Nagar Mahapalika Varanasi Vs. Durga
Das Bhattacharya & Ors  INSC 56 (4 March 1968)
04/03/1968 RAMASWAMI, V.
CITATION: 1968 AIR 1119 1968 SCR (3) 374
CITATOR INFO :
RF 1975 SC 846 (15,19) R 1980 SC1008 (17,21)
U.P. Municipalities Act (II of 1916) Chapters
V, VIII and IX-Licence fees from owners of rickshaws and rickshaw drivers-If in
the nature of tax-Whether quid pro quo in the form of services by municipality
Under s. 294 of the U.P. Municipalities Act,
1916 a Municipal Board may charge a fee, to be fixed by bye law, for any
licence, and, s. 298 enables the Board to make the bye-laws. Purporting to act
under s. 298(2) and List I-H, of the Act, the appellant (Municipal Boa Varanasi)
framed certain bye-laws relating to the plying of rickshaws, under which, the
owner of each rickshaws had to pay an annual licence fee of Rs. 30/and each
rickshaw driver an annual licence fee of Rs. 51-. The rickshaw owners and
drivers challenged the validity of the bye-laws in a suit on the ground that
the licence fees were not commensurate with the services and advantages
rendered or provided by the appellant.
The trial court dismissed the suit. The High
Court, on appeal. held that the imposition of licence fees at the rates of Rs.
30/and Rs. 51was ultra vires and illegal, because, after excluding certain
items of expenditure the balance did not constitute sufficient quid pro quo for
the amount of licence fees charged.
In appeal to this Court, it was contended :
(1) that the fee charged was not for rendering any services but was in the
nature of a tax; (2) that s. 294 of the Act contemplates the charge of a fee
not only in the restricted sense of a fee for which a quid pro quo is provided
but also in the sense of a fee in which the taxation element is predominant,
that such a licence fee could be imposed by enacting a bye-law for that purpose
under s. 298, and that the licence fee in the present case was of that category
and (3) that even if it was held to be a fee in the restricted sense for
services rendered by the appellant, there was sufficient quid pro quo.
HELD : (1) The fees mentioned in Chapter
VIII, which contains s,,_ 294, are meant for the purpose of regulation of
certain trades and professions, for rendering services and for the maintenance
of public safety and convenience of the inhabitants of the municipality, and,
it is not contemplated that they should be merged in the public revenues of the
municipality or should go for the upkeep of the roads and other matters of
general public utility. Therefore, the fees imposed under s.'294, are only fees
in the restricted sense of a fee for which a quid pro quo is provided and
cannot be considered to be an impost in the nature of a tax.
[384 E-G] The Commissioner, Hindu Religious
Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Sirur Mutt, 
1005, 1042, followed.
(2) The Act contemplates only two categories
of impost, that is, taxes enumerated in Chapter V and fees mentioned in ss.
293, 293-A and 294 of Chapter VIII. If a levy is a tax the imposition could be
lawfully made only after following the mandatory procedure prescribed under ss.
131 to 135.
Under s. 128(1)(iii) and (iv), which are in
Chapter V, it is 375 competent to a municipality to impose, a tax on rickshaw
drivers and rickshaw owners. If it is assumed that the tax element was
predominant in the present case and that therefore the licence fee was in the
nature of a tax, the imposition would be ultra vires because the procedure
under ss. 131 to 135 was not followed. There is no third category of impost of
licence fee which is in the nature of a tax for which the procedure prescribed
by ss. 131 to 135 is not applicable, but the procedure contemplated by Chapter
IX, which contains s. 298, is applicable. [383 G-H; 384 D-E] (3) The items
disallowed by the High Court could not be considered as having been spent in
rendering any services to rickshaw owners and drivers, because they were spent
over paving bye-lanes suitable for rickshaws and for the lighting of streets
and lanes; and, under s. 7(a) and (h) of the Act, it was the statutory duty of
the municipal board to light public streets and places and to construct and
maintain public streets, culverts etc. A licence fee cannot be imposed for
reimbursing the cost of ordinary municipal services performed in the discharge
of its statutory duty to provide for the general public. Since the balance of
expenditure constituted only 44% of the total income of the appellant from the
licence, the High Court was right in holding that sufficient quid pro quo was
not established in the circumstances of this case. [385 G-H; 386 A-c] India
Sugar and Refineries Ltd. v. The Municipal Council, Hospital, I.L.R. 
