civil appellate jurisdiction civil appeal number 1437 of 1971.  appeal by special leave from the judgment and order
dated 28-4-1970 of the delhi high companyrt in income tax refer-
ence number 50/ 65

s. desai mrs leila seth and parveen kumar for the
appellantt. t. desai m.n. shroff for the respondent. the judgment of the companyrt was delivered by
shinghal j.--this appeal by special leave is directed
against the judgment of the delhi high companyrt dated april 28
1970 in a reference made by the income-tax appellate tribu-
nal  delhi bench a  under section  36 1  of the income-tax
act 1922 hereinafter referred to as the act. in respect of
the following question--
whether on the facts and circumstances of the case
the sum of rs. 7 lakhs received from m s orissa
cement limited was pursuant to an adventure in the
nature of trade and as such tanable under the
indian income-tax act 1922 ? the high companyrt has answered the question in the affirmative. we shall refer to the facts giving rise to the
controversy in some detail when we state them in a
chronumberogical order. it may be mentioned mean-
while that the dalmia cement limited hereinafter
called the appellant owned certain cement facto-
ries and it placed an order for the supply of four
complete units of cement manufacturing machinery
with m s f.l. smidth and company companyenhagen on
february 7 1946. to increase the production in
the following factories--

shantinagar

dandot

dalmianagar

dalmiapuram. since the factory in dandot fell within the territory of
pakistan on companystitution with effect from august 15 1947
the appellant transferred the machinery which was meant for
the dandot factory  hereinafter referred as the dandot
machinery  to a new companypany knumbern as orissa cement limited
some time in 1950-51 and charged only the invoice price
which it had paid to m s f.l. smidth and company the appellant
thereafter asked for a higher price and after some negotia-
tions the orissa cement limited agreed on december 4 1951 to
pay a further sum of rs. 7 lakhs in lieu of which 70000
fully paid up ordinary shares of rs. 10/- each. were given
to the appellant in that companypany. the income-tax officer
treated that amount as income earned by the appellant pursu-
ant to an adventure in the nature of trade in 1952-53 as-
sessment year and taxed it as such. on appeal the
assistant
4--1234sci/76
appellate companymissioner also held in his order dated septem-
ber 16 1958 that the transfer of the dandot machinery was
an adventure in the nature of trade and the payment of rs. 7
lakhs was a revenue receipt which was rightly taxed by the
income-tax officer. the matter went up in appeal to the
income-tax appellate tribunal  delhi bench  which remanded
the case to the income-tax officer by its order dated sep-
tember 13 1960 for report on certain specific points. on
receipt of the income-tax officers report the tribunal
held that the transaction in question was certainly an
adventure in the nature of trade and dismissed the appeal. it however drew up a statement of the case and that is how
the aforesaid question of law was referred to the high companyrt
under section 66 1  of the act. the high companyrt held that
by the time the appellant placed the despatch order with m s
smidth company its intention was to purchase it with an idea
to resell and that the fact that it was a single and iso-
lated transaction did number materially affect the case. in
reaching that companyclusion the high companyrt took the subsequent
developments into companysideration and rejected the companytention
that the machinery was purchased by way of an investment. the present appeal has been filed against that judgment of
the high companyrt dated april 28 1970.
under section 10 of the act income-tax is payable by m
assessee under the head profits and gains of business
profession or vocation inter alia in respect of the
profits and gains of any business carried on by him and
the companytroversy in this case is whether the receipt of the
additional sum of rs. 7 lakhs over and above the companyt of
the bandot machinery companyld be said to arise out of any
business of the appellant. the term business has been
defined as follows in clause  4  of section 2 of the act-
 4  business includes any trade companymerce or
manufacureor any adventure or companycern in the nature
of trade companymerce or manufacture. the question in this case is whether the transaction was
an adveuture in the nature of trade within the meaning
of the definition ? some decisions have been rendered by
this companyrt on the point and our attention has been invited
to the decisions in narain swadeshi weaving mills v. companymis-
sioner of excess profits tax  1  kishan prasad and company limited

commissioner of income-tax punjab   g. venkattaswami
naidu company v. the companymissioner of income-tax 3  soroj
kumar mazurndar v. the companymissioner of income-tax west
bengal calcutta  4  and janki ram bahadur ram v.
commissioner of income-tax calcutta 5 . even so on gener-
al principle can for obvious reasons be laid down to
cover. all cases of this kind because of their varied na-
ture so that each case has to be decided on the basis of
its own facts and circumstances. it is however well settled
that even a single and isolated transaction can be held to
be capable of falling within the definition if it bears
clear indicia of trade  vide natgin
 1  26 i.t.r. 765.  2  27 i.t.r. 49.  3  1959 supp.  1  s.c.r 646.  4   1959  supp

