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Karnati Rangaiah v. A. Sultan Mohiddin And Brothers, Tadipatri And Others

Andhra Pradesh High Court

Nov 8, 1955

Judgment

Subsequent
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Structured Summary of the Opinion (Bhimasankaram, J.)

Factual and Procedural Background

The appellant is the proprietor of Vauhini Kala Mandir, a licensed theatre in Tadipatri, holding a licence under Section 4 of the Cinematograph Act to exhibit films. The first respondent purchased an old theatre building (in which film exhibition had ceased in 1940 due to defects and subsequent requisition and use as a godown until 1953). Early in 1954 the first respondent applied to the District Magistrate for a licence under Section 4 of the Cinematograph Act; receiving no response, he petitioned the local Government on 29 May 1954. The appellant lodged objections with the District Magistrate on 8 July 1954.

The State Government, by G.O.R No. 14 dated 12 January 1955, directed that a licence "may be granted" to the old theatre at Tadipatri (belonging to the first respondent) provided necessary repairs were carried out and requested the Collector to give the management time (three or four months) to carry out the repairs to bring the theatre up to specification. The appellant challenged that decision by filing a writ petition (W.P. No. 375 of 1955) seeking mandamus or other writ to restrain the District Magistrate from issuing a licence. The learned single judge (Umamaheswaram J.) declined relief, and the appellant appealed to this Court.

Legal Issues Presented

Whether, under the Cinematograph Act (notably Section 4 and Section 5(3)), the State Government can give directions to the District Magistrate (the licensing authority) to issue a licence to a specific person, or whether the District Magistrate alone has exclusive statutory authority to grant or refuse licences.
Whether the appellant (an existing licensee) was entitled, as a matter of natural justice, to receive prior notice before a licence was granted to a prospective rival theatre.
Whether the Government erred in interpreting earlier Government Orders (notably G.O.Ms No. 2070, Home Department, dated 5 May 1950, and a subsequent memorandum dated 20 February 1951) concerning the permissible number of permanent cinemas in a locality and the exception for cinemas whose construction started prior to 5 May 1950.

Arguments of the Parties

Appellant's Arguments

The licensing authority under the Act is the District Magistrate and the local Government has no power to direct him to issue a licence; control by Government under S.5(3) cannot be co-extensive with the initial power to grant a licence and, at best, the Government could direct issuance only after the District Magistrate had first refused.
The appellant should have been given prior notice before a licence was granted to a prospective rival as a matter of natural justice (despite there being no statutory provision for such notice).
The Government misinterpreted its earlier orders about the permissible number of permanent cinemas in a locality; specifically, because the building in question had been used as a godown and not as a cinema for more than ten years, it could not be treated as a cinema whose construction started prior to 5 May 1950 for the purpose of the exception in the Government memoranda.

The opinion does not contain a detailed, separate account of the respondents' (District Magistrate's or State Government's) adversarial arguments in the same structured form; the Court's reasoning addresses and disposes of the appellant's contentions.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Commissioner of Police, Bombay v. Gordhanadas Bhanji ((1952) SCR 135; AIR 1952 SC 16)	Interpreted statutory rules under the City of Bombay Police Act to hold that the Commissioner of Police was the sole authority vested with power to grant or refuse a licence for erection of a building for public amusement and that the State Government could not interfere with that authority.	The Court distinguished that decision: it held the Cinematograph Act expressly subjects the licensing authority's grant of licences to the "control of the (Provincial) State Government" under S.5(3). Thus, unlike the rules considered in the cited case, the Statute here contemplates broad State Government control (including particular directions), and the cited decision does not prevent such control under this Act. The Court also quoted the Supreme Court's observation (from that decision) that a licensing authority may take into consideration the Government's views provided it does not surrender its own judgment, and used that to interpret the present executive order as permissible guidance rather than an unlawful usurpation of the magistrate's discretion.

