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TMI Blog1999 (8) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... duction of seating capacity in the petitioner's cinema theatre. 2. As both the writ petitions came to be framed in the same set of facts and circumstances and raise common questions of law and facts, both the writ petitions are being disposed of by this common order. 3. Before considering the questions of law, the facts leading to filing of these cases may be briefly stated. Messers Nataraj theatre is a theatre with ultra-modern facilities. The theatre's gross collection came down in recent years. The reason attributed by the petitioner is the advent and proliferation of private Satellite television channels like Star T.V., ET.V. and Cable T.V. etc., In the light of the changed circumstances, the petitioner made an application to the Licensing Authority. Needless to mention that the Licensing Authority is the Joint Collector in the District and the Commissioner of Police where the cities are under a Police Commissionerate. Be that as it may, in the application made by the petitioner to the Licensing Authority he prayed for permission to reduce the seating capacity and also for enhancement of the rates. In the said application dated 8-8-1995 he explained va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsons to be admitted, the petitioner's right to choose floor area cannot be infringed as Rule 10-A makes the event of reduction of seating capacity subject to the conditions mentioned in clauses (a) and (b) of the proviso to Rule 10-A. The same is ultra-vires the Act. 5. In both the writ petitions, the impugned memo has been challenged on similar grounds. According to the petitioners, the object of Rule 10-A (assuming that Rule 10A was intra-vires) is to provide a remedy to licensee to seek reduction of seating capacity when the theatre is running in loss. The impugned memo defeats the very object of the rule if the condition in Para 3(1) of the impugned memo is given effect to. The said para permits the licensee to seek reduction of seating capacity if they have not availed the benefit from 21-5-1998. Virtually, if a theatre has availed the reduction of seating capacity the impugned memo debars the licensee to seek further reduction after 21-5-1998. This condition is discriminatory, unreasonable and violates not only the rights under Article 14 but also the rights under Article 19(1)(g) of the Constitution. The same creates an unreasonable restrictions on the right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Genl-A) Department dated 21-5-1988. It contains guide-lines to the Licensing Authorities to be followed while considering the applications for reduction of seating capacity who have not availed the benefit as on 21-5-1998. As many representations were made by the owners of the theatres, the Government issued impugned memo. Subsequently, the guide-lines issued were extended upto 31-12-1998. Any reduction of seating capacity in excess of 20% would result in evasion of entertainment tax. On one hand the petitioners are seeking reduction of seating capacity on the ground of impact of Satellite Television, Cable Television etc., and on the other hand increasing admission rates abnormally ranging from ₹ 20/- for Second Class to ₹ 40/- for First Class. The demand for increase of rates consistently indicates that there is no fall in the number of cinema goers and request for reduction in seating capacity is with a motive to fix high rates for upper class and get more profits. The instructions issued by the Government are in accordance with sub-section (2) of Section 5 of the Act. As the petitioners have availed the benefit under various Government memoranda issued from time t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther classes. As the main controversy in these writ petitions do not concern with these two aspects, the details are not necessary in this context. 10. The learned Counsel for the petitioner in WP No. 1688 of 1988 filed additional affidavit and prayed this Court to treat it as additional affidavit in these two writ petitions. Accordingly, the additional affidavit filed in WP No. 1688 of 1995 is being treated as additional affidavit in these two writ petitions. In the additional affidavit, it is stated that in the year 1988 there were limited T.V. Channels and the Doordarshan was telecasting only one regional movie in a week. By the year 1999 the number of T.V. Channels were increased to about 40 to 60 which are transmitted through cable T.V. network. These cable T.V. Channels telecast 10 to 15 movies for a day in various languages. The following aspects have been placed by way of comparison: (i) The production of films in 1988 was nearly 250 to 300 in Telugu language; and 50 to 100 dubbing movies from various language into Telugu language. But the production of films in 1998-99 is only 50 in Telugu language and less than 10 dubbing movies. (ii) The electr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (Regulation) Act, 1955? (ii) Whether the Memorandum bearing NO. 1730/Genl.A1/94-3 dated 23-5-1995 issued by the Government of Andhra Pradesh is not without power or jurisdiction and is not illegal and ultra-vires? (iii)Whether the Memorandum issued by the Government of Andhra Pradesh is arbitrary and unreasonable? (ii) Whether the Licensing Authority had abdicated the statutory functions thereby rendering the order passed by the Licensing Authority illegal and bad? (v) To what relief? Point No.