Kashmir Motor Drivers Association and anr. Vs. Union of India (Uoi) and ors. - Court Judgment

Excerpt:
- orderj.k. kotwal, j.1. through the medium of this writ petition, the petitioners, out of whomthe first petitioner, namely, the kashmir motor drivers union, is a company registered under the indian companies act of 1956, which operates as many as 486 passenger buses, and the second petitioner, namely, the western bus stand is a union of transporters, which also operates 490 passenger buses owned by different owners is the state of jammu and kashmir, have challenged the revised tariff recommended by the tariff advisory committee, for short t. a. c., respondent no. 2 herein, which has been made applicable with effect from 1-2-1982. precisely speaking, the grounds of challenge are as follows:--(1) the revised rates of premia we highly arbitrary and unreasonable, which have been enforced.....

Judgment:
ORDER

J.K. Kotwal, J.

1. Through the medium of this writ petition, the petitioners, out of whomthe first petitioner, namely, the Kashmir Motor Drivers Union, is a company registered under the Indian Companies Act of 1956, which operates as many as 486 passenger buses, and the second petitioner, namely, the Western Bus Stand is a union of transporters, which also operates 490 passenger buses owned by different owners is the State of Jammu and Kashmir, have challenged the revised tariff recommended by the Tariff Advisory Committee, for short T. A. C., respondent No. 2 herein, which has been made applicable with effect from 1-2-1982. Precisely speaking, the grounds of challenge are as follows:--

(1) The revised rates of premia we highly arbitrary and unreasonable, which have been enforced without any rational basis and without following the guidelines provided therefor by Section 64-UC of the Insurance Act of 1938. Respondent No. 3, namely, the General Insurance Corporation of India, being the agency/instrumentality of the Government of India and respondents 3 to 7 having the monopoly of the business in insurance of motor vehicles, the impugned tariff is liable to be struck down as being violative of Article 14 and Article 19(1)(g) of the Constitution, read with Clause (6) of the said Article.

(2) The impugned tariff is highly discriminatory and is liable to be struck down as being violative of Article 14 of the Constitution.

(3) The contract of insurance being subject to periodical renewal, the respondents could not have enhanced the rates unilaterally. Consequently, their action is opposed to the principles of natural justice.

(4) Under Section 64-UC(3) of the Insurance Act, approval of the Controller of Insurance was necessary to give effect to the impugned tariff. No such approval has been accorded by him so far. Consequently, respondents 3 to 7 cannot charge insurance premium according to the revised rates.

2. The respondents have denied almost all the allegations made in the writ petition. But briefly, their case is that the revised tariff is neither arbitrary nor unreasonable, but the same is based upon the past loss experience and similar loss apprehension in future. The revision is based upon actuarial calculations and opinion of experts based upon sample surveys. The factors that havecontributed to the rise in the rates of the premia are, among others, the increase in statutory liability under the Workmen's Compensation Act, 1923, and the Motor Vehicles Act, 1939, the decision given by the Supreme Court in Motor Owners Insurance Co. Ltd. v. Jadavji Keshavjee Modi, AIR 1981 SC 2059, the steep rise in the cost of vehicles and their repairs, the 10% commission that has to be paid to Commission agents and 20% of the premium required for meeting the administrative expenses. The rise, according to them, is nominal as the premium chargeable is only six to seven percent of the operational cost of the vehicles. They have also denied that the impugned tariff is discriminatory in nature for which no material, according to them, has been placed by the petitioners on the file, and have further challenged the maintainability of the writ petition on the grounds : firstly, that no writ lies to avoid contractual obligations; secondly, that fixation of rates by the T. A. C. being a legislative act, the presumption of validity will be attached to it and the Court will not examine it by microscopic analysis, but wilt interfere only if on the acceptable data the rates fixed by it appear to the Court to be patently unreasonable or coufiscatory is character; thirdly, that the loss that the business community may have to suffer on account of such a legislative act will be no ground to hold that it places an unreasonable restriction on its rights to carry on trade or business; fourthly, that the petitioners are guilty of suppressio veri and suggestio falsi; and fifthly, that in any event the petition is liable to be dismissed because it raises disputed questions of fact.

3. Before coming to its merits, it may be necessary to first dispose of the plea set up as a bar at the very threshold to the maintainability of the writ petition. The plea is that the mutual rights and obligations of the insurer and the insured in each case having been reduced to the form of a written contract, no writ lies to enforce or avoid the contract. This argument was put forth on the authority of three Supreme Court decisions viz., Har Shankar v. The Deputy Excise and Taxation Commr., AIR 1975 SC 1121, Radhakrishna Agarwal v. State of Bihar, AIR 1977 SC 1496 and The Divisional Forest Officer v. Bishwanath Tea Co. Ltd., AIR 1981 SC 1368.

