JUDGMENT B.D. Agrawal, J. - The common question which these petitions under Article 226 of the Constitution give rise is whether the U. P. State Road Transport Corporation may allow the permits held by it to be valid by private operators under agreement enabling the latter thereby to run vehicles owned by them on nationalised routes. 2. The U.P. State Road Transport Corporation (hereinafter referred to as the Corporation) is a statutory body created under the Road Transport Corporations Act, 1950 with effect from June 1, 1972 having for its object progressively to provide or secure or promote the provisions for efficient, adequate, economical and properly coordinated system of road transport services in the State. The Corporation is a State Transport Undertaking within the meaning of S. 68-A(b) of the Motor Vehicles Act, 1939. In exercise of the powers under Chapter IV A of the Motor Vehicles Act, the State Transport Undertaking the Corporation has nationalised more than ?rd of the routes in the State. The U.P. State Road Transport Services (Development) Rules, 1974 (for short, the Rules, 1974) framed under Sections 68 and 68 of this Act prescribe the manner in regard to the formulation of the nationalisation schemes and specify vide Rule 2(6) that the State Road Transport Service means a road transport service by transport vehicles owned by the Corporation. The Corporation has been running into huge deficit; the recurring loss has reached staggering dimensions. From Rs. 9.65 crore in 1980-81 the loss rose to Rs. 15.68 crores in 1984-85 and during April 1 to December 31, 1985, there has been further loss of over Rs. 6.88 crores. During 1980-85 the Corporation proposed to purchase 5050 buses out of which 4000 buses were required to replace the old ones but 2987 only could be purchased leaving a deficit of 2063. The percentage of old and over aged buses, as is revealed from the extract of the Seventh Five Year Plan and the yearly plan of 1985-86 rose from 12% (with 5769 buses) to 27.69% (with 6040 buses.) The plan is to add 851 buses but the budget did not propose any purchase in 1985-86. The number of hired buses rose from 680 in 1980-81 to 1350 in 1984-85 while during this period the addition to the fleet was insignificant being 271 only from 5769 buses in 1980-81 to 6040 in 1984-85. The number of hired buses rose from 680 in 1980-81 to 1350 in 1984-85 while during this period the addition to the fleet was insignificant being 271 only from 5769 buses in 1980-81 to 6040 in 1984-85. Up to March 31,1985 the number of buses operated through private operators on the nationalised routes was 1284; in the Seventh Five Year Plan the proposal is to raise this to 1350 as mentioned above. The Annual Report 1985-86 of the Corporation envisages accomplishing this under executive instructions. 3. Aggrieved against the practice of the Corporation to enter into agreement with private operators enabling the latter to ply their vehicles upon permits held by the Corporation on the nationalised routes, the petitioners who are in business as stage carriage operators have approached the Court seeking writ, order or direction in the nature of mandamus against the Corporation. 4. We have heard Sri L.P. Naithani and Sri R.A. Sharma for petitioners and Sri S.K. Sharma counsel for the Corporation besides the Standing Counsel. Counsel for the parties are agreed that both the petitions be decided together finally at the preliminary stage. 5. Learned counsel for the petitioners contended that under the scheme of the statutory provisions there can be no vehicle plied except upon permit and on nationalised routes the service is to be provided by the Corporation through vehicles owned by it. The owner of a transport vehicle may not use or permit the use of the vehicle in any public place except in accordance with the conditions of a permit duly granted, vide S. 42(1) of the Motor Vehicles Act, 1939. The conditions which may be attached are specified in S. 48. Section 58 governs the duration and renewal of permits. There may not be transfer of permit from one person to another except with the permission of the transport authority which granted the permit; a person to whom a vehicle covered by the permit is transferred gets no right to ply it unless there be the permission for the transfer of the permit(S. 59). There may not be transfer of permit from one person to another except with the permission of the transport authority which granted the permit; a person to whom a vehicle covered by the permit is transferred gets no right to ply it unless there be the permission for the transfer of the permit(S. 59). In Khawaz Bux v. Mirza Mohammad Ismail, AIR 1984 All 83 the Full Bench ruled: "To us it is evident that enforcing an agreement whereby the permit as well as the vehicle covered by it are transferred without