Bombay High Court
Steel Authority Of India Limited vs The Bombay Metropolitan Region ... on 9 February, 2018
Bench: A.S. Oka
1 wp-1650,1632.97 2.doc
pmw
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.1650 OF 1997
Steel Authority of India Ltd. ... Petitioner
Versus
1. The Bombay Metropolitan Region Iron &
Steel Market Committee
2. State of Maharashtra ... Respondents
WITH
WRIT PETITION NO.1632 OF 1997
Tata Iron & Steel Company ... Petitioner
Versus
1. The Bombay Metropolitan Region Iron
& Steel Market Committee
2. State of Maharashtra ... Respondents
----------------
Mr. S.C. Naidu a/w Mr. Rakesh Mandavkar and Ms. Amrita Dubey i/by
Mr. Bhavesh V. P Panjuani i/by M/s. Mulla & Mulla & Craigie Blunt &
Caroe for the Petitioner in WP/1650/1997.
Mr. S.C. Naidu a/w Mr. H.N. Vakil a/w Mr. Rushil Mathur i/by M/s.
Mulla & Mulla & Craigie Blunt & Caroe for the Petitioner in
WP/1632/1997.
Mr. N.N. Bhadrashete for the Respondent No.1.
Mr. A.B. Vagyani, G.P. a/w Mr. Manish M. Pabale, AGP and Mr. R.S.
Sawant, A.A.G.P. and Ms. G.R. Golatkar, A.A.G.P. for the Respondent
No.2.
CORAM : A.S. OKA & RIYAZ I. CHAGLA, JJ.
DATE ON WHICH SUBMISSIONS WERE HEARD : 29.09.2017
DATE ON WHICH JUDGMENT IS PRONOUNCED : 09.02.2018
1 of 37
2 wp-1650,1632.97 2.doc
JUDGMENT (PER A.S. OKA, J.):-
1 The issues which arise in these two Petitions are more or less
identical and hence, the same are taken up for hearing together. In both
the Petitions under Article 226 of the Constitution of India, there is a
challenge to the provisions of the Mumbai Metropolitan Region
Specified Commodities Markets (Regulation of Location) (Enactment of
Bye-Laws with retrospective effect to provide for levy and collection of
the Registration Fee and Market Fee and Validation and Continuance)
Act, 1997 (for short "the Validating Act").
2 The petitioner in Writ Petition No.1650 of 1997 is the Steel
Authority of India which is a Government of India Enterprise. The
petitioner in Writ Petition No.1632 of 1997 is a Company registered
under the Companies Act, 1956. The first respondent has been
constituted under the provisions of Bombay Metropolitan Region
Specified Commodities Market (Regulation of Location) Act, 1983 (for
short "the said Act of 1983"). The first respondent - Market Committee
is constituted under Sub-Section (1) of Section 8 of the said Act of
1983. Under Section 34 of the said Act of 1983, a power is vested in
Market Committees constituted under Section 8(1) to levy and collect
fees.
2 of 37
3 wp-1650,1632.97 2.doc
3 As far as the petitioner in Writ Petition No.1650 of 1997 is
concerned, under an agreement to lease dated 29 th December, 1983 a
plot of land admeasuring about 1,67,900 square meters was allotted to
the petitioner by the City and Industrial Development Corporation of
Maharashtra Limited(for short "CIDCO"). The said plot of land is
situated at revenue village Kalamboli, District Raigad. It is claimed in
the petition that the said plot was developed by the petitioner by
spending a huge amount. As far as Writ Petition No.1632 of 1997 is
concerned, the petitioner acquired a plot of land admeasuring 72,000
square meters under an agreement of lease dated 31 st March, 1982
executed by the City and Industrial Development Corporation of
Maharashtra Limited (for short "CIDCO"). The said plot of land is also
situated at revenue village Kalamboli in Raigad District. In this Writ
Petition also, the petitioner has set out the details of the development
work carried out on the said plot by the petitioner.
4 In both the Petitions, the case made out by the petitioners is
that under relevant clauses of the lease deeds, the petitioners are
required to pay service charges to CIDCO towards the cost of
establishing and maintaining civic amenities such as roads, water
drainage, conservancy of the said land, etc. The details of the service
charges paid by the petitioners to CIDCO have been also set out in the
3 of 37
4 wp-1650,1632.97 2.doc
Petition. The case of the petitioners in both the Petitions is that the
amenities to the said plots were not provided either by CIDCO or by the
first respondent - Market Committee.
5 On 2nd March, 1990 a meeting of the first respondent was
held in which it was decided to charge market fee at the rate of Rs.9/-
per square meter on all warehousing plot holders/ stockyard holders
with effect from 1st September, 1989. Accordingly, a demand was made
to the petitioners. The petitioners in both the Petitions requested the
first respondent to reconsider its decision as the petitioners were paying
service charges to the CIDCO. Reference is made in both the Petitions to
various demands made and action taken for non-payment of market fee
to first respondent. Being aggrieved by the action of demanding market
fee at the rate of Rs.9/- per square meter, the petitioner in Writ Petition
No.1650 of 1997 filed Writ Petition No.370 of 1994 in this Court. The
said Petition was disposed of by an order dated 2nd December, 1994.
The Writ Petition was disposed of by recording a statement of the first
respondent that the first respondent was withdrawing the demands
made with regard to the market fee. As far as the petitioner in Writ
Petition No.1650 of 1997 is concerned, there was again a demand made
by the first respondent by a letter dated 20th December, 1996 in the sum
of Rs.1,14,05,545/- comprising of market fee of Rs.1,06,17,149/- and
delayed payment charges of Rs.16,88,396/-. The demand was made on
4 of 37
5 wp-1650,1632.97 2.doc
the basis of Maharashtra Ordinance No.XVII of 1996 dated 10th October,
1996 which enabled the first respondent to levy and collect market fees
with effect from 1st September, 1989 with retrospective effect. Similar
demand was issued to the petitioner in the other Petition. Ultimately,
the said ordinance was replaced by the Validating Act which is the
subject matter of challenge in this Petition which is deemed to have
come into effect on 10th October, 1996. We may note here that earlier
bye-laws made by the first respondent were approved by the State
Government on 25th April, 1995. Prayer clause (a) of both the Petitions
read thus :-
"(a) that this Hon'ble Court be pleased to declare that the Mumbai
Metropolitan Region Specified Commodities Markets (Regulation
of Location) (Enactment of bye-laws with retrospective effect to
provide for levy and collection of the Registration fee and Market
fee and Validation and Continuance) Act, 1997 and the bye-laws
approved by the 2nd Respondent on 24th April 1995 are ultra Vires
the Constitution of India and the provisions of the Bombay
Metropolitan Region Specified Commodities Markets (Regulation
of Location) Act 1983 and null and void."