4. Section 13-B of the Insurance Act defines 'miscellaneous business' as the business of effecting contracts of insurance which is not principally or wholly of any kind or kinds included in Clauses (6-A), (ii) and (13-A). Clause (6-A) defines fire insurance business, Clause (11) defines life insurance business, and Clause (13-A) defines marine insurance business. Each insurance business, according to its definition given in the Act, is to be evidenced by a contract between the insurer and the insured. Every instrument evidencing such a contract is called a policy. Policy is thus a contract of insurance in writing, which holds the insurer as well as the insured to its terms and conditions and is ordinarily governed by the law of contract, unless otherwise provided by any other statute. To the extent, therefore, the proposition that the mutual rights and obligations of the parties arising out of an insurance policy are traceable to a written contract cannot be easily disputed. Another feature of this contract is that under Section 95 of the Motor Vehicles Act, willy-nilly, taking out such a policy by the owner of a motor vehicle is a must. He cannot refuse to take it out save at his own peril. In this sense, therefore, such a contract is a statutory contract. The next question which then arises is as to whether or not in this background the objection raised in regard to the maintainability of the writ petition can still survive.

5. In Bar Shankar's ease (AIR 1975 SC 1121) (supra) the petitioners had challenged the powers of the Financial Commissioner of Punjab to hold open auction for the sale of country liquor and beer by the licence holders. A preliminary objection that since offering a bid with open eyes at the auction and its acceptance by the Government constituted a valid agreement, no writ would lie to enforce or question the rights and obligations arising under such a contract. This objection was allowed by their Lordships by making the following observations (at page 1125):

'.. .. .. Those who contract with open eyes must accept the burdens of the contract along with its benefits. The powers of the Financial Commr. to grant liquor (licence) by auction and to collect licence fees through the medium of auctions cannot by writ petitions be questioned by those who, had their venture succeeded, would have relied upon those very powers to found a legal claim. Reciprocal rights and obligations arising out of contract do not depend for their enforceability upon whether a contracting party finds it prudent to abide by the terms of the contract. By such a test no contract could ever have a binding force.'

And, again (at p. 1126):

'.. .. ... The writ jurisdiction of High Courts under Articte 226 of the Constitution is not intended to facilitate avoidance of obligations voluntarily incurred. That, however, will not estop the appellants from contending that the amended rules are not applicable as their licenses were renewed before the amendments were made.'

6. In Radba Krishna Agarwal's case (AIR 1977 SC 1496) (supra) the petitioner had challenged the revision of the royalty payable under the agreement into which he had entered with the State of Bihar for extraction of sal seeds from the State forests. One of the clauses in the agreement authorised the Government to enhance the royalty in consultation with the petitioner He had challenged the revision of the royalty, and the Government order cancelling his contract on Ms failure to pay the enhanced royalty inter alia on the ground that the State was bound by the provisions contained in Part III of the Constitution, even when it was exercising its executive or administrative powers under Article 298 of the Constitution. Their Lordships upheld the three divisions made by the Patna High Court in such cases, viz.: (i) where there was breach of a promise) net reduced te the form of a written contract within the meaning of Article 299, acting whereupon the petitioner has altered his position; (ii) where the contract between the petitioner and the State is traceable to a statutory provision; and (iii) where the contract is non-statutory and the rights and liabilities of the parties are governed purely by its terms and conditions. Since the case of the petitioners before their Lordships did not belong to the first two categores, but it clearly fell in the third one, distinguishing the case of Erusian Equipment and Chemical Limited v. State of West Bengal, AIR 1975 SC 266, that the rule of equality embodied in Article 14 has to be observed by the State even in the matter of granting contracts but that it has to be observed at the very threshold, that is, at the time of entering into contract but not thereafter, their Lordships dismissed the writ petition as not maintainable on the ground that there was no grievance that it was not so observed when the parties had entered into the contract. It was observed (at p. 1501):

'It then, very rightly, held that the cases now before us should be placed in the third category where questions of pure alleged breaches of contract are involved. It held, upon the strength of Umakant Saran v. State of Bihar, AIR 1973 SC 964 and Lekhraj Sathram Das v. N. M. Shah, AIR 1966 SC 334, and B. K. Sinha v. State of Bihar, AIR 1974 Pat 230 that no writ or order can issue under Article 226 of the Constitution in such cases' to compel the authorities to remedy a breach of contract pure and simple.'

7. In B. T. Company's case (AIR 1981 SC 1368) (supra) the petitioner had filed a writ petition that the respondent, the State of Assam, be directed to refund to him the royalty that he had paid to it under protest, as the same could not have been recovered from him either under the terms of the contract, or by virtue of the proviso to Rule 37 of the Settlement Rules. A preliminary objection was taken that since the right claimed flowed from a contract, it was not enforceable by a writ petition; no matter that it was also traceable to a statutory rule, but which itself had been made a part of the contract. It was observed (at pp. 1371-72):

'...... ... It thus can be demonstrably established that the respondent was trying to enforce through the writ petition the right to remove timber without the liability to pay royalty not under the proviso to Rule 37 which was merely an enabling provision, but the specific term of lease agreed to between the parties. Proviso to Rule 37 may not be incorporated in an indenture of lease. If incorporated after fulfilling pre-condition it becomes a term of lease. The High Court in our opinion, therefore, was in error in posing a question to itself as to whether the applicant (respondent herein) was entitled to the enforcement of legal right under the proviso to Rule 37 of the Settlement Rules. The camouflage successfully worked, but once this cloak is removed, it unmistakably transpires that the respondent was trying to claim benefit of Clause 2 of the lease having fulfilled its pre-condition and obtaining the inclusion of its latter part in the contract of lease. The question, therefore, really is whether such contractual obligation can be enforced by the writ jurisdiction? How dangerous it is, can be demonstrably established in this case.'

