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PETITIONER: MOHAMMAD YASIN

       Vs.

RESPONDENT: THE TOWN AREA COMMITTEE,JALALABAD AND ANOTHER.

DATE OF JUDGMENT: 27/02/1952

BENCH: DAS, SUDHI RANJAN BENCH: DAS, SUDHI RANJAN SASTRI, M. PATANJALI (CJ) MAHAJAN, MEHR CHAND MUKHERJEA, B.K. AIYAR, N. CHANDRASEKHARA

CITATION:  1952 AIR  115            1952 SCR  572  CITATOR INFO :  F          1952 SC 118  (1,3)  R          1953 SC 252  (8)  R          1954 SC 403  (9)  R          1955 SC 661  (5,60,145)  RF         1957 SC 790  (10)  R          1958 SC 296  (7)  RF         1958 SC 578  (228)  R          1958 SC 956  (26)  R          1959 SC 480  (2,4)  R          1962 SC 123  (12)  R          1962 SC1006  (34,81)  F          1962 SC1563  (115)  R          1962 SC1621  (39,45,165)  R          1970 SC 564  (74)  D          1971 SC1737  (45)  RF         1975 SC1443  (6)  RF         1992 SC1033  (33)

ACT:     Constitution  of India, 1950, Arts. 19(1)(g), 32--U.  P. Municipalities Act, 1916, ss. 293 ( 1), 298(2)(g)(d)--Munic- ipal bye-laws-Bye-law imposing fee for carrying on wholesale trade in vegetables and fruits within municipal area--Valid- ity--Restraint   on   fundamental   right   to   carry    on trade--Licence and tax, difference.

HEADNOTE:     There is a difference between a tax like the  income-tax and  a licence fee for carrying on an occupation,  trade  or business.  A licence lee on a business not only  takes  away the property of the licensee but also operates as a restric- tion on his fundamental 573 right to carry on his business.  Therefore if the imposition of  a  licence  fee is without authority of law  it  can  be challenged by way of an application under Art. 32.     Under  Art. 19(1) (g) of the Constitution a citizen  has the right to carry on any occupation, trade or business  and the only restriction on this unfettered right is the author-

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ity  of the State to make a law relating to the carrying  on of  such occupation, trade or business as mentioned  in  cl. (6)  of that article as amended by the  Constitution  (First Amendment)  Act, 1951.  If therefore a licence  fee  imposed for  carrying on an occupation, trade or business cannot  be justified on the basis of any valid law, no question of  its reasonableness can arise, for an illegal impost must at  all times  be an unreasonable restriction and  will  necessarily infringe  the right of the citizen to carry on  his  occupa- tion,  trade  or  business under Art. 19(1)  (g),  and  such infringement  can properly be made the subject matter  of  a challenge under Art. 32 of the Constitution.     Bye-law No. 1 of the Bye-laws of the Town Area Committee of  Jalalabad  (in the United Provinces)  provided  that  no person shall sell or purchase any vegetables or fruit within the  prescribed limits of the Town Area Committee by  whole- sale  or  auction, without paying the fees  fixed  by  these bye-laws  to the licensee appointed by the Town  Magistrate. Bye-law  No.  4  (b) provided that any person  can  sell  in wholesale at any place in the town area provided he pays the prescribed  fees  to the licensee.  A person  who  had  been carrying  on the business of wholesale dealer in  vegetables and  fruits  in his own shop at Jalalabad for  a  period  of seven years applied for protection under Art. 32  contending that these bye-laws infringed his fundamental right to carry on  his trade guaranteed by Art. 19 (1) (g) and were  there- fore void.     Held, that s. 293 (1) and s. 298 (2) (J) (d) of the U.P. Municipalities  Act, 1916, as amended at the time they  were extended  to the town areas in the United Provinces did  not empower  the Town Area Committee to make any bye-law  autho- rising it to charge any fees otherwise than for the use  and occupation  of  any property vested in or entrusted  to  the management  of the Town Area Committee including any  public street.  The bye-laws in question which imposed a charge  on the  wholesale  dealer in the shape of the  prescribed  fee, irrespective  of any use or occupation by him  of  immovable property  vested  in or entrusted to the management  of  the Town  Area Committee including any public street, are  obvi- ously  ultra vires the powers of the Committee  and,  there- fore, the bye-laws cannot be said to constitute a valid  law which  alone  may, under Art. 19 (6)  of  the  Constitution, impose  a restriction on the right conferred by  Art.  19(1) (g).   In the absence of any valid law authorising it,  such illegal  imposition must undoubtedly operate as  an  illegal restraint  and  must infringe the unfettered  right  of  the wholesale dealer to carry on 74 574 his occupation, trade or business which is guaranteed to him by Art. 19 (1) (g) of our Constitution.     Kairana case [1950] S.C.R. 566 and Ramji Lal v.  Income- tax Officer, Mohindargarh [1951] S.C. R. 127 distinguished.

