Madhya Pradesh High Court
Sagardeep Advertising vs Municipal Corporation And Ors. on 31 January, 2006
Author: R.S. Jha
Bench: Chief Justice, R.S. Jha
ORDER R.S. Jha, J.
1. The petitioner has filed the present petition against the tender notice dated 2-4-2006 issued by the respondent-Municipal Corporation, Jabalpur inviting tenders from prospective advertisers for installing hoardings and advertisement boards at specific streets/zones in the city of Jabalpur. The petitioner has also assailed the increase in the rate of advertisement tax for the year 2006-2007 as decided in the resolution of the respondent-Corporation.
2. The brief facts of the case are that the respondent-Corporation in its annual general meeting resolved that the advertisement tax for installation of hoardings and advertisement boards on Corporation lands would be Rs. 3/- per sq. ft. while the tax in respect of advertisement boards and hoardings on private lands and shops would be Rs. 5/- per sq. ft. for the year 2006-2007 to be applicable with effect from 1-4-2006. It was also resolved that the rent for installation of advertisement boards/hoardings on Corporation lands would be Rs. 20/- per sq. ft. per year. The Corporation thereafter issued a tender notice on 2-4-2006 inviting tenders for installing hoardings and advertisement boards for the period upto 31-3-2008 from prospective advertisers for 38 groups/zones identified in the city. The last date for submission of tender forms and opening of tenders was 22-4-2006. Though more than 100 forms were issued, about 23 tenders were received by the respondents. As the tender forms for all the zones were not received, the tenders were recalled for a second time and thereafter on the 3rd occasion on 19-5-2006. In all 12 persons or agencies have been selected for the 37 groups as tender for one of the groups has been abandoned. The petitioner firm which is engaged in the business of advertisement in the city of Jabalpur has assailed the resolution as well as the tender notice in the present petition.
3. The petitioner has assailed the tender notice dated 2-4-2006 on the grounds that there is no provision in the M.P. Municipal Corporation Act, 1956 (hereinafter referred to as "the Act") permitting or authorizing the Municipal Corporation to allot advertisement sites by way of tender proceedings and therefore, the entire action is contrary to law; that the Municipal Corporation has no power of authority to invite tenders in respect of private lands and therefore, the tender notice deserves to be quashed; that the advertisement tax and fees imposed by the respondent-Corporation vide the impugned resolution is contrary to the provisions of Section 133 of the M.P. Municipal Corporation Act, 1956 as no maximum or minimum limit of fees has been fixed; that the advertisement tax imposed by the Corporation is discriminatory and creates monopoly in favour of the Corporation as different rates of tax are levied for installation of advertisement boards on Corporation lands and private lands; that the impugned tender proceedings have resulted in depriving the petitioners of their statutory right of renewal of licence as contained in Section 366 of the Municipal Corporation Act; and that the tender proceedings are contrary to the provision of Section 366, which does not envisage inviting of tenders for the purpose of granting permission or licence to install advertisement boards or hoardings and therefore, deserves to be quashed and the petitioner has relied upon a Division Bench judgment of this Court reported in 1979 JLJ 668 Kishore Gupta v. Municipal Corporation, Indore and Anr. in support of this submission.
