*THE HONOURABLE Mr. JUSTICE NOOTY RAMAMOHANA RAO +Writ Petition No.11391 of 2006 % Dated: 03-04-2008. # m/S Prasad Media Corporation Limited. … Petitioner $The Commissioner of Police, Hyderabad City Police, Basheerbagh, Hyderabad and 2 others. … Respondents ! Counsel for petitioner: Mr.S.Ravi ^ Counsel for respondent Nos.1and 2: G.P.Home Counsel for respondent No.3 : G.P. for Tourism < GIST: >HEAD NOTE: ? Cases referred: IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE THIRD DAY OF APRIL TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE NOOTY RAMAMOHANA RAO WRIT PETITION NO : 11391 of 2006 Between: M/s. Prasad Medica Corporation Limited, D.o. 6-1-38/1, NTR Garden Marg, Hyderabad. Sri A.B.S.R. Vasanth Prasad, S/o. Sri Ram Mohan Rao aged 58 yrs. ..... PETITIONER AND 1. The Commissioner of Police, Hyderabad City Police, Basheerbagh, Hyderabad. 2 . The Government of Andhra Pradesh,Rep. by its Special Chief Secretary to the Government, Home Department, Secretariat, Hyderabad. 3. Yough Advancement Tourism Culture Department, Government of Andhra Pradesh,Rep. by its Secretary, Secretariat, Hyderabad. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to pass a writ, direction or order in the nature of writ of Certiorari quashing the memo no. 36758/Gen.A1/2001-7 dt. 26-4-2006 as being illegal, arbitrary and contrary to the G.O.269 Home (Genl.A) Dept. dt. 16-12-2005 and pass such other order(s) as this Hon'ble Court deems fit and proper. Counsel for the Petitioner:MR.S.RAVI Counsel for the Respondent No.: GP FOR HOME The Court made the following : THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO W.P.No.11391 of 2006 Oral order: Calling in question the orders passed by the State Government through their Memo dated 26.4.2006, the present writ petition has been instituted by the writ petitioner company. The writ petitioner company was selected for setting up IMAX theatre with multiplex and entertainment complex on land of little over two acres belonging to the State, which has agreed to lease out for a period of 33 years subject to the condition of payment of 5% of the market value of the land as lease amount. The petitioner company was required to establish an IMAX theatre and a multiplex with at least four screens and the important factor for the State Government seeking to establish this entertainment project on it’s site is that it will be sharing the revenue with the petitioner company at the rate of 15% of gross receipts or Rs.2.5 lakhs per month whichever is higher. It had passed orders through its G.O.Ms. No. 553, Revenue Department, dated 29.4.2003 granting exemption from entertainment tax for a period of five years commencing from 23.7.2003 to 22.7.2008. It had also granted exemption from operation of the classification of the seating arrangement and the pricing of admission. Accordingly, the petitioner has established the Entertainment Complex and obtained the licence in Form B in terms of Rule 11-B of A.P. Cinemas (Regulation) Rules, 1970 from the Commissioner of Police, Hyderabad. The maximum admissible rate was fixed at Rs.60/-. In accordance with G.O.Ms. No. 538, Home Department, dated 11.7.1994, the fixation of admission rate for the higher classes was left to the discretion of the managements while in respect of the lowest class in the theatre the rates prescribed by the government had to be adopted and followed. In other words, the scheme allowed the management of the theatres to have necessary flexibility to adopt the admission rates for higher classes while at the same time the State had retained control over admission to the lowest class. However, in view of the exemption granted in favour of the petitioner company from the operation of this scheme of varying rates of admission, the petitioner company was applying only a uniform rate of admission. In terms of para (4) of G.O. Ms. No.538, any licencee who intends to enhance the rates of admission for higher classes is required to make an application to the Licensing authorities concerned along with the licence granted in Form B for making necessary endorsement thereon, which the licencing authority is required to make within a period of two weeks from the date of receipt of such an application. To ensure that the managements do not keep varying the rates of admission too frequently, the State Government had decided through G.O. Ms.No. 308, Home Department, dated 11.11.1997 that the exhibitor be permitted to come up before the licensing authority with a request for enhancing the rates of admission only after expiry of a period of six months after the preceding enhancement was granted. Since the rate of admission has been uniform insofar as the petitioner is concerned, the petitioner submitted an application seeking enhancement of the rate of admission from Rs.60/- to Rs.80/- from 12.10.2004. The 1st respondent considered this