(1) Where, in exercise of the powers conferred by clause (b) or clause (c) of sub-section (2) of section 103, any existing permit is cancelled or the terms thereof are modified, there shall be paid by the State transport undertaking to the holder of the permit compensation, the amount of which shall be determined in accordance with the provisions of sub-section (4) or sub-section (5), as the case may be.
(2) Notwithstanding anything contained in sub-section (1), no compensation shall be payable on account of the cancellation of any existing permit or any modification of the terms thereof when a permit for an alternative route or area in lieu thereof has been offered by the State Transport Authority or the Regional Transport Authority, as the case may be, and accepted by the holder of the permit.
(3) For the removal of doubts, it is hereby declared that no compensation shall be payable on account of the refusal to renew a permit under clause (a) of sub-section (2) of section 103.
(4) Where, in exercise of the powers conferred by clause (b) or sub-clause (i) or sub-clause (ii) of clause (c) of sub-section (2) of section 103, any existing permit is cancelled or the terms thereof are modified so as to prevent the holder of the permit from using any vehicle authorised to be used thereunder for the full period for which the permit would otherwise have been effective, the compensation payable to the holder of the permit for each vehicle affected by such cancellation or modification shall be computed as follows:—
(a) For every complete month or part of a month exceeding fifteen days of the unexpired period of the permit: Two hundred rupees;
(b) For part of a month not exceeding fifteen days of the unexpired period of the permit: One hundred rupees:
Provided that the amount of compensation shall, in no case, be less than four hundred rupees.
(5) Where, in exercise of the powers conferred by sub-clause (iii) of clause (c) of sub-section (2) of section 103, the terms of an existing permit are modified so as to curtail the area or route of any vehicle authorised to be used thereunder, the compensation payable to the holder of the permit on account of such curtailment shall be an amount computed in accordance with the following formula, namely:—
Explanation.—In this formula,—
(i) “Y” means the length or area by which the route or area covered by the permit is curtailed;
(ii) “A” means the amount computed in accordance with sub-section (4);
(iii) “R” means the total length of the route or the total area covered by the permit.
(6) The amount of compensation payable under this section shall be paid by the State transport undertaking to the person or persons entitled thereto within one month from the date on which the cancellation or modification of the permit becomes effective:
Provided that where the State transport undertaking fails to make the payment within the said period of one month, it shall pay interest at the rate of seven per cent. per annum from the date on which it falls due.
Simplified Explanation
Section 105 of the Motor Vehicles Act outlines the principles and methods for determining compensation when a private operator’s rights are affected due to the implementation of a government transport scheme. This section is important because it ensures that private transport operators receive fair compensation if their business is impacted by the state taking over transport services in a particular area or on a route.
Key Aspects of Section 105
- Compensation for Private Operators:
- When a State Transport Undertaking (STU) takes over routes or areas previously operated by private transport operators as part of a government transport scheme (under Chapter VI), the affected private operators are entitled to compensation.
- This compensation is provided because their existing permits or operational rights may be cancelled or restricted due to the implementation of the public transport scheme.
- Principles for Determining Compensation:
- The compensation amount is determined based on fair and equitable principles. It should reflect the loss of business or operational rights that the private operator would incur due to the takeover by the state-run service.
- Factors considered in determining the compensation amount include:
- The value of the operator’s existing permit.
- The investment made by the private operator in acquiring vehicles, maintaining the fleet, and operating the service.
- The potential loss of income or profits that the operator would face due to the cessation or reduction of their services.
- Method of Compensation Determination:
- A detailed process is followed to calculate the compensation amount. This may involve assessing the operator’s financial records, the valuation of vehicles and equipment, and other relevant factors to ensure that the compensation is just and reasonable.
- Negotiation and Consultation: In some cases, the state government and the affected operators may negotiate the compensation amount. Both parties can present evidence or arguments to justify their respective positions on what constitutes fair compensation.
- Payment of Compensation:
- Once the compensation amount is determined, the state government is responsible for making the payment to the affected operator.
- The payment may be made as a lump sum or in installments, depending on the agreement or the terms laid out by the government.
- Timely payment is crucial to ensure that the private operators are not left in financial difficulty due to the loss of their business rights.
- Dispute Resolution:
- If there is a dispute between the state government and the private operator regarding the amount of compensation, the matter can be referred to an appropriate authority or tribunal for resolution.
- This provides a formal avenue for operators to challenge the compensation if they believe it is insufficient or unfair.
Impact on Stakeholders
- For Private Transport Operators:
- Section 105 provides a safeguard for private operators whose business may be negatively impacted by state-run transport schemes. The compensation helps to mitigate the financial losses incurred due to the cancellation or restriction of their operational permits.
- For State Governments:
- The state government is required to provide fair compensation, ensuring that the transition to state-operated transport services is equitable and does not unfairly harm private operators.
- For State Transport Undertakings (STUs):
- The STUs benefit from having clear routes or areas to operate in without competition, but the state must ensure that affected private operators are compensated in accordance with the principles of fairness.
- For the Public:
- While this section primarily affects private operators and the government, the public benefits indirectly. Fair compensation ensures smoother transitions when state transport services take over, reducing potential disruptions in transport services.
Example of Application
Suppose a state government introduces a new public bus service on a route that was previously operated by private bus companies. As a result, the private companies’ permits are cancelled. Under Section 105, these private operators are entitled to compensation for their loss. The state government would assess the value of their permits, their investments in vehicles, and their potential lost earnings, and then pay an agreed-upon amount to compensate for the takeover of the route.In summary, Section 105 of the Motor Vehicles Act ensures that private transport operators receive fair compensation when their operational rights are affected by the implementation of state-run transport services. It provides a clear method for determining compensation, ensuring that private operators are treated equitably when public transport schemes are introduced.