4. The respondents on the other hand in support of the tender proceedings and the resolution submit that in view of the provisions of Section 132(6)(1) of the Act, the Corporation has the power and the authority to impose advertisement tax within the limits of the Municipal Corporation. It is submitted that as the proper management and development of the entire Municipal area is vested in them as per the provisions of the Act and as unregulated and unruly advertisement boards have mushroomed all over the city and are causing traffic and safety hazards and are also adversely affecting the aesthetic development of the city, the respondent Corporation has undertaken the impugned steps to regulate and control the installation of hoardings and advertisement boards. It is also contended that due to unregulated and uncontrolled installation of hoardings and advertisement boards, the Corporation authorities were losing a lot of revenue as most of the hoardings and advertisement boards were set up without obtaining any permission or paying the requisite tax or rent, and therefore, for the proper realization of revenue and for preventing escape of revenue, the respondent authorities have selected various zones and areas and divided them into 38 zones for the purpose of installing hoardings and advertisement boards and have similarly earmarked various other commercially important advertising sites and have notified them in the tender notice. It is submitted that selected streets or zones have been earmarked and offered as it would work as an inbuilt regulatory measure that would ensure proper recovery of revenue and prevent escape of revenue as well as installation of unauthorised advertisement boards. It is further contended by the respondents that the Corporation has the power and the authority under the provisions of Section 133 of the Act to impose tax by passing a resolution and therefore there is no illegality in the imposition of advertisement tax by the respondents and that they have not invited any tenders for installing hoardings or advertisement boards on private lands, therefore, the contention of the learned Counsel for the petitioner being contrary to the facts on record deserve no consideration. The respondents in response also submit that the impugned actions are neither prohibited nor they are in contravention of the provisions of Section 366 of the Act and that looking to the fact that several persons were desirous of installing advertisement boards at the same time and same place and were willing to apply for the same the respondents in their wisdom thought it best to adopt the impugned procedure as it was the most reasonable, fair and transparent method of deciding the applications and have also prayed that the petition is misconceived and meritless, and therefore, deserves to be dismissed.
5. The main issue raised by the petitioner is that the entire proceedings undertaken by the respondents and the procedure adopted by them is illegal as it is not in consonance with Section 366 of the Act which regulates the procedure for grant of permission and license. It is submitted by the petitioner that the respondents could only have considered individual applications for grant of license to establish advertisement boards and hoardings and while granting the same should have mentioned the date, the purpose, the period, the restrictions and conditions, the tax and fee and the date by which application for renewal was to be filed and as this procedure has not been followed the entire proceedings undertaken by the respondents deserves to be quashed.
6. The respondents in response have submitted that hoardings and advertisement boards are springing up all over the city. They are not just causing impediment in the beautification and development of the city but are also traffic and safety hazards. While the Corporation has the power to impose advertisement tax and to charge rent for installation of such hoarding and advertisement boards, in the absence of proper regulation of advertisements, the Corporation is losing precious revenue in terms of tax and rent and at the same time there has been a mushroom growth of unauthorised advertisement hoards. With a view to regulate the same, the Corporation has earmarked specific streets and places within the Corporation limits where they would permit installation of hoardings and advertisement boards. In furtherance of this object the tax and basic rent have been fixed by the impugned resolution of the Corporation. As there were several persons desirous of installing hoardings and advertisement boards in the area reserved and earmarked for the same, the respondent/Corporation in its wisdom thought it proper to call for tenders for grant of permission so as to maintain procedural fairness, transparency, openness and to earn maximum revenue from rent.
7. To appreciate the rival contention of the parties, it is necessary to analyze the relevant provisions of the Municipal Corporation Act, 1956. Section 66 of the Act empowers the Corporation to make adequate provisions by any means or measures which it may lawfully take, to provide for matters enumerated therein, which include fulfilling any obligation imposed by the Act or any other law for the time being in force. Section 69 of the Act provides that the Municipal Government of the city shall vest in the Corporation and that subject to exceptions; the entire executive power for carrying out the purpose of the Act shall vest in the Commissioner of the Municipal Corporation. Section 132 of the Act enumerates taxes which may be imposed under the Act. Section 132(6) of the Act confers power on the Corporation to impose certain optional taxes. Section 132(6) Clause (1) of the Act empowers the Corporation to impose a tax on advertisement other than advertisements published in newspapers. Section 133 of the Act empowers the Corporation to impose any of the taxes or fees specified in the Act or increase the rate of taxes or fees already imposed by a resolution and further provides that passing of such a resolution shall be conclusive evidence of the imposition or increase of the tax or fee as