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Govindji Vithaldas and Co. Vs. the Municipal Corporation of the City of Ahmedabad and ors. - Court Judgment

LegalCrystal Citation
CourtMumbai High Court
Decided On
Case NumberSpecial Civil Appln. Nos. 1477 and 1478 to 1507 of 1956
Reported inAIR1959Bom26; (1957)59BOMLR129; ILR1957Bom147
ActsBombay Provincial Municipal Corporations Act, 1949 - Sections 2(40), 69(2), 376, 376(5), 451 and 453; Constitution of India - Article 19, 19(1) and 19(5); Coal Control Order; Drugs Act; District Municipal Act - Sections 63(10), 63(16), 249(1), 458 and 458(40)
AppellantGovindji Vithaldas and Co.
RespondentThe Municipal Corporation of the City of Ahmedabad and ors.
Appellant AdvocateRajani Patel, ;I.C. Bhat and ;V.B. Patel, Advs.
Respondent AdvocateH.M. Seervai and ;B.G. Thakor, Advs., ;i/b., Little and Co. Attorneys, ;Adv. General and ;R.M. Kantawala, Adv., ;i/b., Little and Co. Attorneys
.....municipal corporations act (bom, lix of 1949), section 370 - constitution of india, article 19--power conferred upon commissioner to grant or withdraw licence under section 376(5) whether constitutes unreasonable restriction upon fundamental right of person to carry on his business--law conferring unfettered and absolute discretion upon authority when bad.;the power conferred upon the commissioner under section 376(5) of the bombay provincial municipal corporations act, 1949, to grant or withdraw a licence to a person in respect of an article to which under the rules framed under the act the relevant provision of section 376 applies, does not constitute an unreasonable restriction upon the fundamental right of the person to carry on his business which has been granted to him under..........or (b) to withhold any such licence.' and the commissioner has purported to act pursuant to the power conferred upon him by this sub-section and has withheld the licence from the petitioner. what is urged by the petitioner is that under the constitution he has the right to carry on his business and the restriction upon that right can only be a reasonable restriction and when sub-section (5) confers an arbitrary and unfettered discretion upon the commissioner to grant him a licence or withhold a licence from him, that restriction is not a reasonable restriction and therefore his fundamental right under article 19 has been violated.6. we shall presently turn to the authorities, but apart from the authorities and on a construction of the sub-section itself it seems to us that it is.....

M.C. Chagla, J.

1. These are 31 petitions challenging the refusal by the Municipal Commissioner of the Ahmedabad Municipality to issue licenses to them for carrying on timber business in a certain locality in Ahmedabad. The point involved in all these petitions in identical and therefore it will be sufficient if we deal with the facts of the first petition, Special Civil Application No. 1477 of 1956, and decide the point in that petition.

2. Now, this petitioner has been doing timber business for several years in a locality which is known as City Wall locality and a license was given to him to carry on this business for several years. When he applied for a license for the year 1951-52 the license was refused on the ground that in the opinion of the Fire Superintendent the Municipal law was not observed and the margin of five feet around the premises was not kept as required by law. Notwithstanding the refusal of the license the petitioner carried on his business and when he applied for a license for the year 1956-57 the license was refused on 17-5-1956 and the ground given for the refusal of the license was that a zone had been fixed for keeping and selling timber wood, that the place in respect of which license was applied for was not within the said zone, and as the place was outside the zone and the reserved plots, the application of the petitioner for license for the current year was rejected. This decision was arrived at by the Deputy Health Officer and it is this refusal which has been challenged in the petition.

3. Now, we may very briefly dispose of the merits of the matter. It appears that there are two Town Planning Schemes which, although they have not received the final legal imprimatur, have been adopted by the Ahmedabad Municipality. One is the City Wall Scheme under which timber depots are prohibited within the City Wall limits and the other is the Jamalpur Scheme under which certain plots have been reserved for timber depots, and the reason why the Municipal Commissioner refused a license to the petitioner was that his timber depot was within the City Wall limits and the Municipality offered to give every facility to the petitioner if he were to shift his depot from the City Wall limits to the Jamalpur limits. The petitioner insisted on carrying on his business within the City Wall limits and thereupon the Municipal Commissioner refused the license.

