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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOs. 243-247  OF 2003

Lala Ram (D) by L.R. & Ors.                   …Appellants

Versus

Union of India & Anr.                                …Respondents

With

Civil Appeal Nos. 268-279, 263-266 & 248-262 of 2003

J U D G M E N T   

Dr. B. S. CHAUHAN, J.

1.   These  appeals  have  been  preferred  against  the  impugned  

judgment  and order  dated 13.8.2001,  passed  by the High Court  of  

Delhi at New Delhi in Writ Petition Nos.349, 2812-2814 and 2822 of  

1989  by  way  of  which,  the  High  Court  dismissed  the  said  writ  

petitions  challenging  the  notice  dated  25.5.1987,  issued  by  the  

Divisional  Railway  Manager,  Northern  Railway,  calling  upon  the

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appellants to pay the licence fee for the railway property in their use,  

at  the  enhanced  rate,  and  also  letter  dated  29.7.1987,  terminating  

licences to operate the shops in question and to vacate the premises  

for failing to deposit outstanding dues on account of non-payment of  

licence fee.

2. Facts and circumstances giving rise to these appeals are that:

Each  of  the  appellants  is  a  licensee  of  the  shops  in  dispute  

admeasuring 4.22 sq. yards upto 100 sq. yards situated at Qutub Road,  

Sadar Bazar,  Delhi which have been in their  occupation since pre-

independence.   As  per  the  appellants,  there  has  been  previous  

litigation in respect of this very land and the same became evacuee  

property under the Administration of Evacuee Property Act, 1950 and  

was taken over by the Custodian.  The appellants, being licensees  of  

the shops, have regularly been paying the license fee to the Railways,  

at  rates  which  were  mutually  agreed  upon  and  have  also  been  

increased in the past.  In 1977, the said licence fee was increased to  

Rs.21 per  sq.  yards per  annum, while  earlier,  it  was  fixed at  only  

Rs.18 per sq. yards per annum.  The appellants received a notice dated  

7.8.1980 from the respondents-Railways Authorities, about increase in  

the licence fee from Rs.21 per sq. yards to Rs.270 per sq. yards per  

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annum.   Representations made by the appellants’ association were  

considered  by  the  Hon’ble  Railway  Minister  and  order  dated  

26.9.1980  was  passed,  staying  the  auction  thereof,  with  a  further  

direction to examine their grievances. The Hon’ble Railway Minister  

further  considered the representation of  the appellants’  Association  

and observed that the auction of the said shops was not reasonable.  

He  also  stated  that  the  revision  in  license  fee  was  excessive  and  

expressed his opinion with respect  to reconsidering the whole case  

and  increasing  the  license  fee  by  5%  to  10%.   The  Railway  

Administration,  after  considering  the  case  of  the  appellants,  again  

passed an order dated 25.5.1987 to enhance the license fee @ Rs.270  

per  sq.  yards  with  retrospective  effect  from  1.11.1980.   The  

appellants’  Association  had  been  making  representations  since  

receiving the aforementioned notice for enhancement dated 25.5.1987,  

and ultimately filed writ petitions before the High Court which have  

been dismissed.  Hence, these appeals.   

3. Shri  Altaf  Ahmed,  learned  Senior  counsel  appearing  for  the  

appellants has submitted that once the enhanced license fee had been  

disapproved  by  the  Hon’ble  Railway  Minister  and  the  matter  was  

reconsidered in light of the observation made by the Hon’ble Minister  

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stating that the said enhancement was excessive and that the license  

fee  could  be  enhanced  by  5%  to  10%,  the  notice  impugned  was  

unreasonable and arbitrary.

The Ministry  of  Urban Development  issued  guidelines  dated  

14.1.1992  as  how  the  license  fee  could  periodically  be  revised.  

