This landmark judgment concerns the complex legal interplay between inter-State transport agreements (IS-RT Agreements) under Section 88 of the Motor Vehicles Act, 1988, and notified intra-State routes reserved for State Transport Undertakings (STUs) under Chapter VI of the Act.
The appeals arose from conflicting High Court decisions directing the Uttar Pradesh State Road Transport Corporation (UPSRTC) to countersign permits issued by the State Transport Authority (STA), Madhya Pradesh (MP), for certain inter-State routes overlapping portions of notified intra-State routes in Uttar Pradesh.
Court: Supreme Court of India
Title of the Case: U.P. State Road Transport Corporation v. Kashmiri Lal Batra & Ors.
Citation: (2025) INSC 1281
Judges: Justice Dipankar Datta and Justice Augustine George Masih
Date of Judgment: 4 November 2025
Factual Matrix
1. Inter-State Reciprocal Transport Agreement (IS-RT Agreement)
On 21 November 2006, an IS-RT Agreement was executed between the State Transport Authorities (STAs) of Madhya Pradesh and Uttar Pradesh under Section 88 of the MV Act.
- Schedule A: Routes reserved for private operators.
- Schedule B: Routes exclusively reserved for the Madhya Pradesh State Road Transport Corporation (MPSRTC).
Clause 4(3) of the agreement stipulated that if MPSRTC was wound up or ceased to operate, the routes listed in Schedule B would automatically be deemed transferred to Schedule A, allowing private operators to apply for permits on those routes.
2. Closure of MPSRTC and Resulting Disputes
When MPSRTC ceased operations, the STA, MP began granting temporary permits to private operators on the formerly MPSRTC routes.
However, the STA, UP refused to countersign those permits, citing overlap with notified intra-State routes reserved for UPSRTC under Chapter VI of the Act.
This led to multiple litigations before the Madhya Pradesh High Court, eventually culminating in several appeals before the Supreme Court.
Proceedings Before the High Court
Kashmiri Lal Batra (W.P. No. 8678/2013)
- Filed as a Public Interest Litigation seeking a mandamus to the State of UP to countersign permits granted by STA, MP.
- High Court directed MP to issue permanent permits and UP to countersign them within 15 days.
Guruprit Singh & Seema Arora (W.P. No. 8703/2016)
- Sought permission to park and operate under their valid interstate permits.
- A Single Judge ordered that they not be obstructed pending a decision.
- UPSRTC’s appeal (W.A. No. 189/2017) was dismissed by the Division Bench.
Javed Akhtar (W.P. under Article 226)
- Sought similar relief for the operation on the Chhatarpur–Kanpur route.
- Relief was granted by applying the previous High Court directions.
Virender Singh & Ors. (W.P. (C) No. 748/2024)
- Filed directly under Article 32 before the Supreme Court, raising identical issues regarding countersignature of inter-State permits.
Arguments Advanced
Appellants: UPSRTC and State of Uttar Pradesh
- The PIL was not bona fide; Kashmiri Lal was allegedly acting on behalf of private operators.
- Private operators cannot ply on any portion of a notified route, whether inter-State or intra-State, as per Chapter VI.
- The High Court exceeded its jurisdiction by directing the issue and countersignature of permits in disregard of approved schemes protecting UPSRTC’s exclusive rights.
- Relied on precedents including Adarsh Travels Bus Service v. State of U.P., (1985) 4 SCC 557, and T.V. Nataraj v. State of Karnataka, (1994) 2 SCC 32.
Respondents: Private Operators
- Claimed that MPSRTC had been wound up, triggering Clause 4(3) of the IS-RT Agreement.
- Argued that MP’s STA had lawfully issued permits after public notice and that UP’s STA was bound to countersign under Section 88(6).
- Contended that no Central Government approval under Section 100 proviso for notified routes in UP was shown; hence, such routes could not override the IS-RT Agreement.
- Emphasised that the IS-RT Agreement, once executed and published, is binding on both States and cannot be nullified unilaterally by one State.
Issue
- Whether a private operator can be granted a stage carriage permit on an inter-State route under an IS-RT Agreement when part of such route overlaps a notified intra-State route under an approved scheme under Chapter VI of the MV Act, 1988?
Statutory Framework
1. Section 88 – Validation of Permits for Use Outside Region
- Empowers States to enter reciprocal transport agreements for granting or countersigning permits.
- Sub-sections (5) and (6) mandate publication, public objections, and notification of final agreements.
2. Chapter VI (Sections 97–103)
- Section 98: Chapter VI overrides Chapter V and all other inconsistent laws.
- Sections 99–103: Authorise State Transport Undertakings (STUs) to operate exclusive services in public interest; allow cancellation/modification of private permits and issue of exclusive permits to STUs.
- Section 100 proviso: Requires Central Government approval for schemes affecting inter-State routes.
