Case: Ved Gupta Vs. Apsara Theatres

In July, 1966, the appellant Ved Gupta decided to embark upon a venture to construct and operate an air- conditioned Cinema in a plot of land which he proposed to take on lease in Gandhi Nagar, Jammu, in Collaboration with two osher persons, namely, Todar Mal and Kishan Kumar. Accordingly, on July 22, 1966, Ved Gupta purporting to act on behalf of a partnership consisting of himself and the two persons aforementioned (as a matter of fact, no partnership had been constituted at all by that date), applied to the District Magistrate, Jammu, under section 3 of the Jammu and Kashmir (Cinematograph) Act, 1989 (1933 A.D.) (herein-after referred to as the Act) for permission to construct a modern Cinema Hall at the proposed site, a detailed description of which was furnished in the plan annexed to the application. Shri Ved Gupta was informed by the District Magistrate, Jammu by his Memo (Annexure-B) that the Government had approved the construction of a Cinema Hall at the proposed site and had g ranted the requisite permission in his favour as per letter dated September 11, 1967, issued by the Secretary to Government, General Department. From Annexure- B, it would appear that the permission so granted was in favour of Ved Gupta in his individual capacity and not as the representative of any firm. In the meantime, by a deed dated December 7, 1966, which was registered on December 24, 1966, the plot in question was taken on lease jointly by Ved Gupta, Todar Mal and Krishan Kumar for a period of 40 years on the terms and conditions set out therein. Thereafter, under a deed dated July 15, 1969, the aforesaid three persons entered into a partnership along with 11 others under the name and style "Metro Theatres" for carrying on the business of constructing and running a modern air-conditioned Cinema in the site covered by the permission granted by the Government. Clause 15 of the said deed provided that the site for construction of a Cinema which had been obtained on lease by Ved Gupta, Todar Mal and Krishan Kumar in their own names shall not be their personal property, but shall be the property of the partnership, and that the permission which Ved Gupta had obtained from the Government for construction of the Theatre in the said plot shall be treated as the property of the partnership. By a subsequent agreement executed by the 14 partners on February 22, 1969, the name of the Cinema business was changed from Metro Theatre to Apsarae construction of the Cinema Theatre appears to have been, completed by the middle of June 1969. On June 17, 1969, Ved Gupta submitted an application to the District Magistrate, Jammu, reporting that the construction of the theatre and the installation of the cinematograph machinery and equipment had all been completed pursuant to the permission granted by the Government and requesting that the requisite licence for running the Cinema Theatre may be issued to him under the Act and the Rules. Annexure-C is a copy of the said application and it shows that it was filed by Ved Gupta in his personal capacity without any mention whatever therein of the partnership. On July 22, 1969, a licence was issued by the District Magistrate to Ved Gupta under Section 3 of the Act to give public exhibition of cinematograph films at the Apsara Theatre situated at Gandhi Nagar, Jammu.      Annexure-D is a copy of the said licence and it is expressly stated therein that the said licence has been granted to Shri Ved Gupta and that it shall remain in force until March 31, 1970, provided that Shri Ved Gupta or any person to whom, with the consent of the licensing authority, the licence is transferred, continues to own or manage the cinematographs used ill the said Apsara Theatre. A Schedule of conditions imposing various duties and obligations on the licensee is also appended to the said licence.On March 31, 1970, two partners-Todar Ma l and Sham Kumar- retired from the partnership. Consequent thereon, the firm was reconstituted and a new partnership deed was executed by the remaining partners on April 11, 1970, Clause 18 of the said document contained the following recital:"The licence for running the Cinema, by which Apsara Theatre is being run stands in the name of Shri Ved Gupta s/o Shakur Dass, the 9th party. The right to operate the Cinema licence shall be the property of this partnership and changes in the constitution shall make no difference in thisn thereafter, on December 3, 1975, Todar Mall who had retired from the firm and Krishan Kumar who continued to be a partner jointly issued a notice to the District Magistrate, Jammu, claiming that their names should also be included in the licence issued to Ved Gupta in respect of the Apsara Theatre. Subsequently, on January 26, 1976, Krishan Kumar addressed a communication to the Di strict Magistrate stating that he had not actually signed the notice sent on December 3, 1975, that Todar Mal had unauthorisedly purported to send the notice on his behalf also without his knowledge or consent and the said notice may, therefore, be treated as fictitious. A copy of the said letter was sent by Krishan Kumar to Ved Gupta also. Strangely, after the expiry of nearly two years thereafter, Krishan Kumar submitted an application to the District Magistrate