Gullapalli Nageswara Rao and Others vs Andhra Pradesh State Road Transport Corporation and Another

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Petition No. 100 of 1958

Decision Date: 5 November 1958

Coram: Natwarlal H. Bhagwati, Bhuvneshwar P. Sinha, K.N. Wanchoo, K. Subba Rao, K. Das, Sudhi Ranjan

In the matter titled Gullapalli Nageswara Rao and Others versus Andhra Pradesh State Road Transport Corporation and Another, the Supreme Court of India rendered its judgment on 5 November 1958. The Bench that delivered the decision comprised Justice Natwarlal H. Bhagwati, Justice Bhuvneshwar P. Sinha and Justice K. N. Wanchoo. The petition was filed by Gullapalli Nageswara Rao together with other respondents, herein referred to as the petitioners, against the Andhra Pradesh State Road Transport Corporation and an additional respondent, designated as the respondents.

The citation of this decision appears in several law reports: it is reported in the 1959 All India Reporter at page 308, in the 1959 Supreme Court Reports Supplement (1) at page 319, and it carries the citator references R 1959 SC 1376 (paragraphs 2 and 4), R 1960 SC 1073 (paragraph 13), RF 1961 SC 82 (paragraphs 8 and 12), RF 1961 SC 1361 (paragraph 8), F 1961 SC 1575 (paragraph 6), F 1962 SC 1110 (paragraph 8), R 1962 SC 1183 (paragraph 10), R 1962 SC 1621 (paragraphs 79 and 118), F 1963 SC 416 (paragraph 7), RF 1964 SC 381 (paragraph 75), R 1964 SC 436 (paragraphs 8 and 10), R 1965 SC 1017 (paragraph 16), RF 1966 SC 81 (paragraph 5), R 1966 SC 1571 (paragraph 8), RF 1967 SC 1507 (paragraph 6), RF 1967 SC 1815 (paragraph 10), D 1970 SC 1095 (paragraphs 3 and 8), F 1971 SC 1594 (paragraph 9), R 1972 SC 1863 (paragraph 12), F 1973 SC 974 (paragraph 8), RF 1973 SC 2237 (paragraph 3), D 1974 SC 669 (paragraph 12), R 1976 SC 2428 (paragraph 9), RF 1979 SC 777 (paragraph 31), C 1981 SC 660 (paragraphs 4 and 8), E 1990 SC 1402 (paragraph 20), OPN 1990 SC 1744 (paragraph 6), and RF 1991 SC 933 (paragraph 10). The case also concerns the Road Transport‑Nationalisation‑Scheme as proposed by the State Transport Undertaking and approved by the Government, and it raises questions regarding the procedure’s compliance with fundamental rights, the scope of the scheme’s authority under the Motor Vehicles Act of 1939 as amended by Act 100 of 1956, and the meaning of “colourable legislation” in the context of Article 31 of the Constitution of India.

The headnote summarises the factual backdrop: in order to nationalise road‑transport services pursuant to Chapter IV A of the Motor Vehicles Act, 1939, the General Manager of the Andhra State Transport Undertaking issued a scheme under section 68C of that Act and placed it in the Official Gazette, inviting objections. The Chief Minister ordered that objections be received and examined by the Secretary to the Home Department, who was responsible for transport matters, but the ultimate decision on those objections was taken by the Chief Minister. Following this process, the State Government approved the scheme and re‑published it in the Official Gazette. The petitioners, who operated buses on several routes in the Krishna District under permits granted by the Act, feared that the newly created State Corporation would assume control of their routes in accordance with the scheme. Consequently, they approached this Court seeking protection of their fundamental right to carry on their business.

On behalf of the petitioners, counsel argued several points. Firstly, they contended that Chapter IV A of the Motor Vehicles Act represented a piece of colourable legislation whose true purpose was to enable the State to take over the petitioners’ business under the pretext of cancelling their permits, thereby violating Article 31 of the Constitution. Secondly, they maintained that the scheme was ultra vires the Act because the State Government, whose duty was to act judicially in approving the scheme, had breached fundamental principles of natural justice. The petitioners thus claimed that both the legislative basis and the administrative procedure adopted by the State were untenable and infringed upon their constitutional protections.

In approving the scheme, the State Government had transgressed certain fundamental principles of natural justice. The Court held per curiam that the issue of colourable legislation was, in essence, a question of the legislative competence of the legislature that had enacted the law. It observed that a legislature could make statutes only within the limits of its constitutional authority. The field of legislative power might be restricted by specific entries in the constitutional list or by fundamental rights that the Constitution had created. The Court emphasized that the legislature could not exceed the scope of its competence, whether directly or indirectly. It clarified that it was the duty of the Court to examine whether a legislature, while purporting to act within its jurisdiction, in substance and effect went beyond the limits of that jurisdiction. If the legislature possessed the power to enact the law, the Court would not consider the motive behind the legislation. The Court followed the precedent set in K. C. Gajapaji Narayan Deo v. State of Orissa, [1954] S.C.R. I, and also referred to the decision in The State of Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbhanga, [1952] S.C.R. 889. Applying these principles, the Court concluded that Chapter IVA of the Act could not be described as a colourable piece of legislation.

The Court further analysed the powers conferred by section 68F of the Act on the Regional Transport Authority and found that they did not involve any transfer of the business of existing permit‑holders to the State Transport Undertaking, nor did they authorize the Undertaking to acquire any assets of the private permit‑holders. Section 68G, which dealt with compensation for the unexpired portion of a permit, did not imply that Chapter IVA effected a transfer of property or possession that would trigger compensation rights under article 31(2) of the Constitution. Consequently, Chapter IVA did not infringe the petitioners’ fundamental right under article 31. The Court, on behalf of Chief Justice Das, Justice Bhagwati and Justice Subba Rao, observed that while the purpose of section 68C was unquestionably to establish a scheme of road‑transport service as prescribed by the Act, the proposed scheme could affect the rights of individual permit‑holders by excluding them, either partially or completely, from operating on specific routes. The procedural provisions of section 68D together with Rules 8 and 10 required that the Government hear both the objectors and the State Transport Undertaking before approving or modifying the scheme. The Court held that the State was therefore deciding a dispute and had to do so in a judicial manner. It relied upon the authorities in Province of Bombay v. Kusaldas S. Advani, [1950] S.C.R. 621; Nagendra Nath Bora v. Commissioner, Hills Division, [1958] S.C.R. 1240; and Express Newspapers Ltd. v. Union of India, [1959] S.C.R. 12, while noting that Franklin v. Minister of Town and Country Planning, [1948] A.C. 87, was not applicable. The Court reiterated two fundamental principles of natural justice: that the authority deciding a matter must be unbiased, and that where the Act mandates a personal hearing, the same authority must also make the decision. The procedure followed in the instant case whereby the Home

The Court observed that the Secretary who was in charge of Transport, being himself a party to the dispute, heard the objections that had been filed, and the Chief Minister thereafter decided those objections. The Court held that this arrangement violated the fundamental principles of natural justice, and consequently the order of the State Government that approved the transport scheme had to be set aside. According to the separate opinions of Justices Sinha and Wanchoo, the sole purpose of Chapter IV‑A of the Motor Vehicles Act was to nationalise road‑transport services, and the inquiry contemplated by that chapter was intended to be of a limited character. The inquiry was meant solely to determine whether the scheme that had been presented was in the public interest as required by section 68C of the Act, and it was not intended to adjudicate the competing claims of a private permit‑holder on one side and the State Transport Undertaking on the other. The Court noted that once the scheme was approved, the exclusion of private transport, which was the effect of the scheme, would inevitably follow. Therefore, there could be no substantive dispute or “lis” for the Court to entertain, and the Government, in approving or modifying the scheme under Chapter IV‑A and the Rules framed thereunder, must be regarded as acting in its ordinary administrative capacity. The Court further held that no objection could be sustained in the present case to the procedure adopted by the Government in empowering the Secretary to hear the objections while the Chief Minister decided them, and that the Secretary could not be considered a party to any dispute. In support of these conclusions, the Court referred to Province of Bombay v. Kusaldas S. Advani, [1950] S.C.R. 621; Nagendra Nath Bora v. Commissioner, Hills Division, [1958] S.C.R. 1240; and Express Newspapers Ltd. v. The Union of India, [1959 S.C.R. 12]. The cases of Franklin v. Minister of Town and Country Planning, [1948] A.C. 87, and Robinson v. Minister of Town and Country Planning, [1947] I All E.R. 851, were also applied.

The judgment proceeded to set out the factual and procedural background of the petition. The original jurisdiction involved Petition No. 100 of 1958, filed under Article 32 of the Constitution for the enforcement of fundamental rights. The petitioners were represented by counsel, and the respondents were represented by the Attorney General for India and other counsel. The judgment was dated 5 November 1958 and was delivered by Chief Justice Das, together with Justices Bhagwati and Subba Rao, while Justices Sinha and Wanchoo delivered separate opinions. Justice Subba Rao’s opinion began by stating that the application was made under Article 32 for the enforcement of the petitioners’ fundamental right to carry on the business of motor transport in Krishna District of Andhra Pradesh, and also sought an order prohibiting the respondents from taking over the routes on which the petitioners had been operating their stage carriages. The petitioners had been conducting motor‑transport operations in Krishna District for several years, having obtained permits under the Motor Vehicles Act, 1939 (Act IV of 1939) as amended by Act 100 of 1956, hereinafter referred to as “the Act”. They asserted that the value of their investment in the business amounted to Rs. 20,00,000. The amendment that introduced Chapter IV‑A into the Act provided for the establishment of a State Transport Undertaking, which was intended to run the transport business to the exclusion, either wholly or partially, of all other persons conducting transport in the State.

Chapter IV‑A of the Motor Vehicles Act introduced a mechanism known as the State Transport Undertaking, which is defined in section 68‑A(b) as an entity that provides road‑transport services and is intended to operate the transport business throughout the State. Exercising the authority granted by section 68‑C, Shri Guru Pershad, who held the position of General Manager of the State Transport Undertaking of Andhra Pradesh Road Transport, issued a scheme aimed at delivering an efficient, adequate, economical and well‑coordinated transport service in the public interest. The scheme was to become operative from a date that the State Government would later announce. The publication of the proposal in the Official Gazette on 14 November 1957 invited objections within a thirty‑day period. A total of one hundred and thirty‑eight objections were received, and the State Government sent individual notices by registered post to each objector. On 26 December 1957 the Secretary to the Government, Home Department, who was in charge of transport, conducted a hearing of the objections. Eighty‑eight of the objectors presented their cases through counsel, three appeared personally, and the remaining objectors were absent at the time of the hearing. After hearing all parties and allowing the objectors, their representatives and the representatives of the State Transport Undertaking to present their arguments, the State Government concluded that the objections were without merit. Accordingly, the Government approved the scheme through Government Order No. 58, Home (Transport IV), dated 7 January 1958. The approved scheme was published in the Andhra Pradesh Gazette on 9 January 1958 and was ordered to take effect from 10 January 1958. In addition, the Government of Andhra Pradesh established a Road Transport Corporation under the Road Transport Corporations Act, 1950 (Act LXIV of 1950). This corporation, named the Andhra Pradesh Road Transport Corporation, came into existence on 11 January 1958, and by an order dated the same day it was given authority to assume management of the former Road Transport Department. The corporation is now implementing a phased programme of nationalisation of bus transport. The petitioners, who operate buses on various routes in Krishna District, fear that their routes will be taken over by the corporation under the aforementioned scheme and therefore seek the Court’s intervention to protect their fundamental right to carry on their business. Counsel for the petitioners argues that the scheme, which seeks to transfer the petitioners’ bus routes to the State Road Transport Corporation, is ultra vio​les and illegal on two grounds: first, that the provisions of Chapter IV‑A of the Act infringe the fundamental rights guaranteed by the Constitution, and second, that the scheme purportedly enacted under the Act exceeds the powers conferred by that Act. The first ground is sought to be supported

The petitioner contended that Chapter IV‑A of the Act, in its substance and effect, authorised the State to acquire the undertakings of private citizens without providing full compensation for those undertakings, and that such a scheme amounted to a fraud on the Constitution, particularly on Article 31. In short, his argument was that Article 31 of the Constitution forbids any law that transfers ownership or the right to possession of property to the State or to a State‑controlled corporation unless the law fixes the amount of compensation or specifies the principles on which compensation is to be determined and paid. He maintained that Chapter IV‑A of the Act was a colourable piece of legislation that enabled such a transfer of ownership under the pretext of cancelling a permit, while failing to provide compensation for the property transferred. To appreciate this argument, the Court found it convenient to read the relevant constitutional provisions, omitting words that were unnecessary for the purpose of the case. Article 191 states that all citizens shall have the right to practise any profession, or to carry on any occupation, trade or business. Clause (6) of that article provides that nothing in sub‑clause (g) shall affect the operation of any existing law insofar as the law imposes, or prevents the State from imposing, reasonable restrictions in the public interest on the exercise of the right conferred by sub‑clause (g). Moreover, the clause makes clear that it does not affect any existing law that relates to, or prevents the State from making, a law concerning the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise. Article 311 provides that no person shall be deprived of his property save by authority of law. Sub‑section (2) adds that no property shall be compulsorily acquired or requisitioned except for a public purpose and except by authority of a law that provides for compensation, either by fixing the amount of compensation or by specifying the principles and manner by which compensation is to be determined and given; and that such a law shall not be questioned in any court on the ground that the compensation provided is inadequate. Sub‑section (2A) further states that where a law does not provide for the transfer of ownership or the right to possession of any property to the State or to a State‑controlled corporation, the law shall not be deemed to provide for compulsory acquisition or requisitioning of property, even if it deprives a person of his property. The Constitution (First) Amendment Act of 1951, which came into force on 18 June 1951, amended clause (6) of Article 19 by adding sub‑clause (ii) to that clause, together with other amendments. Clause (2) of

Article 31 was amended by the Constitution (Fourth) Amendment Act, 1955, which inserted clause (2A) into that article. The purpose of inserting clause (2A) was to override the earlier majority rulings of this Court in three cases: State of West Bengal v. Subodh Gopal Bose, Dwarkadas Shriniwas of Bombay v. Sholapur Spinning and Weaving Co. Ltd., and Saghir Ahmed v. State of U.P. In the Subodh Gopal case a majority of the Bench held that clauses (1) and (2) of Article 31 are not mutually exclusive in their scope or content. The Court said they must be read together as addressing the same subject, namely the protection of the right to property through limitations on State power, and that the deprivation contemplated in clause (1) is essentially the acquisition or taking possession of property referred to in clause (2). The Dwarkadas case reaffirmed this principle and expanded the meaning of the word “acquisition.” The Court explained that “acquisition” embraces a wide concept, covering the procuring of property or its taking, whether permanently or temporarily, and need not be limited to the State acquiring legal title over the property it possesses. In Saghir Ahmed’s case, applying the same principles, the Court observed at page 728: “If the effect of prohibition of the trade or business of the appellants (citizens) by the impugned legislation amounts to deprivation of their property or interest in a commercial undertaking within the meaning of Article 31(2) of the Constitution, does not the legislation offend against the provision of that clause inasmuch as no provision for compensation has been made in the Act?” The cited authorities are (1) [1954] S.C.R. 587, 608; (2) [1954] S.C.R. 674; and (3) [1955] 1 S.C.R. 707, 728.

It is noteworthy that the Subodh Gopal decision was rendered after the Constitution (First) Amendment Act, 1951, which amended Article 19(6), even though the dispute arose before that amendment took effect. In the three decisions mentioned, the Court, by a majority, articulated two overarching principles. First, both clauses (1) and (2) of Article 31 relate to the doctrine of eminent domain and concern compulsory acquisition of property. Second, the term “acquisition” does not necessarily require the State to obtain legal title to the property; it can also include situations where a citizen is substantially dispossessed of the right to onion the property, resulting in a serious impairment of the right to enjoy the property or a material reduction in the property’s value due to the impugned State legislation. The Constitution (Fourth) Amendment Act, 1955, therefore amended clause (2) of Article 31 and inserted clause (2A). For the purposes of the present analysis, the amendment replaces the expression “taken possession of or acquired” with the terms “compulsorily acquired or requisitioned,” thereby limiting the applicability of clause (2) to statutes that provide for a transfer of ownership or possession of property to the State or to a State‑controlled corporation.

