Holding

Both Rule 297‑A(1)(c) and Rule 297‑A(6)(f) are intra vires the Motor Vehicles Act, 1988, and only the Central Government may frame rules for all‑India tourist permits.

Summary

The State of Andhra Pradesh appealed against a Division Bench of the Andhra Pradesh High Court that had struck down Andhra Pradesh Motor Vehicles Rules 297‑A(1)(c) and 297‑A(6)(f) as ultra vires the Motor Vehicles Act, 1988 and Article 19(1)(g). The respondents, holders of contract‑carriage permits (Sec. 74) and all‑India tourist permits (Sec. 88), had their vehicles seized on the ground that they were being used as stage carriages. The Supreme Court held that the two rules are consistent with Sec. 2(7) of the Act and therefore intra vires; the High Court’s view that a “common purpose of journey” need only imply a common destination was wrong. The Court also affirmed that only the Central Government may frame rules for all‑India tourist permits under Sec. 88(14); the State’s power under Secs. 95 and 96 does not extend to such permits. Consequently, the High Court’s decision striking down the rules was set aside, while its finding that Central rules govern all‑India tourist permits was upheld.

Issues considered

The validity of Rule 297‑A(1)(c) defining ‘common purpose of journey’ under the Motor Vehicles Act, 1988.
The validity of Rule 297‑A(6)(f) mandating a written agreement for contract carriage.
Whether the State Government can make rules for all‑India tourist permits under Sections 95 and 96 of the Act.
The proper interpretation of ‘under a contract’ in Section 2(7) – single versus multiple contracts.
Whether ‘common purpose of journey’ requires a common purpose in addition to a common destination.

Legislation cited

Andhra Pradesh Motor Vehicles Rules, 1989s. Rule 297‑A(1)(c), s. Rule 297‑A(6)(f)
Motor Vehicles Act, 1988s. 2(4), s. 2(7), s. 72, s. 73, s. 74, s. 80, s. 81, s. 82, s. 83, s. 84, s. 85, s. 86, s. 88(11), s. 88(14), s. 88(9), s. 89, s. 95, s. 96

Subjects

contract carriagestage carriagecommon purpose of journeyMotor Vehicles Actintra viresall‑India tourist permitrule validitycentral vs state rulemaking

Judgment

A STATE OF ANDHRA PRADESH AND ORS.
v.
B. NOORULLA KHAN AND ORS.

MAY 6, 2004

B [R.C. LAHOTI AND ASHOK BHAN, JJ.]

Motor Vehicles:

Andhra Pradesh Motor Vehicles Rules, 1989:

c Rule 297-A(J)(c)-"Common purpose of journey"-Meaning of-
Held: Passengers travelling together need to have the intention to travel
to a common destination for the same purpose as we//-R 297-A(J)(c) is
in consonance with S. 2(7) of the Motor Vehicles Act, 1988 and is intra
vires the 1988 Act.
D
Rule 297-A(6)!J)-Conditions under-Whether ultra vires the Motor
Vehicles Act, 1988-Held: R. 297-A(6)!J) does not go beyond the purview
of the 1988 Act-It carries out the purpose of the 1988 Act and is intra
vires the 1988 Act.

E Motor Vehicles Act, 1988:

Sections 2(4) and (7)-"Stage carriage" and "contract carriage"-
Distinction between-Explained.

F . Sections 88(9). (I 1) & (14) and Sections 95 & 96-All-lndia tourist
vehicles-Powers to frame rules/prescribe conditions in respect of-Held:
From a conjoint reading of Sections 88(9), (11) & (14), it is abundantly
clear that Central Government alone is authorised to frame rules/prescribe
conditions in respect of all-India tourist vehicles-State Government is not
G authorised to frame rules applicable to all-India tourist vehicles, which is
exclusively vested in the Central Government.

Words & Phrases:

"Common purpose of journey "-Meaning of-Jn the context of
4 R. 297-A(l){c) of the Motor Vehicles Act, 1988.
432
STATE v. B.N. KHAN 433
"Under a contract "-Meaning of-In the context of S. 2(7) of the A
Motor Vehicles Act, 1988.