Court's Reasoning and Analysis

On the first contention (exclusive authority of the District Magistrate): the Court examined Section 4 and Section 5(3) of the Cinematograph Act. It noted that S.5(3) expressly makes the licensing authority's power to grant licences "subject to the control of the (Provincial Government)". The Court interpreted the word "control" broadly, concluding that the statute does not delimit the ambit of that controlling power and that such control may take the form of general or particular instructions. The Court therefore rejected the submission that the District Magistrate was the sole statutory authority whose decision the Government could not direct or influence. The Court distinguished the Gordhanadas Bhanji decision (where the statutory/regulatory scheme vested sole authority in the Commissioner) on the ground that the Cinematograph Act explicitly provides for governmental control.

On the second contention (right to notice as a matter of natural justice): the Court observed there is no statutory requirement of notice to other licensees before issuing a licence to a new entrant. It reasoned that potential financial impact from competition does not amount to a private right that requires protection by procedural notice; competition is a normal business risk. The Court also noted as a factual matter that the appellant had actual notice of the first respondent's application and had made representations to the District Magistrate.

On the third contention (construction of prior Government Orders): the Court interpreted G.O.Ms No. 2070 (5 May 1950) and the subsequent memorandum (20 February 1951) and concluded the building in question was properly characterized as a "cinema whose construction started prior to 5th May, 1950" because it was originally constructed as a theatre long before 1950, despite its subsequent use as a godown. The Court further explained that the Government Orders relied upon were executive instructions (terms, conditions and restrictions within S.5(3)) rather than rules made under Section 8 of the Act; therefore, the Government was not precluded from issuing directions at variance with earlier G.Os since those G.Os did not have the force or formal status of rules under S.8 (they need not be published as rules or have effect "as if enacted in the Act").

The Court also took into account the procedural history: the District Magistrate had considered the matter and communicated to the State Government (3 December 1954) that a licence could not be refused merely because issuing it would exceed a previously prescribed maximum; the Government's subsequent order directed that a licence may be granted subject to repairs. The Court emphasized that the District Magistrate had not yet actually granted a licence and that the Government's order used permissive language ("may be granted"), which the Court treated as acceptable guidance rather than an unlawful compulsion of the magistrate's independent judgment.

Holding and Implications

Holding: The appeal is dismissed. The Court found no substance in the appellant's contentions and upheld the position that the State Government could direct or give effect to the grant of a licence in the manner it had done.

Immediate consequences for the parties:

The appellant's challenge to the Government's direction permitting grant of a licence to the first respondent was rejected.
The District Magistrate had not actually issued a licence at the time of the judgment; the Government's order merely authorized that a licence "may be granted" subject to repairs being carried out by the first respondent.
The Court awarded costs to the respondents (one set) and fixed advocate's fee at Rs. 100.

Implications regarding precedent and legal doctrine: The decision clarifies that under the Cinematograph Act the licensing authority's discretionary power to grant licences is expressly subject to broad "control" by the State Government (S.5(3)), and that executive G.Os which are not rules under Section 8 may be varied by subsequent executive directions. The opinion does not purport to lay down a novel legal doctrine beyond these interpretations and does not state that it creates a new binding precedent beyond its application to the facts before the Court.

H.G.P

Disposition: Appeal dismissed.

Show all summary ...

Bhimasankaram, J.:— This is an appeal against the decision of our learned brother Umamaheswaram J., in W.P No. 375 of 1955, declining to issue a writ of mandamus or any other appropriate writ restraining the District Magistrate, Anantapur, from issuing a licence to the first respondent under Section 4 of the Cinematograph Act, II of 1918 (hereinafter called ‘the Act’).

2. The facts material for the determination of the questions of law raised before us are simple. The appellant is the proprietor of a theatre called “Vauhini Kala Mandir” in the municipal town of Tadipatri. He has a licence under Section 4 of the Cinematograph Act to exhibit cinema shows in that theatre. The 1st respondent purchased a building in 1949 in which cinematograph films were being exhibited upto the year 1940 under a licence till then in force. As a result of certain defects pointed out by the Executive Engineer such exhibition was stopped in the year 1940.

