JUDGMENT
A. Misra, J.
1. The petitioner is engaged in the business of transport of goods by public carriers on obtaining permits under the provisions of the Motor Vehicles Act, 1939 (hereinafter to be referred to as the Act) from the concerned transport authorities. He filed this application under Article 226 of the Constitution to quash the Notification issued by the State of Orissa (Opposite Party No. 1) in S R. O. No. 633/70 at Annexure 1 by which every applicant for grant of a new permit is required to deposit the security amount in the shape of National Savings Certificate instead of depositing the same in cash. It is alleged that such a direction is beyond the competence of Opposite Party No. 1 and if security is furnished by way of ‘National Savings Certificate, the petitioner is adversely affected, inasmuch as, he will be deprived of a portion of the amount given as security, because National Savings Certificates which are issued either for a term of 7 or 10 years will be subject to deduction of certain
amount of discount in case they are encashed prematurely where the applicant becomes entitled to refund.
2. Opposite Parties resist the application on the ground that Section 45 (3) of the Act authorises the State Government to direct by notification the manner in which the security deposit is to be made, and as such, the present direction is within their competence. Secondly, it is stated that if security deposit is taken in cash, it will necessitate opening of a different Head in the Treasury and will entail risk of misappropriation or delay in making the refund.
3. ‘ The impugned Notification runs as follows:–
“S. R. O. No. 633/70 — In exercise of the powers conferred by Section 45 of the Motor Vehicles Act, 1939 (Act IV of 1939), the Government do hereby direct that every applicant for the grant of a new permit under Section 46 or Section 54 shall deposit by way of security the following amounts in shape of National Savings Certificate along with his application
(1) Application for Stage Rs. 200/-
Carriage permit Per Vehicle.
(2) Application for Public Rs. 100/-
Carrier’s permit per Vehicle”
4. It is not disputed that under law regulating issue and encashment of National Savings Certificates, they can be issued only for Terms of 7 or 10 years and if they are sought to be encashed before maturity, the holder is entitled to receive the surrender value as provided in the tables therein. This surrender value is less than its face value and ranges between Rupees 98.50 and Rupees 98.75 for every hundred rupees according to the length of period which has expired after its purchase before it becomes mature.
5. This being the position, it is to be seen whether the direction in the impugned Notification for furnishing the security deposit in the shape of National Savings Certificate is a valid one in the light of the provisions of the Act. The two relevant provisions which require careful examination are Sub-sections (3) and (4) of Section 45 which run as follows :–
“45 (3) Every applicant for the grant of a new permit under Section 46 or See-54 shall deposit, by way of security, with his application an amount in such manner and at such rate not exceeding rupees two hundred per motor vehicle, as the State Government may with reference to each class of vehicle, by notification in the official Gazette, specify.
(4) The security furnished under subsection (3) may be forfeited in whole or in part by the transport authority if it is satisfied that the application was made for the purpose of preventing the issue of a temporary permit under Section 62 and
the whole or part of it as has not been forfeited shall be refunded to the applicant as soon as may be, after the disposal of the application.
Provided that no such forfeiture shall be made unless the transport authority has given the applicant a reasonable opportunity of being heard.”
6. The first contention on behalf of the petitioner is that Sub-section (3) requires deposit of an amount by way of security and the power given to the State Government is restricted to specifying the manner and rate of the deposit. This being the provision, the security required is the deposit of an amount and the power of the State Government is limited to specifying the rate at which and the manner in which the deposit is to be made by the impugned Notification, Opposite Party No. 1 has directed deposit of the amount in the shape of National Savings Certificate. The direction for making the deposit in the shape of National Savings Certificate does not constitute the manner of depositing the amount, because a National Savings Certificate cannot be construed as an “amount”. A National Savings certificate is issued in the name of the purchaser of the same. He can only pledge the same by way of security under the relevant rules. Pledging of such a certificate will not tantamount to making deposit of an amount. It constitutes furnishing of security by way of pledging a certificate, just as. pledging or giving security of any other property. Section 45 (3) of the Act requires deposit of the security amount and not furnishing security in any other manner. The impugned Notification giving such a direction cannot be construed as specifying the manner of deposit of the amount. As the impugned Notification instead of specifying the manner of depositing the amount, in substance specifies the nature of security to be furnished, this contention must prevail.
7. The second contention on behalf of the petitioner is that under Sub-section (4) of the Act, an applicant is entitled to refund of the whole or unforfeited portion of the security deposit after disposal of the application. As already stated under the rules regulating National Savings Certificates before expiry of 7 years, the holder of a certificate gets only the surrender value which is something less than the amount paid for it. In a given case, the applicant who furnishes security by way of National Savings Certificate becomes entitled to refund of the amount paid by him as security or unforfeited portion of it after disposal of his application. If he seeks to encash the certificate, he gets only the surrender value which is less than the amount to which he becomes entitled by way of refund. Thus, the consequence is that if the deposit of the
amount by way of security is required to be made in the shape of National Savings Certificate as directed in the impugned Notification, it works out to the prejudice of the applicant, inasmuch as, he gets refund of a lesser amount than that to which he is entitled. Hence, the direction in the impugned Notification to deposit the security amount in the shape of National Savings Certificate is not consistent with the requirements of Sub-sections (3) and (4). On this ground also, the direction in the impugned Notification cannot be sustained.
8. The argument advanced by learned Standing Counsel that requiring the security deposit to be made in cash will necessitate opening of a new Head or sub-head in the Treasury accounts or entail risk of misappropriation or delay in making refund is entirely extraneous to the question under consideration. These difficulties ‘ and apprehensions can be safeguarded against by providing appropriate instructions or rules in the matter of deposit which will prevent such abuse or risk. On the aforementioned two grounds we are clearly of opinion that the impugned Notification not being in consonance with Sub-sections (3) and (4) is liable to be struck down.
9. In the result, we allow the writ application and order that a writ of mandamus be issued quashing the impugned Notification. In the circumstances of the case, there will be no order as to costs.
G.K. Miska, C.J.
10. I agree.