Therein,  it  was  provided  that  the  standard  license  fee  should  be  

determined as per the provisions of the Rent Control Act applicable to  

a State.  In the instant case, the Delhi Rent Control Act is applicable,  

and therefore, the  standard license fee as provided therein ought to  

have been calculated.  The Delhi Rent Control Act was  amended in  

1963,  making  it  applicable  to  the  premises  belonging  to  the  

Government as well.

The respondents  have filed an affidavit  before  this  Court  on  

5.9.2002, giving a particular mode of calculation and even if the same  

is applied, the enhanced license fee would not be enhanced to  this  

extent, and the High Court has erred in not deciding any issue raised  

by the appellants  and in  dismissing the writ  petitions in  a  cursory  

manner.    Thus,  the  said  appeals  deserve  to  be  allowed.  Being  a  

welfare state, it is the duty of the State to provide shops at nominal  

license fee.   

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4.  Per  contra,  Shri  Chandra  Bhushan  Prasad,  learned  counsel  

appearing for the respondents, has submitted that the appellants have  

been enjoying the said property at nominal license fee.  The property  

is situated in a very busy market of old Delhi.  The area of the shops  

varies from 4.22 sq. yards to 100 sq. yards.  Therefore, considering  

the geographical situation of the shops, alongwith the other facilities  

provided  to  the  appellants,  such  enhanced  license  fee  is,  in  fact,  

nominal.  The High Court has rightly dismissed their writ petitions  

and no interference is called for.

5. We  have  considered  the  rival  submissions  made  by  learned  

counsel for the parties and perused the record.

6. The  High  Court  has  taken  judicial  notice  of  the  facts  and  

surrounding circumstances,  considered the geographical  situation of  

the suit properties and held as under:

“For a similarly situated shop if it was owned  by  a  private  persons,  the  rental/licence  fee  would have been much more.  The mere fact  that the Railway is a State Enterprise does not  mean  that   ………….  on  the   premises  in  occupation of the petitioner and other persons.  State enterprise must  not look elsewhere for  funds.   It  must  generate  funds  through  the  activities  which  are  undertaken  by  it  for  providing services to the public at large.   It  

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cannot  be  expected  to  run  in  deficit……  Since  the  action  of  the  first  respondent  is  reasonable,  we  decline  to  interfere  with  the  aforesaid enhancement.”

7. We are of the considered opinion that  no fault  can be found  

with the aforesaid observations and no interference is required.  The  

enhanced license fee cannot be held to be unreasonable or arbitrary,  

and as warranting any interference by a court of equity.

8. Undoubtedly,  the  enhanced  license  fee  being  13  times,  the  

earlier license fee amount seems excessive, and such an observation  

was  also  made  by  the  Hon’ble  Railway  Minister  in   order  dated  

11.4.1981, but the enhanced license fee would be illusory if the same  

is  compared  with  the  prevailing  license  fee  in  the  said  market  as  

applicable to private shops. A welfare state must   serve larger public  

interest.  “Salus Populi Suprema lex”, means that the welfare of the  

people  is  the  supreme law.  A state  instrumentality  must  serve  the  

society as  a whole,  and must  not  grant  unwarranted favour(s)  to a  

particular  class  of  people  without  any  justification,  at  the  cost  of  

others.  However,  in  order  to  serve  larger  public  interest,  the  State  

instrumentality must be able to generate its own resources, as it cannot  

serve  such  higher  purpose  while  in  deficit.  Merely  because  the  

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appellants  have  been  occupying  the  suit  premises  for  a  prolonged  

period of time, they cannot claim any special privilege. In the absence  

of any proof of violation of their rights, such concession cannot be  

granted to them.  

