M.L. Jain, J.
(1) This common Judgment will dispose of Civil Writ Petitions Nos. 1100, 1290, 1565, 1618, 1619, 1715 of 1979 and 14 d 15 of 1980.
(2) The Commissioner, Municipal Corporation of Delhi, in his letter dated October 18, 1962, mooted a proposal to license the trade of transporting goods by trucks by resort to the provisions of clause (b) of sub-section (1) of S. 417 of the Delhi Municipal Corporation Act, 1957 (hereinafter referred to as the Act), because (1) the loading and unloading of trucks is generally done on public streets causing extreme inconvenience to the users of the roads and pavements; (2) the constant plying of trucks on narrow roads such as Naya Bazar is a nuisance to the public; (3) traffic is obstructed and there is danger of the passersby being run over when trucks take turn in the narrow lanes; a few fatal accidents have already taken place; (4) most of transport companies stock their goods on the pavements in front of the offices and godowns of the companies; and (5) the goods stored by the transport companies are of all sorts including inflammable goods; though the goods are stored temporarily but at any given moment of time the total storage is almost the same; and precautions are required in respect of the safety of these godowns.
(3) No action was taken until a fire broke out in the godowns of the Economic Transport Association in Darya Ganj on June 26, 1969, which took a toll of 17 lives and destroyed goods worth Rs. 3 lacs. A Commission of Inquiry was appointed. It submitted its report on June 12, 1970. The Commission suggested that the Corporation should have used its powers under S. 417 of the Act to license user of premises of transport company storages in order to regulate them. Accordingly, the Assistant Commissioner prepared a schedule of re- vised rates of license fees in respect of items subject to license and submitted it for the approval of the Commissioner on April 14, 1976. He also submitted a list of 56 items including transport company storages which were not specified in the Eleventh Schedule to the Act. The Deputy Commissioner in his note of April 16, 1976, stated that the trades indicated in the proposal are regarded as dangerous items in terms of S. 417(l)(b) of the Act. The Assistant Commissioner further reported on April 21, 1976. that in case the proposals for revised rates were approved, the income would swell from Rs. 4 lacs to Rs. 15 lacs a year. The proposal was approved by the Commissioner on April 22, 1976. Consequently, the circular, the subject- matter of challenge herein, was issud on April 30, 1976. The circular says that in supersession of all previous orders on the subject and in exercise of the powers conferred under Ss. 415, 416, 417, 421 and 422 of the Act, the Commissioner has been pleased to revise the license fees for storage and different trades as shown in the list of 56 unspecified goods attached with the circular. In this list the last item is 'Transport company storages', license fee Rs. 500.00. The Corporation is revising the license fee from time to time and the last time. it did so was on October 3, 1977, by resolution No. 129 by which the license fee for storage of goods in godowns of transport companies was fixed at Rs. 375.00 for conforming areas and Rs. 500.00 for non-conforming areas.
(4) The petitioners in these writ petitions are owners of the transport godowns and since they failed to obtain licenses, they were challaned under S. 461 of the Act for contravention of S. 417 of the Act. The accused appeared and pleaded not guilty. It is prayed by these petitions that the aforesaid circular of April 30, 1976, and the penal proceedings be quashed and a writ of mandamus be issued against the Municipal Corporation directing it to forbear from taking any action argainst the petitioners, because the Corporation has no power to impose any license or charge license fees on the storage of transport company goods in their premises.
(5) In George Walkem Shannon and others v. Lower Mainland Dairy Products Board, and another Air 1939 P.C. 36(1), the Privy Council observed :
'IFregulation of trade within the province has to be held valid the ordinary method of regulating trade, i.e. by a system of licenses, must also be admissible. A license itself merely involves a permission to trade subject to compliance with specified conditions. A license fee, though usual, does not appear to be essential. But if licenses are granted it appears to be no objection that fees should be charged in order either to defray the costs of administering the local regulation or to increase the general funds of the province or for both purposes.'