The Division Bench of the High Court had struck down Rules 297-
A(l)(c) and 297-A(6)(t) of the Andhra Pradesh Motor Vehicles Rules,
1989 being ultra vires the provisions of the Motor Vehicles Act, 1988 B
and Article 19(1 )(g) of the Constitution. The Division Bench had also
held that the Rules framed by the State Government under Sections
95 and 96 of the Act and the further conditions prescribed in Section
74 of the Act were not applicable to the all-India tourist permit
vehicles. Hence the appeal.
c
Allowing the appeal in part, the Court

HELD: 1. The High Court has erred in holding that the "common
purpose of journey" occurring in Rule 297-A(l)(c) of the Andhra
Pradesh Motor Vehicles Rules, 1989 means that the passengers travelling D
together need to have the common intention to travel to a common
destination but they need not share the common intention of travelling
for the same purpose as well. [442-E]

1.2. The High Court has also erred in construing that the words E
"under a contract" occurring in Section 2(7) of the Motor Vehicles Act,
1988 to mean as referring to both a single contract and more than one
contract. If such a construction is placed then the distinction between
the contract carriage and the stage carriage permits would be lost and
obliterated. [438-C-D; 442-G-H]
F
Brijendra Kumar Chaudhari v. State of UP., [1992] 4 SCC 703,
relied on.

2.1. The distinction between a stage carriage permit and a
contract carriage permit as envisaged by the Legislature has to be G
maintained as the two types of permits are intended to meet different
requirements. The contract carriages are for those who want to hire
the vehicle collectively or individually for a group or a party for their
transport to a destination /destinations. The vehicle has to be hired as
a whole for the carriage of passengers mentioned in the contract. There H
434 SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.
A has to be only one contract for carrying the passengers mentioned in
the contract from one destination to another. An agent or a group of
persons/individuals cannot hire a public service vehicle for going from
one place to another with passengers having different purposes. If such
a construction is put then there would be no distinction between stage
B carriage or contract carriage permits. If contract carriage permit
holder is permitted to pick up an individual or a few of them from the
starting point of journey and drop them at the last terminus of the
route it would virtually be a stage carriage with corridor restriction.
Stage carriage is intended to meet the requirements of the general
C public travelling from one destination to another having different
purposes whereas a contract carriage is meant for those who want to
hire a public service vehicle as a whole collectively for their transport
from one destination to another having the same purpose. (446-B-FJ

2.2. The High Court was not right in declaring ultra vires Rules
D 297-A(l)(c) and 297-A(6)(t) of the Andhra Pradesh Motor Vehicles
Rules, 1989 framed by the State Government providing that the party
hiring the contract carriage vehicle should, not only, have the intention
of travelling to the same destination but should also have .the common
purpose of travelling as well. Rule 297-A(l)(c) does not run counter
E to the provisions of Section 2(7) of the Act either in its intent or in its
expression. The Rule is in consonance with the intent of Section 2(7)
of the Act. The same has been framed to fulfil the object with which
Section 2(7) has been enacted. Any other interpretation would obliterate
the distinction between a stage carriage permit and a contract carriage
F permit. (446-G-H; 447-B-C, HJ

Brijendra Kumar Chaudhari v. State of UP., [1992) 4 SCC 703 and
Nirmala Jagdish Chandra Kabra v. Transport Commissioner, (1997] 9
sec 227, relied on.
G Roshan Lal Gautham v. State of UP., AIR (1965) SC 991 and
N. Krishnasami Chetty v. Licensing Officer, AIR (1988) Mad. 274, cited.

3.1. This Court while interpreting Section 2(7) of the Act has held
that the contract entered between the parties shall be prior and persons
H who are to be carried shall also be known prior to the journey.
STATE v. B.N. KHAN 435

Similarly, the permit, which grants the contract for carriage of the A
passengers, should contain the names of the passengers to be carried
from one destination to another without picking up or dropping the
passengers enroute. Contract may be express or implied as contemplated
by Section 2(7) but the names of the passengers to be carried have to
be settled prior to undertaking the journey. Rule 297-A(6)(t) does not B
go beyond the purview of the Act. Rather it carries out the purpose
of the Act. Essentially, it provides for settling the names of the
passengers undertaking the journey under an agreement for hiring a
public service vehicle. Passengers who are to be carried are to be
known prior to the journey as the definition of contract carriage in C
Section 2(7) includes the words "for the carriage of passengers
mentioned therein". The High Court erred in striking down Rule 297-
A(6)(t). [447-F-H; 448-A-B]

Brijendra Kumar Chaudhari v. State of UP., [1992] 4 SCC 703 and
Nirmala Jagdish Chandra Kabra v. Transport Commissioner, [1997) 9 D
sec 227, relied on.
3.2. Both the Rules 297-A(l)(c) and 297-A(6)(t) are held to be intra
vires of the Act and the findings recorded by the High Court to the
contrary are set aside. (448-B-C) E

4. From a conjoint reading of Sections 88(9), (11) and (14) of the
Motor Vehicles Act, 1988, it is abundantly clear that it is the Central
Government alone which has been authorised to frame the Rules as
well as to prescribe the conditions for the purpose of an-India tourist F
vehicles. The power of the State Government to make Rules under
Sections 95 and 96 would not include the power to frame Rules
applicable to aD-lndia tourist permit which is exclusively vested in the
Central Government. (451-A-B)

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1385- G
1406 of 1998.

