The Municipal Corporation of Delhi sought to justify the zoning regulations contending that "without such requirement of zoning there would be traffic chaos and cycle rickshaws would clog-up congested areas of the city and also cause disruption in smooth movement of traffic in busy areas. Consequently if zoning regulations permitting plying of cycle rickshaws in certain areas at certain times and prohibiting them on the main or busy roads are made, there is nothing unreasonable or arbitrary as they are based on rationale and relevant considerations."
The Full Bench declared that the right to ply rickshaw was a legitimate professional activity protected by the Constitution as a means of livelihood. In this regard its decision observes inter alia as under;
unless the profession or trade or occupation is inherently noxious or is termed as res extra commercium and thereby excluded from the guarantee under Article 19(1)(g) – such occupation or activity being dangerous and inimical to general public, such as liquor trade, dealing with drugs, dangerous substances etc. – every other activity which is capable of yielding profit, and affording livelihood to an individual or body of persons is deemed legitimate and is protected as a guaranteed Fundamental right. The State, of course, is within its rights to regulate such activity, having regard to relevant considerations and the restrictions it can reasonably place upon individuals who carry-on that trade, under Article 19(6). Therefore, the right of an individual or citizen to ply cycle rickshaw or other forms of transport falls within the legitimate exercise of his freedom guaranteed under Article 19(1)(g).
35. The observations in Hemraj apparently were premised on an understanding that cycle rickshaw plying hurts or offends human dignity and that the State should eventually eliminate the trade altogether. We are afraid that no such material exists on the record in support of the reasoning. Our country is vast with an ever-growing population, alarming numbers of whom continue to swell the list of the unemployed. Educating and skilling such vast masses of people is a major challenge to the State and its agencies. Vast budgetary resources are allocated and considerable public money is spent to achieve that end. Yet, illiteracy and lack of meaningful education is all pervasive. The natural corollary to the phenomenon is unemployment and ever growing numbers of unskilled and unemployed. In these circumstances, any opportunity towards gainful employment, howsoever slight (not from the point of view of those who are educated, trained, skilled or with the ability to make choices) is worth exploring – it may be part-time employment or full-time, it may be seasonal or regional. In fact, State policies recognize this and welfare measures such as “100-day Employment Guarantee Scheme, Food for Work” programme and the entire underlying assumption of the National Rural Employment Guarantee Act is the attainment of such object. If these are recognized as legitimate, the conclusion that cycle rickshaw plying is offensive to human dignity and needs to be eliminated altogether – as appears to be also the underlying theme of Bye-Law 15 – cannot be understood at all. It is one thing to say that cycle rickshaw plying, like other activities, having regard to road conditions, congestion etc., needs to be regulated. That is undoubtedly a legitimate concern for the State since scientific and rational road management is an everyday challenge which is faced by Municipal and police authorities in view of the expansion of vehicular traffic in metropolises and big cities. However, to say that a segment of such vehicles – primarily non-motorized have to be eliminated altogether, or drastically reduced, there has to be something more than a mere assumption. In the opinion of this Court, that decision has to be based on permissible heads of restrictions, which can be placed under Article 19(6) of the Constitution; “public interest” is certainly not one of them. Nor can it be said that to further public order, the cycle rickshaws plying on the roads in Delhi are to be either eliminated altogether, or reduced drastically.In this background, holding that the Municipal Corporation had not disclosed rationale considerations for fixing the number of licences to 99,000 rickshaws, the same was declared as arbitrary and set aside. The High Court inter alia noted;
37. Every State action – be it legislative or executive or actions of State agencies, even in the contractual field, are to be non-discriminatory and only by reason. Article 14 mandates that every person is entitled to the Right to equality and equal opportunity before law. All along, – the Supreme Court has held that Article 14 permits classification between disparate individuals or objects, provided there is an “intelligible” or rational differentia between the two and importantly such differentia must bear a rational nexus or link with the object sought to be achieved by the legislation or executive policy. A new dimension to the right to equality was recognized in the law declared in Maneka Gandhi v. Union of India, AIR 1978 SC 597, when it was held that no State policy or law can be arbitrary as that is antithetical to equality. This formulation has been applied in numerous decision rendered at later points of time. Thus, for instance, in Anuj Garg v. Hotel Association of India, 2003 (3) SCC 1, a restriction on employment of persons below 25 years, and women altogether, was held to be arbitrary.
38. The decisions of the Supreme Court have consistently ruled that the mere existence of power, either in law or in executive policy, is insufficient to answer a challenge to state action, on the ground of arbitrariness; the executive agency has to satisfy that the decision is not based on whim or caprice, but was taken after a consideration of all factors relevant in that regard. (Ref. Shrilekha Vidyarthi v. State of U.P., (1991) 1 SCC 212; M.I. Builders v. Radhey Shyam Sahu., 1999 (6) SCC 464; Larsen and Toubro v. State of Gujarat, 1998 (4) SCC 387; Food Corporation v. Om Prakash Sharma, 1998 (7) SCC 676). ...
In the present case, the rationale for the limit fixed by the impugned notification, i.e. 99,000 licenses, is not disclosed. There is no objective material to remotely justify imposition of such cap. On the other hand, there is ample material by way of relevant factors, disclosing that the authorities have been periodically reviewing the need for upward revision of such limits – in the past 50 years or so, at least on 4 occasions upward revision of such limit, has taken place. In the circumstances, it is held that the limit of 99,000 placed on the number of licenses which can be issued by the MCD is held to be arbitrary and hereby set aside.
