ORDER
1. Some of the petitioners are saved operators and the remaining are the
operators on the Inter-State Routes. Each one of them has applied for renewal of their stage carriage permits before the second respondent. The 4th respondent-Karnataka State Road Transport Corporation (Corporation in short) has also made applications on each one of the routes concerned herein for grant of permits. Thus the applications filed by the petitioners for renewal of their permits and the applications filed by the the 4th respondent for grant of permits on the very routes are pending before the second respondent. At this stage the petitioners have approached this Court seeking a writ of prohibition against the Chairman of the second respondent on the ground that she being a member of the Board of Directors of the 4th respondent, is disqualified in Saw to function either as a member or as the Chairman the second respondent. In addition to this prayer there are various other prayers made in each one of these writ petitions, but the learned counsel appearing for the petitioners have submitted that the other prayers may be treated as given up. Therefore the other prayers are not considered. The only prayer for issue of a writ in the nature of prohibition to the Transport Commissioner refraining her from functioning as the Chairman or a member of the second respondent is considered.
2. Having regard to the contentions urged, the point that arises for consideration is whether the Transport Commissioner who is an official director of the 4th respondent Corporation, is disqualified to function as the Chairman or a member of the Karnataka State Transport Authority.
3. It is contended on behalf of the petitioners that the Transport Commissioner who is appointed as a Director of the Corporation is connected directly with the management or operation of the Transport undertaking of the Corporation, therefore she is disqualified from holding the office of the Chairman or a member of the Karnataka State Transport Authority (KSTA for short). It is contended that as a Chairman of the KSTA she has to decide the rival contentions of the private operators and the Corporation while granting
or renewing the permits, therefore she being the person connected with the management and operation of the transport undertaking of the Corporation cannot be expected to discharge the functions as Chairman or as a member of the KSTA without any institutional bias. As the office of the Chairman of the KSTA and the office of the Director of the KSRTC are held by one and the same person, the functions and duties of both the offices are intermingled, there is every possibility that the interest of the Corporation is likely to weigh in the mind of the Chairman while deciding the rival contentions of the parties. In addition to this reliance is also placed on sub-sec. (1H) of S. 47 of the Motor Vehicles Act (hereinafter referred to an the Act) read with R. 91 of the Karnataka Motor Vehicles Rules 1963. These provisions have a bearing on the exercise of power by the Chairman of the K.S.T.A. Sub-sec. (1H) of S. 47 of the Act though it relates to a preference being given to the State Transport undertaking, as held by the Supreme Court in Sher Singh v. Union of India, , where all things being equal the State Transport undertaking is entitled to preference. Therefore it is necessary for the authority, before giving effect to rule of preference, to determine as to whether, under the facts and circumstances of the case, the K.S.R.T.C. is capable of operation on the additional routes keeping in view the interest of the travelling public. (See also and ). In addition to this it is also contended that in the case of difference of opinion amongst the members of the K.S.T.A. the Chairman has got a casting vote, therefore the Chairman has got the last say in the matter, hence the Chairman being the director of the Corporation which is also an applicant before the authority cannot be expected to take a dispassionate view in the matter. At any rate, the test, to find out whether there is a bias in favour of the Corporation, is not what the deciding officer feels about it or assures that he/she will be acting impartially, but what a reasonable litigant feels about the matter in the facts and circumstances of the case. On the contrary, it is contended on behalf of the State that the Transport Commissioner will not be directly
connected with the management and operation of the State Transport undertaking and as such he or she as the case may be, cannot be oisqualified to hold the office of the Chairman of the K.S.T.A. or a member thereof. It is also further submitted that sub-sec. (2) of S. 44 of the Act contains a rule of statutory exclusion, therefore even if the Transport Commissioner is connected with the management or operation of the State Transport undertaking, in law, he or she as the case may be is eligible for discharging the functions of the Chairman of the K.S.T.A. In addition to this an affidavit of the Transport Commissioner is filed assuring to the Court that in the discharge of her duties as the Chairman of the K.S.T.A. she will be impartial and she will not give scope for any such thing so as to give an impression to the applicants before the authority that there is a bias towards any one of the applicants before it. It is also stated in the affidavit that the Transport Commissioner is not actually concerned with the day to day administration of the undertaking and it is the Managing Director who attends to the day to day administration of the undertaking.
