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Issues Involved:
1. Whether Rule 10-A of the A.P. Cinemas (Regulation) Rules, 1979 is ultra-vires the provisions of the A.P. Cinemas (Regulation) Act, 1955? 2. Whether the Memorandum bearing No. 1730/Genl.A1/94-3 dated 23-5-1995 issued by the Government of Andhra Pradesh is without power or jurisdiction and is illegal and ultra-vires? 3. Whether the Memorandum issued by the Government of Andhra Pradesh is arbitrary and unreasonable? 4. Whether the Licensing Authority had abdicated its statutory functions, thereby rendering the order passed by the Licensing Authority illegal and bad? 5. To what relief are the petitioners entitled? Detailed Analysis: Point No. (i): The petitioners contended that Rule 10-A of the A.P. Cinemas (Regulation) Rules, 1979 is ultra-vires the Act as it imposes a minimum seating capacity, which is not stipulated by the Act. The Act is primarily concerned with the regulation of cinema halls for public welfare and safety, and it only specifies the maximum seating capacity based on floor area. The Government Pleader argued that Rule 10-A is within the rule-making authority's power under Section 11 of the Act, which empowers the Government to make rules for carrying out the Act's purposes. The Court held that Rule 10-A is directly related to the Act's objective of regulating cinema halls and is not ultra-vires. The rule-making authority has the power to fix both maximum and minimum seating capacities to ensure public safety and compliance with the Entertainment Tax Act. The Court also referred to the Division Bench judgment in State of A.P. v. A.P. Cinema Exhibitors, which upheld the authority's power to reduce seating capacity, further supporting the validity of Rule 10-A. However, the cut-off date in the proviso to Rule 10-A was deemed manifestly arbitrary. Point No. (ii) and (iii): The petitioners challenged the impugned memo as being ultra-vires and without jurisdiction, arguing that it contradicts Rule 10-A and imposes unreasonable restrictions. The memo restricts the reduction of seating capacity to 20% of the capacity as of 21-5-1988 and only allows one-time reduction, which the petitioners argued is irrational given the changing circumstances in the film industry. The Court found that the impugned memo is beyond the scope of Rule 10-A and scuttles the rule. The Government's power under Section 5 of the Act to issue guidelines does not extend to issuing directions that contradict the rules. The memo was found to be without power and jurisdiction, and therefore, ultra-vires. The Court also noted that the Government's control under Section 5(2) should be interpreted as filling gaps in the rules, not overriding them. Point No. (iv): The Licensing Authority, being the Joint Collector, has the statutory power to entertain applications for reduction of seating capacity. By rejecting applications based on the impugned memo, the Licensing Authority abdicated its statutory functions. The Court cited Supreme Court judgments in Commissioner of Police v. Gordhandas and Purtabpur Co. v. Cane Commissioner, Bihar, which established that statutory authorities must exercise their discretion independently and not under higher authority's dictates. The Licensing Authority's rejection of applications was declared illegal and the orders were set aside. Point No. (v): In light of the findings on points (i) to (iv), the Court set aside the impugned memo and the consequential orders passed by the Licensing Authority. The petitioners were permitted to apply for reduction of seating capacity, and such applications should be considered in accordance with Rule 10-A without any cut-off date. The Court also directed that any interim orders allowing reduction of seating capacity should be formalized by the Licensing Authority. The petitioners were not entitled to enhance admission rates beyond what was already sanctioned. Relief Granted: 1. The impugned Memo No. 1730/Genl.A1/94-3 dated 23-5-1995 was declared ultra vires and set aside. 2. Consequential orders passed by the Licensing Authority were set aside. 3. Petitioners were permitted to apply for reduction of seating capacity, and such applications should be considered in accordance with Rule 10-A without any cut-off date. 4. Any interim orders allowing reduction of seating capacity should be formalized by the Licensing Authority. 5. Petitioners were not entitled to enhance admission rates beyond what was already sanctioned. 6. No order as to costs.
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