Mad. 521, approved.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 558 of 1967.
Appeal from the judgment and decree dated
November 23, 1961 of the Allahabad High Court in First Appeal No. 315 of 1958.
C. B. Agarwala, Ravindra Rana and 0. P. Rana,
for the appellant.
S. Y. Gupta, Jai Shankar Lal, Yogevhwar
Prasad and Mohan Behari Lal, for the respondents.
The Judgment of the Court was delivered by
Ramaswami, J. This appeal is brought, by certificate, from the judgment of the
Allahabad High Court dated November 23, 1961 in First Appeal No. 315 of 1958 by
which the appeal of the respondents was allowed and the suit was decreed with
On March 26, 1956, the plaintiff respondents
who are rickshaw owners and rickshaw drivers filed a representative suit in the
court of Civil Judge, Varanasi praying for a decree against the, appellant to
restrain it by means of a permanent injunction from charging any license fee or
preventing the respondents from plying rickshaws for hire without paying
license fee within the municipal limits of Varanasi. Purporting to act under's.
298(2), List I-H of the U.P. Municipalities Act, 1916 (Act No. IT, of 1916),
hereinafter referred to as the 'Act', the Municipal Board L6SLip. C.1/68-11 376
of Varanasi framed certain bye-laws relating, to the plying of rickshaws. The
bye-laws were first published by Government order No. 3471/XXIII-9994 dated
March 10, 1941 and were subsequently amended by two notifications No.
4022/XXIII-445 dated February 2, 1950 and No.
5834-XXIII-745 dated September 6, 1951. Under these bye-laws, as they stood
amended, the owner of each rickshaw had to pay an annual licence fee of Rs.
30/1and each driver of a rickshaw had to pay an annual fee of Rs. 5/-. The
respondents challenged the validity of these byelaws mainly on the ground that
considering the amount that was being levied what should have 'been only a fee
was really a tax which the Municipal Board had no authority to levy. It was,
contended on their behalf that a licence fee could be levied only for services
rendered or advantages provided and the imposition must be commensurate with
the services and advantages so rendered or provided. It was urged that so far
as the rickshaws that were being plied within the municipal limits of Varanasi
were concerned no advantages or services were provided which could justify the
levy of a fee at such a rate. The suit was contested 'by the appellant
Municipal Board on the ground that services and advantages were, in fact,
provided and their cost was much more than the total amount that was being
realised from the rickshaw owners and drivers. By his judgment dated March 26,
1958 the 1st Additional Civil Judge, Varanasi dismissed the suit of the
respondents, holding that the bye-laws in question were not invalid. The respondents
took the matter in appeal to the, Allahabad High Court being First Appeal No.
315 of 1958. The appeal was first placed before Gurtu and Srivastava, JJ. Who
referred it for consideration by a larger Bench. The appeal was finally heard
by the Chief Justice, Jagdish Sahai and Bishambhar Dayal, JJ. By a majority
_judgment dated November 23, 196 1. the appeal of the respondents was allowed,
the judgment of the trial court was set aside and the suit of the respondents
decreed. It was held by Sahai and Dayal, JJ. who delivered the majority
judgment that the imposition of the license feeat the rate of Rs. 30/on each of
the rickshaw owners and Rs. 5/on each of the rickshaw drivers was ultra vires
and a permanent in junction was accordingly granted restraining the appellant
from realising the license fees at this rate for the period in question. It was
however, made clear that it was open to the Municipal Board to reduce the fee
to a reasonable figure and co-relate it to the services rendered by the Municipal
Chapter V of the Act deals with Municipal
Taxation. Section 128 falls within that Chapter and reads as follows :
"(1) Subject to any general rules or
special orders of the State Government in this behalf, the taxes which 377 a
board may impose in the whole or any part of a municipality are..........................................
(iii) a tax on trades, callings and vocations
including all employments remunerated by salary or fees ' (iv) a tax on
vehicles and other conveyances plying for hire or kept within the municipality
or on boats moored therein;
Section 131 deals with framing of preliminary
proposals and reads as follows :
"131. (1) When a 'board desires to
impose a tax, it shall by special resolution frame proposals specifying,(a) the
tax, being one of the taxes described in subsection (1 ) of section 128, which
it desires to impose; .
