Delhi High Court
M/S. North Eastern Carrying ... vs Municipal Corporation Of Delhi on 20 April, 2010
Author: Valmiki J. Mehta
Bench: Sanjay Kishan Kaul, Valmiki J.Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P(C) No. 5294/1999
20th April, 2010
M/S. NORTH EASTERN CARRYING CORPORATION ...... Petitioner
Through: Mr. Manish Kaushik, Advocate.
VERSUS
MUNICIPAL CORPORATION OF DELHI ....Respondent
Through: Mr. Navin Tripathi, Advocate.
CORAM:
HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
1. Whether the Reporters of local papers may be
allowed to see the judgment? Yes
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in the Digest? Yes
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VALMIKI J. MEHTA, J (Oral)
1. The petitioner by means of this writ petition under Articles 226 and 227 of the Constitution of India, seeks quashing of the challans dated 30.7.1999 and 10.8.1999 issued by the respondent/Municipal Corporation of Delhi on the W.P(C) 5294/1999 Page 1 of 13 basis of its circulars dated 24.1.1983/19.2.1983 issued under Section 417 of the Delhi Municipal Corporation Act, 1957(hereinafter referred to as the „Act‟). The quashing is sought on four grounds. The first ground is that the impugned circulars have been issued under Section 417(1)(b) of the Act whereas the said provision does not deal with storage of goods-the activity the petitioner engages in as part of its main business as a transporter. The second ground urged is that a reading of the impugned circulars show that they have been issued under Section 417(1)(b) whereas it is Section 417(1)(d) which deals with the requirement of a licence for storage of goods. The third ground is that there is no quid pro quo for the licence fee charged for issuing of a licence and thus the fee is in the nature of tax and hence the impost is illegal and consequently it is claimed that the requirement of taking a licence also falls. The fourth ground urged is that respondent corporation has no power to require a licence for storage of goods, when such goods are stored for a short duration being goods in transit.
2. For the first two grounds reliance is placed on the language of Section 417(1)(b) that it does not deal with storage of goods and that the circulars issued refer only to the provision of Section 417(1)(b) and Section 417(1)(d) is conspicuous by its absence. For the third ground the petitioner almost entirely places reliance on a decision of a learned Single Judge of this Court in the judgment reported as Puran Chand Vs. Commissioner MCD, 19(1981) DLT. On W.P(C) 5294/1999 Page 2 of 13 the basis of this judgment, it is contended by the learned counsel for the petitioner that the respondent has no power to impose the licence fee inasmuch as the said decision of the learned Single Judge which struck down the claim of licence fee under Section 417 was not taken up in appeal by the respondent and hence the decision binds the parties. In Puran Chand's case, the learned Single Judge held that there is no power in respondent to impose licence fee under Section 417(1)(b) of the Delhi Municipal Corporation Act, 1957 inasmuch as a fee is different from tax and since there was no quid pro quo from the respondent to the licencees, and the charge being not in the nature of an impost/tax, but only of a licence fee, therefore, the action of the respondent in requiring a licence on payment of fee was illegal and consequently, the learned Single Judge quashed the circulars and its subsequent prosecutions initiated by the respondent for carrying out storage activities without obtaining a licence. The fourth ground of non-requirement of licence for storing of goods in transit is pressed on logic and meaning of storage that storage only for long duration is storage.
3. Since Section 417 of the said Act is relevant, it is necessary to at the very outset refer to the same. The said provision reads as under:
"Section 417(1) No person shall use or permit to be used any premises for any of the following purposes without or otherwise than in conformity with the terms of a licence granted by the Commissioner in this behalf, namely:-
(a) any of the purposes specified in Part I of the Eleventh Schedule; W.P(C) 5294/1999 Page 3 of 13
(b) any purpose which is, in the opinion of the Commissioner dangerous to life, health or property or likely to create a nuisance;
(c) keeping horses, cattle or other quadruped animals or birds for transportation, sale or hire or for sale of the produce thereof; or
(d) storing any of the articles specified in Part II of the Eleventh Schedule except for domestic use of any of those articles:
Provided that the Corporation may declare that premises in which the aggregate quantity of articles stored for sale does not exceed such quantity as may be prescribed by bye-laws in respect of any such articles shall be exempted from the operation of clause
(d).
