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PETITIONER: STATE OF PUNJAB AND ANOTHER

       Vs.

RESPONDENT: HARI KRISHAN SHARMA

DATE OF JUDGMENT: 09/12/1965

BENCH: GAJENDRAGADKAR, P.B. (CJ) BENCH: GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N. HIDAYATULLAH, M. RAMASWAMI, V. SATYANARAYANARAJU, P.

CITATION:  1966 AIR 1081            1966 SCR  (2) 982  CITATOR INFO :  F          1970 SC1896  (15)  D          1980 SC1008  (30)  RF         1982 SC1407  (15)

ACT: Punjab  Cinemas (Regulation) Act (11 of 1952) s.  5(2)-Scope of Government’s Control.

HEADNOTE: The  second  appellant-the Sub-divisional  Officer-had  been constituted  as the licensing authority, under s. 4  of  the Punjab   Cinemas  (Regulation)  Act,  1952,  for  the   area concerned  in  the  present case.  The  respondent  made  an application  to him for a licence to construct  a  permanent cinema  hall.   Pending the application,  instructions  were issued by the first appellant-the State Government-that  all such  applications  for licence shall be  forwarded  to  the State   Government  for  orders  accompanied  with   certain particulars  regarding the applicant.  The second  appellant forwarded  the  respondent’s application with  the  relevant facts  to  the  first  appellant  and  the  first  appellant rejected  the  application. The respondent’s appeal  to  the first appellant under s. 5(3) of the Act was also  rejected. The respondent then moved the High Court under Art. 226  and the  High  Court  held  that  the  first  appellant  had  no authority or power to require all applications for  licences under  the Act to be forwarded to it and to deal  with  them itself. In appeal to this Court, the first appellant contended  that it had jurisdiction to deal with the application because  s. 5(2) of the Act conferred very wide powers of control on  it and  that  the power took within its  sweep  the  directions issued by it. HELD  : The scheme of the Act indicates that there  are  two authorities which are expected to function under the Act-the licensing  authority as well as the State  Government.   The basic  fact  in  the  scheme is that  it  is  the  licensing authority  which is solely given the power to deal with  the applications  for  licence in the first instance,  and  this

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basic position cannot be changed by the State Government  by issuing  any executive orders or by making rules under s.  9 of the Act. [989 G; 990 B-C] The control of the State Government under s. 5(2) subject to which the licensing authority has to function is very  wide; but however wide this control may be, it cannot justify  the State Government to completely oust the licensing  authority and itself usurp its functions.  The licensing authority has to act under the control of the State Government, but it  is the  licensing  authority  which  has to  act  and  not  the Government  itself.   The  said  control  can  be  exercised generally before applications are granted by issuing general instructions  which  are legitimate and reasonable  for  the purpose of the Act, or particularly by correcting individual orders granting licences if they are found to be  erroneous, but in any case the State Government has to function  either as  an appellate authority under s. 5(3) or as a  revisional authority under s. 5(2), but it cannot assume for itself the powers of the licensing authority. [988 H-989 E] Karnati  Rangaiah  v. A. Sultan Mohiddin, A.I.R.  1957  A.P. 513, M/s.Vishnu Talkies v. The State, [1962] I.L.R. 12  Rai. 14 and Bharat Bhushan v. Cinema and City Magistrate,  A.I.R. 1956 All. 99, overruled. 983

JUDGMENT: CIVIL    APPELLATE    JURISDICTION:   Civil    Appeal    No. 763 of 963. Appeal  by special leave from the judgment and  order  dated March 30, 1961 of the Punjab High Court in Civil Appeal Writ No. 1100 of 1959. Bishan Narain and R. N. Sachthey, for the appellant. S. N. Andley, for the respondent. The Judgment of the Court was delivered by Gajendragadkar, C.J. The short question of law which  arises in  this appeal relates to the construction of section  5(2) of  the  Punjab Cinemas (Regulation) Act, 1952  (No.  11  of 1952) (hereinafter called ’the Act’).  The respondent,  Hari Krishan Sharma, who claims to be the owner of a certain site in  the town of Jhajjar, desired to construct a cinema  hall at   the   said  place  for  the   purpose   of   exhibiting cinematography.   On  December  16, 1956,  he  submitted  an application  to appellant No. 2, the  Subdivisions  Officer, Jhajjar, for the grant of the licence to construct and run a permanent  cinema hall on his site.  On February  22,  1957, appellant  No.  2  forwarded the  said  application  to  the Tehsildar  for inspection of the site.  It appears  that  on April 24, 1957, the Government of appellant No. 1, the State of Punjab, had issued instructions in regard to the grant of licences  under the relevant provisions of the  Act.   These instructions  required  that all requests for the  grant  of permission  for opening all new permanent cinemas should  be referred  to appellant No. 1 for orders.  On  September  26, 1957,  the  Tehsildar  made a report that the  site  was  in accordance  with  the  provisions of the Act  and  that  the respondent  was its owner.  On September 30,  1957,  another memorandum  was issued by appellant No. 1 addressed  to  all the  District  Magistrates and the  Sub-Divisional  Officers conveying  the  decision  of appellant No. 1  that  when  an application for grant of permission to construct a permanent cinema  was  referred  to  the  Government,  it  should   be accompanied by the particulars enumerated in the memorandum. Amongst the items thus enumerated were the population-of the