6 There is a reply filed by Shri B.B. Srivastava, Chief Executive
Officer of the first respondent in both the Petitions. In Writ Petition
No.1632 of 1997, there is a rejoinder filed by the petitioner.
7 The first submission of the learned counsel appearing for the
petitioners is that the provisions of the Validating Act are declaratory in
nature and there is no change or alteration brought about in the Parent
Act by the Validating Act. In the alternative, he submitted that
5 of 37
6 wp-1650,1632.97 2.doc
Validating Act imposes a fresh levy which is impermissible. He relied
upon the learned opinion expressed by Justice G.P. Singh in his well
known commentary styled "Principles of Statutory Interpretation". He
relied upon a decision of the Apex Court in the case of Shri Prithvi
Cotton Mills Vs. Broach Municipality1 in support of his submission that
the Validating Act cannot be a mere declaration but in substance, the
same must amend the Parent Act to remove deficiency or cause of
invalidity. He pointed out that the object of a Validating Act is to
remove the cause, ineffectiveness or invalidity of actions or proceedings
which are validated by legislative measures. He relied upon a decision
of the Apex Court in the case of Hari Singh and others Vs. The Military
Estate Officer2. In this behalf, he also relied upon the decisions of the
Apex Court in the case of Utkal Contractors & Joinery (P) Ltd. and Ors.
Vs. State of Orissa3 and Bakhtawar Trust Vs. M.D. Narayan4. He invited
our attention to the Maharashtra Ordinance No.XVII of 1996 as well as
Maharashtra Ordinance No.III of 1997. Inviting our attention to the
provisions of both the ordinances, he pointed out that Section 2 of the
Ordinance provided that the bye-laws enacted and incorporated in
Section 2 of the said Ordinance shall be deemed to be duly and validly
made by the first respondent under Section 69 read with Sections 5 and
34 of the said Act of 1983. Section 3 of the first ordinance provided for
1 AIR 1970 SC 192
2 AIR1972 SC 2205
3 AIR 1987 SC 2310
4 AIR 2003 SC 2236
6 of 37
7 wp-1650,1632.97 2.doc
a declaration that collection of fees by Market Committee during the
earlier period specified therein stands validated. Second ordinance is
virtually the same as the first Ordinance. As far as the Validating Act is
concerned, it is on the lines of the first ordinance.
8 The submission of the learned counsel appearing for the
petitioners is that the Validating Act does not amend Sections 2 and
Section 69 of the said Act, 1983. There is no provision made that levy
and collection of market fee will be competent without a valid bye-law
in place. He pointed out that Section 2 of the Validating Act purports to
frame a bye-law as contemplated by the said Act of 1983. A deeming
fiction is provided that bye-laws mentioned in Section 2 shall be
construed as having been made by the first respondent - Committee
under Section 69 read with Section 34 of the said Act of 1983. He
pointed out that however there is no amendment carried out to Sections
2(2) and 69 of the said Act of 1983. He pointed out that under Section
69 of the said Act of 1983, a power is conferred on the Market
Committee to levy and collect different types of fees only as per the bye-
laws. The learned counsel urged that Section 34 remains unamended
and that the State legislature has purported to frame bye-laws which
were required to be framed by the first respondent. He submitted that
only bye-laws contemplated under the said Act of 1983 are the one
7 of 37
8 wp-1650,1632.97 2.doc
made under Section 69 of the said Act of 1983 and save and except
Section 69, there is no other statutory power conferred which enables
framing of bye-laws. He submitted that Market Committee can frame
bye-laws only in accordance with Section 69 and therefore, no bye-laws
could be framed by the Market Committee by giving retrospective
effect.
9 The learned counsel placed reliance on decisions of the
Madhya Pradesh High Court in the case of Narottamdas Harjiwandas vs.
P.B. Gowarikar5 and Dayalal Meghji vs. State of Madhya Pradesh6. He
also relied upon a decision of Allahabad High Court in the case of
Shashikant Rai vs. Regional Transport Authority7. He submitted that in
any case a fresh levy with retrospective effect cannot be imposed under
the Validating Act. He relied upon a decision of this Court in the case of
CIT Vs. Hico Products Limited8.
10 He submitted that in any event, the provisions of the
Validating Act to the extent of retrospective operation are unreasonable
and violative of Article 14 of the Constitution of India. He submitted
that a Validating Act cannot provide for a declaration for regularising
illegal executive action.
5 AIR 1961 MP 182
6 AIR 1962 MP 342
7 AIR 1978 ALL 68
8 (1990) 92 Bom.LR 659
8 of 37
9 wp-1650,1632.97 2.doc
11 He also invited our attention to the fact that the petitioners
are paying service charges to the CIDCO as well as property taxes to the
Village Panchayat.
12 He also invited our attention to the bye-law incorporated by
the Validating Act. He invited our attention to the well settled
proposition of law regarding distinction between a tax and a fee. He
urged that as held by the Apex Court in the case of Bhagwan Das Sood
Vs. State of H.P9, the market fee is essentially a fee and not a tax. He
pointed out that the affidavit filed by the first respondent does not
indicate that common services, amenities and facilities were provided at
the relevant time by the first respondent. He submitted that the levy of
market fee in the facts and circumstances is nothing but a tax. He relied
upon a decision of the Apex Court in the case of Kewal Krishan vs. State
of Punjab10. The learned counsel would, therefore, submit that the
provisions of the Validating Act will have to be struck down.
