Court holds Section 354 of Karnataka Municipal Corporations Act mandates only one-time permission for installation; BBMP's demand for yearly renewal and hefty fees deemed unsustainable.
In a significant judgment delivered on September 7, 2026, the Karnataka High Court (Division Bench) in the case of Island Star Mall Developers Pvt. Ltd. vs Bruhat Bengaluru Mahanagara Palike (BBMP) clarified the legal position regarding permissions and licensing for diesel generator sets installed in shopping malls. The Court ruled that under Section 354 of the Karnataka Municipal Corporations Act, 1976, the installation of diesel generator sets requires only a one-time permission and not a renewable trade license, thereby setting aside the BBMP's demand for annual renewal and associated hefty license fees.
The appellant, Island Star Mall Developers Pvt. Ltd., operating the Phoenix Market City mall in Bengaluru, had initially obtained a power license from BBMP in 2011 upon payment of Rs.10,00,000. However, BBMP insisted on annual renewal of this license with similar fees. The appellant challenged this demand, submitting that the statutory provision only requires a one-time permission for installation and not a recurring trade license renewal. They also highlighted that other statutory bodies like the Electrical Department, Karnataka State Pollution Control Board (KSPCB), and Fire Force Department already regulate and inspect the generator's safety and functioning.
The Single Judge had earlier dismissed the appellant's writ petition, holding that periodic renewal was necessary. Upon appeal, the Division Bench carefully examined Section 354 of the Karnataka Municipal Corporations Act, which mandates an application for permission before installing machinery driven by power but does not stipulate any requirement for renewal of such permission. The Court noted that Section 354 distinguishes between a "permission" for installation and a "trade license" for continued use, the latter governed by Section 353 and Schedule X, which are not applicable to diesel generator sets in shopping malls.
Furthermore, the Court observed that the BBMP's demand for a license fee of Rs.10,00,000/- was neither regulatory nor compensatory, as BBMP did not provide any corresponding service such as inspection or certification of the generator set. Such services were already carried out by other statutory authorities. The Court also clarified that shopping malls themselves do not require trade licenses, although individual shops inside malls do.
The judgment emphasized that where a diesel generator set is owned and maintained by the mall owner, it does not amount to a separate trade or business requiring a trade license. The Court accordingly allowed the writ appeal, set aside the Single Judge's order, and declared that there is no legal requirement for renewal of the trade license for the diesel generator set. However, the Court declined the appellant's prayer for refund of the license fees already paid.
This ruling provides relief to shopping mall owners and similar establishments by reducing the compliance burden and unnecessary financial strain from unjustified license fee demands. It also underscores the importance of interpreting municipal laws in harmony with their plain language and legislative intent.
Bottom Line:
Karnataka Municipal Corporations Act, 1976, Section 354 requires only a one-time permission for the installation of diesel generator sets, and there is no legal requirement for a trade license or its annual renewal for operating such generators within a shopping mall.
Statutory provision(s):
Karnataka Municipal Corporations Act, 1976 Sections 354, 353, 443
