Madras High Court
The State Of Tamil Nadu vs Theatre Amirtham A/C on 24 March, 2010
Author: R.Banumathi
Bench: R.Banumathi, M.Venugopal
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 24.03.2010
CORAM:
THE HON'BLE MRS.JUSTICE R.BANUMATHI
AND
THE HON'BLE MR.JUSTICE M.VENUGOPAL
W.A.Nos.1827 to 1829, 1837 to 1840, 1901 to 1903, 2098 to 2100 and 2300 to 2302 of 2002 and W.A.M.P.Nos.3151 to 3153, 3250 to 3252, 3555 to 3557 of 2002 and 3921 to 3923,
1.The State of Tamil Nadu
represented by its Secretary to Government
Home (Cinemas) Department, Fort St.George
Chennai - 9
2.The Collector of Madurai, Madurai District .... Appellants in
all Appeals
Vs.
Theatre Amirtham A/c., represented
by its licensee, Madurai .... Respondent in
W.A.No.1827
of 2002
Theatre Thangam, rep.by its licensee
Madurai .... Respondent in
W.A.No.1828
of 2002
T.K.V.S.L.Mahadevan, Proprietor,
Ram Theatre, Madurai .... Respondent in
W.A.No.1829
of 2002
Theatre Mathi A/c.rep.by its licensee .... Respondent in
W.A.No.1837
of 2002
Sundaram Theatre, rep.by its licensee
Madurai .... Respondent in
W.A.No.1838
of 2002
Theatre Annamalai, rep.by its licensee
Madurai .... Respondent in
W.A.No.1839
of 2002
New Delux, rep.by its licensee, Madurai .... Respondent in
W.A.No.1840
of 2002
1.Hajeera Theatre, rep.by its licensee
Madurai
2.The Corporation of Madurai, rep.by
its Commissioner, Madurai .... Respondents in
W.A.No.1901
of 2002
Kathirvel Theatre,
rep.by its licensee, Madurai .... Respondent in
W.A.No.1902
of 2002
1.Sha Theatre, rep.by its licensee, Madurai
2.The Corporation of Madurai,rep.by its
Commissioner .... Respondents in
W.A.No.1903
of 2002
T.Cinthamani Talkies, rep.by its
licensee, Madurai .... Respondent in
W.A.No.2098
of 2002
Theatre Thanga Regal,rep.by its
licensee, Madurai. .... Respondent in
W.A.No.2099
of 2002
Sri Meenakshiparadise,rep.by its licensee
20,Oridimuthu Maistry Street
South Veli Street, Madurai 1. .... Respondent in
W.A.No.2100
of 2002
Madura Talkies Private Limited,
Owner, New Cinema, Madurai
rep.by its licensee .... Respondent in
W.A.No.2300
of 2002
T.M.V.N.Sahasranathan, Proprietor
City Cinema Theatre, South Masi
Street, Madurai .... Respondent in
W.A.No.2301
of 2002
Vellaikkannu Theatre
Arasavadi, Madurai 10
rep.by its licensee, Madurai. .... Respondent in
W.A.No.2302
of 2002
Writ Appeals in W.A.Nos.1827 to 1829, 1837 to 1840, 1901 to 1903, 2098 to 2100 and 2300 to 2301 of 2002 are filed under Clause 15 of the Letters Patent against the order of this Court dated 20.11.2000 made in W.P.Nos.6563, 7443, and 12767 of 1997, 18877, 18879, 18878 and 18942 of 1996, 20352 of 1999, 16723 of 1997, 20742 of 1999, 5109, 506, 3565, 15941, 15655 and 13572 of 1997 respectively.
For Appellant : Mr.P.S.Raman,Advocate General
in all Appeals assisted by Mr.M.Dhandapani,
Govt.Pleader (Writs)
For Respondent No.2 : Mr.P.Srinivas
in W.A.No.1901 and
1903 of 2002
For Respondent No.1 : Mr.R.Subramanian
in W.A.Nos.1829 and
1901 to 1903 of 2002
For Respondent in : Mr.D.Kumar
W.A.Nos.2300 to 2302
of 2002
For Respondent in : Mr.K.Ravi Ananta Padmanabhan
in W.A.No.1827 of
2002
For Respondent in : Mr.K.V.Sanjeev Kumar
W.A.No.2099 of 2002
For Respondent in : No Appearance
in W.A.No.2098 of 2002
JUDGMENT
R.BANUMATHI,J.
Whether the amendment to Rule 92(1)(v) of Tamil Nadu Cinemas Regulation Rules, 1957 regarding submission of property tax clearance certificate from local bodies as pre-condition for renewal of C-form licence is ultra vires the Tamilnadu Cinemas (Regulation) Act is the point falling for consideration in these Appeals. Feeling aggrieved by allowing of writ Petitions by the learned single Judge declaring G.O.Ms.No.1311 Home (Cinemas) Department dated 9.9.1996 as ultra vires and unenforceable, the Government has filed these Writ Appeals.
