Judgment :- PALANISWAMY, J. 1. The petitioner, who is running timber business at Kancheepuram, Chingleput, Dt. prays for the issue of a writ of Mandamus or suitable orders restraining the first respondent the Kancheepuram Municipality, from implementing Resolution No. 612 dated 29th November 1969, in so far as the licence fee for timber depots is concerned. The licence fee in respect of a timber depot, which was originally Rs. 75 per annum, was raised to Rs. 200 by that resolution in addition to increasing the licence fees in respect of several other items The petitioners contention is that the said resolution is invalid for two reasons. Firstly, it is contended that the power of the Municipal Council to levy a licence fee should bear quid pro quo to the services rendered by the Municipality in respect of such licence and that there was absolutely no justification or reason for raising the fee from Rs. 75 to Rs. 200 without rendering corresponding additional service. Secondly, it is contended that he levy of fee is not based on any reasonable classification and that, therefore, the levy of fee being arbitrary, violates Art. 14 of the Constitution. 2. The Municipality contends that the expenses incurred by the Municipality for supervision and provision for sanitary and other amenities have since enormously and considerably increased after 1958, when the fee was fixed at Rs. 75 and that, therefore, revision of rates of licence fees has become necessary. The contention that the levy is arbitrary and discriminatory is denied. (The alternative stand taken in the counter affidavit that the levy is a tax was not pressed and the arguments were confined only to the question whether the impost in question was or was not valid as a licence fee). The question of increasing the licence fees was considered by the Council on a former occasion by Resolution No. 350 on 30th August 1969. The Chairman put up a note stating that the cycle tax should be abolished, that the income from the cycle tax was Rs. 14,000 per annum and that in order to compensate the loss of income arising from such abolition of tax, the licence fees should be raised which was expected to give an additional income of Rs. 50,000 per annum. 14,000 per annum and that in order to compensate the loss of income arising from such abolition of tax, the licence fees should be raised which was expected to give an additional income of Rs. 50,000 per annum. This matter, which was brought in the form of a resolution, was passed by a majority and the cycle tax was abolished with effect from 1st April 1970, and the resolution expressly stated that in order to compensate the loss arising therefrom, the fee for licences was decided to be increased with effect from 1st April 1970. On coming to know about this resolution, the petitioner lodged his protest by letter dated 24th September 1969 stating that the licence fee could be imposed only by way of recompense for expenses that may be incurred by the Municipality and that the increase was arbitrary and without due regard to the statutory provisions. This protest appears to have made the Municipality realize that the reason for increasing the licence fee could not be sustained, and thereupon, the matter was reconsidered on 29th November 1969. On that date, the Municipality cancelled Resolution No. 350 pissed on 30th August 1969 and resolved to abolish cycle tax with effect from 1st April 1970 and passed the impugned resolution No. 612. The agenda with regard to that resolution read: “Since the rates of licence fees for dangerous, noxious and offensive trades is in force from 1st April 1958 and since the salary and D.A. for supervisors and officers have been increased and there is an additional expenditure incurred therefrom the approval of the Council is requested to raise the licence fee for the various items mentioned in the schedule with effect from 1st April 1970. With one Councillor dissenting, this Resolution was approved by the majority. 3. The Petitioners contention is that the aforesaid resolution is mala fide in that the Municipality did not originally set forth the reason that there was additional expenditure involved by reason of increase in salary and dearness allowance and that, therefore, it was necessary to increase the licence fees. With one Councillor dissenting, this Resolution was approved by the majority. 