Supreme Court Upholds State Government in Motor Vehicles Act Inter-State Route Nationalisation Approval. State Government's approval of inter-State route scheme under Section 68D(3) with prior Central Government approval is valid and does not amount to legislation or violate territorial limits of State executive power under Article 298.

Case Note & Summary

These appeals arose from a challenge by private bus operators, primarily from Rajasthan, to the nationalisation of certain inter-State bus routes between Uttar Pradesh and Rajasthan under Chapter IVA of the Motor Vehicles Act, 1939. Pursuant to a reciprocal arrangement between the Governments of Uttar Pradesh and Rajasthan, the Uttar Pradesh Government issued a notification under Section 68C proposing a scheme to provide State road transport passenger services exclusively on the Agra-Dholpur inter-State route. The scheme provided that no private operator would be permitted to provide services on the route or portions thereof, and existing permits would be cancelled. No objections were filed, and the scheme was approved by the hearing authority under Section 68D(2). The Central Government conveyed its approval under the proviso to Section 68D(3), and the approved scheme was published on March 16, 1963. Subsequently, permits held by private operators, including the appellants, and countersigned by the Regional Transport Authority, Agra, were cancelled under Section 68F(2). The appellants filed writ petitions under Articles 226 and 227 of the Constitution before the Allahabad High Court challenging the notifications. A learned Single Judge allowed the writ petitions, holding that a State could not unilaterally provide transport services outside its territory, that effective notice had not been given to Rajasthan operators because notifications were published only in the Uttar Pradesh Gazette, and that one State could not cancel permits held by operators of another State. The State appealed, and a Division Bench of the High Court set aside the Single Judge's order. The Division Bench held that when the undertaking proposed the scheme and the State Government approved it, they performed functions of the Central Government under Article 258(2) of the Constitution. It further found that permits of Uttar Pradesh operators were cancelled by Uttar Pradesh authorities, and Rajasthan operators' permits were cancelled by Rajasthan authorities, with respective counter-signatures also cancelled; hence there was no substance in the argument of encroachment. The Division Bench also held that publication and notice requirements were complied with and notices were put up on notice boards of both State transport authorities. It accordingly upheld the schemes and notifications as valid, but remitted individual grounds of the petitioners to the Single Judge for consideration. Before the Supreme Court, the appellants contended that a State Government could not approve a scheme for an inter-State route under Section 68D because its power operated only within its own territory; that approval of a scheme amounted to legislation which a State Legislature could not enact for areas outside its territorial limits under Article 245; and that the State's executive power under Article 298 could not operate beyond its boundaries. The Supreme Court dismissed the appeals. It held that the proviso to Section 68D(3) manifestly contemplated that a State Government could approve and publish a scheme relating to an inter-State route after obtaining prior approval of the Central Government. The necessity of prior Central approval would not arise if the State Government's approval were limited to the portion of the route within its own territory; an inter-State route normally covered the entire route, not merely the portion within the approving State's territory. The Court further held that the State Government in approving a scheme did not legislate in the sense in which a State Legislature makes law under Article 245; the territorial limitation on legislative power could not restrict a power conferred by parliamentary legislation. With respect to executive power, the Court ruled that Article 298 extended to the carrying on of any trade or business by a State without territorial limitation, and a scheme approved under Section 68D(3) effectuated the object of State monopoly in transport service. Since the two State Governments acted in concert, there was no encroachment by one State upon the executive sphere of another. The appeals were dismissed, affirming the validity of the impugned schemes and notifications.

Headnote

Issue of Consideration

Final Decision

Appeals dismissed. The Supreme Court upheld the Division Bench judgment of Allahabad High Court, holding the impugned schemes and notifications valid. State Government of U.P. was competent to approve and publish the scheme under Section 68D(3) with prior Central Government approval; approval did not amount to legislation; Article 298 executive power was not territorially limited; no encroachment when two States act in concert.

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