JUDGMENT:     ORIGINAL  JURISDICTION: Petition No. 132 of 1951.  Peti- tion  under  Art. 32 of the Constitution for a writ  in  the nature  of mandamus.  The material facts are set out in  the judgment. Nuruddin  Abroad for the petitioner. K.N. Aggarwal for the respondents. 1952.  February 27.  The Judgment of the Court was delivered by     DAs  J.--This is an application under article 32 of  the

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Constitution  made by Mohammad Yasin for the  protection  of his  fundamental  right of carrying on his  business  which, according to him, is being infringed by the respondent.     The  case sought to be made out in the petition  may  be shortly stated as follows:--     The petitioner is a wholesale dealer in fresh vegetables and fruits at Jalalabad in  the district of Muzaffarnagar in the State of Uttar  Pradesh and claims to have been carrying on  such  business for the last 7 years or so  at  his  shop situated in the town of Jalalabad.  The vegetable and  fruit growers  used to bring their goods to the town and get  them auctioned  through  any of the vegetable  dealers  of  their choice  who used to charge one anna in the rupee as  and  by way   of commission.   The respondent Committee which  is  a Town Area Committee has framed certain bye-laws under  which all right and power to levy or collect commission on sale or purchase  of vegetables and fruits within the limits of  the town  vest in the respondent Committee or any  other  agency appointed by the Committee and no one except the  respondent Committee is authorised to deal in wholesale vegetables  and fruits  and collect the commission thereof in any place  and in any event.  The respondent Committee has by auction given the contract for sale of 575 vegetables and fruits and for collecting the commission  for the  current  year to the respondent Bishamber  who,  it  is alleged,  has  never  dealt in vegetables  and  fruits   The respondent  Committee has not set up any market nor  has  it framed  any bye-laws for issue of licences to the  vegetable and fruit merchants.  The bye-laws also provide for prosecu- tion  for the breach of any of the provisions of these  bye- laws.  Although, in terms, there is no absolute  prohibition against carrying on business as wholesale dealer in  vegeta- bles  and fruits, the result of the bye-laws  requiring  the wholesale  dealers to pay the prescribed fee of one anna  in the  rupee to the contractor who holds the monopoly  is,  in effect,  to bring about a total prohibition of the  business of  the  wholesale dealers in vegetables  and  fruits.   The petitioner contends that by granting a monopoly of the right to  do  wholesale business in vegetables and fruits  to  the respondent Bishamber the respondent Committee has in  effect totally prevented the petitioner from carrying on his  busi- ness  and  has thereby  infringed   his   fundamental  right under article 19(1)(g) of the Constitution.  In the alterna- tive, the petitioner contends that the respondent  Committee has  no legal authority to impose a tax of the kind  it  has sought to do, that the imposition of a tax calculated at one anna in the rupee is in the nature of a sale-tax and  cannot be  regarded as a licence fee and such  unauthorised  impost constitutes  an illegal restraint on his  fundamental  right under article 19 (1) (g).     The  notice of motion has been served on the  respondent Committee as well as on respondent Bishamber.  The  respond- ents  have  entered  appearance and filed  an  affidavit  in opposition  to  the present application  affirmed  by  their agent on record  Paragraph 4 of that affidavit is as follows :--     "4.  Paragraphs 4, 5, 6 and 7 of the petition are  wrong and  misleading and do not convey the correct idea.  If  the bye-laws  are read from beginning to end, the correct  posi- tion  is that the Town Area Committee has  lawfully  imposed certain taxes on the purchase 576 and  sale of fruits and vegetables within the ambit  of  the Town  Area;  and instead of collecting the  aforesaid  taxes

