Alfred Henry Lionel Leach, C.J.
1. Within the Municipal limits of the town of Tiruvarur, there are three markets which are privately owned. The proprietor of a private market is required to take out each year a licence for which a fee is chargeable. The question which arises in these appeals is whether the Municipal Council of Tiruvarur has fixed the licence fee at a rate higher than the law allows. Of the three markets one is a general market, which is held once a week. The other two markets are held daily, one for the sale of fish and the other for the sale of vegetables. Up to the 1st April, 1934, the annual licence fee charged in respect of the general market was Rs. 50; for the fish market the fee was Rs. 100 and for the Vegetable market Rs. 25. For the year 1934-35, that is from the 1st April, 1934, to 31st March, 1935, the Council increased the fees to Rs. 452-4-0, Rs. 550 and Rs. 187-8-0 respectively. These fees were based on the provisions of Section 262-A of the Madras District Municipalities Act, 1920, which reads as follows:
When a licence granted under Section 262 permits the levy of any fees of the nature specified in Sub-section (2) of Section 260, a fee not exceeding fifteen percentum of the gross income of the owner from the market in the preceding year shall be charged by the Municipal Council for such licence.
2. Section 262 provides for the licensing of private markets and the levy of fees of the nature specified in Sub-section (2) of Section 260 in such markets.
3. The new licence fees amounted to twelve and a half per cent, of the gross income. At one time the Council proposed to charge licence fees on the basis of fifteen per cent. of the gross income, the maximum allowed by Section 262-A; but on representations made by the owners of the private markets in Tiruvarur the Council decided to reduce the percentage to twelve and a half. The proprietors were still dissatisfied. They maintained that Section 262-A had not altered the law as laid down by the Privy Council in Pazundaung Bazaar Co., Ltd. v. Municipal Corporation of the City of Rangoon (1931) 61 M.L.J. 740 : L.R. 58 IndAp 313 : I.L.R. 9 Rang. 440 (P.C.) which had been followed in this Court in several cases before the insertion of Section 262-A in the Act. In Pazundaung Bazaar Co., Ltd. v. Municipal Cmporation of the City if Rangoon (1931) 61 M.L.J. 740 : 1931 L.R. 58 IndAp 313 : I.L.R. 9 Rang. 440 (P.C.) the question was whether the Corporation of Rangoon had fixed the scale of licence fees to be paid by market proprietors so high that the sums charged were really taxes and not licence fees. Stated broadly the decision of the Privy Council was that the licence fee might reasonably cover the cost of all special services Necessitated by the duties and liabilities imposed upon the municipal authority in respect of the supervision and regulation of private markets. The proprietor? of the Tiruvarur markets contended that if the licence fee based on fifteen per cent, of the gross income of the previous year meant the payment of more than what would reasonably cover the cost of such special services, the municipal council would be acting in excess of its powers. They averred that twelve and a half per cent, of the gross income meant an overcharge on this basis. In these circumstances they sued in the Court of the District Munsiff of Tiruvarur to recover what they had been compelled to pay in excess of the old rates. Their suits were numbered as O.S. Nos. 209, 227 and 210 of 1935, respectively. The District Munsiff held that the increase in the licence fee was lawful and consequently dismissed the suits.
4. The plaintiffs appealed to the District Judge who held that the licence fee to be lawful must be commensurate with the services rendered. The fee could not exceed fifteen per cent. of the gross income; but if the special services rendered by the Council cost less the excess amounted to an illegal exaction. The onus was on the licensee to prove that the increased fees levied by the Council were not commensurate with the services rendered, and they had not discharged the onus of proof. The District Judge was, however, of the opinion that the levy was unlawful because the new fees had been fixed with retrospective effect. On this basis he reversed the decision of the District Munsiff and granted the plaintiffs the decrees which they had sought. The Council has appealed from these decrees in S.A. Nos. 357, 358 and 359 of 1938.
5. On the 2nd April, 1938, the Council filed suits against the market proprietors. These were numbered as O.S. Nos. 96, 97 and 218 of 1938 respectively. Out of these suits S.A. Nos. 614, 615 and 616 of 1940 arise. The object of the Council in filing these suits was to recover from the market proprietors the increased rates in respect of the years 1935-36, 1936-37 and 1937-38. The District Munsiff followed the judgment of the District Judge in the other cases and dismissed the suits. The Council appealed to the Subordinate Judge who agreed with the District Munsiff. Therefore the Court has now to decide whether the market proprietors were entitled to decrees in O.S. Nos. 209, 227 and 210 of 1935 and whether the dismissal of the suits filed by the Council was in accordance with the law.
6. The first question which arises is whether Section 262-A has altered the law by rendering the judgment of the Privy Council in Pazundaung Bazaar Co., Ltd. v. Municipal Corporation of the City of Rangoon (1931) 61 M.L.J. 740 : 1931 L.R. 58 IndAp 313 : I.L.R. 9 Rang. 440 (P.C.) inoperative in a case governed by the Act. We think that it has and that it was inserted in the Act with the object of putting an end to constant litigation with regard to fees charged by Municipal authorities in respect of licences for private markets. The section expressly states that a licence fee not exceeding fifteen per cent, of the gross income which the owner of the market has received from it in the preceding year shall be charged. The authority is not compelled to charge the maximum of fifteen per cent. It may base its licence fee on a smaller percentage. The option is with the authority.
7. Then it is said that the action Of the Council was illegal because it did not fix the licence fees for the year commencing from the 1st April, 1934, until the 25th February, 1935, which meant imposing it retrospectively. As we have indicated, it was on this ground that the District Judge allowed the appeals of the market owners from the decrees passed by the District Munsiff in their suits. We find ourselves unable to accept this argument. The section itself makes it clear that the licence fee cannot be fixed until the year has advanced. The fee is based on the gross income of the previous year and that has to be ascertained before the Council is in a position to fix the fee. Obviously the Council cannot decide what the gross income is until some date after the commencement of the financial year and perforce the exaction must be retrospective. It may be mentioned that the market owners did not raise the question of retrospective enhancement. This point was taken by the District Judge on his own initiative, and his conclusion was erroneous.
8. For these reasons we allow the appeals with costs throughout: This means that O.S. Nos; 209, 227 and 210 of 1935 are dismissed and that O.S. Nos. 96, 97: and 218 of 1938 are decreed.