13 The learned counsel appearing for the petitioners invited our
attention to the decision of the Federal Court in the case of United
Provinces Vs. Atiqa Begum16. Inviting our attention to two decisions of
the Apex Court in the case of M/s. J. K. Jute Mills Co. Ltd vs. The State
9 (1997) 1 SCC 227
1 0 AIR 1990 SC 1008
1 6 (1940)FCR 110
9 of 37
10 wp-1650,1632.97 2.doc
Of Uttar Pradesh17 and Rai Ramkrishna Vs. State of Bihar18, he submitted
that where a law suffers from infirmity which has been noted in the
judgment of the Court, it is permissible for the legislature to remedy the
defect by curing the defect. He submitted that legislation of validating
nature is constitutionally permissible because by such a legislation,
what the legislator seeks to achieve is to enact a valid piece of
legislation that removes the defects in the earlier legislation which is in
force. He pointed out that, however, under the guise of enacting a
validating legislation, the legislature cannot issue a mandate simplicitor
to override the judgment of a Court. He pointed out that a validating
legislation can always have a retrospective character. He submitted that
a validating enactment in substance should amend the Parent Act to
remove the deficiency or cause of invalidity as held by the Apex Court
in the case of Prithvi Cotton Miils Vs. Broach Municipality (supra). He
pointed out that in the present case, the purported defect perceived by
the State Government under the said Act of 1983 was that it did not
enable the Market Committee to levy and collect the registration fee
and market fee unless the bye-laws are framed by exercising power
under Section 69. He submitted that it was open for the legislature to
bring a valid enactment providing for a provision enabling the Market
Committee to levy and collect registration fee and market fee in
1 7 AIR 1961 SC 1534
1 8 AIR 1963 SC 1667
10 of 37
11 wp-1650,1632.97 2.doc
absence of bye-law. Merely by providing that bye-laws framed by the
Market Committee in exercise of powers conferred under Section 69
would have retrospective effect without inserting enabling provision to
that effect in the said Act of 1983 would mean that there has been no
effective legislative amendment to the Parent Act. He invited our
attention to the objects and reasons of the Ordinances which
acknowledge the fact that Market Committee without making requisite
bye-laws under Section 69 proceeded to levy and collect market fee. He
invited our attention to both the Ordinances. He pointed out that the
impugned enactment does not amend Sections 2(2) and Section 69 of
the said Act of 1983. The Validating Act does not bring about
amendment providing that levy and collection of registration and
market fee can be made without a valid bye-law being in place. By
amendment, no power has been conferred on the Market Committee to
levy and collect market fees in absence of bye-law and in fact Section 2
of the impugned enactment seeks to frame bye-law as contemplated by
Section 69 of the said Act of 1983. He pointed out that the impugned
enactment does not amend the main Act for conferring power on the
State Legislature to frame bye-laws which power vests only in the
Market Committee as provided in Section 69. He submitted that the
legal position that a Market Committee cannot levy and collect fees
without there being a proper bye-law framed under Section 69 remains
11 of 37
12 wp-1650,1632.97 2.doc
unaltered. He relied upon a decision of the Division Bench of the
Madhya Pradesh High Court in the case of Firm - Dayalal Meghji vs
State of Madhya Pradesh19 as well as a decision of the Allahabad High
Court in the case of Shashikant Rai Vs. Regional Transport Authority20.
14 The learned counsel submitted that in any event by Validating
Act, a fresh levy with retrospective effect cannot be provided for. He
submitted that a Validating enactment should be a curative legislation
to remove the deficiency or cause of invalidity and not a fresh
legislation imposing levy for the first time. Such levy violates
fundamental rights guaranteed under Article 19(1)(g) of the
Constitution of India. He submitted that the said Act of 1983 does not
permit even by implication retrospective application of bye-laws framed
in exercise of powers under Section 69 of the said Act of 1983.
15 The learned counsel submitted that the impugned enactment
is unreasonable and violative of Article 14 of the Constitution of India.
He also submitted that the impugned enactment is repugnant to the
said Act of 1983 as Sections 2(2) and 69 are not altered or amended by
the impugned enactment.
16 He pointed out that the impugned enactment seeks to
regularise the illegal collections made by the Market Committee for the
1 9 AIR 1962 MP 342
2 0 AIR 1978 ALL 68
12 of 37
13 wp-1650,1632.97 2.doc
period from 1st February, 1988 to 23rd February, 1999. He submitted
that imposition of this levy, in any case, is oppressive and confiscatory
in nature. He pointed out that the petitioners are under an obligation to
pay service charges to CIDCO as per the provisions of the lease deeds
executed by the CIDCO. He urged that the Market Committee is not
declared as a Local Authority and that the CIDCO has not transferred
amenities to the Market Committee. He submitted that in addition, the
traders in the market yard are paying taxes to Kalamboli
Grampanchayat which are levied in accordance with Section 126 of the
Bombay Village Panchayat Act, 1958.
17 He also invited our attention to the bye-laws purportedly
framed by the impugned enactment. He pointed out that the market fee
is essentially a fee and not a tax. He submitted that there is no basis to
levy the market fee on per square meter basis.
18 He submitted that bye-law No.4 sought to be incorporated by
the impugned enactment and bye-law No.32 framed by the Market
Committee are irrational, arbitrary and discriminatory and are required
to be struck down. He submitted that the bye-laws sanctioned by
communication dated 25th April, 1995 cannot stand the test of legality.
19 The learned Government Pleader submitted that there could
be a taxing legislation which is retrospective. He relied upon a decision
13 of 37
14 wp-1650,1632.97 2.doc
of the Apex Court in the case of Commercial Motors Limited vs.
Commissioner of Trade Tax, Uttar Pradesh, Lucknow and Ors 11. He relied
upon another decision of the Apex Court in the case of Dr. Indramani
Pyarelal Gupta and Ors. Vs W.R. Natu and Ors12.
20 He also relied upon another decision of the Apex Court in the
case of Bachan Singh and Another Vs. Chhotu Ram and Ors 13. The
learned Government Pleader relied upon another decision of the Apex
Court in the case of R. Dalmia Vs. The Commissioner of Income Tax 14 in
support of the proposition that the words used are required to be
incorporated conceptually. The learned Government Pleader relied
upon the decision of the Apex Court in the case of Joint Action
Committee of Air Line Pilots' Association of India v. Director General of
Civil Aviation15. The main object was to decongest the old island City
and to shift as many commercial activities as possible to places outside
island City of Mumbai. He pointed out that many wholesale markets
were shifted to Navi Mumbai. Even textiles, iron and steel markets were
located outside the island City. He submitted that power to collect fees
stems from the provisions of Section 34 of the said Act of 1983. He
accepted that the manner of collection and rates of fees are to be
specified by the bye-laws prepared under the said Act of 1983. He
1 1 (2015) 15 SCC 168
1 2 (1963) 1 SCR 721
1 3 (1986)3 SCC 652
1 4 (1977)2 SCC 467
1 5 (2011)5SCC 435
14 of 37
15 wp-1650,1632.97 2.doc
submitted that bye-laws by itself do not enable collection of fees as the
same is enabled by Section 34. He submitted that by following
procedure under Section 69, the bye-laws were framed under the said
Act of 1983. He pointed out that by the impugned Amending Act only a
date on which the bye-laws will come into force has been laid down by
a deeming fiction.
21 The learned Government Pleader relied upon the meaning of
the words "retrospective", "retroactive" and "retro-activity" in various
judicial dictionaries and Law Lexicons. He relied upon the concept of
quasi retro-activity. He relied upon a decision of the Apex Court in the
case of Commercial Motors Limited Vs. CIT. He submitted that when
the words of statute are clear and unambiguous, full effect must be
given to the same in order to give full effect to the intention of the
legislature. By relying upon a decision of the Apex Court in the case of
R. Dalmia Vs. The Commissioner of Income Tax (supra), the learned
Government Pleader urged that the impugned amending Act is not
arbitrary or unreasonable. He urged that the State has power to amend
the bye-laws for levy of fees with retrospective effect. He submitted that
power to manage includes power to levy fees for management of the
market areas. If the bye-laws were silent about the power to collect
certain fees from the earlier date, the Validating Act has made good the
lacuna in the said bye-laws.
