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Y.R. Parpia Vs. R.M.D. Chamarbagwalla - Court Judgment

LegalCrystal Citation
SubjectOther Taxes
Decided On
Case NumberO.C.J. Appeal No. 40 of 1948 and Miscellaneous No. 91 of 1948
Reported inAIR1949Bom109; (1948)50BOMLR728
AppellantY.R. Parpia
RespondentR.M.D. Chamarbagwalla
bombay prize competition tax act (bom. xi of 1939), sections 4, 5 and 10 - prize competition-issue of license-discretion of collector to refuse license-such discretion vests in collector-'in the public interest'-construction of, whether ejusdem generis-cofirment of power by statute-exercise of such power-bombay high court rules (o.s.), 1936, rule 180-affidavit by collector-whether cross-examination of collector can be ordered-indian evidence act (i of 1872), section 114-presumption as to official acts.;section 4 of the bombay prize competition tax act, 1039, does not provide for the issue of any license by the collector. there is implied and assumed in the section a power on the part of the collector to issue a license. this power is discretionary : it is not a power coupled with a duty,.....m.c. chagla, c.j.1. the petitioner in this case is the sole concessionaire for india, burma and ceylon of messrs. littlewood's pool limited, liverpool, who are conducting on a large scale a football pool competition. in july 1946, the petitioner applied for and obtained a license from the collector of bombay for a period ending march 31, 1947. he further applied and obtained a license for a further period ending march 31, 1948. on the expiration of that period he made an application for a renewal of his license, and the collector of bombay refused to renew the license. on that he presented a petition for a mandamus under section 45 of the specific relief act to compel the collector to issue the license to him. the matter came up before mr. justice bhagwati and he made an order on the.....

M.C. Chagla, C.J.

1. The petitioner in this case is the sole concessionaire for India, Burma and Ceylon of Messrs. Littlewood's Pool Limited, Liverpool, who are conducting on a large scale a Football Pool Competition. In July 1946, the petitioner applied for and obtained a license from the Collector of Bombay for a period ending March 31, 1947. He further applied and obtained a license for a further period ending March 31, 1948. On the expiration of that period he made an application for a renewal of his license, and the Collector of Bombay refused to renew the license. On that he presented a petition for a mandamus under Section 45 of the Specific Relief Act to compel the Collector to issue the license to him. The matter came up before Mr. Justice Bhagwati and he made an order on the Collector to issue the license to him. From the order of Mr. Justice Bhagwati the Collector of Bombay has come in appeal before us.

2. The license which the petitioner seeks is issued under the Bombay Prize Competition Tax Act, 1939, and Section 4 of that Act provides that no prize competition shall be conducted unless a license in respect of such competition has been obtained by the promoter thereof from the Collector. This section does not provide for the issue of any license by the Collector, but it cannot be and it is not disputed that there is implied and assumed in the section a power on the part of the Collector to issue a license. The question that arises for determination is whether this power is discretionary or whether it is a. power coupled with a duty and the Collector is bound to exercise the power in favour of the petitioner if he complies with the conditions laid down in the Statute. Now, the principles which have to be considered in determining this question have been by now very well settled and I had occasion to attempt to formulate them, after considering various English decisions, in the case of Chief Controlling Revenue Authority v. Maharashtra Sugar Mills : (1947)49BOMLR893 . Those principles clearly show that not much help or guidance can be obtained for determining this question from the language and the terms of the section itself. On the face of the language used in the section it could not be said that there is any obligation upon the Collector to issue a license in favour of the petitioner. But that question has got to be decided aliunde by considering the object, the scope and the scheme of the Act. If it is found in considering these factors that there is a right created in favour of the applicant, then the law will assume a corresponding duty on the part of the respondent. Therefore, what we have to determine is, after looking at the scheme of the Act, whether there was any right in the petitioner to obtain a license from the Collector. If we find that there was such a right, then the power with which the Collector is entrusted under Section 4 is a power which he must exercise in favour of the donee of such a right.

