Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 8528 OF 2011  (Arising out of SLP (C) NO. 11653 OF 2010)

  The State of West Bengal & Ors.         …… Appellants

Versus

Mani Bhushan Kumar                         …… Respondent

WITH CIVIL APPEAL No. 8529 OF 2011  

(Arising out of SLP (C) NO. 11876 OF 2010)    

The State of West Bengal & Ors.         …… Appellants

Versus

Vijay Kumar Jha                         …… Respondent

J U D G M E N T

A. K. PATNAIK, J.

Civil Appeal arising out of SLP (C) NO. 11653 OF 2010:

Leave granted.

2. This  is  an appeal  by special  leave against  the order  

dated 23.03.2010 of the Division Bench of the Calcutta High

Court  in  A.S.T.  No.  83  of  2010 (for  short  ‘the  impugned  

order).

3. The facts very briefly are that on 02.09.2009 the State  

Transport  Authority,  Bihar,  issued a temporary permit  in  

favour of the respondent for plying a Stage Carriage Vehicle  

for the route Motihari in Bihar to Siliguri in West Bengal, for  

a period of four months with effect from 01.09.2009.  On  

07.09.2009, the respondent submitted an application to the  

Secretary,  State  Transport  Authority,  West  Bengal,  for  

counter-signature  on  the  temporary  permit.   On  

08.09.2009,  the  respondent  also  deposited  a  sum of  Rs.  

9,180/-  towards  tax  and additional  tax  in  respect  of  his  

vehicles  for  plying  within  the  State  of  West  Bengal.   On  

08.10.2009 vehicle no. BR-31P 5105 of the respondent was  

intercepted by the Enforcement Branch of the Motor Vehicle  

Department  at  Siliguri  and  the  driver  of  the  vehicle  was  

asked to produce the papers including permit and proof of  

payment of  tax relating  to  the  vehicle.   Since  the  permit  

produced by the driver of the vehicle was not counter-signed  

by the State Transport Authority, West Bengal, the vehicle  

was seized by the officials of the Motor Vehicle Department  

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and a notice was issued to the respondent under Section  

16(4)(a)  & (b) of  the West Bengal Motor Vehicles Tax Act,  

1970 (for short ‘the Motor Vehicles Tax Act’) to produce the  

papers  and  documents  showing  payment  of  tax  and  

additional  tax  due  for  the  vehicle  and  other  necessary  

documents relating to the vehicle failing which the vehicle  

will be sold.   

4. Aggrieved, the respondent filed Writ Petition No. 17755  

(W) of 2009 before the Calcutta High Court challenging the  

seizure of his vehicle and praying for release of the vehicle  

alongwith the seized documents.  The appellants herein filed  

a reply in the said Writ Petition contending  inter alia that  

the temporary Stage Carriage permit granted by the State  

Transport Authority, Bihar, in favour of the respondent for  

the route Motihari in Bihar to Siliguri in West Bengal had  

not been counter-signed by the State Transport Authority,  

West  Bengal,  as  provided  in  Section  88  of  the  Motor  

Vehicles Act, 1988 (for short ‘the Motor Vehicles Act’) and  

hence the vehicle of the respondent was plying without a  

valid permit and had to be seized under Section 207 of the  

said Act.  In the reply, the appellants also contended that in  

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the  facts  of  the  case  the  duration  of  plying  has  to  be  

reckoned  as  17  weeks  retrospective  from  the  date  of  

interception of the vehicle and the respondent is liable to  

pay a tax at the rate applicable for a period of 17 weeks  

together with a fine of equal amount and therefore the total  

of tax and penalty payable by the respondent works out to  

Rs.1,13,460/-  as  per  the  assessment  memo  dated  

15.10.2009 of the Taxing Officer, Siliguri.   

5. The learned Single Judge, who heard the Writ Petition,  

held in his order dated 04.03.2010 that while sub-section  

(1)  of  Section 88 of  the  Motor  Vehicles  Act  provides that  

counter-signature is absolutely necessary for a permanent  

permit, it will be clear from sub-section (7) of Section 88 of  

the Motor Vehicles Act that for a temporary permit no such  

counter-signature is necessary.  The learned Single Judge  

also  held  that  the  entire  tax  had  been  paid  by  the  

respondent relying on a notification dated 13.04.2007 of the  

State Government.  Accordingly, the learned Single Judge  

allowed  the  Writ  Petition  and  directed  the  appellants  to  

forthwith release the vehicle of the respondent and awarded  

a cost of Rs.10,000/- in favour of the respondent against  

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the appellants.  Aggrieved by the order of the learned Single  

Judge,  the  appellants  filed  an appeal  before  the  Division  

Bench of  the  Calcutta  High  Court  and  by  the  impugned  

order, the Division Bench of the High Court sustained the  

findings of the learned Single Judge that a temporary permit  

issued under Section 87 of the Motor Vehicle Act to be valid  

in the State of West Bengal need not be counter-signed and  

that the respondent has paid the tax and additional tax to  

the  State  Transport  Authorities  in  respect  of  the  vehicle.  

