R.M.Gunasekaran v. The Government of Tamil Nadu & Ors.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 27.10.2010CORAM:THE HONOURABLE MR.JUSTICE F.M. IBRAHIM KALIFULLAWrit Petition No.190 of 2002R.M.Gunasekaran.. Petitionervs.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... RespondentsPrayer: Writ petition filed under Article 226 of the Constitutionof India praying for the issuance of a Writ of Certiorari to call forthe records of the respondents relating to the order of the 1strespondent in G.O.(D)No.509, Municipal Administration, dated05.11.2001 and the Resolution of the second respondent in ResolutionNo.332, dated 29.03.2000 and the demand notice of the secondrespondent dated 21.12.2001 and quash them in so far as thepetitioner is concerned.For Petitioner : Mr.Kandavadivel DoraisamiFor Respondents : Mr.B.K.Girish Neelakandan Govt. Advocate for R1 Mr.R.Sivakumar Standing Counsel for R2.O R D E RThe petitioner seeks to challenge G.O.(D) No.509 dated05.11.2001 and the Resolution of the second respondent in ResolutionNo.332 dated 29.03.2000 as well as the Demand Notice of the secondrespondent dated 21.12.2001.2. The brief facts, which are required to be stated, are thatthe petitioner is a licenced wholesale dealer in paddy and rice. Heis 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 wholesalebusiness, the petitioner got a godown at New No.16-B (Old No.73),Rajee Chettiar Veedhi, Ukkadam, Coimbatore. According to thepetitioner, there are about 84 wholesale paddy and rice merchants inCoimbatore like that of the petitioner. The petitioner and the othersuch wholesale paddy and rice merchants stated to have obtainedlicences issued under the provisions of the Tamil Nadu EssentialTrade Articles (Regulation and Trade) Order, 1984. Apart from thesaid licence, it is stated that the petitioner also obtained alicence by paying appropriate licence fee issued by the secondrespondent-Corporation. According to the petitioner, the licence feewas initially Rs.250/- per annum till 1993 and it was increased toRs.500/- in the year 1994 and the same was continued till 1999-2000. 3. By the impugned Resolution of the second respondent dated29.03.2000, the licence fee was stated to have been increased for theyear 2000-2001 onwards in a sum of Rs.5,000/- per annum for eachlicenced paddy godown. The petitioner and similarly placed otherwholesale paddy and rice merchants were stated to have made arepresentation dated 25.01.2001 through their association forreducing the abnormal increase of the licence fee. 4. The second respondent-Corporation by its Resolution No.413dated 26.02.2001, stated to have passed a resolution to reduce thelicence fee from Rs.5,000/- to Rs.1,000/- per annum, which resolutionwas 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 ofthe second respondent and directed the second respondent to implementits earlier Resolution No.332 dated 29.03.2000 by fixing the licencefee at Rs.5,000/-. Consequent to the issuance of the said GovernmentOrder, the second respondent has raised a Demand Notice dated21.12.2001 demanding a payment of licence fee at the rate ofRs.5,000/- together with a sum of Rs.1,250/- by way of penalty forlate payment. 5. It is in the above said background, the petitioner approachedthis Court by filing this writ petition challenging the saidGovernment Order, Resolution No.332 dated 29.03.2000 and the DemandNotice dated 21.12.2001.6. I heard Mr.Kandavadivel Doraisami, learned counsel for thepetitioner, Mr.B.K.Girish Neelakandan, learned Government Advocatefor the first respondent and Mr.R.Sivakumar, learned counsel for thesecond respondent.7. Learned counsel for the petitioner by drawing my attention toSections 48, 49, 360 and 451 of the Coimbatore City MunicipalCorporation Act, 1981 (hereinafter called as 'the Act'), contendedthat 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 theAct, by taking into account the relevant circumstances, by passingnecessary resolution, placing of such a resolution by the secondrespondent-Corporation before the State Government under Sections 48and 49 of the Act, enabling the first respondent-State Government toeither approve or reject such a resolution. Having regard to thespecific stipulations contained in Section 49(1)(ii)(b) of the Act,in the event of rejection of such a resolution, the State Governmentshould give adequate reasons in accordance with the prescriptioncontained in the said provision. The learned counsel contended thatthe impugned Government Order does not give any valid reason, muchless reasons, which are specifically to be stated under Section 49(2)of the Act, in order to state that the impugned Government Order ofthe first respondent is valid. 