3. Therefore, let us look at the object, scope and the scheme of the Act. The preamble of the Act states that it is for the purpose of regulating and levying of tax on prize competitions in the province of Bombay, and judging merely by this preamble it would be possible to contend, as it has been contended by Mr. Kolah very strenuously, that this piece of legislation is a purely fiscal legislation. Section 2 contains definitions, and the prize competition with which we are concerned in this case is a prize competition which falls under Section 2, Sub-clause (2)(b). Section 3 is a charging section. It provides for a, levy of tax on prize competitions at the rate of 12 per cent, and Sub-clause (6) gives power to the Provincial Government to vary the rate to be levied so long as it does not exceed 25 per cent. Then comes Section 4 to which we have already referred and which provides for the issuing of a license. Mr. Kolah's contention is that a license is only to be issued under Section 4 for the purpose of facilitating the collection of revenue. It has no other purpose except this, and once the conditions laid down under the Act with regard to various formalities to be observed by the person who applies for the license are complied with, then the license must be granted as a matter of right. We shall deal with this contention a little more in detail when we come to consider the other sections of the Statute. Section 5 deals with expiry and renewal of the license. It is under this section that the petitioner has applied for a renewal of the license from the Collector. Section 5(1) provides that every license shall be in such form and subject to such conditions as may be prescribed and shall expire on the last day of the year for which it was granted and may be renewed from year to year; and Sub-clause (2) of Section 5 provides : 'The Collector may impose for the grant or renewal of every such license such fee not exceeding Rs. 10 as may be prescribed.' Section 6 is a penal section which is consequential upon Section 4. Section 7 provides for promoters keeping and maintaining accounts, and Section 8 is a penal section following upon Section 7. Section 9 gives the power to the Collector to inspect accounts maintained by the promoter. Section 10 is a very important section which gives the power to the Collector to suspend or cancel a license for reasons stated in that section. Now these reasons are set out in four Sub-clauses : (1) deals with the case of the tax mentioned in Section 3 not being paid; (2) deals with a breach of any of the conditions subject to which the license is granted, and (3) deals with the contravening by the licensee of the provisions of Section 7. Then comes Sub-clause (4) which is in these terms : 'for any other reason for which the suspension or cancellation of the license is, in the opinion of the Provincial Government, necessary in the public interest.' Now Mr. Kolah's contention is that Sub-clause (4) is ejusdem generis with what is contained in Sub-clauses (1), (2) and (3), or, in other words, according to Mr. Kolah, that the public interest contemplated in Sub-clause (4) is a public interest which is confined to the question of collection of tax. Therefore according to Mr. Kolah, all the four grounds mentioned in Section 10 are of a fiscal character. We are unable to accept that contention. With very great respect to the learned Judge who also took the same view that Sub-clause (4) was ejusdem generis with Sub-clauses (1), (2) and (3), on the face of this clause and the manner in which it has been drafted, it is impossible to hold that 'in the public interest' is ejusdem generis with what is contained in Sub-clauses (1), (2) and (3). If the intention of the Legislature was that Sub-clause (4) should deal with the same genus as is dealt with in Sub-clauses (1), (2) and (3), then Sub-clause (4) would have stopped at the expression 'necessary.' But the Legislature has gone on to provide and mentioned a new-genus and indicated a different head which is 'public interest,' and it is impossible to contend that public interest is not something which is infinitely wider than fiscal considerations which might move and influence the State. It may be-and very often is-that collection of revenue from a certain source may be contrary to the interest of the State. Therefore, according to Mr. Kolah, although it may be under certain circumstances contrary to the interest of the State, to allow certain kinds of prize competitions to go on in Bombay, still it would not be open to the Provincial Government or the Collector under Section 10 to cancel the license for that reason, because that would not be a fiscal consideration and far from helping the collection of tax it would prevent the collection of tax. Once we come to the conclusion that it is open to the Collector to suspend or cancel a license for a reason which is other than a fiscal reason and a reason which in the opinion of the Provincial Government constitutes a reason of public interest, then that interpretation has a very great bearing both on Section 4 and on the question of whether the petitioner has or has not a right to the obtaining of a license, if he complies with the other conditions set out in the Act. If a license could be suspended or cancelled for public interest, then it is not possible for the petitioner to say that ha has a right to carry on his business of prize competition subject merely to the formal granting of license. Higher and wider considerations would then come into play. It would be then for Government to say whether under particular circumstances a particular prize competition business should or should not be allowed to go on, and if such a right is not vested in the petitioner, then in interpreting Section 4 we cannot say that a duty or an obligation is cast upon the Collector to grant a license to the petitioner. It is also difficult to see why, if the Collector can suspend or cancel a license for a particular reason mentioned in Section 10, that consideration cannot also move him in either refusing a license in the very first instance under Section 4 or refusing the renewal of a license under Section 5. Mr. Kolah has argued that whereas the Legislature has specifically provided for Sub-clause (4) in Section 10, no such limitation is placed either in Section 4 or Section 5 of the Act. Now, that has been done for a very good reason. When a license has been issued a vested right has been created, and in order to take away that vested right or interfere with that vested right there must be a specific statutory provision and that statutory provision is contained in Section 10. On the other hand, if the issuing of a license or the renewal of a license was discretionary with the Collector under Sections 4 and 5, no such considerations need be specifically stated, and the Legislature need not point out how and under what circumstances he should exercise his discretion. Look at the other absurdity of the situation, if we accept the contention of Mr. Kolah. According to him there is an indefeasible right in his client to obtain a license as soon as he applies for its renewal and complies with the conditions laid down in the Act. Yet under Section 10, on the very next day, it would be open to the Collector to suspend or cancel the license, if in the opinion of the Provincial Government such a cancellation or suspension became necessary in the public interest. And also according to Mr. Kolah (and he is driven to that conclusion, he says), it may be that after the Collector has suspended or cancelled the license, if the licensee were to apply again under Section 4 or Section 5 there would again arise an obligation on the part of the Collector to issue a license. Mr. Kolah says there is possibly a lacuna in the Statute, but we must not read and construe Acts in a manner which leave such anomalous and illogical lacuna to be filled up. Therefore, the authorities clearly lay down that when you are deciding whether a particular power with which an authority is vested is a power coupled with duty or merely a discretionary power, you must look at the whole scheme of the Statute, and if you come to the conclusion that it is not possible to reconcile all the sections of the Statute, if you interpret the power as a power coupled with duty, then you should not do so and give to the expression its ordinary plain meaning and construe it merely as a power to be exercised at the discretion of the authority. Therefore, under Section 4, in our opinion, the implied power to grant a license also carries with it the implied power to refuse to grant the license.