4. The petitioner challenges the action of the Municipal Commissioner on two grounds. The first is that the section of the Municipal Corporation Act to which we shall presently refer, which makes it incumbent upon the petitioner to obtain a license in order to carry on his business of timber, is ultra vires of the Constitution, and the other ground is that assuming the section is intra vires and valid, the discretion exercised by the Municipal Commissioner was arbitrary and capricious. Mr. Patel very fairly did not press the second ground and did not dispute that if the discretion could be exercised under the law and a license was necessary, the discretion could not be said to have been wrongly or dishonestly or arbitrarily exercised by the Municipal Commissioner. Therefore, the only question that we have to consider in this petition is whether the impugned section contravenes any provision of the Constitution.

5. Now, under Section 376 of the Bombay Provincial Municipal Corporations Act it is provided:

'(1) Except under and in conformity with the terms and conditions of licence granted by the Commissioner, no person shall - (a) keep in or upon any premises any article specified in the rules.....'

and the relevant part is in Sub-clause (ii):

'(ii) for any purpose whatever or for sale or for other than domestic use as may be specified in the case of each article in the rules.....' and the rules which under Section 453 are incorporated in the schedule to the Act prescribe timber as one of the articles to which this sub-section would apply. Therefore, if the petitioner wants to keep timber on any premises for any purpose whatever or for sale or for any other use except domestic use, he can only do so provided he obtains a licence from the Commissioner and carries out the terms and conditions of the licence. Sub-section (5) of Section 376 provides:

'(5) It shall be in the discretion of the Commissioner-

(a) to grant any licence referred to in Sub-section (1) subject to such restrictions or conditions (if any) as he shall think fit to prescribe, or

(b) to withhold any such licence.'

And the Commissioner has purported to act pursuant to the power conferred upon him by this Sub-section and has withheld the licence from the petitioner. What is urged by the petitioner is that under the Constitution he has the right to carry on his business and the restriction upon that right can only be a reasonable restriction and when Sub-section (5) confers an arbitrary and unfettered discretion upon the Commissioner to grant him a licence or withhold a licence from him, that restriction is not a reasonable restriction and therefore his fundamental right under Article 19 has been violated.

6. We shall presently turn to the authorities, but apart from the authorities and on a construction of the Sub-section itself it seems to us that it is erroneous to suggest that an arbitrary and unbridled discretion has been conferred upon the Municipal Commissioner to refuse a licence to a person who applies for it. It is clear from the language of Section 376 that the Legislature did not have as its object in enacting this section to prohibit a business to which under the rules the relevant provision of Section 376 applied. The object was to regulate business. It is equally clear that in the exercise of his discretion the Municipal Commissioner cannot withhold a licence from a person who wishes to carry on the business unless he does so for good cause. When a statutory discretion is conferred upon an authority that discretion does not permit that authority to do what he likes, to act with caprice, or to act without reason or without fairness and justice. The limits of a statutory discretion have been well settled over a long period of time and in the very act of conferring a discretion upon the officer the Legislature clearly requires that discretion must be exercised with reason, according to law, and fairly and justly, so as not to prejudice the rights of any party who would be affected by the exercise of the discretion by that authority. Maxwell on the Interpretation of Statutes, Tenth Edition, page 123 points out :

'Where, as in a multitude of Acts, something is left to be done according to the discretion of the authority on whom the power of doing it is conferred, the discretion must be exercised honestly and in the spirit of the statute, otherwise the act done would not fall within the statute.'According to his discretion' means, it has been said, according to the rules of reason and justice, not private opinion: according to law and not humour; it is to be, not arbitrary, vague and fanciful, but legal and regular; to be exercised, not capriciously, but no judicial grounds and for substantial reasons.'

