P L D 1960 Supreme Court (Pak (PLP)

Before noticing the contentions raised on behalf of the appellant, it appears necessary to set out the material terms on which the levy of fees in the Municipal Market was farmed out to the contractors. Under the terms of auction, detailed at p. 63 of the typed paper book, occur the following provisions "

2. This vegetable market comprises the chabutra shop and the chabutra compound, for which no rent will be charged except the lease money. The lessee will not be competent to auction vegetables at any place, except this appointed place.

5. None but the person, in whose favour the auction will be closed shall have a right to auction the vegetables. His agent approved by the Committee can conduct auction, one or two persons may be appointed agents, None but the lessee will be competent to conduct auction and wholesale business at any place other than the Vegetable Market. The Committee shall take due action against such a person.

8. The lessee will be entitled to realize as fees six pies per rupee from every purchaser and six pies per rupee from every vendor of the vegetables and fruits of every kind brought to the market. If he realises more than this, the lease shall be cancelled and the amount confiscated.

9. Nobody will be competent to conduct wholesale business of any sort of vegetables and fruits in the Bazar, unless he pays the market fee.

10. The lessee will file an agreement written on a stamped paper of one rupee.

11. No one can remove vegetables after having brought them in the market without paying the fee.

12. The approved area of the Town Committee, Ram Nagar, will be considered as the boundary for the vegetable market." A formal agreement, that followed the auction, appears at page 67 of the typed record. By this agreement, the contractors bound themselves to follow the terms of the auction specified above, in so far as they concerned their own operations. It is thus clear, that the respondents were to function as the sole auctioneers‑cum‑Arhties, entitled to charge the fixed commission on all sales of fruits and vegetables in the Market. The Committee undertook in its turn to prevent others from conducting auction or carrying on wholesale business in these commodities, elsewhere within the area of its jurisdiction. The Town Committee Ramnagar had issued, with the sanction of the Commissioner of the Division, a general order, bearing the date, the 31st August 1949, and published in the West Punjab Gazette, dated the 9th September, 1949, purporting to act in exercise of the powers conferred by clause (p) of section 35 and clause (b) of subsection (1) of section 41 of the Punjab Small Towns Act, 1922. It was under this general order that the Committee took action for farming out its right to levy fees for the use of its Market. The general order is reproduced below No person shall sell either wholesale or by auction any fresh fruits or vegetables within the town area of Ramnagar at any place but the fruit and vegetable market of the committee, for the use of which he must pay brokerage or arhat at Re. 0‑0‑6 per rupee on the sale and Re. 0‑0‑6 per rupee on the purchase prices of fruits and vegetables respectively to the contractor of the fruit and vegetable market appointed by the Town Committee, or person authorised by the Town Committee on its behalf." It is the case for the appellant that the provisions of law under which this General Order was issued entitled the Town Committee to charge fees for the use of its market and instead of directly undertaking this task, it had decided to engage a contractor for the purpose and, consequently, the arrangement could not be attacked as in any way creating an illegal monopoly. By clause (p) of section 35 of the Act, a Town Committee may, subject to the provisions of section 34 and to any rules which the Provincial Government may make in this behalf, and on the requirement of the Deputy Commissioner, shall, by general or special order in writing, provide for the licensing of premises for the manufacture, preparation for sale or sale of articles of food or drink, and the regulation of the transport within the small town, of articles of food and drink. Under clause (b) of subsection (1 ) of section 41 of the Act, a committee may, inter aria, charge fees ‑for the use of markets. The question that arises for determina tion, therefore, is whether these provisions afford legal cover for the action taken by the Committee. It appears unnecessary to examine critically, the finding arrived at by the High Court on the facts of the case that the agreement between the parties created an exclusive monopoly, falling within the mischief of section 23 of the Contract Act in favour of the contractors. We prefer to rest our decision on somewhat different grounds. The real point that calls for consideration is, however, whether the General Order promulgated by the Committee, in pursuance of which action was taken to auction the right of levying fees in the market, on sales of fruits and vegetables, was intra vires of the Act. Towards this aspect of the matter, attention does not appear to have been paid in the High Court. Mr. Ghias Muhammad, on behalf of the appellant, contended before us that the finding of the District Judge on the point, as to whether the Committee had committed a breach of the terms of the lease, in not preventing other sales within the area of Ramnagar, outside the market belonging to the Committee, should have been accepted as final and there was little justification for the High Court in making observations to the contrary. In support of his position, learned counsel relied on Abdul Majid v. Khalil Ahmad (P L D 1955 F C 38). It was laid down in that case that the High Court would have no jurisdiction to entertain a second appeal on the ground of an erroneous finding of fact, however gross and inexcusable the error may seem to be, unless there was an error in the procedure provided by law, which may possibly have produced an error of fact in the decision of the case on the merits. He, therefore, argues that we must proceed with the case on the assumption that in fact no sales took place; of fruits and vegetable outside the market area, in Ramnagar Small Town. The question however, is not so much as to whether actually there were sales of these commodities outside the market area, so as to give a legitimate cause of grievance to the respondents, but whether the General Order, issued by the Committee and the action taken in purported exercise of power under that order, really had the sanction of the statute or not. It may perhaps be conceded that clause (b) of subsection (1)~ of section 41 of the Act, relates at least partly to taxation powers