DELHI CLOTH AND GENERAL MILLS COMPANY LIMITED Vs. CHIEF COMMISSIONER DELHI

JUDGEMENT

(1.) This is an appeal from a judgment of the Punjab High Court (Circuit Bench, Delhi) involving the question of the validity of Rule 7 read with Rule 5 and its Schedule of the Delhi Factories Rules 1950 made under Section 112 of the Factories Act, 1948, hereinafter called the Act. The impugned Rules relate to the grant of a licence for a factory and renewal thereof, the fees being prescribed by the Schedule to Rule 5.

(2.) The Delhi Cloth and General Mills Co. Ltd., operates within the Delhi area a number of industrial establishments which are factories within the meaning of Section 2 (m) of the Act. The company has to pay a total sum of Rs. 12,775.00 as annual licence fee for all its factories in Delhi, the fees being calculated according to the horse power and the maximum number of workers to be employed on any day during the year as given in the Schedule. The Maximum fee that is payable is Rs. 2,000 for a factory. The factories can be run only after registration and under a licence granted under the Act and the Rules on payment of the prescribed fee. The licence is renewed every year under Rule 7 on payment of the same fee which is paid at the time of the granting of the licence. Every licence granted or renewed remains in force upto Dec. 31, of the year for which it is granted or renewed. In January 1963 the company filed a petition under Articles 226 and 227 of the Constitution in the High Court challenging the validity of the Rules under which the licence fee for renewal of the licence for each of its factories in Delhi was being levied and collected i.e., Rule 7 read with Rule 5 and its Schedule. This petition was dismissed by a Division Bench on February 11, 1965. The company then filed the present appeal by certificate.

(3.) The principal point which has been canvassed on behalf of the appellant company is that the payment made for renewal of the licence was and is only to endorse the licence as valid for the next year and the amount charged for the renewal thereof cannot and does not entail services which can reasonably be regarded to be commensurate with the amount so charged. In other words the element of quid-pro-quo which distinguishes a fee from a tax is absent and lacking. The Act, it is pointed out, contains specific provisions for rendering of benefit and service to the workmen by the owners of the factories. The Inspectors who are appointed under the Act to ensure that its provisions are complied with by the factory owners constitute a policy agency and it is not possible to say that the powers and duties of the Inspectors when exercised and carried out amount to services rendered for the benefit of the factory owners or the workmen.