CHAIRMAN, REGIONAL TRANSPORT AUTHORITY, RAWALPINDI vs PAKISTAN

SHAFIUR RAHMAN, J.---Leave to appeal was granted to the appellant, Chairman, Regional Transport Authority, Rawalpindi to examine---

(i) whether the respondent had a legal right enforceable at law by means of a Constitution petition;

(ii) whether the law applicable envisages no such application as was presented by the respondent and rejected by the appellant;

(iii) whether the discretion possessed and exercised by the appellant in rejecting the application of the respondent was sound on facts and law; and

(iv) whether the High Court had erred in granting relief to the respondent by declaring by the impugned judgment the action of the appellant, in rejecting the application as mala fide, and substituting its own discretion for that of the appellant, in the matter?

2. The factual background of the controversy in this appeal is that in section 67 of the Motor Vehicles Ordinance, 1965 (hereinafter referred to as the Ordinance) provision existed in the case of death of, injury to, a passenger in a stage carriage or a contract carriage, other than a contract carriage constructed, adopted or used to carry not more than six passengers including the driver, for payment of compensation. Such compensation was payable by the holder of the permit or by the owner of the carriage. The exact amount of compensation was specified in the thirteenth schedule. To entrench and strengthen this provision further, provision was made in section 49 to the following effect:-- "49. Procedure for grant of applications for stage carriage permits.--(1) Where an application for a stage carriage permit conforming to the provisions of section 48 has been received by the Regional Transport Authority, it shall, on the payment of the prescribed fee, and on the applicant furnishing to the Regional Transport Authority, a bank guarantee of the prescribed sum as security for payment of any compensation that the applicant may be required to pay under the provisions of section 67, grant a permit to the applicant in the prescribed form in respect of the motor vehicle specified in the application: ' Provided that where any such permit granted in respect of the vehicle for which the permit granted in respect of the vehicle for which the permit is applied for has been suspended or cancelled, the Regional Transport Authority---

(a) shall not, during the period of suspension of the previous permit, grant a permit in respect of the vehicle;

(b) may, in case of a previous permit, for reasons to be recorded in writing, a copy whereof shall be granted to the applicant free of cost, refuse to grant a permit for a period not exceeding three months whereafter the applicant may make a fresh application for the grant of stage carriage permit.

(2) No security in the form of bank guarantee shall be required in respect of:-

(a) a stage carriage permit authorising the plying of a stage carriage in an urban area; and

(b) any other stage carriage permit if--

(i) the applicant furnishes a certificate duly assured by the West Pakistan Transporters' Mutual Assistance Co-operative Society Limited, Lahore, showing him as member thereof;

(ii) the certificate so issued remains valid; and

(iii) such certificate is withdrawn."

' The Punjab Ordinance IX of 1970 substituted the subsection (2) of section 49 by the following provision:-- "(2) No bank guarantee shall be required in respect of--

(a) a stage carriage permit authorising the plying of a stage carriage in an urban area; and

(b) any other stage permit if--

(i) the applicant furnishes security to the satisfaction of the Chairman of the Regional Transport Authority, to which the application is made, for payment of any compensation that the applicant may be required to pay under provisions of section 67; or

(ii) the applicant furnishes a certificate duly issued by the West Pakistan Transporters Mutual Assistance Co-operative Society Limited, Lahore, showing him as member thercof, and the certificate so remains valid and is not withdrawn."

3. Though section 69 of the Ordinance specifically authorised the Provincial Government to make rules for the purposes of carrying into effect the provisions of the Chapter in which both section 67 and section 49 referred to above are contained, we are told, no rules whatsoever were framed on this specific subject. The result was that the designated authority/Chairman, Regional Transport Authority received applications for being approved as guarantor from diverse quarters, political and non-political, and also giving the impression that the Chairman's discretion was unbounded and he could act for the benefit of any or none at all, everyone trying to influence the exercise of that discretion and the designated authority showing its independence and probity in the matter.