the requisite permission under S. 58, by issuance of an injunction restraining the defendant from interfering with the plaintiff using the vehicle in the manner authorised by the permit, will be violative of S. 59. Section 23 Contract Act forbids enforcement of a contract which will defeat the provisions of any law." 6. In respect of nationalised route provision is made in S. 68-F for the grant of permit to the Corporation. Section 68FF provides that where a scheme has been published under sub-s. (3) of S. 68-D in respect of any notified route, the permit shall be granted only in accordance with the provisions of the scheme. The scheme specifies whether the State Road Transport Service, that is, road transport service by transport vehicles owned by the Corporation, shall be run and operated to the exclusion, complete or partial of other persons or otherwise and the extent, if any, to which persons other than the State Transport Undertaking (Corporation) shall be permitted to provide road transport services on the route or any portion thereof covered by the scheme (see the U. P. State Road Transport Service (Development) Rules, 1974). In Adarsh Travels Bus Service v. State of U. P. (1985) 4 SCC 557 : (1986 All LJ 215) the Constitution Bench held that once a scheme was published under S. 68-D in relation to any area or route or portion thereof, whether to the exclusion, complete , \or partial of other persons or otherwise, no person other than the State Transport Undertaking could operate a stage carriage on the notified route or in the notified area except as provided in the scheme itself. 7. Our attention is invited then to the salient features of the agreement which the Corporation enters into with private operators in respect of the nationalised routes. 7. Our attention is invited then to the salient features of the agreement which the Corporation enters into with private operators in respect of the nationalised routes. The relevant clauses thereof would read as under: - 1. The Corporation shall be competent to operate the bus No owned by the bus owner X' on the route operated by the Corporation as the transport vehicle; 2. The bus owner X shall appoint a driver on the bus under the agreement and shall pay the salary of the driver and in addition shall pay all other operational expenses such as diesel oil, repair and wear and tear, insurance and shall be responsible for the safety of the passengers; 3. The bus owner X shall get the bus comprehensively insured which includes the third party insurance; 4. The road tax shall be paid by the owner; 5. The conductor shall be the appointee of the Corporation and the bus shall be plied as per schedule which the Corporation prescribes; 6. The bus owner would get Rs. 2.40 per km. he is laid under duty to earn Rs. 2.40.90 per km the sum of .90 per km. is to be paid to the Corporation as the supervision charges. In case the owner of the vehicle does not get that amount of booking the difference is to be borne by him. 8. It will thus be noticed that the permit is held by the Corporation; the vehicle would continue to belong to its owner - the other party to the agreement. The driver is the employee of the owner; the entire cost of its maintenance and keeping it road worthy including the insurance and the road tax has to be borne by him. The earning made through the process is shared between the bus owner and the Corporation and with a view to exercise supervision over the issue of tickets etc. the conductor is appointed by the Corporation. 9. Learned counsel for the petitioners have submitted not without force arrangement thus arrived at by the Corporation is in contravention of provisions of the Motor Vehicles Act. The permit to ply the bus on nationalised routes is held by the Corporation; this constitutes the essence of the nationalisation schemes. the conductor is appointed by the Corporation. 9. Learned counsel for the petitioners have submitted not without force arrangement thus arrived at by the Corporation is in contravention of provisions of the Motor Vehicles Act. The permit to ply the bus on nationalised routes is held by the Corporation; this constitutes the essence of the nationalisation schemes. The assumption is that the vehicles on the route shall be operated by the Corporation on the strength of the permit granted to it; if the scheme does not wholly exclude the private operators, they would need to have permit to operate. What happens under the arrangement impugned is that even though there is no permission for the transfer of permit nor is the permit transferred as such, the private operator is enabled to operate on its basis with the Corporations consent. The Corporation, in other words, accedes to the unauthorised user of the permit. The vehicle undeniably continues to be owned by the private operator; the title to this does not pass to the Corporation under any mode of transfer known to law. The agreement itself treats the vehicle as of the private owner throughout, Sri S. K. Sharma, counsel for the Corporation, refers to the definition of the expression owner appearing in S. 2(19) of the Motor Vehicles Act as under: - "Owner" means, where the person in possession of a motor vehicle is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire purchase agreement, the person in possession of the vehicle under that agreement. 