Rushabh Outdoors, Thane vs. The State of Maharashtra Case Summary You Can Listen To on CaseOn

Mumbai Municipal Corporation Act, License Fees, Excessive Delegation, Constitutional Validity, Article 14, Advertisement Regulations, Municipal Corporation, High Court, Writ Petition, Taxation

06 Apr, 2026
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Rushabh Outdoors, Thane Vs. The State of Maharashtra

Bombay High Court WP-227-2017

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Case Background

As per case facts, Rushabh Outdoors and Vandana Borse challenged subsection (2) of section 479 of the Mumbai Municipal Corporation Act, 1888, seeking its declaration as unconstitutional. They were aggrieved ...

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WP-227-2027.doc

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION NO.227 OF 2017

1. Rushabh Outdoors, Thane ]

2. Vandana Borse, ]

Proprietor of M/s. Synnovation, Mumbai] .. Petitioners

Versus

1. The State of Maharashtra, ]

2. Municipal Corporation of Greater Mumbai ] .. Resp ondents

Mr. Navroz Seervai, Senior Advocate with Mr. Aseem Naphade,

Mr. Akash Rebello, Mr. Jatin Sheth, Ms. Chaitra Rao and Ms.

Meera Parmar, Advocates for the Petitioners.

Dr. Birendra Saraf, Advocate General with Mr. Milind V. More,

Additional Government Pleader and Mr. Jay Sanklecha, “B” Panel

Counsel for Respondent No.1-State of Maharashtra.

Mr. Suresh B. Pakale, Senior Advocate with Ms. K. H. Mastakar

i/by Ms. Komal Punjabi, Advocates for Respondent No.2-MCGM.

CORAM : SHREE CHANDRASHEKHAR, CJ. &

GAUTAM A. ANKHAD, J.

Reserved on : 16

December 2025.

Pronounced on : 06

April 2026

JUDGMENT

Per, Shree Chandrashekhar, C.J. :

M/s. Rushabh Outdoors which is a partnership firm an d

represented through its partners, namely, Navnit Ha ria and

Zaverben Liladhar Haria is joined by the proprietress of M/s.

Synnovation, namely, Vandana Borse in laying a challenge to sub-

section (2) of section 479 of the Mumbai Municipal Corporation

Act, 1888

. The petitioners are seeking a declaration that sub-

section (2) of section 479 of the MMC Act is unconstitutional and

liable to be struck down. They are aggrieved by Resolution No.999

passed by the Municipal Corporation of Greater Mumb ai in its

meeting held on 11

December 2009 by which a revision in the

schedule of fees for the advertisement license issu ed under

1MMC Act

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sections 328 and 328A of the MMC Act was approved a nd

increased by 80 percent of the prevailing rate for one year and

then it is to be increased by 10 percent per annum every following

year. The petitioners have challenged the power of the

Commissioner to fix the rates of license fees and it is in that

context that they are raising a question to the con stitutional

validity of sub-section (2) of section 479 of the MMC Act.

2. The petitioners state that they obtain a license from the

Municipal Corporation under sections 328/328A of the MMC Act

on payment of license fees for carrying on the business of outdoor

publicity. The Municipal Corporation proposed a revision in the

license fees for the permissions granted under sections 328 and

328A and the said proposal contained in the letter dated 4

November 2009 was considered by the Law Committee an d it was

decided to take approval of the Municipal Corporati on. The

reasons for seeking a revision in the license fees are said to be the

rising expenditure for the establishment of the Mun icipal

Corporation, an increase in the wholesale price index and service

costs, decline in the revenue of the Municipal Corporation from

the license fees etc. However, the information received by them

through the RTI is that the Municipal Corporation has reserves

and surplus of Rs.47244.56 crores (excluding inter budget

contributions) and its consolidated income far exce eds its

expenditure. The petitioners have provided the deta ils of the

license fees collected by the Municipal Corporation for the period

between 2007 to 2016 and endeavored to demonstrate that the

total income of the Municipal Corporation from the advertising

licenses constitutes about 69 percent of the total collection of the

License Department. The petitioners blame the Commissioner for

not applying his mind before proposing increase in the license

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fees. They say that the Municipal Corporation also did not apply

its mind and approved the proposal for increase in the license fees

in a mechanical manner inasmuch as there was no dis cussion in

the meeting of the Municipal Corporation held on 11

December

2009. They contend that the effect of 10 percent increase in

perpetuity in the license fees is excessive, arbitr ary and

unreasonable and violates their fundamental rights under Articles

14 and 19 of the Constitution of India.

