Holding

The notification’s fee‑revision provisions are intra vires, but the clause making DTC concessional passes binding on private operators is ultra vires of Section 67 and is struck down.

Summary

The appellants, private stage‑carriage operators, challenged a Delhi Government notification dated 31‑12‑1999 issued under Section 67 of the Motor Vehicles Act, 1988, which (i) raised the fees for using DTC bus shelters and terminals and (ii) made all DTC concessional passes binding on private operators. The Supreme Court held that the fee revisions were within the State’s power and the notification’s provisions relating to them were intra vires. However, the clause compelling private operators to honour DTC concessional passes was beyond the scope of Section 67(1)(d) and therefore ultra vires. The Court quashed that clause, directed the respondents to devise a scheme for student pass holders, and allowed the appeal in part.

Issues considered

The validity of the notification under Section 67(1)(d) of the Motor Vehicles Act, 1988 for revising shelter and terminal charges.
Whether the State Government can, by a Section 67 notification, make DTC concessional passes binding on private stage‑carriage operators.
Whether the upward revision of charges for bus shelters and terminals violates the permit conditions or the statutory scheme.
Whether imposing the binding nature of DTC passes infringes the constitutional right to trade (Article 19(1)(g)) and the concept of social obligations under Article 38.
Whether the State can alter permit conditions without complying with the variation rules under Section 72(2) and the Delhi Motor Vehicles Rules.

Legislation cited

Constitution of Indias. Article 19(1)(g), s. Article 38
Motor Vehicles Act, 1988s. 66, s. 67, s. 69, s. 70, s. 71, s. 72(2)(xx), s. 72(2)(xxii), s. 72(2)(xxiv)
Road Transport Corporation Act, 1950s. Section 3

Subjects

Motor Vehicles ActSection 67Stage carriage permitsConcessional passesUltra viresPublic transportArticle 19Article 38Delhi Transport CorporationState Transport AuthorityFare revisionBus shelter chargesPermit conditionsSocial obligations

Judgment

CAPTAIN SUBE SJNGH AND ORS. A
v.
LT. GOVERNOR OF DELHI AND ORS.

APRIL 30, 2004

[R.C. LAHOTI, B.N. SRIKRISHNA AND G.P. MATHUR, JJ.) B

Motor Vehicles Act, 1988:

Section 67-Stage carriage permits-Notification dated 31-12-1999
issued by Lt. Governor of National Capital Territory of Delhi-Para 3(a)- C
Bus queue shelters and bus terminals charges payable by private operators
upwardly revised-Validity of-Held: Steep increase ofcharges does not make
the conditions of the permit illegal or ultra vires the power ofState Transport
Authority-Hence, upward revisions ofcharges valid-Para 3(a) ofNotification
dt. 31-12-1999 intra vires the Act. D
Section 67-Stage carriage permits-Notification dated 31-12-1999
·issued by Lt. Governor of National Capital Territory of Delhi-Para 3(b)-
Concessional passes issued by DTC-Whether binding on private stage carriage
operators-Held: A power to enforce the binding nature of the concessional
passes issued by DTC on private stage carriage operators cannot be subsumed E
under the powers ofthe State Government-Hence, para 3(b) ofthe_ notification
dt. 31-12-1999 is clearly ultra vires the powers ofthe State Government under
S. 67(/)(d) r/w clause (i) and, therefore liable to be quashed and set aside-
However, since a sudden discontinuation ofconcessional passes would seriously
affect commuters, especially students, the State Transport Authority given time F
to make alternative arrangements and formulate an appropriate scheme
therefor.

Section 72(2)(xx)-Stage carriage permits-Conditions-Alteration of-
Permissibility of-Held: Conditions ofpermit could be altered by issuance of
notification under S. 67-However, the notification must. have been validly G
issued-But the Authority must act in accordance with the rules for variation
of the conditions attached to the permit-It is not permissible for the State
Government to purport to alter these conditions by issuing a notification
under S. 67(/)(d) rlwl clause (i).

929 H
930 SUPREME COURT REPORTS [2004) SUPP. I S.C.R.

A Chapter VJ-Concessional passes-Considerations in favour of Delhi
Transport Undertaking (DTC)-Held: Apart from the concessions, which are
expressly made available in favour of State Transport Under,tak,ing, there are
no special considerations in favour of DTC.

Delhi Motor Vehicles Rules, 1973:
B
Rules 75 and 76-Stage carriages-Halting of-Jn public places -
Permissib1/ity ·a/-Held: A stage carriage ope~ator is required to stop the bus
only at such places as directed by the conditions of the permit_;_Buses of the
private operators are required to stop their buses only at bus shelters and
C terminals of DTC. {

Constitution of India, 1950:

Articles 19(1)(g) and 38-"Social obligations "--Concessional passes-'-
lssued by DTC-Honouring of-By private transport operators-Held: Private
D transport operators not required to honour t~ concessional passes issued by
DTC in discharge of its so-called "social obligations".

The appellants were private transport operators and were granted
stage carriage permits under the Motor Vehicles Act, 1988, read with the
Delhi Motor Vehicles Rules, 1993. Respondent No. 1 issued a notification
E dated 31-12-1999 under Section 67 of the Act whereby the charges for bus
queue shelters and bus terminals payable by the appellants were upwardly
revised. The said notification further stipulated that the concessional passes
issued by respondent No. 4-Delhi Transport Corporation, would also be
binding on the appellants.