request and rejected it by order dated 8.11.2004. On 10.11.2004, the petitioner again pleaded that the enhanced rate of admission is warranted though there is only one uniform and single rate of admission in the petitioner’s theatre. That was once again considered and rejected on 23.11.2004. An appeal has been preferred against the decision declining to enhance rate of admission on 3.3.2005. That appeal was considered by the State Government and through their orders in G.O.Rt.No.1910, Home Department, dated 14.1.2006 permitted the petitioner to enhance the rate of admission from Rs.60/- to Rs.80/-, subject to the conditions stipulated therein. However, it will be relevant to notice, that the State Government issued orders through their G.O. Ms.No.269, dated 16.12.2005 entertaining the representation submitted by the Andhra Pradesh Film Chambers of Commerce seeking enhancement of the rates of admission of higher classes. It will be worthy to notice the contents of the orders of the State Government which read as under : Government of Andhra Pradesh Abstract CINEMAS-Variable Rates of Admission in Upper classes for Two Weeks in Cinema Theatres in respect of release films in the State – Enhancement – Orders issued. --------------------------------------------------------------------------------- HOME (GENERAL.A) DEPARTMENT G.O.Ms.No. 269 Dated 16.12.2005 Read the following :- 1. G.O.Ms. No.175, General Administration (I&PR.II) Department, dated 2.4.2005 2. From the A.P.Film Chambers of Commerce, Hyderabad Representation No. 87/APFCC/2005-06, dated 28.11.2005 3. From the M.D., APSFTV & TDC Ltd., Hyd., Lr. No. APSFTVTDC/Films/APFCC/2005-1668, dt. 5.12.2005. *** ORDER : In the G.O., first read above, orders have been issued, among others, stipulating ceiling on rates of admission in respect of higher classes of the Theatres situated under the jurisdiction of Municipal Corporations, Selection Grade and Special Grade Municipalities. 2. In the representation second read above, the A.P. Film Chamber of Commerce, Hyderabad has submitted that big budget films with reputed technicians and artistes generate hype and expectations in public. These films attract a huge audience at the theatres during the first few days of release and this in turn results in tickets being sold by the black marketeers at exorbitant rates. Nothing of this revenue generated on the first few days of release is shared (n)either by the Government as entertainment tax (n)or by the Producer, Distributor or the Theatre owner. The industry is finding it difficult to control this unethical business. The huge revenue from this illegal black marketing of tickets is only going into the hands of anti social elements and making them more powerful. 3. The Chamber stated further that neighbouring States like Tamil Nadu, Karnataka, Kerala, Maharashtra etc., issued orders permitting the exhibitors to have variable admission rates for the first two weeks only, on prior intimation to the Government authorities and such practice has proved to be successful, resulting in increase in revenue both to the Government and the industry. 4. The Chamber has, therefore, requested to consider on experimental basis variable admission rates for the two upper classes for a period of only two weeks for release films in respect of high budget films. 5. The Government after careful consideration of the proposal made by the President, Andhra Pradesh Film Chamber of Commerce, Hyderabad and in partial modification of the orders issued in G.O., first read above, hereby allow the licencees of Cinema theatres to charge enhanced rates of admission upto 75% (Seventy five per cent) of the existing admission rates for the 2 (two) upper classes for the initial period of two weeks from the date of release of new film. 6. The Licensees of the theatres, who want to enhance the rates of admission in terms of the above orders shall submit applications to the Licensing Authorities by enclosing B-Form licence clearly indicating the dates from which they want to enhance the rates and only after getting necessary entries in the B-Form licence carried out by the Licensing Authorities, to collect the enhanced rates of admission from the audience. 