State of Karnataka & ANR Vs. Shri Ranganatha Reddy & ANR [1977] INSC 195 (11 October 1977)
UNTWALIA, N.L.
UNTWALIA, N.L.
BEG, M. HAMEEDULLAH (CJ) CHANDRACHUD, Y.V.
BHAGWATI, P.N.
KRISHNAIYER, V.R.
SINGH, JASWANT KAILASAM, P.S.
CITATION: 1978 AIR 215 1978 SCR (1) 641 1977 SCC (4) 471
CITATOR INFO :
R 1980 SC1955 (12) F 1981 SC 234 (100) RF 1981 SC1597 (3) F 1983 SC 239 (19,20) F 1983 SC 937 (33) F 1984 SC 326 (6,24,25,33,57,61,64,66,71,73, F 1984 SC 374 (18) R 1984 SC 981 (8) RF 1984 SC1130 (52) RF 1986 SC 468 (26,31,34) RF 1986 SC1466 (13) RF 1988 SC1487 (32) RF 1989 SC 509 (7) F 1990 SC 123 (37) C 1990 SC 781 (72) R 1990 SC1277 (29) R 1990 SC2072 (24,29,37,47) RF 1992 SC 938 (22,31)
ACT:
Constitution of India. Article 31(2)-"Public purpose" Scope of, Whether includes compulsory acquisition for Road Transport Corporation-Part acquisition of undertaking, validity of-"Amount" in lieu of acquired property, quantum and principles of evaluation, whether questionable under Art. 31(2).
Karnataka Contract Carriages (Acquisition) Act, 1976, vis-avis Constitution of India, Articles 31(2) and 39(b) and (c) and Schedule List 1 Entry 42-Whether on acquisition the State Govt. can transfer counter signed portions of InterState permits to Road Transport Corporation-S.4(3), "deemed", whether introduces legal fiction-S.6(1), fixation of amount by arbitrator S. 6(1) Schedule, Para 1(1), Explanation-Interpretation of "acquisition cost".
HEADNOTE:
The Karnataka State Road Transport Corporation published in the Karnataka Gazette dated May 16. 1974 a draft scheme for nationalization of contract carriages in the State. under Chapter IV-A of the Motor Vehicles Act, 1939. Objections were preferred by some of the respondents, but the State Government and the Corporation dropped the idea of proceeding with the scheme without concluding the hearing.
Later, on January 30, 1976 the State Government promulgated an ordinance followed by a number of notifications by which all contract carriages operating in Karnataka, and the permits specified in the notifications, vested in the State.
Under Clause 20(1) of the Ordinance, the State Government transferred them to the Corporation which seized the vehicles and the relative permits. The High Court stayed the seizure of six vehicles operating tinder Inter State permits, and quashed some of the notifications, holding that the ordinance did not empower the acquisition of the vehicles not covered by valid contract permits. The ordinance was replaced by the Karnataka contract carriages (Acquisition) Act, 1976, published in the Karnataka Gazette dated March 12. 1976. The Act was made effective retrospectively from January 30. 1976. and everything done under the Ordinance was deemed to have been done trade the Act. Writ Petitions were filed by various contract carriage operators, fanciers and others including those who had successfully filed the earlier Writ Petitions. The High Court allowed the writ petitions, struck down the Act as unconstitutional, and quashed the notifications. (Judgment reported in K.Jayaraj Ballal and Ors. v. State of Karnataka and Ors. I.L.R. Karnataka 1976, Vol. 26, P. 1478).
Allowing the appeals and upholding the constitutional validity of the Act on merits, the Court
HELD : Per Untwatia, J. (Also on behalf of M. H. Be-,, C.J., V. Y. Chandrachud, and P. S. Kailasam, JJ.)
1. Whether the law of ocquisition is for public purpose or not has to be gathered mainly from the statement of Objects and Reasons of the Act and its preamble. The matter has to be examined with reference to the various provisions of the Act its context and set up and then it has to be judged whether the acquisition is for a public purpose within the meaning of Article 31(2) and the law providing for such acquisition while establishing a Road Transport Corporation, the State Government is obliged to keep in mind primarily the public interest. The acquisition for the purpose of the Corporation was, therefore, in public interest. [648 C-E] H. H. Keshavananda Bharathi Sripadagalavaru v. State of Kerala [1973] Suppl. S.C.R. 1, Applied.
642 The court observed :
There may be many circumstances and facts to justify the acquisition of even a movable property for a public purpose.
A particular commercial activity of the State may itself be for a public purpose. In a larger sense one can say that augmentation of the coffers of the State is also for a public purpose. Acquisition of property either movable or immovable, may in such a situation be for a public purpose.
[651 C-D] The State of Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbhanga and Ors. [1952] SCR 889, referred to.
(2) The scheme for the compulsory acquisition may be for a part of the undertaking also and that would mean a part of the property of the under taking or a branch of the undertaking [651 F-G] (3) The amount payable for the acquired property either fixed by the legislature or determined on the basis of the principles engrafted in the law of acquisition cannot be wholly arbitrary and illusory. In some respects it may be inadequate but that cannot be a ground for challenge of the constitutionality of the law under Article 31(2). [653 B-C] H. H. Keshavananda Bharati Sripadagalavaru v. State of Kerala, [1973] Suppl. SCR 1, applied.
The State of West Bengal v. Mrs. Bala Banerjee and Ors.
[1954] SCR 558, P. Vajravelu Mudaliar v. The Special Deputy Collector, Madras [1965] 1 SCR 614, Union of India v. The Metal Corporation of India Ltd. &Anr. [1967] 1 SCR 255, State of Gujarat v. Shri Shantilal Mangaldas and Ors. [1969] 3 SCR 341 and Rusto covarjee Cooper v. Union of India [1970] 3 SCR 530, referred to.
(4) The Karnataka Contract Carriages (Acquisition) Act, 1976 does not seek to legislate in regard to any Inter-State trade and commerce. In pith and substance it is an Act to provide for the acquisition of contract carriage, the InterState permits and the other properties situated in the State of Karnataka. Any incidental encroachment on the topic of Inter-State trade and commerce cannot invalidate the Act.
[661 D-E] Prafulla Kumar Mukherjee & Ors. and Bank of Commerce Ltd., Khulna v. Advocate Genera,' of Bengal [1947] Federal Court Reports 28, Kerala State Electricity Board v. Indian Aluminium Co., [1976] 1 S.C.R. 552 S. K. Peseri V. Abdul Ghafoor and Ors., Civil Appeal No. 306/1964 decided on 4-51964, Narayanappa v. State of Mysore [1960] 3 S.C.R. 742, and Tansukh Rai Jain v. Nilratan Prasad Shaw and Ors., [1965] 2 S.C.R. 6 applied.