3. The Petitioners contention is that the aforesaid resolution is mala fide in that the Municipality did not originally set forth the reason that there was additional expenditure involved by reason of increase in salary and dearness allowance and that, therefore, it was necessary to increase the licence fees. It is contended that originally what was thought of as the only reason for increasing the licence fee was the loss which the Municipality would incur on account of the abolition of the cycle tax and that the Municipality originally was of the view that by increasing the licence fee, it could earn additional income. It is, therefore contended that the impugned resolution is mala fide . We shall assume for the sake of argument that the reason now given in Resolution No. 612 increasing the licence, fee is the real reason and examine the question whether the increase is justifiable or not. 4. It is not in dispute that the licence fee is not in the nature of tax and that fee should always be justified on the principle of quid pro quo . The validity of increase in the licence fee for weekly market under S. 102 of the Madras Panchayats Act, 1958, arose for consideration in Muthusami v. Kadayanallur Panchayat Union Council I.L.R. (1965) 2 Mad. 501-77 L.W. 723. Veeraswami, J. as he then was held that the quantum of fee or increase of fee should be correlated and should be proportionate to the cost or increased cost of the special services rendered to the person who is liable to pay the licence fee. In that case, the learned Judge found that the increase did not satisfy the correlation and quid pro quo test and quashed the resolution of the Panchayat. A similar question arose before one of us in Damodara Mudaliar v. Municipal Commissioner (1972) 1 M.L.J. 389 -86 L.W. 28 in which the validity of a resolution increasing the licence fee in regard to storing and selling kerosene oil and petrol among other things arose for consideration. On the same principle, namely, that the increase did not satisfy the correlation and quid pro quo tests it was quashed. 5. On the same principle, namely, that the increase did not satisfy the correlation and quid pro quo tests it was quashed. 5. In the Indian Mica and Micanite Industries v. State of Bihar A.I.R.1971 S.C. 1182 the Supreme Court reviewed the case law on this subject and reiterated the position that before any levy could be upheld as a fee, it must be shown that the levy has a reasonable correlationship with the service rendered by the Government. In other words, the levy must be proved to be a quid pro quo for the services rendered though it would not be possible to have an exact correlationship, which would be one of a general character and not as of arithmetical exactitude. 6. In the instant case, as already noticed, the licence fee for a timber depot was Rs. 75 and it was raised to Rs. 200 under the impugned resolution. The contention of the petitioner is that the Municipality is not tendering any extra service and that the increase is both arbitrary and discriminatory. Along with the counter affidavit, the Municipality has filed a statement giving certain details, which according to the Municipality, justify the increase in the licence fee. In that statement, the pay and allowance of certain officers and employees of the Municipality as on 1st April 1958 are set out and certain percentages of the salaries of the persons are shown as proportionate amount, which, according to the Municipality represents the cost of the services rendered to licencees trading in dangerous and explosive articles Side by side with those figures, details are also given as regards pay and dearness allowance as on 1st April 1970 with the corresponding proportionate amount calculated on the same percentage as on 1st April 1958. On this basis, it is shown in the statement that on 1st April 1958 the approximate expenditure was Rs. 28,147 , whereas the expenditure as on 1st April J970 was Rs. 75,876 . Along with this statement, the Municipality did not give any particulars about the amount that was being realised as licence fee on 1st April 1958 and the licence fee that was expected, to be realised as on 1st April, 1970 based upon the increase in the licence fee. 75,876 . Along with this statement, the Municipality did not give any particulars about the amount that was being realised as licence fee on 1st April 1958 and the licence fee that was expected, to be realised as on 1st April, 1970 based upon the increase in the licence fee. But, without obtaining the leave of the court, the counsel for the Municipality has filed a supplementary counter affidavit stating that during the year 1969-1970, 2410 licences were issued for the dangerous and offensive trades and a sum of Rs. 37,782,32 was demanded and collected from the licencees and that after the enhancement of the fees with effect from 1st April 1970 2306 licences were issued in the year 1970-1971 and a sum of Rs. 88,806-30 was demanded and collected under this head. These figures were given to justify the increase of the several items of licence fees. 7. We are unable to place any reliance upon the foregoing figures In the first place, the figures have been given in a pleading which has been filed into court without the leave of the court and without giving an opportunity to the petitioner to controvert the facts. Secondly, we are unable to understand any rationale behind the proportions fixed as regards the expenditure in the from of salary and dearness allowance to the several officers and employees shown in the statement. Certain arbitrary percentage have been adopted in fixing the proportionate amount out of the pay and allowance of the officers and other employees as being attributable to the services rendered for the licencees. 