IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 24.03.2010 CORAM: THE HON'BLE MRS.JUSTICE R.BANUMATHI AND THE HON'BLE MR.JUSTICE M.VENUGOPAL W.A.Nos.1827 to 1829, 1837 to 1840, 1901 to 1903, 2098 to 2100 and 2300 to 2302 of 2002 and W.A.M.P.Nos.3151 to 3153, 3250 to 3252, 3555 to 3557 of 2002 and 3921 to 3923, 1.The State of Tamil Nadu represented by its Secretary to Government Home (Cinemas) Department, Fort St.George Chennai - 9 2.The Collector of Madurai, Madurai District .... Appellants in all Appeals/ Respondents 1 & 2 Vs. Theatre Amirtham A/c., represented by its licensee, Madurai .... Respondent in W.A.No.1827 of 2002/ Petitioner Theatre Thangam, rep.by its licensee Madurai .... Respondent in W.A.No.1828 of 2002/ Petitioner T.K.V.S.L.Mahadevan, Proprietor, Ram Theatre, Madurai .... Respondent in W.A.No.1829 of 2002/ Petitioner Theatre Mathi A/c.rep.by its licensee, Madurai. .... Respondent in W.A.No.1837 of 2002/ Petitioner Sundaram Theatre, rep.by its licensee Madurai .... Respondent in W.A.No.1838 of 2002/ Petitioner Theatre Annamalai, rep.by its licensee Madurai .... Respondent in W.A.No.1839 of 2002/ Petitioner New Delux Theatre, rep.by its licensee, Madurai .... Respondent in W.A.No.1840 of 2002/ Petitioner https://hcservices.ecourts.gov.in/hcservices/ 1.Hajeera Theatre, rep.by its licensee Madurai 2.The Corporation of Madurai, rep.by its Commissioner, Madurai .... Respondents in W.A.No.1901 of 2002/ Petitioner & 3rd Respondent Kathirvel Theatre, rep.by its licensee, Madurai .... Respondent in W.A.No.1902 of 2002/ Petitioner 1.Sha Theatre, rep.by its licensee, Madurai 2.The Corporation of Madurai,rep.by its Commissioner,Madurai .... Respondents in W.A.No.1903 of 2002/ Petitioner & 3rd Respondent Cinthamani Talkies, rep.by its licensee, Madurai .... Respondent in W.A.No.2098 of 2002/ Petitioner Theatre Thanga Regal,rep.by its licensee, Madurai. .... Respondent in W.A.No.2099 of 2002/ Petitioner Sri Meenakshiparadise,rep.by its licensee 20,Oridimuthu Maistry Street South Veli Street, Madurai – 1.....Respondent in W.A.No.2100 of 2002/ Petitioner Madura Talkies Private Limited, Owner of New Cinema, Madurai rep.by its licensee .... Respondent in W.A.No.2300 of 2002/ Petitioner T.M.V.N.Sahasranathan, Proprietor City Cinema Theatre, South Masi Street, Madurai .... Respondent in W.A.No.2301 of 2002/ Petitioner Vellaikkannu Theatre Arasarvadi, Madurai – 10 rep.by its licensee, .... Respondent in W.A.No.2302 of 2002/ Petitioner Writ Appeals in W.A.Nos.1827 to 1829, 1837 to 1840, 1901 to 1903, 2098 to 2100 and 2300 to 2301 of 2002 are filed under Clause 15 of the Letters Patent against the order of this Court dated 20.11.2000 made in W.P.Nos.6563, 7443, and 12762 of 1997, 18877, 18879, 18878 and 18942 of 1996, 20352 of 1999, 16723 of 1997, 20742 of 1999, 5109, 506, 3565, 15941, 15655 and 13572 of 1997 respectively. W.P.No.6563/97, 7443/97, 18877/96, 18879/96, 18878/96,20352/99, 16723/97, 20472/99, 5109/97, 506/97, 3565/97, 15941,13572/97. https://hcservices.ecourts.gov.in/hcservices/ This W.P. filed under Article 226 of the Constitution of India praying to issue a writ of Declaration declaring item No.(V) of Sub Rule (1) of Rule 92 of the Tamil Nadu Cinema Regulation Rules 1957 introduced by way of an amendment by G.O.Ms.No.1311 Home (Cinema) Department dated 9.9.96 requiring the license to submit evidence from the local authority that there is no property tax due in respect of the site and building of the Cinema theatre along with the application for renewal of the 'C' Form license is unconstiutional, ultravires the cinema Regulation Act, void and unenforceable. W.P.No.12762/97,15655/97: To issue a writ of Certiorarified mandamus calling for the records pertaining to G.O.Ms.No.1311 Home (Cinema) Department dated 9.9.1996 issued by the 1st Respondent, quash the same and direct the 2nd Respondent to renew the license of Ram Theatre Madurai (W.P.12762/97) City Cinema, Madurai (W.P.15655/97) without insisting on the production of no due Certificate from the authorities. For Appellant : Mr.P.S.Raman,Advocate General in all Appeals assisted by Mr.M.Dhandapani, Govt.Pleader (Writs) For Respondent No.2 : Mr.P.Srinivas in W.A.No.1901 and 1903 of 2002 For Respondent No.1 : Mr.R.Subramanian in W.A.Nos.1829 and 1901 to 1903 of 2002 For Respondent in : Mr.D.Kumar W.A.Nos.2300 & 2301 of 2002 W.A.No.2302/02 : N.A For Respondent in : Mr.K.Ravi Ananta Padmanabhan in W.A.No.1827 of 2002 W.A.No.1828 of 2002 : N.A For Respondent in : Mr.B.S.Gnanadesikan SC for W.A.No.2099 of 2002 Mr.K.V.Sanjeev Kumar For Respondent in : No Appearance in W.A.No.2098 of 2002 https://hcservices.ecourts.gov.in/hcservices/ JUDGMENT R.BANUMATHI,J. Whether the amendment to Rule 92(1)(v) of Tamil Nadu Cinemas Regulation Rules, 1957 regarding submission of property tax clearance certificate from local bodies as pre-condition for renewal of C-form licence is ultra vires the Tamilnadu Cinemas (Regulation) Act is the point falling for consideration in these Appeals. Feeling aggrieved by allowing of writ Petitions by the learned single Judge declaring G.O.Ms.No.1311 Home (Cinemas) Department dated 9.9.1996 as ultra vires and unenforceable, the Government has filed these Writ Appeals. 