Holding

Section 5, read with Rule 4 and condition 4A, validly empowers the licensing authority to classify seats and fix admission rates as a reasonable restriction under Article 19(6).

Summary

Deepak Theatre held a licence under the Punjab Cinemas (Regulation) Act, 1952. The licensing authority classified the theatre's seats into four categories and fixed admission rates, which the theatre challenged as ultra vires and a violation of its Article 19(1)(g) right to carry on business. The High Court initially held the classification ultra vires, but a division bench reversed that decision, upholding the authority's power. On appeal, the Supreme Court examined whether Section 5 (read with Section 9, Rule 4 and condition 4A) of the Act authorised the authority to fix rates and classify seats, and whether such regulation infringed Article 19(1)(g). The Court held that the power to regulate includes fixing reasonable admission rates and seat classifications in the public interest, constituting a valid restriction under Article 19(6). Consequently, the appeal was dismissed.

Issues considered

Whether the licensing authority's power under Section 5 of the Punjab Cinemas (Regulation) Act, 1952, read with Rule 4 and condition 4A, to classify seats and fix admission rates is ultra vires the Act.
Whether such classification and rate fixation violates the fundamental right to carry on trade, occupation or business under Article 19(1)(g) of the Constitution.
Whether the restriction is a reasonable one under Article 19(6) in the interest of the general public.

Legislation cited

Constitution of Indias. Article 19(1)(g), s. Article 19(6), s. Article 38
Punjab Cinemas (Regulation) Act, 1952s. 5, s. 9

Subjects

Article 19Freedom of tradeLicensing authorityCinema regulationSeat classificationAdmission ratesReasonable restrictionPublic interestPunjab Cinemas Act

Judgment

A DEEPAK '.THEATRE, DHURI
v.
'STAIB OF PUNJAB AND ORS.
r
,.--
. DECEMBER 6, 1991

B [K. RAMASWAMY, M. FATIIlMA BEEVI· AND
YOGESHWAR DAYAL; JJ.]

Constitution of India, 1950:

Article 19(1) (g~inema Theatre~lassification of·seats and pre-
C scription ofadmissi<>n rates-Pawer of licensing authority under Punjab Cine-
mas (Regulation) Act, j952.......:..whether ultra vires and violative of

Punjab Cinkmas (Regulation) Act, 1952/Punj<ib Cinemas RuleS:
. , , ' ' '., ' ' . I

Sectfons 5, 9/Ruli 8icensing authority~_:.Powers to i::lassify seats and
D prescribe admissionfe~ons~itutionalvalidiiy of .
. The appellant has been ~~hibiting cinematograph films on a licence
granted to him under Section 5 of the Punjab Cinemas (Regulation) Act,
1952~ The licensing af!ihority classifi,ed the seats for admission into four
cla5ses and fixed t.he rates of admission to the four classes. Appellant filed
E a ·writ; Petition _before- the High Court challenging the power ,of the
licensing authority. in classifying .the classes· and contending that it of-
fended its right to carry on business·under Artide 19(1)(g) .of the. Consti-
tution or India. The appellant also challenged Rule 4 · of the Punjab
Cinemas Rules and condition 4A ·of the Conditions of Licence .
. ~. I I L' . :
F
'.A learned Single Judge' declared the regulation ultra vires or the
power,'and offending Article.• 19(1)(g) of the Constitution.· On a· Letters
Patent Appeal, the Division ·Bench of the High Court reversed the judg-
ment and upheld ·the power of the Licencing Autliority. It also held that
the• regulation did not offend 'Arti'cle 19(1)(g) of 'the-Constitution. ·Ag•
G grieved against this decisfon;the'appellant preferred the present appeal by
special'leave. . ' . . . . ' . . .
~ :

· DismisSing the appeaj, this.'Court,
. :.
• , ' I ~' ~ " . • ' • '

· · HELD: ~. Sec:tion 5 ~r the ~njab_Ci~e~as (Reg1;1iatiqn) A.ct, ~952
H read With Rule 4 of Punjab Cineinas.Rules and' condition, 4A of th~ licence