As a matter of fact the word 'fee' does not indicate only a levy in return for services. In U.S.A., if the primary purpose of the law is to regulate dangerous business, occupation calling or activity, it is an exercise of the police power, even if it incidentally produces revenue. However, in a long line of cases resting with Kewal Krishan Puri and another v. State of Punjab and another, : 3SCR1217 , the Supreme Court has had to grapple with the meaning which should be put upon 'fee' so as to be distinguishable from 'tax', occurring in the Constitution and various enactments. In the State of Maharashtra and others v. The Salvation Army, Western India Territory, : 3SCR475 , it was observed, 'As we said, the fee must, as far practically as possible, be commensurate with the services rendered. One should not seek for any mathematical accuracy in these matters but be content with rough approximations'. In the Delhi Cloth and General Mills Co, Ltd. v. The Chief Commissioner, Delhi, and others, : 2SCR348 , the court expressly stated that services worth 60 per cent of contribution would be sufficient quid pro quo to make a levy a fee. Beyond that the fee will assume the character of a tax as that merely augmented the income. Accordingly to Kewal Krishan Puri (supra), each case has to be judged from a reasonable and practical point of view for finding out the element of quid pro quo. It is not disputed by the Corporation that there is no sufficient quid pro quo for the fees in question, apart from the services which the Corporation readers in general in performance of its duties out of the Municipal Fund into which fall the fees in question under S. 99 of the Act. But, they maintain that even if the fees in question assume the character of a tax, then too, the levy is permissible under the residuary entry 97 in the List I in the Seventh Schedule to the Constitution, as the Act has been enacted by the Parliament. But, Mr. Bhatia contends that the Act never envisaged to levy a tax in the garb of a fee. What the legislature has authorised is a fee which must before it can be imposed, satisfy the following conditions, namely, (1) there must be an element of quid pro quo, that is to say, the authority levying the fee must render some special or certain services for the fee levied whether the payer accepts the services either willingly or unwillingly; and (2) that the fee collected must not form part of the general revenues of the State and must have a reasonable correlation to the cost of such services, that is, a substantial portion of the fee collected must be appropriated for the special benefit of its payers, vide Sri Jagamiath Ramanuj Das and another v. State of Orissa and another, : 1SCR1046 . The Municipal Council, Madurai v. R. Narayanan etc., : 1SCR333 . The Chief Commissioner, Delhi and another v. The Delhi Clotli and General Mills Co. Ltd. and others, : 3SCR657 , and Kewal Krishan Pun (supra). Relying further upon the decisions of the Supreme Court in Nagar Mahapalika, Varanasi v. Durga Dass Bhattacharya and others, : 3SCR374 , and the Municipal Council, Madurai (supra), he urged that an examination of the text and context of the various provisions of the Act will show that the Corporation has been invested with the power to tax so as to raise revenue to finance its various welfare activities and also to exercise the police powers of the State for the purpose of controlling, regulating and prescribing any noxious or dangerous operations of individuals. Towards these ends, licenses and fees for services, if any rendered, may be prescribed. The Act has a separate chapter on taxation, Chapter Viii, including optional tax on professions, trades, callings and employments, vide S. 113(2)(c), while fees contemplated by the impugned circular fall under Chapter Xx, S. 417, specifically under a sub-heading 'Trades and Occupations'. The Act relegates licenses and license fee to a part different from taxation. The procedure for each is also delineated separately. If the fees under challenge were held to be a tax, then, the processual protection written into the law in regard to levy of taxes shall be frustrated. There is nothing in the Act to indicate that besides the fwo categories of impost, namely, tax and fee. the Act contemplated a third category of impost of license fee which is in the nature of a tax. It was also pointed out that when according to clause (2) of Article 276 of the Constitution, tax on professions, trades, callings and employments payable to a municipality cannot exceed Rs. 250.00 per annum, how can then a license fee of up to Rs. 500.00 could be envisaged by the Parliament without meaning that commensurate services will have to be rendered if any fees under S. 417 are imposed? For these reasons, it was contended that the fee contemplated under S. 417 of the Act is not a tax and since the legislature's intention was to authorise a fee, the Corporation is precluded from levying the fee because it provides no services to the petitioners commensurate with the impugned exaction. Some licenses are imperative to be taken only by way of regulatory measure, some are in the nature of grant of exclusive right or privilege of the State, some may be cases of license fees where element of quid pro quo is necessary to be established. 'The cases of license fees are generally speaking on some different footing. Even where there is a substantial element of regulatory measure involved in them, they can bo justified on the ground that even within the upper limit prescribed by the law they are not exhorbitant or excessive and that there exists a suffi- cient quid pro quo between the payer of the fee and the authority charging it. Though the proposed fee charged on the storage of goods in transport does not cross the limit of Rs. 500.00 prescribed by sub-section (3) of S. 417, and looking to the prosperity in the trade it is neither excessive nor exhorbitant, yet it appears to me that admittedly, the fee proposed to be levied is for the augmentation of the income from Rs. 4 lacs to Rs. 15 lacs and is not a purely regulatory fee. It cannot be supported without establishing a relative quid pro quo, which the Corporation is unable to do.
(6) Mr. Bhatia next contends that the fee does not fall even within the purview of S. 417 of the Act, which reads as under :
'417.(1) No person shall use or permit to be used any premises for any of the following purposes without or otherwise than in conformity with the terms of a license granted by the Commissioner in this behalf, namely : (a) any of the purposes specified in Part I of the Eleventh Schedule; (b) any purpose which is, in the opinion of the Commissioner dangerous to life, health or property or likely to create a nuisance; (c) keeping horses, cattle or other quadruped animals or birds for transportation, sale or hire or for sale of the produce thereof; or (d) storing any of the articles specified in. Part Ii of the Eleventh Schedule except for domestic use of any of those articles : Provided that the Corporation may declare that premises in which the aggregate quantity of articles stored for sale does not exceed such quantity as may be prescribed by bye-laws in respect of any such articles shall be exempted from the operation of clause (d). (2) In prescribing the terms of a license granted under this section for the use of premises as mills or iron yards or for similar purposes the Commissioner may, when he thinks fit, require the licensee to provide a space or passage within the premises for carts for loading and unloading purposes. (3) The Corporation shall fix a scale of fees to be paid in respect of premises licensed under sub-section (1) : Provided that no such fee shall exceed five hundred rupees.'
