Holding

The RTA must decide each application afresh, give both parties a fair hearing, and cannot rely on undisclosed material; the order granting preference to the corporation and rejecting the renewal applications is set aside.

Summary

Three private operators whose stage‑carriage permits on an inter‑state route were about to expire applied for renewal under section 58 of the Motor Vehicles Act. Simultaneously the Rajasthan State Road Transport Corporation applied for fresh permits for the same route. Both sets of applications were heard together by the Regional Transport Authority (RTA), which reserved its orders in November 1981 but finally rejected the renewal applications and granted fresh permits to the corporation in November 1982, after holding several other meetings on unrelated matters without giving the private operators any notice or opportunity to be heard. The operators appealed to the State Transport Appellate Tribunal, then to the Rajasthan High Court, both of which dismissed the appeals. The Supreme Court, on special leave, held that the RTA had violated the principles of natural justice and the statutory requirement that a State transport undertaking’s claim for preference under section 47(1H) (and the proviso to section 58(2)) be assessed only after giving the private applicants a fair hearing. Consequently the Supreme Court set aside the orders of the RTA, the Tribunal and the High Court and remitted the matter to the RTA for fresh consideration.

Issues considered

Whether the Regional Transport Authority complied with the principles of natural justice in deciding the renewal applications of private operators versus the fresh permit applications of the State Road Transport Corporation.
Whether the preference granted to a State transport undertaking under section 47(1H) of the Motor Vehicles Act (and the proviso to section 58(2)) is applicable in the present case and, if so, whether the statutory conditions precedent were satisfied.
Whether the RTA could rely on material and discussions from other proceedings without giving the private applicants an opportunity to rebut.

Legislation cited

Motor Vehicles Acts. 47(1H), s. 58(2)

Subjects

Motor Vehicles Actstage carriage permitrenewalfresh permitinter‑state routenatural justicepreference clauseState Transport UndertakingRegional Transport Authorityprocedural fairness

Judgment

KAN SINGH, ETC. A
v.
STAIB TRANSPORT APPELLATE TRIBUNAL AND
OTHERS, ETC.

OCTOBER, 27 1987
B
[E.S. VENKATARAMIAH, K.N. SINGH AND
S. RANGANATHAN, JJ.]

Motor Vehicles Act-Renewal of Stage carriage permits under
section 58 thereof-Grant of fresh permits.

The appellants filed applications for renewal of their stage car-
c
riage permits on a route in Rajasthan, under section 58 of the Motor
Vehicles Act. At the same time, the Rajasthan State Road Corporation
(Corporation) moved applications for the grant offresh permits to it for
the same route. Both the applications for renewal of permits and the
applications for fresh permits, were heard together by the Regional D
Transport Authority (R.T.A.) which reserved its orders thereon. The
R.T.A. passed orders in the matters after a year of the hearing, reject-
ing the renewal applications of the appellants and granting fresh permits
to the Corporation. The R.T.A. had, during the intervening period of
one year, held several other proceedings and meetings in connected
matters of which no notice and no opportunity had been given to the E
appellants whereas the Corporation was a party to all those meetings
and discussions before the R. T.A.

- Against the orders of the R. T. A., the appellants filed appeals
before the State Transport Appellate Tribunal (S.T.A.T.).- The F
S.T.A.T. dismissed the appeals. The appellants moved the High Court by
writ petitions against the order of the S.T .A. T. The High Court (Single
Judge) dismissed the writ petitions. Further appeals by the appellants to
the Division Bench of the High Court were also dismissed. The appel-
lants moved this Court by special leave.
G
Allowing the appeals, the Court,

'-"'\ HELD: The principal issue to be decided by the R.T.A.
was whether the claims of the Corporation for fresh permits had pre-
cedence over the claims of the appellants for the renewal of their
permits. [643E] H
641
642 SUPREME COURT REPORTS [1988] 1 S.C.R.

