Ramaswamy, J.
1. These four writ petitions consisting of individual and juristic persons (Partnership Firms) and a lone lessee-licensees of cinema buildings (hereinafter called 'theatres') situation in West Godavari, Khammam, Nizambad and Mahboobnagar Districts are the petitioners. They invoked the constitutional remedy under Article 226 impugning 'the vires of R. 12 (3)' of the Andhra Pradesh Cinema (Regulation) Rules, (1970), hereinafter called 'the impugned Rule', mounting three pronged attack viz., infringement of their fundamental right to carry on trade or business in exhibiting cinematographs, on the anvil of (1) smack of statutory base, (2) excessive delegation and (3) unreasonable constraint in the exercise and enjoyment of their aforesaid right. Whether the base thus created on their four pillars (writ petitions) stand erected on solid foundation or shifting sand, is the subject of broach hereinafter. The reliefs claimed thereon are : (a) for declaration that the conferment of the rule-making power under Section 11 of the Andhra Pradesh Cinema (Regulation) Act (4 of 1955), hereinafter referred to as 'the Act' as ultra vires the Constitution; (b) to declare R. 12 (3) and the conditions if any imposed in Form 'B' Licence pursuant to the said rule fixing the prices of cinema tickets as illegal, void and ultra vires the Constitution and the rule-making power; (c) and to issue a direction to the respondents to permit the petitioner to revise the rates of admission to their theatres.
2. The allegations made in support thereof are that the petitioners are either proprietors or lessee-licensees of the theatres at their respective places of business. They constructed the theatres at a huge cost. They provided all amenities as per law. Pursuant to the licences granted under the provisions of the Act and the Rules in the prescribed 'B' Form to exhibit cinematographs, they are doing their business. As owners thereof and as incident to their business avocation, they have got a right to fix the rates of admission to permit the persons to enter into different classes to witness the cinematographs. But the respondents have impeded their free right to fix the rates of admission at their choice. The Act was legislated with the sole object to regulate only to ensure safety to the cine-going public in their theatres as enjoined under Section 6 and health and sanitation, as incidental to regulation. Sections 3 and 5 of the Act are intended to operate only in that field. Section 11 delegates power to the State Government to make rules regulating to work out successfully in implementation of the aforesaid purpose. Rules were initially made to meet those purposes. But the price control of cinema tickets is not within the purview of the Act and the Rules. Therefore, the fixation of maximum rates of admission to different classes cannot be said to carry out any of the purposes of hteAct. There is no specific provisions under the Act empowering the State Government or the Licensing Authority to fix the rates of admission. So, the rule-making power under Section 11 cannot travel beyond the above 'purposes'. They are incurring huge expenditure to provide the facilities and amenities prescribed, apart from the payment of minimum wages to workmen while meeting the mounting cost of exhibiting films. But in view of the unlawful interference by the licensing authority, viz., the second respondent in these writ petitions in fixing the rates of admission, the petitioners are put to great financial loss. The petitioners made repeated representations bringing to the notice of the licensing authorities of the loss thus being incurred and requrested to revise the rates of admission. Without any justification, they have been delaying revision of the rates of admission, thereby they are made to incur huge financial loss. Gradually the business be closed and be driven out from trade or business.
3. The power to fix rates of admission is a legislative act. Incases where the Parliament intended to operate detrimental to the fundamental right of a citizen in respect of fixing the rates of prices, vis--vis the right to trade or to carry on business, specific enactments like the Essential Commodities Act, 1955, Industrial (Development and Regulation) Act 1951 and the Defence of India Act and various Control Orders issued in pursuance of the delegation thereunder, have been brought on statute book inhibiting the free right of a citizen to fix the prices of essential commodities. If the Legislature intended to invade into this right of fixation of rates of admission, being a legislative act, the Legislature would have specifically provided for such a power under the Act itself. But the Act does not envisage any such power. A reading of the preamble, all the provisions of the Act and Rules, does not indicate any such power being given to the Legislature. The Legislature intended its delegate to make rules only to operate in the field adumbrated and adverted to earlier. Therefore, exercise of power by the delegated authority, viz., the State Government in making Rule 12 (3) lacks legislative competency and therefore unconsitutional. Even admitting that there inheres such power. It is not incidental to the main purpose and is of excessive delegation. There are no guidelines provided under the Act or the Rules made thereunder. Therefore it is arbitrary leading to capricious exercise of power. Even otherwise, it is an unreasonable restriciton on the exercise of their fundamental right enshrined under Article 19(1)(g). It is also arbitrary, offending Article 14 of the Constitution. The petitioners in all the four writ petitions have reiterated these contentions. Untrammelled by question of fact, questions of law arise for decision in all these writ petitions, we have therefore extracted the averments made in W. P. No. 480 of 1980 being first to approach.
4. The Government have filed their counter-affidavits in all these writ petitions. We are constrained at the outset, to express out dissatisfaction of lack of interest and apathy on the part of the Government to meet any of the legal contentions in any of the counter-affidavits filed, except stating few skeletal factual position. It is deplorable, that when, the vires of R. 12 (3) which has got a great public importance is specifically assailed the Government adopted usual apathy and did not bestow any thought, care or attention to deal with these points, providing necessary material to the Court. But these questions being questions of law bearing constitutional importance, we are not inclined to short circuit the issues on mere technicality but propose to deal them in extenso.
5. In the counter-affidavit filed in W. P. 480/80 it is stated that the licensing authority viz., 2nd respondent fixed the maximum rates of admission to different class4es in the theatres in the District in the year 1979. Within a short period thereafter the petitioners attempted to get them revised on the pretext of increast of expenditure. The Licensing Authority has to take into account the additional amenities provided in the interregnum and the purchasing capacity of the cine-going public. These factors required through examination. The Licensing Authority is anxious to consider the request. But without awaiting the decision, they rushed to this Court on vague feat. The Government made the impugned Rule. The Government also provided guidelines in G. O. Ms. No. 2041 Home Department dated 25-6-1953 and G. O. Ms. No. 744 Home Department dated 3-4-1965, hereinafter called 'the Guidelines' for fixing the rates of admission. On receipt of interim directions from this Court, the authorities considered the request in the light of the guidelines, examined various aspects and enhanced the rates of admission taking into account the authorities provided in the theatres.
6. In the counter-affidavit filed in W. P. no. 1279/80 it was averred that the petitioner No. 2 did not apply for enhancement of rates of admission. Petitioners 1, 3 and 4 made their applications. It was referred to the concerned officer for inspection and reports. They submitted the reports pointing out lack of some of the basic amenities and of their giving direction for rectification thereof. Without rectifying those defects and to evade providing the wanting amenities and sanitary conditions in the theatres, they approached this Court suppressing those facts and obtained directions.
7. In pursuance of the interim directions issued by this Court, the Licensing Authority made personal inspection of all the theatres. He found deplorable insanitary conditions and lack of basic amenities prevalent in the theatres. Yet he objectively considered and received the rates of admission depending upon the existing amenities etc. in the respective theatres. With regard to petitioner No. 1, he gave in paragraph No. 4 the particulars thereof and the reasons for increase or otherwise and for others in the subsequent paragraphs. He stated the existing, proposed and revised rates. They read thus :-
Peititoner No. 1 :
___________________________________________________________________________________Sl. No. Class. Existing rates Rates proposed by Rates enhanced nowthe management.___________________________________________________________________________________1. Balcony Rs. 2-60 Rs. 2-80 Rs. 2-802. I Class 2-00 2-65 2-203. II Class 1-20 1-50 1-404. III Class 0-60 0-75 0-70___________________________________________________________________________________ Petitioner No. 3 :
___________________________________________________________________________________1. Balcony Rs. 2-25 Rs. 3-25 Rs. 2-702. II Class 1-50 2-50 2-203. III Class 1-00 1-75 1-504. IV Class 0-60 1-00 0-70___________________________________________________________________________________ Petitioner No. 4 :
___________________________________________________________________________________1. Balcony Rs. 1-95 Rs. 2-50 Rs. 2-302. I Class 1-45 2-00 1-753. II Class 0-95 1-40 1-204. IV Class 0-45 0-70 0-60___________________________________________________________________________________ Petitioner No. 2 : ___________________________________________________________________________________1. Balcony Rs. 1-75 Rs. 2-30 Rs. 2-302. I Class 1-15 2-00 2-003. II Class 0-75 1-25 1-254. III Class 0-60 0-80 0-70___________________________________________________________________________________
8. In the counter-affidavit in W. P. No. 1279/80 it is pleaded that the rates were revised at request on 4-7-1978. No request thereafter was made except on 14-3-1980. Thereon it was referred to the Revenue Divisional Officer for report which is awaited. In the meantime he obtained interim directions on 27-3-80 from this Court. On receipt thereof on17-4-1980, he was called upon to produce evidence. It was received on 14-4-1980. By petition dated 16-4-80 he requested time for eight days which was acceded to. Yet he did not produce any evidence. The R. D. O. submitted his report stating that the petitioner did not provide any additional amenities. The record was considered and the request was rejected by memo dated 23-4-80. In W. P. No. 6335/80 it is stated in the counter-affidavit that a petition dated 4-2-1980 was filed requesting revision. On 26-4-1980 it was referred to the R. D. O. for inspection and report. It was submitted on 19-1-81. In the meanwhile the petitioner reduced the seating capacity. As per the rules, the concerned Commercial Tax Officer has to be consulted. On having consultation, the rates were revised by memo dated 22-3-1981 to the following effect :
(For revised rates see the table below) ___________________________________________________________________________________Existing classwise Classwise seating capacity and Now Seating capacitySeating capacity and rates of admission proposed and rates of admissionRates of admission. .by the proprietor. .allowed.___________________________________________________________________________________1. Ist Class 129 seats 1. Spl. Class 18 seats 1. Spl. Class 18 seats(Chairs) Rs. 1-00 (Box. Newly Rs. 3/- Rs. 2.20opened Class) (Box)2. 2nd Class 160 seats 2. Ist Class 140 seats 2. 1st Class 140 seatsRs. 0-70 (chairs) Rs. 2-25 (chairs) Rs. 1-703. 3rd Class 500 seats 3. 2nd Class 180 seats 3. 2nd Class 180 seats(benches) Rs. 0-50 (Chairs) Rs. 1-50 (Chairs) Rs. 1-204. 3rd Class 430 seats 4. 3rd Class 430 seats(Benches) Rs. 0-80 (Benches)Ladies 200Gents. 230 0-70___________________________________________________________________________________
9. Sri M. R. K. Choudary, learned counsel appearing for the petitioners in all these writ petitions, while reiterating the contentions in the pleadings, referred to us the preamble and purposes envisaged in Ss. 3, 5 and 6. From that he reiterated that the fixation of maximum rates of admission is not one of the purposes connected with the Act and pressed the contentions in the pleadings as part of his argument. He contends that the word 'Regulation' though is of wide meaning only intended to operate in the matter of construction or reconstruction. The faixation of maximum rates of admission is not one of the purposes nor an incidental power. Had the Legislature intended, to give such power to its delegates, the Act would have made specific provision in that regard. The absence is eloquent. A reading of the provisions and the rules made thereunder does not lend any such indication. Therefore the delegatee cannot make the rule beyond what is provided for except to the extent of cognate or analogous matters incidental to the main purpose. He draws an analogy from the rules made for admission of students into medical courses and the University Acts and the Statutes made thereunder for the actual running of the University subsequent to the admission. He states that rules of admission are only made to select candidates. Once candidates are selected and were admitted into courses, the rules ceased to have any application and thereafter the students are bound by the University Act and the Statutes made thereunder. On that premise he urges that once the rules were made for construction of the theatres, and the theatres are constructed as per the rules, the power gets exhausted. There is no further power to inhibit the fixation of right of admission by the licensees of the theatres unless there is a separate provision in the Act to that effect. In support of his contention that fixation of rates of admission is not one of the purposes of the legislative act, he places strong reliance on the decisions reported in a Division Bench decision of the Delhi High Court in Durga Chand v. Union of India, : AIR1979Delhi249 , a single Judge's decision of the Punjab and Haryana High Court in Deepak Theatres, Dhuri v. State, and also a judgment of the Madras High Court in Royal Arts v. State, : AIR1969Mad211 . He further contended that in construcing the provisions of the Act for the purpose of ascertaining its intention the law laid down in Pathumma v. State of Kerala, : [1978]2SCR537 , has to be kept in view. In this context he pressed for considerations the motive behind the the impugned Rule. According to him, this was made as a step-in-aid to the Andhra Pradesh Entertainments Act to levy higher rate of tax. He also contends that unless there is specific power given under the Act, no rules can be made in exercise of its delegated legislation. It is not a plenary power. If made, it would be without authority of law. For this contention, he relies upon the decision reported in Hukum Chand v. Union of India, : [1973]1SCR896 .
10. He further contends that even assuming that there is any such power to make rules, it is an excessive delegation of rule-making power. He contends that rules cannot override Statutes and Government cannot make rules fixing rates of admission under the guise of the rule-making power to trenching upon the legislative field. He relies upon Venkateswara Rao v. Govt. of Andhra Pradesh, : [1966]2SCR172 ; Sant Saran Lal v. Parsuram, : [1966]1SCR335 ; A. M. Sinha v. A. K. Biswas, : 1974CriLJ885 ; and Gwalior Rayon Mills v. Asstt. Commr. of Sales Tax, : [1974]94ITR204(SC) .
