Calcutta High Court
The Calcutta Municipal Corporation & … vs The Cricket Association Of Bengal & Ors on 19 June, 2025
Author: Arijit Banerjee
Bench: Arijit Banerjee
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IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
Original Side
APO/248/2016
WITH
WPO/2662/1996
IA NO: GA/2/2021
THE CALCUTTA MUNICIPAL CORPORATION & ORS.
VS
THE CRICKET ASSOCIATION OF BENGAL & ORS.
BEFORE: The Hon'ble JUSTICE ARIJIT BANERJEE
AND
The Hon'ble JUSTICE KAUSIK CHANDA
For Appellants : Mr. Alak Kr. Ghosh, Adv.
Mr. Swapan Kr. Debnath, Adv.
Ms. Sima Chakraborty, Adv.
For UOI Ms. Susmita Saha Dutta, Adv.
For Respondent no. 1 (CAB) : Mr. Jaydip Kar, Sr. Adv.
Mr. Samrat Sen, Sr. Adv.
Mr. Kaushik Mandal, Adv.
CAV on : 05.03.2025
Judgment on : 19.06.2025
Arijit Banerjee, J. :-
1. This appeal is directed against a judgment and order dated April 24,
2015, whereby the writ petition of the respondent no. 1 herein being WP No.
2662 of 1996, was allowed by a learned Judge of this Court.
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2. The material facts of the case are that Cricket Association of Bengal
(in short 'CAB') enjoys a lease of the Eden Gardens ground in the city of
Kolkata. The owner of the property and the lessor is the Ministry of Defence,
Government of India.
3. The inaugural ceremony of the Wills World Cup of 1996 was organized
by CAB at the Eden Gardens on February 11, 1996. Thereafter, a Semifinal
match of the World Cup was held at the said Cricket ground on March 13,
1996. Certain advertisements had been put up both inside and outside the
Eden Gardens Stadium. The Kolkata Municipal Corporation (in short KMC)
issued a demand notice dated March 27, 1996, claiming a sum of Rs.
51,18,450/- from CAB on account of advertisement tax for the aforesaid two
days of the Wills World Cup, by invoking Section 204 of the KMC Act, 1980.
4. CAB and its president and secretary challenged such demand notice
by filing the instant writ petition. The challenge was based on three
grounds. Firstly, the concerned advertisements had been displayed within
the Eden Gardens Stadium which is not a public place and the same were
not visible to the public from a public street or a public place. Therefore, the
provisions of Section 204 of the KMC Act, 1980 as it stood before
amendment in 2019, did not apply. Secondly, the demand notice suffered
from the vice of arbitrariness and had been issued in breach of the
principles of natural justice. The basis for the amount claimed in the
demand notice had not been disclosed. The writ petitioners had not been
granted an opportunity of being heard prior to the issuance of the notice.
Thirdly, in view of Article 285 of the Constitution of India, the Union of India
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being the owner of the land which houses the Eden Gardens Stadium, the
KMC authority cannot levy any tax thereon.
5. Learned Single Judge upheld the grounds of challenge as put forth by
the writ petitioners and quashed the demand notice dated March 27, 1996.
Being aggrieved, KMC and its officers have come up in appeal.
6. Before recording the respective arguments of the parties, we may note
the provisions of Section 204 of the KMC Act, 1980 prior to its amendment
in 2019 and Article 285 of the Constitution of India, which read as follows:-
"204. Tax on advertisements.
(1) Every person, who erects, exhibits, fixes or retains upon or over
any land, building, wall, hoarding, frame, post, kiosk or
structure any advertisement or, displays any advertisement to
public view in any manner whatsoever, visible from a public
street or public place (including any advertisement exhibited by
means of cinematograph) shall pay for every advertisement
which is so erected, exhibited, fixed or retained or so displayed
to public view, a tax calculated at such rate as the Corporation
may determine by regulations or as the budget estimate shall
state under sub-section (3) of Section 131:
Provided that a surcharge not exceeding fifty per cent of
the applicable rate may be imposed on any advertisement on
display in temporary fairs, exhibitions, sports events or cultural
or social programmes.
(2) Notwithstanding the provisions of sub-section (1), no tax shall
be levied under this Sections on any advertisement which:
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(a) relates to "non-Commercial advertisement" or
"advertisement related to public interest" as defined in the
Explanation to sub-Section (4) of Section 2002; or
(b) is exhibited within the window of any building if the
advertisement relates to the trade, profession or business
carried on in that building ; or
(c) relates to the trade, profession or business carried on
within the land or building upon or over which such
advertisement is exhibited or to any sale or letting of such land
or building or any effects therein or to any sale, entertainment
or meeting to be held on or upon in the same; or
(d) relates to the name of the land or building upon or over
which the advertisement is exhibited or to the name of the
owner or occupier of such land or building; or
(e) relates to the business of a railway administration and is
exhibited within any railway station or upon any wall or other
property of a railway administration; or
(f) relates to any activity of the Government or the Corporation.
(3) The tax on any advertisement leviable under this section shall
be payable in advance in such number of instalments and in
such manner as the Corporation may by regulations determine
or as the budget estimate shall state under sub-section (3) of
Section 131:
Provided that the Corporation may under the terms and
conditions of the licence under Section 203 require the licensee
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to collect and pay to the Corporation, subject to a deduction of
five per cent to be kept by him as collection charges, the
amount of tax in respect of such advertisements as are
displayed on any site for which he is the licensee."
Article 285 of the Indian Constitution - Exemption of property
of the Union from State taxation
(1) The property of the Union shall, save in so far as Parliament
may by law otherwise provide, be exempt from all taxes imposed
by a State or by any authority within a State.
(2) Nothing in clause (1) shall, until Parliament by law otherwise
provides, prevent any authority within a State from levying any tax
on any property of the Union to which such property was
immediately before the commencement of this Constitution liable
or treated as liable, so long as that tax continues to be levied in
that State."
Argument of the appellants
7. While assailing the judgment of the learned Single Judge, Mr. Ghosh,
learned Senior Counsel representing the appellants, formulated 5 points for
consideration:-
a) Whether or not the Eden Gardens ground and/or Stadium is a public
place?
b) Whether or not the advertisements put up at the Eden Gardens were
visible to the public from a public place and/or public street?
c) Whether KMC was entitled to impose advertisement tax on CAB by
invoking Section 204 of the KMC Act, 1980?
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d) Whether the area where the Stadium and/or Eden Gardens is situated, is
outside the purview of the KMC Act, 1980?
(e) Whether or not the demand notice under challenge suffers from the vice
of arbitrariness or has been issued in breach of the principles of natural
justice?
8. Mr. Ghosh submitted that it is true that entry to the Eden Gardens
Stadium is restricted to the number of seats available there. However,
several other persons/officials remain at the Eden Gardens during the
sports events, for various purposes. It is clear that the public at large, on
purchasing tickets, are allowed to enter the ground/Stadium. Hence, the
entry to the Stadium is open to the public at large on fulfilment of certain
terms and conditions. The entry is not restricted to a defined body of
individuals with a particular social standing or specific qualification or
professional attainment or interests or purposes. When entry to Eden
Gardens is thrown open to the public at large on purchase of ticket, the
Eden Gardens ground/Stadium does not remain a private place but attains
the status of a restricted public place.
9. Learned Senior Counsel further made submission on the aspect of
whether or not the Cantonment Act, 1924 applies to Eden Gardens thereby
excluding the jurisdiction of KMC. We do not dilate on that point as
although the same was initially argued on behalf of CAB, subsequently the
argument was not pressed, since, it transpired that requisite notification
under the Cantonment Act was never issued.
10. Mr. Ghosh argued that when advertisements are deployed either inside
or outside the Eden Gardens Stadium, such advertisements are visible from
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a public place. The members of the public upon entering Eden Gardens area
or Stadium see the advertisements. Further, the sports events conducted at
the Eden Gardens are telecast through different modes for the purpose of
allowing the people to watch and enjoy the same from public places/ streets.