(i): The learned Counsel for the petitioner in WP No. 30691 of 1998 Sri P. Girish Kumar has contended that Rule 10-A of the Rules is ultra-vires the Act. It is his submission that the Act nowhere stipulates the minimum seating capacity. There is no mandatory stipulation regarding extent of minimum floor area. The Act itself is concerned with regulating operation of cinema halls keeping in view the public welfare and public interest. Rule 6 read with Para 19 of Appendix-1 to the Rules only stipulates maximum number of persons to be permitted which is 25 persons per 9 square metres of floor area. Therefore, the Act is not concerned with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute conferring the power to make the rule, regulation, etc., and also the object and purpose of the Act as can be gathered from the various provisions of the enactment. It would be wholly wrong for the Court to substitute its own opinion for that of the Legislature or its delegate as to what principle or policy would best serve the objects and purposes of the Act and to sit in judgment over the wisdom and effectiveness or otherwise of the policy laid down by the regulation to be ultra vires merely on the ground that, in the view of the Court, the impugned provisions will not help to serve the object and purpose of the Act. So long as the body entrusted with the task of framing the rules or regulations acts within the scope of the authority conferred on it, in the sense that the rules or regulations made by it have a rational nexus with the object and purpose of the Statute, the Court should not concern itself with the wisdom or efficaciousness of such rules or regulations. It is exclusively within the province of the Legislature and its delegate to determine, as a matter of policy, how the provisions of the Statute can best be implemented and what measures, substantive as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC) , the Hon'ble Supreme Court dealing with notification of the Government of India issued under Section 25 of the Customs Act, 1962 has laid down the following tests for examining the Subordinate Legislation: A piece of Subordinate Legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent Legislature. Subordinate Legislation may be questioned on any of the grounds on which plenary Legislation is questioned. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute. That is because Subordinate Legislation must yield to plenary Legislation. It may also be questioned on the ground that it is unreasonable, unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary. In England, the Judges would say Parliament never intended authority to make such rules. They are unreasonable and ultra vires , 16. Therefore the Constitutional validity of Rule 10-A of the Rules has to be decided with reference to the power conferred on the rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he specifications under Para 19 has to be construed as also including the power to fix minimum seating capacity. 17. The learned Counsel for the petitioners as well as the learned Government Pleader for Home have relied on the judgment of a Division Bench of this Court in State of A.P. v. A.P. Cinema Exhibitors, 1978 (2) APLJ 442, to support their respective contentions. According to the learned Counsel for the petitioner the judgment of the Division Bench is an authority for the proposition that reduction in the revenue cannot be a ground for not permitting the reduction of seating capacity. Whereas the learned Government Pleader has pressed the judgment to support his contention that the authorities have also got power to fix the seating capacity including reduction of seating capacity. 18. In State of A.P. v. A.P. Cinema Exhibitor's case (supra) interpretation of explanation to Section 4C and the Explanation to Section 5 fell for consideration. Explanation under Section 5(1) of the Entertainment Tax Act resulted in freezing the seating capacity in a theatre as on 1-4-1976 without any option to the owner of the theatre to reduce the seating capacity. Whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erately violated the very basic premise of the agreement, which, at the same time, results in depriving the State of the lawful revenue to that extent. Ordinarily, however once the reduction in seating capacity is validly sanctioned by the competent authority, the authority under the Entertainments Tax Act cannot choose to ignore the same, or say that the said reduction or the sanction thereof is not genuine or bona fide 19. Therefore, the question raised by the learned Counsel for the petitioner is no more res integra. The Division Bench in State of A.P. v. A.P. Cinema Exhibitor's case (supra) has categorically held that the Act as well as the Rules empower the competent authority to reduce the seating capacity. It may be noted that Rule 10-A was introduced in the rules by way of Amendment by G.O. Ms. No. 12 dated 17-1-1987 after the judgment of the Division Bench in State of A.P. v. A.P. Cinema Exhibitor's case (supra). Therefore, the point No. 1 is answered against the petitioners. Nonetheless the cut off date in proviso to Rule 10-A cannot be sustained as the same is manifestly arbitrary. 