A The appellants have not had an opportunity of putting forward 'r"-
their contentions and of being heard before the R.T.A. in the various
proceedings/meetings held by the R. T.A. during the period of one year
following the reservation of orders by it on the applications of .
the Appellaats and the Corporation. The principles of .natural justice
were flouted by the R. T .A. by its failure to apprise the appellants
B of what bad transpired at the meetings/discussions held in their
absence. (6460-F] )-

The appellants' applications and the applications of the Corpora- ·
tion require to be considered and disposed of afresh by the R. T.A. in \ "'
the light of the observations made by the Court. [6488, 649Al •.
c Sher Singh v. Union of India, AIR 1984 SC 200, referred to.

CIVIL APPELLATE J(JRISDICTION: Civil Appeal No. 2603-
2605 of 1987.

D From the Judgment and Order dated 8.12.1986 of the Rajasthan
High Court in D.B. Special Appeal No. 889, 975 and 1135 of 1986.

G.L. Sanghi and Mrs. Rani Chhabra for the Appellants.

Shanti Bhushan and S.K. Jain for the Respondents.
E
The Judgment of the Court was delivered by

RANGANATHAN, J. Special Leave granted. Appeals are dis- -
posed of by this order.

f The three appellants had been granted permits on a route from ·
Bhadra to Hissar via Adampur. This route lay both in the State of _)....-
Rajasthan and in the State of Haryana and was thus an inter-State
route. When the permits were about to expire the petitioners filed
applications for their renewal in accordance with the provisions of
section 58 of the Motor Vehicles Act (hereinafter called 'the Act'). At
G the same time, the Rajasthan State Road Transport Corporation
(hereinafter referred to as 'the Corporation') also moved applications
before the Regional Transport Authority, Bikaner, for the grant of ~·
fresh permits to it on the same route. The applications for renewal of r
permits made by the petitioners as well as the applications for the
grant of permits by the Corporation were heard together by the Re-
H gional Transport Authority, Bikaner (R.T.A.) on several dates, the
..
KAN SINGH v. S.T.A.T. [RANGANATHAN, J.] 643

last of which was the 6th of November, 1981. On that date, orders
were reserved by the R.T.A. The R.T.A., however, passed its order A
only on 27th November, 1982, about a year after the date of the
hearing. It rejected the renewal applications of the petitioners and
granted permits to the Corporation in respect of the above route.

Aggrieved by the orders of the R.T.A., the petitioners filed B
appea'ls before the State Transport Appellate Tribunal (S.T.A.T.) The
STAT dismissed the appeals preferred by the petitioners and confirmed
the order of the R.T.A. The petitioners filed writ petitions in the High
Court of Rajasthan, which were dismissed by a Single Judge on 2 lst
July, 1986. Further appeals preferred by the petitioners and certain
other operators were dismissed by a Division Bench of the High Court
of Rajasthan by its judgment and order dated 8th December, 1986. C
These Special Leave Petitions have been preferred against the order of
the Division Bench dated 8th December, 1986.

We have come to the conclusion that the order of the R.T.A.
(and consequently the orders of the STAT and the High Court) should D
be set aside and the matter should be remitted back to the R.T.A. for
fresh consideration on the short ground that the petitioners have not
had a fair opportunity of putting forward and being heard on their
contentions relevant to the issue before the R. T.A.

( The principal issue that had to be considered by the R.T.A. was E
whether the claims of the Corporation for the grant of a permit had
precedence over the claims of the petitioners for renewal. This issue
had to be decided in the context of two statutory provisions. The first
is section 47( lH) of the Act which reads as follows:

Notwithstanding anything contained in this section, an F
application for a stage carriage permit from a State trans-
port undertaking for operating in any inter-State route
shall be given preference over all other applications:

Provided that the authority shall not grant a permit
under this sub-section unless it is satisfied that the State G
transport undertaking would be able to operate in the
inter-State route without detriment to its responsibility for
providing efficient and adequate road transport service in
any notified area or notified route as is referred to in sub-
section (3) of section 68D where the undertaking operates
the service. H
II
644 SUPREME COURT REPORTS [1988] 1 S.C.R. j
A
Explanation-For the purposes of this sub-section, "inter-
state route" means any route lying contiguously in two or
more States.