A. S. Krishna v. State of Madras [1957] S.C.R. 399, U.S.A., Plff. in Crr. v. Can Hill 63 Law Ed. 337, Claude R. Wickard, Secy. of Agriculture of the United States etal v. Roscoe C. Filburn 87 Law Ed. 122 and the Steamer Denial Ball, Bayron D. Ball and Jessie Ganoe, Claimants, Aptt. v.
United States 19 Law Ed. 999 referred to.
(5) The acquisition of permits of the vehicles kept and registered in the State of Karnataka, in respect of which initially Inter-State Permits had been granted by the State, would be an acquisition of the permit operative within the territory of the State. Permits granted by one regional Authority and counter-signed by another Regional Authority either in the same state or in different states are really different permits rolled into one. The counter-signed portion of the permit is in substance and in effect a separate permit authorising the permit holder to ply the bus in another State, and cannot be acquired. Such an acquisition would fall within the extra-territorial operation of the law. The State Govt. on acquisition and the vesting of acquired permits, therefore, cannot transfer their counter-signed portions to the Road Transport Corporation. Any particular vehicle which is kept and registered, or is plying, on an initial permit granted by another State, also could not be acquired under the Act and the notification issued, thereunder. [662 C-D, 663 B, C-D] M/s Bundelkhand Motor Transport Company, Nowgaon v. Behari Lal Chaurasia and Anr. [1966] 1 S.C.R. 485, and Punjab Sikh Regular Motor Service, Mondhapara v. The Regional Transport Authority, Raipur and Anr. [1966] 2 S.C.R. 221; applied.
643 The Bengal Immunity Co. Ltd. v. The State of Bihar and Ors.
[1955] S.C.R. 603, R.M.D. Chamarbaugwala v. Union of India and Ors. [1957] S.C.R. 930, Gulabhai Vallabhbhai Desai etc.
v. Union of India and Ors., [1967] 1 S.C.R. 602; and lit re.
a Special Reference under Section 213 of the Govt. of India Act, 1935 [1941] Federal Court Reports 12; referred to.
(6) Section 4(3) of the Karnataka contract carriages (Acquisition) Act, 1976, is worded with the object of putting the challenge to the factum of public purpose beyond the pale of any attack. The use of the word "deemed" does not invariably and necessarily imply an introduction of a legal fiction, but it has to be read and understood in the context of the whole statute. [651 A-B] (7) In the absence of an agreement, the State Government shall appoint an arbitrator for fixing the amount payable in lieu of the acquired property. The arbitrator, reading section 6(1) of the Karnataka Contract Carriages (Acquisition) Act, as a whole, is not obliged to fix the amount as specified in the Schedule, but he has to fix an amount which appears to him just and reasonable on the totality of the facts and circumstances keeping primarily in mind the amount mentioned in the Schedule occurring in Sec. 6(1). [657 E-F, 658 D-E] Saraswati Industrial Syndicate Ltd., etc. v. Union of India [1975], 1 S.C.R. 956, Illingworth v. Walnsley (1900) 2 Q.B.
142 and Perry v. Wright (1908) 1 K. B. 441; referred to.
(8) The correct meaning of "acquisition cost", used in the Explanation in the light of Para 1 (1) of the Schedule of Sec. 6 (1) of the Karnataka Act, would mean, the cost of the chassis fixed by the manufacturers for their dealers to charge from the purchasers. The acquisition cost qua the purchaser is the price which he pays to the manufacturer's dealer from whom he purchases and not the manufacturer's actual cost of manufacturing the chassis. The acquisition cost of the body of a schedule would be the actual cost charged by the body builder. [659 B--C] Per Iyer. J. (Also on behalf of P. N. Bhagwati and Jaswant Singh, JJ.) (1) The purpose of a public body to run a public transport service for the benefit of the, people, operating it in a responsible manner through exercise of public power which is controlled and controllable by society through its organs like the legislature and, at times, even the court, is manifestly a public purpose. If the purpose subserves some public use or interest, or produces some public good or utility then everything considered for subserving such public purpose falls under the broad and expanding rubric.
If the purpose is a private or nonpublic one, the mere fact that the hand that acquires or requires is Government or a public corporation, does not make the purpose automatically a public purpose. The acquisition of road transport undertakings by the State will undoubtedly be a public purpose, and it is a fallacy to deny the presence of public purpose merely because its satisfaction by readily available private purchase is possible. [672 D-E, 673 B, 676 D] Black's Legal Dictionary, 'The Supreme Court of India' by Rajeev Dhavan (Tripathi Publications), 'Words and Phrases Legally defined' II Edn. P. 229; Sir Alladi Krishnaswami Ayyar's speech in the Constituent Assembly; Mr. Justice Mathew's speech in the second Kerala. State Lawyer's Conference; H. F. Peti v. Secy. of State for India, 42 I.A.
44; The State of Bihar v. Maharjadhiraja Sir Kameshwar Singh of Darbhanga & Ors. [1952] SCR 889; The State of Bombay v.
Ali Gulshan, AIR 1955 SC 810; A. K. Gopalan v. State of Madras, AIR 1950 SC 27; The State of West Bengal v. Anwar Ali Sarkar [1952] SCR 284 and The State of West Bengal v. S. B. Bose & Ors. [1954] SCR 587, referred to.
(2) The amount Payable when private property is taken by the State is a matter of legislative policy and not of judicial fixation. The 25th, Amendment of the Constitution, while restructuring Article 31 and bringing in Article 31C, has excluded judicial examination even of the principles of evaluation.The Court can only satisfy itself about the amount not being a monstrousor unprincipled undervalue.
The payment may be substantially less than the 644 market value and the principles may not be all-inclusive, but the court can upset the taking only where the principles of computation are too arbitrary and illusory to be unconscionably shocking. The quantum of the amount or the reasonableness of the principles are out of bounds for the court. [680 B, 682 C, 685 A, C, G, H.] H. H. Kesavanand Bharati Sripadagalavaru v. Stale of Kerala (supra) followed. Speech by Mahatma Gandhi at the Round Table Conference; Fundamental Rights & Socio-Economic Justice by K. P. Krishna Shetty pp. 123 and 127-128; The 46th Report of the Law Commission and R. S. Cooper v. Union of India (supra), referred to.