Therefore, if the Municipal Commissioner were to withhold the granting of a licence on grounds other than those suggested in this passage of Maxwell, he would not be exercising the statutory discretion at all and in failing to exercise the statutory discretion he could be compelled at the instance of any party aggrieved to exercise the discretion as the law requires him to exercise. Therefore, it seems to us that it is rather an exaggeration to suggest that when a statutory discretion is conferred upon an authority, that discretion is either arbitrary or unfettered and unbridled. Even though the Legislature may not indicate the nature of that discretion and how it should be exercised, the principles of law which are well settled must be imported into the consideration of the question as to what discretion the legislature has conferred upon the authority.

7. But it is pointed out that the Supreme Court has taken a contrary view and what the Supreme Court has laid down is that when we find a discretion conferred upon an authority which is unregulated in the sense that no direction is given by the Legislature as to how he should exercise it, it is arbitrary and unfettered in the sense that if there is no appeal from his decision, then that discretion is likely to cause injustice, it is likely to be abused, and therefore such a conferment of discretion cannot be upheld by the Courts. Turning to that judgment which is in Dwarka Prasad Laxmi Narain v. State of Uttar Pradesh, : [1954]1SCR803 , what the Supreme Court was considering was the provisions of the Uttar Pradesh Coal Control Order, 1953, and what was challenged was Clause 4(3) of the Order which empowered the licensing authority to grant or refuse to grant, renew or refuse to renew, suspend, revoke, cancel or modify and licence or any terms thereof granted by him under the Order for reasons to be recorded; provided that every power which is under this Order exercisable by the licensing authority shall also be exercisable by the State Coal Controller or any person authorised by him in this behalf. Mr. Justice Mukherjea who delivered the judgment of the Court, after conceding that for ensuring equitable distribution it was quite a reasonable thing to regulate sale of certain commodities, says:

'.....but the mischief arises when the power conferred on such officers is an arbitrary power unregulated by any rule of principle and it is left entirely to the discretion of particular persons to do anything they like without any check or control by any higher authority. A law or order, which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities cannot but be held to be unreasonable.'

And when it was pointed out to the Court by counsel that the licensing authority had to record the reasons for refusing the licence or cancelling the licence, Mr. Justice Mukherjea at p. 813 (of SCR): (at p. 227 of AIR) points out:

'This safeguard, in our opinion, is hardly effective; for there is no higher authority prescribed in the order who could examine the propriety of these reasons and revise or review and decision of the sub-ordinate officer. The reasons, therefore, which are required to be recorded are only for the personal or subjective satisfaction of the licensing authority and not for furnishing any remedy to the aggrieved person.'

And the learned Judge relies on an American case of Yick Wo v. Hopkins, (1886) 118 US 356 , for the proposition

'that the action or non-action of officers placed in such position may proceed from enmity or prejudice, from partisan zeal or animosity, from favouritism and other improper influences and motives which are easy of concealment and difficult to be detected and exposed, and consequently the injustice capable of being wrought under cover of such unrestricted power becomes apparent to every man, without the necessity of detailed investigation.'

8. Mr. Patel has pointed out that on the fact the case before us is stronger than the case which the Supreme Court had to consider. At least says mr. Patel, in the case before the Supreme Court the licensing authority had to record the reasons for refusing to issue a licence or renewing the licence or cancelling the licence; in out case no such obligation is cast upon the Municipal Commissioner. It is also pointed out that in the case before the Supreme Court there was a power vested in the licensing authority to delegate his power to any person authorised by him and it is pointed out that under the provisions of the Act the Municipal Commissioner can also delegate his power under Section 376 to any Municipal officer. We may just look at these provisions of delegation. Under Section 69 the Commissioner may delegate any of the powers, duties or functions conferred or imposed upon him or vested him upon any Municipal Officer, and under Sub-section (2) of that section, if the power, duty or function falls within any of the sections enumerated in that sub-section, then the delegation cannot be effected without the prior approval of the Standing Committee. Section 376 with which we are dealing does not fall within Sub-section (2) and therefore admittedly the Municipal Commissioner could have delegated this power upon any Municipal officer, and in this very case has delegated the power upon the Deputy Health Officer, and an order has been passed by the Municipal Commissioner on 31-3-1956, delegating this power to grant licences upon the Deputy Health Officer.

