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IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR
S.P. Khare, J.
Kalpana Salunke
Vs.
Jabalpur Development Authority and others
W.P. No. 3038 of 1999
Decided On: 26.10.1999
LICENSE FEE - ENHANCEMENT - M.P. NAGAR TATHA GRAM NIVESH ADHINIYAM, 1973 - SECTION 6 - INCREASE IN LICENSE FEE BY 20% EVERY TWO YEARS HELD UNJUST, EXCESSIVE, AND UNREASONABLE - REASONABLE INCREASE OF 10% EVERY TWO YEARS PERMITTED.
Fact of the Case:
The petitioner, a licensee of a shop allotted by the Jabalpur Development Authority (respondent), challenged the enhancement of license fee from Rs. 660/- per month to Rs. 1642/- per month and the demand for arrears of Rs. 69,982=00.
Finding of the Court:
The court held that the respondent was entitled to increase the license fee only once, by 50% of the original amount, as per the agreement between the parties and the earlier order of the court. The subsequent increases of 20% every two years were excessive, unjust, and unreasonable.
Issues: 1. Whether the respondent was entitled to increase the license fee every two years at the rate of 20%. 2. Whether the increase in license fee was just and reasonable.
Ratio Decidendi: 1. The court interpreted Clause 6 of the agreement between the parties, which allowed for an increase in license fee "not exceeding 50%" at the expiry of the initial two-year term, as permitting only a one-time increase of 50% of the original amount. 2. The court held that the subsequent increases of 20% every two years were excessive, unjust, and unreasonable, as they were not justified by any material or details provided by the respondent. 3. The court also held that the respondent, being a statutory authority covered by the definition of 'State' in Article 12 of the Constitution, was bound by the requirement of Article 14 to act fairly and reasonably, and that its action in increasing the license fee in the present case was arbitrary and violative of Article 14.
Final Decision: The petition was allowed, the impugned order was quashed, and the respondent was directed to recalculate the increase in license fee at the rate of 10% instead of 20% on the amount of Rs. 660/- for each block of two years from 25-7-1989 to 24-7-1999.
S.P. Khare, J.
1. This is a petition under Article 226 of the Constitution of India challenging the order dated 19-3-1999 (Annexure P-13) of the respondent No. 1 by which license fee has been enhanced to Rs. 1642/- per month and the petitioner has been asked to pay Rs. 69,982=00 as arrears.
2. The petitioner was allotted shop No. 3 at Adhartal in Scheme No. 3 having an area of 290 Sq. ft. on license fee of Rs. 225/- per month as per agreement dated 2-8-1987 (Annexure P-2) with effect from 25-7-1987. The period of this agreement was two years. There was a renewal clause. The respondent No. 1 reserved a right as per Clause 6 of the agreement to increase the license fee 'not exceeding 50%' at the time of renewal. This was subject matter of interpretation in M.P. No. 2534/93 when the petitioner and the licensees of other shops challenged the increase. It was held by order dated 24-4-1997 (Annexure P-4) that the respondent No. 1 could increase the license fee as per Clause 6 of the agreement.
3. The petitioner's case is that she is now paying a license fee of Rs. 660/- per month and by the impugned order it has been increased to Rs. 1642/- per month. It is highly unjust, excessive and unreasonable. One time increase has been upheld in the writ petition mentioned above but it cannot be increased every time after the expiry of a period of two years. It has been pleaded that the rent charged by private owners for such shops in that area does not exceed Rs. 500/- per month. There has been a fresh agreement between the parties on 10-8-1998 (Annexure R-7) in which the license fee was mentioned at Rs. 660/- per month. That has been scored and substituted by the figure of Rs. 1642/- per month. The period of lease in this agreement is shown from 25-7-1989 to 24-7-2001. That is again subject to renewal at the expiry of three years on enhanced license fee of 20 percent.
4. The case of the respondents is that the increase in the license fee has been upheld by this Court in the writ petition mentioned above and that decision operates as res judicata. The demand made by the respondents by various notices is in conformity with this decision. On failure to pay the arrears and enhanced license fee the shop has been locked and its possession has been taken over with the help of the police force. That has been restored to the petitioner because of the interim order of this Court.
5. The point for determination is whether the respondent No. 1 is entitled to increase the license fee to the extent it has done. The arguments of the learned counsel for both the sides were heard.
6. It is necessary first of all to look at the earlier order of this Court dated 24-4-1997 in M.P. No. 2534 of 1993. A perusal of this order shows that it was agreed by both the parties that the license fee was Rs. 225/- per month from 25-7-1987 to 24-7-1989 and it was subject to increase "not exceeding 50%" at the expiry of the term of license of two years on 24-7-1989. That was precisely upheld by this Court. It was not held that the respondent No. 1 would be entitled to increase the license fee upto 50% at the end of each block of two years. It was held: "the petitioners cannot claim that they should be allowed to continue the premises on the license fee fixed at the time of their induction as licensee". Therefore, the contention of the respondents that Clause 6 of the agreement dated 2-8-1987 (Annexure P-2) or the order of this Court gave a license to them to increase the fee to the extent of 50% on the expiry of each period of two years is not acceptable. In terms of the order of this Court based on Clause 6 of the agreement there could be one time increase to the extent of 50% of the agreed amount of Rs. 225/- i.e. Rs. 225 + Rs. 112.50 = Rs. 337.50 paise.
7. It is an admitted fact now that the petitioner is already paying Rs. 660/- per month as license fee from 25-7-1989. That is much more than Rs. 337.50 paise per month. In the return filed by the respondents it has not been
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