From the Judgment and Order dated 27.12.95 of the Andhra Pradesh
High Court in W.P. Nos. 23003, 24299, 24409, 24425, 24497, 23877,
23953,24066,24067,24268,23637,23644,24543,23651,23657,23662, fl
436 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A 23663, 23695, 23847, 23863, 23864 and 23873 of 1995.

Ms. K. Amareswari, K. Subba Rao, O.S.G. Prasuna, T.V. Ratnam,
Guntur Prabhakar, G. Rama Krishna Prasad, Mohd. Wasay Khan, S. Udaya
Kumar Sagar, Ms. N. Annapoorani, (NP), A. Subba Rao and A.D.N. Rao
B for the appearing parties.

The Judgment of the Court was delivered by

BHAN, J. : State of Andhra Pradesh & Others have filed these
C appeals challenging the impugned judgment passed by a Division Bench
of Andhra Pradesh High Court wherein it has struck down Rules 297-
A(l )(c) and 297-A(6)(f) of The Andhra Pradesh Motor Vehicles Rules,
1989 (for short 'the State Rules') being ultra vires the provisions of The
Motor Vehicles Act, 1988 (hereinafter referred to as 'the Act') and Article
19(1)(g) of the Constitution of India. The Division Bench has also held that
D the rules framed by the State Government under sections 95 and 96 of the
Act and the further conditions prescribed in section 74 of the Act are not
applicable to all-India tourist permit vehicles.

Original writ petitioners, respondents herein, are either the holders
E of contract carriage permits granted under Section 74 of the Act or holders
of all-India tourist permits granted under Section 88 of the Act. The
checking officials seized and detained the vehicles being of the opinion that
the vehicles were being used as Stage Carriages. This action of the
authorities was challenged by the respondents by filing a set of writ
F petitions which were disposed of by a Division Bench on 12th September,
1995. Vires of the Rules were not challenged in these writ petitions. The
writ petitions were dismissed and it was held that the authorities had the
power to detain vehicles during transit as and when any violation of the
rules was found at the time of checking. The vehicles were again seized
and detained and thereafter the respondents filed the present set of writ
G petitions challenging the constitutional validity of Rules 185 (e)(v), 297-
A(l)(c), 297-A(2)(b) read with 297-A(6)(b)(i) and 297-A(6)(f) of the State
Rules being ultra vires the provisions of the Constitution of India and the
Act. By the impugned judgment, the High Court has upheld the validity
of Rules 185(e)(v), 297-A(2)(b) and 297-A(6)(b)(i). The respondents have
H not carried appeals to challenge the part of the judgment by which the
STATE v. B.N. KHAN [BHAN, J.] 437

High Court has upheld the constitutional validity of the Rules, referred to A
above.

Section 2(4) of the Act defines the Stage Carriage. Section 2(7)
defines the Contract Carriage. Chapter V deals with the control of the
transport vehicles. Section 72 vests the Regional Transport Authority with B
the power to grant State carriage pennit [or refuse it) subject to the Rules
framed and attach any one or more of the conditions mentioned under
Section 72(2) of the Act. Section 74 enables the concerned authority to
grant contract carriage permit. Section 84 envisages the general conditions
attaching to all pennits. Section 86 vests the authority with the power to
cancel or suspend the permits. Section 88 provides for validation of permits C
used outside the region in which it is granted. Section 88(9) enables the
State Transport Authority to grant all-India tourist permits subject to the
Rules framed by the Central Government under clause 14 of Section 88
for the whole of India or in such contiguous States, not less than 3 in
number, including the State in which the permit is issued, as per choice D
indicated in the application. The provisions of Sections 73, 74, 80 to 86
and Clause (d) of sub-section(!) of Section 87 and Section 89 shall as far
as may be apply in relation to such permits. Section 88(11) lays down the
condition of every permit granted under sub-section (9) of Section 88.
Section 88( 11 )(iii) empowers the Central Government to prescribe other E
conditions of permit. Sub-section (14)(a) of Section 88 empowers the
Central Government to make rules to carry out the provisions of section
88. Section 95 of the Act empowers the State Government to make rules
as to Stage Carriages and Contract Carriages and the conduct of passengers
in such vehicles. Section 96 empowers the State Government to make rules F
for the purpose of Chapter V to carry into effect the provisions of the said
Chapter.