4. It is also contended on behalf of the Corporation by learned Counsel Sri Jaya-kumar Patil that the Transport Commissioner, no doubt, is an official director of the Corporation; but there is a subcommittee formed consisting of some of the directors and the Transport Commissioner is not one of them, which looks after the day to day management and operation of the transport undertakings Corporation and the Transport Commissioner does not actually attend to any of the matters relating to the management and operation of the transport undertaking of the Corporation. Reliance is placed on Rr. 3 and 5 of the Karnataka State Road Transport Corporation Rules, 1961 (hereinafter referred to as ‘the Corporation Rules’).
5. The relevant portion of Sub-sec. (2) of S. 44 of the Act reads :
“44 (2). A State Transport Authority or a Regional Transport Authority shall consist of a Chairman who has had judicial experience or experience as an appellate or a revisional authority under any law relating to land revenue and in the case of a Slate Transport Authority, such other officials and non-officials, not being less than two, and, in the cass of a Regional Transport Authority, such other persons (whether officials or not), not being less than two, as the State Government may think fit to appoint; but no person who has any financial interest whether as proprietor, employee or otherwise in any transport undertaking shall be appointed as or continue as a member of a State or Regional Transport Authority, and if any person being a member of any such Authority acquires a financial interest in any transport undertaking, he shall, within four weeks of so doing, give notice in writing to the State Government of the acquisition of such interest and shall vacate office;
XX XX XX
Provided also that nothing in this subsection shall be construed as debarring an official (other than an official connected directly with the management or operation of a transport undertaking) from being appointed as or continuing as a member of any such authority merely by reason of the fact that the Government employing the official has, or acquires, any Financial interest in a transport undertaking.”
6. A reading of the aforesaid provisions contained in sub-sec (2) of S. 44 of the Act makes it clear that no person who has any financial interest whether as proprietor, employee or otherwise in any transport undertaking is eligible to be appointed as or continue as a member of the State of Regional Transport Authority. If as a member he acquires a financial interest in any transport undertaking, he shall have to vacate the office. However, there is a further exception to this Rule carved out in the third proviso which states that such of those officials who are not connected directly with the management or operation of a transport undertaking will not be disabled from appointment merely because the Government employing the official has, or acquires any financial interest in the transport undertaking. However, the third proviso shall not be applicable to such of those officials who are directly connected with the management or operation of the Transport undertaking. Therefore, the case of the petitioners is that the Director of the Corporation is one such person who is connected directly with the management oc operation of the transport undertaking of the Corporation. If the Transport Commissioner as a Director of the Corporation is connected directly with the management or operation of the transport undertaking of the Corporation, there can be no doubt that she will be disqualified to hold the office of the Chairman or a member of the KSTA. This question has to be examined with reference to the provisions contained in the Road Transport Corporation Act, 1950 (hereinafter referred to as the R.T.C. Act) which governs the Corporation. S. 5 of the R.T.C. Act provides that the general superintendence, direction and management of the affairs and business of a Corporation shall vest in a Board of Directors which, with the assistance of its committees and Managing Director, may exercise all such powers and do all such acts and things as may be exercised or done by the Corporation. The Board shall consist of a Chairman and such other Directors, being not less than five and not more than 17 as the State Government may think fit to appoint. S. 12 of the R.T.C. Act further provides that the Board may, from time to time, by resolu-tion passed in a meeting appoint committee consisting of Directors for performing such functions as may be specified in the resolution, delegate to any such committee or to the Chairman or Vice-Chairman, subject to such conditions and limitations, if any, as may be specified in the resolution, such of its powers and duties as it may think fit; and authorise the Managing Director or any other officer of the Corporation, subject to such conditions and limitation, if any, as may be specified in the resolution to exercise such powers and perform such duties as it may deem necessary for the efficient day to day administration of its business. Sections 18 and 19 of the R.T.C. Act provide for general duties and powers of the Corporation. The powers of the Corpora-tion which are enumerated in S. 19 are to be exercised through the Board of Directors. The Corporation by itself cannot function
without the Board of Directors. The Board of Directors are the governing body of the Corporation. In fact while dealing with the Board of Directors Palmer in Company Law, 24th Edition on page 875, has stated the position of the Directors thus :
“A company can only act by agents, and usually the persons by whom it acts and by whom the business of the company is carried on or superintended are termed as directors”.