the case may be. Section 189-A enables and empowers the Corporation to lease out the recovery of any of the taxes and fees imposed under the Act by way of public auction or private contract subject to conditions and limitations, if any prescribed by the State Government. Sections 76 to 85 of the Act relate to provisions empowering the Corporation to manage municipal properties and liabilities. Section 80 of the Act lays down that no streets, lands, public places, drains or other immovable property shall be sold, leased or otherwise alienated, save in accordance with such rules as may be made in this behalf. Chapter XXVI of the Act empowers the Corporation to control and manage streets within the limits of the Corporation area. Section 322 of the Act prohibits the erection of any wall, fence, rail, post or other structure fixed or movable, permanent or temporary on any street or to deposit upon any street or part thereof any material which would form an obstruction or an encroachment except with the express permission of the Commissioner and in accordance with such conditions including the payment of rent or fee as may be generally or specially imposed. Section 323 of the Act prohibits opening, breaking up, depositing of building material or to set up any scaffold or any temporary erection or posts, bars, rails, boards etc., on public streets or in any open space vested in the Corporation except with the permission of the Commissioner and in accordance with such terms and conditions, including payment of rent, as the Commissioner may impose either generally or in special cases. Section 323(2) of the Act makes the permission granted by the Commissioner terminable at the discretion of the Commissioner on giving 24 hours' written notice. Section 335 of the Act prohibits affixing of bills, notices or any means of advertisements upon any streets, building, wall, tree, board, fence etc., without the consent of the owner or occupier or the person in charge of any property and makes such an act punishable with fine and also empowers the Commissioner to prohibit by a public notice the use of any building, wall, tree, board, fence etc. for the sticking of bills or any means of advertisement. Section 366 of the Act deals with the general conditions of licenses and permissions. Section 366(1) of the Act provides that in all cases under the Act where the permission of the Commissioner is necessary for the doing of any act, such permission shall be in writing. Section 366(2) enumerates the terms and conditions subject to which licence and permissions would be granted. Section 426(23) of the Act empowers the Corporation to frame bye-laws regulating exhibitions or advertisements and hoardings and similar structures used for the purpose of advertising.
8. Parts of Sections 322, 323, 335 and 366, which are of relevance read as under:
Section 322. Prohibition of obstructions in streets.-
(1) No person shall, except with the written permission of the Commissioner granted in this behalf and in accordance with such conditions including the payment of rent or fee, as he may impose either generally or specially in this behalf:
(a) erect or set up any wall fence, rail, post, step, booth or other structure whether fixed or movable or whether of a permanent or temporary nature, or any fixture in or upon any street so as to form an obstruction to, or an encroachment upon, or a projection over, or to occupy any portion of such street, channel, drain, well or tank.
(b) deposit upon any street or upon any open channel, drain or will in any street or upon any public place, any stall, chair, bench, box, ladder, bale or other thing whatsoever, so as to form an obstruction thereto or encroachment thereon.
Section 323. Streets not to be opened or broken up and building materials not to be deposited therein without permission.-
(1) Except in such cases as the Government may by general or special order exempt from the operation of this section, no person shall, except with the permission of the Commissioner and in accordance with such terms and conditions, including payment of rent or otherwise, as the Commissioner may impose either generally or in each special case-
(a) open, break up, displace, take up or make any alteration in or cause any injury to, the soil or pavement, or any wall, fence, post, chain or other material or thing forming part of any street or in any open space vested in the Corporation; or
(b) deposit any building material in any street or in any open space vested in the Corporation; or
(c) set up in any street or in any open space vested in the Corporation any scaffold or any temporary erection for the purpose of any work whatever, or any posts, bars, rails, boards or other things by way of enclosure, for the purpose of making mortar or depositing bricks, lime, rubbish or other materials.
(2) Any permission granted under Clause (b) or (c) of Sub-section (1) shall be terminable at the discretion of the Commissioner on his giving not less than twenty four hours' written notice of the termination thereof to the person to whom such permission was granted.
335. Bill-sticking without permission.-
(1) Whoever, without the consent of the owner or occupier or other person for the time being in charge of any property affixes or causes to be affixed any poster, bill, notice, placard or other paper or means of advertisement against or upon any streets, building, wall, tree, board, fence, or pale or writes upon, soils, defaces or marks any such building, wall, tree, board, fence or pale with chalk or paint or in any other way whatsoever shall be punishable with fine which may extend to two hundred rupees.
(2) Notwithstanding anything contained in Sub-section (1), the Commissioner may by public notice prohibit the use of any building or part of a building, wall, tree, board, fence or pale in any specified locality or a street without his permission.
Section 366. Licences and permissions.-
(1) Whenever it is prescribed (by or under this Act) that the permission of the Commissioner is necessary for the doing of any act, such permission shall, unless it is otherwise expressly provided, be in writing.
