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PETITIONER: STATE OF GUJARAT AND ANR.

       Vs.

RESPONDENT: M/S.  KRISHNA CINEMA AND ORS.

DATE OF JUDGMENT: 10/09/1970

BENCH: GROVER, A.N. BENCH: GROVER, A.N. SHAH, J.C. SHAH, J.C. HEGDE, K.S. SHAH, J.C. HEGDE, K.S.

CITATION:  1971 AIR 1650            1971 SCR  (2) 110

ACT: Bombay  Cinemas (Regulation) Act 11 of 1953 and  Rules--Rule 89 does not prohibit construction of cinema building  before grant  of no objection certificate by  Licensing  Authority- Direction  given by State Government to Licensing  Authority vitiated  if  there  is no application  of  mind  to  facts- Appellate order under s. 8A must give reasons--Use of  words ’absolute  discretion’  in s. 5(2) of Chapter  If  does  not invest State Government with arbitrary power.

HEADNOTE: The Bombay Cinemas (Regulation) Act 11 of 1953 and the rules made thereunder were made applicable to the territory of the State  of  Gujarat by the Bombay Reorganisation  Act,  1960. Under s. 3 of Act It of 1953 films can be exhibited only  in licensed  premises.  By s. 4(3) the District Magistrate  is, where  there  is no Commissioner of  Police,  the  Licensing Authority.   By s. 5 the Licensing Authority is  subject  to the control of the State Government.  A person aggrieved  by the order of the Licensing Authority has under s. 8A a right of appeal to the State Government.  Rule 5(2) authorises the Government  on consideration of the report of the  Licensing Authority,  in its absolute discretion to  grant  permission for the issue of a no objection certificate to the applicant or to refuse to grant the same.  By r. 89 it is enacted that no person shall put up any building or structure or  convert existing premises for being used as a cinema except with the permission in writing of the Licensing Authority. The  respondents  carried  on  the  business  of  exhibiting cinematograph  films  in a theatre named Krishna  Cinema  at Rajkot.   On  May  14, 1963 they  applied  to  the  District Magistrate for a ’no objection certificate’ to the user of a building  to  construction  as an ’annexe’  to  the  Krishna Cinema,  The Magistrate sanctioned the construction  of  the building  and  the plans submitted by the  respondents  were approved  by the Executive Engineer.  On completion  of  the building  the Executive Engineer recommended the grant of  a ’no   objection  certificate’.   Thereafter   the   District

