Brooke Bond India (PTE) Ltd vs The Corporation of Madras

Srinivasan, J.—Messrs. Brooke Bond India Private Ltd, is the petitioner. It is a company registered under the Indian Companies Act with its registered office at Calcutta. The petitioner deals in packetted tea and coffee. The course of its business is to purchase tea at Public auctions at Calcutta and Cochin, blend the tea and packet the tea and tea dust in suitable containers in five factories, one of which is situated in Coimbatore and the others in four other States. We are not concerned in these petitions with its process of manufacture. The tea so packed in air-tight containers is sold through a number of depots situated in the whole of India These packages are sent to the several depots and sales are effected to dealers either at the depots where they are stored or by taking them to the premises of the customers. These depots are only places of storage where the packed tea is kept in cases. In the City of Madras, the petitioner has 30 such depots in addition to two big godowns for the purpose of storage.

On various dates during the second half of the calendar year 1960, the Corporation of Madras purported to issue notices to four of these depots and a godown. The Revenue Officer of the Corporation informed the petitioner that the Commissioner of the Corporation of Madras has declared that the use of the premises in connection with storing and sale of tea was dangerous to human life or health or properly or will create or cause a nuisance. This the Commissioner is purported to have done in the exercise of his powers under the residuary clause in Sch. VI of the City Municipal Act. By virtue of the above declaration, the premises where tea was stored became liable to be licensed under S. 287 of the City Municipal Act. The petitioner was accordingly informed that it should take out a licence for the premises in question. Notices were issued in respect of depots in Usman Road, Devar Sixth Street, Thambu Chetti Street, Jermiah Road and Kilpauk. A further notice issued on 7th September 1960 related to the Thiru-vottiyur High Road, premises and the Health Officer of the Corporation of Madras informed the petitioner that as the petitioner was storing and selling tea dust and leaves without a licence, it was liable to be prosecuted under S. 379-A of the Act and that steps would be taken to (sick) the petitioner from continuing (sick) These premises for the above said (sick) There was a further notice threatening to prosecute the petitioner in this regard.

The petitioner addressed the Corporation of Madras by a letter dated 7th November 1960 and pointed out that the mode of trade and sale of tea was such that both by the nature of the articles and by the manner of disposal thereof, public health, safety or convenience would not be affected. It was urged that storing of packed tea would not in law come within the purview of S. 287 of the Act as constituting a trade which is dangerous to public health or safety. The Corporation replied to this letter stating that it was within the jurisdiction and power of the Commissioner to declare whether any particular trade was or was not of a nature bringing it within the mischief of S. 287 and that since a declaration to that effect had been made, the petitioner was bound to take out a licence.

It is in these circumstances that the writ petitions have been filed praying that this Court may issue a writ or direction in the nature of mandamus to restrain the Corporation from interfering with the user of the premises by the petitioner and from enforcing the provisions of S. 287 of the City Municipal Act.

The grounds upon which the proceedings of the Corporation are attacked are that the imposition of the restriction, viz., the requirement of a licence for the purpose of carrying on a trade or business, is a restriction on the fundamental right of the petitioner to carry on business, and unless the restriction imposed is a reasonable one in the interests of the general public, it is violative of Art. 19 of the Constitution. It is pointed out that the Act itself contains a schedule listing out the trades and occupations which fall within the ambit of S. 287, and tested in the list of such trades and occupations, which the Legislature has clearly considered to be of a nature requiring a licence for the use of the premises, the trade in the present instance is not even remotely liable to be regarded as dangerous to the health or convenience of the public. It is urged further that under the relevant provisions of the Act, the State Government is vested with an authority to alter or add to the entries in Sch. VI. but this power of the State Government is exercisable only after such alterations and amendments are laid before the Legislature and approved of by that body-In contrast therewith, the power that is given to the Commissioner under the residuary clause of Sch. VI is apparently unfettered by any control of that kind and in sharp contrast to the requirements of previous publication and approval as the exercise of the power by the State Government calls for, the power of the Commissioner is wholly restrained. It is further pointed out that when once a trade carried on in certain premises comes within the mischief of Sch. VI and S. 287, the user of the premises without a licence becomes a punishable offence. Virtually, therefore the Commissioner is conferred with uncontrolled authority not only to add to the list of items contained in Sch. VI but also to create a punishable offence merely on the basis of an opinion recorded by him without any prior publication or promulgation. The conferment of such a power upon the Commissioner is also attacked as amounting to excessive delegation, even apart from the question of the reasonableness of the opinion of the Commissioner which the petitioner claims has to be established to the satisfaction of the Court.

