Case: Asa Ram Vs. The District Board, Muzaffarnagar

Asa Ram appellant runs certain machines with the aid of power in premises which are in a locality which is admittedly within the Jalalabad town area since the year 1953-54. He did not take out a licence for running these machines for 1953-54, as required by bye-law (7) of the Muzaffarnagar Factories Bye-laws, framed by the District Board of Muzaffarnagar, under S. 174 (1) (k) read with S. 106 of the District Boards Act. Consequently, he was prosecuted for contravening the byelaws in question. He admitted that he was running these machines with the aid of power; but his contention was that as the premises where the machines were running were in the town area of Jalalabad, the byelaws framed by the District Board did not apply to him and it was not necessary for him to take out a licence, and his prosecution at the instance of the District Board for contravening the bye-laws was bad. The decision of this point depended upon the construction of S. 93 (3) of the District Boards Act and S. 26 of the Town Areas Act2. The trial Magistrate was of the opinion, on a construction of the sections abovenamed, that the bye-laws framed by the District Board were not applicable to premises within the Jalalabad town area, and therefore, Asa Ram need not have taken out a licence. He consequently acquitted Asa Ram. There was a revision application by the District Board, which was dismissed by the Additional District Magistrate (Judicial), Muzaffarnagar, who agreed with the view of the Magistrate. The District Board then went up in revision to the High Court of Allahabad. The revision was heard by a learned Single Judge, who framed three questions which arose for determination, namely,(1) Is running of a flour mill, etc., an offensive trade ?(2) Does the word regulation used in S. 26 (a) U. P. Town Areas Act include the power of issuing a licence? and(3) Does S 93(3) of the District Boards Act amount to a divestment of authority of the District Board in favour of the Town Area Committee ?On the first question, the learned Judge was of the opinion that the machines run by Asa Ram would come within the provisions of S.26(a) of the Town Areas Act, though he also took the view that it was not necessary for him to decide the point. On the second question, he held that regulation did not include the power of granting a licence, though this was against a Division Bench authority of that High Court reported as Municipal Board, Hathras v. Bohrey Narain Dutt, A I R 1948 All 1  . He relied on a decision of this Court in Mohammad Yasin v. The Town Area Committee Jalalabad 1952 S C R 572 : (A I R 1952 S C 115) also in this connection. On the third question he was of the view that S. 93(3) barred the District Board from exercising any authority in a town area which is vested in the body mentioned in it. He was further of the view that the amendment of the Town Areas Act in 1934 by which the word Panchayat occurring in the Town Areas Act was substituted throughout by the word Committee made no difference even though S.93(3) of the District Boards Act was not simultaneously amended by substituting the words Town Area Committee for the words Town Panchayat therein in conformity with the change made in the Town Areas Act. But in view of his decision on the second question, viz., that regulation did not include the power of granting a licence, he held that bye-laws framed by the District Board for taking out licences applied to premises within the town areas. He, therefore, set aside the acquittal and ordered a retrial. He also gave leave to appeal to this Court.

Court's reasoning:
It is enough to point out that the District Boards Act under which these bye-laws have been framed does not specifically provide anywhere for granting of licences. Section 174 (1) (k) itself speaks only of regulating offensive trades etc., and has not given in so many words power to issue licences. It is true that S. 106 provides that the board may charge a fee to be fixed by bye-law for any licence, sanction or permission which it is entitled or required to grant by or under the Act; but that section merely provides for levying of fee where a licence is necessary under other provisions of the Act and is not in itself an authority for issue of licences. Therefore, when the Board framed a bye-law relating to issue of licences it did so under its power of regulationSection 294 of the Municipalities Act is in the same terms as S. 106 of the District Boards Act and deals with the power of levying fees. The High Court seems to have lost sight of the distinction between granting licences which depends on the power of regulation and levying of licence-fees, which can only be levied if there is specific provision to that effect in the law. 1952 S C R 572 : (AIR 1952 S C 115) (supra) decided that as there was no provision authorising a Town Area Committee to levy licence-fee it could not do so. That, however, did not mean that regulation did not include the power of issuing licences, though in the absence of a provision for charging licence-fees, licences must be issued without charge, if bye-laws require the issue of a licence in order to regulate trades or callings which a Town Area Committee can regulate under S. 26 (a) of the Town Areas Act.The view of the learned Judge, therefore, that the Town Area Committee could not issue a licence when framing rules regulating offensive trades or callings is not correct. The Town Area Committee would thus have the power to frame bye-laws requiring taking out of licences in case it exercises its power of regulation under S.26 (a) of the Town Areas Act in the same way as a District Board has the power of framing bye-laws under S. 174 (1) (k) requiring those carrying on certain trades to take out licencesThe U. P. District Boards Act deals with a larger area in which the area constituting the town area is also included. The Town Areas Act on the other hand deals with a smaller area and on principle when there is a body dealing with a larger area and from that area is carved out a smaller area which is entrusted to another body, the law giving power to the body governing the smaller area should prevail over the law giving power to, the body governing the larger area. If the substitution of the word committee for the word panchayat is merely a translation, as observed earlier, it makes no difference to the application of S. 93 (3) even after 1934. But if it is not treated as a mere translation and it is said that a new body was vested with powers under the Town Areas Act by the amendment of 1934, then it means that a smaller area was carved out from a larger area in 1934 and a new statutory body was created to govern it with certain powers; in those circumstances the powers given to the new statutory body in the smaller area carved out from the larger area will prevail.