Chapter VI Trumps Section 88: Supreme Court Reaffirms Bar on Countersignature of Inter‑State Permits Overlapping Notified Intra‑State Routes and Sets a Coordination Framework for MP–UP

Introduction

In U.P. State Road Transport Corporation through its Chief General Manager v. Kashmiri Lal Batra & Ors. (along with connected matters), Civil Appeal Nos. 10522–10524 of 2025, SLP (C) Diary No. 29083 of 2018, and W.P. (C) No. 748 of 2024 (2025 INSC 1281), a Bench of the Supreme Court of India (Dipankar Datta, J. and Augustine George Masih, J.) resolved a recurring and practically significant question at the intersection of Chapter V and Chapter VI of the Motor Vehicles Act, 1988 (1988 MV Act). The Court addressed whether private stage carriage operators could obtain and enforce inter‑State permits—granted pursuant to an inter‑State reciprocal transport agreement (IS‑RT Agreement) under Section 88—when the proposed inter‑State route overlaps a portion of an intra‑State notified route reserved under an approved scheme in Chapter VI.

The appeals stemmed from multiple orders of the High Court of Madhya Pradesh directing countersignature and operational facilitation for private operators holding permits issued by the Madhya Pradesh State Transport Authority (STA, MP) under a 2006 IS‑RT Agreement between Madhya Pradesh and Uttar Pradesh. The core controversy arose because portions of these inter‑State routes overlapped notified intra‑State routes in Uttar Pradesh reserved for the U.P. State Road Transport Corporation (UPSRTC) under Chapter VI.

While the case revisits settled doctrine, it adds a robust implementation roadmap: the Supreme Court reaffirms that Chapter VI overrides Section 88 (via Section 98), thereby barring countersignature or operation by private inter‑State permit holders on overlapping notified segments unless permitted by the approved scheme or its modification. Simultaneously, the Court directs structured inter‑governmental coordination between Madhya Pradesh and Uttar Pradesh to reconcile the IS‑RT Agreement with notified schemes, including exploring partial exclusions to minimize passenger inconvenience.

Summary of the Judgment

The Supreme Court set aside the impugned orders of the Madhya Pradesh High Court that had either directed countersignature and operational facilitation for permit holders or held such relief to be within the High Court’s territorial competence. The Court also dismissed the Article 32 writ petition seeking similar relief. It held:

• Private operators cannot be granted or enforce stage carriage permits on inter‑State routes that overlap any portion of a notified intra‑State route covered by an approved scheme under Chapter VI of the 1988 MV Act, unless the scheme expressly permits it.
• An IS‑RT Agreement under Section 88 (Chapter V) is not “law” and cannot override Chapter VI; Section 98 explicitly gives Chapter VI overriding effect.
• Relief premised on the 2006 IS‑RT Agreement’s clause converting Schedule B routes (reserved for MPSRTC) to Schedule A (open to private operators) upon winding up of MPSRTC could not be granted because conclusive proof of MPSRTC’s winding up was not on record. Even if winding up were established, the Chapter VI bar would continue to operate unless schemes are duly modified.
• In the public interest, the Court directed the Principal Secretaries (Transport) of Madhya Pradesh and Uttar Pradesh to meet within three months to work out modalities to fully implement the IS‑RT Agreement, including:
  • Verifying whether MPSRTC stands wound up and, if so, considering inclusion of Schedule B routes into Schedule A;
  • Exploring partial exclusions from approved schemes or other lawful methods to permit through services without undermining notified routes, consistently with the caution in Adarsh Travels Bus Services v. State of U.P. (1985) 4 SCC 557;
  • Balancing the interests of UPSRTC with commuter convenience; and
  • Fast-tracking permits/countersignature if consensus and lawful adjustments are achieved.

