KERALA MONEY LENDERS ASSOCIATION v STATE OF KERALA

# `IN THE HIGH COURT OF KERALA AT ERNAKULAM` ## `PRESENT` ``` THE HONOURABLE MR. JUSTICE EASWARAN S. ``` ``` MONDAY, THE 15[TH] DAY OF JULY 2024 / 24TH ASHADHA, 1946 ``` ``` WP(C) NO. 11276 OF 2013 ``` ## `PETITIONER:` ``` KERALA MONEY LENDERS ASSOCIATION REGISTER NO. 232/83, NEYYATINKARA TALUK, THIRUVANANTHAPURAM DISTRICT, REPRESENTED BY ITS SECRETARY, K. KAMALASANAN NAIR. ``` ``` BY ADVS. SRI.P.K.SURESH KUMAR (SR.) SRI.K.P.SUDHEER ``` ## `RESPONDENTS:` - `1 THE STATE OF KERALA REPRESENTED BY THE CHIEF SECRETARY TO GOVERNMENT, SECRETARIAT, THIRUVANANTHAPURAM - 695 001.` - `2 THE SECRETARY TO GOVERNMENT FINANCE DEPARTMENT, GOVERNMENT OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM - 695 001.` - `3 THE SECRETARY TO GOVERNMENT TAXES DEPARTMENT,GOVERNMENT OF KERALA, SECRETARIAT,THIRUVNANTHAPURAM – 695001.` - `4 THE COMMISSIONER OF COMMERCIAL TAXES THIRUVANANTHAPURAM - 695 001.` - `5 THE INSPECTING ASSISTANT COMMISSIONER (AGRICULTURAL INCOME TAX AND SALES TAX), NEYYATINKARA, THIRUVANANTHAPURAM -695 121.` ``` BY ADV. SRI T K VIPINDAS, SR GP ``` ``` THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 15.07.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` WP(C) NO. 11276 of 2013 ``` **==> picture [8 x 9] intentionally omitted <==** **“C.R”** **EASWARAN S., J.** ------------------------------------------------ **W.P.(C.) No. 11276 of 2013** -------------------------------------------------- **Dated this the 15[th] day of July, 2024** ## **JUDGMENT** The challenge in the writ petition pertains to the amendment brought to the Kerala Money-Lenders Act, 1958 by the Finance Act, 2013. Originally, when the writ petition was filed, the petitioner had challenged the Kerala Finance Bill, 2013 proposing to amend Section 4(2)(i) of the said Act for revision of rates of the licence fee by the Government from Rs.3,000/- to Rs.10,000/-. The challenge was mainly directed against the amendment based on the judgment of the Division Bench of this Court in **Kerala Small Financiers’ Association** vs. **State of Kerala,** reported in **1998 (2) KLT 813** . Pending the challenge, the State of Kerala promulgated the Kerala Finance Act, 2013 on 23.07.2013, by which Section 4(2)(i) of the Kerala Money-Lenders Act, 1958 has been amended reducing the licence fee from Rs.10,000/- as proposed under the Finance Bill, 2013 ``` WP(C) NO. 11276 of 2013 ``` `3` to Rs.6,000/-. It is pertinent to note that though the writ petition stood admitted on 26.04.2013, in view of the changed circumstances when the Finance Act, 2013 was promulgated, this Court refused to extend the interim order, vide order dated 28.10.2013. 2. The main ground of challenge to the Finance Act, 2013 is based on the principles laid down by the Division Bench in **Kerala Small Financiers’ Association** ( _supra_ ). It is contended that there is no reasonable nexus in causing increase of licence fee of Rs.3000 to Rs.6,000 to the object sought to be achieved. The petitioner further placed reliance on Article 276(2) of the Constitution of India to buttress their argument that such levy is unconstitutional and that the maximum levy can only be Rs.2,500/- per annum. 3. The respondents in their counter affidavit have specifically pointed out that the proposal to enhance the licence fee from Rs.3,000/- to Rs.10,000/- was to cope up with the increase in the administrative expenses and services rendered to the money lenders from the Department. From 1.4.2012 onwards filing of return was made electronically. So filing of annual return, quarterly return and ``` WP(C) NO. 11276 of 2013 ``` `4` remittance of renewal fee etc. are made electronically. The proposal to enhance the licence fee was to meet the administrative expenses as stated in the Budget Speech. It is also stated that subsequently the fee was reduced to Rs.6,000/-. 4. Based of the rival contentions, this Court is called upon to decide mainly the following two issues: i) Whether the Finance Act, 2013 causing increase to the licence fee for money lending from Rs.3,000/- to Rs.6,000/can be sustained. ii) Whether the amendment offends the dictum laid down by the Division Bench of this Court in **Kerala Small Financiers’ Association** ( _supra_ ). 5. Dealing with the first question, the Court should always remember that while undertaking the exercise of judicial review of the question whether increase in the levy of the licence fee is permissible, this Court may encroach on the wisdom of the State Legislature on the realm of the policy making. Before deciding the issue as to whether this Court should venture into such exercise, it must be remembered ``` WP(C) NO. 11276 of 2013 ``` ``` 5 ``` that decision to levy licence fee will not amount to a tax which may necessitate an element of quid pro quo. To delve into this point further, it is pertinent to note the decision of the Supreme Court in **Secunderabad Hyderabad Hotel Owners Association** Vs **Hyderabad Municipal Corporation, Hyderabad [(1999) 2 SCC 274],** wherein imposition of licence fee in a regulatory nature was considered and it was held that such levy is not a tax which requires quid pro quo. 6. It must be remembered that the words “Licence Fee” in the context of Kerala Money Lenders Act, 1958 should be understood as the fee collected by the Government to grant permission to a person to carry on the trade of money lending. It must also be noted that there is no vested