IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 27.10.2010 CORAM: THE HONOURABLE MR.JUSTICE F.M. IBRAHIM KALIFULLA Writ Petition No.190 of 2002 R.M.Gunasekaran .. Petitioner vs. 1. The Government of Tamil Nadu rep. by its Secretary Municipal Administration & Water Supply Department Secretariat, Chennai 600 009. 2. Corporation of Coimbatore rep. by its Commissioner Coimbatore 641 001. .. Respondents Prayer: Writ petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorari to call for the records of the respondents relating to the order of the 1st respondent in G.O.(D)No.509, Municipal Administration, dated 05.11.2001 and the Resolution of the second respondent in Resolution No.332, dated 29.03.2000 and the demand notice of the second respondent dated 21.12.2001 and quash them in so far as the petitioner is concerned. For Petitioner : Mr.Kandavadivel Doraisami For Respondents : Mr.B.K.Girish Neelakandan Govt. Advocate for R1 Mr.R.Sivakumar Standing Counsel for R2. O R D E R The petitioner seeks to challenge G.O.(D) No.509 dated 05.11.2001 and the Resolution of the second respondent in Resolution No.332 dated 29.03.2000 as well as the Demand Notice of the second respondent dated 21.12.2001. 2. The brief facts, which are required to be stated, are that the petitioner is a licenced wholesale dealer in paddy and rice. He is running his business under the name and style of "Sekar Rice https://hcservices.ecourts.gov.in/hcservices/ Mundy" from the year 1985-86. For carrying on his wholesale business, the petitioner got a godown at New No.16-B (Old No.73), Rajee Chettiar Veedhi, Ukkadam, Coimbatore. According to the petitioner, there are about 84 wholesale paddy and rice merchants in Coimbatore like that of the petitioner. The petitioner and the other such wholesale paddy and rice merchants stated to have obtained licences issued under the provisions of the Tamil Nadu Essential Trade Articles (Regulation and Trade) Order, 1984. Apart from the said licence, it is stated that the petitioner also obtained a licence by paying appropriate licence fee issued by the second respondent-Corporation. According to the petitioner, the licence fee was initially Rs.250/- per annum till 1993 and it was increased to Rs.500/- in the year 1994 and the same was continued till 1999-2000. 3. By the impugned Resolution of the second respondent dated 29.03.2000, the licence fee was stated to have been increased for the year 2000-2001 onwards in a sum of Rs.5,000/- per annum for each licenced paddy godown. The petitioner and similarly placed other wholesale paddy and rice merchants were stated to have made a representation dated 25.01.2001 through their association for reducing the abnormal increase of the licence fee. 4. The second respondent-Corporation by its Resolution No.413 dated 26.02.2001, stated to have passed a resolution to reduce the licence fee from Rs.5,000/- to Rs.1,000/- per annum, which resolution was forwarded to the Government on 08.03.2001. By G.O.(D) No.509, Municipal Administration, dated 05.11.2001, the first respondent- State Government cancelled the Resolution No.413 dated 26.02.2001 of the second respondent and directed the second respondent to implement its earlier Resolution No.332 dated 29.03.2000 by fixing the licence fee at Rs.5,000/-. Consequent to the issuance of the said Government Order, the second respondent has raised a Demand Notice dated 21.12.2001 demanding a payment of licence fee at the rate of Rs.5,000/- together with a sum of Rs.1,250/- by way of penalty for late payment. 5. It is in the above said background, the petitioner approached this Court by filing this writ petition challenging the said Government Order, Resolution No.332 dated 29.03.2000 and the Demand Notice dated 21.12.2001. 6. I heard Mr.Kandavadivel Doraisami, learned counsel for the petitioner, Mr.B.K.Girish Neelakandan, learned Government Advocate for the first respondent and Mr.R.Sivakumar, learned counsel for the second respondent. 