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Magistrate in his report of the State Government  suggesting that  a no objection certificate be granted even though  the construction  of  the  building  before  the  grant  of  the certificate  was  against  the  rules.   The  Government  of Gujarat intimated by a letter dated July 9, 1964 written  by the  Add.  District Magistrate, Rajkot that the  application filed  by the respondents could not be granted,.  An  appeal filed against the order communicated by the Addl.   District Magistrate  to  the  State  Government  was  rejected.   The respondent  filed  a writ petition in the High  Court  which succeeded.   The  State of Gujarat appealed  to  this  Court relying on r. 89 for their contention that the building  was constructed  in violation of the rules and,  therefore,  the refusal  of  a  ’no objection  certificate’  was  justified. Dismissing the appeal, HELD  :  (1) Rule 89 authorises the Licensing  Authority  to allow   conversion   of   an  existing   building   into   a cinematograph  theatre.   Therefore the  completion  of  the building  before the Government considered the request to  a ’no  objection certificate’ did not constitute a bar to  the exercise  of  jurisdiction  to  grant  the  certificate  and District   Magistrate  was  right  in  his  view  that   the certificate applied for must be granted. [II S B-C] 111 The  ’annexe’  complied  with all the  requirements  of  the rules,  but  by  letter dated July  9,  1964  the  Licensing Authority   under  instructions  of  the  State   Government informed the respondent that application for constructing  a permanent  annexe  near the present Krisha  Cinema  and  for obtaining  a ’no objection certificate’ was not  admissible. The building had been constructed several months before  the date  on which the letter was written.  The contents of  the letter  created  an  impression  that in  the  view  of  the authorities  the building had still to be  constructed.   It was  clear that the authority did not apply its mind to  the application.   It did not consider whether a building  which was  already in existence should be allowed to be  converted into a cinematograph theatre. [116 A-C] Further  in  dismissing the appeal preferred  to  the  State Government it was recorded that the Government did ’not  see any  reasons  to change the decision already  taken  by  the District  Magistrate’.   The order of the  State  Government which was a reaffirmation of its original decision  communi- cated  through  the Licensing Authority gave  no  indication that the objections raised in the memorandum of appeal  were considered.   No  reasons in support of the order  were  set out. [116 C-D] Since the State Government did not correctly apprise  itself of  the facts when it gave its directions to  the  Licensing Authority to dismiss the application and later dismissed the appeal  without.  giving  any  reasons,  its  order   giving directions  to  the District Magistrate and in  appeal  were rightly set aside by the High Court. [117 A-B] (ii)Power  to control the Licensing Authority under s. 5  is not power to supplant the Licensing Authority.  The power to grant  a licence under   the Act is a  quasi-Judicial  power and by the use of the Expression ’absolute discretion’ in r. 5 it is not intended to invest the Licensing Authority  with arbitrary power so as to destroy the limitations to which it is subject by its inherent nature. [116 G-H] [The court found it unnecessary for the purpose of the  case to  express  any  opinion on the propriety  or  validity  of provisions  making exercise of quasi-judicial power  subject to  the control, at the stage when it was exercised, of  the executive.   It  observed  however that a  right  of  appeal

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Linder  s. 8A the State Government against the order of  the Licensing  Authority  issued under the order  of  the  State Government  was  a  futile formality and  served  no  useful purpose. [114 F-H]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1435  of 1970. Appeal  by special leave from the judgment and  order  dated August  12,  13, 1969 of the Gujarat High Court  in  Special Civil application No. 919 of 1969. S.K.  Dholakia,  B.  D. Sharma and S. P.  Nayar  for  the appellants. A.K.  Sen, H. R. Gokhale, J. L. Hathi, K. N. Bhat and  K. L. Hathi, for the respondents. The Judgment of the Court was delivered by Shah,  J. The respondents in this appeal carry on the  busi- ness  of exhibiting cinematograph films in a  theatre  named Krishna 112 Cinema at Rajkot.  On a plot of land adjacent to the Krishna Cinema the respondents desired to construct "an annexe"  for exhibiting   foreign  films  with  independent  screen   and auditorium.  On May 14, 1963 the respondents applied to  the District Magistrate who is the Licensing Authority under the Bombay  Cinemas  (Regulation)  [Act 11 of 1953]  for  a  ’no objection  certificate’  to the user of the "annexe"  to  be constructed on the site for exhibiting cinematograph  films. On  the  same day they submitted to the  Executive  Engineer plans  of the proposed building of "annexe" to be used as  a cinematograph  theatre.   They  also applied  to  the  local Municipality  for leave to construct a building to  be  used for  cinematograph  theatre.   The  Municipality  sanctioned construction  of the building. The Executive  Engineer  also signified  his assent by letter addressed to the  Additional District  Magistrate  to  the  grant  of  a  "no   objection certificate". By an application submitted on May 14, 1963 the  respondents prayed  that a "no objection certificate" under  the  Bombay Cinemas  (Regulation)  Act  be granted  in  respect  of  the "annexe" to be constructed.  As required by the rules framed under   the  Act  the  District  Magistrate   notified   the application  and  invited objections to the  proposal.   The District  Magistrate  then  forwarded  his  report  to   the Government  of  Gujarat  that according  to  the  rules  the respondents  should  have commenced construction  of  the  " annexe" only after obtaining the ’no objection  certificate’ under  the Act, but since the building was constructed  with the  sanction  of the Municipality and the building  was  in conformity  with  the  rules, he recommended  that  the  "no objection certificate" be granted. The Government of Gujarat intimated  by  a letter written by the  Additional  District Magistrate,  Rajkot  that  the  application  filed  by   the respondents  could not be granted.  An appeal filed  against the  order  communicated  through  the  Additional  District Magistrate  to  the State Government was  rejected  and  the respondents   were   asked   not   to   make   any   further representations in that behalf. The  respondents then filed a petition in the High Court  of Gujarat for a declaration that r. 5 sub-r. (2) of the Bombay Cinema  Rules,  1954, infringes Art. 19(1)(f) & (g)  of  the Constitution and for a direction calling upon the Government of the State of Gujarat to grant ’no objection  certificate’