F Being aggrieved by the aforesaid notification, the appellants filed a
writ petition before the High Court, which was dismissed. Hence the
appeal.

Allowing the appeal in part, the Court

G HELD: 1.1. Apart from the concessions, which are expressly made
available under Chapter VI of the Motor Vehicles Act, 1988, in favour of
the State Transport Undertakings, there are no special considerations in.
favour of respondent No. 4-Delhi Transport Corporation (DTC), which
must be treated as any other operator. [942-B-CI
H
CAPTAIN SUBE SINGH v. LT. GOVERNOR OF DELHI 931
Ishwar Singh Bagga v. State of Rajasthan, [19871 1 SCC 101, relied A
on.

1.2. The peculiar circumstances under which the running of stage
carriage permits within the National Capital Territory of Delhi, were
thrown open to private operators and the specific conditions imposed in B
the permits would have to be kept in mind for adjudging the legality of
the notification dated 31-12-1999. [942-D; 937-G)

2. A stage carriage operator has no liberty in the manner of halting
of the motor vehicle in public places by reason of the directions made
under Rule 75 of the Delhi Motor Vehicle Rules, 1993. Consequently, the C
stage carriage operator is required to stop the bus only at such places as
directed by the conditions of the permit. It so happens that, in the case of
the appellants, they were directed to stop their buses only at the bus
stations and terminals of DTC. Thus, they have no choice in the matter
and are obliged to halt their buses at such specified places. [943-D-E]
D
3. The appellants have not challenged the legality of condition No.
17 of the permit. Their only grievance is about the steep increase in the
charges for bus queue shelters and bus terminals. Condition No. 17
requires the private stage carriage bus operators to make payment of such
charges as shall be determined by the State Transport Authority (STA) E
in consultation with the DTC .from time to time. This was the very
condition subject to which the permit was issued to the appellants. The
fact that originally the service charges payable were a certain sum, or that
it has subsequently been revised, does not make the condition of the permit
illegal or ultra vires the powers of the respondent authorities. There is no
merit in the contention that the increase in the service charges payable to F
the OTC is unauthorized or ultra vires the powers of the STA and the State
Government. [943-F-G; 944-A-B)

4.1. A fair reading of condition No. 13 of the permit would be that
the STA would approve the issuing of concessional passes by the transport
operator and indicate the conditions subject to which such concessional G
passes are approved. [944-C-D)

4.2. The contention of the respondents that by reason of the aforesaid
condition of permit the concessional passes issued by the DTC would
automatically become enforceable and binding upon private operators who H
932 SUPREME COURT REPORTS [2004] SUPP. I S.C.R.

A were issued stage carriage permits, does not appear to be sustainable.
[944-E)

5.1. When a statute vests certain power in an authority to be
exercised in a particular manner, the said authority has to exercise it only
in the manner provided in the statute itself. (944-FJ
B
In re: Anjum MH. Ghaswa/a, [2002) 1 SCC 633 and Dhanajaya Reddy
v. State of Karnataka, [2001] 4 SCC 9, relied on.

5.2. The Motor Vehicles Act, 1988, requires the authority to act in
accordance with the rules for variation of the conditions attached to the
C permit. It is not permissible for the State Government to purport to alter
the conditions by issuing a notification under Section 67(1)(d) read with
sub-clause (i) thereof. (944-G; 945-A]

6. The power to enforce the binding nature ofthe·concessional passes.
issued by the DTC on the private stage carriage operators, can not be
D spelled out from the provisions of Section 67(1)(d) of the Act. Such a power
cannot be subsumed under the powers of the State Government to fix fares
and freights for stage carriages having regard to the desirability of
preventing uneconomic competition among holders of permits. Permit
condition No. 13 merely ~tipulates that the permit holder shall ensure that
E the concessional passes issued to various sections authorised for these buses
shall be honoured. The authorization has to come from the STA. In other
words, only concessional passes, which are authorised by the STA, would
be binding on the operators. There is no power in Section 67(1)(d) of the
Act or otherwise by which a concessional pass issued by the DTC could
be made binding upon private stage carriage operators, particularly when
F there was no such condition imposed in the permit issued. Hence,
paragraph 3(b) of the notification dated 31-12-1999 is clearly ultra vires
the powers of the State Government under Section 67 of the Act and,
therefore, liable to be quashed and set aside. (945-A-D; 937-G)

·7.1. Even assuming that the losses a·re not on account of
G mismanagement or inefficiency of the DTC, and. are really attributable
to the so-called honouring of its "social obligations", there is no warrant
or justification, under the provisions of the Statute as it stands, for
transferring this assumed responsibility to competing transport operators.
If the state authorities are of the view that the fare structures should be
H identical for all the operators including the DTC, there is no justification
CAPTAIN SUBE SINGH v. LT. GOVERNOR OF DELHI 933
for this indirect method of passing on the costs to the appellant operators. A
(945-E-FJ