Factual and Procedural Background

• IS‑RT Agreement (21 Nov 2006): Between STA, MP and STA, UP under Section 88. Schedule A reserved for private operators; Schedule B reserved for MPSRTC. Clause 4(3) provided that if Schedule B routes are de‑notified (e.g., due to MPSRTC’s winding up), they would be deemed included in Schedule A.
• Temporary Permits: STA, MP granted temporary permits to private operators on routes previously in Schedule B (claimed to be de‑notified). STA, UP refused countersignature where routes overlapped notified intra‑State routes in UP.
• High Court Proceedings:
  • PIL (W.P. 8678/2013) sought mandamus to countersign; Division Bench directed MP to grant permanent permits and UP to countersign within timelines.
  • In related writs, Single Judge and Division Bench orders facilitated pick‑up/drop and parking under permits; UPSRTC’s challenge on territorial jurisdiction failed at the High Court stage.
  • Article 32 petition (W.P. (C) 748/2024) sought identical relief against STA, MP and STA, UP.
• Before the Supreme Court: UPSRTC and State of UP argued Chapter VI overrides Section 88 and prohibits private operators on overlapping notified segments; private permit holders argued the IS‑RT Agreement binds both States, and that in the absence of Central Government approval under the Section 100 proviso, UP’s “notified route” status could not stand.

Issues

The central question of law framed by the Court was: Can a private operator be granted and enforce a stage carriage permit on an inter‑State route under an IS‑RT Agreement when a portion of that inter‑State route is common to an intra‑State notified route covered by an approved scheme under Chapter VI of the 1988 MV Act?

Statutory Framework

• Section 88(5)–(6) (Chapter V): Provides for publication, consultation, and effectuation of inter‑State reciprocal agreements; STAs/RTAs “shall give effect” to such agreements.
• Chapter VI (Sections 97–103):
  • Section 98: Chapter VI overrides Chapter V and any inconsistent law/instrument.
  • Sections 99–100: Procedure to frame and approve a scheme; once approved and published, the scheme is final; proviso to Section 100(3) requires prior Central Government approval if a scheme “relates to any inter‑State route.”
  • Section 102: Power to modify an approved scheme in public interest after hearing affected parties.
  • Section 103: Permits are to be issued to the State transport undertaking (STU) to give effect to approved schemes; authorities may cancel/modify existing permits as necessary to implement the scheme.

Precedents Cited and Their Influence

1) T.N. Raghunatha Reddy v. Mysore State Transport Authority (1970) 1 SCC 541

Held that an inter‑State agreement is not “law” and cannot override Chapter IV‑A of the 1939 MV Act (the predecessor of Chapter VI). This set the foundational principle that approved schemes take precedence over IS‑RT agreements.

2) S. Abdul Khader Saheb v. Mysore Revenue Appellate Tribunal (1973) 1 SCC 357

Reiterated Raghunatha Reddy: a scheme of nationalisation (approved under Section 68‑D of the 1939 Act) prevails over an IS‑RT agreement. The Court again underscored that IS‑RT agreements do not displace the statutory priority of approved schemes.

3) Mysore SRTC v. Mysore Revenue Appellate Tribunal, (1975) 4 SCC 192 [Mysore SRTC (I)]

A coordinate Bench suggested that unless a scheme explicitly excluded inter‑State operators, mere physical overlap would not bar permits; in effect, private inter‑State operators could traverse overlapping segments if the scheme did not clearly prohibit such traversal. This view departed from earlier three‑Judge rulings.

4) Mysore SRTC v. Mysore STAT, (1974) 2 SCC 750 [Mysore SRTC (II)]

A three‑Judge Bench restored orthodoxy: if a scheme prohibits operation on a route or part thereof, no permit or renewal can be granted to private operators—even for a short overlap—and conditions like “no pick‑up/drop on the common sector” cannot salvage an otherwise prohibited permit. Intersection (a crossing) is different from overlap (sharing linear alignment on the same highway segment).

5) Adarsh Travels Bus Services v. State of U.P., (1985) 4 SCC 557 (Constitution Bench)

The Constitution Bench expressly dissented from Mysore SRTC (I) and approved Mysore SRTC (II), affirming that private operators are excluded from overlapping notified segments unless the scheme itself permits. Importantly, the Court added a policy “caution”: to avoid undue inconvenience to through passengers, States may craft schemes with appropriate exemptions/conditions and even consider legislative solutions (as U.P. did via Act 27 of 1976).

6) T.V. Nataraj v. State of Karnataka, (1994) 2 SCC 32

A coordinate Bench, bound by Adarsh Travels, reaffirmed that notification of a route under Chapter VI excluding private operators encompasses inter‑State operators as well; the controversy is no longer res integra.

The present judgment faithfully applies the Constitution Bench’s ratio in Adarsh Travels, treating Chapter VI as paramount and holding that overlapping inter‑State permits cannot be granted/countersigned contrary to a notified scheme.