4. The same view of the law was taken by Mr. Justice Kama in the case Fakir Mahomed v. Municipal Commissioner of Bombay (1936) 39 Bom. L.R. 536 which, according to us, on the facts is very analogous. That learned Judge in that case was considering Section 411 of the City of Bombay Municipal Act, and under that section no person could carry-on in the city of Bombay the trade of a butcher without a license granted by the Commissioner, and Mr. Justice Kania held that that section entitled the Commissioner either to grant or refuse a license for carrying on the business of a butcher. There also the contention was, as it has been before us, that there was a duty cast upon the Commissioner to issue a license, if the conditions laid down in the Act or the Rules had been satisfied. Mr. Justice Kania took the view that Section 411 deprived every citizen, living within the city or to whom the Act applied, of the power to carry on the business of a butcher. The only exception to that was the grant of a license by the Commissioner and carrying on the trade of a butcher in conformity with the terms of that license. Therefore, in effect, Mr. Justice Kania rejected the contention, which has also been pressed upon us, that there is any such thing as a general right or a common law right to carry on this particular business of prize competition. Once the Act is passed the only right that a citizen has is to carry on that business provided a license is granted to him. Mr. Justice Kania also held that the power to refuse the license must also be vested in the Commissioner under Section 411, because the power to grant necessarily implied a right to refuse. The cases of Rossi v. Edinburgh Corporation [1905] A.C. 21 and Gell v. Taja Noora I.L.R. (1903) Bom. 307 : 5 Bom. L.R. 133 were relied upon by the petitioner before that learned Judge and that case has also been cited at the Bar before us. In that case the House of Lords was considering the conditions of certain licenses which were issued by the Magistrates under the Edinburgh Corporation Act, and under the relevant section power was given to the Magistrates to regulate the selling of ice cream during certain hours. The Magistrates purported to determine by the terms of the license all that might be desirable or expedient to be done with reference to the times and the circumstances under which ice cream should be sold, and the House of Lords held that in trying to do so they had travelled far outside the ambit of the Statute which gave them the power to issue the license. This case is relied upon by Mr. Kolah in order to support his contention that inasmuch as the Bombay Prize Competition Tax Act, 1939, is a fiscal Act for the purpose of regulating the tax to be levied on these competitions, it would not be open to the Collector by exercising his discretion to refuse licenses to put an end to the business of those competitions. Mr. Kolah says that just as in the case of Rossi what the Magistrates were purporting to do was travelling outside the ambit of the Act, the Collector is doing the same. In our opinion, that Rossi's case has really no bearing on the point that we have to consider here. In the first place, refusing a license to the petitioner does not necessarily mean a complete ban on or prohibition of trade of prize competitions in Bombay, and there is no suggestion here that a license is being refused pursuant to any such idea, and in any case the ambit of the Act we are considering is much wider and its scope much greater than the narrow limited powers that were sought to be given to the Magistrates under the Edinburgh Corporation Act.

