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Licence is must under sec.394 (1)(e) of the Bombay Municipal Corporation Act, 1888 for running a Eating house/Catering establishment by any club whether for it’s members or for commercial purpose = Brihanmumbai Mahanagarpalika and another ….Appellants versus Willingdon Sports Club and others ….Respondents = published in http://judis.nic.in/supremecourt/imgst.aspx?filename=40987

Licence is must under sec.394 (1)(e) of the Bombay Municipal Corporation Act, 1888 for

 

Brihanmumbai Municipal Corporation

Brihanmumbai Municipal Corporation (Photo credit: Wikipedia)

 

running a Eating house/Catering establishment by any club whether for it’s members or for commercial purpose =

 

 

 

 Section 394(1)(e) and relevant extracts of Schedule  ‘M’,  which  have

 

bearing on this case read as under:

 

 

 

      “394. Certain articles or animals not to be kept, and certain  trades,

 

      processes and operations not to be carried on without a  license;  and

 

      things liable to be seized  destroyed,  etc.,  to  prevent  danger  or

 

      nuisance.

 

 

 

      (1) Except under and in accordance with the terms  and  conditions  of

 

      the licence granted by the Commissioner, no person shall—

 

 

 

 

 

      (e) carry on or allow or suffer to be  carried  on,  in  or  upon  any

 

      premises.—

 

Part IV

 

      Trades or processes or operations connected with  trades  which  shall

 

      not be carried on or allowed  to  be  carried  on  upon  any  premises

 

      without a licence.

 

 

 

 

 

      Keeping an eating house or catering establishment”

 

 

 

 

 

If we examine the rules and

 

      by-laws, it is clear that the object with which they have been  framed

 

      is to promote and preserve sanitation and public health and to prevent

 

      the spread of disease within the municipal limits and if that was  the

 

      object, it is difficult to see how canteens conducted on no  loss  and

 

      no profit basis could be excluded from the definition of  a  “catering

 

      establishment”. 

 

 

 

In Balkrishna Karkera v. K.J. Mishra and  another  AIR  1979  (Bombay)

 

198,  learned  Single  Judge  interpreted  Section  394(1)(e)(i)  read  with

 

Section 471 of the Act and observed:

 

 

 

      “Now it is pertinent to note  that  although  the  expression  “eating

 

      house” has been defined under the Bombay  Municipal  Corporation  Act,

 

      the expression “catering establishment” has not been  defined.  It  is

 

      true that the staff canteen run by Accused No. 2 was not open  to  the

 

      members of the public at large and the admission was restricted solely

 

      to the employees of the said Company. To that extent  Mr.  Shrikrishna

 

      would be justified in his submission that the staff canteen could  not

 

      be termed as an “eating house.” However, what is  significant  is  the

 

      fact that Accused No. 2 has not  been  charged  with  carrying  on  an

 

      “eating house” but he has been charged  for  carrying  on  a  catering

 

      establishment. “Catering establishment”  is  an  expression  which  is

 

      wider in its  connotation  than  the  expression  “eating  house”  and

 

      whether a staff canteen was open to the public or restricted only to a

 

      section of the public, it would still fall within the definition of  a

 

      “catering establishment”.

 

 

 

 

 

 

 

26.   In our view, the aforesaid judgments of  the  Bombay  High  Court  lay

 

down correct law and ratio thereof deserves to be applied  for  interpreting

 

Section 394 (1) (e) read with Part IV of Schedule ‘M’ of the Act.

 

 

 

27.   As a sequel to the above discussion, we  hold  that  the  Bombay  High

 

Court was not right in relieving the respondents of the obligation  to  take

 

licence under Section 394(1)(e) of the Act.

 

 

 

 

 

 In the result, the appeal is allowed, the impugned order is set  aside

 

and the writ petition filed by the respondents is  dismissed  with  cost  of

 

Rs.50,000. The amount of cost shall be deposited  by  respondent  No.1  with

 

Maharashtra State Legal Services Authority within a  period  of  four  weeks

 

from today.

 

 

 

29.    Within  four  weeks  from  today,  the  respondent  shall   file   an

 

application for grant of licence under Section  394(1)(e)  of  the  Act  and

 

produce the necessary documents.  The application  shall  be  processed  and

 

decided by the competent Authority within next four weeks.

 

 

 

30.   It is made clear  that  appellant  No.1  shall  be  free  to  initiate

 

proceedings for imposition of penalty on respondent No.1 for its failure  to

 

take licence and pass appropriate order in accordance with law.

 

 

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 5840 OF 2013
(Arising out of SLP(C) No. 7119 of 2010)

 
Brihanmumbai Mahanagarpalika and another ….Appellants

 

versus

 

Willingdon Sports Club and others ….Respondents

 

 

 
J U D G M E N T

 

G.S. SINGHVI, J.

 

1. The question which arises for consideration in this appeal filed
against order dated 29.9.2009 passed by the Division Bench of the Bombay
High Court in Writ Petition No.2199/1999 is whether respondent No.1 is
obliged to take licence under Section 394(1)(e) read with Part IV of
Schedule ‘M’ of the Bombay Municipal Corporation Act, 1888 (now titled as
‘the Mumbai Municipal Corporation Act, 1888’ – for short, ‘the Act’) for
the catering services provided by it to the members and their guests.

 

2. Respondent No.1 provides various sporting facilities, viz., golf,
tennis, squash, billiards, badminton, etc., to its members. The Catering
Department of respondent No.1 provides catering services to the members and
occasionally to their guests. By order dated 21.11.1990, appellant No.2
called upon respondent No.1 to make an application for grant of licence
under Section 394 of the Act for the eating house. The latter submitted the
application on 24.11.1990. Thereafter, Senior Sanitary Inspector of
appellant No.1 sent communication dated 3.12.1990 to respondent No.2
requiring him to submit various documents including NOCs from Assistant
Engineer (Buildings and Facilities) and Executive Engineer (Buildings
Proposals). In compliance of that letter, respondent No.2 furnished some of
the documents. However, nothing appears to have been done for the next two
years.