7. Learned counsel for the petitioner by drawing my attention to Sections 48, 49, 360 and 451 of the Coimbatore City Municipal Corporation Act, 1981 (hereinafter called as 'the Act'), contended that there is every power vested with the second respondent- https://hcservices.ecourts.gov.in/hcservices/ Corporation to fix the licence fee under Section 451(2)(a) of the Act, by taking into account the relevant circumstances, by passing necessary resolution, placing of such a resolution by the second respondent-Corporation before the State Government under Sections 48 and 49 of the Act, enabling the first respondent-State Government to either approve or reject such a resolution. Having regard to the specific stipulations contained in Section 49(1)(ii)(b) of the Act, in the event of rejection of such a resolution, the State Government should give adequate reasons in accordance with the prescription contained in the said provision. The learned counsel contended that the impugned Government Order does not give any valid reason, much less reasons, which are specifically to be stated under Section 49(2) of the Act, in order to state that the impugned Government Order of the first respondent is valid. 8. The learned counsel also contended that there is no justification for the second respondent to have passed a resolution dated 27.03.2000 in its Resolution No.325 by increasing the licence fee for the year 2000-2001 onwards from Rs.500/- to Rs.5,000/-, when compared to other Corporations, such as Corporations of Chennai, Madurai, Trichy and Tirunelveli, it has no proportion at all and on that ground as well, the Government Order is liable to be set aside and the subsequent Resolution of the second respondent dated 26.02.2001 in Resolution No.413 is to be restored. The learned counsel therefore contended that since the impugned Government Order of the first respondent is not in consonance with the statutory prescription namely, the Act, the same is liable to be set aside and consequently, the Demand Notice dated 21.12.2001 is also liable to be set aside. 9. Mr.R.Sivakumar, learned standing counsel for the second respondent, contends that when the State Government has issued G.O. (D) No.509, dated 05.11.2001, the second respondent-Corporation is bound to follow the said Government Order and therefore, the Demand Notice dated 21.12.2001 for payment of the revised fee of R.5,000/- along with penalty cannot be questioned. 10. Learned Government Advocate in his submissions contended that in paragraph 3 of the impugned Government Order, the State Government has given its reasons as to why it chose to reject the second respondent's Resolution dated 26.02.2001 and such reasons are in consonance with the prescription contained in Section 49(1)(ii)(b) of the Act and therefore, the impugned Government Order should not be interfered with. 11. One other relevant fact to be noted is that while entertaining this writ petition, interim order was passed on 08.01.2001 granting stay of the operation of the impugned Government Order as well as the Demand Notice dated 21.12.2001 subject to the condition that the petitioner pays 50% of licence fee i.e. Rs.2,500/- https://hcservices.ecourts.gov.in/hcservices/ within six weeks from the date of the order and continues to pay at the said rate for the future years. The condition imposed in the said interim order having been complied with, the said order was confirmed by order dated 06.03.2002. The learned counsel states that the said interim order continue to remain in force till now. 12. In the above said background, when the issue raised by the petitioner is examined, I find that under Section 451(2)(a) of the Act, there is every power in the second respondent-Corporation to prescribe the fee in order to retain the licence valid and such prescription of fee under Section 451(2)(a) of the Act, should be fixed by the Council. Under Section 48 of the Act, the Mayor of the second respondent-Corporation should submit to the State Government copies of all the important resolutions of the Council. Section 49 (1)(ii)(b) and the proviso to the said Clause read as under: 49. Power to suspend or cancel resolutions, etc., under this Act:- (1) ... (i) .... (ii) .... (a) ... (b) such resolution, order, licence, permission or act, is in excess of the powers conferred by, or in contravention of, this or any other Act or of any rule, notification, regulation or by-law made or issued under this or any other Act, or is an abuse of such powers or adversely affects the financial stability of the Corporation or the efficiency of municipal administration as a whole. (c) such resolution, order, licence, permission or act is in contravention of any direction issued by the Government; or (d) the execution of such resolution or order, the continuance in force of such licence or permission or the doing of such act is likely to cause danger to human life, health or safety, or is likely to lead to a riot or an affray: Provided that the Government shall before taking action under this section on any of the grounds referred to in clauses (a), (b) and (c) give the authority or person concerned an opportunity for explanation." 