(3) Article 39(b) fulfils the basic purpose of restructuring the economic order and undertakes to distribute the entire material resources of the community, as best to sub serve the common good. To exclude ownership of private resources from its coils, is to cipherise its very purpose of redistribution the socialist way. Article 39(b) is ample enough to rope in buses, as motor vehicles, are part of the material resources of the operators. Socially conscious economists will find little difficulty in treating nationalisation of transport as a distributive progress for the good of the community. [689 C-D, E-.F. 690 0] The Court observed :
(1) The State symbolises, represents and acts for the good of society. Its concerns are the ways of meeting the wants of the community, directly or otherwise, and the public sector in our constitutional system, is a strategic tool in' the national plan for transformation from stark Poverty to social justice, transcending administrative and judicial allergies. [672 D-E] (2) Serious constitutional problems cannot be studied in a socioeconomic vacuum, since socio-cultural changes are the source of new values. Our emphasis is on abandoning formal legalistic or sterile logomachy in assessing the vires of statutes regulating vital economic areas, and adopting instead, a dynamic, goal-based approach to problems of constitutionality. Our nation has, as its dynamic doctrine, economic democracy sans which political democracy is chimerical. The Constitution ensouls such a value system in Parts III and IV and elsewhere, and the dialectics of social justice should not be missed if their synthesis is to influence State action and Court pronouncement. Illusory compensation, nexus doctrine and 'distributed to sub serve the common good, should not reduce lofty constitutional considerations into hollow concepts. [666 F, 667 A] R. S. Cooper v. Union of India (Supra); Towne v. Eigner 245 U.S. 418= 62 L. ed. 372, 376; Dias Jurisprudence 4th Edn. p. 625 H. H. Kesavananda Bharati Sripadagalavaru v. State of Kerala (supra); Legal Theory and Social Evolution 5th Edn. P. 81 and Dr. Ambedkar's speech in the Constituent Assembly, referred to.
(3) Bills without sufficient study of their economic.
project, occasionally result in incomprehensibility and incongruity of the law for the lay and the legal. A radicalisation of the methodology and, philosophy of legal drafting, and ability for the legislative manpower to express them in streamlined, simple, project-oriented fashion is, therefore, essential. [667 C-E] 'Laws are not for laymen'-Guardian Miscellany dated May 29.
1975 referred to.
(4) Sheer legalism cannot lightly upset legislative wisdom or efficiency while passing on the constitutionality of economic legislation based on national planning, public finance, private investments, cost accounting, policy decisions historical factors and a host of complex social variables. Raw realities like poverty id stark inequalities to abolish which, Article 31(2), 31C. 38 and 39 have been enacted, must inform legal interpretation. The Courts must be circumspect not to rush in where serious reflection will make them fear to tread, not to resort to adroit circumvention because of economic allergy to a particular policy. [669 F, 670 A-B] 645 Burton v. Honan 1952, 86 CLR 169. 179; Preface to the English Leg Aid System by Seton Pollck (Orient Longmans);
referred to.
(5) Part IV of the Constitution, especially Article 39(b) and (c) is futuristic mandate to the State with the message of transformation of the economic and social order. Such change calls for collaborative effort from a the legal institutions of the system: the legislature, the judiciary and the administrative machinery. The Court and counsel have a justice constituency with economic overtones, the manifesto being the constitution designed to uphold the humanist values of life, liberty and the equal pursuit of happiness, material and spiritual. [690 D-E] Lawyers for Social Change; Perspectives on Public Interest Law' by Robert L. Rabin, Standord Law Review Vol. 28, No. 2 January 1976; Law in America p. 34 by Bernard Schwartz;
The nature of judicial Process by Cardozo, 1932. p. 170;
The Indian Constitution-by Granville Austin; British Coal Corporation v. The Kind 1935 AC 500; Attorney General of Ontario v. Attorney General of Canada 1947 AC 503; 1 Constituent Assembly Debates, p. 61. referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1085 and 1522 1894/76.
From the Judgment and Order dt. 20th September 1976 of the Karnataka High Court in W. P. Nos. 817 and 818-826/76 etc.
etc.
L. N. Sinha, R. N. Byra Reddy, Adv. Genl., Narayan Nettar, K., S. Puttawany (For A. 2 in CA. Nos. 1085 & 1522) and Mr. Aruneshwar Gupta, Advs. for the appellants :
A. K. Sen, K. N. Bhatt, and M. R. V. Achar, for the Respondents in Civil Appeals Nos. 1537, 1538-48, 1549, 155152, 1555, 1557-69. 1562, 1564-66 1967-68, 1569-72, 1574, 1576-80, 1586-89 1593-9 1597-1611, 1612-1613, 1618-24 162829, 1631-329 1635-36 1638-42-, 1644, 1646-48 1660, 166263, 1664-65, 1668, 1670-74, 1676, 1684-85, 1689 1695, 1697, 1700, 1701, 1703-4, 1710, 171216, 1724-27 1729-30, 1732, 1734-37, 1738-39, 1741, 1746, 1748-50, 1753, 1-59-60, 1761, 1763, 1765-66, 1768-69, 1771. 1774-76, 1786, 1785, 1803, 1805 (R-1) 1806-7, 1809, 1814-17, 1825, 1828, 1832, 1836-37 1840-41, 1844-46, 1850, 1858-59, 1863. 1865-66, 1868-71, 1873-77, 1879, 1882, 1884, 1887 & 1889/76 A.K.C. Sen. A. T. M. Sampath, and M. R. V. Achar, for the Respondents in Civil Appeals Nos. 1677, 1758 & 1778/76 :
G. L. Sanghi, S. K. Mehta, K. R. Nagraja & P. N. Puri and A.
K. Sanghi, for the Respondents in Civil Appeals Nos. 1523-24 1528, 1530, 1532-33 1575, 1581. 1583, 1595-96, 1626. 167883, 1686-88, 1691-94, 1996 (R-1) 1717, 1720, 1723, 1742.
1747, 1755-56, 1779-80, 1782-83, 1785, 1787-90 1792, 1798.
1810 1823, 1830, 1861 & 1878/76.
S. S. Javali, A. K. Srivastava, and B. P. Singh, for the Respondents In Civil Appeals Nos. 1630, 1656, 1657 & 1854/76 CA. 1085/76.
Girish Chandra, (Not present) for Respondent No. 2 in CA 1085/76,.
S. Narayana Bhat (In persons) for Respondent in CA. No. 1804/ 76:
N. Byra Reddy, Adv, Gnl. Narayan Nettar. for the Adv. Genl/Karnataka.
646 The following Judgment were delivered UNTWALIA, J. This batch of 374 appeals by certificate is from the decision of the High Court of Karnataka given in 374 Writ Petition filed by different persons having various kinds of interest in the Contract Carriages which were taken over by the State of Karnataka Contract Carriages (Acquisition) Ordinance, 1976 (Karnataka Ordinance No. 7 of 1976) (for brevity, hereinafter, the Ordinance) followed by the Karnataka Contract Carriages (Acquisition) Act, 1976 (Karnataka Act No. 21 of 1976) (hereinafter to be referred to as the Act). The judgment of the High Court is reported in K. Jayaraj Ballal, and others v. State of Karnataka and others.(1) For the sake of convenience hereinafter in this judgment, reference to the High Court judgment wherever necessary will be made from the said report.