 

3. In May 1993, respondent No.1 approached appellant No.2 for grant of
No Objection Certificate for the eating house and permission to keep L.P.
Gas Cylinders. Appellant No.2 gave ‘No Objection’ for carrying out the
trade of eating house and for L.P. Gas as fuel subject to the following
conditions:

 

“(1) The internal roads, passages in the premises & complex of the
Club shall be maintained free from obstructions.

 

2) Entrances, exists, passages in both the Restaurants shall be
maintained free from obstructions.

 

3) The existing four cabins housing gas cylinders of i) 12 Nos.
each of 50 kgs. ii) 18 Nos. each 19.2 kgs. iii) 15 Nos. each. &
iv) 8 Nos. each of 19.2 kgs. shall be of brick masonary R.C.C.
and as per the plan signed in token of approval.

 

4) The gas installation shall be maintained as per “Industrial &
Commercial use of L.P. Gas Rules” and got tested once in year by
the gas dealer or any competent authority of inventory to that
effect shall be maintained.

 

5) The Gas cabins shall be kept under lock and key.

 

6) Smoking, cooking, heating, use of naked light shall be
prohibited near the gas cabins.

 

7) The gas pipes shall be supported, protected from physical
damages, painted in red and taken at least 10 cms below the
electric wirings/ cables.

 

8) Main shut of valves shall be provided to the gas pipes where
pipes enter into the building for promptly closing the valves in
case of emergency.

 

9) Tandoors in kitchen on ground floor permitted. However, any
other fuel, any gas cylinders shall not be used.

 

10) Premises shall be kept well ventilated by providing Exhaust fans
in the kitchens.

 

11) Metal hood covering the burners shall be provided. The ducting
shall be taken to roof level or water wash system.

 

12) Fire extinguishers shall be kept as follows:

 

a) One dry chemical powder extinguisher each of 10 kgs. having
I.S.I mark & two buckets of sand shall be kept at each of the 4
gas cabins. b) Two dry chemical powder extinguishers each of 10
kgs. & two sand buckets shall be kept in the kitchen of Indian
Food. c) One dry chemical extinguisher of 10 kgs. shall be kept
in Chinese kitchen.”

 

(reproduced from the appeal paper book)

 

 

 

4. After four months, appellant No.2 sent communication dated 4.11.1993
to respondent No.2 for compliance of the requirements communicated by Chief
Fire Brigade Officer and also by his department. The relevant portions of
that communication are extracted below:

 

“With reference to your above application, I have to inform you that
your request will be considered subject to satisfactory compliance of
the following requirements communicated by Chief Fire Brigade Officer
alongwith the requirements of this department within 14 (fourteen)
days from the date of receipt of this letter. If you fail to carry out
the same within specified time, necessary action under Sec. 394 of
Bombay Municipal Corporation Act will be initiated against you which
please note.

 
1) The internal roads, passages, in the premises and complex of
club shall be maintained free from obstructions.

 

2) Entrances, Exists, passages in both the Restaurants shall be
maintained free from obstructions.

 

3) The existing four cabins housing gas cylinders of (i) 12 Nos.
each of 50 kgs., (ii) 18 Nos. each of 19.2 kgs., (iii) 15 Nos.
each of 50 kgs., (iv) 8 Nos. each of 19.2 kgs., shall be of
brick masonry / R.C.C. and as per the plan signed in taken of
approval.

 

4) The Gas installation shall be maintained as per “Industrial &
Commercial use of L.P. Gas Rules” and got tested once in year by
gas dealer or any competent authority of Inventory to that
effect shall be maintained.

 

5) The gas cabins shall be kept under lock and key.

 

6) Smoking, cooking, heating, use of naked light shall be
prohibited near the gas cabins.

 

7) The gas pipe shall be supported, protected from physical damage,
painted in red and taken at least 10 cms, below the electric
wiring / cables.

 

8) Main shut of valves shall be provided to the gas pipes where
pipes enter into the building for promptly closing the valves in
case of emergency.

 

9) Tandoors in kitchen on ground floor permitted, however, any
other fuel, any loose cylinders shall not be used.

 

10) Premises shall be kept well ventilated by providing exhaust fan
in the Kitchens.

 

11) Metal hood covering the burners shall provided. The ducting
shall be taken to roof level or water wash system.

 

12) Fire extinguishers shall be kept as follows:-

 

a) One dry chemical powder extinguishers each of 10 kgs.
having I.S.I. Mark and two buckets of sand shall be kept at
each of 4 Gas cabins.

 

b) Two dry chemical powder extinguisher each of 10 kgs. and
two sand buckets shall be kept in the kitchen of Indian
food.

 

c) One dry chemical extinguisher of 10 kgs. shall be kept in
Chinese kitchen.”

 

(emphasis supplied)

 

(reproduced from the appeal paper book)

 

5. On the same day, i.e., 4.11.1993, appellant No.2 sent another letter
to respondent No.2 informing him that the application for grant of trade
licence will be considered subject to fulfillment of the following
conditions:

 

“(1) In the eating house

 

(a) Where snacks are prepared and served, there shall be at
least 3 rooms, one of which shall be used as a dining room,
another as kitchen and the third as a store room. The rooms
to be used as dining room and as kitchen shall not be less
than 9.2903 sq.mt. (100 qt.ft.) each in floor area and not
less than 2.440 mt.(8 ft) on any side. The third room to be
used as a store room shall not be less than l/3rd of the
total area of the dining room and the kitchen upto the
maximum of 9.2903 sq. mt.( 100 sq. ft.). The height of all
these rooms shall be as required under the Building Bye-
Laws of the Bombay Municipal Corporation, i.e. 3.050 mt.
(10 feet).

