Andhra Pradesh Bankers and Pawn Brokers Association vs Municipal Corporation of Hyderabad

P. Venkatarama Reddi, J

The appellant which is an association of moneylenders and pawn brokers filed Writ Petition No.5250 of 1987 questioning the Notification dated 11-4-1987 issued by the Commissioner of Municipal Corporation of Hyderabad making an upward revision of the rates of licence fee fixed u/s 622 of Hyderabad Municipal Corporation Act, 1952 (hereinafter referred to as ''H.M.C. Act''). The said notification enhancing the licence fee was issued after obtaining the sanction of the Standing Committee and the General Body of the Corporation. The licence fee was fixed at Rs.500/- in respect of money-lending and pawn broker business and at Rs.200/- for those engaged in money exchange operations. The members of the petitioner association are said to be pawn brokers (vide para 7 of the affidavit). Initially, in the year 1992, the business of money-lending and pawn broker were notified as trades or operations which require licence. In the year 1985, the licence fee was Rs.50/- and thereafter, by the impugned notification, the licence fee was enhanced to Rs.500/-. It appears that during the pendency of the writ petition, the licence fee was further enhanced to Rs.1,000/-. However, the members of the petitioner association had the benefit of ''stay'' pending writ petition and after dismissal of the writ petition, the stay was granted subject to payment of 50 per cent of the enhanced fee.

Section 521(1) enjoins that no person shall carry on certain trades and operations except under and in conformity with the terms, and conditions of licence granted by the Commissioner. Paragraph (ii) of Clause (e) of Section 521(1) refers to "any trade or operation which in the opinion of the Commissioner is dangerous to life, health or property, or likely to create a nuisance either from its nature, or by reason of the manner in which, or the conditions under which, the same is or is proposed to be carried on". Sub-section (4) vests the discretion in the Commissioner to grant a licence subject to such restrictions or conditions if any as he may think fit to impose or to withhold the licence. Sub-section (3) lays down that a person shall be deemed to carry on or to allow to be carried on a trade or operation within the meaning of paragraph (ii) of clause (e) of sub-section (1), if he does any act in furtherance of such trade or is in any way engaged or concerned therein whether as principal, agent, clerk, master, servant, workman, handicraftsman or otherwise.

The object of Section 521(1)(e) is to regulate by means of a licensing provision the trades or operations which in the opinion of the Commissioner are dangerous to life, health or property or likely to create nuisance either because of inherent nature of the trade or operation or by reason of the manner in which the conditions under which such trades or operations are carried on. The opinion whether trades or operations are dangerous to life or health or property or likely to create nuisance is to be formed by the Commissioner. It is axiomatic that the Court or some other authority cannot substitute its own opinion to that of the Commissioner, though the opinion expressed by the Commissioner is not final and conclusive. Judicial review is still there on the question whether the Commissioner has formed his opinion having due regard to the relevant criteria set out in the Section itself and such opinion could at all be formed by any reasonable or rational standards. A whimsical, capricious or perverse view taken by the Commissioner can be invalidated on the ground that he acted ultra vires the provisions of the statute or that the opinion is vitiated by legal mala fides.

The question therefore is whether the opinion formed by the Commissioner that the trade of money-lending and pawn brokerage is a trade that falls within the ambit of clause (ii) of sub-section 1(e), passes the above test and can be sustained in law.

Section 622 of HMC Act provides that whenever it is provided in the Act that licence or written permission may be given for any purpose, such licence or written permission shall specify the period for which and the conditions subject to which, the same is granted. Sub-section (2) of Section 622 empowers the Commissioner to fix the fee to be charged from time to time with the sanction of the Corporation. The procedure for submitting the application for licence is laid down in that Section. It is in exercise of the powers conferred by Section 622(2) read with Section 521(1)(e), the impugned notification dated 11-4-1987 was issued. Just as the earlier notifications, it is in two parts. Firstly, the Commissioner expressed the formation of his opinion that the trades and operations notified in Annexure II are dangerous to life, health or property or likely to create nuisance. Secondly, the reason for enhancement is set out. Annexure II specifies various trades and operations and the enhanced licence fee chargeable therefrom. A variety of trades including watch repairing, stationery, cycle taxi, magazine and paper shops, typewriting institutes etc., are included therein.