What applies to the Company, having regard to the provisions contained in the R.T.C. Act applies to the Board of Directors of the K.S.R.T.C.
7.1. The contention of the Corporation is that the Transport Commissioner as a Director is not actually participating in the day to day administration of the Corporation, nor is she connected with the operation of the transport undertakings of the Corporation, as such she cannot be held to be directly connected with the management of the Transport undertaking of the Corporation. It is not possible to accept this contention, because the Transport Commissioner as a member of the Board of Directors of the Corporation is part and parcel of the Board of Directors and as such she is entitled to exercise, as a member of the Board of Directors, the powers vested in the Board of Directors. Of course individually she may not be able to do anything. But as a member of the Board of Directors in which general superintendence, direction, and management of the affairs and business of the Corporation are vested, she can as any other Director of the Board be a party to the decision of the Board of Directors of the Corporation in respect of the matters relating to management or operation of a transport undertaking of the Corporation. Therefore, it is not possible to hold that the Transport Commissioner as a Director of the Corporation is not directly connected with the management, or operation of a transport undertaking, the affairs and business of the Corporation including the general superintendence. Merely because a subcommittee out of the members of the Board of Directors is constituted by the Board of Directors for the purpose of running a day to day administration which is nothing but an internal arrangement of the Corporation, cannot in any way be held to exclude the Transport Com- missioner from functioning as a member of the Board of Directors which is fhe ultimate authority of the Corporation. Every policy of the Corporation and every scheme to be published for taking over of new routes have to be determined by the Board of Directors and it is to these decisions to which the Transport Commissioner will be a party. Therefore, having regard to the provisions contained in the R.T.C. Act, there is no escape from the conclusion that the Transport Commissioner as adirector is a member of the Corporation and she is connected with the general superintendence, direction and management of the affairs and business of the Corporation which also necessarily includes operation of a transport undertaking which is the main object for which the Corporation is established. S. 3 of the R.T.C. Act specifically provides that :
“The State Government, having regard to– (a) the advantages offered to the public, trade and industry by the development of road transport;
(b) the desirability of co-ordinating any form of road transport with any other form of transport;
(c) the desirability of extending and improving the facilities for road transport in any area and of providing an efficient and economical system of road transport service therein;
may, by notification in the Official Gazette, establish a Road Transport Corporation for the whole or any part of the State under such name as may be specified in the notification.”
7.2. However, reliance is placed on behalf of the respondents on a decision of this Court in W.P. No. 5782/1976 N. Ramaswamy v. KSTAT and others, dated 4-12-1980, rendered by me. One of the points raised for consideration in that decision was as to whether the Chairman of the KSTA was disqualified to hold the office being a member of the K.S.R.T.C. On taking into consideration the provisions contained in sub-section (2) of S. 44 of the Act and also the provisions of the R.T.C. Act as they stood at that time it was held thus :
“Therefore, even if he was given a sitting allowance, his financial interest was not in his individual capacity and it was in his official capacity and the 3rd proviso to sub-sec. (2) of S. 44 of the Act, specifically exempted such financial interest. Therefore, it was not possible to hold that the Chairman of the 2nd respondent was disqualified to function as such merely because he was a member of the 3rd respondent-corporation. No provision in the Road Transport Corporations Act, 1950, was brought to my notice to show that a member of the 3rd respondent-Corporation was directly connected with the management of the Corporation or the operation of the transport undertaking. Merely because the Chairman of the second respondent in his official capacity was a member of the Corporation not connected directly with the management or the operation of the 3rd respondent State Transport undertaking, he was not disqualified from holding the office of the Chairman of the 2nd respondent. The position held by him in the 3rd respondent-Corporation as a member of that Corporation squarely fell within the third proviso to sub-sec. (2) of S. 44 of the Act.”
Accordingly the point was answered in the negative.
8. In this regard it is very relevant to notice that S. 5 of the R.T.C. Act as it stood on 4-12-80 was as follows :
“5. (1) Subject to rules made under this Act, a Corporation shall consist of a Chairman and such number of other members as the State Government may think fit to appoint.
