IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 243-247 OF 2003
Lala Ram (D) by L.R. & Ors. …Appellants
Union of India & Anr.
Civil Appeal Nos. 268-279, 263-266 & 248-262 of 2003
J U D G M E N T
Dr. B. S. CHAUHAN, J.
1. These appeals have been preferred against the impugned
judgment and order dated 13.8.2001, passed by the High Court of Delhi
at New Delhi in Writ Petition Nos.349, 2812-2814 and 2822 of 1989 by
way of which, the High Court dismissed the said writ petitions
challenging the notice dated 25.5.1987, issued by the Divisional
Railway Manager, Northern Railway, calling upon the appellants to pay
the licence fee for the railway property in their use, at the enhanced
rate, and also letter dated 29.7.1987, terminating licences to operate
the shops in question and to vacate the premises for failing to
deposit outstanding dues on account of non-payment of licence fee.
2. Facts and circumstances giving rise to these appeals are that:
Each of the appellants is a licensee of the shops in dispute
admeasuring 4.22 sq. yards upto 100 sq. yards situated at Qutub Road,
Sadar Bazar, Delhi which have been in their occupation since pre-
As per the appellants, there has been previous
litigation in respect of this very land and the same became evacuee
property under the Administration of Evacuee Property Act, 1950 and
was taken over by the Custodian.
The appellants, being licensees of
the shops, have regularly been paying the license fee to the Railways,
at rates which were mutually agreed upon and have also been increased
in the past. In 1977, the said licence fee was increased to Rs.21 per
sq. yards per annum, while earlier, it was fixed at only Rs.18 per sq.
yards per annum.
The appellants received a notice dated 7.8.1980 from
the respondents-Railways Authorities, about increase in the licence
fee from Rs.21 per sq. yards to Rs.270 per sq. yards per annum.
Representations made by the appellants’ association were considered by
the Hon’ble Railway Minister and order dated 26.9.1980 was passed,
staying the auction thereof, with a further direction to examine their
The Hon’ble Railway Minister further considered the
representation of the appellants’ Association and observed that the
auction of the said shops was not reasonable. He also stated that the
revision in license fee was excessive and expressed his opinion with
respect to reconsidering the whole case and increasing the license fee
by 5% to 10%.
The Railway Administration, after considering the case
of the appellants, again passed an order dated 25.5.1987 to enhance
the license fee @ Rs.270 per sq. yards with retrospective effect from
The appellants’ Association had been making
representations since receiving the aforementioned notice for
enhancement dated 25.5.1987, and ultimately filed writ petitions
before the High Court which have been dismissed. Hence, these
3. Shri Altaf Ahmed, learned Senior counsel appearing for the
appellants has submitted that once the enhanced license fee had been
disapproved by the Hon’ble Railway Minister and the matter was
reconsidered in light of the observation made by the Hon’ble Minister
stating that the said enhancement was excessive and that the license
fee could be enhanced by 5% to 10%, the notice impugned was
unreasonable and arbitrary.
The Ministry of Urban Development issued guidelines dated
14.1.1992 as how the license fee could periodically be revised.
Therein, it was provided that the standard license fee should be
determined as per the provisions of the Rent Control Act applicable to
a State. In the instant case, the Delhi Rent Control Act is
applicable, and therefore, the standard license fee as provided
therein ought to have been calculated. The Delhi Rent Control Act was
amended in 1963, making it applicable to the premises belonging to
the Government as well.
The respondents have filed an affidavit before this Court on
5.9.2002, giving a particular mode of calculation and even if the same
is applied, the enhanced license fee would not be enhanced to this
extent, and the High Court has erred in not deciding any issue raised
by the appellants and in dismissing the writ petitions in a cursory
manner. Thus, the said appeals deserve to be allowed. Being a
welfare state, it is the duty of the State to provide shops at nominal
4. Per contra, Shri Chandra Bhushan Prasad, learned counsel
appearing for the respondents, has submitted that the appellants have
been enjoying the said property at nominal license fee. The property
is situated in a very busy market of old Delhi. The area of the shops
varies from 4.22 sq. yards to 100 sq. yards. Therefore, considering
the geographical situation of the shops, alongwith the other
facilities provided to the appellants, such enhanced license fee is,
in fact, nominal. The High Court has rightly dismissed their writ
petitions and no interference is called for.
5. We have considered the rival submissions made by learned counsel
for the parties and perused the record.
6. The High Court has taken judicial notice of the facts and
surrounding circumstances, considered the geographical situation of
the suit properties and held as under:
“For a similarly situated shop if it was owned by a private
persons, the rental/licence fee would have been much more.