to be used for the purpose of raising revenue for the Committee.; But clause (p) of section 35 is clearly referable to police powers of the State, which were to be exercised under the mandate of the legislature by the Committee, as a delegate of the State, The tenor of the whole section makes it plain that the object of the provisions of the section was to enable the Committee 0 regulate certain matters in the interest of sanitation, health etc of the population in the area within their jurisdiction. Inter aria clause (p) conferred the power of licensing premises for the sale of articles of food or drink. The General Order issued by the Committee in this case stands on no higher footing than a regulation or a bye‑law framed by a Municipal Corporation under the authority of a statute under which it functions. Such regula tions or bye‑laws must not be in excess of the statutory powers authorising them, nor repugnant to that statute, or the general principles of law (Maxwell on Interpretation of Statutes, Tenth Edition, page 300). It is true, as Maxwell states in his well known book that there is a "well‑recognised principle that, where there is competent authority to which an Act of Parliament entrusts the power of making regulations, it is for that authority to decide what regulations, are necessary ; and any regulations which they may decide to make, should be supported, unless they are manifestly unreasonable or unfair". The learned author adds that the power to regulate and govern, seems to imply the continued existence of that which is to be regulated and governed. Under the guise of regulation, lawful activity cannot be forbidden in a manner which reveals that the object is to raise revenue for the benefit of the Municipal Corporation rather than to ensure conditions in which the health and convenience of the inhabitants are safeguarded. The following quotation froth 1lalsbury's Laws of England, Volume 24, Third Edition, at page 516 would seem to be apposite to such a situation :‑ "A bye‑law is invalid if it is not intra vires the local authority that makes it. A local authority cannot by bye‑law, invest itself with power beyond that conferred on it by statute, nor may bye‑laws prohibit what the empowering enactment sought merely to regulate, or order one thing under a power to order another". It may perhaps be noticed that the relevant statute in the present case, does not use the word "regulate" in clause (p) to section 35, but merely empowers the Committee "to license premises". In its specific sense, "to license" means to confer op a person the right to do something which otherwise he would not have legal power to do. A licence is "in the nature of a special privilege rather than a right common to all, and is often required as a condition precedent to the right to carry on business or to hold certain classes of property within the jurisdiction" (American Jurispudence, Volume 33, page 325). In this very treatise, it is further specifically declared at page 339 that "It is well settled that a licence tax may not, under the guise of the police power, be imposed for revenue purposes." Now in the present case, what the Committee sought to do by the General Order was to take power for ensuring that no sales of fruits and vegetables within the Small Town Committee area should take place, except in its own market and in its agreement with the respondents, the Committee bound itself beforehand to reject all possible applications for licensing of any other market within Its jurisdiction, however suitable that might be, from the points of view of sanitation, public health, etc. The object clearly was that the respondent‑contractors should have the maximum benefit of arhat on all sales of fruits and vegetables so as to justify the Committee realising from them a substantial lump‑sum in advance. That lump‑sum would have been consider ably lower if the Committee had not undertaken to prevent sales other than those taking place in its own market. The General Order and the action taken subsequently under it, were said to derive their force from clause (p) of section 35 of the Act, which is a regulatory provision, and on the pretence of operating under it, the provision could not be utilized as a measure of self enrichment by the Committee. The duty was clearly cast on the Committee to exercise these powers for the public good, in a reasonable measure, consistently with the regulatory functions contemplated by this provision. This was precisely what the Committee precluded itself from doing, by the General Order and the agreement in question. We have, therefore, come to the conclusion that the General Order was ultra vires of the Act and it follows that the action taken by the Committee, in farming out its right to levy fees in the market, was also tainted by the same illegality. On this view, it must be held that the agreement between the parties was unenforceable at law. There seems to have been some discussion in the High Court as to the effect of the Agricultural Produce Markets Act, 1939 on this case, but it is now agreed that the provisions of that Act have no bearing on the issues that arise for decision here. Mr. Ghias Muhammad drew our attention to two decisions of the Indian Courts, which, however, do not appear to be in point and we do not, therefore, propose to notice them. Learned counsel, when faced with the predicament that the contract between the parties was unenforceable, urged that the Court might order an enquiry so as to determine what benefit had been derived by the respondents, from the contract with a ,view to compelling them to refund it to the Committee, on the principle of quantum meruit embodied in section 65 of the Contract Act. This point involves an investigation into the facts and therefore ought to have been raised in the High Court. No attempt seems E to have been made to do so in that Court. The Committee has already realised Rs. 725 from the respondents and Its. 300 from. the new contractors.. We understand that in previous years, the total lease money realised per year, was of the order of Rs. 600 only. In the circumstances, no equities exist, compelling us to, order an enquiry for the benefit of the appellant‑Committee on the question of quantum meruit. The Committee appears to have received more than the amount it could expect to get normally from such a transaction, judging from past history. We, therefore, decline to order a remand to the High Court on this ground. The result of the above discussion is that the order of the High Court ought to be affirmed, though for reasons somewhat different from those that prevailed in that Court. The appeal is, . consequently, dismissed with costs. A. H. Appeal dismissed.