11. He further contends that even if there is any such power, the Legislature did not give any guidelines. It left to the arbitrary exercise of power by the executive. Therefore it is uncanalised and unguided power leading to exercise of unbriddled and arbitrary power. The guidelines provided in the G. Os. referred to earlier are not statutory; they are only administrative in character; they cannot supplement the statutory rules and they cannot be relied upon. Therefore, unless statutory rules are made as part of the impugned rule, the conferment of the power in the impugned rule is unwarranted or excessive. It is the usual legislative practice that after the rules are made, they should be laid before the Legislature immediately after its sitting and the Legislature has got the power to annul. Under this enactment, there is no such provision provided. Therefore that should be taken as one of the indicia to find that the Legislature did not intend to give such wide power of fixation of rates of admission, a legislative act, to the rule-makign authority. Lastly it is contended that even assuming that the Act provides for making such a rule and the rules are not made in excess of hthedelegated legislation and are valid; even then, the rule infringes their fundamental right to carry on the trade and their incidental right to fix rates of admission is ultra vires and unreasonably invaded their right; therefore it is violative of their fundamental right guaranteed under Art. 19(1)(g) of the Constitution. He relied on the decision reported in R. M. Seshadri v. District Magistrate, Tanjore, : [1955]1SCR686 .
12. We may mention at the outset that though in the course of argument the learned counsel stated certain figures of percentage said to be increased in the cost of exhibiting cinematographs, we are refraining to refer them in detail for what of any material placed before us to consider their correctness. Though the contention of arbitrariness in procedure violating Article 14 of the Constitution was raised in the pleadings, it is not pursued at the Bar. Therefore we are relieved to consider the same.
13. Sri A. Venkatarama Reddy, learned Government Pleader appearing for the respondents, strenuously repelled all the above contentions. He argues in the first instance, that the Act itself is a regulatory measure. The provisions of Ss. 3 and 5 of the Act read in the light of its preamble clearly contemplates that the Legislature intended to regulate all the steps in the business inclusive of the right to fix the rates of admission. It is an integral part of the provisions of the Act. The Legislature enacted the law to delegate the power to make rules. The regulation of exhibition, therefore, includes the power to fix the maximum rates of admission to different classes for entry into the theatres by the cine-going public. This power is incidental to the power of regulation of exhibiting cinematographs to prevent the arbitrary exercise of power by the owners of the theatres or lessees thereof, so as to avoid unhealthy competition in exhibiting cinematographs. Thus, it is incidental to the main purposes of the Act. In support of his contention, he relies upon S. Subba Rao v. P. Veeraraghaviah, AIR 1977 Andh Pra 63 and Jayanthilal v. Union of India, : AIR1970Guj108 . Therefore, the exercise of the power by the delegated legislation in making the impugned rule is thus backed by the legislative sanction and is within the competency of the State Government.
14. He further contends that the Government have wide power to issue instructions regulating the manner of exercise of power by Licensing Authority. He relies upon the decisions reported in State of Punjab v. Harikishan, : [1966]2SCR982 and Vishnu Talkies v. State of Bihar, : AIR1975Pat26 . In exercise of that power, the Government have issued G. Os. referred to earlier in the counter-affidavit. The delegation of the power is not excessive. The Legislature has given discretion to the Licensing Authority to fix the rates of admission. He relies upon R. K Porwal v. State of Maharashtra, : [1981]2SCR866 . He further contends that the Licensing Authority in each case has properly taken all the material available before them and revised the rates of admission in pursuance of the interim directions given by this Court and negatived in one case. There is no illegality committed by the Licensing Authority in revising the rates of admission. No material has been placed before the Court to substantiate as a fact the alleged arbitrary exercise of power in any of these writ petitions. Therefore the writ petitions are entailed to be dismissed.
15. In view of the above respective contentions, the questions that emerged for decision are:
(1) Whether the Act gives power to make the impugned Rule?
(2) Whether the fixation of the rates of admission are illegal?
(3) Whether the fixation of the rates of admission are illegal?
16. Before adverting to the above questions, it would be profitable to refer to the legislative history of the Act and the Rules.
Legislative history:
17. For the first time in 1918, the Central Legislature stepped in to regulate proper control of cinematograph exhibitions with particular reference to the safety of the persons to witness them and to prevent exhibition to the public of improper or objectionable films. In implementation therefo, the Cinematographs Act (2 of 1918) was brought on Statute Book to obtain licence subject to the conditions prescribed thereunder and certification of films suitable for public exhibition. The Act reigned the field nearly for 34 years with amendments made from time to time. With the ushering of the Constitution and with the avowed pledge in the fundamental principles of State Policy to promote welfare of the people, economic, social and cultural, to secure social order vis--vis the fundamental rights designed to entrust the task to its sovereign Legislature to make laws in that regard. As a step-in-aid, it enumerated the legislative power in Arts. 245 and 246 of the Constitution and earmarked to the Parliament and State Legislatures of the respective entries thereto enumerated in VIIth Schedule to the Constitution, namely, the Union List, State List and the Concurrent List. Thereunder Entry 60 of the Union List empowers the Parliament 'for sanctioning of cinematographs for exhibition' and Entry 33 of the State List empowers the Legislature of the State to enact laws relating to 'cinemas' subject to the provisions of Entry 60 of the Union List. As a consequence thereof, Act 2 of 1918 became a fixed blend necessitating to bring about an amendment. It was resolved to re-enact the provisions of Act II of 1918, separating the provisions relating to the sanctioning of films for exhibition relegating the licensing regulation of Cinemas (State subject) to the State Legislature. Thus, the Cinematographs Act (37 of 1952) was retained by the Parliament with suitable amendments.
18. Similarly, the State Legislatures set in motion to enact laws under Entry 33 of the State List. Several States made Laws similar to the Act. On the conferment of the power on the President of India bys. 3 of the Andhra Pradesh Legislature (Delegation of Powers) Act, 1954 (Central Act 45 of 1954), the Parliament enactaed the Andhra Cinemas (Regulation) Act (4 of 1955). It was brought into force with effect from 19th March, 1955. It was re-enacted by the Andhra Pradesh (Andhra Area). Re-enacting Act, 1956 (Act VI of 1956). By Section 3 of the Schedule of Andhra Pradesh Extension of Laws (Andhra Pradesh Act 23 of 1958), the Andhra Cinemas (Regulation) Act, 1954 was extended to the Telangana area. The Short Title was substituted in the Act by amendment of Andhra Pradesh Laws (Amendment of Short Titles) Act, 1961 (Act IX of 1961). Thus, the Andhra Pradesh Cinemas (Regulation) Act (4 of 1955) has come into force in Andhra Area with effect from 27th March, 1955 and in Telangana Area from April 1, 1960. As on the date of filing of writ petitions, the Act is in force in the entire State of Andhra Pradesh regulating the exhibition of cinematographs.
Meaning of the word 'Regulation' & Title a Key :
19. In view of the specific contentions raised by the parties, it is profitable to refer to the relevant provisions of the Act in detail. The prominent feature that strikes glaringly to the naked eye is the title of the Act, 'The Andhra Pradesh Cinema (Regulation) Act, followed by its preamble. It is true', quoted Chief Justice Lefroy, by Craies on Statute Law, Seventh Edition at page 192 that 'although the title of an Act cannot be made use of to control or express provisions of the Act, ye tif there be in these provisions anything admitting of a doubt, the title of the Act is a matter proper to be considered, inorder to assist in the interpretation of Act, and thereby to give to the doubtful language in the body of the Act a meaning consistent rather than at variance with the clear title of the Act (Shaw v. Ruddin, (1858) 9 Lr CLR 214, 219). The heart of the title is the word 'Regulation'. The prominence thus ascribed is to the word was 'Regulation'. But it lacks legislative definition of its own. Therefore, it is profitable to find what meaning has been ascribed to it either under the dictionaries or analogous statutes or Judge made law to understand its scope and reach and whether it would comprehend within its ambit the power to make rules to regulate maximum rates of admission. The term 'Regulate' is defined in Oxford Dictionary, as follows:
'to control, to govern, to protect by rules or regulations, to subject to guidance or restrictions, to adopt to circumstances or surroundings.'
IN Corpus Juris Secundum, Volume 76, p. 610, the meaning of the word 'regulate' is stated thus:
'The word 'regulate' is derived from the lating word 'rego and regula'. It is a word of broad import having a broad meaning and is very comprehensive in scope.'
20. IN Municipal Corporation of the City of Toronto v. Virgo, (1896) AC 88 at 93 (House of Lords (Privy Council - Ed.), Lord Davey, while considering the word 'Regulation' has held that:
'There is a marked distinction to be drawn between the prohibition or prevention of trade and the regulation or governance of it and indeed ............ a power to regulate and to govern seems to imply the continued existence of that which is to be regualted or governed.'
21. Sri C. Herman Prechette in 'The American Constitution' III Edition, at page 186, gives the meaning of the word 'Regulation' as the breadth of regulatory power which the Congress may exercise within its recognised scope of authority has seldom successfully questioned. Efforts to read restrictive interpretations into the word 'regulate' have almost uniformly failed. Regulations, the Court has said, means not only 'protection and promotion' but also 'restriction and even prohibition'.
2. In Cook v. Marshall Country, (1904) 196 US 261 at 272 Mr. Justice Brown of the Supreme Court of Congress to regulate inter-State Commerce, observed that :
'.......... But so long as they are adopted in good faith, with an eye single to the public welfare, they are as much entitled to the recognition of the general Government as if they were uniformly adopted by all the States.'
23. In this context, it is appropriate to refer to a decision of their Lordships of the Supreme Court in Indu Bhushan v. Rama Sundari, : [1970]1SCR443 , where the scope of the word 'regulation' was considered, it was held :
'The Dictionary meaning of the word 'regulation' in Shorter Oxford Dictionary is 'the act of regulating' and the word 'regulate' is given the meaning 'to control, govern, or direct by rule or regulation'. This entry thus, gives the power to Parliament to pass legislation for the purpose of directing or controlling all house accommodation in cantonment areas. Clearly, this power to direct or control will include within it all aspects as to who is to make the constructions under that conditions the constructions can be altered, who is to occupy the accommodation and for how long, on what terms is to be occupied, when and under what circumstances the occupant is to cease to occupy it, and the manner in which the accommodation is to be utilised. All these are ingredients of regulation of house accommodation and we see no reason to hold that this word 'regulation' has not been used in this wide sense in this entirety.'
24. It would, therefore, be reasonable to deduce that the word 'regulation' is a word of broad import having wide meaning comprehending all facets not only specifically enumerated in the Act but also embrace within its fold the powers incidental to the regulation envisaged in good faith with an eye single to the public welfare. Court has to recognise this power of the Government in public interest.
Relevant provisions in the Act and Rules and their salient features:
25. When such is the sweep of the word 'Regulation' engrafted in the title of the Act, what is the ambit it embraced in the Act is to be considered.
26. The Preamble of the Act is a key to open the mind of its makers adumbrating that it is intended to regulate the exhibitions by means of cinematographs in the State of Andhra Pradesh. Section 2(1) defines 'cinematograph' includes any apparatus for presentation of moving pictures or series of pictures. sub-section (2) of S. 2 defines 'Government' means the State Government. Sub-section (3) defines 'Notification' means notification published in the Andhra Pradesh Gazette. Sub-section (4) defines 'Place' includes a house, building, tent and any description of transport whether by water, land or air. Under sub-section (5), 'Prescribed' means prescribed by rules and under the Act.
27. Section 3 is important for consideration which reads thus:
'cinematograph exhibitions to be licensed; save as otherwise provided in this Act, on person shall give an exhibition by means of a cinematograph elsewhere than in a place licensed under this Act, or 'otherwise than in compliance with any conditions and restrictions imposed by such license.'
28. Section 3 posits that a person acquires no right to exhibit cinematograph except as otherwise provided in this Act. It was couched in the negative language. In the positive form a person shall exhibit cinematographs only in the licensed 'place' on his complying with any conditions and restrictions imposed by such licence. It thus highlights the regulatory control by licensing system and its control thereof bythe Licensing Authority.
29. Section 4 defines 'Licensing Authority' as to mean the District Controller having power to grant licences under this Act. The proviso thereto enables the Government by notification to constitute for the whole or anypart of the State 'such other authority' as it may specify in the notification to be the Licensing Authority for the purposes of the Act.
30. Section 5 imposes restrictions on powers of Licensing Authority to grant licence. It reads thus:
'(1) The Licensing Authority 'shall not grant a licence' under this Act, 'unless it is satisfied that'-
(a) 'the rules made under this Act' have been substantially complied with, and
(b) adequate precautions have been taken in the place, in respect of which the licence is to be given, to provide for the safety of the persons attending exhibition herein.
(2) 'Subject to' the foregoing provisions of this Section and 'to the control of' the Government, the Licensing Authority may grant licences under this Act, to such persons as that authority 'thinks fit and on such terms and conditions and subject to such restrictions as it may determine;
(3) The Government may, from time to time, issue directions to licensees generally or to any licensee in particular for the purpose of regulating the exhibition of any film or class of films, so that scientific films, films intended for educational purposes, films dealing with news and current events, documentary films or indigenous films secure an adequate opportunity of being exhibited, and where any such directions have been issued, those directions shall be deemed to be additional conditions and restrictions subject to which the licence has been granted.'
