Judgment:
Petition filed under Article 226 of the Constitution of India to issue a Writ of Ceritorari calling for the records in connection with the order dated 8.3.2010 made in No.27011, originated from the file of the first respondent, signed by the second respondent and to quash the same.
ORDER
1. This writ petition is filed to issue a Writ of Ceritorari calling for the records in connection with the order dated 8.3.2010 made in No.27011, originated from the file of the first respondent, signed by the second respondent and to quash the same.
2. The petitioner is a private limited company incorporated under the Companies Act 1956 and runs the club by name Chennai Corporate Club and admits members on certain terms and conditions. The club is promoted for the benefit of the members, their family and guests of the members as and when they are invited. The club provides the following among other facilities i.e., Inhouse, Indoor games, Outdoor games, Swimming, Physical Fitness Centre, Tennis Court, Recreation Centres, etc. It has many branches and runs a resort as well. The relevant Rules and Regulations/bye-laws of the club is as follows:
1. Club Timings:
1.1. The club will remain open from 7 am. to 10.30 p.m. on all days.
1.2. On special occasions, the club will remain open till 12.00 midnight. There will be no Kitchen service before 11.00 am and after the closing hours prescribed for the day.
4. Catering Timings:
4.1 The Kitchen will be open for service during the following hours.
All days vegetarian/ non vegetarian; 11.00am to 10.30pm.
7. Late Hours:
7.1 No members or his guest shall remain within the Club premises after 11.30 except on notified special nights.
9. General:-
9.1 Members are requested to surrender their club membership card at the front office/reception when they are entering in the club.
9.2 The Front office Executive will give a Service card after collecting the membership card from the members.
9.3 If the member is occupied with more than guests, then they have to get a prior permission from the administrative office. Without the management's permission, they will not be allowed to enter the club.
9.4 Liquor will be served only in the Bar and in the area mentioned thereof. No liquor will be served at any place deemed right by the member. Members' co-operation is solicited in this regard.
9.5 Outside Food and beverage items are not allowed in The Club. Food or Beverages brought from outside are not permitted for consumption in the club and other premises.
9.6 Do not litter the club premises. Litter Bins are provided and member's are requested to put the litter inside the same.
9.7 The club is not to be used for any immoral or unlawful activities. If found guilty, the club membership will be withdrawn and the member will be asked to vacate the club premises immediately.
10. Guest Policy:-
10.1. Guests must be accompanied by the eligible member club.
10.6 Persons, who are not members of the club shall not be brought into the club as guests of members for more that 36 days in year. The term 'persons' shall mean to include any male person of member family above the above of 25 years and married daughters.
10.9. No member shall be entitled to bring more than 5 guests, at a time, twice a month. More that 5 guests will be charged party rates @ Rs.200) Besides guest charge.
15. Dependent (relative) Members:
15.1 Dependent relative shall mean a member's wife. Son below 25 years of age and unmarried daughters, who are dependent of such member. No other relative shall be considered to be a dependent person.
15.2.Dependent children shall not introduce guests/visitors to the Club.
20. Food from outside:-
20.1. Members shall not bring inside the Club any items of food whatsoever to be consumed in the club premises.
23. Party Guidelines:
23.1. Members intending to hold parties are required to submit in writing the order form that is available with the Catering Manager/ Supervisor along with 75% of the anticipated charges as advanced. "
(emphasis supplied.)
3. The club was incorporated on 10.7.2000. The petitioner-club is an assessee under the Service Tax and covered under the Employees State Insurance Act. They also hold a Certificate of Registration under the C.S.T. Act. The petitioner club is regularly paying income-tax, professional tax. The petitioner-club contributes to the Labour Welfare Board. While so, on 8.3.2010, the Health Officer, Corporation of Chennai, issued a notice stating that the club is running the eating house without a license being issued in this regard in contravention of Section 279 of the Chennai City Municipal Corporation Act, 1919 (Tamil Nadu Act IV of 1919) (herein after referred to as 'The Act). The petitioner was called upon to apply for the license by paying the required fees, failing which, action will be taken under Section 379A of the Act. In response to the same, the petitioner submitted a detailed reply on 9.3.2010. It has been specifically pointed out to the authorities that the club is not running any eating house as defined under Section 279 of the Act and therefore, there is no requirement of obtaining license.
4. The main contention of the petitioner and the learned Senior Counsel appearing for the petitioner, is that the petitioner club does not fall within the definition of lodging house. Chapter XII of the Act provides for license in respect of a lodging house and Section 279 of the Act, deals with the license with regard to lodging house and it reads as follows:
"279. Prohibition in respect of lodging houses .-(1) No person shall without or otherwise than in conformity with the terms of a license granted by the Commissioner in this behalf, keep any lodging house, eating-house, tea-shop, coffee-house, cafe, restaurant, refreshment room, or any place, where the public are admitted for repose or for consumption of any food or drink or any place where food is sold or prepared for sale:
(Provided that no such licence shall be required for a lodging house as defined in the (Tamil Nadu) Public Health Act, 1939, if the keeper thereof been registered under that Act.)