15 of 37
16 wp-1650,1632.97 2.doc
22 The learned Government Pleader submitted that the bye-laws
have been framed by the Market Committee and as the bye-laws do not
make any provision for retrospective levy of fees, the State enacted the
Validating Act to give retrospective effect to the bye-laws framed by the
Market Committee. He submitted that under the bye-laws framed the
Market Committee, it became empowered to collect market fees with
effect from 25th April, 1995.
23 The learned Government Pleader submitted that the
petitioners are themselves members of the Market Committee which has
framed the bye-laws and therefore, the petitioners are estopped from
challenging the retrospective operations of the bye-laws. He relied upon
the decisions of the Apex Court in the case of Indramani Pyarelal Gupta
(Dr.) and Ors. Vs. W.R. Natu and Ors. (supra) and Joint Action
Committee of Air Line Pilots' Association of India v. Director General of
Civil Aviation (supra). He would, therefore, urge that no interference is
called for in writ jurisdiction.
24 We have also heard the submissions of the learned counsel
appearing for the first respondent who supported the submission of the
learned Government Pleader. We have also heard the rejoinder of the
learned counsel representing the petitioners.
16 of 37
17 wp-1650,1632.97 2.doc
25 We have given careful consideration to the submissions. We
have carefully gone through each and every decision relied upon by
both the parties. Many of the decisions lay down the same principles of
law. Therefore, we have quoted only some of the decisions.
26 We must firstly refer to the provisions of the said Act of 1983.
Sub-Section (2) of Section 2 defines "bye-laws" to mean "the bye-laws
made by a Market Committee under this Act". Section 3 deals with the
declaration of market area and market yards. There is no dispute that
the area in which subject plots of the petitioners are situated was
notified as a market area with effect from 1 st January, 1987. Section 34
incorporates the power of the Market Committee to levy fee. Section 34
reads thus :-
"34. Power of committee to levy fees. - It shall be competent to a
committee to levy and collect fees in the manner and at the rates
laid down in the by-laws made, -
(i)subject to the provisions of sub-section (2) of section 35, for
stalls, offices, shop, godowns, etc., and open spaces in the market
yard;
(ii)for the grant and renewal of licences;
(iii)for any common services, amenities and facilities provided or
arranged by the committee;
(iv)for the entry of persons, vehicles and goods into the market
yard; and
(v)for any other matter for which fee is to be or may be levied and
collected by it."
27 Another Section which is relevant is Section 69 which reads
thus :-
"69. Power of committee to make by-laws. - (1) The power to make
all by-laws under this Act shall be exercisable by the committee,
17 of 37
18 wp-1650,1632.97 2.doc
subject to the previous sanction of the State Government as
hereinafter provided.
(2) Without prejudice to any power to make by-laws contained
elsewhere in the Act, any committee may make by-laws consistent
with this Act and the rules made thereunder for the administration
of its affairs and for the guidance of standing committee, sub-
committees, officers and servants.
(3)(a) The Committee, whenever it desires to make by-laws
under this Act, shall, by a resolution at a special meeting, approve a
draft of such by-laws.
(b) As soon as possible after such resolution is passed, the
committee shall display the draft of the by-laws on its notice-
board and publish a notice in at least two newspapers circulating
in the market area and also in such manner, as may in its opinion,
be best circulating to inform the public and all persons likely to be
affected by the by-laws so displayed and inviting their objections
and suggestion in respect of the proposed draft within a
reasonable period to be specified in such notice.
(4) The committee shall consider the objections and
suggestions received, if any, and may by a resolution approve the
final draft of the by-laws.
(5) Within seven days of the passing of such resolution, the
Chief Executive Officer shall submit the final draft of the by-laws
approved under sub-section (4) to the Metropolitan Commissioner
who shall send it with his recommendation to the State
Government. The State Government may sanction the by-laws sent
to it subject to such modifications, if any, as if may think necessary."
28 On plain reading of Section 34 of the said Act of 1983, it is
18 of 37
19 wp-1650,1632.97 2.doc
apparent that the Market Committee can levy and collect fees in the
manner and at the rates laid down by the bye-laws. Therefore, unless
there were bye-laws lawfully made, the first respondent could not have
exercised the power under Section 34 to levy market or registration
fees. Sub-Section (2) of Section 2 defines bye-laws to mean the bye-
laws made by a Market Committee under the said Act of 1983. Perusal
of the provisions of the said Act of 1983 shows that under Section 68 a
power to make rules is conferred on the State Government and under
Section 69, a power to make bye-laws is vested only in the Market
Committee subject to previous sanction of the State Government. Thus,
condition precedent for a Market Committee to levy the market fee is
making of bye-laws by exercising the power under Section 69 by the
Market Committee. Thus, so long as the bye-laws are not made, the
Market Committee is not competent to levy or charge market fees.
29 It is undisputed that the bye-laws contemplated by Section
69 of the said Act of 1983 came into force on and from 25 th April, 1995
when the bye-laws (for short "the said bye-laws") made by the first
respondent were approved by the State Government. The said bye-laws
do not confer any power to levy the market fees with retrospective
effect for a period prior to 25th April 1995. It was also pointed out that
the resolution of Market Committee dated 2nd March, 1990 of levying
market fee was withdrawn after the same was challenged in Writ
19 of 37
20 wp-1650,1632.97 2.doc
Petition No.370 of 1994.
30 On perusal of the provisions of the said Act of 1983, we find
that there is no power vested in the State Government to frame bye-
laws contemplated by Sub-Section (2) of Section 2. Sub-Section (3) of
Section 69 lays down a procedure to be followed for framing of bye-
laws which can be summarised as under :-
A] The Committee is required by a resolution at a special
meeting to approve a draft of the bye-laws;
B] The draft of the bye-laws is required to be displayed on its
notice board and the Committee is required to publish a
notice in at least two newspapers circulating in the
market area for inviting objections and suggestions in
respect of the proposed draft bye-laws;
C] The Committee is under an obligation to consider the
objections and suggestions received and thereafter, by a
resolution is required to approve the final draft of the
bye-laws;
D] The Chief Executive Officer of the Market Committee is
required to submit final draft of the bye-laws to the
Metropolitan Commissioner who is under an obligation
to send the same with his recommendations to the State
Government;
20 of 37
21 wp-1650,1632.97 2.doc
E] Thereafter, the State Government has power to sanction
the bye-laws subject to such modifications, if any, as it
may think necessary.