Hence, it cannot be said that the provisions of Section 204 of the KMC Act,
1980, could not have been invoked in respect of such advertisements.
11. Learned Counsel further submitted that the demand under challenge
cannot be said to be arbitrary or in breach of the principles of natural
justice. The imposition of advertisement tax has been made on the basis of
calculation at the prescribed rates. In the instant case, though the demand
notice did not include the details of computation, it was open to CAB to ask
for such details, but it did not do so.
12. Mr. Ghosh relied on the decision of the Hon'ble Supreme Court in the
case of Brihanmumbai Mahanagarpalika & Anr. v. Willingdon Sports
Club & Ors., reported at (2013) 16 SCC 260 and in particular reliance
was placed on paragraph 20 of the reported judgment which reads as
follows:-
"20. In our view, both the aforesaid reasons are incorrect. A
cursory reading of the definition of the expression 'eating house'
may support the conclusion of the High Court because general
public is not allowed entry in the premises of the Club and, in the
first blush, it appears that food is not supplied for consumption on
the premises for profit or gain. However, if we apply purposive
interpretation, then it becomes clear that the Catering Department
of the Club which prepares and serves/supplies food to members
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of the club is covered by the definition of the expression 'eating
house'. It cannot be denied that members of Club also fall within
the ambit of the term 'public'. No doubt, the primary activity of the
Club is to provide sporting facilities to the members, but the
supply of food is an integral part of such activity and the Catering
Department of the Club satisfies an essential component of the
facilities provided by the Club. One can take judicial notice of the
fact that many members who avail sporting facilities remain on the
premises for a very long period. Therefore, the articles of food
become integral part of their activities. Not only this, many join the
Club in the name of availing sporting facilities only for the purpose
of spending their time in leisure and for enjoying the facilities
provided by the Catering Department of the Club. Thus, even
though profit may not be the motto of catering facilities provided
by respondent No.1, it certainly gains by these facilities."
13. Citing an unreported judgment of a Coordinate Bench of this Court
rendered in APO no. 55 of 2016 with G.A. No. 2506 of 2015, KMC &
Ors. v. Calcutta Ladies Golf Club & Ors., Mr. Ghosh relied on the
following observations in the said judgment:
"A member pays a monthly subscription to avail of the services of
the Club and he also pays for the food and the drink that he buys.
He has to make an extra payment to accommodate his gests or to
avail of special certain facilities. It would be inconceivable and
against reason that other places of public entertainment like
licensed foreign liquor vendors, restaurants with orchestra or
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facilities for floor show would be required to obtain an enlistment
certificate whereas a club carrying out the same nature of activity
from a restricted public place would be exempt from it. This
certainly could not have been intention of the legislature."
14. Mr. Ghosh also argued that the argument relating to non-application of
KMC Act, 1980, is self-contradictory since CAB has admitted paying
advertisement tax for all advertisements put up outside the Eden Gardens
Stadium.
15. As regards Article 285 of the Constitution, Mr. Ghosh submitted that
the property in question is enjoyed and controlled by CAB which is a society
registered under the Societies Registration Act. It has a separate and
distinct entity and comes within the definition of 'owner' when it uses and
enjoys the property of the Union of India under lease. In this connection
reference was made to Section 2(62) of the KMC Act which reads as follows:-
" 'owner' includes the person for the time being receiving the rent
of any land or building or of any part of any land or building,
whether on his own account or as agent or trustee for any person
or society or for any religious or charitable purpose or as a receiver
who would receive such rent if the land or building or of any part
of the land or building were let to tenant"
16. Learned Advocate submitted that the property in question is assessed
by KMC making CAB the person liable to pay property tax. In any event,
advertisement tax is different from property tax and Article 285 does not
have any manner of application. In this connection learned Counsel relied
on the decisions of the Hon'ble Supreme Court in Electronics Corporation
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of India Ltd & Ors. v. Secretary, Revenue Department, Govt. of A.P. &
Ors. reported at (1999) 4 SCC 458 paras 14 and 15 and Food
Corporation of India v. Municipal Committee, Jalalabad & Anr.,
reported at (1999) 6 SCC 74.
Submission made on behalf of CAB
17. Appearing for CAB, Mr. Joydeep Kar, learned Senior Advocate,
submitted that the notice of demand dated March 27, 1996, was not
preceded by any bill raised by KMC or any show-cause notice or opportunity
of hearing. The notice also does not contain any break-up of the amount or
the rate at which advertisement tax has been charged. No reason is stated in
the notice justifying either the imposition or the quantification of
advertisement tax.
18. A comprehensive representation dated April 1, 1996, was made by
CAB in response to the demand notice. In short, the contention of CAB was
that Section 204 of the KMC Act is not attracted in the facts of the case.
19. Without responding to such representation, KMC lodged a complaint
before the Municipal Magistrate, Kolkata, purportedly under Sections 620
and 580 of the KMC Act, read with Section 612 thereof, for taking
cognizance of the purported criminal offence committed by CAB in not
making payment of the demanded sum of Rs. 51,18,450/-. In the complaint,
KMC alleged violation of Sections 202(1) and 204(1) of the KMC Act.
20. The notice of demand followed by the complaint lodged before the
Municipal Magistrate, prompted CAB to file the instant writ petition.
21. Mr. Kar submitted that the following issues fall for consideration in
the instant appeal:-
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(i) Whether in-stadia advertisements exhibited inside the Eden
Gardens Stadium can be said to be visible from a "public street or
public place" so as to fall within the prohibition of Section 202 of
the KMC Act (prior to its amendment in 2019) and thereby require
written permission of the Municipal Commissioner?
(ii) Whether KMC can levy tax on advertisements in terms of
Section 204 of the KMC Act, 1980, (prior to its amendment in
2019) without framing appropriate Regulations therefor?
(iii) Whether KMC is entitled, in law, to levy advertisement tax on
advertisements put up on land and structures owned by the Union
of India through the Defence Estates Officer, Ministry of Defence?
(iv) Whether the impugned notice of demand which does not
contain any break-up and does not disclose the basis of the claim,
is sustainable in law?
(v) Whether the impugned notice of demand can be sustained
without affording an opportunity of hearing in consonance with
the principles of natural justice?
(vi) Whether the impugned notice, being unreasoned, is arbitrary
and perverse?
(vii) Whether liability for payment of advertisement tax rests with
CAB?
22. Regarding issue (i) learned Senior Advocate submitted that the subject
in-stadia advertisements were erected/exhibited within the precincts of the
Eden Gardens Stadium. They were not visible from outside the Stadium.
One necessarily needed to have access to and enter inside the Stadium for
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such advertisements to be visible to him/her. The inside/interior of the
Eden Gardens Stadium is certainly not a 'public street' as defined in Section
2(71) of the KMC Act, 1980. Therefore, the only question is whether the
inside of the Eden Gardens Stadium can be said to be a public place.
23. The expression 'public place' is defined neither in the KMC Act nor in
the General Clauses Act, 1897. In common parlance, for a particular place
to be a public place, the members of the public must have absolute,
unqualified and unconditional right of free access thereto at their own free
will and volition without any restriction whatsoever. Such place should be
open for entry by an indeterminate number of members of the public and
not only to a definite or select or a determinate number. If the right of access
to a premises is reduced to being a permissive or limited or restricted right
or regulated (by tickets or passes), then such premises ceases to be a public
place.
24. Mr. Kar submitted that members of the public do not have an
absolute or unqualified or unconditional right of free access to the Eden
Gardens Stadium. Such right of admission is reserved in favour of CAB.
Moreover, such right is restricted to only specific days on which certain
special matches are held and to only those persons who hold a valid ticket.
Even then, such persons have the right of access to only that portion of the
Stadium to which their tickets pertain and only on the specific date and for
the limited period for which such tickets were issued. Even the number of
people who can obtain such right of access is restricted by the seating
capacity of the particular portion of the Stadium to which the tickets
pertain.