4. On 9th July, 1979 the respondent addressed an application to the appellant giving in it year wise claims paid from 1971 to 1978 and requested as hereunder:-- "We may submit here that the Pakistan Mutual Insurance Company Ltd., Head Office, Lahore which has been in operation since 1946 and is financially strong, has valid licence to transact the Motor Insurance (all types of covers) from the Central Government of Pakistan. The company has a network of its branches, offices and agencies in Pakistan and has to its credit more than 33 years record of unique service to its policyholders and the victims of road accidents. We have our reinsurance treaties with the Pakistan Insurance Corporation (established by the Central Government) whereby each and every loss against our Motor Policy including Passenger Guarantees is covered to the tune of 2-1/2 lacs of rupees. The Company covers the risk of all types including the one falling within the description of section 67 of the West Pakistan Motor Vehicles Ordinance, 1965.

' We, therefore, request your honour to kindly authorise this national company to be recognised by the Chairman Regional Transport Authority for the purposes of issuing a guarantee to its policy- holders in connection with the fulfillment of the requirements of section 67 of the West Motor Pakistan Vehicles Ordinance, 1965."

5. On 25-2-1980 finding that no response was forthcoming more details were supplied in the reminder concluding as hereunder:-- "As was submitted by us to your Honour earlier, the figures of claims account paid and settled from 1971 to 1978 aggregated Rs,51,54,119.53 and to that figure the sum of Rs,6,19,409.22 was added representing our payments on claims account during the year 1979.

' We hope, the information submitted herewith will be a useful supplement to our petition awaiting your Honour's orders."

' Yet another reminder was issued on 13th March, 1980.

6. On 28-3-1981, Punjab Government in the Services, General Administration and Information Department (Transport Cell) addressed the following letter to Chairman, Regional Transport Authorities of Rawalpindi and Bahawalpur, the posts ex officio held by the Commissioners of the respective Divisions:-- "Subject: Pakistan Mutual ,durance Company Ltd. Recognition as guarantors under sections 49 and 16 of Motor Vehicles Ordinance.

1965.

' The request of Pakistan Mutual Insurance Co. Ltd. 17-Be Shah Alam Market, Lahore has been considered by the Government and it has been decided that the Chairman of RTAs.

(Commissioners) of Rawalpindi and Bahawalpur Divisions may recognise them as guarantors within their regions and also for cases of Inter-Provincial routes issued by the Punjab Provincial Transport Authority for the purposes of sections 49 and 67 of Motor Vehicles Ordinance, 1965.

(2) The Pakistan Mutual Insurance Co. Ltd. Has clearly been furnishing passengers guarantee in other three regions of the Province namely, Lahore, Multan and Sargodha since 1971 and their performance has been considered as satisfactory on the basis of which they have been recommended to the Ministry of Communications for incorporation of their name in the enactment under revision with them."

7. It was after this that the request of the respondent made in application dated 9-7-1979 was responded to by letter dated 27-4-1981, not by reference to that application but by reference to Government's letter referred to by the directive as hereunder:-- ' Subject: Pakistan Mutual Insurance Company Limited Permission as guarantee under sections 49 and 67 Motor Vehicles Ordinance, 1965.

' Memorandum ' Reference memo. No,SO/PP/1/1-13/75, dated 28-3-1981 from the Section Officer-I, Government of the Punjab, S.G.A. & Information Department (Transport Cell) Lahore addressed to this office, copy endorsed to you.

' You are directed to please produce a bank guarantee amounting to Rs,10 lac for the purpose."

8. The respondent represented against the demand of bank guarantee by its letter dated 3-5-1981 demonstrating its onerous character in the following words:-- "We would like to bring it to your kind notice that ours is an Insurance Company duly licensed by the department of Insurance, Government of Pakistan which has been functioning successfully since 1946. Our company has its Reinsurance Treaties with the Pakistan Insurance Corporation (which is a body sponsored and managed by the Government of Pakistan) whereby each and every claim arising out of a single accident in respect of any Motor Vehicle Policy issued by us is covered by the said Corporation to the tune of Rupees two and a half lacs for each and every accident. This means that if there be a series of successive accidents of a particular motor vehicle, the risk in respect thereof is also covered likewise by the said Corporation. That being so, there is hardly any need or justification for asking us to furnish the bank guarantee as is demanded by you.

