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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5840 OF 2013 (Arising out of SLP(C) No. 7119 of 2010)

Brihanmumbai Mahanagarpalika and another ....Appellants

versus

Willingdon Sports Club and others ....Respondents

J U D G M E N T

G.S. SINGHVI, J.

1. The  question  which  arises  for  consideration  in  this  appeal  filed  against  

order dated 29.9.2009 passed by the Division Bench of the Bombay High Court in  

Writ Petition No.2199/1999 is whether respondent No.1 is obliged to take licence  

under  Section  394(1)(e)  read  with  Part  IV  of  Schedule  ‘M’  of  the  Bombay  

Municipal  Corporation  Act,  1888  (now  titled  as  ‘the  Mumbai  Municipal  

Corporation Act, 1888’ – for short, ‘the Act’) for the catering services provided  

by it to the members and their guests.

2. Respondent  No.1  provides  various  sporting  facilities,  viz.,  golf,  tennis,  

squash, billiards, badminton, etc., to its members.  The Catering Department of  

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respondent No.1 provides catering services to the members and occasionally to  

their guests.  By order dated 21.11.1990, appellant No.2 called upon respondent  

No.1 to make an application for grant of licence under Section 394 of the Act for  

the eating house. The latter submitted the application on 24.11.1990. Thereafter,  

Senior Sanitary Inspector of appellant No.1 sent communication dated 3.12.1990  

to respondent No.2 requiring him to submit various documents including NOCs  

from  Assistant  Engineer  (Buildings  and  Facilities)  and  Executive  Engineer  

(Buildings Proposals).  In  compliance  of  that  letter,  respondent  No.2 furnished  

some of the documents.  However, nothing appears to have been done for the next  

two years.

3. In May 1993, respondent No.1 approached appellant No.2 for grant of No  

Objection  Certificate  for  the  eating  house  and  permission  to  keep  L.P.  Gas  

Cylinders.   Appellant  No.2  gave ‘No Objection’  for  carrying out  the trade  of  

eating house and for L.P. Gas as fuel subject to the following conditions:

“(1) The internal roads, passages in the premises & complex of the  Club shall be maintained free from obstructions.

(2) Entrances,  exists,  passages  in  both  the  Restaurants  shall  be  maintained free from obstructions.

(3) The existing four cabins housing gas cylinders of i)  12 Nos.  each of 50 kgs. ii) 18 Nos. each 19.2 kgs. iii) 15 Nos. each. &  iv) 8 Nos. each of 19.2 kgs. shall be of brick masonary R.C.C.  and as per the plan signed in token of approval.

(4) The gas installation shall  be maintained as per  "Industrial  &  Commercial use of L.P. Gas Rules" and got tested once in year  by the gas dealer or any competent  authority of inventory to  

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that effect shall be maintained.

(5) The Gas cabins shall be kept under lock and key.

(6) Smoking,  cooking,  heating,  use  of  naked  light  shall  be  prohibited near the gas cabins.

(7) The  gas  pipes  shall  be  supported,  protected  from  physical  damages, painted in red and taken at least 10 cms below the  electric wirings/ cables.

(8) Main shut of valves shall be provided to the gas pipes where  pipes enter into the building for promptly closing the valves in  case of emergency.

(9) Tandoors in kitchen on ground floor permitted. However, any  other fuel, any gas cylinders shall not be used.

(10) Premises  shall  be  kept  well  ventilated  by  providing Exhaust  fans in the kitchens.

(11) Metal hood covering the burners shall be provided. The ducting  shall be taken to roof level or water wash system.

(12) Fire extinguishers shall be kept as follows:

a)  One  dry  chemical  powder  extinguisher  each  of  10  kgs.  having I.S.I mark & two buckets of sand shall be kept at each of  the 4 gas cabins.  b)  Two dry chemical  powder extinguishers  each of 10 kgs. & two sand buckets shall be kept in the kitchen  of Indian Food. c) One dry chemical  extinguisher of 10 kgs.  shall be kept in Chinese kitchen.”

(reproduced from the appeal paper book)

4. After four months, appellant No.2 sent communication dated 4.11.1993 to  

respondent No.2 for compliance of the requirements communicated by Chief Fire  

Brigade  Officer  and  also  by  his  department.   The  relevant  portions  of  that  

communication are extracted below:

“With reference to your above application, I have to inform you that  

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your request will be considered subject to satisfactory compliance of  the  following  requirements  communicated  by  Chief  Fire  Brigade  Officer  alongwith  the  requirements  of  this  department  within  14  (fourteen) days from the date of receipt of this letter. If you fail to  carry out the same within specified time, necessary action under Sec.  394 of Bombay Municipal Corporation Act will be initiated against  you which please note.

1) The internal roads, passages, in the premises and complex of  club shall be maintained free from obstructions.

2) Entrances,  Exists,  passages  in  both  the  Restaurants  shall  be  maintained free from obstructions.

3) The existing four cabins housing gas cylinders of (i) 12 Nos.  each of 50 kgs., (ii) 18 Nos. each of 19.2 kgs., (iii) 15 Nos. each  of  50  kgs.,  (iv)  8  Nos.  each  of  19.2  kgs.,  shall  be  of  brick  masonry  /  R.C.C.  and  as  per  the  plan  signed  in  taken  of  approval.

4) The Gas installation shall  be maintained as per "Industrial &  Commercial use of L.P. Gas Rules" and got tested once in year  by gas dealer or any competent authority of Inventory to that  effect shall be maintained.

5) The gas cabins shall be kept under lock and key.

6) Smoking,  cooking,  heating,  use  of  naked  light  shall  be  prohibited near the gas cabins.