8. In the instant case, the petitioners had no option but to take out the policies of their vehicles according to the enhanced rates of premia fixed by the T. A. C., in exercise of its powers under Section 64-UC of the Insurance Act, and which had there by become a provision of the statute itself.This was indubitably a statutory requirementand they were bound to fulfil it howsoeverdiscriminatory, arbitrary or unreasonable thesame in their opinion might have been. It is,therefore, not a case of voluntarily enteringinto a contract with open eyes. That apart,what the petitioners are really challenging isthe aforesaid act of the T. A. C. of enhancingthe rates of premia on the ground that it isViolative of Articles 14 and 19(1)(g) of theConstitution, in that, it is not only discriminatory in character, but is also arbitraryand unreasonable and tends to affect theirright to carry on trade or business. Assuming, therefore, that the revised rates of premiawere themselves made the terms of the contracts, the petitioners are still not estoppedfrom challenging them, because for throwinga challenge to these rates, they are not seeking support from the terms of the contract,or for that matter from any statutory provision embodied in the contract, but are in factdepending upon the unconstitutionally ofthe statutory provision that was embodiedin the contracts under legal compulsion.Actus me invito factus, non est mens actus,that is, an act done by me against my willis not my act. The decisions relied upon byMr. Mirdul are, therefore, clearly distinguishable on facts and no challenge can bethrown to the maintainability of the writpetition on the ground that it seeks toenforce the rights and obligations arising outof a contract. The preliminary objectionthus fails.

9. Irrespective of the fact as to whetherthe act of the T. A. C. in revising the ratesof premia is a legislative act or an administrative act, the fact remains that in bothcases it has to satisfy the requirements ofreason and relevance; It should neither bediscriminatory, nor arbitrary or unreasonable, but should be justifiable on someprinciple. A provision of law that authorises subordinate legislation will be liable tobe struck down as violative of Article 14 onthe ground of excessive delegation of power,when it neither discloses the legislative policy,nor does it provide any guidance for theauthority entrusted with the task of subordinate legislation. Any such legislationwhich is either arbitrary or unreasonable,based upon irrelevant or extraneous considerations, is liable to be struck down asviolative of Article 14. The same is true, ofan administrative order which entails penalor civil consequences. Such an order too hasto satisfy the test of Article 14. Keeping inview, however, the other contentions raised at the bar, the question as to whether the functions of the T. A. C. in revising the rates of premia is legislative or administrative, has still to be determined.

10. General Insurance business in India was nationalised by virtue of the General Insurance Business (Nationalisation) Act, 1972. Numerous insurance companies were merged and reduced to only four in number to be called the acquiring companies, which are respondents 4 to 7 herein. By virtue of Section 4 of the Act, all shares in the capital of each insurance company was transferred and made to vest in the Central Government. A corporation known as the General Insurance Corporation of India, for short Corporation, respondent No. 3 herein, was thereafter formed by the Central Government for the purpose of superintending, controlling and carrying on the business of general insurance, and by virtue of Section 10 of the Act, all the shares in the capital of the insurance companies, which had hitherto vested in the Central Government in pursuance of Section 4, were transferred in favour of the said Corporation. Section 23 gave plenary powers to the Central Government to issue directions to the acquiring companies as well as to the corporation in regard to matters of policy involving public interest, which they were bound to follow. Section 25 conferred power on the Central Government to exclude, restrict, or limit the provisions of the Insurance Act of 1938 to the Corporation and the acquiring companies by means of issuing a notification to that effect.

11. In exercise of its aforesaid power under Section 35 the Central Government issued a notification on 29-12-1972, excluding the application of a number of provisions of the Insurance Act, and at the same time applying some others with some alteration or modification to the Corporation and the acquiring companies. For the present discussion, we need notice only Clause (a) of Subsection (1) of Section 64-UA and Clause (3) of Section 64-UC of the Insurance Act. Whereas Clause (a) of Sub-section (1) of Section 64-UA, which dealt with the composition of the T. A. C. was applied with modification, and the membership of the T. A. C. restricted to the Chairman of the Corporation or any other member of the T. A. C. to be nominated by him as its Chairman, and not more than fifteen other members to be nominated by the Corporation with the prior approval of the Central Government, Sub-section (3) of Section 64-UC was totally omitted. This sub-section before its omission read as under:

'(3) Every decision of the Advisory Committee shall be valid only after and to the extent it is ratified by the Controller arid every such decision shall take effect from the date on which it is so ratified by the Controller, or, if the Controller so orders in any case, from such earlier date as he may specify in the order.'

