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Judgment
Ramaprasada Rao, J.—Original Suit No. 110 of 1965 on the file of the Court of the Subordinate Judge, Coimbatore, was originally filed by
Market Vyabarigal Sangam, Coimbatore, by its Principal Secretary, for the time being, but in a representative capacity. On an objection taken as
regards the frame of the suit, Plaintiffs 2 and 3 were impleded as co-Plaintiffs, and at the time when they sought themselves to be impleaded, they
made it clear that they were joining in the action in a representative capacity for and on behalf of the stall-holders carrying on business in Thyagi
Kumaran Market, Coimbatore and not only to further the alleged rights in themselves as such stall-holders in the said market. The suit is for a
declaration that the levy of fees by the Municipal Council, Coimbatore, for the use and occupation of the stalls in the Thyagi Kumaran Market
owned by it, is ultra vires, illegal and void and for a permanent injunction restraining the Municipality from collecting such fees demanded by them
in view of their occupation and use of the stalls in the market. The various stalls and their position are set out in schedules A (I), B (J), C (I), and D
(I). The Plaintiffs claim is that even though the stalls are situate in the same precincts, different rates of levy have been made from time to time, and
such levy is not in accordance with the provisions of the District Municipalities Act or the rules framed thereunder. The Plaintiffs case is that at one
stage, there was an increase in such a levy by 35 per cent of the previous fee by a resolution, dated 12th February 1964 and that rate was
prevalent since 1st April, 1964, till the date of suit. The complaint, however, is that by Resolution No. 1309, dated 23rd January, 1965, the rate of
fee was further increased and such enhanced levy was demanded by notices issued by the Municipality soon after the passing of the resolution as
above and this is said to be cause of action for the suit in question. The Plaintiffs'' case is that the Municipality has no right to make such a levy, and
in any event the levy is arbitrary and. illegal besides being discriminatory. Though in the pleadings, the resolution as such is attacked on the ground
that it is ultra vires the powers of the Municipality, yet, there is no prayer in the plaint seeking for the removal of the said resolution under which the
impugned demand was made.
The Municipality, in its written statement says that the suit is not maintainable in law, as what was sought to be collected is in the nature of a
return from the property owned by the Municipality, that it has the right to fix and levy such fees on the occupants or stall-holders in the market and
that the relationship between the Municipality and the stallholder is one of licenser and licensee theperiod of the license being one year. As this
licensee was renewable annually under written agreements generally entered into for the purpose, the occupation of the stalls is governed by a
contract between the parties, the legality or otherwise of which cannot be the subject-matter of a civil dispute. It is also claimed that the rate fixed
by the Council was to augment the resources of the Council and to meet the increased cost of maintenance and upkeep of the market. For the
above reason, the levy was bought to be sustained and the suit was resisted.
On the above pleadings, the following issues were framed:
Whether the levy in pursuance of resolution No. 1309, dated 13--1--1965 is illegal, void and arbitrary?
Whether the levy is ultra vires the powers of the Defendants under the Madras District Municipalities Act?
Whether the suit as framed is not maintainable in law?
Whether the suit is barred by the principles of res judicata)
Whether the Plaintiff has no cause of action to file the suit ?
Whether the Plaintiff is entitled to the declaration and permanent injunction prayed for? and
To what relief is the Plaintiff entitled ?
The learned Subordinate Judge dismissed the suit and held that the levy was legal, not void and is not arbitrary and that it was well within the
powers of the Defendant-Municipality under the provisions of the Tamil Nadu District Municipalities Act. On the issue whether the suit was barred
by res judicata, he held against the Defendant, but on the primary issues raised, the judgment was against the plain-tiff. It is as against this the
present appeal has bean filed.
Mr. Sundaram Iyer, the learned Counsel for the Appellants, hesitantly urged before us that the levy is beyond the powers of the Municipality,
and that the fee claimed by it under the resolution of 1965 savours of discrimination as an element of arbitrariness is writ large in it. We have said
that the argument is hesitant, for the reason that Mr. Sundaram Iyer was aware of the decisions of this Court rendered under similar circumstances,
wherein similar questions were raised about the power of the Municipality to levy such a fee and collect it from the stall-holders in the market
owned and maintained by them. The other question posed before us was, whether the levy, even if it is intra vires of the powers of the Municipality
it ought to be removed, since in the light of the evidence let in it is arbitrary and savours discrimination.
Mr. Alagimswami, the learned Counsel for the Municipality, relying upon the decisions of our Court, which we shall presently refer to, urges that
the Court below has rightly appreciated the position, though for different reasons rendered by it, and urged that as a uniform yardstick was
adopted by the Municipality in evolving a formula for the levy of fee in question, no question of discrimination or arbitrariness is apparent in the levy
or in the record.