5. The case very strongly relied upon by Mr. Kolah is a judgment of Mr. Justice Blackwell in Ratanshaw Nusserwanji v. McElhinny : (1941)43BOMLR896 . In that case an application was made for a license for tapping toddy under the Bombay Toddy Tapping Rules framed under the Bombay Abkari Act. The Collector refused to grant the license on the ground that the policy of Government was declared to be in favour of general prohibition, and Mr. Justice Blackwell held that the Collector was under an obligation to issue a license to the petitioner. In coming to this conclusion Mr. Justice Blackwell considered the scheme of the Bombay Abkari Act and also the rules framed thereunder. The learned Judge refers to Section 14 of the Act which provides that no toddy producing trees shall be tapped except under the authority and subject to the conditions of the license granted in that behalf by the Collector. Then he went on to consider the Bombay Toddy Tapping Rules, 1928, and Rules 9 to 12 provide for various formalities that have to be gone through after an application for a license was made, and what has got to be done by the Excise Inspector and the Superintendent and the other Government Officers is described in mandatory language in these Rules, and as it is obvious from the judgment of the learned Judge, what weighed with him considerably was the imperative nature of the terms used in these Rules. The learned Judge says (p. 907):

Having regard to the use of the word 'shall' in these rules, which are to have the same foree as if enacted in the Act, I am of opinion that no question of the exercise of any discretion by the collector in the granting of a license arises, provided that the requirements of the rules are complied with, but that a statutory duty to issue a license is imposed Section 14(1) of the Act, which I shall proceed to consider, read in conjunction with the rules.

It is needless to say that in the case before us, although rules are framed under the Act, there is no such language used as was used in the rules Mr. Justice Blackwell was considering. Mr. Kolah has drawn our attention to the fact that even in the Abkari Act there was a provision with regard to suspension and cancellation of licenses. Section 32, in the first instance, mentions specific grounds on which a license could be cancelled. Then Section 32A provides that whenever the authority granting a license considers that it should be cancelled for any cause other than specified in Section 32, he may cancel the license. It may be that the power of cancellation conferred under Section 32A is very wide and that may lead to the inference that there was no right in the applicant to obtain an abkari license provided he satisfied the conditions laid down in the Act, and that the rules framed under that Act were merely procedural and cast no obligation on the authority to issue a license. But, in our opinion, Mr. Justice Blackwell's decision rests solely on the view that he took of the particular rules framed under the Abkari Act, and it is unnecessary to consider whether that decision is a correct decision from the larger point of view which we are considering on the facts of this case.