7) The  gas  pipe  shall  be  supported,  protected  from  physical  damage, painted in red and taken at  least 10 cms, below the  electric wiring / cables.

8) Main shut of valves shall be provided to the gas pipes where  pipes enter into the building for promptly closing the valves in  case of emergency.

9) Tandoors in kitchen on ground floor permitted, however, any  other fuel, any loose cylinders shall not be used.

10) Premises shall be kept well ventilated by providing exhaust fan  in the Kitchens.

11) Metal hood covering the burners shall  provided. The ducting  shall be taken to roof level or water wash system.

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12) Fire extinguishers shall be kept as follows:-

a) One dry chemical powder extinguishers each of 10 kgs.  having I.S.I. Mark and two buckets of sand shall be kept  at each of 4 Gas cabins.

b) Two dry chemical powder extinguisher each of 10 kgs.  and  two  sand  buckets  shall  be  kept  in  the  kitchen  of  Indian food.

c) One dry chemical extinguisher of 10 kgs. shall be kept in  Chinese kitchen.”

(emphasis supplied)

(reproduced from the appeal paper book)

5. On  the  same  day,  i.e.,  4.11.1993,  appellant  No.2  sent  another  letter  to  

respondent No.2 informing him that the application for grant of trade licence will  

be considered subject to fulfillment of the following conditions:

“(1) In the eating house

(a) Where snacks are prepared and served, there shall be at  least  3 rooms, one of  which shall  be used as a  dining  room, another as kitchen and the third as a store room.  The rooms to be used as dining room and as kitchen shall  not be less than 9.2903 sq.mt. (100 qt.ft.) each in floor  area and not less than 2.440 mt.(8 ft) on any side. The  third room to be used as a store room shall not be less  than l/3rd of the total area of the dining room and the  kitchen upto the maximum of 9.2903 sq. mt.( 100 sq. ft.).  The height of all these rooms shall be as required under  the  Building  Bye-Laws  of  the  Bombay  Municipal  Corporation, i.e. 3.050 mt. (10 feet).

(b) Where  articles  of  food  other  than  snacks  are  to  be  prepared and served, there shall be at least 3 rooms one  of  which  shall  be  used  as  a  dining room, another as a  kitchen and the third as a store room. The room to be  used for dining and kitchen shall not be less than 11.1484  

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sq. mt. (120 sq. ft.) each in floor area and not less than  2.440 mt (8 feet) on any side. The third room to be used  as store room shall not be less than l/3rd of the total area  of  the dining room and kitchen upto  the  maximum of  9.2903 sq. mt. (100 sq. ft.), the height of all these room  shall be as required under the Building Bye-laws of the  Bombay Municipal Corporation, i.e. 3.050 mt. (10 feet)

(c ) where only ready-made articles of food are served. There  shall be at least two rooms, one of which shall be used  for storing ready-made articles of food and the other as a  service  room.  None  of  the  rooms  shall  be  less  than  9.2903 sq. mt. (100 sq. ft.) each in floor area and no less  than 2.440 mt. (8 ft.) on any side. The third room to be  used as store room shall not be less than l/3rd of the total  area of the dining room and kitchen upto the 9.2903sq.  mt. (100 sq. ft.). The height of all these rooms shall be as  required  under  the  Building  Bye-laws  of  the  Bombay  Municipal Corporation i.e. 3.050 mt. (10 feet)

(2) All the rooms shall be well-lighted and well-ventilated naturally  or with the aid of artificial means and the cook room and the dining  room especially shall have "thorough ventilation."

(3) The walls of all the rooms of the Eating House shall either be  oil-painted or otherwise rendered impervious to moisture and dirt upto  a height of at least 1.83 mt. (6 feet) from the floor and the remaining  upper  portion  above  1.83  mt.  (6  feet),  if  not  oil-painted  or  made  impervious to moisture and dirt, shall be limewashed. All the wood- work in all the rooms shall be oil-painted.

(4) Water shall be stored for use during non-supply hours in a brass  receptacle with a tight fitting cover and a tap. The receptacle shall be  placed on a suitable stand at least 381 mt. (15 inches) height above the  floor. It shall be tinned from inside whenever necessary and shall be  cleaned twice daily and steps shall be taken to see that water is not  contaminated in the process of storing or handling.

(5) Freely  ventilated  fly-proof  safes  and  other  means  shall  be  provided and meat, milk and other eatables shall be kept in them so as  to  protect  all  artificial  food  from contamination  by dust,  flies  and  insects.

(6) Metal sanitary dust bin or bins of approved pattern with a close  fitting lid for each shall be provided and maintained in good repairs  

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and used for the deposit of waste food and sweepings of the floor etc.  and shall  be emptied at least  once a day at the Mahalaxmi Refuse  Siding which is the place appointed by the Municipal Commissioner  for the removal and deposit of trade refuse. In the alternate transport  facilities provided by Corporation shall be availed of on payment of  fixed charges.

(7) A sufficient number of table shall be provided in the room used  for eating and cooking. The top of each table shall be covered with  marble, zinc or some other equally suitable material presenting a non-  absorbent even surface. Only clean cloth or other dusters shall be used  to clean tables etc.

(8) A  proper  washing  place  with  tap  from  Municipal  Main  Measurement shall  be provided in the kitchen. Such washing place  shall be properly drained and shall discharge over a half channel gully  at least 457 mt. (18 inches) away from the drain inlet and in the case  of the trade located in Greater Bombay where drainage system does  not exit, the arrangement for disposal waste water shall be such as to  meet  with  the  approval  of  Municipal  Health  Authorities.  In  the  absence of Municipal Water mains in any area, arrangements shall be  made to store such quantity of water and in such manner as will be  directed by the Municipal Health Authorities.