FACTS
The broad and the, common facts of the various cases are in a narrow compass and not in dispute. At the outset, we shall state them mostly from the High Court judgment. We were not concerned to go into the special facts of some cases in these appeals. They may have to be looked into, if necessary, by the, High Court in the light of this judgment.
The Karnataka State Road Transport Corporation (hereinafter called the Corporation) was established by the State Government of Karnataka on August 1, 1961 under section 3 of the Road Transport Corporations Act, (Central Act 64 of 1950). The Corporation was a party respondent to the writ petitions aid is an appellant before us along with the State of Karnataka. We are stating the facts mostly from Civil Appeal No. 1985 of 1976 arising out of Writ Petition No. 817 of 1976. The Corporation published in the Karnataka Gazette dated May 16, 1974 a draft scheme for nationalisation of Contract Carriages in the State under Chapter IV-A of the Motor Vehicles Act, 1939 (Central Act 4 of 1939).
Objections were invited. Some of the writ-petitioners preferred their objections. it appears the State, Government and the Corporation dropped the idea of proceeding with the scheme and without concluding the and the disposal of the objections and the finalization of their scheme the Government came out with the Ordinance which was promulgated on January 30, 1976. As per clause 1(3) of the Ordinance, it applied to "all contract carriage(s) operating in the State of Karnataka By a number of notifications issued under the Ordinance almost all the contract carriages and the permits specified in the notifications vested in the State.
They were transferred to the Corporation under clause 20(1) of the Ordinance. The officers of the Corporation seized the vehicles and the relative permits pursuant to the notifications aforesaid except six vehicles which were operating under Inter-State permits belonging to some of the writ petitioners. The seizure of the said six vehicles was stayed by the Order of the High Court made on 5th April, 1976 in some of the earlier writ petitions. The earlier writ petitions were decided on February 26, 1976 and March 3, 1976 by a learned (1) The Indian Law Reports (Karnataka) 1976 (Vol. 26).
1478.
647 single Judge of the High Court who field that the Ordinance did not empower the acquisition of the vehicles not covered by valid contract permits and consequently quashed some of the notifications. The Ordinance with some changes was replaced by the Act which received the assent of the President on March 11, 1976 and was published in the;
Karnataka Gazette dated the 12th March, 1976. The, operation of the Act was, however, made retrospective from the 30th January, 1976-the day when the Ordinance had been promulgated and come into force. The Ordinance was repealed by section 31 of the Act and the saving clause in subsection (2) says "Notwithstanding such repeal (i) anything done or any action taken under the said Ordinance, shall be deemed to have been done or taken under the corresponding provisions of this Act;" Fresh notifications were also issued under the Act. 'The combined effect of all these actions was that whatever was done on and from the 30th January, 1976 either under the Ordinance or under the Act was all deemed to have been done or done under the Act. Fresh writ petitions numbering 374 were filed in the High Court by the various contract carriages operators, financiers and others including those who, had filed or succeeded in the earlier writ petitions.
The High Court has allowed all the writ petitions, struck down the Act as unconstitutional and has declared it null and void. The notifications have been quashed. The respondents in the writ petitions, namely the appellants before us, were directed to restore, the vehicles with the relative, permits and all other assets to the operators from whom they were taken over. Some consequential directives for determination of damages in some later proceedings were also given.
We now proceed to state the findings of the High Court on the various points argued before it not in the order as finally recorded in para 98 of its judgment at page 1530 but in the order the points were urged before us by Mr. Lal Narayan Singh, learned counsel for the appellants. They are as follows (1) The acquisition is not for a public purpose.
(2) The compensation or the amount provided for or the principles laid down in the Act for payment in lieu of the various vehicles, permits and other assets is wholly illusory and arbitrary.
For the two reasons aforesaid, the Act is violative of Article 31 (2) of the Constitution and is a fraud on it. It is, therefore, null and void.
(3) The acquisition of contract carriages with Inter-State permits and other assets pertaining to such operators is ultra vires the legislative power and the competence of the State Legislature.
648 Article 31 C does not bar the challenge to the Act as being violative of Article 31(2) of the Constitution as there is no reasonable and substantial nexus between the purpose of the acquisitions and securing the principles specified in clauses (b) and (c) of Article 39.
We now proceed to deal with the points aforesaid seriatim in the above order.
PUBLIC PURPOSE It is indisputable and beyond the pale of any controversy now as held by this Court in several decisions including the decision in the case of His Holiness Kesavananda Bharati Sripadagalaveru v. State of Kerala(1) popularly known as Fundamental Rights case-that any law providing for acquisition of property must be, for a public purpose.
Whether the law of acquisition is for public purpose, or not is a justiciable issue. But the decision in that regard is not to be given by any detailed inquiry or investigation of facts. The intention of the legislature has to be gathered mainly from the Statement of Objects and Reasons of the Act and its Preamble. The matter has to be examined with reference to the various provisions of the, Act, its context and set up, the purpose of acquisition has to be culled out there from and then, it has to be judged whether the acquisition is for a public purpose within the meaning of Article 31(2) and the law providing for such acquisition.
The acquisition of the vehicles namely the contract carriages. their permits and other assets for running them for the purposes, of the Corporation could not be challenged as being not for a public purpose merely because it was for the purposes of transferring them to the Corporation.
Statement of Objects and Reasons for the impugned law as follows :
"A large number of contract carriages were being operated in the State to the detriment of public interest and were also functioning stealthily as stage carriages. This had to, be prevented. Article 39(b) and (c) enjoins upon the State to see that the ownership and control of the material resources of the community are so distributed as best to sub serve the common good and that the operation of the economic system does not result in the concentration of wealth to the common detriment.
In view of the aforesaid it was considered necessary acquire the contract carriages run by private operators." Accordingly the Karnataka Contract Carriages (Acquisition) Ordinance, 1976 was promulgated.