requesting that the names of himself and of Todar Mal should also be included as licensees in the licence for Apsara Theatre, issued to Ved Gupta. Notice of the said application was issued by the District Magistrate to Shri Ved Gupta and the District Magistrate conducted an enquiry at which both sides were heard through their advocates. After considering the arguments advanced before him by the counsel appearing for the contending parties, the District Magistrate passed a detailed order dat ed December 29, 1977, rejecting the request of Todar Mal and Krishan Kumar and declaring Shri Ved Gupta to be the sole licensee authorized to run the Apsara Theatre. Thereupon, Todar Mal preferred an appeal against the said order passed by the District Magistrate. Krishan Kumar was impleaded as a second respondent in that appeal. The Minister of State for Revenue and Law, Government of Jammu and Kashmir, heard counsel on both sides and ultimately dismissed Todar Mals appeal by a detailed order, of which Annexure-G is a copy. Todar Mal did not leave the matter there. He filed a writ petition in the High Court of Jammu and Kashmir, challenging the legality and validity of the orders passed by the District Magistrate and the appellate authority, namely, the State Government. Krishan Kumar was made a party-respondent in the said petition. That writ petition was dismissed in limine by the High Court by an order dated April 29, 1978. Thereafter, Todar Mal came up to this Court, praying for the grant of special leave to appeal (S.L.P. Civil No. 3490 of 1978) against the said decision of the High Court. This Court rejected that Special Leave Petition by order dated November 13, 1978. Krishan Kumar was a party-respondent in the Special Leave Petition also.On April 19, 1979. Krishan Kumar addressed a letter to the District Magistrate, Jammu, requesting that the renewal of the licence may be granted "in the name of the "premises of Apsara Theatre" The District Magistrate rejected the said request by a detailed order dated April 21, 1979. (Annexure- I) Before the said order was passed by the District Magistrate, an elaborate hearing appears to have been given by him to Krishan Kumar and Ved Gupta rep resented by their Advocates. It is seen from Annexure-I that the contentions advanced before the District Magistrate on behalf of Krishan Kumar were that even though the licence had originally been issued in the name of Ved Gupta, the right of operation of the licence had become the property of the firm by virtue of clauses 13 and 18 of the partnership deed and since Ved Gupta had been expelled from the partnership and had thereby ceased to be connected with the firm, he did not have the possession of the premises and he was not entitled to claim a renewal of the licence. These contentions were repelled by the District Magistrate who held that the renewal of the licence could not be made in the name of any party other than the original licensee, namely, Shri Ved Gupta, who had been declared to be the sole licensee in respect of the Apsara Theatre by the proceedings of his predecessor dated December 29, 1977, which was confirmed in appeal by the State Government and which had acquired finality between the parties by reason of the dismissal of the writ petition and the Special Leave Petition by the High Court and Supreme Court, respectively. In March, 1980 the licence for the Theatre was renewed by the District Magistrate in the name of Ved Gupta.On April 27, 1979, a suit was instituted against Ved Gupta and seven others by seven of the partners including Krishan Kumar for a declaration that the Cinema licence dated July 22, 1969, issued by the District Magistrate, Jammu (8th defendant) for exhibition of cinematographs in the building known as Apsara Theatre, Gandhi Nagar, Jammu, is the property of the firm Apsara Theatre and for a prohibitory injunction restraining defendants 1 to 7, namely, Shri Ved Gupta and six of the partners who were residing with him from interfering with the running of the Cinema by the plaintiffs and also for a prohibitory injunction against the District Magistrate (defendant 8) restraining him from interfering in any manner with the exhibition by the plaintiffs of cinematographs in the premises of Apsara Theatre. On the date of the institution itself, the District Judge, Jammu, issued an order of temporary injunction restraining defendants 1 to 7 from interfering with the possession and the running of the Theatre Apsara by the plaintiffs. In being served with the order of injunction, Ved Gupta wrote to the District Magistrate on Sept ember 24, 1980 that it had become impossible for him to operate the Cinema licence in view of the temporary injunction issued by the District Court and since it is only the licensee who is held responsible under the Act and the Rules for due compliance with all the terms and conditions of the licence and answerable to the licensing authority for all commissions and omissions in the Cinema premises, he may be saved from any prosecution or other action under law in the capacity of licensee of the Apsara Theatre in respect of any illegal acts or offences committed by others in the said premises. On September 26, 1980, the Superintendent of Police, Jammu City, reported to District Magistrate that