(2) In prescribing the terms of a licence granted under this section for the use of premises as mills or iron yards or for similar purposes the Commissioner may, when he thinks fit, require the licensee to provide a space or passage within the premises for carts for loading and unloading purposes.
(3) The Corporation shall fix a scale of fees to be paid in respect of premises licensed under sub-section(1):
Provided that no such fee shall exceed five hundred rupees." A bare reading of the Section 417(1)(b) shows that if use of any premises is in the opinion of the Commissioner dangerous to life, health, property or likely to create a nuisance, then the Commissioner may require that a licence be obtained before putting the premises to such use. So far as Sub Section (d) is concerned the same is quite categorical in that if any premises is put to use for storing of articles specified in part II of the Eleventh Schedule, except for domestic use, then, the Commissioner may require a licence before putting the premise to the use of storing of articles specified in part II of the Eleventh Schedule of the said Act.
Sub Section(3) is a wholly independent part of Section 417 and whereby the Commissioner is entitled to fix fees for obtaining a licence by a person subject to the condition that the fees may not exceed a sum of Rs.500/-. We are saying that W.P(C) 5294/1999 Page 4 of 13 sub Section(3) is a wholly independent part of Section 417 of the Act because requirement of a licence and requirement of fee for the said licence are two separate issues, meaning thereby, even if assuming that licence fee under sub Section (3) is not payable on account of lack of quid pro quo, the same on account of the plain language of Section 417 cannot do away with the requirement of obtaining the licence if the premises are put to the use as envisaged under sub sections (b) and (d). Requirement of licence and requirement of a fee cannot be mixed up. Even assuming the requirement of payment of licence fee is illegal, the same will not mean that the requirement of a licence also is automatically to be done away with. One does not follow the other and the requirement of a licence is an independent requirement whether or not the licence fee can be imposed and claimed by the respondent-corporation. Of course, it is another matter for the reasons stated hereinafter, that the charges which are claimed by the Municipal Corporation of Delhi for issuing of licence are also valid for the reasons stated hereinafter.
4. The impugned notices/circulars of the respondent have been filed as Annexure P-5 and P-6 to the writ petition. A reference to the circulars dated 24.1.1983/19.2.1983 shows clearly that the charges which are claimed are on the basis of both Section 417(1)(b) as also Section 417(1)(d). This disposes of the argument which was sought to be urged by the counsel for the petitioner that the W.P(C) 5294/1999 Page 5 of 13 impugned circulars mention and have been issued only under Section 417(1)(b) and not under Section 417(1)(d). We are also additionally of the clear opinion that the impugned circulars are valid not only by virtue of Section 417(1)(b) but also independently under Section 417(1)(d), assuming the latter provision not having been stated in the circulars. This is for the reason that it is now settled law that mere mentioning of wrong provisions of law cannot make a notification or circular invalid as long as the issuing authority has the necessary power, meaning thereby even if Section 417(1)(d) is not mentioned in the notification, but as long as the said provision exists in the Act, it cannot be said that the circulars are invalid because of mentioning of an alleged wrong provision of law i.e. Section 417(1)(b) instead of Section 417(1)(d). This issue is no longer res-integra and there are a catena of judgments of the Supreme Court, most recent of which are Ram Sunder Ram Vs. Union of India 2007(8)SCR 292 and N. Mani Vs. Sangeetha Theatre and others 2004(12)SCC 278. The conclusion therefore is that the contentions of the counsel for the petitioner that the impugned circulars have not been issued under Section 417(1)(d) besides being factually incorrect is thus also not a valid argument inasmuch as the power to require licence for the activity of storage of goods is very much provided for under Section 417(1)(d) and which provision can be called in aid to justify the issuing of the impugned notices/circulars. W.P(C) 5294/1999 Page 6 of 13