12. The above discussion leaves no room for doubt that the Corporation and the four acquiring insurance companies are instrumentalities of the Central Government and are, therefore, subject to all such constitutional limitations to which the Central Government itself is.

13. This bring me to Section 64-UC, upon which both the parties have relied so heavily to substantiate their rival contentions. This section after the omission of Sub-section (3) reproduced heretofore, reads as under:--

'64-UC. Power of the Advisory Committee to regulate rates, advantages, etc.-- (1) The Advisory Committee may, from time to time and to the extent it deems expedient control and regulate the rates, advantages terms, and conditions, that may be offered by insurers in respect of any risk or of any class or category or risks, the rates, advantages, terms and conditions of which, in its opinion, it is proper to control and regulate, and any such rates, advantages, terms and conditions shall be binding On all insurers;

Provided that the Controller may, with the previous approval of the Central Government, permit any insurer to offer, during such period (being not more than two years but which may be extended by periods of not more than two years at a time) and subject to such conditions as may be specified by him, rates, advantage, terms or conditions different from those fixed by the Advisory Committee in respect of any particular category of risks, if he is satisfied that such insurer generally issued policies only to a restricted class of the public or under a restricted category of risks.

(2) In fixing, amending or modifying any rates, advantages, terms or conditions, relating to any risk, the Advisory Committee shall try to ensure, as far as possible, that there is no unfair discrimination between risks of essentially the same hazard, and also that consideration is given to past and prospective loss experience :

Provided that the Advisory Committee may, at its discretion, make suitable allowances for the degree of credibility to be assigned to the past experience, including allowances for random fluctuations and may also, at its discretion, make suitable allowances for future fluctuations and unforeseen future contingencies, including hazards of conflagration or catastrophe or both.

(4) The decisions of the Advisory Committee in pursuance of the provisions of this section shall be final.

(5) Where an insurer is guilty of breach of any rate, advantage, term or condition fixed by the Advisory Committee, he shall be deemed to have contravened the provisions of this Act:

Provided that instead of proceedings against the insurer for such contravention, the Controller may, if the insurer removes the contravention by recovering the deficiency in the premium or where it is not practicable to do so; modifies suitably or cancels the contract of insurance, compound the offence on payment to the Advisory Committee of such fine, not exceeding rupees one thousand, as he may decide in consultation with the Advisory Committee.'

14. The T. A. C., as already noticed, is constituted by the Central Government in exercise of its powers Under Section 64-UA. It is thus clearly a creature of the statute. By virtue of Sub-section (1) of Section 64-UC, it has been invested with the powers of regulating the rates, advantages, terms and conditions, that may be offered by the insurers, and once it regulates them, the same are final and binding on the insurer as well as the insured. Under the proviso to Sub-section (1) the Controller, in case he is satisfied that the insurer in respect of any particular category of risks generally issues policies only to a restricted class of public or under a restricted category of risk, he may with the previous approval of the Central Government, modify the rates, advantages, terms and conditions fixed by the T. A. C. But, this cannot detract from its statutory power to fix such rates, advantages etc. etc. The rates thus fixed, become a part of the statute itself. Exceptio probat regulam de rebus non-exxceptis, that is, an exception proves the rote concerning things not excepted. Under these circumstances, therefore, it is not possible to hold, as argued by Mr. Sen, that the function of the T. A. C. is not legislative but is merely administrative. After the deletion of Subsection (3) it is impossible to contend that the T. A. C. is merely a fact finding or a re-commendatory body. It is surely a statutory body, entrusted with the task of subordinate legislation. Every owner of a motor vehicle has to take out a policy in respect of toe vehicle to meet the statutory requirement of Section 95 of the Motor Vehicles Act, and the rates of premia fixed by the T. A. C. are binding on him in the same manner as any other provision of the Insurance Act is. The act of the T. A. C. in fixing the rates is thus legislative and not administrative in character.

15. In the Tulsipur Sugar Co. Ltd. v. The Notified Area Committee, Tulsipur, AIR 1980 SC 882, their Lordships had quoted with approval the observations made by Megarry, J. in Bates v. Lord Hailsham of St. Marylebone, (1972) 1 WLR 1373, in almost similar circumstances. In that case, the committee appointed under Sub-section (1) of Section 56 of the Solicitors Act, 1957, had in compliance with Sub-section (3) of Section 56, sent its draft to the British Legal Association, proposing the scale of fees under Schedule I to the Solicitors Remuneration Order, 1883. The Association not being satisfied with the proposed scale, had sought ex parte injunction against the members of the Committee, restraining them from holding a meeting to give a final shape to its proposal. This motion was dismissed by Megarry, I, with the following observations (at pp. 887 to 888):

'In the present case, the committee in question has an entirely different function; it is legislative rather than administrative OB executive. The function of the committee is to make or refuse to make a legislative instrument under delegated powers. The order, when made, will lay down the remuneration for solicitors generally; and the terms of the order will have to be considered and construed and applied in numberless cases in the future. Let me accept that in the sphere of the so-called quasi-judicial the rules of natural justice run, and that in the administrative or executive field there is a general duty of fairness. Nevertheless these considerations do not seem to me to affect the process of legislation whether primary or delegated. Many of those affected by delegated legislation, and affected very substantially, are never consulted in the process of enacting that legislation; and yet they have no remedy. Of course the informal consultation of representative bodies by the legislative authority is a common place; but although a few statutes have specifically provided for a general process of publishing draft delegated legislation and considering objections (see for example, the Factories Act 1961, Schedule 4). I do not know of any implied right to be consulted or make objections, or any principle upon which the Courts may enjoin the legislative process at the suit of those who contend that insufficient time for consultation and consideration has been given. I accept that the fact that the order will take the form of a statutory instrument does not per se make it immune from attachment whether by injunction or otherwise; but what is important is not its form but its nature, which is plainly legislative.'