8. The learned counsel also contended that there is nojustification for the second respondent to have passed a resolutiondated 27.03.2000 in its Resolution No.325 by increasing the licencefee for the year 2000-2001 onwards from Rs.500/- to Rs.5,000/-, whencompared to other Corporations, such as Corporations of Chennai,Madurai, Trichy and Tirunelveli, it has no proportion at all and onthat ground as well, the Government Order is liable to be set asideand the subsequent Resolution of the second respondent dated26.02.2001 in Resolution No.413 is to be restored. The learnedcounsel therefore contended that since the impugned Government Orderof the first respondent is not in consonance with the statutoryprescription namely, the Act, the same is liable to be set aside andconsequently, the Demand Notice dated 21.12.2001 is also liable to beset aside.9. Mr.R.Sivakumar, learned standing counsel for the secondrespondent, contends that when the State Government has issued G.O.(D) No.509, dated 05.11.2001, the second respondent-Corporation isbound to follow the said Government Order and therefore, the DemandNotice 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 contendedthat in paragraph 3 of the impugned Government Order, the StateGovernment has given its reasons as to why it chose to reject thesecond respondent's Resolution dated 26.02.2001 and such reasons arein consonance with the prescription contained in Section 49(1)(ii)(b)of the Act and therefore, the impugned Government Order should not beinterfered with.11. One other relevant fact to be noted is that whileentertaining this writ petition, interim order was passed on08.01.2001 granting stay of the operation of the impugned GovernmentOrder as well as the Demand Notice dated 21.12.2001 subject to thecondition 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 atthe said rate for the future years. The condition imposed in thesaid interim order having been complied with, the said order wasconfirmed by order dated 06.03.2002. The learned counsel states thatthe said interim order continue to remain in force till now.12. In the above said background, when the issue raised by thepetitioner is examined, I find that under Section 451(2)(a) of theAct, there is every power in the second respondent-Corporation toprescribe the fee in order to retain the licence valid and suchprescription of fee under Section 451(2)(a) of the Act, should befixed by the Council. Under Section 48 of the Act, the Mayor of thesecond respondent-Corporation should submit to the State Governmentcopies 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 oract, is in excess of the powers conferred by, or incontravention of, this or any other Act or of any rule,notification, regulation or by-law made or issued underthis or any other Act, or is an abuse of such powers oradversely affects the financial stability of theCorporation or the efficiency of municipaladministration as a whole.(c) such resolution, order, licence, permission oract is in contravention of any direction issued by theGovernment; or(d) the execution of such resolution or order, thecontinuance in force of such licence or permission orthe doing of such act is likely to cause danger to humanlife, health or safety, or is likely to lead to a riotor an affray:Provided that the Government shall before takingaction under this section on any of the grounds referredto in clauses (a), (b) and (c) give the authority orperson concerned an opportunity for explanation."13. A conspectus consideration of Section 360 of the Act, whichempowers the second respondent-Corporation to issue a licence for anyof the purposes mentioned in Schedule IV, Section 451(2)(a) andSection 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 toissue the licence for any wholesale dealer for paddy and rice, he hasalso been empowered to prescribe the fee for the licence to remainvalid for the period for which it is issued. The above power of theCouncil of the second respondent-Corporation is however subject tothe supervisory powers of the first respondent to examine thecorrectness or validity of any such action of the second respondent-Corporation and to set aside such action in the event any of thegrounds specified in Section 49(1)(ii)(a) to (c) exists. 14. Keeping the above statutory prescription in mind, theimpugned G.O.(D) No.509 dated 05.11.2001 is examined, I find that inparagraph 6 of the G.O., the State Government when it examined thevarious factors mentioned in the preceding paragraphs, chose toaccept the recommendation of the Commissioner of Local Administrationfor setting aside the second respondent's Resolution No.413 dated26.02.2001 and for restoring its earlier Resolution No.332 dated29.03.2000. The recommendation of the Commissioner of LocalAdministration has been referred to in paragraph 3 of the impugnedGovernment Order and the said part of the Govt. Order is relevant forour purpose, which reads as under:"nfhak;g[j;J}h; khefuhl;rp Mizahpd; nkw;go fojj;ij muRf;FmDg;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;wtpjp ,Uf;ifapy;. 