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departmentally  the Committee finds it more  convenient  and less  expensive to auction the ’right to collect the  taxes’ and give the contract to the highest bidder or whomsoever it thinks fit and proper. There is absolutely no restriction on anybody who wants to purchase or anybody who wants to  sell; only he must pay the prescribed tax to the Town Area Commit- tee  through the Contractor.  The market is open,  and  writ large  throughout the territory of the Town  Area  Committee and  anybody can purchase from anybody and anybody can  sell to  anybody,  without  any control or  intervention  by  the Contractor, whose position is simply that of a  taxcollector on behalf of the Town Area Committee. Instead of getting the pay,  he  gets  the profits, if any, and runs  the  risk  of incurring  losses  if his gross realisations are  less  than what  he  paid.   This is clearly the position,  and  it  is submitted,  there  is nothing wrong with it legally  and  no interference of the petitioner’s rights."     The  petitioner has to his petition annexed copies of  a set of bye-laws dated June 24, 1942, and a copy of a resolu- tion  of  the  respondent Committee dated  March  16,  1950, recommending the addition of several bye-laws to the  previ- ous  bye-laws.  At the hearing of the petition before us  it was  agreed  by and between counsel on both sides  that  the petition has to be disposed of on the basis of the  bye-laws of 1942 only and learned counsel for the respondent  Commit- tee  has produced the original bye-laws of 1942  before  us. Bye-law  1 only provides that no person shall sell  or  pur- chase any vegetable or fruit within the prescribed limits of the   Town  Area  Committee,  Jalalabad  by   wholesale   or auction,without  paying the  fee fixed under these  bye-laws to the licensee appointed by the Town Magistrate.  Bye-law 4 (b) expressly provides that any person can sell in wholesale at  any  place in the Town Area provided he  pays  the  pre- scribed fees to the licensee.  It is, therefore, clear  that these byelaws do not in terms, prohibit anybody from dealing in vegetables and fruits as alleged by the petitioner 577 and in this respect they materially differ from the bye-laws which  this  Court had to consider in  the  Kairana  case(1) which consequently does not govern this case.  Learned  counsel,  however,  contends--and  we  think  with considerable  force  and cogency--that  although,  in  form, there  is no prohibition against carrying on  any  wholesale business by anybody, in effect and in substance the bye-laws have  brought about a total stoppage of the wholesale  deal- ers’ business in a commercial sense. The wholesale  dealers, who  will have to pay the prescribed fee to  the  contractor appointed  by auction, will necessarily have to  charge  the growers  of vegetables and fruits something over  and  above the  prescribed  lee so as to keep a margin  of  profit  for themselves but in such circumstances no grower of vegetables and fruits will have his produce sold to or auctioned by the wholesale  dealers  at a higher rate of commission  but  all of  them will flock to the contractor who will  only  charge them  the prescribed commission. On the other hand,  if  the wholesale  dealers  charge  the growers  of  vegetables  and fruits  only the commission prescribed by the bye laws  they will  have  to make over the whole of it to  the  contractor without keeping any profit themselves.  In other words,  the wholesale   dealers will  be  converted  into mere tax  col- lectors  for  the  contractor or  the  respondent  Committee without  any  remuneration from either of them   In  effect, therefore,  the bye-laws, it is said, have brought  about  a total  prohibition of the business of the wholesale  dealers in  a commercial sense and from a practical point  of  view.