31. In respect of the matters specified in clauses (a), (b) and (c) of S. 6(1) of the Act set out in sub-section (1) of S. 6 are excluded in their application with reference to construction or reconstruction or use of or the installation of any machinery in anyplace or building to be used 'exclusively' for the holding of cinematograph exhibitions. The applications for permission thereof shall be made to the Licensing authority under the Act in accordance with the rules made in that behalf. Sub-sec. (2) gives power to the Licensing Authority, subject to the control of the Government and any rules made in that behalf, after making consultations with the authorities mentioned therein and for the reasons to be recorded, either to grant or refuse to grant licence or the permissions applied for.
32. Section 7, provides right of appeal to the aggrieved persons against the decisionof the Licensing Authority under S. 6.
33. Section 7 empowers the Government of the District Collector to suspend exhibition of films in certain cases while Section 9 prescribes penalties. Section 10 gives power to revoke or suspend the licence against which the right of appeal to the State Government and the power of the State Government to suspend the impugned order have been provided for. Though these provisions are are ......, a close reading of them would indicate that the regulation of licensing and control of the business of trade in exhibitions of cinematographs 'was couched in broad language'.
34. Section 11 gives power to the State Government to make rules by notification 'for carrying out the purposes of the Act'.
Sub-section (2) says that-
'In particular' and without prejudice to the generallity of the foregoing power, such rules may provide for-
(a) 'the terms', 'conditions and restrictions', 'if any', subject to which licences and permissions may be granted under the Act, ............... (The other clauses are not necessary for the purpose of this Act. Hence they are omitted.)
35. In exercise of the aforesaid powers, originally rules have been framed viz., Andhra Pradesh Cinema (Regulation) Rules, 1961 and were published in the Andhra Pradesh Gazette dated 26-7-1962 and they came into force with effect from July 26, 1962. Thereafter, the rules have been completely recast and new rules have been brought on the Statute viz., the Andhra Pradesh Cinema (Regulation) Rules, (1970), with appendices and forms prescribed therein hereinafter called 'Rules'. They were published in the Andhra Pradesh Gazette and they came into force with effect from August 14, 1970. Now for the first time impugned rule was made. Therefore, these rules and appendices are statutory in character and form part of the integral scheme of the Act.
36. Rule 2 (c) defines 'building' means - in relation to a permanent cinema and temporary cinema, a building which is constructed for permanent use with stone, etc.; Rule 2 (n) defines 'place' means town or village (including the hamlet or hamlets attached to the village); Rule 2 (o) defines 'prescribed' means prescribed by order of the Licensing Authority. Rule 2 (q) defines 'existing cinemas' mean the cinema buildings existing or those under construction prior to the commencement of these rules. Rule 4 empowers any person of the age of 20 years or any company or firm or association of individuals whether incorporated or not, to obtain or hold any permission or licence under the Act.
37. Rules 6 to 9 relate to compliance with the requirements of the specifications for construction of the cinema building and other general matters, as elaborated in the Appendices attached to the Rules etc.
38. Rule 11 in Chapter III provides the procedure for applying to the Licensing Authority for grant or renewal of licence under the Act and the formalities to be complied with.
39. Rule 12 gives power to the Licensing Authority to grant licence or permission on satisfaction of the conditions prescribed therein.
40. Rule 12 (3) is the relevant which is now the subject-matter of attack. Therefore it is necessary to extract the said rule in extenso. It reads thus:
'12 (3) (a). The Licensing Authority, while granting or renewing a licence in form-B shall also fix the maximum rates of payment for admission to the different classes in the licensed premises;
(b) These rates shall not be increased during the currency of the licence without an order in writing by the Licensing Authority permitting such increase.
(c) The order of the Licensing Authority is liable to be cancelled or modified by the Government, if they consider such a course just or necessary.
(d) Any person aggrieved by the order of the Licensing Authority may appeal to the Government who may make such order as is deemed fit.'
41. Rule 13 prescribes the duration of the period of licence granted under the Act shall be either for five years or one year respectively for permanent or temporary licences. Chapter IV deals with fees payable for inspection certificates, licences and appeals under the Act.
42. Chapter V deals with powers and functions of the Licensing Authority and the inspecting officers. It enjoins on the Licensing Authority or the officers specified therein to make necessary inspections and send the reports with the desirability of ..... of licence or renewal of licences applied for.
43. Rule 17 prescribed the power and functions of the Licensing Authority, etc. Chapter VI provides the right of appeal.
44. Rule 18 postulates that any appeal to the Government under S. 7 or sub-section (4) of s. 10 or clause (d) of sub-rule (3) of R. 12 shall be preferred within thirty days from the date of receipt of the order appealed against, accompanied by the stated particulars. The proviso gives power to admit appeals after the expiry of the prescribed period, provided the appellant satisfies sufficient cause for the delay caused in not preferring the appeal.
45. Appendix I, under para 6 specifies the requirements as to specifications for construction of the cinema building and other general methods.
46. Para 19 of Appendix I deal with :
'Seating arrangements : (1) The number of seats to be provided in the auditorium;
(2) The number of persons to be admitted ......... calculating at the rate of 25 persons per 9 square meters of floor area, .... .... And at the rate of 30 persons per 9 square meters of floor area, etc. .......'
47. Para 22-A prohibits the use of licensed premises for any other purposes except for the purpose for which the licence has been granted.
(The other appendices are not necessary to be dealt with in detail for the purpose of this case.)
48. Form 'B' is the licence for exhibiting cinematographs as required under sub-rule (2) of R. 12.
49. It is necessary to extract Condition (11) as prescribed in sub-rules (2) and (3) of R. 12 referred to and extracted earlier, which reads thus:
1. Maximum number of persons permitted and maximum rates of admission allowed in each part of the auditorium under sub-paragraph (2) of para 19 of Appendix I and sub-rule (3) of R. 12.
___________________________________________________________________________________Class of accomodation Maximum number of persons Maximum rates of admissionpermitted. allowed.(1) (2) (3)xx xx xx __________________________________________________________________________________ Note: These rates of admission shall not be increased during the currency of this licence without an order in writing by the Licensing Authority permitting such increase.
(The other conditions are not necessary to be dealt with.)
50. A resume of the relevant provisions thus surveyed would indicate 'the broad spectrum spread out the whole gamut of controlling the regulation of exhibiting cinematographs starting from construction and ending with appeals including imposition of terms, conditions and restrictions' subject to which licensees are to carry their trade or business thereunder.
Whether fixation of maximum rates of admission to different classes is one of the purposes:
51. As stated, earlier, Sri M. R. K. Choudary, learned counsel for the petitioner contends that the object of the Act is only to regulate the construction or reconstruction of the cinema theatres and providing health and sanitation as incidental thereat. The power thereafter gets exhausted. Section 11 empowers to make rules to achieve the said object. The fixation of rates of admission is a legislative act. There is no specific power in the Act to fix the rates of admission. Therefore fixation of maximum rates of admission is not one of the purposes of the Act. There is no policy or guidelines given under the Act except to regulate the above contended purpose. Undoubtedly there is no specific provision empowering the rule-making authority to frame the impugned rule. Therefore the first question that arises for consideration is, whether fixation of the maximum rates of admission to different classes is one fohte purposes and hwether the Legislature intended to give such power to the State Government to frame the impugned rule. Whether such a power inheres in the Act has to be gathered from a consideration of all the provisions of the Act, Rules and Appendices together. We have already considered earlier the meaning of the word 'Regulation' in the context of the title of the Act.
52. Willoughby on American Constitution, II Edition, at page 1750, in connection with the right of a citizen to trade vis--vis public interest, construed the scope of regulation and said : 'The Constitutional Authority of the State to regulate private services and the use of private property affected with a public interest is 'often spoken of' as embracing within the meaning of the so-called police power. The term 'Police Power' ..... originally gave a signification 'broad enough' to include within its scope 'all the general regulative powers of the State and thus to embrace the specific power over public employment and those affected with public interest.'
53. In a regulatory measure the Legislature should lay down its policy and indicate the rule of line of action which would serve as a guidance to the implementing authority. The Court would consider as to what is the scope of the regulation, its operation and effect on the exercise of the rights of the citizen in Part III of the Constitution. When large powers are given to certain authorities, the exercise whereof may make serious inroads into the rights of the citizen. Court has to see whether there is any guidance to be collected from the Act itself, its object, its controlling provisions in the light of the surrounding circumstances the Legislature takes note of which the Court might take judicial notice. The Court would put up such construction which would effectually implement the provisions of hteAct to achieve its object and if possible avoid construction which would frustrate the very object of the legislation. The Court would also endeavour to find whether the Act provides any policy or nourishment by proper environment to the rule-making authority to frame rules to regulate the exhibition of cinematographs.
Whether the Act intended only limited purpose:
54. Before embarking on consideration of the provisions in the Act, it is to be consdiered whether the Act intended to serve only the limited purpose contended for as extracted earlier or whether it intends to embrace all the facets relating to the exhibition of the cinematographs. As held already, that the title fohte Act itself indicates the meaning of the word 'regulation' with a wide meaning comprehending all facets not only specifically enumerated in the Act and the rules but also embrace within its fold the powers incidental to the regulation under the statute.
55. A citizen gets a right to exhibit cinematographs only on obtaining licence from the licensing authority. He was injuncted from exhibiting cinematographs 'otherwise than in compliance with any conditions and restrictions imposed by such licence.' The licensing authority, as enjoined under Section 5, shall not grant licence under this Act unless it is satisfied that the rules made under the Act have been substantially complied with. It shall also be subject to such terms and conditions and subject to such restrictions as may be determined by the licensing authority and be further subject to the control fohte Government. Section 5 demonstrates that the licensing authority is empowered to issue directions generally for a particular purpose regulating the exhibition of any films or class of films for scientific or educational purposes or films dealing with news and current events or documentary films or indigenous films to impart and disseminate scientific, educational and current news to the people by means of exhibiting cinematographs. To achieve that objective, power of regulation is reserved in the licensing authority by issue of general or special directions. They were declared to be additional conditions or restrictions as part of conditions subject to which the licence has been granted. This is also one of the guidances given by legislative policy laid down in the Act. Thus, it would indicate that 'the policy was laid in broad terms' and the right to exhibit cinematographs and the right to trade or business in connection therewith are made to acquire subject to the terms and conditions of the licence under the Act or Rules and further subject to such restrictions, terms and conditions as may be determined by the licensing authority.
56. In Jullundur Rubber Goods Manufacturers' Association v. Union of India, : [1970]2SCR68 it was held:
'Where legislative policy is enunciated with sufficient clearness or a standard is laid down the Courts will not interfere. It will depend on consideration of the provisions of a particular Act including its preambles as to the guidance which has been given and the legislative policy which has been laid down in the matter.'
57. Therefore, the Legislature indicated in Section 3 read with Section 5 and preamble laying down its broad policy specifying the purposes; adumbrated the powers and vested them in the licensing authority or notified officer and the State Government to carry out them. Power was given to the State Government to make rules regulating such conditions, restrictions and terms subject to which the licence could be granted and the general control. Thus, it could be seen that the purposes mentioned are neither exhaustive nor conclusive.
58. Section 11 gives power to the Government to make rules by notification to carry out the purpose of this Act; in particular and without prejudice to the generality of the foregoing power, such rules may provide for the terms, conditions and restrictions, if any subject to which the licences and permission may be granted under the Act. Thus, the Act specifies the purposes, adumbrates the power and vests the powers in the authorities mentioned therein. It may be mentioned that it is implicit in the nature of the business of exhibiting cinematographs that several incidental restrictions, conditions and terms are to be imposed for the successful operation of the exhibition of cinematographs. Therefore it may not be possible or practicable to specify, particularise or enumerate with precision in the Act as a catalogue. It depends upon varying and fluctuating factors depending upon the local exigencies. Under these circumstances, the Legislature felt expedient to leave the detaus to be worked out by the rule making authority. In this context, the dictum of Justice Holmes is apposite to state : 'The meaning of a sentence is to be felt not proved. The general purpose is an important aid to meaning then any rule, grammer or formal logice, may lay down.' The policy of a statute should be drawn out of its terms as 'nourished by the proper environment' and not like nitrogen out of the air as held in D. A. Schulte Incorporated v. Gagni, (1945) 328 US 108 at pp. 121-122. This would equally apply to the facts in the present case.
59. Thus it could be seen that the object of the Act does not appear to confine its operation only within the limited campus contended for. On the other hand, it appears to have animated to give power to make rules to embrace all the legitimate activities connected with the exhibition of cinematographs.
60. It is to be remembered that no specific provision in the Act is assailed. Only R. 12 (3) is subject of attack. When Legislature while empowering the Government to make rules enumerated its policy deliberately in broad language 'terms, conditions and restrictions' subject to which licence may be granted to exhibit cinematographs, it appears to have intended that the rules thus made would subserve not merely the enumerated but any other legitimate incidental purposes necessary to carry them out effectually.
61. Therefore it has to be seen whether fixation of maximum rates of admission to different classes is one of the purposes envisaged under the Act. Witnessing cinematographs is an amusement to every person, rich or the lowest of the low. This habit has spread out widely even into the remotest villages or hamlets in the rural areas too and by now became an accustomed part of living. The Act itself provides for licence to permanent, semi-permanent and temporary theatres at any place. 'Place' has been defined in Rule 2 (n) to mean town or village including hamlet or hamlets attached to the village. Therefore, theleg intended that the power to regulate licensing of the exhibition of the cinematographs in all places situated at every nook and corner of the State. A majority of the population in the country are illiterates. Exhibition of cinematographs became media to impart education not only of the news, current events, but also of scientific, educational etc. (and) mythological stories of historical importance. Majority of population are poor, semi-middle class and middle class sections of the society. The business assumed public importance.