The Bill seeks to replace the Ordinance." The title of the Actindicates that it is "An Act to provide for the acquisition of contract carriages and for matters incidental, ancillary or (1) [1973] Suppl. S.C.R.1 649 subservient thereto." In the Preamble it is stated :"Whereas contract carriages and certain other categories of public service vehicles are being operated in the State in a manner highly detrimental and prejudicial to public interest;
And whereas with a view to, prevent such misuse and also to provide better facilities for the transport of passengers by road and to give effect to the policy of the State towards securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good and that the operation of the economic system does not result in the, concentration of wealth and means of production to the common detriment;
And whereas for the aforesaid purposes it is considered necessary to provide for the acquisition of contract carriages and certain other categories of public service vehicles in the State and for matters incidental, ancillary or subservient thereto:
A declaration was also made in section 2 that the Act is for giving effect to the policy of the State towards securing the principles specified in clauses (b) and (c) of Article
39. A deep probe into an investigation of the facts stated in the Statement of Objects and Reasons and the Preamble of the Act was neither permissible nor was it gone into by the High Court. Mr. A. K. Sen advanced the leading argument on behalf of the respondents followed by some other Advocates and one of the respondents in person. The main plank of the argument advanced on behalf of the respondents was that acquisition of vehicles which are available for sale in the market cannot be said to be for a public purpose. Counsel submitted that the scheme of nationalisation in Chapter IV-A of the Motor Vehicles Act was given up, whole Undertaking of the various operators was not acquired but what was acquired was certain assets most of which were available in the market. Acquisition of chattels or movables can never be for a public purpose. The High Court. in support of its view, also refers to the wordings of sub-section (3) of section 4 of the Act wherein it has been provided that the contract carriage and other property vesting in the State, Government shall "be deemed to have been acquired for a public purpose". We are of the opinion that neither the argument nor the decision of the High Court that the acquisition is not for a public purpose is correct.
On the fact of the Statement of Objects and Reasons of the Act as also from its Preamble it is clear, apart from further facts which were stated in the various affidavits filed on behalf of the State, that the operators were misusing their permits granted to them as contract carriages permits. In many cases the vehicles were used as stage carriages picking up and dropping passengers in the way.
The Legislature thought that to prevent such misuse and to provide for better facilities to transport passengers and to the general public it is necessary to acquire the vehicles, permits and all rights, title and interest of the contract carriage operators in or over lands, buildings, workshops and other places and 650 all stores, instruments, machinery, tools, plants etc. as mentioned in sub-section (2) of Section 4 of the Act. It was not a case where some chattels or movables were merely acquired for augmenting the revenue of the State or for its commercial purposes. Mr. Sen heavily relied upon some passages in the judgment of this Court in The State of Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbhanga and others(1) to strengthen his submission. The, said decision was concerned with the vires of the Bihar Land Reforms Act, 1950 by which the Zamindaries or intermediaries' interest were acquired by the State. One of the provisions in the Act was for acquisition of arrears of rent due to the intermediaries from their respective, tenants. This provision was struck down as being unconstitutional. And in that connection, Mahajan, J, as he, then was, said at page 944 :
"It has no connection with land reform or with any public purpose. It stands on the same footing as other debts due to zamindars or their other movable properties, which it was not the object of the Act to acquire. As already stated, the only purpose to support this acquisition is to raise revenue to pay compensation to some of the zamindars whose estates are being taken. This purpose does not fall within any definition, however wide, of the phrase "public purpose" and the law therefore to this extent is unconstitutional." Mukherjee J., as he then was agreed with this view at page 957. Das J.,as he then was and Chandrasekhara Aiyar J., also concurred in the same. But the said decision given in respect of the debts due to the Zamindars from their tenants, which were merely chooses in action is of no' help to the respondents.
In these appeals we are not called upon to. decide and express any final opinion as to whether an acquisition of chattels or movables can be for a public purpose or not.
What may only add that the preposition so broadly but is not quite correct. There may be many circumstances and facts to justify the acquisition of even a movable property for a public purpose. It may not be universally so but the converse is also not correct. In the instant cases what has been acquired under the Act is not only movables and chattels namely the vehicles but also the permits, the workshops, land and buildings etc. Although the whole transport undertaking of any carriage operator was not acquired, the acquisition in no sense was of more movable properties available easily for purchase in the market.
Several hundred vehicles were acquired by the various notifications. In substance it was a nationalisation of the contract transport service in the State of Karnataka.
Undoubtedly it was for a public purpose. We may just quote a few lines from the judgment of Mahajan J., in the case of The State of Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbhanga and others (supra) occurring at page 941 "In other words, shortly put, the purpose behind the Act is to bring about a reform in the land distribution system of Bihar for the general benefit of the community as advised.
The (1) [1952] 3 S.C.R. 889 651 Legislature is the best judge of what is good for the community, by whose suffrage it comes into existence and it is not possible for this Court to say that there was no public purpose behind the acquisition contemplated by the impugned statute." The language of section 4(3) of the Act is not for the purpose of introducing a legal fiction as observed by the High Court but with the object of putting the challenge to the factum of public purpose beyond the pale of any attack.
Tile use of the word '.'deemed" does not invariably and necessarily implies an introduction of a legal fiction but it has to be read and understood in the context of the whole statute. it may well be that the State is not authorised to compulsorily acquire any property merely to augment its revenue although in a larger sense one can say that augmentation of the coffers of the State is also for a public purpose. But it is not always correct to say that a property cannot be acquired merely for a commercial need of the Government. Under the Land Acquisition Act, 1894 land can be acquired for commercial purposes of the Government a Public Corporation or a Company. Why can't movables be acquired for commercial purposes if the exigencies of the situation so require ? A particular commercial activity of the State may itself be for a public purpose. Acquisition of property either movable or immovable may in such a situation be for a public purpose.
Mr. Sen referred to section 19 of the Road Transport Corporations Act and specially to clause (c) of sub-section (2) to lend support to his argument that without acquiring the whole undertaking only a portion of its assets leaving out the liabilities could not be acquired. For this purpose, he relied upon the provisions of Chapter IV-A of the Motor Vehicles Act also. The nationalisation of routes under the said Chapter of the Motor Vehicles Act does not necessarily imply the acquisition of the transport undertakings of the various operators, their vehicles or properties. That is a separate and distinct method altogether. In section 19 of the Road Transport Corporations Act are enumerated the powers of the Corporation. Sub-section (2) (c) gives a power to the Constitution "to prepare schemes for the acquisition of, and to acquire, either by agreement or compulsorily in accordance with the law of acquisition for the time being in force the state concerned and with such procedure as may be prescribed, whether absolutely or for any period, the whole or any part of any undertaking of any other person to the extent to which the activities thereof consist of the operation of road transport services in that State or in any area". It is plain that the scheme for the compulsory acquisition may be for a part of the undertaking also and that would mean a part of the property of the undertaking or a branch of the undertaking. Of course, the Corporation can purchase vehicles as provided for in clauses (a) and (g) of sub-section (2) of section 19. But it does not follow there from that in all cases it is obliged to do so.
Compulsory acquisition is also provided for in clause (c).
Under section 3 of Act 64 of 1950 while establishing a Road Transport Corporation the State Government is obliged to keep in mind primarily the public interest as provided for in clauses (a) to (c) thereof. The acquisition in question for the purpose of the Corporation was, therefore, in public interest.
