IMPORTANT POINT
The court established that the imposition of a licence fee by the state is a regulatory measure that does not require a quid pro quo and is within the state's policy-making authority.

JUDGMENT :

(Easwaran S., J.)

The challenge in the writ petition pertains to the amendment brought to the Kerala Money-Lenders Act, 1958 by the Finance Act, 2013. Originally, when the writ petition was filed, the petitioner had challenged the Kerala Finance Bill, 2013 proposing to amend Section 4(2)(i) of the said Act for revision of rates of the licence fee by the Government from Rs.3,000/-to Rs.10,000/-. The challenge was mainly directed against the amendment based on the judgment of the Division Bench of this Court in Kerala Small Financiers’ Association vs. State of Kerala, reported in 1998 (2) KLT 813. Pending the challenge, the State of Kerala promulgated the Kerala Finance Act, 2013 on 23.07.2013, by which Section 4(2)(i) of the Kerala Money-Lenders Act, 1958 has been amended reducing the licence fee from Rs.10,000/-as proposed under the Finance Bill, 2013 to Rs.6,000/-. It is pertinent to note that though the writ petition stood admitted on 26.04.2013, in view of the changed circumstances when the Finance Act, 2013 was promulgated, this Court refused to extend the interim order, vide order dated 28.10.2013.

2. The main ground of challenge to the Finance Act, 2013 is based on the principles laid down by the Division Bench in Kerala Small Financiers’ Association (supra). It is contended that there is no reasonable nexus in causing increase of licence fee of Rs.3000 to Rs.6,000 to the object sought to be achieved. The petitioner further placed reliance on Article 276(2) of the Constitution of India to buttress their argument that such levy is unconstitutional and that the maximum levy can only be Rs.2,500/- per annum.

3. The respondents in their counter affidavit have specifically pointed out that the proposal to enhance the licence fee from Rs.3,000/-to Rs.10,000/-was to cope up with the increase in the administrative expenses and services rendered to the money lenders from the Department. From 1.4.2012 onwards filing of return was made electronically. So filing of annual return, quarterly return and remittance of renewal fee etc. are made electronically. The proposal to enhance the licence fee was to meet the administrative expenses as stated in the Budget Speech. It is also stated that subsequently the fee was reduced to Rs.6,000/-.

4. Based of the rival contentions, this Court is called upon to decide mainly the following two issues:

i) Whether the Finance Act, 2013 causing increase to the licence fee for money lending from Rs.3,000/-to Rs.6,000/-can be sustained.

ii) Whether the amendment offends the dictum laid down by the Division Bench of this Court in Kerala Small Financiers’ Association (supra).

5. Dealing with the first question, the Court should always remember that while undertaking the exercise of judicial review of the question whether increase in the levy of the licence fee is permissible, this Court may encroach on the wisdom of the State Legislature on the realm of the policy making. Before deciding the issue as to whether this Court should venture into such exercise, it must be remembered that decision to levy licence fee will not amount to a tax which may necessitate an element of quid pro quo. To delve into this point further, it is pertinent to note the decision of the Supreme Court in Secunderabad Hyderabad Hotel Owners Association Vs Hyderabad Municipal Corporation, Hyderabad [(1999) 2 SCC 274], wherein imposition of licence fee in a regulatory nature was considered and it was held that such levy is not a tax which requires quid pro quo.

6. It must be remembered that the words “Licence Fee” in the context of Kerala Money Lenders Act, 1958 should be understood as the fee collected by the Government to grant permission to a person to carry on the trade of money lending. It must also be noted that there is no vested right in an individual to carry on the trade of money lending. Therefore, there cannot be an infringement on the right guaranteed under the Constitution of India. Therefore, it has to be held