7.2. In the first place, it cannot be accepted that all concessional
passes issued are necessarily in the discharge of "social obligations", as
claimed. A perusal of the operational statistics of the DTC justifies the
contention of the appellants. From the operational statistics it is noticed B
that nearly 48 per cent of the persons travelling in the DTC buses were
pass holders in April 1998 and this figure has gone to about 68 per cent
in November, 1999. While it may be possible to say that granting of
concessional passes to war widows and their dependents, disabled persons,
freedom fighters and such categories, may be in discharge of "social C
obligations", it would not hold true with regard to a large number of other
holders of concessional passes. 'Destination passes', 'general passes' and
'all route passes' are nothing but smart exercises designed to catch captive
commuters. These passes are really intended to collect advance fares,
which would save the commuters from the trouble of frequently going to
the office of the operator for paying for their passes by offering a marginal D
concession. In other words, a large amount of the fare gets collected, much
in advance, and what the DTC has to forego, is only a small amount
designed to cut down the collection cost, get money in advance and catch
captive co111muters. Such concessional passes are nothing but advance
tickets with marginal concessions giving services to the captive commuters. E
The attempt of the DTC through the STA and the State Government now
appears to be to ensure that even service is not required to be given to all
the captive commuters holding such concessional passes issued by the DTC,
by requiring the private operators to provide service to the pass holders
who have paid to the DTC. There is no discharge of "social obligations",
nor even the shadow of Article 38 of the Constitution, in this arrangement, F
which is sought to be brought into force by resort to the purported power
under Section 67 of the Act. If the DTC incurs losses in its running, it is
bailed out by the State Government by subsidies and convenient loans
which are written off, but, on the other hand, private operators have to
raise capital at enormous servicing cost and do not have finance or subsidy G
on tap. This is clearly an attempt to rob Peter to pay Paul.
(945-F~G; 946-A-EJ

8. When the State has exercised its power under Section 67 of t_he
Act, the conditions of the permit automatically get altered. But the rub is
that the notification under Section 67 of the Act must have been validly H
934 SUPREME COURT REPORTS [2004] SUPP. I S.C.R.

A issued in exercise of the said power. (947-B)
Sree Gajanana Motor Transport Co. Ltd v. State of Karnataka, (1977)
1SCC37 and B. Srikantiah v. Regional Transport Au{hority, (1971) 2 SCC
434, relied on.

B 9. The s.udden ~iscontinuation of th~ concessional passes would
seriously affect the commuters, particularly students community, holding
a large number of concessional passes issued by the DTC. Some locus
poenitentia should be given to the respondents to make alternative
arrangeme~ts by formulat~ng an appropriate scheme in· accordance with
law, which should take care of the student concessional passes. (947-E-F] I
c
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1725 of2001.

From the Judgment and Order dated 19.10.2000 of the Delhi High
Court in C.W.P. No. 409 of 2000.

D Ms. Rani Chhabra and Ms. Sudha Pal for the Appellants.

Mukul Rohtagi, Additional Solicitor General (NP), N.N. Goswami, S.
Wasim A. Qadri, Ms. Anil Katiyar and Ms.A. Subhashini for the Respondents.

The Judgment of the Court. was delivered by

E SRIKRISHNA, J. This appeal by special leave is directed against the
Judgment of the High Court of Delhi dated 19th October, 2000, dismissing
the writ petition of the appellants under Article 226 of the Constitution of
India challenging the notification dated 31st December, 1999 issued by the
Lt. Governor of the National Capital Territory of Delhi.

·F Appellant. Nos. 1 to 4 are transport operators wh3 have been issued
stage carriage permits by the State Transport Authority, Delhi, under various
schemes. Appellant No. 5 is an association of bus operators in Delhi, whose
members have been granted permits under various schemes for upliftment of
different sections of society.

G Respondent Nos. I to 3 represent the Government of the National Capital
Territory of Delhi and Respondent No. 4 is a statutory corporation set up
under Section 3 of the Road Transport Corporation Act, 1950.

Respondent No. 4, Delhi Transport Corporation (OTC), was continuously
making losses and found itself unable to handle the volume of work required
H for providing efficient transport facilities for the public in Delhi. The work
CAPTAIN SUBE SINGH v. LT. GOVERNOR OF DELHI [SRIKRISHNA, J.] 935

of transport was opened up to private operators like the appellants, who were A
granted stage carriage permits under the provisions of the Motor Vehicles
Act, 1988, read with the Rules made thereunder (hereinafter referred to,
respectively, as 'the Act' and 'the Rules'). Under the new policy, which was
adopted in or about 1991-92, about 3000 private buses were permitted to
operate within the territory of Delhi. These private operators were granted
permits to run buses under the provisions of the Act. B
The permit conditions were notified under a Scheme for grant of State
Carriage Permits to private bus operators in Delhi by the State Transport
Authority. The Scheme was framed for augmentation of the public transport
in Delhi. The Scheme was formulated and publicised and also freely available C
to all persons intending to seek permits for operating stage carriages. Although,
there was some dispute as to which were the exact permit conditions under
which the stage carriages were operated, at our instance, the Secretary-cum-
Commissioner of State Transport Authority, Department of Transport,
Government ofN.C.T. of Delhi has filed an affidavit dated 13th April, 2004,
and also remained present before the Court and answered the queries put by D
the Court. On the material placed before us, we are satisfied that the said
affidavit reflects the correct factual situation.