242

. . _.- ..... -c~- .,,.._ ••'"'""'*· '•· • '•· ,,.,,.,._,,-~-• ••
DEEPAK THEATRE v. STATE 243

is a regulatory measure to fix the rates ,of admission and classification of A
the seating in the interest of the general public. It is.within the power of
the licensing authority. They do not _impinge upon th!! ful)damental right
guaranteed under Article 19(1)(g) of the Constitution to trade, avocation
or business of the licen~ee under the Act. It is a reasonable restriction
under Article 19(6) of the. Constitution, imposed in the public interest.
[250 D, EJ B
2. It is settled law that the rules validly made under the Act, for all
intents and purposes, be deemed to be part of the statute. The conditions
of the licence issued under the rules form an integral part of the statute.
The power to regulate may include the power to license or to refuse the
licence or to require taking out a licence and may also include the power
to tax or exempt from taxation, but not the power to impose a tax under
c
the rule-making power unless there is a valid legislation in that behalf.
Therefore, the power to regulate a particular business or calling implies
the power to prescribe and enforce all such proper and .reasonable rules
and regulations as may be deemed necessary to conduct the business in a
proper and orderly manner. It also includes the authority to prescribe the D
reasonable rules, regulations or conditions subject to which the business
may be permitted or conducted. A co-joint reading of Sections 5 and 9 of
the Act, Rule 4 and condition 4A gives the power to the licensing authority
to classify seats and prescribe rates of admission into the cinema theatre.
. -[245 H; 246 A-CJ
3. Access to aIJd admission into theatre is a facility and concomitant E
right_ to a cine goer public. Classification of seats ~nd fixation of rates of
admission according to paying capacity of a cine goer, is also ~n integral
powei: of regulation. Power to fix rates of admission ~ncludes power to
amend and_revise the rates from .time to time. The statute vests that power
in the licensi~g authority subject to control by the State Government. The
F
fixation of the rates of admission has thus become an integral and essential
part of the power and regulation of exhibition of cinematograph.
[247 H; 248 A]

- to.
Minerva Talkies, Bangalore v. State of Karnataka & Ors., [1988]
(Supp.) SCC 176, relied on.
D.K.V. Prasad Rao 'v. Government of A.P., AIR 1984 AP 75, referred \_
1G

4. The right to fix the rates of admission is not an unbridled power
or right_,tmt by implication is subject to the regulation under the Act, rules
and conditions of the ~~ence. The owner/licensee has no unrestricted
power or freedom to fix rates of admission at his whim. Therefore, fixation H
244 SUPREME COURT REPORTS [1991] SUPP. 3 S. C.R.

A of rates of admission, though has, its inception in the womb of private
contract, but clothed with a public interest, could be regulated under the
Act, rules and conditions of the licence.

Minerva Talkies, Bangalore v. State of Karnataka & Ors., [1988]
(Supp.) SCC 176; Narendra Kumar v. Union of India, [1960] 2 SCR 375,
B relied on.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2280 of 1981.

From the Judgment and Order dated 3.4.1981 of the Punjab and Haryana
High Court in L.P.A. No. 9i3 of 1980. -
c ~

A.K. Goyal for the Appellant.

G.K. Bansal for the Respondent.

The Judgment of the Court was delivered by
D
'K. RAMASWAMY; J. The appellant has been exhibiting cinemato-
graph films at Dhuri, on a licence having been granted by ·the District
Magistrate, Sangrur, the 2nd respondent, under S.5 of the Punjab Cinemas
(Regulation) Act, 1952, for short 'the Act' and the Rules. By proceeding dated
February 26, 1975 the 2nd respondent classified the seats for admission into
E four ciasses and fixed the rates of admission to the respective classes. The
appellant impugned as ultra vires of the power of licensing authority in this
1 behalf and also contended that it offends its right to carry on the business under
Art.- 19(1)(g) of the Constitution. It equally questioned rule 4 of the Punjab
Cinemas Rules and condition 4A of the condition of the licence on that score.
The learned single Judge declared the action to be ultra vires of.the power and
F
offend Art. 19(1)(g). On appeal in L.P.A. No. 913/80 dated April 3, 1981 the
division bench reversed the judgment and upheld ·the power of the licensing

-
authority. It also held that the regulation does not offend the right under Art.
19(l)(g) of the Constitution. This appeal arises on leave under Art. 136 of the
Constitution.
G
The licensing authority by proceeding dated February 26, 1975 classified
the seats into Box, First Class, Second Class/Ladies and Third Class and
prescribed the rates of admission of Rs. 2.75, Rs. 1.75, Rs. 1.30 and Rs. 0.80
P. respectively. On obtaining interim stay of the order, the appellant, pending
the writ petition unilaterally enhanced the rates of admission. The question is.
H whether the 2nd respondent has power under the Act. The preamble of the Act
•
DEEP AK THEATRE v. STATE [RAMASWAMY, J.] 245

provides that "an act to make provision for 'regulating' exhibition of cinema- A
tographs in the 'Punjab". The purpose of the Act, therefore, is to regulate the
cinema trade or business in exhibiting the cinematograph in the theatre being
run on the licence duly obtained from the licensing authority. Section 5 gives
power to the licensing authority thus :-