 

(b) Where articles of food other than snacks are to be
prepared and served, there shall be at least 3 rooms one of
which shall be used as a dining room, another as a
kitchen and the third as a store room. The room to be used
for dining and kitchen shall not be less than 11.1484 sq.
mt. (120 sq. ft.) each in floor area and not less than
2.440 mt (8 feet) on any side. The third room to be used as
store room shall not be less than l/3rd of the total area
of the dining room and kitchen upto the maximum of 9.2903
sq. mt. (100 sq. ft.), the height of all these room shall
be as required under the Building Bye-laws of the Bombay
Municipal Corporation, i.e. 3.050 mt. (10 feet)

 

(c ) where only ready-made articles of food are served. There
shall be at least two rooms, one of which shall be used for
storing ready-made articles of food and the other as a
service room. None of the rooms shall be less than 9.2903
sq. mt. (100 sq. ft.) each in floor area and no less than
2.440 mt. (8 ft.) on any side. The third room to be used as
store room shall not be less than l/3rd of the total area
of the dining room and kitchen upto the 9.2903sq. mt. (100
sq. ft.). The height of all these rooms shall be as
required under the Building Bye-laws of the Bombay
Municipal Corporation i.e. 3.050 mt. (10 feet)

 

(2) All the rooms shall be well-lighted and well-ventilated
naturally or with the aid of artificial means and the cook room and
the dining room especially shall have “thorough ventilation.”

 

(3) The walls of all the rooms of the Eating House shall either be
oil-painted or otherwise rendered impervious to moisture and dirt upto
a height of at least 1.83 mt. (6 feet) from the floor and the
remaining upper portion above 1.83 mt. (6 feet), if not oil-painted or
made impervious to moisture and dirt, shall be limewashed. All the
wood-work in all the rooms shall be oil-painted.

 

(4) Water shall be stored for use during non-supply hours in a brass
receptacle with a tight fitting cover and a tap. The receptacle shall
be placed on a suitable stand at least 381 mt. (15 inches) height
above the floor. It shall be tinned from inside whenever necessary and
shall be cleaned twice daily and steps shall be taken to see that
water is not contaminated in the process of storing or handling.

 

(5) Freely ventilated fly-proof safes and other means shall be
provided and meat, milk and other eatables shall be kept in them so as
to protect all artificial food from contamination by dust, flies and
insects.

 

(6) Metal sanitary dust bin or bins of approved pattern with a close
fitting lid for each shall be provided and maintained in good repairs
and used for the deposit of waste food and sweepings of the floor etc.
and shall be emptied at least once a day at the Mahalaxmi Refuse
Siding which is the place appointed by the Municipal Commissioner for
the removal and deposit of trade refuse. In the alternate transport
facilities provided by Corporation shall be availed of on payment of
fixed charges.

 

(7) A sufficient number of table shall be provided in the room used
for eating and cooking. The top of each table shall be covered with
marble, zinc or some other equally suitable material presenting a non-
absorbent even surface. Only clean cloth or other dusters shall be
used to clean tables etc.

 

(8) A proper washing place with tap from Municipal Main Measurement
shall be provided in the kitchen. Such washing place shall be properly
drained and shall discharge over a half channel gully at least 457 mt.
(18 inches) away from the drain inlet and in the case of the trade
located in Greater Bombay where drainage system does not exit, the
arrangement for disposal waste water shall be such as to meet with the
approval of Municipal Health Authorities. In the absence of Municipal
Water mains in any area, arrangements shall be made to store such
quantity of water and in such manner as will be directed by the
Municipal Health Authorities.

 

(9) All copper and brass cooking utensils shall be tinned as often
as necessary or at least once in two months.

 

(10) No person suffering from any contagious or infectious disease
shall be employed on the premises in any capacity.

 

(11) The room used for cooking shall be adequately separated from the
room used for eating. All cooking operations including the preparation
of bhajias or similar artificial shall be carried out in cooking room
only by using kerosene oil stoves, gas or electrical as fuel and fuel
of any other kind shall never be used therein.

 

(12) No “Panshop” or other structure shall be put up or allowed to be
put at the entrance in such manner so as to encroach on the space or
to obstruct light and ventilation of the Eating House.

 

(13) The entire premises of Eating House and all appliance used
therein shall at all times be kept in a scrupulously clean and
sanitary condition and any practice which may lead to the food being
contaminated shall not be employed or permitted to be employed in the
storage, handling, preparation or serving of food.

 

(14) No broken, cracked or chipped articles of crockery or other
utensils shall be used in the eating house either for preparation of
food-stuffs or to serve them.

 

(15) Boards in English and in vernacular prohibiting spitting on the
walls or the floor of the trade premises shall be exhibited.

 

(16) A certificate in the prescribed form that adequate water supply
by meter measurement has been provided shall be obtained from the
Hydraulic Engineer, Bombay Municipal Corporation.

 

(17) A wash-basin with a metered tap and a looking glass shall be
provided in a suitable part of the service room of the Eating House
and maintained at all times in a clean and sanitary state for use of
the visitors.

 

(18) Waiters or other servants employed in the eating house shall
always wear clean apparel while engaged in work in the eating house.

 

(19) No part of the eating house shall be used for stocking, storing
or keeping unserviceable articles.

 

(20) The management shall take measures to have the premises occupied
by Eating House treated with insecticides to rid it of any insect pest
at least once in four months either through the Municipal agency or
any firm recognised in this behalf.