(b) the persons or class of persons to be
made liable, and the description of property or other taxable thing or
circumstances in respect of which they are to be made liable, except where and
in so far as any such class or description is already sufficiently defined
under clause (a) or by this Act, (c) the amount or rate leviable from each such
person or class of persons;
(d) any other matter referred to in section
153, which the State Government requires by rule to be specified.
(2) The board shall also prepare a draft of
the rules which it desires the State Government to make in respect of the
matters referred to in section 153.
(3) The board shall, thereupon, publish in
the manner prescribed in section 94 the proposals framed under sub-section (1)
and the draft rules framed under sub-section (2) alongwith a notice in the form
set forth in Schedule Ill." Section 132 provides for filing objections by
inhabitants of the, municipality and the procedure for dealing with such
objections. It reads 378 "132. (1) Any inhabitant of the municipality may,
within a fortnight from the publication of the said notice, submit to the board
an objection in writing to all or any of the proposals framed under the
preceding section, and the board shall take any objection so submitted into
consideration and pass orders thereon by special resolution.
(2) If the board decides to modify its
proposals or any of them, it shall publish modified proposals and (if
necessary) revised draft rules along with a notice indicating that the
proposals and rules (if any) are in modification of proposals and rules
previously published for objections.
(3) Any objections which may be received to
the modified proposals shall be dealt with in the manner prescribed in
(4) When the board has finally settled its
proposals, it shall submit them along with the objections (if any) made in
connection therewith to the (Prescribed Authority)." Section 133 relates
to the power of State Government to reject sanction or modify the proposals of
the Municipal Board. Section 134 states :
"(1) When the proposals have been
sanctioned by the Prescribed Authority or the State Government, the State Government,
after taking into consideration the draft rules submitted by the board, shall
proceed forthwith to make under section 296, such rules in respect of the tax
as for the time being it considers necessary.
(2) When the rules have been made the order
of sanction and a copy of the rules shall be sent to the board, and thereupon
the board shall by special resolution direct the imposition of the tax with
effect from a date to be specified in the resolution." Section 135(1)
& (2) provide as follows :
"(1) A copy of the resolution passed
under section 134 shall be submitted to the State Government, if the tax has
been sanctioned by the State Government and to the Prescribed Authority, in any
(2) Upon receipt of the copy of the
resolution the State Government or Prescribed Authority as the case may be,
shall notify in the Official Gazette, the imposition of the tax from the
appointed date, and the imposition of a tax shall in all cases be subject to
the condition that it has been so notified." Chapter VII deals with powers
of the Municipal Board in respect of buildings, public drains, streets,
extinction of fires, scavenging and water supply. Chapter VIII deals with other
powers in respect of markets, slaughter-houses, sale of food, public safety,
sanitation and prevention of disease, inspection, entry, search, rent and
Sections 293 and 294 fall within Ch. VIII.
Section 293 of the Act reads as follows :
"(1) The board may charge fees to be
fixed by byelaw or by public auction or by agreement, for the use or occupation
(otherwise than under a lease) of any immovable property vested in, or
entrusted to the management of the board, including, any public street or place
of which it allows the use or occupation whether by allowing a projection
thereon or otherwise.
(2) Such fees may either be levied along with
the fee charged under section 294 for 'the sanction, licence or permission or
may 'be recovered in the manner provided by Chapter VI." Section 293-A of
the Act is to the following effect "A board may with the previous sanction
of the State Government impose and levy fees for use of any place to which the
public is allowed access and at which the Board may provide sanitary and other
facilities to the public." Section 294 of the Act enacts as follows
"The board may charge a fee to be fixed by bye-law for any licence,
sanction or permission which it is entitled or required to grant by or under
,his Act." Section 298 relates to the power of the Board to make bye-laws
and reads as follows :
"298. (1) A board by special resolution
may, and where required by the State Government shall make bye-laws applicable
to the whole or any part of the municipality, consistent with this Act and with
any rule, for the purpose of promoting or maintaining the health, safety, and
convenience of the inhabitants of the municipality and for the furtherance of
municipal administration under this Ac t.
(2) In particular, and without prejudice to
the generality of the power conferred by subsection (1 ), 380 the board of a
municipality, wherever, situated, may, in the exercise of the said power, make
any bye-law, described in List I below and the board of a municipality-wholly
or in part situated in a hilly tract may further make, in the exercise of the
said power, any byelaw described in List II below.
