P L D 1968 Supreme Court 64 (PLP)

FAZLE‑AKBAR, J.‑This judgment will dispose of four Civil Appeals Nos. 37 to 40 of 1966, which arise out of a common judgment delivered by the High Court of West Pakistan. The question involved in these appeals relates to the validity of certain notifications issued by the Provincial Government of Punjab under subsection (4) (a) of section 43 of the Motor Vehicles Act No. 1V of 1939, hereinafter referred to as the Act. This question arises under the following circumstances. The respondents who are Transport Companies, were granted permits by the Regional Transport Authorities to ply transport vehicles for hire on different routes. The Provincial Government purporting to act in exercise of the power conferred upon it under subsection (4) (a) of section 43 of the Act, issued notifica tions canceling their permits. The Transport Companies then filed four suits in the Court of the Civil Judge, Lahore, challenging the validity of the said notifications, mainly on the ground that subsection (4)(a) of section 43 of the Act under which the said notifications were issued, was ultra vires being inconsistent with and repugnant to the provisions of section 299 of the Government of India Act, 1935, as adopted in Pakistan. They made Punjab Province, the Punjab Road Transport Board and the Federation of Pakistan as defendants in the suits. The first two named defendants contested the suits by filing separate written statements. They denied that the impugned notifications were bad or that the Punjab Road Transport Board could be restrained from plying its vehicles. These suits were subsequently transferred to the file of the High Court of West Pakistan, Lahore Bench, and were tried by a learned Single Judge of that Court. Three suits, viz., Nos. 49, 53 and 60 of 1954 were disposed of by one judgment and Suit No. 144 of 1954 was disposed of by a separate judgment. The learned Single Judge being of the opinion that the said subsection (4) (a) of section 43 was intra vires, dismissed all the four suits. The Letters Patent appeals filed from the decisions of the learned Single Judge were, however, heard together and disposed of by one judgment. The Letters Patent Bench accepted the contention of the Transport Companies that section 43 (4) (a) of the Act was wholly ultra vires the Federal Legislature, and hence reversed the decisions of the learned Single Judge and decreed all the four suits. As the question raised was of general public importance this Court granted special leave to appeal in all these cases. In order to appreciate the contentions of the parties, it will be convenient at this stage to set out relevant provisions of the Motor Vehicles Act, 1939, and the Government of India Act, 1935, on which the parties have relied. Section 43 which occurs in Chapter IV of the Motor Vehicles Act under the title `Control of Transport Vehicles' was, before the amendment of 1951, in these terms:‑ "43.‑(1) A Provincial Government, having regard to‑ (a) the advantages offered to the public, trade and industry by the development of motor transport, and (b) the desirability of co‑ordinating road and rail transport, and (c) the desirability of preventing the deterioration of the road system, and (d) the desirability of preventing uneconomic competition amony motor vehicles, and after having heard the representatives of the interests affected and having consulted the Provincial and Regional Transport Authorities concerned, may by notification in the official Gazette, (i) prohibit or restrict throughout the Province or in any area or on any route within the Province, subject to such conditions as it may think desirable, the conveying of long distance goods traffic generally, or of prescribed classes of goods by private or public carriers; (11) fix maximum or minimum fares or freights for stage carriages and public carriers to be applicable throughout the Province or within any area or on any route within the Province. (2) The Provincial Government shall permit, at such intervals of time as it may fix, the interests affected by any notification issued under subsection (1) to make representations urging the cancellation or variation of the notification on the following grounds, namely:‑ (a) that the railways are not giving reasonable facilities or are taking unfair advantage of the action of the Provincial Government under this section; or (b) that conditions have changed since the publication of the notification; or (c) that the special needs of a particular industry or locality require to be considered afresh. (3) If the Provincial Government, after considering any representation made to it under subsection (2) and having heard the representatives of the interests affected and the Provincial and Regional Transport Authorities, is satisfied that any notifi cation issued under subsection (1) ought to be cancelled varied, it may cancel the notification or vary it in such manner as it thinks fit." By section 2, of the Motor Vehicles (Amendment) Act, 1951 (Act XVII of 1951) subsection (4) was inserted to section 43 which runs as follows: "(4) Notwithstanding anything in the foregoing subsections the Provincial Government may by a notification under this subsection (a) cancel generally or in relation to a specified area any permit or class of permits granted under this Chapter in respect of transport vehicles in order to enable the Road Transport Board to use its transport vehicles on the routes thus rendered vacant; and (b) give effect to the term of any agreement entered into with the Central Government relating to the regulation of motor transport generally and in particular to its co‑ordination with railways." At the time the above subsection was enacted, the Government of India Act, 1935, as adopted in Pakistan was in force. Hence, the validity of this subsection is to be tested against the provisions of section 299 of this Act which is as follows: "299.