The amendment substituted the expression “compulsorily acquired or requisitioned” for the earlier wording and inserted an explanation of the terms “acquired and requisitioned” in clause (2A). Consequently, a law that deprives a person of his property will be regarded as relating to acquisition or requisition only if it provides for the transfer of ownership or the right to possession of that property to the State; otherwise, the provisions of clause (2) limiting the legislature will not apply to such a law. While recognising the effect of this constitutional amendment, counsel for the petitioner argued that the right to carry on a business constitutes property, as held in the decision of Saghir Ahmad’s case, and that Chapter IV‑A of the Act effectively transfers ownership of the business to the Corporation, which is owned or controlled by the State. The counsel emphasized that this transfer does not occur directly; rather, it is achieved through a two‑fold mechanism: first, by preventing the individual from continuing his business, and second, by enabling the State‑controlled Corporation to conduct the same business in his place. According to the counsel, this arrangement is a contrivance designed to avoid the payment of compensation for the entire business that is thereby transferred, as noted in the cited authority. The argument further characterizes the legislation as colourable, asserting that its device is intended to evade the limitations imposed by Article 31(2). To address this issue, the Court must properly understand the phrase “colourable legislation.” The Court previously examined this concept in The State of Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbhanga. In that case, the constitutionality of the Bihar Land Reforms Act, 1950 (Bihar 30 of 1950) was challenged on the ground that the Act was a fraud upon the Constitution and therefore void. It was contended that, although the Act ostensibly complied with constitutional requirements by providing for compensation, it actually devised a scheme to deny compensation through a shift or contrivance. Justice Mahajan, speaking for the Court, rejected this contention, observing that while the principles involved were well‑settled, it was not straightforward to assign a dishonest motive to the State legislature or to declare that the law was enacted mala fide with the purpose of perpetrating a constitutional fraud. He noted that certain provisions might operate harshly on specific individuals or a few zamindars and could exceed the legislative competence of the Bihar Legislature, but such circumstances did not render the entire enactment a fraud on the Constitution. Moreover, from the fact that the estates of a handful of zamindars might be taken without compensation, one could not infer that the whole legislation was invalid.

The Court observed that the earlier remarks do not lead to the conclusion that the entire enactment is a fraud on the Constitution or that every provision concerning compensation is illusory. Those observations, however, support the contention that the doctrine of colourable legislation attributes a dishonest motive or mala fides to the State when it makes the law. In this regard, Mukherjea, J., speaking in his earlier capacity, clarified the legal position in the case of K. C. Gajapati Narayan Deo v. The State of Orissa. In that case it had been alleged that the Orissa Estates Abolition Act, 1952, was colourable legislation and therefore void. Addressing that allegation, Mukherjea, J., stated at page 10 that the doctrine of colourable legislation does not rest on any enquiry into the bona fides or mala fides of the legislature. The doctrine is confined to the question of whether a particular legislature possessed the competence to enact the statute in question. If the legislature possessed the requisite competence, then the motives that drove it to legislate are irrelevant. Conversely, if the legislature lacked competence, the motive is a matter that does not arise at all, and the constitutional validity of a statute is always a matter of power. The Court further explained that when a State Constitution allocates legislative authority among different bodies, each body must act within the sphere delineated by its specific legislative entries, and when fundamental rights impose limits on legislative authority, questions arise as to whether the legislature, in a given case, has exceeded the limits of its constitutional powers either in the subject matter of the law or in the manner of its enactment. Such an excess may be overt, manifest, or direct, but it may also be concealed, covert, or indirect; it is this latter category that judicial pronouncements have described as colourable legislation. The expression therefore conveys the idea that although a legislature may appear, on its face, to be acting within its powers when passing a statute, in substance and reality it may have transgressed those powers, the transgression being masked by a mere façade. As Duff, J., observed in Attorney‑General for Ontario v. Reciprocal Insurers (1924 A.C. 328 at p. 337), when the law‑making authority is limited or qualified, it becomes necessary to scrutinise the substance of the legislation with strictness to determine the true nature of the legislative act.

The Court observed that a legislature may not evade the constitutional bans by employing an indirect or disguised method, and it quoted the earlier observations in Extensor because they succinctly summarize the applicable law. In brief, the legal position is that the legislature is authorised to enact statutes only within the limits of its legislative competence, which may be defined by specific entries in the constitutional schedule or may be restricted by the fundamental rights guaranteed by the Constitution. The legislature is prohibited from exceeding the scope of its competence, whether by a direct over‑reach or by a subtler, indirect device. The Court will examine any statute to determine whether the legislature, by means of a contrivance, has fashioned a law that appears on its face to lie within its authority but, in reality and in substance, extends beyond that authority. If the legislature possesses the power to enact the law, the motives behind its enactment are deemed irrelevant. Accordingly, the counsel for the petitioners can succeed only by demonstrating that the provisions of Chapter IV‑A constitute colourable legislation as defined by the earlier discussion. To assess the argument, it may be summarised that “business” falls within the meaning of Article 191(g) of the Constitution. Chapter IV‑A of the Act purports to transfer the business to a corporation that is controlled by the State Government. Such a transfer, however, ought to include provision for compensation to the owners of the business that is being transferred to the State corporation; instead, the statute adopts the device of cancelling the permit held by the citizen and granting it to the corporation, while limiting compensation to the unexpired portion of the permit only. The Court now proceeds to determine whether any of the alleged devices or contrivances are present in the present case. The question is whether Chapter IV‑A, in effect and in substance, authorises the transfer of the citizens’ business to the State or to a State‑controlled corporation, either in law or in fact. Under Article 191 of the Constitution, every citizen possesses a fundamental right to engage in any business, subject only to reasonable restrictions that may be imposed by the State under clause (6) of Article 19 in the public interest. The Constitution (First) Amendment Act, 1951, reserves to the State the power to enact legislation that allows the State or a corporation owned or controlled by the State to carry on any business to the exclusion, wholly or partially, of the citizens. Consequently, the Constitution empowers the State to impose reasonable restrictions on a citizen’s right to conduct business, to create a monopoly, or to enact statutes that empower the State to conduct business to the exclusion of private persons. The right to operate transport vehicles on public roads is unmistakably one of the fundamental rights protected by Article 19. The Motor Vehicles Act, 1939 (IV of 1939), regulates this right in order to protect the interests of the public at large. The term “permit” is defined in clause (20) of section 2 of that Act.

The Act defined a “permit” as the document issued by the Commission or by a State or Regional Transport Authority that authorised the use of a transport vehicle for contract carriage or stage carriage, or that authorised the owner to employ the vehicle as either a private carrier or a public carrier. Section 57 of the Act laid down the procedure for applying for and obtaining such permits to conduct transport business on public highways. Section 47 enumerated the factors that a Regional Transport Authority had to consider when disposing of applications for transport carriers. Section 59 prescribed the conditions that each permit must contain and expressly prohibited the transfer of a permit from one person to another unless the Transport Authority gave its permission. Under section 60, the Transport Authority that had granted a permit possessed the power to cancel the permit or to suspend it for any period that it deemed appropriate for any of the reasons specified in the provision. Section 61 dealt with the situation where a permit‑holder died; it allowed the legal heir to continue using the permit for a period of three months and to apply for the transfer of the permit to his name, subject to the conditions laid down in the provision. Section 68‑F empowered the Regional Transport Authority, for the purpose of implementing an approved scheme concerning a notified area or route, to refuse to consider any application for renewal of any other permit, to cancel any existing permit, to modify the terms of an existing permit so that it would become ineffective after a specified date, and to reduce the number of vehicles authorised under the permit. From these provisions it was clear that the Regional Transport Authority, exercising its regulatory power in the public interest, could issue a permit to a person for a stage carriage on a particular route for a defined period subject to the conditions stated in the permit; it could also suspend or cancel that permit under the circumstances described in the Act, and it could either renew the permit or refuse renewal after the expiry of its term. Under Chapter IV‑A, when a scheme was promulgated that authorised the State Transport Undertaking to assume control of transport services on a specified area, route or portion thereof to the exclusion of any private person who had been operating on that route, the Transport Authority was empowered to cancel the existing private permit and to issue a new permit to the State Transport Undertaking. The Court observed that such cancellation and re‑issuance did not amount to a transfer of the business or undertaking of the former permit‑holder to the new entrant. In fact, the process did not involve any transfer of the permit itself; rather, one permit terminated and a separate, new permit came into existence, reflecting the distinct regulatory steps vested in the Regional Transport Authority.

The Court observed that the authority to cancel an existing transport permit and to issue a fresh permit to a different entity constitutes a fundamental component of the regulatory powers vested in the Regional Transport Authority. According to the Court, the cessation of one permit and the creation of another do not amount to a transfer of business from the former permit‑holder to the new permit‑holder; rather, they represent two distinct licences under which two independent commercial operations may be conducted. The Court noted that this legal understanding applied even before Chapter IV‑A was introduced into the Act, and therefore it could not be inferred that the power of cancellation followed by the grant of a permit to the State Transport Undertaking would automatically involve the transfer of the previous permit‑holder’s business to the State entity. The Court rejected the argument that section 68‑F of the Act envisions a composite process—first cancelling the existing permit, thereby barring the former holder from continuing the business, and then granting a permit to a nominee of the State so that the same business could be carried on, effectively resulting in a transfer of the business to the State or its nominee. While acknowledging that the statutory process inevitably prevents the former permit‑holder from operating on the cancelled route and may permit the State Transport Undertaking to pursue a similar service, the Court emphasized that no wording in the statute, nor any permissible legal construction, supports the conclusion that the State Undertaking literally assumes the same business that the former holder was conducting. The Court further explained that, when the issue of a permit is viewed not merely in terms of the right to conduct the activity but also in relation to the assets associated with the business, it becomes clear that no assets of the former permit‑holder are transferred to the State Transport Undertaking. Although the cancellation of the permit may cripple the former holder’s ability to earn revenue from that route, the Court stressed that the entire asset base of the business remains in the possession of the former holder. The Court conceded that, within the broader scheme of nationalisation, the former holder might find it difficult to redeploy those assets on other routes or to achieve a substantial advantage from their disposal. Nevertheless, the Court asserted that the cancellation does not leave the former holder with merely a ‘husk’; the full complement of assets stays with him, and the State Transport Undertaking does not acquire any of those assets. Finally, the Court addressed the contention that section 68‑G of the Act, which provides for compensation to the permit holder, implies a legislative assumption of a transfer of property. The Court concluded that such an inference is unwarranted, for the provision merely reflects a legislative policy to compensate the permit holder for the loss of the ability to operate during the unexpired portion of the permit term, not an intention to effect a transfer of ownership or possession of the business to the State.

The Court observed that the reference in the statute to compensation for the permit holder did not imply that the legislature intended a transfer of property from the former permit holder to the State. It held that because the permit was cancelled before its stipulated expiry, the legislature merely chose to provide some compensation to the holder who was consequently prevented from operating his business for the remaining period of the permit. Whether this provision was introduced as a precaution, as suggested by the learned Attorney General, or to alleviate the hardship caused by the premature cancellation, the Court found no basis to conclude that the legislature presumed a transfer of the business under Chapter IV‑A. Accordingly, the Court affirmed that Chapter IV‑A of the Act did not effect any transfer of ownership or possession of any property to the State or to a corporation owned or controlled by the State. In the absence of such a transfer, the Court noted that Article 31 of the Constitution does not deem the law to provide for compulsory acquisition or requisition of property, and consequently no compensation is required under Article 31(2). Hence, the Court concluded that Chapter IV‑A does not violate the petitioners’ fundamental right under Article 31. The petitioners’ counsel then argued that even if Chapter IV‑A were constitutionally valid, the petitioners could be deprived of their rights only according to the law made for that purpose and in the manner prescribed, and that the scheme was framed in contravention of the provisions of that Chapter. The counsel further contended that the requirements of sections 68‑C and 68‑D had not been observed in the formulation of the scheme. The Court indicated that these contentions would be examined separately. The first of those contentions was that no State Transport Undertaking had been created under the Central Act, and therefore the scheme initiated by the Transport Undertaking established under the Motor Vehicles (Hyderabad Amendment) Act, 1956, was invalid. To assess this point, the Court outlined the factual background: before the formation of the State of Andhra Pradesh in November 1956, eight districts, commonly known as Telangana, were part of Hyderabad State. On 29 September 1956, the Motor Vehicles (Hyderabad Amendment) Act, 1956, came into force, inserting Chapter IV‑A into the Central Act for the application to Hyderabad State. Section 68A of that Chapter defined the State Transport Undertaking as the Road Transport Department of Hyderabad State, which functioned as a statutory authority. After the States Reorganisation Act, those eight districts became part of Andhra Pradesh, and consequently the Road Transport Department of Hyderabad State became the Road Transport Department of Andhra Pradesh, exercising its powers only over the Telangana region. Following the formation of Andhra Pradesh, the General Manager of the Andhra Pradesh Road Transport Undertaking published a scheme under section 68‑C of the Act. The petitioners argued that the State Transport Authority created under Chapter IV‑A of the Hyderabad Amendment was not legally constituted as the State Transport Undertaking under the Central Act, and therefore the scheme issued by that authority lacked legal status. The Court proceeded to consider these arguments in detail.

In the matter before the Court, it was noted that the statute defined a State Transport Undertaking as an entity that provides road transport services on behalf of a State Government. Under that definition, the Road Transport Department of the Hyderabad State had been operating as a statutory authority when the Motor Vehicles (Hyderabad Amendment) Act was in force. When the States Reorganisation Act came into effect, the eight districts that had formerly formed part of Hyderabad were merged into the newly created State of Andhra Pradesh. Consequently, the Road Transport Department that had previously served Hyderabad was transferred to become the Road Transport Department of the State of Andhra Pradesh, although it continued to exercise its powers only with respect to the area popularly known as Telengana. After the formation of Andhra Pradesh, Sri Guru Pershad, who was designated as the General Manager of the Andhra Pradesh Road Transport Undertaking, issued the scheme contemplated under section 68‑C of the Act. The petitioners argued that the State Transport Authority created under Chapter IV‑A of the Hyderabad (Amendment) Act had not been lawfully constituted as a State Transport Undertaking under the Central Act, and therefore the initiation of the scheme by the Hyderabad State Transport Undertaking, which they claimed lacked legal status under the Central Act, was untenable. They further contended that the State Transport Authority under the Hyderabad Act differed from that under the Central Act in three respects: statutory parentage, character and constitution, and territorial jurisdiction, and that these differences prevented the former from functioning under the Central Act. The Court held that this line of argument bore no relevance to the facts of the present dispute. The Court explained that it was not concerned with a situation in which a statutory authority created by one legislation is employed for the purposes of another legislation that has expressly adopted that authority as a body constituted under its own provisions. In the present case, the Andhra Pradesh Road Transport Department was providing road transport services in Telengana, an integral part of the State of Andhra Pradesh, and that department, when it belonged to the Hyderabad State, had functioned as a component of the Hyderabad State Secretariat. The mere historical fact that the present department originated as a segment of a department of another State and was once described as falling within the definition of the State Transport Undertaking under the Hyderabad Act did not diminish its identity as the Road Transport Department of Andhra Pradesh. Even assuming, for the sake of argument, that the Hyderabad Act continued to operate in the Telengana area, there was no legal prohibition against a department being defined simultaneously by two statutes. The provision of the Central Act states that a State Transport Undertaking means an undertaking that provides road transport service where such undertaking is carried on by a State Government; it does not prescribe the statutory parentage of the undertaking nor impose a condition that the undertaking must render transport services throughout the entire State. Because the State Government maintained the department for the purpose of providing road transport services, the department clearly satisfied the definition of a State Transport Undertaking. The Court also referred to a citation from Salmond on jurisprudence, observing that the law in creating legal persons …