(9) All copper and brass cooking utensils shall be tinned as often as  necessary or at least once in two months.

(10) No person suffering from any contagious or infectious disease  shall be employed on the premises in any capacity.

(11) The room used for cooking shall be adequately separated from  the  room  used  for  eating.  All  cooking  operations  including  the  preparation  of  bhajias  or  similar  artificial  shall  be  carried  out  in  cooking room only by using kerosene oil stoves, gas or electrical as  fuel and fuel of any other kind shall never be used therein.

(12) No "Panshop" or other structure shall be put up or allowed to be  put at the entrance in such manner so as to encroach on the space or to  obstruct light and ventilation of the Eating House.

(13) The entire  premises  of  Eating  House  and all  appliance  used  therein shall at all times be kept in a scrupulously clean and sanitary  condition  and  any  practice  which  may  lead  to  the  food  being  contaminated shall not be employed or permitted to be employed in  the storage, handling, preparation or serving of food.

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(14) No broken, cracked or chipped articles of crockery   or other  utensils  shall  be used in  the eating house  either  for  preparation of  food-stuffs or to serve them.

(15) Boards in English and in vernacular prohibiting spitting on the  walls or the floor of the trade premises shall be exhibited.

(16) A certificate in the prescribed form that adequate water supply  by meter measurement has been provided shall be obtained from the  Hydraulic Engineer, Bombay Municipal Corporation.

(17) A wash-basin with a metered tap and a looking glass shall be  provided in a suitable part of the service room of the Eating House  and maintained at all times in a clean and sanitary state for use of the  visitors.

(18) Waiters or other servants employed in the eating house shall  always wear clean apparel while engaged in work in the eating house.

(19) No part of the eating house shall be used for stocking, storing or  keeping unserviceable articles.

(20) The  management  shall  take  measures  to  have  the  premises  occupied by Eating House treated with insecticides to rid it  of any  insect pest at least once in four months either through the Municipal  agency or any firm recognised in this behalf.

(21) The floor of every room used for eating, cooking or the storage  or preparation of food shall be paved with hard impervious material  with a smooth and even surface.

(22) The eating house or any part of it shall not be used for dwelling  purposes,  except in the Eating Houses  which have separate  special  arrangements for lodging the customers.

(23) No encroachment shall be made on any footpath adjoining the  eating house by placing thereon chairs,  benches,  tables,  soda water  boxes  or  any  other  articles  either  for  the  use  of  applicant  or  his  customers.

(24) The  entire  trade  of  conducting  the  eating  house  and  all  the  operations connected therewith shall be strictly restricted to the area  occupied by the concern.

(Para 25 is not given in the appeal paper book)

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(26) No article of food which is adulterated, unwholesome or unfit  for human consumption shall be kept, sold or exposed for sale on the  trade premises.

(27) Requirements of Chief fire brigade officer's are out.

(28) The applicant produces an authority letter issued by said Club  authorising him to hold the licence in his name.”

(reproduced from the appeal paper book)

6. While the issue relating to compliance of the conditions enumerated in the  

two letters dated 4.11.1993 was pending, appellant No.2 sent demand notice dated  

14.1.1994 to respondent No.2 for payment of Rs.2,70,915 as licence fees. The  

respondents paid the amount, but after expiry of the period specified in notice  

dated 14.1.1994.  This prompted appellant No.2 to send notice dated 23.6.1994 to  

respondent  No.1  for  payment  of  additional  amount  of  Rs.1,04,756.25.  

Respondent No.2 sent reply dated 27.6.1994 citing the opinion of a law firm that  

the club is not required to obtain eating house licence under the Act because food  

and beverages are not served for any profit or gain.  The appellant did not accept  

this assertion and demanded Rs.1,21,715.65 towards compounding fee.

7. Respondent  No.1  and  two  of  its  office  bearers  challenged  the  demand  

notice before the Bombay High Court in Writ Petition No.2199/1999 primarily on  

the ground that catering facilities being provided to its members were incidental  

to their main activities and the same are exclusively meant for the members and  

not for the public.   

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8. In the written statement filed by the appellants,  it was averred that food  

items  were  being  prepared  by  the  Catering  Department  on  large  scale  and  a  

licence was required to be obtained from the point of view of health and safety of  

the members coming to the club.

9. The Division Bench of the High Court relied upon order dated 18.9.1992  

passed by a co-ordinate Bench in Writ Petition No.4765 of 1984 titled Sohrab  

Vakil (Lt.Col.) and another v. B.G. Pimple and another and held that respondent  

No.1 is not required to take licence under Section 394 of the Act because the  

catering facilities provided to its members are ancillary to the main activity, i.e.,  

the  sporting  facilities.  The  relevant  portion  of  the  High  Court’s  order  is  

reproduced below:

“The question whether a Club which as ancillary activities provides  catering services exclusively to its members can be said to be running  an eating house within the meaning of the Act, fell for consideration  before  a  Division  Bench  of  this  Court  in  the  case  Sohrab  Vakil  (Lt.Col.) and another Vs. B.G.Pimple and another referred to above.  Perusal  of  that  judgment  shows  that  the  Division  Bench  has  in  categorical  terms  held  that  a  club  which  maintains  a  facility  of  catering for its members exclusively as ancillary activity cannot be  said  to  be  running  an  eating  house.  In  our  opinion,  therefore,  the  question that arises for consideration in this petition is no more res  integra in view of the judgment of the Division Bench in the case  Sohrab  Vakil  (Lt.Col.)  and  another  Vs.  B.G.Pimple  and  another  referred to above. So far as the judgment of the learned Single Judge  of this Court in the case 1.W.I.A.A.Club Ltd & Anr. Vs. 1.Municipal  Corporation  of  Gr.Bombay & others  referred  to  above,  which was  relied  on  by  the  learned  Counsel  appearing  for  respondents  is  concerned, perusal of that judgment shows that that judgment does not  decide any controversy. It appears that initially the WIAA Club had  filed a petition claiming that it is not required to take out eating house  licence for providing catering services to its members. But when the  