on verification by the Sub-Inspector deputed for the purpose, it had been found that the cinematographs were being conducted in the Apsara Theatre by persons other than the licensee and the Police had challaned the licensee under Section 6 of the Act. The District Magistrate was requested by the said letter that exhibition of cinematographs in the Theatre may be suspended till the final decision was rendered by the Court in favour of either of the parties. Acting on the aforesaid material brought to his notice, the District Magistrate passed the order (Annexure-J) dated September 26, 1980, directing that exhibition of cinematographic films in Apsara Theatre will remain suspended until further orders. The sole question arising for determination in these appeals concerns the validity of the said order passed by the District Magistrate and hence, it will be convenient at this stage to reproduce the full text of the order. Its it has been brought to my notice by Shri Ved Gupta, sole licensee, Apsara Theatre that the District and Sessions Judge, Jammu, has issued a temporary injunction against the exhibition of films by him in the above-said Theatre;      And whereas the S.P. City by his letter No. 1/Conf. dt. 16.9.80 has intimated that there was exhibition of films on 25th September, 1980, in Apsara Theatre by persons other than the licensee;      And whereas under the provisions of the Cinematograph Act, read with rules, none other than licensee is permitted to exhibit films during the currency of the licence without permission of the licensing authority;      Now, therefore, I, A. Sahasranaman, District Magistrate, Jammu, hereby order that exhibition of films in Apsara Theatre will remain suspended till further orders.      This order shall come into force with immediate effect."On Septembers 29, 1980, a writ petition-Writ Petition No. 436 of 1980-was filed in the High Court of Jammu and Kashmir by M/g Apsara Theatre, seeking to quash the aforsaid order passed by the District Magistrate as being illegal, ultra vires and void. It was contended inter alia by the petitioner that there had been a gross violation of the principles of natural justice inasmuch as the petitioner- firm and its partners had not been given any notice or afforded hearing before the impugned order was passed. Another ground put forward by the petitioner was that the District Magistrate had no power to suspend the licence under any of the provisions of the Actor the Rules and that the only power vested in the licensing authority was to revoke the licence under Section 6.F of the Act and that too only if the conditions precedent mentioned in the said Section were found to exist. The learned Single Judge of the High Court Dr. Anand, J), by a well-considered judgment rejected the contentions of the petitioners and dismissed the writ petition. M/s Apsara Theatre represented by Krishan Kumar preferred a Letters Patent Appeal- L.P.A No. l of 1981 against the judgment of the learned Single Judge. That appeal was heard by a Division 19 Bench consisting of Mufti Baha-ud-din Farooqi, Acting Chief Justice and Mir, J. The two learned Judges comprising the Division Bench, however, came to divergent conclusions. Mir, J. agreed with the view expressed by the learned Single Judge that the District Magistrate had acted strictly in accordance with law in passing the impugned order and that the writ petition was devoid of merit. But, the Acting Chief Justice was of the view that where the licensed premises including the cinematographs used therein belonged to a partnership and one of the partners had obtained a licence in his separate name, the other partners automatically acquired an interest in the licence. It was further held by The Acting Chief Justice that the effect of the licence was that "it renders privilege the building of the cinematographs used therein and the privilege must necessarily follow the title in such building and the cinematograph." on this reasoning, it was held by him that the plaintiff-firm had a legal right in the licence which entitled it to notice and hearing under the Act before the licence was suspended, and inasmuch as the said procedure has not been followed by the District Magistrate, the impugned order was void and in violation of the principles of natural justice. The learned Acting Chief Justice has further expressed the view that except only the power of revocation, embodied in Section 6-F of the Act and an implied power to suspend a licence pending the proceed- in gs for such revocation, the District Magistrate had no jurisdiction or power to suspend the licence of the Theatre under any other circumstances. Hence quite apart from the question of natural justice, the impugned order was also held by the Acting Chief Justice to be one passed without jurisdiction on this ground also.In view of the difference of opinion between the two learned Judges, the Letters Patent Appeal was referred to Kotwal, J. under Rule 23 (2) of the Jammu and Kashmir High Court Rules, 1975. It may be mentioned at this stage that at that time, the High Court was functioning with a srength of only four Judges, and excluding the learned Single Judge who heard the writ petition and the two members of the Division Bench the Acting Chief Justice and Justice who