Supreme Court Upholds Constitutional Validity of C.P. and Berar Motor Vehicles (Amendment) Act, 1947

Large Bench Rules that Amendments Allowing State Monopoly on Road Transport Are Valid Post First and Fourth Constitutional Amendments

In a landmark judgment delivered on September 29, 1955, the Supreme Court of India (Large Bench) dismissed the petitions challenging the constitutional validity of the Central Provinces and Berar Motor Vehicles (Amendment) Act, 1947 (Act III of 1948). The petitions, filed by stage carriage operators including Bhikaji Narain Dhakras and others, questioned the extensive powers conferred by the amending Act on the Provincial Government to regulate and control motor transport services, including the right to cancel permits and establish state-run transport undertakings.

The petitioners argued that the amending Act violated their fundamental right under Article 19(1)(g) of the Constitution, which guarantees freedom to carry on any occupation, trade, or business, and also infringed their property rights under Article 31(2). The Act empowered the Provincial Government to fix fares, cancel permits, limit permit durations, and grant permits preferentially to the State or State-controlled undertakings. At the time of its enactment, these provisions were valid laws; however, with the commencement of the Constitution on January 26, 1950, the petitioners contended that these provisions became void due to inconsistency with fundamental rights.

The Court undertook a detailed constitutional analysis, focusing on the interplay between the amending Act and Articles 13, 19, and 31 of the Constitution. It was observed that the Act, as an existing law, became void to the extent it conflicted with Article 19(1)(g) read with clause (6) of the same Article, which at that time allowed only reasonable restrictions on fundamental rights. The Court referenced its earlier decision in Shagir Ahmad v. State of U.P. (AIR 1954 SC 728), where a similar law sanctioning total prohibition on motor transport business was held unconstitutional.

However, the pivotal development came with the Constitution (First Amendment) Act, 1951, which amended Article 19(6) to explicitly permit the State to impose restrictions including the carrying on of a trade or business by the State or a State-controlled corporation, even to the exclusion of citizens. The Court ruled that this amendment revived the previously void provisions of the amending Act, rendering them enforceable post-amendment. The Court clarified that the law was "eclipsed" rather than dead between January 1950 and June 1951 and was "revivified" by the constitutional amendment.

Furthermore, the petitioners' claim of violation of their property rights under Article 31(2) was addressed in light of the Constitution (Fourth Amendment) Act, 1955, which modified Article 31 to clarify that deprivation of property without transfer of ownership to the State or a State corporation is not considered compulsory acquisition. Since the amending Act did not transfer ownership but only regulated permits, the Court held that the provisions were constitutionally valid and compensation mechanisms provided were adequate.

The Court also rejected arguments that the Act was invalid prior to the Constitution, noting that relevant provisions in the Government of India Act, 1935 had a narrower interpretation of "acquisition" and the objections were not raised at the appropriate stage.

In conclusion, the Supreme Court upheld the constitutional validity of the C.P. and Berar Motor Vehicles (Amendment) Act, 1947, affirming the State’s power to nationalize and regulate road transport services, including the establishment of State monopolies, subject to compensation rules. The petitions were dismissed without costs.

This decision clarifies the constitutional scope of State regulation over trade and business under Article 19 and property rights under Article 31, especially in the context of legislative amendments modifying the fundamental rights framework.

Statutory provisions

Constitution of India - Articles 13, 19(1)(g), 19(6), 31(2); Central Provinces and Berar Motor Vehicles (Amendment) Act, 1947; Motor Vehicles Act, 1939; Constitution (First Amendment) Act, 1951; Constitution (Fourth Amendment) Act, 1955.

Bhikaji Narain Dhakras v. State of M.P., (SC) : Law Finder Doc Id # 112902