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State Of Rajasthan v. Mohan Lal Vyas .
Factual and Procedural Background
In December 1948, the respondent and the then State of Jodhpur (which merged with the State of Rajasthan on April 7, 1949) executed two separate agreements granting the respondent an exclusive (“monopoly”) right to operate buses on:
- Nagaur–Role–Deh route for the period 1 December 1948 – 30 November 1951;
- Kuchera–Khajwana route for the period 1 July 1948 – 30 November 1951.
The respondent agreed to pay the State Rs 72,121 under the first contract and Rs 41,121 under the second, in instalments. By 26 January 1950 the respondent had paid Rs 51,000. After the Constitution of India came into force on that date, the respondent claimed the monopoly clauses became void and refused further payments. The State issued a demand notice for Rs 69,932-4-0 covering instalments falling due after 26 January 1950. The respondent filed a suit seeking an injunction restraining recovery of that amount.
The District Judge, Jodhpur, granted the injunction. The Rajasthan High Court affirmed, holding the contracts void post-Constitution. The State of Rajasthan appealed to the Supreme Court by special leave.
Legal Issues Presented
- Whether the monopoly bus-route agreements survived the commencement of the Constitution of India on 26 January 1950 in view of Article 19(1)(g) read with Article 13.
- Consequently, whether the State of Rajasthan could lawfully demand and recover the balance amounts stipulated in those agreements.
Arguments of the Parties
State of Rajasthan (Appellant)
- The Marwar Motor Vehicles Act, 1945, remained operative until 1 April 1951 when the Central Motor Vehicles Act, 1939, was extended to Rajasthan; hence, the monopoly contracts continued to be valid until that date.
- Section 57(8) of the Marwar Act (operative from 8 June 1946) expressly authorised the grant of monopoly permits, supporting the State’s right to enforce the agreements.
Respondent
- With the enforcement of the Constitution on 26 January 1950, the monopoly provisions violated the fundamental right to practise any trade or business under Article 19(1)(g).
- Under Article 13, any pre-Constitution law inconsistent with fundamental rights became void; therefore, the agreements were unenforceable and no further payments were due.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Court began by affirming that Article 19(1)(g) guarantees every citizen freedom to carry on any trade, including operating buses. Under Article 13, any law inconsistent with this right is void. The Court found no post-Constitution law authorising the State to confer or maintain a private monopoly in transport services.
It distinguished the 1951 constitutional amendment adding Article 19(6) which allows State monopolies as reasonable restrictions but noted that the impugned contracts granted monopoly rights to a private citizen, not to the State itself. Such a grant is “indefensible and impermissible” under the Constitution.
Because the Constitution “struck at the root” of the agreements, performance of the contracts after 26 January 1950 became illegal. Consequently, the State lacked legal authority to demand the remaining instalments for use of the highways. The High Court’s conclusion that the contracts were void and unenforceable was therefore correct.
Holding and Implications
Appeal DISMISSED with costs.
The decision prevents the State of Rajasthan from recovering any further amounts under the impugned monopoly agreements and confirms that, post-Constitution, a State cannot validly confer exclusive transport rights on a private party. The ruling applies existing constitutional principles but sets no new precedent beyond reinforcing the prohibition on private monopolies inconsistent with Article 19(1)(g).
A.N Ray, J.— This is an appeal by special leave against the Judgment, dated February 8, 1966, of the High Court of Rajasthan upholding the judgment and decree of the District Judge, Jodhpur, restraining the appellant State of Rajasthan from recovering any amount from the respondent under two agreements for plying buses or trucks on route or routes mentioned in the agreements. The High Court further upheld the judgment of the District Judge that the contracts granting monopoly rights to the respondent became void with the coming into force of the Constitution, and, therefore, the State Government had no right to demand or realise from the respondent any amount for plying the buses and trucks on the routes mentioned in the impugned contracts.
2. In the month of December 1948, the respondent and the Government of the State of Jodhpur which subsequently on April 7, 1949, merged with the State of Rajasthan entered into two agreements in respect of two bus routes. The first route was Nagaur-Role-Deh for three years from December 1, 1948, to November 30, 1951, and the second was for Kuchera-Khajwana route from July 1, 1948, to November 30, 1951. Under both the agreements the respondent was given the monopoly right to ply the buses on the routes mentioned. Under the first agreement the respondent was to pay to the State, Rs 72,121 for the period mentioned thereunder. For the second agreement the respondent was to pay Rs 41,121 for the entire period. The several sums of money under both the agreements were payable by instalments. Up to January 26, 1950, the respondent paid Rs 51,000 to the State. The respondent contended that on the Constitution coming into force on January 26, 1950, the monopoly contracts between the respondent and the State became void and were unenforceable.
3. The State issued a demand notice for Rs 69,932-4-0 under the aforesaid two agreements. The alleged amounts, according to the State, were payable subsequent to January 26, 1950, for the remaining period. The respondent filed the suit for an injunction restraining the State from recovering the sum of Rs 69,932-4-0 inasmuch as the monopoly contracts became illegal. Void and unenforceable.
4. The State contended that the Marwar Motor Vehicles Act, 1945, remained in force up to April 1, 1951, when the Motor Vehicles Act of 1939 was extended to the entire area of the State of Rajasthan including the former State of Jodhpur and therefore the monopoly contracts which were entered into by and between the respondent on the one hand and the State of Jodhpur on the other continued in force. Reliance was also placed on sub-section (8) to Section 57 of the Marwar Motor Vehicles Act, 1945, which was brought into effect on June 8, 1946, whereby the monopoly permits could be granted.
5. It is manifest that after the Constitution came into force every citizen under Article 19(1)(g) of the Constitution has the right of freedom of trade including the right to ply buses and trucks on the road. Under Article 13 the law has to be in consonance with the Constitution. It has, therefore, to be found out as to whether there is any law by virtue of which the State of Rajasthan could grant or keep alive any monopoly contract. The answer is in the negative. There cannot be any law in violation of the provisions of the Constitution. A monopoly right cannot be conferred on a citizen under the Constitution nor can it be justified under the Constitution.
6. In 1951, there was amendment of the Constitution whereby Article 19(6) provided that the monopoly rights could be created in favour of the State in respect of any trade or business. The monopoly contracts in the present case were not in favour of the State Government. Article 19(6) of the Constitution provides a reasonable restriction on the fundamental rights of citizens as contained in Article 19(1)(g). If the State obtained a monopoly it would be defensible as a reasonable restriction on the rights of citizens to carry on any business or trade and to ply buses. On the other hand, if the State conferred any monopoly right on a citizen it would be indefensible and impermissible and would be an infraction of the inviolable provision of the Constitution.
7. The Constitution forbids grant by the State to a citizen of monopoly right to carry on the business of plying buses undertaken in the agreements. The manner in which the agreements were to be performed became illegal as a result of the Constitution. The agreements were therefore incapable of enforcement. The Constitution struck at the root of the agreements. The effect was that circumstances of the agreements were radically changed as a result of the Constitution and the agreements were incapable of performance under the law of the land.
8. We are of opinion that the High Court correctly held that the State was unable to rely on any provision of the law which empowered the State Government to realise the amount demanded from the respondent for using the highway. No reliance could be placed by the State on the monopoly contracts which were impeached by the respondent inasmuch as these were unenforceable and unconstitutional.
9. For these reasons, we are of opinion that the appeal fails and is dismissed with costs.
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