16. In order to determine the nature of its functions, Sub-section (1) of Section 64-UC can be safely compared with Section 4 of the Jammu and Kashmir General Sales Tax Act, 1962, which empowers the Government to fix different rates of tax for different commodities. A Division Bench of this Court in Writ Petition No. 37/78 titled Mangat Ram v. Government of Jammu and Kashmir had recently taken the view that the aforesaid power is a power of subordinate legislation, which in the absence of a specific provisions to that effect in Section 4 itself, cannot be exercised by the Government retrospectively.

17. To the same effect is the view taken in Saraswati Industrial Syndicate Ltd. etc. v. Union of India, AIR 1975 SC 460, and Prag Ice and Oil Mills v. Union of India, AIR 1978 SC 1296, where the act of the Central Government in fixing the price of an essential commodity in exercise of its powers Under Section 3 of the Essential Commodities Act, was held to be legislative in character. I am, therefore, clearly of the opinion that the act of the T. A. C. in revising the rates of premia, or determining other advantages, terms and conditions of insurance in exercise of its power Under Section 64-UC is legislative in character.

18. The other principle which stands settled through judicial decisions, and which must also be noticed before proceeding further in the matter is that whereas presumption of constitutionality will remain attached to a statute which has been challenged on the ground that it violates Article 14, and the burden to prove the contrary by pleading the necessary facts would be on the petitioner, the onus to prove that the restriction imposed on a fundamental right guaranteed to a citizen under Article 19(1) is reasonable, will be on the State, once it is shown that the right has been taken away, or even abridged by the impugned legislation. This distinction was clearly brought out by their Lordships in Khyerbari Tea Co. Ltd. v. State of Assam, AIR 1964 SC 925, wherein it was held (at p. 939) :--

'...... Another principle which has to be borne in mind in examining the constitutionality of a statute, it was observed, is that it must be assumed that the legislature understands and appreciates the needs of the people and the laws it enacts are directed to problems which are made manifest by experience and that the elected representatives assembled in a legislature enact laws which they consider to be reasonable for the purpose for which they are enacted. Presumption is, therefore, in favour of the constitutionality of an enactment. It is significant that all the decisions to which reference is made in support of the statement of the law are decisions under Article 14 of the Constitution. Mr. Setalvad has fairly conceded that in view of the decision in the case of Saghir Ahmed, (1955) 1 SCR 707 : (AIR 1954 SC 728). It would not be open to him to contend that even after the invasion of the fundamental right of a citizen is proved under Article 19(1)(g), the onus would not shift to the State. In our opinion, the said decision is a clear authority for the proposition that once the invasion of the fundamental right under Article 19(1) is proved, the State must justify its case under Clause (6) which is in the nature of an exception to the main provisions contained in Article 19(1). The position with regard to the onus would be the same in dealing with the law passed under Article 304(b). In fact, in the case of such a law, the position is somewhat stronger in favour of the citizen, because the very fact that a law is passed under Article 304(b) means clearly that it purports to restrict the freedom of trade. That being so, we think that as soon as it is shown that the Act invades the right of freedom of trade it is necessary to enquire whether the State has proved that the restrictions imposed by it by way of taxation are reasonable and in the public interest within the meaning of Article 304(b). This enquiry would be of a similar character in regard to clause (6) of Article 19.'

19. I now come to the main contentions raised in the writ petition. The impugned tariff has been challenged on three grounds; one, that it being discriminatory as well as arbitrary and highly unreasonable, takes away the right of equality guaranteed under Article 14 of the Constitution; two, that it tends to adversely affect the business of the petitioners and is as such violative of Article 19(1)(g) and three, that it has been made applicable by the T. A. C. without hearing persons to be effected by it and is, therefore, violative of the principles of natural justice. In view of what has been stated heretofore, the third ground that the impugned tariff is violative of the principles of natural justice need not detain me any longer. I have already held that the function of the T. A. C. is legislative in nature and it is well settled that rules of natural justice are not applicable to legislative acts, whether the same are acts of subordinate legislation or that of conditional legislation. Authorities on the point are legion. (See Sarawati Industrial Syndicate Ltd. v. Union of India AIR 1975 SC 460; The Tulsipur Sugar Co, Ltd. v. The Notified Area Committee, Tulsipur, AIR 1980 SC 882; and Rameshchandra Kachardas Porwal v. State of Maharashtra, AIR 1981 SC 1127). That apart, in case the T. A. C. were to hear all those who were likely to be affected by the revision of the tariff, it might have had to hear hundreds of thousands of transporters before enforcing the impugned tariff. This would have surely made its task virtually impossible. Rules of natural justice, it is well settled, cannot be made applicable to such cases. In taking this view I derive support from the following observations made by the Supreme Court in The Bihar School Examination Board v. Subhas Chandra Sinha, AIR 1970 SC 1269 (at p. 1272) :

'...... The examination was vitiated by adoption of unfair means on a mass scale. In these circumstances it would be wrong to insist that the Board must hold a detailed inquiry into the matter and examine each individual case to satisfy itself which of the candidates had not adopted unfair means. The examination as a whole had to go.'