62. It is settled law that the Court can take judicial notice of the matters of common knowledge or well-known facts. Therefore we can safely take notice of them. In such circumstances, the question for consideration is whether the right to fix the right of maximum admission is incidental to the exercise of the said power. It admits of no argument that when the object of the cinematograph is to impart education or amusement to the cine-going public it is of a welfare measure. Would it not be reasonable to conclude that the right to fix the maximum (sic) purpose? The analogy of rates of admission of students into medical colleges and governance by the University Act and Statutes thereafter and exhaution of power drawn by Sri Choudary, from experience as Ex. Government Pleader though alluring is inapt to apply to a Cinema Regulation. The Act, Rules and Appendices are integral part of comprehensive composite scheme. It intended to operate in the circumstances prevalent not only in praesenti but also to develop in futuro.
63. In Corpus Juris Secundum, Vol. 76, at page 612, it is stated: 'The power to regulate carries with it full power over the thing subject to regulation, and in the absence of restrictive words the power must be regarded as 'plenary over the entire subject.' ... ... It has been held to contemplate or imply the continued existence of the subject-matter to be regulated. The power to regulate includes the power to restrain, and indicate restriction in some respects and the term 'regulate' embraces the idea of fixing limitations and restrictions, and contemplates the power of restriction or restraint.' 'The word necessarily denotes some degrees of restraint of acts usually done in connection with the thing to be regulated.' ... ... ... ... 'The power to regulate may include the power to licence or to refuse a licence, or to require a bond from an applicant therefor, or to require the taking out of a licence and it may include the power to tax or to exempt from taxation but not the right to impose a tax for revenue.'
64. Thus, it could be seen that the power to regulate would also include the power to restrain and embrace the idea of fixing limitations and restrictions on the acts usually done in connection with the right to trade or business under existing licence and includes the power to tax or to exempt from taxation. But in exercise of this power, the Government have no right to impose tax for revenue.
65. It is not the contention that the Government is collecting any revenue from the rates of admission fixed. We will deal separately with the argument that the rates of admission are only motivated to fix the entertainment tax at an appropriate stage. But suffice to state here that the State is not deriving any revenue from the maximum rates of admission fixed under the impugned rule.
66. In Corporation of Calcutta v. Liberty Cinema, : [1965]2SCR477 it is laid donw by their Lordships of the Supreme Court that (at p. 1117):
'... ... ... fixation of rates of taxes may be legitimately left by a statute to a non-legislative authority for we see no distinction in principle between delegation of power to fix rates of classes of goods and power to fix rates simpliciter, if power to fix rates in some cases can be delegated then equally the power to fix rates generally can be delegated.'
67. In Sukhanandan Saran Dinesh Kumar v. Union of India, : [1982]3SCR371 it was laid down that the power to fix minimum price or grant of rebate comprehends the power to provide such incidental and anicllary regulations which will ensure the price. Chief Justice Waite held in Munn v. People of Illinois, (1876-78) 94 US 113 that 'the right to establish the maximum of charges as one of the means of regulation is implied. In fact, the common law rule which requires the charges to be reasonable is itself a regulation as to price. Without it the owner could make his rates at will and compel the public to yield to his terms or forego the use.'
68. In Craies on Statute Law, 7th Edition at page 258, it is stated that if the legislature enables something to be done, it gives power at the same time, 'by necessary implication, to do everything which is indispensable for the purpose of carrying out the purposes in view.'
69. The contention of Sri Choudary that the power to fix maximum rates of admission is a legislative power and that it should be made manifest from the provisions of the Act, is not tenable. If Rule 12 (3) is in the nature of an impost intended to empower the State to collect revenue, then undoubtedly it is a legislative act and unless there is a specific charging provision under the Act or specific delegation thereof the State Government derives no power to make the impugned rule. But if the object is only incidental or ancillary for effective exercise of the regulatory power, then it is not mandatory that the Act itself should provide such a power. Witnessing a motion picture has become an amusement to every person; a reliever to the weary and fatigued; a reveller to the pleasure seeker; an imparter of education and enlightment enlivening to news and current events; disseminator of scientific knowledge; perpetrator of cultural and spiritual heritage to the teeming illiterate majority of population. Thus, cinema have become tools to promote welfare of the people to secure and protect as effectively as it may a social order as per directives of the State Policy enjoined under Article 38 of the Constitution. Mass media through motion picture has thus become the vehicle of coverage. The passage of time made manifest this growing imperative and the consequential need to provide easy access to all sections of the society to seek admission into theatre as per his paying capacity. Though it is business incident, the petitioners having created an interest in the general public therein, it has become necessary for the State to step in and regulate the activity of fixation of maximum rates of admission to different classes as a welfare weal. Thereby it became a legitimate ancillary or incidental step in furtherance of the regulation under the Act.
70. The decision in B. C. Banerjee v. State of M. P., : [1971]81ITR105(SC) relied on by the petitioners for the proposition that the tax cannot be levied under the rule has no application to the facts in this case. Therein, the question that arose was, whether the Government under the guise of the rule making power can impose excise duty through an amendment to the rule. The object of the Excise Act is to get revenue to the State by imposing duty on the exercisable articles. Section 25, as stated in para 12 of the judgment, limits, the power to impose excise duty on specified four items. Section 62 gives power to the Government to make rules to carry out the purposes of the Act. During the currency of the contract, rules were amended imposing levy of duty of minimum quantity of the liquor and to pay monthly deficit of the minimum duty on unlifted liquor. It was challenged as being ultra vires. While considering the scope of the Act, their Lordships have considered in paragraphs 17 and 18 of the judgment holding that the Legislature has levied excise duty on those articles which come within the scope of Section 25. The rule making authority has not been conferred with any power to levy duty on any article which do not fall within the scope of Section 25. Rule was amended giving power to the Government to levy duty on liquor which the contractor failed to lift. While considering that question, it was held that :
'No tax can be imposed by any bye-law or rule or regulation unless the statute under which the subordinate legislation is made specifically assumed that the power to tax can be delegated to the executive. The basis of the statutory power conferred by the statute cannot be transgressed by the rule-making authority. A rule-making authority has no plenary power. It has to act within the limits of the power granted to it.'
Thus the rule was struck down. We have carefully analysed the facts. The ratio has no application to the point in issue.
71. Sri M. R. K. Choudary then relies upon the provisions of the Essential Commodities Act, etc. and contended that such Acts have provided specific power to fix the prices of the essential commodities. Absence of such a provision in the Act is fatal. Those provisions have no application as an analogy to the facts in this case. The purposes therein are different. There is a direct interference with the right of the owner of the produce to fix the prices of essential articles or goods produced and that it was sought to be regulated in the public interest. Therefore the Legislature stepped in and made law delegating power under the Act to fix prices of essential commodities. The Division Bench decision of the Delhi High Court in Durga Chand v. Union of India, : AIR1979Delhi249 (supra) relied upon by the learned counsel, in our considered view, with due respect has not correctly laid down the law. Therein, the learned Judges agreed that fixation of rates of admission is a 'laudable purpose' but assumed that it is in the nature of 'power to fix price control'. Further, it would appear from a reading of the provisions extracted in the judgment that there is no specific power delegating to the rule-making authority to impose such restrictions or conditions in the licence. We have carefully considered the judgment. We are unable to follow the ratio.
72. Similarly, in Deepak Theatre, Dhuri v. State, (supra) a single Judge of the Punjab and Haryana High Court had taken the view as that of the Delhi High Court referred to above, but therein, the learned Judges proceeded on the assumption that the Act postulates only three enumerated objects referred to therein and were to be exhaustive of the purposes. On the premise the learned Judge held that there is no section in the Act authorising the licensing authority to prescribe classes in the cinema hall and to fix the rates of those classes. It is more in the nature of a dictum without providing any persuasive reasoning. In view of the consideration made on the subject by us, we are unable to agree with the learned Judge that there is no power under the Act to fix rates of admission. Therefore we are not persuaded to accept the same as correct law.
73. Similarly, the decision in Royal Arts v. State of Madras, : AIR1969Mad211 (supra) also does not provide us any assistance. Therein the Government amended the rule directing the owner of the cinema theatre to collect fee of 0-05 ps. For each cycle kept in the cycle stand. That was challenged as being ultra vires of the power that learned Judge followed the earlier decision of that Court and held that the principle laid down in that decision apart from being applicable, the impugned order itself states that what is to be collected from the users of the cycle-stand is a fee for such user. In that event the licensee can correlate the quantum of the fee to the actual expenses incurred for providing amenities. That is the basis on which the learned Judge proceeded. Therefore it is also not of any help to decide the point in this case.
74. Thus, on principle and on authority, it leads to an unmistakable conclusion that the right to fix maximum rates of admission to different classes is an incidental or ancillary purposes of the regulation to exhibit cinematographs. Under Section 11, the State Government is empowered to frame R. 12 (3) of the Rules.
Delegation whether valid:
75. The next contention of Sri M. R. K. Choudary is that if it is held that the Legislature intended that the fixation of maximum rates of admission to different classes is one of the purposes which the Act seeks to achieve, then, it being a legislative act, the Legislature abdicated its legislative function by delegating the power to the State Government. Therefore the impugned rule is excessive and thereby unconstitutional. In support thereof, he relied upon a decision reported in Gwalior Rayon Mills v. Asst. Commr., Sales Tax, : [1974]94ITR204(SC) (supra).
76. The principle of delegating the legislative function to the subordinate legislation is now well known. The legislature cannot delegate its power to make a law but it can make law to delegate power to determine some facts or state of things upon which the law makes or intends to make its own action depend. The law being flexible having laid down broad principles of its policy, Legislature then can leave the details to be supplied by the administrator to adjust to the rapid changing circumstances.
77. Schwartz on American Administrative law at page 21 says that : 'The discretion should not be so wide that it is impossible to discern its limits.' The delegate cannot transgress its limits bounded. Stream cannot raise higher than the source.
78. Willoughtry on 'Constitution of United States' Second Edition, Volume III, at page 1637, stated:
'A discretionary authority may be granted to executive and administrative authorities - (1) To determine in specific cases when and how the powers the legislatively conferred are to be exercised; (2) to establish administrative rules and regulations binding both upon their subordinates and upon the police, fixing in detail the manner in which the requirements of the statute are to be met and the rights created therein to be enjoyed.'
Therefore, what is left to the administrative official is not the Legislative determination of what public policy demands but simply the ascertainment of what the facts the case require to be done according to the terms of the law by which it is governed. It Union Bridge Co. v. United States, (1906) 204 US 364 at p. 368, approved the statement of law in Lock's Appeal, 72 Pa. 491 at 498 wherein it was held:
'To assert that law is less than a law, because it is made to depend on future event or act, is to rob the legislature of the power to act wisely for the public welfare whenever a law is passed relating to a state of affairs and yet developed or to things future or importance to fully know........
To deny this would be to stop the wheels of the Government. There are many things upon which wise and useful legislation msut depend which cannot be known to the law making power and msut therefore be subject to enquiry and determination outside the halls of legislation.'
79. This statement of law in Lock's appeal was approved by the Lordships of the Supreme Court in Hamdard Davakhana v. Union of India, : 1960CriLJ671 .
80. In Corpus Juris Secundum, Vol. 73, at page 326, it is stated thus-
'The effectuation of principle and policy declared by legislature can be confided to agency created to administer the law in which the principle and policy are declared.'
81. At pages 327-328 it is stated:
'The legislature may establish a broad statutory rule and delegate to an administrative agency the duty of specifically applying the statute within the framework of a sufficiently definite primary standard. In other words the legislature need not specify precisely each ancillary act that may impose the duty to be performed within a prescribed field for a designated end, leaving to the discretion foh te administrative body the selection of appropriate methods and the other administrative details to be employed in accomplishing the statutory purpose ...... ......'
'Where it is impracticable to lay down a definite comprehensive rule, it is not essential that a specific prescribed standard be expressed.'
82. In Licher v. U. S. Cal Massons, Ohio, (1944) 324 US 742 it was laid down that :-
'The Congress need not supply administrative officials with a specific formula for their guidance in a field where flexibility and adaptation of the congresstional policy to infinitely variable conditions constitute the essence of the programme.'
83. In Hamdard Dawakhana v. Union of India, : 1960CriLJ671 (supra) their Lordships of the Supreme Court, speaking through Kapur, J. held (at p. 566):
'.. ..... ... by delegated legislation the delegate completes the legislation by supplying details within the limits prescribed by the statute .. ... .....'
84. In Banarsi Das v. State of Madhya Pradesh, : [1959]1SCR427 their Lordships held that:
'This therefore is clear authority that the fixing of rates may be left to non-legislative body. No doubt when the power to fix rates of taxes is left to another body, the legislature must provide guidance for such fixation ... ... ...
we first wish to observe that the validity of the guidance cannot be tested by a rigid uniform rule; that must depend on the object of the Act giving power to fix the rate.'
85. In Corporation of Calcutta v. Liberty Cinema, : [1965]2SCR477 (supra) the Supreme Court, per majority, held (at p. 1109):
'No doubt a delegation of essential legislative power would be bad. But the fixation of rates of tax is not of the essence of legislative power of taxation. The fixation of rates of taxes may be legitimately left by a statute to a non-legislative authority, for there is no distinction in principle between delegation of power to fix rates of taxes to be charged on different classes of goods and power to fix rates simpliciter, if power to fix rates in some cases can be delegated then equally the power to fix rates generally can be delegated.'
86. In Arnold Rodrick v. State of Maharashtra, : [1966]3SCR885 , it was laid down that the delegation is necessary and the rules made are 'ancillary and subserve' the purpose of the Act. That is the reason why the Legislature appears to have given wide power under Section 5 read with Section 11 in that behalf.
