Licensees, Sri Devi Theatre vs Collector

P. Sathasivam, J.—The above writ petition is directed against the order of the Collector of North Arcot Ambedkar District, Vellore made in

his proceedings dated 1-7-93 suspending the ""C"" Form licence of the petitioner''s permanent Cinema theatre called ""Sri Devi Theatre"" in Palanipet,

Arakkonam for 5 days from 1-8-93 to 5-8-93.

The case of the petitioner is as follows :-- The petitioners are licensees of permanent cinema theatre called ''Sri Devi Theatre'' in Palanipet,

Arakonam. They have been running the theatre in accordance with the Rules and Regulations and the conditions of the ''C'' Form licence. While

so, the respondent in his proceedings dated 1-7-93 suspending the ''C'' Form licence of the theatre for 5 days from 1-8-93 to 5-8-93 on the

ground that at the time of inspection by the Entertainment Tax Officer on 17-2-93, they noticed that the licensee admitted 84 persons without valid

tickets, for that the compounding fee of Rs. 500/- was collected by them. In order to avoid unpleasant events during the show time and with

compulsion, the petitioners paid a compounding fee of Rs. 500/-. Against the said order of compounding, the petitioners preferred an appeal to the

Assistant Commissioner of Commercial Taxes, Vellore and the same is pending. While at this stage, without giving any show cause notice calling

for explanation, the respondent herein passed the order of suspension of ''C'' Form licence for 5 days u/s 9(1) of the Tamil Nadu Cinemas

(Regulation) Act, 1955.

The respondent has filed a counter affidavit disputing various averments made by the petitioner. At the time of inspection, the inspecting officers

found that 84 persons were admitted without tickets and in excess of the entries in the daily collection register. The offence was compounded by

the licensee of the theatre for Rs. 500/-. Admitting excess persons in the Auditorium without proper ticket is an offence punishable u/s 14(1)(a) of

Tamil Nadu Entertainment Act, 1939. As it has been brought to the notice of the licensing authority, that the writ petitioner had compounded such

an offence, the provision of Section 9(1) of the Tamil Nadu Cinema (Regulation) Act, 1955 were invoked. He passed orders suspending ''C'' form

licence of the theatre in proceedings dated 1-7-93 for a period of 5 days. The respondent is fully justified in passing the impugned order, more

particularly in view of the admission of the guilt and compounding for violation of the provisions of the Tamil Nadu Entertainment Tax Act and there

is no merit in the writ petition.

In the light of the above pleadings, 1 have heard the learned counsel for the petitioner as well as learned Government Advocate.

The only point for consideration is whether the respondent-District Collector is justified in suspending the ''C'' Form licence of the petitioner

theatre for a period of 5 days merely on the basis of compounding for violation of the provisions of the Tamil Nadu Entertainment Tax Act ?

There is no dispute that pursuant to the surprise Inspection made on 17-2-93 and in respect of admitting 84 persons without valid tickets, the

petitioner licensee had compounded and paid Rs. 500/-. However, it is the case of the petitioner that against the said order, he had filed an appeal

to the appellate authority and the same is still pending. Based on the compounding for violating the provisions of the Tamil Nadu Entertainment Tax

Act, 1939 (hereinafter referred to as ""the Act""), the respondent herein by invoking Section 9(1) of Tamil Nadu Cinema (Regulation) Act, 1955

(hereinafter referred to as ""the Cinema (Regulation) Act), passed the impugned order suspending the ''C'' form licence for a period of 5 days. Mr.

N. Thiagarajan, learned counsel for the petitioner, would contend that without a show cause notice and due enquiry, the impugned order

suspending ''C'' form licence cannot be sustained. The very same question has been considered by a Division Bench of this Court consisting of S.

Jagadeesan and E. Padmanabhan, JJ., in the case of Sri Kamatchi Theatre v. District Collector, Madurai 2000 (2) MLW 255. The Division Bench

was asked to consider whether the Collector has to issue show cause notice and hold an enquiry u/s 9(2) of the Cinema (Regulation) Act before

taking actionunder Section 9(1), based upon compounding of the offences under the provisions of the Tamil Nadu Entertainment Tax Act. The

Division Bench after considering the relevant provisions from both the enactments as well as the earlier case laws have concluded thus :-- (para 61)

61..... As already pointed out, there has been compounding of the offences u/s 15 of the Entertainment Tax Act and based upon that

compounding, further action is taken u/s 9(1) and therefore, as provided in Section 9(2), ashow cause notice alone is sufficient, and it is not

necessary to hold a detailed enquiry.....

They further observed in para 62 as follows :--

In other words, we hold that when once the licensee is permitted to compound the offence, which means that there exists a pre-existing

conviction or order of composition which does not require any further enquiry and it would be sufficient to issue a show cause notice as provided

in Sub-section (2J of Sec. 9. We also make it clear that when the petitioners themselves had concedingly admitted the irregularities by

compounding the offences, nothing more is required to hold that the petitioner or their managers or agents or attorneys have violated the licensing

conditions, and no further enquiry is warranted for an action being taken u/s 9(1) of the Tamil Nadu Cinemas (Regulations) Act and the authority is

well Justified in passing an order after issuing the show cause notice.