31 We may note that the said power to make bye-laws was
exercised by the first respondent and accordingly, along with a letter
dated 10th January, 1995 final draft of the bye-laws was submitted to
the State Government. By a letter dated 25th April, 1995, the Urban
Development Department of the State Government informed the first
respondent that the bye-laws have been approved by the State
Government subject to modification made in bye-law Nos.32 and 33.
Bye-law No.32 enjoins plot/shop/office premises/godown/open space
holders in the market yard to pay market committee, market fee of
Rs.9/- per square meter per annum on the basis of the area of their
plots/ shops/ office premises/ godowns/ open spaces as well as delayed
payment charges as the committee may decide. For larger holding
above area of 5,000 square meters, it was provided that market fee
payable will be Rs.7.50/- per square meter for the area between 5001 to
1,00,000 square meters. The market fee will be payable at the rate of
Rs.6/- per square meter of area of 1,00,001 square meters and above.
21 of 37
22 wp-1650,1632.97 2.doc
32 On 2nd March, 1990 a resolution was passed by the first
respondent to levy and recover market fee at the rate of Rs.9/- per
square meter per annum with retrospective effect from 1 st September,
1989. Against the petitioner in Writ Petition No.1650 of 1997 on 7th
May, 1993, a demand was made by the CEO of the first respondent by
which he requested the District Collector to recover a sum of
Rs.62,38,518/- on account of market fee for the period from 1st
September, 1989 to 31st March, 1993. On 2nd February, 1994 a Writ
Petition was filed by the said petitioner being Writ Petition No.370 of
1994. In the said Writ Petition, a statement was made on behalf of the
first respondent that the demand in respect of the market fee was being
withdrawn and recovery of market fee will be made as and when lawful
demand is made. On 10th January, 1996 the first ordinance was
promulgated. On 17th January, 1997, the second ordinance was
promulgated. Both the ordinances are in terms of the subsequent
Revalidating Act. Therefore, we are referring to the provisions of the
Revalidating Act. In the preamble, it is stated that the Act has been
made to enact the bye-laws with retrospective effect to provide for levy
and collection of the registration fee and market fee under the
provisions of the said Act of 1983 and to make certain validating
provisions. Sub-Section (2) of Section 1 of the Revalidating Act provides
that the same shall be deemed to have come into force on 10 th October,
22 of 37
23 wp-1650,1632.97 2.doc
1996. Section 2 of the Revalidating Act reads thus :-
"2. Enactment of bye-laws with retrospective effect to levy and collect
registration and market fees. - The following bye-laws to provide for
levy and collection of the registration fee and the market fee for
common services, amenities and facilities provided or arranged within
the area of the Bombay Metropolitan Region Iron and Steel Market
Committee, Kalamboli, Navi Mumbai (hereinafter referred to as "the
said Market Committee") and the market yard, during the period
commencing on the 1st February, 1988, and ending on the 23 rd April,
1995, shall be deemed to be duly and validly made by the said Market
Committee under section 69 read with sub-section (3) of section 5 and
section 34 of the Mumbai Metropolitan Region Specified Commodities
Markets (Regulation of Location) Act, 1983, on the 1 st February, 1988,
namely :-
"1. Title, Commencement and Application. - (1) These bye-
laws may be called the Bombay Metropolitan Region Iron and Steel
Market Committee, Kalamboli, Navi Mumbai (Levy and Collection or
Registration Fee and Market Fee) Bye-laws, 1988.
(2) They shall come into force on the 1st February, 1988.
(3) They shall apply for the levy and collection of the
registration fee and market fee, for the period commencing from the
1st February, 1988 and expiring on the 23rd April, 1995.
2. Definition. - In these bye-laws, unless the context otherwise requires. -
(a) "Act" means the Mumbai Metropolitan Region Specified
Commodities Markets (Regulation of Location) Act, 1983;
(b) "Market Committee" means the Bombay Metropolitan Region Iron
and Steel Market Committee, Kalamboli, Navi Mumbai,
constituted under section 4 of the Act.
3. Registration fee. - (1) An application for Registration with the Market
Committee, shall be made by the traders lawfully engaged in the
specified trade within the market area, to the Chief Executive Officer
of the Market Committee.
(2) A registration fee of rupees 100 till the 31 st December, 1990; and
thereafter of rupees 200, per application, shall be charged for such
registration.
4. Levy and collection of market fee. - (1) There shall be levied and
collected, from every person carrying on specified trade in Iron and
Steel and holding any premises whether as a lessee or otherwise in the
market yard, on the basis of the area of the plot, shop, office premises,
godown or open space, a fee at the rate specified in the table below,
per annum, for the common services, amenities and facilities provided
by the Market Committee.
23 of 37
24 wp-1650,1632.97 2.doc
Serial Area Market Fee Per
Number Square Meter
1 Upto 5,000 Square metres Rupees 9.00
2 5,001 to 1,00,000 Square Rupees 7.50
metres
3 1,00,001 Square metres and Rupees 6.00
above
(2) If the market fees levied and demanded are not paid within the period
specified for making such payment, the Chief Executive Officer of the
Market Committee may also charge such delayed payment charges, as
may be decided by him."
(underline supplied)
33 Thus, Section 2 purports to make bye-laws to provide for levy
and collection of registration fee and market fee for the period between
1st February, 1988 and 23rd April, 1995. It provides that the bye-laws
incorporated in the said Section shall be deemed to be duly and validly
made by the said Market Committee under Section 69 read with Sub-
Section (3) of Section 5 and Section 34 of the said Act of 1983 with
effect from 1st February, 1988. Thus, by Section 2 of the Revalidation
Act, the legislature has purported to frame bye-laws referred in Section
35 of the said Act of 1983 and the Section declares that the bye-laws
shall be deemed to have been made by the first respondent - Market
Committee. As stated earlier, the power to frame bye-laws under the
said Act of 1983 is only under Section 69 which vests only with the
Market Committee. Thus, by Section 2, the legislature has purported to
exercise the power to make bye-laws vesting in the Market Committee
and that also with retrospective effect from 1 st February, 1988. Section
3 of the Revalidating Act is also relevant which reads thus :-
24 of 37
25 wp-1650,1632.97 2.doc
"3. Validation of fees levied and collected by Market
Committee. - Notwithstanding anything contained in
the Mumbai Metropolitan Specified Commodities
Markets (Regulation of Location) Act, 1983 or in any
judgment decree or order of any court, any registration
fee or market fee levied and collected including any
action (taken or things done) in pursuance of such levy
and collection, by the said Market Committee acting or
purporting to act under the provisions of the said Act,
during the period commencing on the 1st February,
1988 and ending on the 23 rd April, 1995, in so far as it
is in accordance with the bye-laws 3 and 4 of the bye-
laws made under section 2 of this Act, shall be deemed
to be and shall be deemed always to have been validly
levied and collected in accordance with law as if the
said bye-laws 3 and 4 had been continuously in force at
all material times and accordingly, -
(a) all actions, proceedings or things done or taken by the
said Market Committee, or any of its officers or servants
in connection with the levy and collection of such fee
shall, for all purposes, be deemed to be and have
always been done or taken in accordance with the
provisions of the said Act;
(b) no suit or other proceedings shall be maintainable or
continued in any court, against the said Market
Committee or any of its officers or servants for the
refund of the registration fee or market fee so levied
and collected;
25 of 37
26 wp-1650,1632.97 2.doc
(c) no court or any other authority shall enforce any decree
or order directing the refund of any registration fee or
market fee."