It is significant that no such guarantee has ever been demanded from or furnished by West Pakistan Transporters Mutual Assistance Cooperative Society Ltd., Lahore, although the said Society has no such reinsurance cover as is available to US.

' We may also respectfully bring it to your kind notice that in the aforementioned three regions, in which we have been furnishing passengers guarantees since 1971, we were never called upon to furnish any bank guarantee.

' It is, therefore, requested that requirement of furnishing bank guarantee may please be withdrawn and our Company be recognised as guarantors in accordance with decision of the Government of Punjab, which is unconditional. We are, however, willing and ready to submit an undertaking regarding our performance, if so required."

9. Again when it remained unheaded, a reminder, was sent on 11-7-1981 with copies to the concerned functionaries of the Punjab Government. On 22-7-1981, the Secretary, Regional Transport Authority addressed the following letter to the respondent:-- "Reference your letter No,A/896/8I, dated 11-7-1981, on the above subject.

(2) As already desired in this office memo. No,700/RTA-81, dated 27-4-1981, you are advised to please produce a Bank Guarantee amounting to Rs,10 lac for the purpose."

10. Again, the respondent represented on 18-8-1982 in terms as before.

11. Once again, the Government of the Punjab intervened by a letter dated 4-10-1982 addressed to the Chairman, Punjab Provincial Transport Authority and to all Chairmen, Regional Transport Authorities, in the following terms:- "The request of the Pakistan Mutual Insurance Co. Ltd., Shahalam Market, Lahore for registration as Guarantors for the purpose of sections 45 and 67 of Motor Vehicles Ordinance, 1965, for the two regions of Rawalpindi and Bahawalpur, as also for the newly-created three regions of Faisalabad, Gujranwala and Dera Ghazi Khan, has been considered by the Government and it has been decided that the Chairman of Provincial Transport Authority and Regional Transport Authorities in the Province, may allow them to function in their respective jurisdictions to issue guarantees of 'Compensation to Passengers' so also to cover Third Party Risk under section 45 of the Motor Vehicles Ordinance, 1965, to the commercial and private vehicles.

(2) The Pakistan Mutual Insurance Co. Ltd., Shahalam Market, Lahore, which is registered with the Controller of Insurance, Government of Pakistan, Department of Insurance, and are already approved Guarantors for Lahore, Sargodha and Multan regions, do not stand committed to make prompt payment in cases where compensation to the victims of accident is liable to be decreed by any competent Court/Tribunal throughout the Province."

' Again, it was followed with reminders dated 23-10-1982 and 25-10-1982.

12. In the meeting of the Regional Transport Authority held on 18-11-1982 a similar application of Ittefaq General Insurance Company, forwarded by Punjab Government by letter dated 1-9-1982, and that of the respondent mentioned as forwarded by Punjab Government on 4-10-1982, came to be discussed, that of the former approved and that of the latter deferred 'to seek advice from the Controller General of Insurance, Government of Pakistan, Karachi, whether the reinsurance treaty with Pakistan Insurance Corporation as such and the breakup to be furnished by the Company could be deemed to be sufficient to regard it as a viable concern'. The required certificate from Insurance Company was submitted on 23-12-1982. Not receiving any reply the appellant sent a telegram on 17-2-1983. The orders were passed on 23-2-1983, and the material part is reproduced in extenso as hereunder:- "The Company was directed to furnish a bank guarantee, as required under section 49 of the Motor Vehicles Ordinance, 1965 but this condition was not accepted by it.