(2) Every licence and written permission granted under this Act or under any rule or bye-law made thereunder, shall be signed by the Commissioner and shall specify-
(a) the date of the grant thereof;
(b) the purpose and the period, if any, for which it is granted;
(c) the restrictions and conditions, if any, subject to which it is granted;
(d) the name of the person to whom it is granted;
(e) the tax or fee, if any, paid for the licence or written permission;
(f) the date by which application for the renewal of the same may be made.
(3) Except when it is otherwise expressly provided in this Act or in any rule or bye-law made thereunder, a fee for every such licence or written permission may be charged at such rate as may be fixed by the Commissioner and such fee shall be payable by the person to whom the licence is granted.
(4) *** *** *** *** *** (5) Any licence or written permission granted under this Act, or under any rule or bye-law made thereunder, may at any time be suspended or revoked, by the Commissioner if any of its restrictions or conditions is infringed or evaded by the grantee, or if the grantee is convicted of a breach of any of the provisions of this Act or of any rule or bye-law made thereunder in any mater to which such licence or permission relates.
(6) *** *** *** *** *** (7) Pending the receipt of orders on his application made on before the date prescribed (by bye-laws) for application for renewal, an applicant shall be entitled to act as if it has been renewed.
(8) *** *** *** *** *** (9) Every application for a licence or permit shall be addressed to the Commissioner.
From the above mentioned analysis of the provisions of the Act it is immediately apparent that:
(a) The power to impose tax on advertisements and to regulate all activity including advertisements on Corporation land, streets and open spaces within the Corporation area and to charge rent or fee vests is in the Corporation;
(b) that the Corporation has the power to frame bye-laws to regulate advertisements, but in the instant case no bye-laws have been framed by the Municipal Corporation, Jabalpur;
(c) that Section 366 of the Act only prescribes the general conditions of Licences and permissions but does not deal with the manner in which the application shall be processed nor does it prescribe any procedure to cater for a situation like the present one where several persons apply for installing advertisement boards or hoardings at the same place and same time or the manner in which their rival claims should be considered. At this stage, it would not be out of place to take note of the fact that a perusal of the tender notice filed alongwith the petition and the proposed proforma in which permission would be granted to the successful tenderer clearly establishes the fact that the essential conditions regarding name of the person, the date of grant, the purpose and period thereof, the restrictions and conditions, are all mentioned therein as is envisaged and prescribed by Section 366 of the Act, and therefore, the contention of the learned Counsel for the petitioner that the permission to be granted is in contravention of Section 366 of the Act is factually incorrect;
(d) there is no provision under the Act, which expressly either permits or prohibits allotment of advertisement sites by adopting tender proceedings.
Thus, it is apparent that the Corporation has the power to regulate advertisements but no statutory procedure or manner has been prescribed or framed to regulate them in the present case.
9. It is settled law that the absence of procedure for exercise of power does not denude the authority from exercising the power vested in it by statute nor does it indicate lack of power in the authority as has been held by the Supreme Court in the case of Dhanjibhai Ramjibhai v. State of Gujarat in the following words:
Para 7. It is next urged that as no rules have been framed indicating the manner for extending the period of probation, there is no power to extend the period of probation. The argument suffers from a fallacy. The power to extend the period of probation must not be confused with the manner in which the extension may be effected. The one relates to power, the other to mere procedure. Merely because procedural rules have not been framed does not imply a negation of the power. In the absence of such rules, it is sufficient that the power is exercised fairly and reasonably, having regard to the context in which the power has been granted.
The Supreme Court in the case of K. Vinod Kumar v. S. Palanisamy and Ors. , has held that in the absence of prescription of any procedure or manner of exercise of powers, the authority must act in a manner which is bonafide, fair, transparent and the most suitable in the context in which the power has been vested in the following terms in Paragraph 7:
Para 7 ... In the absence of a particular procedure or formula having been prescribed for the Board to follow, no fault can be found with the manner in which the proceedings were conducted by the Board. The Board is entrusted with the task of finding out the best suitable candidate and, so long as the power is exercised bonafide, the Board is free to devise and adopt its own procedure subject to satisfying the test of reasonableness and fairness.
Similar view has been taken by the Supreme Court in the cases of Dhanjibhai (supra) and Haryana Financial Corporation v. Jagdamba Oil Mills .
