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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1431 OF 2015 (Arising out of SLP (C) No. 30485 of 2013)

Kandivali Cooperative Industrial Estate and another       …Appellant (s)                  versus

Municipal Corporation of Greater Mumbai and others    …Respondent(s)

WITH

CIVIL APPEAL NO.1433 OF 2015 (Arising out of SLP(C)No. 33545 of 2013)

Bulwark Warehousing Company and others      …Appellant (s)                  versus Municipal Corporation of Greater Mumbai and others    …Respondent(s)

CIVIL APPEAL NO.1436  OF 2015 (Arising out of SLP(C)No. 35558 of 2013)

Wadi Bunder Cotton Press Co. …Appellant (s)                  versus Brihan Mumbai Mahanagar Palika and others    …Respondent(s)

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CIVIL APPEAL NO.1434 OF 2015 (Arising out of SLP(C)No. 35589 of 2013)

Tulsidas Khimji Warehousing Pvt. Ltd. and others …Appellant (s)

versus

Brihan Mumbai Mahanagar Palika and others    …Respondent(s)

CIVIL APPEAL NO.1435  OF 2015 (Arising out of SLP(C) No. 35593 of 2013)

Narendra & Co. and another …Appellant (s) versus

Brihan Mumbai Mahanagar Palika and others    …Respondent(s)

J U D G M E N T

M.Y. Eqbal, J.:

  Leave granted.

2. These  appeals  are  directed  against  the  common  

judgment  and  order  dated 30.7.2013  passed by  the  High  

Court  of  Bombay  in  the  writ  petitions  preferred  by  the  

appellants.

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3. By the impugned judgment and order, the High Court  

dismissed  the  writ  petitions  preferred  by  the  appellants  

challenging the Circular dated 12th December, 2011 and the  

respective entries made in the schedule appended thereto  

issued by  the  Respondent-Municipal  Corporation  of  Grater  

Mumbai  as  also  the  respective  entries  in  the  schedule  

appended  thereto,  thereby  questioning  the  levy  of  ‘trade  

refuse charges’ and the rates thereof.

4. The  appellants  are  traders,  carrying  on  activities  of  

warehouse  keepers,  godown  keepers,  bank  mukadam,  

carriers of stores, material and goods required to be stored  

and  kept safe  from insects,  ants,  rodents,  moisture,  rain,  

heat, fire etc. For this purpose, the appellants from time to  

time  have  been  obtaining  trade  licences  issued  under  

Section 394 of the Mumbai Municipal Corporation Act, 1888  

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(in  short,  ‘MMC  Act’).  According  to  the  appellants,  the  

respondents  recover  'trade  refuse  charges'  (hereinafter  

referred  to  as  ‘TRC’),  by  making  the  payment  thereof  a  

condition for renewing the trade licences under the MMC Act  

on a yearly basis.        

5. Respondent  Corporation,  vide circular  dated 5.6.1999  

fixed  the  pattern  of  Trade  Refuse  Charges  (TRC)  to  be  

collected from the owners/occupiers of trade premises. On  

receiving various representations from the traders, Municipal  

Commissioner  took  the  decision  of  modifying  the  earlier  

charges levied on the trade refuse. Therefore, the TRC were  

revised  by  the  Respondent  Commissioner  vide  a  circular  

dated 14.1.2008 w.e.f.1.1.2008 by almost 300% of the trade  

licence  fees.  It  was  further  stated  that  the  same  was  

required  to  be  collected  once  in  a  year  along  with  the  

Licence fees at the time of renewal of licences issued under  

section 394 of the Mumbai Municipal Corporation Act, 1888.  

The  appellants  and  several  other  parties  made  

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representations  and  preferred  writ  petitions  urging  

reconsideration of the rates, which were disposed of by the  

Bombay High Court by an order dated 12.4.2010 upon the  

statement  being  made on  behalf  of  the  respondents  that  

they would reconsider the rates of TRC.   

6. Respondent  Corporation  gave  a  hearing  to  the  

representations and instructed the department concerned to  

submit  the  detailed  report.  A  Core  Committee  was  

constituted  which  submitted  its  report  in  2010.   On  

consideration of Core Committee report, TRC were modified  

by  the  impugned  Circular  dated  12.12.2011.  The  circular  

stipulated that the TRC would be collected with retrospective  

effect from 1.1.2008 onwards.  

7. Although there was very significant reduction in rates of  

trade refuse charges to be collected, the appellants, being  

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dissatisfied, again moved the Bombay High Court by way of  

writ  petitions,  contending  that  they  merely  receive  goods  

from the customers for purposes of safe custody and upon  

receipt of the prescribed charges, return such goods to the  

customers in the same conditions.   For this purpose, they  

provide  adequate  space,  security  and  safeguards  against  

fire, rain, water, etc.  In the process, neither any solid waste,  

nor any trade refuse is generated.  In the circumstances, it is  

their  case  that  levy of  TRC upon them and that  too with  

retrospective effect  i.e.  from 2008 is  illegal,  arbitrary and  

unconstitutional.    