10. This evidently is of no assistance to the Corporation - there being no case of hire-purchase of the vehicle. The Corporation is not in possession of the vehicle nor is it under any agreement of hire-purchase. We need hardly repeat that under U. P. State Road Transport Services (Development) Rules, 1974, which are statutorily framed by the State Government under Sections 68 and 68-1 of the Motor Vehicles Act, the vehicle has to be owned by the Corporation (see also in this connection Form III of application under S. 68-F(l) ). The private operator is placed in position to put the vehicle which he owns on the nationalised route without a permit in connivance with the Corporation which obtained the permit but does not own the bus. 11. The private operator is placed in position to put the vehicle which he owns on the nationalised route without a permit in connivance with the Corporation which obtained the permit but does not own the bus. 11. Reference is apposite at this stage to the provisions of the U.P. Motor Vehicles (Special Provisions) Act, 1976 (U.P. Act 27 of 1976). Section 5(1) thereof provides in so far as relevant ; - (1) Notwithstanding anything contained in an approved scheme, the Competent Authority may authorise - (a) any holder of a permit for a stage carriage on such portion of the notified route as may be specified and for such period and subject to such terms and conditions, which may be in respect of matters specified in sub-s. (3) of S. 48 of the principal Act or in respect of any other matter as it thinks fit; (b) any State Transport Undertaking or a Statutory Corporation of Uttar Pradesh or any other State or Union Territory to ply their public service vehicles on an inter-State route covering notified or non-notified routes within the territory of Uttar Pradesh, subject to such terms and conditions as it thinks fit; and (c) for the period during which such authorisation is in force, the scheme shall be deemed modified to the extent of such authorisation. 12. The competent Authority is constituted by the State Government under S. 3(1) of this Act and it consists of: - (1)The General Manager of the Corporation; (2) The Transport Commissioner, U. P. (3) The Secretary, Finance, U. P. 13. The Corporation does not opt to invoke the jurisdiction of the Competent Authority under these provisions. May be, this is in view of the interpretation placed upon these provisions in Sumer Chand Sharma v. State of U. P., (1986) 3 SCC 263 : (1986 All LJ 597) following Hindustan Transport Co. v. State of U. P., AIR 1984 SC 953 to the effect that to be covered under S. 5 (quoted above) the operator seeking authorisation should have held a permit on the date of notification of the scheme and that it does not suffice that the permit was held on July 1, 1976 when this Act commenced. 14. Learned counsel for the Corporation falls back on certain provisions contained in.I the Road Transport Corporations Act, 1950. 14. Learned counsel for the Corporation falls back on certain provisions contained in.I the Road Transport Corporations Act, 1950. Among the powers of the Corporation constituted under this Act are included, as appearing from S. 19(2), it is argued, the power are : - (h) to purchase or otherwise secure by agreement vehicles, garages, sheds, office buildings, depots, land, workshops, equipment, tools, accessories to and spare parts for vehicles, or any other article owned or possessed by owner of other undertaking for use thereof by the Corporation for the purposes of its undertaking; (i) to enter into and carry out agreements with any person carrying on business as a carrier of passengers or goods providing for the carriage of passengers or goods providing on behalf of the Corporation by that other person at a through fare or freight. 15. We must also take note of sub-s. (41 of S. 19 which lays down :- "Except as provided by this Act, nothing in the foregoing provisions shall be construed as authorising the Corporation to disregard any law for the time being in force." 