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CASE NO.: Appeal (civil) 1691  of  2001

PETITIONER: A.P. BANKERS & PAWN BROKERS ASSOCIATION

       Vs.

RESPONDENT: MUNICIPAL CORPORATION OF HYDERABAD

DATE OF JUDGMENT:       02/03/2001

BENCH: A.P. Misra & S.N. Variava

JUDGMENT:

S. N. VARIAVA, J.

Leave granted. L...I...T.......T.......T.......T.......T.......T.......T..J

   This  Appeal is against a Judgment dated 27th  November, 1998.

   Briefly stated the facts are as follows :

   The  Appellants are an Association of money lenders  and pawn  brokers.   The Respondent-Corporation had in the  year 1972 by a Notification dated 14th/15th April, 1972, notified the  business of money lenders and pawn brokers as one which required  a  licence  under  Section 521  of  the  Hyderabad Municipal Corporation Act.  Having so notified a licence fee of  Rs.50/-  was  charged from all money  lenders  and  pawn brokers.   At  that  time  no  challenge  was  made  to  the Notification.   However, by another Notification dated  11th April,  1987, the licence fees was enhanced from Rs.50/-  to Rs.500/-  in case of money lending and pawn broking business and Rs.200/- in case of money exchange operations.

   The  Appellants filed a writ petition in the High  Court of  Andhra  Pradesh challenging the Notification dated  11th April,  1987, inter alia, on the ground that Section 521 did not  empower the Commissioner to notify the trades of  money lending and pawn broking as being trades for which a licence is  necessary.  The Writ Petition came to be dismissed by  a single  Judge  of the High Court on 18th of February,  1994. The  single  Judge,  inter alia, held that the  business  of money lending and pawn broking were dangerous to property in the  sense  that  they involved a risk to  property  of  the persons  who hypothecate the same with the money lenders and that   having  regard  to  the   manner  in  which  and  the circumstances  under which such business is carried on  they are likely to create nuisance.

   Against  the  judgment of the learned single Judge,  the Appellants filed an Appeal.  The Appeal came to be dismissed by  the impugned Judgment dated 27th November, 1998.  By the

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impugned  Judgment, the learned Judges have dis-agreed  with the single Judge and held that the business of money lending or  pawn  broking is not dangerous to property.  They  have, however,  held that these are operations which are likely to create  a  nuisance inter alia on the  following  reasoning: "Approaching  the  term  in  the  background  of  the  above meanings  and  definitions, more especially the  concept  of "nuisance in fact"/"nuisance per accidens", one can say that running  of  a  money lending or pledge shop  is  likely  to create  nuisance to the residents of locality at times.  Let us take a case where such a shop is set up in the thick of a residential  locality  inhabited  by middle class  and  poor families  and  the proprietors resort to advertisements  and other  types  of  canvassing so as to  lure  the  vulnerable sections  of  society  to  borrow money  at  high  rates  of interest  by pledging the jewellery and so on.  A section of population  residing  in that locality may feel  annoyed  or entertain a feeling of insecurity.  The activity of pledging and  money lending on security of articles held precious the families  may  affect  the susceptibilities  of  the  family members   and   other  residents  of  the   locality.    The ramifications  or  the  impact  of   the  business  may  not necessarily  be  confined within the precincts of the  shop, but it may stretch beyond that and percolate into the day to day life stream of the residents of the locality.

   Let us take another example which equally holds good not only  for  the money lender’s shop, but also for  any  other trade  in a City.  Supposing the shop is set up at a crowded place, just adjacent to, or encroaching on the foot path and the  pursuit of the business involves visits by large number of  customers.   It  is  likely   to  cause  obstruction  or inconvenience  to  the passers-by.  Thus, the location of  a money  lending or pawn broker’s shop more often assumes good deal of importance.  Viewed from this angle, the possibility of  a  professional money lender’s shop causing nuisance  in some  degree  or the other cannot be ruled out.  It may  not cause nuisance at all times and in all localities, but under certain situations or circumstances or at certain times, the running  of  such  shop is likely to create  nuisance  to  a section of members of public.  That is enough to justify the formation  of  the opinion by the Commissioner.  As  already observed,  the  Court cannot substitute its own view on  the question  whether a particular trading activity is likely to create  nuisance.   If  the  Commissioner  had  reached  the satisfaction that the trade or operation is likely to create nuisance  either by its nature or by reason of the manner in which  or the conditions under which the trading activity is carried  on, that is sufficient to uphold the Commissioner’s notification.  The judicial review of the opinion reached by the  Commissioner  ought  to  be  confined  within   limited parameters as indicated above.