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as  applied  for  by them for  setting  up  a  cinematograph theatre in the "annexe" and for an order quashing or setting aside  the communications from the District  Magistrate  and the  order in appeal passed by the State of Gujarat  and  to direct  the State of Gujarat and the District Magistrate  to consider   the  application  of  the  respondents  for   ’no objection  certificate’  in accordance with law.   The  High Court  of  Gujarat  upheld  the  contention  raised  by  the respondents and set aside the orders of the State Government and of the District Magistrate. 113 The  High Court directed that a writ of mandamus  be  issued directing  the  State  Government  to  permit  the  District Magistrate  to  issue a ’no objection certificate’  and  the District  Magistrate  to issue such a.  certificate  to  the respondents  as prayed in their application.  The  State  of Gujarat has appealed to this Court with special leave. Exhibition  of cinematograph films and licensing  of  places for  such  exhibition  is governed  by  the  Bombay  Cinemas (Regulation)  Act 11 of 1963.  By virtue of  the  provisions contained in the Bombay State Reorganisation Act, 1960,  the Act  and  the Rules are applicable to the territory  of  the State   of  Gujarat.   By  S.  3  of  the   Bombay   Cinemas (Regulation)  Act 1953, "save as otherwise provided  in  the Act  no  person  shall  give an exhibition  by  means  of  a cinematograph  elsewhere than in a place licensed under  the Act or otherwise than in compliance with any conditions  and restrictions  imposed  by  such licence".  In  the  town  of Rajkot,  by  virtue  of  S. 4(3) of  the  Act  the  District Magistrate is the Licensing Authority.  By sub-s. (1) of  s. 5  the  Licensing Authority is prohibited from,  granting  a licence unless it is satisfied that the rules made under the Act  have  been  substantially complied  with  and  adequate precautions  have  been taken in the place,  in  respect  of which the licence is to be given, to provide for the  safety of persons attending exhibition therein.  By s. 5(2) subject to  the provisions of sub-s. (1) and to the control  of  the State Government the Licensing Authority may grant  licences under the Act to such persons as that Authority thinks fit.. Section  7 authorises the Licensing Authority with power  to revoke  or  suspend a licence.  Any person aggrieved  by  an order  of  a Licensing Authority, inter  alia,  refusing  to grant  a licence or revoking or suspending any licence,  may under S. 8A appeal to the State Government s. 9 provides for the  making  of the rules for the purpose of  carrying  into effect the provisions of the Act.  By r. 3, insofar as it is relevant it is provided :               "(2) Any person desirous of erecting a  cinema               or converting existing premises into a  cinema               shall first make public his intention to do so               by exhibiting a notice in Form "A" on a  board               on  the proposed site in such a position  that               it  can  be  plainly  seen  from  the   public               throughfare  upon  which  the  site  of   such               proposed cinema abuts.               (3)Such  person shall also give  a  similar               notice  in writing to the Licensing  Authority               and  make  an  application  to  the  Licensing               Authority  for the grant of a  "No  objection"               Certificate specifying therein whether the               114               application  is  in  respect  of  a  permanent               cinema or a touring cinema." By r. 4 provision is made for inviting objections on receipt of  a  notice from the applicant’ Rule 5(2)  authorises  the