7. These orders shall come into force with immediate effect. The Licensing Authorities in the State are directed to take action accordingly. (BY ORDER AND IN THE NAME OF THE GOVERNOR OF ANDHRA PRADESH) PAUL BHUYAN, SPECIAL CHIEF SECRETARY TO GOVERNMENT Based on the above scheme of grant, the petitioner has applied for permission to enhance the rates of admission for a period of two weeks and such a permission was accorded by an endorsement made on 23.12.2005. However, when similar requests have been subsequently made by the petitioner, the Licensing authority entertained certain doubts and solicited clarifications from the State Government. In response thereto, the State Government passed orders through the impugned Memo dated 26.4.2006, the contents of which read as under : Government of Andhra Pradesh Home (General.A) Department Memo No.36758/Genl.A/2001-7 Dated : 26.4.2006 Sub : Cinemas – Variable rates of admission in Upper Classes for two weeks in cinema theatres in respect of release of films the State – Clarification – Sought for – Regarding. Ref : From the Commr. Of Police, Lr. No. L&O/A3/1739/2005, Dated : 6.3.2006 & 28.3.2006 *** The attention of the Commissioner of Police, Hyderabad City is invited to the references cited. The following clarifications are issued in the matter. a) The new policy of variable rates to new films for initial two weeks ordered in the G.O. Ms. No. 269 Home (Genl.A) Department, dated 16.12.2005 applicable to all new release films irrespective of language. b) The orders are not applicable to Multiplex theatres since, they are exempted from normal regulations pertaining to classes of admission and rates of admission into theatres and in some cases exemption from Entertainmennt Tax also available. c) Limit of high budget movies or otherwise was not contemplated in the said G.O. d) Distinction of Technicians or/Artistes or Language of movies is not a factor to apply the variable/enhanced rates. PAUL BHUYAN, SPECIAL CHIEF SECRETARY TO GOVERNMENT To xxxx Heard Sri S.Ravi, learned counsel for the petitioner and the learned Government Pleader for Home. Principally, it is contended by Sri S.Ravi, learned counsel for the petitioner that for totally extraneous reasons which are not connected in any manner with the issue at hand, the request of the petitioner for granting enhancement of rates of admission for a period of two weeks in accordance with the orders of the State Government contained in G.O. Ms.No. 269, Home Department, dated 16.12.2005 has been turned down by the respondents and hence the orders passed by them deserve to be set aside. Further, the writ petitioner is a class in itself in the sense that it had a uniform class of viewership and consequently it had adopted the uniform structure of admission rate. Therefore, the reasons that weighed with the State Government for acceding to the request for enhancing the rates of admission to higher classes of admission to all other theatres, also being common to the petitioner theatre, the State could not have discriminated the Multiplex theatres. Nextly, the enhanced rates of admission are found by the State Government as warranted for circumstances which are otherwise considered as rational and reasonable. It is one of the measures devised to counter the menace of black marketing of tickets of admission. Therefore, the Multiplex theatres could not have been singled out for the hostility in declining the enhancement of rate of admission. Nextly, it is contended that similarly placed IMAX theatres in other cities have been allowed enhanced rates of admission while the petitioner has been denied the benefits of the same. Per contra, the learned Government Pleader for Home would contend that the petitioner company stands entirely on its own and does not offer any comparison with the other theatres where motion pictures are exhibited. According to the learned Government Pleader, several concessions have been extended in favour of the petitioner company including exemption from entertainment tax for a period of five years. Further it was also resolved by the State Government to exempt it from the operation of certain other liabilities or obligations such as maintaining different classes of viewership. Learned Government Pleader would further contend that there is a single and uniform class of admission available in the petitioner theatre in contrast to the other theatres where there are more than two classes of viewership and consequently different rates of admission are prevailing and hence the enhancement of rates of admission is confined to the two higher classes, thus a sizeable section of the viewers of motion pictures are saved from the additional burden of the enhanced rate of admission thereat and the burden is only thrown against the higher classes. In the absence of any such variety of classes of viewership in the petitioner theatre the claim for enhancement of viewership rate is justifiably denied. This apart the State’s infrastructure has been made available in favour of the petitioner company for establishing, running and managing the entertainment complex and therefore it cannot compare itself with the other theatres. Therefore, the claim of the petitioner for enhancing the rate of admission is denied. Further, there are no supporting pleadings with regard to the enhancement facility extended to the other IMAX theatres. The State Government has, as a policy preferred to fix the rates of admission, more with regard to the lowest classes of admission in particular. The reason is