Pune Khadya Peya Vikreta Sangh, ... vs The State Of Maharashtra, Home ...
2003 Latest Caselaw 241 Bom

JUDGMENT

R.M. Lodha, J.

1. The Commissioner of Police, Pune ON 16.08.1991 made, "Rules for keeping places of public entertainment in Pune Police Commissionerate Rules, 1990" with the previous sanction of the Government and after following the procedure as contemplated under Section 33 of the Bombay Police Act, 1951. By the said rules, interalia fees of licence/registration of a place of public entertainment were increased. In this writ petition filed by the Association of Hotel owners in Pune district, the enhancement of fees for licence/registration under the said rules are under challenge.

2. The enhancement in the fees for licence/registration under the impugned rules is thus:

"I.

Pune City Rates Rs.

5 Star Hotel 3,000

4 Star Hotel 2,500

3 Star Hotel 2,000

II.     Hotels/Restaurants/Canteens with bar in respect of:-

(a)

areas with population upto 50000

(b)

areas with population above 50000 but below 3 lakhs

(c)

areas with population above 3 lakhs but below 10 lakhs

(d)

areas with population above 10 lakhs but below 20 lakhs

(e)

areas with population above 20 lakhs.

III.     Lodging house, boarding and lodging house or residential hotel with permit room:

(a) having upto 10 rooms

(b) having 11 to 25 rooms

(c) having 26 to 100 rooms

(d) having more than 100 rooms

IV.     Lodging house, boarding and lodging house or residential hotel without permit room or bar:-

(a) having upto 10 rooms

(b) having 10 to 25 rooms

(c) having 26 to 100 rooms

(d) having more than 100 rooms

V.     Hotels Restaurants, Canteens with permit room in respect of areas:-

(a)

having population; upto 50000

(b)

having population above 50000 but below 3 lakhs

(c)

having population above 3 lakhs but below 10 lakhs

(d)

having population above 10 lakhs but below 20 lakhs

(e)

having population above 20 lakhs

VI.

Renewals/transfer or assignment of Licence

The same fee which is chargeable for grant of licence for any purpose.

VII.

Delay in renewal of licence

A fee of Rs.50 per month shall be charged from the date of expiry of licence if there is delay of two months in making application for renewal. If there is delay beyond one year in making application the licence shall be treated as cancelled.

VIII.

Change of location

IX.

Inclusion of name of partner, agent, conductor or manager in the licence.

X.

Addition or alteration or both other than that mentioned at IX above.

XI.

Temporary licence for keeping a place of public entertainment on special occasions irrespective of hours of business for a period not exceeding thirty days.

XII.

Special licence for keeping place of public entertainment open on special occasion beyond the time limit specified in each licence.

25 per each hour

XIII.

Duplicate copy of licence 25 per copy. "

3. Though in the writ petition diverse contentions in challenging the enhancement of licence/registration fee of a place of public entertainment have been raised, during the course of arguments; Mr. S.M Gorwadkar, learned counsel for the petitioners pressed only once contention. His contention is that the increase of licence/registration fee is grossly unreasonable, arbitrary and unjustified. He submitted that the fee which was hitherto charged at Rs. 10/- for every licence has been increased multifold and particularly to some of the places hundred times to three hundred times which is ridiculous. To buttress his argument, the learned counsel for the petitioner placed reliance upon the judgment of the Apex Court in A.P. Paper Mills Ltd. v. Govt of Andhra Pradesh and Anr. .