The Division Bench, however, reduced the cost awarded by  

the  learned Single  Judge from Rs.10,000/- to  Rs.5,000/-  

provided  the  vehicle  of  the  respondent  is  released  by  

26.09.2010.   On  26.04.2010,  this  Court  directed  that  

pending  consideration  of  the  Special  Leave  Petitions,  the  

vehicle  shall  be  released  subject  to  the  respondent  

furnishing  a  Bank  Guarantee  for  Rs.1,00,000/-  for  the  

vehicle.   

6. Mr.  Altaf  Ahmed,  Learned Senior  Counsel  appearing  

for  the  appellants,  submitted  that  in  the  Reciprocal  

Agreement entered into by and between the State of West  

Bengal and State of Bihar, there was no provision for grant  

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of temporary permit in respect of a Stage Carriage Vehicle,  

except  for  the  interregnum  between  the  draft  and  final  

publication of the Reciprocal Agreement.  He submitted that  

in the absence of any such Reciprocal Agreement for grant  

of temporary permit in respect of a Stage Carriage Vehicle,  

no  temporary  permit  could  be  granted  from  Motihari  in  

Bihar  to  Siliguri  in  West  Bengal.   In  support  of  this  

submission, he cited the decisions in  Ashwani Kumar and  

Another v.  Regional  Transport  Authority,  Bikaner  and   

Another [(1999) 8 SCC 364] and A. Venkatkrishnan v. State   

Transport  Authority,  Kerala [(2004) 11 SCC 207] in which  

this  Court  has  held  that  in  the  absence  of  reciprocal  

agreement between two States, grant of permit for an inter-

state route is illegal and beyond the jurisdiction of the State  

Transport Authority.  He submitted that sub-section (1) of  

Section 88 clearly states that a permit granted in any one  

State shall not be valid in any other State unless counter-

signed by the State Transport Authority of that other State  

or  by  the  Regional  Transport  Authority  concerned.   He  

vehemently  argued  that  in  the  absence  of  any  counter-

signature by the State Transport Authority of West Bengal,  

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the  permit  issued in favour of  the  respondent was not  a  

valid permit in the State of West Bengal.  He submitted that  

since  the  vehicle  was  plying  without  a  valid  permit,  the  

authorities of the Motor Vehicle Department had detained  

and seized the vehicle in accordance with the provisions of  

Section 207 of the Motor Vehicles Act.  Regarding the tax,  

he  relied on the  provisions  of  sub-sections (3)  and (4)  of  

Section 16 of the Motor Vehicles Tax Act and submitted that  

the  tax  and  penalty  amounting  to  Rs.1,13,460/-  as  

assessment in the assessment memo dated 15.10.2009 of  

the  Taxing  Officer,  Siliguri  had  not  been  paid  by  the  

respondent.   

7. Mr.  Nagendra  Rai,  Learned  Senior  Counsel  for  the  

respondent, on the other hand, submitted that admittedly  

the  respondent  had  filed  an  application  for  counter-

signature  on  the  permit  before  the  Secretary,  State  

Transport  Authority,  West  Bengal,  but  the  counter-

signature was not put on the permit by the State Transport  

Authority and as a result the vehicle of the appellant was  

seized and detained.  He cited the decision of this Court in  

Kusheshwar  Prasad  Singh v.  State  of  Bihar  and  Others  

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[(2007) 11 SCC 447] for the proposition that a wrong-doer  

ought not to be permitted to make a profit out of his own  

wrong.  He argued that since the State Transport Authority,  

West  Bengal  has  not  counter-signed  the  permit  of  the  

appellants,  the  appellants  cannot  take  advantage  of  this  

wrong-doing  and  recover  exorbitant  amount  of  tax  and  

penalty from the respondent.  