H-Public safety and convenience
(c) Imposing the obligation of taking out
licences on the proprietors or drivers of vehicles other than motor vehicles
boxes or animals kept or plying for hire, or on persons hiring themselves out
for the purpose of carrying, loads within the limits of the municipality, and
fixing the fees payable for such licences and the conditions on which they are
to be granted and may be revoked;
(d) Limiting the rates which may be demanded
for The hire of a carriage, cart, boat or other conveyance, or of animals hired
to carry loads or for the services of persons hired to carry loads, and the
loads to be carried by such conveyances, animals or persons when hired within
the municipality for a period not exceeding twenty-four hours or for a service
which would ordinarily be performed within twenty-four hours;
By Government Notification No. 3471/XXIII-994
dated March 10, 1941 the bye-laws framed by the Municipal Board under s.
298, List IL-H (c) and (d) of the Act and
confirmed by the Commissioner, were published. Paragraphs 12, 13 and 14 of the
bye-laws are to the following effect :
"12. For every licence granted under
these byelaws to the proprietor of the rickshaw, a fee of Rs. 25 per annum
shall 'be charged for cycle rickshaw and Rs. 3 per annum for handdrawn
13. The licences shall be annual and shall
terminate on the 31st March, in each year.
14. A fee of Re. 1 shall be charged from
every person who desires to take out a licence for driving a rickshaw and the
licence shall be issued to the applicant 381 on receipt of the prescribed fee
by the licensing officer, after ascertaining that he is strong, healthy and
above the age of 18 years, provided that the Licensing Officer may refuse the
license if he is of opinion that it would be inexpedient to grant it to the
person applying." An amendment was made by the Municipal Board to the
byelaws by Government Notification No. 4022/XXIII-745 (45-49) dated February 2,
1950 and No. 5834/'XXIII-745 dated September 6, 1951 which read thus :
"No. 4022IXXIII-745 (45-49) dated
The following amendment in the Rickshaw byelaws
for the Banaras Municipality published under notification No. 3471/XXIII-994
dated March 10, 1941, which has been made by the Banaras Municipal Board under
section 298-H(c) and (d) of the U.P. Municipalities Act 1916 and confirmed by
the Commissioner, is hereby published as required under Section 301 (2) of the
AMENDMENT In the 2nd line of rule 12 of the
Rickshaw bye-laws read 'Rs. 30' instead of 'Rs. 25' in between the words 'a fee
of' and 'per annum'.
No. 58341'XXIII-745 dated September6, 1951
The following amendment in the bye-laws for the regulation and control of
Rickshaws plying for hire or kept for private use in the Banaras Municipality
sanctioned under G.O. No. 3471/XXIII-994 dated March 10, 1941, which has been
made by the Municipal Board of Banaras, under Section 298-H(c) and (d) of the
U.P. Municipalities Act, 1961, as confirmed by the Commissioner is hereby
published as required by Section 301 (2) of the said Act.
Amendment In Rule 14 between the words 'A
fee' and 'shall be charged' 'rupees five' be substituted in place of 'Re. I/-'
occurring in the first line." On behalf of the appellant Mr. Agarwala
argued, in the first place, that the impugned bye-laws under which the appellant
charged the license fee from the respondents were not ultra vires the powers of
the Board. It was maintained that the impost was not a fee in the sense ,'bat
the Municipal Board had to give a quid 382 pro quo to the persons from whom the
fee was charged. In other words, the contention of the appellant was that the
fee charged Was not under the bye-laws a fee taken for render in any services
but it was a license fee which was in the nature of a tax. I'( was contended
that it was not necessary to show that there was any co-relationship between
the amount of license fee and the services rendered by the Municipal Board to
rickshaw owners and rickslia" drivers concerned. The question about the
distinction between a tax and a fee has been considered by this Court in The
Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Tirtha
Swamiar of Sri Shirur Mutt(1) in which the constitutional validity of the
Madras Hindu Religious and Charitable Endowments Act 1951 (Madras Act XIX of
1951) came to be examined. Amongst the sections challenged war s. 76(1 ). Under
this section every religious institution had to pay to the Government annual
contribution not exceeding 5 per cent of its income for the services rendered
to it by the said Government; and the argument was that the contribution thus
exacted was not a fee but a tax and as such outside the competence of the State
Legislature. In dealing with this argument Mukherjee, J., as he then was, cited
the definition of tax given by Latham, C.J., in the case of Matthews(1) and has
elaborately considered the distinction between a tax and a fee. "A
tax", said Latham, C.J., is a compulsory exaction of money by public
authority for public purposes enforceable by law and is not payment for
services rendered". In be in out the essential features of a tax this
definition also assists in distinguishing a tax from a fee. It is true that
between a tax and a fee there is no generic difference; both are compulsory
exactions of money by public authorities but whereas a tax is imposed for
public purposes and is not supported by any consideration of service rendered
in return, a fee is levied essentially for servires rendered and as such there
is an element of quid pro quo between the person who pays the fee and the
public authority which imposes it. In The Commissioner, Hindu Religious
Endowments, Madras.v v. Sri Lakshmindi-a Tirtha Swamiar of Sri Shirur Mutt(1)
Mukherjee, J. examined the scheme of the Act and observed as follows:
" If, as we hold, a fee is regarded as a
sort of return or consideration for services rendered, it is absolutely
necessary that the levy of fees should, on the face of the legislative
provision, be co-related to the expenses incurred by Government in rendering
the services. As indicated in Article 110 of the Constitution, ordinarily there
are two classes of cases where Government imposes 'fees' upon persons. In the
first class of cases, (1)  S.C.R. 105, I-42. (2) 60 C.L.R. 263, 276.