 

(21) The floor of every room used for eating, cooking or the storage
or preparation of food shall be paved with hard impervious material
with a smooth and even surface.

 

(22) The eating house or any part of it shall not be used for
dwelling purposes, except in the Eating Houses which have separate
special arrangements for lodging the customers.

 

(23) No encroachment shall be made on any footpath adjoining the
eating house by placing thereon chairs, benches, tables, soda water
boxes or any other articles either for the use of applicant or his
customers.

 

(24) The entire trade of conducting the eating house and all the
operations connected therewith shall be strictly restricted to the
area occupied by the concern.

 

(Para 25 is not given in the appeal paper book)

 

(26) No article of food which is adulterated, unwholesome or unfit
for human consumption shall be kept, sold or exposed for sale on the
trade premises.

 

(27) Requirements of Chief fire brigade officer’s are out.

 

(28) The applicant produces an authority letter issued by said Club
authorising him to hold the licence in his name.”

 

(reproduced from the appeal paper book)

 

6. While the issue relating to compliance of the conditions enumerated
in the two letters dated 4.11.1993 was pending, appellant No.2 sent demand
notice dated 14.1.1994 to respondent No.2 for payment of Rs.2,70,915 as
licence fees. The respondents paid the amount, but after expiry of the
period specified in notice dated 14.1.1994. This prompted appellant No.2
to send notice dated 23.6.1994 to respondent No.1 for payment of additional
amount of Rs.1,04,756.25. Respondent No.2 sent reply dated 27.6.1994
citing the opinion of a law firm that the club is not required to obtain
eating house licence under the Act because food and beverages are not
served for any profit or gain. The appellant did not accept this assertion
and demanded Rs.1,21,715.65 towards compounding fee.

 

7. Respondent No.1 and two of its office bearers challenged the demand
notice before the Bombay High Court in Writ Petition No.2199/1999 primarily
on the ground that catering facilities being provided to its members were
incidental to their main activities and the same are exclusively meant for
the members and not for the public.

 

8. In the written statement filed by the appellants, it was averred that
food items were being prepared by the Catering Department on large scale
and a licence was required to be obtained from the point of view of health
and safety of the members coming to the club.

 

9. The Division Bench of the High Court relied upon order dated
18.9.1992 passed by a co-ordinate Bench in Writ Petition No.4765 of 1984
titled Sohrab Vakil (Lt.Col.) and another v. B.G. Pimple and another and
held that respondent No.1 is not required to take licence under Section 394
of the Act because the catering facilities provided to its members are
ancillary to the main activity, i.e., the sporting facilities. The relevant
portion of the High Court’s order is reproduced below:

 

“The question whether a Club which as ancillary activities provides
catering services exclusively to its members can be said to be running
an eating house within the meaning of the Act, fell for consideration
before a Division Bench of this Court in the case Sohrab Vakil
(Lt.Col.) and another Vs. B.G.Pimple and another referred to above.
Perusal of that judgment shows that the Division Bench has in
categorical terms held that a club which maintains a facility of
catering for its members exclusively as ancillary activity cannot be
said to be running an eating house. In our opinion, therefore, the
question that arises for consideration in this petition is no more res
integra in view of the judgment of the Division Bench in the case
Sohrab Vakil (Lt.Col.) and another Vs. B.G.Pimple and another referred
to above. So far as the judgment of the learned Single Judge of this
Court in the case 1.W.I.A.A.Club Ltd & Anr. Vs. 1.Municipal
Corporation of Gr.Bombay & others referred to above, which was relied
on by the learned Counsel appearing for respondents is concerned,
perusal of that judgment shows that that judgment does not decide any
controversy. It appears that initially the WIAA Club had filed a
petition claiming that it is not required to take out eating house
licence for providing catering services to its members. But when the
petition came up for final hearing, it was stated on behalf of the
petitioner-Club that now they have decided to engage a contractor for
running Canteen and therefore, they are not pressing their contention
that they are not required to take out a licence for maintaining the
catering services for its members. The learned Single Judge,
therefore, did not decide that question in that petition. In our
opinion, therefore, the submission made on behalf of the Corporation
that the question that arises for consideration in this petition is
already decided by the judgment of the learned Single Judge in Writ
petition no.1413 of 1982 which was disposed of by order dated
20.1.1986, cannot be accepted. In our opinion, in view of the law laid
down by the Division Bench in the case Sohrab Vakil (Lt.Col.) and
another Vs. B.G.Pimple and another referred to above, this petition
has to succeed.”

 
10. We have heard Shri Atul Y. Chitale, learned senior counsel for the
appellants and Shri T.R. Andhyarujina, learned senior counsel for
respondent Nos. 1 to 3. The Act is divided into 25 Chapters. Chapters IX
to XV except Chapter XII contain provisions which are regulatory in nature
and are meant for the benefit of public at large. Chapter IX contains
provisions for construction of drains and cleaning thereof, connection of
the drains of private streets with municipal drains, disposal of sewage,
construction of water-closets, privies, urinals, etc. and inspection
thereof. Chapter X contains provisions for regulating water supply,
inspection of water works, prohibition of building and other acts which may
injure sources of water. Chapter XI contains provisions for regulation of
streets, public as well as private and lighting thereof. Chapter XII
contains provisions for regulating construction of buildings, removal of
dangerous structures, etc. Chapter XIII speaks of grant of licences of
surveyors and plumbers and making of regulations for guidance of licensed
surveyors and plumbers and fees, etc., to be charged by them. Chapter XIV
contains the provisions relating to municipal fire brigade. Chapter XV
contains provisions of scavenging and cleaning of streets and removal of
refuse, inspection and sanitation of buildings, etc. This chapter also
contains provisions for regulation of public bathing, washing, etc.,
regulation of factories, trades, etc., maintenance and regulation of
markets and slaughter houses, prohibition against sale and supply of
articles of food outside the markets, licensing of butchers, etc.,
inspection of places of sales, etc., prevention of dangerous diseases, etc.
Section 394, which finds place in Chapter XV is couched in negative form
and lays down that the activities specified therein shall not be carried
out by any person except under and in accordance with the terms and
conditions of licence granted by the Commissioner.