very obvious. The State never wanted the entertainment available to the large masses to be too expensive for them and consequently it has been regulating the rates of admission. When it came to higher classes rates of admission, certain amount of flexibility was sought to be shown by the State. When it was represented that the exhibitors have been facing the problem of black marketing of tickets of the newly released films and in that process the revenue of the State is also getting dented, more with a view to curb this menace, permission has been accorded for enhancing the rates of admission of the two higher classes, so that the viewers will not be tempted to secure tickets for admission from the unorganized sector and instead will seek to secure them across the box office. Having conceded the demand of the exhibitors in this regard, as it is rational and reasonable, the State has authorized enhancement of rates of admission with regard to the first two classes. The freedom with regard to the pricing of the rates of admission is therefore sought to be confined by allowing the same only for a period of two weeks. Therefore, the claim of the petitioner is that it should have also been granted the necessary permission to suitably enhance the rates of admission into its theatre. The State Government has declined this request of the petitioner for two fold reasons. One is that the petitioner has already been accorded several fiscal benefits and any further benefit therefore is uncalled for and (2) there is only a single class of admission in the petitioner’s theatre whereas at all other places, the rates of admission was multi-class. It is this decision of the State Government declining the permission, which is sought to be attacked in this writ petition. The case of the petitioner can be summarized as under : It is not at all mandatory for the State to regulate the admission into motion picture theatres and therefore freedom should be allowed to the exhibitor of motion pictures to charge the viewers suitably. The 2nd is that multiplexes are not at all a separate class from the rest of the motion picture theatres and at both places, perhaps, at a time the same movie could also be exhibited. For instance in major cities and towns like Hyderabad, Vijayawada, Visakhapatnam, Guntur or Warangal, it is quite probable and possible that the same movie may have been exhibited simultaneously in more than one theatre. It could be that one of them a multiplex while the others are not. Therefore, Multiplexes cannot be treated distinctly in this regard, particularly from the point of view of regulating the rate of admission therein. Alternatively, if multiplexes have got to be dealt with as a separate class then there should have been a conscious effort and attempt on behalf of the State and its regulating agencies like the licensing authorities to grant the necessary liberty and freedom in the matter of fixation of the rates of admission therein to tackle the menace of black marketeering of the tickets. Further, if there is a single class of viewership available in a multiplex theatre like that of the writ petitioner, then the same has got to be counted as the upper class. Instead, treating it as a lower class is unfair. More importantly, the menace which is sought to be addressed and curbed viz., the black marketeering of tickets being common to all the motion picture theatres, then, the remedy cannot be different and distinct insofar as the writ petitioner theatre is concerned. Further, the concessions accorded to the writ petitioner in other respect does not render it a unique one at that. Therefore, what the petitioner solicited was not any further concession at all by way of enhancing the rates of admission in it, but parity of treatment with other exhibitors. At this stage, it is worthy to notice some of the important provisions of law on the subject. A.P.Cinemas (Regulation) Act, 1955 Section 3 : Cinematograph exhibitions to be licensed:- Save as otherwise provided in this Act, no person shall give an exhibition by means of a cinematograph elsewhere than in a place licensed under this Act, or otherwise than in compliance with any conditions and restrictions imposed by such licence. 