   We  have heard the parties at length.  The question  for consideration  is whether the Commissioner has powers  under Section 521 of the said Act to insist that money lenders and pawn  brokers  only  run their business on the  basis  of  a licence  issued  by the Respondents.  Section 521  reads  as follows :

   "521.   Certain things not to be kept and certain trades and  operations  not to be carried on, without a licence  :- (1)  Except  under  and  in conformity with  the  terms  and conditions  of  a  licence granted by  the  Commissioner  no person shall -

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   (a)  keep,  in  or upon any premises,  for  any  purpose whatever :

   (i)  any  article specified in Part I of  Schedule  ’P’. (ii)  any  article specified in Part II of Schedule  ’P’  in excess  of the quantity of such article which may at any one time be kept in or upon the same premises without a licence;

   (b) keep, in or upon any premises, for sale or for other than  domestic  use,  any article specified in part  III  of Schedule ’P’;

   (c)  keep, in or upon any building intended for or  used as  a  dwelling  or within fifteen feet  of  such  building, cotton,  in  pressed  bales or boars or loose,  in  quantity exceeding four cwts;

(d) keep or allow to kept in or upon any premises, horses, cattle or other four footed animals -

(i) for sale;

(ii) for letting out on hire;

(iii) for any purpose for which any charge is made or any remuneration is received; or

(iv)        for sale of any produce thereof;

(e) carry on, allow to be carried on, in or upon any premises -

(i) any of the trades or operations connected with trade specified in Part IV of Schedule ’P’;

(ii)  any trade or operation which in the opinion of the Commissioner  is  dangerous to life, health or property,  or likely  to  create a nuisance either from its nature, or  by reason  of  the  manner in which, or  the  conditions  under which, the same, is or is proposed to be carried on;

(f) carry on within the city or use any premises for the trade or operation of a carrier.

(2)  A person shall be deemed to have known that a trade or  operation  is,  in  the  opinion  of  the  Commissioner, dangerous or likely to careate a nuisance within the meaning of  paragraph  (ii) of clause (e) of sub-section (1),  after written  notice  to that effect, signed by the  Commissioner has been served on such person or affixed to the premises to which it relates.

   (3)  A person shall be deemed to carry on or to allow to be  carried  on a trade or operation within the  meaning  of paragraph (ii) of clause (e) of sub- section (1), if he does any  act  in  furtherance  of such trade or is  in  any  way engaged  or  concerned therein whether as principal,  agent, clerk,   master,   servant,   workman,   handicraftsman   or otherwise.

   (4) It shall be in the discretion of the Commissioner -

   (a)  to grant any license referred to in sub-section (1)

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to  such  restrictions  or conditions, if any, as  he  shall think fit to impose;  or

   (b) to withhold any such licence.

   (5)  Every  person to whom a licence is granted  by  the Commissioner  under sub-section (3) shall keep such  licence in or upon the premises, if any, to which it relates.

   (6)  Nothing in this section shall be deemed to apply to mills for spinning or weaving cotton, wool, silk, or jute to any  other large mill or factory which the Commissioner may, from  time  to  time,  with the  approval  of  the  Standing Committee specially exempt from the operation thereof."

   It  is  admitted that the Notification is under  Section 521(e)(ii).  Section 521 provides for "certain things not to be  kept and certain trades and operations not to be carried on  without a licence".  Sub-section 1 starts with the words Except  under  and  in  conformity   with  the  terms   and conditions  of a licence granted by the Commissioner."  Thus the  whole  purpose  of Section 521 is to  ensure  that  the Commissioner  is  in  a position to regulate  the  trade  or operation  or  to prevent things from being kept  except  on certain  terms  and  conditions, which may be fixed  by  the licence.  It, therefore, automatically follows that if there are  no  terms  and  conditions which can be  imposed  by  a Commissioner  or the Municipality in respect of a particular trade  or operation then even if the Commissioner is of  the opinion that that trade or operation is dangerous to life or health or property or that it is likely to create a nuisance he  would  not be able to regulate or control that trade  or operation.  Insistence on getting a licence, in such a case, would  be a useless formality and would not be authorised by Section 521.

   It is with this view in mind that this Court had on 23rd of  January,  2001 called upon the Respondents to produce  a licence,  which  had been issued to money lenders  and  pawn brokers.   This  had  been done with a view to  see  whether there  was  any term or condition which could be imposed  by the Respondents on money lenders and pawn brokers.