Legal Reasoning

• Chapter VI’s Primacy: Section 98 gives Chapter VI overriding effect over Chapter V. Because IS‑RT Agreements draw their authority from Section 88 (Chapter V), their implementation cannot contravene approved schemes under Chapter VI.
• IS‑RT Agreements Are Not “Law”: Consistent with Raghunatha Reddy and Abdul Khader, the Court reiterates that such agreements cannot trump statutory schemes framed and approved under the Act.
• Overlap vs Intersection: Adopting Mysore SRTC (II) and Adarsh Travels, the Court distinguishes overlap (barred unless the scheme permits) from mere intersection (not barred). Here, the routes involved overlapping segments, invoking the bar.
• “No Pick‑Up/Drop” Conditions Insufficient: Following Mysore SRTC (II), the Court confirms that the integrity of a notified scheme cannot be preserved by attaching conditions to an otherwise impermissible permit; the threshold question is whether the scheme allows any private operation on that segment.
• Section 100 Proviso Argument Rejected in Substance: Private operators invoked the proviso to Section 100(3), arguing absence of Central Government approval for inter‑State schemes. The Court proceeded on the basis that UP’s notified routes are intra‑State schemes; the proviso applies only when a scheme “relates to any inter‑State route.” In any event, the onus to demonstrate the absence of requisite approvals was not discharged; the bar under existing notified intra‑State schemes in UP therefore stood.
• Effect of IS‑RT Agreement’s Conversion Clause (Schedule B → A): The Court recognized the clause allowing conversion upon the winding up of MPSRTC. However, it found no conclusive proof that MPSRTC had been wound up. Even if it had, the conversion under the IS‑RT Agreement would still be subject to Chapter VI constraints; any operationalization that affects notified segments would require lawful scheme modification (Section 102) or other permissible solutions.
• Maintainability Concerns Sidestepped: Though UPSRTC questioned the bona fides of the PIL, the Court decided the cases on merits under the controlling statutory and precedential framework.

Impact and Implications

A. For Private Operators

• No enforceable right to countersignature or operation on inter‑State routes that overlap notified intra‑State segments unless the approved scheme itself permits or is lawfully modified to permit it.
• Temporary permits granted by one State cannot be operationalized across notified segments in a reciprocating State merely via Section 88; countersignature must yield to Chapter VI.
• Practical path forward lies in State‑driven scheme modification (Section 102), carefully crafted exemptions, or legislative measures consistent with Adarsh Travels’ caution.

B. For State Transport Undertakings and Authorities (UPSRTC, STA‑UP/MP)

• Statutory priority of approved schemes reaffirmed; STUs may legitimately exclude private operators on notified routes unless the scheme provides otherwise.
• However, the Court expects proactive inter‑governmental coordination to balance STU interests with commuter convenience and to avoid “public interest” detriment due to rigidities in scheme design.
• Where IS‑RT Agreements and notified schemes collide, STAs must:
  • Audit overlaps during negotiation and prior to finalization;
  • Contemplate scheme modifications or explicit carve‑outs (e.g., through passenger exemptions with “no boarding/alighting” conditions written into the scheme);
  • Document and, where applicable, obtain requisite approvals (including Central Government approval if a scheme relates to inter‑State routes).

C. For Commuters and Public Interest

• The judgment safeguards statutory integrity while urging solutions that minimize inconvenience to through passengers—echoing the Constitution Bench’s guidance in Adarsh Travels.
• The Court’s structured directive (Principal Secretaries’ meeting within three months) is a notable governance intervention designed to align legal architecture with modern mobility needs.