5-951SCI/77 652 In our judgment, therefore, the decision of the High Court on the question of public purpose is erroneous. We hold that the impugned law of acquisition and the acquisitions are for public purpose.
AMOUNT TO BE PAID FOR THE PROPERTY ACQUIRED.
The High Court in paragraph 92 at page 1527 has come to the conclusion........ the scheme for payment for the property acquired under the Act is wholly illusory and therefore the Act violates the fundamental rights of the petitioners secured under Article 31 (2)." The history in relation to the provision of payment of compensation or the amount in Article 31(2) of the Constitution is interesting and clearly points out the difference in the approach to the question by this Court and the Parliament resulting in the amendments in the provisions from time to time as and when some important and leading judgment were handed down by this Court which according to the Constituent Body did not correctly lay down the law as it intended the Article to mean. The word used in the original Article 31(2) was 'compensation'. In The State of West Bengal v. Mrs. Bela Banerjee and others(1) compensation was held to mean a just equivalent of what the owner has been deprived of. Then came an amendment in the Article by the Constitution (4th Amendment), Act, 1955 stating in clause (2) of Article 31........ no such law shall be called in question in any court on the ground that the compensation provided by that law is not adequate." In spite of the amendment, this Court in some decisions-to with P. Yajravelu Mudaliar v. The Special Deputy Collector, Madras (2) and Union of India v. The Metal Corporation of India Ltd. and Another (3) largely, if not fully, stuck to its view in Mrs. Bela Banerjee's case (supra). Then came the decision in State of Gujarat v. Shri Shantilal MangaldaS N Ors (4) where Shah J., as he then was in his leading judgment to which was appended a short concurring note by Hidayatullah C. J., made a conspicuous departure from the views expressed in Vajravalu's case and the case of The Metal Corporation (supra) and the said decisions were over-ruled. Thereafter came the decision of 11 Judges of this Court the, leading judgment being of Shah J., on behalf of himself and 9 others in what is known as the Bank Nationalisation , case in Rustom Cavasjee Cooper v. Union of India(5). Although in terms the decision of this Court in the case of Shantilal Mangaldas (supra) was merely explained, in substance it was over-ruled. Thereafter, by the Constitution (25th Amendment) Act the word 'compensation was substituted by the word 'amount? in Article 31(2), which, as in the case of 'compensation', may be fixed by the law of acquisition or be determined in accordance with such principles and given in such manner as may be specified in such law. law was sought to be kept beyond the pale of challenge in any Court by reiterating in a slightly different form that it cannot be assailed on the ground "that the amount (1) [1954] S.C.R. 558.
(2) [1965] 1 S.C.R. 614.
(3) [1967] 1 S.C.R. 255.
(4) [1969] 3 S.C.R. 341.
(5) [1970] 3 S.C.R. 530.
653 so fixed or determined is not adequate or that the whole or any part ,of such amount is to be given otherwise than in cash". In the Fundamental Rights case (supra) the change in the phraseology of Article 31(2) came up for consideration before the Bench of 13 Judges. The ,High Court is not right in saying that decision in the Bank Nationalisation case still holds the field on the question of amount or compensation to be paid for the acquired property. A departure has been made from the view expressed earlier in the light of the 25th Amendment. It is not necessary to pin-point the details of such departure. For the purpose of deciding the point which, falls for consideration in these appeals, it will suffice say that still the over-whelming view of the majority of judges in Kesavananda Bharati's case is that the amount payable for the acquired property either fixed by the legislature or determined on the basis of the principles engrafted in the law of acquisition cannot be wholly arbitrary and illusory. When we say so we are not taking into account the effect of Article 31 C inserted in the ,Constitution by the 25th Amendment (leaving out the invalid part as declared by the majority).
Just to support the principle of law culled out above, we may refer to a few lines in some of the judgments in Kesavananda Bharati's case. Sikri C. J., has said at page 197 : "Applying this to the fundamental right of property, Parliament cannot empower legislatures to fix an arbitrary amount or illusory amount or an amount that virtually amounts to confiscation, taking all the relevant circumstances of the acquisition into consideration." Shelat and Grover JJ., in addition to what they have said earlier categorically say at page 285 : and further that the "amount" is neither illusory nor it has been fixed arbitrarily, nor at such a figure that it means virtual deprivation of the right under Article 31(2). The question of adequacy or inadequacy, however, cannot be gone into." Hedge, and Mukherjee JJ., have observed at page 338 :
"Therefore, stated briefly, what the 25th Amendment makes non-justiciable is an enquiry into the question whether the amount fixed or determined is an equivalent value of or 'compensations for the property acquired or requisitioned It is difficult to believe that Parliament intended to make a mockery of the fundamental right conferred under Article 31(2). It cannot be that the Constitution while purporting to preserve the fundamental right of the citizens to get an "amount" in lieu of the property taken for public purpose has in fact robbed him of all his right." Ray J., as he then was goes point out at pages 446 and 447 the Article still binds the legislature to provide for the giving to the owner a sum of money either in cash or otherwise. The legislature may either lay down principles for the determination of the amount or may itself fix the amount.
The Constitution does not allow judicial review of a law on the ground of adequacy of the amount and the manner as to how such amount is to be otherwise than in cash." At page 555 is to be found the view of Jaganmohan Reddy J., in these words 654 "Once the Court is satisfied that the challenge on the ground that the amount or the manner of its payment is neither arbitrary or illusory........
Lastly we would refer to a passage occurring in the judgment of one of us (Chandrachud J.) at pages 992 and 993. It runs thus:
"The specific obligation to pay an "amount" and in the alternative the use of the word "Principles" for determination of that amount must mean that the amount fixed or determined to be paid cannot be illusory. If the right to property still finds a place in the Constitution, you cannot mock at the man and ridicule his right. You cannot tell him . "I will take your fortune for farthing." As already stated the High Court took the view that the amount payable under the, Act for the property acquired would be such that it will be wholly arbitrary illusory and leave the many operators in huge debts. Many of them were playing their contract carriages having taken loans of considerable sums of money from the, various financiers on hire-purchase system, for whom also Mr. A. K. Sen appeared and argued before us. They would not only be paupers but huge liability will remain on their shoulders if the interpretation put by the High Court were to be correct.
Mr. Lal Narayan Sinha, learned counsel for the appellants, took a just and proper attitude in advancing an argument before us which would take away the basis of the High Court Judgment in this regard. With respect to each and every relevant section on the question of payment of the amount in lieu of the property acquired he suggested such a reasonable, harmonious and just construction' by the rules of interpretation that we found no difficulty in accepting his argument-rather, were glad to do so. The other side on the interpretation so put, which we are going to mention hereinafter, felt satisfied to a large extent. Mr. Sinha also advanced some argument with reference to the valid part of Article 31 C read with clauses (b) and (c) of Article 39 but very wisely did not choose to heavily rely upon it. On the interpretation of the statute as canvassed by him, there hardly remained any necessity of it.
