Holding

The proviso is a reasonable regulatory measure not violative of Article 19, and “new entrant” means an applicant who does not possess a stage‑carriage permit at the time of application, so the appeal is dismissed.

Summary

The Supreme Court examined an appeal concerning the grant of stage‑carriage permits under Rule 212 of the Andhra Pradesh Motor Vehicles Rules, 1964. The dispute centered on whether the proviso that an applicant may receive marks for either residential or sector qualification (whichever is more advantageous) infringed Article 19 of the Constitution, and on the proper interpretation of the term “new entrant” for short‑route permits. The Court held that the proviso is a reasonable measure aimed at preventing monopolies and does not violate Article 19. It further clarified that “new entrant” means an applicant who does not hold a stage‑carriage permit at the time of application, not necessarily a first‑time entrant into the transport business. Consequently, the preference for short‑route permits rightly went to the respondent who was a new entrant, and the appeal by the petitioner was dismissed.

Issues considered

The proviso to sub‑clause (a) of clause (iv) of Rule 212, which limits awarding marks for both residential and sector qualifications, violates Article 19 of the Constitution.
The correct meaning of “new entrant” under Rule 212(ii)(a): whether it refers only to persons who have never held a stage‑carriage permit or to any applicant lacking a permit at the time of application.
Whether preference for short‑route permits should be given to applicants without any stage‑carriage permit at the time of consideration, irrespective of prior experience.

Legislation cited

Constitution of Indias. Article 19, s. Article 226
Motor Vehicles Act, 1939s. 47, s. 64A

Subjects

Motor Vehicles ActStage carriage permitArticle 19New entrantAndhra Pradesh Motor Vehicles RulesEquality of opportunityAdministrative law

Judgment

A 380
!
P. VENKAIAH

v.

G. KRISHNA RAO & OTHERS.

August 25, 1981

[D. A. DESAI, A. 0. KOSHAL AND
R. B. MISRA, JJ.]
c Andhra Pradesh Motor Vehicles Rules 1964 Rule 212(ii) (a) proviso-Scope
of-Whether hit by article 19 of the Constitution·"new entrant'' meaning of.

For evaluating the merit of various applicants for a stage carriage permiti
rule 212 of the Andbra Pradesh Motor Vehicles Rules 1964 classifies routes as
short, medium and long routes. In the matter of grant of permit for short )

D routes clause (ii) envisages preference being given to those applicants who are
"new entrants". Clause (iii) provides criteria for weeding out undesirable appli-
cants, while clause (iv) provides for marks being awarded for sector or residential
qualifications. If an applicant possesses both residential and sector qualifica-
tions the proviso to sub·clause (a) to clause (iv) requires that he shall be awarded
marks only for one of them so that he is given credit for the qualification more
advantageous to him marks-wise.
E With the nationalisation of road transport in the State, the appellant,
respondent no. 1 and respondent no. 5 were deprived of the stage carriage permits
I
which they were holding before nationalisation.

Subsequently the Regional Transport Authority granted one permit to the
appellant and another to respondent no. 5. In appeal, the State Transport
Authority, holding that respondent no. 1 was a ''new entrant" within the mean-
F ing of the rule 212(ii)(a) granted one permit to him and the other to respondent
no. 5 who was held to have an edge over the appellant for another reason.

In revision, the State Government held that the appellant and respondent
no. 5 were entitled to preference over respondent no. 1 by reason of their longer
experience in the field of motor transport, in spite of the fact that respondent
:oo. 1 was a "new entrant".
G
A single Judge of the High Court held that respondent no. 1 who was a
• ''new entrant" was entitled to preference over the others by reason of rule
212(ii)(a). The second route was granted to respondent no. 5.

