N. S. Shethna Vs. Vinubhai Harilal
Panchal  INSC 144 (25 August 1966)
25/08/1966 SHELAT, J.M.
RAO, K. SUBBA (CJ)
CITATION: 1967 AIR 1036 1967 SCR (1) 574
Bombay Cinema (Regulation) Act 1953 and
Bombay Cinema Rules 1954-Licence for exhibiting films and licence for selling
tickets renewable from year to year-Contravention of Rules in one year--Whether
renewed licence for next year can be suspended.
The respondent carried on the business of
exhibiting cinema to graphic pictures a Ahmedabad. Under the Bombay Cinema
Rules 1954 framed under the Bombay Cinema (Regulation) Act 1953 such business
could be carried on only under a licence renewable from year to year. The
respondent held a licence for the year 1960. On June, 1960 a notice was served
on him requiring him to show cause why his licence should not be suspended for
contraventions of the Rules. An enquiry was instituted in this connection. On
December 31, 1960 the licence issued to the respondent for the year 1960 expired
and an endorsement renewing it for the next year i.e., 1961 was made on the
same date. Subsequently as it result of the aforesaid enquiry the first
appellant passed an order suspending the respondent's licence for two months
from the date of service of the order. The service was effected on March 5,
1961. Aggrieved by this order the respondent filed a writ petition in the High
Court. The, petition was allowed, the High Court faking the view that the
renewed licence was a 'separate licence and not in continuation of the licence
for 1960 and therefore the renewed licence could not be suspended without a
fresh show cause notice. The appellants came to this Court with certificate.
HELD : Ile fact that under the Bombay Cinema
Rules renewal is not a matter of course, the fact that the licensing authority
can in proper circumstances refuse an application for renewal and is not
precluded from imposing different conditions and can grant it for a different
period coupled with the absence of any Rules for renewal are all indications
leading to the result that renewal is a fresh grant and is not merely
continuation of the licence previously issued. The High Court was therefore
correct in allowing the writ petition on -a conclusion that the show cause,
notice relating to the licence for the year 1960 could not be regarded as a
show cause notice in respect of the renewal for the next year and if the
renewed licence was sought to be affected in the enquiry a fresh show cause
notice relating to the renewed licence was necessary. [180 B-D] V.C.K. Bus
Service Ltd. v. The Regional Transport Authorities  S.C.R. 663 and Anish
v. R.T.S.  Andhra Law Times, 347,. referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 580 of 1964.
Appeal from the judgment and order dated
April 3, 1961 of the Gujarat High Court in Special Civil Application No. 146 of
175 N. S. Bindra and B.R. G. R. Achar, for
S. T. Desai, G. I Sanghi, and B. R.
Agarivala, for the respondent.
The Judgment of the Court was delivered by
Shelat, J. This appeal by certificate is directed against the judgment and
order of the High-Court of Gujarat quashing the order of suspension of a
licence for sale of cinema tickets passed by the first appellant on February,
At all material times the respondent was
carrying on and still carries on the business of exhibiting cinematographic
picture Lakshmi Talkies in Ahmadabad and had obtained for that purpose a
licence for sale of tickets which was valid upto December 31, 1960. On an allegation
that through his manager and other employees he was indulging in safe of
tickets contrary to the Bombay Cinema Rules, 1954 framed under the Bombay
Cinema (Regulation) Act, XX of 1953 a notice dated June 14, 1960 was served
upon .him to show cause why the said licence should not be suspended. On an
inquiry having been held by the first appellant, that officer passed the
impeached order suspending the said licence for a period of two months from the
date of service of the order. But before the inquiry was completed and the said
order passed, the period for which the licence was issued expired and an order
renewing it for the next year, that in 1961, was passed on December 31, 1960.
The impugned' order was served on the respondent on March 5, 1961.
Aggrieved by the said order the licensee took
out a writ petition in the High Court for setting aside the said order.
The plea urged in the petition was that the
show cause notice related to the licence for the year 1960 which expired on
December 31, 1960 and therefore did not affect the renewed licence for 1961
sought to be suspended by the impugned order. The High Court took the view that
the renewed licence was a separate licence and not in continuation of the
licence for the year 1960 and a fresh show cause notice ought to have been
served for Suspending the renewed licence and that not having been done the
inquiry was not in consonance with the rules and quashed the order.
The question arising in this appeal is
whether on the licence issued for the year 1960 having been renewed for the
next year the renewed licence was in continuation of the licence previously
issued and whether the show cause notice issued in relation to the original
licence would be sufficient and relate to the renewed licence also. Chapter VII
and Chapter VIII of the said rules deal with the licence called the cinema
licence and the licence for sale of tickets. Rule 101 in Chapter VII provides
that no place shall be opened or allowed to remain open for use as a cinema
unless 176 the person being the owner, tenant or occupier thereof has obtained
a cinema licence therefor. This licence is obviously for opening a cinema for
exhibiting cinematographic films. That is clear from the language of Rule 102
which requires that certain documents set out therein have to accompany an
application for this licence.