The second relevant provision is the third proviso inserted in section
58(2) of the Act by an amendment applicable to the State of
B Rajasthan. This sub-section, in so far it is material for our present
purposes, reads: •'

"(2) A permit may be renewed on an application made and
disposed of as if it were an application for a permit:
J
~

Provided further that, other conditions being
c equal, an application for stage carriage permit by a
State transport undertaking as defined in section
68(A), shall be given preference over applications
from individual owners and cooperative societies."

0 The arguments before the R.T.A. primarily ranged round the
question whether the terms of the proviso to section 47(1H) were
fulfilled in the present case or not. The petitioners (as well as
operators on several other routes whose requests for renewal had also
been countered by applications for permits by the Corporation) con-
tended that the Corporation was not in a position to operate in the
E inter-State routes in question without detriment to its responsibility
for providing efficient and adequate road transport service in routes
which had already been nationalized under Chapter IV-A of the Act.
The R. T.A. has applied its mind to this contention in what may be
described as a piecemeal manner. This was because applications made
by several private operators and the corporation in regard to various
F routes came up for consideration by it in separate meetings held at
different places on different occasions. Jn fact it is this which also
explains the delay in the passing of its order by the R.T.A. in the
present case. In course of the hearing before us, we called upon the
respondents to produce the original records. These show that the mat-
ter relating to renewal of permits of six operators (including the pre-
G sent petitioners) was heard on 6.11.1981 and orders reserved. On
30. I !.81, the counsel for the Corporation made a request to the
R. T.A. that certain other matters pertaining to renewals of permits in
the Bikaner region were coming up for consideration on 16. 12 .81 and
that, therefore, the orders in the instant cases may be deferred till after
the· other matters were also heard by the R.T.A. This request of the
H counsel for the Corporation was accepted by the R. T.A. The other
KAN SINGH v. S.T.A.T. [RANGANATHAN, I.] 645

.....,., matters referred to could not be heard on 16. 12. 1981 but got adjour-
ned from time to time. The order sheet of the R.T.A. in the present A
case shows that the decision in the present cases was deferred on three
subsequent occasions upto 22.03.1982. The-records do not indicate
what happened thereafter but it appears that the decision was post-
poned on subsequent occasions also for the same reason and ultimately
announced by the R.T.A. on the 27th of November, 1982, after the B
-(_ connected matters had been heard. This is clear from the order of the
R.T.A. which, in arriving at its final decision, has followed the orders
passed by it on 15.9.82 & 24.11.82 in certain other matters and the
: orders passed by the R.T.A., Jaipur on 7.4.82 & 10.9.82 in relation to
two routes falling within its jurisdiction. '

J The short grievance of the petitioners was that, by adopting the
above procedure, the R.T.A. has imported into its final decision and
C

order various transactions, facts, events and arguments of which they
had no notice and which they had not been given a proper opportunity
to rebut. The STAT dealt with the argument by simply observing that
"for considering the obtainable facts a fresh opportunity to appellants D
in my opinion was not very much required, as there would not be any
end to it." The learned Single Judge in the High Court recognised
that: "If such long spell time has lapsed and such new material has
come into existence the proper course for the RTA should have been
~ to get the case listed back for comments of both the parties but did not
think that "the case warranted any interference on this aspect." E

The Division Bench observed:

"It was urged on behalf of the appellants that the Regional
Transport Authority took into account events after hearing
and closing the cases without giving any opportunity to the F
appellants to rebut that material. It was also urged that out
of 83 documents filed by the appellants before the Regional
Transport Authority in rebuttal of this material, only 2
were ac~epted, while remaining 81 were rejected. There is
no merit in this contention. The mere fact that the appel-
lants filed these documents out of which two were taken G
into account shows that they had the knowledge of the
subsequent material being used for the purpose of deciding
these cases and it is for this reason that they filed these
documents out of which two were also taken into account.
Moreover, the subsequent events relate only to matters of
record pertaining to operation of the existing routes by the H
646 SUPREME COURT REPORTS [1988] I S.C.R.