Sometime in the year 1992, when the scheme was.first formulated, the
penriit condition stipulated in the scheme was as under:
E
"13. The permit holder shall ensure that concessional passes issued to
various sections authorized for these buses shall be honoured."

In the year 1995, another scheme was launched by the S.T.A., Delhi for
granting 392 stage carriage permits to the private operators. A copy of this
scheme is produced and marked as Annexure 2 to the affidavit of Mr. Rajeev F
Talwar, Secretary-cum-Commissioner, S.T.A. Apart from indicating the fare
structure, the scheme provided that "there shall be a provision for free passes
for freedom fighters only. There may be a provision for monthly/quarterly
passes valid in all the private buses on a particular route." The permits for
stage carriage operations of private buses were, inter alia, made subject to G
the following conditions:

"13. The permit holder shall ensure that concessional passes issued to
various sections authorised for these buses shall be hc;moured."

H
936 SUPREME COURT REPORTS [2004] SUPP. 1 S.C.R.

A 17. Permit holder shall ensure that the bus stops to pick up and allow
the passengers to get off at the authorised DTC bus stops and no
passengers is allowed to board or to get down at a non-prescribed bus
stop. The operators will have to pay service charges @ Rs. 250 per
bus on monthly basis to the DTC for using DTC bus stops as
determined by STA in consultation with the DTC.
B

"25. The State Transport Authority, may after giving notice of not
less than one month:

C (a) vary the conditions of the permit and

(b) attach to the permit further conditions."

In the year 2002, another scheme, for grant of stage carriage permits to
private CNG bus operators in Delhi was formulated and published by the
D respondent authorities. A copy of this scheme is marked as Annexure 3 to the
aforesaid affidavit. Apart from indicating the fare structure, the scheme also
says, "there shall be a provision for free passes for freedom fighters only.
There may be a provision of monthly/quarterly passes valid in all the private
buses on a particular route." The relevant permit conditions indicated in this
scheme are as follows:
E
"13. The pef1!1it holder shall ensure that concessional passes issued to
various sections authorised for these buses shall be honoured.

17. Permit holder shall e~sure that the bus stops to pick up and allow
F the passengers to get off at the authorised DTC bus stops and no
passenger is allowed to board or to get down at a non-prescribed bus
stop. The operators will have to pay service charges for using DTC
bus stops and bus terminals as determined by STA in consultation
with the DTC from time to time.
G (

"25. The State Transport Authority, may after giving notice of not
less than one month:

(a) vary the conditions of permit and
H
CAPTAIN SUBE SINGH v. LT. GOVERNOR OF DELHI [SRIKRISHNA, J.] 937

(b) attach to the pennit further conditions." A
Sometime in the year 1997, both the OTC and the private operators
appealed to the State Transport Authority (STA) for revision in the fares on
the ground that the cost of various inputs like diesel, oil, staff salary and
wages, insurance, road tax, permit fee, repair charges, apart from increase in
capital investment for replacement and interest rates of borrowed capital, had B
increased between 25 per cent to 30 per cent. The State Transport Authority
did not accede to the request. Repeated and continued representations together
with an unprecedented 35 per cent hike in diesel price in .October, 1999
brought about a rethinking on the part of the STA as a result of which a
decision was taken on 16th October, 1999 by the State Government to revise C
the fare structure applicable to the OTC and the private operators with effect
from the said date on the same lines as proposed by the OTC in the year
1998. It was also decided that the fare structure should be uniform for both
the OTC and the private operators. On 21st December, 1999, the State
Government issued an order to the STA directing that along with the upward
revision of fare the private operators would be required to: D
(a) pay Rs. 2500 p.m. as Bus Shelter charges to OTC;
(b) pay Rs. 5000 p.m. for using the Bus Terminus to OTC; and that
(c) passes issued by OTC would be applicable to all Private Stage
Carriages. E
This decision was made applicable to all Private Stage Carriages with
immediate effect. The appellants and other stage carriers challenged the said
order before the Delhi High Court on various grounds. While the petition was
pending before the Delhi High Court, on 31st December, 1999, purportedly
in exercise of its power under Section 67( 1) of the Act, the State Government F
issued a notification in the following tenns:

"TRANSPORT DEPARTMENT
NOTIFICATION

Delhi, the 3 lst December 1999. G
No. F.189/Secy/STA/99/2832 - In exercise of the powers conferred
by clause (i) of sub-section (1) of Section 67 of the Motor Vehicles
Act, 1988 (59of1988), the Lt. Governor of the National Territory of
Delhi, having regard to clauses (a) to (d) of the said sub-section (1), H
938 SUPREME COURT REPORTS [2004) SUPP. I S.C.R.

A hereby issues the following directions to the State Transport Authority
of Delhi, namely:

Directions:

I. The fares chargeable by the operators of stage carriages/city buses
plying in the National Capital Territory of Delhi, shall be as follows:
B
Distance Fare
Upto 4 kilometers Rs. 2.00

c
From 4 kilometers upto 8 kilometers
From 8 kilometers upto 12 kilometers
Above 12 kilometers
Rs. 4.00
Rs. 6.00
Rs. 8.00
For the 'LTD', 'Green Line' and 'Railway Spl.' Buses the fare structure
-
shall be ten rupees instead of six rupees.