34 It seeks to validate collection of registration fee or market
fee by the Market Committee during the period commencing on 1 st
February, 1988 and ending on 23rd April, 1995 insofar as it is in
accordance with the bye-laws No. 3 and 4 of the bye-laws made under
Section 2. The statement of objects and reasons under both the
Ordinances and the Validating Act are similar. It is mentioned therein
that the first respondent - Market Committee without making requisite
bye-laws under Section 69 of the said Act of 1983 for levy and
collection of market fee and registration fee, during the period from 1 st
February, 1988 to 23rd April, 1995 has levied and collected registration
fee and market fee only on the basis of the resolutions, it was necessary
that the said irregular levy and collection of registration fee and market
fee made by the said Market Committee be legalised with retrospective
effect at the rates specified in the bye-laws validly made and that the
Market Committee is not called upon to refund the same on the ground
that the levy and collection thereof was not in terms of the said Act of
1983. It is further stated that it was necessary to undertake suitable
legislation providing for enactment with retrospective effect of the
26 of 37
27 wp-1650,1632.97 2.doc
requisite bye-laws empowering the said Market Committee to levy and
collect registration fee and the market fee and to make suitable
validating provisions for validating such levy and collection of such fees
by the first respondent.
35 Perusal of the Revalidating Act shows that :-
A)The same does not purport to amend the said Act of 1983 by
conferring power to frame bye-laws on the State
Government. It does not confer any power on the maket
committee to frame bye-laws with retrospective effect;
B)It purports to frame bye-laws as contemplated by Section 69
of the said Act of 1983 with retrospective effect from 1 st
February, 1988;
C) It purports to validate levy and collection of registration fee
and market fee made by the first respondent w.e.f. 1 st
February, 1988;
36 It will be necessary to make a reference to the law laid down
by the Apex Court dealing with the Validating Acts. It will be necessary
to make a reference to the decision of the Apex Court in the case of
Utkal Contractors & Joinery (P) Ltd. and Ors. Vs. State of Orissa (supra).
Paragraph 14 of the said decision reads thus :-
"14. The next question to be considered is whether the State while
purporting to amend the Act has encroached upon the judicial
power and set aside the binding judgment of this Court. We do not
27 of 37
28 wp-1650,1632.97 2.doc
think that Mr. Nariman was justified in contending so. The
principles has been well established in a string of decisions of this
Court, and we may briefly summarise as follows:-
The legislature may, at any time, in exercise of the plenary
power conferred on it by Arts. 245 and 246 of the Constitution
render a judicial decision ineffective by enacting a valid law.
There is no prohibition against retrospective legislation. The
power of the legislature to pass a law postulates the power to
pass it prospectively as well as retrospectively. That of course,
is subject to the legislative competence and subject to other
constitutional limitation. The rendering ineffective of
judgments or orders of competent Courts by changing their
basis by legislative enactment is a well known pattern of all
validating acts. Such validating legislation which removes the
causes of ineffectiveness or invalidity of action or proceedings
cannot be considered as encroachment on judicial power. The
legislature, however, cannot by a bare declaration, without
more, directly overrule, reverse or set aside any judicial
decision. Hari Singh v. Military Estate Officer (1973) SCR 515 :
(AIR 1972 SC 2205), Govt. of Andhra Pradesh v. Hindustan
Machine Tools Ltd. 1975 Supp SCR 394 : (AIR 1975 SC 2037),
I.N. Saksena v. State of M.P. (1976) 3 SCR 237 : (AIR 1976 SC
2250) and Misri Lal Jain v. State of Orissa (1977) 3 SCR 714 :
(AIR 1977 SC 1686)."
(emphasis added)
37 In the case of Bhaktawar Trust (supra), the Apex Court held
thus:
"14. The validity of any statute may be assailed on the ground that
it is ultra vires the legislative competence of the legislature
which enacted it or it is violative of Part III or any other
provision of the Constitution. It is well settled that Parliament
and State Legislatures have plenary powers of legislation
within the fields assigned to them and subject to some
constitutional limitations, can legislate prospectively as well as
retrospectively. This power to make retrospective legislation
enables the legislature to validate prior executive and
legislative Acts retrospectively after curing the defects that led
to their invalidation and thus makes ineffective judgments of
competent courts declaring the invalidity. It is also well settled
that a validating Act may even make ineffective judgments and
orders of competent courts provided it, by retrospective
legislation, removes the cause of invalidity or the basis that had
led to those decisions.
15. The test of judging the validity of the amending and validating Act
is, whether the legislature enacting the validating Act has
competence over the subject-matter; whether by validation, the
28 of 37
29 wp-1650,1632.97 2.doc
said legislature has removed the defect which the court had found
in the previous laws; and whether the validating law is consistent
with the provisions of Part III of the Constitution."
(emphasis added)
In the case of Shri Prithvi Mills Ltd (supra), the Apex Court
held thus:
"When a legislature sets out to validate a tax declared by a court to
be illegally collected under an ineffective or an invalid law, the
cause for ineffectiveness or invalidity must be removed before
validation can be said to take place effectively. ... Granted
legislative competence, it is not sufficient to declare merely that the
decision of the court shall not bind for that is tantamount to reversing
the decision in exercise of judicial power which the legislature does
not possess or exercise. A court's decision must always bind unless
the conditions on which it is based are so fundamentally
altered that the decision could not have been given in the
altered circumstances. ... The legislature may follow any one
method or all of them and while it does so it may neutralise the
effect of the earlier decisions of the court which becomes ineffective
after the change of the law. ... If the legislature has the power over
the subject-matter and competence to make a valid law, it can at
any time make such a valid law and make it retrospectively so as to
bind even past transactions. The validity of a validating law,
therefore, depends upon whether the legislature possesses the
competence which it claims over the subject-matter and whether
in making the validation it removes the defect which the courts
had found in the existing law and makes adequate provisions in
the validating law for a valid imposition of the tax."
