Municipal bye-laws cannot fix exclusive trading places for fruit and vegetable sales or impose an unreasonable business restriction.
Municipal bye-laws that confined wholesale or auction sale of fruits and vegetables to four specified shops were held to go beyond the power to prohibit sales in unlicensed premises, because that power allowed licensing of suitable premises but not fixing exclusive places of trade. They also could not be justified as market regulation, since "regulation" under the relevant provision did not extend to a complete prohibition or to restricting an ordinary business to a few designated shops. The restriction created an exclusive commercial privilege and an unreasonable restraint on the right to carry on business, so the bye-laws were invalid.
Issues: (i) Whether the bye-laws limiting wholesale or auction sale of fruits and vegetables to four shops in the Sabzi Mandi were within the power conferred by Section 197(a) of the Punjab Municipal Act, 1911. (ii) Whether the same bye-laws could be supported as a valid regulation of markets under Section 188(e)(ii) of the Punjab Municipal Act, 1911. (iii) Whether confining the trade to four auctioned shops created an unreasonable monopoly and restriction on the right to carry on business.
Issue (i): Whether the bye-laws limiting wholesale or auction sale of fruits and vegetables to four shops in the Sabzi Mandi were within the power conferred by Section 197(a) of the Punjab Municipal Act, 1911.
Analysis: The power under Section 197(a) authorises a municipality to prohibit sale of specified articles in premises not licensed by it. That power permits licensing of suitable premises and exclusion of unlicensed premises, but it does not restore the repealed power to fix a particular place or places for sale. The bye-laws did more than regulate licensing: they confined the business to four specified shops and thereby effectively fixed the place of sale.
Conclusion: The bye-laws were ultra vires Section 197(a) of the Punjab Municipal Act, 1911 and invalid to that extent.
Issue (ii): Whether the same bye-laws could be supported as a valid regulation of markets under Section 188(e)(ii) of the Punjab Municipal Act, 1911.
Analysis: Section 188(e)(ii) empowers proper regulation of markets and stalls, including inspection, price currents, fees, rents, and other charges. The word "regulation" must be read in context and does not, in that setting, include power to impose a complete prohibition or to confine an ordinary trade to a few designated shops. The bye-laws therefore exceeded the regulatory power conferred by that provision.
Conclusion: The bye-laws could not be sustained under Section 188(e)(ii) of the Punjab Municipal Act, 1911.
Issue (iii): Whether confining the trade to four auctioned shops created an unreasonable monopoly and restriction on the right to carry on business.
Analysis: A monopoly is not confined to a single person; it may exist where exclusive trading rights are granted to more than one person. By restricting the wholesale or auction sale of fruits and vegetables to four successful bidders, the municipality created an exclusive privilege and excluded others from carrying on the business. Such a restriction was held to be more than reasonable in the context of an ordinary trade in fruits and vegetables.
Conclusion: The impugned bye-laws imposed an unreasonable restriction and were invalid.
Final Conclusion: The municipality had no lawful authority to restrict the trade in fruits and vegetables to four specified shops, and the challenge to the bye-laws succeeded. The appeal was dismissed with costs.
Ratio Decidendi: A municipal bye-law that merely authorises licensing or market regulation cannot be used to fix exclusive places for trade or to create an exclusive commercial privilege amounting to an unreasonable restriction on the right to carry on an ordinary business.
TaxTMI 
AI Drafter ✕
TaxTMI 
