STATE OF U.P. AND ORS. versus M/S. S.K. THEATRE PRODUCTIONS AND ORS.

Citation: [2007] 2 S.C.R. 391 · Decided: 09-02-2007 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

" 
STATE OF U.P. AND ORS. 
A 
V. 
MIS. S.K. THEATRE PRODUCTIONS AND ORS. 
FEBRUARY 9, 2007 
[S.B. SINHA AND MARKANDEY KA TJU, JJ .] 
B 
-f 
Taxation-Subsidy-Subsidy for promotion of production of films in 
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regional languages by 'Film Policy'-Subsidy was restricted to 25% of the 
processing charges only and not of the entire cost of production-Plea that c 
other film producers given subsidy on the entire cost of production-Held: 
Matter remanded to High Court for deciding after considering as to how was 
the relevant clause of the Film Policy understood by the Department and 
what subsidies were given to other jilmmakers-Uttar Pradesh Film Policy 
2001-Clause 23.3. 
D 
Interpretation of Statutes-Interpretation of Government Circulars-
t 
Held: When two interpretations of a circular are possible, the relevant factor 
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for its interpretation is, how the circular has been understood by the issuing 
development. 
In order to promote film production in regional languages of U.P., State E 
Government gave various incentives including trade tax exemptions, tax 
incentives, subsidy etc. Respondent herein produced a regional film after due 
approval and claimed subsidy under clause 23.3 of 'Uttar Pradesh Film Policy 
2001 '. The authorities restricted the subsidy to 25% of the processing 
-r 
charges only and not 25% of the entire cost of producing the film. Respondent F 
filed Writ Petition challenging the order, and the same was allowed. 
In appeal to this Court, appellant contended that subsidy payable was 
only 25% of the cost involved in the processing of the film in the laboratory 
(subject to a maximum of Rs. 10 lacs.) 
Respondent contended that other film producers had been granted 25% G 
,,, 
of the entire cost of production. 
.. 
·....f 
Allowing the appeal, and remanding the matter to High Court, the Court 
HELD: 1. If other film producers were granted subsidy of 25% of the 
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391 
H 
392. 
SUPREME COURT REPORTS [2007] 2 S.C.R. 
A cost or production of the film (subject to a maximum limit of Rs.10 lacs) then 
,( 
the writ petitioners should also be given the same benefits. However, if that 
was not done then the subsidy should be 25% of the cost offilm processing 
in the lab (subject to a maximum of Rs.IO lacs) and not the entire cost of the 
film production. (Para 101 [394-DI 
B 
2. A relevant factor for interpretation if there is some ambiguity in a 
circular, is how the circular has been understood by the department itself 
which issued it. This is particularly so when there are two interpretations 
possible, as is in the present case. Matter remanded to the High Court for a 
·i.. 
.;.:. 
fresh consideration after calling for the relevant material in order to 
c understand how clause 23.3 of the Film Policy was understood by the 
department itself and what subsidies have been given to other film producers. 
(Paras 11 and 12) [394-E-F) 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 653 of 2007. 
D 
From the final Judgment and Order dated 7.12.2005 of the High Court 
of .Judicature at Allahabad, Lucknow Bench, Lucknow in Writ Petition No. 
3281 (M/B) of 2004. 
'" 
Dr. R.G. Padia, Arvind Varma, Kamlendra Mishra and Rajeev Dubey for 
the: Appellants. 
E 
Ravindra Kumar, Javed Mahmud Rao, Shahid Ali Rao, Pavan Sharma, 
Nitish Massey and B. Vijayalakshmi Menon for the Respondents. 
The Judgment of the Court was delivered by 
F 
MARKANDEY KA TJU, J. I. Leave granted. 
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2. This appeal has been filed against the impugned judgment of the 
Allahabad High Court (Lucknow Bench) dated 7.12.2005 in Writ Petition 
No.3281 (MB) of2004. Heard learned counsels for the parties and perused the 
record. 
G 
3. The facts of the case are that to promote film production in the State 
' 
ofU.P. the State Government constituted a Society named Film Sandhu in the 
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year 200 I which was registered under the Societies' Registration Act. Various 
Government orders were issued to give facilities for film production in U.P. 
and a film policy was made. Various incentives were also declared to be given 
H to the films made in regional languages in U.P. such as Avadhi, Bhojpuri and 
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STATE OF U.P. v. SK. THEATRE PRODUCTIONS [MARKANDEY KA TJU, J.] 
393 
Braj etc. These various incentives are mentioned in the booklet entitled 'Uttar A 
).., 
Pradesh Film Policy 200 I', copy of which has been supplied to us. These 
include trade tax exemptions, tax incentives, subsidy, two weeks' compulsory 
exhibitions of regional films, et
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