(1) This is a petition under Article 226 of the Constitution of India.
(2) The petitioner is a resident of Malerkotla and wants to do the business of selling vegetables and fruits, wholesale and retail, by auction and otherwise within the Municipal limits of Malerkotla. It is stated that he has taken on lease plot's Nos. 17 and 18 in Mohalla Iftkhar Nagar Malerkotla for carrying on his business. He approached the Municipal authorities with an application for the grant of a licence in the first week of March 1961 for doing the business of selling vegetables and fruits on the aforesaid two plots. It is stated in paragraph 4 of the petition that the respondent Municipal Committee declined to entertain the application of the petitioner on the ground that he was not a lessee of any of the four specified plots for the vegetables market on the Sabzimandi and no other premises could be licensed for the said purpose. According to paragraphs 5 and 6 of the petition, another application was made for the grant of a licence and although the same was entertained but no orders, one way or the other, had been made. The specification of only four plots in the Sabzimandi for the purpose of sale of vegetables and fruits and the granting of licences to the lessees of those plots alone is said to be in accordance with the bye-laws of the Committee. Those bye-laws which came into force in the year 1950 are in the following terms:
(i) No person shall sell wholesale or by auction any fruit, vegetables or sugarcane within the Municipal limits at any premises other than Sabzimandi or any other place specially demarcated by the Municipal Committee in this behalf. The Municipal Committee will demarcate premises for the purpose of sale, wholesale or by auction, of any fruits, vegetables or sugar-cane, from time to time as the necessity may arise.
(ii) Any person wishing to obtain a licence for the premises for sale, whole-sale or by auction, of any fruit, vegetable or sugar-cane may apply to the Committee in the first week of March every year, provided that in the first year of the enforcement of these bye-laws such application may be made at any other time and that licence fee shall be in proportion to the portion of the year for which licence is granted.
(iii) In the Sabzi Mandi or in any other specified premises number of plots to be licensed shall be fixed by the Committee and each plot shall be let out by public auction on the spot under an agreement drawn by the Committee for this purpose.
(iv) Lessees of each of the above auctioned plots shall be granted a licence by the Committee for the sale and auction of Fruits and Vegetables on his plot on payment of a fee mentioned in clause 5 of the bye-law.
(v) A licence referred to in bye-law (iv) shall be issued on payment at the rate of Rs. 50/- per annum. This licence fee shall be exclusive of the lease money determined under clause (iii) of the bye-laws.
The case of the petitioner is that the Municipal Committee had specified Sabzimandi as the only premises where the business of selling vegetables and fruits, wholesale or by auction, could be done and has fixed the number of plots which are to be licensed, at 4. The leases had to be granted by public auction, with the result that it became impossible for an ordinary person to bid for any plot at a reasonable price and only the four highest bidders could carry on the business and the rest of the people including the petitioner had been debarred from doing their business. These plots have already been let out by public auction for the year 1961-62 and licences have been granted to the lessees of those plots to do the business. The action of the Committee in granting the licences for the ensuing year to the four lessees of the specified plots and in virtually refusing to grant the licence to the petitioner and other persons to carry on their business has been impugned in the present petition.
(3) In the return which have been filed on behalf of the respondent, all that is admitted is that the petitioner applied for the grant of a licence by means of an application dated 13th March 1961 but the same was rejected on the ground that the applicant had not mentioned the site where he wanted to carryon the business. It was admitted that the aforesaid bye-laws had been framed, the object being to regulate the wholesale sale of fruits and vegetables by auction. According to the committee, the bye-laws are in the interest of the public generally and enable the Committee to perform its functions under the Act. These by-laws have been farmed under sections 197 and 188(e)(ii) of the Punjab Municipal Act. The allegations of the petitioner that a monopoly has been created in favour of the four plot-holders have been denied.
It may be mentioned that although in the written statement certain facts have been denied, but the main position taken up by the petitioner that owing to the existence of the bye-laws he cannot be granted a licence to carry on his business in plots Nos. 17 and 18, which he has taken on lease privately, has not been controverted before me and the learned counsel for the Committee sought to rely on the bye-laws framed by the Committee which according to him were perfectly valid. It is apparent that in the presence of the bye-laws the petitioner cannot be granted a licence to carry on his business in these plots because they do not happen to be in Sabzimandi where alone in accordance with the bye-laws such a business can be carried on and that also by the lessees of the plots auctioned to them by the Committee in that area.