20. Arbitrariness or unreasonableness of the impugned tariff is sought to be proved from the following circumstances: (1) Insurance premium of Rs. 1,508/-, which was payable under the old tariff on account of third party risk in respect of 52 seater passenger bus, has now been raised to Rupees 2,420/-. Similarly, the premium of Rupees 1,984/- payable on comprehensive policy in respect of a similar vehicle has now been raised to Rs. 4,420/-. The increase in the first case is 60%, whereas the increase in the second case is 122%. (2) Under the old tariff, Rs. 6/- per passenger were charged for passenger risk liability fixed by Section 95 of the Motor Vehicles Act. This rate has been enhanced by 100% and is now Rs. 12/-per passenger. Similarly, the rate chargeable for unlimited passenger risk liability under the old tariff was Rs. 15/- per passenger. This rate has been raised by more or less 350% and is now Rs. 50/- per passenger. (3) The rate chargeable under the old tariff for unlimited third party injury/death was Rs. 4/- per vehicle. This has now been raised by 1250% and is now Rs. 50/- per vehicle. (4) Under the old tariff, out of the damage to the vehicle amounting to Rupees 2,000/- the insurer was liable to pay Rupees 1,900/- but under the new tariff it has to pay Rs. 1,500/- only. (5) Under the old tariff, a uniform rate of 0.50% on Insured Estimated Value (I. E. V.) was charged on all classes of passenger vehicles irrespective of their seating capacity. Under the new tariff, however, this rate has been enhanced to 0.70% on vehicles having a seating capacity up to 60 and to 1.40% on vehicles having a seating capacity of more than 60.

21. This ground of arbitrariness or unreasonableness of the revised tariff, or that it is based upon irrelevant or extraneous considerations, in my opinion, must fail for more than one reason. To begin with, the Court will presume that the impugned tariff is neither arbitrary nor unreasonable, when the challenge has been thrown to it on the basis of violation to Article 14. It was for the petitioners to have pleaded the necessary facts and placed some acceptable material before the Court to satisfy it that the new rates are either arbitrary, or otherwise highly unreasonable, or the same have been fixed on irrelevant or extraneous considerations. Beyond repeating the bald expressions 'arbitrary', 'unreasonable' and 'based upon irrelevant or extraneous considerations', the petitioners have not said even a word more in their writ petition. They were attacking the tariff on the ground of violation of Article 14. It was, therefore, for them to show by acceptable data as to in what manner it offended the said Article. No relief can be given to the petitioners on their mere ipse dixit.

22. Secondly, the alleged exorbitant increase has been made in respect of those covers only which are optional. Comprehensive policy, for instance, which includes own damage as well, is not a statutory requirement. Nor is the unlimited passenger or third party injury/death or damage to property risk a requirement of Section 95 of the Motor Vehicles Act. It is only in these cases that the increase has been made more than 100%. In all other cases the increase is not more than 60%. No grievance can, therefore, be made by the insured that these rates are arbitrary, unreasonable, or based upon irrelevant or extraneous considerations, when he has an option not to cover such risks. Arbitrariness or unreasonableness in such cases is rendered inconsequential.

23. Thirdly, what the T. A. C. has to keep in mind in fixing, amending or modifying the rates, advantages etc. is the past or prospective loss experience, besides random fluctuations and unforeseen circumstances. This is borne out from Sub-section (2) of Section 64-UC, which in a broad manner provides the guidelines to be followed by it in such matters. How many accidents might take place in future, what type of people might be killed in such accidents, how much compensation the insurance company might have to pay on account of such accidents, are matters in which the element of speculation inhers to a very large extent. To expect the T. A. C. to fix, amend or modify the rates of premia with mathematical exactitude is therefore, neither possible nor proper. A fair and reasonable margin has to be given to it in doing so.

24. This conclusion is also justifiable on the basis of the facts and circumstances pleaded by Mr. Vadilal Dalsukhbhai Shah in his counter-affidavit, who happens to be the Secretary of the T. A. C. which has enforced the impugned tariff. Put briefly, these are:--

(1) statutory liability under the Workmen's Compensation Act and the Motor Vehicles Act has been considerably enhanced;

(2) cost of the vehicles, their spare parts and the labour required for repairing them has also gone considerably high;

(3) the claim ratio has also increased between the years 1976 and 1980 by more than 95%;

(4) the Supreme Court in Jadavji Kishavjee Modi's case (AIR 1981 SC 2059) (supra), has alarmingly enhanced the liability of the insurance company in so far as third party risk is concerned;

(5) there is an even growing consciousness in the general public to put forth its claims arising out of Motor Vehicles Accidents;

(6) 10% of the premia collected is to be paid to the agents by way of commission, and 20% of it is needed for meeting administrative expenses; and

(7) the increase is based upon sample surveys and actuarial calculations.

