A two-judge bench of the Supreme Court comprising of Justice K.M. Joseph and Justice P.S. Narasimha has observed that Rule 174(2)(c) of the Kerala Motor Vehicle Rules,1989 was valid and salutary and did not go beyond the scope of Section 83 of the Motor Vehicles Act, 1988

The Court also held that RTO can exercise its discretion under Rule 174 (2) (C) of Kerala Motor Vehicle Rules to reject an application for permit replacement if the new vehicle proposed is older than the one sought to be replaced.

In this case, the Respondent was granted a stage carriage operator permit by the Regional Transport Authority to conduct transport service on the route Pattimattam-Kakkanad in Kerala. The Respondent had applied to the Authority under Section 83 of the Motor Vehicles Act, 1988 read with Rule 174 of the Kerala Motor Vehicle Rules, 1989 for grant of permission to replace the vehicle covered under his permit with another vehicle. Alleging inaction on the part of the Authority, the Respondent filed a Writ Petition before the Kerala High Court.

The Single Judge disposed of the Writ Petition and directed the State and the Authority to consider the application on the ground of road-worthiness alone and without reference to the model of the vehicle. The Authority preferred an appeal before the Division Bench of the Kerala High Court which was dismissed. This impugned judgment was challenged before the Supreme Court.

Advocate, Shri G Prakash, appeared for the Appellants i.e. the State and the Authorities, and Shri Santosh Krishnan, was the Amicus Curiae before the Apex Court.

The primary issues in this case were –

  • Whether Rule 174(2)(c) of Kerala Motor Vehicles Rules, 1989 was ultra-vires the provisions of the Act as the power with respect to prescription of age limit of a motor vehicle was in the exclusive domain of the Central Government.
  • Whether Rule 174(2)(c) of the Kerala Motor Vehicles Rules, 1989 traveled beyond and contrary to Section 83 of the Motor Vehicles Act, 1988.
  • What was the scope of the discretion exercised by the Authority in the exercise of its power under Rule 174(2)(c) of the Kerala Motor Vehicles Rules, 1989/
  • Whether the Respondents could challenge the legality of Rule 174(2)(c) without specifically praying for the same in the Writ Petition and whether the High Court was justified in permitting such a submission.
  • Whether the fact that the impugned judgment had held the field over the last few years and had been followed in subsequent orders was in itself a sufficient ground to reject the appeals.

It was contended by the Appellants that the purpose of Rule 174(2)(c) was to ensure the safety of the traveling public and therefore the prohibition for replacement of a vehicle covered under a permit with an older model would be legal and justified as it would also ensure that the vehicle of the 'same nature' as prescribed under Section 83.

On the other hand, the Amicus Curiae submitted that the State Government did not have the legislative competence to make the impugned Rule. It was further argued that matters related to prescription of conditions, methodology for verification and even certification of fitness of vehicle (Section 56 read with the Rule 62) as well as the power to fix the age limit of a motor vehicle (Section 59) fell within the province of the Central Government and therefore, the State Government did not have the competence to make Rules 174(2)(c).

On the first issue, The Court observed that Section 83 was an enabling provision and it allowed a permit holder to replace the vehicle covered under the transport permit. The right to replace the vehicle under a permit was subject to the permission of the Authority. The right, as well as the power to grant permission, were subject to the condition that the vehicle to be replaced is 'of the same nature.'

According to the Court, as the text by itself had not conferred certainty to the meaning of the expression – of the same nature, the phrase had to be understood, in context of the words in the Section, the neighboring provisions, the Chapters, Parts and its location in the Statute as a whole.

Moreover, the Court opined that when the statute said the same nature, it was only relatable to the permit. The scrutiny was not of the vehicle in itself but the vehicle in relation to the permit. It was for this reason that a scrutiny of the vehicle, stood alone, irrespective of its relation with the permit became an irrelevant consideration for the purpose of Section 83.

Thus, the Court held that Rule 174 (2) (c) made by the State Government to enable replacement of the vehicle under a Transport permit, did not impinge upon the powers of the Central Government with respect to fixation of the age of the vehicle, or fitness of the vehicle conferred upon it under Sections 56 and 59 in Chapter IV. Hence, Rule 174(2)(c) was not ultra vires the provisions of the statute.

On the second issue, the Court observed that the reasoning adopted by the Division Bench in the impugned order that Rule 174 (2) (c) had overridden the Act was not correct because subordinate legislation must be interpreted to effectuate the statutory purpose and objective.

According to the Court, the Rule should enable the transport authorities considering applications for a replacement to insist upon the permit holder to abide by the same rigor and regulation that he was put to when the permit was granted. Thus, the High Court had not appreciated the context in which Rule 174 (2) (c) read with Section 83 was to be construed.

The Section, as well as the Rule, were to be seen in the context of Chapter V relating to control of transport vehicles with respect to which the State Government had the jurisdiction and power grant and regulate transport permits. Rule 174 (2) (c), gave effect to that regulatory regime of the State. The Court further opined that the replacement of a vehicle during the subsistence and continuation of a transport permit was only an incident in the working of a transport permit. While addressing such an incident, the Authority could not be oblivious of the history and background in which the permit was granted. Thus, it was held that the rule is neither beyond nor contrary to Section 83.

On the third issue, according to the Court, discretion was to be exercised wherever necessary in order to render the exercise of power reasonable, fair, and non-arbitrary. Discretion could be express or implied. The Court asserted that Rule 174(2) was a provision where the Government had expressly enabled the authority to apply discretion, wherever necessary while exercising the power to grant replacement of a vehicle under a permit. This discretion had to be exercised reasonably, fairly as the facts and circumstances would clearly demonstrate. The Court further observed that if the exercise of the discretion was not based on just reasonable and non-arbitrary principles, such a decision would be vulnerable and subject to correction in appeal and a further review.

On the fourth issue, Rule 174 (2) (c) was neither ultra vires the Act, nor had overridden Section 83 as was held by the High Court, and thus, according to the Court, there was no need to deal with this issue.

On the fifth issue, the Court held that the Special Leave Petition against the order impugned was filed immediately after the decision of the Division Bench of the High Court and the matter had been pending adjudication before this Court. Apart from the fact that the matter had been sub-judice, the decision that the Court had arrived at was based on the interpretation of statutory provisions and the principles concerning the construction of subordinate legislation. The Court thus observed that as the judgment of the High Court was contrary to law, it was compelling and inevitable that the Apex Court set aside the judgment and rule upon the correct position of law.

Thus, the judgment of the Kerala High Court was set-aside and held that Rule 174 (2) (c) was intra vires the provisions of the Act and also Section 83 of the Motor Vehicles Act. The appeals were accordingly allowed.

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