(7) It will be noticed that the section contemplates four licenses for different types of purposes, namely, (1) purposes specified in Part 1 of the Eleventh Schedule, (2) storing of any of articles specified in Part Ii of the Eleventh Schedule except for domestic use of any of these articles, (3) keeping horses, cattle or other animals or birds for transportation) sale or hire or for sale of the produce thereof; and (4) any purpose which is in the opinion of the Commissioner dangerous to life, health or property or likely to create nuisance. It was submitted that the law has already specified the articles for the storing of which a license is required. thereforee, the Commissioner could not add to the list of those articles. If he wants to act under the residuary clause, then the Commissioner has to state that the storage of the goods of the transport companies is in his opinion dangerous to life, health or property or is likely to create nuisance. As held. in M. A. Rasheed and others v. The State of Kerala, : 2SCR93 , where opinion of the administrative authority is a condition precedent to the exercise of the power, the courts can inquire whether the power has been exercised in good faith and on relevant considerations. The impugned circular does not purport to say that in the opinion of the Commissioner the storage of transport goods is dangerous etc. or is likely to create nuisance. It shows that there is no application of the mind. Even, the purposes that have been stated by the Corporation could be taken care of by licensing the specified articles and by regulating traffic under the Bombay Police Act and other relevant provisions of the Act but fees cannot be levied under a camouflage of regulation of traffic or encroachment on pave- ments and roads. The storage of goods iff transport is not dangerous to life, health or property, nor does it cause any nuisance.
(8) I have given my anxious consideration to this part of the argument. I am of the view that except in the case of articles specified in Part Ii of the Eleventh Schedule, the Commissioner must form his opinion that the storage of the transport goods in general is dangerous to life, health or property or likely to create nuisance, because it is an unspecified purpose. That a serious fire broke out in a godown and that on account of frequent movement of vehicles to and from the godowns traffic congestion occurs and causes nuisance are grounds enough to justify the formation of opinion to regulate these godowns in order to ensure safety of life, health or property of the public, and to control nuisance the definition of which in S. 2, Clause (33) of the Act covers anything which is offensive. That the Commissioner formed such an opinion can be evidenced by recitals in the circular or by supplementary information on an affidavit. I would thereforee hold that clause (b) of sub-section (1) of S. 417 of the Act covers the impugned regulation by requirement of a license for the purpose. It is no doubt a trade purpose.
(9) The challenge to the fees that they are discriminatory and arbitrary in the sense that two types of fees have been prescribed, one for conforming areas, that is areas in which commercial use of build- ings is permitted, and the other for non-conforming areas, that is, where no such use is permitted, I do not think, is a valid challenge. The amount of fees can be different for different areas as the criterion of permitted user or non-permitted user can provide a reasonable nexus to the object of regulation.
(10) It was next contended that the fees are for regulating trade and occupation and have no reference to goods. This argument' is void of any merit because S. 417 contemplates regulation with reference t to purposes such as storing and keeping etc. It can, thereforee, cover storing of goods in transport as well. I, however, need not say anything respecting the submission that fee for storage cannot be levied article-wise. Firstly, because the circular of October 24, 1977, provides that in case of dealing in more than one article, fee shall be charged for the item carrying the highest rate. Secondly, because my concern is only with regard to storage of transport goods for which only one license fee is required.
(11) The circular is then attacked on two more grounds, firstly, that the restriction on trade is a restriction on fundamental right and no license or fees thereforee can be imposed without an opportunity of being heard, and, secondly, that the order was not published as to acquire a statutory force. Since the levies are for regulation of trade and occupation in public interest, there is no violation of any fundamental right. There is a provision for previous and final publication of byelaws in S. 483 but the Act does not appear to provide for any particular mode of publication of the opinion formed by the Commissioner and imposition of fees by the Corporation. There also appears no requirement that before any such opinion is formed or any fee is prescribed, the affected parties should be generally or spe- cially heard. The petitioners should have been widely aware of the circular as they have not stated anything about their ignorance in this regard in their petitions. These contentions are thereforee rejected.
(12) My conclusion, thereforee, is that the levy of fee by the impugned circular and subsequent revision thereof is had for want of quid pro quo- As regards prosecutions, the petitioners allege that they are or ate likely to be prosecuted for not getting a license for storage of goods in transport. The learned counsel for the respondents pointed out that the prosecutions have been instituted for storage of cotton yarn which is a specified article, but they have placed no material on record such as copies of complaints to substantiate their contention. However, this order will not apply to the complaints which are in respect of articles specified in the Schedule to the Act.
(13) Consequently, I accept these writ petitions and direct that the impugned orders in so far as they relate to license fees on 'Trans- port Company Storages' or 'Storage of Goods in the Godowns of Transport Companies' and the prosecutions, if any, for such storages without a license shall be and are hereby quashed. No costs.