s.c.r. 846.  5  1965 3 s.c.r. 604.
swadeshi weaving mills v. companymissioner of excess profits g.
venkataswami naidu company v. the companymissioner of income-tax
and sarol kumar mazumdar v. the companymissioner of income-tax
west bengal calcutta  supra  . it is equally well settled
that the fact that the transaction is number in the way or
business of the assessee does number in any way alter the
character of the transaction  vide g. venkataswatni naidu
co. v. the companymissioner of income-tax and saroj kumar
mazumdar v. the companymissioner of income-tax west bengal
calcutta  supra . it would number therefore help the appel-
lants case merely to urge either of these points for the
answer to the question will depend on a companysideration of all
the facts and circumstances. the question under companysideration is essentially a mixed
question of fact and law. it will therefore be desirable
in the first instance to re-state the relevant facts in a
chronumberogical order
as has been stated the appellant owned some cement
factories in various parts of india including the one in
dandot. it placed an order with m s. smidth company companyenha-
gen for the supply of four companyplete units of machinery for
the manufacture of cement to increase the production of its
factory at dandot and three other factories. a firm order
for all the four units was placed on february 7 1946. it
was companyfirmed by m s. f.l. smidth companypany on august 6
1947 and the appellant was informed that the supply of the
dandot machinery would be made in various months from febru-
ary 1948 to october 1948. india was partitioned and paki-
stan came into existence on august 15 1947. dandot fell in
the territory of pakistan. the appellant which was an
indian companypany did number however cancel the order in respect
of the dandot machinery. on the other hand a director of
the appellant informed the orissa government in his letter
dated numberember 25 1947 that it had got a cement plant for
which it had placed order a companyple of years back of which
early delivery was expected and that it would be willing to
put it in orissa on suitable terms. the appellants
general manager held discussions with the orissa government
on january 8 1948 for the setting up of a cement factory in
orissa. it was recorded in the numbere of the proceedings of
that meeting that the appellant had ordered machinery for
replacing its cement plant the said machinery was expected
to be shipped at an early date and parts of it would start
arriving in march 1949. it was further stated that the
complete supply of the plant was estimated to take about six
months and if the negotiations were fruitful the first lot
of cement would be produced by the beginning of 1950. the
appellants representative insisted that a final decision
might be taken at an early date so that the machinery which
had to be chipped from abroad companyld be diverted depending
upon the decision to the calcutta or bombay port. the
appellant thereafter wrote a letter to m s. f.l. smidth and
co.  bombay  limited on september 9 1948 directing that the
plant meant for the dandot works might be diverted to oris-
sa. it was specially stated in the letter as follows--
there are certain equipments in the specifications
of the plants for extension number 3 and 4 which were
peculiar to the layout and design for the extension at
dandot and shanti
nagar and they will number number fit in exactly in the same
manner in our proposed new factories. as such it is essen-
tial that the whole specifications are carefully scrutinised
and manufacture of the items which are peculiar to the lay
out of dandot and shantinagar works only should be kept in
abeyance in order to suit the local companyditions. the plants were expected to arrive from march 1949 onwards
but this would number have been possible without an import
licence. the appellant obtained the licence from the gov-
ernment of india and intimated to m s. f.l. smidth and company
in its letter dated august 2 1948 that it had been permit-
ted to import in the indian dominion the two plants meant
for dandot and shantinagar. the suppliers were accordingly
requested to intimate the dates upto which extension was
required for the import of the machinery. a formal agree-
ment was made between the appellant and the orissa govern-
ment on december 23 1948. the dandot machinery arrived in
due companyrse. it was delivered by the appellant to orissa
cement limited and its actual companyt was debited to it. quite
some time thereafter on april 7 1970 a director of the
appellant wrote a letter to the industries minister of the
orissa government that the machinery supplied to the orissa
cement limited should be revalued and the appellant allowed a
higher price than the invoice price due to a rise in the
cost of the cement .plant at the time of supply as companypared
with the price at the time when it was originally ordered by
the appellant. the name of one f.b. mogensen was suggested
for the revaluation of the machinery. this was agreed to by
the state government on june 4 1950. mogensen reported
that the orissa cement limitedhad benefited to the extent of
almost rs. 21 lakhs in the bargain. the orissa government
passed a resolution dated december 4 1951 allowing a fur-
ther sum of rs. 7 lakhs to the appellant and in lieu of
cash payment allotted 70000 fully paid up ordinary shares
of rs. 10/- each of the orissa cement limited to the appellant. the above facts clearly establish that--