In this case, the Court observed that the principle of giving legal personality to an entity by describing it as a “person” did not affect the issue that required determination, because the entity in question—the Road Transport Department—fell within the definition provided by both statutes and therefore could operate as a statutory authority under each of those Acts. Consequently, the Court held that the Road Transport Department of the Andhra Pradesh Government qualified as a State Transport Undertaking under the Central Act and was consequently empowered by law to launch the scheme that was the subject of the dispute. The next objection raised before the Court concerned the manner in which the scheme had been published; specifically, it was argued that the scheme had been issued by Sri Guru Pershad, who was identified as the General Manager of the State Transport Undertaking, but that no proof had been shown that he possessed legal authority to act on behalf of the Statutory Authority created by the Act. The Court recalled that it had already determined that, after the merger of the Telangana area with the Andhra State, the Transport Department of the former Hyderabad State continued to function as the Transport Department of the newly formed Andhra Pradesh State. The petitioners, in the affidavit they filed, asserted that Sri Guru Pershad had been the General Manager of the Road Transport Department of the erstwhile Hyderabad State, that he had never been appointed as General Manager of the State Transport Undertaking of Andhra Pradesh, and that, as a result, he lacked any legal authority to publish the scheme. In response, the counter‑affidavit filed on behalf of the first respondent averred that the General Manager of Andhra Pradesh Road Transport—an entity that fell within the meaning of section 68‑B of the Act—had prepared a scheme which was then published in the Andhra Pradesh Gazette on 14 November 1957. From these submissions, the Court found that it was an established fact that Sri Guru Pershad had been the General Manager of the Road Transport Undertaking of the former Hyderabad State and that he had not ceased to hold that position after the department became part of Andhra Pradesh. The Court noted that it had already held that the same department continued to function as the statutory authority under the Central Act, and that Sri Guru Pershad was also the General Manager of that undertaking. In the circumstances, the Court concluded that there was no merit in the contention that Sri Guru Pershad should have been re‑appointed as General Manager under the Central Act, because the pre‑existing Road Transport Department of the former Hyderabad State, together with its General Manager, had persisted as a statutory authority under the Central Act and therefore possessed the legal capacity to represent the State Transport Undertaking. Accordingly, the scheme was published and signed by Sri Guru Pershad in his capacity as General Manager of the State Transport Undertaking (Andhra Pradesh State Road Transport), and the notification issuing the scheme must be regarded as having been issued by the State Transport Undertaking operating under the Central Act. The learned counsel for the respondent then argued that the published scheme did not expressly disclose that the State Transport Undertaking was of the opinion that the scheme was necessary in the public interest.

The Court observed that the statutory provision required the undertaking to hold the opinion that a scheme was necessary in the public interest before the scheme could be enforced. Section 68‑C provided that when a State Transport Undertaking considered it necessary, for reasons specified in the statute, that road‑port services be run or operated by the Undertaking, it could prepare a scheme, set out the particulars of the scheme and publish it in the Official Gazette. The Court noted that the statute did not make an express recital of the formation of that opinion a condition of the scheme’s validity. The published scheme, according to the provision, had to contain details of the nature of the service to be provided, the area or route to be covered and any other relevant particulars. While the preparation of the scheme was indeed predicated on the Undertaking’s subjective opinion of necessity, the only remaining issue was whether the State Transport Undertaking had formed that opinion before preparing the scheme and causing its publication in the Gazette. The Court pointed out that the scheme had been signed by Guru Pershad, identified as the General Manager of the State Transport Undertaking, Andhra Pradesh Road Transport. The preamble to the scheme stated: “In exercise of the powers conferred by section 68‑C of the Motor Vehicles Act, 1939, it is hereby proposed, for the purpose of providing an efficient, adequate, economical and properly coordinated road transport service in public interest, to operate the following transport services as per the particulars given below with effect from a date to be notified by the Government.” The Court reaffirmed its earlier finding that Guru Pershad represented the State Transport Undertaking. It held that the scheme was proposed by the Undertaking in exercise of the powers under section 68‑C for the purpose of delivering an efficient, adequate, economical and properly coordinated road transport service in the public interest. Although the word “opinion” was omitted from the preamble, the Court observed that the first part of section 68‑C was effectively incorporated in the preamble, and the scheme additionally disclosed that it was proposed under the authority of section 68‑C. The Court explained that the State Transport Authority could frame a scheme only when it was of the opinion that it was necessary in the public interest for the road transport service to be run by the Undertaking. When the Authority proposed a scheme for such an undertaking, it manifested its opinion. From a reading of the scheme, the Court concluded that the State Transport Undertaking had indeed formed the requisite opinion before preparing and publishing the scheme. The Court found the counsel’s argument to be a technicality taken to an extreme and rejected it.

The Court observed that, for the reasons already mentioned, the earlier contention was dismissed. The counsel then focused on the provisions of section 68‑D, paragraph (2) of the Act. Before addressing that argument, the Court found it useful to set out the text of section 68‑D together with the rules made under the Act. Section 68‑D provides that any person affected by a scheme published under section 68‑C may, within thirty days of the scheme’s publication in the Official Gazette, file objections before the State Government. Sub‑section (2) states that the State Government, after considering the objections and, if it wishes, after giving the objector or his representatives and the representatives of the State Transport Undertaking an opportunity to be heard, may either approve the scheme or modify it. Sub‑section (3) provides that a scheme approved or modified under sub‑section (2) shall be published in the Official Gazette by the State Government; that publication shall render the scheme final and it shall be called the approved scheme, while the area or route covered shall be termed the notified area or notified route. A proviso adds that any scheme relating to an inter‑State route shall not be deemed approved unless it has first been published in the Official Gazette with prior approval of the Central Government.

The Court then recited the relevant rules. Rule 8 requires any person, concern or authority aggrieved by a scheme published under section 68‑C to file, within the prescribed period, written objections and representations before the Secretary to the Government in charge of the Transport Department, setting out concisely the reasons for the objection. Rule 9 provides that no objection or representation concerning a scheme published in the Official Gazette will be considered by the Government unless it complies with Rule 8. Rule 10 outlines the procedure for considering a scheme: after receiving the objections, the Government may fix the date, time and place for an enquiry, give at least seven clear days’ notice of that date and place to the persons who filed objections under Rule 8, and then consider the objections and pass such orders as it deems appropriate, after giving the persons an opportunity to be heard in person or through authorized representatives.

From these provisions, the Court summarized the procedure for approving a scheme. First, the State Transport Undertaking prepares a scheme that provides for road‑transport service in a particular area to be run or operated by the Undertaking, either exclusively or partially, and publishes the scheme in the Official Gazette. Second, any person affected by the scheme may, within thirty days of its publication, file written objections and representations with reasons before the Secretary to the Government in charge of the Transport Department. After receiving the objections and representations, the Government fixes

In the matter before the Court, the statutory provision required that the Government fix a date for the hearing, give the persons who objected an opportunity to be heard either in person or through authorised representatives, consider the objections, and then either modify or approve the scheme. The factual record shows that this procedure was carried out in the way prescribed. After the scheme for road transport service was prepared by the State Transport Undertaking and published in the Official Gazette, the petitioners together with other interested parties lodged their objections before the Secretary to the Government in the Transport Department within the period fixed by law. A total of one hundred thirty‑eight objections were received. The Government then issued individual notices to each objector by registered post, informing them of the date fixed for the hearing, which was 26 December 1957. On that date the Secretary to the Government, who was also the Home Department official in charge of Transport, heard the representations presented by the objectors. Some objectors appeared in person, while others were represented by their advocates. In addition, the General Manager of the Road Transport Undertaking also made a representation before the Secretary. After hearing all the representations, the Secretary prepared a set of notes summarising the material and placed the whole file, together with his notes, before the Chief Minister for further consideration.

The petitioners then advanced several points of contention. Their first contention was that, in approving the scheme, the State Government was exercising a quasi‑judicial function and therefore was obligated to provide each objector a personal hearing, rather than delegating that responsibility to the Secretary. Their second contention was based on the principle that a judicial hearing requires the same individual to hear the case and to render the decision; they argued that because the Secretary conducted the hearing while the Chief Minister rendered the final decision, the statutory requirement of a judicial hearing was not satisfied. The third contention extended this argument by asserting that even if the hearing conducted by the Secretary could be deemed a hearing by the State Government, it was nevertheless tainted because the Secretary who conducted the hearing also headed the Transport Department. According to the petitioners, this situation made the department act as the judge of its own cause, thereby violating a fundamental principle of judicial procedure that a decision‑maker must not be an adjudicator of a matter in which it has an interest. Finally, the petitioners highlighted that, although the hearing was scheduled for 26 December 1957, the Chief Secretary to the Government had, before the hearing commenced, given interviews to the newspaper ‘Deccan Chronicle’ and to the ‘Golconda Patrika’, stating that the Government had already decided to nationalise road transport in Krishna District and had selected certain routes, including the Guntur‑Vijayawada route. The petitioners contended that these public statements demonstrated that the Government had prejudged the case prior to the hearing, thereby compromising the fairness of the enquiry.

The learned Attorney General responded to each of the petitioners’ submissions. He maintained that the State Government had strictly complied with the procedure laid down in section 68‑C of the Transport Undertaking Act. He emphasized that the Government, as an impersonal corporate body, conducted the hearing through the institutional machinery prescribed by law, and that the function performed was essentially administrative rather than judicial. In his view, even if the act of approving the scheme could be characterised as a judicial act, the role of the Home Secretary in charge of the Transport Department was limited to the collection of material and the preparation of notes, while the ultimate decision was taken by the Chief Minister. Consequently, the Attorney General argued that the hearing was not a mere perfunctory exercise but a legitimate procedural step consistent with the statutory scheme. He also contended that the interview given by the Chief Secretary to the newspapers merely indicated the factual background of the proposed scheme and did not amount to a declaration of a final decision, thus not amounting to a prejudgment of the matter before the enquiry. Accordingly, the Attorney General submitted that the entire process satisfied the requirements of natural justice and that no violation of judicial principles occurred.

The government argued that the act of collecting material by the Home Secretary who headed the Transport Department did not constitute a judicial function, because the ultimate decision was taken solely by the Chief Minister. The argument further asserted that the Home Secretary’s comments to the press merely indicated the existence of a proposed scheme and did not amount to any substantive adjudication.

At the beginning of its analysis the Court found it useful to examine whether the State Government, while exercising the powers granted under section 68‑C of the Act, performed a quasi‑judicial role. The Court noted that the distinction between a judicial act and an administrative act has been clearly set out in earlier authorities. The test was originally formulated by Lord Justice Atkin in Rex v. Electricity Commissioners, Ex Parte London Electricity Joint Committee Co., and later elaborated by Lord Justice Scrutton in Rex v. London County Council, Ex Parte Entertainments Protection Association Ltd.. The Supreme Court of India reaffirmed this test in Province of Bombay v. Khusaldas S. Advani. These authorities identified three essential conditions for an act to be characterized as judicial: first, the body must possess legal authority; second, the authority must be empowered to resolve questions that affect the rights of individuals; and third, the body must have a duty to act in a judicial manner.

The Court then turned to the third condition, which has been the subject of detailed discussion in several decisions. In the Province of Bombay case, Justice Das examined the scope of the duty to act judicially. He explained that where a statute authorizes a non‑court body to adjudicate a dispute between two parties arising under the statute, the body is confronted with a “lis” and, unless the statute provides otherwise, it has a duty to act judicially, making its decision a quasi‑judicial act. He further held that even when a statutory authority possesses the power to take an action that could prejudice an individual, and the conflict is between the authority itself and the affected person, the final determination of the authority still qualifies as a quasi‑judicial act if the statute requires the authority to act judicially.

Justice Das reiterated this principle in In re Banwarilal Roy. He observed that a judicial or quasi‑judicial act involves more than the mere mental exercise of forming an opinion. Such an act encompasses the method by which the opinion is reached, including the presence of a proposal, an opposition, and a decision on the issue. He quoted Lord Justice Scrutton’s description that a quasi‑judicial proceeding “vaguely connotes hearing evidence and opposition.” The Court noted that the degree of procedural formality required for receiving or hearing evidence may vary according to the specific demands of the governing statute, but the essential difference between an administrative act and a judicial or quasi‑judicial act remains the presence of a structured hearing and a binding decision on contested rights.

The Court observed that while statutes prescribe certain requirements, there exists an indefinable yet appreciable difference between the manner in which an administrative or executive act is performed and the manner in which a judicial or quasi‑judicial act is performed. This observation is essentially consistent with the first proposition that had been extracted earlier and therefore reinforces the earlier analysis of the distinction. The Court again examined this issue in Nagendra Nath Bora v. Commissioner of Hills Division, where it considered the provisions of the Eastern Bengal and Assam Excise Act, 1910 (I of 1910), to determine the scope of the concept of “judicial act”. Justice Sinha, delivering the judgment, stated at page 408 that determination of whether an administrative body or authority functions purely administratively or in a quasi‑judicial capacity must be made in each case by examining the relevant statute and the rules made thereunder. In Express Newspapers Ltd. v. The Union of India, the Court reviewed the law to decide whether the Wage Board established under the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955 (45 of 1955) performed merely administrative functions or quasi‑judicial functions. Justice Bhagwati, speaking at page 613, observed that if the Wage Board’s functions consist of determining issues between a proposition and an opposition based on data and materials gathered through questionnaires, then the Board is engaged in adjudicative activity. He further held that such circumstances inevitably import a duty to act judicially into the Board’s proceedings, making its functions quasi‑judicial in character (1) A.I.R. 1958 S.C. 398. (2) A.I.R. 1958 S.C. 578. These three decisions collectively hold that whether an administrative tribunal bears a duty to act judicially must be derived from the specific provisions of the statute and its subordinate rules, and they express the view that whenever an authority is required to adjudicate the rights of opposing parties, or where a lis exists, the authority ordinarily has a judicial duty. Applying this test, the Court proceeded to examine sections 68‑C and 68‑D of the Act, together with the rules made thereunder, to determine whether, under those provisions, the State Government performs a judicial act or merely an administrative function. Section 68‑C comprises three distinct components that together outline the steps the Undertaking must follow in exercising its statutory powers. The Undertaking must first form the opinion that, in the public interest, the road‑transport service should be operated by the State Transport Undertaking. It may also form the opinion that a particular class of service in any area, route, or portion thereof should be operated by it, possibly to the exclusion, either complete or partial, of other persons. Second, the Undertaking forms that opinion with the purpose of providing an efficient, adequate, economical, and properly coordinated road‑transport service.

The section requires the Transport Undertaking, after forming an opinion that a public‑interest road‑transport service is needed, to draw up a scheme. The scheme must set out the nature of the services to be provided, the area or route to be covered, and any other details that the law prescribes, and the scheme must then be published in the Official Gazette. By this requirement the provision draws a clear line between the purpose for which a scheme is prepared and the specific details contained in the scheme. In other words, although the overarching purpose is to secure an efficient, adequate, economical and well‑coordinated road‑transport service for the public, the actual scheme may nonetheless impact individual rights, for example by excluding other persons, either wholly or partially, from operating on a particular route. Consequently, under section 68‑C the State Transport Undertaking is authorised to propose a scheme that can affect the proprietary rights of individual permit‑holders who are engaged in transport business on the designated route or routes. Such a proposal therefore threatens the proprietary rights of the concerned individual or individuals.

Section 68‑D, read together with Rules 8 and 10 made under the Act, allows any person who is affected by the proposed scheme to file objections within the prescribed time before the Secretary of the Transport Department. The same provisions obligate the State Government to either approve or modify the scheme after conducting an enquiry and after providing the objectors, their authorised representatives, and the representatives of the State Transport Undertaking an opportunity to be heard either in person or through authorised agents. The procedure prescribed therefore bears a close resemblance to the process followed in courts of justice. In this context there are essentially two disputing parties: the State Transport Undertaking, which is a statutory authority under the Act, and a citizen whose rights may be infringed by the scheme. The citizen may raise objections on public policy grounds or on personal grounds, such as arguing that the scheme is not in the public interest or that the route he currently exploits should be excluded for various reasons. Thus a proposal and an opposition arise, and the State Government, as a third party, must decide the dispute and, on the face of it, must do so in a judicial manner. The Act and the Rules expressly require the Government to resolve the dispute following the procedure laid down, namely by considering the objections and hearing both parties. Accordingly, the Court observed that the statute imposes a clear duty on the State Government to decide the matter judicially when it approves or modifies the scheme proposed by the Transport Undertaking. The learned Attorney General contended that sections 68‑C and 68‑D do not envisage an enquiry concerning the parties’ rights, asserting that the scheme is solely intended to achieve an efficient, adequate, economical and properly coordinated bus transport service.