Explanation: - " Lodging house" means a hotel, boarding house, choultry or rest-house other than a choultry or rest-house maintained by the Government or a local authority, unlicensed emigration depot or any place where casual visitors are received and provided with sleeping accommodation with or without food on payment but does not include a students' hostel under public or recognized control.
(2) The commissioner may, at any time, cancel or suspend any licence granted under sub-section (1) if he is of opinion that the premises covered thereby are not kept in conformity with the conditions of such licence or with the provisions of any bye-law made under Section 349 relating to such premises whether or not the licensee is prosecuted under this Act."
5. According to the petitioner, the terms, lodging house, eating house, tea shop, coffee house, cafe, restaurant, refreshment room or any place where the public are admitted for repose or for consumption of food or drinks, will not take within its ambit, a club, which is run exclusively by the members for the benefit of the members of the club exclusively. It does not fall in any of the categories mentioned in Section 279 of the Act. It is not open to public since access is restricted only to members. It does not sell food to the public.
6. The learned Senior Counsel referred to various clauses in the bye-laws of the Club to state that the club is run exclusively for the benefit of the members and does not cater to public need either for repose or for consumption of food or drinks. It is not a place where a food is sold or prepared for sale to the public. The various conditions imposed in running the club, which has been extracted above, clearly provides that only members of the club are entitled to enjoy the benefits and it does not provide the facility to the public. The guests even if admitted, are not allowed to pay for the food. It is charged on the member who invites the guest at his cost.
7. The explanation to Section 279 of the Act states that the lodging house means a hotel, Boarding house, choultry or rest house other than the choultry or rest house maintained by the Government or a local authority, unlicensed emigration depot or any place where casual visitors are received and provided sleeping accommodation with or without food on payment.
8. In this case, neither in the Section 279 of the Act or in the explanation, there is reference to a club. It is therefore, contended that by the language of section 279 of the Act, a lodging house does not include a club and that is a different entity by itself. The various conditions imposed in the bye-laws of the club and the manner in which the club functions will clearly go to show that it does not fall within the definition of lodging house or under any other category mentioned in Section 279 of the Act.
9. According to the learned Senior Counsel, the petitioner club is not intended to admit any public for repose or for consumption of food or drinks. On this premise, he contended that the notice calling upon the petitioner-club to take a license in terms of Section 279 of the Act is bad. He also relied upon the decision in The Corporation of Madras by its Commissioner Vs. Mr.A.D. Charles, the present President and member of General Committee of the Madras Club reported in (1952, 2 MLJ 247) where Section 279 of the Act was considered by this Court and this Court upheld the order of the City Civil Court, which held that a Club would not fall within the ambit of Section 279 of the Act and therefore, it need not to take a license.
10. Sri. Bharathidasan, learned counsel for the respondents, on the other hand contended that if the club sells food or allows the club premises to be used for commercial exploitation like Marriage reception, Fashion show, Trade fair, etc., where public is inducted, then it will come within the definition of Section 279 of the Act and therefore, there is a requirement of taking license. He pointed out that in Section 279 of the Act, it is specifically stated that the need to take license will apply to any place where food is prepared and sold in respect of the various categories mentioned in Section 279 of the Act. He further contended that since food and beverages are sold to the members and there is an element of sale and hence, the license becomes a necessity. He stated that where club premises is let out for Exhibition, Trade fair, etc. food is also sold to the public and therefore, Section 279 of the Act will be attracted.
11. The point in issue is wether a club requires a licence in terms of Section 279 of the Act. Having considered the rival contentions, this Court is of the view that the provisions of Section 279 of the Act mandates a license for the purpose of running lodging house, eating house, tea shop, coffee house, restaurant, refreshment rooms or any places where public are admitted for repose or for consumption of food and drinks will not preclude a club. A reading of the explanation lodging house clarifies that by no stretch of imagination, a club, which is run by the members for their own benefits, would come under the definition of a lodging house. The members are governed by the terms and conditions of by-laws of the club, which has been highlighted above and it clearly provides that there will be no sale of food to the public nor food can be brought from outside into the club. Insofar as guests are concerned, it is for the members to pay for the guests and there will be no payment made by any guest. Furthermore, the various clauses of the bye-laws clearly provides that the club is run exclusively for the benefit of the members and it is not open for the public for repose or consumption of food and drinks.