5. We are also of the further categorical opinion that the storage activity may also fall under Section 417(1)(b) if the storing activity amounts to danger to life, health or property or the same is likely to create a nuisance. A reference to the schedule of the licence fee annexed to the circular dated 24.1.1983/19.2.1983 shows that the licence fee has been imposed on storing of articles made of paper, cloth, jute, photographic goods, batteries, electronic items, inflammable material and explosive material. Surely, by their very nature, it can be said that storing of these articles can lead to danger to life, health, property and that storing of the same in various quantities in aid of the business of transportation, at all times of the day and night (including in congested localities like walled city/old Delhi) and which activity the petitioner is engaged in, can also be said to create a nuisance. We cannot agree or subscribe to the view that unless it is not mentioned in the notification that the goods are dangerous to life, health, property or the same create a nuisance, the circulars and notifications are bound to fail. The very nature of articles, in our opinion, clearly shows that the same fall within the categories as specified under Section 417(1)(b). The exercise of power, in our opinion, by issuing of the impugned circulars, therefore cannot be said to be faulted on account of non-mentioning of the language of the provisions of Section 417(1)(b) in the impugned circulars inasmuch as the articles dealt with in the impugned notices/circulars are inherently such that they can be said to have complied the W.P(C) 5294/1999 Page 7 of 13 requirements of Section 417(1)(b). There may be certain articles where on the face of it the same may not amount to damage to life, health or property. Let us say as a primary example of storing of rocks. In such case, if the Commissioner seeks to impose the requirement of obtaining the licence, there must be found material on record either in the form of a statement in the impugned circulars or in the files of the respondent corporation as to how the Commissioner has arrived at the opinion as required under Section 417(1)(d). However, forming of such an opinion in certain cases in view of the nature of the goods of which storage is done (such as the present case), may introduce the obvious conclusion of the requirement of Section 417(1)(b) having been met with. It is not permissible, in our opinion, to require the statement of the ingredients of Section 417(1)(b) merely as a formality in circulars/notifications being issued once it is otherwise clear that the subject goods are such the storage of which would cause damage to life, health or property or the same may create a nuisance.
The above discussion with respect to applicability of Section 417(1)(b), is given by us as an alternative basis for upholding the circulars that the impugned circulars only mention the provisions of Section 417(1)(b) and not 417(1)(d), whereas, factually as stated above, the circulars do mention Section 417(1)(d) and in any case, even if, as stated above, merely because no provision is stated or the incorrect provision is stated, the same would not invalidate a circular W.P(C) 5294/1999 Page 8 of 13 as long as the authorities have the necessary power to issue the circulars, and, it cannot be disputed that storing is an activity which very much directly requires a licence in terms of the plain language of Section 417(1)(d).
Thus, looking at it in any view of the matter, we find that the impugned circulars are valid not only under Section 417(1)(b) but also under Section 417(1)(d).
6. Now, the issue is whether the circulars in question while imposing a licence fee, can be said to be bad on account of the charges being in the nature of fee and the charge is illegal as no quid pro quo exists. Of course, it is a settled law where there is no quid pro quo, licence fee cannot be imposed and a tax cannot be imposed in the guise of a licence fee. While saying this, of course, we are conscious of the fact that by means of the recent judgments, the difference between a tax and fee has been considerably watered and whittled down, however, in the facts of the present case, we are proceeding on a wholly different basis. This different basis is that, in our opinion, the fees which are being imposed, in view of the quantum thereof, in today‟s date and age would amount to and be in the nature of processing fee for issuing of licences and not a licence fee under Section 417(3) of the said Act. Why we say so is because a fee of Rs.500/- in the year 1957 and for quite a few years thereafter may have been a fee considering the value of Rs.500/- in the year 1957 and let us say for a decade or two thereafter. However, W.P(C) 5294/1999 Page 9 of 13 more than 50 years after passing of the DMC Act, in 1957, we do not think the sum of Rs.500/- can be said to be a licence fee if we take/compare the purchasing power of the rupee in 1957 and today in 2010. Today, the cost of issuing of the licence, maintaining of records with respect to the same, besides also the cost of the human resources required for issuing and the maintaining of the records is such that any sum of Rs.500/- or lesser can be said to be merely in the nature of a processing charge and not a licence fee. A Legislation which is valid at one point of time with the passage of time may become illegal and ultra vires. The Supreme Court has dealt with the issue in great detail in its judgment of Malpe Vishwanath Acharya Vs. State of Maharashtra AIR 1998 SC 602. In this judgment given by a Bench of three Judges, the Supreme Court has at