We would have, but for the decisions of this Court rendered under similar circumstances, entered into a fuller discussion into the legal aspect
which this case poses. Unfortunately, however, the decisions rendered by this Court have not been reported, and it has, therefore, become
necessary for us to quote in extenso the observations made by this Court earlier, in a case which arose before it and in which also the question was
whether the levy was intra vires or ultravires of the powers of a Municipality functioning under the Tamil Nadu District Municipalities Act.
In Writ Appeal No. 218 of 1972, etc., (Arumugha Kone v. The Palayamkottai Municipal Council and Ors.) before a Division Bench to which
one ''of us was a party, a similar question came up for consideration In those proceedings, writs of mandamus were asked for directing the
Palayamkottai Municipality to forbear from levying and collecting as well the fees at the enhanced rates as per the resolution of the Municipal
Council made in 1972 in relation to the permanent stalls in the Mahatma Gandhi Market, Palayamkottai. Before the writ appeals came up for
consideration before the Divisional Bench, consisting of is mail and Natarajan JJ., I had occasion to deal with almost a similar question and
considered the legality of the levy and observed:
In conclusion I have to hold that impost in the instant case is not a tax but certainly it is not a fee which is governed by the doctrine of quid pro quo
but is a compulsory exaction sanctioned by statute and being annexed with the right of ownership of property, the owner of the public market has
the right to vary it by increasing or diminishing it after notice and after such fixation, recover the same from the stall-holder.
The judgment of mine so rendered in Writ Petition No. 981 of 1970 (A. Subbiah Nadar v. Tirunelveli Municipality and Anr.) was appealed
against. In Writ Appeal Nos. 1 and 2 of 1971 (A. Subbiah Nadar v. Tirunelvali Municipality and Anr.), a Division Bench of this Court consisting
of the learned Chief Justice and Raghavan J., while dismissing the appeal at the admission stage, observed
We do not think It is necessary to decide in this case whether the nature of the levy is the or a tax, or some kind of statutory collection, as
Ramaprasada Rao J., is inclined to think.
The learned Chief Justice said:
Once it (the Municipality) has the power to license the markets for fees to be collected in any manner stipulated in the section, 260 (2), it includes
also the power, in our view, to license a single market among others to the highest bidder.
The learned Chief Justice also expressed the view that even so, the Municipality is entitled to a return for the use of the market, and for such use, it
is entitled to levy a fee. Ismail J., in Writ Appeal No. 218 of 1972 (Arumugha Kone v. The Palayamkottal Municipal Council), was inclined to
consider the main question as to the properly and legality of the levy in full, as the Counsel desired for such an opinion from the Bench. As this
judgment, which, in our view, is an important one, has not yet been reported, it has became necessary for us to quote excerpts from it in extenso
so as to answer the contentions of Mr. Sundaram Iyer raised in this case. The learned Judges in the above appeal said:
...the fees contemplated by Clauses (a) and (b) of Sub-section (2) of Section 260 of the Act can include an element of return to the Municipal
Council on the investment which it has made in acquiring or constructing the market in question. Once this has been conceded, we are clearly of
the opinion that there is absolutely nothing in the statute to put a limit on the said element of return What should be the proper rent payable in
respect of the please of; the stalls in the market or the fees payable in respect of a licence granted by the Municipal Council for the use of the stalls
will have necessarily to be variable and flexible depending upon the demand for such place in the particular locality at a particular time, and
therefore, there cannot. be any hard and fast rule as to what should be the said return.
* * *
From the very nature of the case it should be a subject-matter of bargain between the owner of the property and the person who is permitted to
occupy and no person will be willing to occupy a stall unless he thinks that it is worthwhile for him to do so.
* * *
It is not c pen to them to contend that they will continue to occupy or make use of the Municipal Councils'' markets on their own terms and not on
the terms offered by the owner. So long as there is no statute controlling or regulating the letting of and the rents recoverable from, a property, the
owner of the property has the liberty to put his property to the best use possible and obtain the best return. Taking into account that any benefit or
advantage the Municipal Council derives in such process ultimately goes to the public the buildings, belonging to such Municipal Councils have
been placed out of the operation of the Madras Buildings (Lease and rent Control) Act.
* * *
In this case there can be no dispute that the Appellant and the Petitioners are only in the position of licensees as contemplated by the Easements
Act....
The learned Judges referring to a decision of our Court rend wed in The Corporation of Madras Vs. S.A. Khan and Others, observed:
The Beach held that whether the agreement between the stall-holders and the Corporation amounted to a lease or tenancy or was for the payment
of a fee by the licensee mattered not, and the rights given by the agreement to the stall-holder were to continue until the agreement was determined,
and during its subsistence he was under an obligation only to pay the amount which it specified.
The learned Judges further observed
If so, whether the fees were actually utilised for the maintenance of the market or not, is totally irrelevant, for the reasons we have already indicated
namely, that the right to recover such fees flows from there ownership of the market being vested in the municipal corporation concerned.
