Calcutta High Court
Dalhousie Institute & Anr vs Kolkata Municipal Corporation & Ors on 9 March, 2015
Author: Debangsu Basak
Bench: Debangsu Basak
W.P. No. 1469 of 2003
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Original Side
Dalhousie Institute & Anr.
Vs.
Kolkata Municipal Corporation & Ors.
For the Petitioners : Mr. Abhrajit Mitra, Sr. Advocate
Mr. S. Ray, Advocate
Mr. C. Gupta, Advocate
For the Respondents : Mr. A.K. Ghosh, Advocate
Mr. D.K. Chatterjee, Advocate Hearing concluded on : February 26, 2015 Judgment on : March 09, 2015 DEBANGSU BASAK, J.:-
Is a private members club obliged to obtain permission from and pay amusement fees under Section 422 of the Kolkata Municipal Corporation Act, 1980 and whether the premises of a private members club is a "place of public amusement" within the meaning of Section 422 of the Kolkata Municipal Corporation Act, 1980 and, therefore, falls for consideration in the present writ petition.
The first writ petitioner is a club registered under the Societies Registration Act, 1961. It claims to be a private members club and not open to outsiders, having stringent admission policies. It contends that, it is not obliged to obtain permission under Section 422 of the Kolkata Municipal Corporation Act, 1980 and, therefore, not liable to pay amusement fees under such section.
In support of such contentions Mr. Abhrajit Mitra, learned Senior Advocate for the writ petitioners relies upon 1970 Volume 1 Supreme Court Cases page 462 (The Joint Commercial Tax Officer, Harbour Division, II-Madras v. The Young Men's Indian Association (Regd.), Madras & Ors.), 153 Income Tax Reports page 676 (Commissioner of Income-Tax v. Darjeeling Club Ltd.), 2005 Volume 1 Calcutta Law Times page 575 (The Saturday Club Limited v. Assistant Commissioner, Service Tax Cell, Calcutta & Ors.) and 1989 Criminal Law Journal page 535 (Bengal Club Ltd. v. Deputy Commissioner of Police & Ors.). Mr. Mitra contends that, Section 422 of the Kolkata Municipal Corporation Act, 1980 contemplates a situation where a premises is open to the public and is used for recreation, amusement and like purposes, then the owner of such premises may be obliged to obtain permission under Section 422 of the Kolkata Municipal Corporation Act, 1980 and pay amusement fees for the same. So far as the writ petitioners are concerned, he submits that, the premises of the first writ petitioner is not a public place and, therefore, does not satisfy the requirements of Section 422 of the Kolkata Municipal Corporation Act, 1980 for the first writ petitioner to apply for and obtain a licence under such section. He contends that, the first writ petitioner is not liable to pay the amusement fees for the same.
Mr. A.K. Ghosh, learned Advocate for the Kolkata Municipal Corporation submits that, the first writ petitioner satisfies the definition of a resort within the meaning of Section 422 of the Kolkata Municipal Corporation Act, 1980. He relies upon the dictionary meaning of various words used in such Section and submits that, the first writ petitioner is obliged to obtain permission under Section 422 of the Kolkata Municipal Corporation Act, 1980 and pay the fees thereunder. He refers to 1994 Volume 5 Supreme Court Cases page 690 (Calcutta Municipal Corporation & Ors. v. East India Hotels Limited & Ors.) and submits that, the Supreme Court has held that a restaurant within a hotel premises with dancing floors is covered by the expression "other similar place" of public resort under Section 443 of the Calcutta Municipal Act, 1951. He contends that the words used in Section 443 of the Calcutta Municipal Act, 1951 and Section 422 of the Kolkata Municipal Corporation Act, 1980 are similar. Consequently, he submits that, the first writ petitioner is within the purview of Section 422 of the Kolkata Municipal Corporation Act, 1980 and is obliged to obtain permission thereunder and pay amusement fees.
Section 422 of the Kolkata Municipal Corporation Act, 1980 is as follows:-
422. Theatres, circuses, exhibitions, and places of public amusement not to be established without permission. - (1) No person shall, without the written permission of the Municipal Commissioner or otherwise than in conformity with the conditions, if any, of such permission, which shall be granted subject to the provisions under section 425, use, or permit to be used, or materially alter, enlarge or extend the use of any premises for the purpose of establishing or keeping open any theatre, cinema house, drive-in theatre or cinema house, circus, fair, fete, exhibition or dancing hall, or any other place or similar public resort, recreation or amusement for any such purpose :
Provided that nothing in this section shall apply to private performance in any place.