26/2/2001y; eilbgw;w khkd;wf; Tl;lj;jpy; fl;lzj;ijjpUj;jpaikf;f jPh;khdk; bra;jJ rupay;y vd;Wk;. ,J rl;l tpjpfSf;FKuzhf 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;yvd;Wk; bjhptpj;J khkd;w jPh;khd vz;/413. ehs; 26/2/2001I uj;J bra;ankny 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;lkhkd;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;Fhpankah; mth;fsplk; nfl;;fg;gl;lJ/@ 15. As per the recommendation of the Commissioner, under theprovisions of the Corporation, in order to keep the licence valid orfor making any application for issuance of the licence, anyapplication should be preferred within 45 days prior to thecommencement 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 wasconflicting with the statutory provisions, that when 25% of thelincencees have paid the revised licence fee at the rate ofRs.5,000/- as per the earlier resolution dated 29.03.2000, therevision of such licence fee under Resolution No.413 dated 26.02.2001was not proper and therefore, the same is liable to be cancelled. 16. In accordance with the prescription contained in Section 49of the Act, the first respondent called upon the Mayor of the secondrespondent-Corporation to submit his explanation as to why the secondrespondent's subsequent Resolution dated 26.02.2001, which wasrecommended by the Commissioner of Local Administration, should notbe cancelled. The Mayor of the second respondent submitted hisexplanation dated 09.04.2001, pointing out that out of 72 members,including the Deputy Mayor, 30 of the Members made a requisition forrevising the licence fee fixed in the earlier resolution dated29.03.2000 and such requisition was made by the Members based on therepresentation of the Association representing the traders, thatbased on the said requisition, a special meeting was convened, inwhich unanimous decision was taken on 29.03.2000 in Resolution No.332in accordance with Rules 8(1)(2) and 11 of the Rules. 17. In reply to the said explanation of the Mayor of the secondrespondent-Corporation, the Commissioner once again was stated tohave pointed out that if the subsequent resolution dated 26.02.2001is implemented and revised licence fee is collected, it would causemonetary loss to the Corporation, apart from creating lack ofconfidence in the minds of the public, which was highlighted by theCommissioner in his report and the same was not specifically met bythe Mayor of the second respondent. By referring to the abovenamely, the recommendation of the Commissioner of LocalAdministration and the explanation of the Mayor of the secondrespondent-Corporation, the first respondent merely held that therecommendation of the Commissioner is accepted and the subsequentResolution of the second respondent-Commissioner dated 26.02.2001 inResolution No.413 is set aside. 18. When the said G.O. is tested in the light of theprescription contained in Section 49(1)(ii)(b) of the Act, I findthat, broadly the reason which weighed with the State Government wasthe alleged financial loss that might be caused to the secondrespondent-Corporation, the payment of the revised fee of Rs.5,000/-by 25% of the traders and any lack of confidence that may be createdin the minds of the public at large. If such revision is resorted toby the subsequent resolution dated 26.02.2001 under Section 49(1)(ii)(b) of the Act, apart from the other ground such as Resolution beingin contravention of the Act, or any other Act, or any rule,notification, regulation, by-law issued under the Act or in abuse ofsuch powers, it is specifically stipulated that such resolution ifadversely 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 suchcircumstances, such a resolution can be suspended or cancelled by theState Government. 19. Though the recommendation of the Commissioner of LocalAdministration would state that such a revision, as resorted to basedon the representation of the traders Association, would createmonetary loss to the second respondent-Corporation, except this ipsedixit, such a statement by the Commissioner of Local Administration,there appears to be no other material either placed before the firstrespondent-State Government or even with the Commissioner himself formaking such a statement. In fact, in the counter affidavit of thesecond respondent-Corporation, it is nowhere stated that the revisionsought to be introduced by the resolution dated 26.02.2001, wouldcreate serious financial instability, as stated by the Commissionerof Local Administration. 