The High Court held that reading of Section 2(7) indicated that the
'common purpose' means that all the passengers travelling in the contract
carriage must have a G(lmmon destination, but it could not be stretched G
beyond that and to hold that purpose of going to a common destination
must also be the same. That it could not be held that the travelling party,
as a whole, must have one 'common purpose'; it was enough if they had
a common destination. If common purpose as defined by rules is read into
the definition of Section 2(7) then it would amount to amending or H
438 SUPREME COURT REPORTS [2004) SUPP. 2 S.C.R.

A modifying the said section which is within the purview of the legislature
•
only. The High Court has further held that the rules could not go beyond
the Act and therefore rule 297-A(l)(c) was ultra vires the provisions of the
main Act as well as the Constitution of India.

B The High Court has a.lso held that Rule 297-A (6)(t) contemplates that
where a public service vehicle has been, as a whole, engaged by a hiring
party, an agreement shall be drawn up in writing and executed by the agent
and the hiring party or its authorised representative containing the particulars
mentioned therein. The rule obligates the agent to enter into a written
C agreement with the hiring party.

According to the High Court, under Section 2(7), a contract could be
either express or implied. The express contract could be taken to include
a written contract but implied contract itself denotes that it is not mandatory
to have a written contract. Rules could not go beyond the purview of the
D Act or contrary to the Act. Since the definition of contract carriage
contemplates express as well as implied contract, an oral contract could
also be entered into. The provision made under Rule 297-A(6)(t) mandating
the agent to enter into written contract was ultra vires the Section 2(7) and
therefore liable to be struck down.
E
In so far as all-India tourist permits are concerned it has been held
by the High Court that under Section 88(14)(a), it is the Central Government
alone which can frame the Rules to carry out the provisions of Section 88
and the State Government has no authority to frame rules in regard to all-
F India tourist permits in exercise of its powers under Sections 95 and 96
of the Act. Since the rules framed by the State Government as made
applicable to all-India tourist permits run contrary to the Rules framed by
the Central Government the same were bad in law being repugnant.

Section 93 of the Act provides that an agent or canvasser who is
G engaged in the sale of tickets for travel by pub Ii.I;: service vehicles or in
otherwise soliciting customers for such vehicles is required to obtain a
licence from such authority and subject to such conditions as may be
prescribed by the State Government. Sub-section (2) enumerates the
conditions of such a licence as to the duration of the licence, fee payable,
H deposit of security, provision as to the insurance of goods in the transit,
STATE v. B.N. KHAN [BHAN, J.] 439
and the circumstances under which the licence may be suspended or A
revoked. Clause (f) vests the State Government with the authority to lay
"such other conditions as may be prescribed by the State Government".

Rule 297-A of the State Rules makes special provisions for licensing
ofagents engaged in the sales of tickets or in otherwise soliciting customers B
for public service vehicles. Rules 297-A(l)(c) and 297-A (6) (f) which
have struck down by the High Court, read as follows:

"297-A. Special provisions regarding licensing ofagents engaged
in the sales of tickets or in otherwise soliciting customers for C
public service vehicles:-

(I) In this rule, unless the context otherwise requires.

I , Xxx xxx
D
(c) "Common purpose of journey" means the intention shared
alike by all the persons travelling by the public service
vehicles;

(i) to attend a meeting, gathering or function, social, religious, E
political and the like, or

(ii) to go on a pilgrimage or tour to visit places of tourist's
interest or both. But it shall not include the intention or the
act of such persons of merely travelling from one common F
point to another."

Section 297-A (6) (/):

"An agent's licence shall be subject to the following
conditions: G

xxx xxx

(f) Where the public service vehicle has been, as a whole,
engaged by a hiring party an agreement shall be drawn up in H
440 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A writing and executed by the agent and the hiring party or its
authorised representative containing the following essential
particulars and stipulations, namely:

(i) Name, Father's/Husband's Name, Age/Occupation and full
B postal address of the members or/representative of the hiring
party who executes the agreement;

(ii) An Annexure containing the list of all members of the hiring
party giving their particulars in the following form:

c I. Serial number,

2. Name of the Member:

3. Father's/Husband's name:
D
4. Age:

5. Full Postal Address:

E (iii) The nature of the common purpose of the journey;

(iv) The period for which the vehicle is engaged by the hiring
party;

F (v) The places to be visited by the hiring party;

(vi) The place or places to be specified where all or some to be
specified of the members of the hiring party are to be picked
up or let down under the agreement;
G
(vii) Hire charges,

a) if payable in a lumpsum, the amount so payable; or

b) if calculable at a rate, the rate so agreed upon; and
H
STATE v. B.N. KHAN [BHAN, J.] 441
c) in either case, the amount if any paid in advance ami A
the time for the payment of the balance.