In the counter affidavit filed on behalf of the respondent, the Corporation of Madras, it is stated that the City Council is the authority to fix the fees leviable for licences. When the Act in Sch. VI listed certain trades and industries for the purpose of licensing, it was obviously not intended to be exhaustive of all such licensable trades. It is contended that the Legislature has for that reason empowered the Commissioner to declare any purpose which in the opinion of the Commissioner is likely to be dangerous to human life or health or likely to create a nuisance. This statutory power conferred upon the Commissioner, it is claimed, is perfectly legal and the Commissioner is entitled in the exercise of that power to declare that certain trade carried on in certain premises should require a licence. It is urged that no infringement of the fundamental right of the petitioner to carry on its business Is caused and that a reasonable restriction in the interests of the general public, which is all that the requirement of a licence connotes, is perfectly within the competence of the chief executive authority of the Corporation. It is again averred on the part of the Corporation that when the Commissioner declares his opinion, it is not a rule that is framed under any of the provisions of the Act and that therefore no previous publication or promulgation is called for. The bona fides of the opinion of the Commissioner, it is claimed, cannot be questioned, and the Commissioner is under the provisions entitled to decide what should be licensed in the interests of public health. Lastly, it is contended that where a discretion has been conferred upon the Commissioner even though the conclusion reached by the Commissioner might be disputable, so long as the exercise of the discretion is within the scope of the powers conferred upon him and in the exercise of a statutory authority, a writ of mandamus should not issue.

In order to appreciate the contentions of either side, it is necessary to refer to a few of the provisions of the Act. The City Municipal Act was passed in the year 1919. Ch. XI of the Act deals with nuisances and Chapter XII with licences and fees. Under the sub-heading "Industries and Factories" the prohibition upon the use of any place within the limits of the City for any of the purposes mentioned in Sch. VI without a licence obtained from the Commissioner finds place in S. 287. Sch. VI lists out numerous items under the heading "purposes for which premises may not under S. 287 be used without a licence". For the word "premises" the word "places" was substituted by Madras Act LVI of 1961. The further clause of S. 287 requires that the owner or occupier of every place, for the use of which for any purpose a licence is required, shall apply to the Commissioner for such licence not less than 45 and not more than 90 days before the place is used for such purpose. The licence may be granted by the Commissioner, subject to such restrictions and regulations as may be specified, or he may refuse the grant of such licence. The Amending Act LVI of 1961 made further provisions for dealing with the application for licences. The section also requires applications for annual renewal of the license.

In Part V of the Act providing for subsidiary legislation and penalties, provisions are made for making of rules by the State Government to carry out all or any of the purposes of the Act. S. 347, Sub-S. 3 states :

The State Government may make rules altering, adding to or cancelling any of the schedules to this Act except Schedules I, VII and VIII.

It is thus competent for the State Government to make rules adding to Sch. VI. Under Sub-S. 5 However a draft of the rules proposed to be made under Sub-S. 3 shall be laid before both Houses of the State Legislature and the rules shall not be made unless both Houses approve of the draft either without modification or addition, or with modification or addition, to which both Houses agree. After such approval has been obtained, the rules are required to be notified in the official gazette before they can take effect. It is clear therefore that where the State Government purports to alter, add to or cancel any of the entries in Sch. VI, a definite procedure Is laid down requiring the approval of the Houses of the State Legislature followed by the publication of the rules in the official gazette. Turning to Sch. VI, after setting out numerous items-trades and industries-for the purpose of which a place is required to be licensed under S. 287, a residuary clause was enacted herein to the following effect;

In general, any purpose or the doing in the course of any industrial process anything which in the opinion of the Commissioner is likely to be dangerous to human life or health or property or is likely to create or cause a nuisance." It is in the exercise of the power conferred by this residuary clause that in or about December 1959, the Commissioner made a declaration in respect of 44 items of trade or industry which in his opinion required a licence, when such trade or industry was carried on in any premises in the City of Madras. One of such (sick) is "tea" and the purpose for which (sick) may not be used, without a (sick) stated as " storing, packing pressing, cleansing, preparing or manufacturing by any process whatever.