20. In view of the law declared by the Hon'ble Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than 300% even if the seating capacity is reduced there would not be reduction in the gross collections, which is the basis for calculating the entertainment tax. For example assuming that a cinema theatre with a seating capacity of 1000 is getting gross collections of 'Y' amount. When the average admission charges are Rs.X, even if the seating capacity is reduced to 300 or for that matter 500, the gross collection would not come down because average admission charges are at present fixed at X x 4 in which event the gross collection would be Y x X x 4 - the amount that might have been fetched from the reduced seats at minimum rates. Therefore, in sum and substance, the submission of the learned Counsel is that the impugned memo is not only without power and jurisdiction but also arbitrary and unreasonable. The learned Counsel for the writ petitioner in WP No. 30691 of 1998 Sri Girish Kumar also made submissions on the same lines. 22. Refuting these submissions, the learned Government Pleader for Home Sri C. Sadasiva Reddy submitted that the Government have power under Section 5 of the Act to issue instructions to Licensing Authority. The impugned memo falls within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve. In fact clauses (iii), (iv) and (v) are the conditions mentioned in Rule 10-A which enable the Licensing Authority to entertain an application for reduction of seating capacity. Therefore concedingly there is no objection for these three clauses of Paragraph 3 of the impugned memo. The main objection is against the offending clauses (i) and (ii) of paragraph 3. These two clauses restrict the right to seek reduction of seating capacity not only with reference to the number of seats to be reduced but also prohibit to seek reduction of seating capacity more than one time. 25. Now we may again notice the contents of Rule 10-A. Rule 10-A has a heading Alteration of Seating Capacity . Rule 10-A as such says that the seating capacity fixed in 'B' Form licence shall not be allowed to be reduced. There is a proviso under the Rule which empowers the Licensing Authority to accord sanction for reduction of the seating capacity if the Licensing Authority is satisfied that the licensee is under loss. Such sanction under the proviso to Rule 10-A is subject to the condition that when the seating capacity is reduced, it should be done in such a manner that there shall not be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to adequate precautions to be taken by the licensee for providing safety of the persons attending the cinema theatre. This is what sub-section (1) of Section 5 says. Next comes sub-section (2) which starts with the words subject to the provisions of sub-section (1) and to the control of Government', the Licensing Authority may grant licence in accordance with subsection (1). As per sub-section (3), the Government is empowered to give directions to the licensee in general or to any licensee in particular for the purpose of regulating any class of films. This power is conferred on the Government, as can be seen from sub-section (3) itself, to secure an adequate opportunity of exhibiting the scientific films, educational films, documentary films, indigenous films and films dealing with news and current events. When the Government exercise powers under sub-section (3) those shall be deemed to be additional conditions and restrictions subject to which licence has been granted. 28. In my considered view the power to control vested in the Government under sub-section (2) should be interpreted as that power to fill up the gaps or vacuum in the Rules. The power to cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reof. The limitation as contained in the proviso to Article 162 was necessary to avoid conflict in the exercise of executive power of State and the Union Government in respect of matters enumerated in List III of the Seventh Schedule. 29. In Sona Exports case (supra) a Division Bench of this Court considered the scope of the power of the Officer on Special Duty to give instructions to the Director of Mines who is the Licensing Authority for issuing licensees as per A.P. Minor Mineral Concession Rules 1966 framed under Section 15 of the Mines and Minerals (Regulation and Development) Act, 1957. Holding that Officer on Special Duty has no authority under the Rules to issue any directions to the Director in the matter grant of leases, this Court held: As a matter of fact, since the field is occupied by a Legislative enactment and the rules framed in terms therewith, the only authority prescribed under the law has the jurisdiction to take steps in terms of authorisation as is available under the statute or the rules framed thereunder. There cannot possibly be any other authority over and above the Director in terms of the provisions of the rules and in that view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the power of regulating exhibition of cinematograph. In view of this, the submission of the learned Government Pleader for Home is liable to be rejected. 