State Transport Undertaking. There is thus no prejudice to .,._..,
A the appellants. This argument is, therefore devoid of any
merit."

In our opinion the approach of the STAT as well as the High
Court was erroneous. There is no doubt that the R.T.A. in deciding
B the present case has been influenced not merely by the discussions
which took place during the hearing of the applications of these
petitioners and the Corporation but also the facts circumstances, and _).._
arguments that surfaced at the meetings held by it in relation to vari-
ous other permits in the State. It is true that the point that arose for
consideration viz. whether the Corporation had placed sufficient mate-
rial on record to satisfy the R.T.A. concerned that the grant of a
C further permit or further permits to it would not prejudicially affect j___
the nationalised services already run by it was, in a sense, a point · ·
common to all the meetings. Nevertheless, the grant of a permit in
each case is a separate issue to be decided on the facts and circum-
stances placed on record in relation to that case. In support of their
o claims for permits, the petitioners had placed some material before the
R.T.A. and so also the Corporation. If, in reaching its decision, the
R. T.A. desires to take into account circumstances and facts placed by
other petitioners or by the Corporation at other meetings, the petition-
ers should atleast have had an opportunity of knowing what that mate-
rial was. This could have been done either by allowing the petitioners ~
E to partieipate at the other meetings or by giving the substance of that
material to the petitioners, and giving them an opportunity of rebut-
ting it before passing the final order. In this cont~xt it is important to
remember that the Corporation was a party at all the meetings and was
aware of all the materials that had been placed on record by other
operators as well as by themselves thereat. On the contrary, the
F petitioners were handicapped in that they had no knowledge of the ,
material placed at the other meetings. In our opinion, the require- _).J"'
ments of natural justice were flouted by the failure of the RTA to - ·
apprise the petitioners, atleast broadly, of what had transpired at the
other meetings.

G The High Court has observed that the petitioners had not been
prejudiced as is seen from the fact that they had placed several ducu-
ments on record in rebuttal of the Corporation's case. It may be, as
pointed out by the High Court, that the petitioners were vaguely aware
of the nature of the general contentions urged as well as the evidence
placed by the Corporation and also tried to put in some ducuments to
H controvert the material placed on record by the Corporation but they
KAN SINGH v. S.T.A.T. [RANGANATHAN, J.] 647

......., had no direct knowledge of such'material. Further, the petitioners'
grievance is that out of 83 documents placed by the pet~ioners only A
two were considered. We are not able to appreciate the Hlgh Court's
answer to this contention in the extract we have quoted above. We
could have understood it if the other 81 documents which the petition-
ers relied upon had been found to be irrelevant. The R.T.A. has not
discussed this evidence. Nor does the STAT appear to have considered B
the material or given the petitioners an opportunity, atleast at the
.-.(_ appellate stage to attempt to substantiate its contentions by reference
to these documents. In the Special Leave Petitions before us, the
petitioners have catalogued several circumstances to substantiate a
contention that the Corporation was not in a position to undertake the
plying of buses on the routes in question without prejudice to the
efficiency of the nationalised services already being run by it. We c
A ·express no opinion on the correctness of these averments or the effect
they can have on the satisfaction to be reached by the Regional Trans-
port Authority but it appears manifest that the impugned order reject-
ing the renewal applications of the petitioners has been passed without
there being reasonable opportunity given to the petitioners to counter D
the case put forward by the Corporation. On this sbort ground that the
procedural requirements of natural justice have not been complied
with, we think, the impugned order should be set aside and the R.T.A.
directed to pass a fresh order after giving the opportunity to the
.___,, petitioners to put forward their contentions .
E