(viii) Additional charges, if any, payable in case the journey is
delayed or extended at the instance of the hiring party."

"Contract Carriage" in Section 2(7) has been defined as:
B

"2(7): 'Contract Carriage' means a motor vehicle which carries
a passenger or passengers for hire or reward and is engaged under
a contract, whether express or implied, for the use of such vehicle,
as a whole for the carriage of passengers mentioned therein and C
entered into by a person with a holder of permit in relation to such
vehicle or any person authorised by him in this behalf on a fixed
or an agreed rate or sum, -

- (a) on a time basis, whether or not with reference to any route D
or distance; or

(b) from one point to another;

and in either case, without stopping to pick up or set down
passengers not included in the contract anywhere during the E
journey, and includes

(i) a maxicab; and

(ii) a motorcar notwithstanding the separate fares are charged
for its passengers." F

Definition of contract carriage makes it clear that:

I. In order that a vehicle can be used to transport passenger/
passengers there must a prior contract express or implied; G

2. Contract shall have to be entered into by a person with the
holder of the permit or any person authorised by him;

3. Engagement under the contract must be for use of the
vehicle as a whole; H
442 SUPREME COURT REPORTS [2004) SUPP. 2 S.C.R.

A 4. Contract must indicate the names of passengers to be carried
in the vehicle;

5. Vehicle is engaged on a fixed or an agreed rate or sum on
a time basis whether or not with reference to any route or
B distance;

or

from one point to another;

C 6. Without stopping to pick up or set down passengers not
included in the contract anywhere during the journey.

In Rule 297-A(l )( c) 'common purpose ofjourney' has been explained
to mean common intention shared by all the persons travelling by the
D vehicle under the contract to attend a meeting, gathering or function which
may be social, religious, political and the like or to go on a pilgrimage or
place of tourist's interest but it shall not include the intention or the act
of such persons of merely travelling from one common point to another.

E High Court has held that 'common purpose' means that the passengers
travelling together need to have the common intention to travel to a
common destination but they need not share the common intention of
travelling for the same purpose as well. For instance, where a group of
persons engage a contract carriage vehicle for travelling from Delhi to Agra
they have the common intention of travelling to the same destination i.e.
F from Delhi to Agra but their purpose of travel from Delhi to Agra could
be different. In other words, according to the High Court, the words "under
a contract" would include both single contract and more than one contract.

This point was examined by this Court in Brijendra Kumar Chaudhari
G & Anr. v. State of UP. & Ors., [I 992] 4 sec 703. It was held that it was
not correct to read the words "under a contract" occurring in Section 2(7)
of the Act to mean as referring to both a single contract and more than
one contract. And in case such a construction is placed then the distinction
between the contract carriage and the stage carriage permits would be lost
H and obliterated. It was held:
STATE v. B.N. KHAN [BHAN, J.) 443

"! 0. The definition makes it clear that in order that a vehicle could A
be used to transport passenger or passengers there must be a prior
contract express or implied; that the contract must indicate as to
who are the passengers to be carried; that the contract shall have
been entered into by a person with the holder of the permit or any
person authorised by him; and that the engagement under "a B
contract" is for use of the vehicle as a whole. It is not possible
to read the words "under a contract" in the context as referring
to both a single contract and more than one contract. If the
construction placed by the learned counsel is accepted there
would be no distinction between stage carriage and contract
carriage permits. Both these classes of permits are intended to C
meet different requirements. A stage carriage is intended to meet
the requirements of the general travelling public. But the contract
carriages are for those who want to hire the vehicle collectively
or individually for a group or party for their transport from place
to place and the whole vehicle is at their disposal. This is also D
made clear in Section 88(8) of the Act corresponding to Section
63(6) of the old Act wherein it is provided:

"88(8) Notwithstanding anything contained in sub-
section (I), but subject to any rules that may be made E
under this Act by the Central Government, the Regional
Transport Authority of any one region or, as the case
may be, the State Transport Authority, may, for the
convenience of the public, grant a special permit in
relation to a vehicle covered by a permit issued under F
Section 72 (including a reserve stage carriage) or under
Section 74 or under sub-section (9) of this section for
carrying a passenger or passengers for hire or reward
under a contract, express or implied, for the use of the
vehicle as a whole without stopping to pick up or set
down along the line of route passengers not included G
in the contract, and in every case where such special
permit is granted, the Regional Transport Authority
shall assign to the vehicle, for display thereon, a special
distinguishing mark in the form and manner specified
by the Central Government and such special permit H
444 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A shall be valid in any other region or State without the
countersignature of the Regional Transport Authority
of the other region or of the State Transport Authority
of the other State, as the cast may be."