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town   where  the  permanent  cinema  is  proposed   to   be constructed; whether there are any permanent cinemas already in  existence in the town, and if so, how many; whether  the applicant/applicants  has/have been taking any part  in  any activity undermining the security of the State; and  whether the  financial position of the  applicant/applicants  is/are sound.  These notifications were issued by appellant No.1 8Sup.  CI/66-16 984 while the application made by the respondent was pending co; sideration. On  April 24, 1958, appellant No. 2 informed the  respondent that  the site proposed by him for the construction  of  the cinema hall had been approved.  The respondent was  required to  submit a plan of the building within a month and he  was warned not to transfer the ownership of the site without the previous  sanction of the licensing authority.  On  May  23, 1958,  the respondent submitted the building  plans.   These plans  were  forwarded by appellant No. 2 to  the  Executive Engineer, Provincial Division, Rohtak, for scrutiny.   While forwarding  the plans to the Executive  Engineer,  appellant No.  2  had stated that the respondent had been  allowed  to construct  a permanent cinema hall at Jhajjar and  the  site plans were being submitted for proper scrutiny and  approval at an early date. Meanwhile,  it appears that one Mohan Lal had  also  applied for grant of a licence for construction of a cinema hall  in June, 1958, but he was informed that permission had  already been  granted  to one person, and there was no scope  for  a second  cinema  hall.   That is why he  was  told  that  his application  could not be considered.  Yet  another  person, Sultan  Singh by name, made a similar application on  August 26, 1958.  On October 7, 1958, the Provincial Town  Planner, Punjab,  wrote to the Executive Engineer that  the  building plans submitted by the respondent had been checked and  they appeared to satisfy the rules framed under the Act so far as the structural features of the building were concerned.   On October  6,  1958,  however, appellant  No.  2  addressed  a memorandum  to  the respondent informing him that  the  site plans  prepared by him for the construction of  a  permanent cinema  hall  would  be  referred to  appellant  No.  1  for approval "according to the latest instructions". Then followed a report made by appellant No. 2 to  appellant No. 1 on October 31, 1958, mentioning all the relevant facts in  regard to the application of the respondent, and  adding that  the  report was forwarded to appellant No. I  for  its consideration.   On  December  20,  1958,  appellant  No.  2 submitted  another report to appellant No. 1  saying,  inter alia,  that  it  had been reported by the  police  that  the respondent had been arrested in connection with "Save  Hindi Agitation" and was discharged on tendering apology and  that he did not pay any income-tax.  On March 4, 1959,  appellant No. 2 informed the respondent that his application had  been rejected  by appellant No.  as the same did not  fulfil  the conditions laid down in the memorandum, dated                             985 September  3-0, 1957.  It appears that appellant No.  I  had decided  of  grant  the licence to Sultan  Singh,  and  that probably is the reason why the application of the respondent was rejected. On  receiving this communication from appellant No.  2,  the respondent  preferred an appeal to appellant No. 1 under  S. 5(3)  of the Act, but his appeal was rejected on  April  14, 1959;  and  that drove the respondent to the High  Court  of Punjab to seek an appropriate relief under its  jurisdiction