 

11. Section 394(1)(e) and relevant extracts of Schedule ‘M’, which have
bearing on this case read as under:

 

“394. Certain articles or animals not to be kept, and certain trades,
processes and operations not to be carried on without a license; and
things liable to be seized destroyed, etc., to prevent danger or
nuisance.

 

(1) Except under and in accordance with the terms and conditions of
the licence granted by the Commissioner, no person shall—

 
(e) carry on or allow or suffer to be carried on, in or upon any
premises.—

 
(i) any of the trades specified in Part IV of Schedule M, or any
process or operation connected with any such trade;

 
(ii) any trade, process or operation, which in the opinion of, the
Commissioner, is dangerous to life, health or property, or likely to
create a nuisance either from its nature or by reason of the manner in
which, or the conditions under which, the, same is, or is proposed to
be carried on;”

 
“Schedule M
Articles which shall not be kept without a licence in or upon any
premises

 
Part IV
Trades or processes or operations connected with trades which shall
not be carried on or allowed to be carried on upon any premises
without a licence.

 
Keeping an eating house or catering establishment”

 

 

 

The expression ‘eating-house’ has been defined in Section 3(ff) in the
following words:
“3(ff) – eating-house means any “premises to which the public are
admitted and where any kind of food is prepared or supplied for
consumption on the premises for the profit or gain of any person
owning or having an interest in or managing such premises.”

 

12. The provisions contained in various chapters of the Act referred to
hereinabove are meant for maintaining public hygiene, health and safety and
also for preventing dangers to life, health and property. Schedule ‘M’,
which is part of Section 394, specifies the articles which cannot be kept
in or upon any premises without a licence. Part IV of the schedule
specifies trades or processes or operations connected with trades, which
cannot be carried on or allowed to be carried on any premises without a
licence. These include keeping of an eating house or catering
establishment. The object of incorporating the requirement of a licence for
an ‘eating house’ or ‘catering establishment’ is to ensure that public
hygiene is maintained at the place/premises where the food is prepared
and/or supplied for consumption. It is also intended to ensure safety of
the people engaged in the preparation of food articles and supply thereof
as well as all those who consume the articles at the particular
place/premises. The No Objection Certificate dated 25.6.1993 issued by
appellant No.2 shows that the municipal authorities are very much concerned
about the safety and health of the people coming to the premises and
complex of the club. The first requirement incorporated in that letter is
free access in and exit from the premises of the club and the restaurants.
The gas installations are required to be maintained as per industrial and
commercial use of Liquid Petroleum Gas Rules. The person having overall
control of the premises is duty bound to ensure that the gas cylinders and
other equipments are tested once in a year by the gas dealer or any
competent authority. The gas cabins are required to be kept under lock and
key. Smoking, cooking, heating and use of naked light is prohibited near
the gas cabins. The gas pipes are required to be protected from physical
damage and main shut valves are required to be provided to the gas pipes
where the pipes enter into the building. While permitting tandoors in the
kitchen on the ground floor, the use of gas cylinders is prohibited. The
premises where the food is cooked are required to be kept well-ventilated
by providing exhaust fans in the kitchen. The burners are required to be
covered with metal hood. The fire extinguishers are also required to be
provided. The length, width and height of the dining rooms has to be as
per the building bye-laws framed by appellant No.1. It is the duty of the
management to keep all the rooms well-lighted and well-ventilated. The
cooking room and dining room should have thorough ventilation. It is also
the duty of the management to keep water in brass receptacle with a tight
fitting cover and a tap and they are to be placed 15 inches above the
ground. Freely ventilated and fly-proof safes are required for keeping the
items, like, meat, milk and other eatables so as to protect them from
contamination by dust, flies and insects. Sanitary bins or dustbins are
also required to be provided and sweeping of floors has to be done. There
is a prohibition against employment of any person suffering from contagious
or infectious disease. The premises of eating house have to be regularly
cleaned to avoid contamination and any practice which may lead to
contamination shall not be employed or permitted to be employed in the
storage, handling, preparation or serving of food. Broken, cracked or
chipped articles of crockery and utensils cannot be used in the eating
house either for preparation of foodstuffs or for serving them. The
management is duty bound to take all measures to have the premises of
eating house treated for insecticides. No article of food which is
adulterated, unwholesome or unfit for human consumption can be kept or sold
or exposed for sale in the eating house. These conditions are meant for
ensuring that the premises where the food is prepared and supplied are kept
clean, adequately ventilated and appropriate measures are taken by those in
control of the premises and quality of food is maintained to ensure that
there is no compromise with the health and safety of the people.