3. In the affidavit-in-reply, the respondents have narrated the

procedure for granting permission for advertisement and claim

that several high-ranking officers of different dep artments

including the officers in the rank of Assistant Commissioner are

involved in the entire process at different stages and it is not true

that the License Department alone is involved in the whole

process. The Municipal Corporation has taken a prel iminary

objection to maintainability of the writ petition on the ground of

delay and laches on the part of the petitioners to challenge the

impugned resolution dated 11

December 2009. It has set up an

objection on the ground of constructive res judicata as a similar

challenge made to the impugned resolution was dismissed in “Yog

Advertising and Marketing Services

". It is pleaded that the

impugned resolution has been in operation for more than eight

years and the petitioners availed advertising rights under the said

resolution on payment of license fees in previous years. Before

“Yog Advertising and Marketing Services”, there was an increase in

the license fees in the year 1996 and that was the subject matter

of challenge in Writ Petition No.735 of 1997. There was again a

revision in license fees in the year 2003 to the extent of about

2Yog Advertising and Marketing Services & Anr. v. Municipal Corporation of Greater

Mumbai & Anr. 2016 SCC OnLine Bom. 62

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100% in the schedule of fees and that continued for about five

years. Thereafter, a new guidelines for exhibiting sign boards and

hoardings became operational on 10

January 2008 and the High

Court passed an order in Writ Petition No.1132 of 2002 directing

the Municipal Corporation to implement the new guidelines which

entailed a complete study of the existing hoardings and about 225

hoardings were removed and 485 licenses were revoked. Since the

last increase in the schedule of fees, there has been substantial

increase in the expenditure of various departments of the

Municipal Corporation. Similarly, there has been increase in the

wholesale price index and costs of services which necessitated

increase in the license fees and an annual increase by 10%. The

Municipal Corporation has emphatically denied that there was no

rationale for increase in the license fees and states as under: -

“14. I deny that the rationale given by the Corporation for the

increase in the fee is incorrect. The decline in the revenues ought to

be considered as compared to the expenditure of the va rious

departments of the Corporation, the increase in the wholesale price

index, the growing expenditure and the various services rendered.

The comparison of the expenditure only towards the ope rative

functioning of the license department from the reven ue of the

hoardings is misconceived and erroneous. Considering the increase

in the license fees by 100% after a gap of 6 years and an annual

increase of 10% can be no stretch of imagination and logical

reasoning be considered to be unreasonable and unjustified. The cost

of administering the municipal services has also increased year to

year. In the year 2003-04, the cost of administering municipal

services was 5366.26 Cr. In 2007-08, it was 10585 Cr. It recites

that the cost of living has been rapidly increasing. The value of

Rupee has also gone down substantially. Whilst the Peti tioners

earned substantial revenue from the hoardings that the Corporation

believes substantially increased over the years, the hoarding owners

are grudging a reasonable justified increase in the license fee

charged by the Corporation. I deny that there is any

unreasonableness in the Resolution dated 11

December 2009 or

that the same, in any manner, is excessive or harsh.”

4. Mr. Navroz Seervai, the learned senior counsel fo r the

petitioners submitted that sub-section (2) to section 479 confers

an unguided, uncanalized and arbitrary powers on th e

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Commissioner for levying license fees on sky-signs and

advertisements, and the delegation of such arbitrary powers on

the Municipal Commissioner shall be an infraction of Article 14 of

the Constitution. There is no policy laid down by the Legislature

and no standard has been set down for guidance of t he

Commissioner to fix the rates of license fees and the manifest

arbitrariness in conferring such unguided powers on the

Commissioner cannot be covered up on the ground of a dormant

or latent legislative policy. The Legislature must set limits of the

power delegated by law through a clear guidance for those on

whom the power to execute law has been conferred [per, “Kishan

Prakash Sharma”

]. The learned senior counsel referred to “Devi

Das Gopal Krishnan"

and further submitted that the Legislature

cannot efface itself in the matter of fixation of rates without giving

any guidance. Rather, the Legislature must provide guidance for

fixation of the rates of taxes when power to fix such rates is left to

a body or authority and such guidance must flow from the statute

[per, “Liberty Cinema”

]. It is no safeguard in the matter of fixation

of the rate of license fees that the Municipal Corp oration

supervises the acts of the Commissioner. The impugned resolution

does not provide any indication as to how the Munic ipal

Corporation approved the proposal for increase in the license fees

and the impugned resolution was passed mechanically without

any application of mind.