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We  are  not of opinion that this contention is  unsound  or untenable.       Learned counsel for the petitioner, however, does  not leave  the matter there. He goes further and urges that  the respondent  Committee has no legal authority to impose  this fee  of one anna in the rupee on the value of goods sold  or auctioned  and  that such imposition is in the nature  of  a sale tax rather than a licence fee. (1) [1950] S.C.R. 566. 578     Learned  counsel  for the respondent in  reply  takes  a preliminary  objection to this line of argument.  He  points out that as the levying of a tax without authority of law is specifically  prohibited under article 265 of the  Constitu- tion, article 81(1) must be construed as referring to depri- vation  of property otherwise than by levying of a  tax  and that  levying of a tax in contravention of article 265  does not amount to a breach of a fundamental right. He  contends, on  the authority of the decision of this Court in  Ramjilal v. Income-tax Officer, Mohindargarh(1), that while an  ille- gal  imposition of tax may be challenged in a properly  con- stituted  suit,  it cannot be questioned by  an  application under  article 32.  This argument overlooks  the  difference between  a  tax like the income-tax and a  licence  fee  for carrying on a business. A licence fee on a business not only takes away the property of the licensee but also operates as a  restriction on his  right to carry on his  business,  for without  payment of such fee the business cannot be  carried on  at  all.  This aspect of the matter was  not  raised  or considered in the case relied on by the learned counsel, and that  case,  therefore, has no application to the  facts  of this case. Under article 19(1) (g) the citizen has the right to  carry on any occupation, trade or business  which  right under  that clause is apparently to be unfettered. The  only restriction to this unfettered right is the authority of the State  to  make a law relating to the carrying  on  of  such occupation, trade or business as mentioned in clause (6)  of that  article as amended by the Constitution  (First  Amend- ment)  Act, 1951.  If therefore, the licence fee  cannot  be justified  on the basis of any valid law no question of  its reasonableness can arise, for an illegal impost must at  all times  be an unreasonable restriction and  will  necessarily infringe  the right of the citizen to carry on  his  occupa- tion,  trade or business under article 19 (1) (g)  and  such infringement  can properly be made the subject-matter  of  a challenge under article 32 of the Constitution. (1) [1951] S.C.R.127. 579     Learned  counsel for the respondents then refers  us  to the  U.P. Town Areas Act (No. 11 of 1914) which governs  the respondent  Committee.  Section 14 of this Act requires  the Committee  to annually determine and report to the  District Magistrate the amount required to be raised in any town area for the purposes of this Act and provides that the amount so determined shall be raised by the imposition of a tax to  be assessed  on  the occupiers of houses or  lands  within  the limits  of the town area according either to  their  general circumstances or to the annual rental value of the houses or lands  so occupied by them as the Committee  may  determine. There were, at the time when the  bye-laws  of the  respond- ent  Committee  were framed, five provisos to  this  section none  of which authorised the imposition of any tax  on  any business  and, therefore, they have no bearing on the  ques- tion  now  under  consideration.  Learned  counsel  for  the respondents,  however, draws our attention to section 38  of