In this matter the Court explained that the objective of a transport‑service scheme is to secure an efficient, adequate, economical and properly coordinated bus service, and that the enquiry prescribed by section 68‑D, although described as a judicial‑like procedure, does not transform the approval of the scheme into anything other than an administrative act. The Attorney General therefore contended that the Government was performing only an administrative duty when it approved the scheme in the public interest and that no party‑rights were at stake in the process. The Court recognised that the argument possessed some apparent plausibility, but it rejected both the premise that only administrative considerations were involved and the conclusion that the act could not be judicial. The Court observed that the scheme being proposed could exclude persons who possess proprietary rights in a particular route or routes. As the Court had previously emphasized, the overall purpose of the scheme must be distinguished from the specific provisions contained in it. Accordingly, although the scheme may bar certain individuals from a route, the affected persons are given a remedy by applying to the Government, and the Government is bound to adjudicate the dispute between the contesting parties. Thus the statute clearly imposes a duty on the Government to act judicially. Even if the challenge to the scheme were limited solely to the purpose articulated in section 68‑C, the Court held that the situation would not change, because even in that limited scenario there remains a dispute between the State Transport Undertaking and the person who is excluded by the scheme, although the objections would be confined to the scheme’s purpose. In either perspective, the two provisions—sections 68‑C and 68‑D—satisfy the three criteria of a judicial act laid down by this Court. The Court then turned to the decision of the House of Lords in Franklin v. Minister of Town and Country Planning for support of this view, noting that strong reliance was placed on that authority and therefore a detailed consideration was necessary. The relevant facts were set out: on 3 August 1946 the respondent, Lewis Silkin, then Minister of Town and Country Planning, prepared the draft Stevenage New Town (Designation) Order, 1946, under paragraph 1 of Schedule 1 to the New Towns Act, 1946, and about 6 August 1946 caused it to be published together with the notices required by paragraph 2 of Schedule I to that Act. Subsequently, objections were received from a number of persons, including the appellants. In response, the Minister directed Mr Arnold Morris, an Inspector of the Ministry, to conduct a public local inquiry as prescribed by paragraph 3 of the Schedule. Mr Morris held the inquiry at the Town Hall in Stevenage on 7 and 8 October 1946, and on 25 October he submitted a report to the Minister, summarising the submissions made and the evidence given by and on behalf of the objectors, and attaching a full transcript of the proceedings, which began with an opening statement by Mr Morris recapitulating the background of the matter.

The report began with an explanation of the reasons that had led the authorities to designate Stevenage as the site for a New Town. Subsequently, on 11 November 1946, the respondent issued the formal order in accordance with paragraph 4 of Schedule I to the New Towns Act, 1946.

The appellants then approached the High Court seeking to have that order set aside. In their application they advanced several grounds. First, they argued that the order was beyond the powers conferred by the New Towns Act, 1946. Alternatively, they contended that the statutory requirements prescribed by the Act had not been observed. A further submission was that the Minister who made the order had, before the Bill became law, publicly stated that he intended to make such an order, and that this prior declaration rendered him biased when considering the objections raised.

The House of Lords examined these submissions and concluded that the respondent’s role under the Act was purely administrative. It held that the respondent had complied with the statutory provisions. Consequently, the House of Lords affirmed the decision of the Court of Appeal, which had dismissed the appellants’ applications.

Lord Thankerton, delivering his judgment on page 102, remarked:

“In my opinion, no judicial, or quasi‑judicial, opinion, no duty was imposed on the respondent, and any reference to judicial duty, or bias, is irrelevant in the present case. The respondent’s duties under s. 1 of the Act and schedule 1 thereto are, in my opinion, purely administrative, but the Act prescribes certain methods or steps in the discharge of that duty… it seems clear also, that the purpose of inviting objections, and, where they are not withdrawn, of having a public inquiry, to be held by someone other than the respondent, to whom that person reports, was for the further information of the respondent in order to the final consideration of the soundness of the scheme of the designation… I am of opinion that no judicial duty is laid on the respondent in discharge of these statutory duties, and that the only question is whether he has complied with the statutory directions to appoint a person to hold the public inquiry, and to consider that person’s report.”

Lord Thankerton observed that, at first glance, the facts of the present case might appear analogous to those in the earlier matter, but a deeper scrutiny of the facts and of the provisions of the New Towns Act, 1946, together with Chapter IV‑A of the Act, revealed fundamental differences.

He then outlined the procedural steps laid down by the New Towns Act, 1946 for developing a new town. First, the Minister, after consulting the local authorities whom he considers concerned, may, in his subjective satisfaction, issue an order designating a particular area as the site of the proposed new town. Second, before making the order, the Minister prepares a draft containing the necessary particulars and publishes it in the London Gazette, inviting objections to the proposed order within a prescribed period. Third, if any objection is received, the Minister shall cause a public local inquiry to be held and shall consider the report of the person who conducts that inquiry.

The procedure prescribed by the New Towns Act, 1946 required that after a draft order was published, any person who wished to contest the validity of that order could apply to the High Court. Such an applicant could obtain a setting aside of the order only if he was able to demonstrate to the Court that the order exceeded the powers conferred by the Act or that his own interests had been substantially prejudiced because the statutory requirements had not been observed. In contrast, the steps laid down for the nationalisation of road transport under the relevant Act were more elaborate. First, the State Transport Undertaking, which functioned as a statutory authority, was required to propose a scheme for the nationalisation. Second, the scheme could contain a provision that the road‑transport services would be operated exclusively by the State Transport Undertaking, thereby excluding any private person or persons. Third, any person who considered himself to be affected by the scheme was entitled to file objections before the Government. Fourth, after receiving the objections, the Government was obliged to resolve the dispute between the Undertaking and the aggrieved persons by following the rules of judicial procedure. Fifth, the dispute was not limited merely to the question of whether the statutory requirements had been complied with; it could also involve a determination as to whether a particular person or persons should indeed be excluded from the services. Finally, the Government was required to afford a personal hearing to both parties before reaching a decision. These procedural safeguards were designed to ensure that affected parties could be heard and that the Government acted in accordance with established judicial norms.

The Court observed that a comparison of the procedural steps under the two statutes highlighted the differing nature of the enquiries each statute contemplated. Under the New Towns Act, there was no cause of action, no personal hearing, and any public enquiry conducted by a third party was confined primarily to ascertaining compliance with statutory requirements or, at most, to gathering additional information for the Minister. By contrast, the road‑transport scheme created a clear dispute between the State Transport Undertaking and the affected persons, a dispute that encompassed not only public‑policy objections but also claims to protect private rights. The Court noted that this dispute had to be adjudicated by the State Government after granting a personal hearing to the parties and after observing the rules of judicial procedure. While some authorities might argue that the Act under consideration did not envisage a judicial act, the Court refrained from forming any opinion on that point. Instead, it concluded that there was no basis to hold that the Government was not performing a judicial function in this context. The Court also cited Robson’s commentary in Justice and Administrative Law, which explained that the New Towns Act did not subject the Minister’s actions to the rules of natural justice because the Minister alone initiated the process and was not required to resolve a controversy between a public authority and private interests. The responsibility, according to that commentary, lay with the Minister to ensure that Parliament’s intention was faithfully implemented.

The Court explained that the observations previously quoted illustrated the principle governing that earlier decision, and that principle could not be applied to the facts of the present case. In the work Principles of Administrative Law by Griffith and Street, the authors commented on the same decision after examining section 1 of the New Towns Act, 1946. They observed that, unlike the Housing Acts, the town‑planning legislation involved the Minister as a party throughout the process, and that the statute did not obligate the Minister to consider any objections. The authors further noted that the statute itself declared the creation of new towns to be a matter of national interest. On page 176 the authors added that Lord Thankerton had not defined the terms “judicial” and “administrative” nor identified the specific factors that led him to classify the matter in a particular way. They suggested that he had likely examined the Act in its entirety, applying an interpretative approach similar to the rule in Heydon’s Case (1584, 3 Co. Rep. 7a, 7b). On page 178 they concluded that the thorough statutory analysis demonstrated in the Errington, Robinson, Johnson and Franklin cases, and the courts’ emphasis on deciding solely on the basis of the statute under consideration, rendered such an approach inevitable. Consequently, the Court held that the Franklin case was rooted in interpreting the provisions of that Act, focusing on informing the Minister’s mind rather than resolving any dispute between the Minister and the objectors. The Court therefore found that the Franklin decision offered no assistance in resolving the present controversy, which centered on the construction of the provisions of the Act. For these reasons the Court concluded that the State Government’s order made under section 68‑D constituted a judicial act.

The Court then turned to the question of whether the State Government had dealt with the petitioners’ objections in the manner prescribed by the Act. It noted that the Act and the rules framed thereunder required the State Government to hear the dispute. However, in the present case the hearing had been conducted by the Secretary in charge of the Transport Department, a person who was not the State Government itself. The Court observed that the State Government is an impersonal entity that can act only through the machinery and procedures authorized by law. Clause (60) of section 2 of the General Clauses Act, 1897, as defined after the commencement of the Constitution (VII Amendment) Act, 1956, described a “State Government” in a State as the Governor and in a Union Territory as the Central Government. Under article 154(1) of the Constitution, the executive power of the State was vested in the Governor and could be exercised by him directly or through subordinate officers in accordance with the Constitution. Article 163 further provided for a Council of Ministers headed by the Chief Minister to aid and advise the Governor, except where the Constitution required the Governor to act at his discretion. Accordingly, the Court emphasized that executive action of the State must be taken in the name of the Governor, and that any orders or instruments executed in that name must be authenticated as prescribed by rules made by the Governor.

The Court explained that, under the Constitution, the executive authority of a State is vested in the Governor, who exercises that authority either personally or through officers subordinate to him, in accordance with constitutional provisions. Article 163 provides that a “Council of Ministers with the Chief Minister at the head” shall aid and advise the Governor in the exercise of his functions, except to the extent that the Constitution requires the Governor to act in his own discretion. Article 166(1) further requires that “all executive action of the Government of a State shall be expressed to be taken in the name of the Governor.” Sub‑clause (2) of that article states that “orders and other instruments made and executed in the name of the Governor shall be authenticated in such manner as may be specified in rules to be made by the Governor,” and sub‑clause (3) directs the Governor to “make rules for the more convenient transaction of the business of the Government of the State, and for the allocation among Ministers of the said business …” insofar as the business does not fall within the Governor’s discretionary jurisdiction. In exercise of the powers conferred by clauses (2) and (3) of Article 166, the Government of Madras framed a set of rules titled “The Madras Government Business Rules and Secretariat Instructions.” Rule 9 of those rules provides, without prejudice to the provisions of rule 7, that the Minister in charge of a department shall be primarily responsible for the disposal of the business pertaining to that department. Rule 21 adds that, except as otherwise provided by any other rule, cases shall ordinarily be disposed of by or under the authority of the Minister in charge, who may, by means of standing orders, give such directions as he thinks fit for the disposal of cases in the department; copies of such standing orders must be sent to the Governor and the Chief Minister. Rule 11 requires that “all orders or instruments made or executed by or on behalf of the Government of the State shall be expressed to be made or executed in the name of the Governor.” Rule 12 provides that every order or instrument of the Government of the State shall be signed either by a Secretary, an Additional Secretary, a Joint Secretary, a draftsman, a Deputy Secretary, an Under Secretary or an Assistant Secretary to the Government of the State, or by such other officers as may be specially empowered for that purpose, and that such a signature shall be deemed to be the proper authentication of the order or instrument. After the formation of Andhra State on 3 October 1953, the rules made by the Governor of Madras under the States Reorganisation Act continued to operate as the rules of Andhra State until they were amended in accordance with the applicable law. The Governor of Andhra State, exercising the powers conferred by clauses (2) and (3) of Article 166, directed that, until other provisions were made, “the business of the Government of Andhra be transacted in accordance with the Madras Government Business Rules and Secretariat Instructions in force on the first day of October, 1953.”

In this matter, the Court explained that after the creation of Andhra State on 3 October 1953, the Governor of Madras issued rules under the States Reorganisation Act, and those rules continued to apply to the new state until they were formally amended. The Governor of Andhra State, exercising the authority granted by clauses (2) and (3) of Article 166 of the Constitution, directed that, until new provisions were made, the business of the Andhra Government should be conducted in accordance with the Madras Government Business Rules and Secretariat Instructions that were in force on 1 October 1953. Subsequently, on 26 October 1956, after the formation of Andhra Pradesh State, the Court observed that Andhra Pradesh was not a completely new entity but a continuation of Andhra State, merely changing its name; consequently, the business rules of Andhra State remained applicable to the Secretariat of the Andhra Pradesh Government.

The Court then set out the effect of the aforementioned provisions. It stated that a State Government is identified with the Governor, that the executive power of the State vests in the Governor, and that such power may be exercised either directly by the Governor or by officers subordinate to him in accordance with the Constitution. The Ministers, headed by the Chief Minister, advise the Governor in the performance of his functions. The Governor also made rules that enabled the Minister responsible for a particular department to dispose of cases pending before that department and to issue standing orders directing how those cases should be handled.

Applying this framework to the facts, the Court found that the record showed the Chief Minister, who was also the Minister in charge of Transport, issued an order directing the Secretary to the Government Home Department to hear objections filed against the scheme proposed by the State Transport Authority. This procedural mechanism, established by the rules for the disposal of cases by the State Government, was followed in the present dispute. The petitioners and other interested parties lodged their objections to the proposed scheme before the Secretary of the Transport Department. The Secretary thereafter conducted a personal hearing; some parties attended in person while others were represented by counsel. All material gathered during the hearing was placed before the Chief Minister, who subsequently issued an order approving the scheme. That order was issued in the name of the Governor and authenticated by the Secretary in charge of the Transport Department. Accordingly, the Court concluded that the State Government had furnished the petitioners with a hearing in strict compliance with the procedural rules made by the Governor.

At this juncture, the Court noted that an argument was briefly mentioned but not vigorously pursued. The argument contended that the rules which the Governor is empowered to make are limited to regulating the acts of the Governor or his subordinates in the discharge of executive power, and therefore would not govern the quasi‑judicial functions entrusted to the administration. The Court identified a fallacy in that reasoning. It explained that a quasi‑judicial act is not entirely judicial; rather, it imposes upon an executive body a duty to follow certain judicial norms while exercising executive authority. Consequently, the procedural rules promulgated by the Governor for the convenient transaction of State Government business also apply to quasi‑judicial functions, provided that those rules adhere to the established principles of judicial procedure. The Court further observed that the manner in which administrative tribunals perform quasi‑judicial acts has been examined in judicial decisions in England, referencing the relevant case law.

In this case, the Court referred to the authority of the House of Lords in the decision of Local Government Board v. Arlidge, reported in the 1909 Housing, Town Planning etc. Act series. At page one‑three‑two of that judgment, the Lords observed that when a duty to determine an appeal is imposed, the person or body that must decide the appeal is required to act in a judicial manner. They must consider the question that is referred to them without any bias and must afford each party the opportunity to present their case adequately. The decision, the Lords explained, must be reached in the spirit and with the sense of responsibility appropriate to a tribunal whose function is to dispense justice, although the Court noted that the procedural rules followed by each such tribunal need not be identical.