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petition  came  up  for  final  hearing,  it  was  stated  on  behalf  of  the  petitioner-Club that now they have decided to engage a contractor for  running Canteen and therefore, they are not pressing their contention  that they are not required to take out a licence for maintaining the  catering services for its members. The learned Single Judge, therefore,  did not decide that question in that petition. In our opinion, therefore,  the submission made on behalf of the Corporation that the question  that arises for consideration in this petition is already decided by the  judgment of the learned Single Judge in Writ petition no.1413 of 1982  which was disposed of by order dated 20.1.1986, cannot be accepted.  In our opinion, in view of the law laid down by the Division Bench in  the  case  Sohrab  Vakil  (Lt.Col.)  and  another  Vs.  B.G.Pimple  and  another referred to above, this petition has to succeed.”

10. We  have  heard  Shri  Atul  Y.  Chitale,  learned  senior  counsel  for  the  

appellants  and  Shri  T.R.  Andhyarujina,  learned  senior  counsel  for  respondent  

Nos. 1 to 3.  The Act is divided into 25 Chapters.  Chapters IX to XV except  

Chapter XII contain provisions which are regulatory in nature and are meant for  

the benefit of public at large.  Chapter IX contains provisions for construction of  

drains  and  cleaning  thereof,  connection  of  the  drains  of  private  streets  with  

municipal  drains,  disposal  of  sewage,  construction  of  water-closets,  privies,  

urinals, etc. and inspection thereof.  Chapter X contains provisions for regulating  

water supply, inspection of water works, prohibition of building and other acts  

which may injure sources of water.  Chapter XI contains provisions for regulation  

of streets, public as well as private and lighting thereof.  Chapter XII contains  

provisions  for  regulating  construction  of  buildings,  removal  of  dangerous  

structures,  etc.   Chapter  XIII  speaks  of  grant  of  licences  of  surveyors  and  

plumbers  and  making  of  regulations  for  guidance  of  licensed  surveyors  and  

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plumbers  and  fees,  etc.,  to  be  charged  by  them.   Chapter  XIV  contains  the  

provisions relating to municipal fire brigade.  Chapter XV contains provisions of  

scavenging  and  cleaning  of  streets  and  removal  of  refuse,  inspection  and  

sanitation of buildings, etc. This chapter also contains provisions for regulation of  

public bathing, washing, etc., regulation of factories, trades, etc., maintenance and  

regulation of markets and slaughter houses, prohibition against sale and supply of  

articles  of  food  outside  the  markets,  licensing  of  butchers,  etc.,  inspection  of  

places of sales, etc., prevention of dangerous diseases, etc.  Section 394, which  

finds place in Chapter XV is couched in negative form and lays down that the  

activities specified therein shall not be carried out by any person except under and  

in  accordance  with  the  terms  and  conditions  of  licence  granted  by  the  

Commissioner.   

11. Section  394(1)(e)  and  relevant  extracts  of  Schedule  ‘M’,  which  have  

bearing on this case read as under:

“394. Certain articles or animals not to be kept,  and certain trades,  processes and operations not to be carried on without a license; and  things  liable  to  be  seized  destroyed,  etc.,  to  prevent  danger  or  nuisance.

(1) Except under and in accordance with the terms and conditions of  the licence granted by the Commissioner, no person shall—

(e)  carry  on  or  allow  or  suffer  to  be  carried  on,  in  or  upon  any  premises.—

(i)  any  of  the  trades  specified  in  Part  IV  of  Schedule  M,  or  any  process or operation connected with any such trade;

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(ii)  any  trade,  process  or  operation,  which  in  the  opinion  of,  the  Commissioner,  is  dangerous to life,  health or property, or likely to  create a nuisance either from its nature or by reason of the manner in  which, or the conditions under which, the, same is, or is proposed to  be carried on;”

“Schedule M Articles  which shall  not  be kept  without  a  licence in  or  upon any  premises

Part IV Trades or processes or operations connected with trades which shall  not  be  carried  on  or  allowed  to  be  carried  on  upon  any  premises  without a licence.

Keeping an eating house or catering establishment"

The expression ‘eating-house’ has been defined in Section 3(ff) in the following  

words:

“3(ff)  -  eating-house  means any "premises to which the public  are  admitted  and  where  any  kind  of  food  is  prepared  or  supplied  for  consumption  on the  premises  for  the  profit  or  gain  of  any person  owning or having an interest in or managing such premises.”

