Municipality's bye-laws restricting wholesale fruit sales to four shops declared ultra vires under Section 188(e)(ii) Punjab Municipal Act

The HC dismissed the municipality's appeal challenging a lower court ruling that declared its bye-laws ultra vires. The municipality had restricted wholesale fruit and vegetable sales to only four shops in Sabzi Mandi through public auction, denying the respondent a license solely because he wasn't among the four successful bidders. The court held this restriction was unreasonable and beyond the municipality's regulatory powers under Section 188(e)(ii) of the Punjab Municipal Act, 1911. The word "regulation" was interpreted as prescribing rules for conduct control, not creating monopolies. The bye-laws were deemed invalid for imposing excessive restrictions on trade rights.

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Issues Involved:
1. Whether the bye-laws in question are ultra vires the provisions of the Punjab Municipal Act, 1911.
2. Whether the bye-laws create a monopoly for the wholesale sale of vegetables and fruits in favor of four persons only.

Detailed Analysis:

Issue 1: Ultra Vires of the Punjab Municipal Act, 1911
The primary question was whether the bye-laws framed by the Municipal Committee of Malerkotla were ultra vires the provisions of the Punjab Municipal Act, 1911. The bye-laws restricted the sale of vegetables and fruits, wholesale or by auction, to only four shops in the Sabzi Mandi of Malerkotla. The learned Judge relied on precedents such as Ghanaya Lal v. Municipal Committee, Montgomery, AIR 1928 Lah 540, Mula Mal v. Emperor, AIR 1929 Lah 607, and Wariam Singh v. Municipal Committee, Nabha, AIR 1953 Pepsu 127, which supported the view that the bye-laws were ultra vires.

The judgment highlighted that Clause (d) of Section 197, which allowed a municipal committee to fix places for the sale of food or drink, was repealed in 1923. The current Clause (a) of Section 197 only allowed the prohibition of such sales in unlicensed premises, but did not grant the power to fix specific places for the sale. Therefore, the bye-laws did not conform to the power under Clause (a) of Section 197 and were rightly held to be ultra vires.

Issue 2: Creation of a Monopoly
The second issue was whether the bye-laws created a monopoly by limiting the sale of fruits and vegetables to four persons who obtained the right through a public auction. The learned Judge relied on Rashid Ahmed v. Municipal Board, Kairana, AIR 1950 SC 163, which dealt with a similar situation where a monopoly was granted to one person. The judgment clarified that a monopoly does not necessarily have to be confined to one person; it can extend to multiple persons as long as they have exclusive rights.

The judgment cited Black's Law Dictionary to define a monopoly as a privilege or peculiar advantage vested in one or more persons, giving them exclusive rights to carry on a particular business or trade. The learned Judge concluded that the restriction imposed by the bye-laws was more than a reasonable restriction and was thus unconstitutional under Article 19 of the Constitution.

Conclusion
The judgment concluded that the bye-laws were ultra vires the provisions of the Punjab Municipal Act, 1911, and created an unreasonable monopoly. The respondent was denied a license solely because he was not one of the four highest bidders, which was not a valid legal ground. The appeal of the appellant Municipality was dismissed with costs, affirming the learned Judge's decision.

Separate Judgments:
The judgment was delivered by Mehar Singh, with D. Falshaw, C.J., concurring.

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