Section 354 requires one-time permission; diesel generators do not require annual trade-licence renewal.

The appellant, owner of the Phoenix Market City shopping mall in Bengaluru, installed and operated a diesel generator set on its premises.

It obtained a “power licence” from the respondent-BBMP on 30 December 2011 by paying ₹10,00,000 and subsequently renewed it, including payment of a penalty, up to 31 March 2014.

When the appellant questioned the statutory basis for the renewal requirement, BBMP relied on Section 354 of the Karnataka Municipal Corporations Act, 1976 (“KMC Act”) and later issued a notice dated 28 February 2015 requiring renewal under the Suvarna Arogya Paravanagi Scheme, 2007.

The appellant challenged the notice in W.P. No.26090/2015. The learned Single Judge held that installation of the diesel generator required permission under Section 354 and that the appellant was bound to continue renewing it. The present writ appeal challenged that decision.

1. Whether Section 354(1) of the KMC Act requires only one-time permission for installation of a diesel generator set, or whether it also authorises BBMP to require periodic renewal of a trade licence for its continued operation?

2. Whether Section 443 of the KMC Act or the Suvarna Arogya Paravanagi Scheme, 2007 provides a statutory basis for annual renewal and levy of licence fees in respect of a diesel generator set operated by the owner of a shopping mall?

3. Whether the appellant’s prior payment and renewal of the power licence precluded it from challenging the legality of the renewal requirement?

4. Whether the licence fees demanded by BBMP could be sustained in the absence of any corresponding regulatory or inspection services rendered by it?

The Court applied Section 354(1) of the KMC Act, which requires a person intending to install machinery or a manufacturing plant driven by steam, water, electrical or other power to obtain prior written permission from the Commissioner before undertaking the installation.

The Court distinguished this one-time permission from a trade licence under Section 353 and Schedule X, which concerns regulated trades or uses of premises.

Section 443 of the KMC Act governs licences and permissions by prescribing their conditions, fees, suspension, revocation and renewal consequences, but does not independently create an annual renewal requirement where the substantive provision does not prescribe one.

The Court further applied the principle that a licence fee may be regulatory or compensatory, and where it is imposed for services rendered, there must be a reasonable relationship between the fee and the regulatory services provided.

The decisions cited by BBMP—M/s. Premier Sea Foods Exim Pvt. Ltd. v. M/s. Caravel Shipping Services Pvt. Ltd., 2022 LiveLaw (SC) 54, and Roche Products Ltd. v. Collector of Customs, 1989 Supp (2) SCC 532—were noted but did not alter the Court’s construction of Section 354.

The Court held that the language of Section 354(1) is directed to the proposed act of constructing, establishing or installing machinery and requires prior permission to undertake that work; it does not prescribe a continuing trade licence or periodic renewal for operation of an already-installed diesel generator.

BBMP’s own concession that no specific provision in the Act, Schedule or Rules required a licence for operating a generator was decisive.

Section 443 could not be used to create a renewal obligation that was absent from Section 354.

The appellant’s earlier applications, payments and renewals could not operate to impose a statutory liability where none existed, particularly because the appellant had merely paid for the licence and BBMP had not rendered any corresponding inspection or verification service.

The Court also distinguished a generator operated by the mall owner for its own premises from a generator operated by an independent entity as a trade or business, in which latter case a separate trade licence could be required.

The writ petition was allowed in part, and the Court declared that no renewal of a trade licence is required under law for the diesel generator set operated by the appellant.

However, the appellant’s prayer for refund of licence fees already paid was declined.