The Court then turned to the earlier decision of New Prakash Transport Co., Ltd. v. New Swarna Transport Co., Ltd., reported in the 1958 Supreme Court reports. In that judgment the Court examined the existing case law on natural‑justice principles and held that the requirements of natural justice differ according to the constitution of the statutory body and according to the legislative rules that govern its operation. The Court emphasized that whether those requirements have been violated in a particular case must be determined not by any preconceived notion of what the rules should be, but by examining the provisions of the relevant statute. The Court reinforced this principle by citing Nagendra Nath Bora v. Commissioner of Hills Division, also reported in 1958.

Having set out this background, the Court proceeded to examine the three alleged departures of the State Government from fundamental judicial procedure. In the present matter the officer who received the objections of the parties and who heard them, either in person or through representatives, was the Secretary of the Transport Department. According to the Madras Government Business Rules and Secretariat Instructions, which were issued by the Governor pursuant to Article one‑six‑six of the Constitution, the Secretary of a department is deemed to be the head of that department. One of the parties to the dispute before the State Government was the Transport Department itself, which functioned as a statutory authority under the applicable Act. The head of that department therefore received the objections, conducted the hearing, recorded the entire proceedings and, as is implied from the record, discussed the matter with the Chief Minister before the latter gave his approval to the scheme. Although the formal orders were issued by the Chief Minister, in substance the enquiry and the personal hearing were carried out by a party to the dispute, namely the Secretary of the Transport Department.

The Court noted that a fundamental principle of judicial procedure requires that the individual or individuals entrusted with the duty of hearing a case must be free from personal bias. To illustrate this principle, the Court quoted from Ranger v. Great Western Railway Co., where Lord Cranworth, L.C., declared that a judge ought to be, and is presumed to be, indifferent between the parties and must have no bias that would cause him to favour one side over the other. The Court emphasized that in ordinary cases such impartiality is a basic ground for the validity of the hearing.

In discussing judicial impartiality, the Court noted that an exception cannot be made for a judge who is not indifferent, and that the very fact that a judge is himself a party or has an interest as a party provides the strongest proof that he cannot be indifferent. The Court then referred to the case of Rex v. Sussex Justices Ex Parte McCarthy, where Lord Hewart, Chief Justice, observed that it was reported that the gentleman retired in the usual manner with the justices, taking with him the notes of the evidence in case the justices might wish to consult him; nevertheless the justices reached a conclusion without consulting him and he scrupulously refrained from referring to the case in any way. Although that conduct was noted, the Court emphasized that a long line of authorities demonstrates that the issue is not merely of some importance, as shown by the citations to [1854] 5 H.L.C. 72, 89; 10 E.R. 824, 827 and [1924] 1 K.B. 256, 258, but is of fundamental importance because justice must not only be done but must also be manifestly and unquestionably seen to be done. Consequently, the Court explained that the question was not whether the deputy clerk in that case had made any observation or offered any criticism that he might not properly have made, but rather whether his civil involvement with the case rendered him unfit to act as clerk to the justices in the criminal matter. The Court further held that the answer to that question depended not on what was actually done but on what might appear to have been done.

The Court proceeded to note that the principle was followed in Rex v. Essex Justices Ex Parte Perkins. It then turned to Franklin’s Case, where, although the construction of the provisions of the Act under consideration led the Court to hold that the Minister was not acting judicially in performing his duties, the Lordship nonetheless accepted the earlier principle and expressed a view on the doctrine of bias at page 103. The Lordship stated that the word “bias” should be confined to its proper sphere and that its proper significance was to denote a departure from the standard of even‑handed justice required by law from those who occupy judicial office or who are regarded as holding a quasi‑judicial office such as an arbitrator. The reason, the Court explained, is that a person adjudicating between two or more parties must approach his adjudication with an independent mind, without any inclination or bias toward either side of the dispute. The Court affirmed that these decisions accept the fundamental principle of natural justice that, in quasi‑judicial proceedings, the authority empowered to decide a dispute must be free from bias toward either party. Moreover, it was held to be of fundamental importance that a person interested in one party or the other should not, even formally, take part in the proceedings, even if in fact he does not influence the mind of the person who finally decides the case, as established in the authorities cited as [1927] 2 K.B. 475 and the 1948 decision.

In this case the Court observed that justice must not only be done but must also be seen to be done, and that the hearing conducted by the Secretary of the Transport Department clearly violated this essential principle of natural justice, rendering the proceeding and the hearing itself invalid. The Court further noted that while the Act and the Rules made under it impose a duty on the State Government to provide a personal hearing, the procedural scheme contained in the Rules situated the duty to hear on the Secretary and the duty to decide on the Chief Minister. The Court held that such a split of responsibility destroys the concept of a judicial hearing because a personal hearing permits the authority to observe the demeanor of witnesses, to resolve doubts during the arguments, and to be persuaded by reasoned submissions. When one official hears and another decides, the personal hearing becomes a mere formality, and this arrangement therefore offends a basic principle of judicial procedure. The learned counsel also contended that the State Government’s mind was already closed before any hearing took place, so that no genuine enquiry as required by the Act was conducted. This argument was based on newspaper reports dated 27‑12‑1957 in the Deccan Chronicle and Golconda Patrika, which quoted the Chief Secretary, Mr M P Pai, saying on 6 December 1957, before the enquiry began, that the Government had already decided to nationalise road transport in Krishna District, to include the Guntur‑Vijayawada route, and that about sixty‑five buses would ply these routes. The counsel argued that this indicated the Government had pre‑decided the nationalisation before the scheme was formally approved, and that the entire procedure was a façade to satisfy legal formalities. In the counter‑affidavit filed by the first respondent it was stated that the scheme had been published in the Andhra Pradesh Gazette on 24‑12‑1957 and that the Chief Secretary’s statement merely referred to the proposal under section 68‑C of the Motor Vehicles Act. Although the newspaper wording spoke of a Government decision, the Court concluded that the Chief Secretary was likely referring to the Gazette notification of 24‑12‑1957. Consequently, the Court held that the newspaper reports could not be taken as proof that the Government, having resolved to reject all objections, conducted a sham enquiry, and thus, for the first two reasons, the quasi‑judicial enquiry held by the State Government was vitiated by the violation of the aforementioned fundamental principles of natural justice.

In this case, the learned counsel for the petitioners advanced a final argument contending that the Road Transport Corporation, which is the first respondent, lacked authority to give effect to the scheme that had been proposed by the now‑defunct State Transport Undertaking. The factual background relevant to this contention is set out as follows. The State Transport Undertaking had published its scheme in the Andhra Pradesh Gazette on 14 November 1957. Subsequently, the General Manager acting as the Undertaking’s representative made a representation to the Secretary of the Transport Department on 26 December 1957. The State Government gave its approval to the scheme on 7 January 1958; the approved scheme was then published in the Andhra Pradesh Gazette on 9 January 1958 and was directed to become operative with effect from 10 January 1958. With effect from 11 January 1958, the Government of Andhra Pradesh established a Road Transport Corporation under the Road Transport Corporations Act, 1950 (Act LXIV of 1950) for the State of Andhra Pradesh. The State Government subsequently transferred the business of the Road Transport Department to that newly formed Corporation for the purpose of management, and thereafter the Corporation proceeded to take steps to implement the approved scheme. The petitioners argued that, under the Road Transport Corporations Act, the Corporation did not possess the power to assume the business of the State Transport Undertaking or to implement the scheme that had been initiated by the Undertaking. While it is undisputed that the Corporation falls within the definition of “State Transport Authority” under the Act, the question that arose was whether the Corporation could also be regarded as the successor to the State Transport Authority that had originally launched the scheme. The petitioners submitted that the Corporation would be a successor only if it had been legally entrusted with the duty of carrying on the business previously performed by the Road Transport Department. On 9 January 1958, exercising the powers conferred by section 3 of the Road Transport Corporations Act, 1950, the Governor of Andhra Pradesh established, effective from 11 January 1958, a body named the Andhra Pradesh Road Transport Corporation for the State of Andhra Pradesh. Further, exercising the power under section 34 of the same Act, the Governor issued an order dated 11 January 1958 prescribing certain administrative arrangements to take effect. The order provided that (i) the Andhra Pradesh Road Transport Corporation (hereinafter referred to as “the Corporation”) would take over the management of the existing Road Transport Department of the Government of Andhra Pradesh; (ii) all land, stores, articles and other goods belonging to the Road Transport Department would pass to the Corporation; and (iii) subject to the provisions of sub‑paragraphs (b) and (c), all assets and liabilities of the Road Transport Department would also pass to the Corporation. The remaining provisions of the order were deemed merely consequential to the foregoing clauses and thus need not be read in detail. Consequently, the order made it clear that the Government had entrusted the management of the Road Transport Department to the Road Transport Corporation and had directed the transfer of all assets and liabilities of that Department to the Corporation. The effect of this order was that the State

The Court observed that the Road Transport Corporation had taken over the road‑transport business that previously had been performed by the State Transport Department, which earlier had operated as the State Transport Undertaking under the relevant statutory scheme. The Court explained that, provided there was no legal barrier to the Government’s transferring the departmental business and its associated assets to the Corporation, the Corporation would legally become the successor to the earlier State Transport Undertaking. The petitioners contested this conclusion, arguing that the Government lacked any authority to do so under section 34 of the Road Transport Corporations Act, 1950. The Court therefore reproduced the full text of section 34, which provides that the State Government may, after consulting the Corporation, issue to the Corporation general instructions covering matters such as recruitment, service conditions, training, employee wages, reserve requirements, and the disposition of profits and stock; and that the Corporation may not deviate from those instructions without prior permission from the State Government. The Court noted that the Road Transport Corporation had been created with the purpose of extending and improving road‑transport facilities in the Andhra Pradesh region. It further recorded that the Government had transferred the Undertaking and its assets to the Corporation and had issued directions under section 34 for the Corporation to assume management of the Undertaking. While acknowledging that the Act permits a Corporation to acquire an undertaking on payment of compensation, the Court held that this provision was not material to the present case because the Corporation did not claim to acquire any transport undertaking belonging to the petitioners. Moreover, the petitioners had not demonstrated that the direction issued under section 34 conflicted with any provision of the Act.

Consequently, the Court held that the first respondent – the Road Transport Corporation – was the lawful successor to the State Transport Undertaking that had originally proposed the scheme, and that, having satisfied the statutory definition of a “Road Transport Authority,” it possessed the authority to implement the scheme approved by the Government. However, the Court found that the State Government had failed to conduct the required enquiry in a manner consistent with the principles of natural justice before sanctioning the scheme. For this reason, the Court set aside the order approving the scheme and directed the first respondent to refrain from taking over any routes in which the petitioners were engaged in transport business. The Court clarified that this judgment did not prevent the State Government from carrying out a proper enquiry concerning the objections raised by the petitioners, and that the petitioners retained the liberty to file any further objections they might have. Finally, because the petitioners did not succeed on the substantive grounds of their case, the Court ordered each party to bear its own costs, and noted that the judgment was rendered by Justice Wanchoo in a petition filed under Article 32 of the Constitution challenging the road‑transport scheme.

The petition concerned the Krishna district of Andhra Pradesh, and the petitioners advanced two principal arguments. First, they contended that the provisions of Chapter IV‑A of the Motor Vehicles Act, 1939, infringed their fundamental rights as guaranteed by the Constitution. Second, they asserted that the road‑transport scheme that had been proposed was beyond the powers conferred by Chapter IV‑A because the statutory requirements of that Chapter had not been strictly observed. The judge indicated that he had examined the judgment prepared by his brother, Subba Rao, J., and that he fully agreed with the reasoning presented on the first argument, and therefore chose not to repeat the facts and the rationale already set out on that point. However, the judge expressed that, despite his utmost respect for the earlier judgment, he could not wholly endorse the conclusions reached on the second argument, and consequently he decided to address that contention independently. The petitioners’ second contention was that the road‑transport scheme intended to be implemented exceeded the authority of Chapter IV‑A of the Motor Vehicles Act, 1939 (hereinafter referred to as the Act), on the basis that the procedural steps prescribed in that Chapter had not been complied with in a strict manner. Before analysing the petitioners’ submissions on this issue, the judge briefly outlined the procedural sequence required for the finalisation of a road‑transport scheme under Chapter IV‑A of the Act. The initial step, mandated by section 68C, required the preparation of a scheme when a State Transport Undertaking believed that, for the purpose of providing an efficient, adequate, economical and properly coordinated road‑transport service, it was necessary in the public interest that road‑transport services generally, or a specific class of such services in relation to a particular area, route or portion thereof, be operated by the State Transport Undertaking, either exclusively or partially, thereby possibly excluding other persons. Once such a scheme was prepared, it had to be published in the Official Gazette and also in any other manner directed by the State Government. The next step, under section 68D(1), allowed any person who was affected by the scheme to file objections to the State Government within thirty days from the date of publication. The third step required the State Government, as per section 68D(2), to consider those objections, to provide an opportunity for the objectors or their representatives, as well as for representatives of the State Transport Undertaking, to be heard, and thereafter to either approve the scheme or modify it. Finally, under section 68D(3), the scheme as approved or modified had to be published again in the Official Gazette as the approved scheme. After the scheme had been approved, the provisions governing its implementation came into play. Section 68F stipulated that the Regional Transport Authority would, upon application by the State Transport Undertaking and in accordance with the approved scheme, issue the necessary permits. The same section also empowered the Regional Transport Authority to cancel or modify any existing permit, or to refuse renewal of any permit, for the purpose of effecting the approved scheme. Section 68G further dealt with compensation in cases where any existing permit was cancelled or its terms were altered.

Section 68G of the Act provides that compensation must be paid when any existing permit is cancelled or when the terms of such a permit are modified. The petitioners contended that the statutory requirements laid down in sections 68C and 68D had not been observed. They set out their objections in five distinct points. First, they argued that at the time the scheme was to be published there was no State Transport Undertaking in existence that could have lawfully issued the scheme under section 68C. Second, they maintained that even assuming a State Transport Undertaking existed, it had failed to form the opinion required by section 68C, because the General Manager who acted on its behalf lacked the authority to do so. Third, they pointed out that section 68D(2) mandates a hearing before the State Government on any objections filed, and that no such hearing took place; they explained that the Home Secretary in charge of the Transport Department, who heard the objectors, should be considered one of the parties that must be heard by the State Government, and that his hearing did not satisfy the statutory requirement of a hearing by the State Government. Fourth, they claimed that the State Government gave no genuine consideration to the objections, asserting that the matter had already been prejudged, as shown by the Chief Secretary’s speech on 26 December 1957. Fifth, they argued that the scheme could not be enforced by the Road Transport Corporation because that corporation replaced the Road Transport Department only after the scheme had been approved by the State Government.

To understand and adjudicate the petitioners’ contentions, the Court set out the factual background concerning the preparation, approval and intended enforcement of the scheme. The scheme was published on 14 November 1957 under the authority of Shri Guru Pershad, who was the General Manager of the State Transport Undertaking known as Andhra Pradesh Road Transport. Chapter IV‑A of the Act had become effective on 15 February 1957. Prior to that date, the former Hyderabad State had enacted Act XLV of 1956, which amended the Motor Vehicles Act locally and incorporated provisions similar to those later embodied in Chapter IV‑A. Under the Hyderabad legislation, the State Transport Undertaking was defined as the Road Transport Department of the State, responsible for providing road‑transport services. When Hyderabad State ceased to exist and the Telangana region was merged into the State of Andhra Pradesh, the Andhra Pradesh Road Transport Department assumed responsibility for the road‑transport services that had previously been administered by Hyderabad’s department. Consequently, the scheme in question was issued on 14 November 1957 by Shri Guru Pershad on behalf of the Andhra Pradesh Road Transport Department. Objections to the scheme were received by the Secretary to Government who was in charge of the Road Transport Department, and the objectors were subsequently heard by the Home Secretary who oversaw the Transport Department on 26 and 27 December 1957. Ultimately, the Governor of Andhra Pradesh gave final approval to the scheme on 7 January 1958, and the scheme was scheduled to take effect shortly thereafter.