2. In G.O.Ms.No.1311 Home (Cinemas) Department dated 9.9.1996, the Government issued amendment to the Tamilnadu Cinemas Regulation Rules, 1957 (in short, "Rules"), to the effect that every application for renewal of licence shall be accompanied by evidence from the local authority that there is no property tax due in respect of site and building of the cinema theatre.
3. In a batch of writ petitions, the amendment came to be challenged on the ground that Tamilnadu Cinemas Regulation Act (hereinafter referred to the "Act") was enacted for the purpose of regulating exhibition by means of cinematographs in the State of Tamilnadu and the impugned amendment insisting upon production of evidence to the effect that there is no property tax due in respect of the cinema theatre is ultra vires the Act and liable to be struck down. According to licensees/Respondents, the requirement of evidence to show that there is no property tax due in respect of the site and building of the cinema theatre is wholly unconnected and irrelevant to the grant of C-form licence and therefore the conditions brought about by the impugned amendment has no nexus to the object of the enactment and renewal of C-form licence and therefore the condition deserves to be quashed as arbitrary and unreasonable. Some of licensees have also averred that in view of dispute between licensees and local bodies in relation to property tax and in such circumstances, it would not be possible for the cinema theatres to produce evidence to show that there is no property tax due in respect of the site and building of the theatre in question and therefore the impugned rule requiring the said evidence is illegal and will cause prejudice to the licensees and the respondents prayed for declaration that amended rule (v) of Sub Rule (1) of Rule 92 of the Tamil Nadu Cinemas Regulation Rules 1957 is unconstitutional and ultra vires the Tamil Nadu Cinemas Regulation Act.
4. The Government resisted the writ petitions contending that in Tamilnadu Cinemas Regulation Rules, there are already certain conditions such as production of evidence of having insured the cinema theatre, building, machinery, etc., against fire hazards and likewise the Government have issued orders for submission of clearance certificate from the local authority to the effect that all property tax due in respect of cinema theatres have been paid and the amendment is not detrimental to the provisions of the Act.
5. The learned single Judge took the view that by making the impugned Rule, the writ petitioners are compelled to produce evidence to the effect that there is no property tax due in respect of the site and building of the cinema theatre and the said rule appears to have been made only to enable the local authority to collect property tax with respect to the site and building. The learned single Judge also took the view that the insistence for production of certificate from the local bodies has nothing to do with the regulation of exhibition by means of Cinematographs and it will not in any way facilitate the right of the cinema going public and on such findings, declared that the impugned Rule Rule 92(1)(v) of Tamil Nadu Cinemas Regulation Rules, 1957 is ultra vires and unenforceable.
6. Challenging the order of the learned single Judge, learned Advocate General Mr.P.S.Raman appearing for Appellant submitted that even when licence is granted for running cinema theatre, licensing authority would verify status, antecedents, and suitability of the place and while so, it cannot be said that insistence of "no due certificate" at the time of renewal of C-form licence is said to be beyond the purview of the Act. The learned Advocate General would further submit that the amendment of Rule 92(1)(v) to the effect that the property tax clearance was pre-condition of renewal of C-form licence and the same was within the powers of the Government under Section 10 of the Act. Learned Advocate General would further submit that the learned single Judge proceeded under wrong impression that Rule 92(1)(v) was amended with latent object of collecting property tax. Placing reliance upon (2006) 4 SCC 517 (STATE OF TAMIL NADU AND ANOTEHR VS. P.KRISHNAMURTHY AND OTHERS), it was contended that where the alleged inconsistency or non-conformity of the rule is not with reference to any specific provision of the enabling Act but with the object and scheme of the parent Act, the Court should proceed with caution before declaring the rule as invalid.
7. Learned counsel for Respondents Mr.Subramanian submitted that if the impugned amendment is to be sustained, the local authorities would have undue advantage over the licensing authority in granting/renewal of C-form licence. It was further argued that the amendment has no relevancy to the object sought to be achieved under the Act and the amendment cannot go beyond the object of the enactment. Placing reliance upon AIR 1992 SC 1519 (DEEPAK THEATRE VS. STATE OF PUNJAB), it was mainly contended that the power to make rules should be consistent with the object of enactment. It was also urged that the production of "no due certificate" from the local authorities has nothing to do with the suitability of the building and the object of the Act and learned single Judge rightly declared the amendment as ultra vires the Act. Learned counsel placing reliance on (1972) 2 SCC 601 (Hukam Chand v. Union of India) contended that the extent and amplitude of the rule-making power would depend upon and be governed by the language of the section and if a particular rule were not to fall within the ambit and purview of the section, the Government in such an event would have no power to make that rule.