6. The next case relied upon by Mr. Kolah is a decision of the Privy Council in Municipal Corporation of City of Toronto v. Virgo [1896] A.C. 88 and the decision is relied upon for the proposition that when a statute deals with the regulation of a business, it is not competent to make rules or issue orders under that statute which would have the effect of completely destroying that business. The actual case the Privy Council was considering was that of a statutory power being conferred on a Municipal Council to make by-laws for regulating the business of hawkers, and the Municipality passed a by-law prohibiting hawkers from plying their trade in an important part of the Municipality, and the Privy Council took the view that the Municipality had not the power to pass such a by-law. It is to be noted that even in coming to this conclusion the Privy Council was careful to point out that in this particular case no question of any apprehended nuisance from the hawkers arose.

7. The next question that has got to be considered is whether in the exercise of the power of granting or refusing a license conferred upon the Collector under Section 4 of the Bombay Prize Competition Tax Act, the Collector has exercised his discretion in refusing to grant a license to the petitioner. Now, there can be no doubt that the discretion that has got to be exercised is a discretion of the Collector himself. He is the person nominated by the Legislature for this purpose. It is also clear that the discretion to be exercised must be a proper discretion, a discretion free from any caprice or arbitrariness. The allegation of the petitioner in this case is that the Collector has not exercised his discretion at all, but the discretion has been exercised by the Government of Bombay who directs and orders the Collector of Bombay to whom licenses should be granted, cancelled, suspended or renewed, and that, in short, there has been a usurpation by the executive of the exercise of the statutory powers vested under the Act in the Collector. In answer to this averment in the petition the Collector made an affidavit and in para. 12 of that affidavit this is what he stated:

I say that Government decided it and laid down its general policy and confidentially circulated it for the guidance of its officers. I say that I have considered this matter separately on its merits and have refused to grant the license asked for in the honest exercise of my discretion

An affidavit in rejoinder was made by the petitioner and he has taken the same stand in this affidavit as he did originally in his petition and has repeated the statement that the Collector acted under instructions and orders of the Government of Bombay and did not exercise any discretion whatsoever. The petitioner also denied that the respondent had considered the matter separately on its merits or had refused to grant the license asked for in the honest exercise of his discretion. After the Collector had filed his affidavit, the petitioner called upon him to submit himself to cross-examination on the averments made by him in his affidavit. The Collector did not choose to do so, and the learned Judge took the view that inasmuch as the Collector had not stepped into the witness-box, he was entitled to draw the strongest presumption against him, and. therefore, he disregarded the statement made by the Collector in his affidavit that he had exercised his discretion, and came to the conclusion that there was no evidence before him that there was any exercise of discretion by the Collector, and. therefore, according to him the petitioner was entitled to succeed on that aspect of the case as well. Now, with respect to the learned Judge, he has fallen into error in the view that he has taken as to the legal effect of the Collector not responding to the request of the petitioner for stepping into the witness-box. Petitions under Section 45 of the Specific Relief Act are ordinarily disposed of on affidavits. An affidavit is only one mode of giving evidence. The ordinary mode is for a person to step into the witness-box and submit himself to be cross-examined by the other side. But for convenience and to avoid expense and delay, the law permits this alternative method of giving evidence, but the law has also provided a safeguard and that safeguard is contained in Order XIX, Rule 2, of the Civil Procedure Code, 1908, and Rule 180 of the Original Side Rules which corresponds to that provision of the law, and that provision is that it is open to the Court on the application of either party to order the attendance for cross-examination of the person making any such affidavit.