(2) The Municipal Commissioner may specify any conditions for providing, within the premises, space for the vendors catering to the public needs in connection with such purposes.
Section 422 of the Kolkata Municipal Corporation Act, 1980 obliges a person establishing or keeping open any theatre, cinema house, drive-in theatre or cinema house, circus, fair, fete, exhibition or dancing hall or any other place or similar public resort, recreation or amusement for any such purpose to apply for obtain a permission from the Municipal Commissioner. The places enumerated in Section 422 are places where the public have access. This Section 422 empowers the Municipal Commissioner to grant permission for the holding of such recreation and amusements in such public places subject to the conditions that may be laid down by him.
The question is whether the first writ petitioner uses or permits to be used or extends the use of its premises for the purpose of establishing or keeping open any theatre, cinema house, drive-in theatre or cinema house, circus, fair, fete, exhibition or dancing hall, or any other place of similar public resort, recreation or amusement for any such purpose. The proviso to sub-section (1) of Section 422 of the Kolkata Municipal Corporation Act, 1980 states that, nothing in the section shall apply to private performance in any place.
The rules and by-laws of the first writ petitioner are on record. The object of the first writ petitioner appears to promote the literary and scientific improvement of members, to foster spirit of goodwill and sociability amongst the members, to provide amusement, to take part in and to promote sports and games and to embark upon any activity calculated to benefit the first writ petitioner or to advance the welfare of the member of the first writ petitioner. Seven classes of membership are prescribed by the rules and by-laws of the first writ petitioner. It also prescribes right of admission as a member and the procedure of election to membership. The first writ petitioner allows its members to bringing guests to the club premises. The right of admission of a guest of a member is not unqualified and is reserved to the first writ petitioner. It also prescribes that the same guest should not be introduced to the first writ petitioner more than thrice in a calendar month.
The materials made available in the record including rules and by-laws of the first writ petitioner establish that the first writ petitioner is a private member club with a right of admission to membership of the first writ petitioner being restricted, regulated and prescribed. This fact is not denied by the respondents. The introduction and admission of guest of a member to the club premises is also restricted and regulated. The club premises of the first writ petitioner, therefore, on the basis of the materials made available on record could not be said to be a public place where any member of the public has the right of entry. Any member of the public could not enter into club premises. Entry into the club premises is restricted to its members and their guest as prescribed, restricted and regulated by the rules and by-laws of the first writ petitioner.
Section 422 of the Kolkata Municipal Corporation Act, 1980 to my reading applies to a place holding any recreation or amusement for the members of the public. It would apply to the place described therein. Club premises owned by a private members club is not described in Section 422 of the Kolkata Municipal Corporation Act, 1980. In fact, the proviso of Section (1) of the Kolkata Municipal Corporation Act, 1980 provides that nothing in Section 422 would apply to private performance in any place.
Could a premises belonging to a private members club be considered to be a public place within the meaning of Section 422 of the Calcutta Municipal Corporation Act, 1980 ? The facts establish that the first writ petitioner is not using or permitting it to be used or is extending the use of its premises for the purpose of establishing or keeping open any theatre, cinema house, drive-in theatre or cinema house, circus, fair, fete or exhibition or dancing hall or any other place similar public resort, recreation or amusement for any such purpose.
Mr. Ghosh, learned Advocate for the respondents contends that, the club premises of a private members club would fall within the definition of "any other place of similar public place, recreation or amusement for any such purpose." The respondents have not established that the first writ petitioner has a theatre or a cinema house or a drive-in theatre or cinema house or a circus or conducts or holds a fair, fete or exhibition at its club premises. Mr. Ghosh, learned Advocate for the respondents relies upon the words "dancing hall" in the section and submits that, in view of the ratio of East India Hotels Limited & Ors. (supra), the first writ petitioner should be held to fall within the provisions of Section 422 of the Kolkata Municipal Corporation Act, 1980.
In East India Hotels Limited & Ors. (supra) the hotel was running a restaurant where the guests were allowed to dance. In such context it has been held that restaurants run by a company are places similar to dancing halls and as such are places of public amusements covered by the Section 443 of the Calcutta Municipal Act, 1951. The fact that the restaurant was a public place was admitted and was not raised as an issue. It has also held that apart from the places of recreation and amusement specifically mentioned in Section 443 of the Calcutta Municipal Act, 1951 any other place which comes within the mischief of the Act of 1951 must be a similar place.