These provisions establish that once a route is notified under Chapter VI, it excludes private operators from plying on that route or any portion thereof unless expressly permitted.
Supreme Court’s Analysis
Hierarchy between Chapter V and Chapter VI
- The Court reaffirmed that Chapter VI overrides Chapter V under Section 98.
- An IS-RT Agreement (executed under Chapter V) cannot override a notified scheme under Chapter VI.
- Since reciprocal agreements are contracts between States, not laws, they must yield to statutory notifications.
Precedent Review
The Court extensively reviewed six major Supreme Court precedents:
(a) T.N. Raghunatha Reddy v. Mysore State Transport Authority (1970) 1 SCC 541
- Held that inter-State agreements do not override Chapter IV-A (now Chapter VI).
- The overriding clause in Section 68-B makes Chapter IV-A supreme.
(b) S. Abdul Khader Saheb v. Mysore Revenue Appellate Tribunal (1973) 1 SCC 357
- Reiterated that approved schemes prevail over inter-State agreements.
(c) Mysore SRTC v. Mysore Revenue Appellate Tribunal (1975) 4 SCC 192 [Mysore SRTC (I)]
- Held that exclusion of private operators must be explicit in the scheme; mere overlap does not bar inter-State operators.
(d) Mysore SRTC v. Mysore STAT (1974) 2 SCC 750 [Mysore SRTC (II)]
- Disagreed with Mysore SRTC (I), holding that even minimal overlap with a notified route bars private permits.
(e) Adarsh Travels Bus Services v. State of Uttar Pradesh (1985) 4 SCC 557 (Constitution Bench)
Settled the law:
- Rejected Mysore SRTC (I), upheld Mysore SRTC (II).
- Private operators cannot ply on any portion of a notified route, even if part of an inter-State route.
- Stressed public convenience: States may modify schemes or legislate to avoid undue hardship to passengers.
(f) T.V. Nataraj v. State of Karnataka (1994) 2 SCC 32
- Reaffirmed Adarsh Travels; once a route is notified, inter-State operators are excluded unless expressly authorised.
Application to Present Case
- The Supreme Court held that the issue was no longer res integra—settled conclusively by the Constitution Bench in Adarsh Travels.
- Even though the IS-RT Agreement was validly executed, its terms cannot supersede notified intra-State routes under Chapter VI.
- Private operators’ claim based on MPSRTC’s winding up is legally untenable unless the winding-up is conclusively proven.
- The absence of Central Government approval under Section 100 does not automatically invalidate existing notified schemes.
Thus, the High Court’s direction compelling the State of UP to countersign permits was unsustainable in law.
Observations on State Inaction and Public Interest
- While rejecting the private operators’ claims, the Court expressed serious concern about administrative apathy and lack of coordination between MP and UP transport authorities.
- The IS-RT Agreement was meant to serve public interest by ensuring seamless connectivity between the two States.
- Failure to harmonise overlapping routes has led to inconvenience to passengers, defeating the objective of the reciprocal scheme.
- Both States should revisit and renegotiate the agreement to balance UPSRTC’s statutory rights and public convenience.
Directions Issued
High Court Judgments Set Aside: The Madhya Pradesh High Court orders directing the issue and countersignature of permits were quashed.
Writ Petition (C) No. 748/2024 Dismissed: The Article 32 petition by private operators was dismissed.
Inter-State Cooperation Ordered: The Principal Secretaries of Transport Departments of MP and UP were directed to meet within three months to:
- Reassess the IS-RT Agreement in light of MPSRTC’s status.
- If MPSRTC is found wound up, transfer routes from Schedule B to A to allow private operators legally.
- Explore partial modification of approved schemes under Section 99 to permit inter-State operations in public interest.
Public Interest Emphasis:
- Both States must ensure passenger convenience and seamless travel through policy dialogue rather than litigation.
- Encouraged technological and infrastructural modernisation of public transport services.
Ratio Decidendi
- Primacy of Chapter VI: Chapter VI of the Motor Vehicles Act, 1988, overrides Chapter V; hence, notified schemes prevail over any inter-State reciprocal agreement.
- No Private Permits on Notified Routes: Private operators cannot be granted or countersigned permits on routes—wholly or partly—covered by a notified scheme, unless the scheme expressly permits it or is modified.
- Inter-State Agreements Are Not Law: IS-RT Agreements are executive arrangements, not statutory instruments; they cannot override legislative mandates under Chapter VI.
- States’ Duty to Harmonise: States must proactively reconcile overlapping jurisdictions to uphold public convenience rather than litigate over administrative rigidity.
Conclusion
The Supreme Court thus resolved the long-standing conflict between reciprocal inter-State agreements and notified State routes, reaffirming the constitutional supremacy of statutory schemes over contractual arrangements.
While dismissing the private operators’ claims, the Court displayed sensitivity to public welfare, urging inter-State cooperation to update outdated transport policies in tune with modern needs.
Important Link
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