8. Learned counsel for respondent Mr.Ravi Anantha Padmanabhan contended that the delegated legislation cannot traverse beyond the object and preamble of the main Act and the impugned amendment to Rule should have nexus with the object of the enactment. The learned counsel would further contend that "property tax clearance" is sought by the Government only for renewal and not for fresh commencement of the theatre and the word "renewal" means "continuation of commencement" and hence what was not demanded at commencement cannot be made compulsory for its continuation. It was further argued that production of no property tax due certificate cannot be said to be a business incident and learned single Judge has rightly quashed the G.O., and the amendment and the Order of single Judge does not warrant any interference.
9. The Tamilnadu Cinemas Regulation Act is an Act to provide for the regulation of exhibitions by means of cinematographs in the State. The very object of the Act includes power to restrain which embraces limitations and restrictions of all incidental matters connected with the right to trade or business. Section 3 stipulates places in which cinematograph is exhibited to be licensed. Under Section 3 of the Act, "no person shall give an exhibition by means of a cinematograph elsewhere than in a place licensed under the Act, or otherwise than in compliance with any conditions and restrictions imposed by such licence." Section 3-A provides for certain disqualifications for grant or renewal of licence.
10. Section 5 of the Act confers power on the licensing authority to grant or refuse licence. Section 5 deals with restrictions of powers of licensing authority. Section 5(1)(a) to (d) of the Act reads as under:
(1) The licensing authority shall, in deciding whether to grant or refuse a licence, have regard to the following matters, namely -
(a) the interest of the Cinema going public or other sections of the public generally.
(b) the status, antecedents and previous experience of the applicant;
(c) the suitability of the place where the cinematograph exhibitions are proposed to be given;
(d) the adequacy of existing places for the exhibition of cinematograph films in the locality."
11. By reading of Section 5, it is clear that when an applicant applies for licence, Section 5 of the Act enables licensing authority to have regard to the 'status' and 'antecedents' of the applicant and 'suitability of the place'. "Suitability of the place" means where the cinematograph is exhibited is to be suitable and that it should satisfy the specifications, etc.,
12. R.35 of Part II (a) deals with approval of location of permanent cinema. Rule 35 (1) and (2) read as under:
"35 (1) A person who intends to build a permeant cinema building shall furnish the licensing authority with information in respect of items (a) to (f) of section 5(1) of the Act and other relevant particulars required in Form A. The applications shall be accompanied by a plan of the proposed site drawn to scale and shall clearly indicate the surrounding roads and buildings which exist to a distance of 200 metres of the proposed site, schools, hospitals, temples or mosques, churches, or other places of public worship being clearly indicated.
(1)-A .....
(2) A copy of the application in form 'A' referred to in rule 35(1) shall be sent to Panchayat/Town Panchayat Township Committee/Municipal Council/ Municipal Corporation concerned which shall forward it within sixty days from the date of receipt of application from the applicant to the licensing authority with a copy of its resolution regarding its objections, if any, to the site and to the installation of machinery."...
13. Column No.4 of Form 'A' contains the details to be given as to status of applicant, which reads as:- "(i) Have you been regularly paying taxes and other dues payable by you to the State Government; (ii) Are you in arrears in respect of any such tax or dues; and (iii) If so, is the matter under appeal or otherwise under consideration of the authorities." It is thus clear that while applying for licence/C-form licence, the applicant should give details of his status whether any dues are payable by him to the State Government and we are of the opinion that dues payable by a person to the State Government would also include permanent tax payable in respect of the building.
14. As per Column No.(14) of Form A, the applicant should mention whether the site plan is attached by furnishing the details as to "(1) the position of the proposed premises in relation to any adjacent premises and to the public thorough fare upon which the site of such premises abuts and (2) thatched sheds, if any, in the neighbourhood; (3) nearby schools, etc., temples etc., cinematograph exhibitions?" As per particulars contained in Column NO.15, the applicant should state (i) whether it was licensed before and details of the same.