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25. Therefore, the Eden Gardens Stadium cannot be considered to be a
public place. Consequently, no advertisement tax is payable for the in-
stadia advertisements. In this connection reference was made to the
following decisions:-
(i) The Corporation of Calcutta and Ors v. Sarat Chandra
Ghatak and Anr reported at MANU/WB/0199/1959.
(ii) Rajammal v. Associated Transport Co. and Anr reported at
1968 SCC OnLine Mad 111: (1969) 2 Mad LJ 620. Paragraph
17
(iii) Khudi Sheikh v. King Emperor reported at 1901 SCC
OnLine Cal 150 : (1991-02) 6 CWN 33.
(iv) Emperor v. Hussein Noor Mahomed reported at 1905 SCC
OnLine Bom 1 : ILR (1906) 30 Bom 348.
(v) In Re: Kuchampudi Satyanarayana Raju and Ors. reported
at AIR 1950 Mad 729.
(vi) P.K. Chacko v. Mariakutty and Ors. reported at 1986 SCC
OnLine Ker 376 : (1990) 68 Comp Cas 340.
(vii) Directorate of Revenue and Anr v. Mohammed Nisar Holia
reported in (2008) 2 SCC 370.
26. As regards issue (ii), learned Senior Advocate, referring to Section 204
of the KMC Act, 1980 (prior to its amendment in 2019) submitted that no
Regulations have been framed as mandated by the KMC Act. Without such
Regulations, the computation of the amount payable, if any, on account of
advertisement tax, could not have been made and no amount could be
demanded from CAB by way of the impugned notice or otherwise or at all.
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Framing of regulations is a mandatory sine qua non for carrying out
assessment of the amount alleged to be payable towards advertisement tax.
27. Mr. Kar submitted that Article 265 of the Constitution of India
prohibits any tax from being levied or collected, except by authority of law.
Assessing and demanding advertisement tax, in the absence of Regulations
therefor, is without authority of law and ultra vires the Constitution. In this
connection learned Counsel relied on the following two decisions:-
(i) Amit Kumar Singh & Anr. v. The Durgapur Municipal
Corporation & Ors. reported in 2016 SCC Online Cal 4280 :
2016 (4) CHN 653.
(ii) Vital Nutraceuticals Private Limited and Ors. v. Union of
India and Ors reported in MANU/MH/2967/2014.
28. It was further submitted that where a statute confers power on an
authority to do a certain thing in a certain way, the thing must be done in
that way or not at all; other methods of performance are necessarily
forbidden.
29. In this connection the following decisions were referred to:-
(i) Taylor v. Taylor reported at (1875) 1 Ch. D. 426 @ 431.
(ii) Nazir Ahmad v. King-Emperor reported at AIR 1936 PC
253
(iii) State of Uttar Pradesh v. Singhara Singh and Ors.
reported at AIR 1964 SC 358 : 1963 SCC OnLine SC 23.
(iv) Hussein Ghadially alias M.H.G.A Shaikh and Ors. v. State
of Gujarat reported at (2014) 8 SCC 425.
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30. As regards the third issue, referring to the indenture of lease executed
by and between the 'President of India' as the lessor and CAB as the lessee,
Mr. Kar submitted that it is the Union of India which not only owns the land
on which the Eden Gardens Stadium is built, but that CAB also does not
have any ownership right over the constructed Stadium and all other
structures therein which are owned by the Union of India. Therefore, Article
285 (1) of the Constitution operates as an absolute bar to tax being imposed
on CAB by KMC in respect of the Eden Gardens Stadium. The exception
carved out in Article 285(2) of the Constitution is not attracted in the instant
case, since Eden Gardens was not treated as liable for imposition of tax
immediately before commencement of the Constitution. In this connection
reliance was placed on the decision in the case of Turf Properties Limited
v. Corporation of Calcutta and Ors. reported at AIR 1957 Cal 431.
31. Mr. Kar referred to the decision of the Hon'ble Supreme Court in the
case of New Delhi Municipal Council v. State of Punjab and Ors.,
Reported at (1997) 7 SCC 339 to highlight the legislative intent behind
Article 285 of the Constitution. In this context, the following decisions were
also referred to by learned Senior Counsel:-
(A) Union of India Owner of the Eastern Railway v.
Commissioner of Sahibganj Municipality reported at (1973) 1
SCC 676
(B) Municipal Corporation, Amritsar v. Senior Superintendent
of Post Offices, Amritsar Division & Anr., reported at (2004) 3
SCC 92.
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(C) Union of India v. State of Punjab and Ors. reported at AIR
1990 P & H 183.
32. Learned Senior Counsel further submitted that tax on advertisements
under Section 204 of the KMC Act is leviable only when a person who erects,
exhibits, fixes or retains upon or over any land, building, wall, hoarding,
frame, post, kiosk or structure any advertisement or, displays any
advertisement. This is further explained by Section 203 of the Act which
requires a licence for the use of 'site' for advertisements. As such, the tax is
leviable on the 'site' i.e. the property when an advertisement is put up
thereat. Such tax is therefore exempted by virtue of Article 285(1) of the
Constitution of India.
33. Learned Counsel submitted that the sovereign immunity granted
under Article 285 of the Constitution of India is all encompassing and
comprehensive and relates to all and any tax that may be imposed on any
property of the Union of India, including advertisements erected thereon.
Article 285 (1) does not contemplate that the protective umbrella conferred
by it would be pierced in the case of any particular type of tax. As such, the
tax on advertisement would also be covered by the all-embracing provisions
contained in Article 285(1) of the Constitution.
34. It was submitted that the fact that by virtue of Article 285(1), no taxes
whatsoever can be imposed on the properties of the Union of India
(including the Eden Gardens Stadium and structures erected therein) would
also appear from the letter dated May 10, 1994, addressed by the Deputy
Secretary to the Government of India, to the Chief Secretaries to the
Governments of all part 'A' & 'B' States disclosed by KMC as part of its
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affidavit-in-opposition. The said letter along with connected documents
make it manifest that save and except certain service charges only, such as
conservancy, scavenging, water supply, drainage, roads, lighting which
would be paid only up to a specified percentage, no other payment can be
demanded in respect of the properties of the Union of India.
35. It was then submitted that Eden Gardens is situated in an area which
is known as 'Hastings'.
36. From a conjoint reading of Sections 627 to 630 of the KMC Act, it
would appear that all land and buildings belonging to the Government of
India within the Hastings area is subject to the control of the General Officer
Commanding, Presidency District. KMC is however vested with the power, in
the interest of public health, to require the owner or occupier of any land or
building in Hastings, to remedy or abate any sanitary defect on or in such
land or building. Even with regard to erection of masonry building, no
permission can be given by the KMC to carry out such work; only the
sanction of the Central Government is required to carry out such work and
such sanction shall not be applied for unless the plan therefor is approved
by the Commissioner of Police. Therefore, KMC is not entitled to levy tax on
advertisements or any other tax in respect of properties in the Hastings
area.
37. As regards the fourth and fifth issues, Mr. Kar submitted that it is
elementary that if there is a monetary demand, the same must contain
break-up of the basis on which the demand has been made. There being no
Regulation, in the absence of such basis/break-up, the demand is arbitrary
and unsustainable in law.
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38. It is a fundamental principle of administrative law that all decisions
that entail civil consequences must be preceded by an opportunity of
hearing in accordance with the principle of audi alteram partem. The said
principle of natural justice is to be read into a statute even if the statue is
silent on the issue of granting an opportunity of hearing to a party.
Constitutional Courts lean in favour of reading in the principles of natural
justice when faced with a regulatory statute. The application of the
requirement of a prior hearing / pre-decisional hearing can be excluded only
in situations where importing it would have the effect of paralyzing the
entire process, and not otherwise. In this connection reliance was placed
on:-
(i) Radhy Shyam (Dead) through LRs. and Ors. v. State of
Uttar Pradesh and Ors. reported at (2011) 5 SCC 553.
(ii) State Bank of India and Ors. v. Rajesh Agarwal and Ors.
reported at (2023) 6 SCC 1.