(emphasis added)
In the case of Indramani Pyarelal Gupta(supra) relied upon by
the State, in paragraph 26, the Apex Court held thus:
"26. Mr. Pathak invited our attention to a passage in Craies' Statute
Law, 5th Edn., p. 366 reading:
"Sometimes a statute, although not intended to be retrospective,
will in fact have a retrospective operation. For instance, if two
persons enter into a contract, and afterwards a statute is passed,
which, as Cockburn, C.J. said in Duke of Devonshire v. Barrow etc.
Co.[(1877) 2 QBD 286, 289] 'engrafts an enactment upon existing
contracts' and thus operates so as to produce a result which is
something quite different from the original intention of the
29 of 37
30 wp-1650,1632.97 2.doc
contracting parties, such a statute has, in effect a retrospective
operation."
The bye-law insofar as it affects executory contracts requiring such
contracts to be closed out on a day not originally contracted for
and at a price fixed by law is in the above sense undoubtedly
retrospective. The submission of learned counsel was that though
a legislature which had plenary power in this regard could enact a
statute having a retrospective operation, subordinate legislation,
be it a rule, a bye-law or a notification, could not be made so as to
have retrospective operation and that to that extent the rule, bye-
law or notification would be ultra vires and would have to be
struck down, relying for this position on the decision of the Mysore
High Court reported in AIR 1960 Mysore 326. We do not however
consider it necessary to canvass the correctness of this decision or
the broad propositions laid down in it. It is clear law that a
statute which could validly enact a law with retrospective
effect could in express terms validly confer upon a rule-
making authority a power to make a rule or frame a bye-law
having retrospective operation and we would add that we did
not understand Mr Pathak to dispute this position. If this were
so the same result would follow where the power to enact a rule or
a bye-law with "retrospective effect" so as to affect pending
transactions, is conferred not by express words but where the
necessary intendment of the Act confers such a power. If in the
present case the power to make a bye-law so as to operate on
contracts subsisting on the day the same was framed, would follow
as a necessary implication from the terms of Section 11, it would
not be necessary to discuss the larger question as to whether and
the circumstances in which subordinate legislation with
retrospective effect could be validly made.
(emphasis added)
As far as the law regarding validating legislations is
concerned, it is fairly well settled. We have also considered the
decisions of the Apex Court in the case of M/s. J. K. Jute Mills Co. Ltd
(supra) and Rai Ramkrishna Vs. State of Bihar (supra). The Apex Court
has held that the legislature has power to enact laws having
restrospective operation. The object of validating legislation is to enact
a valid piece of legislation that removes the defect or vice in the earlier
legislation. A mere declaration in the validating legislation that the
30 of 37
31 wp-1650,1632.97 2.doc
existing law or executive action which was held to be invalid will be
valid would not be a valid legislation. In fact as held in the case of Hari
Singh and others (supra), the object of a Validating Act is to remove the
causes for ineffectiveness or invalidity of actions by validating the same
by a legislative action.
38 In the light of the well settled law that the impugned
enactment will have to be examined. The object of the legislation is to
validate action of the first respondent of collection of market fee with
effect from 1st February, 1988 till 23rd April, 1995. We have already
adverted to the provisions of Section 34 of the said Act of 1983. As held
earlier, a Market Committee cannot levy and collect fees unless there
are bye-laws made by it in accordance with the Section 69. The reason
being Section 34 mandates that levy and collection of fees shall be in
the manner and at the rates laid down in the bye-laws. Bye-laws have
been defined to mean in Sub-Section (2) of Section 2 of the said Act of
1983 as the bye-laws made by the Market Committee under the said Act
of 1983. As noted earlier, Section 69 is the only Section which
incorporates a power to make bye-laws which vests in any Market
Committee. As distinguished from the power to make bye-laws, under
Section 68, rule making power is conferred on the State Government.
31 of 37
32 wp-1650,1632.97 2.doc
39 For validating the levy and collection of market fee for the
period upto 23rd April, 1995, Section 34 could have been amended
giving power to the first respondent - Market Committee to levy and
collect fees by passing resolutions and by the legislation, the resolutions
made prior to the commencement of the impugned Act could have been
validated. But what the legislature has done under the Validating Act is
to frame bye-laws which are incorporated in Section 2 thereof. By the
impugned enactment, the legislature has not amended the said Act of
1983 by conferring power on the State Government to frame bye-laws.
As stated earlier, under Sub-Section (2) of Section 2 of the said Act of
1983, bye-laws means bye-laws made by a Market Committee. Thus,
the exercise undertaken of framing bye-laws which are incorporated in
Section 2 of the impugned Validating Act is ultra vires the provisions of
Section 69 read with Sub-Section (2) of Section 2 of the said Act of
1983. As the said Act of 1983 does not confer power to frame bye-laws
on the State Government and as the Validating Act does not amend the
said Act of 1983 for conferring power to frame bye-laws on the State
Government, the act of legislature of framing bye-laws incorporated in
Section 2 of the impugned enactment cannot be valid at all. Another
important aspect is that assuming that the legislature could have
exercised the power of the first respondent of framing the bye-laws, as
Section 69 has not been amended, notifying the proposed bye-laws in
32 of 37
33 wp-1650,1632.97 2.doc
the manner provided therein, inviting objections /suggestions and
consideration thereof was mandatory. All this has not been complied
with. Thus, the bye-laws purportedly framed by the Validating Act are
not in accordance with Section 69 of the principal Act.
40 Section 3 of the impugned Validating Act purports to validate
the levy and collection by the Market Committees of the registration
fees and market fees insofar as it is in accordance with the bye-laws
No.3 and 4 forming part of Section 2 of the impugned enactment. Bye-
laws enacted by Section 2 of the impugned enactment purport to
provide for levy and collection of registration fee and market fee.
Section 3 of the impugned enactment purports to validate only that levy
and collection which is consistent or which is in accordance with bye-
laws incorporated in Section 2. As the Section 2 does not stand the test
of constitutionality, obviously, Section 3 cannot be valid. In any event,
if bye-laws incorporated in Section 2 of the impugned enactment are
held to be invalid, Section 3 cannot be enforced as it will not validate
any levy and collection of registration fee and market fee upto 23 rd
April, 1995. Hence, both the Petitions must succeed to the extent to
which validity of the impugned Validating Act is challenged. In both the
Petitions, the impugned demand for market fee is for the period
between 1st September, 1989 to 31st March, 1997. However, it is only
with effect from 25th April, 1995 i.e. when the bye-laws were validly
33 of 37
34 wp-1650,1632.97 2.doc
made, the first respondent was entitled to recover market fees.