4. When no counter was filed by the respondents despite opportunity given vide our Order dated 28.01.2003, we granted further opportunity to respondents to file counter within two weeks therefrom subject to payment of cost of Rs. 10,000/-. In compliance of the said order the respondents have filed counter and conditional cost of Rs. 10,000/- was deposited by them in the Registry. In paragraph 3 of the counter the facts necessitating increase of licence/registration fee have been averred. Paragraph 3 of the counter reads thus:

"3) I say that the Government of Maharashtra has increased the licence fees of hotels, guest houses, beer bars, permit rooms etc. after about 39 years. The said licence fees was prescribed in the year 1950 initially and thereafter, there was no revision in the rates of fees since then. The aforesaid licence fees was required to be increased in the year 1988, looking to the expenditure incurred by the Commissioner of police in favour regions/cities, namely Mumbai, Pune, Thane, Nagpur, Nasik etc., on the establishments and other expenses on the staff deployed for the purposes of issuance of licence, collecting licence fees regulating the entire administration for issuance of licence etc. and also on supervision and inspection of hotels, restaurants, beer bars etc. and also to verify and ascertain whether there is any compliance or breach of the licence conditions etc. For that purpose, huge police staff/personnel were required to be deployed. In the year 1950 the expenses incurred were not much as the number of licence issued during that period was much less. In the year 1988 i.e. after about 39 years, several licences came to be issued and furthermore, in the year 1950, there were hardly a few hotels wherein the business of guest house, permit rooms etc. were going on. The Government of Maharashtra was incurring the expenditure of about of Rs. 62 lakhs on various matters regarding supervision and scrutiny of the licence applications received from hotels, guest houses, permit rooms etc. in the year 1987-88 and against such huge expenses of about Rs. 62 lakhs, hardly about Rs. 3 lakhs used to receive by way of licence fees or hotel licence fees etc. By virtue of increase in the licence fees, by the year 1988, the Government could receive hardly Rs. 39 lakhs on account of revision in the rates of licence fees. I say that the expenditure on establishment/staff has been going up. Further, on account of revision of Pay-scales, D.A., H.R.A., etc. and other benefits/facilities provided to the concerned staff deployed for the said purpose by the Government of Maharashtra, there were serious constraints on resources to the Department. The said subject was studied by the Special Secretary to the Government, Finance Department, as also other Secretaries, and it was concluded that the necessary increase be made in the licence fees with effect from the year 1988. The necessary note recorded by the Secretaries which was approved by the Government. The said licence fees was increased with the aforesaid object. I, therefore, say that the licence fees in the year 1950 was so paltry in the areas of Mumbai, Thane, Pune, Nagpur, Nasik etc. I say that the licence fee that was charged in Pune and other districts was hardly Rs. 10/-, Rs. 5/-, Rs. 2/- etc., in respect of issuance of licences for the hotels and restaurants etc. in Talukas or District Places for shifting of places or for change of names, for issuance of duplicate licences etc. Hereto annexed and marked as Exhibit-1 is a copy of the relevant portion of the nothings recorded by the Home Department. I say that on 01/02/1988, a revision was made for increase of licence fees because by that time, several five-star, four-star, three-star restaurants/permit rooms with beer bars, guest houses, etc. with spacious and several rooms, like 20 rooms, 15 rooms, 10 rooms etc. came to be established and the licences were sought for such purposes. Therefore, the Government was required to deploy necessary staff/personnel for verification, scrutiny etc. of licences and also the provisions of hotels, permit rooms, beer bars etc., while issuing or even after issuing the necessary licences for that purpose. Therefore, a huge amount of expenditure was incurred by the Government on such deployed staff/personnel, such as for their salaries, their allowances and various facilities provided to them. I say that after revision in the licence fees rates, the Commissioner of Police, Pune by virtue of the power and jurisdiction vested in him under Section 33 of the Bombay Police Act, issued necessary notification. Hereto annexed and marked as Exhibit-2 is a copy of the said Notification dated 1/4/1988 issued by the Commissioner of Pune, in respect of increase in the licence fees. I further say that the rates of licence fees in 1956 were not as per gradation of hotels, restaurants, beer bars, permit rooms, guest-house of the establishments. In the year 1956 the closing hours of the establishment were early and since 1988 by and by now the closing hours are increased time to time. Hence for the purpose of regulation of administration number of personnels were required to be deployed more and resultantly there were more expenditure. I say that the departments concerned are collecting and receiving licence fees as per the rates existing and the owners of the hotels, restaurants, guest houses, permit rooms etc. are paying the same."