9. Mr. Seervai seeks to distinguish Dwarka Prasad's case (A) by pointing out that whereas under the Coal Control Order the delegation could be upon any person, under the Municipal Act the Commissioner could only delegate his power to a Municipal officer. It is also pointed out that under Section 69 the delegation is subject to the control of the Commissioner and subject to his revisional powers. It is also pointed out by Mr. Seervai that whereas the language used in the Coal Control Order was 'may', in the section which we have to construe the Legislature has used the expression 'in the discretion of the Commissioner', and what is strongly relied upon by Mr. Seervai is that the expression 'in the discretion' has acquired a judicial connotation which the expression 'may' has not acquired, and therefore the Supreme Court did not consider what the effect was of the Legislature conferring a statutory discretion upon an authority. We must frankly confess that the line of demarcation between the Coal Control Order case and the case we are considering is a very thin one and but for a subsequent judgment of the Supreme Court we would have found difficulty in distinguishing this case from the earlier judgment of the Supreme Court.

10. But the later judgment of the Supreme Court has made the position clear and that is a judgment in the case of Harishankar Bangla v. State of Madhya Pradesh, : 1954CriLJ1322 . There the Supreme Court was considering the Cotton Textile (Control of Movement) Order, 1948, and Clause 3 of that Order provided:

'No person shall transport or cause to be transported by rail, road, air, sea or inland navigation any cloth, yarn or apparel except under and in accordance with-

(i) a general permit notified in the Gazette of India by the Textile Commissioner, or

(ii) a special transport permit issued by the Textile Commissioner.'

Now, the discretion conferred upon the Textile Commissioner under this clause seems to be as absolute and as uncontrolled as the discretion conferred upon the licensing authority in Dwarka Prasad's case (A). The Order itself does not seem to lay down any directions as to how this discretion had to be exercised by the Textile Commissioner. No right of appeal was provided against his decision and it does not even seems that he had to record his reasons for refusing a permit to a person who applied for it, and yet this clause was upheld by the Supreme Court as valid, and when the attention of the learned Judge was drawn to Dwarka Prasad's case (A) the learned Chief Justice who delivered the judgment points at p. 387 (of SCR): (at p. 468 of AIR):

'In the present Control Order there is no such provision as existed in the Uttar Pradesh Coal Control Order. Provisions of that Control Order bear no analogy to the provisions of the present Control Order. The policy underlying the Order is to regulate the transport of cotton textile in a manner that will ensure an even distribution of the commodity in the country and make it available at a fair price to all. The grant or refusal of a permit is thus to be governed by this policy and the discretion given to the Textile Commissioner is to be exercised in such a way as to effectuate this policy. The conferment of such a discretion cannot be called invalid and if there is an abuse of the power there is ample power in the Courts to undo the mischief.'