383 Government simply grants a permission or
privilege to a person to do something, which otherwise that person would not be
competent to do and extracts fees either heavy or moderate from that person-in
return for the privilege that is conferred." After giving an illustration
of licence fees for motor vehicles as coming under that class of cases,
proceeds to state :
"In such cases, according to all the
writers on public finance, the tax element is predominant, and if the money
paid by licence holders goes for the upkeep of roads and other matters of
general public utility, the licence fee cannot but be regarded as a tax.
In the other class of cases, the Government
does some positive work for the benefit of persons and the money is taken as
the return for the work done or services rendered. If the money thus paid is
set apart and appropriated specifically for the performance of such work and is
not merged in the public revenues for the benefit of the general public, it
could be counted as fees and not a tax.
There is really no generic difference between
the tax and fees and as said by Seligman, the taxing power of a State may
manifest itself in three different forms known respectively as special
assessments, fees and taxes." On behalf of the appellant learned, Counsel
relied upon this passage and said that licence fee fell within the first class
of cases mentioned by Mukherjee, J. and it was not necessary for the appellant
to show that there was any co relationship between the levy of the fees and the
expenses incurred by the Municipal Board in rendering the services.
We shall assume in favour of the appellant
that the tax clement is predominant in the imposition of the fee upon the
respondents under the impugned bye-laws and the license fee is therefore in the
nature of tax. Even upon that assumption the imposition of the fee under the
machinery contemplated by s. 294 of the Act is ultra vires the powers of the
Municipal Board. The reason is that if the imposition is in the nature of a tax
the procedure contemplated by ss. 131 to 135 of the Act should be followed by
the Municipal Board and in the absence of such procedure being followed the
imposition of this kind of fee would be ultra virus. It is manifest from s. 128
( 1 ) (iii) & (iv) that it is competent to the Municipality to impose a tax
on vehicles plying for hire or kept within the municipality and also on trades,
calling and vocations including rickshaw drivers and rickshaw owners.
384 But the imposition of such a tax can only
be lawfully made by the Municipal Board after following the procedure prescribed
under ss. 131 to 135 of the Act.
It was, however, contended for the appellant
that under s. 294 of the Act the Municipal Board has authority to impose a
licence fee by enacting a bye-law for that purpose under s. 298 of the Act. It
was said that s. 294 of the Act contemplates the charge of a fee not only in
the restricted sense of a fee for which a quid pro quo is provided but also in
the sense of a fee in which the taxation element is predominant. It was hence
argued that the procedural machinery for the imposition of tax contemplated
under ss. 131 to 135 of the Act need not be followed in such a case.
We are unable to accept this argument as
correct. According to the scheme of the Act there is a sharp and clear
distinction between taxes properly so called and fees.
There is a logical and clear-cut division of
the Act into several Chapters, and taxes, by whatever designation they may be
called, are all comprehended and dealt with in Ch. V. and by that Chapter
alone. And what is permitted to be imposed by S. 294 which occurs in Ch. VIII
is only a fee in the restricted sense as distinguished from a tax. To put it
differently, the Act contemplates only two categories of impost, i.e., taxes
enumerated in Ch. V and fees mentioned in ss. 293, 293-A and 294 of Ch. VIII.
