Kondaiah, J.:— This appeal is directed against the order of our learned brother, Chinnappa Reddy, J., dismissing Writ Petition No. 3678 of 1967.

2. The petitioner, the 4th respondent and six others were the applicants for the grant of a stage carriage permit on the route Bhadrachalam to Venkatapuram, The Regional Transport Authority, Khammam at its meeting held on 20th July, 1966, had considered the applications and granted the permit to the 4th respondent. The petitioner was screened on the ground that no income-tax clearance certificate was produced and that the certificate of income-tax assessment produced by the petitioner shows that the income-tax assessed was yet to be paid by 10th July, 1966, and nothing to substantiate the payment has been produced. The further time requested for by the party was refused. The Regional Transport Authority, agreeing with the contention of the 4th Respondent, felt that it would be the general interest of the public if the temple is granted the permit as it will be able to run the vehicle according to the need and convenience of the pilgrims and serve them better as the traffic is only to go to the temple at Bhadrachalam and that it has control over another temple on the route via Parnasala and hence, granted the permit. Aggrieved by the order of the Regional Transport Authority, an appeal to the Appellate Authority was preferred by the petitioner. The Appellate Authority, holding that the income-tax assessment certificate produced by the petitioner is similar to the one generally produced by the applicants, proceeded to consider its claim on merits and ultimately granted the permit to the petitioner in preference to the 4th respondent and allowed the appeal by its order dated 25th August, 1967. The State Government, agreeing with the order of the Regional Transport Authority, held that the certificate of income-tax assessment produced by the petitioner is not what is required by the Andhra Pradesh Motor Vehicles Rules, 1964 (hereinafter called the rules) and hence, the Appellate Authority erred in considering its claims on merits and allowed the revision petition confirming the grant made by the Regional Transport Authority of the permit in favour of the 4th respondent. The writ petition to quash the order of the State Government was dismissed by the learned single Judge, against which the present appeal has been preferred. It was contended by Sri Mangachari for the Appellant that rule 212(1)(iii) of the rules, in so far as it relates to the insistence of the production of income-tax clearance certificate is unconstitutional, that the certificate produced by the appellant was a proper and valid one and that the order of the State Government should be quashed, remitting the matter to the Revisional Authority for consideration of the grant on merits.

3. The Government Pleader opposed the claim of the appellant contending inter alia that the impugned rule is valid and infra vires and the requirement to file the income-tax clearance certificate is mandatory and there is no merits in this writ appeal.

4. The questions that fall for decision are:—(1) Whether rule 212(1)(iii) of the rules, in so far as it relates to the filing of an income-tax clearance certificate is concerned, is unconstitutional as contended by the appellant, or valid and intra vires as urged by the State?

(2) Whether rule 212(1)(iii) requiring the filing of an income-tax clearance certificate is mandatory or directory?

(3) Whether, on the facts and in the circumstances of the case, the order of the State Government is liable to be quashed?

5. We shall propose to deal with the questions seriatum.

6. The constitutional validity of rule 212(1)(iii) relating to the insistence of the production of income-tax clearance certificate is attacked on the ground that it is unreasonable, arbitrary and without any guidelines leading to discrimination. In order to appreciate this contention, it is relevant and necessary to examine the provisions of the impugned rule which reads as follows:

“The transport authorities shall, in deciding whether to grant or refuse to grant a stage carriage permit, have regard to the following matters in addition to those specified in subsection (1) of section 47.

The applicants shall first be screened and those who are found to be unsuitable on one or more of the following principles shall be disqualified, reasons being given-for the decision of the transport authority whenever an applicant is disqualified:—

(1) Financial instability as evidenced by insolvency or undischarged decrees or failure to produce an income-tax clearance certificate:

Provided that the purchase of vehicle by money borrowed or under a hire-purchase agreement shall not be a disqualification by itself.”

