A.N.GROVER,J. (1) THIS is an appeal from a judgment of the Punjab High court (Circuit bench, Delhi) involving the question of the validity of Rule 7 read with Rule 5 and its Schedule of the Delhi Factories Rules 1950 made under Section 112 of the Factories Act 1948, hereinafter called the Act. The impugned Rules relate to the grant of a licence for a factory and renewal thereof, the fees being prescribed by the Schedule to Rule 5. (2) THE Delhi Cloth and General Mills Go. Ltd. operates within the Delhi area a number of industrial establishments which are factories within the meaning of Section 2(m) of the Act. The company has to pay a total sum of Rs. 12,775.00 as annual licence fee for all its factories in Delhi, the fees being calculated according to the Horse Power and the maximum number of workers to be employed on any day during the year as given in the Schedule. The maximum fee that is payable is Rs. 2,000.00 for a factory. The factiories can be run only after registration and under a licence granted under the Act and the Rules on payment of the prescribed fee. The licence is renewed every year under Rule 7 on payment of the same fee which is paid at the time of the granting of the licence. Every licence granted or renewed remains in force up to December 31, of the year for which it is granted or renewed. In January, 1963 the company filed a petition under Articles 226 and 227 of the Constitution in the High court challenging the validity of the Rules under which the licence fee for rene- wal of the licence for each of its factories in Delhi was being levied and collected i.e., Rule 7 read with Rule 5 and its Schedule. This petition was dismissed by a division bench on 11/02/1965. The company then filed the present appeal by certificate. (3) THE principal point which has been canvassed on behalf of the appellant company is that the payment made for renewal of the licence was and is only to endorse the licence as valid for the next year and the amount charged for the renewal thereof cannot and does not entail services which can reasonably be regarded to be commensurate with the amount so charged. In other words the element of quid-pro-quo which distinguishes a fee from a tax is absent and lacking. The Act, it is pointed out, contains specific provisions for rendering of benefit and service to the workmen by the owners of the factories. The Inspectors who are appointed under the Act to ensure that its provisions are complied with by the factory owners con- stitute a policing agency and it is not possible to say that the powers and duties of the Inspectors when exercised and carried out amount to services rendered for the benefit of the factory owners or the workmen. (4) FALSHAW C.J., who delivered the judgment of the division bench was of the view that the work carried out by the Inspectors under the Act of seeing that all its beneficient provisions for the health and welfare of the workers employed in the factories were fully implemented must definitely be regarded as services rendered in return for the fee levied for the annual renewal of the licence for the factory. It was further observed on an examination of the affidavit which had been placed before the court that at least 60% of the amount realised as licence fee was being utilised on running the department. (5) MR. H. R. Gokhale for the appellant company has contended that the High court failed to apply the principles which are settled by certain decisions of this court for determining whether a fee for a licence or a renewal thereof in circumstances similar to the present case, is in substance and effect a tax. He has relied largely on Corporation of Calcutta and Another v. Liberty Cinema. In that case the licence fee had been raised from Rs. 400.00 to Rs. 6,000.00 per year. It was observed in the majority judgment that the provision under which the licence bad to be taken out for a cinema did not refer to the rendering of any service by the Corporation of Calcutta. It was also not obligatory on the Corporation to make any bye-law under which services were to be rendered. If the bye-laws were not made there would be no service to render. It was also not obligatory on the Corporation to make any bye-law under which services were to be rendered. If the bye-laws were not made there would be no service to render. It was further pointed out that inspection by the authorities concerned could not be regarded as a service to the licensee as it was meant only to make sure that the licensee carried out the conditions on which the licence had been granted to him. Some of the earlier decisions were considered as also the pronouncement in H. H. Sudhundra Thirtha Swamiar v. Commissioner for Hindu Religious and Charitable Endowments, Mysore and with regard to the latter case it was said that a service resulting in the control of the Math Adipathi conferred special benefit on the institution which alone paid the levy. (6) AS far back as 1954 it was laid down in Mahant Sii Jagannath Ramanuj Das and Another v. The State of orissa andAnother that the contributions levied for the expenses of the Commissioner and his staff who were to exercise effective control over the trustees of the Maths and the temples was to be regarded as fee and not a tax. Two reasons were given for .this : (1) The payment was demanded only for the purpose of meeting the expenses of the Commissioner and his staff which is the machinery set up for due administration of the affairs of the religious institution. (2) the collections made were not merged in the general public revenue. Similarly in Ratilal Panachand Gandhi v. The State of Bombay and Others.