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under Article 226 of the Constitution. In  his  petition,  the respondent alleged  that  the  order passed by appellant  No. I rejecting his application  for  a licence under S.    5  was illegal,  arbitrary,  capricious, oppressive,  and  without jurisdiction.  In support  of  his plea, the respondent had also alleged that in rejecting  his application,   appellant  No.  1  had  been  influenced   by extraneous  considerations  which had no  relevance  to  the decision  of the question as to whether a licence should  be granted  to  him  or  not.   The  suggestion  made  by   the respondent was that appellant No. 1 wanted to prefer  Sultan Singh  to  him  for  extraneous  considerations,  and   that rendered the impugned order invalid.  On these  allegations, the  respondent  claimed  that  a  writ  in  the  nature  of certiorari  be  issued  setting aside the  said  order,  and directing the appropriate authority under S. 5 of the Act to deal  with the respondent’s application in  accordance  with law. The appellants disputed the allegations made by the  respon- dent in his writ petition.  It was urged that appellant  No. I  had  taken  into  account  the  relevant   considerations prescribed by the instructions issued by it by virtue of its authority  under  S. 5(2) of the Act, and had  come  to  the conclusion  that the respondent’s application could  not  be granted.  The plea made by the respondent that appellant No. I  had  been influenced by  extraneous  considerations,  was denied. On  these pleas, the High Court was called upon to  consider five  issues.  The important ones amongst these issues  were about the jurisdiction of appellant No. 1 to pass the  order rejecting  the respondent’s application for a  licence,  and about  the invalidity of the order resulting from  the  fact that  it was based on extraneous considerations.   The  High Court  has upheld the respondent’s contention on  the  first point, and has held that appellant No. I had no jurisdiction to  deal with the matter as it has purported to do. On  that view, the High Court did not think it necessary to  consider the  other  issues,  particularly  because  "they   involved questions  of  fact which are more or less disputed  and  on which 986 it  will not be possible to come to any clear conclusion  on the  factual  side".   In the result,  the  High  Court  has allowed  the writ petition filed by the respondent  and  has directed the appellants to treat the order made by appellant No.   as void, ineffective, invalid and of no binding effect. In  consequence,  a writ of mandamus has  also  been  issued requiring   the  licensing  authority  to  deal   with   the respondent’s  application  in accordance with  law.   It  is against  this  order that the appellants have come  to  this Court by special leave and the only question which they have raised before us for our decision is whether the High  Court was   right  in  holding  that  appellant  No.  I   had   no jurisdiction to deal with the respondents application in the manner  it has done under s. 5(2) of the Act.  That  is  how the question about the construction of s.    5(2)  falls  to be decided in the present appeal. Before  dealing  with  this question, we  may  very  briefly indicate the effect of the broad provisions of the Act.  The Act  was  passed  in 1952 in order to  make  provisions  for regulating  exhibitions  by means of cinematography  in  the Punjab.  Section 3 of the Act provides that no person  shall give an exhibition, by means of a cinematography,  elsewhere than in a place licensed under this Act or otherwise than in compliance  with  any condition and restriction  imposed  by

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such  licence.   Section  4  provides  that  the   licensing authority  under the Act shall be the  District  Magistrate. The  proviso to this section authorises the  Government,  by notification, to constitute for the whole or any part of the State, such other authority as it may specify therein, to be the licensing authority for the purposes of the Act.  It  is common  ground that appellant No. 2 has been  constituted  a licensing authority for the area with which we are concerned in the present appeal.               That takes us to s. 5 which must be read               "5.  (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               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 exhibitions therein.               (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                                    987               persons  as it thinks fit, on such  terms  and               conditions as it may determine.               (3)   Any person aggrieved by the decision  of               the  licensing authority refusing to  grant  a               licence  under this Act may, within such  time               as may be prescribed, appeal to the Government               or  to  such  officer as  the  Government  may               specify  in this behalf and the Government  or               the officer, as the case may be, may make such               order in the case as it or he thinks fit". Sub-s.  (4)  of  s. 5 authorises  the  Government  to  issue directions  to  licensees generally or to  any  licensee  in particular  for  the  purpose specified by  it.   Section  6 confers  powers on Government or local authority to  suspend exhibition  of films in certain cases; and s.  7  prescribes penalties.   Section 8 empowers the State Government or  the licensing  authority to suspend, cancel or revoke a  licence granted under s. 5, on one or more of the grounds  indicated by clauses (a) to (g) of sub-s. (1).  The other sub-sections of s. 8 prescribe the procedure which has to be followed  in exercising  the powers conferred by sub-s. (1).   Section  9 confers  on  the  Government the power to make  rules  by  a notification;  this  power can be exercised for any  of  the purposes  mentioned  in clauses (a), (b) & (c) of  the  said section.  Section 10 gives power to the State Government  to exempt   any   cinematograph   exhibition   or   class    of cinematograph  exhibitions from the operation of any of  the provisions  of  the  Act;  and s.  1  1  provides  that  the Cinematograph  Act,  1918 (No. 11 of 1918) in so far  as  it relates   to   matters  other  than   the   sanctioning   of cinematograph  films  for exhibition,  is  hereby  repealed. There  is  a proviso to this section with which we  are  not concerned  in the present appeal.  That, broadly stated,  is the scheme of the Act. There  are two Central Acts dealing with the  same  subject. The  first one is Act II of 1918 which, as we have seen,  is repealed  in the manner prescribed by s. 1 1 of the  Act  so far  as  the  Punjab is concerned.  Section 5  of  this  Act corresponds  generally to s. 5 of the Act.  The Central  Act II of 1918 has been subsequently repealed by Central Act  37 of  1952.   Section  12  of  this  latter  Act   corresponds

