Supreme Court Decision on KSRTC - Need to Reconsider Banni Mantap Terminal by R. Chandra Prakash

On Thursday the 6^th February 2025, Honorable Supreme Court bench of Justices Vikram Nath and Prasanna B Varale has held that “Section 3 of the Karnataka Motor Vehicles Taxation and Certain Other Law (Amendment) Act, 2003, which repeals the (Karnataka Contract Carriages (Acquisition) Act, 1976) [KCCA Act 1976],   is  constitutional. The court said the State Legislature has rightly exercised its power to repeal the Act”.

The bench concurred with  the Karnataka High Court's division bench decision that the repeal Act is rooted in the practical realities of modern transport policy. The court felt contemporary challenges, such as increasing demand for public transport services, congestion in urban areas, and the need for efficient service delivery, necessitated a more flexible regulatory regime. With this the court dismissed an appeal filed by the KSRTC against the March 28, 2011 judgment by the High Court.

This  decision has huge ramifications for the future functioning of the KSRTC and its monopoly over the bus transport system in the state. It will also lead to the transformation of the entire bus public transport system in the state.

A Product of Emergency

The Karnataka Contract Carriages (Acquisition) Act 1976 was passed during the Emergency [1975-77] in the country. It had  liquidated the private bus transport services and had provided a monopoly platform for the KSRTC.  The consequences of this Act were grave. Hundreds of private operators confronted overnight takeover of their transport businesses, without even adequate compensations and proper procedures.

Over a period of fifty years, it created a  gargantuan state owned KSRTC. Between 1976 and 2003 the KSRTC underwent several re-organisations in its structure to be efficient  and profitable. But every effort has failed.

An Attempt to Undo KCCA Act 1976

Country’s economic policy underwent fundamental change in 1991 when the process of liberalization and private sector participation replaced Nehuruvian socialist economic policy. Since then the private sector started to participate in every field of economy, including bus transportation. However, KSRTC monopoly did not allow private sector participation in the state on a wide scale. Only Contract Carriages were allowed  with very limited participation. Government was incurring huge financial losses because of such public sector dominance in bus transport.

It is under the above background that the government had  brought in the  Karnataka Motor Vehicles Taxation and Certain Other Law (Amendment) Act, 2003, with an intention to repeal the Karnataka Contract Carriages (Acquisition)Act,1976.

The KSRTC and others went on appeal against this Act 2003. The judgment of the High Court did not settle the matter and it went up to the Supreme Court, which  has given its  judgment.

Future Repercussions

There will be expansion of bus transport services through extensive private participation. Consequently, entire logistics of transport network services will undergo phenomenal transformation. The public will certainly get an alternative to monopolistic KSRTC. Competition between KSRTC and Private Service Providers will ensure better services to the user.  Profit motive driven private service providers will optimize their return on investment through good management of their resources. Greater employment opportunities for skilled workers and higher revenues for the government will be other benefits.

This judgment will be a timely relief to the present government, which  is facing a huge financial crunch. Now the government can earn revenues by providing permits to the private bus operators to operate bus routes. The ever loss incurring KSRTC will no more be breathing down the financial neck of the government

Loss of Monopoly

KSRTC will lose its monopoly on bus transport services. And therefore, it will have to reconsider its current expansion plans. Shrinking of its services will necessitate it to better utilize its financial resources. Capital investments into infrastructure and  non-productive  areas will also have to be reassessed.

New Terminal Needs Reconsideration

Star of Mysore has published  several articles and letters to the editor by this author on the New Terminal proposal. Many others too have provided 360 degree views on this topic. Hence, this write up only focuses on the repercussions of the Supreme Court decision on the future of KSRTC and also the proposal under consideration.

Under the changed scenario, KSRTC has to reconsider its plan to invest Rs.120 crore into the proposed new terminal at Banni Mantap. It will have to redraw its demand projections in the short term and long term. Because, now a parallel system of bus transportation under the private sector will create its own infrastructure in keeping with its vision. And  the KSRTC will no longer be the sole service provider.

A wrong decision in this regard will cause immense damage to the city’s heritage and culture. It might be appropriate here to recall how KSRTC has in the past built Terminals at Sathagalli as also at Kuvempu Nagar,  which have remained scarcely used for decades. The remodeling of City Bus Terminal at K.R.Cirlce and the Sub-Urban Terminal on  Bangaluru – Nilgiri Road was very unscientific and have scarred the city with avoidable traffic congestions and inconveniences to the public.

Let the proposed new terminal at Banni Mantap not add to such an infamous list.

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