Welfare State means:

9. A welfare state denotes a concept of government, in which the  

State plays a key role in the protection and promotion of the economic  

and  social  well-being  of  all  of  its  citizens,  which  may  include  

equitable  distribution  of  wealth  and equal  opportunities  and public  

responsibilities for all those, who are unable to avail for themselves,  

minimal provisions for a decent life.  It  refers to “Greatest  good of  

greatest number and the benefit of all and the happiness of all”. It is  

important that public weal be the commitment of the State, where the  

state  is  a  welfare  state.   A welfare  state  is  under  an  obligation  to  

prepare  plans  and  devise  beneficial  schemes  for  the  good  of  the  

common people. Thus, the fundamental feature of a Welfare state is  

social insurance. Anti-poverty programmes and a system of personal  

taxation are examples of certain aspects of a Welfare state. A Welfare  

state provides State sponsored aid for  individuals from the cradle to  

the grave. However, a welfare state faces basic problems as regards  

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what  should  be  the  desirable  level  of  provision  of  such  welfare  

services  by  the  state,  for  the  reason  that  equitable  provision  of  

resources  to  finance  services  over  and  above  the  contributions  of  

direct beneficiaries would cause difficulties.  A welfare state is one,  

which seeks to ensure maximum happiness of maximum number of  

people  living  within  its  territory.  A  welfare  state  must  attempt  to  

provide all  facilities  for  decent  living,  particularly to  the poor,  the  

weak, the old and the disabled i.e. to all those, who admittedly belong  

to  the  weaker  sections  of  society.  Articles  38  and  39  of  the  

Constitution of India provide that the State must strive to promote the  

welfare of the people of the state by protecting all  their economic,  

social  and  political  rights.  These  rights  may  cover,   means  of  

livelihood, health and the general well-being of all sections of people  

in society, specially those of the young, the old, the women and the  

relatively  weaker  sections  of  the  society.  These  groups   generally  

require  special  protection  measures  in  almost  every  set  up.  The  

happiness of the people is the ultimate aim of a welfare state, and a  

welfare state would not qualify as one, unless it strives to achieve the  

same.  (See also:  Dantuluri Ram Raja & Ors. v. State of Andhra  

Pradesh & Anr., AIR 1972 SC 828; N. Nagendra Rao & Company  

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v. State of Andhra Pradesh, AIR 1994 SC 2663; and N.D. Jayal &  

Anr. Union of India & Ors., AIR 2004 SC 867).  

10. The  High  Court  has  observed  that  the  letter/notice  dated  

7.8.1980, enhancing the rate of license fee remains unchallenged, and  

therefore, the application of notice dated 25.5.1987, with retrospective  

effect is justified.  This finding is not factually correct.

Notice dated 7.8.1980, enhancing the license fee was received  

by the appellants, and representations were filed by them through their  

Association,  raising  all  their  grievances  to  the  effect  that  during a  

period of 30 years, the license fee paid by them had been enhanced  

about  15  to  20  times,  without  any  justification  and  hence,  they  

demanded justice.  The same were considered by the then Railway  

Minister, and orders dated 26.9.1980 and 11.4.1981 were passed by  

him, observing that the license fee may be revised after every 5 years  

on the basis  of  justice  and equity.   Certain interim relief  was also  

granted.  Thus, in view of the above, we are of the opinion that the  

aforesaid  demands  should  not  have  been  made  to  apply  with  

retrospective effect from the year 7-8-1980.

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In  view  of  the  above,  the  appeals  succeed  and  are  allowed  

partly, to the extent that notice dated 25.5.1987 must not be applied  

retrospectively, i.e., w.e.f. 7-8-1980.  However, the enhanced license  

fee  may  be  recovered  from  the  appellants  from  the  said  date  in  

accordance with law.

With these observations, the appeals stand disposed of.  Interim  

order passed earlier stands vacated.

CA Nos.268-279, 263-266 & 248-262 of 2003

The abovesaid Civil Appeals stand disposed of in terms of the  

judgment passed in Civil Appeal Nos.243-247 of 2003.

 ..………………………….J.  (Dr. B.S. CHAUHAN)

.…………………………..J.            (V. GOPALA GOWDA)

New Delhi,

January 24, 2013

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