H On further appeal it was contended before a Division Bench of the High )
Court that (1) the proviso to clause (iv){a) of rule 212 imposed an unreasonable
restriction on the right of citizens to carry on business and was hit by article 19
P. VENKAIAH V. G.K. RAO 381

of the Constitution; (2) that the expression ''new entrant" covered only persons A
' who took up the business of motor transport for the first time and (3) that even
if contention (2) is not accepted, a "new entrant" would not mean a person not
having a-permit at the time when the question of granting a permit arose but
would apply only to a person who never held any stage carriage permit.

All the contentions, rejected by the Division Bench, were again raised
before this Court. B
Dismissing the appeal,

HELD : The proviso to sub clause (a) of clause (iv) of rule 212 is not hit
by the provisions of article 19 of the Constitution. It merely states that if an
applicant p_ossesses both residential and sector qualifications he is to be given
credit only for the one which is more advantageous to him. The rule is salutary C
and is meant to avoid inonopolies. It is reasonable that an applicant is given
an option of choosing either the residential or the sector qua1ification for the
award of mark._s inasmuch as .the merit accruing to the applicant by reason of
being" clothed with one of thenl would overlap that for which he might get credit
by reason ol' the other. [389 C·DJ ·

(2) From the context in which the term ..new entrant" is used the rule D
making authority clearly intended that a «new entrant" to the stage carriage
business must have preference over the existing operators in respect of short
routes. The fact that responde~ t N<;l. ~. had a public ca,rricr pe,rmit was wholly
irrelevant. He was undoubtedly a "new entrant" to the stage carriage business.
[390 BJ

s~ Chinf!a ,NarasO Reddy v. iJ. Jagadeeshwara Rao and Others, [1972f4 E
\ SCC734=·Am 1972 SC 1'536 followed.

(3) A set of things which is different from that immediately preceding it
may well be called new. A situation Which once existed and then ceased 'to exist
may properly attract the word 'new' on re·appearance. The adjective 'new'
would. be applicable . to a person who ,was once in the line of operators of stage
carri~ges but who had long .ceased ·to be SO: and who sought entry into that line
afresh. [39i' DJ · ·
F

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1625 of
1970

Appeal by Special Leave from the judgment and order dated
the 28th October, 1969 of .the ('\ndbra Pradesh Bigh <;ourt in Writ G
Appeal No; 412 of 1969: .c .. :

T!R Tatachari an<).:1VV .Nair for the, i\~eellant:
KR Chowdhary for Respondent No: 1.
H
' ··o. Narayana Rai/fo~ ResPo~dentNos: ft~ { ..
382 SUPREME COURT REPORTS [1982) l s.c.R.

A The Judgment of the Court was delivered by I
KosHAL, J. The bone of contention in this appeal by special
leave consists of two stage carriage permits granted~ under the Motor
Vehicles Act (hereinafter called the Act) in relation to the route
Chirala Railway Station to Vetapalem, the claimants to which now
B are Venkaiah (the appellant), Krishna Rao (respondent No. I) and
Nagendrudu (respondent No. 5). By the impugned judgment a
Division Bench of the High Court of Andhra Pradesh has dismissed
an appeal under clause 15 of the Letters Patent and has upheld the
judgment of a Single Judge of that Court by which the order of the
State Government was reversed and the permits were granted to
c respondents Nos. I and 5.

2. Before we proceed to lay down the facts leading to the
present contest we may refer with advantage to rule 212 of the
Andhra Pradesh Motor Vehicles Rules, 1964 which have been )
framed under the Act and are hereinafter referred to as the Rules.
0 The marginal note to that rule reads :

"Grant, Variation, Suspension or Cancellation of stage
carriage permit-Guiding principles"

The rule is divided into six clauses out of which we are concer-
ned only with clauses (i), (ii), (iii) and (iv) and the same, in so far
E as they are relevant for the purposes of this appeal, are reproduced
I
below:

"(i) Routes shall be classified as :-

F
(a) Short routes including shuttle services-This class
of route will cover a distance of up to 50 kilo- -
metres.

