V. Bhaskar Rao and Another vs State of Karnataka and Others

Tirath S. Thakur, J.—These two Writ Petitions involve common questions of law and fact and are being disposed of by this common order.

The petitioners have secured agents ''licences in terms of Section 93 of the Motor Vehicles Act, 1988 and the Karnataka Motor Vehicles Rules framed thereunder. Applications for renewal of the said licences were made by them, in response whereto, the Secretary of the Regional Transport Authority, Udupi, by an endorsement dated 15th of February 1992 addressed to each one of the petitioners, directed them, to provide an additional security deposit of Rs. 25,000 as required under Rule 117(5) of the Karnataka Motor Vehicles Rules, 1988. Aggrieved by the said order, the petitioners went up in appeal before the Karnataka State Appellate Tribunal at Bangalore. These appeals succeeded but only in part and were accordingly allowed by the Tribunal''s order dated 29th of June 1992. The Tribunal was of the view that on a true and correct interpretation of Rule 117(2) and (5), the respondents could demand a security deposit of a sum up to Rs. 10,000/- from the petitioners besides an additional security deposit of Rs. 1,000/-. Aggrieved, the petitioners have come up with the present Writ Petitions.

I have heard Mr. Bhat, Learned Counsel for the petitioners and the Learned Counsel for the respondents.

The short question that falls for consideration is as to whether the respondents could, while considering an application for renewal of an agents licence under Rule 117 of the Karnataka Motor Vehicles Rules, demand an additional security of Rs. 10,000/-. According to Mr. Bhat, the petitioners, having already furnished a security of Rs. 5,000/- each besides an additional security of Rs. 1,000/- in terms of Rule 117(5), the respondents were not entitled to demand any further security or additional security from them.

Rule 117 of the Karnataka Motor Vehicles Rules to the extent the same is relevant reads thus:-

"117(1) Agent''s licence".- (1) Any person desiring to obtain agent''s licence shall make an application to the Regional Transport Authority of the region in which he has his place of business or as the case may be, his principal place of business, such application shall be made in Form KMV 57.

(2) The application shall be accompanied by the fee prescribed (deposit of an amount of rupees twenty-five thousand and security in addition to the fee prescribed).

XX XX XX (3) The licensing authority shall, while granting or renewing a licence (including any supplementary licence) or at any time during the validity of licence, by order require a licensee to furnish a security in cash of rupees ten thousand and when a licensee has furnished earlier any security in pursuance of an order passed under this sub-rule, additional security not exceeding rupees one thousand."

A plain reading of the provision shows that the licensing authority can, at any time during the validity of the licence or while granting a renewal thereof, by order, require the licensee to furnish a security in cash of Rs. 10,000/-, what is significant, however, is that in case any such licensee has already furnished a security in pursuance of an order made under sub-rule (5) supra, the Licensing authority can at best demand an additional security from him of an amount not exceeding Rs. 1,000/-. The expression "has furnished earlier any security in pursuance of an order passed for this sub-rule" clearly conveys that the security furnished earlier need not be to the extent of the optimum permissible. Even a security of an amount less than the maximum prescribed would suffice subject only to the rider that the authority may demand an additional security of an amount not exceeding one thousand rupees.

In the instant case, it is not disputed that the petitioners have furnished a security of Rs. 5,000/- each in terms of Rule 117(5). It is also not denied that they had furnished a further additional security of Rs. 1,000/- under the said provision. That being so, the power to demand an additional security of Rs. 1,000/- stood exhausted and could not have been invoked by the licensing authority let alone the power to demand a sum of Rs. 25,000/- as argued by the Government Counsel or Rs. 10,000/- as observed by the Tribunal. This is so because, the Rule clearly draws a distinction between cases where a licensee has already furnished a security and those where no such security has been furnished. In the case of former, all that the Licensing Authority is entitled to demand is an additional security of a sum of Rs. 1,000/- while in the case of latter the maximum security amount that can be demanded from the licensees is Rs. 10,000/- plus Rs. 1,000/- by way of additional security. The case of the petitioners falls in the first of the categories mentioned above and therefore, all that the Licensing Authority could have possibly demanded was an additional security, which having been already furnished by them, there was no room for rising any further demand.

Learned Counsel appearing for the respondents contended that in terms of Rule 117(2), the Licensing Authority was entitled to demand a deposit of Rs 25,000/- besides the security and the prescribed fee. The Tribunal has negatived this contention and held that in the case of existing licensees seeking renewal of their licences and those who have already furnished a security, demand of Rs. 25,000/- as deposit is not permissible. The respondents have not questioned the correctness of the said view by way of a Writ Petition. I am not, therefore, inclined to examine the validity of the view taken by the Tribunal since that part of the judgment has not been assailed in these proceedings. The limited question that is raised and falls for consideration of this Court is as to whether in cases where a security deposit and even an additional security has already been furnished, any order directing a further security is permissible. My answer, however, for the reasons stated earlier, is in the negative. In the circumstances, I need not go into the merit of the further contention raised by Mr. Bhat that the provision made in Rule 117 for the making of a deposit of Rs. 25,000/- besides security is ultravires of Section 93 of the Motor Vehicles Act which permits the demand of only a security and not a deposit besides the security as envisaged by the Rule.

In the result, these petitions succeed and are hereby allowed. The orders impugned are hereby quashed and the 2nd respondent directed to consider the applications made by the petitioners for renewal of their licences in accordance with law and keeping in view the observations made hereinabove. In the circumstances, there shall be no orders as to costs.