Therefore, the demand for the period from 1 st September, 1989 to 24th
April, 1995 will have to be set aside.
41 As far as the demand from 25 th April, 1995 is concerned, the
main challenge is on the ground that the market fee is not a fee but in
substance it becomes a tax. On this aspect, it will be necessary to make
a reference to the affidavit of Shri B.B. Srivastava, the Chief Executive
Officer of the first respondent. In clause (vi) of his affidavit he has
stated thus :-
"(vi) ............... I say that the Committee has been regularly spending
amounts on the establishment and administration etc. of the
Markets, including the maintenance and provision of basic
amenities and common facilities at the Market Yard at Kalamboli.
So far as the maintenance of the inside portion of the warehousing
plot areas allotted to different plot-holders, it is the concern of the
individual plot-holder. So far as the maintenance of the basic
infrastructure and provision of common facilities as also the
common amenities are concerned, the same are provided by the
Market Committee and the CIDCO. On 27.09.1990, it was decided
by the Market Committee that it would maintain the internal and
Service roads and drainage etc., despite the fact that the basic
infrastructure in the Market Yard at Kalamboli, such as roads etc.
have still not been handed over to the Market Committee. Even
prior to this period, the Market Committee was engaged in
providing common service such as Internal security, and
gardening and horticulture etc. and even since then, the
Market Committee has been maintaining the service roads and
internal roads alongwith the drainage alongside these roads.
That alongwith the internal and service roads, the internal
security, horticulture and gardening is also maintained by the
Market Committee. At present, all peripheral roads, street
lights, drainage etc. alongside the peripheral roads and water
supply arrangements etc. are provided by the CIDCO. The
amount which is spent by the Market Committee upon the
establishment and maintenance of the Market Yard, area and
establishment/maintenance of basic infrastructure and
common amenities etc. from the period from 1989-1990 to
February 1997, is as follows :-
34 of 37
35 wp-1650,1632.97 2.doc
Establishment Rs. 53,94,456/-
Administration Rs. 99,35,835/-
Basic Amenities (Repairs
and Developments) Rs.1,74,38,131/-
------------------------------
Total : Rs.4,27,58,412/-
------------------------------
As regards the amount collected between 1989-90 till February 1997,
the Market fees of Rs.3,91,37,463/- and the D.P.C. is collected to
the tune of Rs.24,40,490/-. Thus, the total amount collected by
way of Market fee and the D.P.C. is to the tune of
Rs.4,15,77,953/-. The other receipts are Rs.28,25,580/- (1989-90
to February 1997), and the borrowings at Rs.37.00 lakhs (since
repaid)."
(emphasis added)
42 In paragraph 8, he has stated that the Market Committee
has been rendering services to the plot-holders and traders. The
question is whether the levy of market fee by the first respondent is in
the nature of a tax or a fee. In paragraph 23 of the decision of the Apex
Court in the case of Kewal Krishan Puri vs. State of Punjab and Ors., the
law on this aspect has been laid down which reads thus :-
"23. From a conspectus of the various authorities of this Court we deduce the
following principles for satisfying the tests for a valid levy of market fees on the
agricultural produce bought or sold by licensees in a notified market area:
(1) That the amount of fee realised must be earmarked for rendering services to
the licensees in the notified market area and a good and substantial portion
of it must be shown to be expended for this purpose.
(2) That the services rendered to the licensees must be in relation to the
transaction of purchase or sale of the agricultural produce.
(3) That while rendering services in the market area for the purposes of
facilitating the transactions of purchase and sale with a view to achieve the
objects of the marketing legislation it is not necessary to confer the whole of
the benefit on the licensees but some special benefits must be conferred on
them which have a direct, close and reasonable correlation between the
licensees and the transactions.
(4) That while conferring some special benefits on the licensees it is permissible
to render such service in the market which may be in the general interest of
all concerned with the transactions taking place in the market.
(5) That spending the amount of market fees for the purpose of augmenting the
agricultural produce, its facility of transport in villages and to provide other
35 of 37
36 wp-1650,1632.97 2.doc
facilities meant mainly or exclusively for the benefit of the agriculturists is not
permissible on the ground that such services in the long run go to increase
the volume of transactions in the market ultimately benefiting the traders
also. Such an indirect and remote benefit to the traders is in no sense a
special benefit to them.
(6) That the element of quid pro quo may not be possible, or even necessary,
to be established with arithmetical exactitude but even broadly and
reasonably it must be established by the authorities who charge the fees
that the amount is being spent for rendering services to those on whom
falls the burden of the fee.
(7) At least a good and substantial portion of the amount collected on account of
fees, may be in the neighbourhood of two-thirds or three-fourths, must be
shown with reasonable certainty as being spent for rendering services of the
kind mentioned above.
(emphasis added)
In the present case, from the affidavit of Shri Srivastava, it is
apparent that the first respondent has been rendering services to the
plot-holders and members. The first respondent may not have shown
existence of quid pro quo with arithmetical exactitude, but broadly, it is
established that first respondent is spending substantial amounts for
rendering services to those who are burdened with payment of market
fees. There was some argument based on the contention that rates of
market fees differ on the basis of the area of the plots and therefore, it
is arbitrary. We find that for very large plots, fee is payable at lesser
rate. For smaller plots, the rate of fees is higher than what is prescribed
for bigger plots. There is nothing arbitrary or irrational about it. In the
circumstances, the demand from 24th April, 1995 cannot be questioned.
43 Accordingly, both the Petitions must succeed in part and we
pass the following order :-
36 of 37
37 wp-1650,1632.97 2.doc
ORDER
(i) Rule is made absolute in terms of prayer clause (a) only to the
extent of the impugned validating Act. The bye-laws approved
on 25th April 1995 are held to be valid;
(ii) The impugned demand of market fees for the period from 1 st
September, 1989 till 24th April, 1995 is illegal and is quashed
and set aside. However, the impugned demand with effect
from 25th April, 1995 onwards is held to be valid;
(iii) If the petitioners have paid any market fee for the period
between 1st September, 1989 to 24th April, 1995, the first
respondent shall refund the said amount to the petitioners
with interest thereon at the rate of 6% per annum from the
respective dates of payment within a period of three months
from today. On an application being made by the petitioners
in writing, it will be open for the first respondent to adjust the
said amount with interest towards market fees or other dues;
(iv) Rule is accordingly made partly absolute on above terms;
(v) There will be no order as to costs.
(RIYAZ I. CHAGLA, J) ( A.S. OKA, J)
37 of 37