‑(1) No person shall be deprived of his property in British India save by authority of law. (2) Neither the Federal nor a Provincial Legislature shall have power to make any law authorizing the compulsory acquisition for public purposes of any land, or any commercial or industrial undertaking, or any interest in, or in any company owning, any commercial or industrial undertaking, unless the law provides for the payment of compensation for the property acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, it is to be determined. (5) In this section `land' includes immovable property of every kind and any rights in or over such property, and undertaking' includes part of an undertaking." The sole question for determination is whether section 43(4)(a) offends against Article 299(2) of the Government of India Act. It was contended on behalf of the appellants that sub section (4) (a) provides for cancellation and not for acquisition of permits, and hence the subsection being not confiscatory but of a regulatory nature, was outside the purview of section 299 of the Government of India Act. On the other hand, the learned counsel for the respondents as contended that in the instant case the cancellation of the permits really amounted to acquisition and that as the Amending Act of 1951 did not provide for any compensation it was ultra vires the Federal Legislature. Section 43 before the amendment empowered the Provincial Government to issue such orders and directions of general character as it may consider necessary in respect of any matter relating to the road transport, in the light of the specified con siderations declared in subsections (1) to (3). It is true that the above powers were conferred with a view to regulate the use of a public highway, to control the character and the conduct of the transport companies and also to determine adequacy of the existing services. Really, it was intended to clothe the Govern ment with authority to issue directions of an administrative character. The provision in subsection (4) (a), which is inserted by the amendment of 1951, is totally of a different character. Its object seems to be not regulation but deprivation of the right of permit holders to ply their vehicles for hire with a view to give the same to Road Transport Board. From the words used in C this subsection it cannot be said that this provision is one for regulation and control of the transport business. Its real purpose appears to be to confer monopoly rights on the Road Transport Board for the purpose of plying buses to the exclusion of the permit holders. It may be that this extensive power was given to the Govern ment to implement the policy of nationalizing road transport business. We are not suggesting that in no circumstances exclusion of competition so as to create monopoly in State Agencies, would be justified, but what we are pointing out is that this cannot be achieved under the guise of regulating transport business. For these reasons, we are unable to accept the contention that this subsection (4) (a) is of a regulatory character. We have then to see if this impugned notification is in con flict with section 299 of the Government of India Act. It was argued that mere deprivation of the right to run buses or their interests in a commercial undertaking, is not sufficient to attract operation of clause (2) of section

299. It was urged that clause (2) would be attracted only if the Government had acquired or taken possession of the right and interest of the transport companies. It was also urged that acquisiton in section 299 (2) has a limited meaning of actual transfer of title from the owner and vesting it to the Government but not the wide meaning of deprivation. Hence, the question is: Should the term "acquisition" in clause (2) of section 299 be construed in the restricted sense as suggested on behalf of the appellants? It has not been disputed that the right of the transport companies to ply motor vehicles for gain is an interest in a commercial undertaking. Further, the learned counsel has found it difficult to contend that permit is not an essential part of this undertaking. It will, therefore, suffice to say that the permit which is required under the Motor Vehicles Act of 1939 for plying a transport vehicle for hire in the public highway is an integral 'part of the undertaking. There can, therefore, be no doubt that by the notifications issued by the Government the transport companies have been deprived of their right to ply their vehicles for hire