Legal Review and Analysis of U P State Road Transport Corporation vs Kashmiri Lal Batra & Ors 2025 INSC 1281

In-Short

Case: U.P. State Road Transport Corporation vs. Kashmiri Lal Batra & Ors., 2025 INSC 1281.
Short Caption: The Supreme Court held that a notified route under a nationalization scheme (Chapter VI of the MV Act) prevails over permits granted under an Inter-State Agreement (Chapter V), and private operators cannot ply on overlapping portions.

1. Heading of the Judgment

Case Name: U.P. State Road Transport Corporation vs. Kashmiri Lal Batra & Ors.
Citation: 2025 INSC 1281
Court: Supreme Court of India
Bench: Justice Dipankar Datta and Justice Augustine George Masih

2. Related Laws and Sections

The judgment primarily interprets and applies the following provisions of the Motor Vehicles Act, 1988:

• Chapter V (Control of Transport Vehicles):
  Section 88: Pertains to the validation of permits for use outside the region and the procedure for formulating Inter-State Reciprocal Transport (IS-RT) Agreements.

• Chapter VI (Special Provisions Relating to State Transport Undertakings):
  Section 97: Definition of "road transport service".
  Section 98: The overriding effect of Chapter VI over Chapter V and any other law. This is a crucial non-obstante clause.
  Section 99: Procedure for the preparation and publication of a proposal for a scheme of nationalization.
  Section 100: Process for objections and the final publication of an "approved scheme," making the area or route a "notified route".
  Section 102: Cancellation or modification of a scheme.
  Section 103: Issuance of permits to State Transport Undertakings and the power to cancel or modify existing private permits on a notified route.

3. Basic Judgment Details

• Nature of Proceedings: A batch of Civil Appeals and a Writ Petition challenging orders from the High Court of Madhya Pradesh.

• Core Parties:
  Appellants: U.P. State Road Transport Corporation (UPSRTC) and the State of Uttar Pradesh.
  Respondents/Petitioners: Private bus operators (e.g., Kashmiri Lal Batra, Guruprit Singh) who held permits from the Madhya Pradesh State Transport Authority (STA, MP).

• Subject Matter: The legal conflict between permits granted to private operators under an Inter-State Reciprocal Transport (IS-RT) Agreement and the monopoly rights of a State Transport Undertaking (UPSRTC) on its notified intra-state routes.

4. Core Principle and Analysis of the Judgment

The Central Legal Issue

The substantial question of law before the Supreme Court was: Whether a stage carriage permit can be granted to a private operator on an inter-State route under an IS-RT Agreement when a portion of that inter-State route overlaps with an intra-State route that has been notified under an approved scheme of nationalization under Chapter VI of the Motor Vehicles Act, 1988?

Judicial Analysis and Reasoning

A. The Conflict: Agreement vs. Statute

The private operators argued that the IS-RT Agreement of 2006 between Madhya Pradesh and Uttar Pradesh was binding. This agreement stipulated that if the Madhya Pradesh State Road Transport Corporation (MPSRTC) was wound up, the routes reserved for it would be opened to private operators. Since MPSRTC had ceased operations, they contended that the State of UP was legally obliged to countersign their permits.

The UPSRTC, however, argued that several of these inter-State routes overlapped with portions of its intra-state routes that were "notified routes" under approved schemes framed under Chapter VI of the MV Act. On these notified routes, the State Transport Undertaking has exclusive or preferential rights, which can completely exclude private operators.

B. The Precedential Backbone and Settled Law

The Supreme Court conducted an in-depth analysis of its past precedents to resolve this conflict:

1. Early Jurisprudence: In cases like T.N. Raghunatha Reddy v. Mysore State Transport Authority (1970) and S. Abdul Khader Saheb v. Mysore Revenue Appellate Tribunal (1973), the Court held that an IS-RT Agreement is an agreement between two states and is not a law. Consequently, a nationalization scheme under Chapter VI (and its predecessor, Chapter IV-A) would prevail over such an agreement.