8. Now in this case all that the petitioner did was, as we have pointed out, to give notice to the Collector to submit himself to cross-examination. The petitioner did not apply to the learned Judge for an order in terms of Rule 180 and no such order was passed. There was no obligation whatever upon the Collector to comply with the requisition contained in the petitioner's notice and to present himself for cross-examination. Therefore, in our opinion, the learned Judge, with respect to him, was not justified in drawing any presumption against the Collector for not having stepped into the witness-box. Mr. Kolah, realising the difficulty, has applied to us that we should make an order under Rule 180 so that he should be in a position to test the statements made by the Collector by cross-examination. The Advocate General has strenuously resisted this application. His contention is that on the affidavit of the Collector it is clear that he has exercised his discretion in refusing to grant the license to the petitioner. The Advocate General has also drawn our attention to the fact that it is not usual in cases like this to compel an officer of Government of the standing of the Collector to submit himself to cross-examination. Ordinarily the statements made by him in the affidavit should be accepted. We agree with the Advocate General that it must be in very rare cases indeed that the Court would not accept a statement of a highly placed and responsible Government officer who has made a solemn affirmation, and in coming to the conclusion that we do, we do not want it to be understood that as a normal practice or procedure Courts should make orders under Rule 180 against Government officers. When Government officers exercise a discretion vested in them they do so in their official capacity and there is a presumption under Section 114 that official acts are regularly performed. But after all, the question whether an order like this should be made or not is not a question of principle but a question of discretion and the Court must decide on the facts of each case whether the discretion vested in it under Rule 180 should or should not be exercised. If the Collector had contented himself by saying that he had considered the merits of the case and that he had exercised his discretion and had refused to grant the license, we would not have thought it proper to make an order under Rule 180. But unfortunately the Collector does not content himself with saying that. He also says that in coming to the conclusion that he did he took into consideration the general policy of Government which is contained in a confidential circular and which is issued for the guidance of the Government officers.

9. Now, the whole question which arises is whether the discretion exercised by the Collector was his own discretion or was it a discretion that was fettered by anything that Government has done or said. In our opinion, it would not be wrong or improper for the Collector in exercising his discretion to give full weight to the general policy of Government, provided that policy is within the ambit of the Act. If the Government takes a particular view with regard to prize competitions in the public interest and the Government enunciates that policy, the Collector would be perfectly justified and entitled to consider that policy. But consideration of policy is one thing; to be dictated to or to be ordered to do something is entirely a different thing. If, for instance, Government were to issue instructions that all Collectors in the province should refuse to issue licenses to a particular class of people for particular reasons, then it would be impossible to say that the Collectors acting upon those orders would be exercising a discretion which would be free and. unfettered. We must not forget that after all the Collector of Bombay is a servant of the Government of Bombay, and it is a matter for investigation to what extent his mind was dominated by this particular circular which the Government issued. Whether the domination was such as to make his discretion fettered is a matter which can only be decided after more materials are before the Court. The Advocate General has told us that Government claims privilege for the confidential circular which it has issued. We express no opinion whatever as to whether the privilege claimed by Government is rightly claimed in law.

10. We would, therefore, make an order under Rule 180 for the attendance for cross-examination of the Collector, and for that purpose we will send the matter back to Mr. Justice Bhagwati. We wish to make it clear as to what the compass and scope of the Collector's cross-examination should be. The only question which we want the learned Judge to decide after his cross-examination is over is whether the discretion exercised by the Collector was an unfettered discretion or whether it was fettered by any order issued by Government in respect of licenses to be issued by him. The cross-examination will be confined to the averments contained in the affidavit of the Collector in para. 12 and of the petitioner in para. 13 of his petition and the statement contained in para. 3 of his affidavit in rejoinder to which we have already drawn attention, viz., the respondent acted under instructions and orders of the Government of Bombay. The learned Judge will also consider the question whether the confidential circular is a privileged document or not. We wish to repeat again that the mere consideration by the Collector of the general policy of Government with regard to the issuing of licenses would not, in our opinion, amount to his discretion being fettered. Something much more than that would have to be established.

11. We, therefore, set aside the order made by the learned Judge. With regard to the costs of the appeal, as the record stands, we would certainly have allowed the appeal with costs. It is only an indulgence that we are granting to Mr. Kolah, and what has influenced us in making the order on a very belated application is that we have before us a subject who is fighting for his rights and we should not permit any technicality to come in the way of his attempt at vindication of his rights. But it is at best an indulgence that we are granting. Therefore, it must follow that the petitioner must pay to the respondent the costs of this appeal. With regard to the costs of the petition, as the matter stands, the petition was liable to be dismissed today and the petition survives and gets a new lease of life because of the indulgence we have shown to the petitioner. We think the fair order to make would be that the petitioner should pay half the costs of the respondent. With regard to the other half, they will abide by the ultimate decision of the petition.

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