25. These allegations are not without substance. An owner of a vehicle is required to take out policy covering a risk that may arise under the Workmen's Compensation Act, as a statutory duty is cast upon the insurer to pay compensation to his employees under the. aforesaid Act. This is clearly borne out from Sub-section (1) of Section 95 of the Motor Vehicles Act, read with proviso (J) to it. Schedule IV to this Act has been amended with effect from 1-10-1976 by virtue of Act No. 65 of 1976, and the compensation payable to a workman on account of death or bodily injury has been enhanced by more or less 200%. Similarly, the ceiling on the third party risk Under Section 95 of the Motor Vehicles Act has been increased from Rs. 20,000/- to Rs. 50,000/- per accident, and depending upon the seating capacity of the vehicle, the maximum limit in respect of passenger risk has been increased from Rs. 20,000/- to Rs. 1,00,000/-. What is more material is the Supreme Court decision in Jadavji Keshavjee Modi's case (AIR 1981 SC 2059), according to which, death of or bodily injury to each person in a single accident is to be treated as an independent accident for the purpose of computing compensation. This will be amply borne out from the following observations made therein (at pp. 2064-65):

'.... The expression 'any one accident' is susceptible to two equally reasonable meanings or interpretations. If a collision occurs between a car and a truck resulting in injuries to five persons, it is as much plausible to say that five persons were injured in one accident as it is to say that each of the five persons met with an accident. A bystander looking at the occurrence objectively will be right in saying that the truck and the car met with an accident or that they were concerned in one accident. On the other hand, a person looking at the occurrence subjectively, like the one who is injured in the collision will say that he met with an accident. And so will each of the five persons who were injured. From their point of view, which is the relevant point of view, 'any one accident' means 'accident to any one'. In matters involving third party risks, it is subjective considerations which must prevail and the occurrence has to be looked at from the point of view of those who are immediately affected by it. If the matter is looked at from an objective point of view, the insurer's liability will be limited to Rs. 20,000/- in respect of injuries caused to all the five persons considered en bloc as a single entity since they were injured as a result of one single collision. On the other hand if the matter is looked at subjectively as it ought to be, the insurer's liability will extend to a sum of Rs. 20,000/- in respect of the injuries suffered by each one of the five persons, since each met with an accident, though during the course of the same transaction. A consideration of preponderating importance in a matter of this nature is not whether there was any one transaction which resulted in injuries to many but whether more than one person was injured, giving rise to more than one claim or cause of action, even if the injuries were caused in the course of one single transaction. If more than one person is injured daring the course of the same transaction, each one of the persons has met with an accident.'

26. Data has also been provided in the reply affidavit by way of a sample, showing increase in the cost of motor cars and their spare parts between 1976 and 1981, which varies from 100 to 200%. It is also not in dispute that the claim ratio has gone up to 95.3% in the year 1980, which undoubtedly proves an ever growing consciousness in the general public to claim compensation arising out of motor vehicle accidents. On top of it, insurance company has to pay 10% of the premium by way of commission to its agents. Mr. Sen's contention that the payment of this commission is wholly unnecessary, because the owners of the motor vehicles have no option but to insure their vehicles with respondents 4 to 7 alone who enjoy the monopoly in the business, loses its sting, when considered in the background that there is inter se business competition between these four companies as well. Even 20% expenditure of administrative charges does not appear to be excessive. In anycase, the petitioners have not placed anystatistics to show whether it is really excessive, and if so, to what extent. Administrative machinery has to be maintained throughout the length and breadth of the country.Even administrative functions are multifariouswhich require huge expenditure to be incurred on them. Among others, these includespot inspections, and defending of claimsagainst the insurance companies in Courtsof law. The same is true of I. E. V. rateswhere the increase is only nominal. Thegreater the number of passengers in a vehicle, the greater is naturally the risk of itsaccident and the greater is the quantum ofcompensation to be paid on its account.The explanation tendered by the respondentsfor putting the vehicles in two categoriesi. e, one where the seating capacity does notexceed 60, and the other where it exceeds60, is thus plausible. That apart, keeping inview the consistent alarming growth inpopulation and the regular enormous increasein the number of vehicles that ply on theroads today, the chances of accidents, therecan be no manner of doubt, are also boundto increase considerably. All these facts,and circumstances, according to the respondents, were taken into consideration by theT. A. C. Sample Surveys by experts andcalculations by actuaries were made beforethe decision to revise the tariff was taken,by it. Viewed thus, not to speak of emhancement in the rates of compulsory insurance, even the enhancement of rates inthe case of optional insurance cannot besaid to be arbitrary, unreasonable or otherwise based upon irrelevant or extraneousconsiderations. The authority relied uponby Mr. Sen viz.: The Bihar State ElectricityBoard v. Jawahar Lal, AIR 1976 Pat 323 isof no avail to the learned counsel, for, whatwas settled in that case was the propositionof law that an increase made in the tariffunder the statutory provision of law -- inthat case the increase was made Under Section 49 ofthe Electricity (Supply) Act, 1948 is justiciable, and the Court can hold it arbitraryor unreasonable on the basis of acceptablematerial placed before it. We have noquarrel with this proposition.