12. The  provisions  contained  in  various  chapters  of  the  Act  referred  to  

hereinabove are meant for maintaining public hygiene, health and safety and also  

for preventing dangers to life, health and property. Schedule ‘M’, which is part of  

Section 394, specifies the articles which cannot be kept in or upon any premises  

without  a  licence.  Part  IV  of  the  schedule  specifies  trades  or  processes  or  

operations connected with trades, which cannot be carried on or allowed to be  

carried on any premises without a licence. These include keeping of an eating  

house or catering establishment. The object of incorporating the requirement of a  

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licence for an ‘eating house’ or ‘catering establishment’ is to ensure that public  

hygiene is maintained at the place/premises where the food is prepared and/or  

supplied  for  consumption.   It  is  also  intended  to  ensure  safety  of  the  people  

engaged in the preparation of food articles and supply thereof as well as all those  

who consume the articles at the particular place/premises.   The No Objection  

Certificate dated 25.6.1993 issued by appellant No.2 shows that the municipal  

authorities are very much concerned about the safety and health of the people  

coming  to  the  premises  and  complex  of  the  club.   The  first  requirement  

incorporated in that letter is free access in and exit from the premises of the club  

and the restaurants.  The gas installations are required to be maintained as per  

industrial and commercial use of Liquid Petroleum Gas Rules.  The person having  

overall control of the premises is duty bound to ensure that the gas cylinders and  

other equipments are tested once in a year by the gas dealer or any competent  

authority.  The gas cabins are required to be kept under lock and key.  Smoking,  

cooking, heating and use of naked light is prohibited near the gas cabins.  The gas  

pipes are required to be protected from physical damage and main shut valves are  

required to be provided to the gas pipes where the pipes enter into the building.  

While  permitting  tandoors  in  the  kitchen  on the  ground floor,  the  use  of  gas  

cylinders is prohibited.  The premises where the food is cooked are required to be  

kept well-ventilated by providing exhaust  fans in the kitchen. The burners are  

required to be covered with metal hood.  The fire extinguishers are also required  

to be provided.  The length, width and height of the dining rooms has to be as per  

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the building bye-laws framed by appellant No.1.  It is the duty of the management  

to keep all the rooms well-lighted and well-ventilated.  The cooking room and  

dining  room  should  have  thorough  ventilation.   It  is  also  the  duty  of  the  

management to keep water in brass receptacle with a tight fitting cover and a tap  

and they are to be placed 15 inches above the ground.  Freely ventilated and fly-

proof safes are required for keeping the items, like, meat, milk and other eatables  

so as to protect them from contamination by dust, flies and insects. Sanitary bins  

or dustbins are also required to be provided and sweeping of floors has to be done.  

There  is  a  prohibition  against  employment  of  any  person  suffering  from  

contagious  or  infectious  disease.  The  premises  of  eating  house  have  to  be  

regularly cleaned to  avoid contamination and any practice which may lead to  

contamination shall not be employed or permitted to be employed in the storage,  

handling, preparation or serving of food.  Broken, cracked or chipped articles of  

crockery and utensils cannot be used in the eating house either for preparation of  

foodstuffs  or  for  serving  them.  The  management  is  duty  bound  to  take  all  

measures to have the premises of eating house treated for insecticides.  No article  

of food which is adulterated, unwholesome or unfit for human consumption can  

be kept or sold or exposed for sale in the eating house.  These conditions are  

meant for ensuring that the premises where the food is prepared and supplied are  

kept clean, adequately ventilated and appropriate measures are taken by those in  

control of the premises and quality of food is maintained to ensure that there is no  

compromise with the health and safety of the people.

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13. In  its  publication  titled  ‘Safe  Food  for  Better  Health’  (2002  Edn.),  the  

World Health Organisation (WHO) has recognized that the availability of safe  

food is  a  basic  human right  because  it  contributes to  health  and productivity.  

Many  countries  including  USA,  Australia,  Germany,  France,  Canada,  United  

Kingdom and  India  have  adopted  a  food  safety  regulation  mechanism,  either  

through sui generis legislation or through the adoption of global codes prescribed  

by  the  WHO and  other  UN agencies.  However,  the  implementation  of  these  

regulations cannot be guaranteed if there is no monitoring system. It is essential  

for the success of these regulations and policies that adequate steps are taken to  

ensure the compliance to standards by those in the industry. In order to ensure  

compliance, a strong licensing system has been developed by these countries. The  

purpose of such a system is to ensure that the food supplied to customers in a food  

establishment  is  certified  to  be  of  high  quality  and  standard  by  a  recognised  

authority. Although licensing alone cannot be a foolproof mechanism for ensuring  

food safety but it is certainly one of the most effective methods of ensuring that  

quality food is prepared in most hygienic conditions and is made available to the  

consumers. The licensing system prevents the opening of establishments that pose  

a threat to the health of the people. The licensing mechanism also provides for  

penalties in case of non-compliance with licensing conditions, which could lead to  

cancelling or suspension of the licence. Such a fear created in the minds of the  

licensees  also  ensures  that  they  comply  with  licensing  conditions  in  order  to  

continue enjoying the benefits of the licence. Thus, it can be said that a licensing  

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system goes a long way in ensuring food safety thereby guaranteeing the supply  

of fresh and safe food and preventing the spread of foodborne diseases.

14. At this stage, we may also take notice of the Food Safety and Standards  

Act, 2006 (for short, ‘the 2006 Act’). This Act provides for establishment of the  

Food Safety and Standards Authority of India which is mandated to lay down  

science based standards for  articles  of  food and to regulate their manufacture,  

storage, distribution, sale and import, to ensure availability of safe and wholesome  

food for human consumption and for matters connected therewith or incidental  

thereto. In exercise of the powers vested in it under the 2006 Act, the Food Safety  

and Standards Authority of India made multiple regulations including the Food  

Safety  and  Standards  (Licensing  and  Registration  of  Food  Businesses)  

Regulations, 2011 (for short, ‘the Regulations’). Regulation 2.1 and 2.2 makes the  

obtaining of licence mandatory for commencement of any food business. Part II  

of Schedule IV of the Regulations prescribes general requirements of hygienic  

and sanitary practices to be followed by all food business operators applying for  

licence. Part V of Schedule IV of the Regulations prescribes the specific hygienic  

and  sanitary  practices  to  be  followed  by  food  business  operators  engaged  in  

catering / food service establishments. Relevant portions of these two parts are  

extracted below:

“SCHEDULE IV

PART-II

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GENERAL REQUIREMENTS ON HYGIENIC AND SANITARY  PRACTICES  TO  BE  FOLLOWED  BY  ALL  FOOD  BUSINESS  OPERATORS APPLYING FOR LICENSE.