Therefore, it is clear from the judgment that if the Court can discover a policy underlying the law and if a discretion is conferred under that law, then the Court must hold that the discretion is to be exercised not in an arbitrary manner, not in a capricious manner, not in an uncontrolled manner, but in a manner so as to effectuate the policy of the law. Again, as pointed out by the Supreme Court, if he discretion is not exercised in this manner, then there is no exercise of the power at all, there is an abuse of the power, and the Court has ample jurisdiction to rectify that abuse of power. Mr. Patel has strongly relied on a fact which appears in this judgment that the Central Government had to prescribe forms for applications for intoning permits and the conditions under which the permits could be obtained. It is pointed out that if there were such forms, then it is clear that the discretion of the Textile Commissioner was controlled by the directions given by the Central Government and he could only act in accordance with those directions. But inasmuch as there is no direction whatever given to the Municipal Commissioner in the case before us, our case does not fall within the rule of this decision. But when we turn to p. 388 (of SCR): (at p. 468 of AIR) the learned Chief Justice says:

'Presumably, as appears from the different forms published in the Manual, there the directions and rules laid down by the Central Government for the grant or refusal of permits.'

Therefore, it is clear that the decision of the Supreme Court was not based upon the fact that the Central Government had prescribed forms for application for obtaining permits and the conditions under which permits could be granted. The ratio of the judgment is, as already pointed out, what appears earlier at p. 387 (of SCR): (at p. 468 of AIR) viz., that a discretion is conferred upon an authority under an Act to carry out the policy of the Act and if he fails to carry out that policy then he is not exercising that power and there is an abuse of that power.

11. There is a decision of a Division Bench of this Court which has considered both these Supreme Court judgments and the decision is reported in Natvarlal Ambalal v. State of Bombay, 58 Bom LR 221. In that case Mr. Justice Dixit and Mr. Justice Vyas had to consider Rule 62A of the rules framed under the Drugs Act and that rule was in the following terms:

'Restricted licenses in Forms 20A or 21A shall be issued subject t the discretion of the licensing authority to dealers or persons in respect of drugs whose sale does not require the supervision of a qualified person'.

The discretion was, as will be noticed, in very wide terms and the learned Judges held that where a law conferred upon an authority unfettered, absolute and uncontrolled discretion, the law would be bad, where the question of policy underlying the law is not involved. If, on the other hand, the question was one of policy underlying the law as to how the law was to be enforced, and as to how the provisions of the Act were to be carried out, then a discretion, be it unfettered, uncontrolled and absolute, was not bad. In view of this, what we have now to find is whether there is a policy of law underlying the Municipal Act which policy was to be carried out by the provisions conferring discretion upon the Municipal Commissioner to issue licenses under Section 376. It will be noticed that in the Bombay High Court judgment it is clearly stated that however unfettered, absolute and uncontrolled the discretion might be, so long as if involved a policy underlying the law and it was necessary for carrying out the law, that discretion could not be held to be invalid.

12. Mr. Patel wanted to rely on a judgment of a single Judge of the Madras High Court, where that learned Judge construed Section 249(1) of the District Municipal Act which according to Mr. Patel is almost identical in terms with the section which we have got to consider, and that learned Judge held that the section was invalid in view of Dwarka Prasad's case (A). We have not permitted Mr. Patel to cite this decision because it is not reported in the authorised series. It is reported in Mahmood Khassim v. Municipal Council, Ootacamund, (1955) 2 M LJ 684: AIR 1956 Mad 181 and as that is not an authorised publication we did not wish to avail ourselves of the benefit of the reasoning of that learned Judge. But in any view of the case we are bound by the decision of a Division Bench of our own Court to which reference has been made, and with very great respect, if the learned Judge has taken a contrary view then we must dissent from the judgment. But we can express no opinion as to the reasons which led the learned judge to come to that conclusion as we have not had the benefit of reading that judgment.