The scheme was intended to become effective on 10 January 1958, and the approved scheme was formally published in the Gazette on 9 January 1958. During the same period the Government of Andhra Pradesh resolved to create a Road Transport Corporation under the provisions of the Road Transport Corporations Act, No. LXIV of 1950, for the State of Andhra Pradesh. This resolution was made public on 20 December 1957, and the corporation was scheduled to come into existence on 11 January 1958. Its principal purpose was to assume the business of the Road Transport Department of the State. Accordingly, the members of the Road Transport Corporation were appointed on 9 January 1958, and the corporation was officially established with effect from 11 January 1958. The corporation thereby assumed the responsibility of implementing the approved scheme, which had been published on 9 January 1958 and was to take effect from 10 January 1958. To put the scheme into force, the corporation carried out the steps required under sections 68F, 68G and 68H of the Act.

The petitioners put forward an argument concerning the status of the State Transport Undertaking. They contended that a State Transport Undertaking created under the Hyderabad Act was operating in the present Telengana area of Andhra Pradesh. That undertaking, they said, was the Road Transport Department of the former Hyderabad State, which had become the statutory body under the Hyderabad Act. When the Hyderabad State ceased to exist and the Telengana area merged with Andhra Pradesh on 1 November 1956, the petitioners argued, the State Transport Undertaking of the Hyderabad State continued to function for the Telengana area. They further asserted that because the Hyderabad Act was not extended to the rest of Andhra Pradesh, the scheme relating to Krishna District, which lies outside Telengana, could not be framed by the State Transport Undertaking existing under the Hyderabad Act. The petitioners also claimed that no new State Transport Undertaking was formed after Chapter IV‑A of the Act came into force in February 1957. The Court found this contention without merit. While it is correct that under the Hyderabad Act the State Transport Undertaking was defined as “the Road Transport Department of the State providing road transport service,” the cessation of Hyderabad State on 1 November 1956 caused the Road Transport Department of Andhra Pradesh to become the State Transport Undertaking within the meaning of the Hyderabad Act, albeit limited to the Telengana area where the Act remained applicable. However, when Chapter IV‑A of the Act became operative on 15 February 1957 and applied throughout the whole of Andhra Pradesh, the Hyderabad Act was necessarily impliedly repealed, as the later provision covered the same field as the earlier Act.

It was observed that the provisions of Chapter IV‑A of the Act dealt with precisely the same subject matter as the Hyderabad Act. On 15 February 1957, the only body that existed to provide road‑transport services in the State was the Road Transport Department of Andhra Pradesh, which was already operating in certain parts of the State. Section 68A defined a “State transport undertaking” as any undertaking that provides road‑transport service and is carried on by either the Central Government or a State Government. The Road Transport Department of Andhra Pradesh clearly fell within that definition: it was an undertaking that supplied road‑transport service, albeit only in a portion of the State, and it was operated by the Government of Andhra Pradesh. Consequently, the Department became the State Transport Undertaking under the definition contained in section 68A. The fact that the undertaking, created by virtue of that definition on 15 February 1957, was then furnishing road‑transport services solely in a part of the State did not, in the Court’s view, disqualify it from being a State Transport Undertaking within the meaning of the term. Moreover, no provision in Chapter IV‑A prohibited a State Transport Undertaking that was, at that time, serving only a part of the State from expanding its operations and preparing a scheme for other regions of the State. Accordingly, the Court held that a State Transport Undertaking was indeed in existence in November 1957, when the scheme was prepared and published, and that the Undertaking was the Road Transport Department of Andhra Pradesh.

The parties raised two main contentions on this point. First, they asserted that the General Manager who acted on behalf of the State Transport Undertaking lacked authority to do so. The Court noted that this was a factual issue that should have been specifically pleaded in the petition. The petition itself contained the allegation concerning the authority of Shri Guru Pershad in paragraph 11(e), which read: “Mr Guru Pershad was the General Manager of the Road Transport Department of the erstwhile Hyderabad State. He was never appointed as Manager of the State Transport Undertaking of Andhra Pradesh, and therefore, he has no legal authority whatever to publish a scheme.” The Court observed that this objection was limited to the single question of whether Shri Guru Pershad possessed authority to act for the State Transport Undertaking of Andhra Pradesh, since he had never been appointed as its manager. The petitioners did not argue that, even if he had been appointed as manager, he would still lack authority to frame and publish a scheme on its behalf. The record indicated that Shri Guru Pershad, who had been the manager of road‑transport services when those services were administered by the former Hyderabad State, continued in that role after the Telangana area of the Hyderabad State was merged into Andhra Pradesh.

In this case, the Court observed that it was implausible for Shri Guru Pershad to have issued a Gazette notification on 14 November 1957 describing himself as “General Manager, State Transport Undertaking, Andhra Pradesh Road Transport” if he did not in fact hold that position. Accordingly, the Court concluded that Shri Guru Pershad was indeed the General Manager of Andhra Pradesh Road Transport and, by extension, of the State Transport Undertaking. The Court noted that the petitioners had not challenged his authority to publish the scheme on the basis that he was the Manager of the Andhra Pradesh State Transport Undertaking, and therefore the Court found no merit in allowing them to raise that issue at this stage. The scheme had been published on 14 November 1957 by Shri Guru Pershad in his capacity as Manager, and the Court held that he acted on behalf of the State Transport Undertaking when he prepared and issued the scheme. The Court further examined the second aspect of the petitioners’ contention, namely that the notification of 14 November 1957 did not expressly state that the State Transport Undertaking considered it necessary in the public interest for road‑transport services to be run and operated by the Undertaking. The Court reproduced the exact wording of the notification, which read: “In exercise of the powers conferred by s. 68C of the Motor Vehicles Act, 1939, it is hereby proposed, for the purpose of providing an efficient, adequate, economical and properly coordinated road transport service in public interest, to operate the following transport service as per the particulars given below with effect from a date to be notified by the Government.” While acknowledging that the phrase “the State Transport Undertaking is of opinion” was not verbatim in the notification, the Court held that it was impossible for such a proposal to be prepared and published on behalf of the Undertaking without the Undertaking forming the requisite opinion that the action was necessary in the public interest. The Court expressed the view that the State Transport Undertaking must have formed the opinion required by s. 68C before publishing its proposal and inviting objections. Although there was no prescribed form of words for such an opinion, the Court found it reasonable to infer from the language of the notification that it was issued after the Undertaking had adopted the necessary opinion under s. 68C. In support of this inference, the Court referred to paragraph 2 of the counter‑affidavit filed on behalf of the Andhra Pradesh State Road Transport Corporation, which stated that the General Manager of the Andhra Pradesh Road Transport, identified as the State Transport Undertaking, was of the opinion that transport services in the Krishna District should be operated in the public interest by the Andhra Pradesh Road Transport. The petitioners had argued that this statement reflected only the General Manager’s personal opinion and not that of the Undertaking; however, the Court reiterated that the authority of the General Manager to speak for the State Transport Undertaking had not been specifically contested in the petition, and therefore the petitioners’ contention lacked force and was rejected.

The petitioners argued that the document only revealed the personal view of the General Manager and not the official opinion of the State Transport Undertaking, but the Court observed that the petition never specifically contested the General Manager’s authority to represent the Undertaking. Consequently, the claim that the General Manager spoke beyond his authority lacked any persuasive force and was therefore dismissed. The remaining issue, identified as point (3) in the petition, concerned the nature of the hearing conducted by the State Government under section 68‑D(2). To resolve this question, the Court needed to examine whether, when convening a hearing under that provision, the State Government functioned as a quasi‑judicial tribunal or merely performed an administrative task. The characterization of the State Government’s role determined which set of criteria would apply to assess the propriety of the hearing that had been held. The petitioners maintained that the hearing should be regarded as quasi‑judicial, implying that the State Government owed a duty to act in a judicial manner. Conversely, the learned Attorney General contended that the State Government's role in the hearing was purely administrative and that no judicial standards were applicable. The Court referred to the established doctrine on what constitutes a quasi‑judicial act, as explained in Province of Bombay v. Kusaldas S. Advani, reported in 1950 SCR 621. Justice Das, then writing for the Court, summarized the principle at page 725 as follows: first, when a statute authorises an authority that is not a court in the ordinary sense to resolve a dispute that arises from a claim made by one party and opposed by another party, and to determine the respective rights of those opposing parties, a cause of action exists prima facie, and, unless the statute says otherwise, the authority must exercise its function judicially, rendering its decision a quasi‑judicial act; second, even where the statutory authority possesses power to perform an act that may prejudice the subject, and the contest is between the authority itself and the subject rather than between two external parties, the final determination of the authority will still be a quasi‑judicial act if the statute obliges the authority to act judicially. In other words, the existence of two opposing parties ordinarily imposes on the authority a duty to act judicially, but the absence of such parties does not automatically remove the act from the quasi‑judicial category whenever the statute expressly or by necessary implication requires a judicial approach. The Court noted that the legislation does not usually articulate this duty in explicit terms; the requirement that the authority act judicially must be inferred from the express provisions of the statute.

It was observed that the requirement for an authority to act judicially could be inferred only from the explicit provisions of the statute. Counsel for the petitioners argued that, in the present matter, two distinct parties appeared before the State Government, which functioned as the deciding authority under section 68D(2). Those two parties were identified as the objectors and the representatives of the State Transport Undertaking. Accordingly, counsel submitted that, on a prima facie basis, the presence of these two parties created a duty for the State Government to act judicially, and that no other factor was apparent that would remove the inference drawn from the existence of the two parties before the deciding authority. Counsel further acknowledged that the existence of any additional factor would depend on the particular circumstances of each case, the nature of the matter under consideration, and the scope of the hearing. Counsel for the State, however, contended that an examination of the nature of the issue to be heard and of the scope of the hearing before the State Government led to the conclusion that the State Government acted in an administrative capacity when it conducted a hearing under section 68(2). To determine the character of that hearing, reference was made to article 19(6)(ii), which provides that nothing in sub‑clause (g) of article 19(1)—which deals, among other things, with the right to carry on trade or business—shall prevent the State from making any law relating to the conduct of any trade or business by the State or by a corporation owned or controlled by the State, even if such law results in the exclusion, whether complete or partial, of citizens. Chapter IV‑A had been incorporated into the Act to give effect to this purpose, thereby enabling the State to operate transport services to the exclusion, either total or partial, of citizens. The scheme that had been published provided that, upon its enforcement in the relevant area, there would be a complete exclusion of citizens. The question then arose as to whether the issue of total exclusion of citizens was itself a matter for the State Government to decide when it entertained objections. Counsel for the petitioners submitted that the central question for the State Government to resolve was whether the scheme should impose a complete exclusion of citizens upon its enforcement. Counsel for the State, on the other hand, argued that the State Government’s task was merely to determine whether the published scheme was in the public interest and whether it would furnish an efficient, adequate, economical and properly coordinated road‑transport service. The argument continued that, if the State Government arrived at such a conclusion, the complete exclusion contemplated by the scheme would follow automatically, and the State Government would not need to address the question of exclusion as a separate issue. In other words, the State Government was not called upon to decide between the competing claims of private citizens seeking to provide transport and the State Transport Undertaking intending to provide transport to the exclusion of citizens.

The Court observed that the matter concerned transport to the exclusion of citizens and therefore concluded that there was no real lis in the case. It was noted that an objection to the scheme could be filed not only by the bus operators who would be excluded but also by any person who was affected by the scheme, including members of the travelling public. After giving careful consideration to the arguments presented by both sides on this aspect, the Court held that the scope of the hearing before the State Government was limited. Although the decision might affect citizens who provided transport, the question of whether private citizens should be permitted to provide transport was not before the State Government. The only issue in dispute before the State Government was whether the scheme proposed by the State Transport Undertaking was efficient, adequate, economical, properly coordinated for road transport service and whether it served the public interest. The Court stated that if the State Government concluded that the scheme satisfied those requirements, the complete exclusion of private transport would automatically follow, and the question of exclusion would not need to be decided as a separate issue between the objectors and the State Transport Undertaking. The Court acknowledged that the State Government possessed the power to modify the scheme and could, in doing so, drop a part of it; however, such modification would not be made because of any private citizen’s right to operate road transport in a particular area but because the Government considered that, with respect to that area, the scheme was not efficient, adequate, economical, properly coordinated, or in the public interest. Unless the Government reached that conclusion regarding any portion of the area covered by the scheme and altered it, the consequence of complete exclusion would arise ipso facto. The Court emphasized that while considering objections under section 68D(2), the State Government was not determining whether a state monopoly or private enterprise should exist; it was merely deciding whether the scheme presented could be approved, with or without modifications, within the limits set by section 68C. If the Government approved the scheme, complete or partial exclusion would follow; if it modified any part of the scheme, the exclusion would fail to that extent. In view of the nature and scope of the hearing under section 68D(2), the Court found that there was truly no lis. Even though two parties might appear before the State Government, no determination of their rights was being made; the determination concerned only the efficiency and public‑interest criteria of the proposed scheme. Consequently, the Court held that the character of the hearing did not render the State Government a quasi‑judicial tribunal.

The Court observed that the State Government was not a quasi‑judicial tribunal and that its decision did not constitute a quasi‑judicial act within the meaning of the principles laid down in Advani 's Case(1). In this connection the Court referred to the earlier decision in Franklin v. Minister of Town and Country Planning (2). The facts in that case were as follows: under the New Towns Act, 1946, the Minister prepared a draft order for a new town, caused the draft to be published, and gave notice to the persons who would be affected. After publication, objections were received from a number of owners and occupiers of dwelling‑houses and lands in the area affected by the draft. The Act required that, on receipt of those objections, an inspector should hold a public local inquiry into the objections and then make a report to the Minister. The citation for this provision is (I) [1950] S.C.R. 621. The Minister, after receiving the inspector’s report, made the order under the Act. These proceedings were carried out with respect to a place called Stevenage in 1946, and the Minister eventually passed the necessary order. Some of the owners and occupiers of dwelling‑houses and lands situated at Stevenage then applied to the Court to have the order set aside. Their grounds included the claim that the requirements of the Act had not been complied with and that their interests had been substantially prejudiced. They argued that the New Towns Act, 1946, implied a duty on the Minister to consider their objections fairly and properly, and to give proper effect to the result of that consideration when deciding whether to make the order, and that these implied requirements had not been observed. The Court held in that case that the Minister of Town and Country Planning did not have a judicial or quasi‑judicial duty imposed on him by the Act, and that the procedure followed was in accordance with the statutory requirements. The Court then analogised the present matter to the Franklin case by substituting, in place of the New Towns Act, 1946, the Chapter IV‑A of the Act that governs the present scheme; by substituting, in place of the draft order of the Minister, the draft scheme of the State Transport Undertaking; and by substituting, in place of the final order, the final approval given by the State Government after hearing the objections. The Court noted that the parallel between the two cases was complete. In Franklin a draft order was published, objections were received, a public inquiry and hearing were held, and a final order was made. In the present case a draft scheme was published, objections were received, a hearing was conducted, and the State Government gave its final approval. In the earlier case the interests of persons occupying lands and houses in the proposed area were engaged; in the present case the interests of the bus operators, and perhaps also those of the travelling public, were engaged. Despite this similarity, the Court in Franklin held that the Minister had no judicial or quasi‑judicial duty because his role was limited to considering whether the scheme should proceed. Once he reached that conclusion after following the

The Court observed that once the State Government decided that the scheme should be approved, the effect prescribed by the Act would be the complete or partial exclusion of the bus operators in the area, as envisaged in the scheme. Accordingly, the Court found the present case to be analogous to the earlier Franklin case, reported in (1) [1948] A.C. 87, and, following the same line of reasoning, concluded that the function performed by the State Government while considering objections under section 68D(2) was administrative and not quasi‑judicial. The only distinction noted by the Court was that the New Towns Act expressly provided for the hearing of objections by an Inspector, whereas the present statute did not assign such a role to the Minister; the Court indicated that this difference would be examined later but held that it had little, if any, bearing on whether the State Government acted quasi‑judicially when deciding objections under section 68D(2). The Court also referred to the decision in Nagendra Nath Bora v. Commissioner of Hills Division, reported in (2) A.I.R. 1958 S.C. 398, where it was held that the characterization of an administrative body’s function as either purely administrative or quasi‑judicial must be determined in each case by examining the relevant statute and the rules made thereunder. A similar view was expressed in Express Newspapers Ltd. v. The Union of India, reported in (3) A.I.R. 1958 S.C. 878, wherein the Court observed that the determination of whether a wage Board performed judicial or quasi‑judicial functions depended on the specific statutory provisions governing the Board, and that no universal rule could be laid down for such determinations. Applying the principles laid down in those cases and taking into account the express provisions contained in Chapter IV‑A of the Act and the Rules framed thereunder, the Court arrived at the conclusion that the hearing prescribed by section 68D(2) was not before a quasi‑judicial tribunal and that the decision taken was not a quasi‑judicial act; the State Government was therefore acting purely administratively. Having reached this conclusion, the Court turned to the factual matrix of the present matter. The matter concerned the Road Transport Department, which was under the charge of the Chief Minister. The Home Secretary, who reported to the Chief Minister, was responsible for the Road Transport Department. When the objections were presented, the Chief Minister directed that the representations should be heard by the Home Secretary. The Home Secretary conducted the hearing of the objectors, and a note of the hearing was placed before the Chief Minister for further orders. Subsequently, the Chief Minister issued the order approving the scheme. The Court noted that the principal criticism of this procedure was twofold.