2. In G.O.Ms.No.1311 Home (Cinemas) Department dated 9.9.1996, the Government issued amendment to the Tamilnadu Cinemas Regulation Rules, 1957 (in short, "Rules"), to the effect that every application for renewal of licence shall be accompanied by evidence from the local authority that there is no property tax due in respect of site and building of the cinema theatre. 3. In a batch of writ petitions, the amendment came to be challenged on the ground that Tamilnadu Cinemas Regulation Act (hereinafter referred to the "Act") was enacted for the purpose of regulating exhibition by means of cinematographs in the State of Tamilnadu and the impugned amendment insisting upon production of evidence to the effect that there is no property tax due in respect of the cinema theatre is ultra vires the Act and liable to be struck down. According to licensees/Respondents, the requirement of evidence to show that there is no property tax due in respect of the site and building of the cinema theatre is wholly unconnected and irrelevant to the grant of C-form licence and therefore the conditions brought about by the impugned amendment has no nexus to the object of the enactment and renewal of C-form licence and therefore the condition deserves to be quashed as arbitrary and unreasonable. Some of licensees have also averred that in view of dispute between licensees and local bodies in relation to property tax and in such circumstances, it would not be possible for the cinema theatres to produce evidence to show that there is no property tax due in respect of the site and building of the theatre in question and therefore the impugned rule requiring the said evidence is illegal and will cause prejudice to the licensees and the respondents prayed for declaration that amended rule (v) of Sub Rule (1) of Rule 92 of the Tamil Nadu Cinemas Regulation Rules 1957 is unconstitutional and ultra vires the Tamil Nadu Cinemas Regulation Act. 4. The Government resisted the writ petitions contending that in Tamilnadu Cinemas Regulation Rules, there are already certain conditions such as production of evidence of having insured the cinema theatre, building, machinery, etc., against fire hazards and likewise the Government have issued orders for submission of https://hcservices.ecourts.gov.in/hcservices/ clearance certificate from the local authority to the effect that all property tax due in respect of cinema theatres have been paid and the amendment is not detrimental to the provisions of the Act. 5. The learned single Judge took the view that by making the impugned Rule, the writ petitioners are compelled to produce evidence to the effect that there is no property tax due in respect of the site and building of the cinema theatre and the said rule appears to have been made only to enable the local authority to collect property tax with respect to the site and building. The learned single Judge also took the view that the insistence for production of certificate from the local bodies has nothing to do with the regulation of exhibition by means of Cinematographs and it will not in any way facilitate the right of the cinema going public and on such findings, declared that the impugned Rule Rule 92(1)(v) of Tamil Nadu Cinemas Regulation Rules, 1957 is ultra vires and unenforceable. 6. Challenging the order of the learned single Judge, learned Advocate General Mr.P.S.Raman appearing for Appellant submitted that even when licence is granted for running cinema theatre, licensing authority would verify status, antecedents, and suitability of the place and while so, it cannot be said that insistence of "no due certificate" at the time of renewal of C-form licence is said to be beyond the purview of the Act. The learned Advocate General would further submit that the amendment of Rule 92(1)(v) to the effect that the property tax clearance was pre-condition of renewal of C-form licence and the same was within the powers of the Government under Section 10 of the Act. Learned Advocate General would further submit that the learned single Judge proceeded under wrong impression that Rule 92(1)(v) was amended with latent object of collecting property tax. Placing reliance upon (2006) 4 SCC 517 (STATE OF TAMIL NADU AND ANOTEHR VS. P.KRISHNAMURTHY AND OTHERS), it was contended that where the alleged inconsistency or non-conformity of the rule is not with reference to any specific provision of the enabling Act but with the object and scheme of the parent Act, the Court should proceed with caution before declaring the rule as invalid. 