That the contract shall be prior and the persons who are to
B
be carried shall be known prior to the journey is also clear
from the other limitation that the vehicle cannot stop to pick
up or set down passengers not included in the contract
anywhere during the journey. As pointed out by this Court
in Roshan Lal Gauthan v. State of U.P., AIR (1965) SC 991:
c
'The contract carriage is engaged for the whole of the
journey between two points for carriage of a person or
persons hiring it but it has not the right to pick up other
passengers on route. The stage carriage, on the other
D hand, runs between two points irrespective of any prior
contract and it is boarded by passengers en route who
pay the fare for distance they propose to travel."

If as contended by the learned counsel contract carriage permit
E holder can pick up individual passengers at the starting point of
the journey it is virtually a stage carriage with corridor restriction.
Some express buses and stage carriages with corridor restriction
pick up passengers at the starting point of the journey and drop
them at the last terminus of the route without the right to pick up
or drop passengers on the notified route between the two termini.
F Further the definition in the Act has added the words 'for the
carriage ofpassengers mentioned therein (contract)" which were
not there earlier. These words clearly show that there must be a
prior contract and the passengers shall be settled in advance."
(Emphasis supplied)
G
Another case on the point is Nirmala JagdishChandra Kabra v.
Transport Commissioner & Ors., (1997] 9 SCC 227. ln this case a writ was
filed by an agent who had hired on contract the vehicle from the carriage
permit holder seeking an appropriate writ or direction declaring and
H holding that the authorities had no legal right or power to either seize or
STATE v. B.N. KHAN [BHAN, J.] 445

detain his vehicles solely on the allegation of collection of individual fare A
from the passengers at the starting point of journey without picking up or
dropping the passengers en route. Petitioner was collecting individual fares
per passenger from one destination to another but was not using the vehicle
as a tourist vehicle hired to one group party. Writ petition was dismissed
by the High Court. Dismissing the appeal it was held by this Court: B
"4. It is contended by Shri Arun Jaitley, learned Senior Counsel
for the petitioner, that the petitioner has taken the vehicle on hire
basis from the owner of the veh.icle who had the permit for
contract carriage of the passengers from one destination to
another. They are not collecting any individual fare en route by C
picking up or setting down the passengers. They are picking up
passengers from one place and taking them for tour to the other
destination and, therefore, it is a "contract carriage" within the
meaning of Section 2(7) of the Act. It is not a stage carriage permit
but one of contract carriage and, therefore, the view taken by the D
High Court is not correct in law. It is true that if the holder of the
vehicle obtains a contract carriage, the owner may carry a
passenger or passengers for hire or reward on contract, whether
express or implied, for the use of such vehicle as a whole for the
carriage of passengers mentioned therein and entered into by a E
person with a holder of a permit in relation to such vehicle or any
person authorised by him in this behalf on a fixed or an agreed
rate or sum. In other words, the very permit which grants the
contract for carriage of the passengers should contain the names
of the passengers to carry from one destination to another F
destination without picking up or setting down en route for hire
or reward but when the holder of a permit is another and permits
them to carry the passengers and makes the contract dehors those
mentioned in the list of passengers enclosed to the permit as
contract carriage and takes the passengers from one destination
to another, even without picking up or setting down en route the G
necessary consequence would be that the vehicle has been or is
being used as a stage carriage but not a contract carriage. Under
those circumstances, obviously, the authority had rightlydetained
the vehicle for the contravention of the conditions of the permit.
Therefore, the mandamus, as sought for, was rightly refused by H
446 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A the high Court. The learned counsel sought reliance on a judgment
of the Madras High Court in N Krishnasami Chetty v. Licensing
Officer, Dy. Transport Commr. and Secy RTA, AIR (1988) Mad.
274. The learned Judges have not correctly· appreciated the legal
position. Therefore, it is not correct in view of the above law. It
is accordingly overruled."
B
(Emphasis supplied)