It is common ground that this declaration adding to the items found in Sch. VI and calling upon persons using any premises for any of the purposes of the trades or industries mentioned was never published. It was not even brought to the notice of the public by an ordinary publication as distinguished from a publication in Official Gazette. It is also common ground that ever since the passing of the City Municipal Act, 1919, this is the first occasion when the Commissioner has exercised the power conferred upon him by the residuary clause in Sch. VI.

Under S. 287 (1) of the Act, a contravention of " any provision of any of the sections or rules of this Act specified in the first Column of Sch. VII " Is made punishable and the person contravening it is liable to be punished with fine as laid down in Sch. VII. Sch. VII of the Act lists out the various sections of the Act and the sub-section or clause thereof, the contravention of which invites the penalty indicated in a column of that Sch. A fine of Rs. 200 can be imposed on conviction for " using a place for any of the purposes specified in Sch. VI without a licence and contrary to licence." It is accordingly clear that the addition of any items to Sch. VI by the Commissioner in the exercise of his power under the residuary clause has the effect of creating a new offence which is made punishable en conviction. It may also be mentioned that under S. 347 (3) of the Act, the State Government itself is not competent to alter, add to or cancel Sch. VII except by way of amendment of the Act.

Learned Counsel on both sides have covered a wide area of controversy, but in our opinion, the matter can be disposed of on the short point that the exercise of the power by the Commissioner is not within the proper statutory limits. The foundation of the jurisdiction of the Commissioner is his opinion that there is likelihood of danger to human life, or health or property or that nuisance is likely to be created or caused. We can assume-the language of the statute compels such assumption,-that the opinion is that formed by the Commissioner and no that which a Court can say that he ought to have formed. The opinion is the result of his subjective satisfaction of the existence of matters sufficient to form it. It is not the province of the Court to canvass the adequacy of the materials nor can it substitute its views for the view of the Commissioner. Even granting so much, and giving full allowance to the amplitude of the words of the statute, it would not be proper to say that the Commissioner has the last word on the subject, and that once an addition is made by him to the list, ostensibly on the ground of an apprehended danger to human life or Health or property or of an expected nuisance, the action would not be open to scrutiny of or to challenge in Court. The propriety of the act of the Commissioner cannot be defended or justified merely on the ground that he has repeated, parrot-wise the expression employed in the statute, namely, that "in his opinion there is danger to human life or health or property or there is likelihood of nuisance." Two things are quite essential before the Commissioner can reach a conclusion or record his opinion in any particular matter, necessitating any addition to the list. One is that there must exist some facts which may lead to the inference of a likelihood of danger to human life or health or property or creation of nuisance. The second is that the Commissioner should apply his mind to the facts and take an honest decision on those facts. It is of course not necessary that the Commissioner should ex facie set out the facts and the reasons which impelled him to take the decision. But when his act is called in question he must be in a position to say that he did not act arbitrarily or in any unreasonable manner but that he took into account certain facts and circumstances before forming the opinion. It must be remembered in this context that a licensing provision in a municipal enactment is a restriction upon the person obliged to take out the licence in the matter of carrying on his trade, or business. In the generality of cases, licensing per se may be treated as a reasonable restriction constitutionally permissible under Art. 19 (6) of the Constitution. But it is always open to the licensee either to say that the provision compelling the licensee is an unreasonable restriction or that in any particular case, though the provision is reasonable, the power has been abused and that it has resulted In an unreasonable restriction on his trade, or business. We are not prepared to say that in the present case, the provision as such would amount to an unreasonable restriction of the carrying on of the business of the petitioner. But if it were to be found that the power has not been properly exercised we can strike down the act of the Commissioner on the ground that an unreasonable exercise of a reasonable restriction has infringed the fundamental rights of the petitioner.

When is a power abused ? This cannot be comprehensively or exhaustively answered by a mere catalogue of hypothetical instances. Patent transgression of power is not strictly abuse in the exercise of power but is something ultra vires the power. Where a power is not genuinely, but colorable ,exercised, where the exercise of the power has a complacent look but an ulterior or oblique purpose, there is abuse or misuse. The presence of mala fides is not an essential requirement to establish abuse of statutory power. An arbitrary act without due appreciation of the duty imposed by the Statute cannot be defended on the ground that it was done bona fide

