U.P. State Road Transport Corporation vs Kashmiri Lal Batra & Ors.
Background
Under an inter-State transport agreement between Madhya Pradesh and Uttar Pradesh, certain bus routes were reserved exclusively for the Madhya Pradesh State Road Transport Corporation (MPSRTC). When MPSRTC reportedly wound up and stopped plying buses on these routes, private bus operators who had obtained temporary permits from Madhya Pradesh's transport authority sought Uttar Pradesh's counter-signature to operate on the shared inter-State routes, arguing the agreement entitled them to take over the reserved routes. The Madhya Pradesh High Court had ruled in the private operators' favour and directed U.P. to countersign the permits; U.P. State Road Transport Corporation (UPSRTC) appealed to the Supreme Court, which combined this case with several related appeals and one writ petition raising the same underlying question.
Decision Breakdown
The Supreme Court set aside the High Court's orders and ruled against the private operators, holding that an inter-State agreement between two states is not itself a "law" and cannot override a State's own officially notified transport scheme, which is protected by an overriding provision (Chapter VI) of the Motor Vehicles Act, 1988. Tracing a long line of its own precedents, including a Constitution Bench ruling that had settled this exact question, the Court held that private operators cannot ply on a route, or even a shared portion of it, if a State's notified scheme prohibits it, regardless of what a reciprocal inter-state agreement says. The Court also found no clinching evidence that MPSRTC had actually been wound up, only that the process might be underway. However, rather than leaving commuters stranded, the Court directed the transport departments of both states to hold talks within three months to work out a practical, negotiated arrangement for restoring these routes and protecting passengers' interests.
Lesson Learnt
An agreement between two Indian states does not have the force of law and cannot override a state's own officially notified transport scheme; disputes of this kind ultimately depend on formal government notifications and legislative schemes, not informal or reciprocal arrangements, however logical they may seem.