The insertion of Section 262-A in the Act altered the law regarding licence fees for private markets and allowed for retrospective imposition of fees.

Alfred Henry Lionel Leach, C.J.

1. Within the Municipal limits of the town of Tiruvarur, there are three markets which are privately owned. The proprietor of a private market is required to take out each year a licence for which a fee is chargeable. The question which arises in these appeals is whether the Municipal Council of Tiruvarur has fixed the licence fee at a rate higher than the law allows. Of the three markets one is a general market, which is held once a week. The other two markets are held daily, one for the sale of fish and the other for the sale of vegetables. Up to the 1st April, 1934, the annual licence fee charged in respect of the general market was Rs. 50; for the fish market the fee was Rs. 100 and for the Vegetable market Rs. 25. For the year 1934-35, that is from the 1st April, 1934, to 31st March, 1935, the Council increased the fees to Rs. 452-4-0, Rs. 550 and Rs. 187-8-0 respectively. These fees were based on the provisions of Section 262-A of the Madras District Municipalities Act, 1920, which reads as follows:

When a licence granted under Section 262 permits the levy of any fees of the nature specified in Sub-section (2) of Section 260, a fee not exceeding fifteen percentum of the gross income of the owner from the market in the preceding year shall be charged by the Municipal Council for such licence.

2. Section 262 provides for the licensing of private markets and the levy of fees of the nature specified in Sub-section (2) of Section 260 in such markets.

3. The new licence fees amounted to twelve and a half per cent, of the gross income. At one time the Council proposed to charge licence fees on the basis of fifteen per cent. of the gross income, the maximum allowed by Section 262-A; but on representations made by the owners of the private markets in Tiruvarur the Council decided to reduce the percentage to twelve and a half. The proprietors were still dissatisfied. They maintained that Section 262-A had not altered the law as laid down by the Privy Council in Pazundaung Bazaar Co., Ltd. v. Municipal Corporation of the City of Rangoon (1931) 61 M.L.J. 740 : L.R. 58 IndAp 313 : I.L.R. 9 Rang. 440 (P.C.) which had been followed in this Court in several cases before the insertion of Section 262-A in the Act. In Pazundaung Bazaar Co., Ltd. v. Municipal Cmporation of the City if Rangoon (1931) 61 M.L.J. 740 : 1931 L.R. 58 IndAp 313 : I.L.R. 9 Rang. 440 (P.C.) the question was whether the Corporation of Rangoon had fixed the scale of licence fees to be paid by market proprietors so high that the sums charged were really taxes and not licence fees. Stated broadly the decision of the Privy Council was that the licence fee might reasonably cover the cost of all special services Necessitated by the duties and liabilities imposed upon the municipal authority in respect of the supervision and regulation of private markets. The proprietor? of the Tiruvarur markets contended that if the licence fee based on fifteen per cent, of the gross income of the previous year meant the payment of more than what would reasonably cover the cost of such special services, the municipal council would be acting in excess of its powers. They averred that twelve and a half per cent, of the gross income meant an overcharge on this basis. In these circumstances they sued in the Court of the District Munsiff of Tiruvarur to recover what they had been compelled to pay in excess of the old rates. Their suits were numbered as O.S. Nos. 209, 227 and 210 of 1935, respectively. The District Munsiff held that the increase in the licence fee was lawful and consequently dismissed the suits.

4. The plaintiffs appealed to the District Judge who held that the licence fee to be lawful must be commensurate with the services rendered. The fee could not exceed fifteen per cent. of the gross income; but if the special services rendered by the Council cost less the excess amounted to an illegal exaction. The onus was on the licensee to prove that t