(b) Medium routes -This class of route will cover a
distance varying from 50 kilometres to 120 kilo·
metres.
G (c) Long routes-This class of route will cover a dis·
tancc of more than 120 kilometres.
(ii) Other things being equal, preference shall be given
to applicants as follows :
H
(a) for short routes including shuttle services to new
entrants,
P. VENKAIAH v. G.K. RAO (Koshal, J.) 383

(b) for medium routes to applicants with I to 4 stage A
carriages (excluding spare buses).

(iii) The Transport authorities shall, in deciding whether
to grant or refuse to grant a stage carriage permit, have
regard to the following matters in addition to those
specified in sub-section (I) of section 47. B
The applicants shall first be screened and those
who are found to be unsuitable on one or more of the
' following principles shall be disqualified, reasons being

- given for the decision of the transport authority when-
ever an applicant is disqualified.

(I) Financial instability .........
c

(2) If the history sheet is not clean .........
(3) If there is evidence that the applicant has been
trafficking in permits, either benami or otherwise. D

(4) If the applicant has no workshop facilities or other
arrangement to attend to repairs efficiently :

E
\

(5) If the applicant bas no main office or branch office
on the route or resides beyond 8 kilometres from

- the route applied for to control the service.

(6) If the application is on behalf of others in order
to evade rules.
F

' (iv) After eliminating the applicants in the manner laid
" down in clause (iii) above, marks shall be assigned as
follows for assessing the different qualifications of the
applicants for the grant of permits- G

(a) Sector or residential qualifications-

(I) Four marks may be awarded to the applicant
who bas bis place of business or residence at H
either terminus of the route applied for, and
two marks may be awarded to the applicant
384 SUPREME COURT REPORTS [1982] 1 S.C.R.

A who resides on the route (but not at either
terminus) or within 8 kilometres from the
route.

(2) Marks may be awarded to the applicant who
has sector qualification on the route applied
B for, as follows :-

(i) where the sector qualification is between
1 per cent and 25 per cent of the total
distance of the route applied for-One
mark;
c (ii) where the sector qualification is between
26 per cent and 50 per cent of the total
distance of the route applied for-Two
marks;

(iii) where the _sector qualification is between
D 51 per cent and 75 per cent of the total
distance of the route applied for-Three
marks; and

(iv) where the sector qualification is above
75 per cent of the total distance of the
E route applied for-Four marks :
I
Provided that if the applicant has both residen-
tial· and sector qualifications, he may . be given
marks either for residential qualification or for

F
' sector qualification, whiche,v~r is more advantageous
to him.
...
(b)

(c)

G 'It.will be seen tbat the rule.lays.down a· scheme for the evalua-
tion of the merit of various. applicants for a'stage. carriage permit
and for that purpose classifies routes as short routes, medium routes
and long routes. Aocording to.clause (ii)<preference has to be given
to those applicants in the matter of grant of permit for short routes
wlio are·~ne\v entrants"; Clause (iiil: provides· criteria for weeding
}
out'undesirabfo ·applicanrs. Afrer the' elimination process is over,
' t '.:·i: .:, '

'',,1 .• ,_ "J'
P. VENKAIAH v. G.K. RAO (Kasha/, J.) 385

the evaluation of the merit of the remaining applicants starts under A
clause (iv) which provides for marks being awarded for sector or
residential qualifications as laid down in paragraphs (I) and (2) of
sub-clause (a) thereof. To sub:clause (a) has been added a proviso
which states that if an applicant is possessed of both residential and
sector qualifications he shall be awarded marks only for one of them
so, however, that he is given credit for the qualification more B
adyantageous to him mark-wise.

3. We may now state the relevant facts. In the year 1957
road transport wa_s nationalised in the State of Andhra Pradesh.
Just before that. the appellant, respondent No ..1 and respondent
No. 5 held 1, 3 and I stage carriage permit~ respecti.vely, but on
nationalisation they were deprived thereof. Subsequently the
appellant and respqndent No. 5 granted one such permit each.while
none was issued in favour of respondent No. I.