7. Learned counsel for Respondents Mr.Subramanian submitted that if the impugned amendment is to be sustained, the local authorities would have undue advantage over the licensing authority in granting/renewal of C-form licence. It was further argued that the amendment has no relevancy to the object sought to be achieved under the Act and the amendment cannot go beyond the object of the enactment. Placing reliance upon AIR 1992 SC 1519 (DEEPAK THEATRE VS. STATE OF PUNJAB), it was mainly contended that the power to make rules should be consistent with the object of enactment. It was also urged that the production of "no due certificate" from the local authorities has nothing to do with the suitability of the building and the object of the Act and learned single Judge rightly declared the amendment as ultra vires the Act. Learned counsel placing https://hcservices.ecourts.gov.in/hcservices/ reliance on (1972) 2 SCC 601 (Hukam Chand v. Union of India) contended that the extent and amplitude of the rule-making power would depend upon and be governed by the language of the section and if a particular rule were not to fall within the ambit and purview of the section, the Government in such an event would have no power to make that rule. 8. Learned counsel for respondent Mr.Ravi Anantha Padmanabhan contended that the delegated legislation cannot traverse beyond the object and preamble of the main Act and the impugned amendment to Rule should have nexus with the object of the enactment. The learned counsel would further contend that "property tax clearance" is sought by the Government only for renewal and not for fresh commencement of the theatre and the word "renewal" means "continuation of commencement" and hence what was not demanded at commencement cannot be made compulsory for its continuation. It was further argued that production of no property tax due certificate cannot be said to be a business incident and learned single Judge has rightly quashed the G.O., and the amendment and the Order of single Judge does not warrant any interference. 9. The Tamilnadu Cinemas Regulation Act is an Act to provide for the regulation of exhibitions by means of cinematographs in the State. The very object of the Act includes power to restrain which embraces limitations and restrictions of all incidental matters connected with the right to trade or business. Section 3 stipulates places in which cinematograph is exhibited to be licensed. Under Section 3 of 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." Section 3-A provides for certain disqualifications for grant or renewal of licence. 10. Section 5 of the Act confers power on the licensing authority to grant or refuse licence. Section 5 deals with restrictions of powers of licensing authority. Section 5(1)(a) to (d) of the Act reads as under: (1) The licensing authority shall, in deciding whether to grant or refuse a licence, have regard to the following matters, namely - (a) the interest of the Cinema going public or other sections of the public generally. (b) the status, antecedents and previous experience of the applicant; (c) the suitability of the place where the cinematograph exhibitions are proposed to be given; https://hcservices.ecourts.gov.in/hcservices/ (d) the adequacy of existing places for the exhibition of cinematograph films in the locality." 11. By reading of Section 5, it is clear that when an applicant applies for licence, Section 5 of the Act enables licensing authority to have regard to the 'status' and 'antecedents' of the applicant and 'suitability of the place'. "Suitability of the place" means where the cinematograph is exhibited is to be suitable and that it should satisfy the specifications, etc., 12. R.35 of Part II (a) deals with approval of location of permanent cinema. Rule 35 (1) and (2) read as under: "35 (1) A person who intends to build a permeant cinema building shall furnish the licensing authority with information in respect of items (a) to (f) of section 5(1) of the Act and other relevant particulars required in Form A. The applications shall be accompanied by a plan of the proposed site drawn to scale and shall clearly indicate the surrounding roads and buildings which exist to a distance of 200 metres of the proposed site, schools, hospitals, temples or mosques, churches, or other places of public worship being clearly indicated. (1)-A ..... (2) A copy of the application in form 'A' referred to in rule 35(1) shall be sent to Panchayat/Town Panchayat Township Committee/Municipal Council/ Municipal Corporation concerned which shall forward it within sixty days from the date of receipt of application from the applicant to the licensing authority with a copy of its resolution regarding its objections, if any, to the site and to the installation of machinery."... 