The distinction between a stage carriage permit or a contract carriage
permit as envisaged by the Legislature has to be maintained as the two
C types of permits are intended to meet different requirements. The contract
carriages are for those who want to hire the vehicle collectively or
individually for a group or a party for their transport to a destination/
destinations. The vehicle has to be hired as a whole for the carriage of
passengers mentioned in the contract. There has to be only one contract
for carrying the passengers mentioned in the contract from one destination
D to another. An agent or a group of persons/individuals cannot hire a public
service vehicle for going from one place to another with passengers having
different purposes. If such a constructio.1 is put then there would be no
distinction between stage carriage or contract carriage permits. If contract
carriage permit holder is permitted to pick up individual or a few of them
E from the starting point of journey and drop them at the last terminus of
the route it would virtually be a Stage Carriage with corridor restriction.
Stage carriage is intended to meet the requirements of the general public
travelling from one destination to another having different purposes
whereas a contract carriage is meant for those who want to hire a public
F service vehicle as a whole collectively for their transport from one
destination to another having the same purpose. High Court was not right
in holding that the travelling party as a whole need not have a common
purpose for their travel and it was sufficient if they had a common
destination. The view taken runs counter to the law laid down by this Court
in Brijendra Kumar Chaudhari & Anr. and Nirmala Jagdish Chandra
G Kabra cases (supra) and, therefore, bad in law. High Court was not right
in declaring ultra vires the Rules framed by the State Government
providing that the party hiring the contract carriage vehicle should, not
only, have the intention of travelling to the same destination but should
also have the common purpose of travelling as well. In Rule 297-A (l)(c)
H 'common purpose' has been defined to mean the intention shared alike by
STATE v. B.N. KHAN [BHAN, J.] 447
all the persons travelling by the public service vehicles to attend a meeting, A
gathering or function, social, religious, political and the like, or to go to
a pligrimage or visit to place of tourist's interest or both. That it would
not include the intention or the act of such persons merely travelling from
one common point to another. This Rule framed by the State Government
does not run counter to the provisions of Section 2(7) of the Act either in B
its intent or in its expression. The rule is in consonance with the intent of
Section 2(7) of the Act. The same has been framed to fulfill the object with
which Section 2(7) has been enacted. Any other interpretation would
obliterate the distinction between a stage carriage permit and a contract
carriage permit.
c
High Court has struck down Rule 297-A(6)(f) as it provides for the
execution of a written contract between the hiring party and the agent while
hiring a public service vehicle. According to the High Court the contract
can be in writing as well as an implied contract. Under Section 2 (7) a
contract could be either express or implied and therefore it was not D
mandatory to have a written contract only. It could be an oral contract as
well. The Rule providing to have a written contract mandatorily goes
beyond the purview of the Act and therefore bad in law. Contract could
be implied also as the definition of the contract carriage contemplates
express as well as an implied contract. E

Rule 297-A(6)(f) provides for drawing up of an agreement in writing,
providing therein the list of all the members of the hiring party giving
particulars of their names, father's/husband's name, age, full address, the
period for which the vehicle is engaged, places to be visited etc. and "the F
nature of the common purpose of the journey". This Court in Brijendra
Kumar Chaudhari & Anr. (supra) while interpreting Section 2 (7) of the
Act has held that the contract entered between the parties shall be prior
and persons who are to be carried shall also be known prior to the journey.
Similarly, in Nirmala JagdishChandra Kabra case (supra) it has been held
that the permit which grants the contract for carriage of the passengers G
should contain the names of the passengers to be carried from. one
destination to another without picking up or dropping the passengers en-
route. Contract may be express or implied as contemplated by Section 2
(7) but the names of the passengers to be carried have to be settled prior
to undertaking the journey. Rule 297-A (6)(f) does not go beyond the H
448 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A purview of the Act. Rather it carries out the purpose of the Act. Essentially
it provides for settling the names of the passengers undertaking the journey
under an agreement for hiring a public service vehicle. Passengers who are
to be carried are to be known prior to the journey as the definition of
contract carriage in Section 2 (7) includes the words "for the carriage of
B passengers mentioned therein". These words clearly show that there must
be a prior contract and the passengers shall also be settled in advance. High
Court erred in striking down Rule 297-A (6)( f).

For the reasons stated above both the Rules 297-A(l)(c) and 297-
C A (6) (f) are held to be intra vires of the Act and the findings recorded
by the High Court to the contrary are set aside.

Coming to the last point wherein the High Court has held that the rules
framed by the Central Government under Section 88 (14) would alone be
applicable to all-India tourist permit and not the Rules framed by the State
D Government, it was contended by the learned counsel for the appellants
that all-India tourist permits were basically contract carriages. 'Tourist
vehicle' is defined under Section 2 (43) to mean a contract carriage. The
permits granted under Section 88 (9) enable these vehicles to be used in
more than one State but only for tourist purposes. Apart from this
E difference in the actual area of operation there is no other difference
between a contract carriage and an all-India tourist vehicle. An all-India
tourist vehicle has to comply with the norms of a contract carriage. The
vehicle in any case has to be restricted for the journey as a whole from
one end to the other without picking up any passenger in between. The
F journey is one contract of a round trip for the whole journey to and from
with one common purpose. On checking it was found that all-India tourist
vehicles were indulging in illicit operation as stage carriages and not as •
contract carriages.