The  establishment  in  which  food  is  being  handled,  processed,  manufactured,  packed,  stored,  and distributed by the food business  operator and the persons handling them should conform to the sanitary  and hygienic requirement, food safety measures and other standards as  specified below. It shall also be deemed to be the responsibility of the  food business operator to ensure adherence to necessary requirements.  

In  addition  to  the  requirements  specified  below,  the  food business  operator shall identify steps in the activities of food business, which  are critical to ensure food safety, and ensure that safety procedures are  identified, implemented, maintained and reviewed periodically.

PART - V

SPECIFIC  HYGIENIC  AND  SANITARY  PRACTICES  TO  BE  FOLLOWED BY FOOD BUSINESS OPERATORS ENGAGED IN  CATERING / FOOD SERVICE ESTABLISHMENTS.

In  addition  to  Part-II  the  Catering/  food  Service  establishment  in  which  food  is  being  handled,  processed,  manufactured,  stored,  distributed  and  ultimately  sold  to  the  customers  and  the  persons  handling  them  should  conform  to  the  sanitary  and  hygienic  requirement,  food  safety  measures  and  other  standard  as  specified  below.

It  includes  premises  where  public  is  admitted  for  repose  or  for  consumption of any food or drink or any place where cooked food is  sold or prepared for sale. It includes:

(a) Eating Houses

(b) Restaurants & Hotels

(c) Snack Bars,

(d) Canteens (Schools, Colleges, Office, Institutions)

(e) Food Service at religious places

(f) Neighbourhood Tiffin Services / dabba walas

(g) Rail and airline catering

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(h) Hospital catering”

15. The definition of the term ‘food business’ contained in Section 3(1)(n) of  

the 2006 Act reads thus:

“Section 3(1)(n) Food business means any undertaking, whether for  profit or not and whether public or private, carrying out any of the  activities related to any stage of manufacture, processing, packaging,  storage, transportation, distribution of food, import and includes food  services, catering services, sale of food or food ingredients.”

16. These  provisions  reinforce  the  determination  of  the  legislature  and  the  

executive to ensure safety of food articles manufactured and supplied by the food  

business operators and others engaged in catering / food service establishments.  

Part V of Schedule IV of the Regulations is inclusive and covers eating houses,  

restaurants  and  hotels,  snack  bars,  canteens,  food  service  at  religious  places,  

hospital catering, etc.

17. In the light of the above, we shall now consider whether the High Court  

was right in taking the view that the expression ‘eating house’ is not applicable to  

a club. The main reason which prompted the High Court to take that view is that  

predominant activity of the club is to provide sporting facilities to the members  

and the catering facilities are ancillary. The other reason given by the High Court  

is that the food articles are supplied to the members and not to outsiders except  

when  they  come to  the  club  as  guests  of  the  members  and  that  the  catering  

services are not made available to the members with the object of making profit or  

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gain.  

18. In our view, both the aforesaid reasons are incorrect. A cursory reading of  

the definition of the expression ‘eating house’ may support the conclusion of the  

High Court because general public is not allowed entry in the premises of the club  

and, in the first blush, it appears that food is not supplied for consumption on the  

premises for profit or gain.  However, if we apply purposive interpretation, then it  

becomes  clear  that  the  catering  department  of  the  club  which  prepares  and  

serves/supplies food to members of the club is covered by the definition of the  

expression ‘eating house’.   It  cannot be denied that members of club also fall  

within the ambit of the term ‘public’.  No doubt, the primary activity of the club is  

to provide sporting facilities to the members, but the supply of food is an integral   

part of such activity and the catering department of the club satisfies an essential  

component of the facilities provided by the club.  One can take judicial notice of  

the fact that many members who avail sporting facilities remain on the premises  

for a very long period. Therefore, the articles of food become integral part of their  

activities.   Not only this,  many join the club in the name of availing sporting  

facilities only for the purpose of spending their time in leisure and for enjoying  

the facilities provided by the Catering Department of the club. Thus, even though  

profit may not be the motto of catering facilities provided by respondent No.1, it  

certainly gains by these facilities.

19. As  per  Merriam Webster  Dictionary,  the  word  ‘gain’  means  something  

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wanted  or  valued  that  is  gotten;  something  that  is  gained;  especially:  money  

gotten through some activity or process, something that is helpful: advantage or  

benefit;  an  increase  in  amount,  size,  or  number.   In  Words  and  Phrases,  

Permanent  Edition,  Volume 18,  the word ‘gain’  has been given the following  

meanings:

"Gain"  means  that  which is  acquired  or  comes  as  a  benefit.  Thorn v Dc Breteuil, 83 N.Y.S 849, 856, 86 App.Div. 405.

"Gain"  means  increase  or  addition  to  what  one  has  of  that  which is of profit, advantage, or benefit; resources or advantage  acquired,  profit;  opposed  to  laws;  act  of  gaining  something;  specially,  the  obtaining  or  amassing  of  profit  or  valuable  possessions; acquisition; accumulation. In Re Breuer's Income  Tax, 190 S.W.2d 248, 249, 354 Mo. 578.

