Andhra HC (Pre-Telangana)
M. Sidda Lingama Naidu vs Licensing Officer-Cum-Asst. ... on 11 December, 1986
Equivalent citations: AIR1987AP154, AIR 1987 ANDHRA PRADESH 154, (1987) 1 CURCC 628
Bench: K. Jayachandra Reddy, Syed Shah Mohammed Quadri
JUDGMENT Jayachandra Reddy, J.
1. A question of considerable importance concerning the Transport authorities and the owners of the motor vehicles used as contract carriages or stage carriages arises in this case before us.
2. In Writ Petition No. 5880 of 1978 and batch, a Division Bench consisting of the Chief Justice and Lakshmana Rao, J. Held that when a contract carriage is plied in contravention of the conditions of the permit by carrying passengers in excess of its authorised capacity it ceases to be a contract carriage from the point of view of its user and the excess passengers so carried can be treated as individual passengers who paid separate fares, and consequently it should be treated as 'stage carriage' for the purpose of levying tax. In arriving at such a conclusion the Division Bench took the view that in the case of a contract carriage the contracting party cannot consist of more than the maximum number of passengers the vehicle is authorised to carry, as per the conditions of the permit, and any such contract entered into with a party to carry more passengers than the prescribed limit is illegal being contrary to the conditions of the permit, and when the contract itself is illegal the use of the vehicle as a contract carriage is equally illegal and the excess passengers can be treated as individual passengers carried by collecting separate fares and therefore it ceases to be a contract carriage from the point of view of its user and that the tax can be levied treating it as a stage carriage. After this judgment was rendered the licensing authorities issued demand notices calling upon the owners of contract carriages which were found to have been carrying excess passengers to pay the difference of tax as the vehicles were used as 'stage carriages' as per the judgment of this Court in W.P. No. 5880 of 1978 and batch. Questioning one such notice, the present writ petition was filed, and at the admission stage a Division Bench of this Court consisting of Amareswari, J. and Bhaskara Rao, J. doubted the correctness of the decision in W.P.No. 5880 of 1978 and batch and took the view that it requires reconsideration by a Full Bench. Pursuant to the said order, the matter is posted before this Full Bench.
3. The precise question, therefore, that falls for consideration is whether a contract carriage carrying passengers in excess of its seating capacity fixed as per the conditions of the permit can be treated as a stage carriage for the purpose of levying tax. To answer this question the relevant provisions of the Motor Vehicles Act and the Rules have necessarily to be examined. 'Contract Carriage' as defined under S. 2(3) of the Motor Vehicles Act (hereinafter referred to as 'the Act') is as follows :-
"2(3) 'Contract Carriage' means a motor vehicle which carries a passenger or passengers for hire or reward under a contract expressed or implied for the use of the vehicle as a whole at or for a fixed or agreed rate or sum,
(i) on a time basis whether or not with reference to any route or distance, or
(ii) from one point to another, and in either case without stopping to pick up or set down along the line of route passengers not included in the contract; and includes a motor car notwithstanding that the passengers may pay separate fares.
Section 2(29) of the Act defines 'stage carriage' as follows :
"2(29) 'Stage carriage' means a motor vehicle carrying or adapted to carry more than six persons excluding the driver which carries passengers for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey".
Before we proceed further it is apposite to note the important distinguishing features of these two types of carriages. As seen from the definition the essential features of a contract carriage are : it is available to a particular party under a special contract and the hiring party excludes all others and the vehicle as a whole is hired for a fixed or agreed sum under a contract express or implied and under that single contract the leader of the contracting party can exercise full control over the vehicle and the contract carriage goes where the hiring party desires to go as per the contracts from one point to another without stopping or picking up or setting down any passengers on the route not included in the contract. In the case of a stage carriage the vehicle is not hired as a whole and one passenger does not exclude the other and separate fares may be paid by or for individual passengers. There is no restriction in picking up or setting down passengers along the route and the passengers are at liberty to travel and cover the whole journey or a few stages. Under law permits are necessary to ply both the types of carriages.