5.Per contra, Dr. Birendra Saraf, the learned Advocate General

submitted that Article 243-X is an enabling provision and it does

not mandatorily require the Legislature of a State to enact a law

authorizing the Municipality to levy, collect and appropriate taxes,

3 Kishan Prakash Sharma & Ors. v. Union of India & Ors.:(2001) 5 SCC 212

4 Devi Das Gopal Krishnan v. State of Punjab:1967 SCC OnLine SC 108

5 Corporation of Calcatta & Anr. v. Liberty Cinema:1964 SCC OnLine SC 65

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duties, tolls or fees. There are certain provisions in Part IX-A of the

Constitution of India such as Article 243-Q, Article 243-R, Article

243-S, Article 243-T, Article 243-U, Article 243-V, Article 243-ZA,

Article 243-ZD and Article 243-ZF which are mandato ry

provisions. Whereas, Article 243-W and Article 243-X wherein the

expression “the State Legislature may” has been use d are the

enabling provisions. It is the ordinary rule of interpretation that

the word “may” is used to grant a discretion and not to impose a

mandatory direction and no special circumstance has been shown

by the petitioners to infer a mandatory direction in clause (a) of

Article 243-X to the State Legislature to enact a law providing the

procedure and limits to levy, collect and appropriate taxes, duties,

tolls and fees [per, “Sahodara Devi”

]. Clause (a) of Article 243-X

does not in any manner suggest that the Legislature of a State is

under any obligation to lay down a procedure or to provide limits

in the statute which authorizes the Municipality to collect license

fees. The learned Advocate General further contended that the use

of expression “as may be prescribed” leaves a discretion with the

State Legislature to specify the procedure or limits for levying or

collecting fees [per,“Orient Paper Mills”

]. Supporting him,

Mr.Suresh B. Pakale, the learned senior counsel for the Municipal

Corporation submitted that the license fees levied and collected by

the Municipal Corporation can be in return for the services

rendered by it, to defray the costs of administration and to

increase the general funds of the Municipal Corporation.

6. At the outset, we may indicate that the objection raised by

the respondents on the ground of delay and laches in raising the

question of constitutional validity of sub section (2) to section 479

6 Sahodara Devi (Smt) & Ors. v. Govt. of India & Anr.:(1972) 3 SCC 156

7 Orissa State (Prevention & Control of Pollution) Board v. Orient Paper Mills & Anr.:

(2003)10 SCC 421

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of the MMC Act was rejected at the initial stage of hearing of this

writ petition. A co-ordinate Bench of this Court r ejected the

technical objection based on the principles of constructive res

judicata by referring to the decision in “Amalgamated Coalfields

Ltd.

, wherein the Hon’ble Supreme Court held that the

constructive res judicata being special and artificial form of res

judicata is generally not applied to writ proceedings under Article

32 or Article 226 of the Constitution. This Court further held that

the writ petition may not be rejected on the ground of delay and

laches wherever an infraction of the fundamental right is alleged

qua a challenge to an enactment or its provision. The co-ordinate

Bench referred to “Basheshar Nath

, Olga Tellis

and “Re : Kerala

Education Bill”

and held that there can be no waiver of

fundamental rights and a citizen cannot be said to have lost his

fundamental rights on the ground that it was not exercised for a

long time or not at all. Furthermore, the writ petition cannot be

dismissed on the ground that the aggrieved party had been paying

the tax without objection for years. The real test to determine

whether a writ petition may not be entertained on the ground of

delay is whether any parallel right was created in the meantime

and the lapse of time is not attributable to any la ches or

negligence on the part of aggrieved party.

7. The question posed is whether section 479 of the MMC Act,

which provides as under, suffers from excessive delegation:

“479. Licences and written permissions to specify condit ion

etc., on which they are granted.—

(1) Whenever it is provided in this Act that a licence or a written

8 Amalgamated Coalfields Ltd. & Anr. v Janpada Sabha, Chhindwara & Ors.:1962

SCC OnLine SC 72

9 Basheshar Nath v. Commissioner of Income Tax, Delhi & Rajasthan & Anr.: 1958

SCC OnLine SC 7

10 Olga Tellis & Ors. v. Bombay Municipal Corporation & Ors.:1985 (3) SCC 545

11 Re : The Kerala education Bill :1957 AIR 1958 SC 956

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permission may be given for any purpose, such licence or written

permission shall specify the period for which, and the restrictions

and conditions subject to which, the same is granted, and shall be

given under the signature of the Commissioner or of a municipal

officer empowered under section 68 to grant the same.

(2) Fees to be chargeable.— For every such licence or written

permission a fee may be charged at such rate as shall from time to

time be fixed by the 1 [Commissioner], with the sanction of the

Corporation.