* * *
....the expression fees in the Act has been used to denote also payments in the nature of rents or charges collected from citigens for the benefit or
the a nenity that the Municipal Council itself provided at its own cost.
We are also of the view that the writ petitions are liable to be dismissed on the simple ground that by the enhancement of the fees in question, no
right of the Petitioners has been affected. We have already held that the position of the Petitioners was that of a licensee
....
* * *
Section 62 (c) of the Easements Act itself provided that a license is deemed to be revoked where it has been granted for a limitedperiod and
theperiod expires.
We should confess that we are unable to quote more from the judgment of the Division Bench of this Court for the simple reason that it is very
elaborate, and we have quoted only such of those excerpts therein which would clinch the issue that arises for consideration in this appeal. If,
therefore, the view of this Court is now settled that the levy made by the Municipality if in exercise of their right as owner of the market and is in
pursuance of a licence issued by them annually to the stall-holders occupying the stalls, then we are unable to accede to the contention of Mr.
Sundaram Iyer that the fee in question should be understood in the sense of fee demanded or collected in lieu of certain services rendered by the
Municipality. As already explained, the fee or the levy or the impost made u/s 260 of the Tamil Nadu District Municipalities Act has a popular
characteristic, in that it is a collection made by virtue of the powers in a statute, and incidentally it is a necessary power annexed to ownership of
properties vested is the owners. If this conclusion is reached, viz., that the Municipality has the right to levy such a fee, then the licence being a
yearly one, it has also the incidental right to enhance the fee in view of the circumstances stated in the written statement, to wit, to augment the
resources of the Council and to meet the increased cost of the maintenance and upkeep of the market. Such a levy is not only traslailable, but is
certainly within the powers of the Municipality to levy and increase the same whenever occasion demands it.
The next contention of Mr. Sundaram Iyer is that the levy is arbitrary and discriminatory. Reliance is placed upon a judgment of this Court, to
which one of us was a party, in Writ Petition Nos. 913 etc. of 1970 (A.S. Sivalingam v. Tirunelveli Municipality and Anr.). There, the fee varied in
accordance with the nature of avocation or trade induilged in by the stall-holder. In fact, the turnover of the business conducted by the stall-holder
was made the basis for the variance in the levy. In those circumstances, it was contended that the Invidious distinction made as between the stall-
holder and stall-holder based on the nature of the business done by him in the stalls was discriminatory I was inclined to accept this contention as in
that case there was no dispute that such was the hypothesis on which the differentiation in the levy was thought of by the Municipality. But the
question is whether such a basis is ;he real foundation for the difference in the levy as between stall-holder and stall-holder, in the market of the
Municipality in question
Learned Counsel for the Appellant referred to the evidence of D. W. 1. In his cross-examination he says:
I do not know if the turnover of business of P.W. 6 is about Rs. 60,000 to Rs. 70,000 per year. I do not know if the turnover of the business of P.
W. 9 is Rs. 40,000 to Rs. 50,000. It is not true to say that we have not taken into consideration the turnover of business in the stalls.
On this testimony, the argument is built up that the basis of the levy is referable to the turnover of business of the stall-holders in the market. We are
afraid the at this is a far-fetched contention. In order to make out discrimination, as also the incidental contention of arbitrariness in the levy, more
clinching evidence is required for us to feel satisfied than the testimony brought before us that when the Municipality made a different levy over the
different stalls within the market, the only consideration which weighed with them was the turnover of the trade carried 01 in the stalls. On the other
hand, in the written statement, the Municipality stated that the Council, when it fixed the fees uniformly, took into consideration the nature, location
and the business conducted in the stalls. This is also the evidence of D. W. 1, but it was torn out of context to support the contention that the levy
is discriminatory or arbitrary. Apparently, the Council took into consideration all the relevant material, such as the nature of the stall, the location of
the stall and the business conducted in the stall for the purpose of enhancing the levy. This was uniformly adopted, and no discrimination was made
as between one stall-holder and the other. There is no evidence let in to show that the levy was increased as per the resolution on such or similar
data. Learned Counsel for the Municipality rightly contends that every conceivable aspect which would enter into the computation was in the mind
of the Council when the enhancement was thought of. In any event, as our Court has held in the writ appeals above referred to that the fee is in the
nature of a return from the property owned by the Municipality and the owner has the prerogative right to increase the same from time to time, and
it is for the occupant to choose to occupy it on the terms of the owner, and not for him to dictate his terms to the owner as to what ought to be the
rent or the fee, this question does not now loom large for further consideration.
The learned Subordinate Judge, though no doubt for different reasons, came to the right conclusion that the Plaintiffs cannot have any
redressable grievance against the levy as made and demanded by the Municipality, and his conclusion is well supported by the views pressed by
this Court which we have already referred to.
The appeal, therefore, fails and is dismissed with costs.