39. The demand notice required CAB to submit objection within 2 days of
receipt of the notice; but the time to pay the demanded tax was limited to
only 3 days. In other words, the opportunity to object to the demand was
illusory, pretentious and deceptive. In fact, although CAB submitted a
detailed representation dated April 1, 1996, objecting to the demand, totally
disregarding the same, KMC straight away filed criminal proceedings against
CAB before the Municipal Magistrate, Kolkata. There has been flagrant
violation of the principles of natural justice in the facts of this case.
40. As regards the sixth issue, it was submitted that the impugned notice
of demand does not contain any reason for either the imposition or
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quantification of the amount levied towards advertisement tax. Therefore,
the notice cannot be sustained. Reliance was placed on the following
decisions:-
(i) Woolcombers of India Ltd. v. Woolcombers Workers Union
and Anr reported in AIR 1973 SC 2758 : (1974) 3 SCC 318.
(ii) Siemens Engineering & Manufacturing Co. of India Ltd. v.
Union of India and Anr reported in (1976) 2 SCC 981: AIR
1976 SC 1785.
(iii) The Calcutta Municipal Corporation and Ors. v. Paresh R.
Kampani and Ors. reported in 1998 (2) Cal LJ 87: (1998) SCC
Online Cal 38
(iv) Union of India and Ors v. Jai Prakash Singh and Anr
reported in (2007) 10 SCC 712.
(v) State of Orissa and Ors. v. Chandra Nandi reported in
(2019) 4 SCC 357.
41. As regards the last issue, Mr Kar submitted that the subject of the
licence fee / tax under the statute is the 'site' for the advertisement. It is the
user of the site who is required to obtain a licence, even under the
provisions incorporated by the 2019 amendment to the KMC Act. Unless the
contrary is shown, it is the advertiser who is primarily responsible for
payment of the aforesaid permission fee and licence fee under Sections 202
and 203 (as incorporated by the 2019 amendment) of the KMC Act. Learned
Advocate relied on the decision in the case of Kolkata Municipal
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Corporation and Ors v. Vodafone Idea Ltd reported at (2020) 3 Cal LT
543 : 2020 SCC OnLine Cal 3322.
It was submitted that KMC made no endeavour to ascertain the
purport or effect of the contracts between CAB and the advertisers. CAB did
not have any occasion or opportunity to produce such documents before
KMC which took a unilateral decision in the matter. In the absence of any
contrary evidence, KMC was entitled to levy the advertisement tax, if at all,
on the advertisers only.
Court's View
42. Before considering the rival contentions of the parties, it will be
helpful to extract the Letter of Demand dated March 27, 1996, issued by the
licence officer, KMC, addressed to the President and the Honorary Joint
Secretary of CAB. The subject of the letter is: 'Exhibition of Banners at
C.A.B. playground Eden Gardens.' The body of the letter reads thus:-
"I would request you to pay tax amounting to Rs 51,18,450/- on
advertisement U/s 204 (1) of the CMC Act, 1980 for 11.2.96 and
13.3.96 within 3 days of receipt hereof, failing which legal proceedings
may be taken against you. Payment in advance is imperative under the
Act.
Objection, if any (supported by documentary evidence), should be
submitted within 2 days from the date of receipt of this NOTICE.
Please quote number and date of receipt if payment has already been
made."
43. The impugned demand notice cannot be sustained and must be
quashed for several reasons.
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44. Firstly, we see from the Letter of Demand that no breakup of the
amount demanded has been provided. No details have been furnished.
Simply an amount has been quoted. We do not see how one can
meaningfully respond to such a notice of demand. However, a reply dated
April 1, 1996, to the said notice was sent by learned Advocate for CAB.
Without responding to such reply, KMC initiated criminal action against the
officers of CAB before the Court of Municipal Magistrate, Calcutta. This was
sometime in December 1996.
45. We are of the opinion that the time period prescribed in the notice of
Demand i.e. 2 days, for raising an objection to the demand, is wholly
unreasonable and inadequate. We do not see that there was any grave
urgency in the matter that could have prompted the licence officer of KMC to
grant only 2 days for responding to the demand notice. That there was no
such urgency would also be borne out by the fact that criminal action was
initiated only in December 1996. No opportunity of hearing was granted to
CAB. We are of the view that the demand notice is violative of the principles
of natural justice.
Some of the decisions on audi alteram partem
46. In this connection it may be helpful to notice the development of the
law relating to the principle of audi alteram partem. In the case of Cooper v.
Wandsworth Board of Works reported at (1863) 143 ER 414, an
English Court observed that "Even God himself did not pass sentence upon
Adam before he was called upon to make his defence. 'Adam' (says God),
'where are thou? Hast thou not eaten of the tree whereof I commanded thee
that thou shouldest not eat?"
22
47. In the English case of Board of Education v. Rice reported at 1911
AC 179 (HL), Lord Loreburn observed thus:-
"Comparatively recent statutes have extended, if they have not
originated, the practice of imposing upon departments or officers
of State the duty of deciding or determining questions of various
kinds.....in such cases.....they must act in good faith and fairly
listen to both sides, for that is a duty lying upon every one who
decides anything. But I do not think they are bound to treat such
a question as though it were a trial....they can obtain information
in any way they think best, always giving a fair opportunity to
those who are parties in the controversy for correcting or
contradicting any relevant statement prejudicial in their view."
48. In Ridge v Baldwin reported at (1963) 2 All ER 66, Lord Reid
emphasised on the universality of the right to a fair hearing whether it
concerns property or tenure of an office or membership of an institution.
49. In O' Reilly v. Mackman reported at (1982) 3 All ER 1124, Lord
Diplock observed that the right of a man to be given a fair opportunity of
hearing and of presenting his own case is so fundamental to any civilised
legal system that it is to be presumed that Parliament intended that failure
to observe the same would render null and void any decision reached in
breach of this requirement.
50. In Lloyd v. McMahon reported at (1987) 1 All ER 1118, Lord
Bridge observed that the so-called rules of natural of justice are not
engraved on tablets of stones. It is well-established that when a statute has
conferred on any body the power to make decisions affecting individuals, the
23
courts will not only require the procedure prescribed by the statute to be
followed, but will readily imply so much and no more to be introduced by
way of additional procedural safeguards as will ensure the attainment of
fairness.
51. In Sayeedur Rehman v. State of Bihar and Ors reported at (1973)
3 SCC 333, a three Judge Bench of the Hon'ble Supreme Court observed
that the unwritten right of hearing is fundamental to a just decision by any
authority which decides a controversial issue affecting the rights of the rival
contestants. This right has its roots in the notion of fair procedure. It draws
the attention of the party concerned to the imperative necessity of not
overlooking the other side of the case before coming to its decision, for
nothing is more likely to conduce to just and right decision than the practice
of giving hearing to the affected parties.
52. In Mohinder Singh Gill and Anr v. Chief Election Commissioner,
New Delhi and Ors reported at (1978) 1 SCC 405, the Hon'ble Supreme
Court observed that natural justice is a pervasive facet of secular law where
a spiritual touch enlivens legislation, administration and adjudication, to
make fairness a creed of life. It has many colours and shades, many forms
and shapes and, save where valid law excludes it, applies when people are
affected by acts of authority. It is the hone of healthy government,
recognised from earliest times and not a mystic testament of judge-made
law. Indeed, from the legendary days of Adam-and of Kautilya's
Arthashastra-the rule of law has had this stamp of natural justice which
makes it social justice. The roots of natural justice and its foliage are noble
and not new-fangled. Our jurisprudence has sanctioned its prevalence like
24
the Anglo-American system. Once it is understood that the soul of the rule
is fair play in action, it must be held that it extends to both judicial and
administrative fields.
53. In Maneka Gandhi v. Union of India and Anr., reported at (1978)
1 SCC 248, the Hon'ble Supreme Court observed that the audi alteram
partem rule is intended to inject justice into the law and it cannot be applied
to defeat the ends of justice, or to make the law 'lifeless, absurd, stultifying,
self-defeating or plainly contrary to the common sense of the situation'.