"5. Restrictions on powers of licensing authority:- B

(1) The licensing authority shall not grant a licence under this Act
unless it is satisfied that "

(a) the rules made under this Act have been complied with, and
c
(b) adequate precautions have been taken in the place, in respect
of which the licence is to be given to provide for the safety
of the persons attending exhibitions therein.

(2) Subject to the foregoing provisions of this section and to the
control of the Government, the licensing authority may grant D
licences under this Act to such persons as it thinks fit, on such
terms and conditions as it may de"termine."

Section 9 confers power on the State Government to make rules by
notification published in the official gazette to prescribe terms, conditions and
restrictions, if any, subject to which licence may be granted under the Act. Rule E
4 reads dms:

"Licences, whether for a period of three years on temporary, shall
be in form A annexed to these rules and shall be subject to the
conditions and restrictions set forth therein and to the provisions by
F
these rules". ·

Condition 4-A of the Licence granted under the rules provides "classi-
fication of the seats" and the "prices thereof' for different parts of the licensed
building/place, approved by the licensing authority as indicated thercio and
"shall not amend or alter the same in any way without the prior approval of -G
the licensing authority". The licensing authority will enter the number of
persons to be admitted into the several parts of the Auditorium having special
regards to the provisions of Rule 24.
• (emphasis sup}?lied)

It is set~led law that the rules validly made under the Act, fo_r all intents H
••

246 -SUP~EME COURT REPORTS [1991] SUPP. 3 S. C.R.

R and purposes, be deemed to be part ofthe statute. The conditions of.the licence
issued under the rules form ·an integral part 'of the Statute. The question
emerges whether the word.regulation would encompass the power to fix rates
of admission and classification of the seats. The power to' regulate may include
a
the power to license or to refuse the licence or tO require taking out licence
and may also include the power to tax or exempt from taxation, but not the
B power to impose a tax for the revenue in rule making power unless there is a
valid legislation in that behalf. Therefore, the power to regulate a particular
business or calling implies the power to prescribe'and enforce all such proper
and reasonable rules and regulations as may be deemed necessary to conduct
the business in a proper and orderly manner. It also includes the authority to
prescribe the reasonable rules, regulations or conditions subject to which the
C busfoess may be permitted or conducted. A conjoint reading of S.5, S:9, rule
4 and condition 4A gives, therefore, the power to the licensing authority to
classify seats and prescribe rates of admission into the cinema theatre.

Article 19(1)(g) of the constitution accords fundamental rights to carry
on any profession, occupation; trade or business, but would be subject to
D reasonabl.e restrictions on the exercise of the said right imposed by a law, in the
interest of the general public. This court in Minerva Talkies, Bangalore v. State
of Karnatka & Ors., [1988) (Supp) SCC 176 considered that the right to carry
on business of exhibiting cinematograph films by the provisions. of the
Kamataka Cinemas Regulation Act and the rules framed thereunder. It was
held that the Government have power to limit the exhibiting number of shows
E in a day. These provisions are necessary to ensure public safety, health and
other allied matters. The rules do regulates exhibition of cinematograph film by
providing that, instead of five shows, only four shows should be exhibited in \l
a day. No rule or law can be declared tO be unreasonable merely because there
is reduction in the income of the citiZen on.account o( the regulation of the
business. The Rule 41-A of the rules therein empowering to regulate number
F of shows in a day does not impose any unreasonable· restriction on the
appellant's fundamental rights guaranteed under Art. 19(1)(g) of the Constitu-
tion. This court also held thatthe State Govt. may lay down conditions and
impose restriction prescribing hours· during which the films may be exhibited
in
and also the number of shows the licensed premises. Any rule, if rea·sonably
G connected with the public safety would be justified under the aforesaid
provision. No licensee can claim to have unrestricted right to exhibit films for
all the twenty four hours of the day, which would be against the public interest.
The restriction to limit the number of shows by rule 41-A is regulatory in ·nature
which clearly carries out the purpose of the Act. In paragraph 14, this Court
upheld the ratio of the Andhra Pradesh High Court in D.K.V. Prasad Rao v.
H Government of A.P., AIR 1984 AP 75. Therein Rule 12(3) of the Andhra
DEEPAK THEATRE v. STATE [RAMASWAMY~ J.] 247