Complex Concepts Simplified

• Chapter V vs Chapter VI:
  • Chapter V (e.g., Section 88) regulates permits generally, including inter‑State permits via IS‑RT Agreements.
  • Chapter VI enables State‑run monopolies or partial exclusion on designated routes/areas through “approved schemes.” Section 98 makes Chapter VI override Chapter V where there is conflict.
• Approved Scheme / Notified Route:
  • A “scheme” is a formal, published plan under Sections 99–100 reserving an area/route (or part) for State operation (complete or partial exclusion).
  • Once approved and published, the route becomes a “notified route.” Private operation on such routes is barred unless the scheme permits it.
• IS‑RT Agreement:
  • An inter‑State agreement under Section 88 that allocates inter‑State routes/permits reciprocally. It is not “law,” and cannot override an approved scheme.
• Countersignature:
  • A permit issued by one State for an inter‑State route generally needs the other State’s countersignature for validity in that State. But countersignature cannot legalize operation on a notified segment contrary to an approved scheme.
• Overlap vs Intersection:
  • Overlap: A portion of the inter‑State route shares the same line of travel as a notified route; barred unless the scheme allows it.
  • Intersection: The inter‑State route merely crosses the notified route; this is not “overlap” and is not barred by itself.
• Section 100(3) Proviso (Central Government approval):
  • Required only when a scheme “relates to any inter‑State route.” Intra‑State notified routes do not need Central approval. Overlaps by inter‑State operations do not convert an intra‑State scheme into an inter‑State scheme.
• Scheme Modification (Section 102):
  • Permits the State to modify an approved scheme in public interest after hearing affected parties. This is the lawful mechanism to accommodate through services or carve‑outs without undermining the statutory priority of the scheme.

The Court’s Inter‑Governmental Coordination Framework

Recognizing the modern realities of mobility and the potential for commuter hardship, the Court issued forward‑looking directions:

• Within three months, the Principal Secretaries (Transport), MP and UP, with responsible officers, must meet to:
  • Ascertain whether MPSRTC has been wound up and, if so, consider moving Schedule B routes into Schedule A under the IS‑RT Agreement;
  • Explore consensual, lawful measures such as partial exclusions or scheme modifications so that inter‑State services can function with minimal passenger disruption;
  • Decide how, and to what extent, UPSRTC’s interests should be protected while enabling through services; and
  • If consensus is reached, proceed expeditiously with permits and countersignature in accordance with law.
• If consensus is not reached, Madhya Pradesh is free to consider other lawful policy options, bearing in mind that an IS‑RT Agreement cannot be unilaterally revoked.

Practical Guidance for Stakeholders

For Transport Departments and STUs

• Institutionalize an “overlap audit” before concluding IS‑RT Agreements; do not assume post‑facto countersignature will prevail over notified schemes.
• Where overlaps exist, initiate Section 102 modification processes to create narrowly tailored carve‑outs (e.g., allowing through passage on common sectors with no boarding/alighting), consistent with Adarsh Travels.
• Maintain a clear, public register of notified routes and scheme clauses to reduce disputes.
• When a scheme “relates to any inter‑State route,” ensure prior Central Government approval under Section 100(3) proviso.

For Private Operators

• Before investing in inter‑State operations, independently verify whether any segment overlaps a notified route; if so, insist on documentary proof of scheme carve‑outs or modification.
• Engage with both States during IS‑RT Agreement consultations under Section 88(5) to lodge representations that anticipate overlap problems and propose workable exemptions.

Conclusion

The Supreme Court’s decision does not chart new doctrinal territory; rather, it emphatically reaffirms a Constitution Bench principle with significant operational consequences. The rule is clear: Chapter VI approved schemes prevail over Section 88 IS‑RT Agreements; private inter‑State operators cannot ply on overlapping notified segments unless the scheme itself allows or is lawfully modified. Mysore SRTC (I)’s contrary approach stands displaced by Adarsh Travels and its progeny, including T.V. Nataraj.

Yet, the judgment’s significance lies equally in its pragmatic governance directive. Recognizing India’s rapidly evolving transport ecosystem—and the imperative to minimize commuter inconvenience—the Court nudges States toward cooperative federalism: audit overlaps, modify schemes where appropriate, and operationalize reciprocal arrangements without undermining the statutory framework. If followed in letter and spirit, the Court’s framework can harmonize the rigidity of scheme primacy with the fluidity and speed demanded by contemporary mobility.

Key Takeaways

• IS‑RT Agreements under Section 88 are not “law” and cannot override Chapter VI approved schemes; Section 98 gives Chapter VI overriding effect.
• Private inter‑State operators cannot be permitted on overlapping notified segments unless the approved scheme allows it or is modified under Section 102.
• Intersection is different from overlap; only the latter is barred by the scheme’s exclusivity.
• Central Government approval under Section 100(3) proviso is required only for schemes relating to inter‑State routes; intra‑State schemes are unaffected by the proviso.
• States should proactively coordinate to reconcile IS‑RT Agreements with notified schemes, deploying targeted carve‑outs to protect through passengers, consistent with Adarsh Travels’ caution.