Bombay High Court: In a writ petition filed by PVR Ltd. (‘petitioner’), wherein two Government Orders (‘GO’), issued by the Government of Maharashtra, prohibiting the collection of service charges or convenience fees on booking of computerized cinema tickets online, were challenged, the Division Bench of M. S. Sonak and Jitendra Jain, JJ., quashed the relevant clauses of the said GOs as they violated the right to practice any profession or to carry on any occupation, trade or business guaranteed under Article 19(1)(g) of the Constitution and held that the State had no authority under the Maharashtra Entertainment Duty Act, 1923 (‘MED Act’) to issue such prohibitions.
Background:
The petitioner operated and managed multiplex cinemas in India, including Maharashtra. On 4-4-2013, a GO was issued by the Revenue and Forest Department, Government of Maharashtra wherein clause (d) ordered that no exhibitor, owner, or agent should charge or recover any additional amount from viewers for online computerized ticket sales. On 18-3-2014, another GO was issued, wherein clause (a) stated that all cinema operators across the State should set up their own system for online sale of tickets and while making the tickets available through this system, no additional service charges should be recovered from the viewers. The two clauses stated above were challenged by the petitioner.
On 29-12-2014, the Government amended Section 2(b) of the MED Act which defined ‘payment for admission’ and inserted a proviso which provided that service charges for providing facility of online ticket booking shall be included in the ‘payment for admission’.
The petitioner submitted that the GOs were violative of Article 19(1)(g) of the Constitution as they regulated the consideration in the contract between the private parties and imposed unreasonable restrictions on the right to carry on a legitimate business, which was unconstitutional. It was contended that there was no power conferred upon the respondents under the MED Act to issue such GOs, and that the GOs did not even specify the source of power for issuing such orders. It was further submitted that such an order could not have been issued under Article 162 of the Constitution. The petitioner also invoked Article 14 of the Constitution on the ground that it would lead to disparity between the State of Maharashtra and other States.
The respondents supported the GOs by relying upon Article 162 of the Constitution. They also relied upon Sections 3(3)(e) and 4(2)(b) of the MED Act to justify the impugned GOs.
Analysis:
The Court considered whether the impugned GOs, insofar as they prohibited the theatre owners and others to collect convenience fees on online ticket booking, were constitutionally valid and examined the following three issues:
- Whether, under the MED Act, there was a power given to the authority issuing the impugned GOs to prohibit the collection of convenience fees on online booking.
- Whether such GOs were violative of Article 19(1)(g) of the Constitution.
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Whether the impugned notification could be saved by invoking Article 162 of the Constitution.
Validity of the GOs under MED Act:
The Court analysed Section 7 of the MED Act and observed that the Rules under that provision were made to secure the payment of the entertainment duty and for carrying into effect the provisions of the said Act. The MED Act was enacted for levying and collecting entertainment duty by the State and therefore, prohibiting collection of convenience fee by the theatre owners from its customers on online booking did not fall within the purview and scope of the Act. Regarding Section 10 of the Act, the Court opined that it only permitted delegation of power and that too only for the purpose of powers and duties conferred upon the Act. Thus, the Court concluded that no power was conferred upon the respondents to pass the GOs under Sections 7 and 10 of the MED Act.
The respondents relied on Section 3(3)(e) of the MED Act for which the Court observed that the said section only prohibited collection of an amount more than what was considered for calculating ‘gross collection capacity’ or ‘houseful tax capacity’. The Court opined that, if according to the respondents, Section 3(3)(e) empowered them to prohibit collection of convenience fees then there was no need for issuing the GOs since the provision was already in existence. Coming to Section 4(2)(b) of the MED Act, the Court held that it only dealt with methods of collecting the entertainment duty but did not empower the respondents to issue the GOs.
Reliance was also placed on Section 2(b) of the Act for which the Court held that all the instances specified therein only provided as to what should be ‘payment of admission’ on which the rate of duty specified in Section 3 could be imposed and did not empower the State to provide as to what should be collected and what should not be collected from the customer. Further, the Court found no provision in the Bombay Entertainments Duty Rules, 1958, empowering State authorities to issue such GOs.
Validity of the GOs under Article 19(1)(g) of the Constitution
The Court observed that the prohibition imposed by the GOs interfered with the right of the petitioner to carry on business, occupation or trade as they regulated the consideration to be agreed upon between two private parties and the petitioner was barred from charging them any amount for the business it was engaged in and such a course of action on the part of the State could not be permitted except in cases where there was a statute or law which governed the regulation of the price or consideration.
The Court opined that to impose any restriction upon a legitimate business, firstly, there must be a law enacted by a competent legislature and secondly, any restriction imposed by the law must be based on the grounds specified in Article 19(6) of the Constitution. Thus, Article 19(6) of the Constitution would apply only if the restrictions were imposed by an enactment or law. But the Court held that the impugned GOs could not be saved by provisions of Article 19(6) as they were neither laws enacted by the legislature, nor was there a source of power under which they were issued.
The Court emphasised that the legislation touching upon price control in India has always been specific, eloquent and reasonable, even though important, restriction on the right to carry on business has never been sought to be achieved indirectly or by implication and without setting out a statement of the policy of the legislature in this behalf and declared the GOs violative of Article 19(1)(g).
Validity of the GOs under Article 162 of the Constitution:
Article 162 of the Constitution provided the extent of executive power of the State, but the Court noted that there was no enactment which empowered the State to regulate the consideration between the theatre owner and its customer. There was no price control order governing the transaction under consideration, or price control order issued under a particular Act or law. The Court therefore held that in the absence of any Act regulating the private contract between the two parties, the respondents would not be justified in taking shelter of Article 162 to save the impugned GOs from being quashed and set aside.
The Court drew support from Supreme Courts’s decision in Indian School v. State of Rajasthan, (2021) 10 SCC 517, and observed that the GOs issued by the respondent without fulfilling the mandatory provisions of Article 162 could not be categorised as a decision by a State and, therefore, it could not be said that the State was empowered to issue the GOs prohibiting collection of convenience fee.
Decision:
The Court held that the impugned GOs transgressed the fundamental rights under Article (19)(1)(g) of the Constitution granted to the petitioners by prohibiting theatre owners and others from collecting the convenience fees from their customers. The Court opined that if business owners were not permitted to determine the various facets of their business, economic activity would come to a grinding halt and the choice of whether to book the ticket online or purchase it at the theatre was left to the customers.
Consequently, the Court quashed and set aside clause 3(d) of the GO dated 4-4-2013 and clause (a) of the GO dated 18-3-2014. The Court also clarified that it did not examine the validity of the amendment made in Section 2(b) of the MED Act.
[PVR Ltd. v. State of Maharashtra, Writ Petition No. 497 of 2014, decided on 10-7-2025]
*Judgment authored by: Justice Jitendra Jain
Advocates who appeared in this case :
For the Petitioner: Naresh Thacker a/w Shweta Rajan i/b. Economic Law Practice for the Petitioner in WP/497/2014;
Naresh Thacker a/w Chakrapani Misra, Sameer Bindra & Ananya Misra i/b. Khaitan & Co. for the Petitioners in WP/2221/2014;
Rohan Rajadhyaksha a/w Dhirajkumar Totala & Tejas Raghav i/b. AZB & Partners for the Petitioners in WP/1755/2013.
For the Respondents: Milind More, Addl. G.P.
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