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Government, on consideration of the report of the  Licensing Authority,  in its absolute discretion to  grant  permission for  the  issue  of  a "No  objection  certificate"  to  the applicant  or to refuse to grant the same.  Chapter  III  of the Rules prescribes rules relating to buildings to be  used for  cinematograph  theatres.  Chapter IV  prescribes  rules relating  to electric installation and Chapter V  prescribes precautions against fire.  By r. 89 which occurs in  Chapter VI it is enacted that "no person shall put up any  buildings or structure or convert existing premises for being used  as a  cinema except with the previous permission in writing  of the  Licensing Authority." Rules 90 provides for the  making of  an  application  for permissin.  Rule  91  provides  for submission of the plans along with the application.  Rule 92 provides for the approval by the Public Works Department  of the  plans  and  r. 93 for permission  to  build.   Rule  94 provides that the applicant shall complete the construction. of the cinema within a period of two years from the date  of the  permission  or within such extended period  as  may  be allowed by the Licensing Authority. Under  the Act the District Magistrate is, in  places  where there   is  no  Commissioner  of  Police,  constituted   the Licensing  Authority.   By S. 5 the power of  the  Licensing Authority is subject to the control of the State Government. Authority  to license a cinematograph theatre  is  therefore ;vested in the Licensing Authority subject to the overriding control  of  the  State  Government.   It  is  difficult  to appreciate  what purpose may be served by giving a right  to appeal  to the State to a person aggrieved by the  order  of the Licensing Authority, if the original order is made under the  direction  and  subject to the  control  of  the  State Government.  A right of appeal under s. 8A against the order of  the  Licensing Authority issued under the order  of  the State Government is a futile formality and serves no  useful purpose.   Power  to  issue, revoke  or  suspend  a  licence conferred  upon  the District Magistrate is  exercisable  on satisfaction of that officer of certain objective conditions and  is ’Plainly quasi-judicial.  But exercise of  power  by the  Licensing  Authority to grant a licence is  still  made subject  to  the  control of the State  Government.   It  is unnecessary  for  the purpose of this case  to  express  any opinion  on the propriety or validity of  provisions  making exercise of. quasi-judicial power subject to the control, at the stage when it is exercised, of the executive. From  the affidavit filed on behalf of the State  Government it  appears that the only grounds of objection to the  grant of the no 115 objection certificate’ was that contrary to the terms of  r. 89  the respondents had constructed the "annexe" before  the State  Government  considered their application  for  a  "no objection certificate".  It appears however from the  report of  the  Licensing  Authority that  plans  of  the  building intended  to be constructed complied with the  rules  framed under   the  Act  and  the  building  constructed  did   not contravene the provisions of the Act and the Rules.  Rule 89 authorises the Licensing Authority to allow conversion of an existing  building into a cinematograph theatre.   Therefore the  completion  of  the  building  before  the   Government considered the request for a "no objection certificate"  did not  constitute  a bar to the exercise  of  jurisdiction  to grant the certificate and the District Magistrate was  right in  his  view  that the certificate applied  for  should  be granted. A  proposal  for  setting up a cinematograph  theatre  in  a