Since the life of the law is not logic but experience and every legal
proposition must, in the ultimate analysis, be tested on the touchstone of
pragmatic realism, the audi alteram partem rule would, by the experiential
test, be excluded, if importing the right to be heard has the effect of
paralysing the administrative process or the need for promptitude or the
urgency of the situation so demands. But at the same time, it must be
remembered that this is a rule of vital importance in the field of
administrative law and it must not be jettisoned save in very exceptional
circumstances where compulsive necessity so demands. It is a wholesome
rule designed to- secure the rule of law and the court should not be too
ready to eschew it in its application to a given case. The court must make
every effort to follow this cardinal rule to the maximum extent permissible in
a given case. The audi alteram partem rule is not cast in a rigid mould and
judicial decisions establish that it may suffer situational modifications. The
core of it must, however, remain, namely, that the person affected must
have a reasonable opportunity of being heard and the hearing must be a
genuine hearing and not an empty public relations exercise.
25
54. In Swadeshi Cotton Mills v. Union of India reported at (1981) 1
SCC 664, the Hon'ble Supreme Court referred to the development of law
relating to applicability of the rule of audi alteram partem to administrative
actions, noticed several previous judgements of the English Courts and the
Hon'ble Supreme Court and quashed the order passed by the Central
Government for taking over the management of the industrial undertaking
of the appellant on the ground that opportunity of hearing had not been
given to the owner of the undertaking and remanded the matter for fresh
consideration and compliance with the rule of audi alteram partem.
55. In State of Punjab and Anr v. Gurdial Singh and Ors., reported at
(1980) 2 SCC 471, the Hon'ble Supreme Court observed that the
compulsory taking of a man's property is a serious matter and the smaller
the man the more serious the matter. Hearing him before depriving him is
both reasonable and pre-emptive of arbitrariness, and denial of this
administrative fairness is constitutional anathema except for good reasons.
56. In the recent case of State Bank of India and Ors. v Rajesh
Agarwal and Ors., (Supra), at paragraphs 36, 41, 42, 70, 80 and 85-
92 of the reported judgment, the Hon'ble Supreme Court observed as
follows:
"36. We need to bear in mind that the principles of natural justice
are not mere legal formalities. They constitute substantive
obligations that need to be followed by decision-making and
adjudicating authorities. The principles of natural justice act as a
guarantee against arbitrary action, both in terms of procedure and
substance, by judicial, quasi-judicial, and administrative
26
authorities. Two fundamental principles of natural justice are
entrenched in Indian jurisprudence :(i) nemo judex in causa sua,
which means that no person should be a Judge in his own cause;
and (ii) audi alteram partem, which means that a person affected
by administrative, judicial or quasi-judicial action must be heard
before a decision is taken. The courts generally favour
interpretation of a statutory provision consistent with the
principles of natural justice because it is presumed that the
statutory authorities do not intend to contravene fundamental
rights. Application of the said principles depends on the facts and
circumstances of the case, express language and basic scheme of
the statute under which the administrative power is exercised, the
nature and purpose for which the power is conferred, and the final
effect of the exercise of that power."
41. In State of Orissa v. Dr (Miss) Binapani Dei and Ors
reported at AIR 1967 SC 1269, a two Judge Bench of this Court
held that every authority which has the power to take punitive or
damaging action has a duty to give reasonable opportunity to be
heard. This Court further held that an administrative action which
involves civil consequences must be made consistent with the
rules of natural justice:
"9.... The rule that a party to whose prejudice an order is
intended to be passed is entitled to a hearing applies alike to
judicial tribunals and bodies of persons invested with
authority to adjudicate upon matters involving civil
27
consequences. It is one of the fundamental rules of our
constitutional set-up that every citizen is protected against
exercise of arbitrary authority by the State or its officers. Duty
to act judicially would therefore arise from the very nature of
the function intended to be performed : it need not be shown
to be super-added. If there is power to decide and determine
to the prejudice of a person, duty to act judicially is implicit in
the exercise of such power. If the essentials of justice be
ignored and an order to the prejudice of a person is made, the
order is a nullity. That is a basic concept of the rule of law
and importance thereof transcends the significance of a
decision in any particular case."
42. In Maneka Gandhi v. Union of India and Anr reported at
(1978) 1 SCC 248, a seven Judge Bench of this Court held that
any person prejudicially affected by a decision of the authority
entailing civil consequences must be given an opportunity of being
heard. This has been reiterated in a catena of decisions of this
Court.
70. In Mangilal v. State of M.P reported at (2004) 2 SCC 447, a
two Judge Bench of this Court held that the principles of natural
justice need to be observed even if the statute is silent in that
regard. In other words, a statutory silence should be taken to
imply the need to observe the principles of natural justice where
substantial rights of parties are affected:
28
"10. Even if a statute is silent and there are no positive words
in the Act or the Rules made thereunder, there could be nothing
wrong in spelling out the need to hear the parties whose rights
and interest are likely to be affected by the orders that may be
passed, and making it a requirement to follow a fair procedure
before taking a decision, unless the statute provides otherwise.
The principles of natural justice must be read into unoccupied
interstices of the statute, unless there is a clear mandate to the
contrary. No form or procedure should ever be permitted to
exclude the presentation of a litigant's defence or stand. Even
in the absence of a provision in procedural laws, power
inheres in every tribunal/court of a judicial or quasi-judicial
character, to adopt modalities necessary to achieve
requirements of natural justice and fair play to ensure better
and proper discharge of their duties. Procedure is mainly
grounded on the principles of natural justice irrespective of
the extent of its application by express provision in that
regard in a given situation. It has always been a cherished
principle. Where the statute is silent about the observance of
the principles of natural justice, such statutory silence is taken
to imply compliance with the principles of natural justice where
substantial rights of parties are considerably affected. The
application of natural justice becomes presumptive, unless
found excluded by express words of statute or necessary
intendment.... Its aim is to secure justice or to prevent
29
miscarriage of justice. Principles of natural justice do not
supplant the law, but supplement it. These rules operate only
in areas not covered by any law validly made. They are a
means to an end and not an end in themselves."
80. Audi alteram partem has several facets, including the service of
a notice to any person against whom a prejudicial order may be
passed and providing an opportunity to explain the evidence
collected. In Union of India and Anr v. Tulsiram Patel reported
at (1985) 3 SCC 398, this Court explained the wide amplitude of
audi alteram partem:
"96. The rule of natural justice with which we are concerned in
these appeals and writ petitions, namely, the audi alteram
partem rule, in its fullest amplitude means that a person
against whom an order to his prejudice may be passed should
be informed of the allegations and charges against him, be
given an opportunity of submitting his explanation thereto,
have the right to know the evidence, both oral or documentary,
by which the matter is proposed to be decided against him,
and to inspect the documents which are relied upon for the
purpose of being used against him, to have the witnesses who
are to give evidence against him examined in his presence and
have the right to cross-examine them, and to lead his own
evidence, both oral and documentary, in his defence. The
process of a fair hearing need not, however, conform to the
judicial process in a court of law, because judicial
30
adjudication of causes involves a number of technical rules of
procedure and evidence which are unnecessary and not
required for the purpose of a fair hearing within the meaning
of audi alteram partem rule in a quasi-judicial or
administrative inquiry."
85. Fairness in action requires that procedures which permit
impairment of fundamental rights ought to be just, fair, and
reasonable. The principles of natural justice have a universal
application and constitute an important facet of procedural
propriety envisaged under Article 14. The rule of audi alteram
partem is recognised as being a part of the guarantee contained in
Article 14. A Constitution Bench of this Court in Union of India
and Anr v. Tulsiram Patel reported at (1985) 3 SCC 398 has
categorically held that violation of the principles of natural justice
is a violation of Article 14. The Court held that any State action in
breach of natural justice implicates a violation of Article 14:
"95. The principles of natural justice have thus come to be
recognised as being a part of the guarantee contained in
Article 14 because of the new and dynamic interpretation
given by this Court to the concept of equality which is the
subject-matter of that article. Shortly put, the syllogism runs
thus violation of a rule of natural justice- results in
arbitrariness which is the same as discrimination; where
discrimination is the result of State action, it is a violation of
Article 14: therefore, a violation of a principles of natural
31
justice by a State action is a violation of Article 14. Article 14,
however, is not the sole repository of the principles of natural
justice. What it does is to guarantee that any law or state
action violating them will be struck down. The principles of
natural justice, however, apply not only to legislation and State
action but also where any tribunal, authority or body of men,
not coming within the definition of "State" in Article 12, is
charged with the duty of deciding a matter. In such a case, the
principles of natural justice require that it must decide such
matter fairly and impartially."