comprised the Division Bench which heard the Letters Patent Appeal, Kotwal, J. was the only other Judge available in the High Court. Unfortunately, Kotwal, J expressed his inability to hear the Appeal on the ground that at one stage, he had appeared as an Advocate for M/s Apsara Theatres in the course of the earlier litigations between the parties concerning substantially the same matter. Consequently, it became impossible for the Letters Patent Appeal being heard by a third Judge designated by the Chief Justice, as contemplated by Rule 23 (2). The matter was, therefore, placed before the Division Bench consisting of the Acting Chief Justice and Justice Mir as M .P. No. 454 of 1981 for consideration of the question as to what rule of procedure was applicable. The learned Judges took the view that Rule 23 of the Jammu and Kashmir High Court Rules, 1975, squarely covered the situation that had arisen before them. Rule 23 is in the following terms:"23 (1) In the event of a difference of opinion among the judges composing any bench of the court, the decision shall be in accordance with the opinion of the majority of the Judges.      (2) If the judges composing the bench are equally divided on any point, they shall state the point upon which they differ and the case shall then be heard upon that point by one or more of the other Judges designated for the purpose by the Chief Justice and such point shall be decided according to the opinion of the majority (if any) of the judges who have heard the case (including those who first heard it).(3) If there is no such majority, then the decision shall be in accordance with the decision of the senior Judge except in the case of an appeal from a decree where such decree shall be confirmed"In the opinion of the Division Bench, the present case was governed by sub-rule (3) of Rule 23, and, consequently, the decision in the case had to be in accordance with the opinion of the senior Judge. Accordingly the Division Bench passed orders in C.M.P. No. 454 of 1981 that the Letters Patent Appeal will stand allowed in conformity with the view taken by the Acting Chief Justice in his judgment. This has resulted in the highly anomalous situation that as against the view concurrently taken by the two Judges of the High Court, viz. Anand, J. and Mir, J. the opinion of the Acting Chief Justice which was really the minority view has been allowed to prevail on the basis of the reasoning that the case was governed by sub-rule (3) of Rule 23.Aggrieved by the decision of the High Court, Ved Gupta has filed these appeals after obtaining special leave from this Court. Civil Appeal No. 2611 of 1981 is directed against the judgment of the learned Acting Chief Justice which has been treated as the final judgment in the Letters Patent Appeal and Civil Appeal No. 2611-A of 1981 has been preferred against the order passed by the Division Bench C.M.P. No. 454 of 1981.

Reasoning: We are, therefore, unable to uphold the view taken by the High Court that the impugned order was violative of principles of natural justice.The only other reason stated by the High Court for quashing the District Magistrates order is that the District Magistrate had no power under the Act or the Rules to make such an order. This conclusion is again based on the fallacious assumption that what was done by the District Magistrate under the impugned order was to suspend the licence. Proceeding on that premise, the learned Acting Chief Justice has said that under the provisions of the Act the power to suspend a licence is conferred only by Section 6-F of the Act as on e implicit in the larger power of revocation and unless the conditions precedent mentioned in the said Section are present, the licensing authority had no jurisdiction to suspend the licence. As already observed by us, the impugned order is not one suspending the licence issued in respect of the Theatre. What was done thereunder is to suspend the exhibition cinematograph films in the Theatre by persons other than the licensee. The power to control the exhibition of cinematography by grant of licence and the power to administer and enforce the provisions of the Act and the Rules clearly include the power to take all steps necessary to ensure the due observance of the terms of the statute, the rules and the conditions of the licence as otherwise the competent authority under the Act would have to be a helpless spectator when cinematograph films are publicly exhibited by persons other than the licensee. The impugned order is one obviously passed by the District Magistrate in the exercise of his function of administering the provision of the Act and the Rules and the aforesaid implied power to take all incidental steps necessary for effective enforcement of the statute. We fail to see how it can be said on the f acts and circumstances of the case that the District Magistrate had no jurisdiction to pass the impugned order.It this becomes manifest that all the grounds stated by the Division Bench of the High Court for upsetting the judgment of the learned Single Judge, dismissing the writ petition, are incorrect an unsustainable in law. Hence it was that we passed the order dated November 11, 1982, allowing Civil Appeal No. 2611 of 1981 and setting aside the judgment of the Division Bench.