13. A conspectus consideration of Section 360 of the Act, which empowers the second respondent-Corporation to issue a licence for any of the purposes mentioned in Schedule IV, Section 451(2)(a) and Section 49(1)(ii)(b)(c) and (d) and its provisos makes it clear that https://hcservices.ecourts.gov.in/hcservices/ while the Council of the second respondent-Corporation is entitled to issue the licence for any wholesale dealer for paddy and rice, he has also been empowered to prescribe the fee for the licence to remain valid for the period for which it is issued. The above power of the Council of the second respondent-Corporation is however subject to the supervisory powers of the first respondent to examine the correctness or validity of any such action of the second respondent- Corporation and to set aside such action in the event any of the grounds specified in Section 49(1)(ii)(a) to (c) exists. 14. Keeping the above statutory prescription in mind, the impugned G.O.(D) No.509 dated 05.11.2001 is examined, I find that in paragraph 6 of the G.O., the State Government when it examined the various factors mentioned in the preceding paragraphs, chose to accept the recommendation of the Commissioner of Local Administration for setting aside the second respondent's Resolution No.413 dated 26.02.2001 and for restoring its earlier Resolution No.332 dated 29.03.2000. The recommendation of the Commissioner of Local Administration has been referred to in paragraph 3 of the impugned Government Order and the said part of the Govt. Order is relevant for our purpose, which reads as under: "nfhak;g[j;J}h; khefuhl;rp Mizahpd; nkw;go fojj;ij muRf;F mDg;gpa efuhl;rp epu;thf Mizau;. jpUj;jg;gl;l fl;lz tpfpj';fs; epjpahz;L bjhl';Ftjw;F 45 ehl;fSf;F Kd;djhf mjhtJ gpg;utup 14k; njjpf;Fs; cupikahiz fl;lzk; brYj;j tpz;zg;gpf;f ntz;Lk; vd;w tpjp ,Uf;ifapy;. 26/2/2001y; eilbgw;w khkd;wf; Tl;lj;jpy; fl;lzj;ij jpUj;jpaikf;f jPh;khdk; bra;jJ rupay;y vd;Wk;. ,J rl;l tpjpfSf;F Kuzhf cs;sJ vd;Wk; nkYk; 25 tpGf;fhL chpikjhuu;fs; jpUj;jpaf; fl;lzk; fl;oa epiyapy; fl;lz tpfpjj;ij khw;wpaikg;gJ rhpahdjy;y vd;Wk; bjhptpj;J khkd;w jPh;khd vz;/413. ehs; 26/2/2001I uj;J bra;a nkny 3y; gof;fg;gl;l jdJ fojj;jpy; muRf;F gupe;Jiu bra;jpUe;jh;h/ , itaidj;ija[k; muR ed;F ghprPyid bra;J efuhl;rp eph;thf Mizahpd; gupe;Jiuia Vw;W khefuhl;rp rl;l tpjpfSf;F Kuzhf ,aw;wg;gl;l khkd;wj;jpd; 26/2/2001 ehspl;l jPh;khdj;ij (vz;/413) Vd; uj;J bra;af; TlhJ vd;gjw;fhd khkd;wj;jpd; tpsf;fj;ijg; bgw;W mDg;g[khW nkny 4y; gof;fg;gl;l muRf; fojj;jpy; nfhak;g[j;J}h; khefuhl;rpapd; tzf;fj;jpw;Fhpa nkah; mth;fsplk; nfl;fg;gl;lJ/@ 15. As per the recommendation of the Commissioner, under the provisions of the Corporation, in order to keep the licence valid or for making any application for issuance of the licence, any application should be preferred within 45 days prior to the commencement of the financial year i.e. on or before 14th February, that the resolution passed by the Council on 26.02.2001 providing for https://hcservices.ecourts.gov.in/hcservices/ revision of the licence fee was not proper and the same was conflicting with the statutory provisions, that when 25% of the lincencees have paid the revised licence fee at the rate of Rs.5,000/- as per the earlier resolution dated 29.03.2000, the revision of such licence fee under Resolution No.413 dated 26.02.2001 was not proper and therefore, the same is liable to be cancelled. 16. In accordance with the prescription contained in Section 49 of the Act, the first respondent called upon the Mayor of the second respondent-Corporation to submit his explanation as to why the second respondent's subsequent Resolution dated 26.02.2001, which was recommended by the Commissioner of Local Administration, should not be cancelled. The Mayor of the second respondent submitted his explanation dated 09.04.2001, pointing out that out of 72 members, including the Deputy Mayor, 30 of the Members made a requisition for revising the licence fee fixed in the earlier resolution dated 29.03.2000 and such requisition was made by the Members based on the representation of the Association representing the traders, that based on the said requisition, a special meeting was convened, in which unanimous decision was taken on 29.03.2000 in Resolution No.332 in accordance with Rules 8(1)(2) and 11 of the Rules. 