7. Rule 212 prescribes the guidelines for the transport authorities in exercising their powers relating to the grant, variation or cancellation of stage carriage permits. In exercising their power to grant or refuse to grant stage carriage permit, the transport authorities must have regard to the matters specified in rule 212 in addition to those specified in sub-section (1) to section 47 of the Motor Vehicles Act, 1939 (hereinafter called the Act). Section 47 prescribes the procedure for considering the applications for grant of stage carriage permits by the Regional Transport Authority. The prime consideration for the grant being the interests of and advantages to the general Public, rule 212(1)(iii) provides for a detailed procedure and guiding principles in deciding the grant to be made among the contending applicants. The applicants for the grant of permits being more than the number of permits sought to be granted, a process to eliminate undesirable and less suitable persons has been adopted by disqualifying such persons. The rule-making authority, in its wisdom, thought that applicants with financial instability are not suitable in public interest for the grant of the stage carriage permits. The financial stability of the transport operator is really a relevant and germane consideration for the grant of the permit. If a grant is made to a person who is an insolvent or having undischarged decrees, there is every possibility of the vehicle being attached in execution of such decrees resulting in break-down of the service causing lot of inconvenience to the general public. It is not disputed by the appellant's Counsel that financial instability is a relevant and germane factor for disqualifying an applicant for the grant of a stage carriage permit as unsuitable. However, the rule is sought to be impugned on the ground that it is vague and without any guidlines. The rule as it reads does not suffer from any infirmity as contended by Sri Mangachary so as to make it unconstitutional. The reason behind the rule being admittedly public interest, it has got relevancy and nexus to the object sought to be achieved by the rule-making authority. Hence, it cannot be said that the impugned rule is unreasonable. Nor is there any arbitrariness in the rule. The rule is clear and unambiguous. The financial instability has to be proved either by establishing the insolvency of the applicant or undischarged decrees obtained against him or by his failure to produce the income-tax clearance certificate. The validity of those conditions relating to insolvency and undischarged decrees is not even questioned. The production of the income-tax clearance certificate would establish that such a person is in the habit of paying taxes due and payable to the Government regularly and he was not indebted to the State. Secondly, a person who is in arrears of income-tax will be running the risk of his vehicles, after the grant, being attached and sold for the recovery of such arrears of tax causing much inconvenience and hardship to the travelling public. The contention put forward by the petitioner in Dasai Gounder & Co. v. Deputy Controller of Imports . 1955 2 M.L.J 564., that the condition to produce an income-tax clearance certificate for the grant of export permits was unreasonable and unconstitutional, was repelled by a Division Bench of the Madras High Court. The learned Chief Justice Raja-mannar, speaking for the Court, observed thus:

“Whether the Government have to make a selection, is it unreasonable” that they should say that persons who are not in default in payment of tax to the Government should be preferred to the defaulters? We think not.”

8. The further submission that the insistence of such condition would cause hardship was also rejected on the ground that it was a matter to be taken into consideration by the Import and Export Controller. The learned Chief Justice observed “that would not by itself render the condition unconstitutional or invalid.” The aforesaid view has been approved by the Supreme Court in Chandrakant v. Jasjit Singh. The insistence of the production of income-tax clearance certificate by the transport authorities is a valid, germane factor connected with the financial status, stability and respectability of such a person.

9. It admits of no doubt that no applicant has any fundamental or legal vested right for the grant of a stage carriage permit under the Act. The grant of a stage carriage permit under section 47 being in public interest, the Legislature and the rule-making authority are not only competent but justified in making rule 212(1)(iii) imposing a condition to produce an income-tax clearance certificate for making such an applicant eligible for being considered for the grant on merits. The rule-making authority in its wisdom thought fit and proper to consider the claims of only such persons who produce income-tax clearance certificates for the grant of stage carriage permits. When the Legislature and the rule-making authority prescribed a particular rule to be followed uniformly by the transport authorities in furtherance of their policy, this Court will not interfere with the validity or function of such a rule.