. For the two routes in -question the Regional. Transport Autho- D
rity (hereinafter referred to as the RTA) considered the claims of;
20 applicants out of which 16 appear to have been eliminated in
pursuance of·the provisions of clause (iii) of rule 212.. The case was
then taken up for con8ideration under .clause (iv) and out of the
remairiirig four'applicants, each one of the three present contestants
was awarded 5 marks; i.e., one mark for business or . technical E
experience and 4 for residential/sector qu_alification. On further
consideration of the case the RTA granted one permit to the
appellant and the other to respondent. No 5. In appeal the State
Transport Authority hereinafter re(erred to as the STA) noted the

-
fact that respondent No. I did not hold any stage carriage permit at
the time of the· consideration of the respective claims c;>f the parties
F
and was, therefore, .a new entrant within the meaning of that expres·
sion.as: used. in sub-clause(a) of clause (ii) -of rule 212, while the
appell'i,nt and the .respondent No. 5 .did not have. that .qualification
as each one of them was holding one such permit at the relevant
point"of time. One· permit was, therefore, granted by hitn to
G
respondent.No; 1 and. the other to respondent No. 5 ·who was held
to have an edge over the appellant for the reason that although each
of them had:· to' his· discredit a c011viction:. for a_n offence under the
Act, the offence brought home to the appellant was more serious
than that of which respondent No. 5 was found guilty.
- ' - r'' _(' i- ,' •

The third round of litigation took plaee before the State
H
Government in revision under section 64A of the Act. The State
386 SUPREME COURT REPORTS (1982] I s.C.R.

A Government held that the appellant and respondent No. 5 were enti-
tled to preference over respondent No. I because of their longer
experience in the field of motor transport (in addition to full se:ctor
qualification possessed by each of them) in spite of the fact that
respondent No. I was a "new entrant".

8 The matter was then agitated by the rival claimants in two
petitions under article 226 of the Constitution of India filed before
the High Court, a learned Single Judge of which held that respon-
dent No. I was a new entrant who was entitled to preference over
the other contestants by reason of the provisions of sub-clause (a) of
clause (ii) of rnle 212. The other route was granted by the learned
c Single Judge to respondent No. 5 on the same ground as had
weighed with the STA in that behalf.
•
I
As already stated the judgment of the learned Single Judge was
upheld in the Letters Patent Appeal. I
)
D 4. Before the Letters Patent Bench three contentions were
raised :

A. The proviso to sub-clause (a) of clause (iv) of rule
212 imposes an unreasonable restriction on the right of
citizens to carry on business and is, therefore, hit by
E article 19 of the Constitution. It has thus to be dis-
regarded as being null and void. Consequently the
I
appellant and respondent No. 5 must be awarded 9
marks each as each of them had residential as well as
full sector qualification.

F B. The expression "new entrant" above mentioned covers
only persons who take up the business of motor
transport for the first time and is not restricted to
persons who seek entry to the stage carriage business.

C. Even if contention B is not accepted a "new entrant"
G would not mean a person not having a permit at the
time when the question of granting one arises but
would apply only to a person who never held any stage
carriage permit.

Contention A was repelled by the Division Bench with the
H
following observations :
P. VENKAIAH v. G.K. RAO (Koshal, J.) 387

"The Rule-making Authority must have thought that A
as both the residential and common sector qualifications
will serve the same purpose it is not necessary to award
marks for both the qualifications and if marks were to be
awarded for both the qualifications it would be putting
unnecessary premium on the applicants having both the
qualifications as against the applicants having only one of B
those two qualifications and thus putting unnecessary restric-
tion on equality of opportunity. We do not think the
policy of the Rule-making Authority in adopting that rule
for awarding marks for one or the other of the two q ualifi-
cations, whichever is more advantageous to the applicant,
can be questioned. c

We are satisfied that the prov1s1on contained in clause D
(iv) (aJ of rule 212 read with the proviso thereunder provi-
ding for awarding of marks either for common sector quali-
fication or for residential qualification whichever is more
advantageous to the applicant is made in order to achieve
the objects of both efficiency of service and equality of
' opportunity both of which are needed in the best interests E
of the public. It incidentally discourages tendency towards
monopoly. Therefore, it is not possible to hold that the

- proviso in question works out in any way to be an
unreasonable restriction. We hold that it cannot be struck
down on the ground of unreasonale restriction."