9 A. Penalty for black-marketing in the sale of tickets for admission to cinematograph exhibition:- (1) If the owner or person incharge of a cinematograph exhibition either directly or though any other person,- (i) sells or allows to be sold, the tickets for admission to cinematograph exhibition at any place other than the place licensed under this Act; or (ii) Sells or allows to be sold, such tickets at rates higher than the maximum rates fixed therefore; or (iii) re-sells or allows to be re-sold such tickets at rates higher than the maximum rates fixed therefore either at the licensed premises or elsewhere,- he shall be punished with simple imprisonment for a term which may extend to three months or with fine which may extend to one thousand rupees or with both. (2) Whoever,- (a) with a view to re-sell at rates higher than the maximum rates fixed therefore, purchases, or keeps in his possession, the tickets for admission to Cinematograph exhibition in excess of the number normally required for use by his family members and not more than four of his guests; or (b) sells or allows to be sold such tickets at rates higher than the maximum rates fixed therefore either at the licensed premises or elsewhere; shall be punished with simple imprisonment for a term which may extend to three months or with fine which may extend to one thousand rupees or with both (3) xxx A.P.Cinemas (Regulation) Rules, 1970, henceforth referred to as `Rules’. 11-B. Grant of Licence to Cinema Buildings :- (1) xxxx (2) xxxx (3) (a) The licensing authority-while granting or renewing a licence in Form-B shall also fix the maximum rates of payment for admission to the different classes in the licensed premises. (b) These rates shall not be increased during the currency of the licence without an order in writing by the licensing authority permitting such increase. (c) xxxxx (d) xxxxx Cinematograph Act, 1952. Section 10.- Cinematograph exhibitions to be licensed :- Save as otherwise provided in this Part, no person shall give an exhibition by means of a cinematograph elsewhere than in a place licensed under this Part or otherwise than in compliance with any conditions and restrictions imposed by such licence. A.P. Entertainment Tax Act, 1939 : 4 . Tax on Entertainments :- (1) There shall be levied and paid to the State Government a tax on the gross collection capacity on every show (hereafter referred as the Entertainments Tax) in respect of entertainments held in the theatres specified in column (2) of the Table below and located in the local areas specified in the corresponding entry in Column (1) of the said Table, calculated at the rate specified in the corresponding entry in Column (3) thereof. 4-A. Tax on entertainment shows :- (1) In addition to the tax under Section 4, there shall be levied and paid to the State Government in the case of entertainment held in the local areas specified in column (1) of the Table below, a tax calculated at the rates specified in the corresponding entry in column (2) thereof:- Local Authority Rate of tax for every show, other than the show specified in sub-section (1-A) (1) (2) (a) Municipal Corporations, the Secunderabad Cantonment Area, Selection Grade Special Grade and First Grade Municipalities. (b) Second Grade and Third Grade Municipalities (c) Gram Panchayats, townships and any other local authorities, (i) with a population of 15,000 and above (ii) with a population of less than 15,000 Twelve rupees Eight rupees Four rupees Two rupees 8. Entertainment exempted from payment of tax :- (1) The State Government may, be general or special order, grant exemption from payment of the entertainment tax to any entertainment where they are satisfied— (a) that the entertainment is meant for the education and entertainment of the children; (b) “that the entertainment is a film produced or exhibited by or under the authority of the Government of India or the State Government or under the auspices of the Director of Film Festivals, the National or State Government Corporation”. (c) that the entertainment belongs to such other class as may be prescribed: (2) Any exemption granted under sub-section (1) may be subject to such restrictions and conditions as may be specified in the order and may extent— (a) to the whole of the State or to such area or areas as may be specified in such order : or (b) to specified class of theatres in regard to the whole or any part of their entertainments during any period specified in such order.” It will at once become clear that while regulating the trade by way of grant of licenses, power has been granted to the licensing authority under Rule 11-B, to regulate the rates of admission into the theatres. The seating capacity fixation of the classes of admission and their rates of admission are both taken note of by Rule 11-B. Further, there is power available to grant exemption from entertainment tax, and if valid reasons do exist for such an exercise, then there cannot be any further distinction between the entertainment tax exempted theatre and a theatre not so exempted. When once this much of power has been conceded, it becomes clear that it is only the licensing authority which can grant the necessary permission to enhance the rates of admission. The rates of admission cannot be unilaterally determined by the motion picture exhibitors. In the instant case, the petitioner is not pitching its case seeking enhancement of rates of admission for any other factors, but, it is trying to base upon the policy decision of