Case: Lala Ram (D) by L.R. &amp; Others Vs. Union of India &amp; Another

Each of the appellants is a licensee of the shops in dispute admeasuring 4.22 sq. yards upto 100 sq. yards situated at Qutub Road, Sadar Bazar, Delhi which have been in their occupation since pre-independence. As per the appellants, there has been previous litigation in respect of this very land and the same became evacuee property under the Administration of Evacuee Property Act, 1950 and was taken over by the Custodian. The appellants, being licensees of the shops, have regularly been paying the license fee to the Railways, at rates which were mutually agreed upon and have also been increased in the past. In 1977, the said licence fee was increased to Rs.21 per sq. yards per annum, while earlier, it was fixed at only Rs.18 per sq. yards per annum. The appellants received a notice dated 7.8.1980 from the respondents-Railways Authorities, about increase in the licence fee from Rs.21 per sq. yards to Rs.270 per sq. yards per annum. Representations made by theassociation were considered by theRailway Minister and order dated 26.9.1980 was passed, staying the auction thereof, with a further direction to examine their grievances. TheRailway Minister further considered the representation of theAssociation and observed that the auction of the said shops was not reasonable. He also stated that the revision in license fee was excessive and expressed his opinion with respect to reconsidering the whole case and increasing the license fee by 5% to 10%. The Railway Administration, after considering the case of the appellants, again passed an order dated 25.5.1987 to enhance the license fee @ Rs.270 per sq. yards with retrospective effect from 1.11.1980. TheAssociation had been making representations since receiving the aforementioned notice for enhancement dated 25.5.1987, and ultimately filed writ petitions before the High Court which have been dismissed. Hence, these appeals.

Court's reasoning:
We are of the considered opinion that no fault can be found with the aforesaid observations and no interference is required. The enhanced license fee cannot be held to be unreasonable or arbitrary, and as warranting any interference by a court ofthe enhanced license fee being 13 times, the earlier license fee amount seems excessive, and such an observation was also made by theRailway Minister in order dated 11.4.1981, but the enhanced license fee would be illusory if the same is compared with the prevailing license fee in the said market as applicable to private shops. A welfare state must serve larger public interest.means that the welfare of the people is the supreme law. A state instrumentality must serve the society as a whole, and must not grant unwarranted favour(s) to a particular class of people without any justification, at the cost of others. However, in order to serve larger public interest, the State instrumentality must be able to generate its own resources, as it cannot serve such higher purpose while in deficit. Merely because the appellants have been occupying the suit premises for a prolonged period of time, they cannot claim any special privilege. In the absence of any proof of violation of their rights, such concession cannot be granted todated 7.8.1980, enhancing the license fee was received by the appellants, and representations were filed by them through their Association, raising all their grievances to the effect that during a period of 30 years, the license fee paid by them had been enhanced about 15 to 20 times, without any justification and hence, they demanded justice. The same were considered by the then Railway Minister, and orders dated 26.9.1980 and 11.4.1981 were passed by him, observing that the license fee may be revised after every 5 years on the basis of justice and equity. Certain interim relief was also granted. Thus, in view of the above, we are of the opinion that the aforesaid demands should not have been made to apply with retrospective effect from the year 7-8-1980.