86. In Cantonment Board, Dinapore and Ors v. Taramani Devi
reported at 1992 Supp (2) SCC 501, a two Judge Bench of this
Court held that the rule of audi alteram partem is a part of Article
14. Similarly, in Delhi Transport Corporation v. Mazdoor
Congress reported at 1992 Supp (1) SCC 600, this Court
observed that the rule of audi alteram partem enforces the equality
clause in Article 14. Therefore, any administrative action which
violates the rule of audi alteram partem is arbitrary and violative of
Article 14.
87. Administrative proceedings which entail significant civil
consequences must be read consistent with the principles of
natural justice to meet the requirement of Article 14. Where
possible, the rule of audi alteram partem ought to be read into a
statutory rule to render it compliant with the principles of equality
and non-arbitrariness envisaged under Article 14. The Master
32
Directions on Frauds do not expressly provide the borrowers an
opportunity of being heard before classifying the borrower's
account as fraud. Audi alteram partem must then be read into the
provisions of the Master Directions on Frauds.
88. In Olga Tellis and Ors v. Bombay Municipal Corporation
and Ors reported at (1985) 3 SCC 545, a Constitution Bench of
this Court was called upon to adjudge the validity of section 314 of
the Bombay Municipal Corporation Act, 1888. The provision
enabled the Municipal Commissioner to remove, without notice,
any object, structure or fixture which was set up in or upon any
street. Y.V. Chandrachud, C.J. delivering the judgment of the
Constitution Bench held that the impugned provision must be
construed to ensure that the procedure contemplated is fair and
reasonable. It was further held:
"44.... What Section 314 provides is that the Commissioner
*may*, without notice, cause an encroachment to be removed.
It does not command that the Commissioner shall, without
notice, cause an encroachment to be removed. Putting it
differently, Section 314 confers on the Commissioner the
discretion to cause an encroachment to be removed with or
without notice. That discretion has to be exercised in a
reasonable manner so as to comply with the constitutional
mandate that the procedure accompanying the performance of
a public act must be fair and reasonable. We must lean in
favour of this interpretation because it helps sustain the
33
validity of the law. Reading Section 314 as containing a
command not to issue notice before the removal of an
encroachment will make the law invalid."
89. In Union of India v. COL. J.N. Sinha and Anr reported at
(1970) 2 SCC 458, a two Judge Bench of this Court held that an
endeavour must be made to interpret a statutory provision
consistent with the principles of natural justice:
"8... It is true that if a statutory provision can be read
consistently with the principles of natural justice, the courts
should do so because it must be presumed that the
Legislatures and the statutory authority intend to act in
accordance with the principles of natural justice. But if on the
other hand a statutory provision either specifically or by
necessary implication excludes the application of any or all
the principles of natural justice then the court cannot ignore
the mandate of the legislature or the statutory authority and
read into the provision concerned the principles of natural
justice. Whether the exercise of a power conferred should be
made in accordance with any of the principles of natural
justice or not depends upon the express words of the
provision conferring the power, the nature of to power
conferred, the purpose for which it is conferred and the effect
of the exercise of that power."
90. In C.B. Gautam v. Union of India and Ors reported at
(1993) 1 SCC 78, the question before a Constitution Bench of this
34
Court was whether a show-cause notice must be issued to an
intending purchaser and seller of property before making a
compulsory purchase under Section 269-UD(1) of Chapter XX-C of
the Income Tax Act 1961. M.H. Kania, C.]. speaking for the
Constitution Bench held that where the validity of a provision
would be open to serious challenge for want of an opportunity of
being heard, courts have read such a requirement into the
provision, In C.B. Gautam case, this Court read the principles of
natural justice into the provisions of Chapter XX-C to save them
from the vice of arbitrariness, The Constitution Bench held :
"30.... Again, there is no express provision in Chapter XX-C
barring the giving of a show-cause notice or reasonable
opportunity to show cause nor is there anything in the
language of Chapter XX-C which could lead to such an
implication. The observance of principles of natural justice is
the pragmatic requirement of fair play in action. In our view,
therefore, the requirement of an opportunity to show cause
being given before an order for purchase by the Central
Government is made by an appropriate authority under
Section 269-UD must be read into the provisions of Chapter
XX-C. There is nothing in the language of Section 269-UD or
any other provision in the said Chapter which would negate
such an opportunity being given. Moreover, if such a
requirement were not read into the provisions of said Chapter,
they would be seriously open to challenge on the ground of
35
violations of the provisions of Article 14 on the ground of non-
compliance with principles of natural justice. The provision that
when order for purchase is made under Section 269-UD -
reasons must be recorded in writing is no substitute for a
provision requiring a reasonable opportunity of being heard
before such an order is made."
91. In Sahara India (Firm) (1) v. CIT reported at (2008) 14 SCC
151, a two-judge Bench of this Court was called upon to decide
whether an opportunity of being heard has to be granted to an
assessee before any direction could be issued under Section 142(2-
A) of the Income Tax Act, 1961 for special audit of the accounts of
the assessee. This Court held that since the exercise of power
under Section 142(2-A) of the Income Tax Act leads to serious civil
consequences for the assessee, the requirement of observing the
principles of natural justice is to be read into the said provision.
92. In Kesar Enterprises Ltd. v. State of U.P and Ors reported
at (2011) 13 SCC 733, the Court dealt with a challenge to the
validity of Rule 633(7) of the Uttar Pradesh Excise Manual which
allowed the imposition of a penalty for breach of the conditions of
a bond without expressly issuing a show-cause notice. D.K. Jain,
J, speaking on behalf of the two-judge Bench held that a show-
cause notice should be issued and an opportunity of being heard
should be afforded before an Order under Rule 633(7) is made. The
Court held that the rule would be open to challenge for being
violative of Article 14 of the Constitution unless the requirement of
36
an opportunity to show cause is read into it. The Court
observed:(SCC p. 743, paras 30 & 32)
"30. Having considered the issue, framed in para 16, on the
touchstone of the aforenoted legal principles in regard to the
applicability of the principles of natural justice, we are of the
opinion that keeping in view the nature, scope and
consequences of direction under sub-rule (7) of Rule 633 of the
Excise Manual, the principles of natural justice demand that a
show-cause notice should be issued and an opportunity of
hearing should be afforded to the person concerned before an
order under the said Rule is made, notwithstanding the fact
that the said Rule does not contain any express provision for
the affected party being given an opportunity of being heard.
32. In our view, therefore, if the requirement of an opportunity
to show cause is not read into the said Rule, an action
thereunder would be open to challenge as violative of Article 14
of the Constitution of India on the ground that the power
conferred on the competent authority under the provision is
arbitrary.""
57. Keeping the above discussion in mind and reverting to the facts of the
instant case, we have noted above that two days' time was granted by KMC
to CAB to object to the letter of demand. Such time period is far too short
and the purported opportunity of raising objection or showing cause, if one
were to consider the letter of demand as a show cause notice, was illusory.
37
Granting such inadequate time for responding to the letter of demand itself
offends the principles of natural justice. Being a statutory authority, KMC
was required to act fairly by granting a reasonable time period to CAB for
responding to the notice of demand. Calling upon the noticee (CAB) to pay
the money demanded within three days from the date of receipt of notice
and record objection, if any, within two days of receipt of notice, was clearly
an unfair and unreasonable act on the part of KMC.