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the Act which authorises the Provincial Government by  noti- fication in the Official Gazette to extend to all or any  or any  part of any town area any enactment for the time  being in force in any municipality in the United Provinces and  to declare its extension to be subject to such restrictions and modifications, if any, as it thinks fit. Then he proceeds to draw  our attention to Notification No. 397/XI-871-E,  dated the  6th  February, 1929, whereby, in  supersession  of  all previous notifications, the Provincial Government, in  exer- cise of the powers conferred by section 38(1) of the  United Provinces  Town Areas Act, 1914, extended the provisions  of sections  293(1) and 298(2) (J) (d) of the United  Provinces Municipalities Act (11 of 1916) to all the town area in  the United Provinces in the modified form set forth therein. The original  bye-laws  produced  by  learned  counsel  purport, however,  to  have been framed by the  respondent  Committee under sections 298 (2)(F)(a)and 294 of the United  Provinces Municipalities  Act (11 of 1916). We have not been  referred to any notification whereby section ’294 580 of  the United Provinces Municipalities Act was extended  to the  respondent  Committee. It appears,  however,  that  the bye-laws of the respondent Committee were revised in Septem- ber 1942 and were then said to have been made under  section 298 (2) (J) (d).  It will have, therefore, to be seen wheth- er these bye-laws come within The purview of section 298 (2) (J)  (d) as modified in their application to the  respondent Committee. It will be noticed that under section 298 (2) (J) (d)  as  modified as aforesaid the respondent  Committee  is authorised only to make bye-laws fixing any charges or  fees or  any  scale of charges or fees to be paid  under  section 9.93(1)  and prescribing the times at which such charges  or fees shall be payable and designating the persons authorised to  receive  payment thereof. Section 293(1),  as  modified, authorises  the  respondent Committee to charge fees  to  be fixed  by bye-laws or by public auction or by agreement  for the use or occupation (otherwise than under a lease) of  any immovable property vested in, or entrusted to the management of  the Town Area Committee, including any public street  or place  of which it allows the use or occupation  whether  by allowing a projection thereon or otherwise. Bye-law 1 of the respondent  Committee to which a reference has already  been made forbids a person from using any land within the  limits of  the  town area for the sale or purchase  of  fruits  and vegetables  without  paying the prescribed fee.   Bye-law  4 (b), however, allows any person to sell in wholesale at  any place in the town area, provided he pays the prescribed fees to the licensee.  These bye-laws do not purport to fix a fee for  the use or occupation of any immovable property  vested in or entrusted to the management of the Town Area Committee including any public street or place of which it allows  the use  or occupation whether by allowing a projection  thereon or  otherwise.  Sections 293(1) and 298(2) (J)  (d)  of  the United Province Municipalities Act, 1916, as amended at  the time  they  were extended to the town areas  in  the  United Provinces do not empower the Town Area Committee to make any bye-law authorising it to 581 charge any fees otherwise than for the use or occupation  of any property vested in or entrusted to the management of the Town Area Committee including any public street.  Therefore, the  bye-laws prima   facie go much beyond the  powers  con- ferred  on  the respondent Committee by the  sections   men- tioned  above and the petitioner complains against  the  en- forcement  of  these bye laws against him as he  carries  on

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business  in  his own shop and not in or on  any  immoveable property  vested in the Town Area Committee or entrusted  to their management. Learned counsel for the respondent Commit- tee,  however,  urges  that the growers  of  vegetables  and fruits  come  on  foot or in carts or on  horses  along  the public  street and stand outside the petitioner’s  shop  and for  such use of the public street the respondent  Committee is well within its powers to charge the fees.  From the  way the case was formulated by the learned counsel, it is  quite clear  that  if  anybody uses the public street  it  is  the growers  of vegetables and fruits who come to the  petition- er’s  shop to get their produce auctioned by the  petitioner and  the petitioner cannot be charged with fees for  use  of the  public  street by those persons. In  our  opinion,  the bye-laws  which impose a charge on the wholesale  dealer  in the shape of the prescribed fee, irrespective of any use  or occupation  by him of immoveable property vested in  or  en- trusted to the management of the Town Area Committee includ- ing any public street, are obviously ultra vires the  powers of  the  respondent Committee and, therefore, the  bye  laws cannot  be said to constitute a valid law which  alone  may, under article 19(16) of the Constitution,ofimpose a restric- tion  on the right conferred by article 19(1) (g).   In  the absence of any valid law authorising it, such illegal  impo- sition must undoubtedly operate as an illegal restraint  and must  infringe the unfettered right of the wholesale  dealer to  carry  on  his occupation, trade or  business  which  is guaranteed  to him by article 19(1) (g) of our  Constitution 75 582      In  this view of the matter the petitioner is  entitled to a suitable order for protection of his fundamental right. The  prayer in the petition, however, has been expressed  in language  much too wide and cannot be granted in that  form. The proper order would be to direct the respondent Committee not  to prohibit the  petitioner from carrying on the  busi- ness  of a wholesale dealer in vegetables and fruits  within the limits of the Jalalabad Town Area Committee until proper and  valid  bye-laws  are framed and  thereafter  except  in accordance  with a licence to be obtained by the  petitioner under the bye-laws to be so framed.  The respondent  Commit- tee will pay the costs of this application to the  petition- er. Agent for the petitioner: Naunit Lal. Agent for the respondent: P.C. Aggarwal. 583