10. The submission of Sri Mangachari there was no definite form for the income-tax clearance certificate, the production of the same should not be insisted upon, is devoid of any merit. Whether a particular certificate produced by a party is or is not the requisite income-tax clearance certificate which was expected of as per rule 212(1)(iii), is a question of fact depending upon the facts and circumstances of each case. We are unable to see any difficulty or hardship for any applicant to obtain an income-tax clearance certificate. Where an applicant is not an income-tax assessee at all, there can be no difficulty in obtaining from the concerned Income-tax Officer a certificate to the effect that he is not an income-tax assessee, nor any arrears of income-tax are due and payable by him to the Income-tax Department. If, on the other hand, an applicant is an assessee, he can as well apply for and obtain a certificate from the Income-tax Officer on whose file he happens to be an assessee. In either case, we are unable to agree with Sri Mangachari that it is difficult to obtain a proper income-tax clearance certificate. Where there is a prescribed form of the income-tax clearance certificate the applicants have to produce such certificates in the requisite proper form before the Transport Authorities. Where no specific form in which the income-tax clearance certificate has to be granted by the Income-tax authorities, has been prescribed, it is the substance but not the form that really matters so as to determine the question whether in a given case, the certificate is the income-tax clearance certificate or not. The Transport Authorities therefore, have to examine in each case the information furnished and the contents of the document filed by an applicant and decide whether or not the same is an income-tax clearance certificate. Even assuming that some persons experienced some difficulty in obtaining a proper income-tax clearance certificate, it cannot be a valid ground to hold that the rule itself is invalid or unconstitutional. Hence, we are unable to agree with Sri Mangachari that the impugned rule as such is unconstitutional on any of the grounds urged by him.

11. It next falls for consideration whether the impugned rule is mandatory or directory. Before considering the language of the impugned rule, it is profitable to consider the difference and distinction between a mandatory and a directory provision. The Supreme Court in State of Uttar Pradesh v. Babu Ram, had to consider whether para. 486(1) of U.P Police Regulations was mandatory or directory. The learned Judge, Subba Rao, J., (as he then was), who spoke for the majority view, after reviewing the entire case law on the subject, succinctly laid down the law formulating the tests to ascertain whether a rule is mandatory or directory, thus:—

“When a statute uses the word “shall” prima facie, it is mandatory, but the Court may ascertain the real intention of the Legislature by carefully attending to the whole scope of the statute. For ascertaining the real intention of the Legislature the Court may consider, inter alia, the nature and the design of the statute, and the consequences which would follow from construing it the one way or the other, the impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the circumstance, namely, that the statute provides for a contingency of the non-compliance with the provisions, is or is not visited by some penalty, the serious or trivial consequences that flow therefrom, and above all, whether the object of the legislation will be defeated or furthered.”

12. See also Crawfordon the Construction of Statutes at page 516, Craies on Statute Law (5th edition) at page 242, Interpretation of Statutes, by Maxwell (10th edition) at page 381, Montreal Street Ry. Co. v. Normandin and State of U.P v. Manbodhanlal . 1958 S.C.J 150. The same view has been reiterated once again by the Supreme Court in State of Punjab v. Satya Pal . 1969 1 S.C.R 478. Applying the aforesaid tests, we shall examine the contention of Smt. Amareswari that the impugned rule is only directory and the failure to produce the income-tax clearance certificate is only one of the modes to show or prove financial instability. The expression used in rule 212(1)(m) is “shall”. The intendment, and object of this rule is to screen such of those applicants who are found to be unsuitable for grant of the stage carriage permit. Persons with financial instability are disqualified for being considered for the grant on merits. Such applicants are screened even at the stage of the process of consideration of the applications for the grant of the stage carriage permits. The object of the framers of the rule is to avoid persons who are financially instable or unsound as such people are considered by the Legislature and the rule making authority to be unfit or nor suitable in public interest for the grant of stage carriage permits. The failure, to comply with the requirement of producing an income-tax clearance [certificate visits with penal consequences. We may also notice that the requirement of producing an income-tax clearance certificate is in the negative form, whereas the first two requirements, i.e, insolvency and undischarged decrees are in positive form. The financial instability of an applicant can be established by proving the insolvency of such a candidate or the existence of undischarged decrees against him or by his failure to produce an income-tax clearance certificate. The method and manner of proving or establishing the ground of disqualification, i.e, financial instability of an applicant, has been specified in the rule itself. If any one of the three factors is proved, such an applicant shall be screened. There is no option for the transport authorities except to screen such an applicant. As pointed out earlier, no applicant is having either a fundamental or legal vested right for the grant of a permit under the Act and it is within the discretion of the transport authorities to grant a stage carriage permit to an applicant if he satisfies the requirements of the provisions of the Act and the rules for the grant and he is found to be a suitable applicant in the general public interest but not otherwise. To ‘select a best operator being in public interest, the financial stability is undoubtedly a relevant and germane consideration. The language of the rule, the word used being “shall”, when considered with the real intention of the Legislature in providing this rule and the fact that the non-compliance with the requirement of this rule is visited by the penalty of screening the applicant would clearly establish that this rule is mandatory but not directory.