Section 3 of the Act defines in clause (a) 'acquired property' to mean the vehicles and other property vesting in the State, Government under section 4. The definition of 'contract carriage is an inclusive one with reference to certain provisions of Motor Vehicles Act. Clause (h) runs thus :
"Contract carriage operator' means an operator holding one or more contract carriage permit and includes any person in whose name a public service vehicle is registered and is specified as a contract carriage in the certificate of registration of such vehicle." `Permit' in clause (m) means the permit granted under the Motor Vehicles Act, authorising the use of a vehicle as a contract carriage Then comes the important clause (n) which runs as follows:
655 'Person interested' in relation to any acquired property includes the contract carriage operator and any secured creditor or financier under a hire purchase agreement, who has a charge, lien or any interest in the acquired property and any other person who is affected by the vesting of the acquired property and claiming or entitled to claim an interest in the amount." Section A provides for vesting of contract carriages etc.
with the permit or the certificate of registration or both absolutely free from all encumbrances. Various other properties mentioned in clauses (i) and (ii) of sub-section (2) also vest on the issuance of the notification under subsection (1). While providing that the property shall vest absolutely free from all encumbrances, a safeguard has been provided for a person interested and having a claim to the amount in respect of such property under the Act. Under section 5, the operators are to furnish the required particulars. Section 6 which deals with determination of the amount must be read in full.
"6. Determination of the amount.-(1) For the vesting of the acquired property under section 4, every person interested shall be entitled to receive such amount as may be in the manner hereinafter set out and as specified in the Schedule, that is to say(a) where the amount can be fixed by agreement it shall ,be determined in accordance with such agreement;
(b) where no such agreement can be reached, the State Government shall appoint as arbitrator a person who is an ,officer not below the rank of a Divisional Commissioner or a District Judge;
(c) the State Government may, in any particular case, nominate a person having expert knowledge as to the nature of ,he acquired property to assist the arbitrator and where Such nomination is made, the person interested may also nominate an assessor for the same purpose;
(d) at the commencement of the proceedings before the :arbitrator, the State Government and the person interested shall state what in their respective opinion is the amount payable:
(e) the arbitrator shall, after hearing the dispute, make an award determining the amount which appears to him just and reasonable and also specifying the person or persons to whom the amount shall be paid; and in making the award be shall have regard to the circumstances of each case and the provisions of the Schedule so far as they are applicable;
(f) where there is any dispute as to the person or persons who are entitled to the amount, the arbitrator shall decide such dispute and if the arbitrator finds that more persons than one are entitled to the amount, he shall apportion the amount, amongst such persons;
656 (g) nothing in the Arbitration Act, 1940 (Central Act X of 1940), shall apply to arbitrations under this section.
(2) Every award made by the arbitrator under clause(e) of sub-section (1) shall also state the amount of costs incurred in the proceedings before him and by whom and in what proportions such amount is to be paid." A notice under section 7 is to be given to all persons interested in respect of the amount determined under section
6. Any person interested and served with a notice under section 7 can file a claim before the authorised officer under sub-section (1) of section 8. The language of subsection (2) created some difficulty in harmonising it with the other provisions of the statute. It runs thus :
"The authorised officer shall forward the claim made under sub-section (1) to the State Government for the payment of the amount to the person interested in the manner specified under section 11." Section 10 is important and provides for the various categories of the: amount liable to deduction in certain cases. The nature of such amounts liable to be deducted are relatable to the Employees' Provident Funds and Family Pension Fund Act, 1952, Employees' State Insurance Act, 1948, salary, wags etc. due to an employee, taxes etc. But the important item to be noticed is mentioned in clause (iii) of subsection (3) which makes "the amount due towards the claims of secured creditors" deductible under section
10. Sub-section (4) authorises the arbitrator to decide any dispute regarding the sum to be deducted under sub-section (3). Then section 11(1) providing for the manner of payment of amount for the acquired property says "The amount determined under section 6 shall, after deduction, if any, made under this Act, be given in cash by the State Government to the person interested,(a) in one lumpsum where the amount does not exceed ten thousand rupees; and (b) in ten equal annual installments in other cases, the amount of each installment carrying interest at the rate of six per cent per annum from the notified date." An appeal lies to the High Court from the, award of the arbitrator as provided for in the 12th section. Certain powers of the Civil Court have been conferred on the arbitrator and the authorised officer under section 13.
Section 19 enjoins the, State Government to transfer the whole of the acquired property in favour of the Corporation.
The permit stands transferred to the Corporation under section 19(2). Subsection (6) says :
"(a) All sums deducted by the State Government under sub-section (3) of section 10 shall stand transferred to the corporation referred to in sub-section (1).
657 (b) The corporation shall credit the sums transferred to the appropriate funds or if any part of the sums is payable to the employee, directly, such part shall be paid to him directly." A monopoly is created in favour of the Corporation by the 20th section.
Then comes the Schedule spoken of in section 6 which provides for principles for determination of the amount in relation to the various properties acquired under the Act.
Para 1 deals with the principle and the manner of determination of the amount for the vehicles. The acquisition cost is to be determined first and then a certain percentage is to be deducted in accordance with the Table appended to sub-para (1). The explanation says :
"For the purpose, of this paragraph "acquisition cost" shall be the aggregate cost of the chassis as well as the body of the contract carriage as charged by the manufacturer of chassis and by the body builder." In respect of almost all other properties acquired the amount to be paid is by and large the market value. of the property; vide paras, 2, 3, and 4. Provisions have been also made for payment of the amount in respect of the workshops in para 5 and in respect of stores in para 6. Some compensation has been provided in para 7 of the Schedule for every permit acquired under the Act, although the amount so fixed may not be adequate.
Now by the harmonious and reasonable rules of construction as also to save the Act from being violative of Article 31(2) of the Constitution, we proceed to discuss and accept in a large measure the interpretation put and canvassed by Mr. Sinha. If the amount is fixed by agreement, well and good. In the absence of an agreement, the State Government shall appoint an arbitrator who will be an officer of a high rank. Two assessors having expert knowledge as to the nature of the acquired property--one by the Government and one by the person interested, can be appointed to assist the arbitrator. Both sides will state before the arbitrator as to what should be the amount payable according to each. The arbitrator shall hear the dispute and make an award determining the amount which appears to him just and reasonable. He shall also specify the person or persons to whom the amount shall be paid. In making the award,. he shall have regard to the circumstances of each case and the provisions of the schedule so far they are applicable. Some difficulty at the outset arose in reconciling the expression "as specified in the schedule" occurring in subsection (1) of section 6 and the underlined expression occurring in clause (e) of that sub-section.