13. Turning to the Municipal Act to discover the policy which is to be effectuated by the exercise of the discretion and the issuing or withholding of licences, the Act itself, as the preamble points out, was passed to ensure a better municipal government in cities of Ahmedabad and Poona, and it can not be disputed that municipal Government must be carried on in order to ensure to the residents' health, safety and freedom from annoyance. The better the municipal government the wider would be its activities and municipal Government may go further and try to beautify the city and to give to the residents refined surroundings and even look after its cultural interests. Therefore, it is very difficult to say that any activity of the Municipality in the interests of the residents would not be within the ambit of the Act. Chapter VI of the Act deals with obligatory and discretionary duties of the Corporations and Sub-section (10) of Section 63 provides for the regulation and abatement of offensive and dangerous trades or practices, and Sub-section (16) provides for the reclamation of unhealthy localities, the removal of noxious vegetation and generally the abatement of all nuisances; and as pointed out by Mr. Seervai 'nuisance' has been very widely defined in Section 2(40) as including any act, omission, place or thing which causes or is likely to cause injury, danger, annoyance or offence to the sense of sight, smell or hearing or which is or may be dangerous to life or injurious to health or property. Therefore, it would be an obligatory duty of the Corporation not to prevent any activity which is likely to be dangerous to the life or property of the residents, or to put it in a different language, to regulate every activity in such a manner as not to cause any danger to the health of property of the residents. It is a matter of common knowledge that stocking of timber does lead to fire breaking out and causing damage to neighbouring properties, and therefore is regulating the stocking of a commodity which is likely to cause damage, the Municipality would really be exercising its obligatory function and when, as already pointed out, in the statutory rules timber was included as an article indicated that timber was a commodity, the business in which could not be permitted is an uncontrolled manner and that business in timber should be regulated and for that purpose a licence should be issued to a timber merchant. Therefore, in issuing a license or withholding a licence the Municipal Commissioner is effecting the policy of the law which is to regulate all businesses which are likely to be a nuisance in the wide sense in which that word is defined in the Act. It is also pointed out that under Section 458 power is conferred upon the Corporation to make by-laws and one of the topics on which a by-law can be made is indicated in Clause (20) and which is 'the control and supervision of all premises used for any of the purposes mentioned in Section 376 and of all trades and manufactures carried on thereon and the prescribing and regulating of the construction, dimensions, ventilation, lighting, cleansing, drainage and water-supply of any such premises,' and it is pointed out that this power is conferred to effectuate the same policy which underlies the conferment of power upon the Municipal Commissioner under Section 376. Again, attention is drawn to Section 458(40) which is regulating and prohibiting the stocking of inflammable materials and of the lighting of fires in any specified portion of the city.'

14. Our attention was also drawn by Mr. Seervai to various provisions of the Act which go to show that the Municipal Commissioner does not possess dictatorial powers which he can exercise without any control or restriction. Under the law the Municipal Commissioner is the highest executive officer of the Municipality is vested in the Municipal Corporation. Attention is drawn to Section 71 under which the Corporation may require the Commissioner to furnish a report by himself or to obtain from any officer subordinate to him and furnish, with his own remarks thereon, a report upon any subject concerning or connected with the administration of this Act or the Municipal Government of the City, and what is said is that although the statutory power of issuing licences is conferred upon the Municipal Commissioner by law, the policy followed by him in issuing or withholding permits could be supervised by the Corporation by calling for reports, by having a debate, and by criticising his action. The Corporation being a representative body, could be approached by any voter whose rights were prejudicially affected by any action on the part of the Municipal Commissioner. It is also pointed out that the State Government also exercises control over both the Corporation and the Commissioner under Section 451 in respect of orders which are ultra vires and also orders which are likely to lead to a breach of the peace or to cause injury or annoyance to the public or to any class or body of persons and what is said is that looking to the scheme of the Act, although the Municipal Commissioner is constituted the highest executive authority, he is in a sense responsible to the Corporation and he cannot exercise any of his powers without subjecting himself to the constant and continuous criticism of the Municipal Corporation.

15. In our opinion, therefore, Section 376 does not constitute an unreasonable restriction upon the fundamental right of the petitioner to carry on his business which has been granted to him under Article 19 of the Constitution. As the challenge has been limited to this question, the petition must fail and is dismissed with costs.

16. The other petitions are also dismissed with costs.

17. Petitions dismissed.

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