4. In V. Govindarajulu v. Regional Transport Officer, a Full Bench of this Court considered the question, viz. when is a 'contract carriage' as defined under S. 2(3) of the Motor Vehicles Act 1939 said to have been used as a 'stage carriage' as defined under S. 2(29) of the Act in order to attract the levy and demand of the increased rate of tax for a stage carriage as notified under S. 3 of the Andhra Pradesh Motor Vehicles Taxation Act, 1963. In answering this question, the Full Bench considered the distinguishing features between a stage carriage and a contract carriage, and held thus :
"It would be clear from a combined reading of the definition of 'contract carriage', 'stage carriage', 'permit', 'public service vehicle' and 'transport vehicle' that a contract carriage and stage carriage are public service vehicles used for the carriage of passengers for hire or reward. A contract carriage or a stage carriage can be used as a transport vehicle under a permit granted by the State or Regional Transport Authority. The permit is for the use of the transport vehicle as a contract carriage or as a stage carriage. Now the distinction between a contract carriage and a stage carriage is clearly drawn in the definition of 'contract carriage' under S. 2(3) and 'stage carriage' under S. 2(29) of the Act. The definition of 'contract carriage' is plain and the language not too elastic and wide so as to bring within its sweep a situation never intended by the Legislature. A transport vehicle is a contract carriage when the vehicle as a whole is hired for a fixed or agreed sum under a contract express or implied by a passenger or passengers from one point to another or on a time basis whether or not with reference to any route, and in either case without stopping to pick up or set down along the line of route passengers not included in the contract. On the other hand, in the case of a stage carriage a transport vehicle is not hired as a whole and only separate fares are collected from individual passengers either for the whole journey or for stages of the journey and the restrictions relating to a contract carriage use of the vehicle as a whole for a fixed sum and the journey between two points without a right to pick up passengers on route or set down passengers are not there. In this context R. 213 of the A.P. Motor Vehicles Rules which lays down additional conditions for the permits becomes relevant.
Sub-rule IV, condition (vii) makes it obligatory for the owner of a contract carriage to maintain a list of passengers travelling in the vehicle in the form prescribed therein in respect of each trip and such list shall be produced before the checking officer on demand by him. Thus, it is clear that the dominant factor that determines whether a transport vehicle is plied as a contract carriage or as a stage carriage is the actual user of the vehicle and not the permit granted authorising the use."
5. It may not be necessary to multiply the decisions. Suffice it to say that the dominant factor that determines whether a transport vehicle is plied as a contract carriage or as a stage carriage is the actual user of the vehicle and not the permit granted authorising the use. The definition of 'stage carriage' is clear and unambiguous and it lays down that in a stage carriage persons may pay separate fares for the whole journey or for stages of the journey in their capacity as individual passengers and they have no right to use the vehicle as a whole. In the case of a contract carriage the vehicle is hired as a whole and the contracting party has a right to use the vehicle as a whole by paying an agreed sum. Now the question is whether the excess passengers found to be travelling in a contract carriage can automatically be treated as individual passengers attracting the ingredients of the definition of 'stage carriage', In other words the question is, whether carrying excess passengers in a contract carriage above the limit of the seating capacity prescribed in the conditions of permit changes the nature of the carriage, i.e. its class, from contract carriage to stage carriage on the sole ground that the contract was illegal and it violated the conditions of the permit. In our view it does not unless it is proved on an enquiry that the excess passengers have nothing to do with the contracting party and were allowed to travel as individual passengers paying separate fares. We have already noted the important features of a contract carriage and the dominant factor is that a transport vehicle should be hired as a whole for being used exclusively by the contracting party. That being so,if excess passengers belonging to the same contracting party travel pursuant to the contract engaging the carriage as a whole, we are unable to see as to how those excess passengers become individual passengers. They never cease to be members of the contracting party. May be that the owner of the contract carriage being greedy agreed to carry more number of passengers than the capacity fixed as per the conditions of permit and the contract in that sense may be illegal. Nevertheless, the excess passengers do not become individual passengers as prescribed under the definition of 'stage carriage'. It must also be noted that the contract carriage does not cease to be a contract carriage merely because there is a violation of the conditions of permit. There are other penalties provided under S. 60 of the Act for violation of any of such conditions.