We do not find any force in this submission. Section 88 provides
G that except as may be otherwise prescribed, a permit granted. by the
Regional Transport Authority of any one region shall not be valid in any
other region, unless the permit has been countersigned by the Regional
Transport Authority of that other region, and a permit granted in any one
State shall not be valid in any other State unless countersigned by the State
H Transport Authority of that other State or by the Regional Transport
STATE v. B.N. KHAN [BHAN, J.] 449

Authority concerned. Sub-section (9) which provides for the grant of all- A
India tourist pennits, which reads as:

"9. Notwithstanding anything contained in sub-section (I) but
subject to any rules that may be made by the Central Government
under sub-section (14), any State Transport Authority may, for the B
purpose of promoting tourism, grant pennits in respect of tourist
vehicles valid for the whole oflndia, or in such contiguous States
not being less than three in number including the State in which
the pennit is issued as may be specified in such pennit in
accordance with the choice indicated in the application and the C
provisions of sections 73, 74, 80, 81, 82, 83, 84, 85, 86 [clause
(d) of sub-section (I) of Section 87 and Section 89] shall, as far
as may be, apply in relation to such pennits."

It is clear from the reading of this provision that the State Transport
Authority has been empowered to grant all-India tourist pennit for the D
purpose of promoting tourism, notwithstanding anything contained in sub-
section (I) of Section 88 and subject to the Rules to be made by the Central
Government under sub-section 14 of Section 88, for the whole of India or
such contiguous States not less than three in number including the State
in which the permit is issued. Further the provisions of sections 73, 74, 80, E
81, 82, 83, 84, 85, 86 clause (d) of sub-section (I) of Section 87 and Section
89 are applicable as far as may be in relation to such pennits. Sub-section
.(11) reads as under:

"(I I) The following shall be conditions of every pennit granted F
under sub-section (9), namely: -

(i) every motor vehicle in respect of which such pennit is
granted shall confonn to such description, requirement
regarding the seating capacity, standards of comforts,
amenities and other ma,tters, as the Central Government may G
specify in this behalf;

(ii) every such motor vehicle shall be driven by a person having
such qualifications and satisfying such conditions as may be
specified by the Central Government; and H
450 SUPREME COURT REPORTS [2004) SUPP. 2 S.C.R.

A (iii) such other conditions as may be prescribed by the Central
Government."

Sub-section (I I) provides that every motor vehicle to which all-India
tourist permit has been granted shall conform to the description, requirement
B of seating capacity, standards of comforts, amenities and other matters, as
specified by the Central Government in this behalf. Further, such vehicles
have to be driven by persons having such qualifications and satisfying such
conditions as may be specified by the Central Government. Other such
conditions have also to be prescribed by the Central Government.

C Sub-section 14 reads as under:

"(14) (a) The Central Government may make rules for carrying
out the provisions of this section.

(b) In particular, and without prejudice to the generality of the
D foregoing power, such rules may provide for all or any of the
following matters, namely:-

(i) the authorisation fee payable of the issue ofa permit referred
to in sub-sections (9) and ( 12);
E
(ii) the fixation of the laden weight of the motor vehicle;

(iii) the distinguishing particulars or marks to be carried or
exhibited in or on the motor vehicle;

F (iv) the colour or colours in which the motor vehicle is to be
painted;

(v) such other matters as the appropriate authority shall consider
in granting a national permit.
G Explanation. - In this section,

Xxx xxx"

This sub-section empowers the Central Government to frame Rules for
H carrying out the provisions of this Section as well as for providing for all
STATE v. B.N. KHAN [BHAN, J.] 451

or any of the matters mentioned in sub-clause (b) of this Section. From the A
conjoint reading of sub-sections (9), {I I) and (14), referred to above, it is
abundantly clear that it is the Central Government alone which has been
authorised to frame the Rules as well as to prescribe the conditions for the
purposes of all-India tourist vehicles. The power to make rules under
Sections 95 and 96 would not include the power to frame rules applicable B
to all-India tourist permit which is exclusively vested in the Central
Government. The power to frame rules and pre.scribe conditions for the all-
India tourist permit is exclusively vested in the Central Government and
the High Court was right in holding that the Stat~ Government would have
no jurisdiction to either frame the Rules or prescribe conditions for the all- C
India tourist permits. Such pennits would be exclusively governed by the
Rules framed by the Central Government or the conditions prescribed by
the Central Government. The judgment of the High Court in so far as it
has held that it is the Rules framed by the Central Government only which
would be applicable to all-India tourist permits and not the Rules framed
J by the State Government is upheld. D

For the reasons stated above, the appeals are accepted partly to the
extent indicated in the foregoing paragraphs. No order as to costs.

v.s.s. Appeals partly allowed.