INFRASTRUCTURE
LAW
IA- 2 ASSIGNMENT
ROAD TRANSPORT
CORPORATION ACT,
1950
Submitted by:
Lakshith Nayak
Harish G
Aarya Mohan
Harika Daggubatti
A Framework for Regulated Road
Transport in India
Preindependence Postindependence:
Transportation and
era: British urgent need for
civilization: key to
investment in regulated, efficient
economic and social
railways, neglect of road transport
development
road transport system
History of the Road
Transport Act, 1950
• Colonial era: limited focus on
roads, Grand Trunk Road
modernized
• Introduction of motorized
vehicles and private operators -
Post-independence challenges:
fragmented private sector, rural-
urban disconnect, exploitation
• Legislative shift: enactment to
establish public welfare-oriented
SRTCs- Image suggestion: a photo
of old Indian buses or trucks
Objectives of the Road
Transport Act, 1950
• Establish State Road Transport
Corporations (SRTCs)
• Promote public welfare: affordable and
reliable services - Ensure rural
• Urban connectivity
• Prevent exploitation by private operators
• Enable economic growth, employment,
and national integration
Key
Establishment Operational
and governance: framework:
Provisions
SRTCs as legal standardized
entities with fares, routes,
of the
boards appointed and service
by states quality
Road
Transport Public welfare Funding and
Act, 1950 focus: special
provisions for
autonomy:
revenue
rural areas and generation, state
marginalized support, and
groups borrowing powers
Transformational impact: expanded connectivity,
boosted trade, and facilitated economic
integration
Impact and
Legacy of Modern relevance: continues to shape policies
for sustainable, equitable transport
the Road
Transport Challenges and adaptations: financial
constraints, partnerships with private sectors,
Act, 1950 and evolving infrastructure needs
Future potential: aligning with sustainability and
technological advancements
General Principles and
Capital Structure
General Principle of Corporation’s
Finance:
• STCs should operate on sound
business principles.
• Strive for financial self-sufficiency
and efficiency.
Capital of the Corporation:
• State Government determines initial
capital.
Additional capital can be authorized
as needed.
Additional Capital of the Corporation:
• State Government can authorize
further capital for specific purposes (e.
Borrowing Powers
and Financial
Management
Borrowing Powers:
• STCs can borrow from:
Central Government
State Government
Banks
Financial institutions
Fund of the Corporation:
• Maintains a fund to finance
operations and investments.
Payment of Interest and Dividend:
Pays interest on loans and dividends
on shares.
Provision for Depreciation and
Reserves:
• Creates reserves for depreciation,
contingencies, and other purposes
Accounting, Auditing,
and Financial
Reporting
Disposal of Net Profits
Net profits can be used for:
• Reinvestment
Dividend distribution
Contributions to specific funds
Power to Spend:
• STCs can incur expenses for
operations, maintenance, and salaries.
Budget:
• Annual budgets are prepared for
financial planning.
Accounts and Audit:
• Maintain accurate accounts and
records.
Periodic audits by the Comptroller
and Auditor General of India (CAG)
SUBSIDIARY CORPORATION ( Sec-17A)
• This provisions detail how a parent corporation can set up subsidiary
corporations to improve efficiency, with approval from the State and
Central Governments.
• A clear plan, published in the Official Gazette, must outline the
subsidiaries' names, start dates, assigned roles, management structure,
and funding.
• Subsidiaries need the parent corporation’s permission to launch new
routes.
• The State Government appoints key officials, and both the State and
parent corporation oversee hiring, wages, and reserves. Budgets need
parent corporation approval, with deficits requiring State Government
consent.
• These subsidiaries operate as independent legal entities with the ability
to sue or be sued.
GENERAL DUTY OF CORPORATION (Sec-18)
• The provision tasks the Corporation with
developing an efficient, economical, and well-
coordinated road transport system in its
designated area, including Delhi and extended
regions.
• This duty is not legally enforceable unless
liability arises under other legal provisions.
DISPOSAL OF UNCLAIMED ARTICLES AND
PROPERTIES (Sec 19A)
• The Corporation must serve a notice to the
known owner of unclaimed goods, requiring
removal within seven days.
• If the owner is unknown or unresponsive, the
goods can be sold at auction after a specified
period.
• The sale proceeds, minus expenses and owed
amounts, go into the Corporation’s Fund. The
rightful owner can claim the proceeds within a
year by proving their claim in court or to the
Corporation.