6. In Roshan Lal v. State of U.P., the Supreme Court while pointing out the distinction between the two types of carriages observed thus :
"A contract carriage is engaged for the whole of the journey between the two points for carriage of a person or persons hiring it, but it has not the right to pick up other passengers en route. The stage carriage, on the other hand, runs between two points irrespective of any prior contract and it is boarded by passengers en route who pay the fare for the distance they propose to travel."
7. Therefore as pointed out by the Supreme Court, the fundamental difference between a contract carriage and a stage carriage is that in the former there is a prior contract by the passenger or passengers for the carriage to be used as a whole for a fixed or agreed sum while in the latter there is absence of such a prior contract and the passengers can board the vehicle en route in individual capacity and pay the fare for the distance they travel. It cannot, therefore, be said that mere carrying more passengers than the fixed seating capacity amounts to user of the contract carriage as stage carriage so long as the "excess" passengers belong to the group of the contracting party which has engaged the vehicle as a whole. In this context it must be noted that the limit of seating capacity of a public service vehicle like a stage carriage or a contract carriage is fixed on the basis of the "wheel base" as prescribed in R. 392 of the A. P. Motor Vehicles Rules. Section 51 of the Act governs the grant of contract carriage permits and sub-sec. (2) (iia) lays down that the maximum number of passengers and the maximum weight of luggage that can be carried on any specified vehicle or in any vehicle of a specified type either generally or on specified occasion or at specified times and seasons and the same is prominently marked on the vehicle. These two provisions only go to show that the seating capacity also is one of the conditions of permits along with many other conditions. It is not the violation of every conditions of the permit that alters the nature of the user of the vehicle. In other words, violation of only such condition which "amounts to using of the vehicle as a stage carriage, changes its class from contract carriage to stage carriage. For instance, if it is found that passengers are picked up and set down en route and individual fares are collected separately, then it is well settled that it amounts to using the carriage as a stage carriage and attract the taxation provisions. The same principle cannot be extended to violation of the other conditions of permit. When the seating capacity is fixed the contract carriage should not carry more passengers than the fixed capacity. So overloading in a given case amounts to violation of the condition of the permit. But that does not in any manner change the nature of the usage of the vehicle. The violation may attract any other prescribed penalties. Similarly if a stage carriage for which also the seating capacity is fixed is found to be overloaded it amounts only to violation of the condition of the permit and nothing more, for which the prescribed penalties are there. Viewed from any angle, we are unable to agree with the view taken by the Division Bench in Writ Petition No. 5880 of 1978 and batch. We may now consider some of the decisions cited by both sides.
8. In Writ Petition No. 2063 of 1977 Chinnappa Reddy, J. held thus :
"Now by carrying passengers in excess of the limit prescribed by the permit I am unable to see how a contract carriage becomes a stage carriage. The passengers are carried only on contract for use of the vehicle as a whole. If more passengers than the prescribed by the permit were carried, the contract may be in violation of the condition of the permit. The contract may even be illegal, but I fail to see how it will have the effect of deeming the passengers concerned as individual passengers, who have paid separate fares. The essence of the definition of stage carriage is that passengers should be carried for hire or reward at separate fares paid by or for individual passengers. The illegality of the contract does not necessarily imply that the passengers must be deemed to be carried for hire or reward at separate fares as if they are individual passengers."
9. The Division Bench in W. P. No. 5880 of 1978 and batch however disagreed with this view of Chinnappa Reddy, J. For the reasons given by us supra we are not persuaded to agree with the view taken by the Division Bench. The view taken by Chinnappa Reddy, J. appears to us to be correct in law and accordingly we are in agreement with the same.
