Road Transport Corporations Act Falls Under Union List, Special Appeals Against Regulation Framed Thereunder Are Maintainable: Allahabad High Court

The full bench comprising of Chief Justice Arun Bhansali, Justice Manoj Kumar Gupta and Justice Vikas Budhwar held

“Applying the doctrine of pith and substance, we are of the considered opinion that the Act is referable to List 1 Entry 43 and 44. The power to legislate in relation to 'regulation of the corporations' under the aforesaid Entries, includes within its umbrella the regulation of its workforce. The same is essential part of incorporation and making functional any corporation and in ensuring its proper functioning. Merely because Section 45(2)(c) invests the Corporation with power to make Regulations, inter alia, concerning the conditions of appointment and service of its employees, would not bring the legislation within the ambit of List-III Item No. 22 or 24.”

Factual Background

U.P. State Road Transport Corporation (“UPSRTC”) has been constituted vide notification dated 31.5.1972 by the State Government, issued under Section 3 of the Road Transport Corporations Act, 1950. Appellant, a conductor, was removed from service against which he filed an appeal. Regional Manager, UPSRTC dismissed his appeal. Thereafter, appellant preferred a revision before the Chairman, UPSRTC, which was also dismissed.

Against the termination, appellant approached the High Court. However, his writ petition was dismissed on grounds of alternate remedy. Subsequently, appellant filed a special appeal which listed before a division bench of the High Court.

Relying on the judgment of a division bench of the Allahabad High Court in UPSRTC through RM vs. Abhai Raj Singh and 2 others, respondent questioned the maintainability of the special appeal. However, the appellant submitted that since power had been exercised under U.P. State Road Transport Corporation Employees (Other than Officers) Service Regulations, 1981 which had been framed under a Central Act, the appeal would be maintainable. Appellant relied on division bench decisions of the Allahabad High Court in Jageshwar Prasad Tiwari vs. UPSRTC and Others and Madan Pal Singh vs. State of U.P. and Others.

Though the division bench hearing appellant's appeal believed that the judgment of its coordinate bench in Abhai Raj Singh proceeded on a wrong assumption that the legislation under which the orders were passed by the officers/authority, was a State Legislation, although it is a Central Legislation, the bench referred the matter to a larger bench for consideration.

High Court Verdict

The Full bench referred to a decision of its coordinate bench in Sheet Gupta vs. State of U.P., where the scope of special appeals against order of the single judge was clarified. It was held that special appeals against the orders of a single judge would not lie when the order was passed in the exercise of appellate jurisdiction, in respect of a decree or order made by a Court subject to the Superintendence of the Court, in exercise of revisional jurisdiction, criminal jurisdiction or in the exercise of the power of Superintendence of the High Court.

Further, it was provided that a special would not lie where order is passed in exercise of jurisdiction under Article 226 or 227 of the Constitution of India in respect of any judgment, order or award by a Tribunal, Court or statutory arbitrator, when such order/ award has been made while exercising jurisdiction under any Uttar Pradesh Act or under any Central Act, with respect to any of the matters enumerated in the State List or the Concurrent List in the Seventh Schedule to the Constitution of India.

Lastly, it was held that the special appeal shall not lie against, “the order made by one Judge in the exercise of jurisdiction conferred by Article 226 or 227 of the Constitution of India in respect of any judgment, order or award of (i) the Government or (ii) any officer or (iii) authority, made or purported to be made in the exercise or purported exercise of appellate or revisional jurisdiction under any such Act, i.e. under any Uttar Pradesh Act or under any Central Act, with respect to any of the matters enumerated in the State List or the Concurrent List in the Seventh Schedule to the Constitution of India.”

The Court held that the Regional Manager, UPSRTC, acting as an appellate authority and the Chairman, UPSRTC, acting as the revisional authority derive their powers from the Regulations which have been framed under Section 45 of the Road Transport Corporations Act, 1950 which is a Central Act.

The Court observed that if the Act of 1950 was enacted by the Union Government under the Union List of the Seventh Schedule of the Constitution of India, then the special appeal would be maintainable. However, if it was enacted by the Union Government while exercising powers under the Concurrent List of the Seventh Schedule of the Constitution of India then special appeal would not be maintainable under Chapter VIII Rule 5 of the High Court Rules.

While challenging the maintainability of the special appeal, the respondent pleaded that the Act of 1950 was enacted while exercising powers under Entry 22 and 24 of List III, whereas, appellant argued that the enactment was done under Entry 43 and 44 of List I.

Entries 43 and 44 of the Union List include incorporation, regulation and winding up of trading and non-trading corporations, including banking, insurance and financial corporations, but not including co-operative societies and universities. Whereas, Entries 22 and 24 of the Concurrent List include trade unions, industrial and labour disputes including schemes for the welfare and benefit of labors.

Though the order under challenge before the writ court related to conditions of service, the Court observed that the doctrine of 'pith and substance' was to be applied to see the main object of the legislation.

“In order to determine the question whether the Legislature has kept itself within bounds of its jurisdiction or has encroached upon a forbidden field, the Courts have consistently applied the doctrine of 'pith and substance'. The main object and the true scope and effect of legislation is determined in its entirety and even if some topic incidentally encroaches on matter assigned to another Legislature, it does not detract from the true nature of legislation or the field under which it has been enacted.”

Examining various Supreme Court judgments, the Full bench observed that the Act of 1950 provides for the incorporation and regulation of Road Transport Corporations extending to whole of India. Looking at various provisions of the Act, the Court held that “the main object of the legislation is to provide for the incorporation and regulation of Road Transport Corporations in order to establish an adequate, economical and properly coordinated system of road transport services in the State or part of the State for which it is established having regard to the advantages offered to the public, trade and industry by the development of road transport.”

The Court relied on Sita Ram Sharma and others vs. State of Rajasthan and others, where the Supreme Court has held that the Act of 1950 has been enacted by the Government while exercising powers under Entry 43 of List I.

The Court held that the Act of 1950 falls under the ambit of the Union List as it made for “regulation of corporations”. It was held that functions like providing for regulations governing conditions of employment under Section 45(2)(c) will not bring it within the scope of the Concurrent List. The Court held that incident entrenchment upon entries of List III does not change its nature and thus, it will be referable to List I.

Accordingly, it was held that “intra-court appeal under Chapter VIII Rule 5 of the High Court Rules against a judgment of Single Judge in a writ proceeding under Article 226 of the Constitution of India, preferred against an order passed by an officer or authority exercising appellate or revisional power under U.P. State Road Transport Corporation Employees (Other than Officers) Service Regulations, 1981, is maintainable.”

The judgment of the division bench in UPSRTC through RM vs. Abhai Raj Singh and 2 others which held that such special appeals were not maintainable was overruled to that extent.

Case Title: Rajit Ram Yadav v. State Of U.P. And 5 Others [SPECIAL APPEAL No. - 31 of 2021]