The contention raised before the learned single Judge and reiterated before us is that the pawn brokerage/ money-lending business is neither dangerous to life nor property nor is it likely to create nuisance and therefore, the pre-conditions for formation of the opinion by the Commissioner are not satisfied. The following reasoning of the learned single Judge has been assailed in this Writ Appeal:

"It may be observed that insofar as money-lending, hypothecation of movables and pawn brokerage are concerned, the same are dangerous to property in the sense that they involve risk to property of the persons who hypothecate their valuable movables with the money-lenders; they, having regard to the manner in which and the circumstances under which they are carried on, are likely to create nuisance, as such their trades or operations can be permitted only on conditions that may be prescribed in the licence issued by the Commissioner of Municipal Corporation of Hyderabad. Merely because they are not injurious or dangerous to life and health it cannot be said that the same cannot be included in the notification issued u/s 521(1)(e)(ii).

We express our respectful disagreement with the view expressed by the learned single Judge that the business of money-lending on pledge of valuable articles involves risk to property of the debtors and, therefore, it is dangerous to property within the meaning of clause (ii). Danger to property as contemplated by clause (ii) of Section 521(1)(e) is something which by virtue of the offensive nature of the trade or the operations conducted in connection therewith has the potentiality of causing damage to some property. The deleterious effects on one''s own property or the neighbour''s properly from carrying on certain trades or operations should be direct and/or immediate. In other words, the nexus must be direct and immediate but not remote and indirect. The mere fact that in the course of carrying on the business of money-lending and pledging, the properties of the defaulting customers might be sold, is not a ground to hold that the said business by itself causes danger to the property of the debtors. The sale or appropriation of movables pledged will arise only in the event of default and in effecting such sale of property in exercise of legitimate right conferred by law, it cannot be said that damage to property viz., articles pledged, occurs. It is also relevant to mention that there is no provision empowering Municipal Corporation of Hyderabad to carry on inspections or to take measures to ensure that the pledge business is run properly and the exploitation is avoided. That aspect is taken care of by other laws viz., A.P. (Telangana Area) Money-Lenders Act.

Though we agree with the learned Counsel that the money-lending and pawn brokerage business is not one of the trades or operations which is a source of danger to life, health or property, on a deep consideration, we agree with the learned single Judge that the trade has the potential to create nuisance to the public or Section of public having regard to the manner in which and the conditions under which it is carried on. Then the second limb of clause (ii) of Section 521(1)(e) is therefore attracted. In our view, the Commissioner cannot be said to have formed an incongruous or untenable opinion in classifying the money-lending and pawn broker trade under clause (ii). It is enough, if there is likelihood or reasonability of creating nuisance. Even if the business is perfectly legitimate, situations may arise which may give rise to acts of nuisance, if a wider meaning is given to the expression ''nuisance''. The expression ''nuisance'' has many facets and shades of connotation, more especially in legal parlance.

Let us look at the ordinary dictionary meaning of the term ''nuisance''. The dictionary meanings of the word ''nuisance'' are "hurt or injury that which annoys or hurts; that which is offensive to the senses either by a person or thing that is troublesome or obtrusive" (Chambers Dictionary); person, thing or circumstance causing trouble or annoyance (Concise Oxford Dictionary). In Collins Cobuild English Language Dictionary, it is noted: "If you say that some one or some thing is nuisance, you mean that they annoy you or cause you problems".