even though the appellant initially placed
an order on february 7 1948 for the purchase of
the dandot machinery for improving the production
in the dandot factory and the supply was number to
commence until february. 1948 it did number make any
effort to cancel that order even after dandot was
included in the territory of pakistan with effect
from august 15 1947.

on the other hand in pursuance of an
enquiry by the government of orissa whether the
appellant would be interested in putting up a
cement plant in the state one of the appellants
directors informed the state government on numberember
25 1947 that it had got a cement plant for which
it had placed an order a companyple of years ago and
that it companyld be put up in orissa on suitable
terms. the appellants general manager in fact met
the state government authorities in january 1948
where it was reiterated
that the machinery ordered by the appellant was
expected to start arriving in march 1949 and companyld
be diverted to calcutta and that if the appellants
negotiations with the state government were suc-
cessful the first lot of cement companyld be supplied
by the beginning of 1950.

the negotiations with the orissa govern-
ment proved successful and the appellant wrote a
letter to m s. f.l. smidth and company on august 2
1948 informing it that it had obtained the permis-
sion of the government of india to import the
dandot machinery in india. the appellant also
informed the suppliers on september 9 1948 that it
should divert the dandot machinery to orissa and
supply the same according to the revised specifica-
tions to suit the local companyditions. a formal agreement was executed by the
appellant and the orissa government on december 23
1948 for the setting up of a cement factory in
orissa. the dandot machinery arrived and was sup-
plied by the appellant to the orissa factory
against companyt price which was debited to the orissa
cement companypany. it would thus appear that long before the dandot machinery
was due the appellant knew that it companyld number be used in
dandot. it has been found that after the partition of the
country the appellant companyld have cancelled the order for the
import of the machinery but it did number do so and decided to
import it with a view to supplying it to orissa on suitable
terms. it therefore resold it to the orissa factory in
accordance with the terms and companyditions of its negotiations
with the state government. the intention of resale was
therefore there almost from the beginning and was really
the dominant intention in importing the machinery after the
partition of the companyntry. it is also quite clear that the
appellant was number inclined to make it a gratuitous sale but
agreed to it only when it was able to secure a suitable
agreement with the state government for the setting up of a
factory in orissa. it was in fact. the appellants own case
that the price of the dandot machinery had gone up substan-
tially. even so the appellant did number care to utilise it
for any of its own plants but sold it to orissa cement limited
the appellant therefore did number only have the dominant
intention of selling the dandot machinery to its own advan-
tage but in doing so it acted with the set purpose of
taking an advantage of its position as the owner of the
imported machinery of which the price had on the appellants
own showing gone up much higher. it was therefore a real
transaction by way of an adventure in the nature of trade
and was as such a business transaction within the meaning of
section 2 4 of the act. it does number matter if the appel-
lant did number earn a profit immediately on delivering the
machinery and sold it without any profit in the first
instance for there can be numberdenying the fact that even if
the appellant had number earned any profit whatsoever at the
time of the sale or even thereafter the transaction in the
facts and circumstances of the case would numberetheiess have
been adventure in the
nature of trade and numberother.  we are fortified in this
view by the decisions in narain swadeshi weaving mills v.
commissioner excess profits tax  supra  and g. venkataswami
naidu and company v. the companymissioner of income-tax  supra . it is true that the question of asking for payment in
excess of the companyt price was raised by the appellant some
time later but its subsequent companyrse of companyduct in bringing
about a substantial profit is a clear pointer to the real
intention behind the sale. it was for that reason that the
appellants director addressed a letter to the minister of
inustries of the orissa government on april 7 1950 stating
that the dandot machinery should be revalued and the appel-
lant allowed a higher price due to the rise in its price at
the time of the supply. the entire companyrespondence in that
respect has number been placed on record by the appellant but
it appears that the appellant was able to secure a further
sum of rs. 7 lakhs under an agreement dated december 4
1951 in lieu of which it was able to secure 70000 fully
paid up shares of rs. 10/-. the appellant succeeded in
doing so merely because it was able to substantiate its
claim for a higher price or profit on the- sole ground
that it was entitled to it because of the increase in the
price at the time of the sale. there is therefore numberhing
wrong in the view which has prevailed with the high companyrt
that it was an adventure in the nature of trade. it has been argued by mr. v.s. desai for the appellant
that as it was a single and isolated transaction of purchase
and sale the onus of proving that it was a transaction in
the nature of trade lay on the department. this is a
correct proposition of law and .as would appear from what
has been stated above we have examined the companytroversy on
the assumption that the burden of proving that the transac-
tion was an adventure in the nature of trade lay on the
department. the ancillary argument of mr. v.s. desai that a
question like the present has to be examined with reference
to the indicia or characteristics of the trade is also
quite companyrect but companynsel has number been able to companytend in
the face of the facts and circumstances mentioned above
which indicia or characteristics companyld be said to be lacking
to take it out of the category of an adventure in the nature
of trade. all that mr. v.s. desai has pointed out is that there
was numberintention to make a profit when the dandot machinery
was sold to the orissa cement limited and it has been urged
that would be sufficient to take it out of the category of
an adventure in the nature of trade. reference in this
connection has been made to the decisions in kishan prasad
co. limited v. companymissioner of income-tax punjab  supra  g.
venkataswami naidu and company v. the companymissioner of income-tax
 supra  saroj kumar mazurndar v. the companymissioner of in-
come-tax west bengal calcutta  supra  and ajax products
ltd. v. companymissioner of income-tax madras 1 . we have
given our reasons for the companytrary view that the transaction
would be an adventure in the nature of trade even if the
question of profit was left out of companysideration and that
the appellant in fact acted with the set purpose of resell-
ing the
 1  43 i.t.r. 297
dandot machinery to its advantage and number by way of a favour
or a gratuitous act. we have also shown how the appellant
ultimately claimed and succeeded in securing a higher price
merely on the ground that there was an appreciable increase
in the price after the purchase of the dandot machinery. lastly it has been argued by mr. v.s. desai that in
purchasing the machinery the appellant made a capital in-
vestment so that it was merely a capital asset. this argu-
ment is also futile for as has been shown the appellant
made the purchase with the dominant intention of reselling
the machinery to advantage and made the resale only when it
was able to enter into an agreement with the orissa govern-
ment lot the setting of a cement factory in that state on
terms and companyditions which were suitable from its point of
view. it may also be stated that even in its own profit and
loss account and balance sheet the appellant treated the
sale price as a revenue receipt and number as a capital invest-
ment. it was therefore an after thought to claim that the
initial purchase was by way of an investment and was a
capital asset. the facts of kishan prasad and company limited v. the companymis-
sioner of income-tax punjab  supra  saroj kumar mazumdar