The mere fact that the Railway is a State Enterprise does
not mean that …………. on the premises in occupation of the
petitioner and other persons. State enterprise must not
look elsewhere for funds. It must generate funds through
the activities which are undertaken by it for providing
services to the public at large. It cannot be expected to
run in deficit…… Since the action of the first respondent
is reasonable, we decline to interfere with the aforesaid
7. We are of the considered opinion that no fault can be found with
the aforesaid observations and no interference is required. The
enhanced license fee cannot be held to be unreasonable or arbitrary,
and as warranting any interference by a court of equity.
8. Undoubtedly, the enhanced license fee being 13 times, the
earlier license fee amount seems excessive, and such an observation
was also made by the Hon’ble Railway Minister in order dated
11.4.1981, but the enhanced license fee would be illusory if the same
is compared with the prevailing license fee in the said market as
applicable to private shops.
A welfare state must serve larger
public interest. “Salus Populi Suprema lex”, means that the welfare of
the people is the supreme law.
A state instrumentality must serve the
society as a whole, and must not grant unwarranted favour(s) to a
particular class of people without any justification, at the cost of
However, in order to serve larger public interest, the State
instrumentality must be able to generate its own resources, as it
cannot serve such higher purpose while in deficit.
Merely because the
appellants have been occupying the suit premises for a prolonged
period of time, they cannot claim any special privilege.
absence of any proof of violation of their rights, such concession
cannot be granted to them.
Welfare State means:
9. A welfare state denotes a concept of government, in which the
State plays a key role in the protection and promotion of the economic
and social well-being of all of its citizens, which may include
equitable distribution of wealth and equal opportunities and public
responsibilities for all those, who are unable to avail for
themselves, minimal provisions for a decent life.
It refers to
“Greatest good of greatest number and the benefit of all and the
happiness of all”.
It is important that public weal be the commitment
of the State, where the state is a welfare state. A welfare state is
under an obligation to prepare plans and devise beneficial schemes for
the good of the common people.
Thus, the fundamental feature of a
Welfare state is social insurance. Anti-poverty programmes and a
system of personal taxation are examples of certain aspects of a
A Welfare state provides State sponsored aid for
individuals from the cradle to the grave. However, a welfare state
faces basic problems as regards what should be the desirable level of
provision of such welfare services by the state, for the reason that
equitable provision of resources to finance services over and above
the contributions of direct beneficiaries would cause difficulties.
welfare state is one, which seeks to ensure maximum happiness of
maximum number of people living within its territory. A welfare state
must attempt to provide all facilities for decent living, particularly
to the poor, the weak, the old and the disabled i.e. to all those, who
admittedly belong to the weaker sections of society.
Articles 38 and
39 of the Constitution of India provide that the State must strive to
promote the welfare of the people of the state by protecting all their
economic, social and political rights.
These rights may cover, means
of livelihood, health and the general well-being of all sections of
people in society, specially those of the young, the old, the women
and the relatively weaker sections of the society.
generally require special protection measures in almost every set up.
The happiness of the people is the ultimate aim of a welfare state,
and a welfare state would not qualify as one, unless it strives to
achieve the same. (See also: Dantuluri Ram Raja & Ors. v. State of
Andhra Pradesh & Anr., AIR 1972 SC 828; N. Nagendra Rao & Company v.
State of Andhra Pradesh, AIR 1994 SC 2663; and N.D. Jayal & Anr. Union
of India & Ors., AIR 2004 SC 867).
10. The High Court has observed that the letter/notice dated
7.8.1980, enhancing the rate of license fee remains unchallenged, and
therefore, the application of notice dated 25.5.1987, with
retrospective effect is justified. This finding is not factually
Notice dated 7.8.1980, enhancing the license fee was received by the appellants, and representations were filed by them through their Association, raising all their grievances to the effect that during a period of 30 years, the license fee paid by them had been enhanced about 15 to 20 times, without any justification and
hence, they demanded justice.
The same were considered by the then Railway Minister, and orders dated 26.9.1980 and 11.4.1981 were passed by him,
that the license fee may be revised after every 5 years on
the basis of justice and equity.
Certain interim relief was also granted.
Thus, in view of the above, we are of the opinion that the
aforesaid demands should not have been made to apply with retrospective effect from the year 7-8-1980.
In view of the above, the appeals succeed and are allowed
partly, to the extent that notice dated 25.5.1987 must not be applied
retrospectively, i.e., w.e.f. 7-8-1980. However, the enhanced license
fee may be recovered from the appellants from the said date in
accordance with law.
With these observations, the appeals stand disposed of.
Interim order passed earlier stands vacated.
CA Nos.268-279, 263-266 & 248-262 of 2003
The abovesaid Civil Appeals stand disposed of in terms of the
judgment passed in Civil Appeal Nos.243-247 of 2003.
(Dr. B.S. CHAUHAN)
(V. GOPALA GOWDA)
January 24, 2013