 

13. In its publication titled ‘Safe Food for Better Health’ (2002 Edn.),
the World Health Organisation (WHO) has recognized that the availability of
safe food is a basic human right because it contributes to health and
productivity. Many countries including USA, Australia, Germany, France,
Canada, United Kingdom and India have adopted a food safety regulation
mechanism, either through sui generis legislation or through the adoption
of global codes prescribed by the WHO and other UN agencies. However, the
implementation of these regulations cannot be guaranteed if there is no
monitoring system. It is essential for the success of these regulations and
policies that adequate steps are taken to ensure the compliance to
standards by those in the industry. In order to ensure compliance, a strong
licensing system has been developed by these countries. The purpose of such
a system is to ensure that the food supplied to customers in a food
establishment is certified to be of high quality and standard by a
recognised authority. Although licensing alone cannot be a foolproof
mechanism for ensuring food safety but it is certainly one of the most
effective methods of ensuring that quality food is prepared in most
hygienic conditions and is made available to the consumers. The licensing
system prevents the opening of establishments that pose a threat to the
health of the people. The licensing mechanism also provides for penalties
in case of non-compliance with licensing conditions, which could lead to
cancelling or suspension of the licence. Such a fear created in the minds
of the licensees also ensures that they comply with licensing conditions in
order to continue enjoying the benefits of the licence. Thus, it can be
said that a licensing system goes a long way in ensuring food safety
thereby guaranteeing the supply of fresh and safe food and preventing the
spread of foodborne diseases.

 

14. At this stage, we may also take notice of the Food Safety and
Standards Act, 2006 (for short, ‘the 2006 Act’). This Act provides for
establishment of the Food Safety and Standards Authority of India which is
mandated to lay down science based standards for articles of food and to
regulate their manufacture, storage, distribution, sale and import, to
ensure availability of safe and wholesome food for human consumption and
for matters connected therewith or incidental thereto. In exercise of the
powers vested in it under the 2006 Act, the Food Safety and Standards
Authority of India made multiple regulations including the Food Safety and
Standards (Licensing and Registration of Food Businesses) Regulations, 2011
(for short, ‘the Regulations’). Regulation 2.1 and 2.2 makes the obtaining
of licence mandatory for commencement of any food business. Part II of
Schedule IV of the Regulations prescribes general requirements of hygienic
and sanitary practices to be followed by all food business operators
applying for licence. Part V of Schedule IV of the Regulations prescribes
the specific hygienic and sanitary practices to be followed by food
business operators engaged in catering / food service establishments.
Relevant portions of these two parts are extracted below:

 

“SCHEDULE IV

 

PART-II

 

GENERAL REQUIREMENTS ON HYGIENIC AND SANITARY PRACTICES TO BE FOLLOWED
BY ALL FOOD BUSINESS OPERATORS APPLYING FOR LICENSE.

 

The establishment in which food is being handled, processed,
manufactured, packed, stored, and distributed by the food business
operator and the persons handling them should conform to the sanitary
and hygienic requirement, food safety measures and other standards as
specified below. It shall also be deemed to be the responsibility of
the food business operator to ensure adherence to necessary
requirements.

 

In addition to the requirements specified below, the food business
operator shall identify steps in the activities of food business,
which are critical to ensure food safety, and ensure that safety
procedures are identified, implemented, maintained and reviewed
periodically.

 

PART – V

 

SPECIFIC HYGIENIC AND SANITARY PRACTICES TO BE FOLLOWED BY FOOD
BUSINESS OPERATORS ENGAGED IN CATERING / FOOD SERVICE ESTABLISHMENTS.

 

In addition to Part-II the Catering/ food Service establishment in
which food is being handled, processed, manufactured, stored,
distributed and ultimately sold to the customers and the persons
handling them should conform to the sanitary and hygienic requirement,
food safety measures and other standard as specified below.

 

It includes premises where public is admitted for repose or for
consumption of any food or drink or any place where cooked food is
sold or prepared for sale. It includes:

 

(a) Eating Houses

 

(b) Restaurants & Hotels

 

(c) Snack Bars,

 

(d) Canteens (Schools, Colleges, Office, Institutions)

 

(e) Food Service at religious places

 

(f) Neighbourhood Tiffin Services / dabba walas

 

(g) Rail and airline catering

 

(h) Hospital catering”

 

 

 

15. The definition of the term ‘food business’ contained in Section
3(1)(n) of the 2006 Act reads thus:

 

“Section 3(1)(n) Food business means any undertaking, whether for
profit or not and whether public or private, carrying out any of the
activities related to any stage of manufacture, processing, packaging,
storage, transportation, distribution of food, import and includes
food services, catering services, sale of food or food ingredients.”

 
16. These provisions reinforce the determination of the legislature and
the executive to ensure safety of food articles manufactured and supplied
by the food business operators and others engaged in catering / food
service establishments. Part V of Schedule IV of the Regulations is
inclusive and covers eating houses, restaurants and hotels, snack bars,
canteens, food service at religious places, hospital catering, etc.

 

17. In the light of the above, we shall now consider whether the High
Court was right in taking the view that the expression ‘eating house’ is
not applicable to a club. The main reason which prompted the High Court to
take that view is that predominant activity of the club is to provide
sporting facilities to the members and the catering facilities are
ancillary. The other reason given by the High Court is that the food
articles are supplied to the members and not to outsiders except when they
come to the club as guests of the members and that the catering services
are not made available to the members with the object of making profit or
gain.

 

18. In our view, both the aforesaid reasons are incorrect. A cursory
reading of the definition of the expression ‘eating house’ may support the
conclusion of the High Court because general public is not allowed entry in
the premises of the club and, in the first blush, it appears that food is
not supplied for consumption on the premises for profit or gain. However,
if we apply purposive interpretation, then it becomes clear that the
catering department of the club which prepares and serves/supplies food to
members of the club is covered by the definition of the expression ‘eating
house’. It cannot be denied that members of club also fall within the
ambit of the term ‘public’. No doubt, the primary activity of the club is
to provide sporting facilities to the members, but the supply of food is an
integral part of such activity and the catering department of the club
satisfies an essential component of the facilities provided by the club.
One can take judicial notice of the fact that many members who avail
sporting facilities remain on the premises for a very long period.
Therefore, the articles of food become integral part of their activities.
Not only this, many join the club in the name of availing sporting
facilities only for the purpose of spending their time in leisure and for
enjoying the facilities provided by the Catering Department of the club.
Thus, even though profit may not be the motto of catering facilities
provided by respondent No.1, it certainly gains by these facilities.