87. In Vasanlal Maganbhai v. State of Bombay, : 1978CriLJ1281 their Lordships of the Supreme Court, speaking through Gajendragadkar, J. (as his Lordship then was) while considering the question relating to the delegation of power to the rule-making authority to fix the market rate of rent, held that:
'The relevant factors having been specified by Section 12(3) when the Provincial Government considers the question of fixing a lower rate of maximum rent payable in any particular area it is expected to adopt a basis which is suitable to that particular area. The relevant conditions of agriculture would not be uniform in different areas and the problem of fixing a reduced maximum rent payable in the respective areas would have to be tackled in the light of the special features and conditions of that area; that is why a certain amount of latitude had to be left to the Government in fixing the lower rate of the maximum rent in the respective areas and that is intended to be achieved by giving it liberty to adopt a basis which it thinks is suitable for the area in question ... ... ...' validity of guidance required to make delegation of power cannot be judged by a stereotyped rule.'
88. In Gwalior Rayon Mills v. Asst. Commr., S. T., : [1974]94ITR204(SC) (supra) which was relied upon by Sri M. R. K. Choudary, far from helping the petitioners, supports the view we have taken. Therein, the validity of Section 8(2)(b) of the Central Sales Tax Act, 1956 was attacked as being excessive delegation. While upholding the validity of delegation, their Lordships have laid down the law as culled out from paragraphs 22, 26 and 29 of the judgment, in Head Note A thereof which reads thus:
'The legislature in conferring power upon another authority to make subordinate or ancillary legislation must lay down policy, principle or standard for the guidance of the authority concerned... ... .....
the Parliament has, under Section 8(2)(b) of the Central Sales Tax Act, not fixed the rate of Central Sales Tax but ahs adopted the rate applicable to the sale or purchase of goods inside the appropriate State in case such rate exceeds 10 per cent. The Parliament in doing so has laid down legislative policy and has not abdicated its legislative function. The object of the law apparently is to deter inter-State sales to unregistered dealers as such inter-State sales would cailitate evasion of tax. It is also not possible to fix the maximum rate under Section 8(2)(b) because the rate of local tax varies from State to State, the rate of local sales tax can also be changed by the State Legislature from time to time. Section 8(2)(b) of the Central Sales Tax does not suffer from the vice of abdication or excessive delegation of legislative power.'
89. It is to be seen that in fixation of maximum rates of admission to different classes regard must be had (a) to the theatres-permanent, semi-transparent or temporary; (b) different places at which the theatres are situated i.e., the city, town, village or hamlet; and (c) consideration of varied and inumerable fluctuating factors like cost of production, nature of amenities provided, cost of exhibition and (d) other relevant circumstances. 'It is to be remembered that a regulation is to operate not only to the existing theatres but also the theatres to be constructed or reconstructed in the years to ensue.' The legislature thereby mi9ght well have thought that the problem should be left to be tackled by the licensing authority. Thus it left enough freedom to the State Government to make rules or amend them from time to time. The problem is to be approached from the above perspectives. Rule 12 (3) is part of the composite scheme evidenced by the Act and the Rules made thereunder and if it is examined in the light of the above law and the area in which the Act intends to operate and facts and circumstances, it would be difficult to uphold the plea of the petitioners.
90. We are therefore inclined to hold that the Act being applicable not only to existing theatres but to be constructed or reconstructed in the years to ensure, at different places at which fluctuating factors prevail in praesenti as well as state of affairs yet (not?) developed or things in future fully not known, the regulation is a wise and useful welfare measure. It is thereby impracticable to lay down definite comprehensive rule. It is subject of an enquiry and determination outside the halls of legislation. Therefore the Legislature couched its policy in broad language with sufficient flexibility leaving to the State Government to make rules to adjust meeting the changing circumstances. It is not ncessary to specify precisely each ancillary act. Fixation of maximum rates of admission to different classes is not a legislative act. It can be delegated to the State Government to select appropriate methods and details to infinitely variable conditions. The legislature did not abdicate its legislative function. It has rightly delegated to the State Government. Rule 12 (3) is thus not in excess of the delegated power.
Whether Rule 12 (3) is ultra vires:
91. The next contention of Sri M. R. K. Choudary, learned counsel for the petitioner is that Rule 12 (3) is ultra vires of the power of the rule-making authority. As noticed earlier, though there is no express power empowering the State Government to make the impugned rule, on a consideration of the object and broad language couched in the Act, we held that the word 'regulation' takes within its ambit every legitimate activity reasonably connected with the exhibition of cinematographs. Admittedly, Section 11 gives power to the State Government to make rules and it is held that fixation of maximum rates of admission to different classes is incidental to the power of regulation.
Whether presumption are available to rules:
92. The rules being statutory (are) entitiled to the insignia of all the presumptions available to a statutory provision. At this context, it is relevant to note two decisions of the Supreme Court and one of Bombay High Court, which have got a bearing on the topic.
93. Their Lordships of the Supreme Court, in State of U. P. v. Baburam, : 1961CriLJ773 speaking through Subbarao, J. (as his Lordship then was) considering the scope of the Rule when it vires was assailed vis--vis the power of the Court to take judicial notice of the presumptions for the purpose of construction of rule and held thus (para 23):
'Rules made under a statue must be treated for all purposes of construction or obligation exactly as if they were in the Act and are to be of the same effect as if contained in the Act, and are to be judicially noticed for all purposes of construction or obligation. The statutory rules cannot be described as, or equated with administrative directions.'
94. In Mulchand v. Mukund, : AIR1952Bom296 a Division Bench of the Bombay High Court consisting of Chief Justice Chagla and Gajendragadkar, J. (as he then was) has to consider the scope of rule and held in that connection:
'Parliament or Legislature, instead of incorporating the rules into the statute itself, ordinarily authorise Government to carry out the details of the policy laid down by the Legislature by framing the rules under the Statute, and once the rules are framed, they are incorporated in the statute itself and become part of the statute, and the rules, must be governed by the same principles as the statute by itself.'
95. In J. K. Cotton Spinning & Weaving Mills v. State of Uttar Pradesh, : (1961)ILLJ540SC , Das Gupta, J. held:
'In the Interpretation of Statutes the Court always presume that the Legislature inserted every part thereof for a purpose and the legislative intention is that every part of the Statute should have effect. These presumptions will have to be made in the case of rule-making authority also.'
96. We have no hesitation to hold that the Rules being statutory having been duly made by delegated authority, must be treated for all purposes of construction or obligations exactly as if they are part of the Act and be of the same effect as if contained in the Act. Courts are to take judicial notice thereof. The Court always presumes that the Legislature inserted every part for a purpose and should have effect. These presumptions will have to be made in the case of rule-making authority.
Principles to be kept in
97. Therefore in adjudging the vires of the rule, we have to keep in view the following principles: It is now well settled that there is a presumption in favour of the constitutionality of the Statute and the burden is upon him who attacks to hsow that there has been a clear transgression of the constitutional principles. It must be presumed that the Legislature understands and correctly appreciates the need of its people and that the laws it enacts are directed to problems which are made manifest by experience. The Legislature is free to recognise the degree of harm andmay confine its restrictions to those where the need is deemed to be clearest. In order to sustain the pretake into consideration matters of common knowledge, maters of report, history of the time and may assume every state of facts which can be conceived existing at the time of legislation. While giving latitude to the Legislature, is good faith and its knowledge of existing conditions are to be presumed, if there is nothing on the face of the law or the surroundign circumstances brought to the notice of the Court of the intendment the Legislature seeks to achieve is discernible from the Statute itself, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation. The principles apply proprio vigore to amendments to the Act and amendments to rules as well.
98. In Attorney General v. Great Eastern Railway, (1880) 5 AC 473 at p. 478, Lord Selborne held that:
'The doctrine of ultra vires ought to be reasonably and not unreasonably understood and applied and that whatever may be fairly regarded as incidental to or consequential upon those things which the Legislature has authorised ought not (unless expressly prohibited) to be held by judicial construction to be ultra vires.'
99. We respectfully follow the dictum as it would tersely apply to the facts of this case. When the enactment is assailed as being ultra vires and unconstitutional what has to be ascertained is the true character of the legislation and for that purpose regard must be had to the enactment as a whole, its object, purpose and true intention and to the scope and effect of its provision and what they are directed against and what they aim at.
100. Of course, the Legislature cannot by-pass such constitutional prohibitions by employment of indirect methods. Therefore, the Court has to look behind the form and appearance to discover the true character and nature of the legislation.
101. We have to consider the plea in the light of the above law, whether the impugned rule is ultra vires of the rule-making power. Section 11 empowers the State Government to make rules regulating the terms, conditions and restrictions to be incorporated in the licence subject, to which a citizen should exhibit cinematographs in the licenced theatre. This section itself is not challenged. The power to fix maximum rates of admission to different classes is already held to be incidental or ancillary to the regulation exhibiting cinematographs. Therefore the Legislature empowered the State Government to make the rule. In that perspective, the absence of express provision does not take away the power of the State Government to make rules.
102. In this context, the observation of their Lordships of the Supreme Court in R. K. Porwal v. State of Maharashtra, : [1981]2SCR866 , speaking through Chinnappa Reddy, J. are relevant. It is held (para 9) :
'Absence of an express provision in the Act does merelymean that greater latitude is given to the rule-making authority to introduce regulation of making rules by stages and to ban on marketing activity outside the market. The latitude given to the rule-making authority cannot lead to the inference that the rule-making authority has no power to make a rule banning market activities outside the market once the market is established even when such a ban is found to be necessary.'
103. This pragmatic construction put up on the provisions of the Maharashtra Markets Act would equally apply to the circumstances of regulating the exhibition of cinematographs in the larger interests of the cine-going public.
Whether change in circumstances can be taken note of amend the Rules:
104. Sri M. R. K. Choudary, further contends that initially the Cinematographs Act was brought on statute in the year 1918 and after the advent of the Constitution, the Andhra Pradesh Act of 1955 has come into force. The Act is merely an extension of the Act of 1918 and there is no major change in the policy except necessitated constitutional bifuncation of legislative powers between the Parliament and ht establishments Legislatures. Therefore the circumstances prevailing in 1918 should alone be taken into account to adjudge whether the Legislature intended to give power to the rule-making authority to regulate the rates of admission. We are unable to accept this contention as being tenable.
105. In Home Building Loans Association v. Blaisdell, (1933) 290 US 398 (441), Chief Justice Hughes, speaking on behalf of the majority of the Supreme Court of America laid down that :
'When we consider the contract clause and the decisions which have expounded it in harmony with the essential reserved power of the States to protect the security of their peoples we find no warrant for the conclusion that the clause has been warped by these decisions from its proper significance or that the founders of our Government would have interpreted the clause differently had they had occasion to assume that responsibility in the conditions of the later day. The vast body of law which has been developed was unknown to the fathers but it is believed to have preserved the essential content and the spirit of the Constitution. With a growing recognition of public needs and the relation of individual right to public security, the Court has sought to prevent the perversion of the clause through its use as an instrument to throttle the capacity of the States to protect their fundamental interests. This development is a growth from the seeds which the fathers planted. It is a development forecast by the prophetic words of Justice Johnson in Ogden v. Saudnders, (1824-27) 12 Wheat 286-6- L Ed 631.'
106. The exhibition of cinematographs are to be licensed under the Act to the theatres constructed or to be constructed or reconstructed at various places in the State at different times under varied circumstances. As seen earlier, the thezatres consists of permanent, semi-permanent or temporary and the Act intended to operate even in the remotest village or hamlets. Under those circumstances, the Legislature in its wisdom thought it expedient to empower the State Government to make a rule to fix the maximum rates of admission to different classes depending upon variegating circumstances or factors. Courts would, as laid down by Judicial Committee in A. G., Alberta v. A. G., Canada, AIR 1939 PC 53, take judicial notice of public knowledge of what effect the legislation would be. It is settled law that the prevailing circumstances would be taken judicial notice of. In that context the Legislature did not intend o fix any rigid formula. Nothing may be expected to remain static in this changing world of ours. We have already notieced that exhibition of cinematographs is an amusement to every person and the experience by the administration of the Act and Rule made it manifest the growing need to provide reasonable facility to the public at large to have easy access to witness the exhibition of cinematographs at reasonable rates. Therefore the wide reserved power of regulation inhered in the Act can be taken aid of by the rule-making authority to make the impugned Rule 12 (3).
107. It is no doubt true that the provisions of a particular statute should be construed iwht reference to circumstances prevailing at the time of making law that weighed with the Legislature. But in the case of regulation like the Act when it intended to apply to existing theatres and also to be constructed or reconstructed at a future date as well, then it is reasonable to infer that the Legislature felt it impracticable to lay down a fixed formula. Amending power charged the State Government to catch up with the changes made manifest intheliving habits and pursuits of the people and their impact on the public life and mould the law to subserve public weal so as to be a living law. Thus the delegated authority is empowered to amend the Rules from time to time attuned to the new situations emerged in the working of the regulation. That is the reason, the impugned R. 12 (3) though found no place in 1962 Rules but was engrafted in the recast rules of 1970. The reason therefor is thus obvious.
108. It is, therefore, reasonable to conclude that with the passage of time and the experience gained by the administrator, it became imperative to regulate the fixation of the maximum rates of admission too. Therefore, the prevailing circumstances at the time of making the amendment shall also be taken into account.