In almost all the law Dictionaries and in the vintage decisions of the English and American Courts, it is stated that the term is incapable of exact and exhaustive definition which will fit into all cases. Various meanings are attributed to this expression and it is said that the question whether an act constitutes nuisance depends on the surrounding circumstances, place, time and the mode of commission of the act. As stated in Ramanatha Aiyar''s Law Lexicon, the term ''nuisance'' means literally annoyance, anything which works hurt, inconvenience or damage, or which essentially interferes with the enjoyment of life or property. In Black''s Law Dictionary, it is stated that ''nuisance'' arises from unreasonable, unwarranted or unlawful use by a person of his own property, working obstruction or injury to the right to another, or to the public, and producing such material annoyance, inconvenience and discomfort that law will presume resulting damage.

Nuisances are broadly divided into two: public nuisance and private nuisance. Another division is nuisance per se or nuisance at law and nuisance in fact or nuisance per accident. Whereas nuisance per se is a nuisance at all times and under all circumstances regardless of location, surroundings etc., ''nuisance in fact'' is defined as follows in Black''s Law Dictionary:

"acts, occupations or structures which are not nuisances per se but may become nuisance by reason of the circumstances of the location and surroundings or manner in which it is performed or operated."

The same definition is referred to in Ramanatha Aiyar''s Law Lexicon and then elaborated as follows:

"It has, however, been said of certain acts, occupations, or structures that they are nuisance per se in certain localities, whereas in other localities they would not be nuisances".

Approaching the term in the background of the above meanings and definitions, more especially the concept of "nuisance in fact" / "nuisance per accident", one can say that running of a money-lending or pledge shop is likely to create nuisance to the residents of locality at times. Let us take a case where such a shop is set up in the thick of a residential locality inhabited by middle class and poor families and the proprietors resort to advertisements and other types of canvassing so as to lure the vulnerable Sections of society to borrow money at high rates of interest by pledging the jewellery and so on. A Section of population residing in that locality may feel annoyed or entertain feeling of insecurity. The activity of pledging and money-lending on security of articles held precious by the families may affect the susceptibilities of the family members and other residents of the locality. The ramifications or the impact of the business may not necessarily be confined within the precincts of the shop, but it may stretch beyond that and percolate into the day to day life-stream of the residents of the locality.

Let us take another example which equally holds good not only for the moneylender''s shop, but also for any other trade in a City. Supposing the shop is set up at a crowded place, just adjacent to, or encroaching on the foot path and the pursuit of the business involves visits by large number of customers. It is likely to cause obstruction or inconvenience to the passers-by. Thus, the location of a money-lending or pawn broker''s shop more often assumes good deal of importance. Viewed from this angle, the possibility of a professional moneylender''s shop causing nuisance in some degree or the other, cannot be ruled out. It may not cause nuisance at all times and in all localities, but under certain situations or circumstances or at certain times, the running of such shop is likely to create nuisance to a Section or members of public. That is enough to justify the formation of the opinion by the Commissioner. As already observed, the Court cannot substitute its own view on the question whether a particular trading activity is likely to create nuisance. If the Commissioner had reached the satisfaction that the trade or operation is likely to create nuisance either by its nature or by reason of the manner in which or the conditions under which the trading activity is carried on, that is sufficient to uphold the Commissioner''s notification. The judicial review of the opinion readied by the Commissioner ought to be confined within limited parameters as indicated above.

As already noticed, there is a long list of trades notified u/s 521(1) (e)(ii) and they include ordinary trades involving supply of goods and offering supply of consumer goods and performing job works, service contracts etc. Speaking on a comparative basis, the trade of money-lender or pawn broker would better qualify for inclusion for the purpose of licensing and levy of licence fee.

In the light of the above discussion, we are inclined to uphold the impugned Notification issued by the Commissioner u/s 521(1)(e)(ii) read with Section 622(2) of the Hyderabad Municipal Corporation Act and affirm the judgment tinder appeal. We shall not be understood that we have expressed any view on the question whether the quantum of enhancement of licence fee is justified or not as we are not concerned with that question nor was it raised in this Writ Appeal. The Writ Appeal is dismissed with costs quantified at Rs.2,000/-.