Delegated rule-making and statutory discretion: executive instructions cannot override licensing rules or replace independent decision-making.

Rule 10-A of the A.P. Cinemas (Regulation) Rules, 1979 was treated as a valid exercise of delegated power because regulation of seating capacity had a direct link to the statutory scheme for licensing and cinematograph regulation, including reduction of capacity in appropriate cases. The Government memo dated 23-5-1995 was considered outside statutory power because executive instructions cannot override the Rules or curtail the discretion vested in the Licensing Authority. A statutory authority must apply its own judgment under Rule 10-A, so rejection of applications solely on the basis of the memo amounted to abdication of statutory function and vitiated the orders.

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Issues: (i) Whether Rule 10-A of the A.P. Cinemas (Regulation) Rules, 1979 is ultra vires the A.P. Cinemas (Regulation) Act, 1955; (ii) whether the Government memo dated 23-5-1995 was without power or jurisdiction; (iii) whether the memo was arbitrary and unreasonable; and (iv) whether the Licensing Authority abdicated its statutory function by rejecting the applications on the basis of the Government memo.

Issue (i): Whether Rule 10-A of the A.P. Cinemas (Regulation) Rules, 1979 is ultra vires the A.P. Cinemas (Regulation) Act, 1955.

Analysis: The Rule-making power under the Act was read with the object of regulating cinematograph exhibitions, public safety, and the allied scheme of licensing. The Rule governing alteration of seating capacity was held to have a direct nexus with the statutory purpose. The contention that the Act contemplated only maximum seating capacity and not reduction was rejected, since the power to regulate seating capacity was treated as including the power to permit reduction in appropriate cases. The challenge based on unreasonableness of the Rule itself was not accepted as a ground to invalidate the delegated legislation.

Conclusion: Rule 10-A was held to be intra vires the Act, though the cut-off date in its proviso was found unsustainable as manifestly arbitrary.

Issue (ii): Whether the Government memo dated 23-5-1995 was without power or jurisdiction.

Analysis: The Government's control under the Act was held to operate only within the statutory and rule-making framework and not to override or nullify Rule 10-A. The memo imposed restrictions that were inconsistent with the Rule and effectively defeated the statutory discretion vested in the Licensing Authority. Executive instructions could not supplant the rule or create a restrictive regime contrary to the governing statute and rules.

Conclusion: The memo was held to be without power or jurisdiction and ultra vires.

Issue (iii): Whether the memo was arbitrary and unreasonable.

Analysis: Since the memo was found to be beyond power and contrary to Rule 10-A, the Court declined to separately examine its reasonableness in detail. The challenge under equality and trade freedoms was therefore not pursued as an independent basis of disposal.

Conclusion: No separate finding on arbitrariness or unreasonableness was recorded beyond the declaration that the memo was ultra vires.

Issue (iv): Whether the Licensing Authority abdicated its statutory function by rejecting the applications on the basis of the Government memo.

Analysis: The Licensing Authority was required to exercise its own statutory satisfaction under Rule 10-A. By rejecting the applications solely because of the Government memo, it acted under the dictates of the Government instead of independently deciding the matter. A statutory authority cannot surrender its discretion to executive directions where the statute entrusts the decision to that authority.

Conclusion: The Licensing Authority was held to have abdicated its statutory function, and the rejection orders were vitiated.

Final Conclusion: The writ petitions succeeded to the extent that the impugned Government memo and the consequential rejection orders were set aside, while the petitioners were left to have their applications considered afresh in accordance with law and without any cut-off date restriction.

Ratio Decidendi: Executive instructions cannot override a statutory rule or curtail a discretion that the statute entrusts to the Licensing Authority; a statutory authority must independently exercise its own judgment on the merits of the application.

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