Pradesh Cinemas (Regulation) Rules, 1970 fixing maximum rates.of admission A
to different classes in a cinema theatre was challenged on the ground that the
rule was beyond the power of the State Government under the AP. Cinemas
(Regulation) Act 1955 and that it placed unreasonable restriction on the
fundamentalrights of the petitioner therein violating Art 19 of the Constitu-
tion. The division Bench (to which one of us K. Ramaswamy , J. was a member)
rejected both the contentions and· upheld the rule 12(3). While approving the B
ratio therein· this Court laid down :-
"the power to regulate includes the power to restrain, which
embraces limitations and restrictions on all incidental matters
connected with the right to trade or business ~rider the existing
licence. Rule 12(3) regulated entry to .different classes to the •
cinema hall and it was within the rule making power of the State
c
Government to frame such rule, The court· further held that fixing
limit of rate qf admission was an absolute necessity in the interest
of tne general public and the restriction so placed was reasonable
~nd in public. interest ··on these findings the court upheld the
.• validity of the.rule. We are in agreement with the view taken by the D
Andhra Pradesh High Court" ·
Witnessing a motion picture has become an amusement to every person;
a reliever to the weary and fatigue; a rave lier to the pleasure seeker; an importer
of edu~atiort and enlightenment enlivening to news and current events; dis-
seminator of scientific knowledge; perpetrator of cultural and spiritual heri-
tage, to the teeming illiterate majority of population; Thus, cinemas. have E
beCome tools to promote welfare ofr-the people to secure and protect as
effectively as it may a social order as per directives of the State Policy enjoined
under Article 38 of the Constitution. Mass media,· through motion picture has
thus become the vehicle of coverage to disseminate cultural heritage, knowl-
edge, etc. The passage of time made manifest this growing .imperative and the
F.
consequential need to provide easy access to all sections of the society to seek
· admission into theatre as per his paying capacity. Though the right to fix rates
~ of admission is a business incident, the appellant having created an interest in
·· the general public therein, it has beCome necessary for the State to step in and
reguhue the activity of fixation of maximum rates of admission to different
classes, as a welfare weal. Thereby fixation of rates of admission became a G
legitimate ancillary or incidental power in furtherance of the regulation under
the Act. Access to and admission into theatre is a facility and concomitant right
to a cine goer public. Classification .of seats and fixation of rates of admission
according to paying capacity .of a cine goer is also an integral power of
regulation. Power to fix rates of admission includes power to amend and revise
the rates from time to time. The statute vests that power in . the licensing H
248 SUPREME COURT REPORTS · [1991]. SUPP. 3 S. C.R.

A authority subject to control by the State Government. The fixation of the rates
of admission has thus ~ome an integral and essential part of the power and
regulation of exhibition of cinematograph.

InNarendraKwnarv, Union ofIndia, [1960] 2 SCR 375 this Court held
that prohibition of right to carry on business is possible by putting reasonable
B restrictions under Art. 19(6) of the Constitution. In Minerva Ta/Id.es' case
(supra) this court held that reduction in income of the business by operation of
the regulation is not a ground to declare the law to be unreasonable.

Thus right or power of the owner of a theatre from the inception of its
construction till exhibition of cinematograph is controlled by the regulations
C under the Act, the rules and conditions of the licences issued in this behalf.
There is no compulsion to construct a cinema theatre, but by undertaking to
construct a theatre to exhibit cinematograph films t)lerein, the owner created a
right in the cine going public, to have an easy access to the theatre. Thereby the
private property of the owner is effected with public interest. It, thereby, ceases
to be juris privati and is clothed with public interest. When used in a manner
D detrimental to public interest or welfare it would affect the community at large.
By using the owner's property as theatre he/it submits himself or itself to the
regulations for common good. The public acquire, thereby, direct and positive
interest in exhibition of cinematograph films. Undoubtedly, in a private
contract hedged with no public interest, the state has no power to regulate its
trade but is subject to general law. The right to fix the rates of admission is not
E an unbridled power or right but by implication is subject to the regulation under
the Act, rules and conditions of the licence. The owner/licence, has no
unrestricted power or freedom to fix rates of admission at his whim. Therefore,
fixation of rates of admission, though ha~. its inception in the womb of private ·
contract, but clothed with a public interest to be regulated under the Act, rules
and conditions of the licence. The division Bench in Prasada Rao' s Case,
F
therefore, held:-

