Bus Fare Hike Set Aside – Principles of Natural Justice Violated

Background:

CERC’s first major engagement with consumer protection in public services involved a proposed bus fare hike by Gujarat State Road Transport Corporation (GSRTC) in early 1978 under the Motor Vehicles Act. At the time, CERC had not yet been formally registered as a public charitable trust (August 1978), but proactively intervened in the matter recognizing state monopolies in essential services as a priority concern.

CERC’s Intervention:

The proposed fare hike required a public hearing conducted by the Minister of Road Transport, Government of Gujarat, to allow citizens to submit suggestions and objections under Section 43 of the Motor Vehicles Act.

CERC requested the full text of GSRTC’s proposal justifying the fare hike to enable meaningful participation by the public. The Government refused, citing confidentiality. CERC argued that without access to the proposal, the public could not file effective objections, rendering the public hearing a mere exercise in futility.

CERC challenged the fare hike on the ground that it violated the principles of natural justice by denying affected parties the opportunity to be heard.

Judgment of the Gujarat High Court:

The Gujarat High Court set aside the bus fare hike, ruling that:

• The government’s decision was illegal, as it ignored principles of natural justice.
• A fresh enquiry must be conducted, and if necessary, a rating committee should be appointed within six months to review the fare proposal.
• If the rating committee recommends a lower fare hike than initially proposed, the differential amount must be credited to the ‘Passengers Welfare Fund’.

The Court’s decision established the important principle that arbitrary increases in public service charges without hearing affected parties are illegal.

Significance of the Judgment:

This case reinforced that state monopolies in essential services are accountable to consumers and that public participation in decision-making is a fundamental requirement under natural justice.

It demonstrated the role of CERC in advocating for transparency and fairness in government decisions affecting consumers, even before the organization was formally registered.