The main legal point established in the judgment is the authority of the municipal council to enhance licence fees and the application of the principle of quid pro quo in levying fees.

JUDGMENT :

A.K.Rath, J.

The plaintiff is the appellant against a reversing judgment in a suit for declaration that the enhancement of licence fee levied by the defendant as mentioned in the notice dated 07.12.1983 is not valid and binding on the plaintiff and for permanent injunction.

2. The case of the plaintiff is that he is in occupation of stall no.3 constructed by the defendant. He is doing his business since 1968 on payment of Rs.30/-towards licence fee. The licence fee has been enhanced to Rs.80/-. He used to pay licence fee regularly. While matter stood thus, on 07.12.1983, defendant issued a notice enhancing the licence fee to Rs.200/-with effect from 01.01.1984. He was directed to execute a fresh lease agreement or in the alternative, to vacate the stall by 01.01.1984. Enhancement of licence fee is contrary to the provisions of the Orissa Municipal Act. The Orissa Municipal Act (in short, ‘the O.M. Act’) and Rules does not authorise the defendant to demand high fee. Levying of fee presupposes the existence of quid pro quo relationship, which is absent. He sent a representation to the defendant on 16.12.1983. But defendant maintained a sphinx-like silence. With this factual scenario, he instituted the suit seeking the relief mentioned supra.

3. The defendant entered contest and filed a written statement pleading, inter alia, that the plaintiff is in occupation of stall no.3. Licence fee was Rs.80/-. The same was enhanced to Rs.200/-. The plaintiff had the option either to pay the enhance licence fee or to vacate the stall. The defendant, council decided to enhance the rate of fee taking into consideration of all aspects. The enhancement of fee is legal and justified. On 07.12.1983, the defendant issued a notice enhancing the licence fee to Rs.200/-with effect from 01.01.1984.

4. On the inter se pleadings of the parties, the learned trial court struck three issues. Both the parties led evidence, oral and documentary, to substantiate their cases. Placing reliance on the decisions in A. Raja Rao Dora v. Dhenkanal Municipal Council and others, 41 (1975) C.L.T. 415, learned trial court came to hold that the demand of enhancement of licence fee is bad as it has ceased to be a fee in the absence of quid pro quo. Enhancement of licence fee by the council is not valid and binding on the plaintiff. Held so, it decreed the suit. The defendant filed T.A. No. 15 of 1989 before the learned Sub-ordinate Judge, Chatrapur. Learned appellate court held that no notice was served in the Municipality under Sec.349 of the O.M. Act before institution of the suit. It further held that learned trial court applied the ratio of an overruled decision. Held so, it allowed the appeal.

5. The Second Appeal was admitted on the following substantial question of law:-

“Whether the impugned judgment is bad in law inasmuch as the learned court below did not take into consideration the evidence on record ?”

6. Mr. Ashok Mohanty, learned Senior Advocate for the appellant submits that the plaintiff is in occupation of stall no.3 constructed by the defendant. The licence fee was enhanced from time to time. He used to pay the same. All of a sudden, the fee was enhanced to an exorbitant amount. Enhancement of licence fee to the extent of two and half times is bad in law.

7. Per contra, Ms. Soumya Mishra, learned Advocate on behalf of Mr. S.N. Mishra, learned Advocate for the respondent submits that the plaintiff is a licensee. The municipal council took a decision to enhance the licence fee. Accordingly, the fee was enhanced.

8. In A.Raja Rao Dora (supra), the question before this Court was whether the levy of fee under Sec.295 (2) of the Orissa Municipal Act, 1950 (the Act) was unjustified for non-compliance of the principle of quid pro quo. This Court answered the question in the affirmative and quashed the collection of the fee and restrained the Municipal Council from enforcing the demand.

9. The matter went to apex Court. The apex Court in Dhenkanal Municipal Counc