10. The learned Government Pleader relied on a judgment of Jeevan Reddy, J. In W. P. No. 4127 of 1976. The learned single Judge after referring to the definition of the contract carriage and stage carriage considered the contention of the Government Pleader that extra number of passengers carried beyond the permitted capacity pursuant to a stipulated contract should be treated as individual passengers as the contract itself is illegal held thus :
"The predominant feature in the case of a contract carriage is the contract. A contract must be valid contract. To be a valid contract the number of members of the contract-party must be commensurate, or be less than the permitted capacity. It cannot be in excess of the permitted capacity. Any members over and above the permitted capacity cannot, therefore, be called members of the contract-party. If that is so, then carrying the excess number of passengers would definitely satisfy the requirement of the definition of 'stage carriage' contained in Cl. (29) of S. 2, because they would be 'passengers for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey."
We are unable to agree with this view of our learned brother Jeevan Reddy, J. As already discussed, the dominant factor that determines whether a transport vehicle is plied as a contract carriage or as a stage carriage is the actual user of the vehicle and not the permit granted authorising the use. Therefore, the contract to carry more number of passengers than the fixed capacity may at the most violate the conditions of permit, but that does not ipso facto amount to user of the vehicle as a stage carriage. It must be noted that a contract is different from violation of the conditions of permit. But such contract to carry more number of passengers than the seating capacity may in one sense be illegal but so far as the contracting party is concerned they engage the bus as a whole and the excess passengers cannot be severed from the group of the contracting party which has engaged the bus as a whole and such excess passengers cannot automatically be treated as individual passengers having paid separate fares.
11. The Division Bench in W. P. No. 5880 of 1978 and batch, having held that the contract carriages which carried more passengers than the fixed seating capacity must be deemed to have been used as stage carriage, proceeded further to consider whether in such an eventuality they will be subjected to levy of tax. This aspect need not be gone into by us. It is not in dispute that it is a well settled proposition that whenever it is proved that a contract carriage has been used as a stage carriage, then it has to be subjected to levy of tax as provided under the Motor Vehicles Taxation Act.
12. Sri Raghunatha Raj who also addressed his arguments sought to contend that in his cases the provisions of the Taxation Act are not attracted inasmuch as the vehicles involved are only motor cabs. We are not concerned with that question. He may as well raise these points in the final hearing of these writ petitions. We have only considered the specific question referred to us.
13. To sum up : The dominant factor that determines whether a transport vehicle is plied as a contract carriage or as a stage carriage is the actual user of the vehicle and not the permit granted authorising the use. In the case of a contract carriage the vehicle as a whole is hired for a fixed or agreed sum under a contract, express or implied, by a passenger or passengers from one point to another or on a time basis whether or not with reference to any route, and in either case without stopping to pick up or set down along the line of route passengers not included in the contract. If a contract carriage is found to be carrying more number of passengers than its fixed seating capacity, the excess passengers cannot automatically be treated as individual passengers carried by collecting separate fares. If excess passengers are found to be travelling in a contract carriage an enquiry becomes necessary whether those excess passengers belong to the contracting party which has engaged the bus as a whole. If they do not belong to the contracting party then they can be treated as individual passengers being carried by collecting separate fares. This is subject to verification, and if they are proved to be individual passengers who travelled having paid separate fares, then the nature of the user of the vehicle changes. In such circumstances it shall be deemed to have been plied as a stage carriage and can be subjected to levy of tax. If on the other hand it is found that the excess passengers belong to the contracting party which has engaged the bus as a whole, then they cannot be treated as individual passengers and the contract carriage cannot be said to have been used as a stage carriage and it amounts to violation of the conditions of the permit for which appropriate action can be taken under S. 60 of the Motor Vehicles Act. The contract entered into to carry more number of passengers resulting in violation of the condition of the permit maybe illegal, but that does not change the nature of the usage of the vehicle.
14. In the view we have taken, the decision in W. P. No. 5880 of 1978 and batch stands overruled and we direct the present writ petition to be posted before the Division Bench for disposal on merits.
15. Order accordingly.