on the specified routes. Once a permit is taken away, nothing would be left to the transport company but the empty husk of ownership of the undertaking. It was then contended that such deprivation of a permit would not amount to its acquisition by the Government. Now, in determining whether in this case there has been acquisition of the undertaking or not one must have regard to the substance of the matter and not its mere form. Now, the benefit of the cancelled permits was intended to be given, as disclosed in the impugned subsection (4) (a) itself, to a State Agency, namely, the Road Transport Board. This is also clear from section 43 (a), 43(b) and 43(c) of the Act which deals with the constitution and power, etc., of the Road Transport Board to be constituted by the Provincial Government. In these circumstances, "acquisi tion" in relation to a commercial undertaking would include those kinds of deprivations which not only rob the permit holders of the right to carry on an undertaking but also vest that right in the Government Agency. The emphasis in clause (2) of section 299 is more on what the owner loses than what the State gains. We are, therefore, of opinion that the word "acquisition" would comprehend all cases where right and title is taken out of the owner and appropriated without his consent by transfer, extinction or by some other process. We, therefore, see no justification for adopting the narrow meaning of "acquisition" as contended by the appellants. In this connection, reference may be made to some of the decisions of the Courts in America and India. Under the American Law, acquisition and taking possession of property, include not merely the transfer of title and taking physical possession, but any act which interferes with the use of enjoyment of any right over properties. Thus, in Pennsylvania Coal Company v. Mahon (260 U S 393), a State Law which prohibited the owners from carrying a mining operation under certain circum stances, was held to be taking of property without compensation and therefore bad. Holmes, J. observed:‑ "The general rule, at least, is that while property may be regulated to a certain extent, if regulation goes too far, it will be recognized as a taking." In the Minister of State for the Army v. Dalziel ((1943‑44) 68 C L R 261) it was stated that the Courts must consider whether in the particular facts and circumstances of the case deprivation of interest would amount to acquisition. Similarly, Supreme Court of India while considering the scope of Art. 31 (2) of the Indian Constitution, which is similar to section 299 of the Government of India Act, in the case of Saghir Ahmad and another v. State of U. P. and others (A I R 1954 S C 728) observed at page 740 "The fact that the buses belonging to the appellants have not been acquired by the Government is also not material. The property of a business may be both tangible and intangible. Under the statute the Government may not deprive the appellants of their buses or any other tangible property but they are depriving them of the business of running buses on hire on public roads. We think therefore that in these cir cumstances the legislation does conflict with the provision of Article 31 (2) of the Constitution and as the requirements of that clause have not been complied with, it should be held to be invalid on that ground." Now, section 299 of the Government of India Act, 1935, is designed to protect rights in property and undertaking against deprivation through executive organs. Clause (1) of the said section says that no person shall be deprived of his property save by authority of law. Clause (2) imposes further two limitations on the Legislature itself. It prohibits making of laws (i) authorizing acquisition for public purposes, and (ii) without payment of compensation for the injuries sustained by the owner. Clause (5) says "undertaking includes part of an undertaking". Thus, protection is given to the owner from arbitrary depriva tion of his property and undertaking. There is therefore great force in the argument of the learned counsel for the respondents that the impugned subsection (4) of the Motor Vehicles Act, 1939, was a colourable device to achieve something which the Legislature could. not achieve directly, namely, to acquire the interest of the permit holders but without paying compensation. In this connection, the observation of Maugham, L. C. in Attorney‑General of Alberta v. Attorney‑General of Canada (1939 A C 117) may be aptly quoted:‑ "It is not competent either for the Dominion or a Province under the guise or pretence or in the form of an exercise of its own power to carry on an object which is beyond its power and to trespass on the exclusive power of others." For the reasons stated above, we hold that subsection (4) of section 43 of the Motor Vehicles Act, 1939, being violative of the right protected by section 299 of the Government of India e Act, 1935, was ultra vires the Federal Legislature and hence the impugned notifications issued under the said subsection were also bad in law. In the result, we affirm the judgment and decree of the Letters Patent Bench of the High Court and dismiss all the four appeals with costs. A. H. Appeals dismissed,