2. The Aberration and its Overruling: A later coordinate bench in Mysore SRTC v. Mysore Revenue Appellate Tribunal [Mysore SRTC (I)] (1975) took a different view, suggesting that for a private operator to be excluded from an overlapping portion, the scheme must explicitly state so. However, this view was expressly overruled by a larger bench in Mysore SRTC v. Mysore STAT [Mysore SRTC (II)] (1974) and subsequently by a Constitution Bench in Adarsh Travels Bus Service v. State of Uttar Pradesh (1985) 4 SCC 557.

3. The Settled Position: The Constitution Bench in Adarsh Travels authoritatively held that:
   If a scheme under Chapter VI provides for a total or partial exclusion of private operators from a notified route, no private permit can be granted for any part of that route, however small the overlapping distance.
   The non-obstante clause in Section 98 of the 1988 Act (Section 68-B of the 1939 Act) gives the provisions of Chapter VI an overriding effect over anything inconsistent in Chapter V (which contains Section 88 for IS-RT Agreements) or any other law, including an inter-state agreement.
   The mere physical fact of overlapping is sufficient to invoke the prohibition if the scheme intends exclusion.

4. Reaffirmation: This settled position was later reaffirmed in T.V. Nataraj v. State of Karnataka (1994).

C. Application to the Present Case and Final Outcome

Applying the settled law from Adarsh Travels, the Supreme Court held that:

• The approved schemes and notified routes of UPSRTC under Chapter VI prevail over the permissions granted to private operators under the IS-RT Agreement (which falls under Chapter V).

• Therefore, private operators cannot be granted permits to ply on any inter-State route that overlaps, even partially, with a notified intra-state route of UPSRTC.

• Consequently, the High Court's orders directing the State of UP to countersign the permits were erroneous in law and were set aside.

D. Parting Observations and Directions for Future Resolution

While deciding the legal issue against the private operators, the Supreme Court expressed concern for public interest and the need for administrative resolution. It issued the following significant directions:

• The Principal Secretaries of the Transport Departments of UP and MP should meet within three months to discuss the modalities of the IS-RT Agreement.

• If MP can conclusively prove that MPSRTC has been wound up, the states should consider moving the routes from Annexure B (for MPSRTC) to Annexure A (for private operators) of the agreement.

• The states were also encouraged to explore modifying the approved schemes under Section 102 of the MV Act to permit partial exclusion for these inter-state operators, thereby balancing the monopoly of the STU with the need for public convenience on long-distance routes.

• The Court lamented the lack of foresight by both states in creating an agreement that conflicted with existing notified schemes, thus frustrating public interest.

5. Final Outcome

1. The appeals filed by UPSRTC were allowed.

2. The impugned judgments and orders of the High Court of Madhya Pradesh were set aside.

3. The Writ Petition (C) No. 748 of 2024 filed by the private operators was dismissed.

4. The States of Uttar Pradesh and Madhya Pradesh were directed to engage in dialogue to resolve the underlying issue in the interest of the travelling public.

6. MCQs Based on the Judgment

Question 1: According to the Supreme Court's judgment in U.P. SRTC v. Kashmiri Lal Batra (2025 INSC 1281), which chapter of the Motor Vehicles Act, 1988 has an overriding effect over an Inter-State Reciprocal Transport Agreement?
(a) Chapter V
(b) Chapter VI
(c) Chapter XI
(d) Chapter IV

Question 2: The legal position that an approved nationalization scheme under Chapter VI of the Motor Vehicles Act prevails over an Inter-State Reciprocal Transport Agreement was conclusively settled by which earlier Supreme Court decision, as followed in the present judgment?
(a) Mithilesh Garg v. Union of India
(b) Mysore SRTC v. Mysore Revenue Appellate Tribunal (Mysore SRTC I)
(c) Adarsh Travels Bus Service v. State of Uttar Pradesh
(d) T.N. Raghunatha Reddy v. Mysore State Transport Authority