CORPORATION TO OBTAIN THE APPROVAL OF
THE CENTRAL GOVERNMENT IN CERTAIN CASES
(Sec 19 B)
• The Corporation cannot incur capital
expenditure exceeding twenty-five lakh rupees
on any single project, service, or scheme without
POWERS OF THE CORPORATION (SEC 19)
• To operate road transport services
To provide for any ancillary service- to provide for its employees suitable conditions of
service including fair wages, establishment of provident fund, living accommodation, places
for rest and recreation and other amenities;
To authorise the issue of passes to its employees and other persons either free of cost or at
concessional rates and on such conditions as it may deem fit to impose;
• The Corporation can acquire and hold movable and immovable property necessary for its
activities and transfer property as needed.
Acquire other road transport undertakings by agreement or compulsory acquisition in
Delhi or extended areas.
Lease or purchase land and build necessary structures for its operations.
• Authorize the disposal of scrap vehicles, old tyres, used oils, and other obsolete items.
Enter into contracts necessary for its duties and powers under the Act.
• Purchase suitable vehicles for its road transport services.
Purchase or lease vehicles, garages, offices, depots, and related equipment for its operations.
• Provide training and research facilities to improve employee skills and operational
efficiency.
Contract with other carriers for the transport of passengers or goods at through fares or
freights.
• Provide consignment, storage, and delivery services for goods.
an enter into advertising contracts for its vehicles, premises, tickets, and other materiaial
EXTENSION OF THE
OPERATION OF THE ROAD
TRANSPORT • The Corporation can extend its road
CORPORATION TO AREAS
WITHIN ANOTHER STATE transport services to another state
(Sec 20) with the permission of the State
Government and approval from the
other state’s government.
• After obtaining consent, the
Corporation prepares and sanctions a
scheme for the extension, subject to
the laws of the other state. The
Corporation can also alter or expand
the scheme as needed with further
CARRIAGE OF MAILS (Sec 21)
approvals.
• The Corporation is required to carry
mails, as specified by the Central
Government, at rates and under terms
Chapter V Miscellaneous
This chapter deals with various supplementary and
concluding provisions necessary for the smooth
functioning of Road Transport Corporations. It covers
rules, regulations, penalties, and provisions for special
cases, ensuring the effective operation, governance, and
accountability of the corporations.
Chapter V comprises 16 sections, from Section 34 to
Section 48.
• Sec-34. Directions by the State
Government
• The State Government has the
authority to issue directions to a
Corporation for efficient
management.
• The Corporation must comply
with these directives.
• Sec-35. Returns and Reports
• Corporations are required to
submit annual reports and other
prescribed returns to the State
Government.
• Ensures accountability and
transparency.
• Sec-36. Power to Order Inquiries
• The State Government can
order inquiries into the
operations, finances, and
administration of a Corporation.
• Aimed at identifying
• Sec-37. Power to Control a Part of the
Undertaking of a Corporation
• The State Government can assume control
of specific functions or undertakings of a
Corporation.
• This may occur in cases of poor
performance or public necessity.
• Sec-38. Power to Supersede a Corporation
• If a Corporation is unable to function
effectively or violates regulations, the State
Government can dissolve or supersede it.
• Ensures proper functioning in the public
interest.
• Sec-39. Liquidation of a Corporation
• Provides the procedure for the voluntary
or government-initiated liquidation of a
Corporation.
• Applicable in cases of insolvency or
inefficiency.
Sec-40. Compensation for Sec-42. Power of Entry
Acquisition of Road Transport
Undertakings • Authorizes certain officers to
enter premises for inspection,
• In cases where private transport inquiry, or enforcement of the
undertakings are acquired by the
Corporation, fair compensation Act.
must be provided. • Ensures compliance with
• Protects the interests of private regulations.
stakeholders.
Sec-43. Directors, Officers, and Other
Employees of a Corporation to be
Public Servants
• Declares that Corporation
employees are public servants
under the Indian Penal Code.
• Protects them from undue
influence and ensures integrity .
• Sec-44. Power to Make Rules
• The State Government has the power to
formulate rules for implementing the
Act.
• Includes operational, financial, and
administrative aspects. 45. Power to
Make Regulations
• Corporations can frame their internal
regulations for efficient functioning,
subject to government approval.
• Sec-45A. Every Rule and Regulation to
be Laid Before State Legislature
• Ensures that rules and regulations made
under the Act are presented to the
legislature for scrutiny.
• Enhances legislative oversight.
• Sec-46. Penalty for Breach of Rules
• Penalties are imposed for violations of
the rules made under the Act.
• Encourages compliance and
accountability.
• Sec-47. Special Provisions Relating to Bombay
• Contains provisions specific to the Bombay region for better
management of transport services.
• Sec-47A. Special Provision for Reconstitution or Dissolution
of Certain Corporations
• Allows for reconstitution or dissolution of Corporations under
specific circumstances, especially in reorganized states.
• Sec-48. Transitional Provision Relating to Bombay State Road
Transport Corporation
• Provides guidance for handling transitional issues arising from
changes in the Bombay State Corporation structure.