In turning down contentions B and C the High Court
F
observed :

"The expression "new entrant" is not defined either in
the Act or in the Rules. It must be understood in the con-
text of clause (ii) of rule 212 where it appears. As provided
G
therein for short routes preference should be given to "new
entrants" and with regard to medium routes preference
be given to applicants with I to 4 stage carriages. Thus
with regard to medium routes to have preference the appli-
cants must be having some stage carriages. Viewed in this H
context, it appears that when it is said that for sbort
routes preference should be given to the "new entrants" it
388 SUPREME COURT REPORTS [1982] I S.C.R.

A means preference should be given to the applicants not I
having any stage carriages at that time. If the argument
of Sri Babul Reddy that "new entrants" means an appli·
cant who is for the first time entering into the field of
transport business is to be accepted the applicant who is not
having any stage carriage permit at that time on account of
B his having some stage carriages previously will be placed
in a disadvantageous position so as not to get medium
routes as also short routes. It would practically amount to
ousting that class of applicants getting either the short route
permits or medium route permits which could not have been
the intention of the Rule-making Authority. If the provi-
sion made in sub rule (ii) of rule 212 is read as a whole the
intention appears to be clear. namely, that for short routes
the applicants having no stage carriages are to be preferred
and for medium routes applicants having some stage
)
carriages up to four are to be preferred. Sri Babu! Reddy
has also argued that if a person who had a stage carriage
D previously but whose permit was cancelled for gross viola-
tion of the conditions of the permit would still be entitled
to preference for short routes on the ground of his being a
"new entrant" merely because he possessed no permit at the
time when the applications were considered. It might be so.
But we fail to understand how that would be a startling
E result as contended by Sri Babu] Reddy. If a permit is I
cancelled for any gross vi Jlation of the conditions of a
permit if it is so required it may be considered as a disquali-
fication and so long as it is treated as a disqualification

F
whether that applicant is having a stage carriage permit or
not his application will not be considered at all on account
of that disqualification. As a matter of fact it is provided
-
under clause !iii) of rule 212 that ifthe history sheet is not
clean and contains more than six entries relating to the
offences mentioned therein within twenty four months
preceding the date of grant of the permit such applicants
shall be first screened and they should be disqualified what-
G
ever the other merits of those applicants may be. They do
T>Ot come up for consideration at all on account of such
exclusion. Therefore, this argument of Sri Babu! Reddy
does not appear to be of much substance. It is clear to our
minds that the expression "new entrant" in the rule means ,J
H
an applicant who possessed no stage carriage at the time
P. VENKAIAH v. G.K. RAO (Koshal, J.) 389

' when the applications are considered and not necessarily an A
applicant who is entering the business of transport for the
first time. Accordingly this point also goes against the
appellant."

5. The contentions raised before the High Court have been
reiterated before us and we also find ourselves unable to accept any · B
of them for more or Jess the same reasons as weighed with the
\ Division Bench.

6. We do not see how the proviso occurring in sub-clause (a)
of clause (iv) of rule 212 is bit by the provisions of article 19 of
the Constitution. It merely states that if an applicant possesses
both residential and sector qualifications he is to be given credit only
c
for that one of them which is more advantageous to him. As
pointed out by the High Court the rule contained in the proviso is
salutary and is obviously meant to avoid monopolies. It appears to
us to be eminently reasonable that an applicant is given the option
of choosing either the residential or the sector qualification for the D
award of marks inasmuch as the merit accruing to the applicant by
reason of being clothed with one of them would overlap that for
which be might get credit by reason of the other. We need not
pursue the matter further as we find ourselves in full agreement with
the views of the Division Bench on the point.
E
7. In relation to contentions B and C again we agree fully
with the opinion expressed in the impugned judgment, which we
may add, finds full support from the dictum of this Court in
S. Chinna Narasa Reddy v. D. Jagdeeshwara Rao and Others (1),
wherein Hegde, J. speaking for the Court observed thus while inter-
preting the expression "new entrant" occurring in the relevant part F
of rule 212:

