The Legal QnA

The Motor Vehicles Act, 1988

Chapter 06 Special Provisions Relating to State Transport Undertakings

Section 105: Principles and method of determining compensation and payment thereof

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.

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.

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.

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 from 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—

for every complete month or part of a month exceeding fifteen days of the unexpired period of the permit: Two hundred rupees;
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.

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— Y x A / R
Explanation
In this formula—

“Y” means the length or area by which the route or area covered by the permit is curtailed;
“A” means the amount computed in accordance with sub-section (4);
“R” means the total length of the route or the total area covered by the permit.

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.

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