right in an individual to carry on the trade of money lending. Therefore, there cannot be an infringement on the right guaranteed under the Constitution of India. Therefore, it has to be held in affirmative that the Government has the power to regulate the business of money lending and if they decide to impose the fee for licence, then necessarily it is not for the Court to delve into the ``` WP(C) NO. 11276 of 2013 ``` `6` intricacies which led to the imposition of the licence fee. 7. Having concluded that fixation of the licence fee is within the realm of policy decision of the State, this Court should address the issue raised by the petitioner that the amendment now proposed offends the decision of this Court in **Kerala Small Financiers’ Association** ( _supra_ ). At first blush, the argument may appear to be compelling. But that is not so, when the judgment is closely scrutinized. The Division Bench, it must be noted, despite being conscious of the fact that in the case of regulatory measures, the existence of quid pro quo is not necessary, went on to consider the question as to whether the increase in the licence fee should be excessive. Hence, the view this Court proposes to take may not be in direct conflict with the views of the Division Bench. Still further, after the judgment of the Division Bench, the law as laid down by the Supreme Court in **Hyderabad Municipal Corporation** ( _supra_ ) holds the field. Hence, even if this Court has to render its finding on the question raised before it, necessarily, it can be only in tune with the principles laid down by the Supreme Court. Hence, this Court finds ``` WP(C) NO. 11276 of 2013 ``` `7` that the reliance placed on **Kerala Small Financiers’ Association** ( _supra_ ) is completely misplaced. 8. It will be apposite to refer to the decision of the Constitution Bench of the Supreme Court in **Corporation of Calcutta** **& Another** Vs **Liberty Cinema [(1965) SCR (2) 477]** in which it was held that “licence fee” does not necessarily lead to the conclusion that fee charged must be for the services rendered. The Constitution Bench in the aforementioned judgment went on to hold that in our Constitution, fee for licence is not intended to be a fee for services rendered. 9. It must be noted that the last increase in the licence fee for obtaining the licence under the Kerala Money-Lenders Act, 1958 was done in the year 1998. It must be noted that while proposing the amendment the State Legislature is not expected to state reason for the proposed increase. Be that as it may, the exact reason for causing the increase in the licence fee is explained in the affidavit before this Court and this Court is satisfied with the explanation. It must be remembered that this Court lacks expertise in determining the exact ``` WP(C) NO. 11276 of 2013 ``` `8` requirement of the State Government when they stipulate the licence fee and it is always prudent that this Court refrains from entering into the realm of policy decision. It must also be noted that when the Division Bench rendered its judgment in **Kerala Small Financiers’ Association** ( _supra_ ), the State Government could not put forth an explanation as to why the fee was enhanced to Rs.5,000/-. It is under these circumstances that this Court deemed it appropriate to fix the licence fee at Rs.3,000/-. 10. The Court cannot ignore the fact that the proposed increase was brought in after a lapse of 15 years when the State has proposed the amendment to the Kerala Money-Lenders Act, 1958 by the Finance Act, 2013. 11. There is yet another reason as to why the writ petition should fail. It is pertinent to note that the petitioner is a registered Association of money lenders, having around 160 members in the Association. The law, in so far as filing of the writ petition by an Association is concerned, has now been settled by this Court. When an Association files a writ petition, necessarily, court fee should be ``` WP(C) NO. 11276 of 2013 ``` `9` paid by taking into consideration the total number of members of the Association. In this case, the petitioner has admitted that there are 160 members in the Association. But the court fee paid is only Rs.100/-. Hence, going by the dictum laid down by the Division Bench in **Maradu Market Traders Association** Vs **State of Kerala [2018 (3) KHC 530],** this writ petition is liable to be rejected. However, since the challenge to the Finance Act 2013 is being answered in negative and against the petitioner, necessarily this Court deem it appropriate not to nonsuit the petitioner on that ground alone. In view of the discussions as above, this Court finds that the increase in the licence fee from Rs.3,000/- to Rs.6,000/- as proposed under the Finance Act, 2013 is just and reasonable. Hence, the challenge laid to the amendment proposed and taken into effect on 23.07.2013 is declined. Writ petition accordingly is dismissed. No order as to costs. ## **Sd/-** **EASWARAN S. JUDGE** sjb ``` WP(C) NO. 11276 of 2013 ``` ``` 10 ``` ## `APPENDIX OF WP(C) 11276/2013` ## `PETITIONER’S EXHIBITS` ``` EXHIBIT P1TRUE COPY OF THE JUDGMENT REPORTED IN 1998 (2) KLT 813 (KERALA SMALL FINANCIER'S ASSOCIATION VS. STATE OF KERALA) ``` ``` EXHIBIT P2TRUE COPY OF THE RELEVANT PAGE OF THE KERALA FINANCE BILL 2013. ``` ``` EXHIBIT P3TRUE COPY OF RELEVANT EXTRACT OF KERALA FINANCE ACT, 2013 (ACT 29 OF 2013). ``` ``` RESPONDENTS’ EXHIBITS :NIL ``` ``` //TRUE COPY// PA TO JUDGE ```