'In our opinion, the Appellate Bench erred in coming
to the conclusion that the expression "a new entrant" in the
rule in question means new entrant to the motor transport
field. The marginal note to Rule 2 (I) (ii) says; "Grant,
variation, suspension or cancellation of stage carriage per- G
mit-guiding principles". This note indicates that the rule-
mak'.ng autho~ity was only considering the grant of stage
carnage permits. Suh-clause(a) of clause (ii) of rule 212(i)

(I) [1972] 4 S.C.C. 734 :AIR 1972 SC 1536. H
390 SUPREME COURT REPORTS (1982]1 I S.C.R,

A does not refer to motor transport business. Wh<en it !
comes to business or technical experience the rule specifi-
cally speaks of business or technical experience in motor
transport. But when it speaks of "a new entrant", it does
not refer to motor transport business. From the context
it is clear that the rule-making authority intended that a
B. new entrant to the stage carriage business must have a pre-
ference over the existing operators in respect of short routes.
The fact that the appellant had a public carrier permit was )
wholly irrelevant. He is undoubtedly a new entrant to the
stage carriage business.
c In our opinion the policy behind rule 212 is that in the
matter of short routes perference should be given to new
entrants so that more persons may have employment and
there may be better competition. But when it comes to
routes of longer distance the rule provides for viable units.
If we consider the policy behind rule 212 it becomes obvious
D
that the rule-making authority had in view new entrants to -
stage carriage business. Further, in our opinion the langu-
age of the rule, if considered in the context in which it is
used, clearly indicates that the new entrants referred to
therein are new entrants to the stage carrige business.
E
Mr. Natesan, learned counsel for the first respondent, I
contended that if we read the rule regarding new entrants as
well as the rule relating to business or technical experience
together then it would be clear that "new entrant" referred
to in rule 212 (t) (ii) (a) is a new entrant to the motor
F transport business. We are unable to accept that contention
as correct. If Mr. Natesan's contention is correct then
even an operator of a scooter rickshaw would be deprived
of the benefit of the rule. This could never have been the
intention of the rule-making authority.'

G With respect we fully endorse this view and that disposes of
contention B.

8. In relation to contention C learned counsel for the appellant
has drawn our attention to the dictionary meaning of the word
"new." The Oxford English Dictionary lists the following, amongst
H
others, against that word:
P. VENKAIAH v. G.K. RAO (Koshal, J.) 391

•·not existing before; now made, or brought into exis- A
tence, for the first time ............ not previously known; now
known for the first time."

If these were the only meanings of the word, the contention
might have considerable force. But the word 'new' is also stated
in the same dictionary to mean : B
"Coming as a resumption or repetition of some pre-
vions act or thing; starting afresh ........... restored after
demolition, decay, disappearance, etc ............. other than
the former, or old, different from that previously existing,
known, or used," c
Thus a set of things which is difftrent from that immediately
preceding it may well be called new. Furthermore, a situation
which once existed and then ceased to exist (disappeared) may pro-
perly attract the word 'new' on reappearance. Seen in this light
the adjective 'new' would certainly be applicable to a person who D
was once in the line of operators of stage carriages but who has long
ceased to be so and who seeks entry into that line afresh; and in
onr opinion this connotation of the word is not excluded by the
context in which the word has been used in rule 212. We have,
therefore, no reason to depart from or qualify the observations made
by the Division Bench on the point. E
In the result the appeal fails and is dismissed but with no
order as to costs.

P.B.R. Appeal dismissed.
F

'