The appellants further contended that they do not generate  

any trade refuse and, therefore, question of payment of TRC  

does not arise.

8. The  High  Court  by  the  impugned  common  order  

dismissed the writ  petitions of the appellants holding that  

there  is  nothing  illegal,  arbitrary,  unreasonable  or  

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unconstitutional  in the levy of TRC by the respondents.  It  

was observed that the question as to whether the appellants  

generate 'trade refuse' or not is a disputed question of fact,  

which  cannot  be  adjudicated  in  proceedings  under  Article  

226 of the Constitution of India.  The High Court did not find  

any merit in the contention that the levy of TRC is invalid,  

because according to the Appellants there is no element of  

'quid pro quo'.   The Appellants are certainly benefited, in as  

much as they have been called upon to pay TRC at reduced  

rates with effect from the year 2008. No retrospectivity is  

involved in the implementation of  the Circular  dated 12th  

December,  2011.  If  the  contention  is  upheld,  it  is  the  

appellants who would suffer a higher TRC.  The High Court  

has  further  held  that provisions  of  Sections  368(5)  and  

394(5)  read  with  Section  479 of  the  MMC Act  entitle  the  

respondents  to impose  restrictions  and  conditions  at  the  

time of grant of licence. The same principle will be applicable  

even at the stage of renewal of licences. At this juncture, we  

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consider  it  appropriate  to  reproduce the  reasoning  of  the  

High Court in this regard:

“The  linkage  which  is  challenged  by  the  appellants  in  the  present  petition  is  more  concerned with the manner of recovery of TRC  and  not  competence  of  the  respondents  to  recover TRC. In deciding the manner,  we are  once again of the opinion that this is a policy  matter and sufficient free hand is required to  be conceded to the respondents in formulation  of  such  policy.  The  respondents  are  right  in  submitting  that  it  is  not  possible  to  monitor  each and every establishment for purposes of  determining the precise quantity and quality of  'trade  refuse'  generated.  So  also  the  respondents are right in contending that there  is nothing illegal,  arbitrary or unconstitutional  in respondents recovering TRC at the stage of  renewal of licences. From the averments made  by the appellants themselves, it appears that  this has always been the manner in which the  respondents  have  been  collecting  TRC.  In  matters of policy, merely because some other  system  of  collection  may  be  better,  is  no  ground to exercise power of judicial review. As  long as it is not demonstrated that the manner  of collection is ex-facie, absurd, unreasonable  or  disproportionately  oppressive,  we  are  unable to uphold the seventh challenge as to  the  linking.  We  find  nothing  absurd,  unreasonable or disproportionately oppressive  in the policy adopted by the respondents or the  manner of collection of TRC.”

9. Being  aggrieved,  the  appellants  call  in  question  the  

correctness of the common judgment and order passed by  

the High Court in a batch of Writ Petitions dated 30.7.2013.

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10.   Mr. Shyam Divan, learned senior counsel appearing for  

the  appellant  in  SLP  No.30485  of  2013,  assailed  the  

impugned Circular dated 11.10.2011 as being illegal,  ultra  

vires and unconstitutional. Learned counsel submits that the  

respondents cannot demand, levy or recover any tax, cess or  

compulsory  exaction  without  authority  of  law as  mandate  

under  Section  265  of  the  Constitution.   According  to  the  

learned  counsel,  Section  368(5)  empowers  the  

Commissioner  to  fix  the  charges  only  when the  owner  or  

occupier of trade premises seeks permission to deposit trade  

refuse  temporarily  upon  any  place  appointed  by  the  

Commissioner  in  this  behalf  and  upon  such  permission  

granted by the Commissioner.  It was urged that none of the  

members of appellant had ever sought such permission from  

the  Commissioner  and,  therefore,  the  question  of  levy  of  

trade refuse charges under Section 368(5) of the Act does  

not arise.  According to the learned counsel any compulsory  

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exaction whether it be a fee or tax or any other levy must be  

backed  by  law.   The  Circular  dated  12.12.2011  imposing  

trade refuse charges is irrational and arbitrary.  

11. Mr. Divan, learned senior counsel, submitted that  the  

levy of TRC is contrary  to  the  judgment of  Bombay  High  

Court  in  Doran Bomanji Ghadiali  vs. Jamshed Kanga  

and others, AIR  1992 Bombay  page 13   whereby   the  

High   Court   has  held  that the only charge that can be  

levied  on  traders  is  to  the  limited  extent  provided  under  

Section 368(5) of the Act.  The Court further held that the  

fee imposable by Section 479 of the said Act must relate to  

licence or written permission for any purpose required under  

the  Act  and,  therefore,  the  charge  could  only  be  for  

permission  to  deposit  the  trade  refuse  temporarily  at  a  

particular place and would not apply to traders not seeking  

such permission to dump their refuse at any place.  Learned  

counsel drew our attention to various sections of the Act and  

submitted that the manner in which the imposition or levy of  

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charges contemplated under  Section 368(5)  of  the Act,  is  

ultra vires.  Learned counsel relied upon the decision in the  

case of  Ahmedabad Urban Development Authority vs.   