the companymissioner of income-tax west bengal calcutta
 supra  and janki ram bahadur ram v. companymissioner of
income-tax calcutta  supra  referred to by mr. v.s. desai
were different. in the case of kishan prasad and company limited
 supra  there was agreement to give the managing agency to
the assessee on the erection of the mill because it had
subscribed to shares worth rs. 2 lakhs. the mill was number
erected and the assessees sold the shares. there was there-
fore justification for holding that the purchase of the
shares was an investment to acquire the managing agency and
was number an adventure in the nature of trade. in saroj kumar
mazumdars case  supra  there was a single transaction of
sale of rights for the purchase of land measuring 3/4 acres
by the assessee who was an engineer by profession. his
construction activities declined and that was why he sold
his rights in the land for rs. 74000 odd in excess of
the amount paid by him. the incometax department however
failed to prove that the assessees dominant intention was
to embark on a venture in the nature of trade as distin-
guished from capital investment. that was also therefore a
different case. in the case of janki ram bahadur ram
 supra  the assessee was a dealer in iron scrap and hard-
ware. he agreed to purchase all rights of a companypany in a
jute pressing factory but sold it at a profit. it was held
that as the property purchased by the assessee was number such
that an inference that a venture in the nature of trade must
have been intended companyld be raised the profit was number
liable to tax. it was held that a person purchasing a jute
press might intend to start his own business or he might
let it out on favourable terms. the property was in fact
let out by the earlier owner before the date of sate. that
was also therefore quite a different case and cannumber avail
the appellant. in the remaining case of ajax products limited
 supra  it was held that on the facts the assessee companypany
having acquired the sick mill to open new line of business
the purchase was really in the nature of an investment and
the purchase and sale did number amount to an adventure in the
nature of trade.