(3) Licences and written permissions may be revoked, etc.—

Subject to the provisions of 2 [clauses (d) and (dd)] of section 403,

any licence or written permission granted under this Act may at any

time be suspended or revoked by the Commissioner, if any of its

restrictions or conditions is infringed or evaded by the person to

whom the same has been granted, or if the said person is convicted

of an infringment of any of the provisions of this Act or of any

regulation or by-law made hereunder in any matter to which such

licence or permission relates.

(4) When licence or written permission is revoked, etc.,

grantee to be deemed to be without a licence or written

permission.— When any such licence or written permission is

suspended or revoked or when the period for which the same was

granted has expired the person to whom the same was g ranted

shall for all purposes of this Act, be deemed to be without a licence

or written permission until the Commissioner’s order for suspending

or revoking the licence or written permission is cancelled by him or

until the licence or written permission is renewed, as the case may

be.

(5) Grantees to be bound to produce licence or written

permission.— Every person to whom any such licence or written

permission has been granted shall at all reasonable times while

such written permission or licence remains in force, if so required by

the Commissioner produce such licence or written permission.”

8. In the context of the challenge to sub-section (2) to section

479 of the MMC Act, it is necessary to examine the ambit and

scope of Article 243-X which is reproduced as under :-

"243X. Power to impose taxes by, and Funds of, the

Municipalities.—

The Legislature of a State may, by law,—

(a) authorise a Municipality to levy, collect and appropriate such

taxes, duties, tolls and fees in accordance with such procedure and

subject to such limits;

(b) assign to a Municipality such taxes, duties, tolls and fees

levied and collected by the State Government for such purposes and

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subject to such conditions and limits;

from the Consolidated Fund of the State; and

(d) provide for constitution of such Funds for crediting all moneys

received, respectively, by or on behalf of the Municipalities and also

for the withdrawal of such moneys therefrom,

as may be specified in the law."

9. The Legislature of a State has wide powers to mak e laws. It

has multiple duties under the Constitution but the Legislature in

a welfare State cannot presumably conceive and contemplate all

the details while formulating a particular legislative policy. It may

enact a law to delegate its subsidiary or ancillary powers for

carrying out the policy laid down in the statute. Therefore, the

Legislature can reserve in itself the final control over subordinate

legislation and delegate the ancillary powers of working out the

details for executing the legislative policy. This is also no longer in

the realm of doubt that the power to fix the rates of taxes and fees

may be legitimately left to the executive. In “Harishankar Bagla”

the Hon’ble Supreme Court held that the Legislature must declare

the policy of the law and the legal principles which are to control

any given case and must provide a standard to guide the officials

or the body in power to execute the law. The Hon’ble Supreme

Court further held that the statements in the preamble to the Act

may provide sufficient indication as to the legisla tive

policy.“Vasantlal Maganbhai Sanjanwala”

also clearly recognized

the necessity and need to delegate subsidiary or ancillary powers

to the delegates for carrying out the legislative policy laid down by

the Legislature in the statute. The Hon’ble Supreme Court held

that the inquiry whether the impugned delegation in volves a

delegation of essential legislative power should take into account

12Harishankar Bagla & Anr. v. State of Madhya Pradesh: (1954) 1 SCC 978

13 Vasantlal Maganbhai Sanjanwala v. The State of Bombay & Ors.:1960 SCC OnLine

SC 27

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the statement in the preamble to the statute. The Court held that

the statements made in the preamble itself would be sufficient to

satisfy the requirements of the relevant tests if the statements

made therein afford satisfactory basis for holding that the

legislative policy and the principles have been enunciated in the

preamble with sufficient accuracy and clarity. In such cases, the

discretion can be left with the executive to determine the quantum

of license fees and it shall not violate the provisions under Article

243-X or for that matter any constitutional provision including

Part-III of the Constitution.

10. The Constitution (73

Amendment) Act and Constitution

(74

Amendment) Act infused a new life to the local self-bodies like

the Panchayats and Municipalities which are constituted as the

institutions of self-government. The object behind vesting certain

powers and authority in the municipalities is to enable them to

function as the institutions of self-government. Article 243-W

envisages that the law made by the Legislature of a State may

contain provisions for devolution of powers and responsibilities

upon the Municipalities. The State Legislatures have enacted laws

and made provisions for devolution of powers upon t he

Panchayats and the Municipalities for the social and economic

development of the rural and urban areas. The functions of the

Municipalities are, therefore, necessary to be borne in mind while

interpreting the laws enacted by a State. The Mumbai Municipal

Corporation Act, 1888 was enacted to replace the Bo mbay

Municipal Act, 1872 which was amended in the year 1 878 to

regulate the municipal administration of the City of Bombay. The

statement of objects and reasons appended to the Bill to enact the

Bombay Municipal Corporation Act, 1888 records that the MMC

Act consolidates the existing Municipal laws. The object was to

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recast, to amend and to expand the provisions of th e Bombay