Sharadkumar  Jayantikumar  Pasawalla,  (1992)  3  SCC  

285, which was subsequently followed in the case of Gupta  

Modern Breweries vs. State of J& K,  (2007) 6 SCC 317  

and  Leelabai Gajanan Pansare vs. Oriental Insurance  

Co. Ltd., (2008) 9 SCC 720.

12.    Mr.  Chander  Uday  Singh,  learned  senior  counsel,  

appearing  on  behalf  of  appellants  in  SLP  (C)  Nos.  35558,  

35589  and  35593  of  2013,   after  referring  relevant  

provisions of Municipal Corporation Act, made the following  

submissions:-  

(i).  The  appellants  are  engaged  in  the  warehousing  

business  and they  do  not  generate  any  trade  refuse,  

thus entitling the Respondents to levy the TRC. Neither  

they are conducting any manufacturing activity due to  

which  solid  waste  can  be  generated  and,  hence,  the  

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term  TRC  has  been  misinterpreted  and  equated  to  

garbage.  It  was  asserted  that  the  Appellants  merely  

receive goods from the customers  for  the purpose of  

safe  custody  and  upon  receipt  of  the  prescribed  

charges,  return  such  goods  to  the  customers  in  the  

same condition. Therefore, the Respondents are wrong  

in treating every kind of refuse as 'trade refuse’ and on  

the  said  incorrect  premise  imposing  TRC  upon  the  

appellants. 'Trade refuse' should mean and imply some  

solid  waste  generated  by  an  industry  involved  in  

manufacturing  process  and  in  this  regard  reliance  is  

placed upon sub-clauses (a) and (b) of Section 367 and  

sub-sections (1) and (5) of Section 368 of the MMC Act  

and as the terms "refuse" and "trade refuse" have been  

dealt with separately this is indicative that every kind of  

refuse cannot be qualified as "trade refuse".

(ii).   It  was  pointed  out  that  Respondents'  own  

inspection  reports  of  warehouses  show  that  those  

warehousers only generated dust, tree leaves, etc. and  

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in a quantity of only one and a half to two baskets. This  

cannot,  by any stretch of  imagination,  be  treated as  

trade refuse since the dust and tree leaves are blown  

into the warehouses by the wind and not on account of  

any  activity  being  carried  out  by  the  

warehousers/appellants. Further, under Section 370 of  

the MMC Act it will be incumbent on the occupier of any  

premises situate in any portion of the city for which the  

Commissioner  has  not  given  a  public  notice  under  

Section 142 (a) and in which there is no water closet or  

privy  connected  to  municipal  drains,  to  cause  all  

excrementitious and polluted to be collected and to be  

conveyed to the nearest receptacle /depot provided for  

this  purpose  under  Section  367  (b)  and  not  (a).  

Pertinently, 367 (a) deals with dust, ashes, refuse and  

rubbish and 367 (b) deals with trade refuse. Thus "trade  

refuse" is obnoxious refuse and cannot and ought not  

be  equated  with  refuse  generated  in  any  trade  

/business establishment. It is submitted that this vital  

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difference has been ignored and TRC is being unlawfully  

sought to be levied upon the appellants who generate  

no "trade refuse at all".

(iii). It was the contention of the learned counsel that  

the appellants,  who are engaged in  the warehousing  

business, do not generate any trade refuse and in the  

event TRC constitutes a 'tax' there is no taxable event  

for imposition of tax in the form of TRC. Alternatively, if  

TRC is to be regarded a 'fee', then, on account of the  

circumstance  that  the  appellants  generate  no  trade  

refuse at all, there is no element of 'quid pro quo' and  

hence  levy  of  fee  in  the  form  of  TRC  is  illegal  and  

invalid.  

(iv). It was submitted that the linking of payment of TRC  

with renewal of trade licences under section 394 of the  

MMC Act,  is  illegal,  invalid  and,  therefore,  renewal  of  

trade licences under section 394 of the MMC Act ought  

to  be  granted,  irrespective  of  whether  the  appellants  

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pay TRC or not. The TRC being levied in addition to the  