32. Indeed, the scope of Section 5 of Punjab Cinemas (Regulation) Act was considered by a Constitution Bench of the Supreme Court in State of Punjab v. Hari Kishan, [1966]2SCR982 . In the said case, the Government of Punjab issued instructions in regard to the grant of licence under the relevant provisions of the said Act. These instructions required the Licensing Authorities to forward all the applications for licences to the Government. In accordance with this, the application of the respondent was forwarded to the Government which was rejected. Questioning the rejection order, the respondent filed writ petition before the High Court of Punjab. The Punjab High Court adverting to the question of jurisdiction of Government of Punjab upheld the respondent's contention that the Government had no jurisdiction to deal with the matters which are entrusted to the Licensing Authority under the Act. The matter was brought before the Supreme Court by Special Leave and the question that fell for consideration was as to how sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment itself. The result of the instructions issued by appellant No. 1 is to change the statutory provisions of Section 5(2) and obliterate the Licensing Authority from the Statute-book altogether. That, in our opinion, is not justified by the provision as to the control of Government prescribed by Section 5(2). 34. The Supreme Court also held that though the power under sub-section (2) of Section 5 is very wide and any instructions and directions that are issued by the Government may guide the Licensing Authority, such power cannot be so utilised as to nullify the very power of the Licensing Authority as well as rendering provision regarding appeal to the Government redundant. In the said case sub-section (3) of Section 5 provided appeal to the Government against the orders of the Licensing Authority. It is expedient to refer to the observations of the Supreme Court in this regard: The control of Government contemplated by Section 5(2) may justify the issue of general instructions or directions which may be legitimate for the purpose of the Act and these instructions and directions may necessarily guide the Licensing Authority in dealing with applications f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llector is the Licensing Authority. Rule 10-A confers powers on the Licensing Authority to entertain applications for reduction of seating capacity when the theatre owner is suffering a loss. No role is assigned to the Government to deal with such cases. The Licensing Authority is exercising statutory functions as a statutory authority. It is well settled that a statutory authority vested with statutory powers under a special enactment has to take independent decisions without being influenced by higher authority. In fact, Rule 10-A clearly says that it is the satisfaction of the Licensing Authority that is material and sine-qua-non for passing an order reducing the seating capacity. The Government has no say in this. If any Licensing Authority has passed orders rejecting the request of the owner of the cinema theatre for reduction of seating capacity (as it happened in these two writ petitions), the same amounts to abdication of statutory duty and vitiates the order of rejection. This legal position is well settled and two judgments of Supreme Court in Commissioner of Police v. Gordhandas, [1952]1SCR135 and Pwtabpur Co. v. Cane Commissioner, Bihar, [1969]2SCR807 , amply support th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount considerations of public policy and in some context the policy of a Minister or the Government as a whole when it is a relevant factor in weighing the policy but this will not absolve them from their duty to exercise their personal judgment in individual cases unless explicit statutory provision has been made for them to be given binding instructions by a superior. 38. We may also recall Hari Kishan's case (supra). In the said case the Hon'ble Supreme Court held that the State Government was not justified in assuming jurisdiction conferred on the Licensing Authority by Section 5 (1) and (2) of Punjab Cinemas (Regulation) Act. 39. In both the writ petitions, the petitioners approached the respective Licensing Authority. The Licensing Authority rejected the application seeking reduction of seating capacity on the ground that as per the impugned memo the application cannot be entertained. Therefore, the Licensing Authority has abdicated its statutory functions. The same has to be declared illegal and orders passed by the Licensing Authority are to be set aside. Point No.(iv) is therefore answered in affirmative in favour of the petitioners. Po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... void order. (4) The petitioner is permitted to make application to the Licensing Authority seeking reduction of seating capacity, if not already made before or during the pendency of the writ petition. Such application shall be considered in accordance with law and keeping in view the observations in this judgment. For the purpose of direction No. 3 above the application made by the petitioner, if any, shall be considered. (5) If any licensee has reduced seating capacity in anticipation of sanction by the Licensing Authority, the Licensing Authority may inspect the theatre and give further directions as may be appropriate to avoid abuse or misuse of reduced seating capacity. This direction is in accordance with the judgment of the Division Bench of this Court in WP No. 9640 of 1984 dated 30-10-1984. (6) The licensee shall not be entitled to enhance the rates of admission which has been already sanctioned by the Government vide G.O. Ms. No. 218 dated 14-7-1995 and any further enhancement by the licensee will be in accordance with further sanction by the competent authority. (7) It is further directed that the Licensing Authority has to consider an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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