What went wrong with the approval of the scheme?

The hearing of objections was done by the Secretary, but the Chief Minister took the final decision. The final decision-maker did not personally hear—violating natural justice.

Was delegating hearing to the Secretary valid?

No. In a quasi-judicial process, the person who decides must hear. Splitting hearing and decision offends fairness.

Did Chapter IV-A amount to colourable legislation?

No. It was within competence and aimed at public interest. It was not a dishonest device to do indirectly what cannot be done directly.

What about the right to carry on business?

The Court said the scheme’s approval process offended rights because due process was not followed; fundamental rights can be restricted only by fair procedure.

What was the final result?

The Supreme Court quashed the approval of the nationalisation scheme for breach of natural justice and procedural fairness.

GULLAPALLI NAGESWARA RAO AND ORS. V. ANDHRA PRADESH STATE ROAD TRANSPORT CORPORATION AND ORS.

AIR 1959 SC 308

Supreme Court of India India 1959 AIR 1959 SC 308 Natural Justice & Admin Law ~7 min read

Author: Gulzar Hashmi Location: India Publish Date: 23 Oct 2025 Slug: gullapalli-nageswara-rao-and-ors-v-andhra-pradesh-state-road-transport-corporation-and-ors

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Quick Summary

This case is about a nationalisation scheme for bus routes. Objections were heard by the Secretary, but the Chief Minister signed off without personally hearing. The Supreme Court said the process was quasi-judicial, so the final decision-maker must hear the parties. The approval was quashed for breach of natural justice. Chapter IV-A was within competence and not colourable, but rights can be limited only by fair, lawful procedure.

Issues

Did the approval of the scheme violate natural justice?
Was delegating the hearing to the Secretary while the decision lay with the Chief Minister legally valid?
Was Chapter IV-A of the Motor Vehicles Act, 1939, a colourable legislation infringing fundamental rights?

Rules

Natural justice demands an impartial authority who hears and decides.
Delegation in quasi-judicial functions must follow the statute.
Colourable legislation: doing indirectly what cannot be done directly is impermissible.
Administrative action affecting rights must follow due process and be proportionate.

Facts (Timeline)

Business: Petitioners ran bus services in Krishna District with valid permits.

Scheme: The State Undertaking proposed nationalisation under Chapter IV-A.

Objections: Operators filed objections; Secretary heard them.

Decision: Chief Minister approved the scheme as originally published.

Petition: Article 32 plea—breach of natural justice, violation of business right, colourable legislation.

Arguments

Petitioners (Operators)

Hearing by Secretary + decision by Chief Minister = unfair.
Scheme hits Article 19(1)(g) right to business.
Chapter IV-A is colourable—backdoor takeover.

Respondents (State/APSRTC)

Chapter IV-A serves public interest; within competence.
Delegation to Secretary was an administrative arrangement.
Any restriction is reasonable and by law.

Judgment

Quasi-judicial process: Approving the scheme required strict fairness.
Hearing-Decision split invalid: Final decision-maker must personally hear. Secretary hearing + CM deciding violated natural justice.
Rights: Approval process offended the right to trade since due process was not followed.
Not colourable: Chapter IV-A itself was within competence and for public interest.
Compensation note: Cancelling permits and reallocating to the Undertaking was not a business transfer; only the unexpired permit term matters.
Result: Approval order quashed; enquiry must follow natural justice.

Ratio Decidendi

He who decides must hear. Where the statute sets up a quasi-judicial approval, the ultimate authority must give a fair hearing. Administrative convenience cannot bypass natural justice.

Why It Matters

Classic precedent on fair hearing in administrative approvals.
Clarifies that policy goals cannot override procedure.
Separates validity of the law from the validity of its application.

Key Takeaways

Final decision-maker must hear objections.

Quasi-judicial approvals need strict fairness.

Chapter IV-A not colourable; aims at public interest.

Rights limits require due process, not shortcuts.

Mnemonic + 3-Step Hook

Mnemonic: HEAR = Hearer decides • Every approval fair • Apply law, not shortcuts • Rights via due process

Person: Who decides? That person must hear.
Process: Follow statute; no split of hearing & decision.
Public Interest: Good aim does not cure bad procedure.

IRAC Outline

I — Issue

Was the scheme approval valid when the decider did not hear? Is Chapter IV-A colourable?

R — Rule

Natural justice; quasi-judicial fairness; anti-colourability; proportional limits on rights.

A — Application

Secretary heard, CM decided—unfair; however, Chapter IV-A itself is within power and serves public interest.

C — Conclusion

Approval quashed for breach of natural justice; law not struck down as colourable.

Glossary

Natural Justice: Fair hearing by an unbiased decision-maker.
Quasi-Judicial: Administrative decisions that must follow court-like fairness.
Colourable Legislation: A disguised law that tries to do indirectly what is not allowed directly.
Proportionality: Restriction must fit the need; not excessive.