1. The petition is filed by the President of the Samalkota Panchayat Board, the respondent being the Manager of the Deccan Sugar and Abkari Co., Ltd., at Samalkota. The respondent was prosecuted by the petitioner for failure to take out licenses for (1) the manufacture of arrack with machinery; (2) the manufacture of CO2 gas with machinery; (3) the manufacture of confectionery with machinery. The Cocanada Taluk Board had on 28th August 1930 passed a resolution to the effect that no place within its jurisdiction should be used for any of the three specified manufactures, without the license of the President of the Union Board concerned if the place was within Union limits, the fee for a licence in each case being Rs. 400 while the license was only to endure for a year. The manufacture or refining of sugar was also specified and the fee for this was fixed at Rs. 500. This resolution was notified in the District Gazette on 23rd September 1930. A resolution in similar terms, though of course restricted in its scope to the limits of the panchayat's jurisdiction, was passed by the Samalkot village panchayat on 12th November 1930, and this resolution was notified in the District Gazette on 22nd November 1930: (Ex. A-1). By Ex. A-1 the owner or occupier of every place used for the specified manufacture was to apply to the President of the panchayat for a licence for the use of such place for such a purpose within 30 days of its publication.
2. The order as to applying for the licence was with reference to Sch. 7, Madras Local Boards Act 14 of 1920 and the three manufactures noted above as (1), (2) and (3) can fall under either Clause (p) or Clause (q) of that schedule. The heading of Sch. 7 is 'Purposes for which premises may not be used without a Licence' and Clause (p) runs 'using for any industrial purposes any fuel or machinery,' while Clause (q) runs:
in general doing in the course of and industrial process anything which is likely to be offensive or dangerous to human life or health or property.
3. For the purposes of this case, if any clause applies, it must be Clause (q). The respondent did not apply for any licence for the manufactures (1), (2) and (3), but instead a letter (Ex. B), dated 18th December 1930, was sent through the solicitors of his firm, the managing agents of which are Messrs. Parry & Co., Ltd., pointing out that the firm had been paying a license-fee of Rs. 300 for the use of their factory at Samalkota for the manufacture or refining of sugar and for manufactures (1), (2) and (3); that it was well-settled law that licence-fees are not analogous to taxation, but should be proportionate to the expenses incurred for supervision of the industry or purpose which is licensed; that it was obvious that the fee of Rs. 1,700 in all now imposed could have no relation to the cost of supervision by the panchayat, and that the firm therefore did not propose to apply for licences and would resist any attempt on the part of the President of the Union Board to enforce the levy. The prosecution of the respondent then followed. Ex. B had stated that the respondent's company might address the Government in the matter, but I understand that it has not done so. The prosecution was brought under Sections 193, 207 and 212(9), Madras Local Boards Act. Section 193 provides that a panchayat may notify that no place shall be used for any one or more of the purposes specified in Sch. 7 without a licence issued by the President of the panchayat, which licence is to be applied for by the owner or occupier of such place within 30 days of the publication of such notification. Under Section 207 a person shall on conviction be punished as provided in Col. 4, Sch. 8 for contravention of any provision of any of the sections specified in Col. 1 of that schedule. In Col. 1, Sch. 8, is found Section 193, and the subject noted against it is
using a place for an offensive or dangerous trade without a license.
4. The punishment provided for is one of a fine of Rs. 100. By Section 212(9), when any person is convicted of an offence in respect of the failure to obtain a licence as required by the provisions of the Act, the Magistrate shall, in addition to any fine which may be imposed, recover summarily and pay over to the Local Board the amount of the fee chargeable for the licence. The case was heard by the Sub-divisional Magistrate of Cocanada, who found the respondent not guilty and acquitted him under Section 245, Civil P.C. The Magistrate's ratio decidendi has been stated by him thus:
The proposed licence foes being contrary to the purposes of chapter (obviously a mistake for Part) 4 of the Act, 1 hold that the panchayat's action is not within the powers given to it under the Act, The notifications are therefore ultra vires. Disobedience of a legal notice only constitutes an offence, but not of a notice which is ultra vires. 1 accordingly hold that no offence is made out under Sections 198 and 207, Local Boards Act.