Municipal Acts, 1872 and 1878. At that time, there were nine

minor enactments and other local statutes which dealt with the

matters affecting the Municipal governance in the city. Except

retaining certain parts of such enactments with nec essary

modifications, expansions and improvements, all tho se

enactments were repealed. It is further indicated that the long

experience of the working of the existing laws and other

enactments in force elsewhere were taken into consideration to

supply sufficient powers to the Commissioner for carrying out and

enforcing such measures under the MMC Act as are necessary for

achieving the object. The past experience also supp orted the

wisdom of centering all authority and responsibility for executive

action in the Municipal Corporation.

11. The Municipal bodies need flexibility to raise funds as per

their budgetary needs and that may provide enough guidance and

the delegation of taxing power cannot be held exces sive or

unconstitutional. In “George Walkem Shannon”

, the Privy

Council rendered its opinion that the fees should be charged in

order either to defray the costs of administering t he local

regulation or to increase the general funds of the province or for

both purposes. If a levy is imposed with a view to provide a

specific service and to recover expenses for mainta ining the

services then that would be in the nature of a fees and not a tax.

In case of fees, the Government may do some positive work for the

benefit of the persons but the fee is not always a return for the

work done or services rendered. In “Liberty Cinema” it was held

14George Walkem Shannon & Ors. v. Lower Mainland Dairy Products Board & Anr:

1938 SCC OnLine PC 52

15H. H. Sudhundra Thirtha Swamiar & Ors. v. Commissioner for Hindu Religious &

Charitable Endowments, Mysore & Anr.:1962 SCC OnLine SC 188

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that the word “fee” is sometimes used loosely and it is not always

that fees can be charged only for the services. In that case, the

Corporation of Calcutta was not required to provide any specific

services to the cinema houses and levy of the fees was in reality a

tax. It was held that as long as a local body has a budget and

needs to raise funds, delegation of taxing power shall be valid

even without providing a maximum limit. The Hon’ble Supreme

Court further indicated that the fees for license and the fees for

services rendered are two different kinds of levy contemplated in

the Constitution. The fees for license cannot be equated with fees

for services rendered and this is apparent on a bare reading of

Articles 110(2) and 199(2) of the Constitution of India. This is an

admitted position that the license fees charged by the

Commissioner for granting advertisement permissions is a fee and

not in the nature of a tax imposed in the guise of fees. Therefore,

the general principles for examining the validity of the delegation

of power to impose a tax or to fix the rates of taxes cannot be

applied in this case.

12. Mr. Navroz Seervai, the learned senior counsel f or the

petitioners contended that the law enacted by the S tate

Legislature authorizing a Municipality to collect appropriate

taxes, duties, tolls and fees must lay down a proce dure for

collection and appropriation of such taxes etc. and must also

provide such limits on the quantum of license fees that can be

fixed over a given period of time. He contended that the word

“procedure” for determination of the license fees and the word

“limits” for fixing the quantum of the license fees must be given

its full effect as no word or words in a statutory provision can be

treated as superfluous [per, “Mithilesh Singh”

]. In our opinion,

16 Mithilesh Singh v. Union of India & Ors.:(2003) 3 SCC 309

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it is however not correct to say that the Legislature of a State

when decides to enact a law authorizing a Municipality to levy,

collect and appropriate the license fees then it must specify a

procedure and the limits to the license fees. There is no

requirement in law to provide minimum or maximum ra te of

license fees and the power conferred on the Commissioner is not

unguided or arbitrary. A delegation of power to fix the rate of

license fees is not open to challenge on the ground that no

procedure or limits has been provided. In “The Western India

Theatres Ltd.

”, the Hon’ble Supreme Court held that the

authorization to the Municipality to impose taxes f or the

purposes of Act shall furnish sufficient guidance for imposition of

tax. In “Delhi Race Club Limited”

, the Hon’ble Supreme Court

held that if there is some legislative policy for fixation of the rate

of fees that by itself shall provide sufficient guidance to the

delegate. The test whether any guidance, check, con trol or

safeguard has been provided in the statute shall apply only to the

cases of delegation of the fixation of rate of tax and not of the

fees. It is also well settled that what should be the form of

guidance that the legislative policy should lay down can be

gathered from the preamble, object and reasons and the

provisions of the statute.