Whether motive to make Rule can be looked into:
109. In this context, the contention of Sri. M. R. K. Choudary, learned counsel for the petitioners is that the impugned Rule was made with an oblique motive to get the revenue under the Entertainment Tax Act is to b e disposed of. It is now settled law that the Court cannot go into the motives for enacting the legislation. Therefore it is not permissible for the Court to go into the motives alleged to have prevailed with the State Government in making the impugned rule so long as we found that the rule made was to subserve the public purpose, viz., to enable every person to have an easy access into the theatres to witness the exhibition of cinematographs at reasonable rates.
Abuse of power - whether a ground to declare Rule invaid?
110. It is further contended that aif it is held that the Legislature has confined to the rule-making authority the power to make the impugned rule, then there will be abuse of power by the State Government in making the rule. It is now settled law that it is improper to start with an assumption that the State Government would abuse the discretionary power and decide the legality of the Act on that assumption. Abuse of power some times may occur, but the validity of the law cannot be contested because of such an apprehension. The exercise of discretion is necessarily to be assumed but power to discriminate unlawfully and possiblility of abuse of power will not invalidate the conferment of power. Conferment of power has necessarily to be coupled with the duty to exercise it bona fide for effectuating the purpose and policy underlying the rule which provide for exercise of a power. It has to be borne in mind that discretionary power is not necessarily a discriminatory power and the abuse of the power is not easily to be assumed where the discretion is vested in the Government and not in the minor official.
111. As laid down by their Lordships of the Supreme Court in Chinta Lingam v. Government of India, : [1971]2SCR871 , that when a power is conferred on a high-ranking officers (District Collector in that case) it cannot be assumed that it is likely to be abused. The presumption under Section 114, Illustration (e) of Evidence Act is that public officials would discharge duties honestly and regularly and the power would be exercised in a bona fide manner and according to law.
112. If it is shown that the executive action of the State is abused arbitrarily or in excess of the discretion conferred under the Statute, the arm of the Court is long enough to strike down that particular executive action but on that account it is not reasonable to hold that there will be abuse of power.
113. The possibility of abuse of a statute otherwise valid does not import to it any element of invalidity. The converse must also follow that is statute which is otherwise invalid as being unreasonable cannot be saved by its being administered in a reasonable manner. The constitutional validity of the Statute would have to be determined on the basis of its provisions and on the ambit of its operation as reasonably construed. In this case except making a contention, no specific instance has been brought to our notice that the State Government has abused its discretionary power and made the impunged rule beyond the scope of the power entrusted in it or arbitrary. Therefore we do not find any unreasonableness in the exercise of the discretionary power in making the impugned Rule.
Whether laying guidelines are conditions precedent to exercise power:
114. It is further contended that there are no rules made giving guidance to the Licensing Authority. It is manifest that fixation of maximum rates of admission has to be done depending upon the local conditions in hteparticular theatre be it permanent, semi-permanent or temporary situated either in the city, town, village or hamlet. Therefore it is impracticable to lay down any particular rule in that regard. Guidance may be obtained in the light of the prevailing surrounding circumstances. The Licensing Authority will gather all the material facts including the cost of exhibition, etc., which have got a bearing in determining the rates of admission and hten decide the rates of admission. Of course it would be on observing the principles of natural justice and fair play.
115. In State of Punjab v. Hari Kishan, : [1966]2SCR982 , while considering the similar provisions of Punjab Cinemas (Regulation) Act, S. 5(2) thereof, their Lordships of the Supreme Court have laid down that the power of the State Government is wide to give general or special instructions for the legitimate purposes of the Act. Same is the view of our learned brother, Choudary, J. in D. Satyanarayana v. Government of Andhra Pradesh, : AIR1979AP259 . The Government, in exercise of power under Section 5(2) have issued guidelines in G. O. Ms. No. 2041 dated 25-6-1953 and G. O. Ms. No. 744 dated 3-4-1965 for fixation of the rates of admission. They are:
'......... the following may generally be taken as justifiable grounds for increasing the rates of admission to cinema theatres:
(1) Specially increased cost of production of a particular film of more than ordinary merit and of historical, national, puranic or social importance;
(2) If the show is in aid of some institution, in which case the particular show alone will be given the concession of charging enhance rates;
(3) If improved amenities are provided such as improved seating arrangements, converting a cinema theatre into an air-conditioned one, etc.;
(4) Local conditions and increased cost of exhibition of films;
(5) Increased cost of exhibition of films - the quantum of increase being fixed with due regard to the local conditions.'
Executive instruction - whether not valid?
116. Sri M. R. K. Choudary contended that these are only executive instructions and they have no statutory force. It is undoubtedly true. But in view of S. 5(2) of the Act, it is not necessary that statutory urles alone should be issued providing guidelines. Even administrative instructions pertaining to the subject to achieve legitimate purpose could be issued by the State Government. Therefore the guidelines issued in these G. Os. form part of the rule to supplement the impugned R. 12 (3) and give enough guidance.
Whether executive instructions under Repealed Act could be continued:
117. Sri Choudary further contended that the rules were initially framed under the Act of 1918 and they continued to be in operation even after the Act and the Rules came into force. The instructions referred to earlier in the first G. O. were issued under the old Act and they were continued to operate; therefore they have no legal force. We are unable to accept the said contention. It is seeled law that any rules, regulations or instructions issued under the repealed Act shall be continued to be in force unless they are clearly inconsistent with the amended Act or instructions or the new rules framed. Since there is no inconsistency with the Act or the Rules made thereunder, the guidelines issued under the repealed Act shall continue to be in operation. It is also further settled law that it is not incumbent that Rules should be made before exercise of statutory power. It is further settled law that it is not mandatory to lay the Rules made before the Legislature to be operative. So the absence of such a provision in the Act does not whittle down the effect of the Rule if it is otherwise valid.
118. On consideration of the above facts, circumstances and principles of law, we have no hesitation to hold that the impugned Rule is not ultra vires the power of regulation. It is not either unguided or unbriddled or uncanalised or arbitrary.
Whether petitioners have unbriddled power to fix rates of admission:
119. It is further contended that the petitioners have got an unbriddled righ to fix the rates of admission and that the licence is the best person to fix the reasonable rates of admission, keeping in view, the investment made, amenities provided, cost of exhibition and reasonable rate of profit. It is an incident to the right to trade. But the impairment thereof by the State is unreasonable and hampers free play. It is true. It is already noticed that it has become an amusement to every person more particularly from the lower sections of the society to relieve them of their drudgery of their day long labour, witnessing cinematographs has become relaxation apart from educativae value. If the power to fix the rates of admission is left entirely to whim of the licensee, then depending upon the fortuitous exigencies, he may fix rates convenient to him to have unjust enrichment. Take for instance, a historical picture like Gandhi or mythological cinematograph, that has a grand impact on the public life. If fixation of maximum rates of admission are left to the waggery and fancy of the licensee then he would fix any rate to extort money to admit persons into his theatre. Take another example, where he wants to eliminate his co-competitor from the field of trade to gain monopoly at that place. With a view to drive out his co-competitor from the field he may fix in the first instance such a ridiculous low rates of admission. Though he sustains loss for a shortwhile, ultimately on eliminating his co-competitor and gaining monopoly he will resort to fix his own rates of admission and make the people to stand by to his dictations. Many instances can be multiplied. But suffice to state that in the public interest it is highly unsafe to place unbriddled power to fix maximum rates of admission in the hands of the licensee. Obviously with those and other analogous factors in view and to have uniform beneficial enjoyment by the general public, depending upon the purchasing capacity of the cine-goers, the rules have been framed giving power to the Licensing Authority to fix maximum rates of admission to different classes. To put it negatively that if the plea of the petitioners is allowed to prevail, the wheels of the Government would be brought to a grinding halt; prevents to take stock of growing imperative public need made manifest by course of events ensued and thereby frustrate the purpose of the regulation public welfare depleted; cine-going public be made to crave for mercy of the licensee if admission fee is beyond his paying capacity or else to forgo the amusement; and to deny to the poor the benefit of imparting education or learning culture. Therefore the construction should be leaned inf avour of sustaining the regulation to subserve the public good and avoid frustration of public purpose. Thus it is in the interest of the general public. It is a social and welfare measure.
Whether impugned Rule is valid:
120. Thus we reach consideration of the impugned Rule as the subject of attack. Rule 12 (3) has already been extracted in extenso in the earlier part of our judgment; therefore it is not necessary to reproduce once over, but suffice to state that it consists of four clauses. Clause (a) gives power to the Licensing Authority while granting or renewing licence to fix the maximum rates of admission to different classes; (b) the rates shall not be increased during the currency of the licence without an order in writing by the Licensing Authority permitting such increase; (c) a right of appeal is provided to the State Government against the order of the Licensing Authority; and (d) the order of the Licensing Authority is liable to be cancelled or modified by the Government if they consider that such a course is just or necessary. That is the setting of the Rule. With regard to R. 12 (3) (a) if it is read in conjunction with the guidelines referred to above and para 19 of Appendix I, and Form 'B' as integral part, it goes without saying that it provides enough guidelines for determining the rates of admission in the initial as well as at the renewal stage. It is already stated that the Licensing Authority shall have to take into account all relevant facts in fixing the rates of admission of different classes. If it is shown that fixation of rates of admission is unreasonable, unrealistic, arbitrary or relevant factors were not considered or violates the principles of natural justice, in such an event it is that particular action of the Licensing Authority that is entailed to be attacked but that circumstances itself is not a ground to contend that the Rule itself is ultra vires.
121. Under Rule 12 (3) (b) the rates shall not be increased during the currency of the licence originally granted or on renewal, without any specific order in writing by the Licensing Authority. It passes beyond comprehension as to how this is unreasonable. It is implicit to be an enabling provision beneficial to the licensee to have the rates of admission revised at the stage of renewal on establishing the objective facts and the change in the circumstances since the date of previous revision. Once it is done and accepted by the licensee it means all relevant facts were taken into account and the licensee is satisfied of such fixation of rates. It shall continue to be operative during the period of licence. It also presupposes that, yet, during the currency of the period of licence, if any further charges in circumstances are brought to the notice of the Licensing Authority, the Licensing Authority may order in writing to alter the rates of admission and that is the reason that appeas to have weighed with the rule-making authority to preserve such power to the Licensing Authority and the right of the licensee to bring to the notice of the Licensing Authority such altered circumstances to revise the rates of admission even during the currency of the licence. Without written permission, there is no authority for the licensee to alter unilaterally the rates of admission. It also goes without saying that the licensee obtains a right to exhibit cinematographs subject to the terms and conditions of the licence. Having obtained licence, it is not open to him to resile therefrom and contend that the rates of admission are unreasonable.
122. With regard to R. 12 (3) (c) in a given case where the Government finds that the maximum rates of admission to different classes fixed by the Licensing Authority found to be excessive or ridiculously low or unreasonable, then the State Government may cancel ro modify the said order if such a course found to be just or necessary. It is implicit from it that such a cancellation or modification by the State Government would be consistent with the observance of the principles of fair play of prior notice to the affected parties, reasonable opportunity of hearing and the reasons therefor. It is a valuable built-in safeguard. It is amenable to correctional jurisdiction of this Court under Article 226 of the Constitution. Therefore, though the Rule is not explicit in this regard, the principles of natural justice should be read into this Rule and the vires of this Rule can be sustained. Such a course was held to be valid by their Lordships of the Supreme Court in ManekaGandhi v. Union of India, : [1978]2SCR621 and Swadeshi Cotton Mills v. Union of India, : [1981]2SCR533 .
123. It is not the case of the petitioners that the State Government has exercised its power without affording any reasonable opportunity of observing the principles of natural justice. Therefore this R. 12 (3) (c) is also beyond the pale of assailment.
124. Sub-rule (3) (d) of R. 12, a right of appeal to State Government is yet another benevolent and beneficial enabling remedy of redressal to the licensees. The period of limitation and power to condone delay of time-barred appeals are provided in the Rules. The reasons are to be recorded by the State Government. Therefore it cannot be said that this sub-rule is unreasonable.
125. Section 12 of the Act also gives power of exemption where in the opinion of the Government reasonable grounds exist for doing so, the Government, by order in writing subject to such conditions and restrictions as it may impose, exempt any cinematograph exhibition or class of cinematograph exhibitions from any of the provisions of this Act or any Rules made thereunder. Therefore the power of exemption is also additional safeguard confided in the Government in appropriate cases to exempt from any of the provisions of the Act.
126. Sri Choudary, learned counsel for petitioners relied on Venkateswara Rao v. Govt. of Andhra Pradesh, : [1966]2SCR172 (supra), contending that the Government cannot transgress the statutory limitations provided under the Act. He contends that since there is no power given under the Act to make the impugned Rule, transgression of the legislative power is apparent and so is its ultra vires nature. We have carefully analysed the ratio laid down therein. The facts in that case are clearly distinguishable. Under the Andhra Pradesh Panchayat Samithis and Zilla Parishads Act, 1959, power to establish and maintain primary health centres was vested in the Panchayat Samithis and the State Government while making the rules under Sec. 69 of the Act, framed Rules conferring that power in the Government. Thereby Government sought to defeat the legislative effect through rule-making power. Hence it was found ultra vires.
