DELHI RACE CLUB LTD. versus UNION OF INDIA AND ORS.

Citation: [2012] 8 S.C.R. 1 · Decided: 13-07-2012 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Dismissed
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Judgment (excerpt)

[2012] 8 S.C.R. 1 
DELHI RACE CLUB LTD. 
v. 
UNION OF INDIA AND ORS. 
(Civil Appeal No.6461 of 2003) 
JULY 13, 2012 
[D.K. JAIN AND ANIL R. DAVE, JJ.] 
Mysore Race Courses Licensing Act, 1952 (as extended 
to the Union Territory of Delhi in 1984) - s. 11 - Horse racing 
A 
B 
- Licence fee leviab/e in terms of the 1985 Rules framed u/ C 
s. 11 of the 1952 Act - Delegation of legislative power u/s. 11 
of the 1952 Act - Challenged as unconstitutional and ultra 
vires for allegedly conferring unguided, uncontrolled and 
unfettered power on the Administrator to fix the licence fee -
Held: Delegation of non-essential legislative function of D 
fixation of rate of imposts is a necessity to meet the 
multifarious demands of a welfare state - Such delegation is 
permissible as long as legislative policy is defined in clear 
terms, which provides guidance to the delegate - In the instant 
case, challenge to constitutionality of s. 11 (2) of the 1952 Act E 
was based on the premise that no guidance, check, control 
or safeguard is specified in the 1952 Act - This principle, 
however, applies only to the cases of delegation of the function 
of fixation of rate of tax and not a fee - Since the levy involved 
in the present case is a fee and not tax, and the scheme of F 
the 1952 Act clearly spells out the object, policy and the 
intention with which it has been enacted, therefore, the 1952 
Act does not warrant any interference as being an instance 
of excessive delegation -
Constitution of India, 1950 -
Delegation of legislative power - Delegation of non-essential G 
legislative function. 
Delhi Race Course Licensing Rules, 1985 - r. 6 - Horse 
racing - Licence fee /eviable in terms of the 1985 Rules 
framed uls. 11 of the 1952 Act - Nature of the impost - Tax 
1 
H 
2 
SUPREME COURT REPORTS 
(2012] 8 S.C.R. 
A or fee - Held: The true test to determine the character of a 
levy, is the primary object of the levy and the essential 
purpose intended to be achieved - In the instant case, the 
nature of the impost is not merely compulsory exaction of 
money to augment the revenue of the State but its true object 
B is to regulate, control, manage and encourage the sport of 
horse racing as is distinctly spelled out in the ·1952 Act and 
the 1985 Rules - Wide powers have been conferred on various 
authonties to enable them to supeNise, regulate and monitor 
the activities relating to the race course with a view to secure 
c proper enforcement of the provisions - Therefore, the levy 
involved in the present case is a 'fee' and not 'tax' - Mysore 
Race Courses Licensing Act, 1952 (as extended to the Union 
Territory of Delhi in 1984) -
s. 11 - Delhi Race Course 
Licensing (Amendment) Rules, 2001. 
D 
Delhi Race Course Licensing Rules, 1985 - r.6 - Delhi 
Race Course Licensing (Amendment) Rules, 2001 - Horse 
racing - Licence fee leviab/e in terms of the 1985 Rules (as 
amended in 2001) challenged on the ground that it Jacked 
any element of 'quid pro quo' - Held: The licence fee imposed 
E in the present case is a regulatory fee and is, thus, not 
conditioned by the fact that there must be a quid pro quo for 
the seNices rendered - The Government need not render 
some defined or specific seNices in return as long as the 
licence fee satisfies the limitation of being reasonable - If 
F there is a broad correlation between the expenditure which the 
State incurs and the fees charged, the fees can be sustained 
as reasonable - Taxation - 'Quid pro quo'. 
Delhi Race Course Licensing Rules, 1985 - r. 6 - Delhi 
G Race Course Licensing (Amendment) Rules, 2001 - Licence 
fee prescribed in the 1985 Rules framed u/s. 11 of the 1952 
Act - Ten-fold enhancement of the licence fee in view of 
amendment in terms of the 2011 Rules - Propriety - Validity 
of the 2001 Rules and of the charging section i.e. s.11(2) of 
the 1952 Act - Challenge to - Held: The challenge to validity 
H 
DELHI RACE CLUB LTD. v. UNION OF INDIA AND 
3 
ORS. 
of s. 11 (2) of the 1952 Act was raised after almost 15 years of A 
the commencement of the 1952 Act - The appellant Race 
Course had been regularly paying the licence fee and the 
present challenge was made only when quantum of licence 
fee was increased by the Government on account of non-
revision of the same since the commencement of the 1952 
B 
Act - Evidently, inflation during this period was taken as the 
criterion for increasing the quantum of the fee - The increase 
was reasonable keeping in view the fact that
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