13. Column No.4 of Form 'A' contains the details to be given as to status of applicant, which reads as:- "(i) Have you been regularly paying taxes and other dues payable by you to the State Government; (ii) Are you in arrears in respect of any such tax or dues; and (iii) If so, is the matter under appeal or otherwise under consideration of the authorities." It is thus clear that while applying for licence/C-form licence, the applicant should give details of his status whether any dues are payable by him to the State Government and we are of the opinion that dues payable by a person to the State Government would also include permanent tax payable in respect of the building. 14. As per Column No.(14) of Form A, the applicant should mention whether the site plan is attached by furnishing the details as to "(1) the position of the proposed premises in relation to any adjacent premises and to the public thorough fare upon which the site of such premises abuts and (2) thatched sheds, if any, in the https://hcservices.ecourts.gov.in/hcservices/ neighbourhood; (3) nearby schools, etc., temples etc., cinematograph exhibitions?" As per particulars contained in Column NO.15, the applicant should state (i) whether it was licensed before and details of the same. 15. On a combined reading of Section 5 Rule 35 (1) part II (a) and the columns in Form 'A', it is abundantly clear that there are various parameters for inquiring into the 'status', 'antecedents' of the applicant and 'suitability of the site'. In our considered view, various details stated in column Nos.(4), (10), (11), (14) and (15) would clearly show that the local authority has an important say in issuing certificates to the effect of suitability of site, locality, etc., 16. Section 10 of the Act provides for the power of Government to make Rules. Section 10(2)(a) of the Act provides for terms, conditions and restrictions subject to which a licence may be granted under the Act. For issuance of fresh licence, it is essential that the terms and conditions as laid down under the Act are complied with. Section 10(2)(a) to (3)(b) stipulates some of the areas which such rules may provide for. Exercising power under Section 10 of the Act, by G.O.Ms.No.1311 Home (Cinemas) Department dated 9.9.1996, Rule 92 was amended introducing clause (v) in sub-rule (1), which reads as under: "Evidence from the local authority that there is no property tax due in respect of the site and building of the cinema theatre under the Madras City Municipal Corporation Act, 1919 (Tamilnadu Act IV of 1919) of the Tamilnadu District Municipalities Act, 1920 (Tamilnadu Act V of l1920) or the Tamilnadu Panchayats Act, 1994 (Tamil Nadu Act No.21 of 1994) or the Madurai City Municipal Corporation Act, 1971 (Tamil Nadu Act 15 of 1971) or the Coimbatore City Muncipal Corporation Act 1981 (Tamil Nadu Act 25 of 1981) or the Tiruchirapalli City Municipal Corporation Act 1994 (Tamilnadu Act 27 of 1994) or the Tirunelveli City Muncipal Corporation Act 1994 (Tamilnadu Act 28 of 1994) or the Salem City Municipal Corporation Act, 1994 (Tamilnadu Act 29 of 1994) as the case may be." 17. It was further contended that the production of 'no due certificate of property tax' from the concerned authority at the time of renewal is only to ensure that the licensee is not in unlawful possession of the property and the property is free from encumbrances for a smooth functioning of the cinema theatre. The learned Advocate General Mr.P.S.Raman contended that the amendment to Rule 92(1)(v) of Tamilnadu Cinemas Regulation Rules is in consonance with the provisions of the Act. 18. The stand of Government is that when the local authority raises objection as to 'status', 'antecedents' of an applicant and https://hcservices.ecourts.gov.in/hcservices/ 'suitability of the site', the licensing authority can certainly refuse to grant licence. In the light of regulatory measures, Rule 92 (1) was amended insisting upon production of "no property tax due certificate" from the local authorities. As submitted by the learned Additional Advocate General, in Tamil Nadu Cinemas Regulation Rules, as per Rule 92(1), for renewal of licence, there are also certain other conditions such as treasury receipt for payment of fees at the prescribed rates, production of evidence from commercial tax authorities that there is no tax due under Tamilnadu Entertainment Tax Act, evidence for having insured the cinema building, machinery, etc., against fire hazards etc. Likewise, Government issued orders for submission of "no property tax due in respect of the site and building of the cinema theatre." 19. By reading of Rule 92(1)(v), it is evident that the insistence of "no property tax due certificate" is not in respect of some professional tax, or any other tax, but in respect of the site and building of the cinema theatre. Operator of cinema theatre is directed to produce 'no due certificate' in respect of the site and building. As rightly contended by the learned Advocate General, the amendment is only a check measure to ensure that the cinema theatre is free from encumbrances to ensure the smooth functioning of cinema theatre. 