In The Young Men's Indian Association (Regd.) (supra) the Supreme Court has held that the view which had prevailed in England with regard to private members club has been accepted and applied in India. It has been accepted that a private members club could not be made subject to the provisions of the Licensing Act concerning sale because the members are joint owners of all the club property including exercisable liquor. Members of a private members club are the joint owners of the general property in all the goods of the club, and that the trustees were their agents with respect to the general property in the goods. The fact that, the same position has been taken in England in respect of taxation laws is noted. It also notes that in England it has been held that, a members club although structurally a company, it did not carry on trade or business so as to attract corporation profit tax.
In Darjeeling Club Ltd. (supra) the Division Bench has held that, "11. The principles laid down in the decided cases may be briefly stated. A group of persons can form a club to provide some facilities to themselves and any excess payment for these facilities may be retained for future use. In this process, no profit is made. When these persons form themselves into a company and arrange their affairs in such a way that the company makes profit for and on behalf of the members, it has got a distinct and separate personality from the members in the eye of law, but the members are using the company and the corporate personality for obtaining goods and services. The surplus that the company gets is held on behalf of the members and for future use of the members. The members may get it back either in the shape of reduction of price or extension of facilities that are to be provided to the members in future. The important point is that the company is not acting as a business concern or a trading company on its won for the purpose of making gain. The company is being used by the members for the purpose of obtaining goods and services as their agent. A company can make profit out of its members when members are treated as customers. Where, however, all that a company does is to collect money from a certain number of people and retain the surplus fund for the benefit of those people not as shareholders of the company but as people who subscribed to it or paid for it, then there is not profit. If the people were to do the thing for themselves, there would be no profit and the fact that they incorporate a legal entity to do it for them makes no difference. There is still no profit. This is not because the corporate entity of the company is to be disregarded, but because there is no accrual of profit, the money is simply collected from the members and held on their behalf, not in the character of shareholders but in the character of those who have paid for it. The excess that is realized from the members will be used for the benefit of the members in some form or other."
In The Saturday Club Limited (supra) it has been held that a members club is not liable to pay service tax.
In Bengal Club Ltd. (supra) it has been held that supply of goods by a club to its members at a fixed price does not mean any sale made by the club to its members. A private members club could not be held to be a place of public entertainment. In Bengal Club Ltd. (supra), the Deputy Commissioner of Police had invoked the provisions of the Calcutta Police Act, 1866 and the Calcutta Suburban Police Act, 1866 and requested the club to obtain a licence. The club was warned that in the event of failure to obtain such licence, the establishment of the club could be considered as a place of public entertainment running without any valid police licence and would therefore be liable to consequences. These notices were quashed by holding that a club could not be held to be a place of public entertainment.
So far as private members clubs are concerned the same principles as obtaining in England in respect of licensing laws have been applied. A private members club, though structurally may be found to be a separate legal entity than its members has been treated as one with its members so far as licensing laws are concerned. Applying the reasoning that a member of a private club could not sale to itself any goods as it was one and the same entity, though structurally in the eye of law different, a dance at the dancing hall in a private members club would be a private performance and so also any other activity described in Section 422 of the Act of 1980 at the club premises held in accordance with the club rules. Such activities would attract the proviso to Section 422 of the Kolkata Municipal Corporation Act, 1980 and, therefore, be exempt from the changing provisions of such section. Since it is a private members club, the club premises would remain private for use of the members and their guests. In such context the club premises could not be considered as a place for the public. Since a club cannot be held to be a place for public entertainment, the various words used in Section 422 of the Kolkata Municipal Corporation Act, 1980 need not be considered.
The writ petitioners complain that the municipal authorities have demanded payment of amusement fees under Section 422 of the Kolkata Municipal Corporation Act, 1980. In the facts and circumstances of this case, the demand for amusement fees made by the Kolkata Municipal Corporation against the first petitioner cannot be sustained and is, therefore, quashed.
W.P. No. 1469 of 2003 is allowed. No order as to costs.
[DEBANGSU BASAK, J.] Later:-
Prayer for stay is made which is considered and refused.
[DEBANGSU BASAK, J.]