3. But before the defects were rectified, the Government requisitioned the building and handed it over to a local Co-operative Stores which was using it as godown till the year 1953. The building was however vacated by the Stores in that year and early in the year 1954, the 1st respondent applied to the local District Magistrate for the issue of a licence under S. 4 of the Act. As he received no reply, he presented a petition to the local Government on 29th May, 1954. The appellant who came to know of this filed a memo, dated 8th July, 1954, before the District Magistrate setting out his objections to the grant of a licence to the 1st respondent. The Government in G.O.R No. 14, dated 12th January, 1955, passed the following Order:

“In the circumstances stated by the Collector of Anantapur in his letter, dated 3rd December, 1954, cited, the Government consider that a licence under the Cinematograph Act may be granted to the old theatre at Tadipatri belonging to Sri A. Sultan Mohiuddin and Brothers provided necessary repairs are carried out. The Collector is therefore requested to grant a reasonable time say three or four months to the management of the old theatre for carrying out the requisite repairs to bring the theatre upto the specification of the Cinematograph Rules.”

4. Thereupon, the appellant filed a writ petition out of which this appeal arises for the relief above specified. He has impleaded the State Government as the 3rd respondent. Our learned brother dismissed the application, and the petitioner has come up in appeal before us.

5. The main contentions of the appellant are three in number. In the first instance, he urges that, under the Act, the authority having power to grant licences is the District Magistrate and the local Government has no power to direct him to issue one, as they have purported to do in the above G.O The material portion of the relevant sections are extracted below in order that this contention may be appreciated.

“Section 4:

The authority having power to grant licences under this Act (hereinafter referred as the ‘licensing authority”) shall be the District Magistrate.

5. (3) Subject to the foregoing provisions of this section, and to the control of the (Provincial Government), the licensing authority may grant licences under this Act to such persons as it thinks fit, and on such terms and conditions and subject to such restrictions as it may determine.”

6. It is contended by the appellant that the power of control cannot be co-extensive with the power initially to grant a licence and that at any rate even assuming that the Government could direct the issue of a licence to a particular individual it could only do so after the District Magistrate had declined to grant one in the first instance. We cannot accept this contention. It is to be noticed that the Statute expressly provides that the grant of licences by the licensing authority to such persons as it thinks fit, is subject to the control of the State Government. The power of control extends over the whole range of the power to grant licences and the word “control” has a very wide connotation. In our view, the Statute does not in any way delimit the ambit of controlling power. Such control may take the shape of either general or particular instructions. It cannot be said that the District Magistrate is the statutory authority solely entrusted with the power to grant or refuse a licence, as, for instance, was the case, in the statutory rules framed under the City of Bombay Police Act which were considered by the Supreme Court in Commissioner of Police, Bombay v. Gordhanadas Bhanji, (1952) SCR 135 : (AIR 1952 SC 16) (A)). On an interpretation of the relevant rules, the Supreme Court held in that case that the Commissioner of Police was the only person vested with authority to grant or refuse a licence for the erection of a building to be used for the purpose of public amusement and that the State Government had no power to interfere with that authority. The words in S. 5(3) “to such persons as it thinks fit” and “such terms and conditions, and……….such restrictions as it may determine” do not, in our opinion, necessarily detract from the power of the State Government to give directions to the licensing authority in regard either to the “persons” or to the “terms, conditions and restrictions”. This control over the exhibition of cinematograph films is conceived in the interest of ‘safety, convenience, morality and welfare of the public’, to use a phrase of the Supreme Court in the cited decisions, and as such made subject to the over-all supervision of the State Government. Further, in this case, on the facts, it is evident that the District Magistrate dealt with the matter at first. In a communication dated 3rd December, 1954, he informed the State Government that in the light of the instructions issued earlier, a licence cannot be refused to the 1st respondent merely on the ground that by issuing a licence the maximum number of permanent cinemas prescribed in an earlier G.O issued by the Government would be exceeded—an objection which was raised before the District Magistrate by the present appellant. It was upon this communication from the District Magistrate that the Government passed the order now in question before us directing the grant of a licence to the 1st respondent subject to his carrying out the requiste repairs in order to bring the theatre upto the specification of the Cinematograph Rules.