(4) The learned counsel for the petitioner has assailed the validity of the bye-laws, firstly, on the ground that they are ultra vires the provisions of the Punjab Municipal Act. In this connection reference has been made to sections 197(a) and 188(e)(ii) of the Punjab Municipal Act. Section 197(a) is to the effect that the committee may, and shall if so required by the State Government, by bye-law prohibit the manufacture, sale, or preparation or exposure for sale, of any specified articles of food or drink, in any place or premises not licensed by the committee. In Wariam Singh v. Municipal Committee, Nabha, AIR 1953 Pepsu 127, Chopra J. while examining the validity of similar Bye-laws framed by the Municipal Committee of Nabha, had occasion to consider the scope of the aforesaid provision. According to the learned Judge, this section empowers the Committee to frame bye-laws requiring the subject to obtain licence for the sale of specified articles of food and drinks and prohibiting the sale is taken. It was held by him that the bye-law which had been framed allowed the sale of articles in one particular locality only and such a bye-law could not be framed under section 197(a). He relied on two Lahore decisions, one of Shadi Lal C. J., in Ghanaya Lal v. Municipal Committee, Montgomery, AIR 1928 Lah. 540, and the other of a Bench consisting of Zafar Ali and Bhide JJ. in Mula Mal v. Emperor, AIR 1929 Lah 607, where this question came up for consideration and it was decided that such a bye-law could not be framed under clause (a) of section 197. Bhide J. while delivering the judgment of the Bench in Mula Mal's case, AIR 1929 Lah 607 referred to clause (d) of section 197 of the Punjab Municipal Act, as it stood before the amendment in 1923, which was:
'The committee may by bye-law, fix the places in which any specified article of food or drink may be sold or exposed for sale or the places in which it may not be sold or exposed for sale'.
This clause was deleted by the amendment made in 1923 and the learned Lahore Judges came to the conclusion that in the absence of anything analogous to old clause (d) of section 197, a bye-law could not be framed which would have effect of restricting the sale of vegetable of fruit, wholesale or by auction, to a vegetable market set apart by the Municipal Committee in this behalf. Clause (a) was considered to be much more restricted in its operation. All that it empowered the Committee to do, was to require licences to be taken for manufacture, sale etc., of articles of food and drink and to prohibit manufacture or sale in premises, for which no licence was taken. The bye-law allowing sale of vegetable in the locality only, namely the vegetable market could not be said to be covered by clause (a).
(5) The learned counsel for the Committee submits that the old clause (d) appearing in section 197 before the amendment of 1923 was probably deleted because it was considered unnecessary as a bye-law of the nature which has been impugned in the present case or which was the subject-matter of attack in the Lahore cases could be said to be covered by the other provisions in the Punjab Municipal Act itself. He has relied on clause (e)(ii) and clause (v) of section 188 of the Act. The first clause of the aforesaid section gives power to the committee to frame bye-laws 'for the inspection and proper regulation of markets and stalls', for the preparation and exhibition of a price current and for fixing the fees, rents and other charges, to be levied tin such markets and stalls.
Clause (v) is a residual provision in these words-
'generally provide for carrying out the purposes of this Act'.
It is contended that bye-laws can be framed not only for the inspection of the markets but also for their proper regulation and this would cover a bye-law by which the Committee can particularise or specify some locality where aloe markets will be established. It is further suggested that the purpose of the Act is to set up Municipal Committees and to give them powers and authority inter alia to look after the health of inhabitants of the town as also to make arrangements for proper sanitation. It is said that it is not within the bounds of possibility to carry out proper check and inspection of the fruit and vegetables which are to be sold on wholesale basis to retail vendors unless a few specific localities are demarcated for the purpose which would be under the control of Committee and its officials.
This argument, though attractive, cannot prevail owing to the clear language employed in clause (e)(ii) of section 188 which was also the subject-matter of consideration in Wariam Singh's case AIR 1953 Pepsu 127. The bye-laws essentially can be framed for inspection of the markets as also for their proper regulation. 'Regulation' is an act of regulating and as observed by Chopra J., the power to regulate does not authorise imposition of the subject-matter upon which the authority is to be exercised. I respectfully agree and hold that the power to make bye-laws for the inspection and proper regulation of markets and stalls does not authorise the Committee to make such bye-laws as would have the effect of confining the sale of certain commodities or articles to particular localities only. The learned counsel for the Committee has not been able to point to any particular provisions in the Punjab Municipal Act which may be relevant for the purposes of saying whether the impugned bye-laws can be saved under the general provision embodied in clause (v) of section 188. My attention was invited of section 206 which empowers the Committee or the Executive Officer to authorise any person to enter into and to inspect any market, building, shop, stall or place used for the sale of food or drink for man, or as slaughter-house, or for the sale of drugs, and to inspect and examine any food or drink, animal or drug, which may be therein; * * * * * and to seize and remove the same if it is found to be unfit for human consumption.