13. The majority judgment in “Vasantlal Maganbhai

Sanjanwala” which upheld section 6(2) of the Bombay Tenancy &

Agricultural Lands Act, 1948 held that there was a l egislative

policy laid down by the Act in its preamble and relevant sections

and that provided sufficient guidance to the government to fix a

lower rate of maximum rents payable by the tenant i n any

17 The Western India Theatres Ltd. v. Municipal Corporation of the City of Poona:1959

SCC OnLine SC 28

18 Delhi Race Club Limited v. Union of India & Ors.: (2012) 8 SCC 680.

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particular area. The decision in “Krishna Mohan (P) Ltd."

deals

with an entirely different fact situation and the power to fix the

rate of license fees did not arise in that case. Similarly, the

decision in “Kishan Prakash Sharma" was rendered in the context

of the delegation of powers to frame general scheme for re-

organization of the insurance business. Pertinently, this decision

provides a valuable guideline and lays down the tes t for the

validity of the delegated legislation. This decision held that if the

preamble of the statute, the background facts leadi ng to

enactment of the statute, history of the legislation, complexity of

the problems etc. provide guidelines then a particular legislation

must be upheld. The provisions relating to imposition of tax are

definitely guided by different considerations and the decision in

“Devi Das Gopal Krishnan", which dealt with the amendment to

section 5 of the Punjab General Sales Tax Act, 1948 do not avail

any help to the petitioners. In “Kandivali Co-Operative Industrial

Estate”

, there was a 10% increase every year in the Trade Refuse

Charges (TRC) which was held arbitrary and without any

guidelines and the Corporation was directed not to recover the

TRC at the hiked rate from the year 2009 without gi ving

reasonable opportunity of hearing to the licensee or the persons

liable to pay such increased TRC. The case projecte d by the

aggrieved parties was that they did not generate any TRC and they

were not liable to levy of the TRC upon them. The H on’ble

Supreme Court held that the Legislature can delegate its power to

the statutory authority to levy tax or fees and fix the rates and the

delegation of such power to the local body without providing a

maximum rate of tax or fees does not by itself may render the

19Krishna Mohan (P) Ltd. v. Municipal Corporation of Delhi & Ors.: (2003) 7 SCC 151.

20 Kandivali Co-Operative Industrial Estate & Anr. v. Municipal Corporation of Greater

Mumbai & Ors.: (2015) 11 SCC 161

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delegation excessive or invalid.

14. Mr. Navroz Seervai, the learned senior counsel n ext

contended that the law made by the Legislature of a State vesting

such powers and authority in the Municipalities as may be

necessary to enable them to function as the institutions of self-

government shall be subject to other provisions of the

Constitution. In “Shanti G. Patel & Ors.”

, the Hon’ble Supreme

Court held that Article 243-W of the Constitution of India is an

enabling provision under which the State Legislature may endow

by law the Municipality with such powers and authority, as may

be necessary, to function as an institution of self government. In

“Shanti G. Patel” the Constitutional validity of section 37(1-AA) of

the Maharashtra Regional and Town Planning Act, 196 6 was

called into question on the ground that the Municipal Corporation

was alone competent to make subordinate legislation as regards

the town planning. The Hon’ble Supreme Court held that the State

Legislature is not obliged to provide for a law empowering the

Municipality with powers and authority to levy tax, toll fees etc.

under Article 243-W of the Constitution of India. We are of the

definite opinion that expression “subject to the provisions of this

Constitution” puts a bar on the power of Legislature of a State to

make law endowing the Municipalities such powers and authority

which should not impinge upon the powers of other institutions or

authority as to the matters enumerated under Article 243-W of the

Constitution. The heading “Powers, authority and responsibilities

of Municipalities, etc.” of Article 243-W of the Constitution of India

makes it very explicit and provides as under:-

“Article 243-W. Powers, authority and responsibilities of

Municipalities, etc.-

21Shanti G. Patel & Ors. v. State of Maharashtra & Ors.: (2006) 2 SCC 505,

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Subject to the provisions of this Constitution, the Legislature of a

State may, by law, endow-

(a) the Municipalities with such powers and authority as

may be necessary to enable them to function as institutions of

self-government and such law may contain provisions for the

devolution of powers and responsibilities upon Municipalities,

subject to such conditions as may be specified therein, with

respect to-

(i) The preparation of plans for economic development

and and social justice;

(ii) The performance of functions and the implementation

of schemes as may be entrusted to them including those in

relation to the matters listed in the Twelfth Schedule;

(b) the Committees with such powers and authority as

may be necessary to enable them to carry out the

responsibilities conferred upon them including those in

relation to the matters listed in the Twelfth Schedule.”

