Supreme Court Upholds Appellant in Motor Vehicles Act Scheme Approval Dispute. State Officer Erred in Refusing to Consider Evidence and Reject Draft Scheme Under Section 68-D(2) of Motor Vehicles Act, 1939.

Case Note & Summary

The dispute arose from a draft scheme framed under Chapter IV-A of the Motor Vehicles Act, 1939 by the Rajasthan State Road Transport Undertaking for taking over the Jaipur-Ajmer route. The appellant, a private bus operator, had been plying a bus on that route under a permit granted by the Regional Transport Authority, Jaipur, on 16/17 December 1958. In August 1960, the State Government framed the Rajasthan State Road Transport Services (Development) Rules, 1960 under section 68-I of the Act. A draft scheme was published on 7 September 1960, and the appellant filed objections. The State Government appointed the Legal Remembrancer to hear objections under rule 7. Meanwhile, other bus operators had challenged the constitutionality of section 68-D and the legality of the Rules before the Rajasthan High Court under Article 226; that petition was dismissed on 9 November 1960, with the High Court opining that the officer hearing objections could not cancel the draft scheme. When the matter came before the officer, the appellant twice sought permission to lead oral and documentary evidence to show that the scheme should be rejected. The officer rejected both applications, first on the ground that the Rules did not provide for recording evidence, and second because he felt bound by the High Court's view that he could not cancel the scheme. On 7 December 1960, after hearing only arguments, the officer approved the scheme, which was published on 12 December 1960. The Regional Transport Authority later informed the appellant that his permit would be cancelled from 26 January 1961. The appellant's writ petition before the Rajasthan High Court was dismissed on 3 January 1961, and the Supreme Court granted special leave. The Supreme Court considered two legal issues: first, whether the authority hearing objections under section 68-D(2) had power to disapprove or reject a draft scheme in its entirety; and second, whether the hearing under section 68-D(2) included the right to adduce oral and documentary evidence, or was limited to arguments. The appellant contended that the officer had taken an erroneously narrow view on both points, resulting in no effective hearing and invalid approval. The respondent did not contest the interpretation that 'may approve' included 'may not approve', but defended the officer's approach to evidence. The Court held that section 68-D(2) clearly implied that the authority which could approve or modify a draft scheme also had the power to withhold approval altogether. The words 'may approve' meant 'may not approve'; a draft scheme was merely a proposal until approved. The use of 'shall' instead of 'may' in rule 7(6) of the Rules did not alter this meaning, and if the Rule had attempted to curtail this power it would be ultra vires. On the second issue, the Court relied on Gullapalli Nageswara Rao v. Andhra Pradesh State Road Transport Corporation to reiterate that the State Government or its officer acted as a quasi-judicial tribunal under section 68-D. A quasi-judicial hearing did not merely mean arguments; it could include taking oral and documentary evidence where necessary to decide whether the scheme provided an efficient, adequate, economical and properly coordinated road transport service. However, the Court cautioned that parties could not prolong proceedings by adducing irrelevant evidence; the authority had power to control the giving and recording of evidence. Consequently, the officer's rejection of the appellant's applications to lead evidence and his refusal to consider rejecting the scheme vitiated the approval. The Supreme Court therefore held that the appellant was entitled to a proper hearing, and the approval of the scheme could not stand. A fresh scheme, if any, would have to follow the procedure under Chapter IV-A.

Headnote

Issue of Consideration

Final Decision

The Supreme Court held that under section 68-D(2) of Motor Vehicles Act, 1939 the State Government or officer had power to disapprove the draft scheme entirely, as 'may approve' includes 'may not approve'; rule 7(6) 'shall' does not curtail this power and would be ultra vires if it did. The Court further held that hearing under section 68-D(2) is quasi-judicial and includes taking oral and documentary evidence where relevant, though the officer may control evidence to prevent prolongation. The officer's rejection of the appellant's applications to lead evidence and his refusal to consider rejection of the scheme vitiated the approval; hence the appellant was entitled to a fresh hearing.

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