It does not appear to me wholly necessary that in order to exercise this power, the markets where such articles are sold should be confined only to one particular place. The section merely gives authority to inspect any market, buildings, shop or stall used for the sale of certain articles of food or drug etc., but it has hardly any relevancy so far as the impugned bye-laws are concerned. In my opinion, the reasoning which appealed to the Lahore Court was unassailable, namely, that by deleting clause (d) in section 197, as it existed before 1923, all power conferred on the Municipal Committee to make bye-laws fixing the place in which any specified articles of food or drink might be sold completely taken away. I would consequently hold in respectful agreement with the views of the Lahore and Pepsu High Courts that the impugned bye-laws to the extent they limit the premises where fruit and vegetables could be sold, wholesale or by auction, to Sabzimandi or to any other place specially demarcated by the Municipal Committee are ultra vires the provisions of the Punjab Municipal Act.
(6) It is next contended that the impugned bye-laws have the effect of creating a monopoly in favour of the four lessees to whom the plots in Sabzimandi were auctioned. A good deal of reliance has been placed on Rashid Ahmed v. Municipal Board Kairana, AIR 1950 SC 163. There, the petitioner carried on wholesale business of vegetables within the Municipal Board of Kairana in U. P. Certain bye-laws were framed by that Municipal Board, one of which provided that no person was to establish a market for wholesale transactions in vegetables except with the permission of the Board. There was no bye-law authorising the Board to issue the licence. According to their Lordships, the net result was that the prohibition contained in the aforesaid bye-laws in the absence of any provision for issuing licence became absolute, further another bye-law contemplated the grant of a monopoly to a contractor to deal in wholesale transactions at the place fixed as a market. Acting upon that provisions, the Board had granted a monopoly to one Habib Ahmad and had put it out of its power to grant a licence to the petitioner in that case. That was considered much more than reasonable restrictions on the petitioner as were contemplated by clause (6) of Article 19. That being the position, the bye-laws were struck down under Art. 13(1) of the Constitution.
The same reasoning has been sought to be applied here and it is submitted that in substance and effect the result of restricting the sale of vegetables and fruit, wholesale and by auction, to Sabzimandi and granting the licences to four persons only to whom plots had been leased in that market, is that a monopoly has been created in favour of those four persons. In Cooverjee B. Bharucha v. Excise Commissioner, Ajmer, AIR 1954 SC 220, the contention that the effect of some of the provisions of Excise regulation (1 of 1915) was to enable the Government to confer monopoly rights on one or more persons to the exclusion of others was repelled. It was laid down that elimination and exclusion from business was inherent in the business of liquor and it would be hardly roper to apply to such a business principles applicable to trades which all could carry. At page 223 Mahajan C. J. made certain observations which are noteworthy:
'Properly speaking, there can be monopoly only when a trade which could be carried on by all persons is entrusted by law to one or more persons to the exclusion of the general public'.
This learned Chief Justice proceeded to point out that such was not the case with the business of liquor. There can be no doubt that the business which the petitioner carries on is not of the same type as business of liquor and in fact it is capable of being carried only all persons. By making bye-laws which would have the effect of entrusting such business to only one or more persons to the exclusion of the general public the result would essentially be create a monopoly of a nature that could not be sustained under Article 19(6). The learned counsel for the Committee maintains that there is no denial of a right to a person to enter into a trade or business if that right is offered to the highest bidder at a public auction which is open to all persons but then the condition precedent for the applicability of this principle is that such a regulation should be necessary having regard to the nature of trade or business. There is no analogy between the business which is being carried only the petitioner and the business like selling liquor or conducting public utility services in respect of which it has been recognised that creation of monopolies would not be unreasonable.
(7) For all the reasons that have been stated above, the petition must succeed and it is hereby allowed. The respondents are directed to treat the impugned bye-laws to the extent indicated in this judgment, void and ineffective. Respondent No.1 is further directed to make proper and legal orders on the application of the petitioner for permission to carry on his business for selling vegetables and fruit, wholesale or by auction, and to issue him a licence in accordance with law. The parties will be left to bear their own costs.
(8) Petition allowed.