2. For concessional bus passes the following rates shall be applicable:

D Type of pass New Rate
General Destination Rs. 200
General All-Route Rs. 400
General All-route (Ltd) Rs. 450
In the case of 'General Destination Pass' the route shall be specified
E in the pass itself and one change of bus shall be allowed rates of all
other passes including 'student', 'Re-settlement Colony', 'Press' and
'Old age' shall remain the same.

3 (a)The Private Stage Carriage with the upward revision of fares
shall pay with effect from 16th October, 1999;
F
(i) Rs. 2500 per month as bus queue shelters to DTC and

(ii) Rs. 5000 per month for using the bus terminal to OTC.

(b) All DTC passes shall be applicable to all private Stage
Carriages."
G
Bein~ aggrieved by the notification, the appellants filed a writ petition
before the High Court of Delhi which came to be dismissed by the Judgment
of the High. Court dated 19th October, 2000, upholding the legality and
validity of the said notification. Hence, this appeal by special leave.

H
CAPTAIN SUBE SINGH v. LT. GOVERNOR OF DELHI [SRIKRISHNA, J.] 939

Learned counsel for the appellants contends that the impugned A
notification is ultra vires the powers of the State Government under Section
67 of the Act, apart from being arbitrary and imposing unreasonable restrictions
on the fundamental right to trade and business guaranteed under Article
19( l )(g) of the Constitution of India. It is also contended that, as far as the
provisions of the Act are concerned, DTC is just an operator and private
operators cannot be put into a situation where they are required to subsidise B
the losses made by DTC for any reason. It is also urged that neither the State
Government nor the State Transport Authority (STA) has the statutory
authority under Section 67 of the Act to impose conditions, other than fixing
of fares, which are highly onerous and discriminative against the private
operators. c
It is also submitted that the operational statistics filed by the DTC
before the High Court clearly brings out that more than two thirds of the
passengers travelling by the DTC buses have been issued concessional passes
and it would be unfair and unjust to expect the private operators to give
service in respect of holders of such passes even though the revenue generated D
therefrom is appropriated by the DTC.

Learned counsel for the respondents have reiterated their contentions
which weighed with the High Court. They submit that, in the interest of
discharging its 'social obligations', the DTC has already constructed several
bus shelters and terminals, which are permitted to be used by private operators E
and that in discharge of its social obligations, the DTC has issued concessional
passes to several sections of society and thereby incurs huge losses. Since
differential fare structures cannot be fixed in respect of different. operators,
it is but fair, just and reasonable that a portion of this cost of social obligations
is imposed upon the private operators by an order made under the provisions F
of the Act and the Rules.

Respondents also contend that the impugned notification is fully justified
as it is. pursuant to 'the desirability of preventing uneconomic competition
among holders of permits' within the meaning of Section 67(l)(d) of the Act.
G
Clause (xxi) of sub-section (2) of Section 96 empowers the State
Government to make rules to ensure that stage carriages halt only at designated
places. Clause (xxii) of sub-section (2) of Section 96 empowers the State
Government to prescribe rules with regard to the construction or use of any
duly notified stand or halting place and the fees, if any, which may be
charged for the use of such facilities. Correspondingly, we have Rules 75 and H
940 SUPREME COURT REPORTS [2004] SUPP. l S.C.R.

A 76.
No transport vehicle can be plied without a permit under Section 66 of
the Act. Section 69 provides for making of applications for permits to the
Regional Transport Authority. Such permits in respect of stage carriages are
issued under Section 70 after following the procedure prescribed in Sections
B 71 and 72. Section 72(2) of the Act empowers the Regional Transport
Authority to grant a stage carriage permit subject to any rule that may be
made under the Act and by attaching to the permit any one or more of the
conditions enumerated in Clauses (i) to (xxiv). Clauses (xx), (xxii) and (xxiv)
of Section 72(2) are relevant for our purposes and read as under:
c "(xx) that any specified bus station or shelter maintained by
Government or a local authority shall be used and that any specified
rent or fee shall be paid for such use. .

D (xxii) that the Regional Transport Authority may, after giving notice
of not less than one month,-

(a) vary the conditions of the permit;

(b) attach to the permit further conditions
E Provided that the conditions specified in pursuance of clause (i)
shall not be varied so as to alter the distance covered by the original
route by more that 24 kilometres, and any variation within such limits
shall be made only after the Regional Transport Authority is satisfied
that such variation will serve the convenience of the public and that
F it is not expedient to grant a separate permit in respect of the original
route as so varied or any part thereof.

(xxiv) any other conditions which may be prescribed."

The State Government has made the Delhi Motor Vehicles Rules, 1993,
G in exercise of its powers under the Act. Of relevance to the present discussion
are Rules 75 and 76. Rule 75 provides for the manner of halting of stage
carriages. Under sub-rule (2) of Rule 75, the District Magistrate may direct
that in any street or any road in an urban area notified by him in this behalf,
no stage carriage shall take up or get down passengers except at a place
appointed by him at a bus stop or at a stand. Rule 76 deals with construction
H and control of stands and provides that the District Magistrate may in
CAPTAIN SUBE SINGH v. LT. GOVERNOR OF DELHI [SRIKRISHNA, J.] 941

consultation with the local authority having jurisdiction in the area concerned, A
make an order permitting any place to be used as a stand and that, without
such an order no place shall be so used as a stand. When a privately owned
place is to be so notified, the rule provides that the District Magistrate shall,
J from time to time, fix the fees or the maximum fees payable at any stand.