The abovesaid Division Bench judgment which is directly on the point makes it clear that in a case like this, namely, after compounding for violation

of certain provisions of the Tamil Nadu Entertainment Tax Act, the licensing authority, namely, the District Collector is competent to take action u/s

9(1) of the Cinema (Regulation) Act. It is also clear that before taking any action u/s 9(1) of the Cinema (Regulation) Act, in view of admission of

the guilt and compounding, the only opportunity to be fulfilled is Issuance of show cause notice u/s 9(2) of the Cinema (Regulation) Act and no

detailed enquiry is required.

It is also brought to my notice a decision of S. Jagadeesan, J., in The Licensee, Krishna Theatre, Palanichettipatty, Theni Vs. The Collector of

Madurai, District, Madurai, . In the case before the learned Judge the petitioner was charged with collection of excess fare and for violation of

licence conditions as well as evasion of entertainment tax. the petitioner compounded the offence by paying compounding fee. The respondent

therein passed an order of suspension of ''C'' form licence for a period of 30 days without issuing show cause notice. The learned Judge even

though considered the Division Bench decision rendered in W. P. No. 12640/94 etc., dated 11-11-1999 (since reported in 2000 (2) MLW 255

in which he is also a party, by referring a decision of the Supreme Court in Dharmarathmakara Raibahadur Aroot Ramaswamy Mudaliar

Educational Institution Vs. The Educational Appellate Tribunal and Another, , has made the following conclusion :--

So the principle of issue of show-cause notice is necessary in order to give an opportunity to the aggrieved to submit the explanation before ever

any final order is to be passed. But when the final order is to be passed is on the basis of the admission of the aggrieved himself, then there is no

need to issue any show-cause notice, as the final order is based only on the admission made by the aggrieved and not by any other fresh material

within the knowledge of the punishing authority. Based on the principles laid down by the Apex Court in the above case, there is absolutely no

necessity to issue the show-cause notice as contemplated u/s 9(2) of the said Act for the completion of the empty formality before ever any order

is to be passed u/s 9(1) of the said Act; where such order is based on the compounding of the offences or violations by the licensee. Hence, the

non-Issue of the show-cause notice by the respondent before ever the impugned order of suspension was passed will not vitiate the impugned

order either on the ground of violation of the principles of natural justice or otherwise.....

I have already extracted the conclusion of the Division Bench of this Court in which the very same provisions had been dealt with. I have already

stated that the cases before the Division Bench were concerning the orders of suspension of ''C'' form licence, after issue of show-cause notice as

contemplated u/s 9(2) of the Cinemas (Regulation) Act. It is further clear that when the person admits the guilt, namely, violation of certain

provisions of the Entertainment Tax Act and pays necessary fees by way of compounding, in terms of Section 9(2) of the Cinemas (Regulation)

Act, a show cause notice has to be issued and no further or detailed enquiry is required. That is the law laid down by the aforesaid Division Bench.

No doubt, their Lordships of the Supreme Court held that where allegations and charges are admitted and no possible defence is placed before the

authority concerned, no further enquiry need be made. A reading of the said decision makes it clear that when allegations and charges are

admitted, no further enquiry is required. Here, in our case, the admission of guilt by the petitioner is with reference to violations of certain

provisions of the Tamil Nadu Entertainment Tax Act. Even for this, the petitioner has asserted that they had already filed appeal to the Assistant

Commissioner, Commercial Taxes, Vellore and the same is pending. In such a circumstance, if the District Collector wants to take action based on

the compounding made under the provisions of the Tamil Nadu Entertainment Tax Act, as observed by the Division Bench in 2000 (2) MLW 255

(cited supra), I am of the view that the competent authority, namely, the District Collector is bound to issue show cause notice to the person

concerned and pass an appropriate order thereafter. Though no further or detailed enquiry is required before taking action u/s 9(1) of the Cinemas

(Regulation) Act as observed by the Division Bench, show cause notice alone is to be issued u/s 9(2). Inasmuch as the Division Bench decision

referred to above is directly on the point and as the decision referred to by Jagadeesan, J., namely Dharmarathmakara Raibahadur Aroot

Ramaswamy Mudaliar Educational Institution Vs. The Educational Appellate Tribunal and Another, speaks about ""enquiry"", 1 hold that non-issue

of show cause notice by the respondent before passing the order of suspension vitiates the impugned order on the ground of violation of principles

of natural justice as held by the Division Bench in 2000 (2) MLW 255. As observed earlier, since the decision of the Apex Court

Dharmarathmakara Raibahadur Aroot Ramaswamy Mudaliar Educational Institution Vs. The Educational Appellate Tribunal and Another, speaks

only about ""enquiry"" and we are concerned with giving an opportunity by way of ""show cause notice"", with respect. I am unable to share the view

expressed by the learned Judge rendered in The Licensee, Krishna Theatre, Palanichettipatty, Theni Vs. The Collector of Madurai, District,

Madurai, , and 1 am bound by the Division Bench decision reported in 2000 (2) MLW 255 which is directly on the point. On this ground, the

impugned order of the respondent dated 1-7-1993 is quashed and the Writ Petition is allowed. No costs. It is open to the respondent to issue

show-cause notice u/s 9(2) of the Cinemas (Regulation) Act and pass appropriate orders in accordance with law. Both the miscellaneous petitions

are closed.