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Municipal  area  has  to be cleared  by  three  authorities. First  is  the Municipal Authority which must  sanction  the proposed construction.  For that purpose building plans have to be submitted and construction has to be completed  within one  year from the date of sanction.  Again the  application for  putting  up a building to be used  as  a  cinematograph theatre  must be accompanied by plans to be approved by  the Public Works Department, and the building may be constructed only  after  permission  is  granted  by  the  Public  Works Department.   The  building so permitted must  be  completed within  two  years  from  the date  of  permission  or  such extended   period  as  may  be  allowed  by  the   Licensing Authority.   The third is the Licensing Authority who  under s.  4  read with ss. 3 and 5 (1 ) has the power to  issue  a licence  under  the Act.  Somewhat inconsistently r.  5  (2) states  that  the  Government may grant  the  "No  Objection Certificate" which for some unexplained reason is used as  a synonym for "Licence" in the Act. In  the  first instance the Rajkot  Municipality  sanctioned construction  of the "annexe" by the respondents  by  letter dated  May  28, 1963 and the Executive  Engineer  by  letter dated September 13, 1963 informed tile Licensing  Authority- copy  of which information was sent to the  respondents-that the  former  had "-no objection to issue  sanction  for  the construction  of "annexe" to the existing  Krishna  Cinema". It was also recorded in the letter that the respondents  had agreed  to  carry out modifications in the plan  as  may  be suggested  by  the Executive Engineer.  At the foot  of  the letter  was a note that "the suggestions in accordance  with the  Bombay Cinema Rules, 1954" were being forwarded to  the respondents separately. The respondents then applied by letter dated January 2, 1964 to  the Licensing Authority. that the "annexe"  had  already been   constructed  and  the  sanction  to  use  it   as   a cinematograph theatre 116 may be granted.  The "annexe" complied with all requirements of the rules, but by letter dated July’9, 1964 the Licensing Authority  under  the instructions of the  State  Government informed the respondents that "application for  constructing a  permanent annexe near the present Krishna Cinema and  for obtaining  a ’no objection certificate’ is not  admissible". The building had been constructed several months before  the date on which that letter was written.  The contents of  the letter  create  an  impression  that  in  the  view  of  the authorities the building had still to be constructed.  It is clear  that  the  authority did not apply its  mind  to  the application.   It did not consider whether a building  which was  already in existence should be allowed to be  converted into a cinematograph theatre. In  dismissing the appeal preferred to the State  Government it was recorded that the Government did "not see any reasons to  change  the  decision  already  taken  by  the  District Magistrate"  and  that  decision  was  communicated  to  the respondents by letter dated July 9, 1964.  The order of  the State  Government which is a reaffirmation of  its  original decision communicated through the Licensing Authority  gives no  indication that the objections raised in the  memorandum of  appeal  were  considered.  It sets  out  no  reasons  in support of the order.  The authority which made the order on behalf  of  the  State  Government  appears  to  have   been ,oblivious  of the circumstances in which the  building  was constructed.  The  Government  did not  consider  whether  a building  already in existence which complied with  all  the requirements of the Rules should be allowed to be  converted

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into a cinematograph theatre. It  was urged on behalf of the State Government  that  under r.5  (2)  in Chapter 11 the State  Government  has  absolute discretion to  grant  permission  for  the issue  of  a  "no objection certificate" to the applicant.  Under the Act  the District  Magistrate  and not the State  Government  is  the Licensing Authority.  Granting that the State Government may validly  control  the  exercise of power  by  the  Licensing Authority, on that question we express no opinion the  State Government  cannot relying upon the Rules assume  to  itself the  jurisdiction  of the Licensing Authority to  issue  the licence.  Power to control the Licensing Authority under  s. 5  is  not the power to supplant  the  Licensing  Authority. Again the, power to grant a licence under the Act is  quasi- judicial,  and  by  the  use  of  the  expression  "absolute discretion"  it  is  not intended to  invest  the  Licensing Authority  with  arbitrary  power  so  as  to  destroy   the limitations  to which it is subject by its inherent  nature. The Act does not purport to confer arbitrary authority  upon the Licensing Authority or the State Government, and by  the use in the rule-, of the expression absolute discretion  the legislative   intent   disclosed  by  the  Act   cannot   be superseded. 117 It  is  clear  on a perusal of the  record  that  the  State Government  did  not correctly apprise itself of  the  facts when  it gave its directions to the Licensing  Authority  to dismiss the application, and the State Government also acted in  violation  of  the rules which inhere  the  exercise  of judicial  power when it dismissed the appeal without  giving reasons.  The orders dated July 9, 1964 and August 1964 were rightly set aside by the High Court. The appeal therefore fails and is dismissed with costs. G.C.                     Appeal dismissed. 118