MV Act | Supreme Court Quashes MP High Court Order; Private Bus Operators Cannot Ply On Inter-State Routes Overlapping Notified State Transport Routes
Kiran Raj
The Supreme Court Division Bench of Justices Dipankar Datta and Augustine George Masih held that private operators cannot be issued stage carriage permits on inter-State routes formed under reciprocal transport agreements if those routes coincide with any portion of a notified intra-State route reserved for State transport undertakings under Chapter VI of the Motor Vehicles Act, 1988. Setting aside the order of the Gwalior Bench of the Madhya Pradesh High Court, the Court ruled that the Uttar Pradesh State Transport Authority was not bound to countersign permits granted by the Madhya Pradesh authority to private bus operators under the Inter-State Reciprocal Transport (IS-RT) Agreement between the two States, insofar as those routes overlap with those operated exclusively by the Uttar Pradesh State Road Transport Corporation.
The matter concerned the legality of granting stage carriage permits to private bus operators on inter-State routes covered under an Inter-State Reciprocal Transport (IS-RT) Agreement between the Transport Departments of Madhya Pradesh and Uttar Pradesh, executed under Section 88 of the Motor Vehicles Act, 1988. The agreement allocated certain routes to the Madhya Pradesh State Road Transport Corporation (MPSRTC) under Schedule B and to private operators under Schedule A. Following the winding up of MPSRTC operations, private operators in Madhya Pradesh applied for temporary permits to operate on Schedule B routes. These were issued by the Madhya Pradesh State Transport Authority (STA, MP), but the Uttar Pradesh State Transport Authority (STA, UP) declined to countersign them, citing overlap with notified intra-State routes reserved for the Uttar Pradesh State Road Transport Corporation (UPSRTC) under Chapter VI of the Act.
A public interest petition was filed before the Gwalior Bench of the Madhya Pradesh High Court seeking a mandamus to compel STA, UP to recognize and countersign such permits. The High Court directed Madhya Pradesh to process and issue permanent stage carriage permits within two months and instructed Uttar Pradesh to countersign them thereafter. UPSRTC challenged these directions before the Supreme Court, contending that private operators could not ply on notified routes even partially and that the High Court’s interference was without jurisdiction.
The respondents argued that, since MPSRTC had ceased operations, the routes under Schedule B automatically became part of Schedule A, entitling private operators to apply for permits. They also questioned the validity of the notified routes for lack of prior Central Government approval under Section 100’s proviso. The Court examined the IS-RT Agreement, relevant notifications, and submissions regarding the operational status of MPSRTC to determine whether private operation on overlapping routes was legally permissible.
The Bench observed that “an inter-State reciprocal transport agreement is an agreement between two States but not a law under the Motor Vehicles Act.” It stated that “approved schemes and notified routes, which are envisaged in Chapter VI, would obviously override Section 88 in view of Section 98 of the 1988 MV Act.”
The Court recorded that “private operators can be completely excluded from plying their stage carriages on notified routes and/or part of a notified route.” Relying upon the Constitution Bench decision in Adarsh Travels Bus Services v. State of Uttar Pradesh, it stated that “if there is a prohibition to operate on a notified route or routes, no licences can be granted to any private operator whose route traversed or overlapped any part or whole of that notified route.” The Bench held that this principle continues to govern cases under the 1988 Act, as the relevant provisions remain substantially the same as those in the 1939 Act.
On the issue of the Madhya Pradesh State Road Transport Corporation’s dissolution, the Bench observed that “there is no clinching evidence to that effect. At best, the materials on record hint at the process of winding up of MPSRTC being underway.” It further stated that “grant of relief to the private operators seems well-nigh impossible unless MPSRTC is clearly shown to have been wound up.”
The Court recorded that “while an IS-RT Agreement can be executed by two States drawing power from Section 88 of the 1988 MV Act, once any part of the inter-State route overlaps a notified intra-State route, the latter would prevail.” It found that “the consistent view of this Court has been that an IS-RT Agreement by its very nature is an agreement between two States but not a law under the relevant MV Act.”
Expressing concern over administrative inaction, the Bench observed that “the apparent lack of application of mind and of purpose by the States of UP and MP has dented the prospect of maximisation of public interest.” Nevertheless, it stated that “much can be achieved through dialogue between the two States” and noted that they “may consider the desirability of exploring whether partial exclusion of inter-State routes from the approved scheme… can be permitted so as to further the interests of the passengers and the commuters.”
The Court stated: “The judgment and order of the High Court under challenge in the lead appeal being Civil Appeal No. 10522 of 2025 [U.P. State Road Transport Corporation through its Chief General Manager v. Kashmiri Lal Batra & Ors.] stands set aside.”
“The other judgment(s) and order(s) under challenge in the connected civil appeals also stand set aside. Writ Petition No. 748 of 2024 stands dismissed. The States of MP and UP may proceed in the manner we have observed in paragraph 49 supra.”
“The Principal Secretaries of the Transport Departments of the States of MP and UP, together with other responsible officers of the said departments, meet at a mutually convenient venue within 3 months from date to discuss the modalities for fully working out the IS-RT Agreement.”
Case Title: U.P. State Road Transport Corporation Through its Chief General Manager V. Kashmiri Lal Batra and others
Neutral citation: 2025 INSC 1281
Case Number: CIVIL APPEAL NO.10522 OF 2025
Bench: Justice Dipankar Datta, Justice Augustine George Masih