   At  this stage it must also be mentioned that the  trade and  operation  of  money  lending   and  pawn  broking   is controlled  and  governed by other Acts and other Laws  like the  Andhra  Pradesh Money Lenders Act, the  Andhra  Pradesh Pawn  Brokers  Act, etc.  Those Acts lay down all terms  and conditions  on  the basis of which such trade or  operations could be carried on.  In the Hyderabad Municipal Corporation Act  there  is  no provision empowering the  Respondents  to either  carry  out  inspections or to take any  measures  to ensure  that such trade and operations are run properly  and that  exploitation is avoided.  This aspect has been noticed by the High Court in the impugned Judgment.  In pursuance of the direction issued on 23rd of January, 2001, a copy of the licence  issued by the Respondents had been produced.  On  a perusal  of  the licence it was clear that there was  not  a single term or condition, in that licence, which could apply to  this trade or occupation.  It was, however, sought to be submitted  that  there  were blank spaces  provided  in  the licence.   It  was submitted that in those blank spaces  the terms  and  conditions regulation such trade and  operations were  hand-filled  before a licence was issued.   This  oral submission  was  denied by the Appellants.   The  Appellants

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pointed  out  that no licence was being issued and that  all that  was being done was that a receipt for the licence  fee was  being issued.  Counsel for the Respondents was asked to verify  this  fact and let this Court know what the  correct position was.

   Written  submissions  have  since been  filed.   In  the written  submissions it is admitted that no licence is being issued  to the members of the Petitioner Association.  It is now  admitted that only receipts for the fees collected  are issued.   Now it is sought to be stated that on the  receipt it  is stamped that the offices should be kept clean.  It is now  stated that the regulation is to the extent of deciding the  location,  maintenance  of cleanliness  and  regulating noise  pollution.   These  are new points made out  for  the first  time in the written submission.  Uptill now the  case has  been that the Commissioner was of the opinion that this particular  trade  or operation was dangerous to life or  is likely  to create a nuisance i.e.  under Section 521(e)(ii). Maintenance  of cleanliness deciding location and regulating noise  pollution  would not fall within Section  521(e)(ii). Also  factually  it  has not been shown how  cleanliness  is ensured or location is being controlled by means of licence. There  is also no explanation as to how and by what term  or condition noise pollution is sought to be regulated.  In the receipt  issued  there  is  no  regulation  regarding  noise pollution or location.

   Faced  with this position Mr.  Nageshwar Rao relied upon the  case  of Chief Constable of the North Wales  police  V. Evans  1982 All E.R.  141, RV Radio Authority, ex parte Bull & another 1997 ALL.E.R.  561, M.A.  Rasheed & Ors.  vs.  The State  of  Kerala  1974) 2 S.C.C.  687  and  Narayan  Govind Gavate & Ors.  vs.

   State  of  Maharashtra  & Ors.  (1977)  1  S.C.C.   133. Based  on these authorities it is submitted that the opinion of  the Commissioner as to whether any activity is dangerous or is likely to create nuisance is a subjective opinion.  He submits  that judicial review in such a case is very limited and  the  Court  would not substitute its  opinion  for  the opinion  of the Commissioner.  There can be no dispute  with the  legal proposition.  However the opinion has to be based upon  some  relevant  material.   In  the  present  case  no material has been placed before us to show on what basis the Commissioner  considers such businesses to be dangerous  and are  likely to cause nuisance.  More importantly it has  not been  shown how such trades and occupation are regulated  by the  Respondent.  The only circumstances are those extracted above  from the impugned Judgment.  However, it is not shown or averred that all shops are in residential areas inhabited by middle class and poor families or that all members of the Appellant Association issue advertisements or that all shops are  in crowded areas.  If one or two or some shops are  set up  on  the  thick of a residential  locality  inhabited  by middle  class or poor families or set up in a crowded  place or  issue  an advertisement, the entire trade or  occupation cannot be termed to be dangerous to life, health or property or  likely  to  create  a nuisance.  To be  noted  that  the opening   part  of  Section  521   talks  of   "trades   and operations".   Similarly  Section  521(e)(i) also  talks  of trades and operations.  However, Section 521(e)(ii) uses the word  "trade  or occupation".  Thus if a shop or some  shops are  set up in crowded areas or require any regulation, then it  would be a matter for regulating that particular shop or

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those   particular   shops  by   laying   down   appropriate conditions.   Merely because a pawn broker or a money lender is  likely  to set up a shop in the thick of  a  residential locality  or  in a crowded place would be no ground for  the Commissioner  to come to a conclusion that the entire  trade or occupation of money lending and pawn broking is dangerous or  likely  to create nuisance.  It is clarified  that  this Court  is  not  saying that the  Commissioner  cannot  under Section  521(e)(ii) Notify a particular trade or  operation, i.e.   include all persons carrying on that particular trade or  operation.   In  this view of the matter we are  of  the opinion that the impugned judgment cannot be sustained.  The same  is  accordingly set aside.  The Writ Petition  of  the Appellants  is  allowed.   The  Appeal  stands  disposed  of accordingly.  There shall be no Order as to costs.