Section 67 of the Act empowers the State Government, inter alia, to fix B
the fares ;md freights for such stage carriages, contract carriages and goods
carriages. The relevant provision reads as under:

"67. Power to State Government to control road transport.-

( 1) A State Government, having regard to- c
(a) .. .
(b) .. .

(c) .. .
(d) the desirability of preventing uneconomic competition among
D
holders of permits.
may, from time to time, by notification in the Official Gazette, issue
directions both to the State Transport Authority and Regional Transport
Authority -
E
(i) regarding the fixing of fares and freights (including the maximum
·and minimum in respect thereof) for stage carriages, contract carriages
and goods carriages:
(ii) ...
F
(iii) ... "

It was the case of the respondents before the High Court, and it is their
case before us, that the notification has been issued by the State Government
in exercise of its power under Section 67(l)(d) read with sub-clause (i). In
other words, it is contended that the notification is one which fixes the fares G
and freights of the stage carriages, having regard to the desirability of
preventing uneconomic competition among holders of permits. The submission
is that DTC had already invested capital in constr11ction of bus shelters and
terminals; if the private operators are permitted to use these facilities· without
compensation to the DTC, the DTC would be put in a situation ofunecpnomic
H
942 SUPREME COURT REPORTS [2004] SUPP. I S.C.R.

A competition, that OTC being a statutory corporation, and aware of its social
responsibility, had issued a large number of concessional passes to students,
war widows and their dependents, freedom fighters, disabled persons and
such others, which caused a heavy economic burden on OTC; the private
operators are not by law obliged to discharge this social responsibility, as a ~
result of which there is uneven playing field and uneconomic competition as
B far as the OTC is concerned. Hence, it is just, fair and reasonable that private
operators are made to honour the concessional passes issued by OTC, which
can be done by recourse to Section 67 of the Act.

The learned counsel for the appellants may be justified in his contention
C that, apart from the concessions, which are expressly made available under , ,
the Act in favour of State Transport Undertakings (see in this connection
Chapter VI of the Act), there are no special considerations in favour of OTC
which must be treated as any other operator. Reliance was placed on the
observations of this Court in lshwar Singh Bagga and Ors. v. State of
Rajasthan 1, at paragraphs 7 and 11. That, however, is not conclusive of the
D matter.

The action of the respondent authorities was, not merely about giving
a preferential or favourable treatment to O.T.C. as an operator. The peculiar
circumstances under which the running of stage carriage permits within the
N.C.T. of Delhi, were thrown open to private operators and the specific
E conditions imposed in the permits would have to be kept in mind for adjudging
the legality of the impugned notification. With these factors in mind, the
respondent had appropriately prescribed permit condition No. 17 in the scheme
published in the year 1992 which reads as under:

"17. Permit holder shall ensure that the bus stops to pick up and
F allow the passengers to get off at the authorised DTC bus stops and
no passengers is allowed to board or to get down at a non-prescribed
bus stop. The operators will have to pay service charges @ Rs. 250
per bus on monthly basis to the OTC for using OTC bus stops as
determined by STA in consultation with the OTC."
G
This conditio.n came to be modified in the scheme of 2002. Thus, the
private operators were granted stage carriage permits only on the condition
that they shall have to ensure that the passengers are picked up and dropped
up at authorised DTC bus stops and not elsewhere. They were also reqµired

H 1. [1987] I sec 101.
CAPTAIN SUBE SINGH v. LT. GOVERNOR OF DELHI [SRIKRISHNA, J.] 943

to pay service charges to use OTC bus stops and bus tenninals "as determined A
by STA in consultation with the OTC from time to time"

The respondents contend that though, initially, the service charges for
; use of OTC bus stops were fixed at Rs. 250 per bus per month, they have
been revised by STA in consultation with the OTC and the revision is reflected
in the notification dated 31st December, 1999. As a result of the said B
notification, the pennit conditions stood revised. Clause 3 of the impugned
notification revises pennit conditions and consequently the private stage
carriage operators have to pay with effect from 16th October, 1999, Rs.
2,500 per month as charges for using bus queue shelters to OTC and Rs.
., 5,000 per month for using the bus tenninal to OTC. C
As already noticed, Section 72(2) of the Act gives power to the Regional
Transport Authority to attach conditions to stage carriage pennits which are
required to be followed by the stage carriage operators. The condition in
clause (xx) would require that any specified bus.station or shelter maintained
by Government or a local authority shall be used and that any specified rent D
or fee shall be paid therefor. A stage carriage operator has no liberty in the
manner of halting of the motor vehicle in public places by reason of the

• directions made under Rule 75. Consequently, the stage carriage operator is
required to stop the bus only at such places as directed by the conditions of
the pennit. It so happens that, in the case of the appellants before us, they
were directed to stop their buses only at the bus stations and tenninals of E
OTC. Thus, they have no choice in the matter and are obliged to halt their
buses at such specified places.