(3) The Company applied for permission to furnish passengers guarantee by its petition dated 23- 10-1982. This, however, is different from permission to furnish security under section 49(2)(b)

(Punjab Amendment) as amended by the West Pakistan Motor Vehicles Ordinance, 1970 to the satisfaction of the Chairman, Regional Transport Authority, Rawalpindi for payment of any compensation that the company may be required to pay under provisions of section 67. Besides, the securities furnished by the Pakistan Mutual Insurance Co. Ltd., Lahore are considered .To be inadequate compared with Rs,22,50,000 pledged by Messrs Ittefaq General Insurance Company, Islamabad i,e, the other Company approved by Regional Transport Authority. The applicant has a showing of no more than the irreducible statutory deposit amounting to Rs,1,53,291 under section 7 of the Insurance Act, 1938. I am not persuaded to accept the agreement of Messrs Pakistan Mutual Insurance Company Ltd. That anything more than the statutory minimum for the purpose of insurance would drive it out of the market when another Company has put in nearly twenty times as such. In the result, the application of Messrs Pakistan Mutual Insurance Company is rejected."

13. The respondent invoked the constitutional jurisdiction of the High Court for challenging the Order of the Chairman, Regional Transport Authority. The first grievance made was of inattention at the initial stage to the application made by the respondent. The second grievance was that it was directed to seek amendment of the Motor Vehicles Ordinance in order to get approval. The third grievance was that it was asked to make a deposit of Rs,10 lacs or furnish bank guarantee of the same amount. The fourth grievance was that there was a serious legal misconception in comparing the case of Ittefaq General Insurance Company Limited with that of the respondent company/writ petitioner and taking into consideration the deposit made by Ittefaq General Insurance Company Limited of Rs,22,50,000. The parawise comments were obtained by the High Court from the appellant/Chairman, Regional Transport Authority and with regard to the case of Ittefaq General Insurance Limited, the following comments were offered by the Chairman:-- 'The reference to Ittefaq General Insurance was made in passing only to weigh the contention of the appellant that bank guarantee of Rs,10 lacs as demanded by Authority would derive him out of market. In passing judgment on this argument it was noted that if another company doing the same business could pledge Rs,22,50,000 in satisfactory security, it was not open to appellant to flinch from a bank guarantee of Rs,10 lacs. If in the circumstances adverse presumption was raised about willingness and ability of appellant to insure loss of life or limb of passengers, nothing went amiss firms without sound financial basis, cannot be allowed to play fast and loose with public safety."

14. By the impugned judgment the High Court held as hereunder:-- "(i) The peculiar distinction drawn by 'respondent No,1 that the petitioner company previously applied for permission to issue guarantee certificates but later applied for permission to furnish passengers guarantee, is nothing but creating confusion.

(ii) Respondent No,1 has compared the statutory deposit of Rs,1,53,291 furnished by the petitioner company under section 7 of the Insurance Act, 1938, with the sum of Rs,22,50,000 pledged by Ittefaq General Insurance Company Limited, Islamabad, with the State Bank of Pakistan. This is an invidious comparison. Both the petitioner company and Ittefaq General Insurance Co. Ltd., Islamabad maintain statutory deposit of Rs,1,50,000 each with the State Bank of Pakistan, but the amount pledged by Ittefaq General Insurance Co. Ltd., is pursuant to the recent decision of the Government whereby new insurance companies were required to pledge 90% of their paid up and issued share capital with the State Bank of Pakistan, which is pursuant to the policy of Government to prevent mushroom growth of new insurance companies.

(iii) Ittefaq General Insurance Company Ltd., in comparison to the petitioner-company, is a very young company. The petitioner company's book value assets, as shown by the Government of Pakistan in its certificate dated 23-12-1982 (Annexure 1)/1'), far exceeds Rs,26,00,000. The petitioner company has also demonstrated that it has paid claims under section 67 of the Motor Vehicles Ordinance, 1965 and section 39 of Motor Vehicles Act, 1939, exceeding Rs,23,00,000 during the period 1977-81. The comparison, therefore, drawn by respondent No,1 between the statutory deposit maintained by the petitioner company and the pledged securities deposited by the rival company under the Government's recent policy letter, is discriminatory and mala fide.