17. In reply to the said explanation of the Mayor of the second respondent-Corporation, the Commissioner once again was stated to have pointed out that if the subsequent resolution dated 26.02.2001 is implemented and revised licence fee is collected, it would cause monetary loss to the Corporation, apart from creating lack of confidence in the minds of the public, which was highlighted by the Commissioner in his report and the same was not specifically met by the Mayor of the second respondent. By referring to the above namely, the recommendation of the Commissioner of Local Administration and the explanation of the Mayor of the second respondent-Corporation, the first respondent merely held that the recommendation of the Commissioner is accepted and the subsequent Resolution of the second respondent-Commissioner dated 26.02.2001 in Resolution No.413 is set aside. 18. When the said G.O. is tested in the light of the prescription contained in Section 49(1)(ii)(b) of the Act, I find that, broadly the reason which weighed with the State Government was the alleged financial loss that might be caused to the second respondent-Corporation, the payment of the revised fee of Rs.5,000/- by 25% of the traders and any lack of confidence that may be created in the minds of the public at large. If such revision is resorted to by the subsequent resolution dated 26.02.2001 under Section 49(1)(ii) (b) of the Act, apart from the other ground such as Resolution being in contravention of the Act, or any other Act, or any rule, notification, regulation, by-law issued under the Act or in abuse of such powers, it is specifically stipulated that such resolution if adversely affects the financial stability of the Corporation or the https://hcservices.ecourts.gov.in/hcservices/ efficiency of the Municipal Corporation as a whole, then in such circumstances, such a resolution can be suspended or cancelled by the State Government. 19. Though the recommendation of the Commissioner of Local Administration would state that such a revision, as resorted to based on the representation of the traders Association, would create monetary loss to the second respondent-Corporation, except this ipse dixit, such a statement by the Commissioner of Local Administration, there appears to be no other material either placed before the first respondent-State Government or even with the Commissioner himself for making such a statement. In fact, in the counter affidavit of the second respondent-Corporation, it is nowhere stated that the revision sought to be introduced by the resolution dated 26.02.2001, would create serious financial instability, as stated by the Commissioner of Local Administration. 20. Unfortunately, no counter affidavit has been filed on behalf of the first respondent, even though this writ petition was pending on the file of this Court for the past eight years, to state as to how it was concluded by the first respondent that any financial instability would occur by virtue of the Resolution dated 26.02.2001 when it sought to revise its earlier Resolution dated 29.03.2000 and thereby bring down the licence fee of Rs.5,000/- to Rs.1,000/-. In fact, what has been extracted in paragraph 3 of the impugned G.O., are the two factors noted by the Commissioner of Local Administration, namely, when 25% of the traders virtually accepted the earlier resolution dated 29.03.2000 and came forward to pay the revised licence fee of Rs.5,000/-, there was no reason for the second respondent-Corporation to pass the subsequent resolution dated 26.02.2001 to reduce the licence fee. 21. The said reasoning of the Commissioner of Local Administration cannot be accepted for the reason that the subsequent resolution dated 26.02.2001, would operate only for the financial year 2001-02, namely on and after 01.04.2001 ending with 31.03.2002. As far as the financial year 2000-2001 ending with 31.03.2001 is concerned, the resolution dated 29.03.2000, which prescribed licence fee of Rs.5,000/- would continue to operate and even the rest of the 75% of the traders were bound by the said resolution and there would not be any escape from making the said payment and for that matter, the second respondent is bound to recover from those traders dealing with paddy and rice as whole sale merchant at that rate. Therefore, the said circumstance cannot be a ground for interfering with the subsequent resolution of the second respondent-Corporation dated 26.02.2001. 