15. Except to the extent that the law made by the Legislature of

a State must be in consonance with the constitutional mandate

under Articles 14, 19 and 21 of the Constitution, we do not find

any force in the aforesaid submission. The power to make a law to

authorize a municipality to levy, collect and appropriate taxes,

duties, tolls and fees under Article 243-X is subje ct to the

limitations as afore-mentioned and nothing more. Th e

Constitution (74

Amendment) Act does not contemplate that the

existing laws would become non-operative and a vacuum would be

created in the matter of enforcement of the existing laws. Article

243-X cannot be read in isolation and sub-section (2) to section

479 is not ultra vires to Article 243-X. The MMC Act has been in

existence much prior to 74

amendment and any attack on the

constitutionality of any provision thereof must be considered with

special caution. Sub-section (2) to section 479 of the MMC Act is

not inconsistent or repugnant with Article 243-X or any part of the

Constitution and Article 243-ZF has no application to the MMC

Act. The MMC Act is a pre-Constitution enactment an d no

provision thereof is inconsistent with Part-III of the Constitution of

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India. The power conferred under sub-section (2) on the

Commissioner to fix the license fees is not at all an unguided

power and there are sufficient guidelines and safeguards for fixing

of the license fees. We do not agree with Mr. Navroz Seervai, the

learned senior counsel that no policy or principle has been

enunciated by the Legislature and no guidance is provided to the

Commissioner to fix the license fees.

16. There are two facets of an impost of the license fees. License

fees can be regulatory or the fees for services. The license fees can

be regulatory when the activities for which a license is given

require to be regulated or controlled and an element of quid pro

quo for the levy of such fees is not required [vide,“Secunderabad

Hyderabad Hotel Owners’ Association & Ors.”

]. The Municipal

Corporation has to perform multiple task and provide a variety of

services. But the fees in every services provided by the Municipal

Corporation cannot be determined with mathematical exactitude.

In “Avinder Singh

, the Hon’ble Supreme Court held that the

Legislature can impose multiple taxes under different entries in

the Constitution. For example; a bottle of liquor can be subjected

to excise duty as well as a tax and also municipal tax. In “Pandit

Banarsi Das Bhanot”

, the Hon’ble Supreme Court held that the

delegation of power to the executive to identify the persons on

whom tax is to be levied or to decide the rates of tax to be charged

on different class of goods or other ancillary subjects shall be a

valid delegation so long as the Legislature retains or has the power

of withdrawing or altering the power to tax. In “Sreenivasa General

22Secunderabad Hyderabad Hotel Owners’ Association & Ors. v. Hyderabad

Municipal Corporation, Hyderabad & Anr.: (1999) 2 SCC 274.

23 Avinder Singh v. State of Punjab & Anr.: (1979) 1 SCC 137

24 Pandit Banarsi Das Bhanot & Ors. v. State of Madhya Pradesh & Ors. 1958 SCC

OnLine SC 25

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Traders”

, the Hon’ble Supreme Court held that the co-

relationship between the levy and the services rendered (sic or)

expected is one of general character and not of mat hematical

exactitude and all that is necessary is that there should be a

‘reasonable relationship’ between the levy of the fees and the

services rendered. The Hon’ble Supreme Court held as under :-

“7. It is not always possible to work out with mathematical precision

the amount of fee required for the services to be rendered each year

and to collect only just that amount which is sufficient for meeting

the expenditure in that year. In some years, the income of a market

committee by way of market fee and licence fee may ex ceed the

expenditure and in another year when the development works are in

progress for providing modern infrastructure faciliti es, the

expenditure may be far in excess of the income. It is wrong to take

only one particular year or a few years into consideration to decide

whether the fee is commensurate with the services rendered. An

overall picture has to be taken in dealing with the question whether

there is quid pro quo i.e. there is correlation between the increase in

the rate of fee from 50 paise to rupee one and the se rvices

rendered.”

17. In “Yog Advertising and Marketing Services” the Division

Bench of this Court held that there is a direct co-relation between

the license fees and the services rendered and the proposed 10%

annual increase in the license fees was justified. The surplus

funds or the quantum of collection of license fees has no

co-relation with the license fees for the advertisement promotions.

It is not necessary that the services rendered out of the fees

collected should be directly in proportion to the amount of fees

collected or the services rendered in lieu of the fees collected

should confine to the persons from whom the fees ha s been

collected [vide, “Kesoram Industries Ltd.”

]. In paragraph no.146

of the reported judgment the Hon’ble Supreme Court held as

25Sreenivasa General Traders & Ors. v. State of Andhra Pradesh & Ors.: (1983) 4 SCC

353.

26State of W.B. v. Kesoram Industries Ltd. & Ors.: (2004) 10 SCC 201.