8. Sub-section  (1)  &  (7)  of  Section  88  of  the  Motor  

Vehicles Act are quoted hereinbelow:  

“88.  Validation  of  permits  for  use  outside  region in which granted. -(1) Except as may be  otherwise  prescribed,  a  permit  granted by  the  Regional Transport Authority of any one region  shall not be valid in any other region, unless the  permit has been countersigned by the Regional  Transport Authority of that other region, and a  permit  granted  in  any  one  State  shall  not  be  valid in any other State unless countersigned by  the State Transport Authority of that other State  or  by  the  Regional  Transport  Authority  concerned:

Provided that a goods carriage permit, granted  by the Regional Transport Authority of any one  region,  for  any  area  in  any  other  region  or  regions within the same State, shall be valid in  that  area  without  the  countersignature  of  the  Regional Transport Authority of the other region  or of each of the other regions concerned:

Provided  further  that  where  both  the  starting  point  and  the  terminal  point  of  a  route  are  situate within the same State, but part of such  

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route lies in any other State and the length of  such part  does not  exceed sixteen kilometres,  the permit shall be valid in the other State in  respect of that part of the route which is in that  other  State  notwithstanding  that  such  permit  has  not  been  countersigned  by  the  State  Transport  Authority  or  the Regional  Transport  Authority of that other State:

Provided also that –

(a)  where a motor vehicle covered by a permit  granted  in  one  State  is  to  be  used  for  the  purposes  of  defence  in  any  other  State,  such  vehicle shall display a certificate, in such form,  and issued by  such Authority,  as  the  Central  Government may, by notification in the Official  Gazette,  specify,  to  the  effect  that  the  vehicle  shall  be  used  for  the  period  specified  therein  exclusively for the purposes of defence; and  

(b) any such permit shall be valid in that other  State notwithstanding that such permit has not  been  countersigned  by  the  State  Transport  Authority or the Regional Transport Authority of  that other State.

(7) Notwithstanding anything contained in sub- section  (1),  a  Regional  Transport  Authority  of  one region may issue a temporary permit under  section 87 to be valid in another region or State  with the concurrence, given generally or for the  particular  occasion,  of  the  Regional  Transport  Authority  of  that  other  region  or  of  the  State  Transport Authority of that other State, as the  case may be.”                                                               (emphasis supplied)

9. The last limb of  sub-section (1)  of  Section 88 of  the  

Motor Vehicles Act states that a permit granted in any one  

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State shall not be valid in any other State unless counter-

signed by the State Transport Authority of that other State  

or  by the  Regional  Transport  Authority  concerned.   Sub-

section (7) of Section 88 of the Motor Vehicles Act, however,  

states  that  notwithstanding  anything  contained  in  sub-

section  (1),  a  Regional  Transport  Authority  of  one  region  

may issue a temporary permit under section 87 to be valid  

in  another  region  or  State  with  the  concurrence,  given  

generally  or  for  the  particular  occasion,  of  the  Regional  

Transport  Authority  of  that  other  region  or  of  the  State  

Transport Authority of that other State, as the case may be.  

Hence, unless there is concurrence, given generally or for  

the particular occasion, of the Regional Transport Authority  

of the other region or of the State Transport Authority of the  

other State no valid temporary permit can be issued for the  

other region or the other State.  

10. In the facts of this case, we find that although the State  

of West Bengal and the State of Bihar had entered into a  

reciprocal agreement in 1988 for issue of a certain number  

of  permits,  the State Transport Authority,  Bihar exceeded  

the quota of permits for the inter-state route and there was  

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no concurrence in general or for a particular occasion for  

issue of the temporary permit in favour of the respondent  

for  the  route  from Motihari  in  Bihar  to  Siliguri  in  West  

Bengal.  Hence, the High Court is not right in relying on the  

provisions  of  sub-section  (7)  of  Section  88  of  the  Motor  

Vehicles Act in coming to the conclusion that no counter  

signature  of  the  State  Transport  Authority,  West  Bengal,  

was necessary for the temporary permit of the respondent  

for plying his vehicle in the State of West Bengal.  

11. As admittedly, there was no counter-signature of the  

State Transport Authority, West Bengal, on the temporary  

permit issued by the State Transport Authority (Bihar), the  

respondent did not have a valid permit for the part of the  

route inside the State of  West Bengal.   The plying of  the  

vehicle of the respondent in the Siliguri region within the  

State of West Bengal was thus in contravention of Section  

66(1)  of  the  Motor  Vehicles  Act  which  provides  that  no  

owner of a vehicle shall use or permit use of the vehicle as a  

transport vehicle save in accordance with the conditions of a  

permit granted or counter-signed by the Regional or State  

Transport Authority.   The appellants,  therefore,  were well  

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within their powers to detain and seize the vehicle of the  

respondent under Section 207 of the Motor Vehicles Act for  

contravention of Section 66 of the said Act.  

12. Regarding the tax payable by the respondent for the  

vehicle plying within the State of West Bengal, it appears  

that on 08.10.2009 the appellants had seized and detained  

the  vehicle  of  the  respondent  under  sub-section  (3)  of  

Section 16 of the Motor Vehicles Tax Act and issued a notice  

under sub-section (4) of  Section 16 of the Motor Vehicles  

Tax Act and it is at this stage that the petitioner filed the  

writ petition before the Calcutta High Court for release of  

the  seized  vehicle  and  the  High  Court  has  held  that  

respondent has paid all the taxes in respect of the vehicle.  