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generally to S. 5 of the Act. The  question which we have to decide in the present  appeal lies within a very narrow compass.  What appellant No. 1 has done is to require the licensing authority to forward to  it all applications received for grant of licences, and it  has assumed   power  and  authority  to  deal  with   the   said applications  on  the  merits  for  itself  in  the,   first instance, Is appellant No. 1 justified in 988 assuming  jurisdiction  which  has  been  conferred  on  the licensing  authority by s. 5(1) and (2) of the Act ?  It  is plain  that s. 5(1) and (2) have conferred  jurisdiction  on the  licensing  authority  to  deal  with  applications  for licences,  and either grant them or reject them.   In  other words, the scheme of the statute is that when an application for  licence  is  made,  it has  to  be  considered  by  the licensing authority and dealt with under s. 5(1) and (2)  of the  Act.  Section 5(3) provides for an appeal to  appellant No.  1 where the licensing authority has refused to grant  a licence; and this provision clearly shows that appellant No. 1 is constituted into an appellate authority in cases  where an  application  for licence is rejected  by  the  licensing authority.   The  course  adopted  by  appellant  No.  1  in requiring  all applications for licences to be forwarded  to it   for  disposal,  has  really  converted  the   appellate authority  into  the original authority itself,  because  s. 5(3)  clearly allows an appeal to be preferred by  a  person who  is aggrieved by the rejection of his application for  a licence by the licensing authority. It  is,  however,  urged  by  Mr.  Bishan  Narain  for   the appellants that s. 5(2) confers very wide powers of  control on appellant No. 1 and this power can take within its  sweep the   direction   issued  by  appellant  No.  I   that   all applications  for  licences should be forwarded  to  it  for disposal.   It  is  true  that s.  5(2)  provides  that  the licensing  authority  may  grant  licences  subject  to  the provisions  of  s. 5(1) and subject to the  control  of  the Government;  and it may be conceded that the control of  the Government  subject to which the licensing authority has  to function  while exercising its power under s. 5(1) and  (2), is  very  wide;  but however wide this control  may  be,  it cannot  justify  appellant  No. 1  to  completely  oust  the licensing  authority  and itself usurp his  functions.   The Legislature  contemplates a licensing authority as  distinct from  the  Government.   It no  doubt  recognises  that  the licensing  authority  has to act under the  control  of  the Government;  but it is the licensing authority which has  to act  and  not  the Government itself.   The  result  of  the instructions  issued  by appellant No. 1 is  to  change  the statutory provision of s. 5(2) and obliterate the  licensing authority  from the Statute-book altogether.  That,  in  our opinion, is not justified by the provision as to the control of Government prescribed by s. 5(2). The  control  of  Government contemplated  by  s.  5(2)  may justify  the  issue of general  instructions  or  directions which  may  be legitimate for the purpose of  the  Act,  and these instructions and directions may necessarily guide  the licensing   authority  in  dealing  with  applications   for licences.  The said control may, therefore, take the form of the issuance of general directions and instructions                             989 which  are legitimate and reasonable for the purpose of  the Act.   The  said control may also involve  the  exercise  of revisional  power  after  an order has been  passed  by  the licensing  authority.   It is true that s. 5(2),  in  terms,