20. Unfortunately, no counter affidavit has been filed on behalfof the first respondent, even though this writ petition was pendingon the file of this Court for the past eight years, to state as tohow it was concluded by the first respondent that any financialinstability would occur by virtue of the Resolution dated 26.02.2001when it sought to revise its earlier Resolution dated 29.03.2000 andthereby bring down the licence fee of Rs.5,000/- to Rs.1,000/-. Infact, what has been extracted in paragraph 3 of the impugned G.O.,are the two factors noted by the Commissioner of LocalAdministration, namely, when 25% of the traders virtually acceptedthe earlier resolution dated 29.03.2000 and came forward to pay therevised licence fee of Rs.5,000/-, there was no reason for the secondrespondent-Corporation to pass the subsequent resolution dated26.02.2001 to reduce the licence fee. 21. The said reasoning of the Commissioner of LocalAdministration cannot be accepted for the reason that the subsequentresolution dated 26.02.2001, would operate only for the financialyear 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 isconcerned, the resolution dated 29.03.2000, which prescribed licencefee of Rs.5,000/- would continue to operate and even the rest of the75% of the traders were bound by the said resolution and there wouldnot be any escape from making the said payment and for that matter,the second respondent is bound to recover from those traders dealingwith paddy and rice as whole sale merchant at that rate. Therefore,the said circumstance cannot be a ground for interfering with thesubsequent resolution of the second respondent-Corporation dated26.02.2001. 22. The statement of the Commissioner of Local Administrationwith reference to the time limit within which any application forfresh 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 saidprescribed period, has also no meaning, inasmuch as the resolutiondated 26.02.2001 would adversely operate only for the financial year2001-2002 and it was not applicable for the period prior to the saidfinancial year. Therefore, whomsoever applied for fresh licence orrenewal of the licence by the cut off date 14.02.2001, they would beliable to pay the licence fee only at the rate as on that date,namely at the rate of Rs.5,000/-. Therefore, even the saidcircumstance would not have created any complication, much lessfinancial instability on that score. 23. Therefore, in the absence of any acceptable valid reasonsmentioned in the impugned Govt. Order or any other basic document,specifically referring to any financial instability or efficiency ofthe Municipal Administration as a whole of the second respondent-Corporation, there is absolutely no justification in the firstrespondent having merely referred to the recommendation of theCommissioner of Local Administration in order to set aside theresolution of the second respondent-Corporation dated 26.02.2001. 24. In such circumstances, it is open to the first respondent tore-examine the whole issue afresh and in the event of the firstrespondent able to hold that there were concrete materials to supportthe recommendation of the Commissioner of Local Administration thatthe resolution dated 26.02.2001 of the second respondent-Corporationwould really create financial instability or the said resolutionwould not in any way materially affect the efficiency of theMunicipal Administration as a whole, consider the validity of theresolution dated 26.02.2001 and pass appropriate orders by indicatingthe basis for availability of such materials while passing any freshorders.25. For the above said reasons, the impugned Govt. Order No.509of the first respondent, dated 05.11.2001 cannot be sustained andconsequently, the Demand Notice issued by the second respondent dated21.12.2001 cannot also be sustained. While setting aside theimpugned G.O.D.No.509 dated 05.11.2001 as well as the Demand Noticedated 21.12.1001, the issue is remitted back to the first respondentfor fresh consideration and for passing appropriate orders. 26. Since during the pendency of the writ petition, by virtue ofthe interim orders, the petitioner and other similarly placed traderswere paying the licence fee at the rate of Rs.2,500/- per annum, itis just and fair that the said status as regards the rate of feecontinue to remain in force till the first respondent-StateGovernment pass fresh orders as directed in this writ petition. 27. The writ petition stands allowed with a direction to thefirst 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 ofRs.2,500/- per annum pending fresh orders to be passed by the firstrespondent-State Government. No costs. Sd/-Asst. Registrar//true copy//Sub Asst.RegistrarATRTo1. 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.776321 cc to Government Pleader, Sr.No.776891 cc to Mr.R.Sivakumar, Advocate, Sr.No.77876 W.P.No.190 of 2002BVR {CO}TP/30.11.2010.