Rules 103 and 104 confer power on the
Licensing Authority either to grant or refuse to grant the licence. Rule 106
provides for the period of such a cinema licence and under that Rule the
maximum period is one year. Rule 107 confers power on the licensing Authority
to renew a cinema licence and provides that an application in the manner laid
down in Rule 102 has to be made except that it would not be necessary in such
an application for renewal to attach copies of a no objection certificate or of
a Building permission issued under Rules 6 and 93. Rule 108 lays down fees for
the cinema licence and its renewal and the fees for both are the same. Chapter
VIII inter alia deals with a licence for sale of tickets. Rule 11C lays down a
ban against selling, keeping, offering or exposing for sale or causing to be
sold, kept or exposed for sale any ticket of admission, pass or any other
evidence of the right of admission to any cinema without having first obtained
a licence for the same from the Licensing Authority. Under that Rule a licence
for sale of tickets etc., has to be in Form "F" attached to the
Rules. Rules Ill and 112 provide that the tickets have to be sold at the
licensed booking office and require the prices and the hours of sale to be
notified on a board. Rule 113 provides that such prices are to be printedon the
tickets. Under Rule 114 such alicensee has to maintain accurate sets of records
showing sale of tickets and their rates and is required also to produce them
for inspection by a police officer of the specified rank.
Obviously these Rules are intended to prevent
the mischief of black-marketing in cinema tickets. Rule 116 provides for fees
to be levied for a licence granted under R. I 10.
There is no separate Rule or provision in
this Chapter for a renewal of this licence ,except that R. 110 as aforesaid
provides that the licence will be in form F. Form E is the form of a cinema
licence issued under R. 102 while form F is the form of a licence for sale of
tickets issued under R. 1
10. Clauses 3 and 4 of form F are as follows:"3.
This licence is valid till the............day of..... 19 and a fee of
Rs.......... due for the same has been paid by the Licensee.
4. This licence is granted or renewed subject
to the provisions of the Bombay Cinema Rules 1953 and is liable to be suspended
or cancelled for breach of any of the provisions of the said Rules, and any
breach of the provisions of the said Rules is punishable under the provisions
of section 7 of the Act." 177 Thus there is no separate rule or provision
'conferring power to renew. There is also no provision in these Rules laying
down procedure for renewal or for fees for such renewal or the conditions on
which it may be granted except the insertion in cl. 4 of the word "
renewed" which only suggests that a renewal is competent. Rule 131
provides for suspension or cancellation of a licence and lays down that the
Licensing Authority may suspend or cancel any licence granted under these Rules
for contravention of any of these Rules, provided that the Licensing Authority
shall give the licensee an opportunity to show cause before taking any action
under this sub-rule.
The contention urged by Mr. Bindra on behalf
of the appellant was that the High Court was in error in holding that the show
cause notice did not relate to the renewed licence and that the renewed licence
was a separate and a distinct licence from the licence previously granted.
According to him on a proper interpretation of the Rules the renewed licence is
a continuation of the licence previously granted, that the effect of a renewal
is merely to extend the term of the licence but that in essence both are one
and the same.
Therefore, said he, the show cause notice
though issued before the term of the original licence had expired and though it
mentioned that licence, suspension of the licence proposed therein must affect
the renewed licence if the licence previously granted were to be cancelled or
suspended. The renewed licence being only for extending the period of the
licence previously granted, both are one and the same and if the original
licence is suspended or cancelled the renewal also must be affected. The
suspension of the licence is a condition subsequent on the occurrence of which
the licence would be suspended even if it happens during the renewed period.
Mr. Desai on the other hand argued that suspension can only affect a licence
during the period for which it is granted and not during a subsequent period and
that a renewal granted under Chapter VIII is not a continuation of the licence
previously granted. He also argued that the words "renewed" and
"renewal" should not be construed as carrying the same meaning in
case of all licences issued under different enactments and that the meaning of
these words would depend on the scheme and the provisions of each statute.
Construed in the light of the present Rules a renewal must mean not a
continuation but a separate grant.
We now proceed to examine the validity of these
The Rules relating to the licence for sale of
tickets provide as aforesaid that the maximum period for which such a licence
can be issued is one year. Renewal of a licence is provided for but only
indirectly and in a sort of an offhand manner by cl. 4 of Form F. It appears
therefrom that a licencee has to produce his licence, pay the renewal fee and
get entries made 178 on it reverse as to the date of renewal, the period upto
which it would be valid on such renewal and the fees having been paid
therefore. Since the Rules do not provide as to how much are the fees for
renewal it must be presumed that the fees are the same as for the licence
itself It is clear from the Rules that they do not contain anything to show
that the renewed licence is a continuation of the licence previously issued
except the fact that the Authority has to make the said entries on the reverse
of the licence. The fact that the Rules do not make any provision forthe power
to renew, the procedure for renewal and for its fees .as is done in Chapter VI
in the case of a cinema licence is all indication that the draftsman equated
renewal of a licence with the issuance of a licence. It may also be observed
that it is not as if renewal is automatic nor is to be granted as a matter of
Course. If the Licensing Authority desires to impose any fresh conditions there
is nothing in the Rules to prevent him from doing so. That being so, a renewal
cannot, unless the context requires otherwise, be regarded as a continuation of
the licence previously issued.