 

19. As per Merriam Webster Dictionary, the word ‘gain’ means something
wanted or valued that is gotten; something that is gained; especially:
money gotten through some activity or process, something that is helpful:
advantage or benefit; an increase in amount, size, or number. In Words and
Phrases, Permanent Edition, Volume 18, the word ‘gain’ has been given the
following meanings:

 

“Gain” means that which is acquired or comes as a benefit. Thorn
v Dc Breteuil, 83 N.Y.S 849, 856, 86 App.Div. 405.

 

“Gain” means increase or addition to what one has of that which
is of profit, advantage, or benefit; resources or advantage
acquired, profit; opposed to laws; act of gaining something;
specially, the obtaining or amassing of profit or valuable
possessions; acquisition; accumulation. In Re Breuer’s Income
Tax, 190 S.W.2d 248, 249, 354 Mo. 578.

 

GAIN, BENEFIT OR ADVANTAGE:

 

Under the Retail Sales Tax Act, defining “retailer” as every
person engaged in business of making sales at retail, and
defining “business” as any activity engaged in with the object
of “gain, benefit or advantage”, social club which furnished,
without profit food and drink to its members and their guests
was subject to tax, since, although club realized no “profit”
from furnishing of food and drink, it did realize “gain, benefit
or advantage”. Gen.Laws 1937, Act 8493, Section 2(c-e). “Profit”
may be said to be “gain, benefit or advantage”, but “gain,
benefit or advantage” does not necessarily mean only “profit”.
Union League Club v Jhonson, 115 P.2d 425, 426, 18 Cal.2d 275.

 

A “vendor engaged in the business of selling tangible personal
property”, so as to be liable for sales tax, is one who
commences, conducts or commences, conducts, or continues in the
activity of selling tangible personal property, with the object
of gain, benefit, or advantage, either direct or indirect,
irrespective of whether sales are made for “profit”, since one
may engage in a business activity with an object of “gain,
benefit, or advantage” and not necessarily for “profit”.
Gen.Code, section 5546-1 et seq., 116 Ohio Laws, Pt. 2, p. 323.
“Profit” may be “gain, benefit, or advantage”, but “gain,
benefit, or advantage” does not necessarily mean only “profit”.
State ex rel. City Loan & Savings Co. of Wapakoneta v. Zcllner,
13 N.E.2d 235, 238, 133 Ohio St. 263.”

 

 

 

20. In Re: Arthur Average Association for British Foreign and Colonia
Ships, ex p Hargrove and Company (1875) LR 10 Ch App 545 n at 546, 547,
Jessel MR held that “Gain” is not restricted to pecuniary or commercial
profits, it includes other considerations of value obtained.

 

21. From the above dictionary meanings and judgment of 1875, it becomes
clear that the word ‘gain’ is not synonymous with the word ‘profit’. It is
not restricted to pecuniary or commercial profits and includes other
considerations of value gained. Any advantage or benefit acquired or value
addition made by some activities would amount to ‘gain’. Therefore, even
though profit is not the motto of the club but the advantage derived by it
by supplying food to its members and their guests is certainly covered by
the word ‘gain’ appearing in the definition of ‘eating house’.

 

22. The issue deserves to be examined from another angle. While the
expression ‘eating house’ has been defined in Section 3(ff) of the Act, the
expression ‘catering establishment’ has not been defined. The scope of that
expression is certainly wider than the expression ‘eating house’.

 

23. The expression ‘catering establishment’ came up for interpretation
before the Bombay High Court in Criminal Appeal No.593/1972. After
adverting to dictionary meaning of the word ‘cater’, V.D. Tulzapurkar, J.
(as he then was) held:

 

“In this view of the matter, it is clear to me that the expression ‘ a
catering establishment’ will have to be understood in its normal
dictionary meaning. The word ‘cater’ as a verb means, according to the
Oxford Dictionary, “To act as caterer, or purveyor of provisions; to
provide a supply of food”. It also means “To occupy oneself in
procuring or providing (requisites, things desired, etc.) and ‘cater
is understood to mean “Purvey food and other requisites.” A catering
establishment would, therefore, be an establishment where purveying of
food and other requisites takes place. It is therefore, not necessary,
according to the dictionary meaning of the expression, that the
members of the public should have an access to such an establishment
before it could become ‘a catering establishment’ within the meaning
of the relevant entry in Part IV of Schedule M. It cannot be disputed
that in the canteen in question articles of food and other requisites
are being purveyed to the students and the members of the Institute
and, therefore, the canteen in question clearly falls within the
expression ‘a catering establishment’ occurring in the relevant entry
in Part IV of Schedule.”