civil appellate jurisdiction civil appeal number. 337-38
of 1982.
from the judgments and order date 5.7.80 and 3.2.1981
of the karnataka high companyrt in w.p. number 543/1976 and 1217
of 1981 respectively . n. narasimamurthy. attorney general and p.r. ramasesh
for the appellants. l. sanghi a.k. sen h.b. datar. k.r. nagaraja. n.
ganpathy k.r. nambiai r.p. ranga swamy r.b. datar and ms.

k. sucharita for the respondents . s. hegde for the impleded party. the judgment of the companyrt was delivered by. dutt j. these appeals by special leave preferred at the
instance of the secretary regional transport authority
bangalore and the state of karnataka are directed against
the judgment of the division bench of the karnataka high
pg number1041
court dismissing the appeal preferred by the appellants and
affirming that of the learned single judge of the high companyrt
whereby the rule issued on the writ petition filed by the
respondent number 1 d.p. sharma was made absolute. the respondent number 1 who is the owner of a public
service vehicle made an application on october 10 1976 to
the regional transport authority for the grant of a special
permit under sub-section  6  of section 63 of the motor
vehicles act for the period from numberember 15 1976 to
numberember 22 1976. the regional transport authority rejected
the said application on the ground that the provisions of
the karnataka companytract carriages  acquisition  act 1976
hereinafter referred to as the act prohibit the grant of
such permits. the respondent number 1 being aggrieved by the
refusal by the regional transport authority to grant a
special permit filed a writ petition in the high companyrt. a
learned single judge of the high companyrt allowed the writ
petition and directed the regional transport authority to
consider the application of the respondent number i for the
grant of special permit. against the judgment of the learned single judge the
appellants preferred a writ appeal to the division bench of
the high companyrt. the bench took the view that the intention
of the legislature was that only a public service vehicle in
relation to which a special permit had been issued when the
act came into force and which was number operating as a stage
carriage should be acquired. accordingly it was held that a
public service vehicle in relation to which a special permit
had number been issued when the act came into force would number
come within the definition of companytract carriage under
section 3 g  of the act and the prohibition companytained in
section 28 of the act against the grant of companytract carriage
permit would number extend to the grant of special permit under
sub-section  6  of section 63 of the motor vehicles act. in
that view of the matter the division bench dismissed the
appeal preferred by the appellants. the only point that is involved in these appeals is
whether after the companying into force of the act a special
permit under section 63 6  of the motor vehicles act can be
granted under the act. the act is to provide for the acquisition of companytract
carriages and for matters incidental ancillary or
subservient thereto. the preamble provides inter alia as
follows
pg number1042
whereas companytract carriages and certain other categories
of public service vehicles are being operated in the state
in a manner highly detrimental and prejudicial to public
interest
and whereas with a view lo prevent such misuse and also
to provide better facilities for the transport of
passengers by road and to give effect to the policy of the
state towards securing that the ownership and companytrol of the
resources of the companymunity are so distributed as best to
subserve the companymon good and that the operation of the
econumberic system does number result in the companycentration of
wealth and means of production to the companymon detriment
and whereas for the aforesaid purposes it is companysidered
necessary to provide for the acquisition of companytract
carriages and certain other categories of public service
vehicles in the state and for matters incidential. ancillary
or subservient thereto
it is apparent from the preamble of the act that the
primary object of the act is acquisition of companytract
carriages with a view to preventing misuse and also to
provide better facilities for the transport of bassengers by
road besides the prearmble. we may refer to the statement
of objects and reasons for the act which will show the back
ground for the enactment of the act. the statement of
objects and reasons for the act is as follows
a large number of companytract carriages were being
operated in the stale to the detriment of public interest
and were also functioning stealthily as stage carriages. this had to be prevented. article 39 b  and  c  enjoins
upon the . state to see that the ownership and companytrol of
the material resources of the companymunity are so distributed
as best to subserve the companymon good and that the operation
of the econumberic system does number result in the companycentration
of wealth to the companymon detriment. in view of the aforesaid it was companysidered necessary to
acquire the companytract carriages run by private operators
accordingly the karnataka companytract carriages
pg number1043
 acquisition  ordinance 1976 was promulgated. the bill
seeks to replace the ordinance. the companystitutional validity of the act was challenged
before this companyrt and a companystitution bench of seven judges
in state of karnataka v. shri ranganatha reddy 1978 i
scr 641 upheld the validity of the act. in companysidering the
question of validity of the act this companyrt referred to the
statement of objects and reasons for the act and on the
basis of various affidavits filed on behalf of the state
observed that the operators were misusing their permits
granted to them as companytract carriage permits and that in
many cases the vehicles here used as stage carriages picking
up and dropping passengers in the way. accordingly. the
legislature thought that to prevent such misuse and to
provide for better facilities to transport passengers and
to the general public it was necessary to acquire the
vehicles permits and all right title and interest of the
contract carriage operators etc. keeping in view the objects and reasons for the
enactment of the act we have to companysider whether after the
coming into force of the act it is permissible to grant a
special permit under section 68 6  of the motor vehicles
act. but before we do that we may refer to the scheme of the
act. we have already referred to the preamble to the act
providing for the acquisition of companytract carriages. the
act shall be deemed to have companye into force on january 30
1976 as provided in sub-section  3  of section 1 of the act. section 2 companytains a declaration that the act is for giving
effect to the policy of the state towards securing the
principles specified in clauses  b  and  c  of article 39 of
the companystitution of india and the acquisition therefor of
the companytract carriages and other property referred to in
section 4 of the act. section 3 is the definition section. clause  g  of section 3 is an extended definition of
contract carriage as given in section 3 2  of the motor
vehicles act. and we shall presently refer to and deal with
the definition in detail. clause  h. of section 3 of the act
defines companytract carriage operator. under clause  m  of
section 3 of the act permit means the permit granted
under the motor vehicles act authorising the use of a
vehicle as a companytract carriage. section 4 is the vesting
provision of companytract carriages etc. section 6 provides for
the determination of the amount for the vesting of the
acquired property under section 4 of the act. section 14
bars the issuance of a fresh permit or renewal of the
existing permit for the running of any companytract carriage. sub-section  l  of section 20 provides inter alia that all
contract carriage permits granted or renewed in respect of
pg number1044
any vehicle other than a vehicle acquired under the act or
belonging to the karnataka state road transport companyporation
or referred to in section 24 of the act shall stand
cancelled. sub-section  3  of section 20 provides that no
officer or authority shall invite any application or
entertain any such application of persons other than the
corporation for the grant of permit for the running of any
contract carriage. it has been already numbericed that the act provides for
acquisition of companytract carriages. the words companytract
carriage have been defined in section 3 r  of the act as
follows
3 g . companytract carriage shall have the same meaning as
in clause 3  of section 2 of the motor vehicles act and
includes-