It is settled law that the condition of a pennit can be varied by a
notification issued by the Government under Section 67 of the Act. (See in F
this connection B. Srikantiah and Ors. v. The Regional Transport Authority,
Anantapur and Ors. 2 and Sree Gajanana Motor Transport Co. Ltd v. The
State of Karnataka and Ors. 3 )

The appellants have not challenged the legality of condition No. 17.
Their only grievance is about the steep increase in the charges. Condition No. G
17 requires the private stage carriage bus operators to make payment of such
charges as shall be detennined by the STA in consultation with the DTC

2. [1971] 2 SCC 434.The case arising under Section 43 of the A.P. Motor Vehicles Act.

3. [1977] t sec 37. H
944 SUPREME COURT REPORTS [2004] SUPP. I S.C.R.

A from time to time. This was the very condition subject to which the permit
was issued to the appellants. The fact that originally the service charges
payable were @ Rs. 250, or that it has subsequently been revised, does not
make the condition of the permit illegal or ultra vires the powers of the
respondent authorities, as contended by the appellants. We find no merit in l
the contention that the increase in the service charges payable to the OTC is
13 I
unauthorised or ultra vires the powers of the STA and the State Government.

The next contention urged by the appeflants is that Paragraph 3(b) of
the notification which provides, "all OTC passes shall be applicable to all
private stage carriages," is illegal and ultra vires. There appears to be some
C merit in this contention. As we have noticed, the permit condition in the 1992 r
scheme me~ely provided: "there shall be a provision for free passes for freedom
fighters only. There may be a provision of monthly/quarterly passes valid in
all the private buses on a particular route." Even the permit condition No. 13
declared : "the permit holder shall ensure that concessional passes issued to
various sections authorised for these buses shall be honoured." A fair reading
D of these conditions of permit would be that the STA would approve the
issuing of concessional passes by the transport operator and indicate the
conditions subject to which such concessional passes are approved. Even in
the Scheme of 2002, the relevant condition of the permit reads as under:

"13. The permit holder shall ensure that concessional passes issued to
E various sections authorised for these buses shall be honoured."

The contention of the respondents that by reason of the aforesaid
condition of permit the concessional passes issued by the OTC would
automatically become enforceable and binding upon private operators who
F were issued stage carriage permits, does .not appear to be sustainable.
-
In Anjum MH Ghaswakt a Constitution Bench of this Court reaffirmed
the general rule that when a statute vests certain power in an ·authority to be
exercised in ~ particular manner, then the said authority has to' exerci~e it
only in the manner proyided in the statute itself. (See also in this connection
G Dhanajaya Reddy v_. State of Karnatak:1 5) The statute in question requires the
authority to act in accordan~t! with the rules for variation of the conditions
attached to the permit. In our view, it is not permissible to the _State

4. 120021 1sec 633. ·
H s. c200114sec9.
CAPTAIN SUBE SINGH v. LT. GOVERNOR OF DELHI [SRIKRISHNA, J.] 945

Government to purport to alter these conditions by issuing a notification A
under Section 67(l)(d) read with sub-clause (i) thereof.

The contention of the respondents is that the power to enforce the
}
binding nature of the concessional passes issued by the DTC on the private
stage carriage operators can be spelled from the provisions of Section 67(l)(d)
of the Act. In our view, such a power cannot be subsumed under the powers B
of the State Government to fix fares and freights for stage carriages having
regard to the desirability of preventing uneconomic competition among holders
of pennits. Pennit condition No. 13 merely stipulates that the permit holder
shall ensure that concessional passes issued to various sections authorised for
\
these buses shall be honoured. The authorisation has to come from the STA. C
In other words, only concessional passes which are authorised by the STA,
would be binding on the operators. We see no power in Section 67(l)(d) of
the Act or otherwise by which a concessional pass issued by the DTC could
be made binding upon private stage carriage operators, particularly when
there was no such condition imposed in the pennit issued. Hence, we are of
the view that Paragraph 3(b) of the impugned notification is clearly ultra D
vires the powers of the State Government under Section 67 of the Act and,
therefore, liable to be quashed and set aside.

Appellants contend that the condition imposed upon the appellants of
honouring all DTC passes, is nothing but a covert attempt to subsidise the
losses being incurred by DTC. Even if we assume that the losses are not on E
account of mismanagement or inefficiency of the DTC, and are really
attributable to the so called honouring of its "social obligations", we see no
warrant or justification, under the provisions of the Statute as it stands, for
transferring this assumed responsibility to competing transport operators. If
the state authorities are of the view that the fare structures should be identical F
for all operators including the DTC, we see no justification for this indirect
method of passing on the costs to the appellant operators.

In the first place, we are unable to accept that all concessional passes
issued are necessarily in the discharge of "social obligations", as claimed. A
perusal of the operational statistics of the DTC, which is placed on record as G
Annexure P-9 to the writ petition filed before the High Court, (pp. 64, 66 and
68) justifies the contention of the appellants. From the operational statistics
we notice that nearly 48 per cent of the persons travelling in the OTC buses
were pass holders in April, 1998 and this figure has gone to about 68 per cent
in November, 1999. While it may be possible to say that granting of H
946 SUPREME COURT REPORTS [2004]SUPP. 1 S.C.R.