5. Against this decision the President of the Panchayat Board has come up on revision. It is conceded for the petitioner, and well established, that a licence-fee is not a tax. Licences are imposed under Part 4 of the Act for purposes of public health, safety and convenience. The Magistrate's view that the notification was contrary to Part 4 was based on his finding that the object of the Panchayat Board was to make money from licence-fees and was not required to meet any expenses of supervision, as there was a technical Government staff to supervise the factories and no such staff was employed by the Panchayat Board, while the factory itself was outside the village and unconnected with it, so that it was really not a source of danger to the village. There can be no doubt as to the correctness of the findings. Obviously the Panchayat Board was out to make money by suddenly raising the licence-fees to be paid by these respondent company from Rs. 300 to Rs. 1,700 a year. The evidence of the President, as the one witness for the prosecution, shows that the Board's sanitary staff consisting of a Sanitary Inspector on Rs. 40 a month whose post had been vacant for a year, and of two maistries on Rs. 23 and Rs. 20 respectively per mensem, have to look after the sanitation of the whole panchayat area, and, in respect of the factory premises, have only to see whether they are kept in a sanitary condition or not, while the company itself looks after the sanitation of the factory compound.
6. He says indeed that the licence-fee for the sugar factory was raised to Rs. 500 with the object of appointing a special staff over the sugar factory, but he has to admit that there was no one in view to be appointed for the factory's supervision, and that no resolution had yet been passed for the appointing of an officer for such supervision. It has also to be observed that the manufacture of arrack had been carried on in the factory premises for over 30 years and those of CO2 and confectionery for nine and seven years respectively, before the panchayat decided to treat them as offensive or dangerous to human life, so as to necessitate the taking out of licences for them. Of course however if the manufactures are such that licences can be legally ordered to be taken for them, the panchayat had the right to direct at any time that licenses for them should be applied for. Further, I must note that the schedule to Ex. A, giving the rates of fees for licences for dangerous trades, shows no rate in any approaching those now fixed for the manufactures in question, nor does P.W. 1 attempt to explain why such heavy fees should be paid by the defendant's company. The Magistrate has stated in his judgment that he has refrained from adjudicating upon the reasonableness or otherwise of the notifications in question, as he was doubtful in the face of Chairman Municipal Council, Chidambaram v. Tirunarayana Iyengar AIR 1928 Mad 847 whether it was competent for him to do so.
7. In fact however the question of reasonableness or otherwise is largely involved in the discussion that leads to his conclusion. I have not looked into Chairman, Municipal Council, Chidambaram v. Tirunarayana Iyyengar AIR 1928 Mad 847 as it has not been quoted before me, and I do not find it necessary for me to do so for the purpose of deciding this case, but I may note that Wallace, J., in Criminal Revision Case No. 404 of 1931 which was referred to him on a difference between two learned Judges, Waller, J., and Krishnan Pandalai, J., has, with reference to earlier decisions of this High Court as well as of the High Courts of Allahabad and Lahore, held that the reasonable and equitable nature of bye-laws framed by local bodies is a matter open to the criminal Courts to consider when offenders against the bye-laws are put up for prosecution before them. It is also the law of England that a bye-law may be bad for unreasonableness: Steals v. Galineki (1904) 1 KB D 615 though a Court ought to be allowed to hold that a bye-law is void for unreasonableness: Kruse v. Johnson (1898) 2 QB 91. The matter of reasonableness can also be considered from another point of view, in case of prosecution for failure to take out a licence, namely that of whether, when there has been a legal and valid order for taking out a licence, the fee charged for the licence was reasonable so that its summary recovery could be ordered under Section 212(9) or whether it was so unreasonable that the Court could refuse to order its recovery. That the matter of reasonableness could be gone into in such a case is what was actually decided by Wallace, J., in Criminal Revision Case No. 404 of 1931 in agreement with Waller, J., one of the referring Judges.
8. As I have already remarked, the Magistrate's finding is largely based on what he considers to be the unreasonableness of the notification; and, further what he holds to be illegal is not the order for the taking out of the licence but the proposed licence-fees which he finds to be contrary to the provisions and purposes of part 4 of the Act. Nowhere has he held that the manufactures in question are not of such a nature that the licences could be ordered to be taken out in respect of them. He has indeed remarked that the factory was not in itself a source of danger to the village, but he has not found that the manufactures carried on in it could not from any point of view be regarded as dangerous to human life. Had the Magistrate's decision really been that the entire notifications were illegal, and could that finding be taken as correct, then there are a number of decisions which show that there can be no criminal conviction for the disobedience of an invalid order. To these decisions I do not find it necessary to refer as the point with which they deal is not the one that I have now to consider. I have only to say that no case had been shown to me in which a bye-law, or any rule or order of the kind, as to the taking out of a licence has been held to be bad merely because the licence-fee was excessive. Clearly, I take it, the questions of the legality of ordering that a licence should be taken out and that of the reasonableness or unreasonableness of the fee charged for such licence are separate and independent questions and the legality of the order does not depend on the fees being reasonable. And there is authority for this view in the decision to which I have already referred in Criminal Revision Case No. 404 of 1931.