15. On a combined reading of Section 5 Rule 35 (1) part II (a) and the columns in Form 'A', it is abundantly clear that there are various parameters for inquiring into the 'status', 'antecedents' of the applicant and 'suitability of the site'. In our considered view, various details stated in column Nos.(4), (10), (11), (14) and (15) would clearly show that the local authority has an important say in issuing certificates to the effect of suitability of site, locality, etc.,
16. Section 10 of the Act provides for the power of Government to make Rules. Section 10(2)(a) of the Act provides for terms, conditions and restrictions subject to which a licence may be granted under the Act. For issuance of fresh licence, it is essential that the terms and conditions as laid down under the Act are complied with. Section 10(2)(a) to (3)(b) stipulates some of the areas which such rules may provide for. Exercising power under Section 10 of the Act, by G.O.Ms.No.1311 Home (Cinemas) Department dated 9.9.1996, Rule 92 was amended introducing clause (v) in sub-rule (1), which reads as under:
"Evidence from the local authority that there is no property tax due in respect of the site and building of the cinema theatre under the Madras City Municipal Corporation Act, 1919 (Tamilnadu Act IV of 1919) of the Tamilnadu District Municipalities Act, 1920 (Tamilnadu Act V of l1920) or the Tamilnadu Panchayats Act, 1994 (Tamil Nadu Act No.21 of 1994) or the Madurai City Municipal Corporation Act, 1971 (Tamil Nadu Act 15 of 1971) or the Coimbatore City Muncipal Corporation Act 1981 (Tamil Nadu Act 25 of 1981) or the Tiruchirapalli City Municipal Corporation Act 1994 (Tamilnadu Act 27 of 1994) or the Tirunelveli City Muncipal Corporation Act 1994 (Tamilnadu Act 28 of 1994) or the Salem City Municipal Corporation Act, 1994 (Tamilnadu Act 29 of 1994) as the case may be."
17. It was further contended that the production of 'no due certificate of property tax' from the concerned authority at the time of renewal is only to ensure that the licensee is not in unlawful possession of the property and the property is free from encumbrances for a smooth functioning of the cinema theatre. The learned Advocate General Mr.P.S.Raman contended that the amendment to Rule 92(1)(v) of Tamilnadu Cinemas Regulation Rules is in consonance with the provisions of the Act.
18. The stand of Government is that when the local authority raises objection as to 'status', 'antecedents' of an applicant and 'suitability of the site', the licensing authority can certainly refuse to grant licence. In the light of regulatory measures, Rule 92(1) was amended insisting upon production of "no property tax due certificate" from the local authorities. As submitted by the learned Additional Advocate General, in Tamil Nadu Cinemas Regulation Rules, as per Rule 92(1), for renewal of licence, there are also certain other conditions such as treasury receipt for payment of fees at the prescribed rates, production of evidence from commercial tax authorities that there is no tax due under Tamilnadu Entertainment Tax Act, evidence for having insured the cinema building, machinery, etc., against fire hazards etc. Likewise, Government issued orders for submission of "no property tax due in respect of the site and building of the cinema theatre."
19. By reading of Rule 92(1)(v), it is evident that the insistence of "no property tax due certificate" is not in respect of some professional tax, or any other tax, but in respect of the site and building of the cinema theatre. Operator of cinema theatre is directed to produce 'no due certificate' in respect of the site and building. As rightly contended by the learned Advocate General, the amendment is only a check measure to ensure that the cinema theatre is free from encumbrances to ensure the smooth functioning of cinema theatre.
20. The learned Advocate General submitted that if there is an encumbrance with regard to property tax and if such tax is not paid for a long period of time, the authorities have the right to attach the property itself and to avoid such impediment, the amendment was brought into force. We find much force in the contention of the learned Advocate General that if the property tax is due, the cinema theatre may be attached and the theatre cannot be run until the charge is cleared either by way of paying the dues or by brining the very site for auction and cinema-going public would be affected. In such circumstances, public would be at a loss. Therefore only to ensure smooth conduct of business and to avoid any impediment, litigations, etc., Rule 92(1) was amended introducing sub-rule (5). There is nothing unconstitutional or ultra vires of the Act so as to warrant interference by the High Court.
21. We are of the view that when regulatory measures like 'status' and 'antecedents' of the applicant and "suitability of the site and building" are inquired into at the time of issuing licence, the same is equally applicable for obtaining renewal of C-form licence. It is pertinent to note that "no property tax due" is restricted only to the theatre 'site and building' and not to any other tax due to the Local Authority. When the suitability of the building and other specifications are to be cleared from the Local Authority for obtaining licence, the same regulation is equally applicable to renewal of C-form licence.
22. Learned counsel for Respondents Mr.Ravi Ananta Padmanabhan contended that when the operators of Cinema theatres obtained licence under Tamilnadu Cinemas Regulation Act, the authorities cannot vary the same for renewal of the same. It was further argued that the Tamilnadu Cinemas Regulation Act came into force with effect from 30.5.1956 and nearly forty years thereafter the authorities sought to introduce Rule 92(1)(v) by way of an amendment with a hidden object of collecting properly tax payable to the local authorities. It was further argued that what was not required for obtaining licence the same cannot be insisted for renewal and 'renewal' means only 'continuation of commencement'. Learned counsel for Respondent Mr.Ravi Anantha Padmanabhan contended that what was not demanded at the commencement cannot be made compulsory for its continuation and therefore the impugned G.O., is ultra vires the parent Act.