It was first argued that Rule 10, which is made under Chapter IV‑A of the Act, obliges the authorities to give the objectors an opportunity to be heard either in person or through authorised representatives. On that basis it was contended that the Chief Minister could not lawfully direct the Home Secretary to consider the objections when the final decision was to be taken by the Chief Minister himself. Reference was made to the decision in Franklin’s case, where a specific statutory provision required an Inspector to conduct an inquiry, hear the objections and prepare a report, after which the Minister would issue the final order based on that report. The argument emphasized that, unlike in Franklin’s case, the present Act and the Rules contain no such specific provision. Consequently, it was asserted that the hearing conducted by the Home Secretary could not be characterised as a hearing by the State Government or by the Chief Minister, who was the authority responsible for deciding the objections.

The learned Attorney General, in support of his position, relied on the Rules of Business made under article 166(3) of the Constitution, which empower the State to formulate rules for the convenient transaction of its business. A copy of those Rules was placed on record. Paragraph 13(1) of the counter‑affidavit was cited to point out that the Rules of Business do not expressly provide for personal hearings. Nevertheless, it was argued that the Minister is empowered to issue a standing order for the disposal of business in his Ministry as he deems appropriate. Exercising that power, the Chief Minister issued an order directing the Home Secretary to hear the representations so as to comply with the requirement of Chapter IV‑A and Rule 10, even though the Rules of Business contain no specific provision for an oral hearing by either the Minister or the Secretary.

Counsel further submitted that the order issued by the Chief Minister was not a general standing order but a case‑specific direction ordering the Home Secretary to conduct the hearing. The Court agreed that this observation was correct. The remaining question, however, was whether, when an administrative hearing is required under a rule that mandates the State Government to give a hearing to objectors, it is obligatory for the Minister who makes the final decision to personally conduct that hearing. The Court opined that, in an administrative hearing, it is not essential for the deciding Minister to be the one who hears the objections, provided that the hearing is conducted by a duly authorised officer of the Government. In support of this view, the Court referred to article 154 of the Constitution, which states that the executive power of the State is vested in the Governor and may be exercised by him directly or through subordinate officers in accordance with the Constitution. Since the hearing in question is an administrative one, it falls within the scope of the State’s executive power, and there would be no infirmity if the Governor,

The Court explained that, under the General Clauses Act, the Governor functions as the State Government and may delegate authority to a subordinate officer such as the Chief Minister to conduct a hearing. It further cited the decision in Local Government Board v. Arlidge, which examined the procedure for hearing an appeal by the Local Government Board under the Housing, Town Planning &c., Act, 1909. The Court reproduced Lord Haldane’s remarks at page 132, noting that while courts follow established procedural principles, the exact procedure depends on the nature of the tribunal. In contemporary practice Parliament often confers appellate powers in matters that are essentially administrative on bodies whose primary role is executive rather than judicial. Such bodies, like the Local Government Board, enforce obligations imposed for the community’s benefit and therefore possess an executive character. Consequently, when Parliament entrusts them with judicial duties, it is presumed, unless expressly stated otherwise, that they will follow their own procedural rules suited to efficient performance of their functions. Applying these observations, the Court held that when dealing with an entity such as the State Government, the customary procedures of that entity must be respected. Accordingly, if the Minister, lacking any specific rule on the point, ordered that the hearing be conducted by the Secretary, that order satisfied the essential requirement of providing an oral hearing by the State Government before any decision on the objections. The Court emphasized that separating the hearing function from the deciding function was not improper or violative of rule 10, given that the hearing was administrative in nature and that such separation was necessary for the Government’s efficient operation. Hence, the Court concluded that the Secretary’s conduct of the hearing fulfilled the requirement of rule 10, which mandates a personal hearing prior to the decision on objections. Regarding the second ground of attack, which contended that the Home Secretary, also in charge of the Road Transport Department, was not the appropriate person to hear objections because the scheme originated from his department, the Court reiterated that the administrative character of the hearing must be borne in mind. Since the Chief Minister ultimately decided the matter and approved the scheme, the Court found that the Home Secretary was not an improper person to conduct the hearing.

In this case the Court observed that the ultimate authority to approve the scheme was the Chief Minister, who gave the final decision and sanctioned the proposal. Consequently, the Court held that the Home Secretary, who headed the Transport Department, could not be described as an improper officer to conduct the hearing. The Court noted that the scheme had initially been presented merely as a proposal and that it remained open to either approval or modification after the objections were heard. The body that originated the scheme was the State Transport Undertaking, which was a limb of the Government itself. The Court explained that when a scheme is prepared by one limb of the Government, the Government is required to hear objections to that scheme. Under such circumstances, the Head of the Department – that is, the Secretary – may hear oral objections to a scheme that was prepared by a subordinate officer, such as the General Manager of the Road Transport Department, who is necessarily under the Secretary’s supervision. The Court emphasized that hearing a subordinate who prepared the scheme does not render the Secretary an improper person to conduct the hearing, because the Secretary is merely facilitating the process and not acting as the final decision‑maker. Furthermore, the Court clarified that the Secretary in this case was not the authority that decided the matter; the deciding authority was the Chief Minister. The Secretary’s role was limited to making notes of the hearing and transmitting the arguments to the Chief Minister. Since the entire proceeding was purely administrative, the Court concluded that the procedure could not be characterized as improper. Accordingly, the Court rejected the contentions that the Home Secretary’s participation violated any rule or principle.

The Court then turned to the argument that no genuine hearing had taken place because the issue had supposedly been pre‑judged, relying on a statement made by the Chief Secretary on 26 December 1957. That statement indicated that the Government had already decided to nationalise transport in Krishna District and that certain routes had been selected. The Attorney General argued that the statement merely referred to a scheme that had already been published on 14 November 1957, while the respondent argued that the statement demonstrated that the Government had already formed a firm decision to nationalise road transport in the district, rendering the hearing a mere formality. The Court examined the scope of the hearing required under section 68D(2) and held that there was no prejudgment of the scheme itself. The Court agreed that the Chief Secretary’s remark about nationalisation implied the eventual exclusion of private bus operators, but stressed that the purpose of the hearing under section 68D(2) is to determine whether the scheme is efficient and in the public interest. If the scheme satisfies those criteria, the resulting consequence would be the exclusion of private operators. Therefore, the Court concluded that the Chief Secretary’s statement did not indicate that the Government was irrevocably bound to the scheme at the time of the hearing; it merely emphasized the possibility of complete exclusion should the scheme be approved after a genuine consideration of the objections.

In this matter the Court observed that the published scheme, to which objections had been formally invited, was not shown by the Chief Secretary’s speech to have already received approval; the speech only highlighted the intended complete exclusion of private operators, without stating that the scheme effecting such exclusion had been sanctioned. The Court then referred to the decision in Franklin’s case, where a similar allegation of ministerial bias had been raised because the Minister had previously announced his intention to make the draft order. That precedent held that because the Minister did not bear a judicial or quasi‑judicial function, any claim of bias concerning the performance of such a duty was irrelevant, and the only issue to be examined was whether the Minister had genuinely considered the report and the objections presented. Applying that reasoning, the Court stated that the sole question in the present case was whether the objections to the scheme had been genuinely considered. The Court explained that if, after genuine consideration, the scheme were approved, the result would be mandatory complete exclusion. Consequently, the Court held that the mere fact that the Chief Secretary declared the Government’s decision to nationalise road transport in Krishna District did not demonstrate that the Government was unwilling to fairly consider the objections, because the approval of the scheme, following such consideration, would inevitably lead to the intended exclusion. The Court further concluded that, since the hearing conducted by the State Government under section 68D(2) was purely administrative in nature, the objection that the hearing was biased or predetermined possessed no merit.

The Court then addressed the contention that the scheme had been proposed by the Andhra Pradesh Road Transport Department as a State Transport Undertaking within the meaning of section 68A and that it had received approval while that undertaking still existed, after which the Undertaking was dissolved and the Road Transport Corporation was created, allegedly preventing the Corporation from implementing the approved scheme. The argument suggested that only the body which prepared and obtained approval for the scheme could enforce it, and therefore the newly formed Corporation, having neither prepared nor secured approval for the scheme, lacked authority to enforce it. The Court rejected this argument as without force. It noted that the Road Transport Corporation came into existence on 11 January 1958, and on that same day the State Government issued an order under section 34 of the Road Transport Corporation Act No. LIV of 1950 directing that the Corporation assume management of the Road Transport Department of the Government of Andhra Pradesh, together with all assets and liabilities of the Department. The order further provided that the staff of the Road Transport Department were given the option to serve under the Corporation, and that those who chose this option would be employed by the Corporation subject to regulations made under the Act and to the assurances previously given by the Government to the employees. The Court observed that the initial objection—that such an order could not be made under section 34 of the Road Transport Corporation Act—failed to appreciate the broad powers conferred upon the State Government by that provision.

Section 34 of the Road Transport Corporation Act conferred very wide authority on the State Government to issue directions to the Corporation. Those directions could cover the recruitment of staff, the conditions of service, the training of employees, the wages payable to each employee, the amount of reserve that the Corporation was required to maintain, and the manner in which the Corporation could dispose of its profits or its stock. In the present case, the State Government exercised those broad powers to instruct the newly created Corporation to assume the assets, liabilities and employees of the Road Transport Department, which was in the process of being wound up. The effect of that instruction was to render the Road Transport Corporation the successor of the Road Transport Department. Although Chapter IV‑A of the Act did not contain a specific provision that allowed one kind of undertaking, as defined in section 68A(b), to succeed another kind of undertaking, the fact that the Corporation was ordered under section 34 to take over every aspect of the Department meant that there was no logical reason to deny its status as successor to the Department, which at that time functioned as the State Transport Undertaking. Consequently, having become the successor of the State Transport Undertaking on 11 January 1958, the Corporation was entitled to enforce the scheme that had already been prepared and approved by its predecessor. Requiring the Corporation to repeat the procedural steps already performed by the Department would only postpone the implementation of the scheme and appeared to be a tactic designed solely to cause delay. The Court therefore held that, under section 68F of Chapter IV‑A and in the absence of any provision to the contrary, the Corporation was fully empowered to enforce the scheme. The contention that the Corporation could not enforce the scheme therefore failed, and, in view of the reasoning set out concerning the second contention, the petition was dismissed with costs.

The Court noted that it had carefully examined the opinions expressed by its fellow judges, Subba Rao and Wanchoo. After thorough consideration, it concluded that it could not concur with every conclusion reached by Justice Subba Rao. The petitioners had raised two principal controversies. The first controversy questioned whether the provisions of Chapter IV‑A of the Motor Vehicles Act, 1939, infringed the fundamental rights guaranteed to citizens of India by the Constitution. The second controversy argued that the scheme framed under the Act was beyond the powers conferred by the Act, i.e., ultra vires. While the Court agreed with Justice Subba Rao that the provisions of Chapter IV‑A did not violate any fundamental rights and were constitutionally valid, it differed with him on the view that the State Government, by approving the published scheme, was exercising a judicial or quasi‑judicial function. Instead, the Court concurred with Justice Wanchoo that the State Government, in this context, was performing a normal administrative function. The Court therefore set out its distinct position on the matters raised, while acknowledging the detailed factual findings already articulated by its colleagues.

The Court examined the contention that the scheme prepared under the Motor Vehicles Act, 1939 was beyond the powers granted by that Act. It held that the provisions of Chapter IVA of the Act did not violate any fundamental rights of the petitioners and were therefore constitutionally valid. The Court also agreed with the earlier judgment that the Road Transport Department of the Andhra Pradesh Government qualified as a State Transport Undertaking under the Central Act, that the notification publishing the scheme had been issued validly, and that all conditions precedent to the commencement of the scheme had been satisfied. However, the Court disagreed with the view that, by approving the published scheme, the State Government was exercising a judicial or quasi‑judicial function. Instead, it concurred with the other learned judge that the State Government, in giving its approval, was merely performing its ordinary administrative function. Although the factual findings of the other judges were extensive and required no repetition, the Court felt it necessary to explain the reasons for departing from the earlier opinion and for adopting the view that the approval was administrative. It noted that the established position of this Court is that determining whether a statutory decision is judicial, quasi‑judicial, or merely administrative depends on the language of the statute itself, not on preconceived ideas about the roles of courts or tribunals, as explained in Province of Bombay v. Kusaldas S. Advani, Nagendra Nath Bora v. Commissioner of Hills Division, and Express Newspapers Limited v. Union of India. Turning to the provisions of Chapter IVA, the Court outlined the procedural steps prescribed by the Act. First, a State Transport Undertaking must prepare a scheme of road‑transport service aimed at providing an efficient, adequate, economical and properly coordinated service, which may be exclusive, total or partial with respect to other persons. Second, the scheme must be published in the Official Gazette and by any other method directed by the State Government, specifying the nature of the service, the area or route to be covered and other required particulars, as mandated by section 68‑C. Third, any person affected by the published scheme may file objections to it, and such objections must be submitted to the State Government within thirty days of the scheme’s publication, in accordance with section 68‑D(1). The fourth step, as the Act provides, is for the State Government to consider those objections after giving an opportunity to both the objectors or their representatives and the representatives of the State Transport Undertaking to be heard, as set out in section 68‑D(2).

The State Government must first consider any objections that have been filed, after providing the objectors, their representatives, and the representatives of the State Transport Undertaking an opportunity to be heard, as prescribed in section 68‑D(2). Once all concerned parties have been heard, the State Government may either approve the scheme as it stands or modify it where necessary. It is important to note that the provision does not allow for an outright rejection of the scheme; it only permits modification if deemed required. After approval or modification, the scheme must be published in the Official Gazette, at which point it becomes final. The finalised document is referred to as the “approved scheme,” and the geographic area or route to which it applies is identified as the “notified area” or “notified route,” in accordance with section 68‑D(3). The approved scheme may later be cancelled or altered by the State Transport Undertaking, provided the procedure outlined in sections 68‑C and 68‑D is followed, as specified in section 68‑E.

Chapter IV provisions relating to the grant of stage‑carriage permits have been repealed so that the Regional Transport Authority is now required to issue permits sought by a State Transport Undertaking in accordance with the approved scheme. Additionally, to give effect to the approved scheme for any notified area or route, the Regional Transport Authority has been empowered, under section 68‑F, to refuse the renewal of a permit, to cancel an existing permit, or to modify the terms of an existing permit. Section 64, which previously allowed aggried persons to appeal orders refusing, revoking, suspending, or refusing to renew permits, has been repealed insofar as such orders are made under section 68‑F. A review of sections 68‑C through 68‑F of Chapter IV‑A yields several conclusions. First, a State Transport Undertaking is authorized to determine whether it is in the public interest for road‑transport services, generally or a particular class of service, to be operated by the State Undertaking on any area, route, or portion thereof, keeping in view the objective of providing an efficient, adequate, economical, and properly coordinated road‑transport service. The Undertaking must prepare a scheme reflecting this determination and publish it in the Official Gazette and elsewhere to inform the public, including those who may be affected. Second, objections to such a scheme may be taken by parties interested, but such objections are not claims.