58. Be that as it may, CAB responded to the demand notice through its
lawyer's letter dated April 1, 1996, after having received the notice at its
office on March 28, 1996. In the said letter it was clearly contended that the
demand raised on CAB is without jurisdiction, illegal, arbitrary, wrongful
and mala fide. It was also contended that the premises of CAB is not a
public place and therefore Section 204 of the KMC Act would have no
manner of application. The point of breach of the principles of natural
justice was also raised in the reply. Relevant portions of the reply are
extracted hereunder:-
"Cricket Association of Bengal is an independent Association
registered under the West Bengal Societies Registration Act. Its
premises is a place to which the members of public have no
unrestricted right of access and Cricket Association of Bengal may,
without violating the law, refuse access to a member of the public
even though he is prepared to pay for such access. It is not a
public place within the meaning of the Calcutta Municipal
Corporation Act. The position in law, therefore, is that the
38
provisions of Chapter XIV and in particular Section 204 of the
Calcutta Municipal Corporation Act, 1980 do not empower or
authorise the Calcutta Municipal Corporation to impose any tax in
respect of any advertisements displayed to a few of a selected
gathering within the premises of Cricket Association of Bengal
limited for a few hours in association with the sporting event.
'Public place' or 'Public view' under the law means where public
have legal right to access and regularly frequented as a matter of
right. The premises of Cricket Association of Bengal is not a public
place either within the said meaning of or within the fold of
chapter XIV of the Calcutta Municipal Corporation Act, 1980
relates to advertisements or displays erected for a continuous
period for commercial purpose and not for a few hours only
associated with a particular non-profit making object. Moreover, it
is a condition precedent that display or advertisement must be
visible from a public street or a public place. In stadia
advertisements inside the premises of Cricket Association of
Bengal were neither visible from any public street or public place.
Thus the alleged demand of yours is utterly misconceived and
contrary to the Provisions of Act itself. The records also reveal that
Calcutta Municipal Corporation knowing fully well that it is not
entitled to claim any alleged tax as has been purportedly done in
the instant subject matter, has at no point of time ever demanded,
collected or claimed any similar tax from any other sporting events
or other similar objects in past.
39
...
It is mandatorily required under the law that a responsible
authority would and must exercise fairly and bonafide judgement
and distinctly, affirmatively and legally determine any amount that
is being claimed by fixing a definite rate, mode of calculation and
upon a prior notice and due opportunity of hearing. Regrettably,
all the above ingredients are absent in the instant arbitrary and
wrongful demand. Even long prior to raising the alleged demand,
Press statements were issued, inter alia, stating that demands are
being raised on Cricket Association of Bengal and if not paid, its
assets would be attached and sold.
In the premises, as aforesaid, while denying and disputing each
and every allegations, demands, and/or contentions contained in
your alleged purported demand it is specifically stated that the
same is utterly malafide, wrongful, misconceived and illegal apart
from being arbitrary and capricious. You are, thus, hereby called
upon to forthwith withdraw your aforesaid demand failing which
Cricket Association of Bengal shall be compelled to take such
recourse as it may be advised in accordance with law holding you
entirely responsible and liable for all costs, consequences and
further damages that may be sustained by it without any further
reference to you, which please note. It would not be out of context
to state that it inspite of this, you intend or decide to proceed with
the threats as contained in your letter under reference, you would
40
do so at your own risk and consequences and my client shall
defend the same at your costs and consequences.”
59. It is not in dispute that KMC received the aforesaid reply issued on
behalf of CAB. KMC did not respond to the same, as it should have done, in
our view. In consonance with the principles of natural justice, KMC ought to
have informed CAB as to why the objections raised in CAB’s reply are not
acceptable. KMC should have also offered an opportunity of hearing to CAB.
Without doing any of that, KMC filed criminal proceedings against office
bearers of CAB under the provisions of the KMC Act. The demand raised by
KMC has civil consequences for CAB. It was imperative for KMC to raise or
press such claim only after observing the principles of natural justice, which
it did not do. This is the first ground on which the letter or notice of demand
dated March 27, 1996, must be quashed.
60. Secondly, coming to the issue as to whether or not the impugned notice
of demand is arbitrary for want of reasons, we see that the demand notice
does not furnish any breakup of the amount that CAB has been called upon
to pay. The notice does not mention the particulars of the advertisements in
respect of which tax is claimed. The notice does not indicate as to how the
figure of Rs. 51,18,450/- was arrived at by KMC. It is not possible for
anybody to understand by reading the notice, on what basis the amount of
Rs. 51,18,450/- has been claimed. Such a notice must be held to be
arbitrary and unsustainable in law.
61. Thirdly, another issue raised by CAB is that without framing
appropriate Regulations, KMC could not have levied advertisement tax in
41
respect of the concerned advertisements. We find merit in this contention
also. Section 204 of the KMC Act which has been extracted above,
authorises KMC to claim advertisement tax at such rate as “the Corporation
may determine by regulations or as the budget estimate shall state under
sub-section 3(3) of Section 131″. KMC has not been able to produce any
Regulation in the aforesaid regard, nor has KMC been able to indicate that
the budget estimate for the relevant year prescribes the rate at which the
KMC could have levied advertisement tax. Hence, there does not appear to
be any basis on which or any formulae recognized by law following which
the computation of tax has been made.
62. Further, it is trite law that when a statute empowers or authorises an
authority to do a certain act and indicates in the statute itself the manner in
which that act shall be done, then and in that event, that act shall be done
only in the manner prescribed by the statute or shall not be done at all. Any
other mode of doing that act is necessarily forbidden.
63. Perhaps the leading authority on this point is the celebrated decision of
the Chancery Division of the English High Court in the case of Taylor v.
Taylor, (Supra). Jessel M.R. observed in the judgment that when a
statutory power is conferred for the first time upon a Court, and the mode of
exercising such power is pointed out, it means that no other mode is to be
adopted. In Nazir Ahmad v. The King Emperor (Supra) the Privy Council
reiterated that where a power is given to do a certain thing in a certain way,
the thing must be done in that way, to the exclusion of all other methods of
performance, or not at all. Noting the said two decisions, the Hon’ble
42
Supreme Court, in the case of State of Uttar Pradesh v. Singhara Singh
and Ors., (Supra) held that the rule adopted in Taylor v. Taylor (Supra) is
well recognised and is founded on sound principle. Its result is that if a
statute has conferred a power to do an act and has laid down the method in
which that power has to be exercised, it necessarily prohibits the doing of
the act in any other manner than that which has been prescribed. The
principle behind the rule is that if these were not so, the statutory provision
might as well not have been enacted. This principle of law was again
emphasised by the Hon’ble Supreme Court in the case of Hussein
Ghadially alias M.H.G.A Shaikh and Ors. v. State of Gujarat (Supra).
64. That apart, without framing Regulations or without the budget estimate
prescribing the rates at which advertisement tax may be levied by KMC,
computation and imposition of such tax would be arbitrary. It would have
no rational basis. It would then be open to KMC to quantify such tax as per
its sweet will. This cannot be countenanced under the rule of law. There
must be a guiding factor following which advertisement tax can be assessed
and imposed. On this ground also the demand notice is bad in law.
65. Mr. Ghosh learned Senior Counsel representing KMC did urge that CAB
has paid the advertisement tax claimed by KMC in respect of hoardings put
up at places which are admittedly public places. Hence, CAB cannot today
argue that in the absence of Regulations or mention of rates of tax in the
budget estimate for the relevant year, KMC’s demand in the impugned
notice is bad in law. We are unable to accept such argument. Even if CAB
has earlier paid advertisement tax demanded by KMC, CAB cannot be
43
prevented from arguing the point of absence of Regulations, etc, since there
can be no estoppel against a statute.
66. Coming to the next point, it has not been disputed by KMC that the
advertisements erected/exhibited within the Eden Gardens Stadium were
not visible from outside the Stadium. Only the people inside the Stadium
could see such advertisements. Therefore, the question is whether the Eden
Gardens Stadium can be said to be a public place?