There is also nothing in Chapter VIII or in
Form F indicating that the renewal is such a continuation.
Mr. Bindra however argued that such a
construction would result in nullifying the effect of all order of cancellation
or suspension for it is hardly to be expected that proceedings for such a
punishment can be completed during the period of the licence, the maximum
duration for such a licence being one year only. In the first place we do not
see how such a consequence must follow. The procedure for an action under R.
131 is not an claborate one which would make an inquiry thereunder a prolonged
one. In the second place, unless the Rules are found to be ambiguous we do not
see how a particular consequnce call affect the construction of the Rules. On
the other hand if we were to treat renewal as continuation of the licence
previously granted in a case where a licence is renewed from year to yearas it
would be in a large number of cases, even if a licensee has committed breach of
one of the conditions of the licence in any particular year, action against him
can be taken in any subsequent year and his licence would be liable to be
cancelled or suspended during any such Subsequent year for a breach committed
by him several years ago. That in some cases penalty by way of suspension might
be nullified by reason of expiry of the period of the licence cannot be allowed
to affect the interpretation of plain and unambiguous words in a statute or a
In support of his contention that a renewal
is no more than a continuation of the licence previously granted, Mr. Bindra
heavily leaned on the decision in V. C. K. Bus Service Ltd.
v. The Regional Transport Authority.(1) Ill
that case a permit for stage carriage was (1)  S.C.R. 663.
179 granted to the appellant under the Motor
Vehicles Act, 1939.
The appellate authority at the instance of
the unsuccessful applicant set aside that order and the government in revision
approved the order of the appellate authority and dismissed the revision. The
appellant then moved the High Court by a writ petition and during the pendency
of that petition the High Court stayed the order, with the result that the
appellant could run his buses notwithstanding the cancellation of the order
granting him the permit. In the meantime the period fixed Linder that permit
expired and the appellant applied for and got a renewal of the permit under
sec. 58(2) of the Act. The High Court ultimately dismissed the writ petition.
The question arose is to whether the renewal was a continuation of the permit
previously granted and whether such renewal went away along with the original
permit on its cancellation. This Court held that the renewal was a continuation
of the previously granted permit and not a fresh grant and the cancellation of
the original permit resulted in the cancellation of the renewal also.
The argument urged on behalf of the appellant
was that under the Act an application for renewal had to be dealt with exactly
in the same manner as an application for a new permit, that when renewal was
granted it was on an Independent consideration of the merits and further that
the granting of renewal was not a matter of right for the authorities would be
acting within their power if they were to refuse an application for renewal. It
was also contended that though in the case of a lease renewal might mean
continuation of the lease for a further period on the same terms and conditions
contained in the lease and therefore a renewed lease would be treated as
extension of the original lease that consideration was not available in the
case of renewal of a licence as it was open to the Licensing Authority to
impose new conditions, to alter the period during which it was to operate and
generally to modify its terms. Therefore, the use of the word renewal would not
lead to an inference that it was the original permit which was being continued.
It is noteworthy that Venkatarama Ayyar J. who spoke for the Court said that
there was force in those contentions. But lie did not sustain them because in
the context of s. 58 and the Rules made under the Act and in particular Rule
185 the conclusion that renewal in that case was continuation of the original
permit was inevitable.
In dealing with the reasoning in Anish v. R.
T. S. Guntur(1) which was relied on and in which a contrary view was taken, the
learned Judge again observed at p. 673 that "these considerations though
not without force cannot, in our opinion, outweigh the inference to be drawn
from the other provisions to which we have made reference............ It is
thus clear that the decision did not lay down a general rule that renewal in
all cases must mean, (1) (1946) Andhra Law Times, 347.
180 continuation of the grant previously made
but was rested on the language of the provisions of the Motor Vehicles Act and
the Rules made there under. As already observed there are no such Rules in the
Bombay Cinema Rules, 1954 which led this Court to the conclusion in that case
that the renewed permit for stage carriage was continuation of the permit
previously granted and therefore this decision would not assist the appellant.
In our view the fact that renewal is not a
matter of course, the fact that the licensing authority can in proper
circumstances refuse an application for renewal and is not precluded from
imposing different conditions and can grant it for a different period coupled
with the absence of any Rules for renewal are all indications leading to the
result that renewal is a fresh grant and is not merely continuation of the
licence previously issued. The High Court was therefore correct in allowing the
writ petition on a conclusion that the show cause notice relating to the
licence for the year 1960 could not be regarded as a show cause notice in
respect of the renewal for the next year and if the renewed licence was sought
to be affected in the inquiry a fresh show cause notice relating to the renewed
licence was necessary.
In the result, the appeal fails and is
dismissed with costs.
G.C. Appeal dismissed.