10. The law as crystallized by these decisions is that in the absence of statutory prescription of procedure the authority has to adopt a procedure which is reasonable and fair keeping in mind the exigencies of the statutory powers and duties vested in it and the facts and circumstances of the case. As the respondent-authorities are vested with full powers to implement the provisions of the Act and to administer and regulate all activities within the Corporation area including advertisements keeping in mind the best interests of the Corporation, they are duty bound to adopt a procedure which is fair transparent and in the best administrative and financial interest of the Corporation. As several persons were desirous of installing advertisement boards and hoardings at the same place and to apply for permission simultaneously, the respondents have adopted the process of inviting tenders after giving wide publicity which has ensured maximum public participation, equal opportunity of making offers and securing maximum financial gain to the respondent-Corporation.
11. It would be appropriate here to observe that the present case is one which typically depicts an example of innovation and experimentation which administrative authorities have to undertake to meet the exigencies of development and expansion. With the immense importance that advertisement has assumed in the commercial field in view of expanding media coverage, advertisements have become a major source of revenue and the Municipal Corporation cannot be prohibited or excluded from deriving benefits from the same. The present situation, which has obviously arisen due to competition in the filed of advertisements and the revenue involved therein, could never have been contemplated when the statute was initially enacted. The Jalgaon Municipal Council entered into a contract with a private developer for construction of a commercial complex on self-financing basis, though such kind of a project was not specifically contemplated under the Maharashtra Municipalities Act, 1965 and the Supreme Court in the case of G.B. Mahajan and Ors. v. Jalgaon Municipal Council and Ors. , in Paragraphs 22 and 26 while upholding the action of Council held that:
22. ... With the expansion of the State's presence in the field of trade and commerce and of the range of economic and commercial enterprises of Government and its instrumentalities there is an increasing dimension to Governmental concern for stimulating efficiency, keeping costs down, improved management methods, prevention of time and cost overruns in projects, balancing of costs against time scales, quality control, cost-benefit ratios etc. In search of these values it might become necessary to adopt appropriate techniques of management of projects with concomitant economic expediencies. These are essentially matters of economic policy which lack adjudicative disposition, unless they violate Constitutional or legal limits on power or have demonstrable pejorative environmental implications or amount to clear abuse of power. This again is the judicial recognition of administrator's right to trial and error, as long as both trial and error are bonafide and within the limits of authority. We might recall the memorable words of what Justice Brandeis said:
The discoveries in physical science, the triumphs in inventions, attest the value of the process of trial and error. In large measure, these advances have been due to experimentation ... There must be power in the States and the Nation to remold, through experimentation, our economic practices and institutions to meet changing social and economic needs To stay experimentation in things social and economic is a grave responsibility. Denial of right to experiment may be fraught with serious consequences to the Nation. It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try noval social and economic experiments without risk to the rest of the country. This Court has the power to prevent an experiment.... But in the exercise of this high power, we must be ever on our guard, lest we erect our prejudices into legal principles.
26. In the ever increasing tempo of urban life and the emerging stresses and the strains of planning, wide range of policy options not inconsistent with the objectives of the statute should be held permissible. Referring to the "Role of the Judge in Public Law Litigation" a learned author says :
Administrative Law is, in essence, a search for a theory of how public policy should be made. Two powerful traditions mark the boundaries of that search. On one side, we leave the choice among competing values to a largely unstructured process of pulling and hauling by individuals directly accountable to the citizenry. On the other side, we demand a highly structured process of party-controlled proof and argument before a neutral arbiter to resolve disputes over the application of rules to specific facts. Between these extremes is that vast landscape we call policy making the reconciliation and elaboration of lofty values into operational guidelines for the daily conduct of society's business.
It appears to us that in the context of expanding exigencies of urban planning it will be difficult for the Court to say that a particular policy option was better than another. The contention that the project is ultra vires of the powers of the Municipal Council does not appeal to us.
In view of the above mentioned discussion and the judgments of the Supreme Court referred therein, we are unable to accept the contention of the learned Counsel for the petitioner that the procedure adopted by the respondents is contrary to any statutory provisions of the Act, including Section 366, or is arbitrary and discriminatory, and therefore, the contention of the learned Counsel for the petitioner in this regard deserves to be and is hereby rejected.