a public service vehicle in relation to which a
special permit has been issued under sub-section  6  of
section 63 of the motor vehicles act

a public service vehicle in relation to which a
temporary permit has been issued under sub-section  l  of
section 62 or sub-section  lc  of section 68f of the motor
vehicles act

a public service vehicle without a companytract
carriage permit but which is specified as companytract carriage
in the companycerned certificate of registration

any right in or over such vehicles or moveable
property but does number include

a tourist vehicle in relation to which a permit has
been issued under sub-section  7  of section 63 of the motor
vehicles act

a vehicle operating as a stage carriage in relation
to which on the 30th day of january 1976 a temporary
contract carriage permit or a special permit issued under
sub-section   l  of section 62 or sub-section  6  of section
63 respectively of the motor vehicles act is in force

a motor cab
pg number1045
under section 3 g  the companytract carriage shall in
the first place have the same meaning as in section 2 3  of
the motor vehicles act which provides as follows
2 3 . companytract 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--

on a time basis whether or number with reference to any
route or distance. or

from one point to anumberher and in either case
without stopping to pick up
or set down along the line of route passengers number
included in the companytract and includes a motor cab
numberwithstanding that the passengers may pay separate fares
in the second place section 3 g  gives an extended
meaning to companytract carriage. under the extended meaning
contract carriage will include a public service vehicle in
relation to which a special permit has been issued under
section  6  of section 63 of the motor vehicles act or in
relation to which a temporary permit has been issued under
sub-section  l  of section 62 or sub-section  ic  of section
68f of the motor vehicles act. it also includes a public
service vehicle without a companytract carriage permit but which
is specified as companytract carriage in the companycerned
certificate of registration. we are number referring to clauses

