SUPREME COURT: PRIVATE BUS OPERATORS BARRED FROM OPERATING ON INTER-STATE ROUTES OVERLAPPING NOTIFIED STATE TRANSPORT ROUTES:

The Supreme Court has ruled that private bus operators cannot be granted stage-carriage permits on inter-State routes that overlap with notified intra-State routes reserved for State Transport Undertakings (STUs) under Chapter VI of the Motor Vehicles Act, 1988. A Bench comprising Justice Dipankar Datta and Justice Augustine George Masih delivered this ruling while setting aside a judgment of the Gwalior Bench of the Madhya Pradesh High Court. The High Court had earlier directed that permits granted to private operators in Madhya Pradesh under the Inter-State Reciprocal Transport (IS-RT) Agreement between Madhya Pradesh and Uttar Pradesh be recognized, even for routes overlapping with those exclusively operated by the Uttar Pradesh State Road Transport Corporation (UPSRTC).

The dispute arose from an IS-RT Agreement executed in 2006 between the two States. Under this arrangement, certain routes listed in Schedule A were open to private operators, while those in Schedule B were reserved for the Madhya Pradesh State Road Transport Corporation (MPSRTC). When the MPSRTC ceased its operations on specific Schedule B routes, private operators argued that these routes should automatically open up for private use. Acting on this contention, the Madhya Pradesh State Transport Authority issued permits to private operators. However, the Uttar Pradesh transport authority refused to countersign these permits, leading to litigation. The Madhya Pradesh High Court subsequently ruled in favor of the private operators, directing the Uttar Pradesh transport authority to initiate proceedings for granting permanent stage-carriage permits on the disputed routes. Aggrieved by this decision, the UPSRTC and the State of Uttar Pradesh approached the Supreme Court.

The central issue before the Court was whether private operators could obtain stage-carriage permits for inter-State routes based on an IS-RT Agreement when those routes overlapped with a notified route covered by a scheme under Chapter VI of the Motor Vehicles Act. The Supreme Court answered in the negative, holding that an IS-RT Agreement is merely an administrative “instrument” between States and does not have the force of law. The Bench clarified that such agreements cannot override or supersede approved schemes and notified routes established under Chapter VI, which carry statutory authority and precedence over inter-State arrangements. The Court held that the High Court had erred in allowing private operators to ply on routes overlapping with those reserved for UPSRTC, as doing so would violate the protected monopoly granted to State transport undertakings under Chapter VI.

The Bench also expressed concern over the apparent administrative lapses and lack of coordination between the States of Uttar Pradesh and Madhya Pradesh, observing that such negligence undermines public interest. It observed that when two States enter into reciprocal transport agreements, there is an implicit expectation that public convenience will remain a primary consideration. If the States fail to account for the overlap between inter-State and intra-State routes, the resulting confusion defeats the purpose of the agreement and inconveniences the public.

In its directions, the Supreme Court advised the Principal Secretaries of the Transport Departments of both States to convene a meeting within three months to work out modalities for effectively implementing the IS-RT Agreement. The Bench suggested exploring the possibility of “partial exclusion” from notified schemes, allowing private operators to traverse overlapping sections of routes without picking up or dropping passengers, so that through-travelers could still be served without infringing upon the rights of UPSRTC. The Court further observed that if the MPSRTC has ceased operations or is being wound up, the two States may consider revising the agreement to move routes from Schedule B to Schedule A, thereby allowing private operation under mutual consensus. However, the Court emphasized that such policy decisions should be jointly taken by both States and implemented expeditiously, reaffirming that inter-State agreements cannot be revoked or altered unilaterally.