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-
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
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
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.
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
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
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