127. The other decision relied on by the learned counsel in Sant Saran Lal v. Parsuram, : [1966]1SCR335 (supra), is equally inapplicable. Therein, while making the Rule the Government have fixed the upper limit of loans outstanding at anyparticular time by the money-lender. The Rule was asssailed as being ultra vires. While considering the said contention, Raghubar Dayal, J. speaking for the Bench held that :
'..... Act does not anywhere provide for the fixing of the upper limit for the loans remaining outstanding at any particular time. The rule-making power of the Government does not extend to the fixing of such a limit ....... The rule-making power given to the State Government is not expressed in the usual form i.e., is to to the effect that the State Government may make rules for ht epurpose of the Act. The rule-making power is limited to what is stated in clauses (a) to (e) of S. 27 and these clauses do not empower the State Government to prescribe the limit up to which the loans advanced by money-lender are to remain outstanding at any particular moment of time.'
128. In view of the facts and point raised therein, it has no application to the facts on hand.
129. Yet another decision relied on by the learned counsel is A. K. Sinha, v. A. K. Biswas, : 1974CriLJ885 (supra). Far from helping the petitioners for his contention, it supports the view we have taken. Therein, the High Court has taken the view that the definition of 'gold' in R. 126-A (d) does not include the smuggled gold. Thereby the High Court has given restrictive meaning to the word 'gold'. His Lordships chandrachud, J. (as his Lordship then was) considered the definition of 'gold' in R. 126-A (d) and held that (para 20):
'................. it is couched in wide terms and it does not make any distinction between smuggled gold and gold lawfully possessed. The intention of the Legislature must be gathered primarilty and principally from the words used by it and the definition of 'Gold' carves out no exception in favour of the smuggled gold. Secondly, if the intention of the Legislature as reflected in the scheme of law is to control the meaning of the words used in a particular section or Rule, it strikes us as surprising that the obligation to declare gold should be imposed on lawful possessors of gold but should leave untouched the possession by smugglers or their agents of gold smuggled into the country. Under the definition contained in R. 126-A (d), 'gold means gold' and no rule of statutory construction can permit the definition to be altered materially so as to read 'gold means gold but shall not include smuggled gold'. To put such a construction on the definition is to coin a new definition and therefore to legislate.'
From the ratio of the above decision, it is clear that if the language couched in the Statute is wide enough to include the smuggled gold it is impermissible to cut down the sweep of the language couched in the Statute to defeat its ambit and the purpose of the Act.
130. On a consideration of the above facts, circumstances and principles of law, we have no hesitation to hold that the impugned Rule is not ultra vires the power of regulation.
Unreasonable restriction :
131. The next bow in the string of Mr. M. R. K. Choudary, is that the petitioners have fundamental right to carry ontheir trade or business in exhibition of cinematographs. As incident thereof, they have unbriddled power to fix the rates of admission to the persons who seek admission into the various classes in their theatres. Therefore the impugned Rule impedes it unreasonably trenching upon their fundamental free right to business and fixation of maximum rates of admission, violates Art. 19(1)(g) of the Constitution. Though the State has got the power to regulate, it is not being part of the scheme of the regulation nor being incidental, the restriction imposed is not saved by Cl. (6) of Art. 19 and, therefore, it is unconstitutional. To appreciate this contention, it is necessary to see, what is the nature of the right the petitioners possessed of; whether the right the petitioners claimed is absolute and whether the restriction imposed is in public interest and therefore reasonable. It is undoubted that Art. 19(1)(g) reserves to every citizen fundamental right to practice any profession or to carry on any occupation, trade or business. When exercise thereof is impaired or controlled or limitations are put thereon, then, it is for the party that supports such impairment, etc. to satisfy that the restriction is reasonable in the interest of the general public and not arbitrary nor disproportion to public interest and so constitutional. If the right is not hedged or clothed iwht any public interest, then it is onerous on the respondent to establish with strong reasons for unwarranted interference with the exercise of the said fundamental right. The Court also has to zealously scrutinize with more care. On the other hand, if the right which the citizen claim is itself acquired under a particular statute or regulation or a rule, then his exercise thereof would be subject to the limitation imposed under the said statute or regulation or rule. Therefore, the first question to be considered is what is the right the petitioners possessed of.
Nature of right - Not an absolute right:
132. Before considering that question it is necessary to refer to few decisions which have got a bearing on the subject. Where a Statute creates a right and a specific forum to vindicate the injury, the redressal is to be had only through the forum created, not being a civil right but being a creature of Statute and Special Law, must be subject to the limitations imposed by it, is the law laid down in N. P. Ponnuswami v. Returning Officer, Namakkal, : [1952]1SCR218 .
133. Where a right is created under a special law with a disqualification prescribed to exercise the said right, the right is to be exercised subject to the disqualification, though he has fundamental right to practice the profession of law was held in Sakhawant Ali v. State of Orissa, : [1955]1SCR1004 . The question that arose therein was whether a person practising as an advocate but being a Standing Counsel for the Municipality has a fundamental right to stand as a candidate for election to the Municipality while continuing to be the Standing Counsel. It was negatived. H. N. Bhagwathi, J. (speaking for the Bench) held (para 11):
'There is no fundamental right in any person to stand as a candidate for election to the municipality. The only fundamental right which is guaranteed is that of practising any profession or carrying on any occupation, trade or business. There is no violation of the latter right in prescribing the disqualification of the type enacted in Section 16(1) (ix) of the Act.'
When a right to practice not being an absolute but subject to any other law is prohibited before Tribunals that created the forum, the prohibition was upheld in two Division Bench decisions reported in Mulchand v. Mukund, : AIR1952Bom296 (supra) and Rangaswamy v. Industrial Tribunal, : AIR1954Mad553 .
134. When a right to receive pension by a Government servant was hedged with a condition, though the advocate has a right to practice, so long as he wishes to receive pension, he shall be bound to obey the condition imposed in the recent decision rendered by us in Y. G. Rama Murthy v. Chairman, Central Board of Excise & Custom and Excise Union, W. A. No. 1079/82 dated 25-3-83.
135. When a right to membership of a Society is created under a Statute and the said society is restricted to a specified period, it was held by a Full Bench of this Court in Kamareddy Suryanarayana v. District Co-operative Officer, : AIR1976AP340 that :
'The Society in question is a creature of the Statute formed under the provisions of the Andhra Pradesh Co-operative Societies Act. The right of the petitioner to contest the election for membership of the Committee emanated only out of the provisions of the Act, the Rules and Bye-laws. That right he cannot claim otherwise than under those provisions. His right to become a member of the Society or a member of the Committee is not the common law or a general right given to him from an Association and which is guaranteed under Article 19(1)(c) of the Constitution. The Act under which the Society is formed confers certain rights and privileges and also imposes certain obligations and restrictions on the Society and its members. A member claiming rights under provisions is also bound by any restrictions imposed thereunder ......................... There is no compulsion or bar for one to become a member of a Society under the Act or not ................... If a Society is formed and is registered under the Act and its members calim special privileges and advantages conferred by the Act and the Rules framed thereunder, they cannot turn round and say that they are not bound by any restrictions imposed by same provisions of the Act or the Rules in the interests of good and fair administration and working of the Society on the ground that they are violative of the fundamental right to form Associations, guaranteed under Art. 19(1)(c) of the Constitution and the restrictions imposed are not those contemplated under Clause (4) of Art. 19 and therefore they are not bound by them.'
In all these cases, the inhibition was assailed on the touchstone of Art. 19(1) of the Constitution.
136. From a conspectus of the above decisions, the result that emerges therefrom is that a person that obtains a right to carry on profession, trade or business under a Statute, is not an absolute right. He is entitled to the benefits of the right derived subject to the terms, conditions and restrictions imposed by the Statute. He cannot claim higher rights than was conferred. Having obtained a right it is not open to contend that he is not bound by the conditions and restrictions found unfavourable.
Whether private contractual rights can be regulated:
137. The next question that has to be considered as its integral limb is the nature of business the petitioners undertook to carry on. Does that business purely operate in the field of private contract or does it clothed with public interest to be constrolled by the public for common good? In this context it is apposite to refer to the principle adumbrated by Lord Chief Justice Hale about three centuries ago in his treatise De Portibus Moris reported in Harb Law Tracts 78 thus:
'When the private property is affected with a public interest, it ceases to be 'juris private' only and it becomes clothed with a public interest when used in a manner to make it of public consequence and affect the community at large; and so using it, the owner grants to the public an interest in that use, and must submit to be controlled by the public for common good.'
This statement was approved by the Supreme Court of America, a century ago in 18786, in the leading judgment in Munn v. The People of Illinois, (1876-78) 94 US 113 (supra). The facts therein also are similar to the present case under consideration. Therefore it is proper to state the facts in bried. Therein, the Illinois Legislature passed an Act imposing restriction to fix the rates for storage of grains in warehouses by a Statute of 1871. It was challenged on the ground of constitutional virus. The majority of their Lordships upheld the validity. Their Lordships noticed the impact of the business of storage of foodgrains in the warehouses, the mode of operation of the business, the need of the public and its tendency in the business of near monopoly in regulating the storage and its steep impact on the public utility. While considering the validity of fixation of rates from that background, majority of their Lordships, speaking through Chief Justice Waite, while reiterating the dictum of Lord Chief Justice Hale held that :
'Under such circumstances it is difficult to see why, if the common carrier, or the miller, or the ferrymen or the innkeeper, or the wharfinger or the baker, or the cartman, or the hackney-coachman, pursues a public employment and exercises 'a sort of public office', these plaintiffs in error do not. They stand to use again the language of their counsel, in the very 'gateway of commerce' and take toll from all who pass. Their business 'most certainly tends to a common charge, and is become a thing of public interest and use.'
Then continued and held:
'For our purposes, we must assume that, if a state of facts could exist that would justify such legislation, it actually did exist when the Statute now under consideration was passed. For us the question is one of power, not of expediency. If no state of circumstances could exist to justify such a Statute, then we may declare this one void because in excess of the legislation power of the State. But if it could, we must presume it did. Of the propriety of legislative interference within the scope of legislative power, the Legislature is the exclusive Judge.
Neither is it a matter of any moment that no precedent can be found for a Statute precisely like this. It is conceded that the business is one of recent origin, that its growth has been rapid and that it is already of great importance. And it must also be conceded that it si a business in which the whole public has a direct and positive interest. It presents, therefore, a case for the application of a long known and well established principle in social science, and this Statute simply extends the law so as to meet this new development of commercial progress. There is no attempt to compel these owners to grant the public an interest in their property, but to declare, their obligations, if they use it in this particular manner. It matters not in this case that these plaintiffs in error had built their warehouses and established their business before the regulations complained of were adopted. What they did was, from the beginning, subject to the power of the body politic to require them to conform to such regulations as might be established by the proper authorities for the common good. They entered upon their business and provided themselves with the means to carry it on subject to this condition. If they did not wish to submit themselves to such interference, they should not have clothed the public with an interest in their concern.'
When a contention of loss of profit and the immunity of private contracts vis--vis statutory legislation was pleaded, their Lordships considered and held:
'What they did was, from the beginning, subject to the power of the body politic to require them to conform to such regulations as might be established by the proper authorities for the common good. They entered upon their business and provided themselves iwht the means to carry it on the subject to this condition. If they did not wish to submit themselves to such interference, they should not have clothed the public with an interest in their concerns. It si insisted, however, that the owner of property is entitled to a reasonable compensation for its use, even though it be clothed iwht a public interest, and that what is reasonable is a judicial and not a legislative question. As has already been shown, the practice has been otherwise. In countries where the common law prevails, it has been customary from time immemorial for the Legislature to declare what shall be reasonable compensation under such circumstances, or perhaps more properly speaking, to fix a maximum beyond which any charge made would be unreasonable. Undoubtedly, in mere private contracts, relating to matters in which the public has no control over such a contract. So too, in matters which do affect the public interest, and as to which legislative control may be exercised if there are no statutory regulations upon subject, the Courts must determine what is reasonable. The controlling fact is the power to regulate at all. If that exists, the right to establish the maximum of charges, as one of the means of regulation, is implied. In fact, the common law rule, which requires the charge to be reasonable is itself a regulation as to price. Without it the owner could make his rates at will and compel the public to yield to his terms, ro forgo the use. But a mere common law regulation of trade or business may be changed by statute. A person has no property, no vested interest in any rule of the common law. That is only one of the forms of municipal law, and is no more sacred than any other. Rights of property which have been created by the common law cannot be taken away without due process; but the law itself, as a rule of conduct, may be changed at the will, or even at the whim, of the Legislature, unless prevented by constitutional limitations. Indeed, the great office of statutes is to remedy defects in the common law as they are developed, and to adapt it to the changes of time and circumstances. To limit the rate of charge for services rendered in a public employment, or for the use of property in which the public has an interest, is only changing a regulation which existed before. It establishes no new principle in the law, but only gives a new effect to an old one.'
The above principle has become locus clasicus. In all subsequent host of decisions meeting varying circumstances it was followed. In Spring Valley Water Works v. Schottler, (1883-84) 110 US 347 at p. 354 wherein the statute regulating charging rates at which water shall be sold was upheld. In Wash St. L. P. R. Co,. v. Illinois, (1885-85) 118 US 557 at p. 559 it was held that it it the duty of the Legislature so far as to limit the amount of charges that should be made for such services. In Georgia R & BkG Co. v. Smith, (1887-88) 128 US 174 at p. 179, Field, J. who rendered dissenting judgment in Mann v. Illinois, (1876-78) 94 US 113 (supra) held that the Legislature has power to prescribe the charges for the carriage of persons and merchandise within its limits.