normal  licence  fees  for  issue  of  trade  licences  under  

Section 394 of the MMC Act, there is double charging,  

which is wholly arbitrary and unreasonable and without  

authority of law, particularly, qua the Appellants, who do  

not generate any 'trade refuse'. It was, therefore sought  

to  be  submitted,  that  the  levy  and  collection  of  TRC  

cannot  be  linked  to  the  renewal  of  an  annual  trade  

licence  granted  to  the  Appellants  for  conducting  

warehousing  activity  when  there  is  no  statutory  

provision  enabling such linkage;  and in  the  facts  and  

circumstances and absence of  any specific authority to  

levy  a  retrospective  charge  or  fee,  Respondent  No.1  

could not  levy TRC with effect  from 1.1.2008 when a  

solemn assurance was made by Respondent No.1 to the  

Bombay  High  Court  that  there  would  be  no  linkage  

between TRC and licence fees collected at the stage of  

renewal. Under Section 471 of the MMC Act, Respondent  

No.1 is entitled to impose penalty for contravention of  

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Section 368 (1) to (4) and under Section 472 of the Act,  

the Respondent No.1 is entitled to impose penalty for  

continuing offence in contravention of any provision of  

Section  368  (1)  to  (5).  When  penalty  provisions  are  

provided  under  the  Act,  payment  of  TRC  has  been  

without any basis or justification whatsoever sought to  

be linked with renewal of the Trade Licence,  which is  

impermissible and bad in law. Furthermore, only valid  

trade licence holders are being charged TRC. It becomes  

pertinent to note that after 1976, Respondent No.1 has  

stopped  issuing  warehousing  licences  in  the  Greater  

Mumbai  Area.  Therefore,  the  burden  on  TRC  is  only  

being applied to valid licence holders and not to others  

who are carrying on the trade without any licence.

(v). It was again pointed out that the Respondents have  

completely ignored their own Circular No. ChE/280/SWM  

dated 06.04.2010 which categorically states that for the  

year 2010, TRC will be levied on the basis of licence fees  

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of  the  licence  issued  by  the  Shops  &  Establishment  

Department of the MMC and that the Respondents will  

delink TRC from licence fees in future and new TRC levy  

pattern will  be introduced. The TRC is now wrongfully  

charged  on  the  basis  of  sq.  mtr.  footage  of  area  of  

premises and is in fact more than the licence fees which  

is  wholly illogical,  irrational,  arbitrary and without any  

authority of law. The policy adopted by the Respondents  

and the manner of collection of TRC (whether charged  

based on number of employees or square meter area) is  

absurd,  unreasonable  and  disproportionately  

oppressive,  without  Application  of  mind  and  

incompetent and without the authority of law.

(vi).  Lastly,  it  was  contended  that  any  compulsory  

execration of money by the Government for a tax or a  

cess has to be strictly in accordance with law and there  

should be a specific provision for the same and there is  

no room for  intendment  and nothing is  to  be read or  

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nothing is to be implied and one should look fairly to the  

language used. Our attention was drawn to the decision  

of  this  Court  in  Consumer  Online  Foundation  vs.   

Union of India (2011) 5 SCC 360.  In this behalf it was  

sought to be pointed out, that Imposition of levy/charges  

by Respondent No.1 is in the nature of a tax and not a  

fee  and  hence  such  imposition  without  backing  of  

statutes  is  unreasonable  and  unfair.  Learned  counsel  

also drew our attention to the decisions of this Court in  

the cases of  Gupta Modern Breweries vs. State of  

J&K & Ors. - (2007) 6 SCC 317 and  B.C. Banerjee &  

Ors. vs. State of M.P. & Ors. (1970) 2 SCC 467.

13. Mr.  L.  Nageswar  Rao,  learned  Additional  Solicitor  

General  appearing  for  the  respondents,  firstly  contended  

that the constitutional validity of Section 368(5) of the Act  

was never challenged by any of the appellants as being ultra  

vires to the Constitution. The appellants have only prayed in  

the writ petitions for issuance of appropriate writ directing  

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the  respondents  to  cancel  and/or  withdraw  the  Circulars  

dated 14.1.2008 and 11.10.2011 and also to withdraw the  

notice dated 9th June, 2014.  Learned counsel submitted that  

the appellants challenged the circular  by arguing that the  

manner of collection of trade refuse charges was contrary to  

law. The competence of the authority to demand and levy  

TRC  has  not  been  challenged  at  any  point  of  time.  

Distinguishing  the  imposition  of  fee/TRC  and  tax,  learned  

counsel put heavy reliance on the ratio decided by this Court  

in  the  case  of   The  Commissioner,  Hindu  Religious  

Endowment,  Madras  vs.  Sri  Lakshmindra  Tirtha  

Swamiar of Shirur Mutt, (1954) 1  SCR 1005.    Mr. Rao  

referred to the Core Committee Report and submitted that  

the validity of guidelines provided therein cannot be tested  

on any ground.  Learned counsel put reliance on a decision  

in the case of Corporation of Calcutta & Anr. vs. Liberty  

Cinema, Assam, (1965) 2 SCR 477.  Learned counsel also  

made submission  on  the  object  and purpose of  collection  

and submitted that absolute equality is  impossible for  the  

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purpose of levy of fee or charges. Learned counsel referred  

the  decision  of  this  Court  in  the  case  of  Gulabchand  

Bapalal Modi vs. Municipal Corpn. of Ahmedabad City,   

(1971)  1  SCC  82,  Union  of  India  vs.  Nitdip  Textile  

Processors (P) Ltd., (2012) 1 SCC 226.