9. It has been argued for the respondent that, while Section 166 makes it imperative that a licence shall be taken out before a motor vehicle can be used by him on any public road, Section 193 does not require that a licence shall be taken out for a place to be used for any of the purposes specified in Sch. 7 before that place can be used for any such purposes. I can however see no force in this argument. Both Section 160 and Section 193 appear to me to be equally mandatory in their terms. By Section 166 no person shall use any motor vehicle for hire on any public road in a district except on a license obtained from the President of the District Board, while under Section 193 the panchayat may notify that no place shall be used for any one or more of the purposes specified in Sch. 7, without a licence issued by the President of the panchayat; and the owner or occupier of every such place shall apply to the President for the use of such place for such purpose. It is true that the defendant's company had been carrying on the manufactures in question for a considerable time without having to take out licences therefor, but that cannot exonerate the defendant from continuing the manufactures without licence after the expiry of the term fixed by the panchayat's notification provided that the circumstances warranted the panchayat in ordering the taking out of the licences. This point was not taken before the Magistrate and at the trial the matter seems to have been taken for granted. I do not however think it necessary to ask the Magistrate to give a decision on this point which was not brought to his notice, but has only been taken here by way of opposition to the revision application, especially when it can be decided by a reference to the plain words of the statute and when its decision here will simplify the issue on which he has to find.
10. The main point which I have now to consider is that of whether the licence-fees for the manufactures (1), (2) and (3) are so unreasonable that their summary recovery should not be ordered under Section 212(9). Strictly speaking, the point will not arise unless it is first decided that the defendant can be convicted under Section 207. For reasons already stated I must hold that this matter has not been properly decided by the Magistrate in that he has found that the licence-fees are improper without finding that the panchayat had no right to insist on the taking out of licences; and I shall have to send the case back to him for a decision on proper grounds. Still, as the matter has already been dealt with by the Magistrate and as it has also been fully discussed before me, besides being one which admits of no doubt, I shall consider it. The fees imposed by the notifications are most certainly exorbitant and unreasonable. I have stated some of the grounds on which they must be held so to be above in para. 3; and to what is stated there I would add the citation made by Wallace, J., in the criminal revision case already referred to from the Privy Council decision in Pazundaung Bazar Co. Ltd. v. Municipal Corporation of the City of Rangoon that the fee:
need not be confined to the cost of the issue and inspection of licences and the office expenses of the controlling authority, but may reasonably cover the case of all special service necessitated by the duties and liabilities imposed on the Corporation.
11. In the case dealt with by him, which was one as to the reasonableness of the fee charged under Section 166(2) of the Act for the plying of motor-buses on the public road, Wallace, J., mentioned certain service the cost of which might reasonably be covered by the licence-fee. But in the present case services such as those specified by the learned Judge cannot be supplied nor are any services supplied to it that are at all analogous to them. In fact the panchayat supplies no services that are at all special to the respondent's company, while its President's suggestion that it may do so at some future time are quite nebulous, The very excessive fees then that it has sought to impose cannot be justified, and so they could not in any event be recovered under Section 212(9).
12. The panchayat will have acted within its powers in directing that licences be taken for manufactures (1), (2) and (3) if those manufactures are found to be manufactures separately carried on, that are offensive or dangerous to human life or health or property. I understand that a contention for the respondent is that these manufactures are only parts of the sugar manufacture for which his company had long been taking out a licence and that what they produced are only by-products of the main manufactures. This is a point that I need not now consider as it should be decided first of all by the trial Court.
13. The acquittal of the respondent is set aside and the case will be sent back to the Sub-divisional Magistrate, Cocanada, for proper disposal in the light of these remarks. What he has to decide is whether the notifications of the Taluk Board and Union Panchayat were orders that the respondent was legally bound to obey and the disobedience of which constituted an offence punishable under Section 207 read with Sch. 8. No question of recovery under Section 212(9) will arise.