GAIN, BENEFIT OR ADVANTAGE:

Under  the  Retail  Sales  Tax Act,  defining "retailer"  as  every  person  engaged  in  business  of  making  sales  at  retail,  and  defining "business" as any activity engaged in with the object of  "gain,  benefit  or  advantage",  social  club  which  furnished,  without profit food and drink to its members and their guests  was  subject  to  tax,  since,  although  club  realized  no  "profit"  from furnishing of food and drink, it did realize "gain, benefit  or  advantage".  Gen.Laws  1937,  Act  8493,  Section  2(c-e).  "Profit"  may be  said  to  be  "gain,  benefit  or  advantage",  but  "gain,  benefit  or  advantage"  does  not  necessarily  mean  only  "profit". Union League Club v Jhonson, 115 P.2d 425, 426, 18  Cal.2d 275.

A "vendor engaged in the business of selling tangible personal  property",  so  as  to  be  liable  for  sales  tax,  is  one  who  commences, conducts or commences, conducts, or continues in  the activity of selling tangible personal property, with the object  of  gain,  benefit,  or  advantage,  either  direct  or  indirect,  irrespective of whether sales are made for "profit", since one  may  engage  in  a  business  activity  with  an  object  of  "gain,  benefit,  or  advantage"  and  not  necessarily  for  "profit".  

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Gen.Code, section 5546-1 et seq., 116 Ohio Laws, Pt. 2, p. 323.  "Profit" may be "gain, benefit, or advantage", but "gain, benefit,  or advantage" does not necessarily mean only "profit". State ex  rel.  City Loan & Savings  Co.  of  Wapakoneta  v.  Zcllner,  13  N.E.2d 235, 238, 133 Ohio St. 263.”

20. In Re: Arthur Average Association for British Foreign and Colonia Ships,  

ex p Hargrove and Company (1875) LR 10 Ch App 545 n at 546, 547, Jessel MR  

held that "Gain" is not restricted to pecuniary or commercial profits, it includes  

other considerations of value obtained.

21. From the above dictionary meanings and judgment of  1875, it  becomes  

clear that the word ‘gain’ is not synonymous with the word ‘profit’.  It is not  

restricted to pecuniary or commercial profits and includes other considerations of  

value gained.  Any advantage or benefit acquired or value addition made by some  

activities would amount to ‘gain’.  Therefore, even though profit is not the motto  

of the club but the advantage derived by it by supplying food to its members and  

their guests is certainly covered by the word ‘gain’ appearing in the definition of  

‘eating house’.

22. The  issue  deserves  to  be  examined  from  another  angle.  While  the  

expression  ‘eating  house’  has  been  defined  in  Section  3(ff)  of  the  Act,  the  

expression  ‘catering  establishment’  has  not  been  defined.  The  scope  of  that  

expression is certainly wider than the expression ‘eating house’.

23. The expression ‘catering establishment’ came up for interpretation before  

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the  Bombay  High  Court  in  Criminal  Appeal  No.593/1972.  After  adverting  to  

dictionary meaning of the word ‘cater’,  V.D. Tulzapurkar, J.  (as he then was)  

held:

“In this view of the matter, it is clear to me that the expression ' a  catering  establishment'  will  have  to  be  understood  in  its  normal  dictionary meaning. The word 'cater' as a verb means, according to the  Oxford Dictionary, "To act as caterer, or purveyor of provisions; to  provide  a  supply  of  food".  It  also  means  "To  occupy  oneself  in  procuring or providing (requisites,  things desired, etc.) and 'cater is  understood to mean "Purvey food and other requisites."  A catering  establishment would, therefore, be an establishment where purveying  of food and other requisites takes place. It is therefore, not necessary,  according  to  the  dictionary  meaning  of  the  expression,  that  the  members of the public should have an access to such an establishment  before it could become 'a catering establishment' within the meaning  of the relevant entry in Part IV of Schedule M. It cannot be disputed  that in the canteen in question articles of food and other requisites are  being purveyed to the students and the members of the Institute and,  therefore, the canteen in question clearly falls within the expression 'a  catering establishment'  occurring in the relevant entry in Part IV of  Schedule.”

24. In  Narayan  Gopal  Karadkar  v.  Hanumant  Ramrao  Palkar  (1969)  

Maharasthra Law Journal 728, a learned Single Judge of the Bombay High Court  

considered  the  question  whether  running  of  a  canteen  by  Railwaymen’s  

Cooperative  Society  at  Lonawala  without  a  licence  constituted  an  offence.  

Initially, the Society had obtained a licence for conducting the canteen but the  

same  was  not  renewed  for  a  number  of  years.   Therefore,  the  Borough  

Municipality  sanctioned  prosecution  of  the  Manager  of  the  Canteen  under  

Sections 172 read with Section 61(1)(b)(ii) of the Bombay Municipal Boroughs  

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Act,  1925.   Judicial  Magistrate,  First  Class,  Vadgaon  (Mawal)  acquitted  the  

accused.  The appeal  filed by the appellant  was allowed by the learned Single  

Judge of the High Court. After noticing the relevant provisions, the learned Judge  

observed:

“It is in pursuance of these provisions that the Borough Municipality  of  Lonavala  has  framed  its  rules  and  by-laws  for  licensing  and  regulating the places for use of hotels,  eating houses, tea or coffee  shops and restaurants  within the Municipal  Borough and in Part  I,  which contains definitions, "catering establishment" has been defined  as meaning any place used for the business of sale of any article of  food or drink for consumption on the premises and including hotel,  eating  house,  tea  or  coffee  shop  or  restaurant,  pan bidi  shops  and  sugarcane  juice  shop.  This  definition  would  clearly  show  that  a  catering establishment means any place used for the business of sale  of articles of food or drink and as pointed out by the Supreme Court in  State of Bombay v. Hospital Mazdoor (1960) 62 Bom. L.R. 558:

...'trade'  according  to  Halsbury,  in  its  primary  meaning,  is  'exchange of goods for goods or goods for money', and in its  secondary meaning it is 'any business carried on -with a view to  profit whether manual or mercantile, as distinguished from the  liberal  arts  or  learned  professions  and  from  agriculture';  whereas 'business' is a wider term not synonymous with trade  and  means  practically  anything  which  is  an  occupation  as  distinguished from a pleasure.  