20. The learned Advocate General submitted that if there is an encumbrance with regard to property tax and if such tax is not paid for a long period of time, the authorities have the right to attach the property itself and to avoid such impediment, the amendment was brought into force. We find much force in the contention of the learned Advocate General that if the property tax is due, the cinema theatre may be attached and the theatre cannot be run until the charge is cleared either by way of paying the dues or by brining the very site for auction and cinema-going public would be affected. In such circumstances, public would be at a loss. Therefore only to ensure smooth conduct of business and to avoid any impediment, litigations, etc., Rule 92(1) was amended introducing sub-rule (5). There is nothing unconstitutional or ultra vires of the Act so as to warrant interference by the High Court. 21. We are of the view that when regulatory measures like 'status' and 'antecedents' of the applicant and "suitability of the site and building" are inquired into at the time of issuing licence, the same is equally applicable for obtaining renewal of C-form licence. It is pertinent to note that "no property tax due" is restricted only to the theatre – 'site and building' and not to any other tax due to the Local Authority. When the suitability of the building and other specifications are to be cleared from the Local Authority for obtaining licence, the same regulation is equally applicable to renewal of C-form licence. https://hcservices.ecourts.gov.in/hcservices/ 22. Learned counsel for Respondents Mr.Ravi Ananta Padmanabhan contended that when the operators of Cinema theatres obtained licence under Tamilnadu Cinemas Regulation Act, the authorities cannot vary the same for renewal of the same. It was further argued that the Tamilnadu Cinemas Regulation Act came into force with effect from 30.5.1956 and nearly forty years thereafter the authorities sought to introduce Rule 92(1)(v) by way of an amendment with a hidden object of collecting properly tax payable to the local authorities. It was further argued that what was not required for obtaining licence the same cannot be insisted for renewal and 'renewal' means only 'continuation of commencement'. Learned counsel for Respondent Mr.Ravi Anantha Padmanabhan contended that what was not demanded at the commencement cannot be made compulsory for its continuation and therefore the impugned G.O., is ultra vires the parent Act. 23. There is no force in the contention that no property tax due certificate is not necessitated at the time of granting licence as such contention ignores the various columns in form 'A'. As we pointed out earlier, in Column No.(4) of Form 'A', the applicant has to furnish details as to whether he has been regularly paying taxes and other dues payable by him to the State Government and whether he is in arrears in respect of such tax or dues. At the time of granting licence also, the licensing authority should have regard to the arrears of tax or dues. In any event, it cannot be contended that what was not necessitated at the time of grant of licence cannot be insisted upon for its continuation. As per Form "C", which contains licence for exhibition of cinemas under the Act, as per Clause (4) of Conditions of licence, "grant of the licence" is subject to any order that may be passed by the State Government under Section 5(4) of the Act. Section 5(4) of the Act empowers the State Government to issue directions or orders of a general character as the State Government may consider necessary in respect of any matter relating to licences for exhibition of cinematograph films to the licensing authority. Section 10 of the Act empowers the State Government to frame rules to carry out the purpose of the Act and such rules may provide for terms, conditions and restrictions subject to which licence may be granted under the Act. 24. As per Explanation to Section (5)(i)(b), "antecedents" means the conduct of the applicant in relation to the payment of any tax or dues payable by him to the Government. The learned counsel for Respondent Mr.Subramani contended that the explanation to Section 5 (1)(b) has to be understood in the light of object of the enactment and Section 3-A of the Act to provide for regulation of exhibition by means of Cinematographs in Tamil Nadu. 25. Drawing our attention to some passages in 'Principles of Statutory Interpretation' by Justice G.P.Singh, Eighth Edition, 2001 – Page No.186, learned counsel for the respondent submitted that the https://hcservices.ecourts.gov.in/hcservices/ 'explanation' to any Section in the Statute should be read in a harmonious way with the Section itself and cannot be detached and read in isolation. In support of his contention, learned counsel for respondents Mr.Subramanian placed reliance upon AIR 1989 SC 2227 (M/S.APHALI PHARMACEUTICALS LTD. VS. STATE OF MAHARASHTRA AND OTHERS), wherein the Supreme Court has held that an explanation to the Schedule amounts to an Explanation in the Act itself and in case of