15 percent in the case of the Commissioner, 25 percent in the case of the Municipal health officer, 56 percent in the case of two lower division clerks who are said to deal with applications, 10 per cent in the case of Manager, Revenue officer, two upper division clerks, thotties and lorry drivers and 50 percent in the case of Sanitary inspectors, in addition to 10 percent of the contingencies, have been adopted in arriving at the total expenditure of Rs. 28,147-60. The same percentage have been adopted with regard to the present salary and allowance of the officers and servants, and on that basis a sum of Rs. 75,876-30 has been arrived at. We asked the counsel for the Municipality as to whether there was any basis for adopting the aforesaid different percentages. 28,147-60. The same percentage have been adopted with regard to the present salary and allowance of the officers and servants, and on that basis a sum of Rs. 75,876-30 has been arrived at. We asked the counsel for the Municipality as to whether there was any basis for adopting the aforesaid different percentages. He frankly said that there is neither any rule nor resolution of the council dealing with this matter. We have no doubt that the percentages have been adopted arbitrarily without any basis whatsoever, and unless the Municipality places materials, to warrant these adoption of the percentages; we are unable to place any reliance upon the figures in the statement. It may also be noted in this connection that it is not proved that before the Municipality passed the impugned resolution it took into account these details to justify the increase in the licences fees, except stating generally that there was increase in the pay and dearness allowance of the employees. That bald statement, without anything to support its correctness, cannot be accepted. Thus, the position is that the Municipality has failed to prove that there was justification for increasing the licence fee conesquent on the increase in the cost of rendering service to the licencees. On this short ground, the impugned resolution is liable to be struck down. 8. The impugned resolution is purported to have been passed by virtue of the powers conferred by sub S. (2) of S. 321 of the District Municipalities Act, 1920. That sub-Section reads:— (2): Save as otherwise expressly provided in or may be prescribed under this Act, for every such licence or permission, fees may be charged on such units and at such rates as may be fixed by the Municipal council.” This sub-Section was substituted by the Madras District Municipalities (Amendment) Act, 1930 (Madras Act X of 1930). The sub-Section as it originally stood ran thus: “321(2): For every such licence or permission fees may be charged at such rates as may be fixed by the council.” As would be seen from the old Sub-section, the, Municipal Council was authorised to levy licence fees at such rates as may be fixed. Under the new sub-Section, in addition to rates, Units for such rates should also be fixed. Under the new sub-Section, in addition to rates, Units for such rates should also be fixed. The expression ‘on such Units and at such rates as may be fixed’ clearly indicates that the rate should be correlated to the particular unit and that without a unit, there cannot be a rate. The Legislature appears to have thought that the Municipality would have power to fix units also on which fees could be charged. As the sub-Section originally stood, the Municipality could not fix the units upon which fees could be charged. The notes on clauses appended to the Bill, which subsequently became the amending Act X of 1930, says— “It is necessary that the Municipal Council should have power to fix units on which fees should be charged in addition to fixing the rates of fees for licences and hence this amendment”. As we have pointed out above the language of the new sub-Section is clear and it shows that if the Municipality were to fix a rate, such a rate should be correlated to a unit, and without specifying the unit, no rate can be validly fixed. The dictionary meaning of the word “unit” is:— “quantity chosen as a standard in terms of which other quantities may be expressed”. In the impugned resolution, so far as timber depot is concerned, no unit is specified except Stating that the licence fee is Rs. 200 per depot This has not taken note of the size of the depot, whereas in respect of certain other items the