12. The petitioner has next contended that, even otherwise the respondents should have dealt with each application individually and could not have invited tenders in view of the provisions of Section 366 of the Act. The petitioner has relied upon a judgment of the Division Bench of this Court in the case of Kishore Gupta v. Municipal Corporation, Indore and Anr. reported in 1979 JLJ 668, wherein the right to install advertisement boards which was sought to be granted by the Commissioner of Municipal Corporation, Indore by way of auction was quashed and held to be contrary to law.
13. We have carefully gone through the judgment of this Court in the case of Kishore Gupta (supra), and in our considered opinion the law laid down therein does not support the contention of the petitioner or apply to the present case in view of the totally different factual matrix in the backdrop of which that judgment was delivered as in that case bye-laws regulating advertisements in Municipal Corporation, Indore were in existence wherein advertisement fees as well as the procedure had been fixed and therefore the act of the Commissioner to grant the same by way of auction on a higher fees was held to be contrary to the existing bye-laws and quashed. The scope of the extent of statutory powers vested in the Corporation under Section 366 of the Act and whether the statutory powers and procedure provided thereunder could be abrogated or diluted by bye-laws was also not considered. In the present case admittedly no bye-laws have been framed by Municipal Corporation, Jabalpur or the State Government to regulate advertisements and no procedure has been prescribed to deal with grant of permission to install advertisement boards or hoardings. Thus, reliance placed by the learned Counsel for the petitioner on the judgment in the case of Kishore Gupta (supra), is misplaced and misconceived and for this we may profitably refer to the judgment in the case of Uttaranchal Road Transport Corporation and Ors. v. Mansaram Nainwal , wherein it has been held in Paragraph 13 as under:
13. The High Court unfortunately did not discuss the factual aspects and by merely placing reliance on earlier decision of the Court held that reinstatement was mandated. Reliance on the decision without looking into the factual background of the case before it is clearly impermissible. A decision is a precedent on its own facts. Each case presents its own features. It is not everything said by a Judge while giving judgment that constitutes a precedent. The only thing in a Judge's decision binding a party is the principle upon which the case is decided and for this reason it is important to analyse a decision and isolate from it the ratio decidendi. According to the well-settled theory of precedents, every decision contains three basic postulates - (i) findings of material facts, direct and inferential. An inferential finding of facts is the inference which the Judge draws from the direct, or perceptible facts; (ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on the combined effect of the above. A decision is an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically flows from the various observations made in the judgment. The enunciation of the reason or principle on which a question before a Court has been decided is alone binding as a precedent. See : State of Orissa v. Sudhansu Sekhar Misra and Ors. and Union of India and Ors. v. Dhanwanti Devi and Ors. . A case is a precedent and binding for what it explicitly decides and no more. The words used by Judges in their judgments are not to be read as if they are words in an Act of Parliament. In Quinn v. Leathern, (1901) AC 495 (HL), Earl of Halsbury LC observed that every judgment must be read as applicable to the particular facts proved or assumed to be proved, since the generality of the expressions which are found there are not intended to be exposition of the whole law but governed and qualified by the particular facts of the case in which such expressions are found and a case is only an authority for what it actually decides.
Thus, it is clear that a judgment is a precedent for the principle of law decided in a particular case based on the facts prevalent therein and the principle laid down therein cannot be blindly applied to cases where the facts situation is totally different as in the present case.
14. The Supreme Court in the case of Jespar I. Slong v. State of Meghalaya , has observed in Paragraph 19 that:
It goes without saying that the Government while entering into contracts is expected not to act like a private individual but should act in conformity with certain healthy standards and norms. Such actions should not be arbitrary, irrational or irrelevant. The awarding of contracts by inviting tenders is considered to be one of the fair methods.
The same view has been expressed by the Apex Court in the case of Haji T.M. Hassan Rawther v. Kerala Financial Corporation in the following terms:
The public property owned by the State or by any instrumentality of the State should be generally sold by public auction or by inviting tenders not only to get the highest price for the property but also to ensure fairness in the activities of the State and public authorities. They should act fairly. Their actions should be legitimate. Their dealings should be above board and without aversion or affection and should not be suggestive of discrimination, bias, favouritism or nepotism. Ordinarily, these factors would be absent if the matter is brought to public auction or sale by tenders.