(2) The State Government may, if it so thinks fit, appoint one of the other members as the Vice-Chairman of the Corporation.
(3) Rules made under this Act shall provide for the representation both of the Central Government and of the State Government Concerned in the Corporation in such proportion as may be agreed to by both the Governments and of nomination by each Government of its own representatives therein, and where the capital of a Corporation is raised by
the issue of shares to other parties under sub-sec. (3) of S. 23, provision shall also be made for the representation of such share holders in the Corporation and the manner in which the representatives shall be elected by such shareholders.
(4) The term of office of, and the manner of filling casual vacancies among, members of the Corporation shall be such as may be prescribed.”
The aforesaid provisions have now been substituted by Central Act 63 of 1982 which is given effect to from 13-11-1982. The substituted S. 5 has already been referred to Thus S. 5 as it stands today vests general supreintendence, direction and management of the affairs and business of the Corporation in the Board of Directors of which the Transport Commissioner is one. Therefore subsequent to the aforesaid decision there is a considerable change in the R.T.C. Act. In addition to this in the aforesaid decision it has also been specifically stated that no provision in the Corporation Act, 1950 was brought to the notice of the Court to show that a member of the Corporation was directly connected with the management of the Corporation or operation of a transport undertaking Therefore, it is not possible to hold that the aforesaid decision holds good having regard to the amendments brought about by Act 63 of 1982 in the various provisions of the R.T.C. Act vesting the general superintendence, direction and management of the affairs and business of the Corporation in the Board of Directors.
9.1. A reliance is placed on another decision of this Court in Indian Bank v. Blaze and Central (P) Ltd., . In that case the question arose as to whether an Estate Officer of the State Bank was capable of deciding the eviction proceedings. The act of the Estate Officer of the Bank in deciding the eviction proceedings was held to be valid, since the said act was not violative of principles of natural justice. This Court on considering the provisions contained in the Public Premises (Eviction of Unauthorised Occupants) Act, 1979 held that the powers and functions of the Estaste Officer regarding eviction were provided by the statute itself, therefore the bias could not be attributed to such an authority when the statute itself empowered him to exercise such power. It was further held that when the statute authorised the appointment of an officer of a statutory body concerned as Estate Officer, and the officer so appointed alone was competent to deal with the matter, it would be a case of statutory exception to the applicability of the Rules of natural justice. Accordingly, it was held that he war com-petent to exercise the power and there was no question of any bias, inasmuch as, the contention of bias was not permissible to be urged on the ground that he was an officer of the statutory body the owner of the public premises. Thus, it is clear that in view of the conclusions reached by me in the earlier portion of this order, the decision in M/s. Blaze and Central Private Ltd., cannot be held to be applicable to the case on hand, because the case on hand does not fall under the principle of statutory exception.
9.2. At this stage it is also relevant to refer to the submission made by learned Advocate General. It is very fairly submitted by learned Advocate General that the provisions of the R.T.C. Act vest the general superintendence, direction, management of the affairs and business of the Coporation in the Board of Directors. Therefore, the Transport Commissioner as a member of the Board of Directors is directly connected with the management and transport undertakings of the Corporation. Hence, having regard to the provisions contained in the second proviso to sub-sec. (2) of S. 44 of the Act, the Transport Commissioner as long as she is a member of the Board of Directors of the Corporation is ineligible to hold the office of the Chairman or a member of K.S.T. A. This is also the view expressed by me in the earlier portions of this order.
9.3. For the reasons stated above, I hold that the Transport Commissioner, as long as he/she, as the case may be, continues as a Director of the State Transport undertaking, namely, the KSRTC is not eligible to function either as the Chairman or as a member of the
10. However, the petitioners have also urged that even if it is held that the statute empowers to function as a Director of the KSRTC and as a Chairman of the KSTA, in the facts and circumstances of the case and in view of the nature of the powers to be exercised and the duties to be discharged as a director, the Transport Commissioner as the Chairman of the KSTA cannot at all be expected to discharge her/his functions with-out any institutional bias. In this regard, the petitioners have placed reliance on the statement of law made in text books as well as on the decisions of the High Courts and the Supreme Court. Sri M. Rangaswamy, learned Counsel for the petitioners has drawn the attention of the Court to the statement of law made by WADE, in his Book “On Administrative Law”, 5th Edition on p.431, on the basis of the observations made by Lord Denning M.R., in Metropolitan Properties (F.G.C.) Ltd. v. Lannon, (1969) 1 QB 577. Therefore it is just and appropriate to quote the very observations of the learned Judge. While dealing with the test to determine the bias, Lord Denning M. R. has observed thus :
“The Court does not look to see if there was a real likelihood that he would, or did, in fact favour one side at the expense of the other. The Court looks at the impression which would be given to other people.”