5. Bombay Police Act came into force with effect from 11.06.1951. Section 2(5A), 2(10) defines "eating house" and "place of public entertainment" respectively thus:

"2(5A), "eating house" means any place to which the public are admitted, and where any kind of food or drink is supplied for consumption in the premises by any person owing or having an interest in or managing such place, and include a refreshment room, boarding-house, coffeehouse or a shop where any kind of food or drink is supplied to the public for consumption in or near such shop; but does not include "place of public entertainment".

2(10). "Place of public entertainment" means a lodging-house, boarding and lodging house or residential hotel, and includes any eating house in which any kind of liquor or intoxicating drug is supplied (such as a tauern, a wine ship, a beer shop or a spirit, arrack, today ganja, bhang or opium shop) to the public for consumption in or near such place."

6. Section 33 of the Act of 1951 empowers the concerned authorities viz. the Commissioner, the District Magistrate and the Superintendent of Police, as the case may be to make rules for regulating of traffic and for preservation of order in public place and under Clause (w)(i) the Commission of Police is empowered to make necessary rules for licensing or controlling places of public amusement or entertainment. Eating house unmistakably as per the definition of place of public entertainment is included therein. The licence issued by the Commissioner of Police of place of public entertainment or for that matter to Eating house is definitely regulatory in nature. Regulatory fee is broadly levied for the purpose of monitoring the activities of the licences to ensure that they comply with them and conditions of licence. The licence fee which is regulatory is not charged just for services rendered. It is well settled that the fee which is charged for regulation for such activity would be validly classifiable as 'fee' and not a 'tax' although no service is rendered. It may be noticed that the Constitution of India uses two expressions 'fee for licence' and 'fee for services rendered' in Article 110(2) and Article 199(2) and that indicates that the two expressions are not identical and same. We do not intend to burden this judgment by citing various decisions of the Supreme Court on this aspect but suffice it to refer to A.P. Paper Mills Ltd. v. Govt. of Andhra Pradesh and another, wherein the Supreme Court considered its previous judgments rendered in Commissioner, H.R.E. v. Sri Lakhmindra Thirtha Swamiar of Sri Shirur Math, , Sreenivasa General Traders v. State of Andhra Pradesh, , Corporation of Calcutta v. Liberty Cinema, , Delhi Cloth & General Mills Co. Ltd . v. Chief Commissioner, Delhi, , Vam Organic Chemicals ltd. v. State of Uttar Pradesh, , State of Tripura v. Sudhir Ranjan Nath, , Bihar Distillery v. Union of India, and Secunderabad Hyderabad Hotel Owners Association v. Hyderabad Municipal Corporation, . The Apex Court in A.P. Paper Mills Ltd. in paragraph 32 of the report ruled thus:

"32. From the conspectus of the views taken in the decided cases noted above it is clear that the impugned licence fee is regulatory in character. Therefore, stricto sensu the element of quid pro quo does not apply in the case. The question to be considered is if there is a reasonable correlation between the levy of the licence fee and the purpose for which the provisions of the Act and the Rules have been enacted/framed. As noted earlier, the High Court he answered the question in the affirmative. We have carefully examined the provisions of the Act and the Rules and also the pleadings of the parties. We find that the High Court has given cogent and valid reasons for the findings recorded by it and the said findings do not suffer from any serious illegality. It is our considered view that the licence fee has correlation with the purpose for which the statute and the rules have been enacted."