14. Before appreciating the rival contentions made by  

the parties, we would like to refer the relevant provisions of  

Bombay  Municipal  Corporation  Act,  1988.   Section  3  (yy)  

defines the word ‘trade refuse’ as under:-

“3(yy)   “Trade  refuse”  means  and  includes  the  refuse  of  any  trade,  manufacture or business.”

15.   Section  367  empowers  the  Commissioner  to  make  

provision  for  providing  receptacles,  depots  and places  for  

temporary  deposit  or  final  disposal  of  waste  articles  

including trade refuse.  Section 367 is quoted hereinbelow:-

“367.  Provision  and  appointment  of  receptacles,  depots  and  places  for  refuse, etc.,

The  Commissioner  shall  provide  or  appoint  in  proper  and  convenient  

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situations public receptacles, depots and  places  for  the  temporary  deposit  or  disposal of— (a) dust, ashes, refuse and rubbish; (b) trade refuse;”

16.   Section 368 lays down the provisions with regard to  

the  duty  of  owners  and  occupiers  for  the  purpose  of  

collecting and depositing dust etc.  Sections 368, 394 and  

479, which are under consideration in these appeals, read as  

under:-

“368. Duty of owners and occupiers to  collect and deposit dust, etc. , (1) It shall be incumbent on the owners and  occupiers of all premises to cause all dust,  ashes, refuse, rubbish and trade refuse to  be collected from their respective premises  and to be deposited at such times as the  Commissioner, by public notice, from time  to time prescribes in the public receptacle,  depot or place provided or appointed under  the last preceding section or the temporary  deposit or final disposal thereof  (2) …… (3)……… (4)-………

(5) Notwithstanding anything contained in  this section, if the owner or occupier 'of any  trade  premises  desires  permission  to  deposit  trade  refuse,  collected  daily  or  periodically from the premises, temporarily  upon  any  place  appointed  by  the  

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Commissioner  in  this  behalf,  the  Commissioner may, on the application, and  on  payment  of  such  charges  as  the  Commissioner may from time to time, fix,  allow  the  applicant  to  deposit  the  trade  refuse accordingly.”

“394. Certain  articles  (or  animals)  not  to  be  kept,  and  certain  trades,  processes  and  operations not to be carried on without a licence;  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—  

(a) keep, or suffer or allow to be kept, in or upon  any premises,  

(I) any article specified in Part I of Schedule M; or,  

(II) any article specified in Part II of Schedule M,  in excess of the quantity therein specified as the  maximum quantity (or where such article is kept  along with any other article or articles specified  in that Schedule, such other maximum quantity  as may be notified by the Commissioner) of such  article which may at any one time be kept in or  upon the same premises without a licence;  

(b) keep, or suffer or allow to be kept, in or upon  any premises, for sale or for other than domestic  use, any article specified in Part III of Schedule  M;  

(c) ……………..  

(d)……………..  

(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;  

(f)  carry  on  within  [Brihan  Mumbai]  or  use  or  allow to be used any premises for, the trade or  operation of a carrier.  

(2)…………………

(3)………………..

(4)……………….  

(5)  It  shall  be  in  the  discretion  of  the  Commissioner.—  

(a)  to  grant  any  licence  referred  to  in  sub- section  (1),  subject  to  such  restrictions  or  conditions (if any,) as he shall think fit to specify,  or  (b) for the purposes of ensuring public safety,  to withhold any such licence:  

Provided  that,  the  Commissioner  when  withholding  any  such  licence  shall  record  his  reasons  in  writing  for  such  withholding  and  furnish the person concerned a copy of his order  containing the reasons for such withholding:  

Provided further that, any person aggrieved by  an order  of  the  Commissioner  under  this  sub- section  may,  within  sixty  days  of  the  date  of  such  order,  appeal  to  the  Chief  Judge  of  the  Small  Cause  Court,  whose  decision  shall  be  final.”  

“479. Licences and written permission to specify  condition etc, on which they are granted:-  

(1)  Whether  it  is  provided  in  this  Act  that  a  licence  or  a  written  permission  Licences  and  may be given for any purpose, such licence or  

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written  permission  shall  specify  the  wntten.  period  for  which,  and  the  restrictions  and  conditions subject to which, the same is granted,  and shall  be  given under  the signature  of  the  Commissioner  or  of  a  munici  pal  officer  empowered under section 68 to grant the same.

(2)………………

(3)………………..

(4)……………….”

17. From  a  conjoint  reading  of  the  provisions  quoted  

hereinbefore,  it  is  manifestly  clear  that  the  Commissioner  

may  from  time  to  time  inter  alia specify  conditions  and  

restrictions while granting trade licence.  The Commissioner  

may notify the charges including trade refuse charges i.e. to  

be collected from the trade licencees.