7. The second contention on behalf of the appellant is that he should have had notice issued to him before a prospective rival theatre was granted a licence. It is admitted that there is no statutory provision for such notice. He however claims that he is entitled to it as a matter of natural justice. But we cannot agree. We cannot see why the State Government or the District Magistrate cannot exercise the power to grant a licence to a new entrant without notice to the other licensees. It is true that in one sense their financial interests might be affected by the grant of a licence to the proprietor of a new theatre. But that will be the case in any business where there is competition and no business man can ask that he should be protected from competition. The order now impugned does not affect the appellant's private rights or interests, except in the sense that its effect is that he will have a business rival. On the facts also we find that he had actual notice of the 1st respondent's application and made his representation to the District Magistrate.

8. The third contention raised on behalf of the appellant is that the Government erred in interpreting their earlier orders as to the terms and conditions under which licences could be issued to a permanent cinema in a particular locality. It is stated in G.O.Ms No. 2070, Home Department, dated 5th May, 1950, that the number of permanent cinemas should be regulated on the basis of population and that only one permanent cinema should be allowed to a place of population of 20,000—and Tadipatri is one such—while to places with population of over 20,000 and less than 30,000 one permanent cinema and one touring cinema may be allowed. There was a subsequent memorandum dated 20th February, 1951, which informed the local licensing authorities that the effect of the instructions in a memorandum, dated 5th September, 1950, is

“that no permanent cinemas whose construction started prior to 5th May, 1950, should be refused a licence merely on the ground that by issuing a licence, the maximum number of permanent cinemas prescribed in paras. 6-9 of G.O.Ms No. 2070, Home, dated 5th May, 1950, for such a place would be exceeded.”

9. It is argued that as the building now in question was being used only as godown when the present appellant started his own theatre and as it was not being used as a cinema house for more than 10 years, it cannot be described as “a cinema whose construction started prior to 5th May, 1950” within the meaning of the subsequent G.O We do not think the contention is correct. It seems to us that clearly the building in question should be construed as a cinema whose construction started prior to the 5th May, 1950. (The word “Cinema” in this context should be understood as a cinema house or a theatre). This building was constructed certainly as a theatre long before 1950. Even otherwise, there is nothing which prevents the Government from issuing directions at variance with their own prior G.Os, when such G.Os, do not constitute rules or regulations made under statutory authority. Section 8 of the Act no doubt enables the State Government to make rules for the purpose of carrying out effectively the provisions of the Act. But these G.Os are not rules framed under that section but are simply “terms, conditions and restrictions” such as are referred to in sub-s. (3) of S. 5 of the Act. They need not be published in the Official Gazette as rules made under S. 8 nor do they have effect “as if enacted in the Act”. They merely embody executive instructions in the exercise of a general power to control the grant of licences.

10. No other point has been argued before us. We may add that the District Magistrate has not, as a matter of fact, granted a licence yet in pursuance of the order now questioned. The Supreme Court stated in the decision cited above that even if the Commissioner of Police was the sole authority to grant a licence, they did not “mean to suggest that it would have been improper for him to take into consideration the views and wishes of the Government provided he did not surrender his own judgment”. After all, the order merely says that he may issue a licence. We are therefore satisfied that there is no substance in the contentions urged on behalf of the apellant and dismissed this writ appeal with costs (one set). Advocate's fee Rs. 100.