AUTOMOBILE TRANSPORT RAJASTHAN LIMITED Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) These are three consolidated appeals which arise from the judgment and order of a Division Bench of the Rajasthan High Court dated 9/08/1957. They have been preferred to this Court on the strength of a certificate granted by the said High Court under Art. 132 of the Constitution certifying that the cases involve a substantial question of law as to the interpretation of Art. 301 and other connected articles relating to trade commerce and intercourse within the territory of India, contained in Part XIII of the Constitution. These appeals were originally heard by a Bench of five Judges and on 4/04/1961 that Bench recorded an order to the effect that having regard to the importance of the constitutional issues involved and the views expressed in the decision of this Court in Atiabari Tea Co. Ltd. v. State of Assam, (1961) 1 SCR 809: AIR 1961 SC 232 the appeals should be heard by a larger Bench. The appeals were then placed before the learned Chief Justice for necessary orders, and on his orders have now come to this Bench of seven Judges for disposal. As the constitutional issues involved affect the States of the Union, notices were issued to the Advocates-General concerned. A notice was also issued to the Attorney General on behalf of the Union of India. The States of Andhra Pradesh, Assam, Bihar, Gujarat, Madras, Maharashtra, Orissa, Punjab, Uttar Pradesh and West Bengal intervened and were represented before us either through their respective Advocate-General or other Counsel. M/s. M. A. Tulloch and Co. Andhra Pradesh Motor Congress and Naxeeria Motor Service, Nellore, applied for intervention on the ground that they would be affected in a pending litigation by the decision of this Court on the Constitutional issues involved. Those applications were allowed by us. The result has been that we have heard very full arguments not only from Counsel appearing for the appellants and the respondents, but also from the learned Counsel appearing on behalf of the Union of India, the learned Advocatesgeneral or Counsel appearing for the intervening States and also from learned Counsel appearing on behalf off the other three interveners referred to above.

(2.) The appellants in the three appeals are (1) the Automobile Transport (Raj. ) Ltd. , Ajmer, in Civil Appeal No. 42 of 1959 (2) the Rajasthan Roadways Ltd. , Ajmer in Civil Appeal No. 43 of 1959, and (3) Framji C. Framji and others in Civil Appeal No. 44 of 1959. The respondents are (1) the State of Rajasthan, (2) the Regional Transport Officer who is ex officio Motor Vehicles Taxation Officer, Jaipur, and (3) the Collector of Jaipur. The first two appellants are private, limited liability companies registered under the Indian Companies Act, 1913 and having their registered offices at Ajmer. The third appellant is a partnership firm named Framji Motor Transport registered under the Indian Partnership Act. These three appellants carried on the business of plying stage carriages. The first appellant had nine transport vehicles plying between two stations in the State of Ajmer and between Ajmer and Kishangarh a town in Rajasthan at the relevant period. The two stations in Ajmer were Nasirabad and Deoli. The road from Nasirabad to Deoli was mainly in the former State of Ajmer but for some distance it passed through certain narrow strips of territory of the State of Rajasthan. Similarly, the road from Ajmer to Kishangarh was partly in the former State of Ajmer and partly in the State of Rajasthan, approximately two-thirds of the road lying in Ajmer and one-third in Rajasthan. The second and the third appellant also had some transport vehicles which plied on the Nasirabad-Deoli route or from Kishangarh to Sarwar a town situated on the Nasirabad-Deoli road in the State of Rajasthan. On the passing of the Rajasthan Motor Vehicles Taxation Act, 1951 (Rajasthan Act XI of 1951) (hereinafter referred to as the Act) and the promulgation of the rules made thereunder the second respondent demanded of the appellants payment of the tax due on their motor vehicles for the period beginning on 1/04/1951 and ending on 31/03/1954. The first appellant was called upon to pay Rs. 22,260. 00, the second appellant Rs. 6,540. 00 and the third appellant Rs. 10,260. 