Supreme Court Reinforces States’ Exclusive Rights Over Interstate Bus Routes

In a significant ruling that clarifies the extent of state transport undertakings’ rights, the Supreme Court of India has held that no private bus operator can be granted permits to operate on interstate routes between Madhya Pradesh and Uttar Pradesh if such routes overlap even partially with those reserved for the Uttar Pradesh State Road Transport Corporation (UPSRTC).

The Court’s decision reaffirms the supremacy of state transport route notifications over administrative or contractual arrangements between states, drawing a clear boundary between statutory authority and inter-governmental convenience. The judgment, delivered by a bench led by Justices Abhay S. Oka and Sanjay Karol, underscores that private agreements cannot override statutory protections under the Motor Vehicles Act, 1988.

“Contractual pacts between two states cannot dilute the rights and protections conferred by statute upon a State Transport Undertaking,” the bench observed, adding that any permission granted to private players in violation of notified routes would be ultra vires.

Clarifying the Legal Landscape: What the Court Said

The case revolved around an agreement between Madhya Pradesh and Uttar Pradesh that allowed certain private bus operators to ply on interstate routes overlapping with those already notified for UPSRTC. The Supreme Court found such permissions contrary to the statutory scheme envisaged under Chapter VI of the Motor Vehicles Act, which governs the operation of State Transport Undertakings (STUs) and exclusive route notifications.

The Court reiterated that once a route has been reserved for an STU under a scheme duly published and approved, no private operator can be allowed to operate services overlapping that route, even for a small stretch.

This interpretation, the bench noted, ensures that state undertakings retain their operational monopoly on notified routes, preventing fragmentation of route control and maintaining uniformity in public transport planning.

“Once a route has been notified for exclusive operation by a State Transport Undertaking, no private permit can encroach upon that territory under the guise of inter-state coordination,” the Court said.

The Statutory Context: Understanding Chapter VI of the Motor Vehicles Act

Chapter VI of the Motor Vehicles Act empowers state governments to formulate transport schemes granting STUs exclusive rights over certain routes. Such schemes are often introduced to ensure affordable, reliable public transport and to prevent market monopolies.

Under Section 98, these provisions have overriding authority over other sections of the Act and any agreements inconsistent with them. This means even if two states enter into a coordination pact for interstate transport, such an agreement cannot supersede or contradict a scheme notified under Chapter VI.

The Supreme Court’s verdict reaffirms this legislative hierarchy, restoring the primacy of statutory protection over administrative expediency. It also serves as a reminder that while interstate cooperation is necessary for mobility, it cannot come at the expense of statutory mandates protecting public undertakings.

Why the Ruling Matters

The judgment holds broader implications for federal coordination in India’s transport governance, particularly as states continue to navigate the tension between public service and private participation.

1. Reasserting State Autonomy: By upholding the supremacy of route notifications, the Court has reinforced state governments’ right to regulate transport routes within their jurisdiction — a principle rooted in the federal division of powers.

2. Curbing Unchecked Private Entry: The ruling closes the door on attempts by private operators to use interstate arrangements as a backdoor entry into reserved routes, which could otherwise lead to loss of revenue and disruption of state-run services.

3. Encouraging Statutory Compliance: State governments will now need to ensure that any future interstate agreements strictly conform to existing notified schemes, aligning administrative practices with statutory obligations.

4. Balancing Coordination and Control: The Court emphasized the need for “negotiated solutions” for interstate connectivity, hinting that states should revisit their coordination frameworks to ensure they remain legally compliant.

The Broader Tension: Public Monopoly vs. Private Efficiency

The judgment rekindles the long-standing debate over the role of State Transport Undertakings (STUs) versus private operators. While STUs are often criticised for inefficiency and financial losses, their statutory monopolies are justified on the grounds of public welfare, service accessibility, and equitable pricing.

Private operators, on the other hand, argue that liberalization of routes would improve service quality and competition. However, as the Court has underscored, such liberalisation must happen within the legal framework — not through informal or extra-statutory arrangements.

Legal experts note that the verdict serves as a cautionary precedent for states seeking to privatise portions of reserved routes under coordination agreements. “This is a reminder that statutory route notifications have the force of law and cannot be diluted by policy shortcuts,” said a senior advocate specialising in transport regulation.

Toward Cooperative Federalism in Transport Regulation

While the ruling upholds the legal rights of state undertakings, it also indirectly calls for a more structured interstate coordination mechanism. The Court encouraged states to pursue negotiated and transparent frameworks to resolve overlapping route claims rather than allowing administrative discretion to dictate access.

Such an approach aligns with the spirit of cooperative federalism — balancing the autonomy of state undertakings with the need for seamless interstate mobility. Future policy frameworks may involve:

• Establishing joint route boards to assess overlaps before issuing permits.

• Creating digital permit registries accessible across states.

• Periodically reviewing notified schemes to accommodate changing mobility demands.

These mechanisms could ensure that while STUs retain their legal rights, the larger public interest of connectivity remains protected.

Looking Ahead: Policy Implications Beyond MP and UP

The judgment is likely to influence similar disputes across India, particularly in regions where inter-state routes are economically vital but legally contested — such as Maharashtra-Gujarat, Karnataka-Tamil Nadu, and Punjab-Haryana corridors.

Transport policy analysts predict that states will now review their interstate transport agreements to identify potential conflicts with existing notified routes. The ruling also strengthens the case for greater alignment between transport ministries and state regulatory authorities, ensuring that public undertakings are neither undermined nor bypassed in the name of coordination.

Conclusion

The Supreme Court’s decision in the MP–UP interstate route dispute marks an important reaffirmation of the rule of law in transport regulation. By holding that state route notifications cannot be diluted through administrative convenience or private coordination, the Court restores clarity to an often-overlooked area of federal governance.