It is also further observed that the Court will not inquire whether he did, in fact, favour one side unfairly. Suffice it that reasonable people might think he did. The reason is plain enough. Justice must be rooted in confidence; and confidence is destroyed when right minded people go away thinking : the judge was biased.
While dealing with the intermingling of functions of the authorities, i.e., one and the same person or an authority discharging more than one functions and one of them is connected with the quasi-judicial functions, on page 433 learned Author on the basis of the case law has stated thus :
“Thus where a local education authority had to decide whether to prohibit the dismissal of a school teacher whom the governors of the school had resolved to dismiss, the Court of Appeal found objectional bias because three members of the local authority’s sub-committee, which resolved not to prohibit the dismissal, were governors; yet those members had not attended the governor’s meeting which resolved upon the dismissal. It was observed that members of a body such as a board of governors might be thought to have a built-in-tendency to support their colleagues, and ought not therefore to sit in judgment on their decisions.”
The learned counsel has also drawn the attention of the Court to the following pas-sages at pages 138 and 139 of Garner’s Administrative Law, 6th Edition :
“Turning our attention to the substance of the rule relating to bias, the first point to emphasise is that it is not necessary to prove actual bias. If, in fact, actual bias can be shown the decision in question may be challenged on grounds already considered such as ‘irrelevant considertions’ or ‘improper purpose’. The natural justice ‘bias’ rule looks to external appearances rather than to proof of actual improper exercise of power. If the reasonable observer would have the requisite degree of suspicion of bias in the decision-maker then that decision can be challenged. It is a matter of the Courts ensuring that ‘justice is seen to be done”.
The Supreme Court in International Airports Authority of India v. K. D. Bali, while dealing with the case of bias has held thus :
“It is not enough to show that, even if there was misconduct on his part, the award was unaffected by it, and was in reality just; arbitrator must not do anything which is not in itself fair and impartial. The party to the proceedings should not have apprehension that the authority is biased and is likely to decide against the party. But there must be a real llikelhood of bias and not mere suspicion of bias before the proceedings can be quashed on the ground that the person conducting the proceedings is disqualified by interest. The apprehension must be judged from a healthy reasonable and average point of view and not on mere apprehension and vague suspicion of whimsical pricious and unreasonable people.”
11. Sri C. S. Shanthamallappa, learned Counsel appearing for some of the petitioners has drawn the attention of the Court to a decision in Vishakapatnam Co-operative Motor Transport Ltd., Vishakapatnam v. G. Bangaruraju, . In that case the provisions of S. 44(2) of the Act are considered and held thus :
“The collector of a district is not disqualified from being appointed as a member of the Regional Transport Authority, merely because he happens to be the ex officio president of a Co-operative Society which has applied for the issue of a bus permit,”
Of Course, here it is relevant to notice that a Co-operative Society cannot be equated to a State Transport undertaking. Therefore the aforesaid observtions are not applicable to the case on hand. However, with regard to bias it has been held that it is a matter of fundamental importance that justice should not only be done but manifestly and un-doutedly seem to be done. The combined result of these two well established principles is that irrespective of the possibility or otherwise of actual partiality being proved, the constitution of a tribunal entrusted with judicial or quasi judicial functions is deemed to be bad if and when it deals with any case in which it can be said that one of the members of that body is among the suitors or litigants before the body. Therefore, the Resolution of the R.T.A. was set aside. The learned Counsel has also placed reliance on a decision in N. Gopalam v. General Road Traffic Board, Trivandrum, , in that decision also the provisions of S. 44(2) of the Act were considered and held thus (at p. 346) :
“It is not possible for me to accept the contentions of the respondents that the. State Transport Board functions only as an advisory Board and that it is not connected directly with the management or operation of a transport undertaking. It is unnecessary to repeat the several clauses excepting to mention that according to the terms of the notification, Ex. 1, the State Transport Board is reconstituted with a view to contributing to the efficient working of the Transport Department and for allowing the participation of the representative of the employees of the department in its management.