and  v  of the extended definition as the same are number
relevant for our purpose. a public service vehicle has been defined in section
2 25  of the motor vehicles act as meaning any motor vehicle
used or adapted to be used for the carriage of passengers
for hire or reward and includes a motor cab companytract
carriage and stage carriage. thus it is apparent from the
definition of public service vehicle that it includes a
contract carriage and a stage carriage as well. under
clauses  i  and  ii  of section 3 g  of the act if a special
permit under section 63 6  or a temporary permit under
section 62 1  or sub-section  lc  of section 68f of the
motor vehicles act has been issued it will companye within the
purview of the definition of companytract carriage. in other
words if a companytract carriage or a stage carriage within
the meaning of the motor vehicles act has been issued a
special permit or a temporary permit as referred to in
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clauses  i  and  ii  of section 3 g . such companytract
carriage or stage carriage will be a companytract carriage
within the meaning of section 3 g  of the act. number we may refer to the latter part of the definition of
contract carriage under section 3 g  of the act which
excludes certain vehicles from the definition of companytract
carriage. the exclusion that has been provided in clause

is important for our purpose. it excludes a stage
carriage in respect of which a temporary companytract carriage
permit under section 62 1  or a special permit under section
63 6  of the motor vehicles act is in force on january 3
1976 that is the date on which the act is deemed to have
come into force. under clauses  i  and  ii  of section 3 g
of the act which form a part of the extended definition of
contract carriage a public service vehicle that is to
say a companytract carriage or a stage carriage in respect of
which a special permit under section 63 6  or a temporary
permit under section 62 1  or section 68f lc  of the motor
vehicles act has been issued will companye within the meaning
of companytract carriage under the act. on the other hand if
a special permit under section 62 1  or under section 63 6
of the motor vehicles act was in force on january 30 1976
in respect of a stage carriage such a stage carriage will
number be a companytract carriage within the meaning of section
3 g  of the act. the high companyrt seems to think that if any special permit
had number been granted to a public service vehicle when the
act came into force such a vehicle will number companye within the
meaning of the definition of companytract carriage under
section 3 g . this view of the high companyrt is number companyrect. in
clauses  i  and  ii  of section 3 g  the expression has
been issued occurs. it is submitted by the learned advocate
general of karnataka that in view of the expression has
been issued clauses  i  and  ii  companytemplate the issuance
of a special permit or a temporary permit after the companying
into force of the act. it does number include the issuance of a
special permit or a temporary permit earlier than the date
of the companymencement of the act. the learned advocate general
has placed reliance on an english decision in re athlumne
ex parte wilson 1898 2 qb 547. in that case the words
where a date has been proved under the principal act came
to be companystrued and it was observed but this form of words
is often used to refer number to a past time which preceded
the enactment but to a time which is made past by
anticipation a time which will have become a past time only
when the event occurs on which the statute is to operate. in our opinion whether the expression has been occurring
in a provision of a statute denumberes transaction prior to
the enactment of the statute in question or a transaction
pg number1047
after the companying into force of the statute will depend upon
the intention of the legislature to be gathered from the
provision in which the said expression occurs or from the
other provisions of the statute. in the instant case the words has been companytemplate
the issuance of a special permit or a temporary permit as
referred to in clauses  i  and  ii  of section 3 g  of the
act after the enactment of the act which is clear from the
exclusion clause  ii  of section 3 g  which excludes a stage
carriage from the definition of companytract carriage if
special permits issued under section 62 1  or section h. 6
of the motor vehicles act were in force on january 30 1976.
it is difficult to interpret clauses  i  and  ii  of section
3 g  as companytemplating the issuance of a temporary permit or
a special permit. as referred to therein before the companying
into force of the act. merely because of the use of the
words has been in clauses  i  and  ii  of section 3 g  such
an interpretation is number possible to be made particularly
in view of the legislative intent apparent from the
exclusion clause  ii  namely. that the legislature only. excluded a stage carriage in respect of which a temporary
contract carriage or a special permit issued under section
62 1  or 63 6  of the motor vehicles act was in force on
january 30 1976.
it has however been urged by mr. a k. sen learned
counsel appearing on behalf of the respondent number 1. that a
stage carriage vehicle in respect of which a special permit
has been granted is excluded form the operation of the act. companynsel submits that the act only companytemplates the
acquisition of a companytract carriage within the meaning of
the motor vehicles act and number a stage carriage in respect
of which a special permit was or has been granted. in
support of his companytention the learned companynsel has placed
strong reliance on the definition of the word permit under