It is not contemplated in the scheme of the Act that there should be a third
category of impost of licence fee which is in the nature of a tax for which the
procedure contemplated by Ch. IX is applicable. In our opinion, the scheme of
Ch. VIII of the Act shows that the provisions contained therein are meant for
the purpose of regulation of certain trades and professions and for maintenance
of public safety and convenience of the inhabitants of the municipality. The
fees mentioned in s. 294 are meant to be imposed for the purpose of regulation
of trade and professions and for rendering services. It is not contemplated by
the Act that licence fees imposed by s. 294 should be merged in the public
revenues of the municipality and should go for the upkeep of the roads and
other matters of general public utility. It is therefore not permissible for
the Municipal Board to impose a tax on the respondents under the guise of a
license fee without following the mandatory procedure for imposition of the
taxes prescribed by ss. 131 to 135 of the Act. Otherwise there will be a
circumvention of the provisions of ss. 131 to 135 of the Act. It is manifest
that s. 294 of the Act must be interpreted in such a manner as to prevent the
circumvention of the safeguards of the provisions of ss. 131 to 135 of the Act.
In this context it is important to notice
that the power to tax is not included in the police power in the American
Municipal 385 Law.-(Dillon on 'Municipal Corporations' Vol. IV, 5th Edn., p.
2400). It has been held that the police and taxing powers of the legislature
though co-existent, are distinct powers. Broadly speaking, the distinction is
that the taxing power is exercised for the purpose of raising revenue and is
subject to certain designated constitutional limitations, while the police
power is exercised for the promotion of the public welfare by means of the
regulation of dangerous or potentially dangerous businesses, occupations, or
activities, and is not subject to the constitutional restrictions applicable to
the taxing power.
"It may consequently be said that if the
primary purpose of a statute or ordinance exacting an imposition of some kind
is to raise revenue, it represents an exercise of the taxing power, while if
the primary purpose of such an enactment is the regulation of some particular
occupation, calling or activity, it is an exercise of the police power, even if
it incidentally produces revenue." (American Jurisprudence, 2nd Edn. Vol.
16, p. 519).
We pass on to consider the next question
raised in this appeal, namely, whether there was a quid pro quo for the licence
fees realised by the appellant and whether the impost was a fee in the strict
sense as contemplated by s. 294 of the Act. A finding has been recorded in the
present case by the trial court that a sum of Rs. 1,43,741/7/0 was spent by the
Municipal Board for providing facilities and amenities to owners and drivers of
rickshaws. This sum of Rs. 1,43,741/7/0 is made up of the following items :
"Rs. 68,000/spent over the paving of
bye-lanes, in these the only conveyance that can operate is a rickshaw.
Rs. 20,000/spent as expenses for lighting of
streets and lanes.
Rs. 47,741/7/0 spent in making provision for
Rs. 8,000/spent on payment of salary to the
staff maintained for issuing licences and inspecting rickshaws." The High
Court was of the opinion that the amount of Rs. 68,000/spent for paving of
bye-lanes and Rs. 20.000/for lighting of streets and lanes cannot be considered
to have been spent in rendering services to the rickshaw owners and rickshaw
drivers. The reason was that under s. 7 (a) of the Act it was the statutory
duty of the Municipal Board to light public streets and places and under cl.
(h) of the same section to construct and maintain public streets, culverts etc.
The expenditure under 386 these two items was incurred by the Municipal Board
in the discharge of its statutory duty and it is manifest that the licence fee
cannot be imposed for reimbursing the cost of ordinary municipal services which
the Municipal Board was bound under the statute to provide to the general
public (See the decision of the Madras High Court in India Sugar and Refineries
Ltd. v. The Municipal Council Hospet(1). If these two items are excluded from consideration
the balance of expenditure incurred by the Municipal Board for the benefit of
the licensees is Rs. 55,741/7/0. In other words, the expenditure constituted
about 44% of the total income of the Municipal Board from the licensees. In our
opinion, there is no sufficient quid pro quo established in the circumstances
of this case and the High Court was therefore right in holding that the
imposition of the, licence fees at the rate of Rs. 30/on each rickshaw owner
and Rs. 51on each rickshaw driver was ultra vires and illegal.
For the reasons expressed we hold that the
judgment an decree of the Allahabad High Court dated November 23, 1961 in First
Appeal No. 315 of 1958 is correct and this appeal is accordingly dismissed with
V.P.S. Appeal dismissed.
(1) I.L.R.  Mad. 521.