We must point out that the Commissioner has in one stroke and literally overnight swelled the entries in the list by adding numerous articles requiring licences for particular purposes enumerated by him without any indication as to whether there is likelihood of danger to human life, health or property or apprehension of nuisance. It is true that the words of the clause have been repeated. But it cannot be said from a perusal of the order of the Commissioner whether storing, packing, pressing, cleansing, preparing or manufacturing by any process, whether whatever of tea is dangerous to human life or health or property or would create or cause nuisance. It cannot be said that the acts for which licensing is required are such as to cause danger to human life, or to cause or create nuisance. Nor has the Commissioner chosen, so far, to divulge what prompted him to resort to the residuary power. It seems to us to be obvious that the Commissioner has not applied his mind to the question whether or not the acts for which licensing is required are such as to call for the exercise of his emergency powers and merely added to the list in the belief that his powers in the matter were unfettered. He overlooked what is really manifest that the power is coupled with a duty to be satisfied that the occasion prescribed by the statute was present. The action of the Commissioner appears to have been more a mechanical than a real discharge of his statutory functions. He no doubt observed the form but missed the essence of his duty. In this view of the matter the action of the Commissioner cannot be upheld.

The learned Advocate General appearing for the petitioner has invited our attention to Madras Act LVI of 1961 by which the City Municipal Act, 1919, was amended. By S. 98 of the Amending Act, certain amendments were made to Sch. VI. By this Act, the residuary power conferred upon the Commissioner by the 1919 Act was taken away and in particular certain additions were made to Sch. VI. Apparently, in effecting the amendments to Sch. VI, the Government had before them the list of 44 items added by the Commissioner In 1959 and they proceeded to add to Sch. VI only a few of these 44 items, such as, beedis, glass, ice. It is very pertinent to notice that most of the items so added by the Commissioner were not, at the time the amendment of Sch. VI was undertaken, included in that Schedule. Tea was certainly left out. The learned Advocate General relies upon this circumstance for two reasons. Firstly, he claims that when the Legislature purported to revise the entire list contained in Sch. VI, it would be proper to infer that they impliedly repealed the list as prepared by the Commissioner. We are exceedingly doubtful whether this argument can be accepted as valid. It may be that the Legislature intended to examine the several trades and industries which might be regarded as requiring a licence for being carried on in any place within the limits of the Municipality. But factually, the Schedule, as it stood previously, was not scrapped and replaced by another. By the provisions of this Amending Act, a few more items were added to the Schedule and a few of the original items were amended. The doctrine of implied repeal cannot, therefore, serve the purpose of this argument. But the learned Advocate General argues that, at any rate, to the extent to which the Government examined the matter, they would clearly appear so have been of the opinion that several of the items previously added by the Commissioner did not warrant Inclusion in the Schedule. The weight that one could attach to the opinion of the Commissioner has been, according to the arguments, considerably lessened by the fact that the Government virtually ignored the additions to the list in Sch. VI made by the Commissioner. If, therefore, the Legislature did not consider those items as fit matters for inclusion in Sch. VI, it is urged, the validity of the opinion of the Commissioner that those trades involved any detriment to the health of the general public can hardly by supported. This argument is reinforced by the further feature that the residuary power which had been given to the Commissioner under the unamended Act was taken away altogether. The validity of the exercise of the Commissioner''s power, under the residuary clause, has to be considered as on the date when the Commissioner made the declaration independent of the subsequent legislative Act. The question is not what the Legislature mean by leaving out "tea" from the list of schedule in the recent Act. The question is whether the power entrusted to the Commissioner was valid In law, and if so, was it properly exercised.

While we agree with Mr. Chengalvarayan, for the respondent, that Sch. VI cannot, in the nature of things, be exhaustive for all time and that new trades and industries may develop which may require adequate control in the Interests of the general public and that the reserve power given to the Commissioner was perhaps necessary, we are loath to agree that a power, the exercise of which definitely involves a restriction upon the right to carry on a business may be created solely on the unfettered discretion of the Commissioner. We have pointed out that even the power of the Government to alter, amend or add to the entries in Sch. VI is controlled by the statute by the requirement of prior approval of both Houses of the Legislature and publication in the Official Gazette. The power that is purported to be conferred upon the Commissioner by the residuary clause (such power has since been taken away by Act LVI of 1961) is, in marked contrast, apparently an absolute power subject to no limitations or safeguards. Whatever might be the position with regard to the validity of the conferment of such power upon the executive authority or the Corporation prior to the Constitution coming into force, the validity of the conferment of that power has to be examined in the light of the constitutional safeguards. We have also pointed out that the corollary to the exercise of such power by the Commissioner involves the creation of a penal offence punishable by a Court of law. Undoubtedly, this is a legislative power and the question would naturally arise whether the conferment of legislative authority is justified in the circumstances. As the learned Advocate General argues; even conceding the necessity for enlarging the scope of Sch. VI to meet the coming into existence of new trades and industries, a reasonable construction of that power would be that that power should be exercised only on emergent occasions.