16. Let us analyse clauses (h) and (i) relied upon for the respondents. The expression undertaking is not defined in this Act or the Motor Vehicles Act for that matter but from the definition given to State Transport Undertaking in S. 68-A(b) it may be deduced that the undertaking is what provides 'road transport service which expression is defined in clause (a) to mean "a service of motor vehicles carrying passengers or goods or both by road for the hire or reward." We are doubtful if a person operating a single stage carriage may be covered under the definition but assuming that he is, without the necessity to decide it, the question is whether by agreement such as entered in the instant case the Corporation secures the vehicle. It certainly does not purchase the vehicle; the words then otherwise secure partake in character the elements of purchase. This might, for example, be brought about by hire-purchase or some other arrangement which places the vehicle under the domain or control of the Corporation even though the title is not created in its favour. Where, however. It certainly does not purchase the vehicle; the words then otherwise secure partake in character the elements of purchase. This might, for example, be brought about by hire-purchase or some other arrangement which places the vehicle under the domain or control of the Corporation even though the title is not created in its favour. Where, however. The vehicle continues to be the responsibility of its registered owner including for purposes of its entire maintenance (diesel oil, repair, tear, tyres, insurance, road tax) and is run by driver under the owners control, it does not appear the Corporation may claim to have otherwise secured the bus merely because the conductor checks up the tickets etc. or that the schedule has to be observed or even the Corporation shares the gains of its user. As regards clause (i) Sri Naithani rightly submits that to be covered thereunder the business ought to run by the other party and the arrangement has to provide that he does it on Corporations behalf. Under Clause (h) the vehicle is run by the Corporation while under clause (i) it is on Corporations behalf by the other party. Neither of the two positions exists here. For either of the two it is implicit, moreover, that there be permit held by the operator. Clause (i) too does net dispense with the mandatory requirement laid under the Motor Vehicles Act for the person carrying on business as a carrier of passengers to hold the requisite permit. We put it to Sri S. K. Sharma it if could be legitimate for a permit holder in respect of a stage carriage to let it be operated for without consideration by a non-permit holder and this very he answers in the negative. There appears nothing in the Road Transport Corporations Act 1950 to conclude a variance in this behalf in relation to the Corporation. The employment of permit through its nominees remains prohibited in view of S. 19(4) of this Act. 17. The question arose recently before the Supreme Court in Brij Mohan Parihar v. M.P. State Road Transport Corporation, (1987) 1 SCC 13 : ( AIR 1987 SC 29 ). The M. P. Road Transport Corporation invited tenders from private operators for the grant of the privilege of running buses as stage carriages as the nominees of the Corporation. 17. The question arose recently before the Supreme Court in Brij Mohan Parihar v. M.P. State Road Transport Corporation, (1987) 1 SCC 13 : ( AIR 1987 SC 29 ). The M. P. Road Transport Corporation invited tenders from private operators for the grant of the privilege of running buses as stage carriages as the nominees of the Corporation. Upon challenge made against this it was held by the Supreme Court : "Even though the Corporation is established by the State Government under the Road Transport Corporations Act, 1950 and the State Government has by an executive order approved the action of the Corporation to allow private operators to operate their vehicles under the permits issuer to the Corporation as the nominees of the Corporation, the Corporation cannot in law allow its nominees to exploit the permits by running their motor vehicles against payment of some amount to the Corporation since there is no statutory provision authorising the grant of such permission. It would have been different if there had been a law corresponding to the Uttar Pradesh Motor Vehicles Special Provisions Act (12 of 1976) under which the competent authority can authorise such operation subject to the conditions specified therein. (See Sumer Chand Sharma v. State of U. P. (1986) 3 SCC 263 : (1986 All LJ 597)). The provisions of the Act and in particular Sections 42 and 59 clearly debar all holders of permits including the Corporation from indulging in such unauthorised trafficking in permits. The agreement entered into by the petitioners with the Corporation is clearly contrary to Act and cannot, therefore, be enforced. In the circumstances, the petitioner is not entitled to the issue of a writ in the nature of mandamus to the Corporation to allow him to operate his motor vehicle as a stage carriage under the