12. The words, lodging house, eating house, tea shop, coffee house, restaurant, refreshment rooms should be read to mean similar establishments where public are admitted as a matter of right. A club on the other hand, restricts entry to public and there is no interaction with the public. The explanation to Section 279 of the Act fortifies the views that the lodging house mentioned in Section 279 of the Act cannot apply to a club. The nature of an arrangement between the members of a club, is like a close knit family and all activities are restricted to the members and their family. As has been held in the decision cited above, i.e. The Corporation of Madras by its Commissioner Vs. Mr.A.D. Charles, the present President and member of General Committee of the Madras Club reported in (1952, 2 MLJ 247), the omission of a club from Section 279 of the Act is conscious omission by the legislation. The relevant portion in the above said decision is as follows:
"In appeal I am of the opinion that this Madras club does not fall within the ambit of Section 279, Madras City Municipal Act for the following three good reasons. First of all, the section meticulously describes the types of places which are hit at by the section. Though Clubs constitute a well known and distinct category of institutions, they are not mentioned as one of these types governed by this Section 279. The Legislature cannot be credited with such a blissful ignorance as to ignore these Clubs if it had really intended to make them come within the meaning of Section 279. On the other hand it seems plain as pointed out by the learned City Civil Judge that had the Legislature intended so, it would have added "clubs" to many other names of places found in Section 279(1) and that it seemed plain that the legislature did not consider that clubs stood in need of the inspection, supervision and services, on the part of the Corporation, which the issue of a licence under Section 279 involves and entails. Secondly, this Madras Club cannot be brought within the meaning of the first type of institutions viz, lodging house or eating house. The terms "lodging house" and "eating house" normally connote places to which the members of the public have a right of admission and in which they have no interest otherwise than as mere lodgers or boarders. I have already described the bye-laws and amenities provided by this Club and it would be outrageous to describe this Madras club as only a variety of lodging house or eating house. Therefore, the learned City Civil Judge has pointed out that the matter did not require an elaborate discussion though in fact he has discussed the English cases on this subject which support his conclusion. But really speaking the discussion of these English cases is not very relevant except to throw additional light on this matter because we are guided by the language of Section 279 and as I have just now mentioned by no stretch of imagination the Madras club can be described either as a lodging house or a eating house. Therefore, we have to find whether this club would come within the second category of institutions viz, any place where the public are admitted for repose. The rules of the Madras club excluding all excepting the members of the Club would show that this Club could not be an institution where the public can go and have repose. The third category of institution mentioned in Section 279 is a place where food is sold or prepared for sale. No doubt if the expressions are construed by themselves, they can be stretched to fanciful lengths and will take in to mention one illustration even Vaishnavite temples. On the other hand we must remember that the constructions that should be placed on this third category must be 'ejusdem generis' to be of the same variety as the other two categories enumerated above. In order to support this conclusion that it was a place where food was sold or prepared for sale, the argument which was advanced in the lower court was that the tax officers are assessing the Madras Club to sales-tax. But this argument does not now support the position taken by the Corporation in view of the recent decision of Mack J. in --'Cosmopolitan Club Madras v. Deputy Commercial Tax Officer [(1952) I M.L.J. 401.], wherein my learned brother held that the levy of sales tax has no scope."
13. The argument of Sri.Bharathidasan, learned counsel for the respondents that in certain clubs, the club premises are allowed to be used for commercial exploitation like Marriage reception, Trade fair, Exhibition, etc., where public is inducted and therefore, it will come within the definition of a lodging house, has some force. However, it will not apply insofar as the club which is run exclusively for its members. Section 279 of the Act will apply to the place where food is prepared and sold even if it is not a lodging house, eating house restaurant or refreshment room. In the present trend, such a place where food is prepared and sold are called as fast food restaurants. That is not a case here. In the case on clubs, the preparation and sale of food to the members is not a business venture but a facility for the benefit of the members. It is stated that the income that is derived out of supplying food is pooled back into the club. There is no element of profit to the club or to any individual or persons.
14. In this case, since the bye-laws of the club clearly prohibits entry of public for eating and for drinking and since there is no sale of food of drinks for public, but reserved exclusively for the members of the club, it will not fall within the definition of lodging house.
15. If the club, however, provides the premises of the club for marriage, exhibition, fair, or social function etc., where the public are allowed entry on payment and if food is sold to public, then the respondents-authorities would be justified in invoking the provisions of Section 279 of the Act.
16. So long as the club does not provide the facility as described under Section 279 of the Act to public and it is being run exclusively to members, Section 279 of the Act will have no application and accordingly the notice issued by the respondents corporation is illegal and without jurisdiction and accordingly, the same is liable to be set aside.
17. The writ petition is allowed and the impugned notice is set aside. Consequently, M.P.No. 1 of 2010 is closed. No costs.