 

24. In Narayan Gopal Karadkar v. Hanumant Ramrao Palkar (1969)
Maharasthra Law Journal 728, a learned Single Judge of the Bombay High
Court considered the question whether running of a canteen by Railwaymen’s
Cooperative Society at Lonawala without a licence constituted an offence.
Initially, the Society had obtained a licence for conducting the canteen
but the same was not renewed for a number of years. Therefore, the Borough
Municipality sanctioned prosecution of the Manager of the Canteen under
Sections 172 read with Section 61(1)(b)(ii) of the Bombay Municipal
Boroughs Act, 1925. Judicial Magistrate, First Class, Vadgaon (Mawal)
acquitted the accused. The appeal filed by the appellant was allowed by the
learned Single Judge of the High Court. After noticing the relevant
provisions, the learned Judge observed:

 

“It is in pursuance of these provisions that the Borough Municipality
of Lonavala has framed its rules and by-laws for licensing and
regulating the places for use of hotels, eating houses, tea or coffee
shops and restaurants within the Municipal Borough and in Part I,
which contains definitions, “catering establishment” has been defined
as meaning any place used for the business of sale of any article of
food or drink for consumption on the premises and including hotel,
eating house, tea or coffee shop or restaurant, pan bidi shops and
sugarcane juice shop. This definition would clearly show that a
catering establishment means any place used for the business of sale
of articles of food or drink and as pointed out by the Supreme Court
in State of Bombay v. Hospital Mazdoor (1960) 62 Bom. L.R. 558:

 
…’trade’ according to Halsbury, in its primary meaning, is
‘exchange of goods for goods or goods for money’, and in its
secondary meaning it is ‘any business carried on -with a view to
profit whether manual or mercantile, as distinguished from the
liberal arts or learned professions and from agriculture’;
whereas ‘business’ is a wider term not synonymous with trade and
means practically anything which is an occupation as
distinguished from a pleasure.

 
It would thus be seen that the concept of earning profits is not a
necessary appurtenant of the expression “business” and looked at from
this point of view, a place used for the business of sale of any
article of food or drink does not cease to be so merely because it is
not being conducted with a view to earn profits. Anyway, the
definition contained in the rules and by-laws of the Borough
Municipality is an inclusive definition. After saying that a catering
establishment means any place used for the business of sale of any
article of food or drink for consumption, it further goes on to say
that it includes a hotel or an eating house, etc. and in the same
Supreme Court decision, to which a reference has already been made, it
has been pointed out that the words used in an inclusive definition
denote extension and cannot be treated as restricted in any sense.
Where the Courts are dealing with an inclusive definition it would be
inappropriate to put a restrictive interpretation upon terms of wider
denotation. Therefore, having regard to the inclusive definition in
this case, it is clear that the definition of “catering establishment”
does mean and include a cooperative canteen conducted without any
motive of earning profits.

 
If the object and scope of the rules and by-laws framed by the Borough
Municipality are examined, there can be no difficulty in holding that
a catering establishment does include any canteen, whether conducted
for the purpose of earning profits or not. If we examine the rules and
by-laws, it is clear that the object with which they have been framed
is to promote and preserve sanitation and public health and to prevent
the spread of disease within the municipal limits and if that was the
object, it is difficult to see how canteens conducted on no loss and
no profit basis could be excluded from the definition of a “catering
establishment”. It is as much necessary to preserve cleanliness, and
public health in commercial establishments as in the establishments
conducted by co-operative societies like the one in this case. In this
connection, the following passage appearing at pages 58 and 59 of
Maxwell on the Interpretation of Statutes, 1962 edn., may be quoted
with advantage:

 
It is in the interpretation of general words and phrases that
the principle of strictly adapting the meaning to the particular
subject-matter with reference to which the words are used finds
its most frequent application. However wide in the abstract,
they are more or less elastic and admit of restriction or
expansion to suit the subject-matter. While expressing truly
enough all that the legislature intended, they frequently
express more in their literal meaning and natural force; and it
is necessary to give them the meaning which best suits the scope
and object of the statute without extending to ground foreign to
the intention. It is, therefore, a canon of interpretation that
all words, if they be general and not express and precise, are
to be restricted to the fitness of the matter. They are to be
construed as particular if the intention be particular; that is,
they must be understood as used with reference to the subject-
matter in the mind of the legislature, and limited to it.”

 

(emphasis supplied)

 
25. In Balkrishna Karkera v. K.J. Mishra and another AIR 1979 (Bombay)
198, learned Single Judge interpreted Section 394(1)(e)(i) read with
Section 471 of the Act and observed:

 

“Now it is pertinent to note that although the expression “eating
house” has been defined under the Bombay Municipal Corporation Act,
the expression “catering establishment” has not been defined. It is
true that the staff canteen run by Accused No. 2 was not open to the
members of the public at large and the admission was restricted solely
to the employees of the said Company. To that extent Mr. Shrikrishna
would be justified in his submission that the staff canteen could not
be termed as an “eating house.” However, what is significant is the
fact that Accused No. 2 has not been charged with carrying on an
“eating house” but he has been charged for carrying on a catering
establishment. “Catering establishment” is an expression which is
wider in its connotation than the expression “eating house” and
whether a staff canteen was open to the public or restricted only to a
section of the public, it would still fall within the definition of a
“catering establishment”.

 

 

 

26. In our view, the aforesaid judgments of the Bombay High Court lay
down correct law and ratio thereof deserves to be applied for interpreting
Section 394 (1) (e) read with Part IV of Schedule ‘M’ of the Act.

 

27. As a sequel to the above discussion, we hold that the Bombay High
Court was not right in relieving the respondents of the obligation to take
licence under Section 394(1)(e) of the Act.

 

28. In the result, the appeal is allowed, the impugned order is set aside
and the writ petition filed by the respondents is dismissed with cost of
Rs.50,000. The amount of cost shall be deposited by respondent No.1 with
Maharashtra State Legal Services Authority within a period of four weeks
from today.

 

29. Within four weeks from today, the respondent shall file an
application for grant of licence under Section 394(1)(e) of the Act and
produce the necessary documents. The application shall be processed and
decided by the competent Authority within next four weeks.

 

30. It is made clear that appellant No.1 shall be free to initiate
proceedings for imposition of penalty on respondent No.1 for its failure to
take licence and pass appropriate order in accordance with law.

 
……………………………..….J.
[G.S. SINGHVI]

 
New Delhi, …….……..…..………………..J.
November 18, 2013. [V. GOPALA GOWDA]
———————–
26

 

 

 

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