7. The legal position may be briefly summarised thus: that a licence fee may be either regulatory or compensatory. If the licence fee is regulatory, obviously the concept of quid pro quo does not apply in the strict sense; on the other hand when a fee is charged for rendering services, certain element of quid pro quo must be there between the service rendered and the fee charged so that the licence fee is commensurate with the cost of rendering the service although arithmetical precision is not required. The use of the words 'licence fee' do not necessarily mean a fee in return of services. If licences are granted - it may be charged to defray the costs of administering the local regulation or to increase the general funds of the State or for both purposes. The only restraint is that levy of fee for licences which are regulatory should not be excessive. Looking to the scheme of the Bombay Police Act, 1951 and the power given to the Commissioner of Police under Section 33 interalia under Clause (w)(i) for licensing or controlling place of amusement or entertainment, obviously it is a power for regulating and controlling the activity of place at public amusement or entertainment. This licence is given by the Commissioner concerning place of public amusement or entertainment for regulating or controlling the activities therein. Since the licence fee is regulatory in character, an element of quid pro quo does not apply in the strict sense.

8. What remains is to be seen is now is whether the increase/enhancement of fee for licence/registration by the impugned rules i grossly exorbitant and arbitrary. We find from the counter that the licence fees for place of amusement or entertainment including eating house remained stagnant for almost 39 years. The licence fees prescribed in the year 1950 or so continued to be so without upward revision until the impugned increase/enhancement. The respondents have justified the increase by submitting that expenses on the staff required for the purpose of issuance of licences, collecting licence fees and regulating the entire administration; of issuance of licences have increased multifold. For supervision and inspection of hotels, restaurants, beer bars and for verification and ascertaining in compliance of licence conditions or breach thereof, huge police staff/personnel are required. In the year 1950 there were hardly few places of amusement or entertainment and hardly few hotels, guest houses and permit rooms which have increased by leaps and bounds during all these years. Prior to the increase, the amount received by way of licence fees was hardly Rs. 3 lacs while the expenses required to be incurred by the respondents for the purposes of issuance of licences, collecting licence fees, regulating the administration of issuance of licences, supervision and inspection of places of amusement of entertainment including hotels, restaurants, beer bars come to about Rs. 62 lacs. It was because of this reason that it became imminently necessary to increase the licence fees for the places of public amusement or entertainment. Even after the increase in the licence fees, the State shall hardly receive Rs. 39 lacs which will be much less than expenses incurred. It is submitted by the respondents that on account of revision of pay-scales, H.R.A., D.A. and other benefits/facilities provided to the staff deployed for the purposes of regulating and controlling the places of amusement or entertainment, even the increase impugned is not sufficient. It is true that the increase in licence fees by the impugned rules is substantial, but it does not seem to us to be grossly unreasonable or hugely exorbitant warranting interference by this Court. It is not that for every type of place of amusement or entertainment the increase is hundred to three hundred times as was sought to be projected and contended by the learned counsel for the petitioner. It would be seen from the impugned rules that for some types of hotels, restaurants, canteens with bear bars the increase is only to Rs. 100/ to Rs. 300/-, or Rs. 500/-. Similarly, in respect of lodging houses, boarding and lodging houses or residential hotels with permit room or bar, having few rooms upto 10 rooms No 11 to 25 rooms the increase is Rs. 150/- to Rs. 300/ respectively. For lodging houses, boarding and lodging houses or residential hotels without permit rooms or bar, for smaller places having few rooms the increase is to Rs. 100/upto Rs. 350/-. With regard to the hotels, restaurants, canteens with permit rooms in respect of areas having lesser population, we find that increase is upto Rs. 300/- and for having population above 10 lacs, but below 20 lacs, the increase is to Rs. 500/- and in respect of the areas having population above 20 lacs the increase is to rs. 750/-. The licence fees having remained stagnant for almost four decades right from 1950, at first blush the increase seems to be high, taking into consideration the factors set out by the respondents in the counter, it cannot be termed to be hugely exorbitant or grossly unreasonable. Once the element of quid pro quo is not applicable for levy of fees for licences which are regulatory in character, the increase cannot be tested with the arithmetical precision. Be it noted that prior to the amendment in the said rules, the draft rules were published and the objection raised by the petitioner were considered. All in all, no case for invocation of extraordinary jurisdiction is made out.

9. Writ petition is, accordingly, dismissed. Rule is discharged. No costs.