(iv) The respondent has also openly ignored the orders of the Government dated 28-3-1981 and 4- 10-1982 calling upon him to accept the petitioner company as an approved guarantor."

' The Constitution petition was accepted. The case was remanded back to the appellant/Chairman, Regional Transport Authority, to decide the writ petitioner's company's application in accordance with law and proper consideration of all the relevant material already placed before him.

15. Raja Muhammad Akram, Advocate, the learned counsel for the appellant contended that the Authority designated and empowered by the law was the Regional Transport Authority but in fact we find approvals being accorded and communicated by the Provincial Government and other authorities. Normally such should not have been the case and the designated authority should have been left unhampered in exercising its discretion in the matter. Further it was contended that the use of the expression mala fide is too strong against the Chairman and unjustified on record because nothing was pleaded at any stage to allege personal bias or the personal interest of the designated authority to justify such a remark. On the other hand the learned counsel for the appellant contended that all efforts were made to have as complete a data as was possible in respect of the solvency and soundness of the respondent/writ petitioner for coming to a just and proper conclusion. All the relevant factors were taken into consideration and a discretionary order, supportable in law, was passed. According to him, there was no justification for the High Court to substitute its own discretion and judgment for that of the Regional Transport Authority.

16. It is not disputed that the statute conferred a power on the Regional Transport Authority under section 49, relatable to the requirement of section 67 of the Ordinance. The nature of such a power and the duties appurtenant to its exercise have been dealt with in American Jurisprudence 2nd Edition, Volume 63A (Public Officers & Employees) sections 7, 308, 315 and 317 in the following words:-- "A public office is a public agency or trust created in the interest and for the benefit of the people, and since an incumbent of a public office is invested with certain powers and charged with certain duties pertinent to sovereignty, the powers so delegated to the officer are held in trust for the people and are to be excerised in behalf of the Government or of all citizens who may need the intervention of the officer. Such trust extends to all matters within the range of the duties pertaining to the office. In other words, public officers are but the servants of the people and no their rulers. A public officer is amenable to the rule which forbids an agent or trustee to place himself in such an attitude toward the principal or cestui que trust as to have his interest conflict with his duty Where a statute is silent with respect to the time within which an official act must be performed, the law contemplates that the duty must be performed within a reasonable time. A public official who undertakes to perform an act, even an act which is completely discretionary, must do so reasonably and in complete good faith without such delay as would frustrate its ultimate objective One who accepts a public office does so cum on ere, or with the burden, and is considered as accepting its burdens and obligations with its benefits. He thereby subjects himself to all constitutional and legislative provisions relating thereto and undertakes to perform all the duties of the office, and while he remains in such office the public has the right to demand that he perform such duties. The acceptance of every public office implies an agreement on the part of the officer that he will execute its duties with diligence and fidelity. The duty of a public officer to fulfil the obligations of his office should take precedence over all other matters Every public officer is bound to use reasonable skill ad diligence in the performance of his official duties, particularly where rights of individuals may be jeopardized by his neglect. In other words, he is bound, virtue official, to bring to the discharge of his duties that prudence, caution, and attention which careful men usually exercise in the management of their own affairs."

17. Wherever wide worded powers conferring discretion are found in statute, there remains always the need and the desirability to structure the discretion and the need for this has been pointed out in the Administrative Law test by Kenneth Culp Davis in the following words:-- "Structuring discretion means regularizing it, organizing it, producing order in it, so that decisions will achieve a higher quality of justice The seven instruments that are most useful in the structuring of discretionary power are open plans, open policy statements, open rules, open findings, open reasons, open precedents, and fair informal procedure When legislative bodies delegate discretionary power without meaningful standards, administrators should develop standards at the earliest feasible time, and then, as circumstances permit, should further confine their own discretion through principles and rules. The movement from vague standards to definite standards to broad principles to rules may be accomplished by policy statements in any form, by adjudicatory opinions, or by exercise of the rulemaking power When legislative bodies delegate discretionary power without meaningful standards, administrators should develop standards at the earliest feasible time, and then, as circumstances permit, should further confine their own discretion through principles and rules."