18.     In exercise of power conferred upon the Commissioner  

under  the  MMC  Act,  a  Circular  was  issued  on  14.1.2008  

raising the TRC by almost 300 percent of the trade licence  

fees with the stipulation that the TRC would be collected at  

the time of renewal of the licence under Section 394 of the  

Act which were due to expire in December, 2009. As noticed  

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above  the  said  Circular  dated  14.1.2008  was  challenged  

before  the  Bombay  High  Court  by  way  of  writ  petitions.  

When the writ petitions were taken up for hearing, learned  

counsel appearing for the respondent-Corporation informed  

the  Court  that  the  rate  of  trade  refuse  charges  is  under  

reconsideration  by  the  Authority.   On  the  basis  of  

submissions made by the counsel for the Corporation, the  

writ  petitions  were  disposed  of  as  the  grievances  of  the  

traders were satisfied.

19. In  December,  2011,  the  respondents  after  re-

consideration of the tariff fixed in the earlier circular came  

with  another  Circular  dated  11.10.2011  whereby  the  TRC  

rate was revised effective from 1st January, 2008.  Perusal of  

the  revised  rates  appended  thereto  would  show  that  the  

rates have been significantly reduced in respect of different  

types of business.  Instead of quoting the revised rates we  

would like to quote hereinbelow the modified circular dated  

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11.10.2011. The English translation of the Circular reads as  

under:-

“MUNCIPAL CORPORATION OF GREATER MUMBAI (Solid Waste Management Department)

No. Pra.A/11384/SWM Dated 11.10.2011

CIRCULAR Subject:-:  Revision/Modification  in  the trade refuse  charge.

For  the  purpose  of  recovering  Trade  refuse  charge by Solid Waste Management Department in  Municipal  Corporation  of  Greater  Mumbai,  the  Mayor’s  Council  gave  approval  vide  Resolution  No.14 dated 15.4.99 to recover the said charge in  certain multiplication  of  licence/registration  charge  without  making  any  category  of  the  business.  According  to that procedure, the orders were issued  vide  Circular  Pra.  A/17785/SWM  dated  14.1.2008,  regarding  entrusting  the  responsibility  on  (1)  Licencing  Department  (2)  Shops  &  Establishment  Department (3)  health department and (4)  Market  Department, by co-relating the expenses  incurred  then for disposal  of the waste and the multiplication  of licencing/registration  charges and also to recover  ‘Trade  refuse  charges’  at  the  time  of  renewal  of  licence  and  deposit  the  same  under  the  head  ‘Miscellaneous Charges’  of  Income under Financial  Budget  Head  of  Solid  Waste  Management  Department.

     However,  considering  the  complaints/  representations  as  well  as  certain  other  aspects  regarding Trade refuse charge, meetings were held  with the officials of 1) Licencing Department, Shops  & Establishment Department (3) health department  and  (4)  Market  Department  and  after  detailed  deliberations it  was proposed to carry out suitable  modifications in Trade refuse charges for which the  business people were examined regarding the Trade  refuse  charge.   The  examination  reports  received  

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from  all  the  department  levels  were  carefully  studied and the aspects such as the Trade refuse  charge  being  levied  on  the  business,  the  expenditure  incurred  for  disposal  of  the  waste  generated by them were examined, and accordingly  Hon’ble Municipal Commissioner has given approval  vide  No.  MGC/F/5874  dated  2.9.2011  to  charge  Trade  refuse  charge  accordingly  and  following  decision was taken.

1) As  the  Trade  refuse  charge  being  levied  by  the  Shops  &  Establishment  Department  in  proportion  with  the  waste  generation,  hence   it  will  be  continued as per the circular No. Pra.A/6123 dated  05.06.1999.

2) The businesses for which the complaints about the  Trade refuse charge being more and in respect of  whom  changes  in  the  Trade  refuse  charge  have  been  made  in  accordance  with  their  waste  generation from the year 2008, have been indicated  in ‘schedule B-1”.

3) Trade refuse charge for the halls used for marriages  and  parties  is  being  introduced  now.   The  solid  waste generated in halls of schools, colleges and the  functions  in  layout  R.G.  Plots  of  the  housing  societies, is not included in commercial tax.

4) In respect  of the business who do not agree with  the revised Trade refuse charge, applications  may  be  accepted  from  them  in  enclosed  format  and  after examining the same, a report be sent to the  concerned Asst. Engineer (S.W.M.) for submitting  to  Chief Engineer (S.W.M.).

5) In  respect  of  the  business  where  there  are  more  than one licences, the Trade refuse charge will  be  levied  on  the  licence  of  which  the  fees  are  more  than other licences.

6) Trade refuse charge will be increased by 10 percent  every year from the year 2009.