00 under R. 23 of the Rajasthan Motor Vehicles Taxation Rules. When the appellants failed to pay the tax demanded from them, the second respondent issued certificates under S. 13 of the Act to the third respondent for recovery of the tax due as arrears of land revenue. On receipt of the demand notices the second and the third appellants filed appeals before the Transport Commissioner, Jaipur, under S. 14 of the Act. These appeals were however, dismissed by an order of the Transport Commissioner dated 21/10/1953. The first appellant did not file any appeal. Thereafter the three appellants filed three separate writ petitions in the Rajasthan High Court in which their main contention was that the relevant provisions of the Act imposing a tax on their motor vehicles were unconstitutional and void as they contravened the freedom of trade, commerce and intercourse throughout the territory of India declared by Art. 301 of the Constitution and therefore, the demand and attempted collection of such tax were illegal and should be prohibited. The prayers which the appellants made in their respective writ petitions were mainly these (1) that it be declared that the Rajasthan Motor Vehicles Taxation Act of 1951 and the Rules made thereunder are invalid and not in accordance with the provisions of the Constitution of India and consequently null and void and inoperative, and (2) that a writ of prohibition or mandamus or any other appropriate writ, direction or order directing the respondents not to realise any tax from the appellants under the provisions of the Rajasthan Motor Vehicles Taxation Act of 1951 be issued. The three writ petitions were heard together by a Division Bench consisting of Bapna and Bhandari JJ. They dealt with and disposed of certain other objections to the validity of the Act, with which we are no longer concerned; but as to the contravention of Art. 301 of the Constitution, they felt that in view of the complexity of the points involved and the apparent conflict between certain decisions of other High Courts the question should be referred to a Full Bench. Accordingly, they referred the question whether Sections 4 and 11 of the Act infringed the right of freedom of traded commerce or intercourse granted under Art. 301 of the Constitution. The Full Bench dealt with the question from two different stand points. Firstly, they considered the validity of the Act from the stand point of Art. 19 (1) of the Constitution which guarantees to all citizens of India the right to move freely throughout the territory of India; this the Full Bench dealt with under the heading of freedom of intercourse from the stand point of the individual citizen and came to the conclusion that the restrictions which the Act imposed on the individual citizen were reasonable restrictions having regard to the necessity of raising funds for the maintenance of roads and the making of new roads in the State of Rajasthan. Then the High Court considered the validity of the relevant provisions of the Act from the stand point of freedom of trade and commerce and came to the conclusion that the regulation of trade, commerce and intercourse within the territory of India, both inter-State and intra-State, was not incompatible with its freedom and in the matter of such regulation of trade, commerce and intercourse a distinction must be drawn between restrictions which are direct and immediate and restrictions which are indirect and consequential. The High Court expressed it final conclusion in the following words.

(3.) It may be here stated that neither Division Bench nor the Full Bench of the Rajasthan High Court had the advantage of the decision of this Court in Atiabari Tea Co. case, (1961) 1 SCR 809: AIR 1961 SC 232, which decision came much later in point of time. The main argument on behalf of the appellants before us has been that the provisions of the Act under which the appellants were sought to be taxed in respect of their motor vehicles plying on the Nasirabad-Deoli or Kishangarh road contravened Art 301 of the Constitution and were not saved by Art. 304 (b) of the Constitution. We shall presently read the relevant provisions of the Act, but before we do so we may briefly refer to one short point by way of clearing the ground for the discussion which will follow. Article 305 of the Constitution as it originally stood said that nothing in Arts. 301 and 303 shall affect the provisions of any existing law except in so far as the President may by order otherwise provide. This article was substituted by another article, somewhat wider in scope by the Constitution (Fourth Amendment) Act 1955. The new article repeated the words of the old article in the first part thereof and in the second part it said that nothing in Art. 301 shall affect the operation of any law made before the commencement of the Constitution (Fourth Amendment) Act, 1955, in so far as it relates to or prevent Parliament or the Legislature of a State from making any law relating to any such matter as is referred to in sub-cl. (ii) of cl. (6) of Art. 19. That sub-clause refers to the carrying on by the State or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise. The first part of Art. 305 does not apply in the present cases because the expression "existing law" means any law, ordinance order, bye law etc. passed or made before the commencement of the Constitution. The Act which we are considering now in the present appeals was made in 1951, i. e. after the commencement of the Constitution. The second part of Art. 305 has also no bearing on the questions which we have to consider in these appeals. Article 305, old or new, is, therefore out of our way.