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under :-

“146. ……... It is not necessary that the services rendered from out

of the fee collected should be directly in proportion with the amount

of fee collected. It is equally not necessary that the services

rendered by the fee collected should remain confined to the persons

from whom the fee has been collected. Availability of indirect benefit

and a general nexus between the persons bearing the burden of

levy of fee and the services rendered out of the fee collected is

enough to uphold the validity of the fee charged. The levy of the

impugned cess can equally be upheld by reference to Entry 66 read

with Entry 5 of List II.”

18. The process of regulation and licensing of the h oardings,

sky-signs and advertisements is not simple. It involves the officers

at ward level and co-ordination between different departments.

The municipal authorities including the Commissione r are

charged with the duty to carry out the provisions of the MMC Act.

The duties and powers of the municipal authorities are set out in

different provisions of the MMC Act. The power to fix the license

fees is exercised by the Commissioner while grantin g written

permission to erect, fix or retain any sky-sign, advertisement etc.

19. Section 328 of the MMC Act regulates the sky-sig ns to the

extent that a written permission of the Municipal Corporation is

necessary to erect, fix or retain any sky-sign and such written

permission shall not exceed two years from the date of permission

or renewal so granted. It further provides that the Commissioner

shall cause a scrutiny of the sky-sign which is in the form of a

poster depicting any scene from a cinematographic film, stage play

or other stage performance and he shall grant permission only if

he is satisfied that the erection or fixing of such poster is not likely

to offend against decency or morality. Similarly, the regulation and

control of the advertisements vest with the Commissioner under

section 328A of the MMC Act who may grant written permission to

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erect, exhibit, fix or retain any advertisement upon any land,

building wall, hoarding or structure. There are policy guidelines

on the grant of permission for the display of sky-s igns and

advertisements. The last edition of such policy guidelines was

issued on 10

January 2008. It is stated that there was a need for

further regulation because of the complaints by the residents

about (a) screening of light and ventilation by the residents due to

discriminate erection of hoardings (b) dispute among the housing

society members (c) dispute raised by the landlords of the building

who claimed that they were not aware of the permiss ion to the

Agency (d) clandestine cutting of trees for the better visibility of

the advertisement (e) hoardings causing obstruction to the

visibility of other advertisements and other issues connected

therewith. The area falling within the limits of Mu nicipal

Corporation has been divided into three zones and e ach zone

consists of different wards. The standard sizes of the hoardings for

each zone have been provided. It is further provided that tenders

shall be invited whenever required by the Corporation for tri-vision

backlit boards having certain size for the footpath with minimum

width size of 15 feet on selected roads. This is also provided that

the advertiser shall have to pay additional charges/premium as

decided by the Commissioner for the backlit advertisement boards

on BEST bus queue shelters.

20. There is a new guidelines under which several measures are

indicated. A provision has been made for prohibitin g the

advertisement on moving vehicles, transfer of sign-boards on

municipal lands and not to permit sign-boards on first search

basis. There are several items under the license fees schedule

which were excluded from the revised fees schedule. The various

regulations relating to the advertisements, hoarding boards, sky-

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signs etc. shall be part of the procedure for levying fees by the

Commissioner. The policy guidelines provide the per missible

colours of advertisement, bottom clearance of the hoarding board,

maximum height of the hoarding board, minimum dista nce

between two hoarding boards, alignment of hoardings, clubbing of

hoardings, projection of hoardings etc. In our opin ion, the

parameters laid down thereunder shall provide suffi cient

guidelines to the Commissioner to adopt a procedure for levying

the fees. There is a format of the application form under appendix

“A” which requires definite information such as med ium of

advertisements applied for; illuminated and non-illuminated form

of advertisement; temporary and non-temporary; application made

by a charitable Trust-Institutions for display of free banner

academic/religious/public awareness/health political and other

purposes, name of ward offices, dimensions in lengt h, width,

height etc. and site location. Pertinently, Annexure-II appended to

the guidelines provides the schedule of fees for advertisement

permits issued under section 328 and 328A of the MM C Act for

the advertisements under the business and non-busin ess

categories. We further find that Annexure-II provides the scale of

fees and the rates of fees under different category. For the sake of

clarity, we may reproduce a part of Annexure-II as under:

ANNEXURE-II

Group ‘A’ Advertisement other than Business Premises

Sr.

No.

Description Scale of licence

fees

Rates of fees in Rs.

(p.m.)

Rates of

fees in

Rs.

(p.m.)

Reference cases

Kishan Prakash Sharma & Ors. Vs. Union Of India &...

2:00 mins | 0 | 19 Mar, 2001

State of West Bengal Vs. Kesoram Industries Ltd. and Ors.

mins | 0 | 15 Jan, 2004

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