" It is clothed with a public interest as cine going public acquired
direct and positive interest to have easy access of admission into
the theaters. Thereby the business ceased to 'juris privati' and the
G business tends to a common charge and became a thing of public
interest and use. The business became a sort of public office
nearing monopolisation. The legislature seeks to avoid this ten-
dency in the interest of the public welfare. It becomes absolutely
necessary to over-ride the private rights of persons and property so
as ~o effectuate the public order for the general welfar~ of the
H citizens."
DEEPAK THEATREv. STATE [RAMASWAMY, J.] 249

Thus classification of seats and fixation of rules of admission have direct A
~nd inevitable effect on the public welfare. For its effectuation the'division
bench in Prasada Rao' s case further held that fixation of the rates of admission
has become an absolute necessity to avoid (a) arbitrary exercise of the power
of the licensee to fix his own rates of admission; (b) to avoid unhea1thy
business competition .to drive out co-competitors from the field, by more
powerful monied persons, and thereby tend to avoid near monopoly; (c) to B
avoid keeping the people at the whim and vagery of the licensee in fixing the
rates of admission; (d) to provide a reasonable facility for the public; (e)
prevents the licensees from charging varied rates of admission based on
fluctuating fortuitous factors ensuring consequentia1 curb on unjust enrich-
.ment; and (t) in the general public welfare. The fixation of rules of admission
does not have the inevitable effect to drive out of the licensee from the trade C
or business. In other words, it assures the orderly exercise of right to trade on
business or avocation or occupation. I.t does not impinge upon unreasonable
restrictions on the fundamenta1 right of the trade or business in exhibiting the
cinematograph.

The Division Bench in the Judgment under appeal held that: D.

"There can be little doubt that the whole purpose of this section is
to make available to the public cinema tickets at reasonable mtes
and to prevent any inflated prices thereof and !he black marketing
therein. If the statute could be no solicitious that a violation of E
these conditions resulting obviously in the sale of ticket,s at
inordinately higher prices to the public should be made a cogni-
zable offence, can it possibly be said that the fixation ..c». the price
of cinema, tickets and their fair availability to the public in general
is an object beyond the scope and ambit of the statute. It appears
axiomatic to us that exhibition and licence of every business or F
calling would include within it the power to fix reasonable prices
in accordance with the provisions thereof unless there are specific

-
restrictive words to the contrary which are conspicuous by their
absence in the present Act and the Rules framed tl1ereunder."

G
" ...... the original order of the licensing authority in 1971 was
expressly made in the interest of the weaker sections of the society
for whom a slightly lower classification of seats was sought to be
made at the rate of 80 paises. Similarly, the subsequent order of the
licensing authority in 1976 was again directed towards the availa- H
...
iso S,UPREME. COURT 'REPORTS . (199f]°"SUPP. 3 S. C.R.

'A bility ·or cinema ticketS at fair prices to cinema goers. It would thus
be apparent that both th<£ assailed orders were sought. to-be made
in the interest of the public'and in particular the relatively weaker
section thereof." '

B
" ........ We have taken the·view that the fixation of the prices of
cinema tickets is integral to and a necessary adjunct of the larger
power to 'regulate' and 'licence' thecinematograph trade. At'best,
such a· power is a reasonable restriction fo the interest of the
general public to carry on 'such a business. That being SO, we are
c unable to appreciate the contention that merely because the Act
and the Rules thereunder cloths the licensing authority with power
to fix prices which had been exercised by imposing condition No.
4, 'then· the same would become necessarily unconstitutionaL"

In the above view we hold that s. 5, read with Rule 4 and condition 4A
D of the licence is ·a ·regulatory ·measure to fix the ·rates of admission and
cl.assification of the seating in the interest of the general public.It is within the
po·wer of the licensing authority. They do not impinge upon the fundamental
right to trade, avocation or business· of the licensee under the Act. It is a
reas;onable restrictloQ imposed in the public interest. Accordingly, we do not
find· any ground, warranting 'interference. The appeal is dismissed, but with no
E ord{~rs as to costS. -

G.N. - Appeal dismissed.

-