The Full Bench further declared unconstitutional the policy of the Municipal Corporation of Delhi that licences were required for plying of rickshaws. The High Court reconsidered and set aside its earlier decision which had held such policy to be valid. Noting that there has been change in circumstances since its earlier decision and that the current population situation of the National Capital required rickshaws as an alternate means of transport, the High Court set aside the licensing policy of the Delhi Municipal Corporation. The decision inter alia observes;
47. The two judgments of the Supreme Court in M.C. Mehta of the year 1996 and 2006 have categorically ruled that the Master Plans have the force of law. This is also apparent from a reading of Sections 10, 11 and 29 of the Delhi Development Act, 1957. The reason for such logic is obvious. Imperatives of town planning dictate that local and specialized authorities coordinate their efforts to meet the challenges of an expanding metropolis like Delhi, with an ever-growing population. This challenge takes within its fold certain constants and a number of variables. These variables are socio-economic challenges resultant upon prevailing executive policies which might promote or prioritize certain sectors of the economy, which in turn could generate or significantly impact on employment and livelihood. From the mid 1990s, Delhi has witnessed an explosive growth in population and expansion of infrastructure. It would not be inaccurate to say that physical transformation of the city in terms of the number of colonies that have sprung-up, as well as growth of high-rise buildings and mega colonies with a large concentration of such high-rise structures is unprecedented. Such colonies, in turn, are surrounded by existing colonies. Many such colonies and localities are clustered and located in such manner that access is through one arterial road. The compulsions of travelling in such outlying areas are such that residents – who depend on public transport for their mobility within the city are unable to commute freely; they have to travel some distance for such access. The linkage provided by non-motorized transport, such as cycle rickshaws is invaluable. Similarly, such far-flung and outlying areas are serviced in regard to supply of some essential items, such as fresh vegetables, daily household items, which are delivered to retail vendors etc. through rickshaw trolleys. There is no empirical study made by any local agency on the impact of the existing policies under the bye-laws, either in regard to the cap of licenses or in regard to the inherent restrictions on the number of licenses flowing from the owner-puller policy. In the opinion of the Court, the Delhi Master Plan 2021 accommodates all these viewpoints when it recognizes the urgent need to promote non-motorized transport, particularly, cycle rickshaws, as well as use of bicycles. This is an important circumstance as the Delhi Master Plan is a subsequent event, which not only has the force of law but also is part of a Central enactment, i.e the Delhi Development Act. This circumstance was obviously absent, when All Cycle Rickshaw Owners Union decision upholding the owner-plier policy was delivered by the Supreme Court.
48. The second important circumstance, in the opinion of this Court, is that with the removal of the ceiling or cap on the number of licenses that can be issued, the logic of keeping in position the owner-plier policy breaks down consequent to the finding on the first aspect and depending on if at all the respondents choose to impose a cap on some rational basis, the number of license that would become varied categories - owners, pliers and owner-pliers respectively, a fair share of the available licenses.
49. The third aspect and an important one at that is that there was really no answer to the petitioners‟ submission that rickshaw pliers are hostilely discriminated by the owner-plier policy, which condemns them to an impoverished existence. Neither the State agencies – including the police nor the intervenors were able to justify why the right of a plier to hire a rickshaw on rent for eking out his livelihood requires complete prohibition – barring the excepted category under the proviso to Bye-law 3(1). That such prohibition is inherent in Bye-law 3(1) was not disputed. The prohibition (of cycle rickshaw pliers) from hiring rickshaws (in the absence of their ownership) is relieved to an extent in only two category of cases, i.e. widows and disabled owners. In their cases, the owner can have upto five licenses and need not ply the cycle rickshaw but can hire it out on rent. However, in all other instances, the individual who plies also has to own the vehicles; he, no doubt, has to possess two licenses – one, the ownership license and the other, the “vehicle” license. Yet, the policy of Byelaw 3(1) dictates handing of two licenses in one individual, i.e. the owner-plier. ...
56. This Court is of opinion that the complete change in ground realities, such as phenomenal growth of Delhi‟s population in the last 22 years; the unprecedented rise in motor vehicular population (60 lakhs), the increase in number of new colonies, high rise buildings, growth in employment and livelihood potential in Delhi, elaborated in the earlier part of this judgment, in answer to Point No. 1, are all features which were absent at the time of the Supreme Court decision. An added circumstance is the incremental and negative impact of pollution levels in the environment and the city generally. All these were recognized by the Delhi Master Plan, which mandates the promotion of non-motorized traffic or services, like cycle rickshaws. Coupled with the fact that prohibiting a class of impoverished persons, altogether of the chance of livelihood in a category of non-noxious or non-dangerous commercial activity, i.e. hiring cycle rickshaws for plying cannot be supported as a “reasonable restriction”. Taken together, the Court holds that the owner-plier policy even though was valid, 22 years ago, cannot be regarded as non-discriminatory and valid, now. It is arbitrary.The Court directed the Municipal Corporation to provide parking facilities to the rickshaw pullers and also various Governmental authorities to "constitute a special task force to explore all the questions pertaining to road traffic in Delhi, with the objective of minimizing congestion, reducing pollution levels of motor vehicles, and ensuring equitable access to all classes of vehicles that ply on the roads, including non-motorized transport such as bicycles and cycle rickshaws."