Shri Shanti Bhushan, learned counsel for the Corporation, raised
two contentions. He urged, firstly, that the present case was governed
by section 58(2) and not by section 47( lH) and that the Corporation
was rightly granted precedence over the private operators. We .are
unable to accept this contention for two reasons. In the first place the F

-
grant of a permit for an inter-State route is governed by the special
provision contained in section 47(1H) and not by section 58 which is a
general provision. Secondly, even under Section 58, the Corporation is
not entitled to a permit automatically by reason of the fact that it is a
State Road Transport Undertaking. It is entitled to a priority over
private operators only on "other things being equal". In other words, G
even if section 58 is to apply, the RTA has to apply its mind to the
relative merits of the private operators on the one hand and the Corpo-
~ ration on the other and it is only if both of them stand on the same
footing that the Corporation would be entitled to a preference. This
would necessarily involve a he<1ring by the RTA of the merits of both
the contending parties. H
648 SUPREME COURT REPORTS [ 1988] l S.C.R.

The second contention of counsel is based on an interpretation of.
A s. 47( l-H). The principle and ratio of this provision has been discussed 'r
and approved by this Court in Sher Singh v. Union of India, A.LR.
1984 SC 209. This provision no doubt enables the Corporation to have
a preference over private operators and individuals but this is subject
to a condition precedent that it should satisfy the Authority that it
13 would be able to operate the inter-State route for which permit is
sought without detriment to the efficiency and adequacy of the
nationalised services it is already running in the State. Shri Shanti l
Bhushan would contend that this is a matter on which the Regional
Transport Authority has to reach a subjective satisfaction in the light
of such material as it may be able to gather and that it is not necessary
that it should be arrived at after giving an apportunity to all the
C persons appearing before the Authority. We cannot accept this _}
interpretation. Like analogous provisions contained in several statutes
which require or permit certain action to be taken on the satisfaction
of a particular specified authority, the provision in section 47(IH) also
requires the R.T.A. to arrive at its satisfaction not subjectively but on
O an objective consideration of the various facts and circumstances
placed before it. It will at once be obvious that such a satisfaction
cannot be reached by the Authority without hearing the various
operators. The matter comes up before the Authority on a contest
between an application for a permit or a renewal application of a
private operator and an application for permit by the Corporation.
E Naturally, the Corporation will place before the Authority some mate- r-
rial to satisfy the Tribunal that the condition mentioned in the proviso
to section 47(1H) is satisfied. The R.T.A. on its own can have no
method of assessing the merits of this plea. It is only the private
operators, who are seeking permits for themselves that may be in a
position to place material which would show that the Corporation does
F not have the capacity to take up this additional responsibility of run-
ning buses on the inter-State route for which it seeks a permit. It is ~·
clearly the duty of the R. T .A. to consider the evidence placed by both ·
the parties, allow each party an opportunity to rebut the material f
placed by the other and arrive at its satisfaction one way or the other. ,
The satisfaction contemplated under section 47( IH) is a satisfaction to """
G be arrived at on the basis of such a quasi-judicial enquiry conducted by
the R.T.A. It is, therefore, not possible to accept the contention that
the petitioners were not required to be heard before the R.T.A.
reached its conclusion in favour of the Corporation. r
For the reasons discussed above, we hold that the petitioners'
H applications for renewal of permits as well as the Corporation's appli-
KAN SINGH v. S.T.A.T. (RANGANATHAN, J.] 649

cation for fresh permits on the inter State route Bhadra to Hissar via A
Adampur require to be considered afresh. We, therefore, set aside the
order of Regional Transport Authority dated 27. 11. 1982, the order of
the State Transport Appellate Tribunal dated 20.1.1983 as well as the
order of the Single Judge of the High Court dated 21st July, 1986 and
the order of the Division Bench of the High Court dated 8.12. 1986.
B
The matter will stand remanded to the file of the R.T.A., Bikaner, for
being disposed of afresh in the light of the above observations.

The appeals are allowed but in the circumstances we make no
order as to costs.
'
I
S.L. Appeals allowed. C
_.-l