It  would  thus  be  seen  that  the  concept  of  earning profits  is  not  a  necessary appurtenant of the expression "business" and looked at from  this point of view, a place used for the business of sale of any article  of food or drink does not cease to be so merely because it is not being  conducted  with  a  view  to  earn  profits.  Anyway,  the  definition  contained in the rules and by-laws of the Borough Municipality is an  inclusive definition. After saying that a catering establishment means  any place used for the business of sale of any article of food or drink  for consumption, it further goes on to say that it includes a hotel or an  eating house, etc. and in the same Supreme Court decision, to which a  reference  has  already  been  made,  it  has  been  pointed  out  that  the  words used in an inclusive definition denote extension and cannot be  

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treated as restricted in any sense. Where the Courts are dealing with  an inclusive definition it would be inappropriate to put a restrictive  interpretation  upon  terms  of  wider  denotation.  Therefore,  having  regard  to  the  inclusive  definition  in  this  case,  it  is  clear  that  the  definition  of  "catering  establishment"  does  mean  and  include  a  cooperative canteen conducted without any motive of earning profits.

If  the  object  and  scope  of  the  rules  and  by-laws  framed  by  the  Borough  Municipality  are  examined,  there  can  be  no  difficulty  in  holding  that  a  catering  establishment  does  include  any  canteen,  whether conducted for  the purpose of earning profits or  not.  If  we  examine the rules and by-laws, it is clear that the object with which  they  have  been  framed  is  to  promote  and  preserve  sanitation  and  public health and to prevent the spread of disease within the municipal  limits and if that was the object,  it  is difficult to see how canteens  conducted on no loss and no profit basis could be excluded from the  definition of  a "catering establishment".  It  is  as much necessary to  preserve cleanliness, and public health in commercial establishments  as in the establishments conducted by co-operative societies like the  one in this case. In this connection, the following passage appearing at  pages 58 and 59 of Maxwell on the Interpretation of Statutes, 1962  edn., may be quoted with advantage:

It is in the interpretation of general words and phrases that the  principle  of  strictly  adapting  the  meaning  to  the  particular  subject-matter with reference to which the words are used finds  its  most  frequent  application.  However  wide  in  the  abstract,  they  are  more  or  less  elastic  and  admit  of  restriction  or  expansion  to  suit  the  subject-matter.  While  expressing  truly  enough all that the legislature intended, they frequently express  more  in  their  literal  meaning  and  natural  force;  and  it  is  necessary to give them the meaning which best suits the scope  and object of the statute without extending to ground foreign to  the intention. It is, therefore, a canon of interpretation that all  words, if they be general and not express and precise, are to be  restricted to the fitness of the matter. They are to be construed  as particular if the intention be particular; that is, they must be  understood as used with reference to the subject-matter in the  mind of the legislature, and limited to it.”

(emphasis supplied)

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25. In Balkrishna Karkera v. K.J. Mishra and another AIR 1979 (Bombay) 198,  

learned Single Judge interpreted Section 394(1)(e)(i) read with Section 471 of the  

Act and observed:

“Now  it  is  pertinent  to  note  that  although  the  expression  "eating  house" has been defined under the Bombay Municipal  Corporation  Act, the expression "catering establishment" has not been defined. It is  true that the staff canteen run by Accused No. 2 was not open to the  members of the public at large and the admission was restricted solely  to the employees of the said Company. To that extent Mr. Shrikrishna  would be justified in his submission that the staff canteen could not be  termed as an "eating house." However, what is significant is the fact  that Accused No. 2 has not been charged with carrying on an "eating  house"  but  he  has  been  charged  for  carrying  on  a  catering  establishment.  "Catering  establishment"  is  an  expression  which  is  wider  in  its  connotation  than  the  expression  "eating  house"  and  whether a staff canteen was open to the public or restricted only to a  section  of  the  public,  it  would  still  fall  within  the  definition  of  a  "catering establishment".

26. In our view, the aforesaid judgments of the Bombay High Court lay down  

correct law and ratio thereof deserves to be applied for interpreting Section 394  

(1) (e) read with Part IV of Schedule ‘M’ of the Act.   

27. As a sequel to the above discussion, we hold that the Bombay High Court  

was not right in relieving the respondents of the obligation to take licence under  

Section 394(1)(e) of the Act.  

28. In the result, the appeal is allowed, the impugned order is set aside and the  

writ petition filed by the respondents is dismissed with cost of Rs.50,000. The  

amount of cost  shall  be deposited by respondent No.1 with Maharashtra State  

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Legal Services Authority within a period of four weeks from today.   

29. Within four weeks from today, the respondent shall file an application for  

grant of licence under Section 394(1)(e) of the Act and produce the necessary  

documents.  The application shall  be processed and decided by the competent  

Authority within next four weeks.

30. It is made clear that appellant No.1 shall be free to initiate proceedings for  

imposition of penalty on respondent No.1 for its failure to take licence and pass  

appropriate order in accordance with law.   

     ......………………………..….J.        [G.S. SINGHVI]

New Delhi,                 ...….……..…..………………..J. November 18, 2013.       [V. GOPALA GOWDA]

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