissed. The appellants then obtained certificates from the High Court and that is how the matter has come up before us.

Court's reasoning:
It is true that R. 131 deals inter alia with control of road transport and Cl. (gg) of R. 131 (2) provides for prohibiting or restricting the carriage of persons or goods by any vehicles or class of vehicles, either generally or between any particular places or on any particular route. But we are of opinion that the vehicles, the control of which is envisaged in Cl (gg), cannot be divorced from the persons who are plying the vehicles. No order can be issued to vehicles which are inanimate objects and an order under Cl. (gg) will have to be issued to the persons plying the vehicles and the prohibition or restriction envisaged by Cl. (gg) must addressed to person plying the vehicles mentioned therein. Therefore when Cl. (gg) envisages prohibition or restriction of carriage of persons or goods by any vehicle or class of vehicles, it obviously means that the order will apply to persons plying such vehicles. The argument based on divorcing vehicles from persons plying the vehicles is in our opinion completely fallacious and consequently when Cl. (gg) provides for prohibition or restriction with respect to vehicles, it obviously refers to regulation of the conduct of persons plying the vehicles or prohibiting them completely from plying vehicles. We think that is the only way to carry out the purposes of thisdoes appear that there is some apparent conflict between S. 43 on the one hand and S. 68-B of the Motor Vehicles Act read with S. 6 (4) of the Act on the other, and that conflict has to be resolved. The only way to do it is to decidewhether in such a situation, S. 13 of the Act will prevail or S. 68-B of the Motor Vehicles Act will prevail.We are of opinion that S. 13 of the Act mustintention seems to be clear in view of the collocation of the words "in Ch. IV of this Act" with the words "in any other law for the time being in force" that Ch. IV-A was to prevail over Ch. IV of the Motor Vehicles Act or over any other law of the same kind dealing with motor vehicles or for compensation. On the other hand S. 43 of the Act emphatically says that the Act will prevail over any enactment other than the Act, and this suggests that the legislature intended that the emergency legislation in the Act will be paramount if there is any inconsistency between it and any other provision of any other law whatsoever. Such a provision is under-standable in view of the emergency which led to the passing of theare of opinion that there is no force in this argument. The words "shall have effect" appearing in. 6 (4) of the Act have to be read in the context of that sub-section. In that context they only mean that the Motor Vehicles Act will continue as before subject to the amendments made by S. 6 (4). These words in the context of S. 6 (4) do not mean that the entire Motor Vehicles Act is being made a part of the Act; and it is only the six clauses making changes in the Motor Vehicles Act which can at the best be treated as part of the Act. The over-riding effect given to orders passed under the Act and the Rules by S. 43 of the Act cannot, therefore be taken away with respect to the provisions of the Motor Vehicles Act other than clauses (a) to (f) of S. 6 (4). It is not in dispute that we are not concerned in the present case with Cls (a) to (f) and as a matter of fact if we look at these clauses they are concerned with making provisions which over-ride certain provisions of the Motor Vehicles Act. The argument that the entire Motor Vehicles Act must be read as a part of the Act must, therefore, be rejected and in consequence S. 43 of the Act will have over-riding effect in accordance with its tenor.In view, therefore, of the provisions contained in S. 43 of the Act which as we have said already way passed to meet a grave national emergency, the argument that the provisions contained in Ch. IV-A for framing a scheme and paying compensation must still be complied with where action is taken under R. 131 (2) (gg) of the Act must bein our opinion does not amount to destroying the commercial undertaking which is left untouched by the order. All that may be said to have resulted from the order is that the profit making capacity of the commercial undertaking might have been reduced to a certain extent. That, however, does not in our opinion mean that the commercial undertaking has been destroyed. We may add that even if the profit making capacity of the commercial undertaking was lost due to one line of business being stopped that would not amount to destruction of the commercial undertaking, which could take up other business. So long as the order under Cl. (gg) of R. 131 (2) comes within the terms of that clause, it will be good even though it may diminish the profit making capacity of a commercial undertaking or even reduce it to nothing in a particular line of business. We are, therefore, of opinion that the impugned order is in accordance with the terms of Cl. (gg) sub-r. (2) of R. 131 and cannot be said to go beyond the power conferred on the State Government by thatwhether the vacuum was filled by ordering the Roadways to ply their vehicles on the route in question or by making any other arrangement, that would clearly be within the power of the State Government under Cl. (i) of R. 131 (2).We are, therefore of opinion that the order passed by the States Government on August 17, 1964 was within its powers under R. 131 (2) (gg) and (i) of thecan be no doubt that the matter was considered from all aspects and eventually it was decided to take action under R. 131 (2) (gg) of the Rules.In these circumstances it cannot possibly be said that the action was mala fide and was taken to avoid payment of compensation under Chapter IV-A. The fact that at one stage nationalisation and consequent payment of compensation under Ch. IV-A was under consideration does not mean that if eventually action was taken under R. 131 (2) (gg) to stop activities prejudicial to the defence of India such action was mala fide or was merely a device to avoid payment of compensation. The long period of almost four years which was taken for coming to a decision shows the circumspection with which the State Government acted when it finally decided to pass the order under R. 131/(2)(gg).We are, therefore, of opinion that there is no question of the order being mala fide or having been passed as a device to avoid payment of compensation under Ch. IV-A of the Motor Vehicles Act. Some of the words used in the counter-affidavit on behalf of the State Government in reply are somewhat unfortunate and inapt, but we have no doubt that the impugned order was passed without any mala fide and was not a device merely to avoid payment ofare of opinion that if a person contends that a particular order contravenes S. 44, it is for him to show that anything less than what the order provides would have met the needs of the situation. In the present case the appellants have failed to show any such thing. Besides the affidavit filed on behalf of the State Government shows that for a long time attempts were made to see if the prejudicial activities complained of could be stopped in any other way. It was only when it was felt that there was no other way of stopping the prejudicial activities of the employees of the union that the order in question was passed. In the circumstances we are not prepared to hold that the order in question interferes with the rights of the appellants more than was necessary for the purpose to bedoes appear that the affidavits filed in the High Court were not quite clear on this point. Therefore, we gave an opportunity to the State Government to file an affidavit to show that the satisfaction of the State Government necessary before passing an order of this kind was arrived at.In consequence an affidavit was filed on behalf of the State Government on August 16, 1965 by the Deputy Secretary (Home Department) U. P. Government, Lucknow. In that affidavit it has been stated that under the rules relating to the allocation of business, matters relating to the subject-matter which led to the issue of the impugned notification have to be submitted to the Chief Minister before the issue of orders. It was further stated that after various meetings of the officials of the State, the matter was put up before the Chief Minister on December 5, 1963 or so and the Chief Minister after considering all aspects decided that it was necessary to take over the route in question. The matters were further considered by various officers and there was correspondence with the Government of India and eventually on July 30, 1964, it was finally decided by the Chief Minister to take over the route in question in the interest of security. It was thereafter that the order of August 17, 1964 was issued by the Transport Department with the concurrence and approval of the Home Department. In view of this affidavit filed in this Court there can be no doubt that the necessary satisfaction of the State Government which is a condition precedent for the issue of an order under the rules was there before the impugned order was issued.