The content and purport of the expressions "having regard to" and "shall have regard to" have been the subject matter of consideration in various decisions of the Courts in England as also in this country. We may refer only to a few. In Illingworth v. Welmsley(1) it was held (1) (1900) 2 Queen's Bench, 142.
658 by the Court of Appeal, to quote a few words from the, judgment of Romer C.J. at page 144 : "All that clause 2 means is that the tribunal assessing the compensation is to bear in mind and have regard to the average weekly wages earned before and after the accident respectively. Bearing that in mind, a limit is placed on the amount of compensation that may be awarded....... In another decision of the Court of Appeal in Perry. Wright (etc. etc.) (1) Cozens-Hardy M.R. observed at page 45 1 :"No mandatory words are there used; the phrase is simply "regard may be had".
The sentence is not grammatical, but I think the, meaning is this : Where you cannot compute you must estimate, as best as you can, the rate per week at which the workman was being remunerated, and to assist you in making an estimate you may have regard to analogous cases." It is worthwhile to quote a few words from the judgment of Fletcher Moulton L.J. at page 458. Under the phrase" "Regard may be had to" the facts which the Court may thus take cognizance of are to be "a guide, and not a fetter." "This Court speaking through one of us (Beg J., as he then was), has expressed the same opinion in the case of Saraswati Industries Syndicate Ltd.
Etc. v. Union of India(2). Says the learned Judge at page 959 : "The expression "having regard to" only obliges the Government to consider as relevant date material to which it must have regard." The arbitrator, therefore, reading section 6(1) as a whole is not obliged to fix the amount as specified in the Schedule. But he has to fix the amount which appears to him just and reasonable on the totality of the facts and circumstances keeping primarily in mind the amount mentioned in the Schedule.
Another apparent conflict was writ large on the phraseology of subsection (2) of section 6 and the provisions contained in sections 10 and 11. Section 10 provides for the deductions of the various amounts at the outset from the amount determined by the arbitrator payable in respect of the acquired properties, including those due to the secured creditors, which undoubtedly, would include the financiers of the hire-purchase agreements. The amount payable under section 11 and the manner of its payment is, after deducting all the amounts, provided in section 10. To that extent, for the purpose of harmonious construction, sub-section (2) of section 8 must mean the payments of the amounts as mentioned in section 10 and the balance to the operator in the manner specified under section 11. The Act thus interpreted to a large extent will satisfy not only the claims on account of wages and tax etc. but also the amount due to the secured creditors. Surely the amount due, if any,' to any unsecured creditor cannot be taken into account as there is no such provision made in section 10.
Sufficient power has been conferred on the arbitrator to arrive at a just and reasonable figure of the amount payable for the property acquired. And further, a procedural safeguard has been provided by making a provision for an appeal to the High Court from the award of the arbitrator.
(1) [1908] 1 King's Bench, 441.
(2) [1975] 1 S.C.R. 956.
659 No attack with any reasonable justification could be made on paras 2 to 7 of the schedule. But a difficulty arose in interpretation of the term "acquisition cost" occurring in sub-para (1) of para 1. The literal meaning of that expression in sub-para (1) would have been the acquisition cost of the contract carriage operator or any other person interested therein. But the difficulty created was by the language of the explanation appended thereto when it said that "acquisition cost" shall be the aggregate cost of the chassis as well as the body of the contract carriage as charged by the manufacturer of chassis and by ,the body builder." Mr. Sinha rightly pointed out that the true and the correct meaning of the words used in the explanation in the light of sub-para (1) of para 1 would mean the cost of the chassis fixed by the manufacturers for their dealers to charge from the purchasers. Really the acquisition cost qua the purchaser is the price which he pays to the manufacturers' dealer from whom he purchases and not the manufacturer's actual cost of manufacturing the chassis. So far the acquisition cost of the body of the vehicle is concerned, no difficulty is created by the explanation. It would be the actual cost charged by the body builder.
On the interpretations aforesaid which we have put to the relevant provisions of the Act, it was difficult-rather impossible-to argue that the amount so fixed will be arbitrary or illusory. In some respects it may be inadequate but that cannot be a ground for challenge of the ,constitutionality of the law under Article 3 1 (2). The respondents felt quite satisfied by the interpretations aforesaid and could not pursue their attack on the vires of the Act on that ground.
Legislative Competence Re : Contract Carriages Plying on Inter-State Routes The number of such carriages and such permits compared to the total number of vehicles acquired was very few. It was about 20 to 25 ,only. It is no doubt true that under the Ordinance contract carriages with Inter-State permits were not sought to be acquired. The Act, however, has done so and with are trospective effect. Question is whether the State Legislature ofKarnataka has gone beyond its powers and competence in making such a provision. In that regard it was also canvassed before us whether it was possible to read down certain provisions of the Act to save it from constitutional invalidity. If so, to what extent and in what respect ? The first attack on the legislative competence was that acquisition ,of such a contract carriage squarely fell under Entry 42 of List I of the Seventh Schedule to the Constitution that is to say, "Inter-State trade and commerce." In paragraph 97 of the judgment the High 'Court seems to have rejected the contention that the Act violated the freedom of trade and commerce guaranteed under Article 301 and 304. But the High Court in the earlier portion of its judgment appears to have taken the view that an Inter State permit is, in fact and in substance, two or more permits rolled into one. The vehicle ply in the different States. The permit originally granted by the Karnataka authority under the Motor Vehicle Act has to be countersigned by the authorities of the other States, Some of the operators kept their 660 vehicles and have got their workshops in other States. The law made: by the Karnataka Legislature cannot have extra territorial operation.
We, do not think that the view expressed by the High Court is wholly correct. There are numerous decisions of the Privy Council,. the Federal Court and the Supreme Court in support of the proposition that the pith and substance of the Act has to be looked into and an incidental trespass would not invalidate the law, vide for example Prafulla Kumar Mukherjee and others and Bank of Commerce Limited,.
Khulna and Advocate-General of Bengal(1); Kerala State Electricity Board v. Indian Aluminum Co.(2) The earlier case of this Court is reported in A. S. Krishna v. State of Madras(3). Almost a direct decision on this point is to be found in an unreported decision of this Court in S. K. Pasari v. Abdul Ghafoor and Ors. (4) The question for consideration in that case was whether the State Government had power under section 64A of the Motor Vehicles Act as introduced by the Bihar Amendment to deal with a revision in relation to an Inter-State per