67. Neither the KMC Act nor the General Clauses Act, 1897, defines the
phrase ‘public place’. In our opinion, the phrase has to be given its natural
meaning. It must mean a place which is open to the public at large. In other
words, any member of the public must have access to that place without
any restriction. Nobody’s permission should be required for visiting such a
place. Black’s Law Dictionary, 10th Edition, defines public place as “any
location that the local State or National Government maintains for the use of
the public, such as highway, park, or public building.”
68. In our opinion, as soon as conditions are imposed on members of the
public for having access to a place, that place ceases to be a public place. A
public place must be accessible to an indeterminate number of people
without any hindrance or condition. For example, the Maidan in Kolkata is
undisputedly a public place. The river side is also a public place. Any
member of the public has absolute, unconditional and unrestricted access
to such places, at any time.
69. In this connection one may refer to the Division Bench Judgment of this
Court in the case of The Corporation of Calcutta and Ors v. Sarat
Chandra Ghatak and Anr (Supra) wherein one of the issues involved was
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whether or not under Section 229 of the Calcutta Municipal Act, 1951, the
Corporation was empowered to impose tax in respect of advertisements
displayed to public view in a private cinema house. It was argued on behalf
of the Cinema House owner that the Cinema House was not a public place
within the meaning of Section 229. Das Gupta C.J. in his judgment
observed, as follows:- ” I agree with the learned Judge that it is difficult from
the decided cases to conclude one way or the other whether the words
“public place” have been used in this section in the restricted sense of a
place where the public have a legal right of access or in the wider sense of a
place where the public are permitted to go or habitually go the matter has to
be decided on a consideration of the purpose of the legislation as also with
the help of whatever light is available to other portions of the same statute.
…. It is undisputed that the cinema house is a place where the
members of the public have no unrestricted right of access and the owner of
the cinema may, without violating the law, refuse access to a member of the
public even though he is prepared to pay for such access. On all these
considerations I have come to the conclusion in disagreement with the
learned Trial Judge that the cinema house is not a public place within the
meaning of the Municipal Act, 1951….”
Bachawat J. in his judgment observed as follows:- “… I have come to the
conclusion that the case law does not lay down any general rule as to the
meaning to be given to the words “public place”. In my opinion, the words
“public place” in S. 229 mean a place to which the public have a legal right
of access. Purna Theatre is a privately owned cinema house. The public are
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admitted to the cinema shows on payment of charges. But no member of the
public has a legal right of access. The management of the cinema house has
a right to refuse admission to any member of the public without assigning
any reason. The cinema house is not a public place. It is no more a public
place than the inside of a grocer’s shop or the consulting room of a
dentist…”
70. In Rajammal v. Associated Transport Co. and Anr, (Supra), it fell for
consideration by the Madras High Court as to whether or not the place
where the concerned lorry met with an accident was a public place in the
context of Section 2(24) of the Motor Vehicles Act, 1939, which defined
“public place” as “a road, street, way or other place, whether a thoroughfare
or not, to which the public have a right of access, and includes any place or
stand at which passengers are picked up or set down by a stage carriage.” In
that context the Court held that it is clear from the definition of “public
place” that “the criterion is whether the public have right to access to the
place; and it will not be a public place merely, if as a matter of fact, the
public have access.”
71. In Khudi Sheikh v. King Emperor, (Supra), the petitioners had been
convicted under Section 11 of the Gambling Act, 1867 for indulging in
gambling activities within a thakurbari surrounded by a high compound
wall. A Division Bench of this Court held that the thakurbari was not a place
where any member of the public was entitled to go. The bench further
observed : “the Sub-Divisional Magistrate, who convicted the accused, has
held that it is ‘public place’ because “anybody and everybody was allowed to
46
go in and come out.” The ground, as stated by the Magistrate, cannot be
supported. Though in a thakurbari belonging to a Hindu anybody and
everybody would be allowed to go in, yet the owner of the thakurbari is
entitled to prevent any particular individual going in if he so chooses ….”
72. Keeping in mind the aforesaid discussion, would one be justified in
describing the Eden Gardens Stadium as a public place? In our opinion, the
answer must be in the negative. CAB is the lessee of the property where the
Stadium is situate. CAB can deny permission to anybody to enter the
Stadium even on a day when a match is on and the person is willing to pay
for the ticket. The members of the public do not have absolute or
unrestricted right of access to Eden Gardens. Just because Eden Gardens
Stadium can accommodate a huge number of people, maybe close to a lakh,
that would not per se make the Stadium a public place. Take for example,
may be an extreme example, that a rich person owns a private Stadium
which can accommodate two hundred thousand people. He organises sports
activities in the Stadium and sells tickets which interested spectators can
purchase for watching the activities inside the Stadium. On a particular day
games are played before a packed Stadium. Hoardings are put up by brand
owners inside the Stadium which are visible only to people who are inside
the Stadium. Would KMC be entitled to impose advertisement tax in respect
of the same? We think not. Although two hundred thousand spectators may
be viewing the advertisements, yet, the private Stadium is not a public
place. The owner of the Stadium will be entitled to deny entry to an
interested person even if he offers to pay for a ticket.
47
Therefore, it is not the dimension of a place or number of people that
visit a particular place, that would determine the nature of a place as
‘private or public’. The only criterion must be whether or not the members of
the public have an unrestricted right of access to that place. Applying this
test, Eden Gardens Stadium cannot be held to be a public place.
73. On this aspect of the matter, learned Single Judge in the order
impugned before us referred to the decision in Sarat Chandra Ghatak,
(Supra) and held : “applying such ratio to a Stadium, it can be said that the
Stadium cannot be considered as a public place as a member of the public
does not have an unrestricted right of access and that the writ petitioners
may, without violating the law, refuse access to a member of the public even
though such member of the public is prepared to pay for such access.”
We completely agree with the learned Single Judge.
74. Mr. Ghosh, learned Senior Counsel representing KMC sought to argue
that even if the Eden Gardens Stadium is not a public place because of the
fact that members of the public do not have unrestricted right of entry
thereto, the Stadium can definitely be classified as “restricted public place”.
We are afraid, the concept of “restricted public place” finds no place in
Section 204 of the KMC Act nor is that phrase defined in any dictionary, to
the best of our knowledge.
75. Another point urged by CAB was that even if it be held that KMC was
entitled to levy advertisement tax, it could do so only on the advertisers and
not on CAB in the absence of there being any evidence of any kind of
48
arrangement between the advertisers and CAB whereby the latter agreed to
take upon it the burden of advertisement tax. We find merit in this point
also and the same is squarely covered by a Division Bench judgement of this
Court in the case of Kolkata Municipal Corporation and Ors. v.
Vodafone Idea Limited and Anr., reported at 2020 SCC On Line Cal
3322 : (2020) 3 Cal LT 543.
76. The two decisions relied upon by learned Counsel for KMC and
discussed above, are not germane to the facts of this case. In both the
cases, what fell for consideration is whether the concerned clubs were
included within the expression ‘eating house’ and therefore required to
obtain certificate of enlistment. It was held that members of a club also fall
within the ambit of the term ‘public’. Though the primary activity of a club
may be to provide sporting facilities to the members, yet, supply of food is
an integral part. Therefore, the clubs needed to obtain certificate of
enlistment.
77. Since we have held that the inside of the Eden Gardens Stadium is not a
‘public place’ and therefore Section 204 of the KMC Act (as it was before the
2019 amendment), would not be attracted and also because we have held
that the notice of demand is even otherwise bad in law for the reasons
discussed above, we do not deem it necessary to consider or decide the other
points agitated by the parties including whether or not KMC is entitled to
levy advertisement tax on hoardings put up on land and structures owned
by the Union of India.
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78. In view for the aforesaid we find no reason to interfere with the
impugned judgement and order. The appeal and the connection application
are, accordingly, dismissed. There will be no order as to costs.
79. Urgent Photostat certified copies of this judgment, if applied for, be
supplied to the parties on compliance of all necessary formalities.
(Arijit Banerjee, J.)
I agree.
(Kausik Chanda, J.)
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