The Court observed that because objections to the scheme had to be directed to the merits of the scheme proposed by the State Transport Undertaking, there was no dispute of any kind between conflicting claims. The Court noted that the statutory framework did not assign any specific person or body of persons within the governmental hierarchy the authority to hear those objections and to make a determination on them, unlike the provisions contained in Chapter IV. Moreover, the provisions of Chapter IV‑A and the rules made pursuant to section 68‑1 did not envision the adduction of evidence or the calling of witnesses either in support of or in opposition to the proposed scheme.

The Court further explained that the right of appeal provided in section 64 of Chapter IV had been expressly removed by section 68‑F(3). In addition, Chapter IV‑A did not contain any requirement that a Regional Transport Authority give written reasons for an order passed under sections 68‑F(1) and (2). This stood in contrast to section 57(7) of Chapter IV, which mandated that the Authority provide written reasons when refusing any kind of permit because such an order could be subjected to appeal, revision or review. Consequently, the Court raised the question of whether, in view of the provisions of Chapter IV‑A summarised above and the conclusions drawn, the determination made by the State Government was of a judicial or quasi‑judicial character as argued by the petitioners, or whether it was merely administrative as contended by the respondents.

To classify a determination as judicial or quasi‑judicial, the Court stated that it must be objective, based on evidence for and against the matter (not necessarily adhering strictly to the rules of evidence), and rendered by a definite authority that could not delegate such a function. Section 68‑D(2) authorised the State Government to decide whether the proposed scheme should be approved or modified. The Court clarified that “State Government” could refer to the Governor, any of his Ministers or Deputy Ministers, or officials in the Secretariat, according to the rules of business under article 166 of the Constitution. The Court reasoned that section 68‑D(2) could not require the Governor or any Minister to personally hear the objections because that would impose an excessive burden on them. Instead, the objections could be heard by any person to whom the power had been delegated.

Accordingly, the Court concluded that if the objections were heard by one delegate (identified as “A”) and the decision was made by another delegate (identified as “B”), such a procedure did not satisfy the test of a judicial hearing. The Court observed that this arrangement, even if regular under the statute, did not indicate a judicial process. A further important consideration was that Chapter IV‑A did not lay down any objective tests against which the determination had to be measured. Therefore, the Court held that the determination under section 68‑D(2) could not be described as having a judicial character, whether in the narrow sense or the broader, unapproved sense of “quasi‑judicial.”

In this case, the Court observed that the terms “efficient,” “adequate,” “economical,” “properly coordinated,” and “public interest,” which appeared in section 68‑C, were matters of opinion and policy and did not establish any objective standards. Consequently, the Court held that no evidentiary proof could be required for matters that were subjective to the authority making the determination. A fundamental issue, the Court noted, was whether sections 68‑C and 68‑D created any cause of action at all and, if so, what the proper scope and ambit of the inquiry prescribed by those sections were. The Court explained that a scheme prepared and published under section 68‑C by a State Transport Undertaking was placed before the public only after the Undertaking had concluded that the scheme was necessary in the public interest. After such publication, objections filed under section 68‑D related to the basic question of whether the published scheme served the public interest. The Court emphasized that any person or organization, including an Automobile Association, could file objections, and that the right to object was not limited to those providing road‑transport services. The Court considered it a mistake to assume that objections under clause 1 of section 68‑D could be based on personal grounds of the objectors who were engaged in the road‑transport business. No individual operating a road‑transport service could claim that his particular route should be excluded from the operation of the published scheme. This conclusion was drawn from the explicit language of section 68‑D(1), which authorised the filing of “objections thereto,” meaning objections to the scheme published under section 68‑C. The Court held that objections had to be confined to the merits of the scheme as presented by the State Transport Undertaking and that allowing objections to refer to specific routes or portions of routes would open the process too widely. The purpose of inviting objections, the Court explained, was not to hear claims by individual businessmen but to obtain useful information concerning the feasibility and soundness of the scheme proposed by the Undertaking. Once the Government had adopted a policy of nationalising road‑transport facilities, safeguarding the interests of individual businessmen in that trade was no longer relevant. What mattered for the Government’s inquiry, upon receiving objections, was whether the published scheme served the public interest. Accordingly, the Court found it erroneous to suppose that the object of section 68‑D(1) was to provide any remedy to a private individual in his personal interest. The particulars of the scheme required to be published under section 68‑C were intended for public information so that persons interested in such a public venture could offer intelligent and constructive criticism with reference to the merits of the scheme.

In this case, the Court observed that it was a mistake to view the situation as involving two opposing parties—one represented by the Road Transport Undertaking and the other by private persons engaged in road‑transport services—with the Government acting as a third, neutral arbitrator between them. The Court held that such a reading did not accord with the provisions of Chapter IV‑A of the Act. The purpose of that Chapter, the Court explained, was to replace individual businessmen in the trade with nationalised road‑transport services that would operate in the interest of the whole community and therefore serve the public interest. Accordingly, the Government shared the same interest in the scheme as the Road Transport Undertaking, which the Court described as a “creature and limb” of the Government created to implement the policy of nationalisation. Because the policy aimed at a complete nationalisation, the Court said it was incorrect to portray the State Transport Undertaking as competing with other individuals or corporate bodies whose business was to provide similar transport facilities. This point was reinforced by section 68‑F, which obliges the Regional Transport Authority to issue permits to the State Transport Undertaking when it applies for them. From these observations, the Court concluded that the Government could not be said to function as an adjudicating authority hearing rival claims of the Undertaking and private operators, nor could the Secretary of the Department of Road Transport, who personally heard the objections, be considered a judge or be disqualified for bias. Extending the reasoning, the Court noted that even the Minister in charge of the Department might be deemed equally interested and therefore equally biased, which would render him disqualified under section 68‑D(2). The Court stated that the principle that a person should not be a judge in his own cause was foreign to the scheme and provisions of Chapter IV‑A. While the scheme, as prepared and published in the present case, may have proposed to exclude all other persons from providing road‑transport service on the notified routes, the State Government’s role under section 68‑D(2) was limited to deciding whether the proposed scheme should be approved or modified, not to determine whether any objector could continue to provide service. Thus, the decision of the State Government was confined to the merits of the scheme itself and did not involve adjudication of competing claims by private road‑transport providers.

In this case, the Court observed that the State Government’s power under the relevant section was limited to approving or modifying the proposed scheme and did not extend to outright cancellation. The Court explained that the State Government must first assess whether the declaration made by the Road Transport Undertaking—that the scheme served the public interest—was sound. Cancellation could arise only later, under section 68‑E, when practical experience with an already approved scheme might lead the State Transport Undertaking to conclude that the scheme should be withdrawn or altered. At the initial stage, falling under section 68‑D, the scheme existed solely for the purpose of being approved or modified after considering any objections that might be raised. The Court noted that established jurisprudence held that when several applicants compete for the right to operate a particular road‑transport route, the Regional Transport Authority or any other authority that decides between those conflicting claims must act in a quasi‑judicial manner because the decisions affect individual rights. However, the Court pointed out that the proceedings before the State Government were not of that character; there were no rival claims to be adjudicated. The sole question before the State Government was whether the proposed scheme would advance the public interest. Accordingly, the Court distinguished proceedings under Chapter IV of the Act, which involve determination of individual claims, from those under Chapter IVA, which concern the collective interest of the community. The proposed scheme, the Court explained, was the product of a decision by a segment of the State Government—namely the State Transport Undertaking—that concluded it was in the public interest for the State to operate road‑transport services. The invitation to persons affected by the scheme to lodge objections was not intended to resolve a dispute between the State Undertaking and private service providers. At that stage the State Transport Undertaking had not yet asserted any claim. Such a claim would arise only after the State Government made its determination under section 68‑D(2) and the Undertaking applied for permits under section 68‑F. When the Undertaking applied for a permit, the Court said, the claim ceased to be a rival claim competing with those of private operators and became an absolute claim. Under the relevant provision, the Regional Transport Authority was obliged to grant the permit, and it also possessed the power to cancel, modify, or refuse renewal of existing permits in order to implement the approved scheme. For these reasons, the Court concluded that the proceedings before the State Government under Chapter IVA could not be characterized as a lis between rival claims.

In this matter, the Court observed that the proceedings before the State Government under Chapter IVA were not comparable to a dispute between rival claims, as was the case under Chapter IV of the Act. After considering the relevant factors, the Court held that no actual controversy (lis) existed between any competing claims, that there was no specific tribunal empowered to adjudicate such a controversy, and that Chapter IVA did not prescribe any procedure that resembled or imitated judicial proceedings. Consequently, the Court concluded that the possibility of bias could not arise, because the determination was being made by government officials acting in the performance of their administrative functions.

The Court further explained that the issue presently before it could not be answered in a generic manner. The correct answer, according to the Court, depended on the particular statutory provisions that governed each case, and a decision based on the basic provisions of one statute could not be treated as binding authority for a different statute. For the purpose of illustration, the Court noted that it had referred to reported cases that dealt with analogous questions. The Court mentioned that the learned brother, Justice Wanchoo, had already examined Franklin’s case in detail, and therefore the Court refrained from adding any further comments on that authority.

The Court then turned to another authority, namely Robinson v. Minister of Town and Country Planning, which had not been cited during the arguments. The Court found that this decision was instructive because it addressed the very issue under consideration by analysing section 1(1) of the Town and Country Planning Act, 1944. The Court quoted the operative provision of that Act in full: “Where the Minister of Town and Country Planning (in this Act referred to as ‘the Minister’) is satisfied that it is requisite, for the purpose of dealing satisfactorily with extensive war damage in the area of a local planning authority, that a part or parts of their area, consisting of land shown to his satisfaction to have sustained war damage or of such land together with other land contiguous or adjacent thereto, should be laid out afresh and redeveloped as a whole, an order declaring all or any of the land in such a part of their area to be land subject to compulsory purchase for dealing with war damage may be made by the Minister if an application in that behalf is made to him by the authority before the expiration of five years from such date as the Minister may by order appoint as being the date when the making of such applications has become practicable. A part of the area of a local planning authority as to which the Minister is satisfied as aforesaid is in this Act referred to as an ‘area of extensive war damage’.”

After presenting the quotation, the Court referred to the leading judgment of Lord Greene, M.R., who delivered the Court of Appeal’s opinion, overturning the earlier decision of Henn Collins, J. Lord Greene summarized the procedural steps set out in the Act as follows: “The procedural provisions in connection with the obtaining of an order under the sub‑section may, so far as relevant, be summarised as follows: (a) Under sub‑s. (4) at least two months before the application is made the authority must publish a notice in a local newspaper; (b) under sub‑s. (5) the …”

In the judgment, the Court described the procedural requirements set out in the statutory scheme for an application concerning land designated as an area of extensive war damage. First, the applicant was required to “designate” the land to which the application related by reference to a map, which might be accompanied by descriptive matter if desired. Under subsection (6), the application also had to be accompanied by a statement illustrated by a map that showed how the land in the area of extensive war damage was intended to be laid out, both with respect to its internal arrangement and in relation to the existing or planned layout of the surrounding locality. The statement further had to indicate how the land was intended to be used, whether for purposes that required development or for any other purpose. Subsection (7) provided that if the Minister was satisfied that these particulars were sufficient to enable a prompt decision on the making of an order, the Minister would notify the authority, which would then be required to advertise for objections. Schedule I then dealt with objections. Unless the Minister, after receiving an objection accompanied by a written statement of its grounds, decided either to refuse the application or to modify it by agreement in order to meet the objection, the Minister was obliged to “consider the grounds of the objection as set out in the statement” and could, if necessary, request a further statement. Paragraph 4 of the schedule allowed the Minister, if he was satisfied that he had received enough information to decide whether to make the order sought, to proceed without further investigation into the matters to which the objection related. Subject to that discretion, paragraph 5 required the Minister to give the objector an opportunity to appear before a person nominated by the Minister, and, should the objector avail himself of that opportunity, to give a similar opportunity to the authority. Paragraph 6 provided that if the Minister deemed the matters raised in the objection to require investigation by a public inquiry, he was to cause such an inquiry to be held, and in that circumstance the private‑hearing requirements of paragraph 5 did not apply. Section 1(8), subject to the provisions of Schedule 1, authorised the Minister to make the order with or without modification, but expressly prohibited the Minister from extending the area unless the consent of all persons with an interest in the land was obtained. The Court then referred to the case of Phoenix Assurance Co., Ltd. v. Minister of Town and Country Planning, wherein the learned judge, Henn Collins, had examined the nature of the order that could be passed under section 1(1) of the Town and Country Planning Act, 1944, and concluded that the Minister’s function was of a quasi‑judicial character. The same reasoning was applied by that judge in the subsequent appeal before the Court of Appeal in Robinson v. Minister of Town and Country Planning. However, the Court of Appeal reversed the learned judge’s decision and declined to endorse the view expressed in Phoenix Assurance Co., Ltd. v. Minister of Town and Country Planning. In the course of his judgment, Lord Greene, M.R., made further observations on page 859.

The Court explained that the original order was to be issued by the Minister in his capacity as an executive authority, and that the Minister was free to form his opinion on any material he considered appropriate, whether that material was obtained in the normal course of his executive duties or was presented at a public inquiry, if such an inquiry was held. The Court held that describing the Minister’s decision‑making process as quasi‑judicial misrepresented the nature of the procedure. It was not disputed that the inquiry itself had to be conducted according to principles that might be described as quasi‑judicial, but the Court distinguished that requirement from the act of making the executive order. The inquiry was merely a step that led to the final decision, and the Court found no basis for allowing judicial control over the executive act by reference to the evidence—or lack of evidence—presented at the inquiry. To treat the executive act as though it were a judicial or quasi‑judicial decision was fundamentally incorrect. The judgment then turned to the Court of Appeal’s decision, noting the close similarity between the procedure set out in the British Parliament’s Act and the provisions of Chapter IV‑A of the present Act. In the reported case, an inquiry was also required when objections were raised to a notified town‑planning scheme, and the Minister had to consider all evidence offered by objectors. Unlike the present case, that earlier statute provided for the admission of evidence both for and against the scheme, yet the Court of Appeal still refused to characterize the Minister’s function as judicial or quasi‑judicial because no objective test could be applied to his conclusions before issuing the order under the relevant parliamentary section. On that basis, and agreeing with Justice Wanchoo, the Court concluded that the Government or the Minister, when issuing an order under section 68‑D(2), was performing an administrative function, not a quasi‑judicial one. Consequently, all arguments predicated on the premise that the proceedings before the State Government were quasi‑judicial were rejected. The Court held that the State Government’s order, which was challenged in this petition, could not be subject to judicial interference, and therefore dismissed the petition with costs.

In accordance with the view expressed by the majority of the judges, the Court set aside the order that had approved the scheme. By this action the Court declared that the earlier order approving the scheme was no longer valid and therefore had no legal effect. In addition, the Court issued a clear direction to the first respondent, requiring that respondent to refrain from taking over any of the transport routes on which the petitioners were presently engaged in their transport business. The injunction applied to every route in which the petitioners operated, without any exception, and it was intended to preserve the petitioners’ existing operations on those routes while the issues raised by the petitioners were being reconsidered. The direction was absolute and required the first respondent to hold back from any action that would interfere with the petitioners’ use of those routes until such time as the Court or the appropriate authority might decide otherwise.

The Court further clarified that the direction to the first respondent would not, in any manner, prevent the State Government from conducting the statutory enquiry that is required with respect to the objections that the petitioners had previously filed. The State Government therefore remained fully empowered to examine those objections and to pursue any necessary investigation in accordance with the law. Moreover, the petitioners were granted the liberty to file any additional objections that they might wish to raise at a later stage, and such further objections would be entertained as part of the ongoing enquiry. Finally, the Court ordered that each party should bear its own costs of the proceedings, meaning that no party would be required to pay the legal expenses of the other.