XXX XXX "Power is also given to the Board to recommend the fixation of fares and rates."
Ultimately, it was held that the Transport Board therein was directly connected with the management and operation of the Transport Undertaking. Consequently, official who was a member of such a body was also to be an official connected with the management of the Corporation’s transport undertaking and as such would come within the prohibition mentioned in the proviso to Clause (2) of S. 44 of the Act. Thus this decision accords with the view expressed by me. In addition to this, the learned Counsel has placed reliance on the decisions of the Supreme Court (Ashok Kumar Yadav v. ‘State of Haryana, (Ranjit Thakur v. Union of India) and (Sher Singh v. Union of India) which also Consider the test to be applied for determining the bias. Principles laid down in these decisions are not different from those referred to supra. Therefore, it is not necessary to refer to these decisions in detail.
12. Applying the observations made by Lord Denning M. R. in Metropolitan Properties case and the natural justice “bias” rule as stated by Garner that it looks to external appearance rather than to proof of actual improper exercise of power and that it is a matter of the courts ensuring that “justice is seem to be done” and the principles stated by the Supreme Court in this regard in various decisions referred to herebefore, I am of the view that the Transport Commissioner as the Chairman of the KSTA as long as she/he, as the case may be, a member of the Board of Directors of the Corporation, however much, may ensure about the impartiality and fairness in discharging the duties and performing the functions of the Chairman of the KSTA, cannot be held to satisfy the principle of natural justice that not only should justice be done, but it should be seem to be done. As long as the Transport Commissioner is a member of the Board of Directors of the Corporation applying the standard of’ah ordinary reasonable and average person might feel about the proceedings and not that of a whimsical person, it is not possible hold that the basic principle of justice that not only should justice be done but it should be seem to be done is satisfied. It is because of this only very reasonably and in conformity with the aforesaid basic principle, the law itself as embodied in the third proviso to subsection (2) of S. 44 of the Act specifically provides that if an offical is connected directly with the management or operation of a transport undertaking is disqualified to hold the office of the Chairman or a member of the RTA or KSTA, as the case may be.
13. Before answering the point raised for determination, one other contention raised by Sri Ramesh, learned Government Pleader may also be referred to. It is contended by Sri Ramesh, learned Government Pleader that the petitioners have not sought for quashing the order of the State Government appointing the Transport Commissioner as a Chairman of the State Transport Authority and the writ of prohibition sought for by them cannot at all be granted as long as the order appointing the Transport Commissioner as the Chairman of the KSTA holds the field. It is not possible to accept the contention. Firstly, it is open to the Court to mould the reliefs in the facts and circumstances of each case and in accordance with the conclusions reached in the case. Secondly, a writ of prohibition is sought on the ground that the Transport Commissioner is disqualified to hold the office of the Chairman. For considering or granting this relief, it is not necessary to quash the order appointing the Transport Commissioner as the Chairman of the KSTA, The appointment of the Transport Commissioner as the Board of Directors of the KSRTC is ex officio. It is open to the State Government to withdraw the notification appointing the Transport Commissioner as a member of the Board of Directors of the Corporation. In that event the Transport Commissioner will not be suffering from the disqualification hich is now attached to her. Therefore for the purpose of granting the relief sought for in the petitions, it is not necessary to quash the
order appointing the Transport Commissioner as the Chairman or a member of the KSTA.
14. For the reasons stated above the point raised for determination is answered in the affirmative. Accordingly, these writ petitions are allowed. The Transport Commissioner, as long as she continues as a member of the Board of Directors of the Karnataka State Road Transport Corporation is refrained from functioning either as the Chairman or as a member of the Karnataka State Transport Authority. This order shall not be construed as coming in the way of the State Government to appoint another member to the Board of Directors of the K.S.R.T.C. in the place of the Transport Commissioner so as to enable her to function as Chairman or appoint another person as Chairman of the K.S.T. A. All other reliefs sought for are given up.
15. Petitions allowed.