The main legal point established in the judgment is that for a levy to be upheld as a fee, it must have a reasonable correlation between the services rendered by the Government and the amount collected. The court found that the sudden enhancement of the licence fee was not warranted and that the State Government failed to prove that the fees collected were earmarked for the utilization of any service rendered to the members of the Association. The court also found that the enhancement of the licence fee was unreasonable and arbitrary, and reduced it to Rs. 3,000/- per annum.

A.R. Lakshmanan, J.

W.As. 737, 742, 754, 758, 763, 767, 1042 and 1043 of 1997 were filed by the Kerala Small Financiers' Association and other private financiers, who have taken the licence under the Kerala Money Lenders Act, 1958 (for short 'the Act') for the purpose of carrying on the business of money lending. All the Writ Petitions, out of which the above appeals arise, were filed for a declaration that the amendments to Ss.4(2)(i) and 4(2B) of the Act by the Kerala Finance Bill 1996 and the Kerala Finance Act, 1995 respectively are unconstitutional and void. By the amendment effected to S.4(2)(i) of the Act, the licence fee was enhanced from Rs. 2,000/-to Rs.10,000/-, The learned single judge, by judgment dated 9.4.1997 in O.P,16126 of 1996 and connected cases, has allowed the Original Petitions setting aside the enhancement of licence fee from Rs. 2,000/- to Rs. 10,000/-. Since in the Finance Bill 1997 licence fee was proposed to be reduced to Rs. 5,000/-, the learned judge was pleased to hold that for the year 1996 alone there cannot be a licence fee of Rs. 10,000/-. Hence, the learned judge has ordered that licence fee for the year 1996-97 may be collected at Rs. 5000/-and if any excess amount is collected, that may be adjusted against the licence fee for future years. The above judgment of the learned judge is challenged in the above appeals.

2. The Government of Kerala also filed a Writ Appeal (WA 1825 of 1997) questioning the correctness of the order of the learned judge ordering that licence fee for 1996-97 may be collected at the rate of Rs. 5000/-. By consent of all the parties, the main Writ Appeals themselves were taken up for final hearing.

3. Ai! the Writ Appeals were admitted by then Chief Justice and Sankarasubban, J. considering the question of law that is raised in the appeals. The Bench, as an interim measure, directed all the licensees, who have not paid the licence fee of Rs. 5000/- as indicated in the judgment, shall pay the licence fee of Rs. 5000/-by 30.6.1997positively.

4. The Kerala Money Lenders Act, 1958 was enacted by the Kerala Legislature in the year 1958 with the object of providing for the regulation and control of the business of money lenders in the State, Under S.3 of the Act, the money lenders were to obtain licences for carrying on the business of money lending. Licence fee is prescribed in Section 4(2)(i) of the Act. It was Rs. 100/- in 1958, ie., at the time of enactment of the Act. Subsequently, in 1983, after a lapse of 25 years, the licence fee was enhanced to Rs. 1000/-. Again, after a lapse of 10 years in 1993, it was enhanced to Rs. 2,000/-. In 1996, Government have introduced the new Finance Bill by which S.4(2)(i) of the Act was amended and the licence fee was enhanced from Rs. 2,000/- to Rs. 10,000/-. According to the appellants, most "of the members of the Association are finding in difficult to remit Rs. 2000/- towards licence fee. Hence, they filed the Original Petitions contending that the enhancement of licence fee from Rs. 2000/- to Rs. 10,000/- is highly arbitrary and unreasonable. The members of the Association are mainly depending on the income derived from the money lending business for their livelihood and alter deducting all expenses the net profit received from the business is very low. As per S.4(2A) of the Act, a licensee who lends less than Rs.1 lakh in an year has to furnish a security deposit of Rs. 5000/- and for those who lend more than Rs.1 lakh, but less than Rs. 5 lakh, have to deposit Rs. 10,000/- as security deposit. Hence the members of the Association are finding it difficult to continue the business after remitting such a huge amount towards licence fee and also the specified amounts as security deposit. According to them, in the State of Karnataka, the licence fee fixed for lending business is Rs. 50/- only per annum and for renewal of licence every year, they have to remit only Rs. 25/-. For every branch of their business, they have to r