138. In German Alliance Insurance Co. v. Lewis, (1913) 233 US389 at pp. 411, 412 where the constitutional validity of fixation of rates of fire insurance was assailed, Justice Mc. Kenaa, speaking on behalf of the Court upholding the power of regulation held:
'The underlying principle is that business of certain kinds hold such a peculiar relation to the public interest that there is super-induced upon it the right of public regulation. It would be a bold thing to say that the principle is fixed, inelastic, in the precedents of the past, and cannot be applied though modern economic conditions may make necessary or beneficial its application ... ... .. Its personal character certainly does not of itself preclude regulation ... ... ....'
No doubt the petitioners while undertaking exhibition of cinematographs have adopted the field of private contract. But it assumed of public importance. The question therefore is no longer merely that of one party to a contract as against the other, but of the use of reasonable means to safeguard the well-being of the people. Under such circumstances, reasonable exercise of the protective power reserved in the State is to be read into all the contracts clothed with public interest.
139. From this consideration, we have no hesitation to conclude that fixation of the rates of admission is itself a regulation. Though it is in the realm of private contract, when the persons undertake the business or occupation of exhibiting cinematography, it is 'clothed with a public interest' as the cine-going public acquired direct and positive interest to have easy access of admission into the theatres. Thereby the business ceased to 'Juris Privati' and the business tends to a common charge and became a thing of public interest and use. The business, became a sort of public office nearing monopolisation. The Legislature seeks to avoid this tendency in the interests of the public welfare. It becomes absolutely necessary to override the private rights of persons and property so as to effectuate the public order for the general welfare of the citizens. Therefore it has to be construed I the light of the change of times and the impact of the business on the public welfare. It should be considered in a flexible manner according to general consideration of public requirement, but not in a pedantic way.
Whether Rule 12 (3) imposes unreasonable restriction?
140. Keeping in view of the above factors, it has to be considered whether the impugned rule impinges unreasonable restriction on the right of the petitioners to carry on trade or business in exhibition of cinematographs.
141. Before considering the validity of the regulation on the ground of unreasonable restriction, it is profitable to refer to an instructive approach adopted by a Division Bench of the Bombay High Court consisting of Chagla, C. J. and Gajendragadkar, J. (as he then was) in State of Bombay v. Heman Santlal, : AIR1952Bom16 observed (at p. 18):
'... .... ... In considering the validity of requisition, we have to bear in mind that although the administration of the Act may have resulted in some hardship on the whole it is a beneficial measure intended to subserve a very pressing social need. It, therefore, calls at our hands a benevolent interpretation. The Court must always lean in favour of holding the validity of an Act rather than against it. There may be cases where a law is alleged to contravene fundamental rights. In such a case, undoubtedly, the Court must zealously scrutinize the provisions of the impugned Act in order to see that fundamental rights are not violated. But where what is challenged is only the letter of the law and substance is in the interst of a large body of citizen, then as far as possible the Court must try to uphold the substance and not permit the letter to defeat the object of the Legislature.'
Keeping this instructive caution, let us proceed to enquire whether the impugned rule imposes unreasonable restriction. Every citizen has fundamental right to pursue any lawful profession, occupation, trade or business. But it is obviously subject to such reasonable conditions as may deem expedient or essential to the safety, health, peace, order, morals or well-being of the community. In order to determine reasonableness, regard must be had to the nature of the business, the conditions prevailing in that trade, the interest of the general public sought to be achieved by imposing the restriction and whether it is unnecessarily harsh and overrides the objects to achieve which the law was enacted.
142. Reasonable restriction connotes that the limitation imposed on a person in enjoyment of a right should not be arbitrary or of excessive nature beyond what is required in the interests of the public. The word 'reasonable' implies an intelligent care and deliberations, i.e., the choice of a course which reason dictates. Legislature which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed and the social control permitted by Cl. (6) it must be held to be wanting in that quantity. The test of reasonableness has to be considered in the context of the issues which faced the legislation. In the construction of such laws, and particularly in judging their validity the Courts have to necessarily approach it from the point of view of furthering the social interest which it is the purpose of the legislation to promote, for the Courts are not, in these matters, functioning as a vacuum but as parts of a society which is trying, by enacted law, to solve its problems and achieve social control and peaceful adjustment and thus furthering the moral and material progress of the community as a whole (Jyothi Pershad v. Union Territory of India, : [1962]2SCR125 . In the same judgment, their Lordships have laid down that:
'The criteria for determining the degree of restriction and the right to hold property which would be considered reasonable age by no means fixed or state; but must obviously vary from age to age and be related to adjustments necessary to solve the problem which communities face from time to time.'
Test of inevitable effect on the right:
143. The other important test laid down by their Lordshps of the Supreme Court is, what is the direct and inevitable consequence or effect of the regulation on the fundamental right of the citizen. In Maneka Gandhi v. Union of India, : [1978]2SCR621 (supra) Justice Bhagwati, speaking on behalf of the Court held that:
'In adjudging the constitutionality of a statute on the touchstone of fundamental rights to test or yardstick to be applied for determining whether a statute infringes a particular fundamental rights is 'the direct and inevitable consequence or effect' of the impugned State action on the fundamental right of the citizen.' .... .... 'It is the substance and the practical result of the act of the State that should be considered rather than its purely legal aspect. The correct approach in such cases should be to enquire as to what in substance is the loss or injury cauesd to the citizen and not merely what manner and method has been adopted by the State in placing the restriction.'
It is instructive to note the oft-quoted statement of law laid down by their Lordships of the Supreme Court speaking through Patanajali Sastri, C. J. in State of Madras v. V. G. Row, : 1952CriLJ966 that:
'It is important in this context (restrictions on trade) to bear in mind that the test of reasonableness wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all caes. The nature ofh te right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent of urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict.'
144. In Harakchand v. Union of India, : [1970]1SCR479 , Ramaswami, J. speaking for the Bench laid down that (at p. 1464):
'It is not necessary to emphasise that the principles which underline the structure of the rights guaranteed under Article 19 of the Constitution is the principle of balancing of the need for individual liberty with the need for social control in order that the freedoms guaranteed to the individual subserve the larger public interests. It would follow the reasonableness of the restrictions imposed under the impugned Act would have to be judged by the magnitude of the evil which it is the purpose of the restraints to curb or eliminate.'
Loss of profit no ground for attack:
145. The contention of Sri Choudary that the petitioners are subjected to loss of profit return is answered by their Lordships of the Supreme Court in Nazeeria Motor Service v. State of Andhra Pradesh, : [1970]2SCR52 where the Andhra Pradesh Act 34 of 1961 increasing the tax to be paid by the operators was assailed as being unconstitutional infringing their fundamental right. Grover, J. speaking on behalf of the Court laid down:
'It has been found that there is no material which would warrant the conclusion that the increae in the surcharge of the fares and freight contemplated by the impugned validating Act would constitute an impediment to the trade. The utmost that could be said was that it would result in the diminution of profits. Even on the assumption that the profits would be diminished or greatly reduced it cannot be held that there is any infringement of Art. 19(1)(g).'
Same is the view in a recent judgment of the Supreme Court in Sukhanandan Saran Dinesh Kumar v. Union of India, : [1982]3SCR371 where a similar contention was raised, Desai, J. held (para 23):
'Cl. 4-A (impugned restriction) serves two-fold purposes, (i) it ensures price of sugarcane avoiding impermissible deductions; (ii) it circumvents possible fraud by making such deductions as would render illusory even the negotiated price, if not fixed price. And it is indisputable that if the rebate is not statutory prescribed the cane growers will be at the mercy of the producers of sugar and khandasari sugar. If price or minimum price of sugar can be fixed by the State, because this power was never questioned before us, this very power comprehends the power to provide such incidental and ancillary regulations which will ensure the price. Price fixation measure is for protection of the farmer from the exactions of producers against which he cannot protect himself. The impugned measure ensures price either fixed or negotiated and, therefore, it is a restriction which is undoubtedly reasonable and imposed in the interest of general public and the guarantee of freedom of trade is not violated.'
146. These two decisions have direct application to the facts in this case. The cine-going public at large cannot be allowed to be at the whim or vagary of the licensee seeking admission into the theatres to witness pictures to be exhibited in the theatres. The loss of profit is no ground to declare the rule unreasonble. Though patent injustice may not be encouraged, a reasonable return on investment or a reasonable rate of profit is not the sine qua non of the validity of an action taken in furtherance of the power conferred under the Act. The interst of the public has to be kept in the forefront and the prime consideration is the easy access to admission into theatre at reasonable rates. The problem has to be broached from social purpose. As held in Joseph Bcauharnais v. Illinois, (1951) 96 L Ed 919. 'It is the price for the trial and error inherent in effect with obstinate social issue.'
147. The decision relied upon by the learned counsel for the petitioners in R. M. Seshadri v. District Magistrate, Tanjore, : [1955]1SCR686 (supra) has no application to the facts in this case. Therein a special condition in the licence obliging the cinema owners to exhibit at the commencement of each performance not less than two thousand feet one or more approved films, was assailed as an unreasonable restriction on their right. We have examined the decision in detail and we are unable to see how the ratio therein is applicable to the facts in this case : The fixation of rates of admission by itself is not violative of Art. 19(1)(g) unless it smacks of unreasonableness. We have to consider whether the rule is unreasonable.
148. Keeping these well settled principles in view, we have to consider the contention whether the fixation of rates of admission imposes an unreasonable constraint on the right of the petitioners. We have already stated in the beginning that no material has been placed to determine factual basis regarding fixation of rates. It is already noticed that the right of the petitioners to carry on business in exhibition of cinematographs is not an absolute right. They acquired the right under a licence issued under the Act and the rules made thereunder. The petitioners have to exercise their right subject to the provisions of the Act. No doubt the petitioners made huge investments in construction of the theatres and in providing amenities as required under law. Though it is a private trade, is subject to regulation. They threw open their property devoting to public use. Therefore, their business tend to a common charge. It thereby became a thing of public interest and use. Thereby athe whole public have direct and public interest in the operation of the trade and business. It is already noticed that witnessing cinematographs has become a way of life of the people as a measure of amusement or means to a common man to relieve himself of weary and drudgery from the daily fatigue. The exhibition of cinematographs not only imparts education to illiterate but propogate cultural values creating great impact ro social life. It has a direct and inevitable effect on the public welfare. Thereby the fixation of rates of admission has become an absolute necessity to avoid (a) arbitrary exercise of the power of the licensee to fix his own rates of admission; (b) to avoid co-competitors from the field bymore powerful monied persons and thereby tend to avoid near monopoly; (c) to avoid keeping the people at the whim and vagary of the licensee in fixing the rates of admission; (d) to provide a reasonable facility for the pubilc; (e) it prevents the petitioners from charging varied rates of admission based on fluctuating fortuitous factors ensuring consequential curb or unjust enrichment but even otherwise preserved reasonable rates of profit return on the investment made and avocation pursued; and (f) in the general admission has thus become an integral and essential part of the power or regulation of exhibition of the cinematographs. It does not have the inevitable effect of driving out the licensee from the trade or business. In other words it assures orderly exercise of right to trade, business, avocation or occupation. Thus, it does not impinge nor impose unreasonable restriction upon the fundamental right to trade or business or exhibition the cinematographs. But in a given case, if the fixation of the rates is so unreasonable, arbitrary or capricious or the relevant factors were not taken into account, then it would be a case of assailing the individual action of the licensing authority, but on that account it cannot be held that the fixation of the maximum rates of admission to different classes is unreasonable. We conclude that interference is called for when the impugned statute adopts veiled and subtle trespass into a field unassigned or transgression of constitutional limitations. But when a beneficient legislation is assailed, the Court would adopt benevolent approach to lean in favour of sustaining the validity of the Act to subserve public interest, because the presumption is that the Legislature would not deliberately flout a constitutional safeguard or right. The infraction, however, may appear to be unjust or oppressive trenching upon private contracts, etc., the Court has to consider the object, purpose of the Act, the mischief it seeks to prevent and ascertain the true scope and operation of the Act; its ultimate and inevitable effect on the rights conferred under Part III of the Constitution. The minor invasions are inevitable to occur but be left to the State to rectify in its administration of the Act unless it is palpably arbitrary rendering redressal irremediable. In view of these circumstances, the exercise of the power to fix rates of admission is not an unreasonable restriction and the impugned rule is legal, valid and constitutional.
149. Coming to the third question, we have already stated that the petitioners have not placed any material before us to find out whether the exercise of the power of fixation of rates of admission into the theatre of the petitioners is unreasonable. On the facts in these cases, even before the licensing authorities could take action or decision, they have rushed to this Court seeking appropriate reliefs. This Court gave interim directions pending writ petitions for consideration of the applications by the licensing authority and we have already extracted that the licensing authority considered the matter on the basis of the material placed before it. None of the individual orders has been assailed in these writ petitions except assailing the vires of the rule in general pattern referred to above. Even then, we have perused the orders passed by the authority, as extracted in the counter-affidavit in the earlier part of our judgment. On the facts in these cases, the fixation of rates of admission to different classes cannot be said to be unreasonable nor beset with illegality. The refusal in one case remained unchallenged. Under these circumstances, we hold that ht epes did not make out any case for the issuance of the writs as prayed for. The foundation was laid only on shifting sand and consequently collapsed. Accordingly, the writ petitions are dismissed with costs. Advocate's fee Rs. 250/- in each.
Oral representation for leave to appeal to the Supreme Court.
150. The learned counsel for the petitioners makes an oral application for leave to appeal to the Supreme Court under Article 134-A of the Constitution of India. We do not think that we can rightly certify under Article 133(1) of the Constitution that this is a fit case for leave to appeal to the Supreme Court. The oral application is rejected.
151. Petitions dismissed.