permit obtained by the Corporation as its nominee. It follows that the advertisement issued by the Corporation is equally ineffective. The position would not be different even where the permit is issued in favour of the Corporation under Chapter IV of the Act. It follows that the advertisement issued by the Corporation is equally ineffective. The position would not be different even where the permit is issued in favour of the Corporation under Chapter IV of the Act. If the Corporation cannot run its vehicle under a permit issued to it, it must surrender it so that the Regional Transport Authority may grant the permit to some other deserving applicant or it must transfer it to somebody else with the permission of the Regional Transport Authority granted under S. 59 of the Act. It cannot however allow the permit to be used by somebody else to run his vehicle either for consideration or without consideration. If it does so it would be exercising the power of the Regional Transport Authority. The Corporation cannot thus indirectly clutch at the jurisdiction of the Regional Transport Authority. It is hoped that the Corporation will desist from entering into such agreements with third parties, which are wholly illegal and from continuing to allow them to run their vehicles as its nominees. The concerned Regional Transport Authority should immediately take action to stop such illegal operation of transport vehicles on all routes, both notified and non notified routes." 18. The reliance placed upon Cl. (h) of S. 19(2) of the Road Transport Corporations Act, 1950, was also negatived thus in the succeeding paragraph "It is seen that in one of the documents filed before the High Court it was asserted that the Corporation could allow private operators to operate their vehicles in the name of the Corporation under S. 19 (2)(h) of the Road Transport Corporations Act, 1950. That provision only authorises the Corporation to purchase or otherwise secure by agreement vehicles owned or possessed by the owner of any other undertaking for use thereof by the Corporation for the purposes of its undertaking. It does not however authorise the Corporation to permit another person to run his vehicle on his own under a permit issued to the Corporation by paying some amount to the Corporation. Hence no reliance can be placed on the above provision". 19. This clinches the controversy such as raised before us. Sri S.K. Sharma, however, sought to draw distinction from the agreement which the M. P. Corporation used to enter into. A draft of such agreement is placed as Annexure-2 to the counter-affidavit of the Corporation. Hence no reliance can be placed on the above provision". 19. This clinches the controversy such as raised before us. Sri S.K. Sharma, however, sought to draw distinction from the agreement which the M. P. Corporation used to enter into. A draft of such agreement is placed as Annexure-2 to the counter-affidavit of the Corporation. Upon scrutiny thereof we notice no substantial point of difference and all that Sri Sharma could suggest was that there the operator had to pay only the nominees fee to Corporation - the rest going to himself and that the conductor too would be the appointee of the owner though it was provided that the driver and the conductor both will follow the code of conduct observed for its corresponding employees by the Corporation and also that the operational staff of the owner had to be under the superintendence and check of the Corporations Flying Squad. The crux of the matter and that which constitutes the ratio of the decision in Brij Mohan Parihars case, AIR 1987 SC 29 (supra) is : - "....The Corporation cannot in law allow its nominees to exploit the permits by running their motor vehicles against payment of some amount to the Corporation since there is no statutory provision authorising the grant of such permission." And further it was made clear that" It cannot however allow the permit to be used by somebody else to run his vehicle either for consideration or without consideration." 20. The proportion in which the pecuniary gain made upon the use of the vehicles is shared between the Corporation and the owner is of no consequence. Even if in terms of the consideration, it be adequate in the Corporations favour, the fact remains that this constitutes exploitation of the permits held by it enabling thereby its nominees to ply their vehicles on the nationalised routes which the law does not permit. 21. In the light of the discussion made we direct the U.P. State Road Transport Corporation not to allow the permit held by it to be availed under agreement with or without consideration by private operator; to r n the vehicles owned by them on nation a Used routes, area or portion thereof. The Petitions succeed and are allowed accordingly. The parties will bear their own