22. The statement of the Commissioner of Local Administration with reference to the time limit within which any application for fresh licence or renewal to be made 45 days prior to the end of the https://hcservices.ecourts.gov.in/hcservices/ financial year and that the resolution of the second respondent- Corporation dated 26.02.2001 came to be passed subsequent to the said prescribed period, has also no meaning, inasmuch as the resolution dated 26.02.2001 would adversely operate only for the financial year 2001-2002 and it was not applicable for the period prior to the said financial year. Therefore, whomsoever applied for fresh licence or renewal of the licence by the cut off date 14.02.2001, they would be liable to pay the licence fee only at the rate as on that date, namely at the rate of Rs.5,000/-. Therefore, even the said circumstance would not have created any complication, much less financial instability on that score. 23. Therefore, in the absence of any acceptable valid reasons mentioned in the impugned Govt. Order or any other basic document, specifically referring to any financial instability or efficiency of the Municipal Administration as a whole of the second respondent- Corporation, there is absolutely no justification in the first respondent having merely referred to the recommendation of the Commissioner of Local Administration in order to set aside the resolution of the second respondent-Corporation dated 26.02.2001. 24. In such circumstances, it is open to the first respondent to re-examine the whole issue afresh and in the event of the first respondent able to hold that there were concrete materials to support the recommendation of the Commissioner of Local Administration that the resolution dated 26.02.2001 of the second respondent-Corporation would really create financial instability or the said resolution would not in any way materially affect the efficiency of the Municipal Administration as a whole, consider the validity of the resolution dated 26.02.2001 and pass appropriate orders by indicating the basis for availability of such materials while passing any fresh orders. 25. For the above said reasons, the impugned Govt. Order No.509 of the first respondent, dated 05.11.2001 cannot be sustained and consequently, the Demand Notice issued by the second respondent dated 21.12.2001 cannot also be sustained. While setting aside the impugned G.O.D.No.509 dated 05.11.2001 as well as the Demand Notice dated 21.12.1001, the issue is remitted back to the first respondent for fresh consideration and for passing appropriate orders. 26. Since during the pendency of the writ petition, by virtue of the interim orders, the petitioner and other similarly placed traders were paying the licence fee at the rate of Rs.2,500/- per annum, it is just and fair that the said status as regards the rate of fee continue to remain in force till the first respondent-State Government pass fresh orders as directed in this writ petition. 27. The writ petition stands allowed with a direction to the first respondent to pass fresh orders in accordance with law. The https://hcservices.ecourts.gov.in/hcservices/ petitioner shall continue to pay licence fee at the rate of Rs.2,500/- per annum pending fresh orders to be passed by the first respondent-State Government. No costs. Sd/- Asst. Registrar //true copy// Sub Asst.Registrar ATR To 1. The Secretary Government of Tamil Nadu Municipal Administration & Water Supply Department Secretariat, Chennai 600 009. 2. The Commissioner Corporation of Coimbatore Coimbatore 641 001. 3 cc to Mr.M.Muthumani Doraisami, Advocate, Sr.No.77632 1 cc to Government Pleader, Sr.No.77689 1 cc to Mr.R.Sivakumar, Advocate, Sr.No.77876 W.P.No.190 of 2002 BVR {CO} TP/30.11.2010. https://hcservices.ecourts.gov.in/hcservices/