23. There is no force in the contention that no property tax due certificate is not necessitated at the time of granting licence as such contention ignores the various columns in form 'A'. As we pointed out earlier, in Column No.(4) of Form 'A', the applicant has to furnish details as to whether he has been regularly paying taxes and other dues payable by him to the State Government and whether he is in arrears in respect of such tax or dues. At the time of granting licence also, the licensing authority should have regard to the arrears of tax or dues. In any event, it cannot be contended that what was not necessitated at the time of grant of licence cannot be insisted upon for its continuation. As per Form "C", which contains licence for exhibition of cinemas under the Act, as per Clause (4) of Conditions of licence, "grant of the licence" is subject to any order that may be passed by the State Government under Section 5(4) of the Act. Section 5(4) of the Act empowers the State Government to issue directions or orders of a general character as the State Government may consider necessary in respect of any matter relating to licences for exhibition of cinematograph films to the licensing authority. Section 10 of the Act empowers the State Government to frame rules to carry out the purpose of the Act and such rules may provide for terms, conditions and restrictions subject to which licence may be granted under the Act.
24. As per Explanation to Section (5)(i)(b), "antecedents" means the conduct of the applicant in relation to the payment of any tax or dues payable by him to the Government. The learned counsel for Respondent Mr.Subramani contended that the explanation to Section 5(1)(b) has to be understood in the light of object of the enactment and Section 3-A of the Act to provide for regulation of exhibition by means of Cinematographs in Tamil Nadu.
25. Drawing our attention to some passages in 'Principles of Statutory Interpretation' by Justice G.P.Singh, Eighth Edition, 2001 Page No.186, learned counsel for the respondent submitted that the 'explanation' to any Section in the Statute should be read in a harmonious way with the Section itself and cannot be detached and read in isolation. In support of his contention, learned counsel for respondents Mr.Subramanian placed reliance upon AIR 1989 SC 2227 (M/S.APHALI PHARMACEUTICALS LTD. VS. STATE OF MAHARASHTRA AND OTHERS), wherein the Supreme Court has held that an explanation to the Schedule amounts to an Explanation in the Act itself and in case of conflict between body of Act and Schedule, the Act will prevail.
26. The learned counsel for the Respondents Mr.Subramanian also placed reliance upon AIR 1997 SC 3467 (M/S.OBLUM ELECTRICAL INDUSTRIES PVT.LTD., HYDERBAD VS. COLLECTOR OF CUSTOMS, BOMBAY), wherein the Supreme Court has held that "the Explanation must be read so as to harmonise with and clear up any ambiguity in the main provision". The Supreme Court referred therein the earlier judgment in AIR 1967 SC 389 (BIHTA COOPERATIVE DEVELOPMETN CANE MARKETING UNION LTD. VS. BANK OF BIHAR).
27. For the very same proposition, the learned counsel also relied on AIR 1995 Madras 290 (VELUR D.NARAYANAN VS. GENERAL MANAGER, MADRAS TELEPHONES). Placing reliance on AIR 1973 SC 1034 (M/S.HIRALAL RATAL LAL VS. THE SALES TAX OFFICER, SECTION III, KANPUR AND ANOTHER), he submitted that the effect of explanation must be given the legislative intent notwithstanding the fact the legislature named that provision as an Explanation. The Courts have to find out the true intention of the legislature. Learned counsel appearing for the Respondent submitted that the scope of explanation is only to explain the provisions of the Act and explanation cannot expand the scope of the main Act. It was therefore contended that property tax has no nexus with the object of the Act and while so it cannot be expanded to include "no property tax due certificate" and thereby expanding the scope of explanation, which is not permissible as per the well settled principles of interpretation. Placing reliance on (1998) III MLJ 81 (SC) KANNAN AND ANOTHER VS. TAMIL TALIR KALVI KAZHAGAM, learned counsel submits that when two or more interpretations are possible, the one which subserves the object should be accepted.
28. The main contention of Respondents is that explanation to Section 5(1)(b) and the term "antecedents" should be examined in the light of other provisions, particularly, Section 3-A. Section 3-A deals with disqualification for grant or renewal of licence. Under Section 3-A, no person shall be eligible to apply for the grant or renewal of a licence, if he has been convicted of an offence under Tamilnadu Entertainments Tax Act or Section 7 of Cinematograph Act. It was therefore contended that the expressions 'status', 'antecedents' should be examined only with reference to whether there was any evasion of tax by person responsible for the conduct of the theatre and under no such stretch of imagination can it be said that the licensing authority should have regard to property tax also.