In the present case, looking to the large number of applicants as well as the administrative and financial interest of the Corporation, the respondents have adopted the process of inviting tenders in the absence of any statutory prohibition for the same. As is apparent from the law as laid down by the Apex Court in the above mentioned judgments, the process of inviting tenders is one of the approved and accepted procedure to be adopted by the State or any of its instrumentalities while entering into contracts as it ensures fairness and eliminates discrimination, bias, favouritism or nepotism.
15. In this backdrop of the facts of the present case, we are of the considered opinion that the procedure of calling tenders for the purpose of granting permission to install hoardings and advertisement boards in predetermined areas and to grant the same to the highest tenderer for that particular area is in accordance with law as it stands the test of procedural fairness, transparency and openness. The notification of zones in the tender notice also cannot be found fault with for the same reasons. The action of the respondents is also in lawful discharge of the Corporations' statutory liability to administer and in furtherance of the lawful and laudable object of controlling and regulating advertisements generate revenue for the Corporation and to prevent the escape of revenue.
16. The learned Counsel for the petitioner has relied upon the decisions reported in The Indian Mica & Micanite Industries Ltd. v. State of Bihar and Ors. , Rameshwar Proshad Khandelwal v. Commissioners, Land Reforms & Jagirs, Madhya Pradesh and Ors. AIR 1959 SC 498, Puran Singh Sahni v. Sundari Bhagwandas Kriplani and Ors. , C.M. Beena and Anr. v. P.N. Ramachandra Rao and Som Distilleries of Breweries Pvt. Ltd. v. State of Madhya Pradesh and Anr. (1997) 2 MPLJ 376, to contend that the advertisers would be granted a licence and not a lease, however, as this issue is neither relevant for the decision of the controversy involved in the present petition nor does it have any relevance with the issues raised by the petitioner and is purely academic therefore, we do not think it necessary to decide it in this petition.
17. As the respondent authorities in the instant case are levying tax and charging rent and not a fixed licence fee as envisaged by the taxing provisions, the contention of the learned Counsel for the petitioner that in the absence of prescription of maximum and minimum limit, no fee can be levied by the Corporation deserves no consideration and is hereby rejected.
18. The Corporation has imposed different rates of tax on Corporation and private properties, which the petitioner contends is discriminatory. While the tax on Corporation land is Rs. 3/- per sq. ft., it is Rs. 5/- per sq. ft. in respect of advertisement boards and hoardings installed on private lands. The petitioner has drawn support for this contention from the judgment of the Supreme Court in the case of Punjab Dairy Development Board and Anr. v. Cepham Milk Specialities Ltd. and Ors. and Calcutta Municipal Corporation and Ors. v. Shrey Mercantile Pvt. Ltd. and Ors. . In support of the tax it is submitted by the respondents that the distinction between the two kinds of properties is far to apparent to be ignored. It is submitted that as Corporation land is under the direct control of the Municipal Government and it would also earn rent from the same, it has been treated differently, while on private land, it would be the owner who would earn rent and not the Corporation. It is submitted that in view of this difference the Corporation has classified both kinds of properties separately for the purpose of taxing.
19. To appreciate the contentions of the parties it is necessary to analyse the enabling provision, i.e., Section 132(6)(1) of the Act which empowers the Corporation to levy tax on advertisements. It is obvious from the very nature of the tax that it is a charge of tax on advertisement and therefore, the liability to pay advertisement tax is on the person who advertises or, as in the present case, on the person who installs the hoarding or advertisement board. To put it differently, the liability to pay advertisement tax is on the person who installs the hoardings or advertisement boards and not on the person on whose property the advertisement board or hoarding is installed. It is therefore obvious that ownership of the land or building on which the hoarding or advertisement board is installed has no nexus or relation with the liability to pay advertisement tax. In the circumstances, as the liability or charge to pay advertisement tax is on the advertiser and not on the owner of the land on which the advertisement board or hoarding is installed, the classification made by the respondents on the basis of ownership of the land on which the hoarding or advertisement board is installed, Le., Corporation land and private property has no rational nexus with the object sought to be achieved which is to levy advertisement tax on the advertiser. Such a classification is also absurd and irrational as the same person who installs advertisement boards on Corporation lands as well as on private property would be charged advertisement tax at different rates, Le., Rs. 3/- per sq. ft. in respect of Corporation land and Rs. 5/- per sq. ft. in respect of private land though the activity undertaken by him would be the same on both the properties. The criteria of ownership of the land on which the hoarding or advertisement board is installed for the purpose of classification in alien to the charge of advertisement tax under Section 132(6)(1) of the Act, which has to be paid by the advertiser and if permitted to stand would change the very nature of the tax to a tax on property or ownership rather than on advertisement. The respondents have not placed any facts or given any reason to justify the classification based only on the criteria of ownership of the land for the purpose of imposing advertisement tax.
