Bombay High Court Quashes Maharashtra Govt Order Barring Cinema Owners From Levying Service Charge On Online Film Tickets

In a significant ruling, the Bombay High Court on Thursday quashed two Government Orders (GOs) issued on April 4, 2013 and March 18, 2014 by which the Maharashtra government restricted cinema owners from levying service charge or convenience fees on online tickets. 

A division bench of Justices Mahesh Sonak and Jitendra Jain held that the said GOs violated the right to practice any profession.

"We are of the view that the impugned GO transgressed the fundamental rights under Article (19)(1)(g) granted to the Petitioners by prohibiting theatre owners and others from collecting the convenience fees from their customers. Absent a Statutory regulation which regulates the right to conduct the business of the Petitioner, the imposition of such a restraint would infringe the legitimate rights of theatre owners," the bench said in the order. 

The impugned prohibition, the judges said, was directly contrary to Article 19(1)(g) of the Constitution of India.

"If business owners are not permitted to determine the various facets of their business (in accordance with law), economic activity would come to a grinding halt. The choice of whether to book the ticket online or purchase it at the theatre is left to the customers," the bench held.

The 40-page judgment authored by Justice Jain, states, "Suppose the customer feels it convenient to book the tickets online by not going to the theatre and paying the convenience fees. In that case, the Respondents cannot restrain the Petitioners from collecting the convenience fees since for providing this facility of online booking, the theatre Owners/Petitioners have to invest in the technology."

The restriction/prohibition imposed by the GOs impugned in the present petition, the judges said, interferes with the right of the Petitioner to carry on business, occupation or trade inasmuch as by the impugned GOs consideration to be agreed upon between two private parties is sought to be regulated or interfered with and the Petitioners are barred from charging them any amount for the business they are engaged in.

"There was no argument about such business not being legitimate business or res extra commercium. Such a course of action on the part of the State cannot be permitted except in cases where there is a Statute or Law which governs the regulation of the price or consideration," the bench held. 

The judges further noted that section 2 (b) of the Maharashtra Entertainment Duty (ED) Act, 1923 permits theatre owners and other persons can charge any amount to their customers. "Still, such amount will be considered for the purpose of determining and computing the duty. Therefore, there is no restriction which was shown to us under the ED Act for collecting the convenience fees," the bench noted. 

Further, the bench found no provision in the Bombay Entertainments Duty Rules, 1958, empowering State authorities to issue such GOs to regulate or prohibit collection of convenience charges/fees.

The judges, therefore, quashed and set aside the two GOs. 

Appearance: 

Advocates Naresh Thacker and Shweta Rajan instructed by Economic Law Practice for PVR Cinemas. 

Advocates Naresh Thacker, Chakrapani Misra, Sameer Bindra and Ananya Misra instructed by Khaitan & Co. appeared for FICCI-Multiplex Association of India.

Advocates Rohan Rajadhyaksha, Dhirajkumar Totala and Tejas Raghav instructed by AZB & Partners appeared for the Big Tree Entertainment Private Limited.

Additional Government Pleader Milind More represented the State.

Case Title: PVR Limited vs State of Maharashtra (Writ Petition 497 of 2014)

Click Here To Read/Download Judgment