Municipality appears to have been alive to the requirement of specifying the unit as also the rate. For instance, as regards fuel depot, the licence fee, which was originally Rs. 10 for every 50 sq. yds. was raised to Rs. 50 and for every excess square yard or part thereof the fee, which was Rs. 4 previously, was raised to Rs. 10. Likewise, in fixing the fees for scoring kerosene oil, the rates are fixed with Regard to the quantity, 100 gallons being taken as a basic unit. As the licence fees for the timber depot has been fixed without reference to the size of the depot, the resolution so far as the timber depot is concerned cannot be said to satisfy the requirement of Sub-Sec. (2) of S. 321, which requires the Municipality to fix the units as well as the rates. 9. As the licence fees for the timber depot has been fixed without reference to the size of the depot, the resolution so far as the timber depot is concerned cannot be said to satisfy the requirement of Sub-Sec. (2) of S. 321, which requires the Municipality to fix the units as well as the rates. 9. The contention of the petitioner that the impugned resolution is discriminatory is also well-founded. Entry 65 of the Schedule to the resolution relates to the levy of licence fee for premises where explosive and combustible materials are stored. The minimum fee for storing between 10 and 50 lbs. which was Rs. 15 previously, has been raised to Rs. 50. The fees for storing kerosene oil, as already noticed, has been fixed according to the quantity of the oil. The premises where explosive or combustible materials would be stored and the place where kerosene oil would be stored are certainly more dangerous the premises where timber would be stored for the purpose of sale, as the lire hazard in respect of those two premises are greater than in the case of timber depot. The fee levied for premises in which bamboo is stored has been increased from Rs. 30 to Rs. 100. The fee with regard to industrial premises in which electricity is is used, is based upon horse power. A timber depot, say measuring 100 sq. yds, or 100 cubic yards is treated alike a timber depot measuring 1000 sq. yds. or 1000 cubic yards. The petitioners allegation that his depot is small with a capital investment of only Rs. 3,000 whereas there are depots with capital investment of Rs. 2 lakhs is not denied in the counter affidavit. The volume of stock in a small depot would be considerably less that that in a big depot. The amount of time that may be spent for the inspecting staff would vary depending upon the size of the premises that may be inspected. In the case of a small depot, comparatively less time would be required as against a bigger depot. Thus, without any reasonable classification, the fee for the timber depot has been raised from Rs. 75 to Rs. 200 irrespective of its size. It is necessary on the part of the Municipality to lay down reasonable classification in fixing the fee. Persons dissimilary situated are sought to be treated alike. Thus, without any reasonable classification, the fee for the timber depot has been raised from Rs. 75 to Rs. 200 irrespective of its size. It is necessary on the part of the Municipality to lay down reasonable classification in fixing the fee. Persons dissimilary situated are sought to be treated alike. It is impossible to find any rationale for adopting the timber depot as such a unit for charging licence fee irrespective of the size and consequential cost of services. In Varadachari v. State of Madras , A.I.R. 1952 Mad. 764-65 L.W. 845 a Bench of this court considered the validity of a Government Order providing for enhancement of licence fee under the Madras Manure Dealers Licensing Order, 1949. Previously the rate of fee for each expeller was Rs. 10. It was raised to Rs. 100 under the impugned G.O. For dealers in manure, the old rate of Rs. 20 was allowed to continue. In examining the question whether there was any rationale in levying different rates of fees, the Bench observed at page 767 in paragraph 13:— “It is impossible to discover any rational basis for adopting the expellers as a unit for charging, licence fee. If it is said that the more the number of expellers it would mean more manure produced and sold, then it can be very properly, asked, what about the other dealers who may actually stock and sell more than What any oil miller may be able to produce and sell? Such dealers have to pay only at a flat rate of Rs. 20. The enhancement in the case of oil millers only would in that event be clearly discriminatory and would offend the provisions of Art. 14 of the Constitution”. 10. We have no doubt that the impugned resolution so far as timber depot is concerned is clearly discriminatory and violative of Art. 14 of the Constitution and cannot be sustained. In the result, the writ petition is allowed with costs. Counsels fee Rs. 100.