29. Learned single Judge declared Rule 92(1)(v) as ultra vires the Act itself mainly on the ground that the object of the Act is to regulate exhibition by means of cinema regulation and by making the impugned rule the Respondents are compelled to produce evidence from the local authority to the effect that there is no property tax due in respect of the site and building of the cinema theatre and thereby the theatre owners are compelled to pay the entire property tax for the purpose of renewing licence, as a pre-condition for making application for renewal of licence. The learned single Judge further held that amended Rule 92(1)(v) is made only to enable the Local Authority to collect property tax in respect to the site and building in which the cinematograph films are exhibited and for collection of property tax, sufficient provisions have been made in the respective Acts and the Rules made thereunder. The learned single Judge also took the view that the payment of property tax is alien to the main Act and has got nothing to do with the regulation of exhibition by means of cinematographs and that it will not in any way affect the interest and facilities to be given to the cinema going public.
30. As pointed out earlier, while examining "status" of the applicant, the licensing authority has to examine as to taxes and dues payable by the applicant to the State Government or whether the applicant is in arrears in respect of any such tax or dues. Section 5 Rule 35 Part II(a) and various columns in Form 'A' would make it clear that there are various parameters for inquiring into the "status", "antecedents", of the applicant and suitability of the building. Tax due or otherwise to the Local Authority is also one of the relevant factor, which the licensing authority should have regard to while granting licence/renewal of C-form licence.
31. Learned counsel for the Respondents contended that any rule or regulation made under Section 10 is a delegated legislation and any such rule or regulation must be in furtherance of the object of the Act. It was further contended that Section 10 does not empower the Government to frame Rules which has nothing to do with the Act and therefore learned single Judge has rightly held that the amended Rule 92(1)(v) has no nexus with the provisions of the Act. The main plank of argument of Respondents is that Rule 92(1)(v) does not fall within the legislative competence of Section 10 and the Rule has been amended only to collect the property tax for the local bodies and no way connected with the object of the Act and therefore G.O.Ms.1311 dated 9.9.1996 is liable to be quashed.
32. In 2003(3) SCC 321, ST.JOHN'S TEACHERS TRAINING INSTITUTE VS. REGIONAL DIRECTOR, NCTE, the Supreme Court explained the scope and purpose of delegated legislation thus:
10. A regulation is a rule or order prescribed by a superior for the management of some business and implies a rule for general course of action. Rules and regulations are all comprised in delegated legislations. The power to make subordinate legislation is derived from the enabling Act and it is fundamental that the delegate on whom such a power is conferred has to act within the limits of authority conferred by the Act. Rules cannot be made to supplant the provisions of the enabling Act but to supplement it. What is permitted is the delegation of ancillary or subordinate legislative functions, or, what is fictionally called, a power to fill up details. The legislature may, after laying down the legislative policy confer discretion on an administrative agency as to the execution of the policy and leave it to the agency to work out the details within the framework of policy. The need for delegated legislation is that they are framed with care and minuteness when the statutory authority making the rule, after coming into force of the Act, is in a better position to adapt the Act to special circumstances. Delegated legislation permits utilisation of experience and consultation with interests affected by the practical operation of statutes.
33. In (1985) 1 SCC 641 INDIAN EXPRESS NEWSPAPERS (BOMBAY) (P) LTD. VS. UNION OF INDIA, the Supreme Court referred to several grounds on which a subordinate legislation can be challenged, which is as follows:
"75. A piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature. Subordinate legislation may be questioned on any of the grounds on which plenary legislation is questioned. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute. That is because subordinate legislation must yield to plenary legislation. It may also be questioned on the ground that it is unreasonable, unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary.
34. Holding that the delegate must act in good faith and reasonably and must act in harmony with the Constitution and other laws of the land, in (1990) 1 SCC 223 (SHRI SITARAM SUGAR CO.LTD. VS. UNION OF IDNIA ), the Supreme Court held thus:
47. Power delegated by statute is limited by its terms and subordinate to its objects. The delegate must act in good faith, reasonably, intra vires the power granted, and on relevant consideration of material facts. All his decisions, whether characterised as legislative or administrative or quasi-judicial, must be in harmony with the Constitution and other laws of the land. They must be reasonably related to the purposes of the enabling legislation. See Leila Mourning v. Family Publications Service6. If they are manifestly unjust or oppressive or outrageous or directed to an unauthorised end or do not tend in some degree to the accomplishment of the objects of delegation, court might well say, Parliament never intended to give authority to make such rules; they are unreasonable and ultra vires: per Lord Russel of Killowen, C.J. in Kruse v. Johnson7.
35. Referring to the above decisions and considering the scope and authorities of delegated legislation on the ground on which a subordinate legislation can be challenged, in (2006) 4 SCC 517 (State of T.N. v. P. Krishnamurthy), the Supreme Court has held as under:
"15. There is a presumption in favour of constitutionality or validity of a subordinate legislation and the burden is upon him who attacks it to show that it is invalid. It is also well recognised that a subordinate legislation can be challenged under any of the following grounds:
(a) Lack of legislative competence to make the subordinate legislation.