The learned Advocate General has referred to Dalmia v. Justice S. R. Tendolkar (I). In that case, the question arose whether the power conferred upon the appropriate Government to apply the Commissions of Enquiry Act by notification went beyond the Act and was discriminatory and violative of the equal protection of laws clause. It was contended that the Government had arbitrarily applied the Act to the petitioners and their companies and issued notifications concerning them but left out others from its operation. Their Lordships of the Supreme Court pointed out that though the notifications primarily affected only the petitioners it (1) 1959 S.C.I 147. could not be overlooked that Parliament, having left the selective application of the Act to the discretion of the appropriate Government, the latter must of necessity take its decision on the materials available to it and the opinion it forms thereon. They observe:

It (the appropriate Government) is the best Judge of the reliability of its source of opinion'' and if it acts in good faith on the materials brought to its notice and honestly comes to the conclusion that the act and conduct of the petitioners and the affairs of their companies constitute a definite matter of public importance, calling for an enquiry, with a view to devise measures for preventing recurrence of such evil, this Court not being in possession of all facts will, we apprehend, be slow to adjudge the execution action to be bad and illegal We are not unmindful of the fact that a very wide discretionary power has been conferred on the Government and indeed the contemplation that such wide powers in the hands of executive may in-some cases be misused or abused or turned into an engine of oppression has caused considerable anxiety in our mind. Nevertheless, the mere possibility that powers may be misused or abused cannot per se induce the Court to deny the existence of the powers It cannot be overlooked that Parliament has confined this discretion not to any petty official but to the appropriate Government itself to take action in Conformity with the policy and principle laid down in the Act. As this Court has said in. Matha Jog Dobhi v. H. C. Bare (2) a discretionary power is not necessarily a discretionary power and that abuse of power is not easily assumed where the discretion is vested in the Government and not in a minor official.

The learned Advocate General points out that a discretionary power vested in the Commissioner transcends all limits in the present case and that while such a power vested in the Government might perhaps be protected, the power vested in the executive authority of the Corporation stands on a different footing altogether. We do not wish to express any opinion on the question of the constitutional propriety of a power, which, at the first blush, appears to be Very wide and uncontrolled. It is, however, also possible to take the view that conditions prescribed, danger to human life, etc., or possibility of creation of nuisance, are by themselves sufficient and reasonable criteria for the guidance of the authority vested with the exercise of the power;

A Full Bench decision of the Kerala High Court in Harrison and Crossfield Ltd. v. Kottayam Municipality (3), has (2) Matajog Dobey Vs. H.C. Bhari, (3) Harrisons and Crossfield Ltd., Quilon Vs. Municipal Council, Kottayam, been referred to. In that case, the challenge was against the licence fees levied for the storage of rubber and tea In certain premises within the limits of the Municipality. The demand for licence and licence fees was made on the basis of a notification published by the Municipality la the Gazette under the provisions of S. 261 of the Travancore District Municipalities Act. That provision enabled the Municipal Council to publish a notification in the Government Gazette making it compulsory for a licence to be taken for any one or more of the purposes specified in Sch. III of that Act, which corresponds to Sch. VI of the Madras Act. One of the points that arose there was whether in respect of the same premises where both tea and rubber were stored, two licence fees could be demanded. Another contention was that the storage of tea and the storage of rubber were not specified in Sch. III. The learned Judges relied upon the residuary entry to Sch. III of that Act, which was in the same terms as the residuary entry in Sch. VI in the Madras Act and upheld the validity of the demand for licence, holding that it was for the executive authority to decide whether the connected purpose was one likely to be dangerous to human life or health etc. The relevant section of the Travancore Act did not leave the matter to the final determination of the executive authority. Under S. 261 of that Act, it was the Municipal Council that took a decision and was enjoined to publish the matter by notification in the Government Gazette. This decision does not meet the points that have been raised in the present case.

In our opinion, the exercise of the power by the Commissioner in the instant case is not valid. We do not express any opinion on the other questions raised. The petitions succeed. The rule nisi is made absolute. The petitioner will be entitled to his costs. Counsel''s fee-one set Rs. 200.