K C Cinema (Correct Name K C Theatre) vs State of Jammu and Kashmir & Ors.

Contract – Unfair and unreasonable contract/clause in a contract – Test laid down in Central Inland Water Transport Corpn. case – Held: When one party has unequal bargaining power relative to the other party, any terms and conditions which are unreasonable may not be enforced as against the party with lower bargaining power – Central Inland held that whether parties can be said to have unequal bargaining power and whether a bargain is unfair or unreasonable must be decided on the facts and circumstances of each case – The test in Central Inland is not only to assess whether the parties have unequal bargaining power relative to one another but also to ascertain whether a contractual term or a contract is unfair, unreasonable or unconscionable – A contract (or a term in a contract) can be said to be unfair or unreasonable if it is onesided or devoid of any commercial logic – However, in the present case, although theatre owners may unilaterally determine the conditions of entry into cinema hall, the condition imposed in this instance is not unfair, unreasonable or unconscionable – Jammu and Kashmir Cinemas (Regulation) Rules 1975.

Allowing the appeals, the Court

HELD: 1.1 The trade and business of operating cinema theatres is subject to regulation by the state. In this case, the State Government has framed the 1975 Rules to regulate the industry. Admittedly, the 1975 Rules do not contain a rule compelling the owner of a cinema theatre to allow a movie goer to bring food or beverages from outside within the precincts of the theatre. Similarly, other enactments and rules which regulate the industry, namely, the Cinematograph Act 1952, the Cinematograph (Certification) Rules 1983, the Jammu and Kashmir Cinematograph Act 1989, and the Jammu and Kashmir Cinematograph Rules 1989 do not contain a provision which requires theatre owners to permit movie goers to carry food and beverages of their own into the cinema hall. The rule making power of the state must be exercised consistent with the fundamental right of the cinema hall owner to carry on a legitimate occupation, trade, or business within the meaning of Article 19(1)(g) of the Constitution. The legislature’s omission of a provision requiring the cinema owner to allow eatables and beverages to be brought from outside is significant. In the absence of a specific mandate in the 1975 Rules (or any other applicable law) in this regard, the High Court was not justified in issuing a direction prohibiting theatre owners from disallowing food and beverages to be brought in by persons entering a movie theatre who enter it for viewing a film. The High Court has erred in the exercise of its writ jurisdiction under Article 226 of the Constitution. The exercise of its jurisdiction was not consistent with the provisions of the enactments regulating movie theatres. [Paras 20, 22][583-G-H; 584-A-C, F-G]

Mafatlal Industries Ltd. v. Union of India (1997) 5 SCC

536 : [1996] 10 Suppl. SCR 585 – followed.

1.2 The cinema hall is a private property of the owner of the hall. The owner of the hall is entitled to stipulate terms and conditions so long as they are not contrary to public interest, safety and welfare. Like with any other business, the proprietor or the management is entitled to determine the business model that is to be followed and to give effect to their own conceptions of the economic viability of a particular business model. The owner of a cinema hall is entitled to determine whether she will set up or engage an entity for setting up counters for the sale of food and beverages and to regulate the terms on which such sale should take place. A prohibition on carrying food and beverages from outside into the precincts of the movie hall is not contrary to public interest, safety or welfare. A movie hall is not a movie hall alone but also doubles up as an eatery when food and beverages are sold within its premises. Patrons of a movie hall cannot demand to bring their own food to eat there when a condition to the contrary is enforced by the cinema hall owners. This would be akin to permitting a customer who visits a restaurant to carry their own food to that restaurant and eat it within the premises of that restaurant. [Paras 23, 24][584-G-H; 585-A-E]

1.3 Whether or not to purchase food or beverages after gaining admission to the cinema hall is entirely within the choice of the movie goer. Viewers visit cinema halls for the purpose of entertainment. The transaction of purchasing a ticket permits them to view the movie they have opted to watch. If the food and beverages on sale at the movie hall are not to their taste, they are free to refrain from purchasing them. In this way, they are not being prevented from exercising their right to choice of food. Whether or not to watch a movie is entirely within the choice of viewers. If viewers seek to enter a cinema hall, they must abide by the terms and conditions subject to which entry is granted. Having reserved the right of admission, it is open to theatre owners to determine whether food from outside the precincts of the cinema hall should be permitted to be carried inside. The High Court transgressed its jurisdiction under Article 226 of the Constitution by directing the cinema hall owners not to prohibit movie goers from carrying eatables and beverages from outside within the precincts of a cinema hall and by directing the state to enforce this direction to the cinema hall owners. Absent a statutory regulation which regulates the right to conduct the business of operating a cinema hall, the imposition of such a restraint would affect the legitimate rights of a theatre owner. The condition of entry is imposed as a direct result of the exercise of the right of cinema owners to carry on a business or trade under Article 19(1)(g) of the Constitution. The commercial logic of prohibiting movie goers from carrying their own food to the cinema hall is to stimulate and boost a vital aspect of the business – the sale of food and beverages. If business owners are not permitted to determine the various facets of their business (in accordance with law), economic activity would come to a grinding halt. [Paras 26–28, 31][586-B-F; 587-G-H]

1.4 For movie goers with chronic diseases who may have received dietary instructions from their doctors or who may otherwise be under dietary restrictions due to their medical condition, cinema hall owners are requested to consider requests from such movie goers on a case-by-case basis. [Para 34][588-G]

1.5 The impugned judgment and order of the High Court in regard to direction (i) is set aside. [Para 35][588-H]

Parker v. The South Eastern Railway Co (1877) 2 CDP 416; Olley v. Marlborough Court Ltd (1949) 1 KB 523; McCutcheon v. David Macbrayne Ltd (1964) 1 WLR 125; Thornton v. Shoe Lane Parking Ltd (1970) EWCA Civ 2 – distinguished.

Central Inland Water Transport Corporation v. Brojo Nath Ganguly, (1986) 3 SCC 156: [1986] 2 SCR 278 – relied on.

Alagaapuram R. Mohanraj v. T.N. Legislative Assembly, (2016) 6 SCC 82 : [2016] 6 SCR 611; IREO Grace Realtech (P) Ltd. v. Abhishek Khanna, (2021) 3 SCC 241; Jacob Punnen v. United India Insurance Co. Ltd., (2022) 3 SCC 655 – referred to.