18. In our context, the wide-worded conferment of discretionary powers or reservation of discretion, without framing rules to regulate its exercise, has been taken to be an enhancement of the powers and it gives that impression in the first instance but where the authorities fail to rationalize it and regulate it by Rules, or Policy statements or Precedents, the Courts have to intervene more often, than is necessary, apart from the exercise of such power appearing arbitrary and capricious at times. The Provincial Government was empowered to frame the Rules. It did not. The Authority possessed of the discretion prepared no guide-lines informing the public of the manner of the exercise of this power. The discretion of the Authority entrusted with the power and its own apathy is clear from the facts narrated that as long as the respondent approached it, and it did by letters dated 9th July, 1979, 25th February, 1980 and 13th March, 1981, the Authority did not even acknowledge it. From the correspondence reproduced, it appears that orally the Authority responded calling upon the respondent to get the law amended. It was neither within the power and competence of the respondent/Insurance Company nor of the Authority itself to have got the law amended. The response amounted to asking the respondent to perform the impossible. It was in this situation that the respondent had no alternative but to go to the higher Authority and it is only when communications were received from the Government that the Authority responded in its own fashion, even then not referring at all to the applications earlier filed by the respondent. It is clear, therefore, that a legal right is created, and it is enforceable at law by the beneficiary, where a public power has been conferred on an Authority and the Authority remains silent about its exercise.

19. It is true that in the absence of the Rules, the enacted law of the legislature contains no provision with regard to filing of an application. Such an omission in the substantive law is understandable. In any case, the law does not prohibit the party from filing such application. Articale 4(2)(b) of the Constitution guarantees to the citizen that 'no person shall be prevented from or to be hindered in doing that which is not prohibited by law'. It is not for the statutory authority to call upon the respondent to show which provision of the law provides for the filing of such an application, but to deal with it and show itself the law which prohibits making of such an application. The Authority was passing on its own burden to the beneficiary of that power.

20. The discretion exercised by the appellant in this case suffered from two defects. In the first place, it took into consideration the statutory deposit which was required to be made by each Insurance Company at the time of its incorporation and registration. That was the requirement of the law. That had to be satisfied. The amount deposited depended on the time when the Company was registered. The difference between the amounts was no indication of the solvency of the Company. In adopting a yardstick which was wholly irrelevant, unjustified and improper under the law, the appellant reached a conclusion which could not be arrived at if that element had been ignored. Secondly, in exercising discretionary powers, one has to deal without discrimination, fairly, justly and reasonably. On the facts of the case, it is clear that the Regional Transport Authority had two cases to examine. It examined both of them, applied wrong standards and granted relief to one denying to the other. What it ignored was that the respondent had approached it directly. It had done so earlier than the other. It was already so registered and recognized by other Regional Transport Authorities. It had repeated its request to it directly. It was only when such request remained unresponded for long that it approached the higher authority. The other who came not directly, but through, the higher authority and at a later date, was accommodated more readily than the respondent. Such a treatment negates the very assertion of the appellant that the discretionary power should not be affected by the superiors or quarters non-statutory in character.

It is out of compulsion that in this case the respondent had to approach the superiors.

21. The High Court has not substituted its own discretion. It has indicated the manifest mistakes committed in handling the case and entrusted the matter back to the Authority pointing out the standards which had to be adopted.

22. The learned counsel for the appellant was somewhat sensitive to the observation made that the exercise of power by the Regional Transport Authority and its functionaries was mala fides, taking it to be mala fides of fact rather than of law. There was no ground made out nor assertion made to indicate any mala fides of fact against any functionary of Regional Transport Authority. It was mala fides in law which was alleged and found established by the High Court and it is only this finding which has been upheld by this Court.

23. No merit is found in this appeal and the same is dismissed with costs.