(b) Violation of fundamental rights guaranteed under the Constitution of India.
(c) Violation of any provision of the Constitution of India.
(d) Failure to conform to the statute under which it is made or exceeding the limits of authority conferred by the enabling Act.
(e) Repugnancy to the laws of the land, that is, any enactment.
(f) Manifest arbitrariness/unreasonableness (to an extent where the court might well say that the legislature never intended to give authority to make such rules).
16. The court considering the validity of a subordinate legislation, will have to consider the nature, object and scheme of the enabling Act, and also the area over which power has been delegated under the Act and then decide whether the subordinate legislation conforms to the parent statute. Where a rule is directly inconsistent with a mandatory provision of the statute, then, of course, the task of the court is simple and easy. But where the contention is that the inconsistency or non-conformity of the rule is not with reference to any specific provision of the enabling Act, but with the object and scheme of the parent Act, the court should proceed with caution before declaring invalidity."
36. It is not the case of Respondents that Rule 92(1)(v) is inconsistent with any specific provision of Tamilnadu Cinematograph Act; but the case of Respondent is that it is inconsistent and alien to the object and scheme of the parent Act. As held by the Supreme Court in (2006) 4 SCC 517 (State of T.N. v. P. Krishnamurthy), when where the contention is inconsistency with the object and scheme of the parent Act and not with reference to any specific provision of the enabling Act, the Court should proceed with caution before declaring invalidity. We are of the view that while examining the vires of the subordinate legislation, Rule 92(1)(v) the learned singe Judge did not appear to have proceeded with a cautious approach before declaring it invalid.
37. In the light of the above well settled principles, it is to be examined whether Rule 92(1)(v) is ultra vires the Act. The object of the Act is to provide for regulation of exhibitions by means of cinematographs. As discussed earlier, "status" and "antecedents" of applicant and "suitability of site" are relevant to grant licence and are also relevant to grant renewal of C-form licence. While examining the "antecedents" of applicant, the licensing authority has to examine whether the applicant is in arrears in respect of tax and other dues payable to the State Government. We are of the view that the expression "tax and other dues payable by applicant to the State Government" and the expression "arrears in respect of any such tax or dues" cannot be narrowly construed as only dues to the State Government under Tamilnadu Entertainments Tax Act and Section 7 of Cinematograph Act (Central Act XXXVII of 1952). In our considered view, the expression "arrears in respect of any such tax or dues" stated in Column No.4 of form 'A' would certainly include any due to the local authority.
38. Section 5 of the Act merely enumerates certain conditions which licensing authority is bound to take into account. It does not exhaustively enumerate all the considerations which the licensing authority may take into account. When examining the "antecedents" or "status" of Applicant, it is well within the power of the licensing authority to have regard to the arrears of tax due by the applicant to the local authority. Insisting upon production of 'no property tax due certificate' from local authority certainly falls within the ambit of Section 10(2)(b) securing the public safety and 10(2)(j) - procedure to be followed by the licensing authority before granting or refusing permission.
39. Learned counsel for the respondent Mr.Ravi Anantha Padmanabhan contended that neither in the G.O. nor in the common counter affidavit of the Government, the reasons for insisting such property tax clearance certificate are mentioned except merely stating that such clearance relates to functioning of theatres. The learned counsel would further contend that it is not explained by the Government as to how and in what manner such property tax clearance certificate is relevant for the functioning of theatres.
40. The modern administrative machinery is quite complex and the exact means of achieving the object of an Act may not be adequately comprehended all at once. It is necessary to provide for some elasticity in the actual working of law. Non-mention of reasons in G.O. or counter affidavit, in our considered view, cannot be the reason for holding Rule 92(1)(v) as ultra vires the Act and quashing it.
41. As we pointed out earlier, in certifying suitability of the building, local body also has its say. Running a cinema theatre means hundreds/ thousands of people throng to cinema theatre. When huge number of people throng to cinema theatres, local bodies have more civic responsibilities in providing water supply, sewerage, sanitation, waste disposal, public convenience in and around the area and also maintenance of access road to the cinema theatre. More civic responsibilities are cast upon the authorities pertaining to the area and building in which cinema theatre is run. It is far fetched to contend that the payment of property tax and consequent civic responsibility cast upon the local body has no relevance or nexus to the object of the Act. For instance, let us assume that in a case where the property tax is due from operator of the cinema theatre and that he wants to renew his C-form licence, and if C-form is renewed, even when property tax is due and payable, the Corporation/local body would be expected to discharge its onerous civic responsibility of maintaining roads, providing water supply, sewerage and ensuring public convenience in and around the area. If property tax is due and the owner or operator of cinema theatre is in arrears of property tax, the Corporation/local body would not be in a a position to efficiently discharge its civic responsibility, which would ultimately be prejudicial to the interest of the public. The learned single Judge was not right in saying that under the relevant Corporation statutes/the Tamil Nadu Municipalities Act/ Tamil Nadu Panchayat Act, there are sufficient provisions enabling the authorities to collect property tax. If the building is put to any other normal commercial use, probably, with less civic responsibilities, the Local Authority can proceed under respective enactments to recover the areas of tax, but the same analogy cannot be applied to a cinema theatre, where hundreds/thousands of people throng and the civic responsibilities cast upon the authorities are more.
