IS-RT Agreement By Its Very Nature Is Agreement Between Two States But Not A Law Under Motor Vehicles Act: Supreme Court

The Supreme Court held that an Inter-State Reciprocal Transport Agreement (IS-RT Agreement) by its very nature is an agreement between two States but not a law under the Motor Vehicles Act, 1988 (MV Act).

The Court held thus in a batch of Civil Appeals arising out of the Judgments of the Madhya Pradesh High Court and the sole Writ Petition seeking enforcement of rights under Article 19(1)(g) of Constitution.

The two-Judge Bench comprising Justice Dipankar Datta and Justice Augustine George Masih observed, “In addition, what also stands in the way of grant of relief in favour of the private operators is the statutory ordainment of Chapter VI overriding Chapter V. An IS-RT Agreement can be executed by two States drawing power from Section 88 of the 1988 MV Act, which is part of Chapter V thereof. As has been noted, the consistent view of this Court has been that an IS-RT Agreement by its very nature is an agreement between two States but not a law under the relevant MV Act. Approved schemes and notified routes, which are envisaged in Chapter VI, would obviously override Section 88, in view of Section 98 of the 1988 MV Act.”

The Bench explained that once two States hold talks for formulating and opening up routes for plying of stage carriages connecting cities/towns in such States on reciprocal basis and reduce the agreed terms to a written agreement, which is also given wide publicity to remove any possible hurdles, there is a presupposition of various objects and purposes having been factored therein, which undoubtedly have serving public interest at the forefront.

Senior Advocate Garima Prasad appeared on behalf of the Appellants, while Senior Advocate Shobha Gupta, Advocates Manoj Kumar Mishra and B.S. Rajesh Agrajit appeared on behalf of the Respondents.

Brief Facts

In the lead case, the Respondent approached the High Courtin its public interest litigation jurisdiction by filing a Writ Petition, seeking a mandamus to the authorities to countersign permits granted by the State Transport Authority (STA) of Madhya Pradesh. The authorities before the Court were State Transport Authorities/Departments of the States of Madhya Pradesh, Uttar Pradesh, Rajasthan, and Haryana. As per the Respondent’s case, in terms of an IS-RT Agreement executed by and between STA, MP and the STA, UP under Section 88 of the MV Act, the Madhya Pradesh State Road Transport Corporation (MPSRTC) had exclusive right to operate buses on inter-State routes specified in Schedule B of the IS-RT Agreement. Schedule A of the IS-RT Agreement earmarked routes exclusively for plying of stage carriages by private operators.

It was alleged that MPSRTC was wound up and thus, it stopped plying buses on these routes which came to be de-notified. The private operators had claimed that routes specified in Schedule B be converted and included in Schedule A so that they could be selected and issued permits to ply stage carriages on the routes mentioned in Schedule A, subject to provisions of the MV Act. To operate stage carriages on the routes mentioned in Schedule B, which stood de-notified, the private operators applied for and were granted temporary permits by the STA, MP. However, the STA, UP refused to counter-sign these permits. Being aggrieved, the Respondent approached the High Court, which directed MP State to initiate proceedings to grant permanent stage carriage permits for the routes mentioned in Schedule B and to complete proceedings within 2 months. Within 15 days thereafter, the UP State was directed to countersign the permits. Dissatisfied with such direction, the UPSRTC was before the Apex Court.

Reasoning

The Supreme Court in view of the above facts, said, “MSRTC – I (supra) being no longer good law, such decision cannot aid the private operators though it seems logical that plying of a stage carriage by a private operator on an inter-State route, which happens to overlap a part of a notified intra-State route, should be expressly excluded by incorporating requisite recitals in the IS-RT Agreement, which is subsequent in point of time, because no such agreement can surface in the absence of consensus between two neighbouring States.”

The Court noted that if the two reciprocating States fail to notice that the services to be introduced would face road-blocks because certain inter-State routes overlap a few intra-State routes, public interest is rendered a casualty and thereby, the whole object and purpose of the IS-RT Agreement would be frustrated and lost in the process.

“Much was expected of the States of UP and MP as well as the UPRSTC to protect the interest of the passengers and commuters, which unfortunately has not fructified. While we propose to allow the civil appeals and dismiss the writ petition, it would not be in the best interest of the people of the States of UP and MP for us to remain as mute spectators. We wish to make a few parting observations and directions”, it remarked.

Important Observations

The Court observed that while considering evolution of road transport in India, one cannot miss the significant transformation that it has undergone over the years and sincere and serious attempts to revolutionise travel on road by passengers and commuters are discernible.

“Leaving behind the humble beginnings, focus on infrastructure development has seen a quantum leap. India has developed, in this century, an intricate network of highways providing accessibility to nearby cities and towns from the remotest of villages, thereby establishing ‘last-mile connectivity’. Expressways have been constructed to facilitate faster movement of people and goods between distant locations and thereby reduce travel time. These highways and expressways are transforming India’s transportation landscape and driving economic growth, among others”, it added.

The Court said that the surface of these highways/expressways is smoother than ever before and with the introduction of modern vehicles, operators of stage carriage services have been providing comfort and convenience which are comparable with services available abroad.

“Switch to electric vehicles for both public and private use has facilitated sustainable transportation. A feature of smart transportation has been integration of technology to enhance efficiency and safety. In fine, with continued innovation and investment, the road transport sector seems to have progressed to attain more efficiency, sustainability and accessibility”, it noted.

The Court was of the view that the nation having made substantial progress in the road transport sector, interests of passengers and commuters ought to be of prime concern for the transport authorities; in this case, of both the States, i.e., UP and MP.

“While no permission can be granted at this stage to any private operator having a permit issued by the STA, MP to ply his vehicle on an inter-State route connecting two cities in the neighbouring States, which overlaps any notified intra-State route in the State of UP, we are inclined to the view that much can be achieved through dialogue between the two States”, it added.

Conclusion

The Court further said that it would be desirable if the Principal Secretaries of the Transport Departments of the States of MP and UP, together with other responsible officers of the said departments, meet at a mutually convenient venue within 3 months from date to discuss the modalities for fully working out the IS-RT Agreement.

“If indeed, the transport authorities of the State of MP satisfy the transport authorities of the State of UP that the MPSRTC has been wound up or is on the verge of being wound up and, therefore, not in a position to ply stage carriages on the routes earmarked for it (Annexure B), appropriate decision may be taken to include the routes in Annexure B of the IS-RT Agreement in Annexure A thereof and measures taken to give effect to such inclusion”, it also remarked.

The Court left to the discretion of the transport authorities of the States of UP and MP as to what extent and, if at all, the interest of the UPSRTC needs to be protected and can be achieved.

Moreover, the Court suggested that both the States may also consider the desirability of exploring whether partial exclusion of inter-State routes from the approved scheme can be permitted so as to further the interests of the passengers and the commuters.

“We reiterate, these being matters of policy, should be left to both the States to decide and we do hereby reserve it for their consideration”, it concluded.

Accordingly, the Apex Court allowed the Appeals and set aside the impugned Judgment.

Cause Title- U.P. State Road Transport Corporation v. Kashmiri Lal Batra & Ors. (Neutral Citation: 2025 INSC 1281)

Click here to read/download the Judgment