20. In our considered opinion, as advertisement tax can be levied and charged only from the person who advertises or installs the hoarding or advertisement board and not from the person on whose property the advertisement board or hoarding is installed, the classification made by the respondent-Corporation between advertisement boards installed on Corporation land and those installed on private land is discriminatory, arbitrary and irrational and fails the test of reasonable classification permissible under Article 14 of the Constitution of India.
21. We find support for the view taken by us from the judgment of the Supreme Court in the case of Calcutta Municipal Corporation and Ors. v. Shrey Mercantile Pvt. Ltd. and Ors. (supra), wherein different rates of mutation fees charged by the Municipal Corporation dependent on the value of the property and the cause of transfer was quashed on the ground of being arbitrary and violative of Article 14 of the Constitution and it was observed in Paragraphs 21 and 22 that:
21. Similarly, whatever may be the cause of mutation, whether, it is case of transfer or devolution, the activity of mutation remains constant in all the cases. The expenses incurred in all the cases also cannot vary, whatever be the value of the property or the cause of mutation. In the circumstances, there is no reason given for charging different rates depending on the value of the property and the cause of transfer. By doing so, the incidence of the levy falls differently on persons similarly situated resulting in violation of Article 14 of the Constitution. Moreover, the quantum of fees is disproportionate to the so called 'services' which is one more circumstance showing arbitrariness in the levy of such imposition. So far as Article 14 is concerned, the Courts of India have always examined whether the classification was based on intelligible differentia and whether the differentia had a reasonable nexus with the object of legislation.
22. Applying the said tests to the impugned levy, we find that the levy is irrational, arbitrary, discriminatory and beyond Section 183(5) of the said 1980 Act.
Similar view has also been taken by the Supreme Court in the case of Punjab Dairy Development Board and Anr. v. Cepham Milk Specialities Ltd. and Ors. (supra).
22. In the circumstances, the classification between Corporation land and private land for the purpose of imposing advertisement tax and consequently the different rates of advertisement tax prescribed for them by the respondents being discriminatory and violative of Article 14 of the Constitution of India is hereby quashed.
23. From a perusal of the provisions of the Act namely Sections 322, 323, 366 and others, it is apparent that the permission to install advertisement boards is for a fixed period and is neither absolute nor is it compulsorily renewable as it can be terminated at the discretion of the Commissioner or on violation of any of the terms and conditions subject to which it is granted after giving notice in that respect and therefore, we are unable to agree with the contention of the learned Counsel for the petitioner that the impugned action of the authorities have deprived the petitioner of statutory right to renewal as this contention does not find any support from the statutory provisions. The contention is accordingly rejected.
24. We think it appropriate to state that in view of the specific and unequivocal statement on behalf the respondents that the impugned proceedings do not encompass private properties and that no private property has been notified in the tender notice, the contention of the petitioner that a monopoly has been created in advertising business in favour of the successful tenderers has become academic for the purpose of the present petition need not be and is not being decided in the present petition.
25. In the circumstances, the petition filed by the petitioner is partly allowed to the extent that the different rates of advertisement tax resolved to be imposed by the respondents in respect of Corporation lands and private lands by the impugned resolution is quashed while the petition as far as it relates to the challenge to the tender proceedings and notice dated 2-4-2006 and all the steps taken pursuant thereto is dismissed and the interim order passed by this Court, if any, is vacated. There shall be no order as to costs.