7) In  respect  of  the  businesses  who  have  paid  the  Trade refuse charge at less/more rate than the rate  

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mentioned in the circular,  it should be adjusted at  the time of recovering,  Trade refuse tax from the  next year with effect from 2008.  In respect of the  business whose rates of Trade refuse charge have  not  been  increased/decreased  or  those  business  who have so far not paid the Trade refuse charge,  the  same  should  be  recovered  from  them  immediately at the rate indicated in the Circular of  2008.

    All  the concerned department heads will  take  note of this circular and take further action.

Sd/-

Chief Engineer (S.W.M.)

11.10.11.

Licencing Superintendent.”

20.   The Bombay High Court, while passing the impugned  

order dismissing the writ  petitions came to the conclusion  

that the MMC Act confers power upon the authorities of the  

respondents  to  impose conditions  at  the  time of  grant  of  

trade licence and also to recover trade refuse charges.  The  

High Court observed:-

“21.  The  provisions  of  sections  368(5)  and  394(5) read with Section 479 of the MMC Act,  in our view, entitle the respondents to impose  restrictions and conditions at the time of grant  of licence. The same principle will be applicable  even at the stage of renewal of licences. The  

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linkage which is challenged by the appellants  in the present petition is more concerned with  the  manner  of  recovery  of  TRC  and  not  competence  of  the  respondents  to  recover  TRC.  In  deciding  the  manner,  we  are  once  again of the opinion that this is a policy matter  and  sufficient  free  hand  is  required  to  be  conceded to the respondents in formulation of  such  policy.  The  respondents  are  right  in  submitting  that  it  is  not  possible  to  monitor  each and every establishment for purposes of  determining the precise quantity and quality of  'trade  refuse'  generated.  So  also  the  respondents are right in contending that there  is nothing illegal,  arbitrary or unconstitutional  in respondents recovering TRC at the stage of  renewal of licences. From the averments made  by the appellants themselves, it appears that  this has always been the manner in which the  respondents  have  been  collecting  TRC.  In  matters of policy, merely because some other  system  of  collection  may  be  better,  is  no  ground to exercise power of judicial review. As  long as it is not demonstrated that the manner  of collection is ex-facie, absurd, unreasonable  or  disproportionately  oppressive,  we  are  unable to uphold the seventh challenge as to  the  linking.  We  find  nothing  absurd,  unreasonable or disproportionately oppressive  in the policy adopted by the respondents or the  manner of collection of TRC.

22. We have already held that there is nothing  illegal,  arbitrary,  unreasonable  or  unconstitutional  in  the  levy  of  TRC  by  the  respondents.  In  these  circumstances,  we  are  not inclined to exercise the jurisdiction under  Article 226 of the Constitution of India in order  to assist  the appellants,  who desire  to either  postpone or avoid payment of TRC and at the  same  time  enjoy  the  benefits  of  a  renewed  licence. Upon grant of renewal, the MMC shall  have to initiate fresh proceedings in order to  recover  TRC,  thereby  giving  the  appellants  

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opportunity to resist or delay in the payment of  the same. The extra-ordinary jurisdiction under  Article 226 of the Constitution of India cannot  be exercised for such purposes.”

21. As stated above, the constitutional validity of Section  

368(5)  of  the  Act  has  not  been  challenged  in  the  writ  

petitions.  The  power  of  the  Commissioner  in  fixing  and  

demanding trade refuse charges by the impugned Circular  

have been questioned in all  those writ petitions which are  

the subject matter of these appeals.  The only challenge is  

the Circular dated 11.10.2011 and the respective entries in  

the schedule appended thereto issued by the respondents  

on the ground that the rate fixed in the schedule appended  

to the Circular is wholly irrational and full  of arbitrariness.  

The main contention made by the appellants are that they  

do not generate any trade refuse and,  therefore,  the rate  

fixed for levy of TRC is arbitrary, unreasonable and violative  

of Articles 14 and 19(1)(g) of the Constitution of India.

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22.    Since the constitutional validity of different provisions  

including Section 368 of the Act was not challenged, we do  

not  think  it  necessary  to  go  into  the  vires  of  the  said  

provisions.  The only issue that needs to be considered is as  

to  whether  the  fees  or  charge imposed by  the  impugned  

Circular dated 11.10.2011 is just and proper or suffers from  

arbitrariness.   

23. There  is  no  dispute  with  regard  to  the  settled  legal  

proposition that in almost all the statute dealing with legal  

administration,  Municipal  Authorities have inevitably  to  be  

delegated the power of taxation.  The aim and object of the  

scheme have to be taken into consideration while deciding  

the question as to the excessive exercise of power in the  

matter of collection of fees and charges.  