A concessional passes to war widows and their dependants, disabled persons,
freedom fighters and such c11,tegories may be in discharge of "social
obligations", it would not hold true with regard to a large number of other
holders of concessional passes. In the writ petition before the High Court, the
appellants pointed out that 'destination passes', 'general passes' and 'all route'
B passes are nothing but smart exercises designed to catch captive commuters.
These passes are really intended to collect advance fares which would save
commuters from the trouble of frequently going to the office of the operator
for paying for their passes by offering a marginal concession. In other words,
a large amount of the fare gets collected, much in advance, and what the
DTC has to forego, is only a small amount designed to cut down the collection ,.
C cost, get money in advance and catch captive commuters. We, therefore,
agree with the contention of the appellants that such concessional passes are
nothing but advance tickets with marginal concessions giving services to the
captive commuters. The attempt of the DTC through the STA and the State
Government now appears to be to ensure that even service is not required to
be given to all the captive commuters holding such concessional passes by
D DTC, by requiring the private operators to provide service to the pass holders
who have paid to the DTC. We see no discharge of "social obligations", nor
even the shadow of Article 38 of the Constitution, in this arrangement which
is sought to be brought into force by resort to the purported power under
S~ction 67 of the Act. If the DTC incurs losses in its running, it ~s bailed out
E by the State Government hy subsidies and convenient loans which are written
off; but, on the other hand, private operators have to raise capital at enormous
servicing cost and do not have finance or subsidy on tap. The learned counsel
for the appellants is· right in contending that this is clearly an attempt to rob
Peter to pay Paul. In our view, the condition imposed in Paragraph 3(b) of
the impugned notification is ultra vires the power of the State Government
F under Section 67. It is not possible for us to accept the view of the High
Court that Section 67(l)(d) read with sub-clause (i) thereof clothes the State
Government with the power to impose the condition in Paragraph 3(b) of the
impugned notification dated 31st December, 1999, or that it has been imposed
having regard to "the desirability of preventing uneconomic competition among
G holders of permits" within the meaning of clause (d) of sub-section (I) of
Section 67 of the Act. The directions which can be issued under sub-clause
(i), are only with regard to 'fares and freights'. The expression 'fare' has
been defined in Section 2(12) as inclusive of sums payable fora season ticket
or in respect of the hire of a contract carriage. By Paragraph 2 of the impugned .i...
notification the Transport Department has also prescribed what can be the
H fares for concessional bus passes of different. categories. This only means
CAPTAIN SUBE SINGH v. LT. GOVERNOR OF DELHI [SRIKRISHNA, J.] 947

that, if the permit holders were to issue concessional bus passes for different A
categories including 'students', 're-settlement colony', 'press', and 'old age',
then the fares chargeable are at the rates indicated in Paragraph 2. This is a
perfectly permissible exercise of power.

The High Court relied upon the judgment of this Court in Sree Gajanana
Motor Transport Co. ltd. v. The State of Karnataka and Ors. 6, arising under B
Section 43 of the Motor Vehicles Act, 1939, to the effect that when the State
has exercised its power under Section 43 (corresponding to the present Section
67 of the 1988 Act), then the conditions of the permit automatically get
altered. There is no doubt as to this proposition, but the rub is that the
notification must have been validly issued in exercise of the said power. C
Paragraph 3(b) o(the impugned notification, however, travels much beyond
the legitimate scope of the power under Section 67(l)(d) read with sub-
clause (i). We are of the view that the impugned notification, insofar the
condition in Paragraph 3(b) is concerned, is wholly ultra vires the powers of
the State Government under Section 67 of the Act, illegal and liable to be
quashed and set aside. D
Learned counsel for the appellants stated that they too are conscious of
the "social obligations", and since the number of concessional passes issued
to disabled persons, freedom fighters and war widows and their dependants
is small, without prejudice to their legal contentions, they are willing to
honour such concessional passes issued by OTC. E
In the result, we hold that the condition imposed in Paragraph 3(b) of
the impugned notification is ultra vires of the powers of the State Government
and is, therefore, liable to be quashed and set aside. However, it appears to
us that sudden discontinuation of the concessional passes would seriously F
affect the commuters, particularly students community, holding a large number
of concessional passes issued by the OTC. We are, therefore, of the view that
some locus poenitentia should be given to the respondents to make alternative
arrangements by formulating an appropriate scheme in accordance with law
which should take care of the student concessional passes.
G
In the result, we make the following order:-

(I) The provisions of the impugned notification dated 31st December,
1999, except paragraph 3(b), are held valid and intra vires;

6. [t977J 1 sec 37. H
948 SUPREME COURT REPORTS (2004) SUPP. I S.C.R.

A (2) The condition imposed under Paragraph 3(b) of the impugned
notification is held ultra vires, illegal and unenforceable;
(3) The appellants, as agreed, shall continue to honour the
concessional passes issued by DTC to disabled persons, freedom ~
fighters, war widows, and their dependants;
B (4) The respondents shall lawfully bring forth an appropriate scheme
to provide relief to the students concessional pass holders of
DTC, within a period of four months from today, i.e., on or
before 3 lst July, 2004, failing which the condition imposed under
Paragraph 3(b) of the impugned notification shall stand quashed
c and set aside with effect from 1st August, 2004.

The Judgment of the High Court is modified and the appeal is allowed
to the aforegoing extent.

There shall be no order as to costs.
D v.s.s. Appeals partly al.lowed.

'W.,
I