27. The other attack against the impugned tariff is again based upon the infraction of Article 14 on account of its discriminatory nature. It is said to be discriminatory: firstly because whereas the increase in the rates of motor cars is only 15%, the increase in the rates of passenger buses is more than 100%; and secondly, because whereas ownersof private motor vehicles have to get theirvehicles compulsorily insured, the vehiclesowned by the Government or by the Government Corporations are exempt from insurance. Even this ground is devoid of anyforce. To justify the charge of discrimination, it is first to be shown that the personsor things grouped together are similarlysituated. Nothing has been stated in thewrit petition to indicate that cars and passenger buses are similarly situated. The object of the revision is to make the rates ofpremia commensurate with the loss expectancy. Passenger buses are generally morevulnerable to accidents than small cars.Again, the consequences arising out of apassenger bus accident are normally supposed to be graver as compared to those arisingout of a car accident. Naturally, therefore,the amount of compensation that an insurance company may have to pay in the caseof a passenger bus accident, is apprehendedto be much more than the amount of compensation it may have to pay in the case ofa car accident. Cars and passenger buses, itis thus so obvious, belong to two differentclassees and no question of subjecting oneto hostile discrimination vis-a-vis the othercan possibly arise.

28. The same is true of Government buses and private buses. Government is a class by itself. The legislative object behind insurance of motor vehicles is to safeguard the interests of the passengers and third party sufferers on account of motor vehicle accidents. What is to be insured is the payment of minimum compensation to them due to such accidents. Financial position of the Government to pay the same, judged by any standard, is much more sound than that of a private bus owner. Exempting Govt. vehicles from insurance is thus clearly relatable to the object sought to be achieved by the Legislation. Furthermore, exemption is claimed by Government vehicles under Section 93 of the Motor Vehicles Act. Constitutional validity of this section has not been challenged in the writ petition. In the absence of any such challenge, the petitioners cannot be heard to say that the impugned tariff is discriminatory on that account.

29. This brings me to the last ground of attack that the impugned tariff is violative of Article 19(1)(g), in that, the owners of private passenger buses, in view of the heavy burden of insurance charges placed on them, cannot compete in business with the Government or Government Corporations who are exempt from insurance, except at the cost of running it at a loss. The revision made by virtue of the impugned tariff, it is contended, places an unreasonable restriction on their right to carry on their aforesaid business. Here again, the writ petition suffers from the same vice of deficiency in acceptable material. It is true that the burden of proving the reasonableness of restriction is always on the State, but as already noticed, it is equally true that the initial burden of proving the loss or even an abridgement of a right guaranteed under Article 19(1) is always on the petitioner. In the instant case, the petitioners have not given any data as to how much profit they had been earning before 1-2-1982, what were the fares fixed by the Government then, what are the fares now and how much loss they will have to incur in view of the revised rates of premia. Whether it is a case of earning less profit, or a case of running the business at a loss, it is impossible to say one way or the other, on the basis of the averments made in the writ petition. Consequently, it cannot be said as to whether the impugned tariff tends to take away or abridge the right of the petitioners to carry on their transport business.

30. That apart, the fares are subject to periodical review by the Government. The petitioners can always approach the Government and place all the material facts and figures before it justifying a suitable increase in the rates of fares, so that a reasonable profit is assured to them. Merely because they may have to undergo some loss for a short time will not render the impugned tariff violative of Article 19(1), much less, when they are meticulously silent as to how much profit they were earning prior to 1-2-1982. The element of profit and loss is inherent in every business, which appears and disappears from it due to a variety of causes. As held by their Lordships in Shree Meenakshi Mills Ltd. v. Union of India, AIR 1974 SC 366 (at p. 381):

'In determining the reasonableness of a restriction imposed by law in the field of industry, trade or commerce, it has to be remembered that the mere fact that some of those who are engaged in these are alleging loss after the imposition of law will not render the law unreasonable. By its very nature, industry or trade or commerce goes through periods of prosperity and adversity on account of economic and some times social and political factors .....'

31. A similar view was taken in Saraswati Industrial Syndicate Ltd. v. Union of India, AIR 1975 SC 460 and M/s. Prag Ice and Oil Mills v. Union of India, AIR 1978 SC 1296. This relieves me of dealing with the other contentions raised on behalf of the respondents.

32. For the foregoing reasons. T find no force in this writ petition, which I dismiss accordingly, but without making any order as to costs. The stay issued by the Court at the time of the admission of the writ petition on 24-4-1982, and modified by it by its later order dated 21-5-1982, is hereby vacated.