24. However, it would be appropriate to refer the principles  

laid down by this Court in the case of  The Commissioner,  

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Hindu  Religious  Endowment,  Madras  vs.  Sri   

Lakshmindra Tirtha Swamiar of Shirur Mutt, (1954) 1  

SCR 1005: AIR 1954 SC 282, which according to us will be  

the complete answer to the points raised by Mr. Divan and  

Mr.  Singh,  learned  senior  counsel  appearing  for  the  

appellants.  In para 44, this Court observed:

“44. Coming now to fees, a 'fee' is generally  defined to be a charge for a special service  rendered  to  individuals  by  some  governmental  agency.  The  amount  of  fee  levied  is  supposed  to  be  based  on  the  expenses  incurred  by  the  Government  in  rendering the service, though in many cases  the costs are arbitrarily assessed. Ordinarily,  the fees are uniform and no account is taken  of the varying abilities of different recipients  to pay (Vide Lutz on "Public Finance" p. 215.).  These are undoubtedly some of the general  characteristics, but as there may be various  kinds of fees, it is not possible to formulate a  definition  that  would  be  applicable  to  all  cases.”

25. A  fee  undoubtedly,  is  a  payment  primarily  in  public  

interest,  but  for  some special  services,  rendered or  some  

special  work  done  for  the  benefit  of  those  from  whom  

payments  are  demanded.   In  other  words,  fees  must  be  

levied  in  consideration  of  certain  services  which  the  

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individual accept willingly or unwillingly. It is also necessary  

that fees or charges so demanded must be appropriated for  

that purpose and must not be used for other general public  

purposes.  Further, indisputably, the legislature can delegate  

its power to statutory authority, to levy taxes or fees and fix  

the rate in regard thereto.  

26.  Elaborating the distinction between the tax and a fee,  

this Court in number of decisions held that the element of  

compulsion or coercion is present in all impositions, though  

in different degrees and that it is not totally absent in fees.  

The compulsion lies in the fact that payment is enforceable  

by law against a man in spite of his unwillingness or want of  

consent and this element is present in taxes as well as in  

fees.

27. Since the provisions of Section 368(5) of the Act is not  

under challenge the decisions relied upon by Mr. Divan and  

Mr.  Singh,  learned  senior  counsel  appearing  for  the  

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appellants,  will  have  no  application  in  the  facts  and  

circumstances of the present case.  Be that as it may,  it is  

well settled that an Act delegating power to the local body  

without providing a maximum rate does not by itself render  

the delegation excessive or invalid.

28. Coming back to the impugned Circular, it reveals that  

after  considering  the  complaints  and  representations  and  

certain  other  aspects  regarding  trade  refuse  charges,  

decisions have been taken by the authority. Clause (4) and  

(6) of the said circular are re-quoted hereinbelow:-

(4)  In respect  of the business who do not agree with the  revised  Trade  refuse  charge,  applications  may  be  accepted  from  them   in  enclosed  format  and  after  examining  the  same,  a  report  be  sent  to  the  concerned Asst.  Engineer (S.W.M.) for submitting  to  Chief Engineer (S.W.M.).

(6)Trade refuse charge will  be increased by 10 percent  every year from the year 2009.”

29. So far clause (4) is concerned, provision has been made  

for  making application by persons in  respect  of  particular  

business  who do not agree with the revised trade refuse  

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charge  may  approach  the  authority  by  making  necessary  

application  and  on  such  application  or  representation,  

appropriate response shall be given to those persons, who  

have any grievance to that effect.  We, therefore, direct the  

respondent-authority to follow the procedure mentioned in  

clause (4) of the circular.

30.  As regard clause (6) of the Circular, prima facie  we are  

of the definite opinion that increasing trade refuse charge by  

10% every year from 2009 is highly arbitrary and without  

any  guidelines.   In  our  considered opinion,  the  automatic  

increase  of  trade  refuse  charges  by  10%  every  year  

irrespective  of  the  nature  of  business  carried  on  by  the  

Licencee violates principles of natural justice. We, therefore,  

hold that respondent shall not recover any increased trade  

refuse  charges  with  effect  from  2009  without  giving  

reasonable opportunity of hearing to the licencee or persons  

liable to pay such increased charges.

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31. After giving our anxious consideration in the matter, we  

do not find any reason to differ with the view taken by the  

High Court in passing impugned order.   However, we modify  

the impugned order only by holding that clause (6) of the  

Circular increasing trade refuse charge by 10 per cent every  

year from 2009 is highly arbitrary and without any guideline.  

We, therefore, hold that the increase of trade refuse charge  

by  10  per  cent  every  year  irrespective  of  the  actual  

escalation  or  reduction  in  costs  involved or  the  nature  of  

business carried on by the Licencee  etc. violates principles  

of reasonableness as well as natural justice.  Accordingly, we  

direct  that  the  respondent-authority  shall  not  recover  

increased trade refuse charge at the rate of 10 per cent with  

effect from 2009.  The actual increase can be ascertained  

and  realized  in  future  but  not  without  giving  reasonable  

opportunity of hearing to the licencee or the persons liable  

to pay the said increased charges.

32. With  the  aforesaid  modification  and directions,  these  

appeals stand disposed of with no order as to costs.

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…………………………….J. (M.Y. Eqbal)

…………………………….J. (Shiva Kirti  Singh)

New Delhi February 04, 2015

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