13. When once the impugned rule is found to be mandatory, the non-compliance with such a provision would certainly visit with the penalty of screening the concerned applicant. The observation of our learned brother, Parthasarathi, J., in W.P No. 3497 of 1968 dated 5th August, 1968, while dismissing the writ petition at the stage of admission, that rule 212 does not lend support to the view that it is mandatory, is not correct in so far as this portion of the rule, i.e, rule 212(x)(iii) is concerned. The decision of the learned Judge, Gopalakrishnan Nair, J., in W.P No. 944 of 1964 dated 20th July, 1965, does not support the appellant. The learned Judge has in fact upheld the validity of the impugned rule requiring the production of a income-tax clearance certificate. No other decision has been brought to our notice taking a contrary view in this regard. For all these reasons, we must hold that the rule is valid and intra vires and the same is mandatory. The Regional Transport Authority has no other go but to screen such of those applicants who failed to produce the income-tax clearance certificate as required by that rule.

14. In the light of the aforesaid discussion, we shall proceed to examine the contention of the appellant that the order of the State Government is illegal and liable to be quashed. The certificate produced by the appellant is no doubt not an income-tax clearance certificate in a proper form. It was represented to us that no definite form for the income-tax clearance certificate has been prescribed by the Income-tax authorities. Some certificates produced by the applicants reveal that they are income-tax clearance certificates and some others are described as certificates of income-tax assessment. It therefore, falls for decision what has been furnished by the appellant is or is not an income-tax clearance certificate. Though what has been filed by the appellant has been described as certificate of income-tax assessment, it discloses year-wise assessments and the tax due and payable and the amount paid with a certificate appended by the Income-tax Officer to the effect that the appellant has been paying taxes demanded promptly and regularly. This form of certificate is no doubt not an income-tax clearance certificate in the strict sense. However, in substance, it appear to us as an income-tax clearance certificate furnished by the Income-tax Officer. If it was only an assessment, there would have been no need to certify that the appellant has been paying the taxes demanded regularly and he was to pay some balance before 10th July, 1966. Hence, on a consideration of the relevant factors and the material data furnished in the certificate of income-tax assessment produced by the appellant, coupled with the fact that there is no prescribed form of the income-tax clearance certificate, we are of the view that the one produced in such a form as has been done by the appellant, has to be accepted in substance, though not in form as an income-tax clearance certificate, provided it is certified by the Income-tax Officer that no arrears of income-tax were due and payable by it to the State. The appellant cannot, therefore, successfully contend that it should not be screened under the rule as admittedly the certificate produced by it discloses some arrears due and payable by it on 10th July, 1966, and such a certificate cannot be held to be an income-tax clearance certificate as required by the rule. The certificate in substance must show that no arrears of tax due and payable to the Income-tax Department were due by the date of the certificate.

15. The further submission of Sri Mangachary that his client has paid the amount on 12th July, 1966, and the challan was produced before the Appellate Authority and therefore, the Regional Transport Authority was not justified in screening his client, is devoid of any merit. As observed earlier, the Regional Transport Authority shall screen the appellant and if the income-tax clearance certificate was not produced. It was mentioned in the order that the party was not able to show that the amount payable on 10th July, 1966, has since been paid. In the circumstances, the appellant should have taken sufficient care to produce a proper income-tax clearance certificate and it must blame none but itself for not complying with the requirement. The notification is made very much earlier and the Appellate Authority cannot say that the order of the Regional Transport Authority on that account was erroneous. We are unable to accede to the submission of Sri Mangachari that the Regional Transport Authority's failure to give further time to his client vitiates the order. It is for the transport authority either to grant or refuse to grant any further time but not for this Court to interfere with the discretion of the tribunal in this regard. For all these reasons, we must hold that the appeal must fail. The appeal is dismissed but, in the circumstances, there shall be no order as to costs. Advocate's fee is fixed at Rs. 100.

16. G.S.M

17. Appeal dismissed.