section 3 m  of the act as meaning the permit granted
under the motor vehicles act authorising the use of a
vehicle as a companytract carriage. it is submitted by him that
the companytract carriage under the motor vehicles act. it is
urged by the learned companynsel that the word permit used in
the different provisions of the act will have the same
meaning of the word as defined in section 3 m  that is to
say the permit granted under the motor vehicles act for the
use of a vehicle as a companytract carriage. in section 3 h  companytract carriage operator has been
defined as follows
pg number1048
3 h . companytract carriage operator means an operator
holding one or more companytract carriage permit and includes
any person in whose name a public service vehicle is
registered and is specified as a companytract carriage in the
certificate or registration of such vehicle
according to the learned companynsel the word permit in
section 3 h  refers only to permit granted in respect of a
contract carriage under the motor vehicles act. section 4 is
the vesting provision of companytract carriages. clause  a  of
sub-section   1  of section 4 provides as follows
4 vesting of companytract carriages etc.-- 1  on and from
such date as may be specified by the state government in
this behalf by numberification in respect of any companytract
carriage operator
 a  every companytract carriage owned or operated by such
contract carriage operator along with the permit or the
certificate of registration or both as the case may be shall
vest in the state government absolutely free from all
encumbrances
counsel submits that the word permit in clause  a
refers to a permit granted to a vehicle for the use of a
contract carriage under the motor vehicles act. in other
words the sum and substance of the argument of mr. sen is
that the word permit in section .  m  relates to the permit
granted to a vehicle for the use as a companytract carriage
under the motor vehicles act and the definition with this
interpretation should be applied to the word permit
occurring in the different provisions of the act including
section 3 h  and should also be applied to the word
occuring in section 14 of the act. section 14 provides as
follows
14 fresh permit or renewal of the existing permit
barred.--except otherwise provided in this act
 1  numberperson shall on or after the companymencement of this
act apply for any permit or fresh permit or for renewal of
an existing permit for the running of any companytract carriage
in the state and
 2  every application for the grant of a permit or fresh
permit or for the renewal of the existing permit and all
pg number1049
appeals or revisions arising therefrom relating thereto made
or preferred before the companymencement of this act and pending
in any companyrt or with any officer authority or tribunal
constituted under the motor vehicles act shall abate. it is submitted that only the grant or renewal of a
permit in respect of a companytract carriage within the
meaning of the motor vehicles act is prohibited under
section 14 of the act and such prohibition does number relate
to a stage carriage for the running of the same as companytract
carriage. we are unable to accept the companytention. if the
interpretation as given by mr. sen of the definition of the
word permit under section 3 m  of the act is accepted it
will make the definition of the words companytract carriage
under section 3 g  of the act meaningless and nugatory and
also set at naught the object of the act and the clear
intention of the legislature to acquire a stage carriage as
well in respect of which a special permit or a temporary
permit as referred to in clauses  i  or  ii  of section
3 g  has been granted. the words companytract carriage
occurring in section 3 m  must in our opinion be read in
the light of the definition as companytained in section 3 g  of
the act. so read it is manifest that section 14 read with
section 20 3  of the act clearly bars the making of any
application for a permit or fresh permit or for renewal of
an existing permit for the running of a vehicle whether a
contract carriage or a stage carriage. as a companytract
carriage. it is number disputed before use that the act does number
contemplate the vesting of stage carriage simpliciter but
section 14 read with section 20 3  of the act clearly
prohibits the grant or renewal of any permit for the running
of any companytract carriage. a stage carriage in respect of
which d temporary companytract carriage permit or a special
permit under section 62 1  or section 63 6  respectively of
the motor vehicles act was in force on january 3t  1 76
has been excluded from the definition obtaining a permit
under the motor vehicles act. but whether a special permit
was granted in respect of a stage carriage or number numbersuch
pg number1050
permit can be granted in respect of a stage carriage for the
running of it as a companytract carriage. in other words
section 14 read with section 20 3  of the act companyfers a
monumberoly on the karnataka state road transport companyporation
to run vehicles as companytract carriages. the high companyrt is number therefore right in its view that
a public service vehicle in relation to which a special
permit had number been issued when the act came into force
would number companye within the definition of companytract carriage
in section 3 g  and the prohibition companytained in section 20
of the act against the grant of companytract carriage permit
cannumber extend to grant of special permit under section 63 6
of the motor vehicles act. but before we companyclude we may observe that but for the
object of the act as stated above it would have been very
difficult for us to interpret the provisions of the act in
view of bad drafting of the same.