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does  not refer to the revisional power of  the  Government; but  having regard to the scheme of the section, it may  not be unreasonable to hold that if the Government is  satisfied that in a given case, licence has been granted unreasonably, or contrary to the provisions of s. 5(1), or contrary to the general instructions legitimately issued by it may suo  moto exercise  its power to correct the said order by  exercising its  power  of control.  In other words, in the  context  in which the control of the Government has been provided for by s.  5(2),  it  would be permissible to hold  that  the  said control  can be exercised generally before applications  for licences   are  granted,  or  particularly   by   correcting individual orders if they are found to be erroneous; but  in any case, Government has to function either as an  appellate authority  or  as a revisional authority, for  that  is  the result  of  s. 5(2) and (3).  Government cannot  assume  for itself the powers of the licensing authority which have been specifically provided for by s. 5(1) and (2) of the Act.  To hold  that the control of the Government contemplated by  s. 5(2) would justify their taking away the entire jurisdiction and authority from the licensing authority, is to permit the Government  by  means of its executive power to  change  the statutory  provision  in  a  substantial  manner;  and  that position clearly is not sustainable. Section  5(3) provides for an appeal at the instance of  the party which is aggrieved by the rejection of its application for  the  grant  of a licence.  No appeal  is  provided  for against  an order granting the licence; but as we have  just indicated,  in  case it appears to the  Government  that  an application has been granted erroneously or unfairly, it can exercise  its power of control specified by s. 5(2) and  set aside  such  an  erroneous order, and that  would  make  the provision  as  to  appeal, or  revision  self-contained  and satisfactory. The scheme of the Act clearly indicates that there are,  two authorities which are expected to function under the Act-the licensing  authority, as well as the Government.  Section  8 is  an  illustration  in  point.   It  empowers  the   State Government or the licensing authority to suspend, cancel  or revoke  a licence on the grounds specified by it;  and  that shows  that  if  a  licence  is  granted  by  the  licensing authority,  it  has the power to suspend, cancel  or  revoke such  a  licence just as Government has a similar  power  to take  action in respect of the licence already granted.   We are,  therefore, satisfied that the High Court was right  in coming  to  the  conclusion  that appellant  No.  1  had  no authority-or power to 990 require  all  applications  for  licences  made  under   the provisions  of  the Act to be forwarded to it, and  to  deal with  them itself in the first instance.  Section 5  clearly requires  that such applications must be dealt with  by  the licensing authorities in their respective areas in the first instance,  and if they are granted, they may be  revised  by Government under S. 5(2); and if they are rejected,  parties aggrieved by the said orders of rejection may prefer appeals under  S. 5(3) of the Act.  The basic fact in the scheme  of the  Act  is  that it is the licensing  authority  which  is solely given the power to deal with such applications in the first instance, and this basic position cannot be changed by Government  by  issuing any executive orders  or  by  making rules under S. 9 of the Act. It  appears  that this question has been considered  by  the Andhra Pradesh, and the Rajasthan High Courts and they  have taken  the  view that the Government can, by virtue  of  the

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power  of control, deal with the applications  for  licences themselves  in the first instance lvide Karnati Rangaiah  v. A.   Sultan Mohiddin and Brothers, Tadipatri &  Ors.(1)  and M/s.  Vishnu Talkies v. The State & Others(1) respectively.] We are satisfied that this view does not correctly represent the true legal position under the relevant provisions of the Acts  prevailing  in the two respective States.   In  Bharat Bhushan v. Cinama and City Magistrate & Anr. (3 ) also,  the powers  of  the  State  Government  under  s.  5(3)  of  the Cinematograph  Act, 1918, have been similarly construed  and that again, in our opinion, cannot be said to be right.   In dealing with the question about the scope and effect of  the power  of  control conferred on the  State  Government,  the Allahabad  High Court has taken the view that the  power  of control which has been conferred on the State Government  by s.  5 (2) is wide enough to enable the State  Government  to revise  an order passed by a licensing authority granting  a licence.   This  observation,  in  our  opinion,   correctly represents the true scope and effect of the power of control conferred on the State Government. The result is, the appeal fails and is dismissed with costs. Appeal dismissed. (1)  Al.R. 1957 A.P. 513. (2)  (1962) I.L.R. 12 Raj. 44. (3)  A.I.R. 1956 AU. 99. 991