length expounded on the principle that a Legislation with the passage of time can become illegal and ultra vires although when the same was first passed, the same was such that its validity and vires could not be questioned. This principle has also been applied by the Supreme Court (S. B. Sinha, J. in his concurring judgment) thereafter in the judgment reported as John Vallamattom Vs. Union of India AIR 2003 SC 2902 holding that passage of time does make a difference to the validity of Legislation. This ratio would equally apply in the converse situation. We may note only one aspect while dealing with this issue that it may be advisable for the respondent to have a uniform charge for issuing a licence, although we hasten to add that in absence of W.P(C) 5294/1999 Page 10 of 13 any argument or material we need not say anything finally on this aspect as there can be justifiable basis for different amounts of processing fees. We therefore hold that the charges when imposed in 1957 were invalid as a fee, but, with the passage of time more than 50 years later, we feel that the licence fee no longer has remained a licence fee but is in fact a processing fee for the reasons of cost of issuing and maintaining of records for licencing. In adopting this view, we have kept in mind the development of law that the distinction between a tax and a fee is now considerably blurred and the requirement of quid pro quo is a requirement more in generality rather than in specifics. We thus uphold the charges imposed for issuing of licences inasmuch as the same as on date falls under the head of and amounts to only a processing charge and it need not be classified as a licence fee.
7. Finally we do not agree with the contention of the counsel for the petitioner that merely by doing storage activity for a limited point of time, the activity will cease to be of storage. In any case, we find that this is only a convenient statement by the petitioner because it is not inconceivable that factually, goods may be stored not only for a few hours but also for a whole day or even may be for a few/many days. In any case, storage is storage whether for a few hours or for a few days. Can it be argued that storing of explosives or highly combustible matter even for a few hours is not dangerous to life or health or property or likely to create a nuisance? Surely not. In this view of the matter, we W.P(C) 5294/1999 Page 11 of 13 find the contention of the counsel for the petitioner mis-conceived that the activity with regard to storage should be completely unlicenced and it should not be regulated in any manner whatsoever. Requirement of Licensing thus well advised for regulating the subject activity because the storage activity can cause myriad problems to the society, some of which are found under Section 417(1)(b). The requirement of licence for the storage of goods is therefore a valid entitlement of the respondent by virtue of both Sections 417(1)(b) and 417(1)(d), both in the facts of the present case, and also generally in view of Section 417(1)(d) to seek compliance with the same is upheld.
8. Our conclusions, therefore, are as under:
(1) Factually, the circulars are issued both under Section 417(1)(b) and under Section 417(1)(d), and not only under Section 417(1)(b).
(2) Even if the circulars are issued only under Section 417(1)(b), the same are valid because the nature of the articles are such that they can be said to be dangerous to life, health or property and can also cause a nuisance.
(3) In any case, the activity of storing is directly covered under Section 417(1)(d), and which activity does require a licence, and merely because its provision is not mentioned in the circulars it would not make the circulars invalid because the power to require a licence for carrying out the activity of storage is very much a statutory requirement by virtue of Section 417(1)(d). W.P(C) 5294/1999 Page 12 of 13
(4) The requirement of payment of a licence fee under Section 417(3) is different from the requirement of the activity to be licenced under various sub Sections of Section 417(1) and the requirement of a licence cannot fall merely because the charge/claim of licence fee is illegal. Thus fee may not be imposed, assuming there is no quid pro quo in the facts of the present case, yet, it cannot be said that the storing activity cannot be licenced and regulated.
(5) The charges which are imposed by the respondent in the facts of the present case on account of passage of time are in substance in the nature of processing fee for issuing of licences and not in the nature of licence fee. The value of a sum of Rs.500/- is today more in the nature of the costs for issuing of licences, maintaining of records and of the cost of manpower involved for such purposes and changes claimed are not in the nature of a licence fee.
9. In view of the above, the challenge to the impugned circulars fails and the writ petition is therefore dismissed with costs of Rs.15,000/-.
VALMIKI J. MEHTA, J SANJAY KISHAN KAUL, J April 20, 2010 Ne W.P(C) 5294/1999 Page 13 of 13