13. Sub-sections  (3)  and  (4)  of  Section  16  of  the  Motor  

Vehicles Tax Act are extracted hereinbelow:

“(3)  Notwithstanding  anything  contained  elsewhere in this Act,  any officer  referred to in  sub-section (1) [may seize and detain] any motor  vehicle in respect of which tax is due until  the  person liable to pay the tax,—

(a)  has  satisfied  the  Taxing  Officer  having  jurisdiction  within  thirty  days  of  the  detention  that the tax has actually been paid,

(b) has within thirty days of such detention paid  to the Taxing Officer having jurisdiction the tax  

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due together with the penalty to be paid for non- payment of tax within the prescribed time. (4) (a) On the expiry of the period of thirty days  the vehicle seized and detained may, subject to  the  provisions  of  this  Act,  be  sold  in  auction  unless the person liable to pay tax has, within a  further period of fifteen days, paid to the Taxing  Officer having jurisdiction double the amount of  the  total  tax  due,  including  the  penalty  under  section 11, in respect of such vehicle (hereinafter  referred to as the aggregate amount).]

Provided that the terms and conditions in respect  of  auction  of  a  motor  vehicle  under  this  sub- section shall be specified by order, made in this  behalf, by the State Government.

(b)  The  sale  of  the  vehicle  seized and detained  [may  be  effected  by  the  Taxing  Officer]  within  whose  jurisdiction  the  vehicle  has  been  seized  and  detained  under  this  section,  and  the  proceeds of sale shall be disposed of in the same  manner as an arrear of land revenue.”

It will be clear from the provisions of sub-sections (3) and (4)  

of Section 16 of the Motor Vehicles Tax Act that power is  

vested in the Taxing Officer to decide whether tax in respect  

of the vehicle has been paid and if the same has not been  

paid,  to  recover  the  same  from  sale  of  the  vehicle,  if  

necessary.  Thus, the High Court should not have straight  

away come to the conclusion in the writ petition that the tax  

in respect of the vehicle has been paid.  

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14. We,  therefore,  set  aside  the  impugned  order  of  the  

Division Bench of the Calcutta High Court as well as the  

order  of  the  learned  Single  Judge  and  direct  that  the  

appellants  will  continue  with  the  proceedings  against  the  

respondent  in  accordance  with  Section  16  and  other  

provisions of the Motor Vehicles Tax Act for determining and  

recovering the tax amount after giving all due opportunity to  

the  respondent.   We  direct  that  the  Bank Guarantee  for  

Rs.1,00,000/- furnished by the respondent shall remain in  

force for six months and in case the concerned authority  

holds that the respondent is liable for any amount of tax,  

the  appellant  would  be  entitled  to  encash  the  Bank  

Guarantee for  Rs.1,00,000/- furnished by the respondent  

and recover the tax amount within a period of six months  

from today.  We, however, direct that in the facts of the case  

no penalty will be recovered from the respondent because  

the  State  Transport  Authority,  Bihar  had  granted  the  

temporary permit for the route upto Siliguri in West Bengal,  

in excess of the quota fixed between the two States and the  

respondent  had  in  fact  applied  to  the  State  Transport  

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Authority,  West  Bengal  for  counter-signature  on  the  

temporary permit.  

15. The appeal  is  allowed to the extent  indicated above.  

There shall be no order as to costs.   

Civil Appeal arising out of SLP (C) NO. 11876 OF 2010:

Leave granted.  

2. This  is  an appeal  by special  leave against  the order  

dated 23.03.2010 of the Division Bench of the Calcutta High  

Court in A.S.T. No. 84 of 2010 and this appeal was heard  

alongwith Civil Appeal arising out of SLP (C) NO. 11653 OF  

2010.

3. We have delivered a judgment today setting aside the  

impugned order of the Division Bench of the Calcutta High  

Court  as  well  as  the  order  of  the  learned  Single  Judge  

against which the appeal has been filed before the Division  

Bench  of  the  High  Court  and  directed  that  the  Bank  

Guarantee for  Rs.1,00,000/- furnished by the respondent  

shall remain in force for a period of six months from today,  

during which the appellants will complete the proceeding for  

determination of tax in accordance with Section 16 of the  

Motor Vehicles Tax Act after giving all due opportunity to  

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the respondent and recover the tax amount from the Bank  

Guarantee  within  six  months,  but  will  not  recover  any  

penalty from the respondent.  This appeal is also disposed  

of in terms of the said order passed in Civil Appeal arising  

out of SLP (C) NO. 11653 OF 2010.  

.……………………….J.                                                             (R. V. Raveendran)

………………………..J.                                                             (A. K. Patnaik) New Delhi, October 11, 2011.    

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