42. Placing reliance upon AIR 1986 SC 515 (INDIAN EXPRESS NEWS PAPERS (BOMBAY) PVT.LTD. VS. UNION OF INDIA AND OTHERS), it was contended that a piece of subordinate legislation can be tested on question of its being unreasonable i.e., manifestly arbitrary. On behalf of the respondents, it was contended that insistence for production of "no dues certificate of the payment of property tax" is an indirect way of collecting property tax and not in furtherance of the object of the Act and is unreasonable and arbitrary.
43. There is no force in the contention that the amendment - Rule 92(1)(v) does not pass the test of reasonableness. Tamil Nadu Cinematograph Act is a regulatory measure. The power to regulate includes the power to restrain which embraces limitations and restrictions on all incidental powers. In AIR 1984 Andhra Pradesh 75 (D.K.V.PRASAD RAO VS. GOVERNEMNT OF A.P.), Rule 12(3) of the Andhra Pradesh Cinemas (Regulation) Rules, 1970 fixing maximum rates of admission to different classes in a cinema theatre was challenged on the ground that the Rule was beyond the power of State Government under the Andhra Pradesh Cinemas (Regulation) Act, 1955 and that it placed unreasonable restriction on the fundamental rights of the petitioner therein violating Article 19 of the Constitution. Justice K.Ramaswamy, (as His Lordship then was), rejected both the contentions and upheld Rule 12(3) and held as under:
"The power to regulate includes the power to restrain, which embraces limitations and restrictions on all incidental matters connected with the right to trade or business under the existing licence. R.12(3) regulated entry to different classes to the cinema hall and it was within the rule making power of the State Government to frame such rule. The Court further held that fixing limit of rate of admission was an absolute necessity in the interest of the general public and the restriction so placed was reasonable and in public interest. On these findings the Court upheld the validity of the rule. We are in agreement with the view taken by the Andhra Pradesh High Court."
Referring to the above decision, in AIR 1992 SC 1519 (DEEPAK THEATRE, DHURI VS. STATE OF PUNJAB AND OTHERS), the Supreme Court has upheld the power to classify seats and fix rates of admission as a regulatory measure and does not infringe Article 19(1)(g). Applying ratio of the above decision, we are of the view that the power to impose limitations and restrictions on all incidental matters, while granting or renewing licence.
44. Learned counsel for Respondents submitted that where the theatre is operated by a lessee and the property tax is due by the owner of building, the lessee would not be in a position to produce no due certificate from the Local Authorities and such condition imposed upon the operator of the cinema theatre would give undue advantage to the owners of the building. It was further contended that in cases where there is dispute as to the payment of property tax and even in such cases the operators of the theatre would be compelled to pay enhanced property tax which would infringe the right of the respondents. Even though such an argument was advanced, no specific instance was brought to our notice. In any case, such instance of dispute regarding property tax and the lessee and owner of the building can only be stray instance and that cannot be the reason for striking down the entire amended rule itself.
45. Insisting for production of "no property tax due certificate" from the Corporation Local Authority cannot be said to be arbitrary or outside the scope of the Act. In our considered view, the amendment to Rule 92(1)(v) is not unconstitutional or ultra vires the parent Act nor arbitrary. The order of learned single Judge striking down Rule 92(1)(v) as ultra vires the Act cannot be sustained and is liable to be set aside.
46. In the result, the common order dated 20.11.2000 made in W.P.Nos.6563, 7443, and 12767 of 1997, 18877, 18879, 18878 and 18942 of 1996 etc., batch is set aside and the Appeals are allowed. However, there shall be no order as to costs.
(R.B.I.,J.) (M.V.,J.) 24.03.2010 Index:Yes Internet:Yes usk Copy to: 1. The Secretary to Government Home (Cinemas) Department, State of Tamil Nadu Fort St.George Chennai - 9 R.BANUMATHI,J. AND M.VENUGOPAL,J. usk 2.The Collector of Madurai, Madurai District 3.The Commissioner Corporation of Madurai,Madurai Pre-Delivery Judgment in W.A.Nos.1827 of 2002etc.,batch 24.03.2010